Since 1970, America’s private sector has grown considerably richer, while its public sector has grown vastly more indebted. Over the past five decades, net private wealth in the United States (measured as a percentage of national income) has increased by more than 50 percent; over that same period, net public wealth has fallen by nearly 150 percent.
Late last year, a team of economists led by Thomas Piketty argued that this shift in our nation’s balance sheet — with assets moving away from the public-sector column and into the private one — “arguably limits government ability to regulate the economy, redistribute income, and mitigate rising inequality.”
The economists did not dwell on the flip side of this conclusion: that the private sector’s growing share of capital has expanded its ability — or, more specifically, the ability of (democratically unaccountable) private actors — to regulate the economy, redistribute income, and, theoretically, mitigate inequality to whatever degree they see fit.
On Tuesday, Jeff Bezos, Warren Buffet, and Jamie Dimon provided a reminder of this latter reality, when they announced a plan to funnel their companies’ “collective resources” into a nonprofit entity that will fund medical research, and exert pricing power over the health-care market — an entity that sounds a bit like, well, the federal government (minus democratic accountability).
Amazon, Berkshire Hathaway and JPMorgan Chase announced on Tuesday that they would form an independent health care company to serve their employees in the United States.
The three companies provided few details about the new entity, other than saying it would initially focus on technology to provide simplified, high-quality health care for their employees and their families, and at a reasonable cost. They said the initiative, which is in the early planning stages, would be a long-term effort “free from profit-making incentives and constraints.”
…“The ballooning costs of health care act as a hungry tapeworm on the American economy,” Mr. Buffett said in the statement on Tuesday. “Our group does not come to this problem with answers. But we also do not accept it as inevitable. Rather, we share the belief that putting our collective resources behind the country’s best talent can, in time, check the rise in health costs while concurrently enhancing patient satisfaction and outcomes.”
Now, if we have to live in a country whose three wealthiest men own more than the bottom 50 percent of the population combined — and whose government just took on an additional $1.5 trillion in debt, for the sake of concentrating even more capital into the hands of the superrich — then this development is good news: All things considered, there are much worse things for these men to do with their money than fund a nonprofit health-care company. And for the moment, that company’s ambitions seem to be closer to those of the Mayo Clinic than of the welfare state.
But it would be nice if we could live in a different kind of country — one that marshaled its collective resources to provide “simplified, high-quality health care” to all of its people, through institutions directly accountable to them.
And it’s hard not to feel like we’re moving farther and farther from the path to such a place.
In 2013, for the first time in the post–World War II era, private entities funded a majority of all basic research in the United States. In the 1960s and ’70s, the federal government bankrolled more than 70 percent of all basic science; today, that figure is closer to 40 percent. To an ever greater degree, discretion over what scientific research gets funded, and what doesn’t, is moving away from federal agencies (overseen by democratically elected officials) and toward eccentric billionaires.
And this is just one example of a nearly ubiquitous trend. Whether the capital is provided by megabillionaires, superrich tech monopolies, or a mixture of private investment and public funds, America’s private sector is performing more and more functions that were previously considered Uncle Sam’s domain. Private entities are increasingly responsible for building our infrastructure, providing public transit, fighting our wars, subsidizing our consumption (Amazon’s retail business still inflates your purchasing power by operating at a loss), exploring outer space, “printing” our money, delivering our drinking water, and, of course, keeping a watchful eye on the would-be criminals (and/or debt defaulters) among us.
Many of the original enemies of the American welfare state were business owners who treated their employees quite well. They did not mind redistribution of resources so much as redistribution of power. Their vision of utopia was one in which society’s most visionary individuals — selected through the meritocracy of market competition — would determine how much, and what kind, of social provisions would be distributed through non-market means. This was, more or less, how social welfare worked in the Gilded Age United States — which is to say, it was how social welfare worked the last time the distribution of wealth and income in our country was as grossly unequal as it is now.
As the Koch Brothers gear up to invest $400 million in this fall’s elections, and government borrowing and corporate profits climb ever higher, one wonders if the United States isn’t slouching towards a bizarro-China scenario — where, instead of an authoritarian, communist state developing market mechanisms for the sake of juicing growth, a loosely regulated private sector begins developing nondemocratic, state-like mechanisms of redistribution and coercion, for the sake of containing social unrest.