First, a caveat. It seems to me that the jury is still out regarding part time employment. There is a lot of anecdotal and survey evidence of this effect, but I don't see strong evidence of it in the data. Now, it could be that there are a number of supply and demand factors at work in the part time employment realm. I think that as the economy recovers, the binding constraint on the total level of part time workers will be the supply of part time workers. In the meantime, I don't see any obviously odd movements in part time employment. I'm not sure how to square this with employers reporting that they are transitioning to part time work. There is a lot going on there down in the weeds.
The average weekly hours worked from the monthly establishment survey also doesn't seem out of line compared to long term trends.
from the BLS |
But, with so many regulations, like the ACA, the effects are tough to suss out. Any effects there might be probably just slightly bend the curve of growth of human quality of life, and the damage comes in the long term.
Most of the changes the employers point out probably are accounted for as increases in nominal GDP. There is a lot of economic activity engaged in compliance activities. And, for regulations like this, it comes down to how the hedonic changes in price levels are accounted for. When you lose access to your family doctor, does the BLS account for this as a decrease in quality? Frankly, in an industry so screwed up, I don't understand how they can begin to account for economic activity. What is the market price for a medical procedure that is "billed" at $2,500, but settled with your insurance company for $200, with a $20 co-pay?
It seems to me that much of the added costs of the ACA, the results of this survey being good examples, will play out as inflationary. But, on the other hand, something like secondary education isn't accounted for at all in inflation measures. That kind of government expenditure is simply recorded as real economic activity. (Please correct me in the comments if I'm wrong.)
So, while GDP is useful for much analysis, with government expenditures at nearly half of GDP and a growing number of mandates, it ceases to be a good measure of absolute quality of life. Some measure of the quality of public services and mandates would be required. I'm not aware of any measure that can remotely address that. A problem with programs like ACA is that they muddy the usefulness of indicators like GDP. I'm not sure they even effect growth rates coherently, except in the very long term. Government programs certainly have a knack for growing, which will usually show up as real growth in the GDP. The same goes for mandate-based rent-seeking. The production of ethanol, which probably put millions of acres of US farmland to use with no net positive economic benefit, added $44 billion to GDP in 2013. (And created nearly 400,000 jobs!)
Interesting that education does not come out inflationary in the sense of healthcare, because it is so much easier to account for. When a student enters into the relationship, there's a fairly good understanding all around, what the student may actually be able to contribute, versus what someone else contributes. Whereas, no such certainty exists in the healthcare relationship. Healthcare outcomes are uncertain, insurance claims are uncertain, hospital "monies left over" in given quarters for ongoing needs, are uncertain. All of which mean more exogenous support needed for healthcare expenses which comes from "God knows where".
ReplyDeleteThat's a good point. And it shows how much we have mismanaged education that it has been so inflationary, such as in college expenses, though, again, I'm not sure how that plays out statistically.
DeleteGood post. This is definitely a point to keep in mind:
ReplyDelete"So, while GDP is useful for much analysis, with government expenditures at nearly half of GDP and a growing number of mandates, it ceases to be a good measure of absolute quality of life."
Thanks, David.
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