Economics 101

As the "best schools," attended by policy makers may have skipped Economics 101, it may be worthwhile to visit basic principles high school graduates understand. Ricardo's comparative advantage holds true in most cases and unilateral tariffs, however "strategic," are value destroying. There are many countries around the world who understood this after many years of bad experimentation. But now, one of the most advanced nations seems to be backtracking. Free trade and free markets are value enhancing for society and if the policy makers have any doubt, they may want to return to high school, perhaps this time avoid the "best ones," and attempt to learn something.

A few people making decisions that determine winners and losers has been shown to be sub optimal. In an integrated world economy, with firms and countries holding comparative advantages in differing competencies and production capabilities, it is always better to create an environment that allows specialization and trade freely. The socialists and worse have had difficulty understanding this concept. Some prescribed how many guns and butter to produce and others misguided by their elite education in the West, strategically imposed tariffs on selected goods and services. Underlying all these bad policies is the assumption that the policy maker has infinite wisdom to optimize. And, that has never worked out.

And now with infinitesimal wisdom, the one who is home alone, is attempting policies that have been conclusively proven to be bad. Education from the "best schools," may not be enough to have sufficient common sense.

Less precise health

A recent article (1) proposes that precision health should prioritize actionable information and long-term user engagement. That's a lot of words but it seems to make sense. Hardware and software companies have been on the prowl to sell "precision health," even though they may not know what it means. This could be a shocker for the statisticians, but health is not precise, not by any stretch of the imagination. As they roam the hallways with pocket calculators and actuarial tables, seeking higher and higher "precision," it is important to recognize that the human remains to be the most complex and enigmatic to figure out.

Health is a difficult construct to define. The regulators have gotten wind of "risk," recently and they are clamoring for "risk stratification." None of these people have had any formal education in risk or economics, but they feel they are experts on policy involving the same. They don't even seek information from other industries and that has been symptomatic of the entire healthcare value chain that includes manufacturers, providers, and payers, who seem to know pretty much everything there is to know. Not so. They may be brain surgeons but there are plenty of rocket scientists outside their domains. It may be better to talk to them, before plunging head down into the abyss.

A century of "development," appears to have increased lifespan by 2000 days. But from a utilitarian perspective, the incremental 2000 days gained by fantastic pharmaceuticals, crazy yoga and jumping up and down the whole day, do not seem to add much value. More importantly, the time gained generally reduces the quality of life, impacted by pain, hospitalization, and a lack of flexibility to make decisions. The human brain appears to deteriorate past allowed time and the individual behind the smoke screen suffers. The manufacturers who plunk down close to 100 billion every year into R&D do not seem to have any acceptable answers. The providers, left in the lurch to care for their patients who may not even recognize them, suffer equally. Meanwhile, the accountants at the payers are cranking up their calculators so that they can meet the quarterly EPS.

It is a painful movie to watch. As the brilliant folks in Washington figure out how to save themselves and perhaps the country, there is significant suffering across the landscape. Losing a life is unthinkable, losing a mind is equally traumatic.

(1) http://stm.sciencemag.org/content/10/430/eaao3612