Comment by FD3SA | Hacker News Reader

Comment by FD3SA | Hacker News Reader

Capitalism`s greatest strength is also its greatest weakness. The profit motive is so strong that it often ends up creating irrational scenarios such as the economic situation we have today.

European countries seem to have struck a far better balance by harnessing the profit motive of capitalism while preventing disasters such as for-profit healthcare, for-profit education, for-profit government policies (for the rich), for-profit prisons, etc.

It is fascinating how powerful cultural and institutional momentum can be. I regularly run into very intelligent and rational Americans (particularly on HN!) who defend American institutions (e.g. healthcare) in spite of all the widespread data about them being massively inefficient.

In the end, we reap what we sow. The profit motive brings great riches, but to a tiny few. The rest, sadly, often become the servants who enable the lifestyles of these outliers. Conversely, the outliers become the American Dream, seducing the average worker ever onwards with promises of riches and comfort just a few lucky breaks away.

That and the absolute horrible response to the word Socialism which is equated directly with Communism by large parts of the electorate.

The US system is very good at produce big winners at the expense of everyone else - http://www.youtube.com/watch?v=QPKKQnijnsM astounded me even though I already knew the distribution was inequitable.

Please explain how for-profit education is a disaster. By all measures, private schools in the US are superior to public schools, and the US's private universities are consistently rated best in the world.

You also can't generalize about e.g. for-profit healthcare based on the American situation, because the regulatory environment is so extreme as to have to created a government-controlled crony-capitalistic oligopoly. The for-profit healthcare in less regulated countries like Mexico is inexpensive and amazing.

I can only assume the parent is blaming the spiraling cost of education on Capitalism, when in fact it's the perpetually increasing federal loan guarantees spurring massive inflation that is the root of the cause.

The spiral in healthcare was also caused by the government taking over the industry in the late 1960s. No coincidence both industries began to skyrocket in cost at exactly the same time, shortly after Nixon ended the gold standard, and the Fed acquired free reign to generate immense inflation and aggressively tamper with interest rates (spurring the cheap consumer debt boom of the past 40 years).

Everyone recognizes that healthcare and education became very expensive recently. Nobody seems to ask what changed in the last few decades to cause that. They act like Capitalism didn't exist in 1960.

The spiral in healthcare was also caused by the government taking over the industry in the late 1960s.

I'm guessing that you're referring to the introduction of Medicare and Medicaid in 1965, which is hardly "taking over the industry".

> the US's private universities are consistently rated best in the world.

By whom? In particular, are there any ratings of American versus European universities by people who have experience of both? I only have experience of the latter; from what I've heard from Americans talking about their university experience, it sounds markedly inferior.

http://www.timeshighereducation.co.uk/world-university-ranki...

Another:

http://www.topuniversities.com/university-rankings/world-uni...

Both of these organizations are British.

Here's one done by Jiao Tong University in Shanghai:

http://www.shanghairanking.com/ARWU2014.html

The exact ranking varies, of course, but the trend is clear. The top U.S. universities (and the top U.K. universities) outrank everyone else.

ETH Zurich does pretty well, but doesn't make the top ten on any list.

Okay, taking a look at the criteria they say they use.

Most of the weight is on research. Fair enough. I'm prepared to believe that conclusion, at least as an overall tendency. However, the context of the discussion was education, and that's the context in which I'm disputing the basis of the claim of superiority of American universities.

Of the fraction of the weight placed on quality of teaching, a significant chunk goes on 'perceived prestige' which obviously begs the question.

A small chunk goes on student/teacher ratio, which is a weak indicator; in particular, its behavior is more threshold than monotonic (i.e. you don't want it to be too high, but there's no real advantage in having it remarkably low).

And a chunk goes on total budget per teacher, which is a positively perverse criterion and tends to substantiate the stories I've heard about the level of waste in American universities.

So that's the 'world university rankings'. Moral of that story: when you see an official looking table that seems to support a controversial conclusion, look carefully at where the data comes from.

The U.S. system has both research universities and teaching colleges. Some institutions are both (e.g., Harvard), but many are one or the other.

>when you see an official looking table that seems to support a controversial conclusion

I've presented some data. If you have contrary data, present it. Otherwise it's just your opinion, no? I mean, you dispute the metrics they use, but don't provide any of your own. What would be a better measure of the quality of teaching?

Are you trying to get someone on the internet to admit that they are wrong? I applaud the effort. Here are upvotes.

(Sibling comment since it's not giving me a 'reply' link for some reason)

To be clear, I'm not claiming European universities are better for education (as opposed to research) than American ones. I only have experience of the former, so I'm not in a position to make that claim. I'm merely disputing the reverse claim. I'm saying unless we can find accounts from people who have experience of both, the correct position to take is an agnostic one.

you equated "for-profit" education with "private schools". The two are not the same. Most of the category that you think of as "private schools" are non-profit, but religious or otherwise not government-sponsored.

For profit education is good at delivering education for those that can afford it; in the case of university education that means providing an excellent degree programme and qualification which saddles graduates with cripplingly high loan repayments they will take over a decade to pay off.

What they add in prestige, they subtract by making continuous employment a full-time professional job the only practical option for the average graduate. I'd hesitate to call that a "disaster", but it is a huge factor in the phenomenon the article (edit: and particularly the Economist link posted by spindrift http://www.economist.com/news/finance-and-economics/21600989...) describes: educated professionals in the US actually [necessarily] working more hours than the average person.

Schools like Harvard, MIT, Princeton (which I assume you're thinking of) are non profits.

When America was still Capitalistic, still had a functioning free market system, the results it produced in both education and healthcare put the European welfare state model to shame. If you go back 30, 40, 50 years America embarrassed most of Europe in both healthcare and education. For decades America had both the best healthcare system, and a very cost effective system. That reputation has only been lost in the last 20 years.

It's only the last two decades, with America's collapse into a second-rate welfare state in the French model, with the unemployment and debt to go with it, that a very select few European countries have caught up (most of which are tiny, homogenous and generally locked down on immigration; and the prime example, Norway, only got there due to half a barrel of oil per day per person).

Most of Europe consists of impoverished, backwards welfare states. It seems a lot of people like to pretend Spain doesn't have 36% real unemployment, that Portugal isn't as poor as it is, Greece isn't still watching its failed soft-socialism model erode as promises can't be kept, and they seem to like to pretend that eastern Europe doesn't exist at all. There are only a few countries in all of Europe in fact, that are good examples. Germany is the only large example that is working, both the UK and France are drowning in massive piles of debt, having stolen from the future to fake present prosperity. Denmark and the Netherlands are two of the most indebted nations on earth per capita, both having stolen from the future to fake today as well.

I hardly see any examples where the European welfare state model has actually worked. I'd love someone to show me where I'm wrong about stealing from the future to fake present prosperity via massive debt accumulation.

>>When America was still Capitalistic, still had a functioning free market system, the results it produced in both education and healthcare put the European welfare state model to shame. If you go back 30, 40, 50 years America embarrassed most of Europe in both healthcare and education. For decades America had both the best healthcare system, and a very cost effective system. That reputation has only been lost in the last 20 years.

Your narrative is flawed. The reason America was ahead of other countries many decades ago has nothing to do with it "still being capitalistic" or "still having a functioning free system." America was ahead because other Western nations were still recovering from WWII. Many of them got invaded, and those that did not get invaded still got a lot of their cities and economies destroyed. London for example was pummeled by more than one thousand V2 rockets, and Dresden was flattened with 3900 tons of high explosives and incendiaries, killing 25,000 people. America suffered nothing like that.

> When America was still Capitalistic, still had a functioning free market system, the results it produced in both education and healthcare put the European welfare state model to shame. If you go back 30, 40, 50 years America embarrassed most of Europe in both healthcare and education.

You mean, when Europe had done less to advance out of the destruction of WWII, and much of it was under the thumb of the Soviet Union? Sure. Of course, being "capitalistic" in a different sense than the mixed economies of Western Europe had nothing to do with that; even 50 years ago the US was also a mixed economy with significant regulation and social welfare systems (some of both of which have been disbanded in the interim).

Norway doesn't actually spend any of theoil money. Its all saved in a rainy-day fund. Said fund now owns over 1 % of all publicly listed sticks in the world. Norways welfare state is run of non-oil income, generated by maximizing the number of middl-class taxpayers in the coutry. Much the same strategy as Sweden, Denmark, Finland, Nederlands, Belgium, etc etc employs.

Americas welfare expenses is actually about 1/3rd of what the really successful European eco0nomies spend. Germany, Austria, Switzerland...America spends about what Italy and Spain does per person in welfare. A bit more than Portugal and Greece, but definitely UPIGS territory.

Americas model worked in the decades after world war 2, when all competition was bombed into ruins and needed American resources to rebuild. There is basically three countries that didn't get ruined by WW2, America, Sweden and Switzerland. All had the same prosperity-boom after WW2, despite very different policies.

Also: You don't understand national debt.

Why do you think private healthcare isn't working? Free market is typically inefficient if 1) there's not enough competition or 2) customers don't make optimal market decisions. Which one is it in private healthcare?

In the case of the U.S. health insurance exchange (for individuals), 12 states have only one or two insurers participating.

Source: http://kff.org/health-reform/state-indicator/total-number-of...

I'd say that consumers have a hard time making optimal market decisions.

First, it's difficult (though not impossible) to price-shop for medical care. Then sometimes your medical care is time-sensitive in a way which few other purchases are: if I slip and cut myself badly, I'm not likely to price-shop for my ambulance, then carefully compare emergency room price schedules, then gather bids from various doctors who'll be operating on me...

Also, "health insurance" distorts purchasing decisions by hiding costs -- if your insurance will pay any doctor you go to, and its only cost to you is some abstract impact on the rate your employer pays for their group insurance plan, you're not terribly motivated to be price-sensitive.

You could overcome all these things by wildly changing the way our system currently works. But if you're doing that anyway, I'd much prefer a government single-payer system.

In a nutshell, because the American private healthcare is not free market. It is a fragmented socialized system run by insurance companies and private hospitals. I am not absolutely convinced that free market medicine is bad, but I am absolutely convinced that the U.S. doesn't have it. As another commenter pointed out, I am not really free to go to any provider I like. I go to the providers dictated by my insurance company and my insurance company is dictated by my employer.

I am Canadian, but living in the States. I have experienced both systems, and I can say unequivocally that I vastly prefer the Canadian socialized system. The quality of care that my family has received has been about the same with very little out of pocket in either case, but in Canada, I simply don't have to think about healthcare, ever. It is simply there for me [EDIT: even if I am unemployed].

Yeah, it's similar here in the Czech Republic, healthcare is basically free for everyone (with some exceptions). But I wonder if a free market healthcare with the right regulations wouldn't be more efficient.

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