The Great Hippo wrote:Cigarettes and health-coverage are not actually competing goods. See the conversation re: Zamfir/Heisenberg (cigarettes actually may potentially reduce health costs!). Even barring that (presume they did increase health costs), they're still not competing goods; your explanation here is just a wishy-washy economics 101 handwave.
Doesn't matter. Paying off the insurance companies requires collusion; collusion leaves room for a Prisoner's Dilemma. The Nash Equilibrium is for all parties to defect, and therefore they don't get bribed.
But here's an interesting thought experiment: Presuming cigarettes do reduce health care costs (by killing sick people faster), what incentive does anyone have to research the detrimental effects of tobacco smoke? Cigarette companies are happy because you're buying smokes; insurance companies are happy because when you get sick, you die quicker (instead of clinging on and costing them money with end-of-life care).
Any higher costs incurred by someone living longer is either caused by a) government regulations prohibiting price discrimination based on age or b) faulty actuarial tables, both of which are eliminated in a free market. So, given two people, one of whom smokes and therefore is expected to die x years early from lung cancer, the smoker costs additional up to the point where they die, and in a truly free market the insurance company could continue profiting off the non-smoker as they age, provided they start charging them higher premiums.
Tell me: Who else besides the government would bother to research this? Presuming we relied on market solutions, what compelling reason would anyone have had to discover that cigarette smoking is bad for you?
Haven't I gone over this already?
That's not how economics work. Price-hiking does not make consumers more aware; it just makes things more costly for consumers.
Note the difference between 'feel' and 'understand'. If you raise my cost of living, I certainly feel it -- but I don't necessarily understand it.
As smoking is not a Giffen good and in most cases not a Veblen good, the higher the price, the lower the quantity demanded. Problem solved. You can point out demand is inelastic, but that's short-run. Long-run demand for all goods is more elastic.
That's not how actuarial statistics work. Do you know what an actuary table is? You don't need to research the reason why something has an impact; you just need to know the degree of impact it has.
Actuarial tables for health insurance company would have data drawing a link between smoking and lung cancer. It benefits a company to determine whether it's causal or if there's a hidden third variable since discriminating on a hidden third variable instead of smoking would yield higher profits. Causal and correlative links provided in this way will be pounced upon by advocacy groups and other do-gooders (and even if no one bothers establishing a causal link, I doubt that will deter them in any way).
Angua wrote:Not sure what barrier you're talking about here, patent law? Are you saying that private medical funding is being hindered by patents in general, our just trying to blame the government because in this case where making another version of their drug wasn't profitable enough that the government should disregard the patent and let someone else steal their product (while I think that patents on medicines probably last too long in done cases, I acknowledge they are useful in offsetting the costs of drug development)
Just end patent law, then. Governmental barriers to entry in a market do little but discourage competition; that's why the pharmaceutical industry is close to an oligopoly (if not one already), same for banks, and it seems like agriculture is slipping the same way.
People are researching treatments to ebola (the main setbacks are the fact that it's hard to carry out trials on something that's so rare, and too lethal to infect volunteers with). They are doing so with public funds (mainly military if I'm not mistaken)
I'm not saying that everything needs to be publicly funded, and that there is no place for the private sector. I'm saying that you can't rely solely on the private sector because you don't get research into things that aren't profitable. Sleeping sickness kills thousands of people every year, and we've only got one new drug in the past 50 odd years for it.
We should research treatments for diseases because saves lives. How many people need to be affected by a disease before you decide it's worth it? If it affects 1 000 000 000 poor people who wouldn't be able to pay for treatment, would you go for a disease that only affects 10 billionaires.
But see, even sleeping sickness only affects some number of thousands of people every year. Undoubtedly tragic, but it pales in comparison with people who die from malnutrition, which numbers in the millions. But many of those who can't afford the food still get aid, much of it voluntary charity. Regarding malaria, there's also much charity for that, too. The prominent, widespread diseases get the most money, and that's not a bad thing. If all health research became privatised and some disease started killing off millions, do you really think the same people who made donations for malaria and malnutrition would stand by and do nothing?
As for diseases that only affect 10 billionaires, I'm afraid those probably don't exist (maybe some long-term health effects of cocaine?).
Kit. wrote:Any property barrier is created by some form of government. No government => no property.
But I digress.
Absolutely untrue. Property's primary trait is its excludability, meaning I can prevent someone from using it. You can exclude someone from land, a house, a car, etc.; build a fence, buy a gun, hire security, etc., all without government.
Arariel wrote:If people's desires are fulfilled with less consumption, they'll consume less. So maximal utility can be achieved by increasing the amount and variety of goods able to be consumed, and in a system where all purchases are voluntary, the increased consumption reflects increased utility and thus standard of life.
Not that fast. First, you would need to prove the existence
of the object you are speaking of: the real-world utility function, i.e. a transitive and complete
measure of real-world desires.Then
there will be something to discuss here. But not before.
Actually, I only need to assume revealed preference: Given two bundles affordable at a given income, if one bundle is purchased, that bundle is preferred over the other. For the negation to be true (that the other bundle is preferred over the first bundle and yet the consumer purchases the first bundle), the consumer would have to be incredibly irrational, so it's a pretty good assumption; if they could be happier by buying less, why don't they buy less?
the junk consumables makes them happier... for a while. That's if we disregard the advertising of the matching medical services, which is intended
to make them unhappier with the result of such consumption.
Does it make them happier compared to people from a macroeconomy without such increase
? Not necessarily. What if those junk consumables are:
Someone who's very preoccupied with only present pleasures simply has a high interest/discount rate for expected future utility. For instance, if I can spend $100 now or $200 a year from now and I will not settle for an interest rate less than 200 per cent per annum, I would spend $100 now. Similarly, a person who chooses to ingest health-threatening substances sees present benefits as outweighing expected future returns adjusted for the discount rate.
Arariel wrote:In a voluntary transaction, both producer and consumer are made better off.
As a general rule? Only if they are omniscient
and acting for their own benefit. But then it becomes a tautology.
Assuming no fraud and allowing for long-term corrections.
For the money to enter anything, it needs to exist in the first place. Currently, the money is printed by the Feds to prevent deflation when the amount of supply on the market grows in the "natural units", as deflation is believed to be harmful for the economy. If the medical service sales are not growing, the money to cover them is not printed, and is not going under a mattress, into a speculative bubble or straight onto the consumer market causing inflation.
How adorable. I suppose next you'll tell me hiring a brigade of children to throw bricks at windows will increase long-run production.