Free Stuff!

Hi! New listener here. Thank you for an interesting episode. It was enlightening, specially for me as a non-american. I just wanted to share some thoughts I had, as a swede who take all the things you talked about for granted. Please excuse me for the length and my wiriting, english is not my first language.

You talk a lot about the input side of things, what will be needed for the different welfare policies (how much does X cost? why does X cost this amount? etc), but not as about the output. Another way to put it: you talk about the investments, but not so much about the possible returns.

You warn that the US just can’t adopt european policies and expect european outputs, and while I think that’s fair and true to some extent, it might also miss some of the "magic" of the discussed systems. That is, the "hidden" ways by which it transforms output to input. Different systems can do that more or less well, as the fact that the US spends twice and still have worse health outcomes clearly shows.
I think it might beneficial to view political systems as functions. The same input can results in completely different outputs in two different functions, based on the properties of the function. In case of health care systems, the input is money, the output is health, and the function is the inner workings of the systems that follows from it’s design.

So what are some of these "hidden" reasons that makes the "european" systems so effective?

I’m no expert when it comes to american health care, but two problems that ought to arise when you have a market based health care system with private insurance companies playing a major part is the problem of asymmetric information and dealigned incentives.

In health care, the patients are seldom very knowledgeable about what the right treatment is. They have an interest in getting the right kind and right amount of treatment, but don’t really know what that means more precisely. The private insurer have an interest in giving the patient as little care as possible, since they lose money on expensive care. Insurance companies have more information than patients, but still lacking crucial information that the doctors have, leaving them somewhat in the blind. And lastly, the doctor have an interest in over-treating the patient, since he or she earns their money from bills paid by the insurer. So the three different parties have three different incentives; over-, under-, and the right treatment, and three different types of information. Whereas when I go to see a doctor in Sweden, he’s only interested in trying to give me the right amount of treatment, which is exactly what I’m interested in. No one benefits from either over or under treating me, and we have no need to reconcile different perspectives on what the right amount is. This probably leads to a lot less over (waste of money and resources) and under (waste of health and productivity) treatment, which accumulates in the long run.

Those outcomes are the reasons many people in for example Sweden view health care as a common good. Better and more effective health care leads to reduced costs of healthcare and more productivity in society in general. Less access to health care means lower productivity, more stress, higher risk of catching contagious diseases, less opportunities to catch diseases early, less opportunities for lifestyle guidance, higher risk of even more expensive care needed in the long run etc. There’s a lot of synergy effects going on. A healthy person is not only beneficial to themselves, but indirectly to everyone else in society as well, and vice versa. T

I believe all of these consequences together helps understand why it’s often a lot cheaper for European countries to keep their population healthier, in short, they are more proactive, long term oriented, and efficient with their money. It should also be noted that a staggering majority of people wants to keep the system. In Sweden I would guess it’s over 95 % of the population.

The same is of course true when it comes to higher education. By removing money from the equation, you can create a true meritocracy, where academic success is all that matters to determine who gets which education. This should optimize the academic output based on the populations potential. Which of course would lead to a lot of scientist who maybe otherwise wouldn’t have been scientist, as well as a better educated population, and possible a culturally and intellectually richer civil society.

It’s also worth to point out that you can do all these things without losing your competitive edge. Sweden has implemented all this “free stuff” and still ranks about the same as the US when it comes to business climate and economic freedom. We have some of the best medical researchers in the world and are highly inventive.

I happen to think many of the consequences of “free stuff” are intrinsically good. It dignifies people and make society better. But it’s also good economic policy in the long run, which is worth highlighting. Educated and healthy people make happier, smarter, and more productive citizens, especially in a democracy.
kvårdskostnader) + mer smittorisk (mer sjukvårdskostnader)

a healthy person is beneficial not only to themselves, but to everyone

i länder som har "fri" sjukvård så finns det en enorm konsensus om att vi ska behålla systemet

the same is of course true when it comes to education. not having money, but only academic success, determine who gets which education creates a true metriocracy, which in the long runt benefits the whole of society by optimizing the academic output based on the populations potential. This leads to more productivity, a better educated voting population, and enirched the culture and arts.

I¨ve think this is an intrinsic good. It dignifies people, and makes our society better. But it¨s also good economic policy. Educated and healthy people make better citizens, especially in a democracy.

synergy