The more government intervention we have, the more distorted prices we will see. Governments are constantly dipping their fingers into different industries from health care to schooling, and even into the bank accounts of Wall Street.
If government never got involved with subsidizing these industries, prices wouldn’t be as jacked up as they are now. Let’s just take a look at the health care industry. How many people can afford good health care now-a-days, not many right? It all comes down to the sole fact that government dipped their hands in, by giving out health insurance to everyone. How can this possibly affect health care pricing?
Well if you were a hospital, or a doctor, and you knew your clients are not coming out of pocket, ‘technically’. The insurance will then ask, “Why would you not charge as much as you’d like?†Now over time this has caused an increase in healthcare pricing to where now normal procedures are $6,000-$10,000.
You see if government never subsidized this industry, than hospitals and doctors would have to charge less to make healthcare affordable, or they would go out of business. This is how price distortion happens, and not only distorted prices but also poor quality in services. In a free market environment, this wouldn’t be the case. Because prices would be competitive to win over your business, and quality would go up because you would need to actually care for your clients to refer you and come back to you rather then just a insurance company that just hand you out to any doctor. We can look at this same exact scenario in almost every industry that the government gets involved in.
Let’s take a look at schooling. Rewinding a couple years back, people were able to afford schooling with working a job because prices were for the people. Because if people couldn’t afford it, than your school would go out of business. But now we have government handing out aid to all the students which gives the green light to all these schools to raise their prices on books, classes, ect..
Because they now know it’s the government paying up front for them, so they can afford all these classes and books. Same thing here, if government never got involved, prices would have to be reasonable for the people, or no one would go to school.
Something I always say is, “competition brings better products, better service, and better pricesâ€. With government intervention, you can’t have the competition the free markets need. These steps that governments are taking is leading us closer and closer to socialism.