Mark S Bilk wrote:
If you can't afford auto insurance, you're not allowed to drive.
If you can't afford health insurance, you're not allowed to... live?
That is the crux of the matter.
Economics theory treats all good alike. Whether we are buying a new
car, a candy bar, groceries or gas our behavior fits in certain
patterns. That is a reasonable first approximation, but beyond this
approximation, every class of products is different. You can survive
without most consumer goods, and without driving a car. You can cut
back on driving, or carpool. But if you are starving you will pay any
amount of money for food. Most people who are sick will pay any
amount to be cured. You tend to be vulnerable when sick, and not able
to think straight. My friend was so doped up he felt no pain and he
would have agreed to anything at any price. He told me: "they could
have said, 'hey, let's amputate that leg,' and I would said, 'sure,
go ahead.'" His adult daughter rushed to the hospital and started
negotiating the price and turning down services, such as more diagnostic tests.
A generalized economic analysis of cost-benefits also works well for
a wide range of goods and services, but it breaks down completely for
some things, notably scientific research. What price can you assign
to the work of Newton, Faraday, or Fleischmann? What cost per hour
would be fair? A billion dollars perhaps? Since the benefits of a
discovery will last as long as civilization survives, do we owe
Newton a trillion dollars per second for the time it took him to
write "Philosophiae Naturalis Principia Mathematica"? Such things are
beyond economic analysis. You might as well ask what is the monetary
value of language, or fire.
Some captains of industry and corporate CEOs receive hundreds of
millions of dollars in salaries these days. I doubt they are worth
it, but the issue is debatable. That is to say, you could make the
case that they increase the value of the company and the stock with
their management skill. You can assign a monetary value to their
work. But the lifetime contributions of such people is microscopic
compared to the contributions of a scientist or inventor.
- Jed
