There has been some interest in the 2017 Harvard Business School Publication entitled, Why Competition in the Politics Industry is Failing America: a stragegy for reinvigorating our democracy, authored by Katherine M. Gehl and Michael E. Porter.
In commenting, I must disclose a preternatural suspicion towards any work authored by Professor Michael Porter. This reservation in largely based on his status as a health reform adept and on the 2006 book by Porter and Teisberg, Redefining Health Care: Creating Value-Based Competition on Results. Professor Porter is identified with so-called ‘value-based healthcare’. The premise is that insufficient free market competition saddles American healthcare with high costs, redundancy, therapeutic ineffectiveness, and lack of price transparency. The list of deficiencies is relatively non-controversial. However, the default to a libertarian free market resolution is unusual. It has also escaped a level of rigor applied to less eccentric perspectives. The following brief characterization is not meant as diversion. It is recapitulation of Porter hypotheses that are easily understood and pertain directly to Why Competition in the Politics Industry is Failing America: a stragegy for reinvigorating our democracy,
The contention that American healthcare suffers from a disorder of free market deficiency carves a channel that is novel. Of course, novelty is not an a priori flaw or unwelcome, but deviation is not necessarily innovative, and it is often not disconnected from more pervasive ideological roots that may be dormant for good reasons. The contention that the most costly and price-driven health care system in the industrial world requires an even greater infusion of laissez faire capitalism falls well outside of the critical mainstream. The outline of the solution is wayward. In order to liberate American healthcare through the introduction of competitive markets, a new universe of health care institutions must precede implementation. Porter advances a proposition that American healthcare should be organized around hospital based competing teams, each with its own disease-specialty. Their competition might then require patients to cross regional and State lines in pursuit of the least expensive and most effective care. The contention is that American healthcare, already the most market penetrated system in the industrial world, requires greater invasion by private entities, empowered with fully transparent information on costs and outcomes. The outcome would be friction-free competition trimmed of wasteful redundancy. The free market commitment to ‘perfect’ competition based on universal fluency of information, recalls the neo-classical critique of Kenneth Arrow that American healthcare suffers from unequal access to information and expertise. Apart from the artificial dialectic between healthcare as patient driven selection and health care institutional provision, Porter’s argument is not meant to be thought experiment.
The reliance on informed ‘customer/consumers’ and omniscient profit driven private insurers and plan administrators occurs at a time when 45 year of failure with mixed market solutions seems to have reached an endpoint. We have been through the Kennedy national health insurance models, HMO-based allocation, strategic planning at the State level, and even the promulgation of the Heritage foundation-derived insurance market. All have failed to enable affordable coverage, control of prices, and rational practice norms. Market solutions in our current reality seem to promise submission to corporatism on a national scale. Perhaps not what Porter envisioned, but far more homogenous with tradition and hegemony, a competitive market future would seem to belong to CVS-Aetna, Amazon-Berkshire Hathaway-Chase and their replicants (Google-Pfizer-Cigna?). A market-based ‘competitive’ future would not abolish the underlying separation of price from utility. It is also unlikely that a pseudo-monopsist market solution would defer decision making to libertarian-inclined graduates of schools of management or practitioners of crude economics game theory. The more likely evolution is towards healthcare distribution dependent on social profiling, marketing of medications and out-patient services linked to a menu of price-sensitized tiers. Which is more likely: the marketing of personal trainers profiles and algorithms for biorhythms and sleep activity, or the delivery of perfectly adjusted and therapeutically optimized services?. The approaches advanced by Bernie Sanders, while admittedly crude, will almost certainly come to the forefront at a time when the socialized medicine condemnation has already lost sting, and the appetite for hybridized market solutions seems sated. . Current realities are muddled enough without the addition of a new water hazard.
It may now be apparent that the argument advanced in Why Competition in the Politics Industry is Failing America, has many similarities to the earlier health care proposition — solutions through market competition. Gehl and Porter (Gehl-Porter) presume that government has failed due to entrenched interests that market obstruction. The solution rests on the instillation of an open political market based on greater competition and the shedding of established parties and dysfunctional polarities. Two gates are close; a third way is required It is a simple game theory detached from context and history. The irrelevance and destructiveness of such seemingly bland recommendations, and their acceptance in the peer-reviewed world in healthcare and in politics requires some explanation.
The Gehl-Porter argument seems to rest on three premises:
+ Current legislative and executive failure are an aberration that contradict the historical patterns of an effective American political life. They write, America’s political system was long the envy of the world.
+ The source of this aberration the continuous and recent conflict between two opposing parties that are unnecessarily polarized. Furthermore, an evolution of dedicated partisan industries, consultants, funders etc has created a stalemated political market and stifled change. The most egregious expression of this is partisan gerrymandering. Gehl-Porter-Gehl attribute the 2013 government shut-down to this gerrymandering attributing the circumstances to 16 unchallengeable Republicans from gerrymandered districts..
+ The construction of a third force that bypasses the language of partisanship can evolve with the opening up of the political market, The result is to get government functioning as well as it did in the past.. Options include open primaries and a structured weakening of 2-party hegemony. The parties are leftist and rightist – Elizabeth Warren versus Donald Trump — and a centrist party(ies) will attract the true center-right/center-left middle which defines the American public..
In the most benign interpretation, Gehl-Porter are engaged in a simplistic and ill- conceived market-based academic thought experiment. However, the history of the no-labels initiative that they have embraced suggests a more deliberate and malign imotivation. The following example may suffice.
The authors write:
For example, moderate Connecticut Democrat Joe Lieberman lost his 2006 Senate primary but went on to win comfortably in the general election as a third-party candidate. This was possible only because Connecticut was one of four states at the time without a sore loser law.
Joe Lieberman may be a secular saint of the no-labels movement, but his general election victory over Ned Lamont had nothing to do with the State’s sore loser law. Lieberman failed in a Democratic primary and lost the Democratic and Independent vote in the general election. He won a relatively narrow victory because he received 78% of the Republican vote. It was a disciplined and cynical partnership with the Republican Party that enabled Lieberman’s election. Lieberman went on to endorse Sarah Pallin in the 2008 presidential election and testified for Betsy DeVos in her 2017 hearing for Secretary of Education. And, the Republicans wanted no part of him, blocking his choice as VP in 2008 and closing the door to Senate re-election in 2012. What he accomplished was the defeat of a Liberal Democrat and realization of a dead-end political career that left no trace. Had Gehl-Porter been interested in more substantive Connecticut 3rd party campaigns, they might have referred to Lowell-Weicker’s bold and single-term effort to introduce the State income tax, and Ralph Nader’s repeated attempts to introduce 3rd party progressive politics into national discussion. But Gehl-Porter appear diffident towards real political courage.
In any discussion of American life and blocked central government, we should perhaps rest common language on an elementary distinction between politics and government. Gehl-Porter focus on the dysfunction of the federal government, but their solutions reside in a deconstruction of political life. Whether or not a mystification of the terminology of representative government is intended, their writing is obfuscatory. The political life of society as decanted into broad political parties necessarily submerges and harmonizes underlying conflicts and structural divisions — class, geography, etc. There is a taming of elemental contradictory forces: labor and capital, minorities and majorities, state and federal power. Max Weber’s distinctions between class diversity and the symmetry of political parties presented the basic issues more than 120 years ago. But, functional government must diverge in significant ways from the paired political oppositions that lie beneath either a consensual or conflicted government. As an example, the revolutionary Bolshevik government, a class-based political party, was opposed in principle to the nation state. In 1918, the Bolsheviks released every secret treaty and memorandum in the Tsarist foreign affairs archive. The principle was that secret treaties and communications were based on imperial rivalry and subterfuge and were inconsistent with socialist internationalism. Yet a decade later, the governmental form of state dictatorship was committed to secrecy and misinformation. The analogy is, of course, inexact. The point, however, is that what may governmental affairs, whether decisive or stalemated, not require uniformity in the political economic and social realms.
The assumptions of a 2-component conflict resolution model, are that conflict is a consequence of insufficient optional pathways in the mechanisms of government, more or less independent of underlying polarities and their expression through political division. But what if the impasses are not an artifact of imperfect competition in the governmental realm but are an actualization of non-reconcilable underlying forces?. For example, what is the path to resolution between privatized health care and public health protected by state action, between subsidized public education and the autonomous pricing from unsubsidized universities, or between unfettered prerogatives of the business class, and the protective (regulatory) function of the State? A less operant analysis might rest on the presumption that a stalemated federal government is a consequence of a dynamic political life that is ideocratic and post-political in its domination by a faction that is hostile to resolution. In Germany in 1933 and in much of Europe, contempt for the weaknesses of liberal democracy motivated the strategic destruction of parliamentary government by the Nazi party. Furthermore there may be a profound imbalance in power due to a powerful numerical minority committed to its self-generation. When these forces clashed and then compromised in Germany, it did not end well. Dysfunctional government can reflect a preference over an activist state that effectively reduces the disparities generated from free markets. Then simplified ahistorical theroy will resolve nothing and may complicate any identification of root causes.
The argument that American political life traditionally has been highly functional and effective, and that governmental dysfunction is recent has at most conditional resonance in American history or in more recent practice. The following simplification of two centuries of American government probably replicates Gehl-Porter’s insensitivity to history, but some basic things need to be said. However, the limited function, even lack of a need for a functioning American federal government has been characteristic of much of our political history abided to in the first half of our republican history, and vigorously recurring in the second. Brian Balogh wrote an exceptional account of our minimalist national government in his aptly titled, A Government Out of Sight: The Mystery of National Authority in Nineteenth Century America. For most of our pre-20th century history, its absence was the most exceptional feature of American government. DeToqueville recognized, and Hayek affirmed in similar language more than a century later, that the most striking feature of American government was the invisibility of its agencies, and the primacy of common and often non-articulated common premises on property rights, citizen’s participation, and independence.
For most of the 19th century, American society proceeded without two of the fundamental functions of national government – raising revenue through taxation and a continuously financed mechanism for defense and going to war. The resources and expansion of the country, and its energetic and voracious business class, produced a resourceful capitalism that continues to create. The Homestead Act created an environment where free labor expanded massively in the American West with minimal government imposition. To understand the absence and the lack of necessity of an effective federal government, it is perhaps useful to consider these two prime functions of federal government – national defense and revenue generation. With the important exception of the Civil War, which will be further discussed, neither function was implicit in pre-20th century America. France and Germany could arm 1.5 million men, but the standing army of the United States in 1900 was less than 12,000. As for revenue generation, there was no federal income tax until 1913 and no payroll tax until 1936. In the 19th century our harmonious political life was supported almost entirely by excise taxes. Their acceptance can be appreciated in the politics of the Whiskey Rebellion.
The exception to the creation of a large standing army and to the absence of taxation occurred during the American Civil War. National political life had disintegrated. The dissolution was not due to the confrontation between two frozen perspectives, dissolvable by market forces and third or fourth alternatives. The Missouri Compromise, the Wilmot Proviso, the Kansas-Nebraska Act were compromises for the function of national government that could not resolve the underlying political confrontation, and where one faction was committed to separation. Furthermore, political stasis in ante-bellum American, both in terms of major parties and smaller issue-specific parties, was not consequence of absent 3rd way choices.. The election of1860 was a high water mark of political diversity in terms of competition of political parties. However, in the 70 years between the Act establishing the Northwest Territory and Secession, the fundamental conflict in American political life could not be resolved, despite significant reformulations of the political landscape.
Although there have been recent poorly digested suppositions, notably by General John Kelly, that more bargaining and compromise might have prevented the Civil War, the realities are, of course, that attempted compromise with a regional oligarchy defined the half-century that preceded the Civil War. The contention that an inventive market solution might have diverted the path to factional war seems preposterous. A clever young entrepreneur-theoretician would not have succeeded in conflict resolution with a post-regional third party based on the marketing, as Joseph Heller offered, of chocolate covered cotton. The ridiculous allusion parallels the improbability of the Gehl-Porter position.
Throughout the 19th century, the national revenue structure was severely limited, essentially preventing large scale investment in the protection of public welfare. Throughout the 19th century and prior to the passage of the 16th amendment, the government’s primary source of revenue was the excise tax. This was both a limited source of revenue and a catalyst for popular reaction. There was a fundamental interruption in the tradition of minimally funded national government, as well as in other norms, with the onset of the American Civil War. The Congress imposed its first personal income tax as part of the Revenue Act of 1861 (3% of all incomes over US $800; rescinded in 1872). To pay for the Civil War and with the censoring of the Southern vote, Congress enacted the Revenue Act of 1862, which levied 3% tax on incomes above $600, rising to 5% for incomes above $10,000. Rates were raised again in 1864, but with full repeal in 1872. The next income tax statue, passed in the 1894 Tariff Act, was overruled in the notorious Pollock Decision that prohibited a federal tax on income and property on the basis of a State’s right argument, essentially barring the apportionment of an income tax. It was not until the passage of the 16th Amendment that Pollock was overruled and the income tax enabled a stable national income tax system. During the New Deal in 1936, payroll taxes were initiated, establishing the basis of a stable system of national revenue.
Recapitulating the brief but dramatic reform period that accompanied the Civil War underlines the point is that most of our political history revolved around dysfunctionning national politics and the inability to solve critical and emerging problems. Dysfunctional (limited) government is not a fundamental flaw, and under relatively stable conditions, where quality of life is largely sustained by economic security, the ambitions of legislatures may not be highly consequential. If major cornerstones of the protective state are healthcare, affordable education, and monetized retirement, the current deficiencies in each of these areas are long-term and not the result of a brief period of dysfunction. The now unaffordable trajectory of advanced education has as its major exception the establishment of public land grant universities during the Civil War. The Social Security System required the activism of the New Deal and private sector pension protections have been ignored in the past 4 decades. The failure to enact national healthcare legislation has a brief interruption in its trajectory during the Kennedy Johnson Great Society years. Without the revenue basis for financing a strong state and without reliance on a standing army, the expectations from federal government were historically modest, and the presumption that American political life, in contrast to civic life, has been stable and an admired model bears limited pertinence to our history. In fact, the freezing of our political life into two large parties has been a hallmark of apparent stability in ‘good times’, but it is also the prison that Gehl-Porter wishes to deconstruct.
There is an argument that there have been only three periods of sustained reform and extended public protection in the past century and a half These are the Republican government of the Civil War, the Democratic government of the New Deal, and the Democratic government of the Great Society. The first two were fed by severe crisis, while the third was a consequence of ideology and politics, i.e, the first assault by and overwhelming defeat of the far right, following it conquest of the Republican Party. During the Civil War, the federal government prevented the dissolution of the country through executive power and financing a large army, but there were companion events evolving from the withdrawal from federal government by slavocratic conservatism. In this 4-year period of radical intervention, the settlement of the West based on free labor was actualized by the Homestead Act. The Land Grant Universities were the foundation of state-based public education. And, of course, the defeat of the slavocracy and disenfranchising of the Southern oligarchy resolved the fundamental conflict in American politico-economic life. The Railroad Act facilitated the federal expansion that had been a point of common interest between Wigs and Southern Democrats,
The New Deal established by institutional and constitutional activism an enabling of the federal government to offer social protections for the majority population by shifting power away from unregulated banks and industries, and from the reactionary prerogatives of a business elite . It also established a retirement system that still functions as a primary protection of quality of life in older age, although it has actually weakened in the past 30 years with the reduction in employer retirement benefits,.
The Kennedy-Johnson period ended the American apartheid system, at least de jure, and established partial national health protection with Medicare and Medicaid The reforms were incomplete, and the period differed from its New Deal and Civil War predecessors in that it was not legitimized by crisis and national unity. In fact, the major national conflict of the era, the Viet Nam War, was the brake that restrained reform.
What characterizes these three periods of social protection, progress, and reform is the absence of an effective conservative opposition, either by either political abdication or defeat. The withdrawl of Southern Democrats from national government eliminated the resistance that had impeded popular government and the expansion of citizen’s rights and power, and gave license to the pent-up needs of 19th century America. In the New Deal, the virtual elimination of the Republican Party as a political force, and the cleansing of the conservative faction from government in 1932 established conditions for legislative and executive common action, that along with unionization, created the platform for the American middle class..
The Kennedy-Johnson civil rights and social reforms were the consequence of overwhelming Republican political defeat in 1964. The Goldwater insurgency and nomination represented a successful conquest of the Republican Party by an extreme and organized faction that coalesced in the 1950s. There has been sanitizing. However, the takeover of the Republican Party was reflected in the 1964 political campaign that was based on barely couched white racism, a restoration of power to the ultra-wealthy, the prerogatives of large corporations, and a virulent anti-communism. In a country without a electorally significant Communist Party and without the Right-Left conflicts of pre-War Europe, American anti-communism served to legitimize a strategic assault on organized labor that would result in near complete cleansing 40 years later. The triumph of this extreme rightistist insurgency, with its plutocratic financing, reliance on regionalism and racism, and single-minded dedication to maintenance of power now defines our national political impasse. The domination of the contemporary Republican party by extreme reaction, differentiates the American political conservatism from Canadian, British, French, German, and Scandinavian conservative parties, and makes it particularly indecipherable by politicians in other OECD countries. Moreover, the American public intuitively understood the threat from this political phenomenon in 1964, in part due to a residual political culture of the New Deal , and the strengthening of public protections against unrestrained free market capitalism through the agencies of liberal government and organized labor.. Why the institutions of public self-defense and expansion of rights have diminished goes well beyond this analysis. However, some highlighted key events demonstrate that impasse, and federal dysfunction does not support a shared indictment of two polarized political parties and coteries.
In 1994 and 2013, the Republicans shut down the government during Democratic presidencies, extending legislative power over executive function, in the absence of significant compelling issues. In 1998, a Republican congress asserted its prerogative over the executive with its impeachment trial, again in the absence of any issue approaching the seriousness of the conflict over Reconstruction. In 2000, a Republican Judiciary usurped the power of State legislatures, and appointed a President. In 2016, a Republican Congress intruded on the executive and the judiciary by nullifying a Supreme Court appointment. . Attacks by the Republican controlled legislative branch against professionalized agencies and the courts in 2017-18 are still underway.
The abrasion of government precedent has been deliberate and sinister. This is not a stalemate between two polarized and competing political entities. There are ante-bellum precedents, but it was clear that impasse, usurpation, formal secession, and the effort ally with English power were attributable solely to one faction, southern slaveocracy.
This is why the no-labels argument advanced by Gehl-Porter neither explains nor offers a path to resolution of governmental dysfunction. Their indifference to American history and to the origins of legislative and executive conflict is, at best, deceptive and misleading. The articulation of non-solutions to a reality that does not exist is, at less than best, sinister and destructive. It is only a temporary refuge for disenfranchised elite Republicans and offers no path to compromise for Democrats. What is increasingly understood is that the fate of the country rests on a period of restraint extreme right wing power. Historical precedent indicates that this will require overwhelming Republican defeat. A new Center-Right conservative power may arise in the future there are no prospects for compromise with the current rightist entity with its post-political and non-democratic core and its alt-right ethno-nationalist engine (‘fascist’ requires a less tortured selection of words). The current realities require vigorous grass root organizing, vigorous political debate, and election victories. It also requires a worldview that revolves around the necessity of public protection in a time of political economic transformation and dramatic extremes in income distribution, wealth, and political access. A proposition for a 3rd way is deceptive, even and fraudulent, and can only inhibit the necessary expansion of democratic engagement. It is only in the context distortions of American intellectual and public life by a dominating elite that arguments of the Gehl-Porter type are legitimized through fluent access to publication. In 1930s Germany, powerful conservatives who were disenfranchised by rising Nazi power chose their own third way and sealed themselves from alliance with the liberals and the left. The result was not a triumph for no-labels.
Martin Cherniack is an MD with a Masters in Public Health.