Plan B Forum

Here's a fascinating snapshot of the last decade in American prices.

It comes from Annie Lowrey's look at U.S. poverty, which is appropriate, because you occasionally hear conservatives say that poor people aren't really poor because, you know, they have refrigerators and TVs, don't they? Yes, they do. More than 80 percent of low-income households have a fridge, TV, microwave, and stove. They can heat food and cool food and watch American Idol, no problem.

But the power to alter the temperature of your food and watch FOX is not quite the same as being rich. Tens of millions of families remain uninsured, millions more can't afford to go to (or finish a degree at a high-quality) college, and millions more struggle to pay for daycare for their children. Meanwhile, used HD televisions are dirt cheap and it's never been more affordable to buy simple electronics. Why does it seem like the least important things in life—TVs, toys, and DVD players—are getting cheap while the most important parts of the economy are getting more expensive?

Two observations here.

1) On poverty: Jordan Weissmann nails it: "Prices are rising on the very things that are essential for climbing out of poverty." The road to upward mobility is uncertain, but we know the checkpoints. Graduating from college—whose sticker price is actually rising faster than its actual cost—correlates with higher employment and richer earnings. Chronically sick children affect parents' mental health, and chronically sick parents hurt a family's well-being. Single moms and dads who can't afford daycare and wind up spending lots of hours watching after their kids have trouble finishing school or establishing themselves in the workforce. Just as the benefits of wealth create a virtuous cycle of behavior, the challenges of poverty start a vicious circle that continues to spin down through multiple generations.

2) On productivity: When you look at the items in red with falling prices, they largely reflect industries whose jobs are easily off-shored and automated. The secret to cutting prices (over-generalizing only slightly here) is basically to replace American workers. If you can replace U.S. labor with foreign workers and robots, you're paying less to make the same thing. Look back at the items toward the bottom of the graph. Our clothes come from Cambodia. Our toys come from China. Meanwhile, Korea, a world-leader in electronics and auto manufacturing, has the highest industrial robot density in the world. Cheap things aren't made by American humans.

Now consider education, health, and childcare, the blue sectors above where prices are rising considerably faster than average. These are service industries that employ local workers. They are not, to use the economic term, "tradable." They are not globally supplied. You don't ship your child to Mexico when you get in your car to go to work (unless you live in Mexico), and most U.S. students aren't importing their college classes from Bangalore. In fact, as Michael Spence's research has shown, about 90 percent of job growth went to such "untradable" sectors between 1990 and 2007. These industries are mostly gaining jobs, not shedding them.

Every time somebody raises the point that health care, education, and child care are getting more expensive, somebody makes the observation that these are all government-dominated industries. Are regulations responsible for raising prices? Sometimes. Childcare has rules requiring a certain number of employees per child, which is partly responsible for rising prices. But in the case of public college tuition, the cost of attending school is rising mostly because state governments are cutting higher ed spending, shifting the costs to families. In the case of health care, countries with more government intervention in pricing have lower overall costs. So it's not as simple as: More government = higher prices.

Fundamentally, health care, education, and childcare have entirely different products than a television or iPod. Their product is people: healthy people, educated people, and safe baby-people. And it's quite natural that a rich country use its productivity gains in tradable, globalized, automated industries to make ourselves healthier and happier.

Source: The Atlantic (my emphasis; I also left in all the links that were in the original article.)

Reality check?

For The Poor, the cost of higher education does not track with increases in tuition. Depending on one's academic accomplishments in the FREE public school K-12 system, creativity, and willingness to be flexible, a college education (and beyond) can be had for a relative pittance. The major increases in college tuition apply to people like me, with two incomes and one kid (a long time ago). NOBODY else pays the published tuition. If you don't believe me, ask any recruiter at an expensive private college; the previous sentence is a quote I heard from at least three of them.

HEALTH CARE and HEALTH INSURANCE are two completely different things, and can't be addressed as though they were the same thing. The constant drumbeat from the political Left refuses to acknowledge this difference.

What can one say about the plight of (most) single mothers? If you dig yourself a giant pit then jump into it, don't complain about how hard it is to get out.

HEALTH CARE and HEALTH INSURANCE are two completely different things, and can't be addressed as though they were the same thing.

Except for the very rich, how does one get access to quality healthcare without insurance? At a time where even a short hospital stay for a noncritical purpose can approach $100,000 or more, and drugs for chronic conditions can cost thousands of dollars a month, how many can pay this out of pocket? If you cannot pay for it, you have no access to it (except in the case of extreme emergencies, but then that is also a form of cost sharing and insurance). How do you separate the two?

(a) Is MEDICAID health insurance?

(b) No hospital can turn away anyone requiring urgent care - even if they don't have an insurance card.

(c) I know many people (mainly young, healthy adults) who go for decades without health insurance, by choice, and pay for any medical care they need out-of-pocket. They have no health insurance, but DO have adequate health care. The political Left considers these people to be in crisis, "WITHOUT HEALTH CARE/INSURANCE!" But actually, barring the unforeseen and hugely unlikely occurrence of a catastrophic event or illness, they are doing fine, healthcare wise. Indeed, the fact that they are "doing fine" without a lot of healthcare is the lynchpin that theoretically keeps "ObamaCare" afloat - if the cheap bastards will just sign up for the overpriced insurance that most of them will never need.

(d) Clearly, the "working poor" who have no health insurance can be financially devastated by an injury or illness. This is the ONE THING that both Republicans and Democrats can agree upon. But the Democrats' solution - "ObamaCare" - rather than address this one, real, manageable problem, sought to overwhelm the entire medical world with mandates, regulations, and bullshit, thus obliterating any possibility of young, healthy people obtaining low-cost, traditional health insurance (coverage ONLY for these catastrophic potentialities, with everything else paid out-of-pocket). No, the Sandra Fluke's of the world had to have their fucking BC pills covered, and her office visits, and her diaphragm...

You know the story.

dgs49 wrote:Reality check?

For The Poor, the cost of higher education does not track with increases in tuition. Depending on one's academic accomplishments in the FREE public school K-12 system, creativity, and willingness to be flexible, a college education (and beyond) can be had for a relative pittance. The major increases in college tuition apply to people like me, with two incomes and one kid (a long time ago). NOBODY else pays the published tuition. If you don't believe me, ask any recruiter at an expensive private college; the previous sentence is a quote I heard from at least three of them.

But this is the way it's been for many many years. I've seen no evidence that the amounts of scholarships and grants have been increasing at a HIGHER rate than the increase in tuition and fees (or even a higher rate than general inflation, which is itself a much LOWER rate than tuition inflation), so the actual burden of higher education is getting worse. Also, more and more of what is called "financial aid" now comes in the form of student loans (which even a bankruptcy cannot erase), and someone with no money is certainly less likely to want to take out a loan for tens of thousands of dollars which may take the rest of their life to pay back.

Reality check, mate.