ZeroHedge: Why Socialism (And/Or Big Government) Sucks In One Simple Chart

From the article:

  • Blue lines = prices subject to free market forces.
  • Red lines = prices subject to regulatory capture by government. Food and drink is debatable either way.

https://www.zerohedge.com/news/2019-02-26/why-socialism-sucks-one-simple-chart

29 thoughts on “ZeroHedge: Why Socialism (And/Or Big Government) Sucks In One Simple Chart

  1. People don’t appreciate the magic of the marketplace unless they have lived in its absence.

    https://blog.chron.com/thetexican/2014/04/when-boris-yeltsin-went-grocery-shopping-in-clear-lake/

    You can walk into Food Lion almost any day of the year and buy fresh strawberries at a reasonable price. Think about what has to happen for that to be true.

    Government on its best day cannot do what the invisible hand of the market does every day.

    Liked by 1 person

  2. Few if any Americans are really pushing for the government to take over production of goods and services. Safety inspectors, consumer protections, fraud preventions, employee safety etc. are what we expect and mostly get.

    The shopper can find prices, do comparison shopping, check quality and get money back guarantees in most goods and services. Consumer Reports does a pretty good job for many products. They even do so for hospitals with big data as is available, but limited to very specific outcomes in very specific conditions.

    If healthcare delivery were nearly as transparent, drug tests upfront, service price lists published and the like I might see some credence to healthcare being possible in the free market. If, and this is a big if, universal care would be affordable and available in a free market, you may have a point. But that alone goes against corporate economics. Profit comes from treatment. Insurance profit comes from excluding the expenses of sick people. Endgame would be hard to justify.

    Much more complicated but excluding accurate consumer information is literally selling pigs in pokes.

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    1. RE: “If healthcare delivery were nearly as transparent, drug tests upfront, service price lists published and the like I might see some credence to healthcare being possible in the free market.”

      Healthcare and the other goods and services in the chart are already possible in the free market. Your objection seems to be that they don’t meet your standards. Healthcare, for example, must be “universal” by your lights, and you judge it to be acceptable for prices to be higher than they might otherwise be under natural conditions of supply and demand.

      I wish you could see how immoral your position is in the final analysis.

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      1. What is the problem with having affordable and accessible health care for all Americans? Apparently that is immoral according to you.

        Do you feel the same about fire and police protection? No money, no protection.

        What about access to good legal representation if you are charged with a crime? Not just any 20 minutes of time from an overworked public defender, but a well-trained and effective attorney. Should that be based only on the ability to pay?

        Liked by 1 person

        1. RE: “What is the problem with having affordable and accessible health care for all Americans?”

          Are you serious? Do you really care so much about yourself that you must distort my statements by shifting the goalposts?

          But to answer your question directly, there is nothing wrong with wanting to have affordable and accessible health care for all Americans. The puzzle is how to achieve it, if that is the goal.

          Notice that if public policy causes healthcare to be more expensive, then some amount of healthcare will never be delivered to those who presumably need it. Thus, artificial, price distorting methods defeat the goal of universality.

          What’s immoral is choosing such an approach when you know it won’t work.

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          1. Maybe I misunderstood your reference to my position as being immoral.

            Moving on, universal health care may cost more in the aggregate, but a healthier populace will be less costly than one that has to be treated in the last stages of life because of neglect.

            Put another way, the amount of money we spend on DOD and tax cuts can cover a lot of healthcare.

            Right now the tax cuts have boosted the deficit to close to a trillion dollars. And DOD spending will close that gap. Especially with the programs to upgrade our nukes.

            Which is more beneficial? Universal healthcare or tax cuts for the top and more nukes? Or even a fighter bomber fighting last decades, or centuries, wars?

            We have the money for universal healthcare. The finest in the world. As well as the best roads, the best education for all who qualify. We just don’t think it is a priority.

            If we did, we would have done it years ago.

            IMHO

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          2. RE: “Which is more beneficial? Universal healthcare or tax cuts for the top and more nukes?”

            At this time, the tax cuts and defense spending are more beneficial, as they would be under most circumstances.

            But the equation you propose doesn’t matter, anyway. As a practical matter, the most healthcare any economy can produce is whatever the market will bear. Universality is an ideological fantasy, not an economic one.

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    2. You have not experienced a free market in health care in your lifetime, so why so sure it wouldn’t work?

      Consider prescription drugs and their costs. Federal regulation began in 1938 and the FDA was empowered to assure that drugs were safe. If they had stopped there, the market would have worked.

      But they didn’t. In 1962, the FDA was empowered to regulate drugs on effectiveness, a sufficiently vague standard that put the FDA in charge of the marketplace, allowing it to create monopolies.

      The marketplace had a bit of a reprieve in 1984 when generic versions of drugs were authorized, and initially prices responded.

      But in 1992, the FDA gained the power to license generic drugs, or not. They began to protect profit margins for major US drug firms by refusing to license foreign competitors.

      https://www.fda.gov/downloads/AboutFDA/History/FOrgsHistory/HistoryofFDAsCentersandOffices/UCM586461.pdf

      Regulating safety and purity was a level of regulation that the market could survive, but the decision on whether a drug was effective should properly have been left to physicians and patients. Licensing generic providers with economic protection for US companies killed the market.

      Consider that the patent on insulin was sold to the University of Toronto for $1 in 1923. Almost 100 years later, you still can’t but free market priced insulin because the number of companies licensed to produce it is controlled by the FDA. Insulin that cost $1.72 in 1972 now costs $300, 34 times the rate of inflation. That is only possible due the FDA protection of monopolies by restrictive licensing of generics. If the FDA still simply regulated safety and otherwise stayed out of the way, that insulin should cost about $9.

      Free markets aren’t perfect, but compared to government regulation, the difference between markets and perfection is insignificant.

      Like

  3. You have not experienced a free market in health care in your lifetime, so why so sure it wouldn’t work?

    Good question. But then, neither have you. Yet you are so sure that it would work.

    No matter how you parse it, getting effective healthcare is not like buying strawberries. Or cars. Or houses. We are not dealing with fruit, car or home preferences. We are dealing with lives.

    Yes we have problems with the FDA and generics. But also, other problems with our system of drug manufacturing is that the emphasis is on chronic diseases and not life threatening ones that are on the horizon as antibiotics are becoming less effective. Why, because the market says they will sell better and longer.

    Or patents that can be renewed by changing from a round pill to a square one.

    Or Americans paying thousands while the rest of the world pays tens or hundreds. And we have the most expensive system in the world with mediocre at best outcomes.

    Yet no one else has “free market” because they value universal over healthcare for the upper classes

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    1. “Good question. But then, neither have you. Yet you are so sure that it would work.”

      Well, yes I am, because it works in every case where it is tried.

      If that $300 vial of insulin costed $9, would it matter if it was paid out of pocket instead of by a government entity?

      There is plenty of evidence that markets work in health care, simply look outside of what insurance or government pays for. Laser eye surgery and cosmetic surgery are very competitive simply because no thord party intervenes.

      Like

      1. You deliberately missing the point? Lives are not strawberries. Markets can work for Laser eye surgery and cosmetic surgery for the simple reason that you can “just say no” if the price seems unreasonable. For most of the services provided by the healthcare industry that is not the case.

        And here again is the question you never answer. For a free market to work it HAS to be the case that people who cannot pay do not get the service. In what universe is allowing children to die because their parents are poor acceptable?

        And before you go into your usual routine about how immoral it is to make you pay for someone else’s sick child, keep in mind that the overall cost in Single Payer systems is LESS. So, even if you are forced by jack-booted government thugs to help with saving that child, overall you and all your family would be better off.

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        1. “For a free market to work it HAS to be the case that people who cannot pay do not get the service. ”

          Really? Do those who cannot pay not eat?

          We subsidize groceries with Food stamps, which helps the poor but keeps the grocery market competitive without the government taking over the grocery market. subsidized buyers still shop for the best value.

          It is meddling in the supply side that results in market failure.

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          1. You do know, don’t you, that you have got yourself in a morass of logical inconsistencies. You have constantly attacked the Affordable Care Act but now to wiggle out of the fact that markets must deny service to those who cannot pay you now are proposing the idea it was based on – subsidizing the poor and allowing them to make their own choices in an open market for insurance. If that is a good idea now, why was it a bad idea when President Obama and the Democrats proposed it?

            Subsidized buyers with food stamps to spend undoubtedly shop for the best value because they have a wide variety of choices competing for their food stamp business. That characteristic is not shared by those “shopping” for someone to treat the cancer threatening their child. There is NO effective restraint on the supply side of the transaction which is why the prices for medical services have been skyrocketing for decades. There are ways out of this dilemma and most countries have found it – Single Payer with administered rather than market prices for basic services.

            For example . . .

            https://www.washingtonpost.com/news/wonk/wp/2012/07/01/everything-you-ever-wanted-to-know-about-canadian-health-care-in-one-post/?utm_term=.954608471c1e

            Universal coverage, lower costs and better results. What exactly is wrong with that?

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          2. “You have constantly attacked the Affordable Care Act but now to wiggle out of the fact that markets must deny service to those who cannot pay you now are proposing the idea it was based on ”

            When the Tidewater Libertarian Party offered its alternative to Obamacare, BEFORE Obamacare was passed, it included a subsidy for the truly needy based on the food stamp model.

            http://wp.me/paM4C-dx

            See Item 8

            The point is to assist those who truly need it while still enjoying the benefits of a competitive market.

            Like

          3. So, you were for healthcare subsidies until Obama wanted them?

            HSA’s are a reasonable idea in principle but there is no way for an ordinary working person to save enough to cover more than a few days worth of the costs of a major accident or illness. The subsidies would have to be huge and, in fact, cost more than simply putting everyone into a single pool financed by everyone – Medicare-for-all.

            You continue to pretend that someone whose life is on the line – even someone with a HSA – is in any kind of negotiating position with the medical industry. They are not.

            Like

          4. “HSA’s are a reasonable idea in principle but there is no way for an ordinary working person to save enough to cover more than a few days worth of the costs of a major accident or illness.”

            Had you read the TLP plan completely, you would see that in our proposed enhanced HSAs. the first purchase would be a catastrophic care plan. The funds in the HSA itself would be for purchasing ordinary care.

            I reject the idea that a government plan would be cheaper. That has never been the case for anything. The whole point is to align the incentives of the health care purchaser with the funding. See the comment to Len regarding the cost of drugs. Insulin has been out-of-patent for almost 100years and the cost to produce it is about $5 a vial. It costs $300 a vial because the FDA regulates its production.

            Again, refer to the chart. Those items with less government control are the ones that get cheaper over time.

            Like

        2. RE: “Lives are not strawberries.”

          As a matter of pure economics, lives are, in fact, strawberries.

          That is to say, all those things which are necessary for human life, wellbeing and even prosperity are in themselves commodities. As such, they are perfectly and completely compliant with known principles of economics.

          Some advocates of healthcare delivery by tyranny like to say, “You can’t negotiate your price for services when you are lying in your death bed.” But in reality, you never have to.

          The economy solves this problem for you in advance through the mechanism of pricing marginal utility. It is the same mechanism which ensures that water — which is necessary for life — tends to be inexpensive.

          In other words, the idea that markets cannot solve efficiency problems in the delivery of healthcare is simply fallacious.

          Like

          1. Lives ARE very different than strawberries in how they are handled by markets. If someone says I will give you this pint of strawberries if you give me $100, I will just say no. If someone says I will save your child’s life if you give me $X, no matter what $X is I will pay it if I can even if I end up bankrupt.

            If you are unable to incorporate this obvious economic difference between lives and strawberries in you reasoning then you will reach bogus conclusions.

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          2. _RE: “If you are unable to incorporate this obvious economic difference between lives and strawberries in you reasoning then you will reach bogus conclusions.”

            If you can’t tell the difference between extortion and voluntary transactions, then you are succumbing to bogus premises.

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          3. RE: “If someone says I will save your child’s life if you give me $X, no matter what $X is I will pay it if I can even if I end up bankrupt.”

            That’s the extortion you are putting forward as an example of voluntary transaction.

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          4. ” If someone says I will save your child’s life if you give me $X, no matter what $X is I will pay it if I can even if I end up bankrupt.”

            Really? Will you do it if someone else equally qualified says ‘I will save your child for $X/2?

            Certainly, you’re going to save your child with someone’s aid, but that someone will be the lowest qualified bidder. And, with Yelp and Angie’s list available, you will know who that will be.

            The market can still work even in the most dire circumstances.

            Like

          5. @Tabor
            So, your child has been in an accident and is bleeding out or presents with 105 degree fever. Maybe YOU would go shopping for the best deal but most people would rush their child to the nearest ER. Your conjuring up of competing providers bidding for your business is a fantasy.

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          6. RE: “Certainly, you’re going to save your child with someone’s aid, but that someone will be the lowest qualified bidder.”

            Don’t forget that the range of values will have reached an equilibrium prior to the moment of emergency. Market pricing contains a bias in favor of the buyer in this sense.

            Like

          7. “most people would rush their child to the nearest ER.”

            The market will have worked its magic long before then. It will be well known which ER, if any, overcharges, and Angie’s List will have reviews. which the EMTs will be well aware of.

            Markets work every time we give them a chance.

            After all, you don’t go into a grocery and negotiate the cost of strawberries afresh every time. Market forces will have already driven them to the lowest profitable level.

            Liked by 1 person

  4. The chart is a total joke. The choice between red and blue lines is completely arbitrary. For example, cars are just as heavily regulated if not more so than houses yet one is red and one is blue. Cell service is blue and yet it exists based on government control of the radio spectrum. The government has virtually nothing to do with the price of college textbooks, but there it is in red.

    A more persuasive explanation here is that those products benefiting from technological improvements and globalization have the blue lines while those in red have less such benefit.

    Like

    1. RE: “cars are just as heavily regulated if not more so than houses yet one is red and one is blue.”

      The truth of your observation is not obvious. The car and housing markets are both qualitatively and quantitatively different, with specific regulatory burdens that may not be comparable. There was no tax deduction for car loans as there was for housing loans during the period the chart covers, for example.

      In any case, in the chart data itself red only means that prices rose and blue only means that prices didn’t rise. The inference that regulatory effects played a role in rising prices is a reasonable one, even if — technically — the chart itself doesn’t “prove” that specific interpretation.

      On the contrary, the chart is useful merely for illustrating the correlation. It is obviously true, for example, that Hospital Services are more heavily regulated than TVs. It is just a question of which items in the chart you choose to compare.

      Like

      1. “In any case, in the chart data itself red only means that prices rose and blue only means that prices didn’t rise.”

        Uh, No.

        YOU quoted the article and defined what the colors meant – it was NOT that they rose or didn’t rise.

        “Blue lines = prices subject to free market forces.
        Red lines = prices subject to regulatory capture by government. Food and drink is debatable either way.”

        There is ZERO objective basis for coloring Housing red and Cars blue on this chart. Or coloring Cell Phones blue. Or Textbooks red. None. As I said at the outset, the chart is a joke – sophistry without an ounce of objectivity – that proves nothing.

        Like

        1. _RE: “YOU quoted the article and defined what the colors meant – it was NOT that they rose or didn’t rise.”

          Can’t you read the labels on the chart itself? “More expensive” is red. “More affordable” is blue.

          Like

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