Health Care Also Not the Industry on Which to Build Our Future


Further to my post from earlier today, refer back to a Paul Edward Parker article from the Providence Journal last week.  Noting that manufacturing and health care have more or less flipped places when it comes to number of jobs over the last 25 years, Parker writes:

Two factors figure prominently in the shift, according to Paul Harrington, an economist at Drexel University who has studied Rhode Island’s job market.

Manufacturing could be done other places and cheaper than in Rhode Island, while the manufacturing operations that stayed in Rhode Island switched to automation, getting more done with fewer, highly trained workers.

But health care has to be done where the patients are, and, by and large, robots haven’t taken over the jobs — at least not yet.

Health care — at least its provision and practice, as distinct from the production of its tools — is inherently a secondary industry.  It serves people who are growing the economy doing other things.  If those people are not present, there is nobody to whom to provide the care, and if they are not doing anything to grow wealth, there is no money to pay for their care.

This is another data point in the running theme that I drew from Lawrence, MA, and the notion that Rhode Island is becoming a “company state” — by which I meant to invoke the much maligned idea of a “company town” in which a single company provides most of the work and, insidiously, essentially owns the local government as a department to manage its employees’ lives.  In part because government has destroyed economic incentives, the wealth-generating activities dry up, but those involved in government and its satellite industries (like health care and education) still want to keep their jobs, and (indeed) the demand for public services goes up as people lose work.

This turn of events produces all sorts of perverse incentives.  First, perhaps, comes the urge for protectionism, to keep other local industries, other than government, going as much as possible, but undermining the ability of non-insiders to find new directions or innovation in existing industry.  While hindering locals’ ability to respond to economic realities, the government also works to distort economic signals that people should consider going elsewhere, where there is work.  These joint efforts create a filter that tends to push the most economically motivated residents out while drawing in those who haven’t been able to find work elsewhere.  Naturally, because these people require government assistance (i.e., the services that government has decided to provide), government and its satellites don’t much mind the exchange, in the short term.

In the article, Drexel University Economist Paul Harrington sort of chokes on the concept that health care jobs are less desirable, for the local economy, than manufacturing jobs, but the reality is that they can’t be seen as an economy-sustaining industry.  Indeed, to the degree that the government forces their growth, health care jobs might veryu well be a sign of impending collapse.  Eventually the money dries up.

  • Rhett Hardwick

    It cannot be overlooked that “health care” is a service industry. It does not take something of low value and convert to something of high value, as does manufacturing. Does anyone know what percentage of “health care jobs” are housekeeping and serving food, etc?

    “But health care has to be done where the patients are, and, by and large, robots haven’t taken over the jobs — at least not yet.”

    Not yet. I read an interesting article last week where it was found that AI is already superior at diagnosis. “Where the patients are”? Doesn’t he know of the patients going to Mexico? Particularly for high profit elective surgery.

  • Raymond Carter

    Maybe we can have 10 times the number of doctors and nurses than we need. Then we can be rich—-like Cuba.
    Tommy Cranston

  • GaryM

    The issue of unintended consequences never enters the healthcare discussion. When the wages paid to medical professionals becomes low in relation to, for example, wages paid to an attorney, stock broker, or realtor, there will be fewer people willing to go through the grind of becoming a medical professional, resulting in an eventual doctor shortage.

    Places like Argentina, which I admit does have good socialized medicine, deal with this by paying everyone, even lawyers and judges, next to nothing. In their socialized society, everyone suffers equally, so becoming a doctor has more to do with social status than the cash (what the Brooking’s crowd calls “social equity”).

    I have some knowledge of this because my daughter calls Argentina her second home.

    Places like Argentina also provide a college education at almost zero cost reducing the impact of getting a medical degree. But try to buy a simple item in Argentina, like a basic dishwasher, and you will find yourself smuggling the item in across the border with Brazil.

    In short, to make socialized anything work, the pain has to be spread equally across the collective society. The key term here is “pain”.