February 11th, 2014
04:19 PM ET

What I'm reading: Employer-based health benefits need rethink

By Fareed Zakaria

“It’s never made a bit of sense for health-care benefits to be routed through employers. The system emerged in the U.S. by accident,” writes Ezra Klein for Bloomberg. “Wage controls during World War II made it impossible for companies to attract workers by offering higher salaries. Because health benefits were exempt from high wartime taxes, companies began using them to attract talent. After the war, unions joined employers in pressuring Congress to ensure employer-based health benefits were never taxed. So the U.S. emerged with an odd system in which a dollar of untaxed employer-based health benefits was worth much more to a worker than a dollar of taxed salary. Employers became the main vehicles for insurance not because anyone thought it was a good idea, but because the tax code made it a bargain.”

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“The World Bank has been suggesting for several years that Asian manufacturing jobs could migrate to Africa,” says The Economist. “Obiageli Ezekwesili, a vice president of the bank, says that more than 80 million jobs may leave China owing to wage pressures, not all to neighboring countries with low costs; if African labor productivity continues to rise, many could go to Africa, especially if corruption and red tape, still major scourges of the continent, are curbed. In contrast to China, business in parts of Africa is becoming cheaper as infrastructure improves and trade barriers are lifted. The average cost of manufacturing in Uganda, for instance, has been falling.”

“This could mark a sea change.”

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“America’s culture of openness and innovation will ensure its role as a global hub in an age when networks supplement, if not fully replace, hierarchical power,” writes Joseph Nye for Project Syndicate. “The U.S. is well positioned to benefit from such networks and alliances, if American leaders follow smart strategies. In structural terms, it matters greatly that the two entities in the world with economies and per capita income similar to the U.S. – Europe and Japan – are both American allies. In terms of balance-of-power resources, that boosts America’s net position, but only if U.S. leaders maintain these alliances and ensure international cooperation.”

“Decline is a misleading metaphor for today’s America, and Obama fortunately has rejected the suggestion that he should pursue a strategy aimed at managing it. As a leader in research and development, higher education, and entrepreneurial activity, the U.S., unlike ancient Rome, is not in absolute decline. We do not live in a ‘post-American world,’ but we also no longer live in the ‘American era’ of the late twentieth century. In the decades ahead, the U.S. will be ‘first’ but not ‘sole.’”


soundoff (One Response)
  1. j. von hettlingen

    Joseph Nye wonders whether the US "is turning inward and becoming isolationist"! Yet the Americans are doing some soul searching after 9/11. They have a dualistic view of what they want their country to be and how it should interact with the world – strong, while keeping a low profile; engaged economically but pursuing self-interest; working with the international community, while always ensuring US security priorities take centre stage.

    February 13, 2014 at 7:48 am | Reply

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