The Growing Monster

Financial columnist Robert J. Samuelson, in an article appearing in the September 18^th issue of Newsweek entitled The Monster at Our Door, addressed the spiraling costs of government health care and did not offer any optimistic or realistic solutions to this issue. Mr. Samuelson, a well-known and respected writer on matters economic and governmental does not mention two important criteria in the spiraling cost of health care.

 
Who pays usually determines expense. When people pay for their own health care, they show more discretion than if their company, their health plan, the government, or their parents pay for it. People during the Great Depression did not die in the streets from lack of health care. I was a child of poor immigrant parents during the depression and I had sufficient medical attention for all of my ailments. My age group has extended life spans, something those born in the last 50 years will not have. However, the major increase in the cost of health care and all services has to do with the foundation upon which the economy is built-continual increases in wage rates.

   

The cost of manufactured products varies inversely to wages. As the wages received by industrial workers have increased, the relative price of manufactured items has decreased. Some manufactured items have become so low in cost that to repair them costs more than to replace them resulting in a flagrant abuse of the earth’s resources. We are a nation in which the common man can afford, and even consider it his right to own air conditioners, refrigerators, television sets, radios, sound systems, computers, and of course an automobile (there are more automobiles than licensed drivers in America.) On a lower cost level of manufactured items we find a proliferation of cameras, CD’s wristwatches, cell phones, and video games. The common man can afford to buy all kinds of “stuff.”

 
High wage rates have motivated companies to invest in labor saving devices that reduce production costs, the higher the labor cost, the greater the incentive for business to invest in labor saving machinery. Unions have cooperated with management and have agreed to productivity increases in exchange for higher wages. Productivity increases mean a reduced labor costs for each unit of output. It seems rather incongruous that a labor leader would cooperate to reduce labor; however, the psyche of this nation is stuff oriented and anything that lowers the cost of stuff is seen as a positive development. As part of this psyche industrial labor leaders have been instrumental in reducing union membership to a fraction of what it was 50 years ago.

 
The incentive to make large capital investments in productivity improving machinery and equipment would be reduced if unions pushed to lower wages. The greater the reduction in wages the less the incentive to spend large sums of money to reduce labor, which would result in more man-hours utilized to manufacture a given item. The price of manufactured items would then go up in relation to wages, which had gone down. This means that manufactured items would become less affordable to most people. The effect of continually declining wage rates will result in a decline in manufacturing activity causing the GDP to tumble. This effect sounds like a reduction in the economic well being of the people but contrary to conventional thinking, the life style of the people will not deteriorate, but will increase.

 
In the early part of the last century my grandfather-a European peasant-went to the barber each morning to get his daily shave. A dressmaker came to his house and made tailor-made dresses for his three daughters. They didn’t own much stuff, but they could afford the services of others. Today, what percentage of the American population can afford to have a daily shave or tailor made dresses? The people of my grandfather’s time could afford the services that their fellow man provided.

 
Manufacturing productivity increases mean cheap stuff and expensive labor. Services that cannot be automated such as manicures, haircuts, dental examinations, and medical care to name but a few, have become increasingly costly. Each time labor is made more expensive all non-automated products cost more. The average American can no longer afford medical and dental care, nor can he afford many other services that his grandparents could readily afford.

 
True economic prosperity does not necessarily mean the ability to buy a lot of stuff; it also includes the ability to enjoy and pay for services. In our stuff oriented society we cannot afford most services. The government has stepped in to help with medical services but eventually it will not be able to pay for everyone’s care as it approaches bankruptcy. Only the very rich will be able to afford services; the rest of the nation will be on a subsistence level for services as it wallows in the junk of mass production.

 
The penchant for high wage rates and high productivity rates has produced a negative result in every aspect of human life. Wages have become so high that it has become almost a mania to replace people on all job functions. The Metropolitan Transportation Authority in New York City wants to eliminate conductors from all trains, leaving all ten cars under the responsibility of the train operator. If they win that concession from the unions, the next push will be to eliminate the train operator, and have the trains run automatically from a central station. During the Great Depression I traveled what is now called the M line in Queens and each car had a conductor. There were people everywhere to serve and assist in all business and service activities. What is not realized in this country is that we have another Great Depression. The first resulted in most people hardly able to afford little more than the absolute necessities of life. The depression that we are now in has resulted in most people having a decreasing ability to pay for services. We can no longer afford each other. The cost cutting efforts that cause more and more labor to be eliminated contribute to another depression-mental depression.

 
The remedial, compensatory, corrective, nurturing, and fostering nature of Western society enables it to deal with effects but limits its ability to deal with causes. A disproportionate share of the wealth of this nation is funneled to psychiatrists, psychologists, social workers, counselors, lawyers, legal assistants, home attendants, nursing homes, drug treatment centers, orphanages, and foster care to name but a few of the many services that society utilizes to deal with the negative effects of our stuff oriented way of life. The people of my grandfather’s time didn’t suffer from loneliness and angst and didn’t need therapists to help them reach old age.

 
Our Monster is growing, and rapidly. We are all the worse for it.

 

This entry was posted on Friday, September 15th, 2006 at 12:34 pm and is filed under Vox Populi. You can follow any responses to this entry through the RSS 2.0 feed. | 1 views | Trackback | Print this page |

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