Wealth Is the Great Equalizer

[Robert F. Smith]

20 hours ago, Anijen said:

Excellent question.

I have an autistic son (high functioning) who earned his BS without any debt, zero. He didn't even have a scholarship, it was all paid by his Pell-Grant. I think part of the reason there is so much student debt is one will change their major multiple times, perhaps take a study abroad course, use some of that grant money to pay non-college related bills, take huge student loan debt out for grad school (Pell-Grant does not cover grad school), choose an expensive school, when staying home and going to an in-state school is just as good, (Bachelor's degree is just as credible), probably many other reasons.

However, frankly a frugal lifestyle and reliance on pell grants, scholarships, and choosing a college or university close to home is really just a destination bus stop away. One really doesn't need to go out of state (especially if we are just talking about getting an undergrad degree).

If we are talking about someone living at home and attending a local college or university, say UVU in Utah County, those costs are very manageable.  For someone with talent and a desire to obtain a professional degree in IT, computers, engineering, design, nursing, sociology, psych, education, etc.., that may work well enough.  If one is brilliant or a genius, there is even available a free ride at an Ivy League school.  Law and medical schools are another matter entirely.  Very few can qualify for the best schools.

Not everyone lives close to a major school, and not every school has the curriculum or degree which the student wants.  What happens then?  Just as an example:  If one wants to be a biblical scholar, there is not really anything available in Utah, except an undergraduate degree.  Anything serious beyond that must be sought for out of state.  You'd think that a state as religiously centered as Utah would have more to offer, but you'd be wrong.

[Stargazer]

22 hours ago, bsjkki said:

Some is by choice (private school vs state school) but I tend to agree tuition has gone up too fast.

Tuition has gone up fast because of basic economics.  What happens when lots of money is being thrown around?  The costs of everything goes up.  The very fact that federally-guaranteed education loans exist causes tuition inflation. The students getting the loans can afford to pay much more than they otherwise could, so since the schools know more money is available, they jack up prices.  This causes a ripple effect. With more money available, the schools are able to pay more for professors, equipment, and infrastructure.  The schools not taking student loan money must raise their tuition as well in order to compete for staff and other things that enable them to compete for students.  

The same thing happens in health care.  It's gotten more expensive precisely because so much health insurance money is being thrown around.

By the way, I'm NOT saying that more money is the ONLY reason for this price inflation, but it definitely among the big causes.

Edited February 3, 2020 by Stargazer

[bsjkki]

53 minutes ago, Stargazer said:

Tuition has gone up fast because of basic economics.  What happens when lots of money is being thrown around?  The costs of everything goes up.  The very fact that federally-guaranteed education loans exist causes tuition inflation. The students getting the loans can afford to pay much more than they otherwise could, so since the schools know more money is available, they jack up prices.  This causes a ripple effect. With more money available, the schools are able to pay more for professors, equipment, and infrastructure.  The schools not taking student loan money must raise their tuition as well in order to compete for staff and other things that enable them to compete for students.  

The same thing happens in health care.  It's gotten more expensive precisely because so much health insurance money is being thrown around.

By the way, I'm NOT saying that more money is the ONLY reason for this price inflation, but it definitely among the big causes.

Absolutely agree. I still believe college is attainable for those who want to go without incurring crushing debt. I don’t believe it is only for the rich. But, I do talk to more people wondering if it is worth it. There are a lot of jobs that do not require college that can be very lucrative. 

[ERMD]

16 hours ago, The Nehor said:

Ridiculous and Telestial. If you cannot be wealthy unless 85% of people are poorer than you than you are doing it wrong. Wealth is temporal security.

It is not ridiculous, and the last time I checked, we are in a telestial world.

[The Nehor]

On 2/1/2020 at 3:11 PM, Anijen said:

I know it is my personal responsibility to provide for my family and keep them safe including keeping them as healthy as possible. I do not believe it is my duty to provide for other parents' children, or to take away another fathers duty to keep his children safe and healthy.

I am a business owner. It is successful just enough that allows me to provide, for my children. Our health insurance comes from a federal government job that I have since retired from. My health insurance does not come from the business that I now own. My family run business cannot afford my own families health insurance let alone my employees. I pay my employees a good wage ($15.00, or higher). This is for unskilled work.  On top of the employee wage, I also pay by law, I pay workman's comp and I have to pay a substantial portion of my own employees Medicare tax (I pay 1.45%) and Social Security tax (I pay 6.2%). I do so faithfully each pay period. How am I (the employer) running a protection racket?

 

I agree with this, but I'll add; Through my studies in History the wealth gap is one reason for revolution and economic collapse, but most these wealth gaps were sparked by the catalyst of high taxes (the American revolution was started by the British taxation policies). It is through taxes that enrich governments and cause that governments people to be poorer. True, Automation will take away many jobs (including white collar jobs such as lawyer, judge, etc.).

This, I 100% agree with.

The protection racket is that very few people can afford health insurance unless it is provided by an employer. The scandal is that employers who do not provide it for many of their employees (usually by keeping them as part-timers) are being subsidized. Take Wal-Mart. Last time I checked their employees were getting  over 6 billion dollars in public assistance. One can look at it as those employees forcing taxpayers to subsidize their health and life. It is equally or maybe even more fair to say that the taxpayer is subsidizing the company. They need their employees to be housed and kept healthy but they do not provide health insurance or a living wage to them so they offload a portion of their employee’s living expenses onto the taxpayer. Ronald Reagan’s welfare queens are alive and well but they are not single mothers hoarding food stamps. They are shareholders exploiting people by taking their labor while the taxpayer compensates their employees.

The American Revolution used taxation as an excuse. The average tax rate in Britain was about 25 times as high as the average American colonist was paying. In truth the American colonies were (mostly on a passive level) tax dodgers in that British law was lastly enforced. After the French and Indian War the British has spent a fortune beating the French and the natives and Britain started enforcing the laws a little more strictly (getting up to that 1 to 25 ratio) to recoup their expenses. With the French defeated the colonists no longer wanted British troops around. The rallying cry of the Revolution was never taxation. The Tea Party was over very light taxation of tea and was more in rebellion against British oversight rather than it being unfair. The British fear was democracy. The Royalists had a long memory and Cromwell was not that far in the past. The Royalists controlled Parliament but there was democratic opposition but it was weak at the time. Giving the American colonists representation would have strengthened those elements. There were members of Parliament in favor of a compromise with representation. One even presented the idea that each would get representation proportional to how much money they contributed to the Empire which would have given the colonists token seats and no real power but the Royalist coalition refused even token agreement.

As to high taxation causing the problem the issue is that taxation in the United States is close to historic lows. Some propagandists have tried to convince us that taxation is incredibly high but the income tax bracket tables are easily viewable. We are near lows in real taxation in post-World War 2 America. They were lower pre-World War 1 and for a time in the interwar years but spiked when we went to war (war is expensive). Throughout the 50s, 60s, and 70’s the highest income tax rate was paying 70% taxes or higher when you got to that higher bracket. In the 80s it dropped to 28% with the promise it would never have to go above that again. That promise lasted three years. In the 90s it went back to 39.6%. In the 2000s it went to 35%. It wobbled a bit but is now at 43.4% once you factor in the ACA “subsidy”. Note that is only the highest tax bracket and you are not paying that unless you are making over half a million a year. (Over 600k if married). No one like taxes but pretending we are being horribly oppressed financially is just disingenuous. If high taxes were responsible for the US’s problems the 50s through the 70s should have been a period of great instability. Instead they are considered to be America’s boom years (Ironically the days of high taxation are the decades some are harking back to when they want to make us “great” again) though of course many other factors contributed to that post-war boom. 

Suggesting current taxation is ruinous is just not true. It is propaganda.

This is not all aimed at your post. It just seemed like a good launching point. It is not meant to specifically blame you. Economic history is a passion of mine and I hate the lies that are peddled about our own history to justify bad policies and the bad economic explanations for our current state that make no sense until you see how those peddling them are profiting from them.

Edited February 3, 2020 by The Nehor

[The Nehor]

3 hours ago, ERMD said:

It is not ridiculous, and the last time I checked, we are in a telestial world.

Telestial worlds are inherently ridiculous. That is no reason to justify living like we are in one. If we like and desire such a world we will get to live in one forever. I find that notion unacceptable.

[The Nehor]

15 hours ago, Stargazer said:

Tuition has gone up fast because of basic economics.  What happens when lots of money is being thrown around?  The costs of everything goes up.  The very fact that federally-guaranteed education loans exist causes tuition inflation. The students getting the loans can afford to pay much more than they otherwise could, so since the schools know more money is available, they jack up prices.  This causes a ripple effect. With more money available, the schools are able to pay more for professors, equipment, and infrastructure.  The schools not taking student loan money must raise their tuition as well in order to compete for staff and other things that enable them to compete for students.  

The same thing happens in health care.  It's gotten more expensive precisely because so much health insurance money is being thrown around.

By the way, I'm NOT saying that more money is the ONLY reason for this price inflation, but it definitely among the big causes.

Health care is a different duck. The problem is supply and demand do not work that well on health care. If my choice is to spend $100k a year on healthcare or die the price can stay inelastic even if I cannot reasonably pay for it. This is how pharma gets away with double digit percentage price increases for years on end. People in the United States pay more per capita on healthcare than anywhere else in the world. We pay double per capita compared to the average of the next ten highest spenders yet in the developed world we are consistently ranked worst In health outcomes.

The usual explanations are that we are innovators developing the drugs other nations use and they are piggybacking on us. To an extent this is true but most hard research on disease is done by government funded institutions (including academic ones) and non-profits. Then the pharmaceuticals companies use that research after the taxpayer dollars and charitable dollars did it and develop drugs (much less expensive part of the process) and rake in a fortune. Add to that the Faustian bargains the federal government made with them in the 80s that triggered our opioid issues and I can see why staunch free-market capitalists I know have advocated for nationalizing them.

Even pure capitalism that let people die in the streets if they could not pay might be preferable to what we have now. Pricing is opaque to a ridiculous degree. Hospitals can literally refuse to disclose their pricing as a “trade secret” and have won court cases to this effect. If you go into a hospital it is the equivalent of going to a restaurant that has menus with no prices on them.

I contend we either need to go pure government sponsored with everyone being eligible for Medicare with the option to pay a private insurer or pay out of pocket if they prefer (British model) or go pure free market and require price disclosures with free competition with some kind of proviso (probably tied to income tax) where you get reimbursed if medical costs go over a certain percentage of your income to cover catastrophic healthcare costs. The current system is just stupid and only serves the lobbyists who keep it in place. The ACA was a pushback against it but it was a weak half-measure that was easily coopted by those who were already raking in the money.

[Calm]

1 hour ago, The Nehor said:

It is meant to specifically blame you.

It is “not” meant..?

[The Nehor]

4 minutes ago, Calm said:

It is “not” meant..?

As tempting as it is to lean into that and blame all of our economic problems on one person and then try to construct a rationale for it.....yeah, it was a typo.

[Calm]

1 hour ago, The Nehor said:

As tempting as it is to lean into that and blame all of our economic problems on one person and then try to construct a rationale for it.....yeah, it was a typo.

Let's bring back the Scapegoat!   

[Stargazer]

1 hour ago, The Nehor said:

Health care is a different duck. The problem is supply and demand do not work that well on health care.

That's not quite true.  It is inelastic when it comes to hard-core life-threatening conditions.  It becomes more elastic when it comes down to maintenance or non-critical conditions.  In the ideal case, insurance should only be necessary for the life-threatening conditions that require large layouts of cash, but when insurance starts covering everything then prices rise to meet the availability of excess funding, just like for any other commodity.

One of the big-time causes of price inflation is the increasing government regulation of health-care.  Regulation costs money.  And then we had the "Affordable Health-care Act", which drove prices up rather than down.  There were some exceptions of course, but the government-mandated minimum coverage made insurance less affordable for many, especially poorer people. One of my sons was paying $110 per month for a policy that covered pretty much what he needed, but after ACA cut in that policy was cancelled by the company (because it didn't meet government-mandated minimum coverage levels) and they converted it to a policy that did meet the minimum. And the price went up to $250 per month.  He couldn't afford that, so he dropped all coverage and went to Medicaid -- because he could afford "free".  So instead of paying his own way, he let the government do it.  I've heard of other examples.

1 hour ago, The Nehor said:

If my choice is to spend $100k a year on healthcare or die the price can stay inelastic even if I cannot reasonably pay for it. This is how pharma gets away with double digit percentage price increases for years on end. People in the United States pay more per capita on healthcare than anywhere else in the world. We pay double per capita compared to the average of the next ten highest spenders yet in the developed world we are consistently ranked worst In health outcomes.

How much of that per capita cost is due to our lovely government regulation, as well as lack of tort reform when it comes to malpractice insurance?  

1 hour ago, The Nehor said:

The usual explanations are that we are innovators developing the drugs other nations use and they are piggybacking on us. To an extent this is true but most hard research on disease is done by government funded institutions (including academic ones) and non-profits.

I am not sure that this is true (see italicized). 

But even if true, the cost of developing and bringing a new drug to market IS borne by big pharma. If they have to spend several million dollars developing, testing, and building production infrastructure, they have to get a return on investment, including covering the costs of those initial steps.

1 hour ago, The Nehor said:

Then the pharmaceuticals companies use that research after the taxpayer dollars and charitable dollars did it and develop drugs (much less expensive part of the process) and rake in a fortune. Add to that the Faustian bargains the federal government made with them in the 80s that triggered our opioid issues and I can see why staunch free-market capitalists I know have advocated for nationalizing them.

Even pure capitalism that let people die in the streets if they could not pay might be preferable to what we have now. Pricing is opaque to a ridiculous degree. Hospitals can literally refuse to disclose their pricing as a “trade secret” and have won court cases to this effect. If you go into a hospital it is the equivalent of going to a restaurant that has menus with no prices on them.

That, in my opinion, is immoral and criminal.  Consumers should be able to select treatment courses between competing providers.

1 hour ago, The Nehor said:

I contend we either need to go pure government sponsored with everyone being eligible for Medicare with the option to pay a private insurer or pay out of pocket if they prefer (British model) or go pure free market and require price disclosures with free competition with some kind of proviso (probably tied to income tax) where you get reimbursed if medical costs go over a certain percentage of your income to cover catastrophic healthcare costs. The current system is just stupid and only serves the lobbyists who keep it in place. The ACA was a pushback against it but it was a weak half-measure that was easily coopted by those who were already raking in the money.

I'm currently living in the British model, and I can assure you that there are serious problems with the system. Including spiraling costs, worker disaffection, rationing of health care, and waiting lists for care. But I admit that it seems to cover most peoples' needs most of the time.  If you've got something exotic, however, you might run into problems getting care.

There have been some who speculated that the ACA was meant to fail, so as to give greater impetus towards adopting a single-payer system like in the UK.