Is Health Care Capitalism Growth A Zero-Sum Game?

The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of misery.

Winston Churchill (1874-1965), Saying

Less than seventy-five years after it officially began, the contest between capitalism is over: capitalism has won.

Robert Heilbroner, (1919- 2005 ), American Economist, “Reflections: The Triumph of Capitalism,” New Yorker, 1989

November 17, 2011 - If you’re witnessing the Occupy Wall Street movement, you may be wondering who is winning: the capitalists or the socialists?

If you’re listening to American progressives: you know the answer: neither, it’s a zero sum game.

The gain in health care costs by providers must come at the loss of patients, other economic sectors, and society.

As Paul Starr, a strong advocate of reform, puts in his new book , Remedy and Reaction: The Peculiar American Struggle over Health Care Reform (Yale University Press, 2011), “By the second half of the twentieth century, the United States is the only major advanced society without a system of providing care for all its citizens…As a result of the various limitations of the insurance system. Americans, he asserts, experience forms of economic insecurity virtually unknown in the other advanced countries: “medical uninsurability,” “medical bankruptcy,” and “job lock” (inability to start a business or change jobs for fear of losing health benefits).”

In other words, if the U.S. could only be more like other advanced countries, we could become a civilized society. Starr then explains that U.S. health spending is 42% greater in the U.S. than its income would predict without commensurate gains in our health status.

There’s another side to the story. Health care contributes to U.S. economic growth. According to the Bureau of Labor Statistics, health cae contributed 300,000 jobs to an otherwise stagnant economy in 2011. And in many communities and states, it is the largest employee. Indeed, if you listen to United Health Care ads, headquartered in Minnesota, the health plan has 78,000 people covering 70 million Americans.

In yesterday’s WSJ in an Op-ED, John Mackey, co-founder and co-CEO if Whole Foods Market, and members of the Job Creators Alliance, a non-profit devoted to preserving free enterprise, had this to say,

Business is not a zero-sum game struggling over a a fixed pie, Instead it grows and makes the total pie larger, creating value for all major stakeholders, including employees and the community.

He continues,

Is the United States exceptional? Of course, we are. Two hundred years ago, we accounted for less than 1% of the world’s GP. Today our GDP is 23% of the world’s total and more than twice as large as the number two country’s, China.

Mackey attributes our current lack of economic growth to oppressive taxes and regulation and a dramatic growth in govenment spending. He says the total cost of government is now 40% due to taxes at all government levels, community, state, and federal. The big four tax-eaters – Defense, Social Security, Medicare, and Medicaid – account for 2/3’s of the total budget. Of the entitlement progams, Mackey says we need to steadily raise the retirement age and means-test recipients. Also wemust reform the tax system, lessen regulation, and increase economic freedoms, so entrepreneurship and innovation can flourish and re-energize the economy.

This is Global Entrepreneurs week, and the Kaufmann Foundation in Kansas City, Missouri, says entrepreneurial and innovative small business start-ups, sometimes backed by venture capitalists, contribute disproportionally to economy growth, accounting for as much as 50% of job growth.

Kauffmann points out that foreign enterpreneurs recognize the value of American capitalism. According to a Duke University study, foreign graduates of U.S. universities started 23.5% of new companies in the U.S, from 1995-2005, including 52.4% in Silicon Valley. These companies now emply some 450,000 Americans. Foreign physicians also recognize the value of the American model: 25% of practicing U.S. physicians are foreign-born or trained. The Kaufmann Foundation is backing the Startup Act, which increases access to U.S. educated STEM (Sciene, Technology, Engineering, and Mathematics) graduates educated in the U.S. It is time we acknowledged the value of American free enterpreise, says Carl Schramm, CEO of the Kauffmann Foundation.

Tweet: As the Occupy Wall Street movement reminds us, the contest between capitalism and socialism continues, especially in health care.