Tag: natale

• Free lunch does not exist.

  What is exactly the problem of universal health care systems? Why cannot economies maintain free health care for consecutive generations without struggling too much?

  To the non-economist audience, it might sound reasonable for every country to execute and maintain a sustainable system that manages pensions, healthcare and other welfare payments uniquely and in one account, under ethical and practical standards that match their financing plans perfectly. Politicians bring this matter up during the debates before all the elections and according to the stage the country is in, voters decide whether the health care system must be empowered or weakened. But why a heavenly, ethical and sustainable public healthcare system does not exist for every country? In this article, I will try to avoid technical matters and focus on the outcomes of studies on the issue. In the first paragraph, I will attempt to go over some very basic economics, as known as Econ 101 and then, I will discuss the issue.

  Specifically, we must consider the feasibility of welfare in every country. Well, some nations are wealthy, and some are not. Among wealthier nations, some of them are even wealthier and by some standards, they are getting more and more prosperous. To understand what I mean by wealth and being wealthy and getting wealthier, think of a simple quantified amount of wealth that each citizen holds. This wealth includes his/her financial assets, future income flows, savings, real estate and even knowledge. Taking an average of this value in dollars will easily help us rule out countries like China, India and Russia from wealthy countries and focus on the countries that have higher levels of what we refer to as “wealth per capita”. Without demonstrating many technical issues, the statistics of wealth show that a Chinese individual is not wealthier than an Eastern European citizen, of course on average.

  

  These wealthy nations in Western Europe, North America, Eastern Asia and Oceania are not easily capable of increasing welfare using a high marginal propensity of consumption rate. Instead, their idea has been to increase the number of years that each citizen lives. In simple words, people are getting enough from their normal life and giving them more does not satisfy them enough. Therefore, the allocation of the market tells the policymaker that it is tangible to invest in the length of life, rather than increasing welfare by increasing consumption at any point in time.

  To conclude the previous paragraph that provided a simple overview, I refer back to the word feasibility: is the nation that is discussing a free healthcare system for everyone, “wealthy enough” to do so? I doubt that many nations are at this stage. Maybe few Northern European economies were capable of maintaining such healthcare systems for decades, but even in those countries, the natural ageing tendency of the society and higher life expectancy has brought an end to the infinite willingness to give everything to everyone for a relatively cheap price. Reconsiderations have started, and charging people for what they get is the most reasonable answer, just like the banana market. Pay 1 unit and get 1 banana, pay 2 and get two. In such markets, there are offers to receive more than you pay, when you pay more than average. Take the case of private retirement investment portfolios that insurance companies and banks offer to their clients.

  Rather than feasibility, there is philosophical reasoning behind a private healthcare system, and it raises from a sort of moral hazard. Imagine healthy people start paying very high taxes for people that consume cigarettes or alcohol on a daily basis. What I mean is a public healthcare system, in which there is an annual fee paid as taxes or fees, and everyone pays the same amount! You may want to point out to almost every country that subsidizes negatively the consumer of smoking products by additional taxes. Simple algebra shows that the average amount a smoker pays through taxes does not cover the costs of one case of lung cancer in a public hospital.

  Furthermore, some may mention that health is not an economic good that we shall consider like an ordinary product and therefore, the nature and characteristics of such “ethical” market must be different. So what is an economic good? Why isn’t lime or avocado subsidised to become available for the poorer classes in the society? This logic is misleading and calls for free education in universities, subsidised public transportation, subsidised fuel markets and at the end of the day, subsidises having children because it is “nice” and “ethical” to have children. This system is inefficient, works against its own standards by penalising citizens for every action in their daily lives and ends up in an inflationary economy that might even face a permanent stagnation.

  Eventually, we have to think of COVID crisis as a heavy shock that hit our economies. The world will not be the same, welfare will decrease for some time and we have to pay for what we have not initiated, and it is far from being fair. The problem is there does not seem to be any other solution for such hard times. Calls for increasing public expenditures are nonsense and even dangerous. Take a look at the public debt crisis in Southern Europe and you will see what a true long-term disaster it can become.

  2020.12.18

• WHAT THE HELL HAPPENED IN 2020?

  November in Italy is the “Panettone” time of the year, rain falling on passengers walking by Fontana di Trevi and Duomo Milano and preparing the big Christmas trees in the main squares. Going a bit to North and across the Alpes and towards Germany, Christmas markets already must have been flooding the narrow and rainy streets. But 2020 brought us a brand new version of life that we had never experienced before: stay home, wear a mask and watch the President of the United States calling the US elections a Fraud. By the way, they are recounting!

  

  Whatever these odd events led to, with the discovery (invention, development, you call it) of the Covid19 Vaccine, the tensions have been relieved and concerns have been lessened quite a lot. Let’s not forget that in the spring, we were somehow told that there is a chance that there will never be a vaccine. Some expected that it would not be possible to get the shots until 2022, and they estimated millions and millions of deaths across the globe. After having lost almost two millions of lives until January, the first official calls will have been announced for vaccinations in the EU, and maybe even before that in the US and the UK. Now we have a reason to be relieved: the elderly, medical staff and vulnerable individuals will be vaccinated up to a certain extent and the restrictions will start to lift. Life without a mask, what a pleasure that we did not adore and appreciate enough.

  If we used to deem WWII as the latest global crisis, Covid19 might have replaced it for the upcoming decades, until global warming or an environmental crisis rings the bell. However and as well as Covid, I would take it as an exogenous crisis that we will solve by using technology and science. Before that, we have to remember that we still are not sure about the role of humans in the acceleration of warming. We were already at the end of the ice age. Humans activities such as carbon emissions might have marginally expanded the crisis but has not caused it. Amplification is not the same as causing. It is hence important to stop blaming ourselves and mass production of goods. Without them, we would be still living our probably miserable medieval lives.

  In the end, as a minimal member of the academic community, I would like to urge everyone to participate in the problem-solving stage of the next crisis. Still, scientists are not meant to be magicians. They shall not be left alone to solve our troubles with these exogenous shocks that hit our lives once every couple of decades. A very small step will be my paper, which I expect to publish online at the beginning of the next summer. Until then, stay tuned on my blog. I have promised myself that I must write more.

  2020.11.12