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Why Life Is SO.O.O.O Expensive!
Published on June 24, 2004 By Phil Osborn In Politics
I think if was back in the late '60's that the Reader's Digest published a little economic analysis showing what percentage of the costs of everyday items was taken up by taxes, tariffs, sudsidies, etc., as opposed to the full and complete costs of manufacturing, marketing and delivery to the store shelf. At that time, a loaf of premium bread would typically be on sale at the supermarket for $.25, or 4 for a dollar, which was about half or so of the typical retail price.

According to the article from Reader's Digest, the real costs from farm to hand was about 2 or 3 cents. I believe the article went on to say that this was a fairly typical ratio, although farming subsidies kicked it up a bit higher than most products. So, figure that most products would conservatively cost 15~50% of what they actually do, if you could eliminate all that thievery. But, what about the poor who depend upon state assistance? Where would the money come from if we eliminated the taxes, etc.?

So? With grocery prices cut by more than half, how many people would still be unable to afford food?

And then there's housing. How much can that cost be cut? In the late '70's, when a typical house around here - the OC - could be built for about $75,000, I asked that question of several contractors. Their answers averaged around the figure of $15,000, if you simply took out all the unnecessary permit paperwork and associated infuriating endless delays, and the silly rules requiring licencies to do all the actual critical plumbing, electrical, etc., when you could get the same level of quality just by having them inspect and sign-off, and the restrictive building codes that disallowed using material that was just as good as what the code required, but much cheaper, or innovative architectural designs, etc.

So, figure $15,000, plus the cost of the land, the power, sewerage hookups, etc. Now, figure in the extra costs for the materials, using that Reader's Digest example. Even if it was only 50%, now we're down to something more like $10~12,000, right?

So, how many people would not be able to afford decent housing at that level?

Then there's transport. I drove a Renault R8 in the late '70's that averaged about 40mpg (and cornered like a bat on wheels), which is about the same figure as my 1956 English Ford Anglia that I drove from 1970-1972. They were decent, reliable cars, both of them, and millions of people were happy with that level of technology. Updated to modern technology, a similar cheap gas/electric hybrid would be affordable by almost everyone - especially figuring in that 50% discount from above.

Or, consider that we used to have good universal mass transit in the L.A./OC area, but (and if you saw "Who Killed Roger Rabbit," you know about this already) a cartel and conspiracy (proven in court after the fact) of the gas, oil and auto companies went around the U.S. bribing officials to sell them every piece of mass transit they could grab - such as the Red Car system here - and killed them permanently by putting up buildings on critical right-of-way paths. See "Gangs of America" for the full details and court case references on this.

The same kind of overcharges apply to just about everything. Land prices climb endlessly, even though it only takes one flight out of OC to see immediately that the vast majority of land, even in this real-estate hothouse, is sitting completely idle. But real-estate people have their lobbies and have every incentive to restrict supply via zoning and construction codes and a host of other ploys that all result in you and me paying 5 or 10 times what should be the cost of land.

Or, take medicine (Oh, wait! That wasn't intended to be medical advice...), er, so to speak. We have one of the most expensive medical systems in the world, but not necessarily the best. More and more people are simply being priced out of the medical market, while, at the same time, a quick trip accross the border into Mexico reveals a system that is not really that far behind the U.S. - and not at all in the better hospitals - yet costs a small fraction for the same procedures done here in the U.S. Could it be that having a legal monopoly on medical practice is a big part of that? In Mexico, the pharmacists prescibe medicine, not just the doctors. How many simple medical matters could just as easilly have been handled by a nurse?

Or, legal advice. Remember "Ask Me"? Remember that 14 year old kid who was getting all the legal advice business - taking it from the attorneys? And he was GOOD! Meanwhile, the mere threat of a lawsuit is enough to panic the everage person, as, even if the grounds are totally specious, hiring an attorney to point that out could bankrupt you, or at least bit a sizeable chunk out of your earnings. So, who runs the courts? How about attorneys? Who sits in the legislatures? How about attorneys? Who are the only peopl legally allowed to be judges? Guess...

So, the corporate farmers get the subsidies to jack up the food prices, so that then we have to provide food stamps to those who can't afford it, the real-estate interests jack up the price of land and buildings, the doctors lock in their little monopoly to the point that you might as well die as go to the ER, where you will sign over your life earnings (after waiting for 6 hours), and if you make a fuss, expect to find yourself feeding a buncha attorneys.

Are we upset yet?

I could go on - and, if you have read my other pieces, then you know that I probably will...

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