How is that going to work?
22/11/24 01:41
I am not an economist and I am not an expert on trade policy, so what follows may just be a political rant, but there are a lot of policies that are being proposed by the incoming US president that I do not understand. One of those policies is the threat to use tariffs. The basic theory behind tariffs is that the use of high import fees will raise the cost of imports to the point that they are more expensive than locally produced goods. This will stimulate demand for locally produced goods, which in turn will increase profits and allow for manufacturing efficiencies derived from increased sales and increased production.
If I understand correctly, this means that you raise the price of goods on the promise that businesses will reinvest profits in ways that eventually result in decreased prices. The intent is to level the playing field by raising the price. Continuing the questionable use of the analogy of a playing field, might it make sense to consider other factors that affect prices? What if, instead of raising prices, policy makers took a look at how prices might be cut? For example, a major factor in the cost of goods is labor. If the proposed policies are put into effect, the plan as I understand it is to raise the prices of imported goods while engaging in mass deportation and tight controls on immigration. Decrease the supply of labor while raising prices sounds like a recipe for increased prices all the way around. It sounds like a cycle. Decrease the labor supply, driving up the cost of labor and the cost of goods. Increase the cost of imported goods. Doesn’t the law of supply and demand come into play at some point and decrease sales due to high costs?
Or, consider another difference in the cost of doing business in the United States vs. the cost of doing business in other industrialized countries. In the United States one of the leading causes in the cost of labor is that US businesses are expected to participate in the cost of health care. Virtually all other developed countries do not put the cost of health care directly on businesses. They do impose taxes for general health care, which is a business cost, but those taxes are nowhere as high as the cost of healthcare paid by employers in the US. Every small business in the US struggles with the cost of health insurance for employees.
The high cost of health insurance is the direct result of the high cost of healthcare in the US. In 2022, the most recent year for which statistics are easily available, the US spent $4.5 trillion on health care, which averages to $13,493 per person. By comparison, the average cost of healthcare per person is double that of other wealthy countries.
High costs might be understandable if the outcomes of the care were better, but they are not. Health outcomes in the US are generally worse than other developed countries. Life expectancy is more than four years less than the average of 10 other comparable countries. The US has the highest infant and maternal mortality of those countries and is one of only a handful of countries in the world where infant and maternal mortality rates are increasing. US rate of preventable mortality is double that of other countries. And to top it off, the US ranks last on access to health care.
Pay more for worse outcomes isn’t a recipe for efficient competition. Policies aimed at repealing the Affordable Care Act and decreasing the number of people insured don’t seem like cost cutting measures in the long run. Removing controls on prescription drug pricing doesn’t seem like a way to drive down the cost of doing business.
Beyond all of this the focus of US health care on treatment rather than prevention was proven to be disastrous during the Covid-19 pandemic. With only 4% of world population, the US experienced 15% of Covid-19 deaths. Even had the country escaped some of the worst effects of bumbled administration and misinformation about vaccination risks, Covid-19 deaths would have been higher than countries that emphasize preventive care such as Norway and Iceland. Now, however, the purveyors of that misinformation and bumbled administration will be given authority over health care policy.
Added to those high costs and deadly outcomes is the cost of medical debt. Interest isn’t inexpensive. 41% of adults in the US have medical and/or dental debt. Medical debt is the leading cause of personal bankruptcy in our country. And every unpaid debt contributes to the rise in the cost of care provided.
What if US businesses were offered more alternatives to the failing for-profit health care system allowing them to lower medical insurance costs as a way of “leveling the playing field” instead of raising the cost of the goods imported by their competitors?
If cost of living is as major a factor in the choice of voters as the pollsters have reported, how is increasing the cost of goods purchased going to affect cost of living. Try to purchase a pair of socks made in the US. Almost every brand, including the expensive luxury brands, imports stock from other countries. I realize it is unfair to single out one company, but many folk like to do business with Bombas because they give away a pair of socks for every pair sold. That means that customers participate in the cost of getting socks to folks who cannot afford them. Bombas imports socks from several countries, including China. Increase the cost of the imported socks and the inefficiency of the system is compounded. Now consumers are paying for socks and tariffs and other expenses that might not be required if individuals and families weren’t living on the streets due to medical debt.
Then again, I’m not an expert. I’m just one person who is retired, even though I’m younger than the President elect. And I have the luxury of extremely good health insurance, though it eats up a much larger portion of my retirement income than had been estimated by the investment experts we consulted when planning our retirement. And now we have to budget for the coming increase in the price of our socks. That, however, is another story for another day.
If I understand correctly, this means that you raise the price of goods on the promise that businesses will reinvest profits in ways that eventually result in decreased prices. The intent is to level the playing field by raising the price. Continuing the questionable use of the analogy of a playing field, might it make sense to consider other factors that affect prices? What if, instead of raising prices, policy makers took a look at how prices might be cut? For example, a major factor in the cost of goods is labor. If the proposed policies are put into effect, the plan as I understand it is to raise the prices of imported goods while engaging in mass deportation and tight controls on immigration. Decrease the supply of labor while raising prices sounds like a recipe for increased prices all the way around. It sounds like a cycle. Decrease the labor supply, driving up the cost of labor and the cost of goods. Increase the cost of imported goods. Doesn’t the law of supply and demand come into play at some point and decrease sales due to high costs?
Or, consider another difference in the cost of doing business in the United States vs. the cost of doing business in other industrialized countries. In the United States one of the leading causes in the cost of labor is that US businesses are expected to participate in the cost of health care. Virtually all other developed countries do not put the cost of health care directly on businesses. They do impose taxes for general health care, which is a business cost, but those taxes are nowhere as high as the cost of healthcare paid by employers in the US. Every small business in the US struggles with the cost of health insurance for employees.
The high cost of health insurance is the direct result of the high cost of healthcare in the US. In 2022, the most recent year for which statistics are easily available, the US spent $4.5 trillion on health care, which averages to $13,493 per person. By comparison, the average cost of healthcare per person is double that of other wealthy countries.
High costs might be understandable if the outcomes of the care were better, but they are not. Health outcomes in the US are generally worse than other developed countries. Life expectancy is more than four years less than the average of 10 other comparable countries. The US has the highest infant and maternal mortality of those countries and is one of only a handful of countries in the world where infant and maternal mortality rates are increasing. US rate of preventable mortality is double that of other countries. And to top it off, the US ranks last on access to health care.
Pay more for worse outcomes isn’t a recipe for efficient competition. Policies aimed at repealing the Affordable Care Act and decreasing the number of people insured don’t seem like cost cutting measures in the long run. Removing controls on prescription drug pricing doesn’t seem like a way to drive down the cost of doing business.
Beyond all of this the focus of US health care on treatment rather than prevention was proven to be disastrous during the Covid-19 pandemic. With only 4% of world population, the US experienced 15% of Covid-19 deaths. Even had the country escaped some of the worst effects of bumbled administration and misinformation about vaccination risks, Covid-19 deaths would have been higher than countries that emphasize preventive care such as Norway and Iceland. Now, however, the purveyors of that misinformation and bumbled administration will be given authority over health care policy.
Added to those high costs and deadly outcomes is the cost of medical debt. Interest isn’t inexpensive. 41% of adults in the US have medical and/or dental debt. Medical debt is the leading cause of personal bankruptcy in our country. And every unpaid debt contributes to the rise in the cost of care provided.
What if US businesses were offered more alternatives to the failing for-profit health care system allowing them to lower medical insurance costs as a way of “leveling the playing field” instead of raising the cost of the goods imported by their competitors?
If cost of living is as major a factor in the choice of voters as the pollsters have reported, how is increasing the cost of goods purchased going to affect cost of living. Try to purchase a pair of socks made in the US. Almost every brand, including the expensive luxury brands, imports stock from other countries. I realize it is unfair to single out one company, but many folk like to do business with Bombas because they give away a pair of socks for every pair sold. That means that customers participate in the cost of getting socks to folks who cannot afford them. Bombas imports socks from several countries, including China. Increase the cost of the imported socks and the inefficiency of the system is compounded. Now consumers are paying for socks and tariffs and other expenses that might not be required if individuals and families weren’t living on the streets due to medical debt.
Then again, I’m not an expert. I’m just one person who is retired, even though I’m younger than the President elect. And I have the luxury of extremely good health insurance, though it eats up a much larger portion of my retirement income than had been estimated by the investment experts we consulted when planning our retirement. And now we have to budget for the coming increase in the price of our socks. That, however, is another story for another day.
