Why Is The Cost Of Living So Unaffordable?

Tyler Durden's picture

Via Charles Hugh-Smith of OfTwoMinds blog,

Strip away the centralized power that protects and funds cartels, and prices would plummet.

The mainstream narrative is "the problem is low wages." Actually, the problem is the soaring cost of living. If essentials such as healthcare, housing, higher education and government services were as cheap as they once were, a wage of $10 or $12 an hour would be more than enough to maintain a decent everyday life.

Here are some examples from the real world. In 1952, it cost $30 to have a baby in an excellent hospital. If we adjust that by official inflation as measured by the Bureau of Labor Statistic's inflation calculator to 2017, the cost would be $275. ($1 in 1952 = $9.16 in 2017).

What does it cost to have a baby delivered in a hospital today? $5,000? $10,000? Who even knows, given the convoluted billing process in today's sickcare system?

The pharmaceutical cartel jacks up medication costs per dose from $3 tp $600, even when the medication has been around for decades: the Pinworm prescription jumps from $3 to up to $600 a pill Parents, doctors angry over drug price gouging (via John F.)

My father paid 1.8% of his wages for "hospital group insurance" in the early 1950s (for a household of four kids and two adults.) For someone earning $1,000 a week, the equivalent today would be $72 a month out of a monthly gross income of $4,000.

My spouse and I pay $1330 a month for barebones healthcare insurance in today's sickcare system. Factor out subsidies paid by the employer or state, and minimal healthcare insurance costs tens of thousands of dollars per household annually.

Here's a chart that illustrates the breathtaking rise in healthcare costs. Wages are the nearly flat line:

In the early to mid-1970s, my university tuition was $89.25 per semester (the University of Hawaii was a two-semester system), and student fees were $27 a semester, for a grand total of $232.50 per year. Books added another $170 per year, for a total cost of $400 to $450 for a university education.

$1 in 1975 = $5.51 today, so if tuition, fees and books had gone up along with official inflation, it would now cost $1,800 to $2,000 to attend a large state university annually--including tuition, fees and books.

An entire 4-year university education would cost $8,000. Instead, students now borrow $50,000 and up just to attend state university.

I've covered the skyrocketing cost basis of everyday life for a decade:

Lowering the Cost Structure of the U.S. Economy (August 29, 2008)

My recent exploration of soaring costs for everyday items, The Burrito Index: Consumer Prices Have Soared 160% Since 2001 (August 1, 2016), received quite a bit of interest, along with the companion piece on the source of much of the higher costs: Inflation Hidden in Plain Sight (August 2, 2016) Can we be honest and say that many of the reductions in value, quantity and quality are actually instances of fraud?

No Wrongdoing Here, Just 6,300 Corporate Fines and Settlements (May 2015)

Here's a snapshot of urban rents. Recall that wages for the bottom 90% have been flatlined for decades.

Apologists claim these services have improved greatly in the past 30, 40 and 50 years, but this is only occasionally valid; university education, housing, burritos and conventional preventative care have often declined in quality and quantity, not gotten better.

Other apologists claim that Baumol's Cost Disease explains all these tremendous increases in price; while this may be a factor in some price increases, it is more an excuse than an explanation.

Here's what's going on: cartels that have government backing can jack up prices at will, year after year, decade after decade, while wages have stagnated. Cartels have zero pressure to raise wages, while their immense profits fund vast propaganda/public-relations machines that translate into equally vast political influence.

Have you ever seen a non-profit foundation or a politico that didn't support "more funding for healthcare and higher education"? Of course not. The healthcare, defense industry, Federal Reserve/banking sector and higher education cartels are all entrenched and self-serving.

The cartels have unlimited power to raise their prices, while the average wage-earner has essentially zero power to create non-cartel alternatives or influence central-state/central bank support of rapacious, parasitic cartels.

The "consumer" is supposed to have power, but that power only exists in an environment that enables level playing fields and transparent competition. Cartels buy political influence so the central state protects their pricing power and funds their rentier skims.

Strip away the centralized power that protects and funds cartels, and prices would plummet. I explain how this would work in higher education in my book The Nearly Free University and the Emerging Economy: The Revolution in Higher Education. The same dynamics would radically transform the cost structure of housing, healthcare, defense and everything else currently controlled by monopolies or cartels.

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hugovanderbubble's picture

Sell Biotechs ( Long ZBIO)

Fizzy Head's picture

"Strip away the centralized power that protects and funds" the paper metals market manipualations would also

help the avreage folk hedge against inflation. The whole damn economy is a fraud at this point.

MalteseFalcon's picture

The healthcare "system" is loaded with economic bottlenecks, monopolies, "public/private partnerships" and other parasitic activities which have been growing since WWII.

Reforming the system nearly impossible, because these "constituencies" lobby very well for their "honey pots".

Until these "fiefdoms" are destroyed, nothing is going to change.

AVmaster's picture

This shit is too complicated for dems/sjws/leftards etc etc...

 

You need to spell it out with crayons or those letter blocks...

Pretty colors!

^.^

gatorengineer's picture

Consider if you will that 2k a week puts you in the 10th percentile of incomes.  2k a week aint squat...  50% in taxes and insurance....  

Offthebeach's picture

We've got cop & teacher couples pulling $200k/yr + bennies.  A Boston cop just pulled $400k, a Statey $300k two years in a row.  If you retire from gov with one trough pension, you're a dolt.  Single moms pull in $60k/yr comp plus cash waitresses/houseclean/pipeclean.  1975 buildng permit, 30 minutes $50.  Today, a year or two, $10-20- $100k........and on and on....

Sh3epdog's picture

Right... lets just have "different generations"  just blame each other for all the woes in the world. 

Additionally while it is true that there are broad events and climates that to a degree shape and mold each age group differently - thus allowing for the possibility of making perhaps minor distinctions between age groups, where you want to actually draw the line and define generations is a completely arbitrary decision. There's always more people being born, about 360,000 per day currently. When different generations blame each other for everything wrong in the world it's like two people arguing whether a stick is 1 inch long or rather 2.54 centimeters.

By the way you just got roasted by a snowflake, now that's cold xD

Offthebeach's picture

Yeah, I suppose a fatherless, 10 year old German kid in 1945, or a post Pol Pot orphan, should just say what the heck.

 

 

Krungle's picture

Government is the problem insofar as it can be bought by cartels and other interests. 

flaminratzazz's picture

The International Bankers own most of the "free" world. Those not owned gets bombed or their government leaders overthrown.

Killdo's picture

the biggest problems are the psychopaths in high places. 

They don't (and cannot even if they wnated) care about anyone. Like $hitlery - all they know is games of power and status. 

Until we introduce some kind of PSYCHOPATH TEST as a condition for working in high positions in government - nothing will change. 

Psychos have learned to act well (even Hilary took acting lessons to look more smiling and normal despite her natural psychopathy). They are mostly charming - they know how to pretend they are just one of us and even how to elicit sympathy ("Please don't tell!...")

And through the Hollywood and other BS media they normalize the submissive fashion victimhood they need to enforce their fraud. 

Psychopaths are the biggest problem we have to day - and the fact that Political Correctness BS has been used to make it appear rude to even discuss psychopaths (or religion and other totalitarian structures at the root fo the problem). It works particularly well with sheeple with no confidence (or understanding of the world) in environments where everyone is scared of everything (fear makes it harder to think clearly  - blood flows out of your brain into your limbs to make it easier to run or fight). Totalitarians/marketeers know that  - that's why they promote and glorify fear. And religion propmtes and glorifies slavery and submission - a perfect environmen for psychopaths /totalitarians

Evil Peanut's picture

Actually the problem is entirely the Military Industrial complex and has been for the last century.

The military and related agencies receive more funding each year than any others.

Imagine what could have been acomplished in America if all that money had been spent at home on the very people who provided it and need it most... Already the next few unborn future generations owe the bean counters to pay for the wars of the past and present.

LowerSlowerDelaware_LSD's picture

"The military and related agencies receive more funding each year than any others."

Actually you are completely clueless as well as ignorant. I'm not defending the size of the military but the FACT is that all military spending is less than 20% of the total federal budget. It is MUCH smaller than that for state/local governments. WEALTH TRANSFERS to non-producers is roughly 66% of the federal budget. It makes up enormous portions of state and local government budgets.

The Welfare Industrial Complex is over THREE times LARGER than the MIC and has MUCH more control and power over the government. Look it up.

LowerSlowerDelaware_LSD's picture

Excactly.  Jesse Jackson cartel.  Al Sharpton cartel. And on, and on...

Sh3epdog's picture

The Military Industrial Complex is certainly one of the major issues, but it is by far not the only major and wasteful one.

JTimchenko's picture

Yes. It is all about cartels. From the bankster "Synod" a/k/a "banking cartel", to the Big Pharma cartel, to the cable TV/Internet cartel, the US government seems to be run for the benefit of a few privileged oligarchies. It has got to stop. I do hope Trump follows through on his promise to allow foreign drugs from places like Canada into the USA.

CJgipper's picture

That's about trademark and patents and should not be destroyed.  What SHOULD be done is to get the FDA moving to approve generics.  They are HORRIBLY slow and expensive.  If you removed the FDA from the generics market, it would solve all of the drug cost problems.

 

The other issue is price visibility.  A simple rule requiring posting hourly rates and total fees for common procedures would give consumers what they need to actually price compare.

Panic Mode's picture

Yes, the blood sucking drug companies have been jerking with the prices.

But are you telling me the healthcare cost has nothing to do demographics?? Like we are living longer and less younger people at work.

RathdrumGal's picture

Well, it DOES make one wonder when the same drug is available for a much cheaper price at the feed store, does it not?

Perhaps you can explain why a sterile antibiotic injection is more expensive to produce for a human than an animal -- same glass vial, same drug, same label except the the feedstore one is marked "For Veterinary Use Only".  Wouldn't the extra ink cost MORE?

divingengineer's picture

That's where preppers get most of their med supplies. 

Mr.BlingBling's picture

Of course you're correct about the input costs.  But a big part would be the higher litigation costs associated with human patients.

Krungle's picture

Actually average life expectancy in the US is declining, so we're not living longer. But yes, it certainly doesn't help that older Americans utilizes more medication, provider visits, and other resources. But that is a feature, not a bug, of the system. Fed and state spending on health care is something like $1.5 trillion now; I don't know what out of pocket is for all the other sectors of the health care industry, but out-of-pocket expenses are >$300 billion, the diet industry is somewhere around $60 billion, supplement industry is another $60 billion, 25% of commercial time is now dedicated to pharmaceuticals...at the end of the day what America does is being sick. People are worth more sick than they are healthy now. 

Offthebeach's picture

Did you get your prescription yet for dry eyes and tingle foot syndrome?

Tired=drug

Restless=drug

Bored=drug

Nervous =drug

.....and so on

Jason T's picture

There is something about Charles Hugh Smith .. i read the headline and I just know it's his article.

Snippy21's picture

Its all a fucking racket.

Shift For Brains's picture

I think it could be endlessly elaborated upon but yes, in the final analysis that is EXACTLY what is running America. Non-stop rackets at all levels, intertwined to protect and serve each others' interests so that their own slice is sacrosanct.

The idea we can do nothing is very limited vision, IMHO. No one makes us use a money center bank instead of a local credit union. No one makes us eat food with an ingredient list longer than the Epic of Gilgamesh. No one forces us to have 500 channels of what can only be described as televised retardation. No one forces us to choose Big Pharma rather than nutritious food and healthy lifestyles. No one but us.

Each choice we make is not just an economic, or medical or entertainment choice. It is fundamentally POLITICAL in the we, the polis (community) shape what is happening through out choices, to a large extent.

Everyone single one of us can be lone wolves in our daily choices. If you want these sons of bitches to bleed out of their eyeballs, withhold your money, your support, your CHOICE of them. Tens of millions of people really mad enough to not take it anymore would shake the System to the core.

Get aboard and do your part. It's not going to happen until we do.

Killdo's picture

what you say makes perfect sense

brushhog's picture

One reason why cost of living is so high is because nobody knows how to do anything for themselves anymore and everybody is dependent on these monopolized cartels to wipe their asses for them.

Philo Beddoe's picture

Like the good ole days when my Grandpappy did some open heart surgery on himself while living his tent that Grandma made. 

LyLo's picture

lol  I hear you, and totally get the point... But none of my friends can make a loaf of bread even with a recipe, something as simple as painting a few rooms seems to necessitate calling a contractor, and most still can't drive a nail.  Google killed maps, so I have to explain how to read physical maps to adults regularly at this point.  These are things that most adults were assumed to have known only 20 years ago, but my generation missed out on pretty much all practical education.

We're talking basic human skills, here.

OverTheHedge's picture

But there are so many skills that modern humans CAN do, which are so much more fun!

400 years ago, everyone had the skills to live on their own - if only subsistence farming. Now, almost nobody in the western world could manage - all that vital knowledge is gone. However, the average puritan settler probably wouldn't survive too well in the modern age - people get offended when you burn them to death for being a witch, just because they use Tinder.

The only issue is if we suddenly lurch backwards 500 years technologically, because then everybody is dead, and the Amazonian tribesmen will have to repopulate the world for us, if they can be bothered. Frankly, I don't know if they would see it as being worth the effort.

general ambivalent's picture

But would any of those people be missed?

general ambivalent's picture

Just grab the GPS and drive around in circles when it tells you to.

political_proxy's picture

We The People are nothing more than hosts for the Gov authorized parasites to leach from.

Nostradumbass's picture

How can it be that our friends in Wales spend about 45% less on basic food items than we do here in the 'world's breadbasket'? .

Where is the additional cost coming from and going to?

I'm no fan of a minimum wage but in a corrupt corporate system, perhaps we need a minimum wage of say $17/hr and permamently tie it to cost increases.

chunga's picture

Holy mackeral are you crazy? They're saying they're paying too much already. The wealth is concentrated at the bottom, silly. This must stop!

shovelhead's picture

They have to keep the prices low because the Welsh can't count very high.

A. Boaty's picture

But,...but didn't the Fed say they have inflation under control?

chunga's picture

It's funny how some fundamentals are fundamentalier than others. My favorite economic axiom is how oil price effects everything. It used to be whenever any rumor of anything came out of the middle east consumer prices shot up instantly, just because.

Cold weather in the winter and the summer driving season always manages to sneak up on consumer prices too. Markets never see that coming, year after year.

Oil has been down for a while and whoops, prices still go up.

 

rejected's picture

Simple Charlie...

Americans doing what Americans do best...Screw other Americans!

It's an American eat American world out there....

flaminratzazz's picture

If you have some serious condition and need decent health care gtfo of this country. (usa)