4 ms·

You could also argue that the "red" categories align more closely with "needs" people have little to no choice but to pay, and are ripe for predatory pricing.

by bfdm 4y ago

You could also argue that the "red" categories align more closely with "needs" people have little to no choice but to pay, and are ripe for predatory pricing. It's true there are monopoly problems here, but the answer isn't to remove regulation it's to strengthen it. A return to real anti-trust in particular. The blue items lean more towards luxury items and discretionary spending, so pricing can't be so exploitative.

PeterisP 4y ago
I feel more like the red items are all the ones where the price pressure has been removed for one reason or another, where a new company with a rich investor can't arrive and create a hugely increased supply. Housing in desirable areas works that way due to zoning/NIMBY restrictions, education works that way because at the point of choosing to pay there's no effective price competition as student loans cover the difference so that potential students don't really change their decisions meaningfully because the price is $10,000 higher than in another place, textbooks have the same but even more - because students paying for textbooks have almost no say in which textbooks will get chosen and can't choose a different book because it's cheaper, and medicine because of both of these factors - artificially limited supply of doctors due to restricted residency&licensing spots, and a price disconnect with insurers paying huge bills according to rules of what needs to be paid or not and lack of price transparency (and price competition!) for procedures; the majority of medical cost is for planned, non-urgent procedures but even for these people aren't making a meaningful choice whether they'll do the same thing in Hospital A for $10,000 or in Hospital B for $7,000, it's either covered/in-network/whatever or not; so there's no free market price setting that would limit these costs.
epgui 4y ago
I don’t know if this is the best way to frame it, but at least it’s not disconnected from reality like the article.
- bfdm 4y ago
  I mainly meant to say that there's way more going on than what's described.
zerocrates 4y ago
Even the American Enterprise Institute, where he's getting the chart from, frames it more in terms of globalization, competition, and of course given the source, regulation. Their preferred talking points on it are a little dubious as well: e.g., cars are subject to substantial regulation on all sorts of axes and yet are flat and therefore "blue" on the chart, while college textbooks aren't really meaningfully regulated at all and are one of the worst categories. (AEI's post also without irony points to the influence of open and free textbooks as something sure to bring down prices in the future, brought to you thanks to the free market). Anyway, regardless of your view on AEI's gloss on those numbers, it's much more reasonable than Andreesen's claim that "technology is banned" in all the red sectors.
- notahacker 4y ago
  > (AEI's post also without irony points to the influence of open and free textbooks as something sure to bring down prices in the future, brought to you thanks to the free market). Further irony: the open and free textbooks (and textbook alternatives, and increasingly efficient distribution of second hand textbooks) are probably one of the main drivers of the price rises. Publishers sell to tiny niches with a significant core market who find it really important to have the latest edition of the course text, and fringe around that that now has much cheaper alternatives. There's no mass market potential from pricing really low, so the publishers try to offset the loss of sales to the second group by squeezing the first group for higher prices. In any case, textbook revenues are already in decline despite the price rises.
  - dogcomplex 4y ago
    That's kind of a good sign of the chokehold weakening though - that desperation only drives more people to the alternatives
dogcomplex 4y ago
This is much closer to reality. Markets are priced by demand far more than supply - if you have a perpetual source of demand to milk, the pricing isn't going to come down easily, even if supply could have been made more efficient. I suspect it's a bit of a mixed bag - regulations certainly can be (and are) used as a tool to lock in control in ways that benefit the corporations leading the industry and not the consumer - but abolishing said regulations just makes it even worse. Regardless, if AI is able to lower the bottom-line engineering/labor costs of producing these things (which it absolutely will) then you'll see pretty clearly where the corruption rests. We should expect far better as consumers going forward, and demand both better prices and quality.

by bfdm 4y ago

PeterisP 4y ago

I feel more like the red items are all the ones where the price pressure has been removed for one reason or another, where a new company with a rich investor can't arrive and create a hugely increased supply. Housing in desirable areas works that way due to zoning/NIMBY restrictions, education works that way because at the point of choosing to pay there's no effective price competition as student loans cover the difference so that potential students don't really change their decisions meaningfully because the price is $10,000 higher than in another place, textbooks have the same but even more - because students paying for textbooks have almost no say in which textbooks will get chosen and can't choose a different book because it's cheaper, and medicine because of both of these factors - artificially limited supply of doctors due to restricted residency&licensing spots, and a price disconnect with insurers paying huge bills according to rules of what needs to be paid or not and lack of price transparency (and price competition!) for procedures; the majority of medical cost is for planned, non-urgent procedures but even for these people aren't making a meaningful choice whether they'll do the same thing in Hospital A for $10,000 or in Hospital B for $7,000, it's either covered/in-network/whatever or not; so there's no free market price setting that would limit these costs.

epgui 4y ago

I don’t know if this is the best way to frame it, but at least it’s not disconnected from reality like the article.

bfdm 4y ago
I mainly meant to say that there's way more going on than what's described.

zerocrates 4y ago

Even the American Enterprise Institute, where he's getting the chart from, frames it more in terms of globalization, competition, and of course given the source, regulation. Their preferred talking points on it are a little dubious as well: e.g., cars are subject to substantial regulation on all sorts of axes and yet are flat and therefore "blue" on the chart, while college textbooks aren't really meaningfully regulated at all and are one of the worst categories. (AEI's post also without irony points to the influence of open and free textbooks as something sure to bring down prices in the future, brought to you thanks to the free market). Anyway, regardless of your view on AEI's gloss on those numbers, it's much more reasonable than Andreesen's claim that "technology is banned" in all the red sectors.

notahacker 4y ago
> (AEI's post also without irony points to the influence of open and free textbooks as something sure to bring down prices in the future, brought to you thanks to the free market). Further irony: the open and free textbooks (and textbook alternatives, and increasingly efficient distribution of second hand textbooks) are probably one of the main drivers of the price rises. Publishers sell to tiny niches with a significant core market who find it really important to have the latest edition of the course text, and fringe around that that now has much cheaper alternatives. There's no mass market potential from pricing really low, so the publishers try to offset the loss of sales to the second group by squeezing the first group for higher prices. In any case, textbook revenues are already in decline despite the price rises.
- dogcomplex 4y ago
  That's kind of a good sign of the chokehold weakening though - that desperation only drives more people to the alternatives

dogcomplex 4y ago

This is much closer to reality. Markets are priced by demand far more than supply - if you have a perpetual source of demand to milk, the pricing isn't going to come down easily, even if supply could have been made more efficient. I suspect it's a bit of a mixed bag - regulations certainly can be (and are) used as a tool to lock in control in ways that benefit the corporations leading the industry and not the consumer - but abolishing said regulations just makes it even worse. Regardless, if AI is able to lower the bottom-line engineering/labor costs of producing these things (which it absolutely will) then you'll see pretty clearly where the corruption rests. We should expect far better as consumers going forward, and demand both better prices and quality.