Yup, that is so true. But unfortunately the vast majority of people do not understand why that is, and therefore have no idea what if anything they can do about it. The reason in my opinion that costs have fallen away from the wage curve is because the cost of things no longer follow productivity, because productivity has fallen due to the high degree of effort that must be put into things that have no productive benefit. These would include everything related to government compliance. So we are talking about everything HR wise that is required to comply with EEO, ADA, Tax, Medical Care, FMLA, just to name a few. And without going into all the details, this also includes everything to do with Environmental Compliance, Health & Safety Compliance, Legal/Liability, Tax Compliance, etc etc.
I’ve discussed this here before that these same effects also drive economies of scale such that larger companies can afford larger departments to handle the compliance in all these areas. Which on one hand does lower costs, at least initially, but then also drives monopoly in the long run which leads to higher prices. And further, it directly exacerbates the wage gap because the larger the corporation, the more layers, the more distance between the top level management and front line workers.
In addition, in the specific areas you mention such as housing & healthcare, there are a lot of problems that come from government manipulating those markets. Government artificially keeping interest rates low and having programs that are directed at increasing home ownership in low income groups increases the number of people that can borrow and buy, therefore pushing the price up. But hell, that’s all good because the bank, who ultimately expects a bailout when it all blows up, says I can afford it. In healthcare, the simple fact of allowing employers tax breaks for providing compensation in the form of insurance creates a much less competitive market for insurance. And the whole insurance system disassociates the consumer from the actual cost of providing the healthcare which leads to higher prices.
And in all of this, I’m not necessarily passing judgement on the benefits of govenment, just explaining what I think is going on. But let me go ahead and do that here, my opinion is that while there may be some role/benefit to government, the fundemental fact of government is that it never shrinks and never gets less, because it will always find new problems to solve. And a good bit of the time, the solutions only make the problem worse, and even if it solves the problem, the program never goes away or gets cut when the problem disappears. In fact, you almost never even have a pause in the growth because it’s always something new.
Personally, I think we really need to look around and say enough is enough. Air is cleaner, water is cleaner, people are healthier and living longer, can we just at least say stop, we don’t need any more regulations for a while, or at least start simplifying and eliminating old regulation? Can we at least start with the military industrial complex and agree that system needs to be dismantled before they, and their cronies in washington, lead us into yet another conflict just to sell some more munitions. Can we at least agree that taxes should be simpler even if not lower? Can we at least agree that the family farm is dead and crop subsidies are horribly distorting the agriculture market and leading to unhealthy food system? Could we just agree on something, anything, that isn’t just more government?
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