Economic Update with Richard D. Wolff

[S9 E43] U.S. "Profit-Driven Medicine"

Date: November 7, 2019
Guests: Dr. Mike Magee, medical historian and author

Episode Overview

Richard D. Wolff delivers a two-part episode focused on how economic dynamics shape medicine in the United States. The first half provides updates on economic trends and policy actions around the world, highlighting their implications for social equality and systemic stability. In the second half, Wolff interviews Dr. Mike Magee, author and former Pfizer executive, exposing the inner workings of the American medical industrial complex and contrasting it with healthcare systems abroad.

Part I: Economic Updates & Global Trends

1. Berlin’s Rent Freeze: A Sign of Backlash (00:00–04:00)

• Berlin’s Legislature: Coalition government (Socialist, Green, and Left Parties) passes a law freezing apartment rents for five years, with minor adjustments for inflation.
• Implications: Popular among Berlin’s many renters; similar movements in Munich, Amsterdam, and globally as public backlash rises against capitalist-driven inequality.
• Context: Reflects broader unrest, similar to protests in Chile and Lebanon.
• Quote:
  "Inequalities being bred by modern capitalism are beginning to generate a broad backlash." (03:10, Wolff)

2. Corporate Debt and Instability (04:00–08:00)

• Post-2008 Crash Response: Governments dropped interest rates, leading corporations to unprecedented debt levels.
• Risks Identified by IMF:
  – 40% of corporate debt in major economies is unsustainable if there’s a downturn even half as severe as 2008.
  – Many corporations used cheap debt not to grow, but to buy back shares, inflating stock prices and enriching executives.
• Systemic Warning: "Capitalism is a system that is fundamentally unstable, always has been." (07:20, Wolff)

3. Coercive Free Labor in Los Angeles (08:00–10:30)

• Issue: Up to 5,000 people must either go to jail for minor infractions or "work for free" for the county—likened to modern-day slavery.
• Ethical Challenge: "You are not supposed to threaten people in order to get work done." (09:20, Wolff)
• Concerns: Raises questions about excessive punishment and whose interests such coerced labor serves.

4. Inequality and Social Unrest in France (10:30–12:30)

• Yellow Vest Movement: Recent French government report confirms increasing inequality.
• Labor Strikes: Firefighters and police have joined strikes—historically a sign that a government’s legitimacy is waning.

5. Co-determination & Worker Empowerment (12:30–15:30)

• Sanders’ Proposal: 20–45% worker representation on corporate boards (mirroring German "mitbestimmung").
• Analysis:
  – Improves democracy in workplaces, but does not solve capitalism’s core issues of inequality and elite dominance. – Comparison to universal suffrage: doesn’t necessarily upend concentrated power.
• Quote:
  "Giving workers that control...has not compromised or hobbled capitalism in that country. Not at all. But...it did not change the basic control...or the basic patterns of capitalism." (14:30, Wolff)

Part II: Interview with Dr. Mike Magee — The Medical Industrial Complex (16:00–28:30)

1. Introducing Dr. Mike Magee (16:00)

• Background: Author of Code Blue: Inside the Medical Industrial Complex; worked as a country doctor, at Pfizer, and as a medical historian.
• Quote:
  "Healthcare in America is the tapeworm on our economic competitiveness." (16:18, Magee, quoting Warren Buffett)

2. What is the Medical Industrial Complex? (16:42–17:20)

• Definition:
  "A conspiratorial and collusive network of individuals and organizations that are pursuing, in healthcare, profitability above all. They deal in each other and they deal in everyone except the patient." (16:50, Magee)
• Consequence: System’s complexity is intentional, serving profit over patient care.

3. U.S. Healthcare: High Cost, Poor Outcomes (17:20–18:51)

• Facts: U.S. spends twice as much as peer nations, lacks universal coverage, and has worse outcomes (e.g., maternal and child mortality).
• Quote:
  "In any other industry that would have been the cause for soul searching and change… the medical industrial complex is the explanation for why this situation persists." (18:27, Wolff)

4. Systemic Complexity and Waste (18:51–20:08)

• Staffing: 16 non-physician workers per doctor; half have no clinical function.
• Administrative Bloat: Over half a million Americans sell health insurance alone.
• Result: Wasteful bureaucracy, misallocated resources, and poorer patient outcomes.
• Quote:
  "The more complicated it is, the less you know, the less you know, the more we pay." (18:56, Magee)

5. Comparison: Canada vs. U.S. (20:08–21:29)

• Myths Debunked:
  – More doctors move to Canada, not the reverse;
  – Canadian doctors make more, not less;
  – Canada allows private supplemental insurance, but focuses public funds on health, not profit.
• Critical Distinction: Canada started with "How do we make Canadians healthy?" while the U.S. prioritized "How can we make medical care profitable?" (21:21, Magee/Wolff)

6. Social Determinants of Health (21:29–22:33)

• U.S. Focus: More money spent on medical procedures than on broader factors (housing, clean environment, etc.) vital for health.
• Contrast: Other nations balance social investments, resulting in healthier populations.

7. Bureaucracy and Insurance Waste (22:33–24:10)

• Personal Anecdote: Six office workers in a dermatologist’s practice exist solely to battle insurance companies.
• BIR (Billing and Insurance Related) Expenses: 10–15% could be eliminated with a single-payer system.
• Quote:
  "Just in the billing apparatus that we have, we waste 10 to 15% of our resources." (23:30, Magee)

8. Pharmaceutical Profiteering and Marketing (24:58–27:24)

• U.S. Drug Prices: Americans pay more than double due to lack of negotiation and aggressive marketing.
• Origins: Modern pharmaceutical sales and disease branding started with Arthur Sackler in the 1950s.
• Direct-to-Consumer Advertising: Only legal in the U.S. and one other country; advertising costs outpace research budgets.
• Quote:
  "We should always remember that pharmaceutical companies spend more in aggregate on medical advertising than they do on research. That tells you a lot." (27:00, Magee)

9. The Lipitor Example (27:24–28:00)

• Insight: Lipitor became a $10 billion-per-year drug not because it was uniquely effective, but due to Pfizer’s marketing power.

Memorable Quotes (with Timestamps)

• "Inequalities being bred by modern capitalism are beginning to generate a broad backlash."
  — Wolff (03:10)
• "You are not supposed to threaten people in order to get work done. It's an extraordinary exposure."
  — Wolff (09:20)
• "Giving workers that control...has not compromised or hobbled capitalism in that country. Not at all. But...it did not change the basic control."
  — Wolff (14:30)
• "Healthcare in America is the tapeworm on our economic competitiveness."
  — Magee (16:18, quoting Buffett)
• "A conspiratorial and collusive network...pursuing in healthcare profitability above all. They deal...in everyone except the patient."
  — Magee (16:50)
• "The more complicated it is, the less you know, the less you know, the more we pay."
  — Magee (18:56)
• "America is the only country in the world where we spend more on the actual delivery of health services than on all other social determinants of health combined."
  — Magee (22:07)
• "We should always remember that pharmaceutical companies spend more in aggregate on medical advertising than they do on research. That tells you a lot."
  — Magee (27:00)

Key Takeaways

• The U.S. "profit-driven" medical system is organized to serve investors, not patients—intentionally engineering complexity to profit various stakeholders.
• Systemic issues like administrative bloat, aggressive marketing, and focus on profit rather than health make the U.S. system expensive and ineffective.
• Canadian and other developed nations achieve better outcomes by beginning with the goal of health, integrating social determinants, and not privileging profit motives.
• Pharmaceutical marketing and insurance-related waste drive up costs; public intervention and simplification are seen as critical steps for reform.
• Policy efforts like rent freezes, labor strikes, and proposals for workplace democracy are global signs of resistance to unchecked capitalism and growing inequality.

Suggested Listening Segments

• 00:00–04:00: Berlin rent freeze and global economic unrest
• 04:00–08:00: Corporate debt, stock buybacks, and instability
• 16:00–18:00: Introduction of Dr. Mike Magee and the Buffett quote
• 18:51–20:08: Administrative bloat and core problems in U.S. medical care
• 22:33–24:10: Insurance bureaucracy anecdote and BIR expense waste
• 24:58–27:24: History and impact of pharmaceutical marketing

This episode compellingly argues that the dysfunction of U.S. healthcare is a deliberate feature of its profit-driven structure, and only radical systemic overhaul will refocus it on actual health outcomes. Dr. Magee’s insights crystallize the ways policy, business, and history intertwine to keep patients—and the broader public—on the losing side.