And what's more, the rich should get better education too.
Why? Simply put, because that is how technological innovation happens.
The reason, for instance, that life expectancy has risen in the last century is simple: because the rich were able to buy better care.
Unfortunately, not many people can connect the economic dots to understand that. Instead, they are blinded by class divisiveness and a desire to achieve equality even if it is not economically sustainable.
Greg Mankiw touches on this in his latest post, Should the rich get better health care?
Some excerts:
Technological advance is making state-of-the-art health care increasingly expensive. In any kind of national health system, some treatments will, by simple cost-benefit calculation, be deemed too expensive to provide to all citizens. But does that mean those of above-average income should be excluded as well? Should they lose basic benefits if they choose to pay for these marginal services with their own money?
If you say yes to this last question, as the U.K. health service has, here is a related one: Should a parent who hires an after-school tutor for his child be barred from sending the child to the public schools?
Some people like to think of health care and education [as] basic human rights. Maybe they are. But they are also normal goods. That is, the income elasticity of demand is positive. It is hard to escape the conclusion that the right cost-benefit calculation for providing the good depends on the income of the consumer.
Achieving both efficiency and equality in the provision of these goods is impossible.
I made the same point in this post last August. Its nice to know that me and Harvard economists are on the same page:
The disinformation I see being distributed is 1) the system is broken and 2) the system is unfair and 3) that because of 1 and 2 there is a crisis in the number of people uninsured. These three arguments are used to remove the system from the private market and grow the government.
I don't believe that the system is broke and, even if it was, there is no way the government can fix it.
I think there are two key components to access to healthcare now that are making this an issue, and neither are the "fault" of the industry. One is the cost of technology and two is the cost of government.
First, technology is accelerating. More and more every day we are inventing mind blowing new things. But it is not cheap to do so. Just because a $15 million XYZ spleen machine can exist doesn't mean that a person that makes $15,000 a year has the expendable income to pay enough to support the capital cost of inventing and manufacturing it much less the operational cost of getting it used on him.
Now for those that don't think of the economic mechanics first, this immediately seems unfair because the benefit received from this machine involves people's health and, literally, their lifespans - so the issue becomes far more emotional than rational. If the machine in question was a $15 million yacht, for example, most of us would accept as reasonable that a fast food employee would not be riding on it. But the XYZ spleen machine - that seems different - emotion takes over and says that the fast food employee should be riding it.
But that's the problem - that difference is only the emotion. The economic mechanics are exactly the same. All the emotion and class hatred in the world will not change the economics. Most importantly - all the government intervention in the world won't change it either.
What's important to note is that the health, nutrition and life expectancy of Americans at the lowest levels of wealth increase year after year and continue to do so. If that's a broken system - I'm in.
What we have is the ability to discover and manufacture things at a rate that outstrips the ability of a portion of the population to fund it. But what's the alternative? Not invent the stuff? If we just take the XYZ machine away, then no one will have it and it will all be fair again, right? That's option one. But I'm sure no one would want that.
So, option two is to require the producer to sell it for less. Option three is to require that some of the customers pay more so that others pay less. Of course, neither option two or three will happen in a free country. So if the government comes in to "fix" this "problem" it will be a combination of two and three. So what is the outcome of this? The less money the producer receives, the less his return. And the less his return, the less attractive he is to investors. So with less investment, he ends up inventing less stuff. The more money the higher paying customers pay, the less they have invested which means less stuff gets invented also. So how is it that options two and three are any different than option one?
The second issue is the cost of government. So why can't some people afford health insurance? Hmmm. Well, direct taxes at all levels of government plus corporate taxes and the cost of tax code compliance embedded in the cost of goods approaches an average 60% of individual income. I wonder if that has anything to do with it?
So first, a particular ideology grows the government to the point that it takes 60% of our working effort, then they turn around and act surprised that some people can't afford health care. So they blame the healthcare industry and propose to do what? Increase the government lol. That's some serious disinformation right there.
posted by babbleman on Feb 25, 2008 at 09:03:50 am #