Do not think about, write about or deal with human behavior without determining the effects of incentives. It’s not their money, of course they’ll waste it.
Wherein we see that, in keeping with every thread of history, the more the government regulates and monopolizes an industry the higher the cost, some of it hidden, the scarcer the product and the worse the product. If politicians want to help us, they should stop trying to help us.
Why Luxury TVs Are Affordable when Basic Health Care Is Not
Richard N. Lorenc
Imagine this. You are feeling under the weather. You pull out your smartphone and click the Rx app. A nurse arrives in 20 minutes at your home. He gives you a blood test and recommends to the doctor that she prescribe a treatment. It is sent to the CVS down the street, which delivers it to your door in 20 minutes. The entire event costs $20.
What would the current cost be? 465?
Sounds nuts? Not so much. Not if health care were a competitive industry. As it is, medical care prices are up 105% in the last 20 years. This contrasts with the television industry, which is selling products that have fallen 96% in the same period.
Take a look at this chart assembled by AEI. It reveals two important points. First, there is no such thing as an aggregate price level, or, rather what we call the price level is a statistical fiction. Second, it shows that competitive industries offer goods and services that are falling in price due to market pressure. In contrast monopolized industries can extract ever higher rents from people based on restriction.
Consider each product or service shown. College is heavily subsidized, regulated, and exclusionary, and the costs are soaring. The textbook industry is hobbled by extreme copyright regulation, and can depend on captive buyers. Childcare is one of the most regulated industries in the country. Not just anyone can enter. Every aspect of childcare provision is controlled by the state.
On the other hand, software, wireless service, toys and and TVs (see: free trade) exist in relatively freer market settings. The price pressure is down.
It’s not that complicated, folks. If you want good services, good products, innovative ideas, and low prices, you need competitive markets. The more you control, the higher the prices and the worse the results.
There you have it. The more the government is involved the worse everything gets, but, on the socialist positive side of the ledger, the cost is really high.
Government Job or Respect–Which’ll It Be?
Cheerio and ttfn,
Grant Coulson, Ph.D.
Author, “Power Teaching: How to Find Someone to Teach Your Child when the Education System has Failed.”
Cui Bono–Cherchez les Contingencies