Inflated by Inequality
How Prisons, Healthcare, and Education Prop Up America’s GDP
I’ve been thinking about how much of America’s economic size is propped up by sectors that, in most countries, aren’t primarily profit-driven: healthcare, corrections, and education.
In the U.S., each of these industries is tied to private enterprise and shareholder returns—a dynamic that’s rare elsewhere.
Yes, this inflates GDP and GDP per capita. But is it worth it?
Is it worth having prison occupancy quotas, the world’s highest tuition costs, and the most expensive healthcare system on Earth—often with worse outcomes?
The Comparison: Public Goods vs. Profit Engines
A couple of weeks ago, I had the thought of wondering just how much these three sectors inflate America’s GDP. To do this, I compared the U.S. to Canada—a similar country in many respects, but one that treats these sectors as public services rather than profit centers.
Let’s break it down.
1. Prisons
America has one of the highest incarceration rates in the world—at one point, even higher than the Soviet gulags.
The U.S. imprisons 6× more people per capita than Canada.
While Canada’s cost per prisoner is slightly higher, America’s system contributes $447 more per person to GDP, simply because far more people are behind bars.
This doesn’t mean prisons are more efficient—it just means they’re bigger business.
2. Education
Higher education in the U.S. is dramatically more expensive—and yet, fewer people complete it compared to Canada.
Americans spend over 4.5× more per person on tertiary education.
As a result, the sector contributes $2,122 more per capita to the U.S. GDP—despite lower attainment.
It grows the economy, sure. However, it also increases student debt, limits access, and perpetuates inequality.
The “cost per individual” is based on annual spending spread across the entire population—not actual tuition—so it reflects systemic overhead in it’s entirety.
3. Healthcare
This is the big one.
America spends nearly twice as much per person on healthcare: $13,432 vs $7,013 in Canada.
Life expectancy? Americans live four years less on average.
That extra spending adds a whopping $6,419 per capita to GDP, but doesn’t translate into better care.
Why? Because the U.S. system is entirely profit-driven—from insurers to hospitals to pharma. Layers of administrative bloat, billing complexity, and private shareholders add cost without adding care.
The Bottom Line
Across these three essential sectors—prisons, education, and healthcare—the U.S. adds $8,988 more per person to GDP than Canada.
That’s over $3 trillion in economic output—more than the entire Canadian economy—driven not by efficiency or better outcomes, but by higher costs, privatization, and systemic inequities.
GDP per capita is a useful metric—but without context, it can be dangerously misleading.
Bigger isn’t always better. Especially when it comes at the expense of justice, access, and health.
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Great breakdown. Thanks.