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  • Praxis Strategy Group

  • Advancing Economies by the Power of Industry

    For the last quarter century there has been a growing tendency among policy makers and corporate executives to downplay, and even ignore, the primary importance of the ‘real,’ or tangible, economy. It is now widely believed that the primary engine of wealth creation is the manipulation of symbols and images — ‘the new economy’ of the ‘information/creative age’ — as opposed to the manufacture of tangible products and services.

    This paper challenges these assumptions. Our research in Europe, Asia, Australia and North America suggests that rapid economic and income growth tends to occur most steadily in areas where tangible production has been readily encouraged. Although the successful strategy varies by region and country, the basic fundamentals to propel growth lie in policies that stress the construction of essential physical infrastructure, investments in basic and skill-oriented education, and favorable tax and regulatory policies.

    Increasingly, this also includes the building of what we refer to as ‘infrasystems’, also called regional innovation systems. These are policies that encourage innovation and cross-firm transactions through the development of interlocking regional institutions, such as schools and governments that work closely with local industries. These infrasystems investments represent the cutting edge of progressive economic policies that encourage wealth creation and broad based opportunities for a wide variety of citizens.

    We believe that this ‘back to basics’ approach is particularly applicable during the current global financial crisis. Attempts to ‘create’ wealth through financial manipulation and the hyping of cultural attributes have done very little except create short-lived economic bubbles on the local, national and, most ominously, global levels. The time for a reassessment, and a return to the basic principles of wealth creation, clearly has arrived.

    See attached .pdf file for full report.

    Primary Authors: Joel Kotkin, Delore Zimmerman
    Research Team: Mark Schill, Matthew Leiphon, Andy Sywak
    Editor: Zina Klapper

  • Laughing During ‘Gran Torino’

    Recently, I saw Clint Eastwood’s extraordinary new film, ‘Gran Torino’ in Hollywood. Set in a declining Detroit neighborhood, the movie chronicles the unlikely relationship retired auto worker Walt Kowalski (Eastwood) forges with his new Hmong neighbors.

    Walt is cranky, surly, and bigoted while still possessing a certain rough-edged charm. His dialogue is laced with racist terms and stereotypes that would mandate a lengthy “sensitivity training” seminar if he came of age in a different era.

    And yet, the audience laughed and laughed loud. Here, in one of the nation’s most multi-ethnic cities with a history of racial tension, blacks, whites, Asians and Latinos were chuckling as Walt bemoaned “gook food” and cringed at his neighbor’s ways. Twenty years ago, Walt’s language would have appeared less ironic, perhaps being interpreted as a sign of how a sizeable percentage of white Americans viewed minorities. To laugh at Walt then would appear to be laughing with him rather than at him.

    But in 2009 America, on the cusp of a black president arriving in the White House, a character like Walt feels safely anachronistic – his views seem fringe like. What seemed funny to the audience is that people like Walt still exist. What is so satisfying about ‘Gran Torino’ is how it eschews political correctness and decides to speak to an audience that it figures will laugh at Walt rather than with him. It assumes that Americans watching the film are smart and tolerant enough to get the joke. And they do.

    I’d be curious to know how audiences reacted to the movie across the country.

  • Corporate Sponsorship of the Golden Gate, the Ultimate Sign of Failed Infrastructure

    The most anticipated tourist attraction in the city where I live, The Golden Gate Bridge, is a testament to the lasting utility of a well executed infrastructure project. The world’s most famous suspension bridge still serves as the critical artery connecting San Francisco to the bedroom communities of Marin County to the north, where much of the city’s workforce resides. Remarkably, this marvel of engineering was completed in the late 1930s – a time when the U.S. was coming out of the Great Depression.

    The New Deal brought about an expansion of infrastructure that should inspire us. Yet nearly 70 years after its completion, the sobering reality remains: it’s difficult to imagine a project of that moxie being constructed today.

    One indicator of the distance between then and now can be seen in the story of Doyle Drive – the one-and-half mile southern approach to the Bridge. In 1993, USA Today reported that the elevated portion of Doyle Drive is the 5th most dangerous bridge in America. After years of EIR studies and bickering amongst a myriad of stakeholders and governmental agencies, San Francisco voters in 2003 finally passed Proposition K, a sales tax increase ensuring the city’s funding for an upgrade of Doyle Drive.

    Sales tax revenue generated from Proposition K is slated to cover only $67.9 million of the $1.045 billion estimated cost of the project. State and Federal funding has also been committed for the project, yet there is still $414 million of cost yet to be accounted for. Along with hopes of securing additional funding from the Fed, The Golden Gate Bridge District is responsible for providing $75 million for the Doyle Drive retrofit. To meet the cost of this and other projects, such as the addition of a suicide-prevention net, the Bridge District is seriously considering soliciting corporate sponsorship of the world-famous span.

    The appalling fact that corporate sponsorship is on the table for one of the most iconic pieces of infrastructure in the modern world confirms the failure of the public sector in regards to maintaining an aging infrastructure. For the past few years, politicians at all levels of the government seeking office have beaten the drum of tax reductions in order to secure votes, only to find themselves with budget crises on their hands once elected. With city and state budgets strapped, local politicians often look to the federal government in order to help pay for repairing roads and other basic services, not to mention the huge pensions of public employees.

    The other place local governments look for money to balance the budget is from the private sector. In many cities across America, elected officials have responded to these kinds of crises by partnering up with private enterprise to generate jobs and sales tax revenue by developing ‘convention and retail districts’. Oftentimes these developments will also include hotels, luxury condominiums and even sporting or arts venues. Even before the recent economic downturn, many of these developments were representing white elephants, sitting empty while the issues of sustained job creation and infrastructure repair remain unresolved.

    Examples of infrastructure from the past, such as the ruins of Roman Aqueducts on the Iberian Peninsula and the dams of the ancient city of Petra in Jordan, remind us of the great lengths societies will go through in order to function more efficiently. Although today the concept of infrastructure is primarily associated with industrial economies and modernization in the developing world, the truth is that ever since the earliest agrarian communities humans have been building physical systems that harness the powerful forces of nature and make life more convenient.

    Years from now, the built environment of America will provide one of the primary measurements for historians seeking to quantify 20th Century achievements. Today the vast networks of roads, bridges, ports, airports, power plants and water lines built in the U.S. over the past 150 years remains the standard for nations undergoing industrialization. Yet while other countries are busy catching up to the American paradigm, the U.S. system is falling behind. Entropy is setting in, and repeated policy failures prevent retrofitting and repair to take place at a mass scale.

    With all the current hubris surrounding the “New New Deal” proposed by the incoming Obama administration, discussion about the fundamental role of infrastructure seems to be missing from the conversation. Primary focus about the infrastructure package remains on rapid job creation rather than long term economic health. New Orleans remains a grim reminder of how infrastructural failure can destroy an economy for good, and misplaced investments in convention centers and other ephemera have limited impact.

    There has also been much press about a ‘green revolution’. While looking for cleaner alternatives to powering our society is an important issue, there is almost no acknowledgment that the most sustainable approach lies in fixing and updating what is already in place. Already, speculators are foaming at the mouth at what will end up probably being the next bubble – clean tech.

    In the coming days, it will be critical that careful attention be paid to a basic approach to ensure that stimulus money is not squandered on pork. As state and local governments – as well as big business and special interests – vie for handouts from Papa Fed, the United States government must seek ways to allocate funds for maximum investment in future generations.

    This is not to say such investments should not be bold and even beautiful. I know it’s possible every time I look at, or cross, the Golden Gate.

    Adam Nathaniel Mayer is a native of the San Francisco Bay Area. Raised in the town of Los Gatos, on the edge of Silicon Valley, Adam developed a keen interest in the importance of place within the framework of a highly globalized economy. He currently lives in San Francisco where he works in the architecture profession.

  • Tough Budget Math for City Politicians: Bad Economy + Human Nature = More Cops

    Our economy is going to get better some day, step by step. But it’s bad right now, with a full recovery likely a matter of years rather than months away. Public officials should plan accordingly, keeping in mind how the vicious cycle of a bad economy turns typical decision making on its head.

    Start with a look at a virtuous cycle – the opposite of a vicious cycle – for a point of reference. Look back to the early 1990s, when President Bill Clinton got a tax increase through the U.S. Congress. A lot of folks were genuinely concerned about our federal budget deficits and national debt back then. The tax hike signaled that the federal government had grown serious about getting its finances in line. That quelled fears about inflation, and sent interest rates lower.

    The relatively low cost of borrowing benefited businesses just as new strides in technology were reshaping our lives and helping keep inflation in check. The tech sector’s growth sparked other segments of the economy, leading to more payroll taxes, sales taxes, property taxes, capital gains taxes, etc. The federal budget came into balance, and then went into surplus. Public officials had plenty to divvy up from the virtuous cycle.

    Now we face a vicious cycle. Tapped-out consumers stop spending. Companies cut back on orders and production and payrolls. Weakness leads to more weakness. Jobs keep disappearing. Government revenues decline at every level. Budget deficits abound.

    Elected officials in Los Angeles should beware as they seek to meet those deficits with budget cuts, however. The vicious cycle is in full swing. Plenty of folks are desperate to hang on to their house, make their rent, or just get their next meal. Desperate individuals sometimes take desperate actions. Some of them lie, cheat, steal – and worse.

    This trend holds the potential to tear apart our social fabric. Examine past periods of economic hardship and you’ll see that some folks fall into cynicism, looking beyond government institutions for leadership. Some are drawn to what appears to be strong leadership but is really a criminal element sophisticated enough to exploit stress points in our societal sense of right and wrong. Yesterday’s gangsters could quickly become today’s folk heroes in a tough economy.

    That’s a particularly vicious cycle, and it will take an increased commitment to public safety to head off any such erosion to our social compact amid the current downturn.

    Now is the time for elected officials to trade across-the-board mentalities on budget cuts for a sharpened sense of priorities. They should heed the vicious cycle and find money for more cops to help keep the cynics and criminals at bay while the rest of us make an honest effort to slug our way through tough times.

    The everyday working folks and business owners who will ultimately pull us out of this mess deserve that much cover.

    The Los Angeles Police Department (LAPD), meanwhile, has earned the assumption that properly trained and appropriately deployed cops can do more than simply react to crimes once they have occurred. The LAPD’s recent record has earned a place for the notion that good police work can not only prevent crimes but also dispel any atmosphere of lawlessness that might otherwise take hold – with safeguards on civil liberties in place all the while.

    Indeed, it’s true that the rugged economy is pushing some of our people a rung or two down the socio-economic ladder, and it’s inevitable that some of them will resort to crime. Yet that still doesn’t mean that socio-economic factors trump cops on the beat – or that we must accept lawlessness as a natural and unavoidable by-product of a bad economy. The economic downturn means that the pool of potential criminals will grow, to be sure, but that presents a question of math rather than sociology – and the answer is more cops.

    Just in case that’s not enough, we urge our politicians to consider the bonus that’s in it for them. They should understand just how disappointed voters are with elected officials at every level. They should know that perhaps the best chance for them to recover their standing with the public is to make courageous decisions when it comes to public safety.

    Jerry Sullivan is the Editor & Publisher of the Los Angeles Garment & Citizen, a weekly community newspaper that covers Downtown Los Angeles and surrounding districts (www.garmentandcitizen.com)

  • Calling Pittsburgh Depression-proof is a Journalistic Felony

    A guest-post from Bill Steigerwald in Pittsburgh:

    If the New York Times went to Berlin in 1936 to write a story about how that city was “Depression-proof,” would it forget to mention that Germany was being run by a bunch of Nazis? If it went to Pyongyang tomorrow would it go ape over that city’s tidy orderliness without noting that North Korea was a totalitarian hellhole? If the Times bureau in Moscow reported on wheat production in Ukraine in 1933, would it overlook the government-designed famine that was killing – oops, sorry, let’s not go there.

    Seriously, is it too much to ask for a little Journalism 101 from America’s Rag of Record?

    On Wednesday the Times, following a similarly lame piece of Chamber of Commerce journalism done by the Cleveland Plain Dealer on Nov. 23, did a glowing Page 1 story (“For Pittsburgh, There’s Life After Steel” by David Streitfeld) about the Pittsburgh region’s alleged imperviousness to the national recession.

    You see, cities that have pioneered deindustrialization, shed huge chunks of population and shifted to service economies that run on curing sick people, college kids and government bureaucrats, as the former Steel City basically does, are now recession-proof, the rationalizing goes, because they’ve essentially been in low-grade recessions for decades.

    Anyway, the Times – like the Plain Dealer and the parade of other national media that periodically traipses to this great town to gawk and glorify Pittsburgh’s many natural and man-made assets – forgot to tell its trusting readers that the city of Pittsburgh (where the Steelers and young Mayor Luke Ravenstahl play) is bankrupt and essentially in state receivership.

    Nor did the Times note that Pittsburgh’s ever-dwindling, ever-aging, relatively poor and under-educated population (down in the city to 310,000 from 650,000 about 50 years) is subjected to crippling high taxes and deprived of basic city services like reliable snow-plowing.

    Nor did it note that Pittsburgh’s city schools spend more than $20,000 per student per year yet are hemorrhaging students annually.

    Nor did it note that the city has wasted scores of millions of tax dollars on failed Downtown retail redevelopment schemes, subsidized professional sports stadia and a series of mass-transit boondoggles like our under publicized “Tunnel to Nowhere,” a 1.2-mile, $435-plus-million light-rail tunnel under the Allegheny River.

    It’s tragic enough that the Times’ national editors think that an over-taxed, chronically mismanaged city that has been deindustrialized, depopulated and abused by its political rulers for 70 years is favorably situated to deal with recession.

    But to not devote one paragraph to the shameful failings and idiocies of Pittsburgh’s public sector is a journalistic felony. Somebody please show the Times’ editors how to Google the word “Potemkin.”

  • The Mobility Paradox: Investing in Human Capital Fuels Migration

    China has an interesting urban development strategy. The government bypasses those areas that it considers backward and plagued by poverty and entrenched political corruption. Instead, the investment goes into those areas it presumes to be new boomtowns.

    Now imagine if that Darwinian approach was used here in the United States. A report (“City Beautiful”) authored by two economists at the Federal Reserve Bank of Philadelphia advocates pushing federal infrastructure dollars – which could soon be flowing in the hundreds of billions – not towards our tired, hard-pressed urban areas but those that have experienced the greatest extent of gentrification.

    If you don’t want to slog through the published paper, then you can read about the controversial findings in a recent Boston Globe article. The journalist, not surprisingly, sensationalizes the conclusions and the choice quotes do a great job of provocation: “‘If you have sun and a beautiful beach and 300-year-old buildings, it’s no wonder that you’re going to attract people,’ said [co-author Albert Saiz]. ‘But that’s no use for Detroit or Syracuse.’”

    The author of the Globe piece goes on to question the coming urban bailouts: “Why send another federal dollar to bolster manufacturing in Akron when it could support a golf course in sunny Phoenix?”

    I get the sense that the economists in question aren’t making such a stark distinction. But I can understand why the press would go down that road. I’ve read the research and there are concerns about the wisdom of investing in cities that currently don’t attract tourists or Richard Florida’s elite Creative Class.

    The Federal Reserve Bank of Philadelphia report attempts to reconfigure the understanding of urban geography. People are congregating in urban centers for a new purpose: leisure. The old school of thinking identified the central business district (CBD) as the economic heart of the metropolis. Higher densities were the result of a more efficient way of doing certain types of work (e.g. financial, insurance and real estate).

    The new school sees the city as a special playground and the study tries to capture this effect by looking at tourist Meccas. In short, jobs are following talent to pleasant places to live.

    Gerald A. Carlino and Albert Saiz try to figure out if the geographically mobile are indeed heading to sunnier climes or if the leisure amenities follow the talent. They claim that quality of life comes first. The best and brightest are not chasing top employment opportunities. They are keener on finding a “cool” place to hang out.

    Other research suggests this approach may be limited. For example, although job growth has been very strong in some sun belt cities that are cited, growth rates in other amenity-rich cities – Boston, New York, San Francisco – have been well below par. Although often attractive to twenty-somethings, these areas also suffer a persistently strong net outmigration.

    Perhaps more to the point what use is any of this to those living in the heartland cities? Should Akron start putting more money in skateparks or global warming?

    There are huge problem in spending money in order to attract the geographically fickle. Fads fade and the mobile – largely people under 30 – will move again. And what about the people who can’t move? We’ve yet to address the mobility paradox.

    Moving to a better place might be one of the most distinguishing features of American culture. However, less and less people can manage to do so. There are considerably more “stuck” than there are “mobile.” The nomads of the knowledge economy comprise the global elite. They can live wherever they like and, particularly when young, can move at the drop of a hat.

    Where does that leave the postindustrial cities currently failing to attract the twenty-something demographic? One suggestion is to better educate people tethered to their neighborhood. The rub is that greater investment in your human capital will make your young adults more likely to leave. This is the mobility paradox. Regional workforce development has the unintended effect of increasing out-migration.

    A common response to the mobility paradox is the transformation of a downtown area into a “cool city.” The theory is that the best and brightest won’t leave if there are more fun things to do. Tying up the urban budget with projects aimed at retaining the creative class has its own perils. There is little, if any, evidence indicating that this policy will decrease the geographic mobility of the well-educated. Many cities stuffed with cultural amenities also sport high rates of out-migration. Furthermore, tastes change. ”Best places to live” lists change quite a bit from one year to the next.

    We should learn from the bust of hot destinations such as Florida or even California. Today’s paradise is tomorrow’s backwater. Meanwhile most of the population will continue to live in “Forgottenville.” Should we just forget about them?

    Globalization would seem to reward such an approach. Some cities will cut it, most won’t. Good luck dealing with the political instability. China gets away with ignoring its “old” cities thanks to robust growth and iron-fisted control. Given the current economic slowdown, things may be getting tense there, particularly in the left-behind industrial towns in the interior.

    So should amenities drive President Obama’s economic strategy? These days, the Sunshine States also are in dire need of a bailout. Alabama fights Michigan for federal attention. If the Rust Belt benefits from the Chicago President, let’s hope it’s for its own sake – not just the creative class.

    Read Jim Russell’s Rust Belt writings at Burgh Diaspora.

  • Average Annual Employment Growth, Top Metro Areas, 1990 – 2008

  • How Much do they Really Drive in Houston?

    Our friend Tory Gattis pointed out yesterday at Houston Strategies that conventional wisdom (and the US DoT Federal Highway Administration) are wrong. Quoting a recent report by New Geography contributor Wendell Cox:

    In fact, this data is incorrect. The FHWA 2006 data indicates that the Houston urban area has a population of 2,801,000. According to the United States Bureau of the Census, the population of the Houston urban area was 4,353,000 in 2006…. Actually Houston’s driving is about average: If the urban area population is corrected to agree with the Bureau of the Census data, per capita driving in the Houston area is slightly below the national average for large urban areas. Houston would rank 19th out of 38 urban areas, with daily per capita driving of 23.2 miles, compared to the national average of 23.9 miles.

    Even if you’re not interested in Houston or that potential gaffe, check out Wendell’s report for a table of per capita vehicle miles driven for 38 urbanized areas over 1,000,000 population.

  • Daschle And State-by-State Healthcare Mistakes

    Tom Daschle appears before the Senate this week for confirmation as Secretary of Health and Human Services. While Daschle knows his stuff on health care (see his book, Critical: What We Can Do About the Health-Care Crisis), the discussion is likely to be sidetracked by those who champion a reliance on insurance companies, or on piecemeal reform starting with children. Or, as I’ll discuss here, on a wrong-headed impulse to depend on the states to create new health care models.

    Justice Louis Brandeis famously said, “It is one of the happy incidents of the federal system that a single courageous state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.”

    Brandeis’ elegant language has been distilled to the phrase, “laboratories of democracy,” and used as if that’s a good thing. However, the converse also holds: bad ideas can be legislated at the state level and spread nationwide. One idea that continues to threaten to boil over the boundaries of a single state is “universal health insurance” achieved one state at a time. Oregon, Tennessee, California, and most famously Massachusetts have all experimented with versions, and other states have tried variations, particularly with children.

    I’ll get to the more general notion of why I think states can’t go it alone. But for now, I’ll give a quick rundown on how states have tried and failed.

    Critical Mass: Despite recent claims of a 97-percent coverage rate, Commonwealth Care, the Massachusetts plan, is struggling. You remember the Massachusetts plan: Mitt Romney was for it as governor before he was against it as a presidential candidate.

    The plan is a patchwork of good intentions, political and practical exceptions, and as-yet deferred but heavy-handed enforcement. There’s an appeals system, waivers, and “creditability” (this has to do with the comprehensiveness of the policy and the out-of-network charges).

    The crux of the Massachusetts law is a model of administrative clarity. The goal of insuring the uninsured was to be achieved in a couple of ways. One was that if health insurance was “offered by” an employer, the employee had to take it.

    The problem is that “offered by” the employer isn’t a clean standard. Employers might have an insurance plan that’s technically available to employees, but it might be too expensive for them, or for their families. To square this circle, Massachusetts subsidized employment-based coverage if it cost more than a certain percent of the person’s income, and raised the eligibility limits for public insurance. Those without employers were required to buy private insurance, and insurers were regulated to make the policies “affordable.”

    And then there are the penalties: “To enforce the mandate, [Massachusetts will] establish state income tax penalties for adults who do not purchase affordable health insurance….”

    These stipulations raise obvious questions. What is “affordable”? Will residents be penalized for buying a policy too expensive for their family budget? Will insurance companies be punished for selling them such policies (do I hear the words “sub-prime mortgage”?). Will premium arrearages be counted as medical debt in bankruptcy court?

    Alan Sager and Deborah Socolar, directors of the Health Reform Program at the Boston University School of Public Health, damned the Massachusetts legislation with faint praise in the Boston Globe last July: “the best law that could be passed.”

    Calling it “a blessing to 350,000 newly insured people,” they pointed out that a similar number remained uninsured, and that the law often “can’t work” largely for reasons of cost. The mandates, they said, required huge subsidies, boosted payments to providers without controls, and redistributed funds committed to the most vulnerable.

    Not surprisingly, by summer 2008, the lousy economy had begun to take its toll. To shore up the “coverage” rate, Massachusetts has reduced funding to safety-net hospitals, and has even cut millions of dollars from subsidized immunization programs. Patients wait six months for a physical.

    With no plan for reducing medical costs, the state is effectively obligated to bankrupt itself.

    The Oregon Lucky Number:

    Oregon in March – for the first time in more than three years – will begin accepting new beneficiaries in its Oregon Health Plan […] The state will use a lottery system to enroll 2,000 eligible applicants per month for 11 months. Kaisernetwork.org, Jan. 10, 2008

    The Oregon plan had lost two-thirds of its participants since freezing enrollment in 2004 and a lottery was deemed to be the fairest way to apportion openings.

    Government lotteries have been used for everything from real estate in tax foreclosure to placement in magnet schools or, showing my age, the chance to serve in Vietnam.

    Still, why should anyone have to depend on a lucky number to be treated for diabetes or cancer without going broke? If the plan is funded for 32,000 participants out of a total of 100,000 eligible residents, why didn’t they keep topping up as the numbers diminished? Or was there a theoretical break-even point somewhere?

    California Pipe Dream: In early 2007, Governor Arnold Schwarzenegger announced a $14 billion program that supposedly mirrored the Massachusetts plan. The plan would have extended Medi-Cal, the state’s Medicaid program, to adults earning up to twice the federal poverty line, and to children, regardless of immigration status, who lived in homes with family incomes up to 300 percent above – about $60,000 a year for a family of four.

    One controversial element called for employers without health plans to contribute to a fund to help cover the working uninsured. Doctors were to pay two percent and hospitals four percent of their revenues to help cover higher reimbursements for those who treat patients enrolled in Medi-Cal.

    The ambitious program died in committee a year later, with legislators from both parties agreeing that it was unaffordable.

    Florida No Frills: A 2008 Florida package would allow insurers to offer “no-frills coverage to the state’s 3.8 million uninsured” residents. Residents ages 19 to 64 could purchase limited health coverage for as little as $150 per month; the policies would cover preventive care and office visits, but not care from specialists or long-term hospitalizations.

    “No frills” works better in airline travel than in health care. You can do without hot meals and pay extra for a headset or a Bloody Mary, but what Floridians will ultimately get for their $1800 a year and up are office visits and preventive care. It would probably be cheaper served à la carte and paid for in cash.

    Hawaii’s Keiki Care In October, 2008, Hawaii dissolved the only state universal child health care program in the nation after only seven months. Dr. Kenny Fink, the administrator at the Department of Human Services, told a reporter, “People who were already able to afford health care began to stop paying for it so they could get it for free. I don’t believe that was the intent of the program.”

    I should say not, but this disconnect between the intent of the program and its result makes perfect sense. Consumer behavior is supposed to be based on rational choices, and those parents who switched seem pretty rational. Hawaii’s solution seems simple and elegant, until you apply some basic laws of economics and behavior. Aloha, Keiki Care.

    Why States Can’t Do It Alone

    Why haven’t any of these state “universal health care” plans succeeded? Probably for the same reason that states can’t be self-sufficient in fossil fuels, or in banking. Most don’t produce their own fuels, and those that do can’t require their use within the state. They don’t print their own currencies. They have to compete with the rest of the world, public sector and private, for energy and capital.

    These are not minor issues with localized consequences. The decision-making alone requires resources that might not be available at the state level. We need national bodies to determine standards, to evaluate technology, and – remembering that Medicaid, Medicare, the VA, and the government employee system amount to around half of health care spending – to decide on the appropriate use of federal dollars.

    A final thought: Each additional set of rules, level of supervision, and geographic boundary may make sense initially. But when the lines drawn become indelible, and the bureaucracies created to enforce them calcify, we move further from the goal of providing health care. Jobs, and their budgets, become ends in themselves. We have to return to our original purpose and ask, “How can we get there?” One thing you can be sure of: it won’t be one state at a time. When it comes to health care, we need more unum and less e pluribus.

    Georganne Chapin is President and CEO of Hudson Health Plan, a not-for-profit Medicaid managed care organization, and the Hudson Center for Health Equity & Quality, an independent not-for-profit that promotes universal access and quality in health care through streamlining. Both organizations are based in Tarrytown, New York.

    Tom Daschle photo by: aaronmentele