Are health care and education really free markets? If not, government has a role in pricing them.
Basic economic theory loves to talk about generic products like "widgets" and how the price of widgets is controlled by the law of supply and demand, and that this is somehow fair - it is just assumed that a reasonable price will be determined by buyers and sellers making reasonable decisions regarding value. If the price is too high, the buyers walk away and stop buying widgets.
But when it comes to life-saving health care, people aren't in a position to "walk away" now, are they? Unless they want to risk dying, of course. And this is at the heart of my contention that such a market is no longer "free," when the would-be buyer is so desperate that they'd pay literally any price for the life-saving treatment available. Add dozens of new medicines into the mix each year, and you have that many more products that will receive as high a price as the providers dare to ask, thanks largely to a Medicare/Medicaid Services that has no power to negotiate prices. And thus you have the health-care price spiral.
The same argument can be made for higher education. Maybe it used to be the case that young adults could do without a college education and still succeed, but that's no longer the case. So once again, young adults have to go for some sort of additional training if they want a decent life for themselves - Once again, they aren't really "free" to walk away. A well-intentioned government stepped in to help out with student loans, but once again, by rubber stamping whatever price the educational institutions demand, tuitions just go up and up and up, until students end up saddled with debt until they are 30.
It seems to me there's a huge gaping hole in basic economic theory, that doesn't seem to be concerned in the least that there are whole sectors of the economy where people are not in a position to walk away, and where the law of supply and demand fails us as a society.
= new reply since forum marked as read
