Usually, February is one of my favorite months. The cold weather invigorates when I get out; the distractions of summer are absent; it’s time to buckle down and accomplish something. But not this year. I’ve felt tired and cranky most of the month; things have gotten bogged down at work; I find myself, too often, in the state of not wanting to do anything.
I can point to the economy and the health care bill that refuses to die (and as a result stifles my plans to expand my business) as causes, but there’s something deeper.
Today’s businessmen, and women too, aren’t like Hank Rearden of Atlas Shrugged: they aren’t out to exchange their best effort for the best effort of others. They aren’t even like Henry Ford, who paid his assembly-line workers twice the prevailing wage to assure himself of the best possible labor force. Today’s business leadership wants to achieve the greatest return on its money with the least effort.
This is why manufacturing in the US is a shadow of what it used to be: if you want to manufacture something, it’s easier and cheaper, in many, many cases, to do it elsewhere.
But there are, or have been, domestic opportunities that have resulted in growth in the recent past.
One such example is residential construction. When we had easy mortgages, many people wanted to live in new houses. Since there was a ready market for these houses, and residential construction is fairly simple, the market responded with an abundance of new houses, many of which can now be acquired for a fraction of the original price.
Once upon a time, banking and finance was relatively boring. It existed to support other, more visibly productive sectors of the economy. But in recent years finance, and the art of the deal, became an end in itself.
A generation ago, health care was about 8% of the economy, close to most other industrialized countries. Today it’s about twice that in the US, while in the rest of the developed world it hasn’t changed much.
Why the growth?
Health care was another easy place to get good returns. On one level, health care is a maintenance function: it doesn’t make new things possible in other domains; it just helps keep people alive. And it’s an easy sell: after all, one’s health is ‘priceless.’ Moreover, most of us don’t pay directly for our health care: either the government or private insurance pays for most of it.
This isn’t to say that modern American medicine hasn’t accomplished wonderful things. But the growth in the health care sector was not accompanied by growth in other sectors. As a result, it is starting to take over the economy.
Basically, as more visibly productive sectors of the economy, like manufacturing and transportation, have shriveled or remained static, money and investment have flowed to other sectors that represent support functions, like finance and health care. But these sectors can only thrive, in the long run, if there’s something productive going on to support them.
Ultimately, to get back on track, and build real jobs, we need to rediscover the basics: that in order to ‘add value,’ we need to actually make or do something valuable.