Adventures in Late-Stage Capitalism #6: America’s Economy as Player Piano

I. The Problem of Artificial Intelligence and Automation

Kurt Vonnegut’s debut novel Player Piano, published is 1952, is a reflection on the impact of automation on daily life. It’s a story of people searching for meaning in their lives in a world in which there is no meaningful work for them to do. In the world of Player Piano, everyone has an adequate standard of living but most men are assigned by the government to useless jobs to keep them busy, while virtually all women are housewives who watch a lot of television.

The dystopia of Player Piano has not come to pass... yet. As in the novel, during the second half of the 20th century, millions of Americans did leave their workbenches and assembly lines as machines and robots replaced factory workers on a vast scale (or factory jobs just went overseas). This has not resulted in a economy with widespread unemployment however, because the US successfully made a transition from an industrial economy to a post-industrial service economy. (The term "successfully" is subjective; in 1952 virtually any man could get a good job working at General Motors, while in 2019 America’s largest private-sector employer is Wal-Mart, a company that pays below the poverty line.)

So, questions regarding the shrinking middle-class aside, America’s post-industrial economy is humming right along. Or at least it will be, until the next revolution in automation eliminates the service jobs that are now the backbone of the job market. No doubt about it - artificial intelligence will soon make millions of workers obsolete, both in the industrial and service sectors. From a recent Fortune.com article by Gwen Moran entitled, Your Job Will be Automated - Here’s How to Figure Out When A.I. Will Take Over:

"Automation is increasingly making its way into the workplace, raising concerns among employees about the ways technology will change their jobs—or eliminate them entirely. A June 2019 report by Oxford Economics predicts that 8.5% of the world’s manufacturing positions alone—some 20 million jobs—will be displaced by robots by 2030."

OK, robots replacing factory workers is not news. But from the same article:

"A 2013 paper, "The Future of Employment: How Susceptible are Jobs to Computerisation?" found that roughly 47% of jobs were at high risk of being automated with advances in artificial intelligence."

"This isn’t some futuristic hypothetical. Michael Chui, Ph.D., a partner at McKinsey Global Institute (MGI), says roughly half of the tasks people perform at work could theoretically be done by technology that exists today.

And it’s not just low-income workers whose jobs will change. Chui and his team estimate that roughly six out of 10 jobs are made up of 30% or more tasks that can be automated. CEOs, financial advisors, insurance agents, and others all fall into this category."

II. Don't Expect Any Help from the Republican Oligarchy

So now it’s 2052, the centennial of the publishing of Player Piano, and the automated world described by Kurt Vonnegut has come to pass: there is no productive work for many or most folks to do. In Player Piano, most men are assigned to killing time in public works jobs that aren’t really needed. Ironically, if millions of workers were given public works jobs in today’s America it would actually be a great thing, given our crumbled infrastructure.

My key concern regarding an automated world is this: what makes anyone think that the billionaire oligarchy that controls America's economy and politics will establish a nanny state that would provide employment and social security for millions of people simply because folks can’t find jobs? Knowing what we do about today’s Republicans, isn’t it more likely they would just shrug their shoulders and let widespread poverty takeover?

Consider the Republican attitude to the Medicaid expansion included with Obamacare. The law was designed to provide health insurance to those who cannot afford otherwise afford it, generally because they have no income or resources. Most states controlled by Republicans have refused the Medicare expansion, going so far as to turn down federal grants that would provide life-saving care to those who cannot otherwise afford it.

Conservative Kansas typifies the Republican non-solution to the problem. From a 2015 article by Kartrina vanden Heuvel of the Washington Post:

"Kansas has some of the most restrictive Medicaid eligibility requirements in the country. The program is available only to non-disabled adults earning less than 32 percent of the federal poverty level, and most childless adults don’t qualify, regardless of income. The Affordable Care Act was supposed to raise that threshold to 138 percent, but Brownback declined to implement the Medicaid expansion. As a result, thousands of poor Kansans who would qualify for Medicaid in other states remain uninsured.

Brownback has often characterized his opposition to expanding Medicaid and other poverty programs, in (editor of The Nation Kai) Wright’s words, as a "moral rejection of dependency." Last June, for example, Brownback told the Heritage Foundation’s Daily Signal Web site that Kansas had not expanded Medicaid because "We’re trying to push people that are able-bodied right now to get a job." Similarly, Brownback pledged in his State of the State address this year to continue "helping people move from dependence on the government to independence."

But, in practice, Brownback’s resistance to Medicaid expansion is causing some people to move from independence to desperation. Wright spoke with several Kansans who are suffering because of Kansas’s severe eligibility requirements. Far from the right-wing caricature of lazy moochers, they are hard workers who aren’t looking for a handout. One woman, RaDonna, is too sick to hold down food, let alone a full-time job. Yet, as a childless adult, she doesn’t qualify for Medicaid — and the state rejected her application for disability benefits. While RaDonna now lives with her sister, Cathy, she insists on helping with the laundry and dishes to earn her keep. "She can’t do the whole sink full of dishes without stopping and sitting down for a while," Cathy says.

The stories from Kansas are heartbreaking, but unfortunately they are not unique. According to the Kaiser Family Foundation, "Nationally, nearly four million poor uninsured adults fall into the ‘coverage gap’ that results from state decisions not to expand Medicaid." Republicans have full control of the legislature in all 21 states that have not expanded the program.

"For most Republican leaders, opposing Medicaid expansion is simply a matter of ideological faith. "Why is more people on Medicaid a good thing?" (Wisconsin Governor Scott) Walker asked last year. Echoing Brownback, he added, "I’d rather find a way, particularly for able-bodied adults without children, I’d like to find a way to get them into the workforce. I think ideologically that’s a better approach, not just as a conservative but as an American. Have more people live the American dream if they’re not dependent on the American government." More recently, Walker framed his position in religious terms. "My reading of the Bible finds plenty of reminders that it’s better to teach someone to fish if they’re able," he said."

To summarize, millions of Americans cannot afford health insurance. Many of these folks are too sick or otherwise disadvantaged to be able to find and retain the kind of full-time work that provides insurance. Yet Republican leaders have responded to the problem with a shrug of the shoulders, effectively dooming these these Americans to continue to be denied healthcare. Given these facts, is there any reason to believe that Republicans won’t also deny other basic necessities to those who are unable to find work after being displaced by artificial intelligence? The country has had crises of unemployment in the past; Republicans responded to both the Great Depression of the 1930s and the Great Recession of 2009 mostly by doing nothing.

So let’s assume we remove Republicans from power before everyone who loses a job to artificial intelligence dies from lack of food, shelter and health care. What then? Well if you ask some leading technologists, they’ll tell you we need a program of universal basic income. Next time, I’ll discuss universal basic income in detail; who thinks it's viable on a large scale, how it might work and what might go wrong.

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Adventures in Late-Stage Capitalism #5: America Tried Capitalism Instead of Socialism for Health Care. Boy, Did That Not Work

Before World War II, health insurance was rare. In the following years, the idea that everyone needs health insurance gained widespread acceptance. Among leading industrialized nations, everybody but the United States adopted universal coverage guaranteed by the government, while the US went a with a largely free-market system.

I. The Problem

Nearly a century later, how do these opposing systems compare? Hands down, socialized medicine is the winner. From an article in The Hill by Anders Åslund entitled US health care is an ongoing miserable failure:

"The state of U.S. health care is catastrophic. In no other area is the U.S. lagging so far behind the European Union. Average U.S. life expectancy is 78.7 years to compare with 81 in the 28 countries of the European Union.

U.S. life expectancy has fallen for the last three years, while it rises all around the world. U.S. infant mortality is 5.6 per 1,000 life births, but only 3.6 on average in the EU. American maternal mortality is 14 per 100,000 births and rising. Compare that with a mere 3 deaths per 100,000 births each in Finland, Greece and Poland.

As if to add insult to injury, U.S. health-care costs 18 percent of GDP while the cost is limited to barely 9 percent of GDP in Europe.

This astounding U.S. underperformance raises two questions: How is it possible to perform so poorly; and why has the U.S. failed to do anything about it?"

Åslund goes on to itemize things wrong with the US health care system, including that our free-markets, "do not work because they have been captured by vested interests, reflecting a wider problem of current American crony capitalism."

"While European insurance companies are usually mutually-owned by the insurance takers, U.S. insurance companies work for profit and find it cheaper to harass their customers with innumerable administrative queries than to deliver services."


II. How We Got Here

So why hasn't private health care succeeded? Isn't the profit motive supposed to create greater efficiency than a system run by lazy government bureaucrats? It boils down to two problems:

1. The US health care system is designed to try to create profits rather than to provide care. 
We spend about 30% of health care dollars on administrative costs, while other leading nations spend half as much or less. This is the outcome of a system that's built around health care providers trying to get paid by insurance companies for providing care, while insurance companies are trying to protect profits.

2. Even profitable insurers reserve the right to deny insurance to unprofitable customers.
The individual insurance market in Iowa is a complete mess. The number of people in the individual market was small in the first place, which makes it difficult to create a healthy risk pool. Then the decision was made to let folks stay on non-Obamacare-compliant "junk" plans, which many did. Obamacare was actually designed to anticipate the problems insurance companies would have covering smaller pools of high-risk people. It originally had a "risk-corridor" system that would pay insurers if they suffered large losses on a high-risk pool. But of course congressional Republicans managed to kill that program.

As a result, insurers are pulling out of the the Iowa Obamacare market. Wellmark Blue Cross Blue Shield, the state's largest carrier announced it would leave in 2017. But what's really going on here? Consider these observations on Wellmark from Shelby Livingston in 2017 on modernhealthcare.com:

"In a statement, Wellmark said it lost about $90 million from ACA-compliant health plans sold in Iowa over the past three years.

That's not a small sum, and insurers aren't in the business of withstanding losses to prop up a struggling market, said Craig Garthwaite, a health economist at Northwestern University. It's critical that the insurers are able to at least break even on the marketplaces, he said.

Still, the loss is a drop in a bucket relative to the $2.7 billion in revenue Wellmark recorded in 2016 alone, financial documents show.

Given the minor loss, it is likely that Wellmark's exit has more to do with the uncertainty surrounding the future of the health insurance landscape and the prospect of further financial losses if the Trump administration fails to shore up the marketplaces, experts said."

Got that? Even though Wellmark is a very profitable company, it reserves the right to serve only those customers who help make it more profitable.


III. The Future

Can the US make a successful transition from its patchwork system to single-payer? All it takes is the will to do so. Consider the same experience in Taiwan. From Tsung-Mei Cheng of Health Affairs:

"In 1986 Taiwan’s government began planning to provide universal health insurance for its citizens. At the time, 41 percent of Taiwan’s population (8.6 million people) was uninsured and either paid for care out of pocket or went without it. The objective was to provide every citizen with timely access to needed health care, on equal terms, without unduly burdening the budgets of households, but also with effective controls on the growth of overall health spending."

"In the relatively short time from the late 1980s to 1994, Taiwan’s health policy planners carefully studied alternative health care systems around the world. This global survey persuaded the planners to consolidate the more than ten insurance programs then in existence in Taiwan into a single-payer government-run health insurance system modeled after the Canadian provincial health plans, but coupled with a financing scheme inspired by Germany’s payroll-based premium system."

"On its twentieth anniversary, Taiwan’s National Health Insurance (NHI) stands out as a high-performing single-payer national health insurance system that provides universal health coverage to Taiwan’s 23.4 million residents based on egalitarian ethical principles."

"Taiwan’s experience with the NHI shows that a single-payer approach can work and control health care costs effectively. There are lessons for the United States in how to expand coverage rapidly, manage incremental adjustments to the health system, and achieve freedom of choice."

America's private insurers are very afraid that something like Taiwan's transition to single-payer will happen here. Before the first Democratic primary Presidential debate last this, a Republican group ran a scare ad asking, "How long will you wait for care?" "In other countries with socialized health care, patients wait weeks, even months for treatment." Typical of the disingenuous way that Republicans talk about health care, the ad does not inform the viewer in which countries, "patients wait weeks, even months for treatment". For the record, the ad appears to refer to wait times to see a specialist; grasping at straws to find anything about the US healthcare system that isn't inferior to single-payer, Republicans have discovered that wait times for non-threatening surgery are slightly longer in many public systems than in the US.

Get ready for more of the same scare tactics as Democrats continue to debate Medicare for All. Lying all the time about Democratic solutions to the country's problems is how Republicans do business.

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