The bulls on CNBC touted the increase in health care employment in the most recent Non-Manufacturing Institute for Supply Management Report on Business. Similarly, Fox Business News trumpeted growth in health care employment, but did point out these jobs paid substantially less than jobs in the manufacturing sector. What both news outlets missed was that these jobs were derivative. These positions are substantially funded by the productive sectors of the economy.
Economic Illiteracy
Michael Shedlock this week focused on a major theme plaguing America, economic illiteracy. See Are Teachers to Blame for Economic Illiteracy? Nowhere is this lack of economic literacy more evident than in the service sector in general and health care in particular. If polled, most Americans would most likely answer that the government or insurance companies provide health care in the United States. Medicare and the current debate on health care reform only add to this misperception.
Thank Goodness for the Private Sector
Health care money comes from the support of the private sector which directs a portion of a workers’ compensation to paying health insurance premiums for their employees. Public sector employers also pay health insurance premiums for their employees. However, in the case of the public sector, that employer is recycling tax receipts, real money, received from private sector activities. In short, without a productive private sector there would be no health care support.
Restoring Economic Literacy
Americans have come to expect a “free lunch” from the government. Of course, this is fantasy; there is no free lunch. Health care is paid for by our productive enterprises and manufacturing was the lynchpin. Further, other service industries such as law, insurance, travel, leisure, entertainment, and others are derivatives of productive manufacturing enterprises. When the economy turned down law firms were among the first to layoff partners and associates. Without a vibrant private economy legal activity declined, with fewer contracts real estate transactions, mergers, acquisitions and frivolous lawsuits. Corporations reduced their legal budgets. Similarly, other service businesses contracted.
Outsourcing lucrative manufacturing jobs and global wage arbitrage have only worsened the unemployment situation in the United States. Reliance on a service economy and public sector employment has been false bedrock for our system. If we want first class health care, we must bolster the private manufacturing sector and reduce the public sector. Government dominance of our health care system and other service sectors (think banking) only ensures larger deficits, continued recession, higher unemployment and an inadequate, underfunded, cheap, quick and dirty, band aid solutions health care system.
That is not a good prescription for anyone’s health.
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