Antoon Spithoven

The productivity paradox and the business cycle

From the early 1980s to the late 1990s overall productivity rates did not reflect the rising investment in information and computer technology (ICT). This paradox, the productivity paradox, which was widely discussed among economists may well turn out to be mainly a mirage once the assumption is excluded that investment has a short‐run effect on productivity. The apparent productivity paradox seems to be rooted in an ICT infrastructure that is inadequate and in an increase in income disparities that thwart the realization of economies of scale.

Lean production and disability

Since the early 1980s, Dutch productivity rates have been driven by a shift from traditional mass production firms to lean production. It slightly counteracted the generally acknowledged procyclical productivity rates; instead of working less hard during the recession of the 1980s and 1990s, employed labor had to work harder. Because the combination of mass and craft production makes lean production very demanding on employees, it appears to be more stressful than production in a traditional firm. This possibly influenced the rise of disability in the 1980s and 1990s, when almost one‐third of disabilities were due to “mental disorders”.

An explanation for the rising share of services in employment

Services are crucial for the functioning of a society and an economy. Nonetheless, they have not been given the attention they deserve and remain poorly understood by the economics profession. In many studies services are taken to be technologically sluggish or stagnant, and this then, is regarded as an explanation for their rising share in overall employment. The fact that due to the new information technologies, labor productivity in services has been perceptively increasing is not adequately reflected and acknowledged in economic statistics. This article discusses some aspects relating to changes in labor productivity with special reference to services. It describes the product of services from the final consumers’ point of view, as well as from the point of view of producers and analyzes the effect of services on process and product innovation. Attention is directed to the problem of measuring productivity in services and to some explanations for their rising share in GNP and employment in OECD countries. The conclusions suggest that changes in income, and in consumer behavior, affect the share of services and influence the growth of productivity in service industries.

Why U.S. health care expenditure and ranking on health care indicators are so different from Canada’s

Compared to other industrialized countries, the U.S. spends most of all on health care. Nonetheless, the U.S. ranks relatively low on health care indicators. This paradox has been already known for decades. For example, the turning point comparing the U.S. and Canada was in 1972. Health expenditure as a percentage of GDP was higher in Canada than in the USA from 1960 until 1972. Since 1972 expenditure on health care has been higher in the U.S. than in Canada (OECD 2005a, Health data 2005, fourteenth OECD electronic database on health systems, date of release June 2005, last update 04/26/2005). The present study integrates the dispersed literature on spending and health care rankings and adds some statistical analysis to these studies. The evaluation of different factors influencing health care expenditure in the U.S. relative to other countries is restricted to a comparison with Canada. The U.S. and Canada are two countries that are sufficiently similar to make comparisons useful. The comparison of factors influencing health care expenditure in the U.S. and Canada in 2002 reveals that health care expenditure in the U.S. is higher than in Canada mainly due to administration costs, Baumol’s cost disease and pharmaceutical prices. It is not primarily inefficiency in health care production but the dominant prevalence for free choice and own responsibility that explains the paradox of high expenditure on health care and low ranking on health care indicators.

Public governance of healthcare in the United States: a transaction costs economics (TCE) analysis of the 2010 reform

This article aims to address the lack of transaction costs economics (TCE) studies in health economics. It provides a content analysis of ObamaCare and 25 lawsuits that challenge the 2010 reform. It shows that the cultural environment determines the strength of features of governance structures and in line with this the strength of their instruments. Following Williamsons TCE model of governance structures, the zero transaction costs criterion is supplanted by the remediableness criterion. Assuming that ObamaCare might be ruled to be constitutional, the regulation of healthcare is found to be a comparative efficient governance structure in addressing adverse selection. However, the TCE analysis also reveals that ObamaCare itself is subject to some flaws in efficiency and effectiveness, namely: unbalanced adaptation mechanisms, unbalanced incentives and weak enforcement devices.

It's the Institutions, Stupid! Why U.S. Health Care Expenditure Is so Different from Canada's

The United States and Canada are rather similar in social orientation. However, this is not reflected in health care. Firstly, Canada implemented the principle of universal coverage much earlier than the United States. Secondly, U.S. health care continues to rely much more on private funding and private managing, while Canadian health care relies more on cost containing public funding and governmental budgeting. These differences can be explained, among other things, by their different paths of development since the American Revolutionary War: the United States followed an independent path while Canada was oriented on Europe (for a long period of time). The different governance structures of health care and associated institutions such as lobbying result in a much higher health care expenditure in the United States than in Canada.

The Great Financial Crisis and Functional Distribution of Income

This article provides a post-Keynesian analysis of economic growth and discusses the effects of austerity measures on demand in countries where growth is wage-led. It finds that growth is predominantly wage-led in both the United States and the Eurozone, although it is profit-led in some European Union countries. Profit-led growth may flourish under austerity measures, whereas wage-led growth requires economic stimuli (and reforms) to address an economic downturn. The dominant policies of addressing the great financial crisis currently are austerity measures to deleverage balance sheets, incidental interventions to save banks, and market reforms. However, these policies ignore the effects of the functional distribution of income on growth and are not likely to turn the tide in economies where growth is wage-led. Distribution of income cannot be left to marketmechanisms alone. A decent society requires a government policy of income distribution.

Cultural Foundation of Distribution of Income: The Dutch Case

Income inequality is not persistent as far as the Netherlands is concerned. Dutch income inequality diminished with the rise of the welfare state. One of the explanatory factors of the development of income inequality is the corporatist model applied to socio-economic negotiations. The Dutch case endorses the view that corporatist institutions are significant for income distribution. Corporatism also may positively influence productivity. Therefore, the integration of the successful corporatist countries into the European Union does not imply that they have to converge to the socio-economic governance structure of the other countries. It is likely that European countries, such as the Netherlands, can continue their approach to income equality.

Markets and Rules: The Case of the Global Credit Crunch

Neoliberal thought assumes that a free market economy promotes the application of new techniques in the most efficient way. In the financial world it especially implied the introduction of sophisticated techniques of risk management. A more realistic view says without any other control mechanism free markets produce chaos rather than order. To achieve some justice and prosperity society first needs to establish some order. More prudent behavior of the economic elite, more secure codes of conduct, and a stricter legal framework of rules are necessary conditions for a financial system that fulfils its societal function well. Only then can the world continue working on a steady improvement in terms of justice and prosperity.

Surfing the Baby Boom Wave in the Netherlands

Abstract: Mainstream economists and liberal politicians are criticizing the Third Way as it is being applied in the Netherlands. They argue that mutual consultation precludes an efficient adaptation to disturbances. The present study analyzes changes in wage and income policy in the Netherlands until 2005. It finds that wage and income policy has proven to be flexible enough to address “new” challenges in the Netherlands. The flexibility is rooted in a culture of tolerance that allows for some breaking of working rules. The latter arises from bounded socialization, that is, the imperfect transmission of information with respect to social working rules that result in similar but not identical copies of institutions.