Trust Busting Education and Healthcare

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Today, our youth is expected to pay 2 1/2 times what was demanded 30 years ago, for a four year college. High rates on student loans ensure that the actual payments for college are far beyond that increase in the ‘sticker price’. And, our elderly incur healthcare costs which have ballooned similarly. While those institutions charge more, nurses and professors do not see a similar increase in salaries. That ‘extra cash’ is going into the hands of administrators, debt-collectors, and companies euphemistically called ‘providers’. In any other market, such an increase in prices perpetrated by the sellers would be called collusion. Our diminishing standing in the global economy, and the expansion of our inequality, can be attributed in large part to these inflated costs.

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Suppose that, over the last few decades, all car companies raised prices on their vehicles by 250%. You would hope that these new, expensive models would be a significant improvement! And, you would expect the workers at those car companies to be paid more, in proportion.

However, if those factory workers saw their wages flat-line or decline, and vehicle quality remained the same, then the difference in revenue for those car companies must be going somewhere else. Unless a huge decline in available materials was driving up price, that windfall is going to the executives.

Inequality is growing, primarily, because of this swindle.

The Counterfactual:

> If education was NOT becoming more expensive, then more Americans could afford to go to college. Their incomes would be higher.

> If education was NOT becoming more expensive, then Americans would have more money SAVED — and they would be paying interest on LESS DEBT.

> If health care costs were NOT rising, and our care was similar to other advanced economies, then more Americans would receive quality care, earlier; there would be less productivity lost to poor health.

> If the average worker, benefiting from improved health, was earning more, then they would have more money SAVED — consequently, they would be paying interest on LESS DEBT.

Our debt payments are a transfer of wealth that would not occur if our incomes were higher (because of improved health and increased education) and our costs were lower (because of reasonable prices for healthcare and education). If such a massive transfer of wealth were flowing from the rich to the poor, it would be decried as socialism. Instead, this money flows from the poor and middle-class into the hands of the rich, and constitutes price-fixing and extortion. The combined effect of these costs, and the additional interest on debts that result, have caused the majority of the decline of the middle class.

Without those DEBTS?

If education and health care had remained at prices seen decades ago, then each of us would have an extra ten thousand dollars, each year. That comes from a combination of lower costs, higher incomes, and NOT paying unnecessary debts. Lacking that windfall, more of us go further into debt. Those additional debts incur interest, exacerbating our losses. This is the key money-siphon in our economy.

Because our economy adds these fictional costs, without supplying anything, our overall demand suffers. The economy fails to grow businesses if its consumers cannot afford to buy. Meanwhile, the industries and individuals who profit from this hack are able to re-invest their spoils, driving stocks higher. When that stock-rush yields a return, they pay lower taxes (or none at all, by offsetting capital gains with the sale of poor-performing stocks)! As a result, our government debt grows, as well.

What about CEO paychecks?

News articles lament the easy-to-spot statistics: wages have been flat or in decline for most of us, while corporate bosses take home huge bonuses. The real picture is slightly more complex. Yes, CEOs are walking away with exorbitant salaries and compensation, even when their companies are doing worse. That is a real problem. And, wages have been flat, while basic goods’ prices rise. That is a source of some of the strain on the average American.

Yet, these sources do not account for the heinous disparity growing, here. Debt-payments do. And, those debts are made worse, primarily, by the costs of education and healthcare, as well as the lost income opportunities of good health and schooling. The effect of lost income opportunities on our national productivity makes us less competitive, putting a squeeze on all of our businesses. Wages continue to suffer, as a result. And, the debt that results from lower wages funnels cash into the pockets of creditors, and eventually to investors, raising stock values that supply most of the wealth to the elite.

Even if we magically tempered executives’ excessive compensation, our growing income inequality would not be halted. Lost income, from poor education and healthcare, combined with debts, again from education and healthcare, are strangling what remains of an American middle-class. Without serious reform, our situation will get much worse.

Written by

Easily distracted mathematician

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