Why things are so expensive Part 2


This is the continuation to last weeks article of why things are so expensive:

Pharmaceuticals

 This article is not meant to make any one depressed, however in case you are there are medicines for that. O wait, that is another monopoly that is protected by the government. I cannot go out and make my own aspirin or other narcotic. I would be charged with a crime if I did that. A lot of these drugs are made out of things that are illegal in the US however they can be given by a medical professional This whole system essentially locks prices into place and doesn’t allow for any kind of competition which might drive down prices. I am not advocating this stuff be able to be freely bought at Wal Mart however there should be some kind of market pressure on the prices of these products.

 Drugs are also very expensive to produce. For you to get a drug approved onto the markets takes millions of dollars and that isn’t even a guarantee that it wont be pulled very quickly. The FDA has to be shown that the drug is safe, which adds massive costs on to the market. However the catch is that many drugs still are not safe as you have seen in the case of 10, 000 dead each year by drugs approved by the FDA and lets not forget all the drugs that have caused physical damage. Just look at all the commercials for lawsuits against companies that produced faulty metal hip implants, bad birth control pills and the list goes on.

 I am not saying that the FDA is not effective, however no one there loses their job if a drug makes it onto the market and it ends up hurting or killing some one. Also for many drugs and vaccines there is a special fund set up that pays out if they are harmful. So a person cannot sue the company directly. Wait…what?? But that is a whole other discussion.

 Insurance (car and health)

 How do most people pay for these drugs and medical treatments? They use insurance; this is another field that is truly riddled with crony capitalism. When you use your insurance you get a statement. Have you ever looked at it? It shows how much your insurance company settled to pay the hospital. Unfortunately, you don’t really feel the full impact of how much this would have cost without insurance. But if you go and buy medical treatments your self you do get hit with a bill and you cannot negotiate.  This means that there are two tiers of payments and because most people have insurance they will only see the statement. How can there be any kind of market pressure or competition in a medical system if you don’t know how much you have to pay for the services.

 Then there is mandated car insurance. I mean, it’s not that I don’t want people to get insurance but this creates an automatic monopoly. Have you ever noticed how everyone’s insurance is more or less the same? It is generally some where between 80 to 150 a month, unless you are young. There doesn’t even need to be competition because it is mandated and if you don’t get it, you can get thrown into prison for it. Maybe if there was competition then the price would go down and everyone would buy insurance anyway. Side note: You should have it because you are a responsible adult and in case someone hits you that doesn’t have it).

 This article could go on and on. There are so many more fields out there that drive up the costs that shouldn’t be happening. Student loans, Social Security and Unions. However the biggest one that drives up prices is the Federal Reserve and its ability to make money out of thin air. This results in the devaluing of the currency and purchasing power otherwise known as inflation. However it doesn’t look as though the Federal Reserve will not be ending anytime soon.

 

In the past there were banks that issued currency too, however they had to base their interest rates on real market pressures. This meant that money could be less or more valuable depending on which bank issued it. The Federal Reserve doesn’t need to worry about that since there is no bank that competes with them.

 Read more:

 Pharma

http://www.forbes.com/sites/matthewherper/2013/08/11/how-the-staggering-cost-of-inventing-new-drugs-is-shaping-the-future-of-medicine/

http://www.econlib.org/library/Enc/PharmaceuticalsEconomicsandRegulation.html

Insurance:

 About mandatory insurance: http://www.ehow.com/info_8092221_auto-insurance-mandatory.html

 Inflation:

http://www.federalreserve.gov/faqs/economy_14419.htm

http://www.businessinsider.com/arthur-laffer-interview-2014-1

 

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