I'm a really market-oriented guy, but I have concerns about wealth's distorting effect on markets. That is, the "cost" of an item is much less to a wealthy person than to a non-wealthy person.
Billionaire Bob can spend $100,000 on a whim, but Pauper Paul can't scrounge $10,000 for life-critical health-care. Or after a natural disaster, market theory says equilibrium prices rise to balance demand, but prices cannot rise enough so that Bob hesitates to buy all the ice for his drinks, pricing Paul out of buying ice to keep his insulin cold.
It almost feels like there needs to be some fixed currency that everyone gets equal amounts of per day and that can be exchanged for the really important things. But then some people will accumulate that currency, and we're back to wealth distortions.
Making fees and fines dependent on income is a good way to get incentives right. In Germany for example health insurance is based on your income, not a fixed amount like here.
I believe that health care in the US is subsidized to some degree by people with higher income.
—- Medicare payroll taxes are proportional to salary.
—- Low income people that use hospitals generally don’t end up paying for their surgery and care which is passed on to people that do pay their bills.
—- Big pharma offers heavy discounts to low income patients for expensive drugs resulting in higher costs for the rest of us.
—- Under the current Afforadable Care Act free/low cost insurance is provided by raising taxes on the upper income people.
I don’t know what’s the best way to improve the system; I just wish the costs, who was paying for it, and where the money was going was more transparent. It appears that it is intentionally designed to be inscrutable.
But only up to a certain point: the tax is only on the first 50k EUR or so of your salary, and there is a minimum charged (about 100 EUR/mo.) no matter how little you make.
No, they should just improve the economy and supplement income (minimum income, negative income tax) to ensure that everyone can afford the cost of living, $40 tolls included.
Both the "fake money" and the "cost scales with income" are great ways to extend the applicability of markets to areas without currency or to minimize wealth effects.
Food stamps are equivalent to cash. A true rationing program as proposed would prevent you from using cash. This creates black markets which is why it is bad.
The resources people need: ice to cool insulin, food, healthcare, day care, basic housing, etc. are not scarce, or at the very least scarcity is fixable for little money.
Merely that they idea that everybody can't have it, and there it must be rationed by economic means is a little crazy.
We can't all have private jets; but efficiency gains in food production suggests we can easily produce enough food. We are choosing not to distribute it.
That works for this one example, where the government is selling something, effectively creating a tax on people willing to pay to save time.
But most market exchanges do not involve the government (except sales tax). The government can't efficiently capture the excess funds Bob is willing to spend on ice to provide ice for Paul (though the increased price should provide great incentive for people to increase the supply of ice...)
> It almost feels like there needs to be some fixed currency that everyone gets equal amounts of per day and that can be exchanged for the really important things.
Votes could be that, but they too are depreciating.
> Or after a natural disaster, market theory says equilibrium prices rise to balance demand, but prices cannot rise enough
This happened recently in Texas not because of a market failure, but because Texas has “anti-gouging” laws that prevent people from raising prices around a disaster, which entirely predictably had the effect of people being unable to get what they needed (wood, water, etc.) during Harvey.
"A well-known gouging case involves the invisible hand actions of John Shepperson. After the Hurricane Katrina disaster, John bought 19 generators, rented a U-Haul truck, and drove 600 miles from Kentucky to Mississippi. In return for his efforts and risk, he hoped to sell the generators at double his purchase price. Instead, he was arrested for price gouging, spent 4 days in jail, and the generators were confiscated. It’s a tricky issue: while Mr. Shepperson’s morality can be debated, his initiative would have unequivocally added supply and made some people better off. We all are charitable, of course, but how many of you would have rented a truck and driven twelve hundred miles round trip to sell generators for the price you purchased them?"
Billionaire Bob can spend $100,000 on a whim, but Pauper Paul can't scrounge $10,000 for life-critical health-care. Or after a natural disaster, market theory says equilibrium prices rise to balance demand, but prices cannot rise enough so that Bob hesitates to buy all the ice for his drinks, pricing Paul out of buying ice to keep his insulin cold.
It almost feels like there needs to be some fixed currency that everyone gets equal amounts of per day and that can be exchanged for the really important things. But then some people will accumulate that currency, and we're back to wealth distortions.