Back in December I wrote a post about some economists who remind Americans that, after adjusting for population growth, our economy is not in fact growing and that our expenses for healthcare, housing, and education are “soaring”.
A friend recently shared Scott Alexander’s “Considerations on Cost Disease,” which is along similar lines.
On our public schools:
Costs really did more-or-less double without any concomitant increase in measurable quality.
So, imagine you’re a poor person. White, minority, whatever. Which would you prefer? Sending your child to a 2016 school? Or sending your child to a 1975 school, and getting a check for $5,000 every year?
Inflation-adjusted cost of a university education was something like $2000/year in 1980. Now it’s closer to $20,000/year. No, it’s not because of decreased government funding, and there are similar trajectories for public and private schools.
I don’t know if there’s an equivalent of “test scores” measuring how well colleges perform, so just use your best judgment. Do you think that modern colleges provide $18,000/year greater value than colleges did in your parents’ day? Would you rather graduate from a modern college, or graduate from a college more like the one your parents went to, plus get a check for $72,000?
(or, more realistically, have $72,000 less in student loans to pay off)
My uncle paid for his tuition at a really good college just by working a pretty easy summer job – not so hard when college cost a tenth of what it did now.
On health care:
The average 1960 worker spent ten days’ worth of their yearly paycheck on health insurance; the average modern worker spends sixty days’ worth of it, a sixth of their entire earnings.
Countries like South Korea and Israel have about the same life expectancy as the US but pay about 25% of what we do.
On building a subway system:
[the original cost of building New York City subway lines] looks like it’s about the inflation-adjusted equivalent of $100 million/kilometer today, though I’m very uncertain about that estimate. In contrast, Vox notes that a new New York subway line being opened this year costs about $2.2 billion per kilometer, suggesting a cost increase of twenty times – although I’m very uncertain about this estimate.
Maybe this is all fine because we’re paying ourselves more?
health care and education aren’t paying their workers more; in fact, quite the opposite.
If some government program found a way to give poor people good health insurance for a few hundred dollars a year, college tuition for about a thousand, and housing for only two-thirds what it costs now, that would be the greatest anti-poverty advance in history. That program is called “having things be as efficient as they were a few decades ago”.
Right now the standard of living isn’t just stagnant, it’s at risk of declining, and a lot of that is student loans and health insurance costs and so on.
Readers: What do you think of Scott Alexander’s analysis? He admits that he has no solutions to offer (though perhaps returning education and health care to the market economy would be a start?).
- my health care reform article from 2009 where I asked “Who Voted to Spend All of Our Money on Health Care?”