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.