I’ve been thinking more and more about the concept of a win-win on a macro scale. Most of this is probably due to the surprising way in which the most recent national election grabbed my attention. The non-stop conversation about states that were read versus states that were blue reminded me that our nation is very much divided. There is no such thing as consensus on major issues these days. Much of the musings in this narrative also have to do with my experiences in dealing with businesses over the last decade or so and my deeper study of macro economic concepts. It’s all coalesced into this idea that as a nation we generally tend to focus on win-lose, not win-win.
I think politically this is somewhat understandable. Our representatives really represent the people who are supporting them financially. That’s not a criticism, it’s just the way the system works. If your biggest donors, the ones who are empowering you to be competitive, want you to champion something or they turn off the financial spicket, you do it or you’re dead in the water. Typically big donors don’t want you to show great concern for the other side of an issue.
On the national front, this can easily be seen with something like universal health care. Current system stakeholders will fight tooth and nail to keep the status quo with nary a thought to those who are affected by it negatively. That includes both business owners who are on the hook for providing health care and individuals without access to it. I know from dealing with businesses for the last decade, they begrudgingly provide health care. It’s my experience that most small to midsize businesses would prefer to just drop the whole healthcare thing in order to concentrate on their core business activities.
Then there are the healthcare service providers who lose out because they are responsible for annuitizing services they are required by law to provide to anyone who walks in the door and requests them. The current infrastructure has gone so far as to vilify an entire nation to keep any meaningful changes to the system. The only winners in this scenario are the investors in the current health care insurance infrastructure.
Health care, of course, is the national issue of our times, and it really has been since post world war II when an unintended consequence of wage controls put American businesses in the, unique in the world, position of being expected to provide health care to their employees.
An issue that is on the right side of the aisle, relates to education. Specifically the school vouchers debate. Currently, the vast majority of families only have the public school option for educating their children. The idea of vouchers, where parents can take their education dollars and spend it at the school of their choosing is debated furiously. In this case it’s the existing system stakeholders, ie the government runs school system, that is adamant they will lose out. I personally believe it goes right down to the individual teachers and school employees who feel like they’re getting a better deal from the state than they will from the private sector. There is no question in my mind that this is true. The private sector cuts every corner it can. But what if the voucher system required that educators and administrative staff of charter schools received the same pay and benefits as the government schools employees received as their baseline? What if the voucher system also required that any school receiving a voucher be a non-profit entity? At that point parents have choice, the system has competition, and educators and support staff can go wherever they want and never lose out on any of the benefits they receive. To me this is an example of a win-win. The school systems aren’t losing dollars that go directly to teachers because no matter where the teachers wind up they’re getting the same pay and benefits. I see it is somewhat analogous to the US postal service co-existing with Federal Express and the United parcel service. One provides universal service, the other two specialized in different things that the USPS is not designed to accomplish.
There’s an issue, a local one, that is much more acute for me. I’ve discussed it before, and it is still a major problem every minute of every day. I’m talking about internet service to my rural North Carolina house. Currently, North Carolina is one of the few states that has legislation in place that keeps municipalities and counties from putting in their own networks to compete with for-profit service providers. As I’ve complained about ad nauseam, the for-profit providers in my area refuse to bring service to our community as it doesn’t generate enough return on investment for shareholders. In this situation, the win for the for-profit companies is a huge loss for the people struggling with one megabit internet service, or even no service at all.
As I’ve written about before I’ve been told I have a Wiifm personality. I talked about the idea of a win-win back then. In all instances where there are opposing views, The only perspective that actually works, the only deal you can actually make, has to be one where both sides can benefit.
When you’re on an individual level, this looks like a classic sales transaction that happens hundreds of millions of times per day. I give you the money that you want, you give me the product that I want. We both win. If you charge too much, and I have no other option, I begrudgingly purchase the product but do not come back if I can help it. That is win-lose and, if companies don’t watch themselves, It eventually kills them. One look at the cable TV industry will show you an example of this from the private sector. That industry kept pushing rates up higher and higher because they were in a monopoly position and their customers had no choice If they wanted a good selection of video entertainment. Then streaming happened, and barring areas with horrible internet like mine, cord cutting became the thing.
So what does win-win look like with healthcare? Somehow or other the needs of those who will lose out have to be addressed. In an ideal situation, the system stays the same for everybody who currently has healthcare and is happy with it, and a universal option is automatically given to those who don’t have health care for example if you’re let go from your company unexpectedly. This could potentially mean that many health insurers, service providers, and pharmaceutical manufacturers could see some sort of disruption to their business models. It’s this disruption that is keeping these organizations from getting on board with the universal service provisioning. It’s not the potential increase in taxes, because we’re already paying for it as a society. Without going into it too much, increased costs in one area would be mitigated by savings in another. The total cost pie really does stay the same. It’s just that different people shoulder it.
If health insurance companies close because of the new system, then their shareholders should be compensated. I believe it should go beyond just giving them the value of their shares, there should be a premium. If I am an institutional investor and I know that I have a million dollar investment in a health insurance company, I can sell that investment for a million dollars right now. If there is disruption in the market, because of some form of major government universal care act I may only get $500,000 for that million dollar investment. In a win-win, part of the legislation would include a provision for those people who have investments. I’m not a financial person, but the way it should be structured would be something like a buyout. In a classic buyout situation, when company A wants to buy out company B, company A will pay a premium to own company B. If company B was worth a billion dollars company A would probably spend a billion and a quarter. This is how these deals are structured.
Going back to my example of the institutional investor with the million dollar investment, they could either sell those shares on the open market and get their million, or get on board with the new healthcare plan, and be guaranteed 1.25 million. The point isn’t the exact numbers, the point is that you have to make sure that people who stand to lose are not just covered for their losses, you make it better for them after all the changes happen. In this scenario, health care providers profit greatly, individuals who are happy with their healthcare keep it, and those who are not happy with their existing care or don’t have any can choose to be covered by a universal system. It’s a win-win-win!
I think the school system solution is even easier. It just requires some form of transition bonus for any county that hits a certain competition level. It could be something crazy like, as soon as a third of the students are in private sector schools that meet the minimum requirements, then everyone in the existing system gets some sort of bonus equal to a year’s pay. Short-term, it’s expensive, long-term costs would go down for the whole system. That’s one crazy idea that I thought of off the cuff, but I’m sure there’s many other ways to incentivize individuals in the existing system to be more accepting of the new multi-provider environment
Now let’s move on to internet. There’s actually a win-win solution that’s currently being batted around our state legislature. When I say batted around what I mean is everybody’s on board except for the house leadership, who is currently keeping it from being voted on because it will pass. In the proposed bill the private companies still put in the networks, but the modification to current law allows the municipalities to partner with network providers. Partnering is code for paying to have the networks put into areas that don’t have good internet access. To me it seems like the best of all worlds and I have no idea why this hasn’t been fast tracked. The telcos get big new customers, the county governments get to put in networks and serve their people, the economies of the rural areas get a spike of activity, and kids who have to go to school remotely can actually see and be seen by their teachers.
Just like in a sales situation, all of these solutions require that you have to do a little bit more to win the business, or in this case, change the status quo. You’ve got to figure out what the other person wants and give it to them so you can get what you want. In a lot of these cases, it could be argued that the costs of the transition would go through the roof, at least initially. But that may not be the case. What the existing systems stakeholders want may not be a check, it may be security, it may be self-determination, it may be that you have to structure your solution so staying the same costs a lot more than transitioning to something new.
As I’ve mulled this over while composing this commentary, I have come to the conclusion that I would rather invest more at the front end in greasing the wheels of the transition. to me that’s an investment to make sure my opposition wins as much if not more than I do, no matter what the issue is.
Going back to the election,states that were evenly divided were called purple states by all the talking heads on TV. To me, the pundits got it wrong. A purple state isn’t equal amounts red and blue in never-ending conflict. A purple state is red and blue working together to come up with something different and new. Now that I think about it, I think that purple is going to be my favorite color moving forward.