Competition is expensive
- april 2024
there is is this economics idea that competition is good for consumers as it lowers prices and through innovation deliver better products.
this seems to work out ok, although i haven't seen any clear evidence for the theory.
but there are definitely cases where there is clear evidence that it competition is not needed.
take healthcare insurance.
the argument for innovation here is a scam. insurance has no need to innovate. they have figured everything out. when insurance companies compete with one another they don't spend on research to win, but on marketing and sales, executive pay and bribery and lobbyists. All of this is expensive with 0 benefits to the end user.
this can be seen in the US where they have overriced insurance that coverss very little and only the richest highest earning can afford to become seriously ill.
Germany has gone in a bit of a different direction. With it's drive to be a socialist market economy they decided to have a system that is controlled by the government but run by companies in competition with one another. all for the sake of them being more efficient companies. especially more efficient than than the state could be.
sounds good in theory, but in practice it turns out to be a bit of a scam.
if you are employee or volunteer in public healt insurance sche 16% of you income goes to insurance company
compare to austria where it is only 8% for pretty much equivalent services in same quality.
how can that be. pay twice the price and get the same.
one even better is israel. everyone just pays 5% of income. one government proovider. no income gaps.
some industries don't need competition to be good and cheap. and even a inefficient bearocracy is cheaper than high paid ceo, ad campaigns and lobbyists. and not just in monetary terms it's also better for society to have less lobbyists and ad campaigns that try to extract value for no clear benefit.
another problem with competition us also that a lot of focus is put on the winning company. but the other dozen of companies will also not lose bad enough to leave the market. but the people there will be miserable for no good reason. other than haven't spend enough on marketing bribed the right politicians etc.
Competition is Expensive
There is this economics idea that competition is good for consumers as it lowers prices and, through innovation, delivers better products. This seems to work out okay in certain cases, although I haven't seen any clear evidence that this theory holds up universally. But there are definitely cases where it’s clear that competition is not needed, and healthcare insurance is one of them.
The argument for innovation in healthcare insurance is a scam. Insurance has no need to innovate—everything that needs to be figured out has already been figured out. When insurance companies compete with one another, they don’t spend money on research or improving services to win. Instead, they pour money into marketing, sales, executive pay, bribery, and lobbying. All of this is incredibly expensive and delivers zero benefits to the end user.
This is painfully obvious in the United States, where health insurance is overpriced, covers very little, and leaves only the wealthiest able to afford to become seriously ill without risking financial ruin.
Germany has taken a different approach. As part of its drive to be a socialist market economy, it decided on a system where healthcare is controlled by the government but run by companies competing with one another—ostensibly to encourage efficiency. The idea is that private companies would be more efficient than the state in managing healthcare. Sounds good in theory, but in practice, it turns out to be another scam.
If you’re an employee or even a volunteer in Germany’s public health insurance system, you’ll find 16% of your income going to an insurance company. Compare that to Austria, where only 8% of income is spent on insurance, yet people enjoy essentially the same quality and scope of services.
How can that be? Twice the price for the same outcome. And then there’s Israel. Israel has gone even further. Everyone pays just 5% of their income into a single, government-run healthcare provider. No gaps in coverage, no lobbying wars, no massive marketing budgets. Just healthcare, delivered simply and effectively. Some industries don’t need competition to be good or affordable. Even an inefficient bureaucracy is cheaper than an industry weighed down by high-paid CEOs, aggressive ad campaigns, and armies of lobbyists. It’s not just about saving money either. A society with fewer lobbyists and fewer ad campaigns designed to manipulate people for profit is a better society overall.
Another problem with competition is the collateral damage it creates. While everyone focuses on the "winning" company, we ignore the dozen others that don’t win but still linger in the market. These companies scrape by, leaving employees miserable and demoralized—not because they lack talent or effort but because they didn’t spend enough on marketing, failed to bribe the right politicians, or got unlucky in the rat race.