Friday, September 22, 2006

White collar workers having problems getting jobs

Charles Smith over at Of Two Minds Blog does a book review of Bait And Switch: The (Futile) Pursuit of the American Dream by Barbara Ehrenreich. One of the the conclusions in her book is that we need a national health care system.

The issue is bigger than just the white collar workers that she focuses on in her book. One of the reasons that the commerce clause was put in the Constitution was to create a uniform national economy free of local barriers to trade.


U.S. Constitution, Article I, Section 8 clause [3]

To regulate commerce with foreign nations, and among the several States, and with the Indian tribes;


One thing that should be patently obvious to anyone who knows anything about macroeconomics: that when workers cannot leave one job and take another that is more suited to their abilities because they would lose their healthcare benefits it will cause a loss of productivity and efficiency. This is also true if they cannot have portability of their retirement benefits. That is one of the tremendous advantages of Social Security. No matter where you work, your Social Security goes with you. The same should be true for your health care and retirement benefits that you have earned. A national health care system would make workers more portable. That is even more critical at a time when economic forces are rapidly changing.

Even though American workers are more productive than ever, many manufacturing jobs are going overseas (or to Canada). One of the main complaints by businesses is the cost of health care. A national system would spread the risk and cost so that it could be controlled through the economy of scale.

Think of it this way: let's say that a single person gets injured with a broken bone. The cost of their hospitalization / treatment comes to $10,000.00. If they have to pay the entire cost themselves, the cost is pretty great (unless they are wealthy). Let's say they go to a church which has 100 members. Let's further assume that ever church member shares equally in the cost of their health care. The cost to each member of the church comes to $100 each -- not too bad. Now lets assume that every American of working age helps pitch in to cover the cost (250 million Americans / $10,000). That comes to $0.00004 each. Now I realize that when you get to that many potential claimants, that there will be more injuries and illnesses. However, the principle is still the same. The economy of scale brings down the cost to each individual overall.

This same principle also applies to Medicare if we allow our government, who buys prescription drugs for Medicare recipients. The economy of scale will bring down the cost of the precription drugs if we allow it to.

We can bring down business costs by creating portability in health care and retirement so that the worker can maximize their efficiency and productivity. This is the win-win-win situation that we have sought: increased profits with increased productivity for the business owner, while increasing the security and portability of the American worker.

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