Tuesday, January 17, 2017

Today's Healthcare: A Missed Opportunity For Trade

Has Washington mostly suffered from a naming rights process, when it comes to the basic gist of Obamacare? It's beginning to appear as though the "wrong" party was in power, for enacting a healthcare policy. Never mind what could have been the use of logic and rationality, to sort out particulars. What an expensive game! Much of what is at stake involves the costs of Medicaid, for which Timothy Taylor provides useful perspective in a recent post.

For me, the real story is that healthcare never got the chance to evolve free market options in the twentieth century. At root, the supply for healthcare in terms of knowledge, skill and other resources is far too restricted for anyone to know its true potential. Consequently, it's difficult to imagine, how producer/consumer choice and personal challenge in these areas might play out, were they given the chance. I thought about these missed opportunities for healthcare, after reading about a computer enactment of a basic economy which took place more than twenty years ago.

In "The Origin of Wealth" (2007), Eric Beinhocker describes an experiment called Sugarscape, created by two researchers, Joshua Epstein and Robert Axtell. Was it possible to create an economy from scratch? They began with a fifty-by-fifty computer grid and one resource: sugar. While each square had varying amounts of sugar, there were two mountains in the grid with a range of four sugar units high.

Each person (agent) in the Sugarscape environment could look for sugar, move, eat sugar and also store what they didn't immediately need. Agents were programmed with metabolisms which needed more or less sugar for survival, and not enough would cause an agent to starve or be removed from the game. Some agents were programmed with better vision: they could see up to six squares ahead, while poor vision may only mean being able to see one square ahead. Agents also had randomly assigned lifetimes.

Once 250 agents were dropped on the Sugarscape, some landed on rich sugar mountains, hence born into wealth. Others had bad luck - being born where sugar was scarce. Even though the game appeared chaotic at the start, order soon emerged, and it proved clear how geographic destiny mattered for survival. Many died before they could reach their needed resource. Indeed Sugarscape was efficient, for almost as soon as sugar grew back to capacity, a grazing agent would find it.

Some had real sugar advantages, and distributions of wealth became increasingly skewed. Sure enough, this was an emergent property of the system. It became particularly interesting for me, when Epstein and Axtell introduced a second commodity called spice. From the book:
Each square on the board now had a value for how much sugar it held and a value for how much spice it held. As with sugar, spice was concentrated in two mountains...Epstein and Axtell also tweaked their agents' metabolisms so that they all required some of each commodity to survive. However, some agents needed lots of sugar and only a little spice, while others needed more spice than sugar - again, this was determined by their DNA...
Epstein and Axtell seeded Sugarscape with randomly endowed agents who could now trade, and hit the switch. The agents started to buzz around, and immediately a brisk business in sugar and spice took off. 
Trade made Sugarscape much richer than it had been. They highlighted one extreme case, in which neighboring agents who were close to death came into close proximity with the other which held the resource they needed. Here, trade was the definitive factor in maintaining life. Again, from the book:
Trade has an effect equivalent to increasing the carrying capacity of the landscape, thus making everyone better off.
Of course, I had to wonder: what might have been the effect on output and agent survival, had they programmed a requirement to get permission, before offering or consuming needed resources. How many more agents would die, before they could get to the mountains where "permission givers" lived in sufficient abundance to give the okay for specific resources? Is not healthcare, a missed opportunity for trade?

Poor logic can be involved in the assignment of permission givers, especially if they capture the wealth capacity of what may have been normal life amenities of a given landscape. When societies have little choice but to accept that permission givers are "necessary" for basic economic activities, it becomes more difficult to accept that logic is truly useful, in other areas of daily life, as well. The negating of logic is often a slow process, but finally - like the ripples from a skipping stone - such perceptions spread to the "edge of a pond".

Once, it may have seemed like a good thing, for authorities to assume logic and important decision making "on behalf" of their citizens. But when this process goes on long enough, people can become convinced that logic isn't really necessary after all. In fact, some people become more inclined to dismiss logic at a social level, if the use of logic means a loss of their own degree of control, or has not proven helpful for their peers. Anyone who has lived any length of time where economic complexity is lacking, likely has seen this process firsthand. And should that dismissal of logic and rationality continue, a growing percentage of populations eventually become convinced to elect leaders who also lack faith in the social processes of logic and rationality. Is it still possible to reverse, what is now taking place?

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