Wednesday, June 14, 2006


Rob Shapiro of NDN's Globalization Project recently commented that low job creation in the US is the result of higher energy and healthcare costs in the US than elsewhere. I question both premises. First, US energy costs are, if anything, lower than in our competitors because we have low energy taxes, subsidize our energy business, possess abundant fuel resources, and have an infrastructure that allows industry to switch between fuels fairly easily. In addition, since we have been worse than other countries in conserving energy since the Reagan administration, we have more ability to reduce our consumption if necessary.

As to healthcare costs, we know that we pay about twice as much as other industrialized countries, and in return receive a lower quality of care. But that doesn't mean industry pays more than elsewhere. Companies receive tax deductions for their expenditures, while other countries charge higher taxes. In addition, US companies have fewer retirees compared to Japan and Europe. I don't know the costs after factoring in these considerations, and perhaps they are still higher, but until someone does the study, the claim that we suffer from higher healthcare expenses is just conventional wisdom.

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