Date post: | 28-Dec-2015 |
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Akerlof - “Market for Akerlof - “Market for Lemons”Lemons”
Health → category of credence goods
Assymetric information is a eo ipso problem in the health segment
Supply: No signaling assumption
Demand: Judging quality by market statistics
Formally: Q=D(p, µ), S=S(p), µ=µ(p)
Equilibrium pre-condition → S(p)=D(p, µ(p))
Good quality is crowded out sequently
Thought ExperimentThought Experiment
Hypothesis: Obama care does not ameliorate existing violation of 2nd principle
Approach too less egalitarian and flawed for both sides of market participants
I. Prohibition to summon pre-existing medicial conditions for dumbing
II. Public-private model → not universal health care might not maximize Rawls´ social welfare function
ConclusionConclusion
Reject Obama care due to efficiency shortcomings & violation against the theory of justice
Economic FactsEconomic Facts
In 2011, health care premiums increased by 9%
Estimated increase for 2012: 12%
Workers have the largest burden
Workers earnings only increased by 4%
More FactsMore Facts
Tax credits for businesses simply don‘t work
90% of firms did not apply
Only 7% applied successfully
70% of the firms can‘t easily find affordable health care
Impact on AS/ADImpact on AS/AD
Higher work costs put downward pressure on investments
Aggregated demand is directly affected, decreases
New equilibrium for the economy at lower price level and lower GDP
PoliticsPolitics
Democratic Capitalism Individuals should be free to pursue
their interest Private ownership of property Totally free market – no government
interventions
ConservatismConservatism
Conservatism is characteristic of Resistance to change Ambivalence regarding governmental activity
to improve human conditions Individual freedom Anti egalitarianism – distrust in human nature
Obama CareObama Care
Does not improve people’s condition
Health insurance should be voluntary
Obama Care will destroy both the free market and individual freedom
Federal government has no business regulating health
Tax increases are unaffordable
Obama CareObama Care
Tarnishes free market Public Plan Government Run Health
Encroaches on State Sovereignty Tenth Amendment ”The powers not delegated to the United
States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”