Productivity and Health Care

The Grossman and Rossi-Hansberg thesis indeed does indicate that Outsourcing actually pays for increases in American real Wages. Don Boudreaux and Arnold Kling both take Gladwell to task for alleging American Manufacturers operate at a disadvantage having to supply Health and Pension benefits to Labor, instead of some Univeral Health and Pension system. What do these articles have in common? The Grossman and Rossi-Hansberg thesis clarifies that real American Wages are not matching the real American increase of Health and Pension Costs. Boudreaux insists there is still Comparative Advantage in Trade even American Manufacturers face higher Production Costs: so far, everything is True.

What is my Point?
Everyone forgets important elements. Increases in Productivity can produce increase Health Care Costs, especially Repetitive Impact injuries. The increased Production Costs of American industry fails to cripple Profits' increase--only the transmission of Wage increases to Households who are suffering from escalating Costs. Check this Reuter's article on the expected increase in Chnese Imports Cost, an indication that Comparative Advantage may be evaporating for American Households. Japanese Beef Imports seem again ready to raise Business Profits while raising Prices at American Meat Counters. American Wage scales are being calified, while American Consumer Prices continue to soar, though Business Profits are in a Golden Age.

At least We are not talking about Iraq!

the inflation rate has reached 70 percent a year, up from 32 percent last year. Wages are flat, banks are barely functioning and the consensus among many American and Iraqi officials is that inflation is most likely to accelerate.

"It’s a very serious problem," said Anthony H. Cordesman, a Middle East analyst at the Center for Strategic and International Studies in Washington. "You don’t have stable trucking; you don’t have stable distribution. You have a constant protection racket, with security forces who are involved in sectarian fighting often taking bribes to have things operate. All of that builds up pressure on prices."

The spike has come as a shock to Iraqis, who make only about $150 a month on average — if they have jobs. Estimates of unemployment range from 40 to 60 percent.

I wish I could say it comes as a Shock to me. lgl