E.J. Dionne's latest column:
http://www.chron.com/opinion/outlook/article/Dionne-What-change-sounds-like-6021317.php
--takes aim at one of the central features of this blog. Dionne claims that we may be witnessing the beginning of the end of economism (which he refers to as neoliberalism).
As President Obama prepares to deliver a State of the Union address which features calls for greater income equality (increased taxes on the richest to counteract tax cuts for the middle class), Dionne is interested in the Republican response. He characterizes that response as a shift from the standard Republican reaction to Obama, which has basically been to ignore the substance of what he is proposing. He cites several GOP leaders as now admitting that income inequality is serious and that something should be done. Their prescriptions are inadequate, but they are at least signaling a willingness to enter into a debate about the issue.
Dionne also goes beneath the latest headlines. He characterizes the Republican position since Reagan as being captive to economism. Economism requires that one ignore the issue of income inequality. The so-called free market, left to its own devices, will spread income around as it should be spread, and that is the end of it. To focus on income inequality as an issue is to pull the rug out from under one of the central features of economism--and to admit that something besides the free market ought to have a say in how goods and benefits are distributed in society.
Dionne is therefore describing recent political events in the US as a major turn away from economism. To follow along the route of the theory he's sketching, I would argue further that the 2016 presidential race seems a crucial event. If the winner is someone sufficiently like Obama, with the steadily increasing criticism of economism that he's put forward, then we can expect a considerable if gradual change in the overall political philosophy of the US (and indeed the world). If another person wins, then we can expect things to settle back to the status quo for some time yet.
The Economism Scam
Monday, January 19, 2015
Sunday, September 14, 2014
Piketty, Capitalism, and Progressive Taxation
One of the most important graphs in The Golden Calf is taken
from Wilkinson and Pickett (The Spirit
Level, 2009) and shows the widening gap between the richest and poorest in
America in income, between 1975 and 2004. It’s the second half of my life. The
first part of my life, beginning in 1949, was the “good news” part, when the
economy worked well, and a worker with one job could buy a home and raise a
family and send kids to college. This was followed by the “bad news,” economism
or neoliberalism, especially under Reagan starting in 1980, when income
stagnated for the lower and middle classes and virtually all the new wealth was
snapped up by the top few percent. By this picture, economism was a bizarre
development, and one was hard pressed to explain why such a thing should have
occurred.
Thomas Piketty, Professor at the Paris School of Economics,
has now cast considerable new light on these developments (Capital in the Twenty-First Century, trans. Arthur Goldhammer,
Cambridge: Belknap Press of Harvard University Press, 2014). As he points out,
until modern computers, economics tended to be light on facts. It’s only within
the past couple of decades that the available data have been recorded and
investigated, to allow those familiar with them a reasonable peek at the actual
history. And history, in fact, is what economics should be concerned about;
Piketty takes a dim view of American neoclassical economics and favors a
collaborative view of the economist as one of the social sciences.
Piketty offers data on capital and income between 1800 and
the present for Britain and France, and going back to the late 1800s for the
United States and other major countries. He focuses a good deal of the basic
equation, r > g, meaning that the rate of return on capital virtually always
exceeds the growth rate of the economy; the former tends to be 3-5 percent and
the latter runs from less than 1 percent to 1.5 percent. Piketty notes that
this is basic to the whole idea of civilization—it allows people to be engaged
in something besides pure subsistence.
When Piketty graphs the history of the relationship between
the after-tax rate of return to capital and the growth rate of world output, as
best as is known from the year 0 to the present, capital return always exceeds
the growth rate except at one point—the years 1913-2012. So the data that
informed my standard way of thinking between 1949 and 1975-80 turns out to be
wildly out of sync with the norm.
Piketty describes what he considers most important,
capital/income ratio, roughly as follows. For Europe, inequality was very
pronounced, until the shocks of the twentieth century, in the years 1914-1945.
Then income inequality rose again. The major change was that before the
twentieth century, there were a small number of rich people who had almost all
the wealth, and the vast majority of laborers who had virtually none of it. Now
there is a middle class which collectively holds a significant amount of
wealth, one-quarter to one-third of the total; while the extreme upper class,
especially the top 1 percent, now holds around 60 percent of the wealth.
The United States presents a different picture. The middle
class was establishing itself all along. However, during the Gilded Age, income
inequality rose in America as well. It then decreased during the world wars and
depression, but America was spared the extreme trials of Europe. Since 1975,
income inequality has risen even higher in the U.S. than in Europe.
Piketty talks then of the future of the remainder of the
twenty-first century, and finds increasing income inequality to be an unstable
factor, so he is hopeful that something can be done about it. His favorite is a
progressive tax on capital. He favors a modest plan that would produce maybe 2
percent of GDP, but argues that the capital tax is more important than the
amount raised, since it carries an important message. In particular, for it to
work at all, it would require that data be gathered in a way that it is not
currently, and particularly that international tax havens be opened to scrutiny.
On Piketty’s plan, everyone would know everyone else’s wealth, throughout the
world. He admits that this is a nearly-utopian goal and will require many
stages of development.
Piketty speaks of the future as if everything will be smooth
and there will be no more “shocks” equivalent to the World Wars. He admits that
he cannot predict what would happen if shocks supervene.
Returning to my own views, it’s discouraging to
find that the time that one had thought of as the halcyon days when everything
was most fair and reasonable (the era 1945-1980 roughly) was a brief, highly
atypical time period. It is, by contrast, encouraging to find that progressive
taxation can so effectively reverse the worst of the trends. The only problem
will be gaining the political will to succeed in such a mission in the US.
Piketty’s own guess is, “Without a radical shock, it seems fairly likely that
the current [state of affairs in the US] will persist for quite some time. The
egalitarian pioneer ideal has faded into oblivion, and the New World may be on
the verge of becoming the Old Europe of the twenty-first century’s globalized
economy. [514]”
Saturday, April 26, 2014
How Can You Expose What’s Already in Plain Sight?
Many of the recent posts on this blog have been book
reports. Maybe I am just getting book fatigue, but I wanted to explain why I do not plan to read a new book that’s
being recommended by none other than one of my usual heroes, Paul Krugman:
http://www.nytimes.com/2014/04/25/opinion/krugman-the-piketty-panic.html?partner=rssnyt&emc=rss&_r=0
Krugman praises a new book by the French economist Thomas
Piketty, Capital in the Twenty-First
Century. Piketty apparently goes over a lot of old ground, explaining the
worsening income inequality in a world sold on the ideology of economism. What
he then does especially well, says Krugman, is documenting the fallacy of the
idea that somehow, the One Percent have earned their incredible wealth through
hard work and smarts. He shows that just as the rich in the pre-World War I era
were overwhelmingly those born to wealth and privilege, today’s wealth is
gained much more by inheritance than by anything resembling “earnings.”
Krugman is so big on Piketty’s book apparently because it
has gotten the knickers of the right-wing pundits in a knot. The usual response
to income inequality from the economism-friendly think tanks is first to deny
the data, saying that the rich are poorer and the middle class are wealthier
than it seems. Once they get over that lost cause, the next chestnut they pull
out of the fire is how the rich made all their money because they are such
brilliant entrepreneurs (as we all know, they are not wealthy, they are “job
creators”). For some reason which I’d presumably find out if I read the book,
Piketty makes it much harder than in the past to trot out this rationalization.
So the right-wingers are reduced to name-calling, accusing Piketty of being a
Marxist—which presumably you are these days if you believe that social classes
or income inequality exist.
I can’t quite bring myself to get excited about reading this
book because, just as Krugman admits that previous authors have already “done”
income inequality, I had thought that it’s already been pretty widely shown
that the rich-are-better ploy is a crock as well. Of the books that I cite in The Golden Calf, Thomas Frank’s One Market Under God first comes to mind
here, but other authors have certainly also addressed the question.
It cannot be very hard to show that the wealth of the
super-rich cannot possibly be explained in this manner. If the really rich were
10 or 20 times richer than me, then I’d be willing to grant that they may well
be 10 or 20 times smarter or work that much harder than I do. But when they are
300 times richer than me, or more, it is really hard to argue that it must be a
matter of pure merit.
If, on the other hand, we are in the throes of economism,
and cling to a quasi-religious faith that the rich are rich because it’s God’s
will and they are the subject of divine favor, then I suppose it all makes
perfect sense. Too bad the right-wingers
can’t say out loud what they believe in their hearts; it would same them a lot
of mental gymnastics.
Saturday, April 19, 2014
The Rise of Economism in the US: The Business Side
I recently posted about Daniel Stedman Jones’s book, Masters of the Universe, a history of
the rise of economism (which he terms neoliberalism) in the US and the UK since
the 1940s. Stedman Jones has a bit of a burr under his saddle about Marxism,
and he appears to interpret any historical account that stresses how the
wealthy supported economism-type policies out of their own self-interest as a
Marxist account. So he stresses the growth of economism as a set of ideas,
promulgated by think tanks. He has to admit that these think tanks relied upon
the financial support of sympathetic capitalists, but as far as he is
concerned, that’s more of a footnote.
In connection with other research, I had my attention
directed to the book by historian Kim Phillips-Fein, Invisible Hands: The Businessmen’s Crusade Against the New Deal (New
York: Norton, 2009). It seems to me that this volume makes a nice bookend with
Stedman Jones. Phillips-Fein is most interested in why the US business
community (she does not address the UK) found it in its interests to support
conservative counterattacks against the New Deal from the 1930s up to the
eventual triumph of conservatism (and economism) with the election of Reagan in
1980. Where Stedman Jones focuses on the ideas and the think tanks,
Phillips-Fein focuses on the organizing and proselytizing among the businessmen
to raise the money to support these ideological and political movements. I
would suggest that between them they provide a more thorough history of the US
part of this story than either volume would by itself. (Phillips-Fein talks
about Hayek, von Mises, Friedman, and the Mont Pelerin Society, but does not
mention the terms ‘neoliberalism’ or ‘economism’—just another clue as to how
the terminology issue continues to vex.)
In reading Phillips-Fein’s narrative, two themes especially
struck me. First, if one looks at the later years of the conservative movement,
one can find among the grievances of the business leaders specific instances of
overreaching among labor unions and government regulators, for which the
businessmen might be forgiven for thinking that the free enterprise system was
under serious attack. However, in the very early years, before either unions or
government had amassed that much power, we still see a core of conservative
capitalists viewing the New Deal as an unmitigated disaster. As Phillips-Fein
analyzes their thinking and quotes from some of their letters and speeches,
what emerges appears to be a very basic sense of entitlement to rule. These
white male business leaders seemed to think that they were, in fact, those
chosen to run America, and they expected to be deferred to. The very idea that
anyone else should demand an equal right to be heard, much less to guide public
policy, was treated by them as a fundamental affront to their status. While
various other segments of the population came along and joined the conservative
bandwagon as it picked up steam in the 1960s and 1970s, these capitalists were at
the center of it from the start.
Second, Phillips-Fein obviously exercised a lot of control
over the quotes that she selected, but a rather surprising number of the quotes
from these conservative capitalists, again reaching well back into the 1930s,
are frankly racist. In keeping with the idea that they are the natural leaders
and deserve deference on all sides was the further idea that minority groups
had better stay in their place. As the conservative movement started to make
headway, and as more politically-minded business leaders realized the need to
form strategic alliances, the main groups this core of business leaders reached
out to along the way were those that in various ways were opposed to
integration and civil rights. Here Phillips-Fein’s poster child is the late
Sen. Jesse Helms of North Carolina. To a person like me, raised in the North as
a self-ascribed liberal, Helms was nothing but a racist demagogue, pure and
simple. Phillips-Fein shows that in fact Helms was much more clever and original
than that. He was actually a master at reframing Southern segregation into the
language of freedom and free enterprise. For example, he agreed that to the
extent that a lunch counter was a public service, blacks had just as much right
as whites to sit down and be served. The only problem, he was quick to point
out, was that a lunch counter was not properly viewed as a public service at
all; a person owned the lunch counter and it was his private property. To
demand that he serve black customers in the South was to demand that the
Federal government could come in and dictate to private property owners what
they could do with their property. Helms was shrewd about avoiding attacks
against blacks and always changing the subject to freedom and opposition to Federal
government power over local communities and private individuals.
In short, the political success of the conservative movement
that ultimately enshrined economism as the common-sense political discourse of
the US would never have succeeded had the movement not been willing to ally
itself at every step with racism and segregation, while at the same time
denying that it was racist and segregationist.
In one other passage, Phillips-Fein contributes to our list
of logical inconsistencies within economism by going back to the core ideas of
Friedrich Hayek and Ludwig von Mises. She notes the irony of their views of the
free market and their need to protect it from any outside interference and
efforts at regulation. On the one hand they were in awe of the power of the
marketplace, “the spontaneity of the economy, a complex system that came into
existence without forethought or planning.” Yet at the same time they
saw the market as “a terribly fragile entity” which could be destroyed by even a
little bit of government interference or regulation. As she notes, they never
confronted or admitted, let alone explained, just how the marketplace could be
so robust and all-powerful on the one hand and so delicate and vulnerable on
the other.
Saturday, April 12, 2014
Masters of the Universe: An Alternative History of the Rise of Economism?
A colleague kindly referred me to this book review—
--of Masters of the
Universe by the British barrister and historian Daniel Stedman Jones. (Both
the review by Michael Clune of the Los Angeles Review of Books, and Stedman
Jones’s book, refer to what I call ‘economism” as neoliberalism, so I will use “N” for short to refer to that
terminology.)
Stedman Jones’s book can be read simply as another
historical treatment of the rise of N during the era 1940-1980, in both the US
and the UK, and as such it seems a reasonable and thoughtful volume. However, according
to both the author and the reviewer, the agenda is more ambitious. Stedman
Jones wishes to argue as to the inadequacies and indeed errors of other works,
notably David Harvey’s A Short History of
Neoliberalism, which some of my historian and social science colleagues
treat as a standard reference on the subject, and Naomi Klein’s Shock Doctrine, upon which I relied
considerably in writing THE GOLDEN CALF. So it naturally interested me to see
how well Stedman Jones could defend his case as to the errors of those other
authors.
Before that, what does Stedman Jones have to say? Very
briefly, he argues that the route from N as a fringe philosophy held by a small
number of thinkers in the late 1940s, to its triumph under Thatcher and Reagan
in the 1980s, was not at all the slam-dunk that right-leaning thinkers now
believe, nor was it the result of an organized conspiracy among capitalists as
he thinks that Harvey argues. It was a long, slow slog that could easily have
turned out differently. Stedman Jones places a lot of weight on what happened
in the 1970s with economic doldrums and “stagflation,” which discredited in
many politicians’ minds the long-standing Keynesian orthodoxy. First it’s
important to note that just as Freud’s reputation was trashed at the hands of
many Freudians, among the worst enemy of Keynes’s reputation were the
Keynesians. While Keynes himself was quite cautious as to the ability of economics
to predict and control events precisely, his followers grew fat and sassy and
promised much more than their theories could deliver. Hence they were easy to
discredit when supposedly Keynesian remedies failed to restore economic prosperity
during those years.
Enter monetarism—Milton Friedman’s own theory of what to do
in difficult economic times. The review stresses that monetarism and today’s N
are quite different species of animal; N rejects government interference with
the economy while monetarism is a method of government interference in the
economy. Accordingly, the left-center governments in power in the UK and US in
the late 1970s thought they could adopt monetarist policies without buying
whole hog into anything like N. But because of both the economic doldrums and
other events such as the Iran hostage crisis, these folks were then voted out
of office and replaced by more extreme ideologues who bought the whole N deal—even
though by today’s standards Reagan’s brand of N was considerably more moderate
than the going ideology, and usually has to be spruced up with some revisionist
history so that today’s N devotees can properly worship Reagan.
OK, so that’s the history, and knowing more about its ins
and outs is certainly valuable. What about the criticisms of Harvey and Klein?
Harvey’s besetting sin, according to both Stedman Jones and
Clune, is apparently being a Marxist, or at any rate what they consider to be a
Marxist, which presumably translates into soft-headed. Looking into the details
as to exactly how this invalidates Harvey’s historical writings, Clune offers
the observation that Harvey apparently believes in a Marxist theory of labor
that has long been discredited. I cannot recall, in my reading of his history,
that whether he believed that theory or not made much difference for most of
the book.
More to the point, Stedman Jones apparently wishes to
attribute to Harvey’s Marxism, and not to a correct reading of history, the
role that capitalists played in the rise of N. Stedman Jones’s account, as one
would expect, is big on the role of N think tanks. And being a decent
historian, Stedman Jones relates just who footed the bills for all those think
tanks. And it was not the poor. So it’s not clear to me how Stedman Jones can
on the one hand admit the crucial role of many capitalists, presumably following
their own self-interest, to fund these N think tanks, and then turn around and
say that capitalists had nothing to do with N’s eventual triumph.
What about Klein’s theory of the shock doctrine, which she
attributes to Milton Friedman and his followers in the Chicago School of
Economics? Well, Klein’s idea, as I understood it, was that the so-called “Chicago
Boys” saw their opening whenever a nation suffered a crisis. They then showed
up with their monetarist policies as a way to get the fiscal crisis under
control. At first the offering seemed modest—a nation could adopt these
monetarist policies without having to abandon whatever other political policies
they wished to espouse. But then as soon as the technocrats took over, they
used their opening to institute a wide range of “reforms” that completely
instituted an N program, and that effectively repealed all the existing
policies, especially any that favored organized labor. I don’t see much
difference between such a program and what Stedman Jones says actually occurred
under Thatcher and Reagan. Certainly one could quibble about details but the
outline seems valid.
In short, Stedman Jones’s attempt to separate his own book
from previous work seems more of a marketing ploy than a sober assessment of
what he actually has on offer—and what he has on offer seems to be useful in
its own right, and not in need of any such trumpeting.
Daniel Stedman Jones, Masters of the Universe: Hayek, Friedman, and the Birth of Neoliberal
Politics. Princeton University Press, 2012.
Wednesday, January 8, 2014
It’s All about Freedom—Only Not That Way
I generally ignore op-ed columns by Jonah Goldberg, who
claims to be a conservative columnist but who appears actually to be an
anti-liberal columnist—whatever liberals believe, he’s agin it. I happened to
catch sight of a passage in his column in the January 8, 2014 Houston Chronicle, however, that seems
to offer an instructive commentary on economism vs. progressive/liberal
thinking.
Here’s what Goldberg has to say:
One of the wonderful things about America is that both the left and
right are champions of freedom. The difference lies in what we mean by freedom.
The left emphasizes freedom as a material good, and the right sees freedom as
primarily a right rooted in individual sovereignty.
Goldberg then goes on to attack such horrible liberal folks
as the Soviets and Franklin Roosevelt for assuming that freedom meant showering
you with all sorts of material goodies.
Well, let’s have a look. With regard to the first part of
Goldberg’s statement, I entirely agree—to the extent that I had intended to
call the book that I thought about writing, as a sequel to The Golden Calf, Visions of
Freedom. (I may yet get around to writing it but that’s another matter.) I
completely agree that at the root of the difference between economism and progressive
thought lies in alternative views of human freedom.
Predictably, however, Goldberg then immediately goes off
track. Let’s take his ideas in reverse order. He suggests that for the right
(i.e., economism), freedom is “a right rooted in individual sovereignty.” As I
have shown both in this blog and in The
Golden Calf, this is a partial truth. Economism recognizes exactly one form
of “sovereignty” and “right,” which is to be a buyer and seller in the
so-called “free” market, which does not in actuality exist anywhere. When push
comes to shove, no other “right” is important, and all other so-called rights
must give way to the all-powerful market and its high priests. So to argue that it’s the left that has
confused freedom with mere material things is at best a highly selective view
of what’s really going on.
Next we come to the claim that for the left, “freedom” means
one thing only, freedom from material want, the solution of which is a nanny
state giving each of us stuff, and so robbing us of our (real) freedom and
responsibility. Let’s look at this in two stages. First, the much-maligned FDR,
in his “four freedoms” speech that included “freedom from want,” made the point
that still seems valid—that a person who is in some theoretical sense free, and
yet is starving, or naked, or homeless, or lacks basic medical care, is in no
real sense free. This person is a slave to material deprivation. Without
some basic set of the material conditions necessary for a minimal human life—not
everything imaginable, not wealth, but a very basic minimum—a person cannot be “free”
in any meaningful sense of the term.
That’s hardly a complete philosophical theory of what
freedom might mean in a world that has broken loose from the ideology of
economism. The next stage, therefore, is to ask which thinkers have taken us
the farthest in recent years toward fleshing out what Roosevelt apparently had
in mind, in a way that represents a defensible and justifiable framework for a decent
and just society. That theory, in my view, is the capabilities approach
developed by philosopher-economist Amartya Sen and philosopher Martha Nussbaum.
Perhaps the most accessible account is in Nussbaum’s Creating Capabilities: The Human Development Approach (2011).
On the Nussbaum-Sen account, what makes humans truly free is
having certain capabilities that are consistent with a life of human dignity.
Some of these capabilities, such as rights of political participation, require
mostly that people leave us alone and not interfere with our free exercise of our
capacities. Other capabilities require that we have at least minimal levels of
material goods provided for us—such as the capabilities that require nutrition,
shelter, health care, and education. On a capabilities approach, human dignity
is a multi-faceted idea, and it’s arbitrary to say that the only rights worthy
of the name are “negative” rights (much beloved by conservatives) merely to be
left alone, or “positive” rights (presumably, much beloved by leftists) to get
stuff given to you. Depending on the specific human capacity, both positive and
negative rights are important.
The fleshing out of such a theory requires first that we
explain what human dignity requires, and we see that material wealth, or all
sorts of material goods, are hardly included; we only need a basic minimum. The
next requirement is that we ask what a just, fair, and decent society is
obligated to do toward providing each citizen with these basic rights and needs;
and again there could be a lot of argument about what’s required, from and for
whom, and why. I don’t have space here to try to develop such an account (hence
the need for the book). But the bottom line, contra Goldberg, is that such an
account can be given; it’s intellectually rich; and it cannot be adequately
captured in caricaturish attacks on Soviet Communism or the usual bogeymen of
the right. (And yes, by the way, the right to buy and sell in the market—real markets,
not fake ones—to try to advance one’s own economic position, is included by Sen
at least as a critical human capability, but only one of many.)
I’m quite confident that if the American public could be
presented with two basic accounts of freedom—the capabilities approach suitably
worked up and fleshed out, and the economism version presented honestly—the capabilities
approach would win. If I’m wrong, so be
it. The whole purpose of my work on economism is to earn the alternative views
a fair hearing.
Monday, December 16, 2013
Who Messed Up the Obamacare Website? Maybe Private Industry
The flawed rollout of the Federal insurance exchange website
has been a huge embarrassment to the President and seems perfectly designed to
reinforce the basic economism narrative that the government can never do
anything right and that all matters ought to be left to the so-called free
market. It’s therefore instructive to review what has happened to one of the
state websites, in Maryland, that also has failed to perform as promised (while
other state sites, I gather, have been working well). Instead of being a simple
parable about how government always messes things up, the true story is more
complicated and lays a huge portion of the blame at the doorstep of the private
sector.
--which in turn cites the original coverage in the Baltimore Sun by Meredith Cohn and Andrea Walker:
http://www.baltimoresun.com/health/bs-hs-exchange-woes-20131207,0,6559272.story
The story can be found on the Health Care Renewal blog:
http://hcrenewal.blogspot.com/2013/12/sickness-in-information-technology.html--which in turn cites the original coverage in the Baltimore Sun by Meredith Cohn and Andrea Walker:
http://www.baltimoresun.com/health/bs-hs-exchange-woes-20131207,0,6559272.story
To get the full picture I need to explain that Dr. Scot
Silverstein, who blogs for Health Care Renewal about information technology, is
very experienced in IT systems for physicians and hospitals, so has had a lot
of opportunity to observe the IT industry at close quarters.
The whole story is quite convoluted and it also appears that
we don’t know a lot of the story. The Sun
reporters sought government e-mails about what went wrong with the Maryland
site, but the state officials refused to release a number of the e-mails. Why?
Because the withheld e-mails “involved the decision-making process of
high-ranking executive officials.” Now, I would have imagined that that’s
exactly why the reporters wanted to see those e-mails, and why the public
arguably has a right to know what’s in them. But back to the actual website.
Maryland figured it would need a lot of help to get this
website operational, and signed up a firm called Noridian to a $71M contract to
construct the website. In doing so state officials bypassed the usual
procurement procedures, presumably so they could get to work more quickly.
Noridian, having convinced the state that they knew exactly
how to design and launch this website, then decided that they didn’t know how
to do it after all, and turned around and subcontracted with another firm, EngagePoint.
Apparently Noridian at least initially withheld this bit of news from
government officials.
Noridian and EngagePoint between them kept reassuring the
state that all was well and everything would work just perfectly and on time,
leading several officials to make reassuring promises to the public which later
came back to haunt them. The website went live and promptly crashed, and some
time later the various parties were still trying to pick up the pieces.
As to why the site was such a flop, Noridian replied with a
long list of excuses, as to how the site was such a complicated thing to
develop and how many different, disparate functions all had to be coordinated
in the same place—much more complex than Amazon selling you a book, for
example. Dr. Silverstein’s response to this is telling. When you hire an IT
firm that’s competent, he says, you expect them to tell you just how hard the
job is going to be, how long it will take, and anything you need to know to
make it work properly up front. His suspicion, based on his own sad experience,
is that in order to snare the contract, Noridian deliberately put out a grossly
overoptimistic schedule and work plan. Then, when everything blew up in their
face, they suddenly discovered how hard things were after all.
Dr. Silverstein drew on his medical experience to note that,
had a surgeon operated on a patient and encountered really nasty but easily
foreseeable complications, and then tried to use the difficulty of the surgery
as an excuse for not having anticipated and planned for the complications, we’d
have a name for that—malpractice.
All this was bad enough, but it promptly got worse. Noridian
and EngagePoint started pointing fingers at each other over the blame for the
debacle. Eventually Noridian cancelled its contract with EngagePoint, but tried
to keep the EngagePoint staff at their jobs and expected them to fix what was
broken. EngagePoint sued and Noridian countersued. While the lawyers slugged it
out, nothing got fixed.
I am reminded of stories from the very early days of fire
departments in the U.S., when fire companies were private, for-profit firms.
They would show up if your house was on fire and offer to put it out for a fee.
If two rival companies both got to your burning house at the same time, they’d
get into a fistfight out in the street as to who had priority to fight the
fire, all while your house was burning down.
Not
to suggest that the Maryland state government is blameless in this tale of woe
and intrigue. But we eventually decided that if fire protection was going to be
done in the public interest, we needed to get the private profit motive out of
the picture. Maybe a similar lesson ought to be learned about how best to make
an Obamacare website that works.
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