Asymmetrical Information

Case-and-point: The Honda I drive was built in Kentucky. Toyota is in the process of building a huge plant here in San Antonio.

One, even union labor in the US is cheaper than Japanese labor. Two, there are still tariffs on Japanese imports but the US has domestic content requirements in order to jump the wall. IIRC it's 80% for cars.

German auto makers love the southern states as well. Mercedes has a huge plant in Tuscaloosa, AL, and BMW has a plant in Greenville, SC. My brother happens to work for Mercedes in AL, and he tells me the German management considers Alabama their "Mexico", only with a highly skilled and dedicated workforce. Its also a non-union shop, full of well-paid, happy workers who in turn build superior products.

But of course, while corporate headquarters are located in Germany, German car companies are relocating their factories to Eastern Europe as fast as their hot little feet can carry them. Wages are lower in Eastern Europe, and of course, those countries do not have the lavish health care systems funded by huge social security contributions.

The Czech Republic, Slovakia and Poland (the first three Eastern European countries I Googled) all have national health care systems. I assume they are cheaper than the German system, but of course everything is cheaper in those countries.

However the health care system is funded in Eastern Europe (and different countries have different systems), it is far, far, far below the standard of Western Europe. Which is normal for countries that are much poorer than Western Europe. But it does lower quite a bit the employment bill.

Does Japan its domestic market auto workers more than export market workers?

Japan exported 1.7 million autos to the US last year so it is currently competitive exporting from Japan, which doesn’t mean it isn't planning to become more competitive by opening up factories in Vietnam or other lower cost areas.

Let's also be clear about the difference between auto construction and component manufacturing. I know my Nissan Z was built in Japan, where there are an abundance of skiled engineers and labor to run those nifty robots that actually bolt the damn things together. However, methinks if I did reseach on the individual components I'd find that from raw material to the plastics and bits to the finnished bumpers and buttons, all of it was done in developing countries with cheap and abundant labor and then shiped to Japan. It's the entire supply chain that is important, and since it only takes a fraction of the people needed to run a auto line today then it did 20 years ago the actual "factory" labor doesn't neccesarily have to be that much.

Yes, Mercedes loves the SUV plant in Alabama where they had such quality problems that it impacted the entire brand.

As the textile and shoes industries discovered, going to the rural south to find cheap labor is not a viable long-term strategy.

Oh come on. Get with it! That slavish, confederate, poorly educated Southern workforce is S0 five years ago. We've moved aeons further into globalization now.

Toyota doesn't bother with the Southern dummies, those converts to the Re'thug'licanism, who'd rather Kiss Corporate Ass than fund education or healthcare.

Now they go to Ontario. So there, righties! See where free-market wholesale abandonment of the American worker gets you.

Sample quote:
"The level of the workforce in general is so high that the training program you need for people, even for people who have not worked in a Toyota plant before, is minimal compared to what you have to go through in the southeastern United States," said Gerry Fedchun, president of the Automotive Parts Manufacturers' Association, whose members will see increased business with the new plant.

more:

Several U.S. states were reportedly prepared to offer more than double [the Canadian] amount of subsidy. But Fedchun said much of that extra money would have been eaten away by higher training costs than are necessary for the Woodstock project.

more:

"The educational level and the skill level of the people down there is so much lower than it is in Ontario," Fedchun said.

more:

In addition to lower training costs, Canadian workers are also $4 to $5 cheaper to employ partly thanks to the taxpayer-funded health-care system in Canada, said federal Industry Minister David Emmerson.

(above from http://www.cbc.ca/cp/business/050630/b0630102.html)

Gee whiz, righties, thanks so much for spreading your c*ap ideology over the whole country and poisoning my future and the future of my family. Love ya, dudes!

As the textile and shoes industries discovered, going to the rural south to find cheap labor is not a viable long-term strategy.

Going anywhere to find cheap labor is "not a viable long-term strategy." Same was true about going to the Philippines, for example. Labor productivity rises, and with it wages, until the advantage of moving there disappears. Of course, in the short-term jobs in the old regions move to the new region, and there's dislocation. In the end there's higher wages and standard of living in a previously poor place.

Public health care is paid for by higher taxes, Camille. So Toyota had better be paying those workers an extra $4 to $6 an hour to make up for the higher taxes they pay, or else those workers are worse off than the workers in Alabama and Toyota's just saving money. Public health care is not truly free; it is paid for somehow.

deak correctly points out that final assembly does not constitute the entire manufacturing process. The BMW plant in SC, for instance, does final assembly, but the engines are imported (from Austria, IIRC) Lots of other components also come from someplace else.

Often, it makes sense to put final assembly close to the point of demand in order to (a)reduce shipping costs, and (b)achieve more flexibility in handling custom orders or model mix changes.

To look at where a car is "made", it is necessary to look at the entire value chain, not just the last stop.

Camille:

You make some stimulating points with those quotes, but lets also look at how Canada's defense spending has decreased to 1% of GDP, which comes to about $12 billion CAD. The U.S. has historically spent about 3% of GDP, declining to less than 2% during Clinton's "surplus" years before rebounding to 4% currently.

If the U.S. is spending 4 times as much on defense, on a pct of GDP basis, and our domestic defense umbrella covers Canada, well that's a lot more than $4-$5 per hour per worker. For Canada to revert to its own historical levels as well as its southern ally's levels, they would have to find another $50 billion CAD to fund defense. For a workforce of 16 million, that's about $100 CAD per hour, assuming 2000 hours worked per year.

I'm a dope, the previous post contains an error for the amount additional spending. Instead of $50 billion, it should only be $36 billion, which results in $72 CAD per hour.

Timothy: Did you misplace a decimal point or something, because $72/hour of additional taxes is utterly ridiculous, even in Canadian money. Even if I assume that was supposed to be $0.72, there is still something screwy about your arithmetic. $36 billion/16 million workers = $2,250 per worker per year. At 2,000 hours/year, that's CAN $1.13 an hour. Or were you converting to US$?

Huh? $36 billion divided by 16 million workers equals $2250 per worker per year. Dividing this by the 2000 hours per worker per year gives $1.12 per hour.

Yeah, after I got home I was thinking that it sounded too high. Serves me right for using a spreadsheet and not checking the formulae. I'm unworthy to post, at least while busy at work. Thanks for raisinr the errors.

Camille and Timothy:

Are there a lot of unemployed former Big Three autoworkers near or around Woodstock? That is probably what explains why the labor there needs less training.

After all, Woodstock is only a few miles from Detroit and in an area where I believe the Big Three have been making cars for a while.

Just a thought.

Also, regarding education: money has got nothing to do with it. The day the teachers union get cozy with pay for performance shemes, which most of us deal with everyday, will be the day I'll be happy to talk about adding funds.

Regarding nationalized healthcare: the day the left will come clean about what it really means to have a financially viable state health care system, will be the day we can have a serious debate. The unions who decry the cost of healthcare are the same ones pushing for maximum nurse to patient ratios and other productivity limiting measures. They got it here in Cali and now some hospitals are closing...

Goes to show, whatever you prefer, you can't have it both ways. Choose, preferably wisely.

Cammille,

Mr. Fedchun claims that his remarks were twisted. Here's his apology to the denizens of Alabama:

Click Here

There are advantages to manufacturing in Canada, like the weaker dollar, but with oil prices rising, so has the value of the Loony. This has HURT Canadian manufacturing, and Canadian productivity in manufacturing is lower than that in the U.S.

There are also aspects of the healthcare system that most Americans would find unnaceptable, such as waiting lists that exceed a year for procedures like hip replacements.

There are some advantages for the Ontario/Quebec area, such as an established infrastructure for manufacturing, well-educated workforce (though your mileage may vary), and the money that the government offers. But I wouldn't sell the South short (and this from someone who will not live in the South because it doesn't snow often enough there).

Are you serious??

"Public health care is paid for by higher taxes, Camille. So Toyota had better be paying those workers an extra $4 to $6 an hour to make up for the higher taxes they pay, or else those workers are worse off than the workers in Alabama and Toyota's just saving money. Public health care is not truly free; it is paid for somehow."

We dedicate like twice the GDP per cent to health care of all other industrialized nations who have a nationalized health care system.

About 40% of that is paper pushing WASTE.

By all the significant public health measures, our health care results are substantially worse that the same competitors mentioned above.

Not only that...! A National Science Foundation study found that lack of health insurance kills 18,000 Americans a year. That number is LOW, because it counts those murdered solely because they have no health insurance, not those for whom lack of health insurance was a contributing factor.

Am I mad? You bet. I've known 2 people murdered in this manner... Just think, 180,000 Americans dead in ten years, murdered by our free market health care system.

Oh right, we murder these people because we have to spend so much money on 'defense'. Give me a break.

Thanks guys, for putting the 'thug' back in Re'thug'lican. I used to feel extremist when I used that phase, but now it just sounds like the evening news.

Anyway, I blame the Re'thug'licans for these deaths. That's what they stand for: Americans Treating Americans Like Sh*t.

The Japanese car companies opened factories in the U.S. in direct reaction to Reagan's protectionist quotas on imports.

Camille,

Have you seen a movie, read a book, or paid a cellphone bill lately?
If you did, you spent money on something other than food and shelter, instead of buying healthcare for those "murdered" by our Capitalist system, as you say.

What does that make you?

Wanting others to pay for things you would like to have (like socialized healthcare) is what everybody does. But calling those who refuse to pay for your dreams murderers in the comments section of a blog -- I assume you are not browsing from a public library -- makes you looke, well, not very clever.

By all the significant public health measures, our health care results are substantially worse that the same competitors mentioned above.

I'm glad to know that my mother's work in pediatric bone marrow transplant isn't significant to you. When it comes to survival rates for rare leukemias and all sorts of other diseases, or for prenatal care, or for a host of other things (including early detection of cancer), the US has much better results than nearly anywhere else. Prenatal ends up "not counting" by "significant public health care measures," because non-live births aren't considered a significant measure. And all those experimental leukemia patients; why, they're expensive to take care of. We could choose to stop funding research and paying for experimental treatments, and dramatically reduce our spending as a portion of GDP without significantly affecting the data. Perhaps it's not "efficient" enough. But as a country gets richer, the percentage of GDP spent on health care rises precisely because you can afford things which aren't "efficient" for poorer countries. And our GDP per capita is much higher than, say, Canada.

We dedicate like twice the GDP per cent to health care of all other industrialized nations who have a nationalized health care system.

About 40% of that is paper pushing WASTE.

Our spending per person and per GDP is higher, yes. ("Like twice" is a big exaggeration-- you're cherrypicking data by picking the nations that spend the least, then comparing results against nations that spend more than that.) However, the spending per GDP and per person on the elderly is also much higher than in other nations, and that's people using Medicare for that most part. We simply spend more, including on a lot of things that other nations don't provide. Medicare certainly has its own set of paperwork too; how would a socialized system eliminate that?

Also note that Sweden, Norway, and France, with excellent health systems, also have a large user fee element; out of pocket costs are often higher for their citizens than for Medicare recipients or people with insurance in the US.

Calling people murderers? What about the patients in Toronto who died of Legionnaires' Disease because Canada's health system has only approved, and only pays for, a cheaper test for the disease, rather than the more expensive test used in the US?

Just so you know, dudes, I am no socialista.

I have 20 years experience at the best companies, and now I have my own technology company, blah blah.

I also know thuggery, having grown up on the South Side of Chicago, and this country is being run by thugs and hacks and their policies are murderous. You don't know public health, you know ideology. People die as a result.

Get used to getting insulted! Get used to having people's rage in your face. Things are getting worse in this country, and you are going to suffer with it just like everyone else.

> I have 20 years experience at the best companies, and now I have my own technology company, blah blah.

Then there's nothing stopping you from setting up a "no administrative cost" system and showing us how it saves money.

We're looking forward to your report, audited.

Camille, the average Canadian pays 53% of their income in taxes to the three levels of government. In other words, Canadians pay more for taxes than food, shelter, clothing, education, transportation, entertainment, and all other expenses combined. "Tax Freedom Day" is in mid-July, creeping inexorably toward August.

So, unless Totyota is paying Canadian workers considerably more than their US counterparts, the individual worker ends up worse off in Canada compared to the USA.

errr... Totyota should be Toyota

Public health care is paid for by higher taxes, Camille. So Toyota had better be paying those workers an extra $4 to $6 an hour to make up for the higher taxes they pay, or else those workers are worse off than the workers in Alabama and Toyota's...

The latest figures I've seen say that Canada and the US spend similar proportions of their economies on their respective public sectors -- the figure is around 37% of GDP for all levels of government in both countries. Canada is not some kind of Sweden compared to the USA in this regard. So, I doubt very much those Canadian autoworkers are paying much more in taxes than the average American worker (maybe more than those in the low tax south, but perhaps less than those in New York or Massachusetts). Canada doesn't currently fund government operations via borrowing as the US does, so there's probably some difference in the taxman's take of the economy, but it's pretty minor (and, of course, it's a number that's not adding to the burden of future taxpayers). And remember, in addition to the taxes they pay, nearly all US workers have to pay at least some of their health insurance premiums out of their own pockets, thus further reducing their paychecks.

Canada is able to do what it does (while having a government no larger than America's, relative to GDP) because it runs a low-cost healthcare sector (through rationing and explicit price controls) and because it spends several points of GPD less than the US on defense. This last factor alone would free up perhaps $300 billion for the US government were it to reduce defense outlays to Canadian levels. I reckon Washington could fund a credible universal health care plan with this much cash on top of what it and the states already spend on healthcare.

I'm not some kind of mindless cheerleader for Canada, by the way. I have family up there, and so I get a lot of exposure to all things Canadian. There are some things that bother me about the place (yes, I am digressing here): the smug, insecure, anti-Americanism; the defensive nationalism (every bit as pungent as the American variety, but a lot less self-confident); the creeping PCness (worse than the US); the residue of whacky 1970s-style welfare dependency; and the ever-present deference to government authority. But on the whole, Canadian protestations to the contrary, I'd say the US and Canada, at least on the big picture economic issues, have become more similar over the last 20 years or so (yeah, I know all the pundits say otherwise). Canada's a lot more of a bastion of free-wheeling capitalism than it used to be. I wouldn't be surprised if support for free trade is higher among Canadians than among Americans.

So yeah, I will admit to taking a closer look at the Canadian model these days, because it's looking more and more attractive. Canada has a lot of the lifestyle and living standard advantages to be found in the US, but it has sounder finances, stronger regionalism (ie., federalism), a much better handle on violent crime, and nobody lacks health insurance.

Camille, the average Canadian pays 53% of their income in taxes to the three levels of government.

Ed: got a single cite for this statement? I know lots of Canadians, and they all seem to keep a similar portion of their paychecks as I do. They do pay higher sales taxes, but property taxes are invariably lower, and, of course, they don't send any of their money to a Blue Cross or an HMO.

So since Japan blocks all auto imports, the japanese consumers are driving ugly unreliable cars!?

So yeah, I will admit to taking a closer look at the Canadian model these days, because it's looking more and more attractive. Canada has a lot of the lifestyle and living standard advantages to be found in the US, but it has sounder finances, stronger regionalism (ie., federalism), a much better handle on violent crime, and nobody lacks health insurance.

Canada also has a population of just 32 million persons, 90% of which are located in a 160km band along the US-Canadian border. Suppose maybe that contributes to the efficieny of distributing government services, including policing?

Canada derives 85% of its trade from a certain wealthy southern neighbor and largely depends on that neighbor for defense, should that need arise. Suppose maybe that contributes to the ability to operate without debt?

In spite of universal health insurance, Canada arguably has some of the most serious problems with heathcare rationing and botchups essentially caused by cost controls, not to mention that a similar crimp on drug prices imposed here would greatly reduce US ability to support R&D. Suppose that contributes to the strong opposition by many in the US to modeling a healthcare system after Canada?

If you think the Canadian model looks more attractive, move there -- because that's the most realistic way of getting it. A look at Canada, followed by an "Aha!" and an effort to push the US a similar direction is an exercise divorced from context.

The time honored adage 'as GM goes so goes America' has never been more relevant and prophetic than at this present time. GM is a microcosm of everything awry with America in the global economy: unsustainable pensions, unsustainable health care, wages of production workers noncompetitive with Asian and Eastern European workers, and a debt load that is less than junk considering probable future earnings. Add in manufacturing tort lability laws and workman's compensation in the mix. Now substitute the US federal government for GM and its expected future expected GDP growth with 350-400 lawyers trying to make a living per 100,000 US poulation compared with less than 10 percent that many for Japan and 1/10 again that many for China and the US economic macrocosm and its future is readily visble.

From the 23 October 2005 Economic Fractalist....

Google's Telltale EEG (Exclamation Exhaustion Gap) Spike Near
The Very End Of The Composite Market Second Decay Fractal

It is fitting that the current three year 30/75/60 weekly
fractal growth series, echoing in a smaller valuation manner, the
great fractal progression from October 1998 to March 2000's
sixty-eight year Wilshire high should end with an exhaustion gap of Google, the dominant high tech software company.

The exhaustion upped Google's PE ratio from 74 to 75. Google is a remarkable reference source. However, its collective innovations and the real utilities of those innovations for the global economy, like so much of the earlier tech stocks, are probably overestimated and overvalued. Its PE ratio of 75 with linear projections for even greater PE ratios and a technically very telling exhaustion gap to new highs this last Friday occurred in the setting of a lower high and saturated current composite market. This is an aged and decrepit market that is already near the end of its second decay fractal and
one that is being propelled by the afterburners and nearly exhausted fumes that represent the present historically cash poor mutual funds.

This set of circumstances should be Deja Vu satori for those
individuals and mutual fund managers who suffered 50 percent loses in the 2000 high PE high tech market. In 2000 alone Yahoo lost over 90 percent of its market value in 12 trading months.

The Wilshire 5000 equity valuation is ultimately and primarily fueled by the debt creation of the American consumer who in turn is dependent on American wages. The Wilshire remains the global bell weather equity composite index. The total cumulative value of the rest of the world equities roughly equals the value of the Wilshire 5000. The elusive but solvable solution for the Wilshire's primary fractal decay pattern will retrospectively be very simple. While the macroeconomy is complex, the summation equity valuation product and patterns are not. Equity valuations grow and decay and otherwise generally 'travel' in non complex maximally efficient fractals.

In the 1929 primary devolution, the DJIA first fractal decay base of 11 days was determined by a preceding rising base sequence of 4 plus days. The 1929 high was contained in the second decay fractal of 27 days, which was then followed by an additional third decay fractal of 27 days in the three fractal decay pattern of x/2.5x/2.5x: 11/27/27 days. For the primary 2005 devolution the first fractal decay base appears to follow a 9 day plus rising antecedent base. Inductively and extrapolating from the 1929 data, albeit with a single pattern for
extrapolation, a 23-24 day fractal sequence including the 3 August high appears to be the defining first fractal base of what will likely be an efficient nonlinear equity asset destructive devolution that will echo the 1858-1932 Second Grand Fractal first sub fractal.

The market equity valuations will grow only as long as growing money or credit is available for its support. At equity top saturation asymptotes smart money exits the equities and flows into debt instruments driving down interest rates. The debt market likewise travels in rather precise growth and decay fractals as investors, during a growth cycle compete and bid the instruments up, driving interest rates lower, and, thereafter, either exit the debt market or invest less when the interest rates are too low relative to other investment opportunities. This drives interest rates higher. In this way the debt market competes with the equity market for available money.

Friday 21 October 2005 was a generally unrecognized turning point for the composite Wilshire. Aside from Google's telltale exhaustion gap, two other important fractal developments occurred. The first was a completion of a 9/22-23/22-23 hourly maximal growth fractal: x/2.5x/2.5x for the Wilshire. Qualitative technicians and chartists would recognize this as a wedge formation. Even in a primary decay pattern there is integration of available money into elegant maximal growth growth fractals with small time units.

The other telltale occurrence was the completion of a three phase growth fractal for the ten year note TNX and 30 year bond TYX. The daily debt market growth fractal count is 18-19/47-48/36-37. On Friday 21 October investors actively competed for bonds and notes and money flowed into TNX and TYX, lowering interest rates. This money at least in part flowed from the cash strapped equity money pool. Compare the debt market's TNX and TYX valuation pattern from December
1996- October1998 with a superimposed and nearly identical sequence from June 2003 until present. Similar nodal patterns of money flows between debt and equities are repeating. Examine the fractal nodal low points dating from December 1996 going into October 1998. The last few months before October 1998 money rapidly exited equities and entered the debt market - dramatically lowering interest rates. That same dramatic pre October 1998 money exit from equities and flow into
debt instruments will either be starting in a few days ... or already began on 21 October.

The primary low is anticipated in about 40-55 trading days consistent with previous estimations. The current best estimation for the primary decay fractal pattern starts on July 7, 2005 for a 23-24/54 of 57-59/57-59 day sequence. The current pattern rhymes with the 1929 scenario. Using the simplest scenario, the primary low would occur in 4-5 plus 58 days or about 61-62 days. However, the terminal portion of the third and last 58-59 decay day fractal sequence is expected to form a base for the next sequence in a probable multimonthly growth sequence that will result in a cascading series of growth fractals with lower highs and ending in lower lows. With regards to the primary devolution a Fibonacci relationship with the 23-24 day first fractal base beginning 7 July 2000 would result in a
primary low in 37-40 days of this final 58 day decay sequence.
The minimal time interval to a primary low using the Fibonacci relationship would be 4-5 more days (54 of 58-59) plus 37 days equalling 40 days subtracting one day for double counting. A lower low is possible within the final 22 days of the 37 of 58 day final decay fractal sequence.

The current best estimation of the inverse grow of decay fractal is 15 of 15/ 38/ 15-24.

Expect nonlinearity of historical proportions. Gary Lammert
http://www.economicfractalist.com/

I would guess the 53% rate is about right, for the average taxpayer. For me? I'm an undergrad student. I get about $6000/year from scholarships and grants. I make another $12000/year from working, after expenses, and including summer employment. My income is low enough to avoid income taxes.

However... I smoke, which, in Ontario, costs me approx. $2000/year in taxes. I pay another $250 in alcohol taxes (I don't dring much). Another $600 in gas taxes, not including those in my work expenses. Another $250/year in property tax. And $1700 in sales tax for all remaining expenditures. That's about $4800 in taxes. With $13000 I have left, I have to pay $2000/year for medical expenses not covered by our free health-care system. I also can't get a family doctor (waiting list is 1 year), so I have to go to a walk-in clinic. And I can't see a specialist about my medical condition, because their time is reserved for those with friends, or people who have already begun to experience complications from their condition.

Camille,

You said

"I have 20 years experience at the best companies, and now I have my own technology company, blah blah."

If you are so smart and caring why are you supporting a Canadian style system? The supreme court of canada ruled in June 2005 that the government healthcare system has resulted in patients having suffered and even died because of delays in Canada's government healthcare sytem.

Quote below is from the CBC

"In a 4-3 decision, the panel of seven justices said banning private insurance for a list of services ranging from MRI tests to cataract surgery was unconstitutional under the Quebec Charter of Rights, given that the public system has failed to guarantee patients access to those services in a timely way.

As a result of delays in receiving tests and surgeries, patients have suffered and even died in some cases, justices Beverley McLachlin, Jack Major, Michel Bastarache and Marie Deschamps found for the majority."

anony-mouse:

Canada also has a population of just 32 million persons, 90% of which are located in a 160km band along the US-Canadian border. Suppose maybe that contributes to the efficieny of distributing government services, including policing?

Um, no, I don't suppose this concentration of population has anything to do with Canada's lower rate of violent crime. If you've got a cite, I'd love to see it. You could probably come up with similar stats for the US. "Let's see, the 50 largest metro areas take up (say) 8% of America's land and account for (say) 70% of the country's population..." I mean, the US, too, concentrates the bulk of its popluation in a small part of its territory. In fact, I don't even buy the line that Americans are more violent. I'd say the higher murder rate in the US is nearly entirely attributable to the fact that America does a poor job keeping guns out of the hands of its criminals.

Canada derives 85% of its trade from a certain wealthy southern neighbor and largely depends on that neighbor for defense, should that need arise. Suppose maybe that contributes to the ability to operate without debt?

Of course it does. I acknowledged this in my original comment. And your point is?

In spite of universal health insurance, Canada arguably has some of the most serious problems with heathcare rationing and botchups essentially caused by cost controls...

The US, too, has "botchups" caused by cost controls. Both the government (the single largest payer of healthcare bills in the US) and private insurers have some things they'll pay for and some they won't. It's true that Canadians wait for procedures. It's also true that Americans do. But Americans with no healthcare coverage at all may wait forever for a necessary procedure -- that's a considerably longer time than Canadians. Moreover, significant numbers of Americans go bankrupt each year because of healthcare problems. That's not true of Canada. Moreover, significant numbers of Americans don't take jobs or start businesses that otherwise make economic sense, because of health insurance problems. That's not true of Canada. Moreover, an ever-larger growing number of American business enterprises are holding off on expansions or hirings because of health insurance costs. That's not true of Canada. Moreover, the United States has the world's most expensive healthcare system. That's not true of Canada.

Oh, and I almost forgot, Canadians live longer.

For the record, I'm not a huge fan of single payer. I think it would be awfully difficult to implement in the US. I simply said the "Canadian model" is looking more attractive. But the thing is, one of America's greatest strengths has been its adaptability. And often, this has meant getting ideas from other countries (like, for instance, the German research university model in the 19th century). So, I'm merely pleading for a little self-honesty here: our healthcare sector is an expensive, broken mess. The sooner we can admit that and take action the better. Increasingly, this fairly libertarian thinker is joined in that opinion by solidly conservative, Republican-leaning business and chamber of commerce types. Healthcare reform is no longer a fringe issue.

Pedro Bento:

I also can't get a family doctor (waiting list is 1 year), so I have to go to a walk-in clinic.

Pedro, your situation sounds admitedly less than ideal, but I'd simply reply that are 40 millions Americans (a figure larger than Canada's entire population) who would be elated to have the option of going to a walk-in clinic, or (eventually) getting a family doctor (even with a one year wait). You poor thing! (read today's NY Times, by the way).

TJIT:

If you are so smart and caring why are you supporting a Canadian style system? The supreme court of canada ruled in June 2005 that the government healthcare system has resulted in patients having suffered and even died because of delays in Canada's government healthcare sytem.

The National Academy of Science's Institue of Medicine estimates that nearly 20,000 Americans die annually because they lack health insurance (http://www.iom.edu/report.asp?id=17632). Nobody is arguing the Canadian system is perfect. As I've stated, I think it would be difficult to implement in the States. But at least Canada's courts are sensibly pushing their country (despite the screams of protest from the country's left) to allow private capital to fill in the gaps. This will only make Canadian healthcare stronger. They're reforming, in other words. We're not.

P.B. Almeida,

You said,

"Nobody is arguing the Canadian system is perfect."

Proponents of nationalized health care consistently argue that the Canadian system is one we should emulate. I am confident that if Americans understand how the Canadian system actually works they will not want anything like it.

Removing the Canadian option from the table will help move the debate from centralized, inefficient, difficult to implement systems, to less disruptive healthcare reforms in the United States. Things like making health insurance spending tax deductible for individuals and access for everyone to health saving accounts.

Removing the Canadian option from the table will help move the debate from centralized, inefficient, difficult to implement systems, to less disruptive healthcare reforms in the United States.

Well, I don't think realistically the Canadian option is "on the table" in the US; as I said, I think it would be awfully difficult to emulate here. It's not just "politics" as to the reason why. It's also the high cost of the USA's system. One of the beauties of Canada's system (if you can force yourself to admit such plans have any virtues at all) is its ability to do things on the cheap, at least compared to the US. By having in place a government-guaranteed, no frills basic healthcare plan that covers the entire country, Canada's healthcare costs are kept at least 5 or 6 points of GDP under the USA's. Healthcare in the US eats up fully 15% (at least) of GDP. Moving to a centralized system here would mean a massive expansion of government.

But if you look closer, you can see it's somewhat of a misnomer to even describe Canada's plan as "single payer". In reality, just as in the United States, there's a dual system of both government and private payers. In Canada private dollars go to pay for things not on the Medicare list. Also, private dollars pay for many drugs and pharmaceuticals (especially for the non-elderly), and they also pay for queue jumping in private clinics and visits with "healthcare consultants". The fact is, much to the dismay of Canada's socialists, the country's monolithic "single payer" system is evolving (I'm sure you've heard of the court order) into a more flexible, adapatable dual system that makes use of private capital.

Now, for the record, I'm what most people would regard as libertarian-leaning conservative (pro free-trade, vouchers, etc.). One reason my eyes glaze over when folks start talking about medical savings accounts and tax credits is that another item on my libertarian wish list is radical simplification and overhaul of the tax code. In fact, I want to see taxes on income and profits removed altogether in favor of a consumption tax. The items you mention further complicate the tax code.

At any rate, the Canadian dual payer model, which in its contemporary reality basically consists of a cheap, no bells and whistles government purchase of basic healthcare combined with increasing private sector involvement, does seem attractive. We seem to be moving in the opposite direction: an increasingly bloated, stultified and inefficient dual system with nary an effective cost control in sight, and increasingly pernicious spillover effects into the wider economy. I'm not so worried about the GMs and Fords. I worry far more about the 38 year-old father of two who declines the job offer with the software start-up because of the precariousness of the health insurance situation. Multiply this sort of economic deadweight by millions, and you're running the risk of real damage to the economy. In addition, there is, of course, the sobering predictions of what healthcare is going to cost America's public sector in the years ahead. Our inefficient dual system definitely ain't healthy for the country's public finances.

If I could wave my magic wand, I'd have the US implement a means-tested voucher plan covering the poorest 95% of the population that gives everybody the ability to buy basic coverage (the wealthiest 5% would be on their own to buy coverage). Coverage for children and for parents of dependent children would be more robust. There would be provisions for dealing with pre-existing conditions, people with catastrophic diseases, etc. There would no longer be a separate system for the poor (Medicaid) and elderly (Medicare). And, of course, you would be able to opt out if you could find a better healthcare option, but coverage would be required by law.

> And, of course, you would be able to opt out if you could find a better healthcare option, but coverage would be required by law.

How are you going to make someone pay for coverage? If they refuse, what are you going to do? (Note - you can't rely on withholding because they're often working under the table.)

We're still waiting for Roy's report on how no paperwork worked at his/her company. (Businesses that provide health care for their employees get to decide how much paperwork there is. They can say, as Roy demands of others, "no paperwork, if they want it, they get it".) Surely s\he's willing to show us how it is done....

"...I'd simply reply that are 40 millions Americans (a figure larger than Canada's entire population) who would be elated to have the option of going to a walk-in clinic, or (eventually) getting a family doctor (even with a one year wait)."

Nonsense.

With my insurance, a visit to my doctor is $25. Without it, it would still be

"Canada is able to do what it does (while having a government no larger than America's, relative to GDP) because it runs a low-cost healthcare sector (through rationing and explicit price controls.."

Canada's health care costs are typically the largest expenditure in provincial budgets, by a huge margin, and are rising far faster than inflation. It is a major issue in Canada. Anyone who argues in favour of a Canadian-style health care setup because of lower costs (or less bureaucracy) automaticallly loses credibity points. The bit about rationing (through waiting lists) is all too real though.

53% of personal income to taxation in Canada sounds pretty close. I'm certainly paying at least that, before even considering hidden taxes, such as on gasoline, and my income wouldn't be much above average. And the "official" Tax Freedom Day announcement is always sometime in the June/July period.

Per capita, my understanding is that violent crime in Canadian cities is every bit as bad as in American cities. Gang violence is making the news even in smaller centres and Toronto has seen more than it's share of drive-bys recently.

Camille, Ontario has been a hub for auto manufacturing for decades. Not sure what your point is, or how Republicans are at fault for your contention that Southerners just ain't smart enough.

I should point out, as well, that Japan relies on an extraordinarily rigid regulatory regime to keep imports out of its markets, which is what allows its domestic auto business to support a pretty lavish pay regime. Obviously, if we blocked all auto imports, Detroit would also be in pretty good shape. American consumers would be stuck driving ugly, unreliable cars, but who the hell cares about them?

"lee" already raised what I think is the interesting question, but since it's gotten lost in the yelling...

OK, Jane -- so why aren't Japanese consumers driving ugly, unreliable cars? In fact, if you go to Japan, a lot of the Asia-only models are somewhat ugly, but everything Toyota and Honda send to the domestic market is reliable.

This last factor alone would free up perhaps $300 billion for the US government were it to reduce defense outlays to Canadian levels.

Canada can afford to skimp on defense for the same reason remoras can; it has attached itself to a larger, more powerful entity that few people want to mess with. The United States doesn't have that luxury.

P.B. Almeida, your response completely missed the point. Here in the US we have states larger than 32 million people, and depending on which state you wish to visit, you could find more or less demographic diversity than what Canada typically has, larger or smaller cities on average, better or worse healthcare, education, crime rates, real estate...pretty much anything you want to imagine.

That's the logical consequence of having a population nearly an order of magnitude larger and effectively occupying several times as much land mass. It also means that you can't just point to Canada and assert that it has emulable strategies. You have to examine why they work *(or don't) in the context of where they are implemented, and whether such a thing is even feasible in other contexts.

Further, you also did no such thing as "acknowledge" Canada's trade dependency, at least not in any meaninful sense. What external country or entity is the US going to dump 85% of its export market into, as well as rely upon for a majority of defense interests in lieu of spending that money itself? Name it, or refrain from implying that sounder finances and a reduction in GDP spending on defense are a low-hanging fruit, just because Canada has done it.

As for healthcare, I doubt many sane people would argue that the US has struck an ideal balance, only that the Canadian system is unoptimal and at risk of becoming worse (in terms of costs). Those cost controls you describe as beautiful are no magic bullet, either. The Canadian government, e.g., forces drug companies to sell pharmaceuticals at marginal production costs (on threat of having their patents broken). Yeah, that works in a population-small country like Canada, but it won't all for a healthy pharmaceutical industry R&D sector if implemented in a country like the US.

Those cost savings have stiff tradeoffs -- another of which is rationing and consequent long waiting lists for non-essential surgery and certain types of doctors and specialists. Some states, such as Oregon, might tolerate that in return for universal coverage; but good luck impleneting it in, say, Texas.

my first attempt got truncated for some reason, so here's a second go...

"...I'd simply reply that are 40 millions Americans (a figure larger than Canada's entire population) who would be elated to have the option of going to a walk-in clinic, or (eventually) getting a family doctor (even with a one year wait)."

Nonsense.

With my insurance, a visit to my doctor is $25. Without it, it would still be less than $100 and there are several doctor's offices in the city that are less still. Anyone who claims you can't get truly basic healthcare without insurance, hasn't actually tried. Also, I would assert that anyone who dies because they don't have insurance didn't do so due to lack of anything reasonably called "basic" health care.

anony-mouse:

Here in the US we have states larger than 32 million people, and depending on which state you wish to visit, you could find more or less demographic diversity than what Canada typically has, larger or smaller cities on average, better or worse healthcare, education, crime rates, real estate...pretty much anything you want to imagine.

Where did I argue that this is not the case? Yeah, I get it, we're much larger than Canada, and on some measurements we're more diverse. And your point is?

Further, you also did no such thing as "acknowledge" Canada's trade dependency, at least not in any meaninful sense.

Huh? What are you saying here? Are you claiming that the fact that Canada sends 80% of its exports to a single country is an advantage? I rather suspect the world's economists would find this to be, um, a novel interpretation. You seem to be saying that Canada enjoys some sort of magical set of circumstances that make it uniquely capable of good macroeconomic policy and inexpensive healthcare. I'm here to tell you that this idea is bunk. All that's required are prudent, repsonbile politicians formulating good policies. All of the rich world enjoys universal healthcare. All of the rich world ejoys healthcare that is cheaper than America's. And most of the rich world runs smaller deficits than we do. Canada is by no means unique in this regard.

...refrain from implying that sounder finances and a reduction in GDP spending on defense are a low-hanging fruit, just because Canada has done it.

I neither wrote nor implied that cutting defense (a move I would oppose) would constitute "low-hanging fruit". Sounder finances in general certainly wouldn't be difficult to achieve, from a techncial standpoint. It's a matter of cutting spending or raising taxes or both. I don't think either of us would disagree with the idea that the primary difficulty here is politics.

Sean E.

Anyone who argues in favour of a Canadian-style health care setup because of lower costs (or less bureaucracy) automaticallly loses credibity points.

Maybe in your book they do, but compared to the United States, where healthcare costs are simply astronomical, and continue to get more so at a frightening clip, Canada is a veritable model of fiscal rectitude on the issue of healthcare. Indeed, the USA's public sector healthcare costs alone are something like 7% of GDP -- on top of another 8 points of private spending.

Per capita, my understanding is that violent crime in Canadian cities is every bit as bad as in American cities. Gang violence is making the news even in smaller centres and Toronto has seen more than it's share of drive-bys recently.

I doubt you're right that violent crime is "just as bad" in Canadian cities, but even if you are, I wasn't talking about the difficult to define term of "violent crime". I was talking about murder. The murder rate in the United States is four times what it is in Canada or Britain. (http://www.nationmaster.com/graph-T/cri_mur_cap&int=-1&id=OECD)
All things being equal, an American is four times more likely to be murdered than his Canadian or British cousin.

With my insurance, a visit to my doctor is $25. Without it, it would still be less than $100 and there are several doctor's offices in the city that are less still. Anyone who claims you can't get truly basic healthcare without insurance, hasn't actually tried.

Noah: So what? What good does "getting a doctor visit" do? Does that same $100 get you blood tests? CT scans? X-rays? Can you get surgery for that same 100 buck? Chemotherapy? Treatment for a stroke? A car accident? HIV? Multiple Sclerosis? Can you treat your sick child? What if you have a pre-existing condition? Granted, the truly poor in America are covered, but they're not the problem. The problem is uninsured or undernisured middle class, working people, and the lack of security they suffer from because they happen to live in the United States during the late statges of the breakdown of that country's healthcare system.

Andy Freeman:

How are you going to make someone pay for coverage? If they refuse, what are you going to do? (Note - you can't rely on withholding because they're often working under the table.)

I'm not sure you read my voucher idea very carefully, but, to reiterate, I'd only fund the bottom 95% of the population by income (I'd means test it, in other words). I very much doubt we'd have to worry that many of America's richest 5% would be foolish enough not to maintain healthcare coverage, and I'd expect the number of non-insured wealthy people to be negligeable -- certainly less than 1% of the total US population. And that means we would be at 99+% coverage, and that's good enough for me. A hospital can always sue a rich person for non-paid bills. Plus, if we did want to try witholding, or having the IRS send people a bill (to those who didn't provide proof of coverage with their tax return, that is) I very much doubt we'd find a lot of people in this group who work "under the table".

I was talking about murder. The murder rate in the United States is four times what it is in Canada or Britain.

No, it isn't. The link you cited is to statistics that are five to six years old. In 2004 the murder rate in Canada was 1.9 per 100,000 versus 5.5 per 100,000 people in the United States. So the Candian murder rate is a little over a third that of America.

All things being equal, an American is four times more likely to be murdered than his Canadian or British cousin

Not really. Murders are concentrated in a small number of demographic groups. The median American is only marginally more likely to be murdered than the median Canadian or Brit. The people who bear the brunt of the murder rate are blacks (black-on-black crime accounts for over half of all homicides) and people involved in the drug trade.

Does that same $100 get you blood tests? CT scans? X-rays? Can you get surgery for that same 100 buck? Chemotherapy? Treatment for a stroke? A car accident? HIV? Multiple Sclerosis?

Obviously you have to pay more (as do Canadians -- the costs are just hidden from them). The difference, of course, is that in the United States you get to receive treatment immediately and pay later. In Canada, you get to go on a waiting list (assuming the government deems your need sufficient) and sit around for weeks or months while your HIV infection or cancerous liver goes completely untreated.

The problem is uninsured or undernisured middle class, working people, and the lack of security they suffer from because they happen to live in the United States during the late statges of the breakdown of that country's healthcare system

Middle and working-class Americans are longer-lived and healthier than the average Canadian is. The sole advantage of Canada is that the poor receive better care there; everyone else receives dramatically inferior care.

Dan

In 2004 the murder rate in Canada was 1.9 per 100,000 versus 5.5 per 100,000 people in the United States. So the Candian murder rate is a little over a third that of America.

And this is cause for bragging? Oh, excuse me, let me correct myself: Americans are a mere three times more likely to be murdered than Canadians. Sheesh! (though unlike me, I noticed you asserted without providing a cite).

The median American is only marginally more likely to be murdered than the median Canadian or Brit.

What the hell is the "median" American? If what you mean by that is white, middle class American, than simply say it. At any rate, last time I checked, black and Hispanics were Americans, too. I doubt they'd find your assertion comforting, and as a (white) co-citizen of these "non-median" Americans, I frankly find it both offensive and embarassing.

The difference, of course, is that in the United States you get to receive treatment immediately and pay later.

Um, you don't get to "receive treatment immediately", Dan, if you lack health insurance in the US. I don't mean to be snarky, but gosh, some of you guys are living in a parallel universe. I mean, we're not talking about a statistically minor problem, here. We're talking about 40-50 million freakin' Americans. Double sheesh! Moreover, lots of Americans with insurance have to wait for this or that procedure. There is a wide range of quality among health insurance providers in the US. Some are exceedingly good. But some are quite bad. And at any rate, as I have mentioned above, Canada is wisely beginning to make wider and wider use of private capital (to the horror of the left) to improve quality and access. In some ways the situation there isn't so much different from that in the states: if you're affluent, you can buy access, quality and speed. But if you're not, at least in Canada you can get treated, or avoid bankruptcy.

Middle and working-class Americans are longer-lived and healthier than the average Canadian is.

Nonsense. Please give me your cite.

The sole advantage of Canada is that the poor receive better care there; everyone else receives dramatically inferior care.

False on its face. It's ludicrous to posit that "everyone else" (in Canada) receive "inferior care" to the 40-50 million non-poor Americans without health insurance.

Where did I argue that this is not the case? Yeah, I get it, we're much larger than Canada, and on some measurements we're more diverse. And your point is?

My point was the very next paragraph of that same post. I just looked, and that paragraph doesn't seem to have been eaten by wolves, so I assume you can go back read it.

Huh? What are you saying here? Are you claiming that the fact that Canada sends 80% of its exports to a single country is an advantage?

85%, according to current figures in the CIA World Factbook. And yes, it is an advantage in the limited sense of providing a dependable revenue stream leading to sounder public finances. If you know your economy can sell more than 4/5s of everything you can serve, manufacture, mine, or cut down to a captive audience located overland in a free-trade zone, then it's a lot easier to keep things simple. It also cuts back on the collective action problem when you only have to serve a small population.

It was you who cited the Canada's "sounder finances" as part of a model that is becoming "increasingly attractive." That's an irrelevant comparison if Canadian means to that end are not emulable here. Sounder finances are attractive on their own merits, although debt-free budgets are not the only way to do business.

All of the rich world enjoys universal healthcare. All of the rich world ejoys healthcare that is cheaper than America's.

Some of the rich world also has to accept rationing as a matter of course, some of the rich world simply consigns the elderly to their fate rather than continuing to offer advanced healthcare services, and some of the rich world could not possibly sustain the kind of pharmaceutical research that the US provides (even though all of the rich world and much of the poor world benefits from that R&D, eventually).

Are you even willing to address that these are real thorns on this rose of yours, and that in some cases (Canada being an expemplary example) the thorns are nearly as big as the flower itself?

I don't think either of us would disagree with the idea that the primary difficulty here is politics.

No disagreement there. Good luck separating the politics from the ideas, though.

And this is cause for bragging? Oh, excuse me, let me correct myself: Americans are a mere three times more likely to be murdered than Canadians.

A little under three times -- and it would have been more gracious to simply admit that you'd made a careless mistake, rather than attacking me for providing accurate statistics. It was significant that you exaggerated the American crime rate by almost 40%. In terms of magnitude of error, that's like claiming that the average American lives for over a century, or that the Second World War ended in 1922. :)

What the hell is the "median" American?

"Median" is a statistical term referring to the middle result in a statistical sampling. I used the term instead of "average American" because some tool always brings up the candard that "the rich" throw off the average. My point is that a typical American is not much more likely to be murdered than a typical Canadian is.

I doubt they'd find your assertion comforting, and as a (white) co-citizen of these "non-median" Americans, I frankly find it both offensive and embarassing

Since my claim was factually correct, I personally don't give a rat's ass if you'd hypothetically be offended by it or not. My point is simply that the threat of homicide is largely confined to a small minority of Americans, and is therefore not a problem the large majority of Americans are personally threatened by. We may be concerned about the high murder rate in the black community, but that doesn't mean that we personally are likely to get shot.

Um, you don't get to "receive treatment immediately", Dan, if you lack health insurance in the US

I know from personal experience that you do, since I myself received immediate medical care from clinics (and, in one case, an emergency room) when I lacked health insurance.

We're talking about 40-50 million freakin' Americans

45.8 million, according to the CBPP. You apparently think that this translates to 45.8 million people who can't get adequate medical care, which is of course a laughably stupid (but typically Canadian) thing to believe.

I'm from Canada and travel frequently to the U.S. to work. I miss the good old days when Canada's profile was so low it approached invisibility. I'd like to inject a couple of facts that I know for sure into this "opinion-ridden free-for-all".

First, the Toyota and Honda plants in Canada, which have indeed expanded just lately, are not unionized. This contrasts sharply with the GM, Ford, and Chrysler plants which all have contracts with the Canadian Auto Workers - Canada, to use their ridiculously redundant official name. Those plants, which have received considerable subsidies over the years from the Canadian federal and Ontario provincial governments, have been undergoing cutbacks recently. In facts, the lone Quebec plant, a GM operation at Boisbriand which once turned out Camaros and Trans Ams, has been closed permanently.

All of the Japanese-owned assembly plants are in Ontario. They are located in central and central-west southern Ontario, away from the American-owned unionized plants which are located either in the Toronto area or in Windsor, across the border from Detroit. Very few if any workers have moved from the unionized plants to the non-union sector. As far as I know, Toyota and Honda have deliberately tried to avoid hiring veterans of the unionized plants.

When the Japanese companies set up assembly plants in the U.S., they also avoided areas that already had auto plants. It has also been speculated that they also avoided areas with significant black populations, choosing instead rural areas with few "minorities". They have been able in both Canada and the U.S. to operate plants that produce cars that are very close to the quality standards of car plants in Japan, and are thus significantly above the quality standards of American-owned auto companies.

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