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We have all been learning about the shared economy. AirBnB, RelayRides, TaskRabbit, GetAround. The basic idea is that some people have equipment, property, or goods and other people need to use them. The Internet helps to put them together through a middleman company.

Bernie Sanders Socialism

Bernie Sanders and Changing Our Society — Michael Hertz

In AirBnB, someone has a house or an apartment with extra space. Other people want a short-term rental or a vacation space. They find each other through AirBnB. The property owner gets money from the rental, the visitor gets an inexpensive rental, and AirBnB gets a small cut of the money that passes between them.

RelayRides does the same with cars. Someone has an unused car. Someone else wants a short term car rental. RelayRides gets them together and provides an umbrella insurance policy for the owner and the driver during the time of use.

What Bernie Sanders is talking about in terms of socialism is, in part, the efficiency of accomplishing important tasks for society in a collective manner.

My father (back in the 30’s) actually dreamed up something like RelayRides, except that he had a larger goal. He wanted no private cars. All cars would be owned by the government, and anyone could get a key to use the cars. Of course, back in those days there were no cell phones, GPS systems, computers, or efficient ways of keeping track of usage the way there is today. But his central idea—no private cars—made sense and it makes more sense now.

If there were no private cars in big cities, the cars in use would probably be a quarter of those now. This would reduce pollution, traffic, and all sorts of other things that hurt our overall society.

But wouldn’t this be socialism? Yes, it would, if the cars were owned and regulated by the government. But the “shared economy” is actually a form of socialism, except that it is all done through private enterprise. If you can imagine all cars being owned privately but shared out like RelayRides you would have something along the same lines as my father’s idea. It could be efficient, socialistic, but capitalistic as well.

So let’s put this in the context of what Bernie Sanders is trying to do and talk about our healthcare system. Obamacare is sort of a hodge-podge shared system. Everyone has to have healthcare through an insurance provider, whether that provider be private or government. The actual providing of the healthcare services is mostly private, but some of it is government (the Veterans’ Administration, city and county hospitals, and the like). It is truly an inefficient system because the payment system is scattered.

If we were going to reorganize the healthcare system, what would we do? One possibility would be to make all healthcare providers (doctors and hospitals) employees or entities of a single entity (which could be government or private). But that would probably be very inefficient, and besides that we aren't used a totally centrally run system. Cuba has one, and it has a lot of doctors to patients (6.7 per 1,000 in 2010, while the U.S. had only 2.5 per 1,000), but the doctors are paid little.

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Our problem is the inefficiency of the insurance system. American hospitals spend 25% of their resources on administrative costs, including the very cost of coding and billing. Canada, which has a single payer system in every province, pays 12%. In other words, the fact that American hospitals have a hodge-podge of entities (government and corporate) where they must get payment increases administrative costs substantially. The estimate is that we would save $150 billion annually if we had a Canadian-type system just for our hospitals.

From personal experience, I know that Canadian doctors have far few staff members to handle billing than do U.S. doctors, because the Canadian doctors only have to submit records to one entity while American doctors have to deal with dozens.

Bernie Sanders is in favor of a single-payer system. The assumption is that the payer would be the government, but in theory it could be a private company. For example, a state government could set up an insurance system and hold an auction every year for private insurers to bid on the right to operate the system for the government. In effect, much like private jails, one would have a private insurance system. I'm not recommending that, but it's possible to imagine. It would certainly reduce the administrative costs, and if you truly believe that private enterprise is more efficient than government, you could consider it. There would be competition, because every year the private insurers would have to decide whether or not to bid. And if no one bid in a satisfactory way, then the government would run the insurer that year.

What Bernie Sanders is talking about in terms of socialism is, in part, the efficiency of accomplishing important tasks for society in a collective manner. We already do that: after all, we have collective police forces, fire departments, roads and bridges, a military force, and so on. We have a collective retirement system, at least in part (Social Security). But if we put our minds to it, we could find other things in our society that would be more efficient and probably better if it were done collectively. Like the operation of automobiles, which is one of the biggest problems in our society, although we don't really talk about it that way.

Some things in our society are becoming more collectivized and we don't realize it. Yet because those are operated privately, we are getting into what amount to monopolies. Bernie suggested breaking up the five big banks, and now others are getting on the bandwagon. And we are developing other monopolies, such as airlines. The four largest airlines are huge compared to the rest, and there has been consolidation in the past six years.

There's really a choice here. As a society, we can stick with the model that says that competition is more efficient in commerce. In that case, we’ve got to break up the “too big to fail” banks, because they weigh on our system. The same may be true of airlines. Or we can permit greater and greater consolidation so long as the entities are heavily regulated from the outside so that they do not overcharge or use their power to control other aspects of our society (as banks have done and as airlines have done).

These are major problems, and the solutions are difficult. What I like most about Bernie Sanders is that he is stimulating discussion and trying to come up with results that will better our society. He is not afraid to think outside the box (breaking up the big banks, going for single payer healthcare, making college affordable for all and talking about worker cooperatives are all important decisions.)

I truly believe if we had Bernie heading our country, we would start working together to make our society better. We would begin to think outside the box again. I started this article by discussing the shared economy, because I believe that the shared economy is "thinking outside the box." Sometimes the shared economy is abusive (e.g., Uber is a classic example, with its surge pricing and abuse of its drivers), but the overall idea is sound.

Having large banks or airlines may be efficient and it may not. If it isn’t, the banks should be broken up. If it is, then we need to be effective to managing them. But Bernie is right: In the end, we are the ones who have to choose, and we need a government that is responsive to our needs, not one that is controlled by an elite group that is thinking only of themselves. We do need a revolution. If the elite group control continues, our country will never be the same again, and we shall all suffer for it.


Michael T. Hertz