[ExI] More on Health Costs

Dan dan_ust at yahoo.com
Tue May 26 16:42:14 UTC 2009

--- On Mon, 5/25/09, Allen <artisan at halenet.com.au> wrote:
> Health Industry means jobs for people.

Um, no.  It could mean more, the same, or less.  And these jobs could be paying more, the same, or less.  There's no constant formula here and I'm uncertain what you mean exactly.  My guess is you're talking about more public funding of healthcare meaning more jobs overall -- as if the same or less public funding of healthcare must be the same or less jobs overall.  There seems to be no reason to believe there's a relationship here.

My guess is more public spending on healthcare might mean more healthcare jobs, but less jobs in other sectors of the economy.  Will this effect equalize?  Probably not, but it'd be strange if it were merely a matter of directing more public spending to one sector would absolutely create more and have no offsetting countereffect elsewhere.

> Recession means not enough 
> jobs.

Actually, I think one effect of a recession -- basically, the process by which the economy tries to recoordinate after an unsustainable boom -- is unemployment as people shift from unsustainable jobs -- e.g., in the US, from finance, real estate, home construction, and related industries that were obviously not sustainable to ones that are (a priori, no way to tell exactly what these are).  But the more important aspect of the recession is cleaning up malinvestments from the [unsustainable] boom.  these are different from employment because the capital structure is far harder to shift around.  E.g., workers in the finance, construction, etc. industries can eventually find employment elsewhere -- even if at reduced wages or after a period of retraining and the like.

A lot of capital will have merely been wasted -- as in, say, the example of a machine that makes a certain type of brick that is no longer saleable.  The machine might become as good as scrap and the user might have gotten it on a loan.  Such capital goods might have to be merely written off -- unlike workers who will eventually find other jobs.  (Of course, this depends on other factors, including government interference in the economy.  When the government provides unemployment benefits and wage supports (including a mandated minimum wage or support of coercive unionism), these tend to prolong unemployment by, respectively, providing an incentive not to return to work* and not allowing wages to lower to the market level.)

Also, any interference in reallocating capital or in the cleansing process will prolong the recession and might lead to a secondary unsustainable boom.  This is being done now -- as is the case with most recessions -- by bailouts, lowering the prime lending rate, continued but increasing inflation [of the money supply], and more regulation and control of investment (e.g., the prohibition on short-selling last year**).

>   The wealth of the country depends on its
> import/export ratio.

I disagree.  I'm unsure of an unambiguous way to measure wealth, but exports have to be sold and imports to be bought.  Eventually, any trade has two sides, both of whom expect to benefit (or they would not trade).  It's ridiculous to believe one can export one's way to prosperity or import one's way to poverty alone.  Usually, something more pernicious is involved, such as inflating (or relatively inflating) money supplies or public debt.  In the former case, what looks like prosperity -- more exports sell as the exporting country's money supply inflates*** more than the importing country's -- is actually a chimera because exporting entrepreneurs expect to make profits, but they don't factor in or factor in enough inflation and actually end up losing -- meaning the export end of being a subsidy to the importer AND eat up wealth in the importing country.

In the latter case -- public debt -- the debt will eventually have to be repaid usually at interest meaning, all else being equal****, higher taxes or inflation in the future which will both lower the 

>  Therefor I, in the process of costing the
> Australian government some 
> dollars at present, don't feel one bit guilty. I have
> always worked at one thing 
> or another, building up my adoptive country and am now
> helping to privide 
> work in radiology etc!

This sounds like an example of the broken window fallacy.  Yes, your use of healthcare there does send more funds into that sector, but you're forgetting the cost side of the equation.  Here's the Wikipedia run down on the fallacy:


Were this really beneficial, we should all try to use up as much healthcare as possible right now.  But it's not.  This doesn't come cost-free and use of people and resources for healthcare comes at the expense of not using them elsewhere.  For Extropians, think of how much of this waste means less people and less resources for technological advances.



*  I personally know people who use unemployment as a way to take a break from work -- who are actually eager for a lay off.

**  In this example, prohibitions against short-selling make it much harder for asset prices to re-adjust.  This is similar to other forms of price control and it tends to protect big players and established market players -- and, notably, such big players and the established insiders lobby for prohibiting short-selling to protect their market position at everyone else's expense.

***  Or there's an expectation it'll inflate a lot more -- as when inflation ramps up, sooner or later, market actors come to expect it to ramp up even more.

****  It's a fool's belief that things will be so much better that it's good to borrow now and spend in hopes of winning the lottery tomorrow and not having to worry about long range bad outcomes.


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