Truck and Barter

Thomas Sowell on Price vs. Cost

Sometimes all you can do is link and quote:

The difference between prices and costs is not just a fine distinction made by economists. Prices are what pay for costs -- and if they do not pay enough to cover the costs, then centuries of history in countries around the world show that the supply is going to decline in quantity or quality, or both. In the case of medical care, the supply is a matter of life and death...

When politicians talk about "bringing down the cost of medical care," they are not talking about reducing any of these costs by one cent. They are talking about forcing prices down through one scheme or another.

All the existing efforts to control the rising expenses of medical care -- whether by government, insurance companies, or health maintenance organizations -- are about holding down the amount of money they have to pay out, not about reducing any of the real costs...

For political purposes, what "bringing down the cost of medical care" means is some quick fix that will win votes at the next election, regardless of what the repercussions are thereafter.

Posted at May 10, 2004 03:03 PM

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