*Key Note: Vermont Businesses for Social Responsibility

A month ago, I was standing in the Sala della Pace in the Palazzo Publico in Siena, Italy, looking up at a fresco by Ambrogio Lorenzetti depicting the virtues of good government and the graphic outcomes of bad government. In 1338, the Sienese councilors commissioned the fresco to remind the civic administrators and the citizenry of the bounty of good government and the pernicious consequences of government with bad people in power. In the early 14th Century, Siena had experienced a sustained period of peace and prosperity, understood by all to be the result of good governance.

The frescoes, almost unique at that time for their non-religious depictions, are full of rich details of medieval life: craftwork, trade, agricultural, construction even street vendors and dancing. The commune, is flanked by the virtues, the principle of which is Pax or Peace, shown as a beautiful reclining figure in white. Charity, Justice and Wisdom are also represented.

The central figures in Bad Government are Fear, Discord and Tyranny. Tyranny bears a cup of poison and a scroll reading “Because he looks for his own good in the world, he places justice, beneath tyranny. So nobody walks this road without Fear: Robbery thrives inside and outside the city gates.”

I looked up amazed by what I saw and also by the date of its creation, thinking sadly to myself “how little we have learned in the intervening seven centuries.”

The central political argument today is about government, whether it is intrinsically good or bad, when in fact, government itself is neither. There are good and bad public servants.

Today’s far right would have us believe it is a barely necessary evil that should be subservient to the natural ability and inclination of unregulated business to fulfill most or all of society’s needs. They oppose any taxation, federal debt, or private sector regulation and want to see the least possible interference by government.

Need I even bother pointing out the irony of this? We have an administration that has ballooned government spending and debt and intervened in the lives of its citizenry to a degree unparalleled in recent history. It has become the object lesson for its own preachments on minimal government. Providentially, this extremist view of government seems to be collapsing of its own incompetence but it still threatens to take society, democratic principle and diplomacy down with it. The same democracy we are trying to export by regime change is being subverted at home by our own leaders and our own political inaction. We are becoming the object lesson in our own principle of government.

What we have now is bad leadership. We will be truly defeated if we do not continue to believe in the potential for good democratic governance. Government is neither good nor bad. It is a reflection of its human makeup. Both business and government are merely forms and their function is dependent on the people at the helm. What really merits our attention and debate is what should fall to free enterprise and what should be the responsibility of government. Each has its role.

Healthcare, education, national defense, the criminal justice system, the preservation of cultural heritage, arts and humanities, national transportation and communication infrastructure, environmentalquality and disaster relief are, in my view, primary responsibilities of government. This does not mean that the private sector may not play a role in delivery, but, to varying degrees, the current administration has tried to wholly privatize each of these functions of governance. Contrary to current federal opinion, business can thrive with an effective, activist government committed to the well-being and security of its citizens. One might look to Sweden, a country with a national service requirement, national healthcare, a healthy economy and no national debt.

The decline in popular trust in government may be in large part be a function of how bad this government has been. But other trends, such as the increasingly money-driven and judicially manipulated electoral process certainly play a role as well. The seepage of Christian evangelism into government with its moral tests and hypocritical moral preachments often followed by scandal only alienates the non-Christian electorate. The demise of civil dialogue and debate in favor of innuendo and personal attack, the consolidation of media ownership and a steep decline in journalistic standards are all factors in the erosion of popular trust in government. But the greatest decline in public trust is the rise of politicians who betray that trust or are simply ill-suited to govern. We must also ask ourselves why those most qualified to lead us increasingly decline to do so.

We must keep reminding ourselves that these are the failures of individuals, not of democratic principles. We must hold faith in the capacity of good, intelligent and open-minded people to govern democratically to the benefit of society and its economy.

We have a shot at it in Vermont, but it won’t be easy. Though we are small, transparent and largely free of corruption, that small scale is both our blessing and our curse. We have only 620,000 people and a micro-economy that is finding it more and more difficult to sustain our vision of a benevolent society.

Educationally, 620,000 of us are served by 65 school superintendencies, 398 schools, 8,643 teachers for 97,437 students, the lowest student ratio in the country. In health care, we have 13 community hospitals and two academic medical centers. State government has 10,000 employees and it relies heavily on our 2800 non-profits. If we truly believe that Vermont is a socio-economic unit unto itself, we will have to assess the efficiencies of that investment. If we understand ourselves to be a semiautonomous part of a larger world, we are going to have to engage fiercely in the battle for better leadership and governance both here and in Washington. We are going to have to strengthen economic and social bridges with our neighbor states and provinces.

We seem to have deluded ourselves into believing that what was true before 1950 is still true – that we are an island, with definable borders and the ability to run our own state as we wish, when in fact we are now integral to, and dependent on our economic and environmental neighbors and a currently hostile federal system. The migration from intrastate economic loops in the 19th century to extrinsic ones today with our power sources, most of our financial institutions, our food sources and our communications infrastructure owned and managed outside of Vermont also makes a difference. It is not good or bad, it is just different.

There is much we have pioneered, but it is incremental, like the billboard law, the bottle deposit law, captive insurance and civil unions.

Let’s look at our opportunities. We have many, but they will take courage and resourcefulness to realize.

We have the opportunity to make health care better, but not perfect. In my 3-year experience in health care, I had a chance to see a great deal of what works and what doesn’t. The conundrum I could never resolve was …reconciling the for-profit motive and a fundamental social mission like health care. How does the “utilization review” insurance administrator possibly reconcile the dual mandates to meet profit targets and ensure the well being of the insured?

My wife and I travel a lot and always asked people we meet about their health care system. We have done this in France, Italy, Canada, the UK and Cuba. In so doing I have learned that popular feelings about health care are all anecdotal. People speak candidly. For the most part, they either revere their system or take it for granted and all grouse anecdotally about one thing or another. Italy, France and Cuba seem to have the most popular systems. Canada and the UK are hybridizing their systems. This both jeopardizes their economic sustainability and generates a two-class system.

Vermont’s regulatory approach has fostered the development of a largely non-profit health care system, and all hospitals in the state are not for profit. The wisdom of this approach is reflected today in the rising failure of many hybrid urban health systems that permit the private sector to siphon off the most lucrative medical procedures, especially those with higher levels of reimbursement such as hip and knee replacements or vascular surgery. Everything that is complicated, risky or expensive devolves to the bankrupt public hospitals, along with the enormous burden of ER visits by the 45 million uninsured. Non-profit hospitals have an “obligation to treat.” For profit hospitals do not. Recently, some private specialty hospitals have been found to be calling 911 when procedural complications occur in their own hospitals to have patients transferred by ambulance to public hospital emergency rooms.

Sometime in the next decade the US will follow the rest of the civilized world and have some form of national health care system. The lead up however, will be a heart-wrenching discussion that no serious politician seems yet to have the courage to initiate, rightly fearing that it will end his or her career.

Painfully, we will have to list what a health care safety net includes and what it does not. We will also have to come to grips with death, and acknowledge, as do other societies, that life does end quite naturally. We will have to retrain doctors to acknowledge and discuss the onset of death with patients and reinvest resources in palliative care and hospice rather than costly heroic measures.

If we can agree on a safety net, individuals and businesses that can afford to might then acquire for themselves or their employees broader gap coverage in commercial markets, while the health care safety net will cover all Americans with basic life-sustaining coverage. As I said, the person leading this discussion will have no future in political life.

Meanwhile what can we do in Vermont? We must look to our network of community hospitals and clinics and see them as an integrated health care network, not competitive entities. We must challenge them to integrate and deploy new services cost- effectively, sharing clinical specialties. Each will function as a primary and in some cases secondary community health center serving surrounding communities. Tertiary and quaternary cases will move up to the academic medical centers, Fletcher Allen or Dartmouth Hitchcock, for more complex care.

Our fixes must be both strategic and incremental. I am not sure that Vermont can afford a mini-national health care system with its micro-economy and 620,000 taxpayers. We can, however, and must take immediate steps towards getting all Vermonters covered.

We know from a recent McKinsey Study that nationally there is at least $98B in excess administrative costs on the insurer side alone, at least half of which is marketing and underwriting costs. This does not include other important cost consequences of the multi-payer system like those imposed on providers like denial management. The report finds another $66B paid in excess drug costs because of Congress’ obscene decision not to allow government negotiation for competitive Pharma prices. If reversed, there would be $164B in savings. To put these non-medical costs into perspective, the report projects the cost of insuring all Americans at about $77B a year.

How much of that savings is in Vermont? Can we go it alone with the severe cost–reimbursement distortions imposed by Medicare and Medicaid? I don’t know how.

Environmentally, we already lead the nation with the lowest carbon emissions per capita. Let’s not delude ourselves, however, and claim this credit by design. We owe most of this to nature’s self-healing capacity. 620,000 of us living on a highly re-forested landmass provide much of the basis for this achievement. This still positions us well to lead the nation by example, as we have done in the past.

Thanks to the work of the VCRD and many of you, communities are in the midst of developing energy plans to support the goal of a more benign environmental impact. With your leadership since we have no energy plan, we could create statewide residential, community and business competitions with several winning categories such as lowest per capita impact, most innovative use of technology and greatest community involvement. It could be grant-driven with a modest capital incentive from the State, the Vermont Community Foundation and environmentally focused private foundations. Many communities are already planning light bulb swaps, reviewing how their communities heat and provide energy for town buildings and schools and fuel town vehicles. Business is doing the same for obvious reasons. Thanks to NRG, Hinesburg has two new windmills, one helping to power the town library. Competitions could engage Vermonters in their communities and attract international attention to Vermont’s leadership, as it did when The Simpsons movie debuted in Springfield. But the prerequisite is leadership and I don’t see any from Montpelier. I do, however, see it in this room.

In agricultural, we can plan forward for continued agricultural use of retiring or bankrupt farm properties as Hinesburg has done with the Bissonette Farm. We can mitigate the flight of capital to growers and processors outside Vermont by building closed-loop agricultural enterprises that support the growth, processing and retail of locally-produced foods. We can even compete nationally with our artisan foods using an e-commerce co-op. We can deploy or expand facilities in our communities for 6-month farmer’s markets that provide covered stall space, community ovens and refrigeration, perhaps a small performance stage, toilets and parking to further encourage local food production, artisan foods and crafts.

In economic development, we must focus on retaining business we have and help it grow. We must incubate new enterprise that flows out of our 17 colleges and universities. As appealing as a new IBM or Toyota plant may be to some, it is not going to happen. We must set our sights on economic sectors that best utilize our workforce, our environment, our natural and man-made resources and initiate in those niches, developing centers of excellence as Ireland and Australia have done. Our core sectors appear to be:

  1. Sustainable Agriculture and Forest Products

  2. Tourism and Recreation

  3. Healthcare, Research and Wellness

  4. Higher Education, Research and Innovation

  5. The Green Economy: NRG, Grow Solar, Brighter Planet, Efficiency Vermont,

  6. Knowledge Industries: Software Development, Content Production, E-commerce, Captives, Communication technologies, Cultural Heritage, Arts and Humanities, et al.

I could go on and on. So could you I am sure, as could many thoughtful Vermonters who are full of innovative ideas and generous with their civic commitments, but this energy will not be harnessed without leadership and vision.

The politics of fear means we study things to death. We spend money on consultants instead of change when imperatives with common sense solutions stare us in the face. We are afraid to move forward until every last dissenter has relented. Leaders take risks, listen to dissent, drive consensus, act and then correct as needed.

Many of you, and many Vermonters, forge ahead in spite of Montpelier. Initiatives In economic and community development, applied research, the arts, agriculture, the environment are being lead by innovative and energetic risk takers like you, rather than by our elected leaders. Think how much more we could do with leadership, vision, 10,000 people and a 2.5 billion dollar budget.

We must turn away from the simple-minded political slogans of lazy slogans like: “the affordability agenda,” “take back Vermont”, “healthcare now,” “no more taxes”, defeat the bond issue”, “no socialized medicine,” “Save Vermont Farms.” The left and the right are equally guilty of this. It is ostrich politics. It gets us nowhere. Our solutions are in the center and they require good ideas, dialogue, leadership that listens and a consensus vision on who we are, what we value and where we want to go as a society.

We must get over our blind hatred of taxes and understand that taxes are rational investments in social well-being, which is fundamental to a vigorous economy. Business cannot function without a well-educated, economically stable and healthy workforce and consumer base – our schools and health care system do just that. We can and must hold politicians and government accountable for the effective investment of tax revenue with measurable outcomes. Simply hating and inveighing against them gets us nowhere.

Finally, you all have the vision, horsepower and experience to make this happen. You do every day in your own businesses. You can and must make Vermont better.

I do not often agree with Tom Friedman, but he got it right several weeks ago when he said the most important thing we can do for the environment is not to change light bulbs, but to change leaders.

Thank you (2772 words)

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