And it is not all finance. Our newly redrawn map of the U.S. economy shows another leading sector besides finance. The administration of our ill-designed health care system now costs us about 4% of GDP over and above the costs of administering health care in other comparable countries.short-sighted distractions that could, from an opportunity cost perspective, well, prove costly, with the price mechanism short-circuited by externalities and shot-thru with subsidies, hidden or otherwise.
Do not get us wrong: we do not hate service industries. But most service industries produce something of value in return for their profits. Health care administration simply produces denials of coverage. Finance as currently construed simply produces portfolios for individuals that involve them bearing extraordinarily large and idiosyncratic risks that they had no idea they were bearing. There are two ways to make money in health care: (i) by providing people with valuable treatments that they are willing to pay for, and (ii) by collecting insurance premiums and finding some excuse not to pay them out when people get sick. There are two ways to make money in finance: (i) to find people who are willing to bear risks that they understand, selling them risks that offer attractive risk-return tradeoffs, and collecting a commission; and (ii) by selling people risks that they don't understand. It looks to us very much as though our modern health-care administration and financial sectors are good at the second but not the first.
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posted by pakoothefakoo at 6:50 PM on January 13, 2011