Class Thirty Two

Evaluate rationing mechanism:

i.                     How is that mechanism going to challenge competition? Constructive or destructive?

ii.                   Encourage people to make more staff because of that mechanism.

Advantages of the Price System
Markets organize themselves; prices force people to economize. Without the price system, there is no way to know anyone else's needs because there are no signals. If you price water, and its price rises, it incentivizes people to produce more water (develop new technologies). Rationing occurs through individual choice.

Healthcare
Kidneys: by banning the sale of kidneys. the profit opportunity is actually higher on the black market. Zero sum world when we talk about kidneys. When you're not selling kidneys, the marginal value of a kidney is much higher.

Transactions
Money changes the nature of the transaction as opposed to bartering. Bartering is really inefficient because of all the transaction costs you must endure (i.e. finding someone to trade with, dividing up your good). Money solves the double consequence of wants problem: suppose we didn't have money, over time, money emerges. Prices emerge to allocate goods - we use price sot assign a monetary value to goods because it lowers the transaction cost of engaging in market activity.

When you assert some positive economic rights, what you are also assuming is that some one's gonna be around to provide that.

Rights cannot exist separately from duties and obligations.

Once an efficient beuarocracy isn't collecting money, it will become incapable of doing things better.

Some people do need medical care more desperately than others, so jumping line is desirable.
Private payments to doctors actually call for more medical care and short line.

When you allow ration by price, what you actually do is set people free to make their own choices.

The beauty of market in the price system is that you don't have to ask folks whether they need certain stuff.(If goods are rationed rather than price, people may cheat or waste supply)


Price forces us to (1)evaluate cost trade-offs of buying a certain good (2)consider values that others place on the goods.


Is it possible or principal to make health care access independent of income, wealth, social status, and other characteristics?
No, because wealthy people can get into better hospital and get better service.

Even it's possible, is it desirable?
No, it's disgusting. You have to waste other resources (time, energy) to get free medical care.