How To Save The World
Give the Chinese free health care. Goldman Sachs’ chief economist Jim O’Neill told me that he thinks the Chinese government’s recent announcement that it plans to offer basic state health care to 90 percent of its population by 2011 is the “most important policy decision in the world at the moment.” That’s saying something given the slew of executive decisions being taken every other day in the U.S, Europe and elsewhere to avert recession. The idea, aside from providing better health care, is to get the Chinese to start spending. Because they have no free medical care or social safety net, they stash away 20 percent of their income to prepare for things like medical emergencies (in China, if you have an operation, you have to put down cash in advance). Nationalize health care, and the need to save so much goes away – a kind of mega-stimulus when you consider the potential consumer power of 1.3 billion people.
Whether or not Beijing manages to make it all happen, the effects of health care and health costs on the economy are becoming a bigger issue everywhere. In Europe, French President Nicolas Sarkozy has called for a new formula for calculating economic growth (to be unveiled in a report later this spring) that would take into account the longer term benefits of state run education, health care and unemployment insurance. As many economists point out, the fact that consumer spending hasn’t fallen off a cliff in Europe as fast as it has in America is in part down to the stronger social safety-net.
Of course, while it’s statistically tricky to try and account for the intangible (if important) benefits of such things, it’s clear that the current system of calculating GDP has got some major flaws. For example, one of the many reasons that American economic growth is historically higher than European growth is because we spend so much more on health care – yet we are sicker and die younger than the average European, proof that at least some of that investment is money wasted. Our GDP numbers also look better because we have so many more people in jail than other nations, and thus spend vastly more on prisons. But that’s another story…
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Rana Foroohar is the deputy editor in charge of international business and economics coverage for Newsweek. She conceives and edits a weekly section of breaking news stories, features and guest articles. She also writes economic cover stories and opinion pieces, and pens a bi-weekly column on the global economy.
Foroohar oversees Newsweek's team of global correspondents and stringers, directing their reporting on the week's business news. She edits regular columnists such as hedge fund manager Barton Biggs, Morgan Stanley emerging markets head Ruchir Sharma, Yale professor Jeffrey Garten and PIMCO CEO Mohamed El-Erian. She is in charge of economic coverage for Newsweek's annual Davos special issue, which features pieces by world leaders and economic thinkers, and also chairs panel discussions while at the World Economic Forum in Davos.
Prior to taking this New York based position in 2007, Foroohar spent six years as Newsweek's European Economic Correspondent based in London, covering Europe and the Middle East. During this time, she was awarded the German Marshall Fund's Peter R. Weitz Prize for transatlantic reporting. She has also worked as a general editor at Newsweek, a reporter for Forbes magazine, and as a writer and editor at various other national and international publications. Foroohar graduated in 1992 from Barnard College, Columbia University, with a B.A. in English literature. She is a life member of the Council on Foreign Relations.
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