Within
Normal Limits
of
Reason

"Chance is the very guide of life"

"In practical medicine the facts are far too few for them to enter into the calculus of probabilities... in applied medicine we are always concerned with the individual" -- S. D. Poisson

November 24, 2005

Paul Krugman - "Bad for the Country"



NYT's Paul Krugman has been commenting on the need for a National Health Insurance in the U.S. He attributes GM's planned termination of 30,000 jobs to the disproportional cost of healthcare that American companies have to spend to cover health insurance for their employees.
... commentary [on G.M.'s troubles] from some conservatives has an unmistakable tone of satisfaction, a sense that uppity workers who joined a union and made demands are getting what they deserve.

We shouldn't be so complacent.

... If the United States had national health insurance, G.M. would be in much better shape than it is.


I need to make a clarification here... On a previous post on Prof Krugman's column A Private Obsession, I said,
One day, many generations from now, when all medical records become electronic, when every senior is well-informed of the risks and benefits of every medication for every disease that they may develop with known probability, the wisdom of the market will triumph. Oh yes it will.


Some have asked me if I said that in jest. First let me say that I know nothing about theories of economics other than what I learned from a political economics course I took in undergrad--about 8 years ago. Hence I don't know where to find reputable sources for support. What follows is all IMHO...

The market economy is known to arrive at efficient equilibriums without intervention. Since interventions are known in some cases to prevent the market economy from reaching that equilibrium, it is argued that the market should be left alone. Laissez-faire.

However while there is much talk on this nirvana of equilibrium, little attention is paid to the kinetics of market economy. That is, given a system of market economy, assuming that such equilibrium exists, how much time will it take to reach this (presumed) nirvana?

Certainly the fact that we have observed successful cases of market economy suggests the kinetics may be reasonable--within a human lifetime--at least in these isolated cases. The economic theorists in us wish to generalize these observations into a Grand Theory of Market Economy. But we cannot. We do not have the data to make this inference. In fact, the empiricists in us make the observation that millions of Americans are left uninsured. These empircists in us may have no health insurance themselves.

Theoretical generalizations are always be trumped by empirical observations.

Comments welcome.

In the same column, Prof Krugman comments on trade deficit:
The trade deficit isn't sustainable... we'll have to reorient our economy back toward producing things ... pulling a lot of workers back into manufacturing. So the rapid downsizing of manufacturing since 2000 - of which G.M.'s job cuts are a symptom - amounts to dismantling a sector we'll just have to rebuild a few years from now.


How much of that rebuilding will be in Michigan?


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1 comment:

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