‘Remind me why socialism is so great again’

Economist Mark J. Perry, who posted this chart on the American Enterprise Institute’s Ideas blog, argued that prices are highest in the economic sectors that are most heavily regulated.

Said he:  “Remind me of why socialism is so great again.”

One possible explanation of the price difference is Baumol’s Cost Disease, the tendency of the cost of human services to rise relative to the cost of manufactured goods.  That’s not the whole story.

The fact is that European countries that most Americans would consider socialist have free or affordable medical care and free or affordable higher education.   And it is not a case of costs being shifted from patients and students onto taxpayers.

Overall costs of health care and higher education are less in so-called socialist European countries (I write “so-called” because most of them have self-described conservative governments).

The reasons why health care costs less in those European countries than in the USA is that there are no for-profit insurance companies standing between the patient and the physician, that European countries control prescription drug prices and that the incomes of physicians and other health care providers are less.

My guess is that European universities cost less because they provide a no-frills education without spending huge sums on sports stadiums and student amenities.  My other guess is that their hospitals and universities are not so top-heavy with highly-paid administrators.

In and of itself, government regulation is neither good nor bad.  It depends on what is being regulated, how it is being regulated and in whose interest it is being regulated.

LINKS

Chart of the day (century?): Price changes 1997 to 2017 by Mark J. Perry for AEI Ideas.

Mark Perry Has Never Heard of William Baumol by ProGrowth Liberal for Angry Bear.

How the U.S. lags peer nations in health care 2

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I came across a 2015 study by The Commonwealth Fund that shows the Americans spend more on health care, use more medical technology and take more prescription drugs than citizens of most peer nations, but aren’t necessarily more healthy.

We’re not the worst in this respect, but we’re far from the best.

The charts above and below tell the story.   I doubt things have changed much since 2013.

The rent is too damn high

Double click to enlarge

This chart shows how the cost of different necessities and amenities of life have changed over the past 75 years.

The high and rising costs of housing stands out, but the cost of health care and education also are going steadily up.

I’d guess the falling cost of food is due to technology and the falling cost of clothing is due to globalization.

But why hasn’t technology brought down the cost of housing and transportation?

LINKS

Unprecedented Spending Trends in America, in One Chart, by howmuch.  Remember that the figures are adjusted for inflation.

Considerations on Cost Disease by Scott Alexander for Slate Star Codex.

Gadgets getting cheaper, necessities more costly

I’m old enough to remember when a personal computer or even a television set were so expensive than an average person couldn’t afford it.  But nowadays second-hand television sets and electronic gadgets are so cheap that hardly anybody does without them.

The things that are increasingly out of reach are child care, health care and education — the things you need to rise in the world.   The things that are affordable are the games, toys and entertainment that distract you from your condition and reconcile you to the limited life that you have.

Click on  Why America’s Essentials Are Getting More Expensive While Its Toys Are Getting Cheaper for more by Derek Thompson for The Atlantic.

Click on How the Middle Class Lifestyle Become Unaffordable for thoughts of Charles Hugh Smith.  One factor I failed to note in my original post is Baumol’s Disease, which is that as technology makes manufactured goods cheaper, the costs of human services become relatively more expensive.  [Added 5/7/14]