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The intersection of ethics and economics
Having It All Out There
October 20th, 2008
Does the public have the right to know the medical history of the U.S. presidential and vice-presidential candidates? CNN’s Campbell Brown believes so and New York Times’ health care reporter, Dr. Lawrence Altman suggests the same. Today Joe Biden released his medical records, placing more pressure on Sarah Palin who hasn’t released a single page of her health history. But who cares about the past? If Americans have a right to know the candidates’ past medical history based upon how this may affect the future, doesn’t it follow that we have an even greater claim to know their genetic makeup? The genome of each candidate combined with their medical history would provide a more robust prognostication of McCain’s melanoma or Biden’s aneurysm than the mere collection of old histories.
But why stop at just their genetic makeup? Shouldn’t we also expect them to reveal the same information provided by the 10 volunteers in the Personal Genome Project at Harvard Medical School (PGP-10)? For instance, knowing Obama’s television viewing habits or McCain’s food preferences could be just as vital as knowing their cholesterol levels or “pack years”.
Dr. George Church who leads the PGP-10 project and is one of the research subjects believes that the more open and publicly available genetic information, then the faster the research will progress. According to Church, “…it is better to have it all out there” than be concerned about the research subject’s privacy. The same position argued by Brown and Altman about presidential and V.P. candidates’ medical records. But this does not involve a right to know. While the candidates have a right to privacy they do not necessarily forego that right just because they are running for public office. If a candidate’s health were such that it would prevent him/her from fulfilling the duties of the office then they should have never thrown their hat in the ring in the first place.
Biden and Palin Play Nice
October 3rd, 2008
Missing numerous opportunities for engaging the issues and each other, Joe Biden and Sara Palin stuck to their rehearsed scripts at last night’s VP debate. Both candidates couldn’t stop smiling–Biden continuously flashed his movie star smile at Palin to tell viewers he was not condescending, while Palin displayed directly to debate watchers an “aw shucks-I’m just a simple hockey mom” smile at inappropriate times throughout her remarks, such as her plan to end the Iraq war, which by the way she has no plan.
But enough about their physical posturing–what about their posturing on the issues? Not one word was mentioned on immigration, prisons and national infrastructure such as–roads, bridges and levies (remember Katrina and Ike?). And what about Palin’s supposed Pro-Life positions? When Gwen Ifill asked about gay marriage, the Governor had the opportunity to at least state, “Gwen I am glad you asked this question and I hope we will have the time to talk about abortion, stem cell research and the treatment of rape victims”, but not a peep from Palin. Biden was just as timid. At one point Palin basically called him a liar–in fact she did it twice–but Biden took no umbrage–again he didn’t want to appear condescending, which makes no sense because his character was under attack not his senate record.
The two most disappointing times during the debate occurred during Ifill’s “Achilles’ Heel” and “Budget Cut Back Because Of The Financial Crisis” questions. Biden showed a depth of character when showed that he understood the question by honestly answering it. Palin never answered the question and Ifill didn’t press her on it. The “Achilles’ Heel” question provided an opportunity for citizens to see these leadership candidates’ ability for self-knowledge–a key disposition for effective leadership. Biden showed it while Palin completely missed it.
But more disappointing, perhaps even frightening, time of the debate involved the candidates’ answers to what they would anticipate they would need to cut back within all of their respective proposals given the state of the economy. Biden thought a reduction in foreign assistance would probably be necessary while Palin maintained that nothing would need to be cut. Given the already unprecedented size of the U.S. debt combined with the $700 Billion Wall Street bailout plan; along with the Trillion plus dollars we will spend in Iraq and Afghanistan; along with the looming millions of Baby Boomers drawing on Social Security and Medicare; along with crumbling roads, bridges and levies; along with all of the other social needs of the citizenry with a shrinking budget–when will a candidate for national office be truthful with the American people and tell us that we are bankrupting our grandchildren’s children and their children? Ethics and Economics present some hard choice and we should expect more from our leaders than just playing nice with each other and with us.
The Buffett Plan
October 2nd, 2008
As Congress and the Bush Administration battled over the details of a Wall Street bailout plan–let’s call it what it is–Warren Buffett took steps to begin the bailout with $5 billion to Goldman Sachs last week and yesterday $3 Billion to General Electric. Who says the free market doesn’t work? Buffett is anticipating that the financial crisis will pass and that there are plenty of opportunities for the wise investor to make a lot of money. Even with the Senate passing bailout legislation, and anticipating House Republicans getting their act together to support legislation from that body of Congress, the details of how the government will actually not lose money on our $700 Billion bailout remains to be determined. Buffett has crafted a sweet deal with both Goldman Sachs and GE, all Paulson needs to do is follow the Buffett Plan–buy low with guarantees to continue to buy low. The market is working–Buffett is proof of that. The problem is that while Buffett is fulfilling his role in a free market system–the federal government is assuming the new role of investor. We might as well have Buffett’s Berkshire Hathaway become the new Treasury Department.
How Much Should They Make?
September 24th, 2008
The $700 Billion federal bailout of Wall Street is stuck on how much executives of the financially stressed companies should be paid. Secretary Paulson and the Bush Administration, argue that in order to sway these beleaguered CEOs to be rescued by the feds, the package has to hit the “sweet spot.” Democrats and some Republicans are critical of excessive executive pay, realizing how difficult it will be to explain to their constituents that the same people who placed the economy into such a mess are being rewarded with multi-million dollar severance packages.
Part of this debate is moot because out of the 700,000 Million dollar bailout the percentage devoted to executive compensation will be small. The fundamental issue that is not being discussed is how much should executives of large corporations be paid in the first place. But not just business executives, what about professional athletes and let’s not forget movie stars and musicians like Bono. The common answer relies on whatever the market will bear–loosely translated–there is no ceiling.
A Senate draft calls for a ban on incentive payments that the Treasury would deem “inappropriate or excessive.” But how would Secretary Paulson make such a determination? Or is excessive executive compensation similar to pornography and Paulson should follow Supreme Court Justice Potter Stewart’s rubric, “…I know it when I see it”?
A debate about executive pay is long overdue. The Economic Policy Institute reckons that in 2007, total compensation for CEOs of large American companies was 275 times that of the salary of the average American worker. Is this ratio excessive and inappropriate? In the late 1970s, the same CEOs made 35 times that of the average American worker. A ratio is a good tool for analyzing the ethical dimensions of executive pay. But even that analysis is based upon ethical assumptions. If we accept the assumption–whatever the market will bear–then the ratio is essentially limitless. An alternative to this assumption is based upon the common good, which is receiving scant attention within the Wall Street bailout debate.
Health care is not exempt from this debate. Non-profit health care organizations, particularly those that are faith-based ministries should be taking the lead in the debate but they can’t because they have succumbed to the same pressures evidenced within Wall Street. When CEOs of faith based health care organizations are making over $1 Million per year, they can’t honestly look in the eyes of a Certified Nurse Assistant, who is making $10 per hour and can’t afford the health insurance premiums.
The root of the Wall Street debacle is more than just some poor decisions by a group of highly trained and compensated CEOs, along with their underlings who were all aided by economic policy decision makers at the Fed and Treasury. At the heart of this debate is the purpose of the corporation and the responsibilities of those charged with running them. Maybe when Congress and Secretary Paulson finalize the bailout plan, they can turn their attention to the more substantive issue-but I’m not holding my breath.
Wall Street Melt Down: the latest WMD
September 23rd, 2008
Having spent several years in hospital intensive care units helping people make ethical decisions in crisis situations, one of the key lessons that I learned is to have everyone slow down and think things through. Even when someone was expected to die within the hour, there always seemed to be enough time to gather the decision makers and have a thought-filled approach to the crisis at hand. Congress should heed such lessons from the ICU. Treasury Secretary Paulson’s $700 Billion bailout proposal needs close scrutiny for the basic reason that no one seems to know exactly what and who Mr. Paulson is trying to bailout. First rule of ethics is to have a clear understanding of the issue. In medicine, an accurate diagnosis is the first ethical step before developing a treatment plan. When Bruce Bartlett, a White House economist during the Reagan administration comments about the Paulson proposal, “The problem is people are operating in a world in which nobody knows what the hell is going on”, this causes ethicists to take notice. It is akin to a physician lacking a diagnosis but deciding that doing something–and something really big–is better than doing nothing.
Let’s not forget that the U.S. Treasury doesn’t have an extra $700 Billion in the kitty. The last time I looked we were running a significant deficit. Let’s also remember that the war in Iraq is costing about $12 Billion per month and according to economits Stiglitz and Bilmes–authors of The Three Trillion Dollar War, the total bill will be somewhere between $1.7 Trillion to $2.7 Trillion by 2017. To be fair, the Congressional Budget Office puts the total estimate much lower, $1.2 Trillion to $1.7 Trillion. So far, for both wars the U.S. has spent somewhere in the neighborhood of $700 Billion. But remember, this isn’t money that we had. The people who should be approving this bailout are not members of Congress but everyone in their 30s, 20s and teenage years because this is the group of Americans who will be paying these bills.
It is rather ironic, even comical that the strategy developed by Secretary Paulson mirros the behavior that created this mess in the first place. The very reason for the current financial situation is because home buyers were approved for mortgages beyond what they could afford and then were approved for home equity loans that they also could not afford. When housing prices began to plummet and the economy weakened, overstretched home buyers–let’s not call them home owners because they never owned their homes–couldn’t pay their mortgages. The financial institutions owning these bad loans couldn’t sell them and still can’t sell them. If they could sell them there would be no need for a federal bailout. They can’t sell them because no one really knows the value. Remember, these aren’t simple loans but complex bundles of millions of mortgages which were then sliced and turned into investments bought, sold and traded by Wall Street.
Secretary Paulson doesn’t even know if $700 Billion will be enough. Yesterday on CBS Face The Nation he said, “What we need is something that is big enough to get the job done. We’ll ask for what we think is a right amount to give us plenty of flexibility.” Sounds like a first year resident unsure about a differential diagnosis.
Congress is scheduled to adjourn next week and September 30th marks the end of fiscal 2008 year for the federal government. Lobbyists for financial institutions and associations will have the most lucrative job in Washington until that time, posititioning their clients’ interests to reap the benefit from the general fear of a Wall Street Melt Down, the 2008 model of WMD.
Brin’s Genes
September 21st, 2008
On his recently launched blog (http://too.blogpost.com), Google co-founder Sergey Brin informed the world that he has a gene mutation that increases the likelihood for him to develop Parkinson’s disease. Why Mr. Brin felt compelled to tell the world of this particular aspect of his genetic makeup is not explained. I hope it is not a shameless marketing plug for his wife’s company, 23andMed (www.23andme.com) that provided the genetic testing and where he invested $3.9 million in May, 2007.
A quick Google search of “genetic testing” shows the numerous genetic labs willing to analyze your DNA. Interesting that 23andMe doesn’t hold the primary place in such a search but it does hold the number 2 spot in the paid right-hand column.
Mr. Brin is correct when he says he is fortunate to be in the position to know his genetic information. But he is not like most people who Google “genetic testing” looking for a lab to analyze their DNA. First of all the $399 charged by 23andMe for the analysis is not covered by insurance and is a luxury for most people. Genetic testing is at the bottom of the health care list for the 45 million Americans without health insurance.
Second, being one of the richest Americans with a personal fortune somewhere in the neighborhood of $15 Billion, Mr. Brin also has the luxury of having the best and the brightest genetic counselors, physicians and scientists at his beckon call to explain the results of his test, develop a customized preventative care health plan, and counsel hiim when “those conditions in our old age” finally do appear. Consider how Ted Kennedy gathered cancer specialists from all over the country to the Hyannis Port compound to diagnosis and recommend a treatment plan for his brain cancer. That is a comprehensive health care benefit package available only to the elite.
23andMe espouses six core values and one deals with ethics. (https://23andme.com/about/values/)
We encourage dialogue on the ethical, social and policy implications of personalized genetic services–We recognize that the availability of personal genetic information raises important issues at the nexus of ethics, law and public policy. 23andMe is committed to fostering open dialogue with a full spectrum of stakeholders. In areas where new policies are needed to protect the public interest, we wll engage directly with decision-makers to contribute our unique expertise and perspective.
I hope this is more than just political correctness. 23andMe does state that they want to encourage dialogue but only offers links to various associations and scholarly papers to foster such dialogue. Their advisory board is solely comprised of geneticists and scientists, not an ethicist among the lot. Maybe Mr. Brin could take a few more million dollars of his 15000 million dollars and help his wife’s company take a leadership role in the ethical, social and policy implications of personalized genetic services.
Short-selling at G.M.
September 1st, 2008
Leave it to the sheer audacity of General Motors Leadership to argue that the auto industry “deserves” $50 Billion in government-backed loans so they can build the fuel efficient cars that they should have been building for the past 10 years. With Michigan as a key battle ground state in the November presidential elections the timing of this request is highly suspicious. How can Obama or McCain tell auto workers–sorry, you should not have been fighting legislation to improve fuel efficiency. But of course, it wasn’t the rank and file per se who set up this pending disaster for the American automobile industry but its leadership. Talk about gambling on your own future–Detroit leadership played a strategy that the American public would continue to want big gas-guzzling vehicles–hey even I owned a Suburban at one point–a great vehicle but at 12 miles per gallon–an unnecessary mode of transportation since I haven’t been hauling horses or a pack of cub scouts. Now, when I pull up to the pump with my scooter and see the $120 previous sale from the SUV pulling away, I breathed a sigh of relief that I dumped that great vehichle.
Let’s now kid ourselves…gas is not going back to anywhere near $3.00 per gallon. As Hurricane Gustav bore down on the gulf coast how many of us gassed up before the next artificial gas hike of 40 plus cents per gallon? The more we spend on gas the less we can spend on other goods and services. Robert Lutz of General Motors and other Detroit executives tried to short-sell an entire industry, borrowing on the false assumption that the future American economy could continue to support fuel inefficiency. Now that this gamble has proven to be an unwise bet they have the bravado to suggest that their poor decisions should not only be forgiven but be fixed by the federal government.
Congress has already approved backing $25 Billion in loans for the auto industry and in order for the next $25 Billion to be available by next year, Congress will need to pass additional legislation by the end of September. This will be a great test of both presidential candidates. There is more at stake than the required $3.75 Billion to back up this loan. Their philosophy to what extent government should become involved in the market will be tested. We will see what they say as they stump through Michigan and when they cast their Senate votes for this loan. Let’s hope they have the courage to vote. �
The First Step
August 25th, 2008
Maybe there is never the exact right time to start blogging–so why not on the eve of the Democratic National Convention? By this time tomorrow the opening gavel will have sounded and first lady to be Michele Obama along with a strong supporting cast will have sung the praises of Barrack. I have the great opportunity to be present during the convention–at least for the first 3 hours–through the press credentials of KRCX at Regis University, where I host a weekly program, Some Of This Is True. But this blog is not about politics or journalism–although these two topics are fair game–rather this blog is about ethics and economics, actually their intersection, thus EthicNomics. Even though I’ll take a special focus on health care since I teach health care ethics, anything having to do with ethics and economics will be open for analysis. Why these two? Because there doesn’t seem to be a day that goes by when there isn’t a news worthy item that involves how and why we make money along with how and why we spend money–this is ethics and economics.
If you are like me, there are a lot of things that don’t make sense. For instance, the U.S. spends somewhere i the neighborhood of $1 Trillion dollars on health care and yet we have some of the worse quality outcomes for comparable companies. Medicare continues to cut payments to primary care physicians causing it more and more difficult to find an internist who accepts Medicare patients, while the U.S. population is rapidly aging and the Baby Boomers are right around the corner. More and more Americans are going bankrupt because of extraordinary health care bills while drug companies are making record profits and spending excessively on marketing no longer to physicians but now directly to consumers. By the way, the drug companies have figured out another way to make more money off of the prescriptions that sit in your medicine cabinet by selling that information to another company that in turn sells it to insurance companies, all under the watchful eyes of the FTC. Check out “They Know What’s In Your Medicine Cabinet” in the August 4, 2008 issue of Business Week.
Remember this isn’t just about health care ethics and economics but issues of ethics and economics in general. We live in such an inter-related society that we can’t separate one issue like health care from the rest of the economy. Both Obama and McCain know this–we probably all know it but we don’t want to believe it. We want life to be simpler, more manageable. Well that’s not going to happen. This morning I was interviewing some folks from The Washington Center (www.twc.org) and they were describing conventions from just 12 years ago when there wasn’t email, cell phones, text messages, twitter, blogs, wikis, etc. etc. etc. They couldn’t imagine what it would have been like to organize the conferences and seminars that The Washington Center sponsors. Technology is wonderful. A cell phone will allow me to call my Dad, who lives 1000 miles away, from the floor of the convention tomorrow afternoon. A small upstart college radion station will be able to broadcast live to every person in the world who has access to the internet, and if they can’t catch it live then download a podcast from iTunes (www.regis.edu/itunes) Just remarkable! Of course there are dangers. There are places where we should not go. There are actions that we should not take. That is the challenge before us and that is what this blog is about.