Adler on Data Governance
From archive: February 2010 X
On Saturday, I took the train from Brussels to Cologne. The train is one of those modern ICE's - sleek, clean, quiet, and fast. The terrain through Belgium is hilly and the tracks pass over rolling fields, deep ravines, and wooded glens. As we neared the German border, the landscape leveled out and the train picked up speed, reaching 200 k/hr at one point. And as the small towns whisked by, I couldn't help think how magical it is to travel from Belgium to Germany via train with no border crossing and no passport control. It is so simple and easy, and without even a word you pass from one country to another.
This is a marvel of modern Europe, and it reminds me that the last 65 years are the longest period of peace in Central European history. Europeans have somehow, perhaps accidentally, realized a reality about modern warfare that has yet escaped the United States of America - modern war is Dumb Governance. For during the same 65 year period the United States has been involved in five large-scale wars lasting over 5 years each, 6 smaller military adventures, and of course one very long Cold War.
If you read my last blog post, you will understand my statement and reasoning that modern war is Dumb Governance. To paraphrase Von Clausewitz, war is the extension of diplomacy by other means. That is, it is an articulation of national policy - the communication of it.
Now back up a minute. If we have a policy that is communicated, according to the principles of Smart Governance it must also have had a decision-making process, some metrics and business case, hopefully either sustainable or situational goals, and some measurable results that we should care to compare to the goals.
In the old days, back before the industrial Revolution, it took 8 people working on farms to support two people working in cities. That meant that you had to have a lot of arable land and unskilled labor to support those cosmopolitan types in cities who made all the decisions. War then was one means to acquiring more arable land for civilized expansion. If you conquered more territory through war, you could expect to feed more city dwellers who produced more income via trade and crafts and that made your society wealthier.
In the early Industrial Age, this logic began to wane because industrial capacity isn't only dependent on land and labor. Its also dependent on capital, and capital tends to dry up when tanks cross borders. Of course, natural resources are also important to industrial economies. But warfare tends to be a fairly resource intensive activity so gains won on the battlefield can be difficult to hold and the net benefit of acquired resources can be undermined by the resource drain of battle.
In the Information Age, knowledge is power and both intellectual labor and capital flow so freely throughout the world that warfare gains on the battlefield don't provide sustainable balance sheet benefits. In fact, they are a net cost to any society waging war.
Think about it for a minute. On 9/11 the World Trade Center was blown up by heinous terrorists based in Afghanistan. Immediately, the United States sent 30,000 troups to invade that country. The stated goal of this policy was to protect Americans from terrorism. The measured need for the policy was the attack on 9/11. The policy decision was made by the President of the United States with full support of Congress and the American people. The policy was communicated with 30,000 American troops and a good contingent from international allies.
And the outcome? Eight years later, we are still occupying one of the poorest countries in the world with over 60,000 troops. Afghanistan is not even a real nation in modern terms. It is a tribal collage of small warlord controlled fiefdoms. Pakistan is barely a modern state, and Afghanistan is 40 years behind Pakistan. Kabul has 4 million people and 95% of them have no running water in their homes. The GDP is only $12.8 billion. It has no agriculture, no industry, few natural resources, no significant knowledge resources.
The war in Afghanistan has cost US Taxpayers $172 billion to date. That is 13 times the GDP of the entire country. We are spending more each year to wage war than Afghanistan is even worth.
Compare the Outcome to the Goals. From an economic perspective, it's a huge loss.
War today is a net economic loss for any country that wages it. Resource control is simply not worth the costs. The Europeans have figured that out. That the US could learn the same lesson...before we bankrupt our nation through warfare...
A recent study in the UK shows that education and wealth have a dramatic impact on life expectancy. Well educated and rich people can expect to live on average 7 years longer than their poorer neighbors. The Obama Administration would do well to pay attention to these demographic factors when considering healthcare reform. Adding 30 million uninsured Americans to the insurance rolls will reduce overall healthcare costs by providing better access to preventative care.
But an even more equitable solution would be to change the insurance premium basis from risk-based pricing to income-based pricing. Richer people should pay more for insurance not only because they can afford it but also because changing the premium basis from risk to income removes any option for denial of coverage based on pre-existing conditions.
Germany's healthcare system uses income-based premiums in a 3-tier model. In the first tier, a government plan provides basic coverage to the poor and unemployed. When you loose your job, you automatically drop into the government plan and your benefits are covered as part of your unemployment insurance. But the benefits offered in the basic government plan are really not desireable. In the second tier, private insurers compete in different industry markets using the government plan as a floor for coverage benefits. Premiums are based on income, and employers must match at least 50% of the premium cost, but many can and do offer more. The private insurers are all regulated in terms of their product offerings by the government and any medical practitioners or healthcare providers in the public system are available. In the last tier, Germany offers a fully private system in which premiums are based on risk (younger people pay less), and patients can only use private providers and hospitals.
The German system provides three levels of coverage - public, semi-private, private - with lots of competition, well regulated practices, and income based premiums for the 90% of the population. Its not a perfect system, as every system requires constant monitoring and dynamic steering. But it provides medical services far superious to the US system at far lower costs with social equity.
What I see in the current healthcare proposals in the Senate and House Bills are a hodge-podge of tactical solutions and a paucity of strategy. There are so many good healthcare systems that work throughout the world. Many use income-based premiums. Its a smart way to go.