Our economic future

[punkedoutriffs]

I've been doing a little reconnaissance on the state of the American economy and it's got me thinking...

We here on SDN frequently mention shrinking reimbursements when we try to predict the future of medicine. Well, it occurred to me (it seems so obvious now) that we here in medicine do not produce capital wealth, but instead provide a service which is paid for by the wealth that's produced in other sectors (i.e. manufacturing). However, the U.S. economy does not produce wealth like we used to. Moreover, our credit limit is maxed out. Therefore, reimbursements for our services are shrinking because we as a country are getting poorer.

So, my question is, how do we get to a position where we are producing capital wealth again? What are you guys' thoughts?

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[dsk89]

Thats a deep question, one that I'm sure many people are trying to figure out. My personal thoughts are that this country is headed in the direction of Europe (unfortunately). One of Europe's problems is that too many people ask too much of their governments (welfare, etc), and the governments can no longer support their countries in that magnitude. I feel like the US is also headed in that direction (too many people on Social security, welfare, unemployed- essentially not contributing economically to the wealth of the country), but I'd say we are still a couple decades behind what Europe is right now. Worst part of it is that the politicians are in discussions right now about that "fiscal cliff" we are rapidly heading towards, and it sickens me to see Democrats and Republicans still bickering over these things and not coming to a consensus. The future of our once great country is really at stake here, and they can't seem to get over their political agendas and just be AMERICANS and start moving our country in the right direction.

 

[punkedoutriffs]

Thought of this: our economy is like an ecosystem without any autotrophs. All we are doing is eating each other.

 

[theseeker4]

Thought of this: our economy is like an ecosystem without any autotrophs. All we are doing is eating each other.

While we are not where we used to be, we are hardly at this point, or even near it, as a country. The US still is one of the top exporters in the world, and while that is a far cry from a few decades ago when we were the top exporter, we are hardly a service only economy. Not only do we produce a large surplus of food, sold around the world, and still manufacture goods for export (albeit at a much reduced rate compared with the past) but scientific advances are a source of wealth as well. It might not be stamping out parts on a line, or putting bolts and nuts together to make machinery, but creating new technologies creates an exportable "good" if you will, that if other countries want, they are willing to pay money for it (even if the physical device using the technology is assembled in China instead of here.)

The bigger problem, as mentioned above, is promising everything to everyone without having the money to actually pay for it. That is a much bigger, and more near term threat to our economy than how much we produce vs how much we consume.

 

[NickNaylor]

Lol, if you know the answer to this, be sure to let the Fed, ECB, etc. know - I'm sure they'd love some input.

 

[RomanTaylor]

I personally feel that it's not a government issue, it's more so a cultural issue.

We have become a citizenry that claims that we are the best in the world at everything, therefore we deserve the best of everything without sacrifice.

We don't know, as a country, how to sacrifice, do with less, and produce more. It's a gross sense of entitlement that is not only liberal...the entire political spectrum does it.

Until that changes...nothing will change. A government is nothing but a microcosm of its people. If the people are jacked up...well...

 

[Praefectus]

Well, it occurred to me (it seems so obvious now) that we here in medicine do not produce capital wealth, but instead provide a service which is paid for by the wealth that's produced in other sectors (i.e. manufacturing). However, the U.S. economy does not produce wealth like we used to. Moreover, our credit limit is maxed out. Therefore, reimbursements for our services are shrinking because we as a country are getting poorer.

So, my question is, how do we get to a position where we are producing capital wealth again? What are you guys' thoughts?

In a free market society, efficiency creates value through superior and/or cheaper products. Wealth is created when we allocate less of our resources towards an equivalent product. The reason why you suggest that medicine doesn't produce wealth is because we have a distorted market. By removing the price component from the product by adding third party payers (insurance and the gov't), the consumer doesn't have an incentive to choose the most efficient option. Thus, doctors and hospitals have a monetary incentive to waste as much as possible. This results in the government stepping in, trying to fix the system by cutting reimbursements and setting artificial price ceilings. Doctors and hospitals now waste even more to make up for lost margin, completing a vicious circle.

 

[ShenanigansMD]

Thats a deep question, one that I'm sure many people are trying to figure out. My personal thoughts are that this country is headed in the direction of Europe (unfortunately). One of Europe's problems is that too many people ask too much of their governments (welfare, etc), and the governments can no longer support their countries in that magnitude. I feel like the US is also headed in that direction (too many people on Social security, welfare, unemployed- essentially not contributing economically to the wealth of the country), but I'd say we are still a couple decades behind what Europe is right now. Worst part of it is that the politicians are in discussions right now about that "fiscal cliff" we are rapidly heading towards, and it sickens me to see Democrats and Republicans still bickering over these things and not coming to a consensus. The future of our once great country is really at stake here, and they can't seem to get over their political agendas and just be AMERICANS and start moving our country in the right direction.

Yeah let's just classify all of Europe as "failing socialist states" while ignoring that the problem exists on a country by country basis in Europe. Let's also forget that Europe is much better at managing healthcare costs than the US.

But yes, the free market is the best solution for Americans, at least with biomedical research, services, and products; I have mixed feelings about the insurance industry though.

 

[punkedoutriffs]

Yeah let's just classify all of Europe as "failing socialist states" while ignoring that the problem exists on a country by country basis in Europe. Let's also forget that Europe is much better at managing healthcare costs than the US.

But yes, the free market is the best solution for Americans, at least with biomedical research, services, and products; I have mixed feelings about the insurance industry though.

In a free market society, efficiency creates value through superior and/or cheaper products. Wealth is created when we allocate less of our resources towards an equivalent product. The reason why you suggest that medicine doesn't produce wealth is because we have a distorted market. By removing the price component from the product by adding third party payers (insurance and the gov't), the consumer doesn't have an incentive to choose the most efficient option. Thus, doctors and hospitals have a monetary incentive to waste as much as possible. This results in the government stepping in, trying to fix the system by cutting reimbursements and setting artificial price ceilings. Doctors and hospitals now waste even more to make up for lost margin, completing a vicious circle.

The efficiency of healthcare delivery is a separate issue from what I was asking. Could our healthcare be delivered more efficiently? Yes. However, the question is: given the level of capital wealth we produce in this country, is it sustainable even under the most efficient model? If not, how can we increase our baseline wealth? What industry or sector can be the fountainhead that provides the wellspring which feeds the rest of our economy? Mining? Logging? Agriculture?

I feel like we're at a point where we're tapped out, and unless we discover some sort of new resource or technological phenomenon (I'm reminded of the Hydrogen/spark/air machine thing in Ayn Rand's Atlas Shrugged), our standard of living (including what we've gotten used to in healthcare) will have to decrease, perhaps even drastically.

 

[dsk89]

Yeah let's just classify all of Europe as "failing socialist states" while ignoring that the problem exists on a country by country basis in Europe. Let's also forget that Europe is much better at managing healthcare costs than the US.

But yes, the free market is the best solution for Americans, at least with biomedical research, services, and products; I have mixed feelings about the insurance industry though.

Sorry, you're right. Should have made that distinction! I think I also have mixed feelings about the insurance industry in this country.

 

[dsk89]

I personally feel that it's not a government issue, it's more so a cultural issue.

We have become a citizenry that claims that we are the best in the world at everything, therefore we deserve the best of everything without sacrifice.

We don't know, as a country, how to sacrifice, do with less, and produce more. It's a gross sense of entitlement that is not only liberal...the entire political spectrum does it.

Until that changes...nothing will change. A government is nothing but a microcosm of its people. If the people are jacked up...well...

Strongly agree with this statement, as well.

 

[ShenanigansMD]

I feel like we're at a point where we're tapped out, and unless we discover some sort of new resource or technological phenomenon (I'm reminded of the Hydrogen/spark/air machine thing in Ayn Rand's Atlas Shrugged), our standard of living (including what we've gotten used to in healthcare) will have to decrease, perhaps even drastically.

Heard the news? The US is projected to be the number 1 oil producer by 2020:

Oil and Gas: America's oil Bonanza

http://economist.com/news/leaders/2...y-was-priced-correctly-united-states-americas

And I agree with you dsk89 that Europe has it's problems with uber statism, but the real problem at the moment is France. You can check the economist on that one too.

BTW I read The Economist religiously.

 

[pre med 2014]

I'm not worried about running out of oil. Humans are smart, we're developing new technology BEFORE we run dry to avoid inconvenience

 

[NickNaylor]

I'm not worried about running out of oil. Humans are smart, we're developing new technology BEFORE we run dry to avoid inconvenience

The question isn't whether we'll have an oil replacement before we functionally "run out." The question is whether we will have an ECONOMICALLY VIABLE solution to the oil problem.

(sent from my phone)

 

[pre med 2014]

The question isn't whether we'll have an oil replacement before we functionally "run out." The question is whether we will have an ECONOMICALLY VIABLE solution to the oil problem.

(sent from my phone)

This is true. I have confidence we will come up with something even cheaper. I am particularly excited about fusion reactors, a lot of potential there.

 

[Dires]

The question isn't whether we'll have an oil replacement before we functionally "run out." The question is whether we will have an ECONOMICALLY VIABLE solution to the oil problem.

(sent from my phone)

T Boone Pickens seems to beleive the economically viable bridge fuel is natural gas.

I'm not at all saying he's unbiased.

 

[punkedoutriffs]

Either way, natural gas and American oil will only buy us some time until we either adjust our system into one of sustainability in light of current technologies, which will require a shift towards austerity, or we have to do something like discover fusion.