I just finished reading Cissy Houston’s remarkable book Remembering Whitney, which is partly Cissy Houston’s autobiography and partly a story of her daughter Whitney Houston.  It is a remarkable book in so many ways!

What makes it most remarkable is Cissy Houston’s ability to recall small, but important, moments in her own life, as well as the life she shared with Whitney Houston.  Relative to her own life, she shared several stories about how she would use a new technique in background singing to give a prominent artist’s song more life and richness.  She clearly took her craft very seriously, but, more importantly, she opened the minds of the artists she supported as to the potential for their musical performances they had not previously appreciated.

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Celebrating everyday heroes

Type 1: the person who performs a single dramatic heroic act

When we talk about celebrating everyday heroes, we should pause to redefine what we mean.  When I was growing up, a hero was someone who did something “extraordinary” and positive for others or for the community at large.  We became accustomed to defining heroism in terms of saving someone’s life, such as a firefighter who entered a burning building to rescue someone or the police officer who saves a citizen’s life.

Type 2: the person who plays a vital role in a bigger heroic effort

More recently, we have expanded our definition of a “hero” to include those who provide a vital contribution to a major accomplishment, such as the work many unsung heroes played in winning World War II, as Paul Kennedy profiled in his great book Engineers of Victory: The Problem Solvers Who Turned the Tide in the Second World War.  On Saturday, March 16, 2013, I attended a wonderful event for the Explorers’ Club, which celebrated both a few very famous people, like Senator John Glenn and Mercury Astronaut Scott Carpenter, and both of these kinds of heroes.

The Explorers Club celebrated a Sherpa who saved many people’s lives in mountain-climbing accidents in Mr. Everest, who would be like our first kind of hero. James Cameron, the director of Titanic, who did a number of deep oceanic exploration efforts, credited a number of engineers like a wonderful gentleman named Kevin Hardy from San Diego’s Scripps Oceanographic Institute with being essential to his success.  Hardy, with whom I spoke at dinner Friday evening, designed and built the unmanned capsule that descended to the bottom of the Mariana Trench, the deepest part of the ocean in the world, took photos and captured other data essential to preparing Cameron for his deep dive in 2012.

Type 3: The person whose cumulative body of work is heroic, but is insufficiently recognized or rewarded

However, there is a third kind of hero, which we do not explicitly celebrate, but should:  the person who consistently develops innovative solutions that make a big difference in the lives of those he or she touches every day.  Often, these innovative solutions are not documented, and, as a result, they are not celebrated in books, movies, plays, or even in recognition events like the Explorers Club event, although the Explorers Club comes closer than any organization I have seen to recognizing this kind of unsung hero.

Along these lines, I was pleased to read today that baseball will be honoring Dr. Frank Jobe at the July 27 Hall of Fame induction ceremony for his pioneering work in what is now called “Tommy John” surgery.  Dr. Jobe invented that surgery on the baseball pitcher, Tommy John, who had damaged his pitching elbow to the point that his chances of recovering and pitching again were estimated at 1 in 100.  His ligament grafting process, invented in 1974, increased the chance of full recovery to over 90% today. Dr. Jobe has contributed to the career successes of several dozen pitchers and position players and has probably been responsible for billions of dollars of enhanced value for baseball team owners, only a fraction of which has gone to him.  Although he is a wealthy man, he is a relatively unsung hero in baseball and other sports.

Coach Catana Starks: the ultimate example of the third type of everyday hero

However, to me, the everyday hero we should celebrate in entertainment, books, and recognition events is the person who innovates everyday in multiple situations, changes the lives of many other people, but does not get recognized publicly for much of what he or she does, and often is far more under-rewarded than Dr. Jobe.  That is why I have put the story of Dr. Catana Starks on screen, and why her story and others like it need to be told.

Our film could only scratch the surface of what Coach Starks was able to do over a lifetime of coaching.  Part of the reason was because she did her job in such a quiet way that it was difficult to dramatize some of her accomplishments within the time constraints of a full-length feature film.  Part of the reason was that she did not think to tell us what she had done because she did not appreciate how heroic it was.  Finally, the major part of the reason was that her heroism was not the single, easily definable accomplishment that could be the subject of a large project, but the cumulative effect of many smaller, innovative acts that made a big difference in the lives of those she touched.

What we would have liked to celebrate, but did not get a chance to celebrate, were many small acts of daily heroism about which we either learned from Coach Starks after we finished shooting the movie, or from others.  There are many stories about Coach Starks, and they fit into three categories:

• Redefining adversity as opportunity;
• Seeing opportunities to make a difference in situations that no one else saw; or
• Using scarce resources in novel ways.

Redefining adversity as opportunity

Coach Starks did not have the budget or the established, prestigious program to recruit the most sought-after golfers, so she often had to recruit people who were from less advantaged backgrounds.  Her genius or “heroism” was her innovative way of convincing them that their apparent “disadvantaged” backgrounds prepared them better for the competitive challenges of life than the so-called “advantages” bestowed on their competitors.

My favorite story about Coach Starks in this regard was how she figured out that the “disadvantages” of not having enough money to afford hotel rooms the night before a tournament and of not having a big enough van to enable everyone to have a sleeper seat could be turned into an opportunity.  In the beginning, the person who sat upright in front with her on a long overnight drive was disadvantaged, but she gave that person a special treat, in terms of hours of conversation in which she presented life lessons.  The golfers with whom I spoke told me that they eventually came to see the front seat position as a better option for them than a sleeper seat, even though they had a less comfortable sleeping position.  Every one of them remembered those long conversations years later.

Seeing opportunities where others did not

Coach Starks was a teacher.  Many teachers have invited inmates from local prisons to speak to students about the problems of drugs and how they lead to bad behavior.  Coach Starks did that as well.

However, she went one step further.  She had one drug dealer speak who had been sentenced to life imprisonment from three felony convictions during his teenage years.  It prompted her to use her accumulated knowhow on coaching and mentoring to persuade the prison system to give him an opportunity to get treatment and eventually be released.  She became an advocate for reducing the sentences of those whose drug-related offenses occurred early in their adult lives and who had reformed during their prison tenure.

Using scarce resources efficiently

Coach Starks did not have the high-priced instructors or technology to help her team refine its golfing skills.  She came up with two innovative solutions:

• She tapped volunteers in the Nashville area who gave her golfers free instruction at the driving range or on the public courses.  These volunteers became mentors beyond the help they gave players relative to their golfing skills.
• She used a video-cassette recorder to capture the golf strokes of her golfers and then urged them to send the video cassettes back to their coaches in their countries or communities of origin.  This accomplished two things:
  • It gave the golfers instruction from someone from whom they had learned to play golf and who was intimately familiar with their technique; and
  • It reinforced a lifelong support system they would need for not only golf, but also everything else they would do.

I could have used many other examples of her innovation solutions to problems caused by resource scarcity, but there are too many from which to choose.  Her decades long success as a coach and teacher is the result of many small innovations, no one of which is dramatic enough to be the foundation for a piece of feature film or documentary entertainment, but the cumulative effect of which was huge.

Her story deserves to be told, and it will be told in public venues, beginning later this year in From the Rough.

In the Saturday, December 22, 2012, issue of The Wall Street Journal, there was an inspiring story written by James Zweig called “The 107-Year-Old Stock Picker.”  The subject of the story was 107-year-old Irving Kahn, the chairman of the Kahn Brothers Group, an investment management firm based in New York City.  As Zweig describes him:

“He personifies the virtues that Graham (Benjamin Graham) spelled out in his classic 1949 book “The Intelligent Investor,” from which this column takes its name.”

Later on in the story, Zweig tells us more about Kahn:

“Discipline has been a key for Mr. Kahn. He still works five days a week, slacking off only on the occasional Friday.”

In answer to a question about his remarkable longevity, Kahn responds:

“Millions of people die every year of something they could cure themselves: lack of wisdom and lack of ability to control their impulses.”

Irving Kahn appears to be an individual firmly grounded in the real world, and as active as a 107-year-old can possibly be. Zweig commented: “In some ways, Mr. Kahn says, these are the good old days.”  As an investor, he correctly notes that he has more tools than ever available to level the playing field between investors and those from whom they buy securities.  His goal is to know more about the stock he is buying than the investor who is trying to sell it to him. He is energized by his job and his daily life, and his physical faculties have declined relatively slowly.

Although I have had many role models in my life, certainly Mr. Kahn has to be added to them.  I believe that the key to health and longevity is a continuation of one’s passionate commitment to family and friends, causes, and work.  When someone completely “retires” from active living, he or she actually increases his or her psychic burden.

The other key to healthy longevity is to live every day with the appreciation of life that a productive very old person carries through the day.  When I have met such people, very little that bothers me would bother them, because they have had a few extra decades in which to put life into perspective.

How do they think differently from someone at my age or someone far younger than I am?

• They have been through enough up-and-down cycles in life to realize that neither success nor adversity is permanent.  Life has a mix of both every year for us.
• Just as those who have had near death experiences tend to worry less about just about every other problem, those who have relatively short life expectancies tend to consider daily problems to be of lesser consequence.
• They celebrate small successes every day.  At first glance, this would appear to be an acknowledgment that a person has failed to achieve more ambitious goals, but it actually increases the likelihood of more ambitious accomplishments.  Efficiently taking small, successful steps often gives an individual the ability to adapt to changed conditions and achieve success with fewer big failures.

Conversely, by encouraging older people to retire and disengage from active work, we inadvertently put them in a much more psychologically vulnerable position.  They lose the ability to see past the news headlines into the many good things that are happening.  They get fearful, when they should be celebrating the progress we are making on many fronts.

Why do I believe that to be the case?  Someone in the flow of the business, political, cultural, and community world has a much better understanding of reality than someone who gathers information from the mass media.  The TV media, in particular, is designed to report what it calls “news,” but what is typically a highly distorted and negative selection of the broader flow of events and trends.  Initially local news editors, but now national and global news editors as well, on all news stations select stories for broadcasting or printing based on the principle of “If it bleeds, let it lead.”

For this reason, although the world is less violent than it was two decades ago, and the absolute level of crime is the lowest it has been for decades, the sensational reporting of crimes gives the impression that violence is at an all-time high.

Recently, I met a highly accomplished journalist and author named Greg Behrman, who feels the same way I do.  We spend far too much time covering what’s wrong in the world, and not enough time spotlighting the things we are doing right, and that require considerable innovation in solving problems.  Think about this point for a minute in a number of contexts:

• As a country, we are seeing a significant increase in the percentage of people that are overweight or even obese.  We have a true public health crisis in slow motion.  That is no longer news.  We see it all around us, particularly in the Southeastern United States, and in the lower income parts of big cities.

However, I learned that New York City has actually stopped and even reversed the incidence of childhood obesity, but I did not learn it from the news media, but from a speech given by Dr. Tom Farley, the City’s Public Health Commissioner.  I am sure that the advisory board meeting at which Dr. Farley spoke was not the first time at which this news was made public, but it would be difficult to find this story in the popular media.

• We get the impression that we are a more violent world than ever before, but Joshua Goldstein recently published a book called Winning the War on War, which documents that the absolute level of armed conflict is declining over time.  Why do we not see these statistics dominating the airwaves?

• The U.S. has had great success in several public health campaigns over the last four decades in reducing the percentage of adults who use tobacco, the likelihood of automobile related fatalities, the likelihood of workplace-related accidents, and the incidence of alcohol abuse.  This is not broadly or frequently reported.

• Our air is cleaner, there is a lower incidence of acid rain, and the level of hazardous waste discharges in our factories is far lower than it was 40 years ago, but there is very little reporting on these positive environmental trends.

• In many respects, medical science has enabled us to achieve a better quality of life than was possible when I was growing up.  My wife was an early beneficiary of lasik surgery, which eliminated her need to wear contact lenses or glasses for everyday distance viewing (although she still wears reading glasses.)

Whenever I am down, I think of Irving Kahn, but more importantly, I think of the old Frank Sinatra song That’s Life, particularly one section of the lyrics:

I’ve been a puppet, a pauper, a pirate, a poet, a pawn and a king

I’ve been up and down and over and out and I know one thing

Each time I find myself flat on my face

I pick myself up and get back in the race

That’s Life, That’s Life

I tell you, I can’t deny it

I thought of quitting, baby but my heart just ain’t gonna buy it.”

We should take a moment upon reading this and celebrate Irving Kahn and everyone like me who keeps getting “back in the race.”  For, in doing so, he has clearly discovered the true fountain of youth.

As my family and I celebrate the holidays this year, we truly feel that we have gone through a rebirth from the many challenges we have faced in the past few years.  Objectively, our path to get our film into the market has been strewn with obstacles, some of which resulted from our inexperience and others of which resulted from the fact that we are trying to do something very different from the kind of film traditional studios produce, finance, and/or distribute. Similarly, my efforts to battle the day-to-day challenges of leading Dossia have presented challenges I did not encounter when I led a more established business at Pitney Bowes.

Oddly enough, we are more energized and happier at this time than ever before.  As I reflect on this strange feeling of happiness as a result of the adversity we have experienced, I think of a quote from Helen Keller:

“A happy life consists not in the absence, but in the mastery, of hardships.”

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In talking with Dr. Robert Green, one of the handful of leading-edge researchers and thinkers on the promise of genomics in transforming health and healthcare, I have gained some quite interesting insights.

Dr. Green is a physician-scientist at Brigham and Women’s Hospital and the Harvard Medical School and has focused much of his professional life on a subject of great passion to me, patient empowerment.  As strange as it may sound, he has had to do a considerable amount of clinical study work to prove to the medical community that the consequences of doctors telling patients that they are at serious risk of a degenerative and currently incurable disease are, on balance, positive.  His work in that regard has been done through a series of studies called the REVEAL Study, for which he has been the principal investigator.

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Many people have asked about the status of our From the Rough film project.  It is alive and well, and we have taken most of 2012 to take a fresh look at every component of the project. We are getting close to finalizing it, and expect the film to be released in 2013.

We looked more closely at the origin of our title, which came from a quote by Seve Ballesteros, the late, great Spanish golfer, who, when asked about what he would have wanted to be different about golf, said: “I’d like to see the fairways more narrow. Then everyone would have to play from the rough. Not just me.”

Initially, we understood his comment to be half-kidding and half-serious.  The serious part of his comment arose from the fact that he was the best player of his time, maybe the best of all time, in designing and executing on shots from the rough, or from any difficult lie or location.  What we did not understand was how these unique skills were foundational to who he was and why he succeeded.

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The reinventions of great companies

Pitney Bowes built a wonderful set of businesses that have served it well for 92 years, and the Company celebrated its 92^nd anniversary on November 16^th.  On that evening, I attended the 75^th Anniversary of the founding of the Company’s Oval Club, an organization that celebrates long service employees, by bringing retirees and long service active employees together.

One long tenured employee, Bob Hoffman, who retired after 56 years of service in 1995 and is now 92 years old, was very important to my success.  I worked closely with him early in my time at the Company.  Even then, I had many ideas about what the Company should do to grow its business.  He would politely and thoroughly tell me which ones had merit and which ones had been tried and discarded because they were fatally flawed.

The longer I spoke with him, the more I appreciated those who came before me. The most important lessons I learned from Bob were that the leaders of the Company over several decades had been highly sophisticated and innovative, and had to make courageous decisions under extraordinary circumstances.

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Today, September 11, 2012, is the 11^th anniversary of the 9/11 attacks, and like that tragic day, is a clear, cool Tuesday.  I remember that day well, as do all of us with some emotional connection to the day’s events.

I was in my sixth year as Pitney Bowes’ CEO.  I was at a breakfast meeting with representatives from our Main Plant.  It was a difficult conversation, because I was explaining why the Plant would eventually close (it closed in 2004).  The reason for its closure was not a cost-saving play, but the fact that postal regulations around the world were driving us away from printing fixed meter impressions on envelopes and toward variable digital printing.  Ink jet technology was the only viable alternative, and companies like Canon, Hewlett Packard, and Brother owned all of the critical patents on that technology.  Inevitably, they, rather than Pitney Bowes, would manufacture the low and mid-range products that had been produced in that factory for over 80 years.

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Vocational and Technical Education

As we just observed the Labor Day weekend, there is a tendency for the media and for elected officials to reinforce obsolete views of labor and of vocational and technical skills required to compete in the global economy. There is also a tendency to celebrate the wrong qualities of people they would generally characterize as being part of the “working class.” As a result many of us have image of “blue collar jobs,” the skills required to do them well, and vocational and technical education required to prepare people for them that is wildly out of date.

Why What We Celebrate is Obsolete

Blogger David Burr concisely described why the Labor Day holiday was created:

“The holiday originated in 1882 as a result of the labor movement and was intended to be a day of rest to recognize the efforts of the average working man.”

We need to reinvent what we honor for this holiday.  Labor Day was designed to recognize the value of the “average worker,” collective activity, labor union membership rights, and “hard work.”  The typical image of the “blue collar” worker is someone using muscular power to do a physically demanding, backbreaking task.  When I think of Labor Day as it has been celebrated historically, I am more likely to think of either the folklore of John Henry as a “steel driver” or the cleaning woman celebrated in Donna Summer’s great song “She Works Hard for the Money.”

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Joseph Stiglitz, a renowned economist, has just published a book entitled The Price of Inequality, in which he directly tackles the cost and root causes of societal inequality. While I do not agree with his broad recommendations or his overall view of the world, I believe that he correctly identifies inequality of political access and influence as the source of economic inequality.

Based on the experiences of being involved with both government and private sector marketplaces in which individuals have gotten very rich or successful, I would make four broad observations about economic inequality:

• More complex customer procurement rules or political systems increase inequality;
• More intensive government regulation to redistribute opportunity increases inequality;
• “Stimulative” government programs to increase opportunity increase inequality; and
• Many well-intended, but flawed, rating, ranking and measurement increase inequality.

Complexity, over-reaching government regulation, stimulus programs and badly designed rating, ranking, and measurement systems benefit people with pre-existing advantages and widen their advantages, and, in some cases, they become obscenely rich.

Increasing system complexity increases inequality.

When I was at Pitney Bowes, we were investigated several times for having achieved leadership positions in mail-related markets.  The Justice Department assumed that we must have done something wrong to have a leadership position that spanned several decades.  They were wrong, and, eventually, after five investigations in 22 years, they implicitly admitted that something other than bad conduct was behind our leadership position.

The technical and process complexity of how we evidenced and collected postal revenues, both through postage meters and mail service operations, gave us a huge advantage.  The postal rate structure for work-sharing discounts was extremely complex.  Success depended on successfully making arguments that caused the Postal Service and the Postal Regulatory Commission to approve increases in particular discounts of as little as .1 cents.  Every .1 cent discount increase we received gave us over $10 million of operating income.  To make these arguments required us to hire and educate postal economic specialists, who understood the unique economics of postal mail processing.  Without the complexity of postal economics, which few economists could master, we would not have the significant competitive advantage that enabled us to grow and be profitable.

There was nothing sinister about this complexity.  It was no different from the economics of other public utility pricing systems, but, because postal mail economics was a smaller perceived business opportunity, few economists attempted to master it, which gave us a big opportunity.

The more complex the discount structures became, the more difficult it became for our smaller competitors, many of whom were anxious to have us acquire them. Our experience is replicated every day as large private sector companies create very complex procurement processes that benefit incumbents or large, resource-rich vendors, at the expense of start-up businesses.

More intrusive government regulation and attempts to redistribute wealth, income, and opportunity have exactly the opposite effect.

This is the point at which I most completely diverge from Stiglitz and others sharing his point of view.  When governments try to “level the playing field” between those they believe to be advantaged and disadvantaged, they are more likely to increase inequality.

Complex and comprehensive laws and regulations that attempt to micromanage the economy to redistribute wealth increase inequality in two ways:

• They give advantages to those with more know how and resources to figure out how to play more effectively within the new rules.

New York City rent control laws have been in place since 1947. They have benefited wealthy people who can maintain a New York apartment and spend their own money for capital improvements, since no honest landlord can afford to invest in upgrading rent-controlled apartments for lower-income tenants. They also benefit unscrupulous landlords, because they are designed to protect absurdly low rents only while the existing tenant is in place.  Instead of improving the housing stock to increase the value of the property, landlords finding creative ways to force out or buy out rent-controlled tenants, either by renting adjacent apartments to rock musicians or motorcycle gangs, refusing to make basic repairs, or engaging in noisy construction. The rent control laws induce this dysfunctional behavior because they create a wide gap between the market rate and the rent control rate.  Wealthy tenants can fight these abuses, but the lower-income tenants rent control laws are designed to protect cannot fight back easily.

• They create a new class of people who thrive on being intermediaries, consultants, or other service providers in the marketplace created by these redistribution schemes.  Addressing the needs of these various intermediaries adds cost, complexity, and inequality to any marketplace these intermediaries touch.

Public sector labor unions clearly thrive when the government creates more jobs to “redistribute” wealth, since more government employees are needed in such an environment.  Civil service professionals do well by “monitoring” the disbursement of funds from government to “disadvantaged” people. Major agricultural corporations benefit from highly profitable food stamp programs.  Firms that provide specialized software for managing government social service programs make a lot of money licensing that software to non-profits that have to comply with complex government requirements.  Ross Perot became a billionaire because he mastered the intricacies of serving government programs, first at EDS and later at Perot Systems.  Not surprisingly, an individual, a small business, or an under-resourced large business will have an even greater disadvantage the more of these intermediaries with which they have to deal.

• Title IX has created a whole new cottage industry of parents, coaches, guidance counselors, college counselors, and providers of athletic equipment that benefit from building girl’s sports teams at the K-12 level. Wealthy, resourceful people “game” the college applications process at top-rated schools by getting their daughters into Title IX-induced sports like lacrosse, equestrian sports, squash, and rowing. Greater governmental intervention to redistribute wealth, income, and opportunity simply creates new opportunity for those who are already rich.  Title IX has created new opportunity for women, but has significantly skewed all sports toward wealthier women and men.  The sports programs that get cut to support a new women’s sports program in lacrosse, squash or equestrian sports are inevitably sports that are more accessible to lower income students, like baseball, track and field, or swimming.

Government “stimulus” programs get burdened by the inevitably costly, onerous and time-consuming audit and compliance programs that accompany them.  Wealthy, resourceful people are far smarter in navigating through these expensive requirements.

Elected officials so completely distrust those to whom they give money for stimulus purposes, and are so concerned about failing to catch fraud, waste, and abuse that they insert requirements that slow up the flow of money and siphon off money that should go toward stimulus.  This was amply documented in Michael Grabell’s comprehensive analysis of what went right and wrong with the stimulus legislation in Money Well Spent?  Many well-intended programs were delayed and costlier because of an excessive preoccupation with government rules and processes.

One example was the weather-stripping program that was going to reduce energy costs for homeowners, reduce environmental pollution, and provide middle-class jobs for people of moderate skills. Despite the program’s obvious merits, it was delayed for several months in communities that did not apply the resources to get the government to define “prevailing wages” for determining compensation.  Wealthier communities were far better able to drive the government to act than their economically challenged counterparts.

Major infrastructure programs end up in wealthier states and localities and major government spending programs often are disproportionately spent in wealthier communities, because these communities can marshal the resources to do what it takes to get the money, especially when the program requires matching funds.

My favorite example of this last point (although it did not arise from any stimulus legislation) was the case of Westhampton Dunes, a community formed in the early 1990’s at the western end of a barrier island in a super-wealthy resort area on Long Island.  A group of very wealthy real estate speculators bought up beachfront homes that had been severely damaged by ocean wave surges during storms in the late 1980’s, at prices ranging from $50,000 to $100,000 per property.  The damage to beaches and homes was caused by a shortsighted county supervisor decision not to fund the construction of protective barriers along several miles of beach (because he thought it only helped wealthy homeowners.)  The speculators petitioned the Army Corps of Engineers and the state of New York for 91% of the funds required for beach replenishment and the construction of protective barriers, and then assessed the wealthy owners of the beachfront properties for the remaining 9%.

After the Army Corps of Engineer project was completed, each property was worth millions of dollars.  The homeowners got very rich from this well-intentioned government program, because they had the capital and the network to assemble the property, the money and the lobbying strength.  The real estate speculators who benefited were far wealthier than those who sold their homes at $50,000 to these speculators.

Many well-intended rating, ranking, and measurement systems have the unintended consequences of increasing inequality.

Given the apparent importance of a college degree from a “good school,” the competition to get into “good schools” is more ferocious than ever.  Schools appear to be more exclusive than ever is that schools actually have the incentive to increase the number of applicants they reject.  The U.S. News & World Reports college ranking and rating system ranks schools higher, based on their “exclusivity.” As a result, many schools encourage applications from many students who, realistically, have no chance to be admitted.

The flood of applications creates additional complexity and risk for those who actually are qualified, but might be rejected, simply because admissions officers have too many applications to review and have to use shortcuts to screen out applicants.  Wealthier people spend a considerable amount of money and time working with college counselors, who help their children “game” the applications process.  The ranking system helps create the conditions that make this “gaming” necessary and more effective.

To bring greater “rationality” into the reimbursement system for physicians, Medicare and Medicaid adopted a system developed by a Harvard Medical School professor called the “Relative Value Resource Based System” in the late 1980’s.  Payments for clinical encounters were determined by a complex points system, which over-rewards complex procedures undertaken by highly-trained specialists, as opposed to simple cures through consultations by primary care physicians.  The end result: American has so lopsided a reimbursement in favor of subspecialists versus primary care physicians that we only see 4% of medical school graduates go into primary care.  This is one reason why our healthcare costs are so high relative to other developed countries.  We excessively reward skill and inadequately reward cost-effective performance.

Final comments

Stiglitz and others are correct that persistent and widening inequality is dangerous and destructive of the American dream.  However, the notion that government intervention is the “cure” for this inequality is misguided.  Government has done a great deal, in the interests of eliminating inequality in the past, to create the conditions that have led to the inequality we face now.  I do not believe that the future would be any different.