Sunday, April 4, 2010

deeper issues in polarized health care and energy debates

A friend of mine recently posted some thoughts about the health care debate,
which got me to think about analogies to energy issues and bigger issues:

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On Fri, Apr 2, 2010 ... wrote:

There were many many details to the healthcare bill, and other things such as student loans were covered, but the fundamentals were established early on and they were debated extensively. It came down to two entirely different approaches:
1. Treat medical care as a market-related good, stimulate competition, add transparency, reduce legal-related costs, and confront people with the true cost of what they are buying.
2. Treat medical care as a kind of public good, and extend free or heavily subsidized coverage to many people who do not get much now. Panels and other devices will be established to find cost effective approaches to healthcare delivery, but demand can be expected to grow and that is a good thing.
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In parallel with this, other folks are organizing debates about whether the government should pick winners and losers
(related to energy and jobs), or not. Industrial policy, or not.
A few years back, the electric power community was deeply divided on the question of whether that sector should
be deregulated, or not.
This reminds me of a guy I used to work with, Lotfi Zadeh of Berkeley, who leads a major movement arguing that
binary yes/no white/black thinking has become an extreme curse which needs to be transcended; his alternative approach
to reasoning is widely used in areas like industry in Japan. But I have replied -- we don't need shades of grey;
we need to think in colors, in more dimensions, when black and white pictures simply don't fit.
For example -- with the electric power system, the free market alternative to the ideology of regulation relies
on the behavior of consumers as rational (actually, clairovoyant) actors. It delegates all the details to the consumer.
Thus comes the idea of sending signals to the consumer every 5 minutes, day and night, and expecting the consumer to
constantly reset a thermostat or turn things on and off. The "little ring" that flashes red when electricity prices rise
is proof that people really have gone to that extreme. That's binary thinking. At the same time, equally thoughtless
adherence to ideas of central power have gotten some utility people to define "smart grid" as: "We have the power to turn off
people's air conditioners whenever we choose to, in our operations room." Neither of the old paradigms is powerful
enough to fit the realities of human life and hnuman needs here. It is possible to build a society based on either of the two extremes,
but either one could get worse and worse in choking off the human spirit...
For the grid case, a coherent kind of third way has begun to emerge. Besides the "red ring" (waking people up when electricity prices rise)
and the central authority... why not develop automated intelligent agents which represent the interests of the consumer?
Why not have the price signals available every 5 minutes to the home, but let the consumer choose higher level POLICIES, in effect,
which he/she leaves it to the intelligent agent to IMPLEMENT? There is a phrase ("price-responsive intelligent appliance")
which I find myself using over and over again, in defining the fourth generation concept of an intelligent grid.
(See http://www.werbos.com/E/Intelligent_Grid.pdf .)
Though I am not a specialist on health care... I have lived in this country long enough to have seen a lot of the pieces
that people need to think about here. A central problem in health care is that consumers simply cannot afford
to keep up with the incredible complexity of what they have to deal with, HERE AND NOW under the existing system,
to the extent that a model of clairovoyant markets would require. It makes the red ring look tiny by comparison.
There is ALREADY excessive cognitive pressure, based on misconceived kinds of ideal thinking. People
die as their paperwork is being processed. Maybe you've been lucky enough to have missed all that, but in my case,
I would simply not be alive today if I hadn't been able to do some end runs around the system, using resources
that most people don't have.
I can't say that I know what the best balance would be for health care -- the sort-of Parto optimum between the
competing considerations that need to be dealt with. It generally requires full application of all the intelligence we have,
and real dialogue, to approximate that kind of optimal balance. (And even ongoing research.) The partisan
approach doesn't get there.
When it comes to breaking our addiction to oil, the same kind of need for rational balance applies.
Neither extreme -- the traditional overprescriptive 2,000 page bill building up unnecessary bureaucracy,
nor the extreme of doing nothing or imposing a simple gas tax -- would do much at all in the real world
to capture the clear opportunities we have to solve that problem before it wipes us out.
(See www.werbos.com/oil.htm for a worked-out middle way.)
Larry Summers said recently that he isn't hearing much talk now of double-dip recession or
"W" curves. I understand the desire to reduce the fear which inhibits some economic activity.
But the price of world oil has not become less threatening in the past few weeks.
(Didn't it just go up? There was that gas station in Maryland where gas was $3.15 again...
but who besides a nagging technical expert would notice that sort of thing? Is it
really "too deep in the weeds"?) If I were planning to run for office later this year or in 2012,
I wouldn't be hiding from the most serious possible thoughts about how to affect
reality on the ground....

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