It's truly about doing those things that just _cannot_ fit on any sane balance sheet trading on Wall Street (or if they tried, investors would truly revolt).
This, to me, is the single most convincing reason for the government to be in charge of health-care, and not the markets. It's always been my assertion that the government needs to be responsible for investments that vest in an amount of time longer than the length of the average career; things like basic science research, retirement benefits, and health care.
I think the failure of the American automotive companies makes this point rather clearly. When automotive execs were faced with a decision in the 60s and 70s to either raise salaries or promise their workers plush retirement benefits, which did they go for? The retirement benefits, of course! Why? Because those execs would likely be long dead and gone before the proverbial shit hit the fan. Ah, but what about the investors? Shouldn't they have demanded long term fiscal responsibility from the executives? Um...why? If you were 20 in 1960 and invested $100 in GM, how many times over would your money have doubled before the trouble began? ...and you'd be 70 now! If you were a prudent investor, you would've moved that money out of stocks and into bonds sometime during the surpluses of the 90s.
In my opinion the government should exist to cover those things the market won't (or to sufficiently incentivize markets to act responsibly enough that they do cover extremely long term investments).
I'd argue that the much maligned concept of "corporate personhood" is designed to solve the problem of individuals having short (and finite) time horizons for making cost/benefit calculations.
Similarly, patent law offers a tradeoff between unfettered innovation monopoly by offering a limited, short-term monopoly on exploiting new ideas. Consider briefly the FDA approval process and a profit-seeking scientist developing a pharmaceutical. The scientist has a 20 year time horizon to maximize profits, so she has a huge incentive to do R&D and to launch the product. Meanwhile the FDA regulator collects the same salary whether he approves or delays approval of a drug, yet he stands to be fired and disgraced if the drug he approved causes harm. If he's overly cautious in order to keep his job, society suffers profoundly.
If you claim that government is better than private industry at solving these sorts of problems, you are making the rather strong claim that the incentives of the FDA burocrat are broadly superior to the incentives of the R&D scientist.
It follows that you would believe that if all R&D scientists were paid a fixed salary and stood to gain nothing for finding a breakthrough drug but stood to be humiliated and disgraced if any unforeseen consequences of a discovery occur, society would be significantly better of.
I think that's a fairly sweeping claim to make, and I'm curious if you could elaborate.
Also, with respect to the automotive pensions, I think you'd be well advised to review this history of the PBGC (pension benefit guarantee corporation). It is a government entity tasked with offering pension insurance for workers in the event that the firm fails. Surprisingly, both unions AND corporate interests lobbied congress to decrease the premiums firms would pay into the PBGC. The result is that the PBGC is not actuarially sound and that if a few major US firms failed the PBGC would go belly up.
Why did this happen? Corporate interests understand that once the government provides a safety net, so long as they were compliant they have nothing to lose (plus, if the firm failed then it's game over anyway). Unions focused on increasing the current allocation of benefits and didn't worry about the future... after all they "won" improved pensions for workers and were pleased when firms could dedicate the extra cash (saved by having artificially low risk premiums) to other forms of compensation, etc. So in this case the government clearly acts on the whim of interested parties and utterly fails to protect citizens (even though doing so is a trivial matter of actuarial calculations and collection of a premium!).
So I would be curious to read your elaboration based on these points of rebuttal.
Whether we call it "corporate personhood" or "the state", I think you and I do not disagree that much. Let me try restating my premise:
I make personal decisions based on the effect those decisions will have in my lifetime. I make family decisions based on the effect those decisions will have in my or my children's lifetimes. Presumably, a corporation should make decisions based on the effect they will have in the corporations lifetime which should, because it's a corporation, be regarded as unbounded.
The problem is that responsibility is a slippery thing with respect to corporations. If the CEO makes a decision which will result in disaster in 100 years, is the CEO responsible when that disaster occurs? or will the CEO be dead? So then the shareholders should be responsible, right? except how many current shareholders will still be shareholders in 100 years? Sure, stocks take the future into account in the price, but how far into the future? At some point, the "outlook is hazy" and stocks put decreasing emphasis on outcomes the further into the future those outcomes will be realized. So who is responsible?
My premise is that, if left to market forces alone, no one is responsible! That means that market economics, alone, cannot make wise 100 year decisions. Ah, but what about states? A state whose corporations have all made bad long-term decisions is not going to last very long, so that over a long enough time scale there will be an evolution toward states which can force responsibility for long term decisions onto someone. I would argue that this is at least partly the reason for the rise in representative forms of government: when the governing responsibility is amortized over the entire population, decisions will likely be made with an eye to at least two lifetimes (the classic "won't somebody think of the children", or "our children will have to pay off our debt").
The bottom line is that sometimes governments have to make decisions that seem at odds with the markets, because they must be responsible for the long-term consequences in a way that corporations are not.
Let's take your R&D scientist, and I'll turn the problem on its head: Given that I have 20 years in which to recoup my expenses, why would I study diseases of the poor or cure short term illnesses? The poor can't pay much for my pills, and a pill to cure pneumonia will only make money for a week or two per person. So what do we end up with? Statins! Lot's and lots of statins! High cholesterol is a disease of the rich, and once you start on statins you have to keep taking statins the rest of your life.
What don't we have? Antibiotics! In fact, most people don't talk about it, but there is a looming antibiotic crisis on the horizon. I've spoken with an expert on the appearance of antibiotic resistance who has studied MRSA and VRSA, and he gives us 20 years until we're basically out of effective antibiotics. You don't have to take my word for it, though...just look at the timeline for the discovery of new antibiotics, and how much it slows down there toward the end: http://en.wikipedia.org/wiki/Timeline_of_antibiotics.
So what of the FDA bureaucrat? It's a straw man unless you can tell me the name of the person responsible for approving thalidomide for use as an anti-morning-sickness treatment. The individual bureaucrats have little to no incentive to not simply "follow the science", but as a society we have every incentive to have a safety net that keeps us from having to support a generation of armless individuals.
This is already getting a bit long, but as for the PBGC? Well, so what? Everyone lobbies the government and gets to give less money to the government and put more money in their pockets. That's a government failure if ever I've seen one. Of course, its not surprising given how close we've allowed corporate interests and government to get.
I was discussing this just the other day with a friend, and if it were up to me to fix the government, you know what I'd do? Every federal politician is set for life! Food, housing, vacations anywhere you like...it's yours! The taxpayer cost for the number of politicians that affect our lives with their decisions would be negligible, but it would effectively remove any and all impact that special interests could have on politicians. Also, if you knew that, when you went into the voting booth, you'd be rewarding someone with a lifetime free pass...well, I bet you'd think about that choice a bit harder than you do now, right?
This, to me, is the single most convincing reason for the government to be in charge of health-care, and not the markets. It's always been my assertion that the government needs to be responsible for investments that vest in an amount of time longer than the length of the average career; things like basic science research, retirement benefits, and health care.
I think the failure of the American automotive companies makes this point rather clearly. When automotive execs were faced with a decision in the 60s and 70s to either raise salaries or promise their workers plush retirement benefits, which did they go for? The retirement benefits, of course! Why? Because those execs would likely be long dead and gone before the proverbial shit hit the fan. Ah, but what about the investors? Shouldn't they have demanded long term fiscal responsibility from the executives? Um...why? If you were 20 in 1960 and invested $100 in GM, how many times over would your money have doubled before the trouble began? ...and you'd be 70 now! If you were a prudent investor, you would've moved that money out of stocks and into bonds sometime during the surpluses of the 90s.
In my opinion the government should exist to cover those things the market won't (or to sufficiently incentivize markets to act responsibly enough that they do cover extremely long term investments).