The Economic Determinants of Homeland Security: Why The U.S. Is A Better Bet Than China or Russia.

Posted on | April 17, 2014 | 1 Comment

Mike Magee

Homeland security is all about economics. And the two levers most critical to the U.S. economy are energy independence and health care. On these two measures, I like America’s odds when compared to China and Russia.

Growing up through the 50’s and 60’s, I’d listen to my parents discuss politics with their friends. My father carried the bias that foreign policy trumped domestic issues. Some of his friends would argue otherwise. As circumstances at home and abroad shifted, their opinions would harden or soften depending on the country’s situation, the economy, and America’s appetite for engagement versus isolation.

Now fifty years later, the clear demarcation between foreign and domestic affairs has largely disappeared. And while we still have waves of enthusiastic zeal for foreign interventions versus cautious retrenchment, the country seems to have absorbed a general truism – economic power equals homeland security.

In this regard, the United States has accomplished much in the past six years. We have addressed an historic financial crisis – albeit it one that resulted from our own deficient financial regulatory systems allowing banks “too big to fail” to fail us all. We have gradually extricated ourselves from Iraq and Afghanistan after taking bin Laden’s bait, an action that has stemmed the outflow of national treasure – both human and financial. We have positioned ourselves to be energy independent – and even more to be an energy exporter, which as we have seen with the Ukraine experience may prove to be strategically critical. And finally, we have broken through the status-quo on health care, and are beginning to see proof that prevention may yield enormous positive economic results.

When we look at our traditional adversaries, we see a very different trend line. The Wall Street Journal this week had a feature on the Chinese building bubble and the risks of foreign investment in this region.(1) Yes, an incredibly large market, but a long list of liabilities and vulnerabilities including: 1. Widespread fraud in local and regional governments. 2. “Build it and they will come” speculation 3. Environmental degradation with serious growing water scarcity and air quality issues. 5. Huge and exponentially growing chronic burden of disease thanks to cigarette consumption, unhealthy environments, and variable and constrained health resources. Add to these, Americans increasing desire to “build it at home” and avoid the cost of shipping product of variable quality from overseas producers.

And then there is Russia, which, thanks to Putin fresh off the $50 billion dollar Sochi Olympics, is now stuck with absorbing an economically troubled Crimea into its already stagflated $2 trillion economy. Low birth rates have created an inadequate work force in both quantity and quality. Russian banks have adjusted growth rate projections as the World Bank predicts near 2% deflation of their economy this year. This is in the wake of a $70 billion capital outflow as Putin rattles his saber. And just this week, a 3% drop in one day of the Russian stock market which is down 10% from March.(2)

And then there is America, where the whine, whine, whine and pick, pick, pick of a vocal minority about the performance of our President, at home and abroad, is relentless. What is the news from home? Well, it’s pretty good actually, especially in health. When President Obama managed to push through the Accountable Care Act a few years back he did more than reform our insurance system. More importantly, he unlocked the status-quo prison gates of a century old, heavily compromised and expensive system, and invited innovation. Make it better. Make it more efficient. Make it faster. Make it smarter. Make it more convenient. Make it more preventive. Make us healthier.

If a report this week on diabetes is any indication, we’re on the right track, and the economic rewards of enhanced productivity could be enormous. Our new competitive and inclusive approach, outcome driven and evidence based, has seen a 31% decline in heart disease since 1990. Even more striking, in patients with diabetes, heart attacks are down 68%.(3) Behind those numbers are an intensive team based focus on vulnerable populations and an evolutionary plan to manage risk factors with a combination of behavioral and pharmacologic solutions. This is what happens when you engage and put patients interests and the nation’s interests ahead of your own.

If we continue to move deliberately and cautiously as we have for the past six years, avoid being drawn into offshore financial sink holes, focus deliberately on environmental and population health, and concentrate on more equitably expanding quality of life to all Americans, the future looks bright. And regardless of your political persuasion, you can thank our current leadership for that.

For Health Commentary, I’m Mike Magee

References:

1. Davis B, Fung E Housing Trouble Grows in China. WSJ. April 14, 2014.

2. Herszenhorn DM. Russia Economy worsens even before sanctions hit. NYT. April 16, 2014.

3. Gregg EW et al. Changes in Diabetes-Related Complications in The United States, 1990 – 2010. NEJM. April 17, 2014. 370: 1514-1523.http://www.nejm.org/doi/full/10.1056/NEJMoa1310799