America’s 9th largest export

Why is America richer than almost all other developed economies?  In a recent post I pointed to several factors, including regulatory differences.  Industries such as fracking are less heavily regulated in the US than in many other developed countries.  This also explains why human blood has become one of America’s leading export industries:

Last year American blood-product exports accounted for 1.8% of the country’s total goods exports, up from just 0.5% a decade ago—and were worth $37bn. That makes blood the country’s ninth-largest goods export, ahead of coal and gold. All told, America now supplies 70% or so of the plasma used to make medicine.

The French government has taken a principled stand against the European blood industry:

In June the European Parliament approved new regulations that allow compensation to be offered for donations, but ban it from being mentioned in advertising and cap payments to an amount proportionate to the value of time spent donating. Whereas Americans can donate 104 times a year, many Europeans are limited to less than 30 times. . . . France lobbied against the European Union’s recent regulatory changes, arguing that they risked making the human body a commodity, as is “already a reality in the United States”.

Instead, they prefer to finance the American blood industry:

At the same time, the French government is the sole shareholder in a company that owns six plasma centres in America, which pay donors, with the fluid collected available for use in France.

If more blood were available, many lives could be saved.  The same is true for kidneys, where even the US bans the compensation of donors.  A study by John Dooley and Emily A. Gallagher shows that blood industry is beneficial to low-income Americans.  Here is the abstract:

In the United States, households donate plasma for compensation at a higher rate than they use payday, auto-title, rent-to-own, or pawn loans. Our paper is the first to explore the household financial implications of plasma donation. Plasma donors tend to be younger and less educated with lower incomes and credit scores; they are also more reliant on non-bank credit. We use dramatic growth in plasma centers between 2014 and 2021 to study the causal effect of the ability to donate plasma on non-bank credit. We find that access to a plasma donation center reduces demand (inquiries) for payday and installment loans by 6.5% and 8.1%, respectively, with larger effects (13.1% and 15.7%, respectively) on younger borrowers. Moreover, foot traffic increases by 7-10% at essential and non-essential goods establishments when a new plasma center opens nearby. Our findings suggest that plasma donation helps households smooth consumption without appealing to high-cost debt.

No matter how much you think you know about the economy, it is bigger and more complex than you can imagine.  I suspect that if Americans were asked to name our 10 largest exports, very few would have put human blood on the list.

The residential home building industry is far bigger than the blood industry, but even it is far too small to have a noticeable effect on the overall economy.  For instance, between January 2006 and September 2007, home building fell nearly in half, with housing starts plunging from 2.273 million to 1.183 million.  You might have expected this to cause higher unemployment.  It did not. The unemployment rate was 4.7% in January 2006, and it remained at 4.7% 20 months later.  Even housing is too small to significantly impact the overall economy.

There has recently been a great deal of discussion about some large computer chip “fabs”, which are currently under construction.  These may or may not be important for the chip industry, but they are almost certainly not important for the overall US economy.  Our economy is far too big and too diverse for any single sector to have a major impact.

PS.  If instead of housing starts you use housing completions, the decline would be somewhat less steep, but still quite large.  The best measure of ongoing construction is probably an average of the two series, which fell from 2.155 million to 1.270 million over that 20-month period.

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