2013 June 23 Sunday
No Way To Emulate The Success Stories Of Our Time

One reason to to read Marginal Revolution is that Peter Schaeffer shows up in the comments:

The Washington consensus has definitely lost its credibility in the last few years. However… No new model has replaced it. Chavism (Venezuela’s system under Hugo Chavez) hasn’t attracted a lot of followers for obvious reasons (not enough oil). China’s model is the supernova success of our time. However, their is no ‘China model’. China doesn’t promote itself as a model (so far) that the rest of the world should emulate (unlike China under Mao or the United States today). Nor is it obvious how other countries might ‘be like China’.

Europe would like to be a model. However, Europe is so visibly failing that virtually no one (outside of Europe) thinks that Europe’s combination of gigantic welfare states, neoliberal economics, etc. is a plausible system to emulate. That’s really the story of our time. The gods have fallen. The success stories of our time either can’t be emulated or don’t want to be replicated. Of course, no one is much interested in the ideas of the losers.

The success stories can not be emulated. Even worse, the success stories are turning into failures. Europe is a case in point: The economic disaster in Greece is part of a larger economic depression in Europe with economic contraction for the last 6 quarters.

The happy talk about how immigration provides a way for a country to improve has run up against harsh reality too.California used to herald changes that many expected to benefit the rest of the country and world. But the decline of California has made that sort of talk rare today. Peter Schaeffer explains one of the reasons: health care costs. Peter Schaeffer's shocking calculations on health care costs per American resident: $12 per hour worked. (ParaPundit added links to the sources Peter mentions)

Basically all you need is total hours worked and total health care outlays. The Conference Board publishes something called the Total Economy Database. It gives hours worked per year at 1,708 and employment at 143.823 million. That gives total hours at 245.65 billion. The Total Economy Database also directly reports total hours as 246 billion.

The Economic Report of the President (EROP). Table B-35 gives total employment at 143.305 million. Table B-47 gives hours worked at 33.7 per week. A little math gives total hours at 251.127 billion. That’s rather close to the Conference Board data.

National Health Expenditures appear to be in the $3 trillion range. Once source (“U.S. Healthcare Hits $3 Trillion”) specifically estimates the number at $3 trillion. However, there is some weirdness involving the accounting for the doc fix. Another estimate is $2.807 trillion. This is derived from a nominal GDP of $15.684 trillion from the BEA and health care spending at 17.9% of GDP.

Another source gives much higher numbers. See “The hidden costs of U.S. health care: Consumer discretionary health care spending” from Deloitte. Their estimates are way over $3 trillion. However, some aspects of their methodology are suspect (including unpaid for care by family members). Note that Deloitte also suggests that large numbers of out-of-pocket health care dollars are not being captured in the standard estimates.

If $3 trillion is the correct health care number, then $12 per hour is about right. You can tweak the number up and down a bit by changing your estimate of health care spending, but it’s going to be in that range.

See also “2012 – The Year In Healthcare Charts” in Forbes for some more data.

People with low earning power are very expensive for the rest of us. They can't pay their total life costs for medical care let alone food, housing, car insurance, utilities, clothing, education and food for their kids, transportation, parole officer supervision, cost of incarceration, cost of police to investigate and arrest them, and more.

Time to emigrate? But where?

Share |      By Randall Parker at 2013 June 23 10:44 AM 

observer said at June 23, 2013 12:38 PM:

Australia and possibly Canada look good in comparison to the other options. It is not hard to emigrate to these places if you have the right skills. It is hard if you don't have the right skills--fortunately.

But there is no model with a good solution for the zero marginal productivity worker/automation problem, because this problem is new to history. China hasn't had to face it yet. Nations will have to experiment with possible responses and many of them will be bad. Even some of the seemingly logical solutions that sound smart to you and I will prove worthless in practice. On an individual level, best to move somewhere with a high achieving populace to delay confronting the issue as long as possible. Let other nations beta test solutions. Perhaps there will be an obvious answer by the time automation catches up with the populace of Australia, Japan, Korea, and Singapore.

Jefferson said at June 23, 2013 12:56 PM:

This is why America (or at least, the US and Canada) are best compared to the Eastern Roman Empire around the time of the sacking of Rome. We'd collapse, but there's nothing to replace us. China's demographic death spiral will hobble it long before anything truly horrific happens here. Some regions may shuffle back into Mexico or suffer their own demographic mini-apocalypses (Detroit), but we'll muddle through in spite of the criminal mismanagement of our elite. As a good rule of thumb, the areas with the highest White/Asian birth rates will be the ones that survive mostly in tact.

Jonathan Portes said at June 24, 2013 12:33 AM:

In other words, there is simply no rational reason for paupers (even if they do work) to exist in the USA.
They are simply a waste of space. No ifs, no buts - they are purely worthless and useless, a liability on the productive.
Reminds me of what the satirist Jonathan Swift said of the poor of Dublin 'why not let thme eat their own children and tan the skin for leather?'

I know it all sounds very harsh - but you cannot deny it's true.
The upshot is that libertarianism ie combining ruthless free markets with free immigration is just a load of balls.

Jonathan Portes said at June 24, 2013 12:36 AM:

Also reminds me of that Randy Newman song 'Short People Have No Reason To Be'.

Just substitute 'poor' for 'short'.

Engineer-Poet said at June 24, 2013 11:36 AM:

Poor people have no reason to be allowed into the USA, or reproduce once here.

That's how England got to be so peaceful and productive:  downward mobility from the upper classes.

RD said at July 7, 2013 2:50 AM:

"Australia and possibly Canada look good in comparison to the other options."

Unfortunately, both countries are being turned into European-minority countries as a result of their liberal immigration policies.

It's only a matter of time before the rapid, immigration-driven demographic changes in those countries start to affect living standards. Import a Third World population and eventually you'll have a Third World country.

Check it out said at August 14, 2013 2:58 PM:

"Poor people have no reason to be allowed into the USA, or reproduce once here."

You should have no reason be allowed in this world. Racist elitist idiot.

Big Bill said at December 19, 2013 2:26 PM:

-- Poor people have no reason to be allowed into the USA, or reproduce once here.

- You should have no reason be allowed in this world. Racist elitist idiot.

So being against importing poor people is racist because ... what exactly?

Because if you are "poor" you must be some dumb deficient black or brown person?

What a hateful thought, Check-it-out!

I'll have you know that white people can be poor. As a matter of fact there are millions of poor white people in this very country. What is it with you privileged white guys? Poor is poor. There is no color attached to it.

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