Arnold Kling  

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Michael Barone on Thomas Brusc... An Assignment for Progressives...

From the New York Times:


Because payroll taxes and firing costs are still so high, businesses across Southern Europe are loath to hire new workers on a full-time basis, so young people increasingly are offered unpaid or low-paying internships, traineeships or temporary contracts that do not offer the same benefits or protections.

"This is the best-educated generation in Spanish history, and they are entering a job market in which they are underutilized," said Ignacio Fernández Toxo, the leader of the Comisiones Obreras, one of Spain's two largest labor unions. "It is a tragedy for the country."

Read the whole thing. I think that the United States is far from immune to these problems. As a parent of a college student, I have to ask: if college is such a panacea, why do college students have to grovel for unpaid internships, even after they graduate?

I suspect that the health-care-cost component of hiring is a major drag on the U.S. economy. Instead of encouraging employer-provided health insurance, I would say that we should outlaw it. Instead of outlawing bare-bones catastrophic health insurance for individuals and households, I say we should encourage it.


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COMMENTS (23 to date)
volatility bounded writes:

The big problem I see with college kids finding jobs is that they go to college with a goal of doing what interests them, instead of a goal of becoming as employable as possible. I see kids that leave high school having put zero thought into career, and then in college aimlessly drifting from major to major, doing whatever looks interesting or easy, preferrably both.

This sort of experience doesn't lend itself to kids having marketable skills.

David N. Welton writes:

I agree strongly that the difficulty in firing workers is a huge problem here in Italy. Companies should be in the business of making money, not taking the place of the state in providing for workers who are not needed. If that's what a society wants, they should pay for it directly through taxes on everyone, like in the nordic countries, rather than saddling employers with unwanted and unproductive employees.

On the other hand, I'm quite happy with the health care system here. Here in the north, it works well, and while it's not perfect, gives you a lot of peace of mind that is absent in the US, and appears to cost a lot less to boot.

What you propose would be an interesting experiment, and perhaps in the long run would drive costs down, but would likely cause some serious pain in the short term, and I think I'd be happier with a system like they have here in Italy, perhaps with a bit more market injected into it in places.

David R. Henderson writes:

I'm guessing this will surprise no one who reads my posts regularly, but I disagree with Arnold's proposal to dictate to employers that they will face legal sanctions if they provide health insurance.

Jon writes:

Indeed.

Douglass Holmes writes:

Professor Henderson, surely you would agree with Arnold's take on bare-bones catastrophic insurance policies.

Arnold Kling writes:

David,
I was joking about "outlawing." Just trying to make the point about how perverse our actual policies are.

Floccina writes:
This is the best-educated generation in Spanish history, and they are entering a job market in which they are underutilized

I think that this shows that they are teaching the wrong things.

Floccina writes:

Also I one admits that school is more about testing than education this problem is easily solvable. You solve it by making school harder and more selective and reducing the number of graduates until the selection is so exclusive that almost all the super qualified graduates are snapped up by business. That is the opposite to what Obama said he wanted to do, he said that he wants to greatly increase the number of college grads. Evidently the democrats want to create a glut of college grads poorly trained to do white collar work. Otherwise you could start full college bachelor program for auto mechanics, hair stylists, electricians, carpenter and plumbers and train them to be great at those jobs (assuming that is possible).

Floccina writes:

Oh yeah, and we must send that many people to schools for 16 years how about focusing on teaching them valuable life skills. Skills useful no matter how you earn a living.

David R. Henderson writes:

@Arnold,
Good. Count me dense: I didn't get that it was a joke but I'm glad it was.
@Douglass Holmes,
Depends on what Arnold means by "encourage." If he means get rid of any legal barriers in the way of catastrophic coverage, then I agree.

Brett writes:
if college is such a panacea, why do college students have to grovel for unpaid internships, even after they graduate?

Most college degrees don't give you some defined skills that get you employment, in the way that engineering, pharmaceutics, and medicine do. Instead, you have to try and find out something to do, and hope it involves what you learned.

Instead of outlawing bare-bones catastrophic health insurance for individuals and households, I say we should encourage it.

It's better than nothing, but not by much. And realistically, we don't want to encourage people to avoid coming into the doctor until they have a massive health problem. We don't want them putting off regular visits with their GP until they walk in one day with Type III cancer, or end up in the emergency room with heart disease or the like. That's more expensive.

GU writes:

College isn't a panacea. It's really only good for folks who wish to: (1) go to grad school to become a professor/researcher, (2) join a learned profession, or (3) become "educated."

So college is either a stepping-stone for grad school or valuable in itself (for those that value becoming an educated person). For everyone else it's a waste of time. Unfortunately, a B.A. is required for middle-class status in the U.S., so lots of people attend college that should not.

I am guessing that both Arnold Kling and David Henderson agree that outlawing voluntary exchange is a really bad idea, with few exceptions.

Yet, leaving health care completely up to voluntary exchange just isn't going to work out in a culture such as ours. Most Americans are simply unwilling to ignore sick or dying people who were either unwilling or unable to provide for their own health care. Most Americans are quite willing to ignore people who unwilling or unable to buy most other goods and services.

If one agrees with my point, then it seems to follow that some sort of law-based divergence from voluntary exchange will be necessary. The idea of mandatory catastrophic health insurance may be the best available divergence.

What if all health care insurers were required by law to offer all individuals (with no restrictions whatsoever, or involvement of one's employer) a uniform catastrophic health care insurance plan. Health insurers would be free to price the insurance as they please, which keeps competition in play, but the minimum insurance plan would be uniform by law across all insurers. Health insurers would also be able to offer more extensive insurance plans for individuals willing and able to buy them. Involvement of one's employer would not be subsidized through tax law as it is now, which I think would quickly enough lead employers to largely abandon health care benefits.

Individuals would be required by law to purchase a plan from the insurer of their choosing (forget state lines and all the rest). Based on an income means test, taxpayers would pick up the tab for the catastrophic insurance for extremely low income households.

Of course, any divergence from voluntary exchange without government interference is abhorrent to libertarians like myself. The sketch of a policy alternative I propose here is not without problems. But I have come to believe divergence is necessary in the case of health care.

Jacob Oost writes:

While it's true that our custom of getting health insurance through employers does have some drag effect on hiring, many progressives use this as an excuse to advocate government-enforced universal health care of some form. Libertarians need to have an argument floating around in the marketplace of ideas to counter this, but I rarely hear one being offered.

I think that the *real* problem, the underlying problem, is the high cost of health care. A huge step in the right direction would be health care reform. REAL health care reform, not health insurance reform. For example, in most other countries you can go straight from high school to medical school. They don't create a huge barrier to entry in the form of a useless bachelor's degree before one can even *begin* learning to be a doctor. That's just one problem among many. I hear too much energy being put into countering progressives' calls for universal health care and not enough energy being put into advocating the kinds of reforms necessary to make the health care industry a properly-functioning one.

Mr. Econotarian writes:

The problem with Europe is that the kids who are being hurt by labor regulations are indoctrinated with socialism, and they protest for MORE regulation and socialism rather than less (see France when they tried to make it easier to fire young people).

Robert Johnson writes:

I'm not convinced that the US is likely in the near future to face the chronic high unemployment that France, for example, has. It was not long ago that we enjoyed both extremely high immigration and nearly full employment, at the same time.

College graduates who have trouble finding employment need to remember to tell THEIR kids to study math, science, and engineering.

Brett writes:
They don't create a huge barrier to entry in the form of a useless bachelor's degree before one can even *begin* learning to be a doctor.

That's a good point. It would probably be better just to come up with a list of courses that you need to earn a medical degree (some of which you have to take as part of your Bachelor's Degree now), and then simply include it and the current medical training as part of a single program that you can get into from high school (or from college later, if you decide you want to become a doctor when you're 25).

The problem is that you have to get past the various licensing barriers that help constrict the number of doctors in the field. That can be a good thing - it's nice to know that the doctor you got to had to go through rigorous training in his field before he can treat you - but it's a big reason that we haven't been able to simply expand the "supply" of medical treatment.

Doc Merlin writes:

Outlaw it? No, thats very unlibertarian. Just tax any subsidies for it at the same rate as income, that way we don't have price distortion.

MernaMoose writes:

Robert Johnson,

It was not long ago that we enjoyed both extremely high immigration and nearly full employment, at the same time.

In the middle of a housing bubble, and BOC (Before ObamaCare), yes, that was true.

The idea that we could become a lot more like France isn't too far-fetched these days.

College graduates who have trouble finding employment need to remember to tell THEIR kids to study math, science, and engineering.

And they're going to tell them this for what reason?

As a math, science, and engineering type person I can tell you two things:

1) If you're smart enough to get an engineering degree, you can make it through med school and get paid a lot better in the end -- at least until ObamaCare gets done "fixing" things for us all.

2) Math, science, and engineering degrees are no ticket to job security anymore. I know quite a few engineers who've moved on to new career paths because they couldn't find jobs, and I know a lot of fresh grads in recent years have had a very hard time finding permanent jobs.


The idea that the US "needs a lot more science and engineering graduates" is a myth, propagated by the MSM and D.C. politicians and bureaucrats. If we graduated "a lot more" of them, they wouldn't have jobs. At least not in their fields of study.

There's good reasons why so many smart people have been avoiding math, science, and engineering majors in recent years.

stuhlmann writes:

"I suspect that the health-care-cost component of hiring is a major drag on the U.S. economy."

While I agree with your thoughts on health care in general, I have to wonder why you introduced the subject of health care here. The initial topic was unemployment among young, educated people. Are health care costs really a factor with this? I mean young people are (or should be) really cheap to insure because they have so few health problems compared to those of us who have moved on in life. I never missed a day of work due to sickness or injury until after I turned 40, and my only medical bills were for periodic physical exams and occasional minor ailments.

Brian Clendinen writes:

First, give individuals the exact same tax advantages that business get which includes getting rid of the yearly use it or loss it policy under health saving plans. Make it simple as possible with no caps. Secondly, allow insurance to be bought across state lines which includes not allowing states to outlaw purchase across state lines. And yes get rid of all insurance regulation at the federal level. If a state want to heavily regulate it, they can go ahead and do it and run insurance firms out of their state. Add into the fray of changing Medicare and Medicaid to a monthly subsidy which individuals then buys private insurance. Also get rid of the FDA’s requirement as the only regulator who determine if a drug is effective.

All of these would be politcally viable to pass and would drive cost down and choices up. Although the privatization of Medicare and Medicaid would be the hardest.

Totally getting rid of the FDA, Medicare, and Medicaid are just not politically viable. To be honest, I am not sure about 100% of the FDA's functions going private.


However, I would be happy with just getting rid of the cross state trade barriers and Obamacare. Though two repels after 10 to 15 years would solve a lot the structure issues with insurance which drive cost up.

It depressing that other than repeal of Obamacare and maybe some tweeks to health saving plans, none of the solutions are really part of the republican leaderships agenda

However, I am in Bryan's camp on the value of a college education which I believe is a major factor on why buisness tend to shy away from hiring them.

Robert Johnson writes:

There's a good graph here that supports my premise that graduating from college is actually worth it.

Robert Johnson writes:

MernaMoose,

I think Med school requires some math and science...

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