Today is Cyber Monday, which may have been the first in a long list of regular words to get the word “cyber” needlessly tacked onto it. While people do their cyber shopping on Cyber Monday for cyber deals they may ask themselves, why the fuck can I order a big screen television for a few hundred bucks but can’t even get a simple medical diagnosis without blowing through my deductible? The answer to that, as with the answer to most economic questions along those lines, has to do with government granted monopolies:
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.
There’s no such thing as an aggregate price level? Next you’ll tell me that gross domestic product is a made up number as well!
If you click on the link and look at the chart you’ll see that prices for college tuition, textbooks, childcare, and medical care have been increasing rapidly whereas the prices for television, toys, software, and wireless services have been decreasing rapidly. The difference? The goods and services that have been increasing in price are all monopolized or otherwise heavily restricted by the State whereas the goods and services that have been decreasing in price all exist in markets with an extremely high level of competition.
The takeaway from this is that there is a vicious cycle when it comes to prices and the State. When prices go up people demand that the State intervene to bring prices down. Usually it was the State’s involvement that caused the prices to go up in the first place and if people get what they want the prices will go up even further as the State gets further involved. With the ramifications of the Affordable Care Act (ACA) becomes apparent many people are demanding the State step in to fix its mess. But most people aren’t demanding that the State decrease its involvement in the healthcare market. Instead they’re demanding that it further increase its involvement by implementing a single payer system. In other words, people are demanding that the vicious cycle be continued and if it is (which it almost certainly will be) we’ll see healthcare prices jump even higher (but those increases will probably be hidden in payroll taxes so most people remain ignorant of them and thus believe that the problem was solved).
But… but… without the government keeping prices low, people would be dying in the streets and only rich, capitalist, cis hetero white men would see doctors!
/s
It’s always nice to see how those sorts of pro-government intervention hold up against reality. Good and water are also important but we get by without the government. Or, rather, we manage to get by DESPITE government smegging around with those and other things. I sincerely believe that this is a large part of why basic economic thought is not taught. Anyone studying such a thing quickly comes across these sorts of questions, such as “why are luxuries like diamonds expensive but necessities like drinking water so cheap?” or some variant of that question.