Why people downvoted this. Price control doesn't work. Just read any economic book and you will realize it's true. It hurts, but it's true. If price control works, then why prices never were freezed. Why don't freeze it forever? Because it doesn't work.
A theory that isn’t validated in practice isn’t much of a theory. I’ve lived in several countries with price controls (at least on reimbursements, you’re free to get price gouged at some doctor but not many people will follow) and things are fine.
If anything I ended up having issues at the few parts that _arent_ price controlled (eyecare in France is a pain, though I think mostly because supply of optometrists are limited)
You can read Forty Centuries of Wage and Price Controls by Robert Schuettinger and Eamon Butler, first published in 1979. The case against price controls is not merely an academic exercise, restricted to economics textbooks. There is a four-thousand-year historical record of economic catastrophe after catastrophe caused by price controls.
In the case of price controls for medical services and products, there are a bazillion cases of it working. Your theory goes up against the universe's facts on this specific case.
I'm not arguing for price controls on everything in general. I'm pointing out that _in this context_ price controls are a proven strategy and work and mean that people don't _die due to not affording their insulin_.
The best healthcare system in the world is private and it's made on Singapur. Every single citizen can afford it, since it starts from 16$/mo. I want to hear one case of those 'bazillion' of price-controlled system.
Price control is not a theory. There are several books, papers (Hayek, Mises, Friedman), topics that address this topic. If it is so good, why isn't implemented? It's the same argument than communism: if it is so good, why we don't implement it? Because it doesn't work. It never worked.
Price control generates scarcity. Because bureaus can't have all the information about the market, it's impossible. The moment a bureau determinate a price you're generating an impact on the different areas without having the possibility to address it. The gov. is not the market, the gov can't be an omnipotent entity that knows everything, that's why they screw everything.
It's more or less implemented for medical care in most other first-world countries and it seems to work better than ours* in all of them.
I lived in Canada for three years, and growing up in a fairly conservative area in the US, I was prepared for the worst - six-month wait times for life-saving procedures, etc. What I saw was more like Star Trek - people who needed medical care went to a clinic or hospital and got it, and they didn't have to worry about being bankrupted in the process.
After I moved back to the US, I got to see what it was like for most people - delaying or never getting critical procedures done, people with teeth rotting in their heads because they can't afford to go to the dentist, almost everyone 1 unexpected medical bill away from permanent financial ruin. Our system is objectively bad, and we deserve to feel bad for sticking with it.
You can cite all the market theory you want, but the US is a perfect empirical example of why those theories are wrong.
* Except for the tiny minority of the ultra-wealthy who can afford to pay any price for health care.
People call economics the dismal science but the truth is that it isn't even a science. Its predictive power is laughable and it seems to consist mostly of just so stories told after the fact.
You can't just claim something which is demonstrably functional somewhere doesn't in fact work because your half baked theory trumps actual reality. This is why this sort of comment is downvoted.
> You can't just claim something which is demonstrably functional somewhere doesn't in fact work because your half baked theory trumps actual reality. This is why this sort of comment is downvoted.
What actual reality? Because there's price controls doesn't mean it works. It generates scarcity, always.
Go to SF, put all rentals to 100 dollars and see the effects of the price controls. They will be the same there and in China.
I am not surprised people who deny the fact of economic science is downvoting this.
Now that advertising drugs to the public had ballooned marketing budgets beyond R&D is that still true?
I imagine that dollar-for-dollar a non-profit with the right incentives and oversight could out do the VC-backed leeches driving up prescription med prices.
The vast majority of pure research has funding generated directly from government funds. Medical funding is roughly half from public funds. This wouldn't change with price controls. More profits don't lead to more research.
The US subsidizes drug development, that's about all. Other medical R&D doesn't really come out of any publicly funded research system, it comes from medical practitioners. The cost of US drug development subsidy is maybe $40 billion, accounting for basic research and development by pharmaceutical companies. This is pretty much peanuts compared to global healthcare spending. Also, this money is arguably not really that well spent, since most of drug development is useless, and nations can improve their health systems and outcomes much more through things like routine care and monitoring than they will through expensive research.
The private actors are the ones who pay for the R&D, to the tune of $70 billion/year. That's on the same order as total annual venture capital spending nationwide ($70-$80 billion/year from 2014-2017, though 2018 was an outlier at $130 billion).
These amounts are small enough where the U.S. government could pretty easily cover the expenditures. So by your logic, why do we need Silicon Valley venture capital? Why not just have the government pay for the R&D and make the results freely available to everyone?
Either the government is good at allocating capital for high-tech R&D or its not. Whether you're talking about medical tech or computer tech doesn't make a difference.
Price control doesn't work on healthcare. I give you an example: Spain, "free" healthcare: they realized people went to socialize to hospitals, making impossible to address the demand. People went to hospitals for headaches, colds, creating an incredible ammount of problems. How they solved it? They charged money (little) for any consult you wanted to do. This reduced instantly a big ammount of the consults and false positives. This was tested in Barcelona and in other provinces. This was also a case for Singapur, where everyone have access to healthcare (starting from 16$/mo) and healthcare is subsidised by demand.
Price controls force efficiency gains. If wages go up you don't stop paying your employee wages, you either train cheaper employees, find a way to get more work out of them, or find a better way to do it. The same applies to price controls.
This is not true. The moment you set a red line, you're making impossible for the lesser trained to join the wagon for getting a chance to climb the ladder. Also, you're making the capitalist not paying for not hiring lesser people, since none has to hire, there are not faults. The idea is that investors should fight to get you in, but if they're denied, they get the monopoly since no one can enter the market to compete with them by hiring people who is willing to work for less than the regulated wage price is meant is. Plus, wages will not go up easily, since you're killing the force supply by setting a line on it. Milton Friedman explained this properly, you can see his speech on Youtube.
Milton Friedman is only one school of economic thought. Nothing is proven in economics and likely won't be since it involves human psychology. When gas prices rose dramatically economists expected the US to move away from large vehicles. That's not what happened. The rational thought is almost never what happens in economics. People buy high and sell low, their purchases are often emotional, and investors pour money into acting blockchain.
