CHART: The Decline of Industry and the Rise of Health Care

A blog about business and economics.
Jan. 25 2012 2:24 PM

The Decline of Industry and the Rise of Health Care

For another cut at what's wrong with manufacuring fetishism, take a gander at this chart I made comparing health care jobs as a share of all jobs to manufacturing jobs as a share of all jobs:

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One way to look at this is as a story about jobs. We're losing good manufacturing jobs in exchange for a polarized labor market featuring a handfull of highly compensated doctors and a vast array of low-paid home health aids, cafeteria workers, receptionists, etc. That's not a terrible story or an inaccurate one.

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But we can also think of it as a story about production. Suppose we waved a magic wand and caused the ratio to switch pack to where it was in 1990 (the earliest year for which health care employment is broken out). What would the implications of that be in terms of real resources? Well, it might become somewhat harder to schedule an appointment to see your doctor or dentist. The compensation of the remaining highly-skilled medical professionals would go up as scarcity allows them to charge higher prices. Fewer seniors in need could afford home health care aids. The level of individual attention offered in nursing homes would slip. Wait times for surgery would increase. Fewer health care workers, in other words, would mean less production of health care services.

In exchange we'd get . . . what? We'd get increased output of manufactured goods. More stuff. My apartment is pretty small, and I'm not sure I could actually fit more stuff in it. But I could have nicer stuff. A better sofa. Kate & I could own two cars rather than one, but that would be pointless. You'd have a lot more manpower available to engage in artisanal craftsmanship. Maybe everything would have little hand-done etchings in it. Or maybe we'd just be exporting the stuff. In exchange for reduced American consumption of health care services, Brazilians would have more manufactured goods. Big win for Brazil.

Or consider a third scenario. Someone invents a pill tomorrow such that if you take it you live a healthy life until the age of 100 at which point you drop dead. Would said pill be a job-killer, or the greatest invention in human history? Well, both. But mostly the greatest invention in human history. And if the "someone" involved works in a Chinese laboratory and the PRC governments insists that the pills must be manufactured in China at a government-subsidized price in order to maximize Chinese employment, it would still count as the greatest invention in human history. Right?

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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