There’s an idea floating out there that the slow-mo collapse of Ford (F) and GM (GM) is somehow a symptom of our lack of nationalized healthcare. The paperback logic is that while GM and Ford are spending to insure all their employees, European and Japanese competitors don’t have this cost, and thus have a better cost structure. So, they argue, it’s time to nationalize healthcare like all of the other “quote-unquote” civilized countries.
We don’t need to have a full debate over socialized or nationalized healthcare to point out out some problems with this argument
- There are many, many domestic companies that compete effectively on the global stage, despite having to pay the healthcare costs of their employees. If healthcare were crucial to the success or failure of Detroit, it would be so to many other firms in other industries.
- Foreign automakers have set up factories here and they’ve proven to be economical. If healthcare costs were so crucial, the Toyotas and Hondas of the world would be hesitant to build factories in any country where that cost isn’t borne by the government.
- Nationalized healthcare isn’t free, just because it’s subsidized by the government. The government pays for health insurance with taxes — taxes that are levied on workers and companies. Our corporate tax rate is much lower than Japan’s corporate tax rate, so the argument could just as easily go in reverse. One imagines that if the tables were turned — if GM and Ford were eating Toyota’s lunch — Japanese pundits would be arguing that the government needed to cut back on social services and reduce taxes for there to be any hope of global competitiveness.
Again, none of this is to say that a socialist healthcare system is, per se, a bad idea. That’s a different debate. It’s just that the global competitiveness argument is weak.
One other unrelated point on healthcare. Both market-based, state-based or mixed (like we have) systems face the same challenge of allocating scarce resources against a limitless desire for health spending on the part of patients. There’s no way to avoid that economics. A recent case in the UK, where a man was denied an experimental, but expensive cancer therapy highlights the issue well.
Remember, all through the election our politicians went out of their way to find people denied some potentially life-saving treatment, as prop to warn against corporate greed. But corporate greed isn’t the issue. The issue is scarcity, which is why the UK’s National Health Service (which has no bottom line or shareholders) has to make the same type of tough decisions.
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