Paul Krugman: Bad for the Country

Paul Krugman continues his series on the need to fix our health care system. Here's a condensed version:

Bad for the Country, by Paul Krugman, NY Times: "What was good for our country," a former president of General Motors once declared, "was good for General Motors, and vice versa." G.M. ... has announced that it will eliminate 30,000 jobs. Is what's bad for General Motors bad for America? In this case, yes. ... I won't defend the many bad decisions of G.M.'s management, or every demand made by the United Automobile Workers. But job losses at General Motors are part of the broader weakness of U.S. manufacturing, especially ... manufacturing that offers workers decent wages and benefits. And some of that weakness reflects two big distortions in our economy: a dysfunctional health care system and an unsustainable trade deficit. ...

[L]ast year General Motors spent $1,500 per vehicle on health care. By contrast, Toyota spent only $201 per vehicle in North America, and $97 in Japan. If the United States had national health insurance, G.M. would be in much better shape ... Wouldn't taxpayer-financed health insurance amount to a subsidy to the auto industry? Not really. ...[T]ying health insurance to employment distorts the economy: it systematically discourages the creation of good jobs, the type of jobs that come with good benefits. And somebody ends up paying for health care anyway. ... either ... taxpayers or ...those with insurance. Moreover, G.M.'s health care costs are so high in part because of the inefficiency of America's fragmented health care system. We spend far more per person on medical care than countries with national health insurance, while getting worse results.

About the trade deficit: ... The flip side of the trade deficit is a reorientation of our economy away from ... manufacturing, to industries that are insulated from foreign competition, such as housing. ... The trade deficit isn't sustainable. ... [O]ne of these days the easy credit will come to an end, and the United States will have to start paying its way in the world economy. To do that, we'll have to reorient our economy back toward producing things we can export or use to replace imports. And that will mean pulling a lot of workers back into manufacturing. So the rapid downsizing of manufacturing since 2000 ... amounts to dismantling a sector we'll just have to rebuild a few years from now.

I don't want to attribute all of G.M.'s problems to our distorted economy. One of the plants G.M. plans to close is in Canada, which has national health insurance and ran a trade surplus last year. But the distortions in our economy clearly make G.M.'s problems worse. ... G.M.'s woes are yet another reminder of the urgent need to fix our health care system. It's long past time to move to a national system that would reduce cost, diminish the burden on employers who try to do the right thing and relieve working American families from the fear of lost coverage. Fixing health care would be good for General Motors, and good for the country.

[See also Paul Krugman in Money Talks:  Denial and Deception.]

Previous (11/21) column: Paul Krugman: Time to Leave
Next (11/28) column: Paul Krugman: Age of Anxiety

Comments

[anne]

http://select.nytimes.com/2005/11/25/opinion/25krugman.html

About the trade deficit: These days the United States imports far more than it exports. Last year the trade deficit exceeded $600 billion. The flip side of the trade deficit is a reorientation of our economy away from industries that export or compete with imports, especially manufacturing, to industries that are insulated from foreign competition, such as housing. Since 2000, we've lost about three million jobs in manufacturing, while membership in the National Association of Realtors has risen 50 percent.

The trade deficit isn't sustainable. We can run huge deficits for the time being, because foreigners - in particular, foreign governments - are willing to lend us huge sums. But one of these days the easy credit will come to an end, and the United States will have to start paying its way in the world economy.

To do that, we'll have to reorient our economy back toward producing things we can export or use to replace imports. And that will mean pulling a lot of workers back into manufacturing. So the rapid downsizing of manufacturing since 2000 - of which G.M.'s job cuts are a symptom - amounts to dismantling a sector we'll just have to rebuild a few years from now....

[anne]

Among your many strengths and ranging interests, you have a more consciously developed philosophy than shows in a couple of instances in which I have grumbled about economics that is not consciously grounded philosophically. Science does not conduct itself, as Israel Scheffler would tell us, we have an overview from suggestions questions to setting up a methodology. Self-conscious science :)

[calmo]

Reflecting on that word,"reflects" here:

"But job losses at General Motors are part of the broader weakness of U.S. manufacturing, especially ... manufacturing that offers workers decent wages and benefits. And some of that weakness REFLECTS two big distortions in our economy: a dysfunctional health care system and an unsustainable trade deficit."

I think "reflects" is light, weak, and misses the leadership, (possibly initiating) role that GM has played in spearheading that dysfunctional national health care system, those trade deficits, and the general hollowing out of the American economy.

Ok it might be on the nitpickety side, but the pickins with Krugman are always a little slim, no?
I would like to insert "dramatizes" to capture first that this company has an audience, the boomers, like no other (those bankrupt airlines for instance did not have our hearts); that this company has brothers (Ford and Chrysler) waiting in the wings to add clarity to this role (not merely about a failure of an auto company or even an auto industry); that the financial adjustments in the auto sector to adjust/manipulate the pension and health care funding may serve as models for the public sector --just as GM served as a model for the other smaller private companies in those heady decades long past.

Sorta. This decline of GM, reflecting not only a decline of our [the possessive is important] manufacturing prowess, but also the lousy trade balance and dysfunctional health care system --is not exactly in focus (maybe only for me).
A Huge and important topic that needs piles of attention.

[save_the_rustbelt]

Krugman has discovered the costs of his "more trade at all costs" policy, so he needs a scapegoat.

Ah ha, healthcare is the scapegoat. If we just had national healthcare we could be competitive.

My cat knows more about healthcare than Krugman, being an economist and a columnist does not make him a genius or diety.

[Blue Cross of California]

Krugman shows many great perspectives on health care. I agree with him on his opinions of health coverage and I hope we can soon improve our heatlh care system.

[calmo]

Thank you Blue. Krugman is in a league by himself --no one else has such a devoted following of critics from right wing think tanks. Entire reputations are built on dismantling, dismembering and generally mutilating his claims --they help demonstrate the thoughtfulness that resides in K's column and we should be thankful.

But savetherust, I expect more from you. This is either a failure in reading comprehension or a deliberate miscasting.
K is not looking for a scapegoat.
And this is silly and fails badly at trying to be cute:
"My cat knows more about healthcare than Krugman, being an economist and a columnist does not make him a genius or diety."

We are not looking for God or geniuses, just some honest to god thinking. Surely you can contribute?

[jay weil]

Have been trying without success to reach you. Am hoping you might either support or dispute my idea that a good deal of the current economic bouyancy in the US is a result of our defense spending, rather than upper income tax cuts as the Administration claims. What do you think?
J. Weil

[Mark Thoma]

jay - I have made the same point. E.g. , see this post for one example. So I have no problem at all with that interpretation.

[anne]

Agreed completely; not the sort of spending that will be to our benefit or any country's benefit in years to come but, yes, there really has been and is a war and occupation in Iraq.