Global.....Cooling?

[pembquist]

In our country, we have car insurance, house insurance, life insurance, etc. that people are mostly happy with and that don't seem to greatly distort the price of cars, houses, etc.  Those industries are not hugely hampered by regulation.

Insurance is heavily regulated though. That's why swaps are called swaps and not insurance. What distorted the price of houses last time was the existence of lightly to un regulated derivatives. I imagine car insurance might distort the price of autobody repair. Come to think of it, you could say that house insurance distorts the price of houses as no one would lend you money to buy a house without it. Imagine if we had to pay cash. I think the problem with health care is that for prices to go down somebody's ox is going to have to get gored. The real market incentive for health care I would argue is quality of outcomes and that along with price is pretty hard to find out ahead of time.

I personally think the whole free market mantra is a little overblown. The free market is a startlingly powerful phenomena for organizing and motivating people,(that's why you have to weld manhole covers down when the price of scrap soars,) but the notion that it is a solution for all that ails us or that if we just let it be and utopia will follow I find as dubious as a young communist's enthusiasms for revolution.

I think this thread has strayed.

[Brooke]

Looking at the tables for these markets of insurance...one thing stands out.

COMPETITION...........
[etc.]

I completely agree.  Competition is a *vital* part of a free market.  Without it, it isn't a free market, and it doesn't work.  If I had the ability to change policy, I'd greatly reduce regulation (not increase it, which is exactly the *wrong* way to go, in my opinion) and allow insurance companies to offer whatever insurance products they wanted wherever they wanted to offer them (i.e., no state monopolies).  People would buy the ones they want and not buy the ones they don't like (just like with car insurance and house insurance).

[pembquist]

The insurance companies are bookies.  You're betting you crash and they're betting you don't.  Vegas wasn't built on winners...neither was the insurance markets. 

Another thing about casualty insurance is that the money isn't made off of a differential between claims and premiums, it is made on the use of the money that is available because of the difference in time between when a premiums are paid in and claims are paid out. When the investment climate is bad you will see the gate come down with lines yanked and stupid premiums, if the outlook is good its the reverse. You won't see this in auto insurance too much but more in business insurances and such.

[Brooke]

Insurance is heavily regulated though.

Yes, that's what needs to get fixed if we want things to work.

What distorted the price of houses last time was the existence of lightly to un regulated derivatives.

No, they were only once contributing factor among many.  There were interest rates going to zero (and when interest rates go to zero, the price of property tends to infinity -- the Fed can bear some blame there) and there were government regulations and strong arming of lenders to make way too many subprime loans.  There were other factors, too, but those two are huge.

I imagine car insurance might distort the price of autobody repair.

No one is saying that autobody repair is a national crisis, unaffordable, unavailable, etc.  So, no, it's not a problem.

Come to think of it, you could say that house insurance distorts the price of houses as no one would lend you money to buy a house without it.

I'm saying that I believe highly regulated health insurance and health industry is a disaster that can be saved only by less regulation and more free market.  I'm not saying that insurance has no effect on pricing or other factors.  Every good and service has an effect on something.

Imagine if we had to pay cash.

Yes, that would affect things a lot.

I think the problem with health care is that for prices to go down somebody's ox is going to have to get gored.

That's the result of every single thing done economically.  If good A costs more, someone benefits, someone does not.  If good A costs less, someone benefits and someone does not.  That's true of healthcare and also of microwave ovens, carpeting, Bic Macs, shoes, children's toys, luxury yachts, etc.  A free market figures out what a good price is for something given alternative uses of those resources.  That's what it's great at that central planning is not great at (as the Soviets, among others, proved).

The real market incentive for health care I would argue is quality of outcomes and that along with price is pretty hard to find out ahead of time.

I disagree.  If you need a house-repair job done, you can get an estimate.  If you need a medical procedure, you can get an estimate (although because the system has been moved so far from free market, that is not as easy as in home repair, but you can still definitely do it -- I have done it on many occasions).

I personally think the whole free market mantra is a little overblown.

Well, look at things subject to free market (microwaves, lumber, computers, air conditioners, car repair, singing lessons, pizzas, etc.) compared to things not subject to free market (especially health care) and see which ones go from expensive and unavailable to cheap and plentiful compared to things that go from expensive and unavailable to more expensive and more unavailable.  Look a which nations have embraced at least some aspect of free markets (US, Germany, Japan, Taiwan, Singapore, China's current moves, India's current moves) vs. those that use high-regulated markets and central planning (Soviet Union, Venezuela, North Korea, Argentina, from time to time portions of Latin America and Africa).

I work in healthcare-related industries.  My opinion is that the free market would work as well there as for any other good or service.  There is nothing magical about the words "health care."  It is technology and business, made up of people working and executing tasks, chemicals, electronics, mechanical parts, etc. -- just like lots and lots of other industries.

The free market is a startlingly powerful phenomena for organizing and motivating people,(that's why you have to weld manhole covers down when the price of scrap soars,) but the notion that it is a solution for all that ails us or that if we just let it be and utopia will follow I find as dubious as a young communist's enthusiasms for revolution.

Why dubious?

I think this thread has strayed.

A little bit, eh?  

[pembquist]

No, they were only once contributing factor among many.  There were interest rates going to zero (and when interest rates go to zero, the price of property tends to infinity -- the Fed can bear some blame there) and there were government regulations and strong arming of lenders to make way too many subprime loans.  There were other factors, too, but those two are huge.



Why dubious?

Well you can say no, and I can say no so I don't think there is any likely hood that we will convince each other otherwise. I would only say that the Magnetar style trades provided the last couple years of on the face of it stunningly stupid lending. Lending which in fact was quite crafty and profitable in default. But you believe what you want and I'll believe what I want we both have the truth on our side.

Dubious is probably another thread that probably make people mad and slop over into politics and get locked. Suffice it to say that I'm pretty agnostic on most things.

[Brooke]

Well you can say no, and I can say no so I don't think there is any likely hood that we will convince each other otherwise.

I say "no" or "yes" based on reasons that usually involve aspects from reading about economics and history and that I love to discuss with folks who likewise like the discussion also for its own sake, whether or not they agree with me.  Whether or not we convince each other is only one part of things and not the whole benefit. 

[Ardy123]

In an honest society where everyone is behaving with good intention regulation is not needed.

No such society exists.

Man has proven, it can not be trusted with power.

Corporations, Politicians and Judges (both sides of the isle) have weakened us little peoples ability to influence our elected politicians.

Regulation gives us, albeit an illusion at best, a sense of trust, where there otherwise would be none.

No society can exist without the sense of trust.

EDIT: Don't want regulation, don't be an A-hole and convince everyone in your industry that as well... good luck!

[Brooke]

In an honest society where everyone is behaving with good intention regulation is not needed.

No such society exists.

I agree completely.  That is why communism doesn't work.

It is also why some regulation is needed -- I agree.

But if the federal government has too much regulatory power and too much ability to redistribute money, then it is a magnet for great corruption.  It is the imperfection of man that is precisely the reason we can't have too much regulation and redistribution.

Corporations, Politicians and Judges (both sides of the isle) have weakened us little peoples ability to influence our elected politicians.

We did it to ourselves by creating a system that fosters corruption.  If people better understood economics and history, they wouldn't vote for laws and politicians that contribute to the problem.

Regulation gives us, albeit an illusion at best, a sense of trust, where there otherwise would be none.

No society can exist without the sense of trust.

Some fairy tales are harmful when they work contrary to the correct solution.  People in the Soviet Union, China, Venezuela, and Argentina felt that socialism was the power of the people, and socialism gave them trust in government until a harsh reality made itself known.  That illusion and initial sense of trust cost them dearly.

We have been shown very clearly through the field of economics and through many historical precedents and lessons -- many -- that light regulation, free markets, and capitalism work very, very well and have lifted millions of people out of grinding poverty and serfdom.  Why can't people have a sense of trust in that marvelous reality?

[Changeup]

Because Ardy wont fly when he tells people he will, that's why

[Ardy123]

Because Ardy wont fly when he tells people he will, that's why

 

[Ardy123]

Some fairy tales are harmful when they work contrary to the correct solution.  People in the Soviet Union, China, Venezuela, and Argentina felt that socialism was the power of the people, and socialism gave them trust in government until a harsh reality made itself known.  That illusion and initial sense of trust cost them dearly.

Communism has nothing to do with regulation and Socialism != Communism, ask Sweden, Norway, Germany, Austria, etc...

Blind faith in any organization, Gov or not is stupid.

This is why we should have a free press and elected officials and we should aggressively go after anything that inhibits it. We have failed to do the latter. Something that people with money and agendas have loved in the past 30 years (I'm looking at you Citizen's United and the 10k+ other 'biz friendly' regulations passed).

[nrshida]

We have been shown very clearly through the field of economics and through many historical precedents and lessons -- many -- that light regulation, free markets, and capitalism work very, very well and have lifted millions of people out of grinding poverty and serfdom.  Why can't people have a sense of trust in that marvelous reality?

There are many negative aspects to capitalism which are already announcing which you fail to mention or are unaware of / disagree with. If we look to the future (and how far into the future is an interesting topic) there will undoubtedly come a point where its usefulness will be outweighed by the damage it causes to both the environment and to human development. There must be regulation to keep the present system in check because business will and must inevitably tend towards the unethical and to its own (pure and abstract) pursuit at the expense of all else. It has no conscience and was not designed with foresight nor intelligence and is intolerant of other systems.

It is an inevitable phase of development and so is its end and subsequent replacement.

[NatCigg]

There are many negative aspects to capitalism which are already announcing which you fail to mention or are unaware of / disagree with. If we look to the future (and how far into the future is an interesting topic) there will undoubtedly come a point where its usefulness will be outweighed by the damage it causes to both the environment and to human development. There must be regulation to keep the present system in check because business will and must inevitably tend towards the unethical and to its own (pure and abstract) pursuit at the expense of all else. It has no conscience and was not designed with foresight nor intelligence and is intolerant of other systems.

It is an inevitable phase of development and so is its end and subsequent replacement.

you see, The problem is not the corporation, the problem is man. This is why nothing will work short of freedom combined with compassion and love. Please,  excuse me, carry on 

[nrshida]

you see, The problem is not the corporation, the problem is man. This is why nothing will work short of freedom combined with compassion and love. Please,  excuse me, carry on 

There are, or rather have been until recently, cultures which have never historically experienced the system of capitalism which are not dominated by the traits to which you are eluding. We must surely separate the 'man' from the environment he has adapted to?

[Changeup]

There are, or rather have been until recently, cultures which have never historically experienced the system of capitalism which are not dominated by the traits to which you are eluding. We must surely separate the 'man' from the environment he has adapted to?

But we must take great care to not go backwards in time...progress is about making positive change, forward.  One could interpret you as meaning, "Taliban-esque".

BTW....fuels should be regulated by output and price will settle.   The forward integration that oil companies have facilitated control the supplies of all the raw materials necessary for production which allows them the one liberty that 99% of all other manufacturers do not have:   Supply side price controls.

One could make the case that this violates UC 1 for unfair competition as a matter of conducting normal business....for one reason alone.  One oil company's price benefit from supply side economics benefits the entire industry in the form of price increases. 

No where else will you find a shut-the -well-off, drive the price up except under normal market conditions....oranges, pork bellies, etc.

Think about it...