Business and Health Care, Money and Merit
Why doesn't business get out of health-care provision? It really does seem like it's more ideology and inertia than anything else. And not just on the part of business: I don't get the sense that it's really popular politically to suggest moving away from an employer-centric system. Which would seem to point to the need for a years long campaign of education and agitation. Led by Matt, of course.
Although I do really like another suggestion that Matt makes in passing in the book: That territorial HR chiefs at big corporations might be a significant part of the problem. Maybe if we just promised to pay them all really big retention bonuses ...
As for Matt's earlier question:
does the current economic crisis truly create an opening in the next few years to rethink our old (and now dysfunctional) ways of doing things - or will we just focus on fixing the financial system, and clawing our way back to growth, and not get to the outdated approaches plaguing us in these other areas?
I think it does create a big opportunity to ditch old ideas, although probably not all seven on Matt's list. I'm starting to think the first to go will be "Money Follows Merit." That's what all the AIG bonus brouhaha has been about, at least in part. Hasn't it? I heard a talk today by a crotchedy old lion of the private equity business (and former Reagan administration official), George Siguler, who went on about how people in private equity and on Wall Street in general needed to realize that they owed their big paychecks in part to luck, and that there were lots of people out there who worked just as hard as they did and were just as smart as they were but didn't make a million dollars a year.
My favorite part of Matt's previous book, The 2% Solution, is a conversation with Milton Friedman in which Matt tries to get Friedman to admit to this truth--that luck plays a huge role in personal economic outcomes--and eventually more or less succeeds. Once people cross that hurdle, one would think they might be open to a bunch of other changes in thinking (about health care, about retirement provision, about taxes, about schools).
Just to be clear: I wouldn't want us all to become convinced that merit has nothing to do with economic success. But I don't think there's too much of a danger of that in American society.
March 27, 2009 4:30 AM | Reply | Permalink
I'm not sure employers are all that enthusiastic about providing health care coverage anymore. I think many of them would be delighted if the government took the responsibility off their hands--as long as they weren't required to pay additional taxes to fund the government program. I suspect the reason employers have resisted government-paid healthcare is primarily because they might be taxed to pay for it. They'd rather pay the cost themselves (and get a tax deduction while maintaining control of the assets, assuming they're self-insured) than have the government tax them to raise a similar sum of money to cover their workers.
March 27, 2009 7:06 AM | Reply | Permalink
Though one other problem with getting employers out of healthcare -- say we have a universal system: won't businesses offer additional coverage to valued employees as a way of enticing them to join/stay a company? We'd wind up with a national system for everyone and a gold plated, privately augmented system for the valued few.
CT above says that we could use some judo like suggesting they pay for auto or homeowners insurance and use the pushback against them rhetorically. But... my company actually gave me a life insurance policy (they pay the premiums) and if you look at public filings that detail executive compensation, C-level people in most companies do get other costs, including homeowners insurance, paid for them all the time.
March 27, 2009 7:52 AM | Reply | Permalink
If employers want to give incentives to employees what's the bog deal. That is why we have benefits in the first place. If we have an adequate system of health care for everyone, why should I care if some company wants to give additional "gold-plated" benefits.
The problem for workers is that their employers have been increasing their compensation, not by paying them higher wages, but by paying for essential the same health care coverage (that covers mediocre health care) that is more and more expensive each year.
Workers who are more and more productive are not being rewarded. It is squeezing everything else--ability to save, afford homes, pay for college.
March 28, 2009 11:24 AM | Reply | Permalink
Let me get this straight.... You think luck is the major determinant of any success? Even yours? So success is like playing the lottery? No effort required? I could never come up with a more destructive idea. It removes the incentive to persevere and blame one's life shortcomings on everything and everyone else.
You need to rethink this, because the next step is that any success is undeserved, and should be taken away for other purposes.
March 27, 2009 9:37 AM | Reply | Permalink
success is like playing the lottery? No effort required?
I think it's more like another kind of gambling - a poker tournament. In theory, the cards break even for everyone over the course of time, and those who play better will take the money from those who don't. In the context of whether you're a CEO or a mere functionary, the ability to promote does not necessarily have to do with one's ability to stimulate productivity in the larger unit, even over the course of years with a company.
Maybe a boss really is a genius at the work. Maybe just as often, he's standing in front of a success that his subordinates built in spite of his actions or omissions to act, and has a firm handshake that someone above him likes. Maybe he's able to sell as success something which ultimately imperils his company, as with AIG. Is that the meritocracy which ensures the sanctity of the market in allocating value?
To me, if you're a CEO at an American motor company making what an entire shift at one of your plants makes, you should be a rainmaker. Damage control should never happen, because making 300 times the average employee salary should mean that you can see the future at all times and know the right move to guard against it. Yet that's not how it works, and the shareholders seem powerless to contain proliferation of management and managerial salaries, despite owning the company as a group.
If I find a way to embezzle twice my peer's salary in a lawful fashion from my company, I am twice as economically successful as my peer. I am also a cancer on my company, all my artful self-aggrandizement notwithstanding.
March 27, 2009 11:06 AM | Reply | Permalink
Well, currently we don't have a national system for everyone and we do have a gold plated, privately augmented system for the valued few. The scenario destor23 describes sounds better than that. I do agree that rank-and-file workers at big companies with generous health care plans risk ending up worse off under just about any new health care regime. But those ranks (to which I belong) are shrinking pretty rapidly as it is.
March 27, 2009 11:46 AM | Reply | Permalink
Taking employers out will only work if they pay higher taxes to make up for that part of the money.
March 27, 2009 5:26 PM | Reply | Permalink