An interesting thing happened in Alabama involving Daimler-Benz, the big German auto manufacturer.

Under Reagan, the US managed to drive labor costs way below the level of our competitors (except for Britain). That's produced consequences not only in Mexico and the US but all across the industrial world.

For example, one of the effects of the so-called free trade agreement with Canada was to stimulate a big flow of jobs from Canada to the southeast US, because that's an essentially nonunion area. Wages are lower; you don't have to worry about benefits; workers can barely organize. So that's an attack against Canadian workers.

Daimler-Benz, which is Germany's biggest conglomerate, was seeking essentially Third World conditions. They managed to get our southeastern states to compete against one another to see who could force the public to pay the largest bribe to bring them there. Alabama won. It offered hundreds of millions of dollars in tax benefits, practically gave Daimler-Benz the land on which to construct their plant, and agreed to build all sorts of infrastructure for them.

Some people will benefit -- the small number who are employed at the plant, with some spillover to hamburger stands and so on, but primarily bankers, corporate lawyers, people involved in investment and financial services. They'll do very well, but the cost to most of the citizens of Alabama will be substantial.

Even the Wall Street Journal, which is rarely critical of business, pointed out that this is very much like what happens when rich corporations go to Third World countries, and it questioned whether there were going to be overall benefits for the state of Alabama. Meanwhile Daimler-Benz can use this to drive down the lifestyle of German workers.

German corporations have also set up factories in the Czech Republic, where they can get workers for about 10% the cost of German workers. The Czech Republic is right across the border; it's a Westernized society with high educational levels and nice white people with blue eyes. Since they don't believe in the free market any more than any other rich people do, they'll leave the Czech Republic to pay the social costs, pollution, debts and so on, while they pick up the profits.

It's exactly the same with the plants GM is building in Poland, where it's insisting on 30% tariff protection. The free market is for the poor. We have a dual system -- protection for the rich and market discipline for everyone else.

I was struck by an article in the New York Times whose headline was, "Nation considers means to dispose of its plutonium." So the nation has to figure out how to dispose of what was essentially created by private capital.

That's the familiar idea that profits are privatized but costs are socialized. The costs are the nation's, the people's, but the profits weren't for the people, nor did they make the decision to produce plutonium in the first place, nor are they making the decisions about how to dispose of it, nor do they get to decide what ought to be a reasonable energy policy.

One of the things I've learned from working with you is the importance of reading Business Week, Fortune and the Wall Street Journal. In the business section of the New York Times, I read a fascinating discussion by a bureaucrat from MITI [Japan's Ministry of International Trade and Industry] who trained at the Harvard Business School.

One of his classes was studying a failed airline that went out of business. They were shown a taped interview with the company's president, who noted with pride that through the whole financial crisis and eventual bankruptcy of the airline, he'd never asked for government help. To the Japanese man's astonishment, the class erupted into applause.

He commented, "There's a strong resistance to government intervention in America. I understand that. But I was shocked. There are many shareholders in companies. What happened to his employees, for example?" Then he reflects on what he views as America's blind devotion to a free-market ideology. He says, "It is something quite close to a religion. You cannot argue about it with most people. You believe it or you don't." It's interesting.

It's interesting, in part, because of the Japanese man's failure to understand what actually happens in the US, which apparently was shared by the students in his business class. If it was Eastern Airlines they were talking about, Frank Lorenzo, the director, was trying to put it out of business. He made a personal profit out of that.

He wanted to break the unions in order to support his other enterprises (which he ripped off profits from Eastern Airlines for). He wanted to leave the airline industry less unionized and more under corporate control, and to leave himself wealthier. All of that happened. So naturally he didn't call on government intervention to save him -- things were working the way he wanted.

On the other hand, the idea that corporations don't ask for government help is a joke. They demand an extraordinary amount of government intervention. That's largely what the whole Pentagon system is about.

Take the airline industry, which was created by government intervention. A large part of the reason for the huge growth in the Pentagon in the late 1940s was to salvage the collapsing aeronautical industry, which obviously couldn't survive in a civilian market. That's worked -- it's now the United States' leading export industry, and Boeing is the leading exporter.

An interesting and important book on this by Frank Kofsky just came out. It describes the war scares that were manipulated in 1947 and 1948 to try to ram spending bills through Congress to save the aeronautical industry. (That wasn't the only purpose of these war scares, but it was a big factor.)

Huge industries were spawned, and are maintained, by massive government intervention. Many corporations couldn't survive without it. (For some, it's not a huge part of their profits at the moment, but it's a cushion.) The public also provides the basic technology -- metallurgy, avionics or whatever -- via the public subsidy system.

The same is true just across the board. You can hardly find a functioning sector of the US manufacturing or service economy which hasn't gotten that way and isn't sustained by government intervention.

The Clinton administration has been pouring new funds into the National Bureau of Standards and Technology. It used to try to work on how long a foot is but it will now be more actively involved in serving the needs of private capital. Hundreds of corporations are beating on their doors asking for grants.

The idea is to try to replace the somewhat declining Pentagon system. With the end of the Cold War, it's gotten harder to maintain the Pentagon system, but you've got to keep the subsidy going to big corporations. The public has to pay the research and development costs.

The idea that a Japanese investigator could fail to see this is fairly remarkable.

It's pretty well known in Japan.

Health care

I don't suppose you can see the Boston skyline from your home in Lexington. But if you could, what would be the two tallest buildings?

The John Hancock and the Prudential.

And they happen to be two types of what?

They're going to be running our health-care program if Clinton has his way.

There's a general consensus that the US health-care system needs to be reformed. How did that consensus evolve?

It evolved very simply. We have a relatively privatized health-care system. As a result, it's geared towards high-tech intervention rather than public health and prevention. It's also hopelessly inefficient and extremely bureaucratic, with huge administrative expenses.

This has gotten just too costly for American business. In fact, a bit to my surprise, Business Week, the main business journal, has come out recently with several articles advocating a Canadian-style, single-payer program. Under this system, health care is individual, but the government is the insurer. Similar plans exist in every industrial country in the world, except the US.

The Clinton plan is called "managed competition." What is that, and why are the big insurance companies supporting it?

"Managed competition" means that big insurance companies will put together huge conglomerates of health-care institutions, hospitals, clinics, labs and so on. Various bargaining units will be set up to determine which of these conglomerates to work with. That's supposed to introduce some kind of market forces.

But a very small number of big insurance conglomerates, in limited competition with one another, will be pretty much in charge of organizing your health care. (This plan will drive the little insurance companies out of the market, which is why they're opposed to it.)

Since they're in business for profit, not for your comfort, the big insurance companies will doubtlessly micromanage health care, in an attempt to reduce it to the lowest possible level. They'll also tend away from prevention and public health measures, which aren't their concern. Enormous inefficiencies will be involved -- huge profits, advertising costs, big corporate salaries and other corporate amenities, big bureaucracies that control in precise detail what doctors and nurses do and don't do -- and we'll have to pay for all that.

There's another point that ought to be mentioned. In a Canadian-style, government-insurance system, the costs are distributed in the same way that taxes are. If the tax system is progressive -- that is, if rich people pay a higher percentage of their income in taxes (which all other industrial societies assume, correctly, to be the only ethical approach) -- then the wealthy will also pay more of the costs of health care.

But the Clinton program, and all the others like it, are radically regressive. A janitor and a CEO pay the same amount. It's as if they were both taxed the same amount, which is unheard of in any civilized society.

Actually, it's even worse than that -- the janitor will probably pay more. He'll be living in a poor neighborhood and the executive will be living in a rich suburb or a downtown high-rise, which means they'll belong to different health groupings. Because the grouping the janitor belongs to will include many more poor and high-risk people, the insurance companies will demand higher rates from it than the one the executive belongs to, which will include mostly wealthier, lower-risk people.

According to a Harris poll, Americans prefer the Canadian-style health­care system by a huge majority. That's kind of remarkable, given the minimal amount of media attention the single-payer system has received.

The best work I know on this is by [Professor] Vicente Navarro [of Johns Hopkins]. He's discovered that there's been quite consistent support for something like a Canadian-style system ever since polls began on this issue, which is now over forty years.

Back in the 1940s, Truman tried to put through such a program. It would have brought the US into line with the rest of the industrial world, but it was beaten back by a huge corporate offensive, complete with tantrums about how we were going to turn into a Bolshevik society and so on.

Every time the issue has come up, there's been a major corporate offensive. One of Ronald Reagan's great achievements back in the late 1960s was to give somber speeches (written for him by the AMA) about how if the legislation establishing Medicare was passed, we'd all be telling our children and grandchildren decades hence what freedom used to be like.

Steffie Woolhandler and David Himmelstein [both of Harvard Medical School] also cite another poll result: When Canadians were asked if they'd want a US-style system, only 5% said yes.

By now, even large parts of the business community don't want it. It's just too inefficient, too bureaucratic and too costly for them. The auto companies estimated a couple of years ago that it was costing them about $500 extra per car just because of the inefficiencies of the US health system -- as compared with, say, their Canadian operations.

When business starts to get hurt, then the issue moves into the public agenda. The public has been in favor of a big change for a long time, but what the public thinks doesn't matter much.

There was a nice phrase about this sort of thing in the Economist [a leading London business journal]. The Economist was concerned about the fact that Poland has degenerated into a system where they have democratic elections, which is sort of a nuisance.

The population in all of the East European countries is being smashed by the economic changes that are being rammed down their throats. (These changes are called "reforms," which is supposed to make them sound good.) In the last election, the Poles voted in an anti-"reform" government. The Economist pointed out that this really wasn't too troublesome because "policy is insulated from politics." In their view, that's a good thing.

In this country too, policy is insulated from politics. People can have their opinions; they can even vote if they like. But policy goes on its merry way, determined by other forces.

What the public wants is called "politically unrealistic." Translated into English, that means the major centers of power and privilege are opposed to it. A change in our health-care system has now become politically more realistic because the corporate community wants a change, since the current system is harming them.

Vicente Navarro says that a universal and comprehensive health-care program is "directly related to the strength of the working class and its political and economic instruments."

That's certainly been true in Canada and Europe. Canada had a system rather like ours up until the mid-1960s. It was changed first in one province, Saskatchewan, where the NDP [the New Democratic Party, a mildly reformist, umbrella political party with labor backing] was in power.

The NDP was able to put through a provincial insurance program, driving the insurance companies out of the health-care business. It turned out to be very successful. It was giving good medical care and reducing costs and was much more progressive in payment. It was mimicked by other provinces, also under labor pressure, often using the NDP as an instrument. pretty soon it was adopted across Canada nationally.

The history in Europe is pretty much the same. Working-class organizations have been one of the main (although not the only) mechanisms by which people with very limited power and resources can get together to participate in the public arena. That's one of the reasons unions are so hated by business and elites generally. They're just too democratizing in their character.

So Navarro is surely right. The strength and organization of labor and its ability to enter into the public arena is certainly related -- maybe even decisively related -- to the establishment of social programs of this kind.

There may be a parallel movement going on in California, where there's a ballot initiative to have single-payer health care.

The situation in the US is a little different from what Navarro described, because business still plays an inordinate role here in determining what kind of system will evolve. Unless there are significant changes in the US -- that is, unless public pressure and organizations, including labor, do a lot more than they've done so far -- the outcome will once again be determined by business interests.

Much more media attention has been paid to AIDS than to breast cancer, but a half a million women in the US will die from breast cancer in the 1990s. Many men will die from prostate cancer. These aren't considered political questions, are they?

Well, there's no vote taken on them, but if you're asking if there are questions of policy involved, of course there are. You might add to those cancers the number of children who will suffer or die because of extremely poor conditions in infancy and childhood.

Take, say, malnutrition. That decreases life span quite considerably. If you count that up in deaths, it outweighs anything you're talking about. I don't think many people in the public health field would question the conclusion that the major contribution to improving health, reducing mortality figures and improving the quality of life, would come from simple public health measures like ensuring people adequate nutrition and safe and healthy conditions of life, clean water, effective sewage treatment, and so on.

You'd think that in a rich country like this, these wouldn't be big issues, but they are for a lot of the population. Lancet, the British medical journal -- the most prestigious medical journal in the world -- recently pointed out that 40% of children in New York City live below the poverty line. They suffer from malnutrition and other poor conditions that cause very high mortality rates --and, if they survive, they have very severe health problems all through their lives.

The New England Journal of Medicine pointed out a couple of years ago that black males in Harlem have about the same mortality rate as people in

Bangladesh. That's essentially because of the extreme deterioration of the most elementary public health conditions, and social conditions.

Some people have linked the increase in breast cancer and prostate cancer to environmental degradation, to diet, and to the increase of additives and preservatives. What do you think about that?

It's doubtless some kind of a factor. How big or serious a factor it is I'm not sure.

Are you at all interested in the so-called natural or organic food movement?

Sure. I think there ought to be concerns about the quality of food. This I would say falls into the question of general public health. It's like having good water and good sewage and making sure that people have enough food and so on.

All these things are in roughly the same category -- they don't have to do with high-technology medical treatment but with essential conditions of life. These general public-health issues, of which eating food that doesn't contain poisons is naturally a part, are the overwhelming factors in quality of life and mortality.

Date: 2015-12-24; view: 644