Right at the end of Peston and the Money Men on Monday Jim Chanos was asked where he might next look for an industry in trouble. Health care, he replied, without hesitation, is heading for disaster.
Not because of Obama’s proposed reforms, but because the current system is obviously in deep trouble & does not work. At 16% the USA spends the largest chunk of its income of any country in the world, but for worst outcomes as measured by infant mortality, cancer incidence etc, etc.
The system is already socialised, but for the producers, not the consumers. (In this he echoes Galbraith’s acid description of American Socialist industrialists landing once more at Washington to seek a government handout - & this was years before the current crisis). The costs are way too high.
Or, as Daniel Finkelstein wrote recently, “the startling fact [is] that the US Government spends more on healthcare per head of population than the UK Government does ($3,076 in the US compared with $2,457 in the UK).”
Earlier in the Peston interview Chanos had said that short selling needed a special cast of mind, different from that which normally brings success in the world of financial industries. From schooldays on most people learn that success breeds opportunity & success, whose upward trajectory finds expression in the self-reinforcing idea that money is made from ever rising prices & values. It needs a kind of quirkiness to recognise that money can be made from failure.
Funnily enough this idea is very similar to one put forward by Martin Chalfie, Nobel prize winning chemist, on Bridget Kendall’s World Service Forum on Sunday night. He said that true success in science came from the ability to be a little bit different, that science can be wedded to its orthodoxies just as much as any other area of human endeavour. The important thing was to have ideas – even if they are wrong, as were many of his own
