Health Care and Competitiveness

Greg Mankiw claims that transferring health care costs to a national program will have no effect on US corporate competitiveness (especially GM) in the long run because workers eventually pay the costs anyway. So, if they pay the cost by some alternative method, they then (in the long run) ask for more in wages. This argument misses a couple of important variables by assuming that employer provided private insurance and a national health insurance program are equivalent goods with similar costs and values.

1) The value to the worker of a given quality of health care is the same, whether it is purchased in efficiently through a private insurance scheme or efficiently through a national or regional (e.g. Canadian) system.
2) The value of health care coverage to the worker is greater if it not dependent on continued employment with a single employer.

Therefore, if workers get greater value by having health care coverage not linked to their employer and that greater value comes at a lower monetary cost -- their demands for additional compensation in the long run will be less than if they were getting inferior health care at a higher cost from the employer. Thus, Larry Summers is right and Mankiw and Elmendorf are missing the point.

Big Stimulus Programs by Big Debtor Countries Will End in Tears??

The argument that, "Keynes, in the 1930s, advocated that the US make up for the demand loss rather than expecting the US's overindebted European trade partners to continue overconsuming" does not hold water. See for example Brad DeLong's econ 161 course notes. Hjalmar H.G. Schacht, the first central banker and then finance minister under Hitler, pursued deficit spending in a way that no other government did -- including the New Deal. One could argue that Schacht was the only Keynesian finance minister of his time. Although, Germany in 1932 was saddled with extreme debt, the expansionary program was fabulously effective -- Germany's unemployment rate problem was quickly solved -- the only industrialized country to achieve that goal. It is ironic that the insightful financial master, who worked for the devil incarnate, had the middle name Horace Greeley because his parents so admired the 19th century Repubican and Abolitionist.