The French economy and health care system

The French economy may be messed up in many ways, but at least you can’t complain about their health care system.

So wrote one MR commentator, that is my paraphrase I can’t find the exact quotation. 

It is worth noting that the French health care system and the failings of the French economy are closely linked.  The French economy is notorious for its resource immobility.  It is hard to switch sectors, hard to switch jobs, and hard to switch regions.  The upshot is that when government taxes factors of production, or caps the price they command, those factors usually have nowhere else to go other than to consume more leisure.  This makes it easier to cap health care prices and doctors’ wages: everything is frozen in place. 

The more mobile American economy would find it much harder to tax skilled labor and doctors.  For related reasons, American transfer programs tend to be more expensive per
dollar of redistribution, less easily based on the provision of quality services at low prices, and they require more complex bells and
whistles.  NB: This is an argument for not trying to copy Europe, not an argument for trying to copy Europe.  Call it a cost of resource mobility if you wish.

The more a European government takes advantage of immobility, the harder it is to break a vicious economic circle.  Instituting French factor mobility, even were it possible politically, would cause low-price, low-wage sectors to decline in quality.  Factors would flee to more entrepreneurial sectors.  In the meantime, pushing everyone into more leisure lowers wealth and makes it harder to finance a "grand bargain" of palatable economic reforms.  The economy will remain stuck, stuck, stuck.  Some sectors will enjoy a captive audience of skilled labor.

I have spent several months of my life in France, and I do understand that life there is truly splendid in many ways.  But it is hard for me to believe that the French system — viewed as the organic whole it is — is the best way forward for the United States.


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