Can the government do it better? The profit motive in private vs public.


from yahoo finance officers ballots in dollars a podcast about the politics at affects your pocketbook armored newman and i'm alexis christoph arrests today we're talking about whether the public sector can do it better than private sector when it comes to things like healthcare and climate change it was a theme that emerged direct from the first set of democratic debates that we saw and let's really dig in here and i guess let's let's start with healthcare which is really sort of i i argue the biggest topic right when you when you survey americans healthcare's right at the top of what they're what they're concerned about these argument that a lot of the democrats put forth in these debates was if you hand over the healthcare system to the government we will do a better job fifty american people then if it's in the hands of the private sector first off do you agree with that statement i don't inherently agree with that statement and i felt like a the democrats in the first set of debates were they never talked about it this way but they were basically arguing about the profit motive a you know they force in capitalism that makes capitalism what it is and for you know dr companies to be efficient and get the most for the least so we heard a elizabeth warren talk about this bernie sanders there's talk about this a in healthcare what was a big topic and those debates as it should be because it's a big issue for voters a any sort of had this easy throwaway line that a well the problem with the healthcare system as we have it is that be companies that are in private healthcare system make eight profit and i think there were only i i think i think elizabeth warren said a twenty three billion dollar profit as if that's a terrible thing because that's twenty three billion dollars there's that should instead be spent on a patient's end on providing care and there's this idea that if you just rolled everything into a government program well what would otherwise be profit in the private sector would be extra money found money in the public program in you'd have all of that extra money to spend on patient except that's not how it works right i worse worse off it is a dirty word i guess so then all right efficient it shouldn't be if they want to take this money these prophecies dirty profits that these horrible healthcare companies are taking an do something with them they're telling us it would go back into what drug making an back to consumers in what way they're not spelling it out but they're basically saying a what would otherwise be profits a word in other words we're gonna have the same amount of i guess revenue coming into the public program through you know again this is all fuzzy because different ideas about how you find all of this a and will be you know will sort of everything will be the same except there what would otherwise be profits will be money the week and spend on patients and on patient care and i think that's a total fallacy so to get back to go back to basics here a fair question should we have the profit motive in something as important as health guy that that is a totally fair question oh but i don't think you should assume the answer is no an what we know about the profit motive in the way private companies operate is they there is when you have a profit motive you have an incentive to provide the service or the good as efficiently as possible that doesn't mean you're ripping off the consumer that means you're figuring out how to take cost unnecessary cost out of the system a eliminate middlemen in terms of providing that service to the end user now people listening and say what do you talking about healthcare systems just filled with middlemen in i readily acknowledging today we have a very very complicated system but if you i think that the government is naturally dissolution in somehow all be simpler if this were any a public sector think about the postal service a like that in a debacle that is the closest thing we have to pay hey company that is run by the government and the postal service loses money every i i'm i'm actually a fan of the postal service i mean i i i think it's too easy to bash the postal service i mean the postal service couldn't deliver a letter to any any address in the country in a couple of yeah but they have a book i agree with you haven't changed with the times internet is killing them and they haven't and they were dinosaur right and the government hasn't done anything in the way of keeping them you know a relevant right and then other example people like they throw out is think about the department of motor vehicles and that that is not exactly that's a government agency that's not really something like a company which is why i like the postal service says they a model but so there are reasons the postal service is not doesn't keep up and is inefficient in certain ways and it never makes me always loses money needs to get extra appropriations mcconnell is one of the big problems is politically interference in this is a really good a reason not have services offered through the government because with regard to the postal service a no member of congress will almost ever allow the postal service closed a post office in their district even if it only search for people a day right so you know you you you cannot get rid of underperforming part of the business a you don't have freedom to revamp the business when you need to a symbol the gun by definition is just not a nimble organization that threaten you need that especially if you're gonna take on something as massive as overhauling healthcare in this country so i think it's to go back to the healthcare system i think it's unknowable 'em whether whether we would be better off with a for profit companies bunnies providing the level of care that they don't they're not only show in town i mean obviously a medicare is a big part of the system so is medicaid but let's remember the doctors don't work for the government in medicare and medicaid they work for private providers a that end medicare and medicaid basically contracts with those providers and covers the some of the costs for the private part of the system i think we should assume that the the private healthcare system actually does a good job of getting rid of unnecessary causton if their business model is not working because technology has changed something has changed the board of united health or at night or cbs or whatever the company is gets together and says we need to make changes they could just do that because that's what companies do they're run by ceos who get paid a lot of money ts make sure the company is profitable but also make sure the company is doing what its customers want in there is choice in the healthcare system a you know art employer memorizing is eight customer of insurance company right end if arising doesn't think it's getting a good deal from whatever insurance can go to the next guy and say a we we think you could offer a better deal so in that regard you know these much vilified terrible insurance companies they do they are responsible customers and they can move quickly in order to give their customers what they want and i think it would be a big mistake to assume that the government would be able to do that and i know transparency is a huge deal and you know president trump recently signed an order basically telling these companies you better start letting i see how you price you're drugs why they're priced the way they are an end senator warren has ashley thrown out the idea of the government is making the drugs which sound a little scary to me talk to us about well let's do different things so what the truck trump wants to do and he's kind of on the right track but i just i doubt he's gonna get anywhere with this this is been tried at the state level and it's complicated but you know people economists to study the healthcare system say one one of the problems is nobody knows what anything costs a so if you're a normal consumer it's impossible to figure out where you're gonna get the get the best deal on let's say it's something that's not life you know urgent in life threatening let's say it's a some kind of test her name are are even just in x ray you have no idea what anything what anybody charges you can't look it up on a website or anything any ideas if you made a the cost of these things transparent the way you could see anything costs at amazon and walmart for example people would you know spend the least the most it's just not that simple because of all the way these things get price there's not a there's not like a market price for a lot of this stuff negotiate and i'm frustrated as a consumer i recently had a habit get a topical in the pharmacist told me oh that's eight hundred dollars and when i pick myself up off the floor but you don't mean i'm paying for that right insurance company and you know what he found eight coupon from where i do not know that left my out of pocket cost zero while something's wrong with that picture i'm glad i got said how do you go from something being a list price of eight hundred dollars so then me not having to pay an i nobody knows nobody and you know she just try this trick next time you go for some a procedure routine procedure something called the doctor up ahead of time and say how much will this cosby if i don't declare it on my insurance they they can't tell you i did this wants to the dermatologist my answer was we can't tell you until after the visit when we put it in the computer and then the computer will tell creepy so i think it's unknown from i know that that's that's one thing but to go to elizabeth warren's idea at one of her ideas is that the government should actually manufactured generic drugs a gun when in certain categories not across the board but in certain categories when there is not a there's not morgan now okay or double generic on the market and there are a lot of chaotic i like the idea maybe you incentivize a private company to do that the companies had actually know how to make the drugs that showed that is kind of what i'm getting at here so we have different ways of approaching this problem so let's go with her idea that the government should get into they manufacture these okay the first thing i envision happening is a huge battle in congress over a which members of congress are gonna get the factories in their district in their an all the battling that's gonna go on there and you know there will be a handful of winners a you know let's say the government develops for places where there by goes in buys them a i mean they're gonna be all kinds of considerations about who gets those in their district that has nothing to do with the efficiency of manufacturing those drunk guys like aaron ray rice so you know what if you were to frame it this way would you rather it's a trait let's say it's a trade off between the politically no interference that is inevitable with anything that has to go through congress in the profit motive pick your poison i think that's a pretty good case where the profit motive and who's to say the government would be all that transparent they haven't made a lot of other way ugly right show all right we we tackled healthcare a little bit i mean we could go on and on and a half hours and hours of a discussion on this but i wanna get the climate we will i think we will but we will all salads dollars will be going on and on and on up to the november twenty twenty election but talk to me about climate change what where somebody ideas put forth by some of these democratic candidates about taking it away from the private sector so this is another big area very important it is a big big issue for more fry democrats i think for republicans the climate change for sure there's something that were gonna be hearing a lot about a so there are two basic strands of thinking here one leans toward the green new deal which is this just gigantic a gigantic government program that would a do all this new research it would kind of directed the automotive industry about what kinds of vehicles to produce they would do the same thing with energy a basically a real real heavy government hand in every industry that in some way has to do with climate so that is mostly a transportation in energy but also homebuilding celery controlled are companies yeah so you know new rules on how to build homes in telling you how to do it in funding this research and stuff like that so that's that's the green new deal that is one approach which is just have the government do it all and then these more market oriented approach is don't don't have the government do it all but use something like a carbon tax which is a government rule or government incentive for a private industry to figure out how to meet targets as efficiently as possible okay that to me is a better idea maybe take some of the best of the new green deal and for something else would you say or not not on now i think they're very different in in of course you could have a spectrum of programs that incorporate some of all of this but there's you know there have been carbon taxes a put in place in europe and other places in the way this works is the government does have a role the government says we're gonna put a price on carbon emissions so every entity that generate some kind of carbon you're gonna have to pay to do that in the cost of that one one the way she would do this this phase it in overtime so that the cost is and crippling at the beginning but it gets higher and higher and higher and everybody knows the cost is gonna get higher and they know when the cost is gonna get higher so and then you could trade a pollution credits so if you need the by credit because you pollute more you could choose to do that let's say you're a power utility you can if you are more efficient than the market average you could sell credits if you're less efficient you by credit and then you have to explain to your customers by saying why are paying more in because if this is kind of an open market m these all the polluters decide they make they make choices they say a it's it's better for me to spend the money to cut back on emissions a damn to buy the credits and as the cost of the credits goes up over time you're gonna get fewer you're gonna get lower and lower emissions 'em this is kind of how we solve the acid rain problem in the nineteen seventies nineteen eighties you just continually raise the cost of a the pollution and let the market figure out the best way the most efficient way to get that done that they kind of expensive at onerous redemption not comply so they'll fight away that comes out it's not perfect nothing's perfect here and you could point to abuser inefficiencies in any system but people who's a shade just the private market has failed to do these things let's just let the government do it i think one thing they have very wrong is that it's not the private market that has failed the government has never created incentives for the private the market to get it done private industry and again i'm sorry they agree with show i think probably before you know in these big things were talking about the government should probably be the last resort it after you of exhausted all other things and we have not exhausted all other things doesn't this give president trump more ammunition when he's going to broad stroke paint the democrats are socialists as we move closer to election day yes would i and i and i and i think that's why you're hearing some democrats pushing back on these you know these ideas here's where you're just gonna have the government to step in to solve every problem i mean you're hearing john hickenlooper the former a governor of colorado spice rack on this yes a any he is he actually said in in his debate you we can't let them characterize us as socialist a michael bennett who's the senator from colorado a is pushing back on this tim ryan is that these tend to be lesser known canada it's and then you've got joe biden who i like i think were kind of way we eat is generally considered eight business friendly centrist but he seems to realize he needs to move to the left on some issues and which i think are kind of waiting to see how far on the left he's gonna move in whether he's really gonna become you know become forceful on some of these issues whether he's gonna vacillate and not really indoors one program or another who do you think i mean it's still very early going it's still a very very crowded race is there a front runner for you when it comes to healthcare somebody who has a plan that could actually be feasible on some level there yeah there are few and you know you know i've talked about this medicare for all is not a pragmatic we have a michael bennett the senator from colorado he sponsors legislation in congress calls that create a plan called medicare axe a so this would be ainu a public health care plan for people who don't get coverage they could afford through employer or some other means andy would not be medicare but it would be administered by same agency that runs medicare so you get to take advantage of that overhead who in london did he say a yeah they used users would fund it would pay premiums to be part of this program so no new taxes in because the buying pool would be large and you get to take advantage of medicare's overhead which is already there in theory and i think it's a pretty good theory cheaper frame probably probably yeah ever than than people who don't just don't have good choices you one other way this this sort of discussion this background discussion about the profit motive is manifesting itself is a argument over companies that don't pay enough in taxes so amazon has now become the poster child has now we don't really know exactly what amazon paid in taxes this is this has been kind of infringe that's been done by some interest groups that are dude running through the numbers and you know trying to figure it out lashley believe amazon pay no tax nobody that's right which is possible but the amazon if amazon tax bill is by the way they do pay all those payroll tax refund social security medicare just like their employees pay those taxes but if amazon's federal tax bill in twenty eighteen really was zero it's not because because amazon is cheating right if you amazon legally doing is taking advantage of legal provisions in the tax code that are meant to incentivize things like research like investment you know when you add online and asked when you yes i need to know am i mean they grow hating job day one person company in nineteen ninety five to accompany unemploy six hundred thousand people right now right so that's what the tax code is trying to do that that's the point of those incentives in the tax code so you're story straight washington if you if you want incentives in the tax code that will help a in called kate small companies so that they can grow and become larger companies then stop complaining one that works right yeah i think you know the the end if you there can't be a period at the end of the sentence when you say amazon didn't pay any federal taxes boom you need to explain the other things they're doing that are all legal they're actually creating opportunities so if a m if there is some flaw in the tax code then fits the tax code amazon amazon but they're or any company and i mean so i think for companies that are you know move profits offshore a in used weird tax havens in bermuda or whatever and that's probably not too many public companies but i think a lot of a lot of private companies right stuff like that i that's that's kind of a day if you're if you're creating overseas tax havens a you know or things like corporate inversions technically legal but 'em shady and they just don't kinda don't feel really no longer works at a snail's pace moves at a snail's pace with anything answering these debates at least the first round they were asked to very simply say what their number one thing would be if they could get one thing done and nine or not and hardly any of them were backed no that is very true to that drove me crazy like no answer the question in five seconds and every every damn one of them just went on fraud is they think they're they exception don't get twelve i don't get why sorted i area but i'm wondering whether or not they would even father to change the tax code apparently a lot of the magic climate change as their number one thing that they would actually tackle and think that they could get done during their administration well a lot of the democrats will there they do have higher taxes in their plan a main if not higher taxes for the sake of higher taxes it's usually to find some some new benefit program by the way no i don't think one of them's says we need to raise taxes just to bring in more federal revenue to lower the federal deficit in here that an anti gay attack the national debt nobody's nobody cares about that now yeah so they so a lot of them do want to raise taxes in one way or another and they in general those tax increases would be on wealthy people in businesses in bernie sanders actually acknowledged that he would raise taxes on a middle class families that man body of knowledge yeah you have to pay for his medicare yeah well now i think he really kind of a duck in twenty sixteen teen people ask them how would you pay for this and now he is at least saying well the way to pay for it is much higher taxes but what you would pay in additional taxes and he he proudly bagley unblock figures would be half of what you're paying and healthcare scare expenses today so you'd be you'd you'd all be better off in the bargain sounds like something for nothing and i think i did a little suspicious even amongst a their colleagues up there at the podium offer these these debates all right this is going to continue but this debate of whether or not things should be private or or public an end who's handed they better off in private prisons or even mentioned yeah that's another one and cory booker had a line along along the lines of a it it's it's just terrible that we have companies profiting on the pain of americans 'em in it's worth revisiting why we have private prisons now there is certainly lobbying that goes on here improbably favors from lawmakers are in you know who have prison these prisons in their district a by the way if we could have lip elizabeth warren wants to put really strict restrictions on lobbying and i i it's it's hard to argue with that because there is basically legalized corruption in washington with all the lobbying andy members of congress who retired and go straight to work a little audio mouth i tell ya but a you know there there's a reason that we have private prisons in theory it's a decent one in as it's the same reason and that like in the nineties it was very a sort of popular to outsource all these government functions i mean bill clinton and rigour outdoor had rigo reinventing government ended up in part a part of that was just outsource whatever you announcers to the private sector 'em do it because they could demonstrate you could lower the cost even even even like a crash there and now even when the private checkers making a profit on it they could do it cheaper than a government agency that has zero incentive to become more efficient so private prison david private ones fandom that disney idea with private prisons is that the profit motive creates an incentive to run these prisons as efficiently as possible 'em andy in the private sector couldn't do that better than the public sector so of course what happens is they wanna cut costs they might be cutting costs in ways that or abusive inmates but if you're if you're worried about that just set the rules that that tell you what they are allowed to do and what they are not penalized by the yes that's right end you know make the make the penalty stiff what three large banks j p morgan chase wells fargo and bank of america have caved to shareholder a un activism a activists out there who were who demanded that they no longer do business with these private detention centers in prison so obviously other banks follow suit you know that's also part of the private sector i mean that is shareholders a you know that is are society in are economy working because shareholders want to express that point of view i mean to me it's totally fair that also be an opportunity a local shareholders have a say yup a an ceos ios can either agree with their shareholders and do what they ask or or not do what they asking a deal with the consequences of that were seeing it play out with wayfair and a you know that is supplying beds to one of the agencies that house is a asylumseekers i don't actually know what the right answer is should i should i know buddy from wayfair protest at owners about should know you must companies sell beds to those agencies right well yes according to somebody and saturday by live shows agencies only by beds from foreign companies yeah or should they not even provide buster posey ideas i'm hearing from these democratic candidates is all or nothing you know it's right yeah not allowed room for compromise as always

Coming up next