Business can be a force for good
The Washington Post, May 27, 2010
With oil gushing in the Gulf of Mexico and Wall Street fighting new rules after helping wreck the economy, it may seem an odd moment to make the case for business's contribution to society. But we shouldn't throw the baby out with the oil-drenched bathwater.
That's because the radical inefficiency of our education and health-care sectors are also atop the news this weeksomething that only entrepreneurial business innovation can fix.
Consider how crazy our approach to schooling must seem to saner nations. The United States already has a shorter school year than most rising powers. Yet schools across the country are shutting down a week early to save money amid budget crises; many districts plan even shorter school years next year. All this while America spends more on education as a share of gross domestic product than most advanced nations, with mediocre results.
How can it be that the rich country that spends more finds itself shrinking children's time on task, when we're already shortchanging learning time compared with what world-class school systems offer? The only possible answer is inefficiency. We're simply not spending our money wisely.
Or take health care. News came this week that private-sector pay shrank to its lowest percentage ever of overall personal income, largely because soaring health costs have been diverting more and more of workers' "compensation" into health benefits. We're spending 17 percent of GDP on health care while other advanced nations spend 10 to 11 percent. Yet we have no better public health outcomes, and 50 million of our neighbors have no coverage at all.
How can the richer United States spend nearly twice as much per person on health care without better outcomes and with so many left in the cold? Again, the only possible answer is epic, mind-bending inefficiency. We're simply not spending our money wisely.
Yet here's the problem. Every dollar of health care or education "waste" is somebody's dollar of income. This iron law of politics makes real reform a nightmare to navigate. It's why Obamacare will focus on expanding coverage before controlling costs. It's why we throw more Pell grants or debt at students struggling to pay soaring college bills even though this only gives colleges license to ratchet up prices ever higher.
Politicians who want to stay in office can't defy this dynamic. Entrepreneurs, given the chance to ply their talents, can. And liberalsparadoxically, the group that tends to bash business the mosthave the greatest stake in these entrepreneurs' success.
Here's why. Making our health-care and education sectors run smarter and better will become a national imperative in the era of permanent fiscal pressure ahead, an effort with special stakes for those who believe in using government for affirmative purposes. Even if taxes are inevitably going up as the baby boomers retire, there will be limits to how high voters will let taxes rise. That means the vast waste in our health-care and education systems will soon take a huge bite out of other liberal priorities.
Put simply, every dollar that goes to Medicare that isn't needed for quality health care is a dollar we can't spend on a poor child. That's what the tradeoffs will look like before long. And whether the left likes it or not, business is the one social force that can help solve this dilemma through efficiency-boosting innovations that deliver more for less.
I'm not talking about the far right's pure privatization agenda, which aims to privatize profit in these sectors while socializing risk. I'm talking about innovations like Minute Clinics, which runs 500 low-cost retail health-care clinics staffed by nurse practitioners. Or online degree-granting firms like the University of Phoenix, which are challenging the traditional, bloated model of higher education with computer-based offerings tailored to adult students hungry for professional advancement.
These and countless related innovations are fiercely resisted by the medical industrial complex, or the education "blob." To these incumbents, re-engineering costs to deliver more for less is a mortal threat. The task for farsighted political leaders is to make the world safe for such innovations in spite of this resistance. And to help citizens remember that BP and Goldman Sachs aren't the only faces of modern business.
"Efficiency" and "innovation" aren't usually associated with loftier concepts like "opportunity," "justice" and "security"but at this point in American economic history, they're the only way to pay for them. So keep a corner of your mind focused on the indispensable social contributions of entrepreneurs even as we rein in the excesses of some big businesses gone bad.