We shouldn’t be surprised that we’re seeing slow growth, ever fewer people employed, and wealth increasingly concentrated in the hands of very few. The tax, immigration, trade, and healthcare policies that have been embraced by both political parties over the period of 30 years ensure that’s the case.
Trade policy has served to give industries that are protected from overseas competition by patents, copyrights, or licensing a competitive advantage over those that produce goods which are by and large no longer protected by tariffs or quotas from overseas competitors. Doubly unfortunately, since in most of the world the intellectual property rights of U. S. corporations are routinely ignored, American consumers pay more for products protected by patents and copyrights than people overseas where patents and copyrights are unenforceable do. I’ve read (and published here) statistics suggesting that our adverse balance of trade would largely be rectified but for piracy.
Further, while strengthening trade ties with China in the 1980s was certainly a good thing for both countries, once China had pegged the yuan to the dollar it changed the nature of the game, laying the foundation for the problems that we see today with China buying a substantial amount of the U. S.’s debt while undermining our goods-producing economy with goods manufactured under near-slave conditions at a nearly zero cost of labor and without the labor, safety, and environmental regulations under which companies must operate in the United States all the while engaging in intellectual property piracy in electronics, pharmaceuticals, and so on at an almost unimaginable level.
Tax policy encourages U. S. managers to think in terms of the next quarter only and reduces the benefit of domestic capital investment. Much of what capital investment has taken place by American businesses has taken place overseas.
Immigration policy has ensured that Americans without skills compete for entry-level jobs with illegal immigrants who in some cases work off the books, furthering depressing the wages on offer for these jobs. Our naive and vague H1-B and L-1 visa policies have depressed wages in science and engineering and, worse, in combination with our trade policy which has encouraged companies to offshore engineering and high tech production, have convinced enough Americans that there’s no future in such jobs that the number of students electing to pursue engineering and science degrees (other than in the life sciences) has dwindled for more than a decade.
According to the Bureau of Labor Statistics about 139 million people in the United States are employed. Also according to the Bureau of Labor Statistics 14.1 million of those or roughly 10% are employed in the healthcare sector. The sector accounts for more than a sixth of the total economy. When you include the spending of Medicare, Medicaid, the Veterans Administration, other healthcare systems administered directly by state, federal, and local governments, and the employer contributions of the healthcare plans, it accounts for roughly two-thirds of all healthcare spending. Said another way tax dollars account for the preponderance of healthcare spending.
Taken together these things have implications, among them that each dollar spent on healthcare in the United States creates fewer jobs than it would in other sectors and that the sector is dependent on the health of the other sectors for its own health. That’s true of all other sectors, too, but in a very different way. No other sector has such opaque pricing, consumers separated from purchase decisions, and suppliers so influential in determining what will be bought and sold as in the healthcare sector. If the defense sector were deciding when, where, and how we were going to war, it might be analogous.
In my view the privileged status of the healthcare sector, subsidized with tax dollars and protected from competition by licensing, creates a drag on the rest of the economy, simultaneously reducing its international competitiveness and sapping the available investment and talent. Why put money and talent into something else when healthcare is such a sure thing?
I won’t deny that each of these policies has its advantages. However, they have also worked synergistically to reduce domestic capital investment, raise subsidized wages in the healthcare sector to remarkable levels, injuring American competitiveness, reduce the actual value of education even as its cost rises, hammer wages for nearly everybody who couldn’t get the federal government to protect them from competition, and put the country into a degenerative spiral from which its hard for me to see how we might escape.
The policies need to change. Unfortunately, rather than changing them we’re doubling down on them.