Progress and Innovation vs Secondary Market Limits

In a mature economy, some secondary markets can gradually undermine the kinds of innovation which could otherwise contribute to growth potential at a general equilibrium level. Nevertheless, in a recent Bloomberg article, "Equality is a mediocre goal. Aim for progress", Tyler Cowen begins with what seems to be a reasonable underlying expectation, re healthcare product:

Innovations should outstrip the growth of the economy. That means not everyone will be able to afford them at first.

"Affordability" is the eventual expectation. But to what extent do many healthcare procedures become more accessible, once they standardize? While Tyler's innovation assumption frequently holds for tradable sector product, often the successful commodification of non tradable sector product, is not so simple. After all: While innovation in tradable sectors contributes to increased product output, innovation which enhances human capital value, still doesn't make it possible for time based product to multiply itself. Given this circumstance, there's also more incentive to apply revenue from innovation gains to individual - rather than group - income. Consequently, many forms of innovation which particularly contribute to progress and prosperity, are more closely associated with tradable sector organizational patterns.

At the very least, some societal progress can be attributed to positive developments in non tradable sector activity. One frequently cited example, is the indirect manner by which earlier infrastructure improvements such as interior plumbing and electrification, greatly benefited public health and well being in general. Just the same, too much non tradable sector innovation accrues to quality gains which - while they increase standards of living - tend to do so by creating excessive time obligation burdens, at lower income levels.

Much of how healthcare is presently organized, means a secondary market dependence on already existing general equilibrium revenue. This makes for more budgetary problems in the near future, which Tyler Cowen particularly highlights. He continues:

To date, so much of the health care debate has been about whom to cover. Over time, it may be more and more about what to cover. It could be that all the citizens will have nominally the same insurance coverage, whether subsidized or guaranteed, but many medical and mental-health conditions will fall outside this coverage - leading to rampant inequalities in access.

It's the best problem to have. It means that medical innovation has arrived at a very high rate. If we enter the future being able to cover most medical treatments with reasonable equality, that would be a sign we failed at the task of progress. In other words, successful futures are likely to be highly unequal futures, again because medical innovation will have outpaced government revenue...It is better to focus on innovation, hoping that over time prices will fall and a greater equality of access will follow.

However: In times of slow economic growth, providers are trying to access a relatively fixed pie of government revenue, which makes it more difficult to cut the costs of already standard procedures. Meanwhile, as fiscal revenue is redirected towards cutting edge technology and innovation, there's even less remuneration from government, for routine forms of healthcare product.

Chances are, today's healthcare which remains structured as dependent (secondary) markets, would gain the most potential benefit from further research and innovation. Still, in order for basic aspects of healthcare to remain fully viable in the marketplace, standardized routines need to be recreated in a primary market capacity, so these important activities might eventually play a role in the restoration of economic growth at general equilibrium levels. Otherwise, "saving" available government revenues for healthcare innovation, won't be enough to preserve a full range of vitally important knowledge, for society as a whole.