The Wealth of Nations and Economic Growth

This is the name of one of the chapters of Tyler Cowen and Alex Tabarrok's new textbook, Modern Principles: Macroeconomics. It is an interesting read and a very clear, intuitive primer into the basics of economic growth, the factors that affect economic growth, the relationship between economic growth and the wealth of nations, and the various differences between richer and poorer nations. The chapter is available (temporarily I believe) online here.

Also, here is a post explaining the differences between this textbook and other Macroeconomics texts.

Staying Home From Work Easier Said Than Done

To combat the spread of the swine flu, Obama had advised workers to stay home if they were feeling ill. Seems simple and logical enough. Thing is: for many workers in this economic climate, missing a day of work is easier said than done. Here is the Economic Policy Institute in an article called "Sensible Approach to Flu Scare Makes No Sense for Many Working Americans."

Problem is, millions of Americans can’t just stay home because they’re under the weather. When EPI looked at corporate sick leave policies in 2007 it found that some 43% of all private-industry workers have no paid sick days. Rather than the common sense precaution the President advices, these workers have a more difficult choice of going to work sick or staying home without pay and risk losing their jobs. In this current climate of high unemployment and even higher job insecurity, workers without any formal sick leave are even less likely to risk taking a day off.

Even more problematic, access to time off for health reasons is especially rare in low-paying jobs. In a 2006 compensation survey, the Bureau of Labor Statistics found that 79% of those earning more than $29.47 per hour had sick time, but only 16% of those earning less than $7.38 an hour had the same benefit.

Universal Coverage, Public Health and Pandemics

Tyler Cowen has a post on how much we should worry about pandemics. In it, he writes:

I say think probabilistically, a concept not prominent in his piece. A one percent chance of one hundred million deaths is, in expected value terms, one million deaths and that is a big deal. Probably the United States is less vulnerable than it was in 1918, but how many people would die in China, India and many other locales? How much disruption to trade, travel, and the world economy would take place? Even in the United States, our public health systems would break down quickly and render many modern medical advances useless (e.g., when would the Tamiflu run out?). Having lots of living space is wonderful, but it pays off only if people stay home from work and that means dealing with massive absenteeism. Not pretty. Better safe than sorry.

I agree with this. Despite the fact that globalization has improved the flow of new medicines between countries and that medical technology is much more sophisticated (especially in wealthy countries) than it has been in decades (this, by the way, accounts for the majority of increases in annual health care expenditures), I do happen to think that investment in public health is a consistently important endeavor and, as Cowen writes, it is better to be safe than sorry.

However, then Tyler uses this point as a jumping off point for attacking universal health care:

The main thing we should do -- invest in public health infrastructure -- is in any case a good idea with many possible payoffs, whether a pandemic comes or not. It is a better investment of money than pursuing the ideal of universal health insurance coverage. I might add that one of the better arguments for universal coverage is simply that it could lead to better monitoring of some public health issues.

And there's where I disagree. As I said, public health is always a good investment. One of the most important investments for sure. Yet, we are not going to prevent the outbreak of new pandemics. Diseases mutate. There's a new strain of the flu every year. Having efficient awareness and technology to combat these manifestations is a big help, but so is having insurance to actually obtain treatment. Is it any surprise that there is a strong correlation between the sick and the uninsured? This is where universal coverage comes in and this is one of its better arguments -- not just to improve public health.