5 ms·

Price Controls Have Failed for 4k Years–and Humans Still Haven’t Learned

9 points by janandonly 4y ago

deleted 4y ago
[deleted]
retrocryptid 4y ago
Lol.
logicalmonster 4y ago
There was a comment here that was subsequently deleted that I wanted to respond to. Somebody said something like "Prices are fixed for medical treatments in many countries and there's no worse clinical outcome." I wanted to ask that person the following. What are the prices for medical treatments fixed at? a) Below Market Rate b) At Market Rate c) Above Market Rate
- HarryHirsch 4y ago
  There is no market. If you are a private patient, prices are fixed, physicians must use the list price, they are prohibited from setting their own: https://de.wikipedia.org/wiki/Geb%C3%BChrenordnung_f%C3%BCr_%C3%84rzte https://de.wikipedia.org/wiki/Geb%C3%BChrenordnung_f%C3%BCr_...
  - logicalmonster 4y ago
    1) I'm not sure if you were the person who made the original deleted post or not. 2) I realize that in many areas there's a price list that they're legally obliged to follow and there's technically not a market. 3) What I want to explore is are the prices set at about what would be the "market rate" or not, and what are the consequences of this. For example, if prices for "treating medical condition X" are set below what the market rate for a service would be in a real marketplace for example, what are the consequences of this?
    - HarryHirsch 4y ago
      Not sure I understand the question. From what I hear, prices do not vary much throughout Europe. If someone wants to save money they can pay a nurse under the table, apparently common with Eastern European illegal construction crews.
      - logicalmonster 4y ago
        > Not sure I understand the question. Let's say that treatment for medical condition X is currently set at $500 on this price list. If there was a market for medical services, how would that price list price compare? Is that price too low, too high, or just right? And what are the consequences of a price being set too high or too low?
- nradov 4y ago
  Prices in such countries are generally fixed below the market rate. But the free market for medical treatments is also distorted in other ways, such as by artificially restricting the supply of healthcare providers. This results in shortages for some non-emergency treatments, in the sense that patients have to wait months or years. Waiting won't necessity reduce lifespan, but it often reduces quality of life. Hence why it's common for wealthy Canadians who need joint replacement surgery to travel to the US as medical tourists and pay out of pocket. They want to get their mobility back immediately instead of waiting potentially for years. Price fixing in healthcare can be a net positive for society if done well. But there are always trade-offs.
logicalmonster 4y ago
By the way, I'd argue that price controls might work: not economically, but politically. Economics education (at least in the United States) is (IMO intentionally) beyond abysmal. The percentage of people that can reason out that restricting the prices of a desired good can cause shortages is a minority. And the media is lazy beyond sin and doesn't go in-depth into issues at all or push back against dumb claims. If a politician wanted to fight tomato prices and went and said "The price of tomatoes is too high and those greedy fatcat corporations aren't going to make unlimited profit if you want to make your family a pizza so we're setting a maximum ceiling on tomato prices" the media would print that and praise them with minimal pushback and the people would view them as a hero for cutting tomato prices, even if finding a tomato in a store subsequently became just about impossible.
- HarryHirsch 4y ago
  Help me out here. One tactic during the Enron Wild West energy market era was to turn off generating capacity so that prices would rise. With a price cap, such a strategy would become unworkable, wouldn't it? At least for the naive onlooker it would.
  - logicalmonster 4y ago
    Without reading up about this history, I have no idea about the context and the particular details there. Was that energy market they were participating in an actual free market, or heavily regulated to prevent easy competition? I'd guess the latter, but can't definitively say so. But in general, if there's free entry into a marketplace, there's a check against this sort of behavior. Rising prices are not bad: they are a flashing signal that society desperately wants more of a particular good and to provide more of it as quickly as possible. If company X tried to cut production of any good in an area and boost up their prices, every entrepreneur out there gets a neon flashing message that there's a new way to profit mightily if they can provide that good.
    - HarryHirsch 4y ago
      That's the theory, the practice is different. Also, the purpose of a market isn't to have a market, it's to have robust infrastructure. That's why the Texas electrical grid is such a basketcase. Generators are paid for production but what you really need is spare capacity on peak days. The price excursions on a few hot or cold days are not nearly enough to incentivise building capacity that sits unused most of the year. In New England, on the contrary, generators are also paid for capacity, which is why one grid works and the other not at all.

9 points by janandonly 4y ago

deleted 4y ago

[deleted]

retrocryptid 4y ago

Lol.

logicalmonster 4y ago

There was a comment here that was subsequently deleted that I wanted to respond to. Somebody said something like "Prices are fixed for medical treatments in many countries and there's no worse clinical outcome." I wanted to ask that person the following. What are the prices for medical treatments fixed at? a) Below Market Rate b) At Market Rate c) Above Market Rate

HarryHirsch 4y ago
There is no market. If you are a private patient, prices are fixed, physicians must use the list price, they are prohibited from setting their own: https://de.wikipedia.org/wiki/Geb%C3%BChrenordnung_f%C3%BCr_%C3%84rzte https://de.wikipedia.org/wiki/Geb%C3%BChrenordnung_f%C3%BCr_...
- logicalmonster 4y ago
  1) I'm not sure if you were the person who made the original deleted post or not. 2) I realize that in many areas there's a price list that they're legally obliged to follow and there's technically not a market. 3) What I want to explore is are the prices set at about what would be the "market rate" or not, and what are the consequences of this. For example, if prices for "treating medical condition X" are set below what the market rate for a service would be in a real marketplace for example, what are the consequences of this?
  - HarryHirsch 4y ago
    Not sure I understand the question. From what I hear, prices do not vary much throughout Europe. If someone wants to save money they can pay a nurse under the table, apparently common with Eastern European illegal construction crews.
    - logicalmonster 4y ago
      > Not sure I understand the question. Let's say that treatment for medical condition X is currently set at $500 on this price list. If there was a market for medical services, how would that price list price compare? Is that price too low, too high, or just right? And what are the consequences of a price being set too high or too low?
nradov 4y ago
Prices in such countries are generally fixed below the market rate. But the free market for medical treatments is also distorted in other ways, such as by artificially restricting the supply of healthcare providers. This results in shortages for some non-emergency treatments, in the sense that patients have to wait months or years. Waiting won't necessity reduce lifespan, but it often reduces quality of life. Hence why it's common for wealthy Canadians who need joint replacement surgery to travel to the US as medical tourists and pay out of pocket. They want to get their mobility back immediately instead of waiting potentially for years. Price fixing in healthcare can be a net positive for society if done well. But there are always trade-offs.

logicalmonster 4y ago

By the way, I'd argue that price controls might work: not economically, but politically. Economics education (at least in the United States) is (IMO intentionally) beyond abysmal. The percentage of people that can reason out that restricting the prices of a desired good can cause shortages is a minority. And the media is lazy beyond sin and doesn't go in-depth into issues at all or push back against dumb claims. If a politician wanted to fight tomato prices and went and said "The price of tomatoes is too high and those greedy fatcat corporations aren't going to make unlimited profit if you want to make your family a pizza so we're setting a maximum ceiling on tomato prices" the media would print that and praise them with minimal pushback and the people would view them as a hero for cutting tomato prices, even if finding a tomato in a store subsequently became just about impossible.

HarryHirsch 4y ago
Help me out here. One tactic during the Enron Wild West energy market era was to turn off generating capacity so that prices would rise. With a price cap, such a strategy would become unworkable, wouldn't it? At least for the naive onlooker it would.
- logicalmonster 4y ago
  Without reading up about this history, I have no idea about the context and the particular details there. Was that energy market they were participating in an actual free market, or heavily regulated to prevent easy competition? I'd guess the latter, but can't definitively say so. But in general, if there's free entry into a marketplace, there's a check against this sort of behavior. Rising prices are not bad: they are a flashing signal that society desperately wants more of a particular good and to provide more of it as quickly as possible. If company X tried to cut production of any good in an area and boost up their prices, every entrepreneur out there gets a neon flashing message that there's a new way to profit mightily if they can provide that good.
  - HarryHirsch 4y ago
    That's the theory, the practice is different. Also, the purpose of a market isn't to have a market, it's to have robust infrastructure. That's why the Texas electrical grid is such a basketcase. Generators are paid for production but what you really need is spare capacity on peak days. The price excursions on a few hot or cold days are not nearly enough to incentivise building capacity that sits unused most of the year. In New England, on the contrary, generators are also paid for capacity, which is why one grid works and the other not at all.