Over the past weeks and months, I’ve encountered more and more examples of people either losing jobs or having their working hours cut so that their employer would not have to pay health care benefits as a result of the requirements of the Affordable Care Act.  And like many people, I’m beginning to get outraged – but not at the ACA. I’m outraged for another reason, one based on the interplay of economics and human nature.

Let us assume you have a business, one with employees, and that you provide a service or produce some physical goods, or perhaps both.  To be successful, any business must bring in more income than what it costs to provide the goods and services that generate that income.  Those costs include what you pay for raw materials, equipment, office supplies, heat, power, rent or mortgage payments for whatever property you need, parts, taxes, permits, fees for accountants, legal services …and wages and possibly benefits for employees.

If a business owner needs a lawyer or an accountant, the owner is going to have to pay more for someone with those skills and credentials.  If the business needs a mechanic, the same is true.  The only levels of employees whose wages are not “protected” in some way are those whose skills do not require specific training or credentials or those who are professionals in fields where there are substantial numbers of unemployed individuals, such as graduate academics. No one protests, or not too loudly [and if they do, few listen] about what it costs to hire a lawyer, a plumber, an accountant, a computer programmer.  But almost every business owner I know complains about the costs of lower-paid individuals, and they complain even more when the government raises those costs, through either the minimum wage or something like ACA/Obamacare, and all too many of those same business owners do everything they can to keep wage costs low for those individuals.  The same is absolutely true of state colleges and universities, with their reliance on low-paid clerical and security staff, and poorly paid teaching assistants and adjuncts.

What this shows, quite clearly, is that, at least in the United States, a sizable chunk of business, higher education, and at least certain parts of government are quite willing to squeeze everything they can out of those employees lowest on the totem pole, whether by hiring double the number of part-timers, or avoiding providing the benefits paid the higher-compensated full-timers, all the time protesting that paying living wages and health insurance for those lowest-paid employees will put them out of business, yet expecting someone else to provide health care, either government or other employers and workers [through higher health care premiums]. And, again, for the most part, those who complain the most are those most insulated from the lack of affordable health care, which, like it or not, translates into the availability of insurance for those low-paid workers.

Yet at the same time, we, as a society, make no distinction between those individuals who work hard and cannot afford health care and those who hardly work.  As a society, we have effectively determined that no one can be denied health care, even those individuals who are clear and total freeloaders.  Is that willful blindness… or hypocrisy… or some combination of both?

Interestingly enough, I also don’t see anyone asking questions on the other side of the issue.  Why should we have any interest in preserving businesses and institutions that can only survive by exploiting people who are working hard to that degree?  Or is it that we all want everything so cheaply that we don’t really care about those people?  And why do so many people vote for politicians who support that view?

The other day I was talking with people at a wedding.  The majority of them were Republicans, and all of them opposed the Affordable Care Act, aka Obamacare.  What floored me wasn’t so much that they opposed the ACA, but the grounds on which they opposed it.  One man told me that anyone who couldn’t afford health insurance was covered by state Medicaid.  Another person insisted that if someone couldn’t afford health instance, she didn’t want to pay for it.  When I pointed out that all of us are already paying for the uninsured through higher medical prices to cover unpaid emergency room and hospital care, she said that they could go to InstaCare, as if local acute care clinics didn’t have the same problem as hospitals and emergency rooms.

 While my wife and I are fortunate enough to have health insurance and in a position where we cannot be denied coverage, we both have seen and continue to see the array of problems.  There’s the college student born with hydroencephalitis, who works minimum wage jobs and cannot get insurance nor meet the criteria for Medicaid.  There are the scores of self-supporting college students who have injuries or long-term health problems whose parents refuse to include them on their own health insurance, or whose parents themselves have no insurance. There are the Walmart employees whose hours are capped so that they cannot have health benefits.  There was the wife of a friend whose cancer treatments were not covered by his company’s health insurance policy and who died because the cancer spread while they tried to raise money for a deposit demanded by the hospitals in order to prove they could pay for the treatment.  Or the full-time retail employee who did have health insurance, but was hospitalized, required surgery, and even after insurance, still ended up owing, as a result of deductibles and exclusions, more than most of his yearly take-home pay. I could give a very long list, and not one of those I listed would be either a so-called welfare queen or deadbeat.  Beyond that, my list wouldn’t begin to deal with all the problems faced by the over 40 million Americans without health insurance.

 I can’t begin to solve these problems, but I am very much aware of them, and we’ve helped where we could, yet most of the people to whom I talked at that wedding refused even to acknowledge that such problems exist, almost as if they occurred in another world.  I’m seeing more and more of this, especially in recent years, and the current Congressional impasse over the federal budget reflects, I believe, the growing trend of Americans – and perhaps those in other industrialized countries – to deny what is happening outside their “world” – or their “bubble,” as the comedian Bill Maher terms it.  The problem with such denial is that compromise is impossible when people in different worlds refuse even to acknowledge the events that are happening to others because those events, and even facts, don’t fit into their own world.

 Put in another way – we don’t need space travel to find other worlds;  there are more than enough alien worlds right here on earth, even if no one wants to admit it.

As I write this, I’m winding up the last legs of a comparatively short – 11 day – book tour that’s beginning to feel a bit longer than that.  Last night, I ate dinner in a small and rather odd restaurant/bar at the edge of the campus of an enormous university.  The restaurant was located in a former flower shop that still retained the burned-out exterior neon lights proclaiming its previous inhabitant; the inside was loud and cacophonous; and the décor was third-rate thrift shop downscale.  The food was far better than all of those, despite the fact that the cook/chef had run out of both chicken, in all forms, and most beef. In fact, the dinner was good.  Not great, but good, and better than some meals I’ve had in far more upscale eateries.

What totally astounded me, however, were the young men I witnessed.  The young women looked, at least to me, pretty much like young female college students have looked for at least the past generation, perhaps a shade more casual, but clearly all had given some thought to their attire and personal appearance and apparent hygiene.  The men, however, were largely the most unwholesome, grubby, grimy crew I’ve witnessed in years.  I’ve seen third world poverty more than I care to remember, and these male college students looked more impoverished and certainly less well attired than most impoverished males I’ve seen in far more destitute locales. I wondered if it just happened to be the restaurant, but, no, there wasn’t too much difference between those males passing on the street and those inside.  These collegiate inhabitants – I hesitate to call them students – made the hippies of the 1960s, by comparison, look well-groomed and like sartorial savants. I’m not against beards or long hair on men, either.  Some men look far better that way, but wearing a rat’s nest on your head or chin doesn’t do much for anyone. Nor does three-and-half-day stubble.

I couldn’t believe it’s just the economy, although I know college students these days are struggling financially, but I also know that, for the most part, women students have to struggle harder financially than do men, yet the women dress far better and are far better groomed.  Is it a matter of priorities – that men now value their tech toys more than their appearance and hygiene?  Or is it other priorities – that video games and tech toys have replaced young women as the highest item on their priority list? I hadn’t the faintest idea, but I couldn’t understand where those male creatures came from, because the young men on the university campus in my town certainly didn’t look like that.  Nor could I fathom how young women could find such men even remotely attractive and interesting.

But here’s the interesting part. The next morning, when I went through the campus again, the vast majority of the collegiate males were just like the ones in my own university town… but that night, the scruffy ones returned.  Are they the new vampires… only out at night? Is it only at that one university?  I can’t really say, but it’s perhaps just as well that I don’t know.

American society is buying the so-called business model lock, stock, and barrel… and almost no one seems to understand the long-term costs, both to the economy and to society.

Effectively, the business model states that present-day costs and prices should determine all decisions… and that model works, at least partially, for business, but only in the short term.  Unfortunately, it works even less effectively in areas of society where costs and values can’t be accurately determined and quantified, or where the true costs and prices may not be apparent for years.  In addition, it’s being applied in areas where costs and prices don’t reflect actual societal requirements.

Underlying this application is the two-pronged belief that (1) resources and skills that are in short supply currently should command higher prices or (2) people with skills to generate more income are more valuable than those whose skills generate less income. 

As an example, because teachers don’t generate income directly, they’re low-paid compared to other professionals, and most ambitious students with great talent for teaching don’t consider it.  This results in lower standards for teachers, and that makes taxpayers even less likely to support higher pay… and the cycle continues. Yet society has a far greater need for good teachers than good hedge fund managers, but the “business model” rewards hedge fund managers, even bad ones, far, far, more than it does teachers, simply because there are more teachers out there.

Along the same lines, more and more often, pundits and politicians are demanding that college students major in “marketable” subjects, especially science, technology, engineering, and mathematical fields, because that’s “where the money is.”  There are more than a few problems with this approach, the first being that not all students have aptitudes for those fields.  The second problem is that overemphasizing these fields will lead to an oversupply of people with those skills and unemployment in such areas – and this is already happening in some engineering fields. High-paying fields don’t always stay that way, as witness computer programming. The third problem is that it encourages bright students who have greater aptitudes in other fields to study fields they may not like and will not do as well in, which is a loss for both the student and society. The fourth problem is that the social and economic conditions will change in the future so that the business “needs” of today may well not be those of tomorrow… when society will be short of expertise in other fields.  The fifth and possibly most important difficulty is the underlying assumption that what a student studies in college will be the only field in which he or she works – when the experience of the past thirty years has shown that the majority of workers change fields at least several times and that this trend is increasing.  Yet applying the business model to higher education essentially emphasizes near-term vocational skills over longer-term critical thinking and problem-solving skills.

For all the problems involved with using the “business model,” it is still applied almost everywhere, from the financial world, where it encourages rampant speculation over solid growth, to government, where federal expenditures on research are now continually cut on the grounds of no immediate benefit, to the pharmaceutical industry, where “large pharma” slashes basic research and tries to buy smaller companies with new products,  to the commercial power industry, which continues to fight cleaner ways of generating power in an effort to retain higher profit and dirtier coal-fired power stations for higher short-term profits… and well beyond.

So just why do politicians, educators, and citizens literally buy into a model that’s so flawed in its own field?  Because business assures them that it’s good, of course.

One of the “goals” of almost every business, regardless of size, is to increase revenue and profits, and those targets are almost always increases exceeding ten percent per year. Executives in those companies are under enormous pressure to meet such targets. For most business, such targets are not only unrealistic, but taken as a whole, the proliferation of such high target growth rates will actually hurt overall economic growth. This is a point that I’ve never seen addressed, and if it has, it’s certainly been buried.

First is the issue of realism. In hard economic terms, businesses as a whole can only increase growth by the amount that the economy and exports grow.  If, as has been the case with the United States, imports exceed exports, what that means is that any growth rate above the national average means that growth on the part of any business or set of businesses means that other businesses are growing less, or even declining.   

To meet these high profit, sales, and revenue targets, the majority of businesses in the United States, particularly in the manufacturing and service sectors, have resorted to cost-cutting through automation, greater use of part-time employees, and by eliminating or limiting wage and salary increases for all but senior executives. This process also effectively re-distributes income from workers to higher paid professionals and executives. Higher-paid individuals spend a lower percentage of their income on goods and services. Another factor that can increase demand and  income is population growth, but when the working-class wages stagnate, that also decreases the birth rate and the level of total immigration. In effect, that reduces the total income available for the purchase of goods and services, and that in turn reduces the ability of the economy to grow. 

In short, while emphasis on high growth of businesses at the expense of workers may increase profits for an individual business, it’s counter-productive for the economy as a whole.

What’s also overlooked in this equation is the question of who benefits from high profit targets. Obviously, no one benefits if a business loses money, but what happens if an already profitable business increases profits?  Where do those additional profits go, and why do businesses insist on and require such high profit margins?  Because, first executives don’t get hefty bonuses without meeting those targets.  Second, because high profits raise stock prices and dividends, and thus the returns to owners and investors.  But what’s not mentioned in this equation is who those executives, investors, and owners are… and they’re almost all in the top ten percent of earners.

In effect, high profit targets are set by those in the top income levels for the benefit of others in the same income levels… but the more this happens, the more the spiral tightens and the fewer and more highly paid are the beneficiaries because the vast majority of Americans, whose wages and salaries are stagnant, can afford to buy less and less, and, in the long run, that hurts everyone.

But then, since when have the majority of those very well off ever considered the long term… or even listened to the minority of the well-off who do see and fear the long-term consequences?