There isn’t a magic solution, but I do think that markets would help in bringing down medical costs. If I have insurance and can go to a doctor for free (no co-pay insurance from my company) or stop by the Minute Clinic and see someone who can give me the same care (or send me to the doctor if they are not sure) but I have to pay $20, I know I’ll choose the doctor. Even though I know the social costs are much, much higher, and that by going to the doctor, I’m making it harder for the Minute Clinic to stay in business and reduce health care costs.

But the idea that someone can decide all this stuff for me, so I don’t have to think about it, or worry that I made a mistake and chose the wrong thing, is pretty appealing to many (me?). So I understand the appeal of centralizing the process, either with an insurance company bureaucracy or the intervention of some government. But I also know that centralization can never work very well (information economics) and will stifle innovation (a hard to determine but real cost).

Here’s a reasonable article arguing for the market solution. But I think there is a way to explain this even more simply and convincingly. I hope someone tries.

Now, please understand that I am not a geologist and have no expertise about drilling for oil. But I do understand that when the price of something goes up, one of two amazing things happen (or a mixture of the two): demand goes down, or people find a way to supply more.

It hurts to fill up the car with gas these days, but here are two independent stories that are different from the usual gloom and doom we read everyday: oil field development in North Dakota and the Falkland Islands.

Hal Varian is a very smart guy who was at UC Berkely and is now at Google. Here’s an interview in the NY Times, and an earlier one in the Wall Street Journal. Good reading and some good advice.

Interesting article in the NYTimes about Microsoft’s offer for Yahoo. Seems to me that Microsoft is trying to sort out what business it is in in the long run, especially with the advent of open source software and on-line tools (Google docs anyone?). The Yahoo strategy seems to indicate that Microsoft is betting that computing is becoming Web 2.0 enabled (rather than driven by software loaded onto your computer). As a thought exercise, consider the minimum amount of software you would need on your computer to do most (all?) of your work. BTW, is this the market that the Apple Air is targeting? If you have everything on the web, a DVD drive and lots of USB ports aren’t as important, eh?

I had not thought about the SAP strategy before reading the article, but that provides a completely different strategy, where in fact Microsoft products (Office, Outlook, etc) continue to be purchased because of their integration with the software that drives enterprises. Individuals use Office-like tools and web based email, but Microsoft stops thinking of them as their customers.

What are the margins in these two businesses? This strikes me as a very interesting case study: the company knows the current business model is not sustainable and has two very viable ways to reinvent itself. Which does it choose and how does it decide?

How many people actually contribute to wikipedia? Do they contribute a little or a lot? Here is an article about some research into how democratic collaborative sites like wikipedia and digg are.