Saturday, May 30, 2009

The Share Economy: Reduction Ad Absurdum or Good Idea

The Share Economy Reductio Absurdum or a Good Idea L. Weitzman wrote a book that proposed making wages a share of gross revenue for a firm. As the company did better or worse and as the economy did better or worse, employee's wages would go up and down. This would avoid the need for layoffs. This is a much more humane way to send employees the message that the demand was declining for their services. Those that could more easily change jobs would do so in response to the opportunity to get a higher wage. Social scientists have documented the devastating emotional effect of unemployment. For example, Dr. Dieter, the famous Dr. Happiness gave a talk at my University and he reported on a study where those who were laid off suffered a decline in happiness. "Preferences over Inflation and Unemployment: Evidences from Surveys of Happiness" found that a one-percent increase in unemployment produces more than twice the decline on happiness of a one-percent increase in inflation. Others report on a more elusive effect. Reading this and seeing the Savings and Loan Crisis of the eighty's, the Asian Financial Crisis of the late ninety's and now the global recession, proposed: All obligations of a firm shall be a percentage of their income! This eliminates the distinction between equity and debt. A firm that does not have cash on hand gives a share of its income. And consistent with participatory democracy and sortition, ones votes in the firms affairs shall be proportional to ones share of the income whether one is an employee or a shareholder. Thus when GM suffered a practical halving in revenue, both its bond holders (I am one), its share holders and its workers would see their income go down by half. It is certainly a blow to see one's income go down by half. But it is not as bad as loosing one's job. And it certainly not as bad as seeing that one's savings disappear. It is certainly better than what in the quote of one bondholder who said they will put their bonds up as "wallpaper. As a GM bondholder myself with about five thousand invested therein, I certainly concur. And it is better than stocks. There is is an idea that the stock market is just one big Ponzi System As I heard on NPR, those who buy Google don't expect to make the money back from dividends or the revenues of the firm. They intend to sell the stocks at a higher price. And, this means of course that chief executive officers are encouraged to increate short term earnings by gimmicks or outright accounting fraud. This drives up the stocks which make the investors happy. Thus, I propose something dramatic. Once one buys a share, one can never sell it. You can vote along with the other shareholders, including the workers to sell the business and liquidate the business. And presumably, when the steel of a factory is of more value as scrap than in making the product, that is what will happen. And sometimes, a hotel might make so little revenue, that it is time to bulldoze and sell the land. And the few remaining workers and those owning shares in the hotel operation would vote to take that benefit and go on with their lifes. Until then, there is no crisis. In the next post, I will talk about how we handle individual finance in a true share economy--hint rent, mortgages, personal debts are paid as a share of one's income.

Monday, May 25, 2009

A Participatory Democracy Framework for HealthCare

Part One, Referendum by Approval voting

We all vote on the major health care restructuring/reform ideas that have been discussed. Any proposal that can get 40% of the votes of either house should be submitted as a possibility. (The Republicans won't feel left out.) Also, President Obama should get one that is solely his idea. And lastly, we should set up major industry groups and groups. Each of these submit a proposal as well.

We vote by approval voting. That is, the citizens can vote for more than one proposal that they like; The one which gets the most votes wins.

Part Two: Parameterize the Structure.

For example, tax rates, penalties for not choosing a planet, reimbursement rates, the percentage of money going to rural providers, different specialties, teaching hospitals are all parameters.

Each year the population gets to vote on each of the number. The final number is the median of whatever everyone selects. To prevent wild gyrations and to allow health care firms to plan, there will be plus or minus five percent cap.

Part Three: Introduce Sortion for allocating funds.

Each of the categories get a fixed amount of money and providers are batched. That is, we have bathces of rural-based orthapaedists, batches of oncologists in teaching hospitals, batches of primary care physicians in low-income areas, etc.

Each provider submits statistics on what they did, who they treated, who they chose not to treat and outcome measures. Of course, the patients submit satisfaction numbers. Patients who have a particularly bad outcome can bring their complaint to the sortition manager. This replaces the current malpractice system. But in addition, patients who particularly think the doctor did a good job (saved their live when noone else could), can raise this as well.

Part Four Extension to Private Health Insurance FundsAll of our private health/HTMO bueauracracy is based on one of two models

  1. Fee for Service
  2. Capitation (Fixed fee for keeping this person well)

The problem with the first is that it provides an incentive for care that isn't needed. Studies have demonstrated when a physician could reasonably make a decision either way about a test, they will order the test.

The problem for the second is the incentive to ration and limit care.

People don't like either because the insurer or HMO bureaucracy gets in the way of the physician/patient relationship. Insurer requires precertification. HMO's require approval to refer to a specialist.

The fixed model with sortition distribution is the third way. The Insurance company says that it will spend x dollars. It tells doctors to provide health care that they feel are needed. The insurer rewards the providers that help the most people, do the least harm with the most dollars. This is based upon ingo and outcome (how sick or injured were the patient; how were they treated, what were their outcomes.)

The sortition juries can help decide, along with the aid of biostatisticians and physicians, how to distribute the funds. The insurance companies provide the structure for the system and provides the medical and statistical experts. They get a percentage of the amount distributed, and do not get rewarded in any way for rationing care. The sortion jurie can also pay a bonus to the experts evaluating the care as well as patients who bring their evaluations. Instead of having paid expert witnesses and lawyers in the malpractice settings, the juries determine who provide the best information.

Autonomy to the physicians in providing the health care; autonomy to the payer (us) in paying for the health care!

Saturday, May 23, 2009

Let's combine a consumption tax, a Carbon Tax, and a health Care Plan!

Let's combine a consumption tax, a Carbon Tax, and a health Care Plan! A Carbon tax or carbon cap and trade discriminates against our own industries including one such as the one just passed in the House Energy Committee. Economist Article We tax the producers in our country. It does not consider embodied energy in imported goods. For example, it takes a lot of energy to produce a PC. Ditto for environmental taxes. Dr. Raymond McDermott a former Economics Professor here at my Western Illinois University found that countries that have strong environmental standards suffer in the import factor (the pollution haven factor) ( and the Walmart effect is at least as much do to finding countries with lax environmental regulations as their cheap labor. Also, see "Unmasking the Pollution Haven Effect" in International Economic Review, Volume 49, Issue One, Page 223 to 254 February 2008. Companies in the United States that provide their workers health care are at a competitive disadvantage. We have all heard that $1500.00 is added to the cost of a car built in the United States because of worker's health care costs. Each good or service receives a tax that reflects 1) how much carbon it produces to the atmosphere 2) how much conventional pollution 3) how they treat their workers including paying health care, occupational safety, and providing stable employment. 4) how need the good is. (Basics like carrots and unadorned underwear get a lower tax than luxury goods and sugar pop.) Firms go before a jury of randomly selected citizens. (We have plenty of unemployed citizens who have the time to hear these). They assign a tax based on all factors. To encourage competition, the firms are grouped by type (cars, clothing, restaurants, etc.) and would be encouraged to compare how they treat their workers and the environment with the competition. Those firms that are relatively better pay little or no tax with the tax burden falling on those goods/businesses that are bad for the environment. A consumption tax can be organized as a sales tax (the fair tax) or a system where we look at each person's income and savings and then they can bring their receipts to get a refund back. (Credit cards now give one an organized method of totalling one's expenses. The stores can send through a UPC number and business back to the Credit card, which can arrange for the Cash back. A Universal Credit card comes to mind here.)