Wednesday, July 15, 2009

Dazed and confused and swingin' that axe

Information has been reaching Latvian media about the government's so-called structural reform plans, but it is somewhat contradictory and confusing. It was announced that of 77 state agencies, 50 % would be eliminated. It was not clear why 50 % and not 25 % or 80 %. Nor were the selection criteria any clearer. Some of the changes would affect agencies that were, in fact, museums (like the one at ex-president Karlis Ulmanis* former country home), others were aimed at merging or reshuffling agencies related to the Ministry of Health. Something called the Pharmaceutical Pricing Agency and some other health-related agency would be merged into something called the Health Care Economics Agency (I translate loosely from the Latvian). Whatever any of that means...
What the point of this is evades me. It is clear that by this fall, there will be little or no government funded health care -- no elective surgery, many regional hospitals reduced to day health centers with little or no funding, no more emergency health care except for some remnants in bigger cities (without a national medical helicopter service, private or otherwise, victims of serious highway and other accidents are simply going to die more often.)
As opinion makers and experts queried by the national daily Diena pointed out, there are goals in terms of numbers and percentages for cutting this, that or the other thing (wages, staff, number of agencies) but no vision of why this is being done and what, exactly, it is that the Latvian institutions of governance are supposed to do.
I have raised the issue of reducing Latvia to a minarchy, which is where the reforms and massive budget and government salary cuts all point to, But there is no conscious plan and long term, socially responsible scheme for doing so. As I write, there are reports that the government (the Ministry of Economics) is looking into raising taxes -- imposing a new capital gains tax, a dividends tax and perhaps even raising VAT on top of one failed VAT increase earlier this year (VAT revenues are down). If you are going to completely gut such services as health and education, the right thing to do is to slash taxes and give people more money to buy these services on the private market or to toss their share into a cooperative and non-profit venture such as a cooperative school. It should also promote private health insurance and various mutual insurance schemes to fund what will be within a few months geographically limited pay-as-you-heal health care.
The US is not a shining example of publicly funded health care nor does the US system work all that well, but when my dad fell ill last year and passed away after nearly six months in various kinds of care -- hospital, home assistance, a rehabilitation home -- he didn't leave my mom with a mountain of debt. His private insurance and Medicare/Medicaid/ whatever took care of it.
According to one news report, some small enterprises are taking things into their own hands and switching from on-the-books, taxpaying mode to the grey/barter economy. When agents of Latvia's State Revenue Service raided an auto repair shop, they found it busy with people fixing cars, but no books or records had been kept for many months. Those questioned claimed they were swapping favors with friends. A mechanic working on a car said he was doing the job without pay because the owner of the car had just helped him weed and hoe his garden. If that was true (which it may not have been) what is the Revenue Service's problem? No money changed hands, there was no classic economic activity.
I see a distinct economic and social logic in the grey/barter economy. Why can't a cooperative of auto mechanics trade hours of work (of different complexity) for hours of medical care for their families or repair tractors in exchange for vegetables and milk? The medium of exchange is not money, though it can (and has in some experiments around the world) be reduced to a virtual currency equivalent. Tax that! And at the same time as there is no way presently to extract tax cash from standardized barter transactions (as far as I know) -- one hour of engine tuning = one tooth cleaning at the dentist's or whatever, this system can make up for state failure. The auto repairshop works on the cars of most of the health care workers in their area and, theoretically, builds up a surplus of doctor visit hours, which it can distribute to families of its staff or, as a gesture of solidarity and good will, pool into a "free" health care fund for the indigent in the local area. It is patchwork, but maybe better than the nothing the goverment is pushing toward.
It is really, really hot for a Latvian summer night, so I may be rambling here. Comments are welcome.


Mr.Key said...

Basic thing is that people live here. People provide medical help and people do car repair work. Not laws, not government. People will find a way how to live, not even survive. Thats a government which has to think how to survive.

Wannabe Sorosieši said...

Mr Key
Do you have the time and the expertise to arrange all of the things (education, medical services, fire services, police etc.) that govt does (if poorly here)? I sure as shit don't! I have expertise limited to education and business and would be hard put to evaluate various other service offers. Are you that much smarter than the rest of us?

We need govt to be intelligent and to structure the services that we need collectively and don't have the individual expertise to intelligently source for ourselves. As Juris points out indirectly when he talked about medicare/medicaid (govt programmes!) even the free-market king uses govt to provide such services.

We need a fucking plan. if it becomes and Ann Raynd purgatory, we are all in trouble.

Mr.Key said...

Wannabe - I have enough time and resources to find good medical help in private clinics. When I try, I get quality service at the first time.

I have no enough time and resources to find GOOD medical help in governmental clinics. When I try I learn about extremely long cues, so called family doctor tells me the same I learned from internet, etc. Do you think he ever talked to me about how to live healthy, etc.?

That could probably be said about education and safety too.

But you are right! We need that plan. And you know what? Its already made, it's called Scandinavian government type what we need.. The sad thing is that Mr. Godmanis promised Latvia will have it. So, it means we never have it. :(