Health care and global competitive advantage

Paul Krugman's July 25 article on Toyota locating a new car factory in Canada rather than the U.S. because of the educated Canadian workforce and its national health insurance system highlights the differences the public sector plays in the two countries. He writes,

"Pundits tell us that the welfare state is doomed by globalization, that programs like national health insurance have become unsustainable. But Canada's universal health insurance system is handling international competition just fine. It's our own system, which penalizes companies that treat their workers well, that's in trouble."

Maybe treating people well is a competitve advantage in the global economy after all.