By Joseph E. Stiglitz
W. W. Norton & Company, June 2012
This book attempts to fathom the depths of one aspect of what has happened in the United States – how we became a society that was so unequal, with opportunity so diminished, and what those consequences are likely to be.
As we look out at the world, the United States not only has the highest level of inequality among the advanced industrial countries, but the level of its inequality is increasing in absolute terms relative to that in other countries.
Our political system has increasingly been working in ways that increase the inequality of outcomes and reduce equality of opportunity. This should not come as a surprise: we have a political system that gives inordinate power to those at the top, and they have used that power not only to limit the extent of redistribution but also to shape the rules of the game in their favor, and to extract from the public what can only be called large “gifts.” Economists have a name for these activities: they call them rent seeking, getting income not as a reward to creating wealth but by grabbing a larger share of the wealth that would otherwise have been produced without their effort. Those at the top have learned how to suck out money from the rest in ways that the rest are hardly aware of – that is their true innovation.
This book is not about the politics of envy: the bottom 99 percent by and large are not jealous of the social contributions that some of those among the 1 percent have made, of their well-deserved incomes. This book is instead about the politics of efficiency and fairness. The central argument is that the model that best describes income determination at the top is not one based on individuals’ contributions to society (the “marginal productivity theory”), even though, of course, some at the top have made enormous contributions. Much of the income at the top is instead what we have called rents. These rents have moved dollars from the bottom and middle to the top, and distorted the market to the advantage of some and to the disadvantage of others.
Health care for all
The two most important impediments to individuals’ achieving their economic aspirations are the loss of a job and an illness. The two together form a lethal combination, one often associated with bankruptcy. Health care in America has traditionally been provided by employers. This inefficient and antiquated system has contributed greatly to the reality that the United States has the most inefficient and poorest-performing, overall, health care system among the advanced industrial countries. The problem with our health care system is not that we spend too much; it’s that we don’t get value for our money and that too many people don’t have access to health care. Obama’s health care reform partially addressed the latter problem… but it did little to improve efficiency. Our high costs are due in part to rent seeking by insurance companies and the pharmaceutical industry. Other countries have curbed these rents. We have not. Other countries not as well-off as the United States have managed to provide universal access to health care. Most countries treat access to medicine as a basic human right. But even if one doesn’t approach the issue from this principled perspective, our failure to provide access to health care increases the inefficiency of our health care system.
Lack of access to health care contributes significantly to inequality, and this inequality in turn undermines the performance of our economy.
OECD Health Working Paper No. 58: Income-Related Inequalities in Health Service Utilisation in 19 OECD Countries, 2008-09
By Marion Devaux and Michael de Looper
OECD (Organisation for Economic Co-operation and Development) ,July 10, 2012
This Working Paper examines income-related inequalities in health care service utilisation in OECD countries. For doctor visits, horizontal equity was assessed, i.e. the extent to which adults in equal need of physician care appear to have equal rates of utilisation.
OECD Working Paper on Income-Related Inequalities in Health Service Utilization
Click on “PDF” for the 61 page paper.
By Don McCanne, MD
Today’s comment is very brief in order to give you more time to read the excerpts from Nobel Prize-winning economist Joseph Stiglitz’s new book, “The Price of Inequality.” One of the prices we pay is our most expensive but poorest performing health care system. Supporting his theme is the coincidental release of a new OECD working paper showing that the United States has the most inequitable access to physicians of the 19 OECD nations studied.
When you read about rents and inequality in Stiglitz’s book, you’ll understand better why the United States is again first… this time in inequitable access to physician visits!