Dead Wrong® with Johan Norberg – Rising Costs of Health and Education

The cost of goods is collapsing,
but the cost of health care and education has increased more
than 4-fold since the 1950s. Greedy companies, or
bureaucracy, or regulation? I don’t know, but
it’s a massive failure. Nope, that’s dead wrong. Economists Erik Helland and Alex
Tabarrok investigated the issue, and they declare the
usual suspects innocent. Market concentration can’t
explain it and administrative costs have not increased. Yes, we have more
regulation today, but that increased costs in all sectors. And neither can the
increasing quality explain skyrocketing costs. In the end, it comes down to a
single thing: Rising costs of labour, of hiring doctors,
nurses, and teachers. They work in labour-intense
sectors, where it’s more difficult to boost efficiency
than in manufacturing. But wages have to rise there as
well, or no one would want to become a doctor when wages are
surging for software developers, and automotive engineers. This is called Baumol’s
disease: In a dynamic economy we constantly have to pay more
to get people to stay in low productivity sectors,
like schools and orchestras. And as Helland and
Tabarrok conclude, it’s not really a disease. It’s a blessing in disguise. It’s a sign that we have
managed to produce more with less in other sectors. If we want to do the same thing
in health care and education, we must stop looking for
scapegoats, and start looking for high productivity
measures like medical AI and online education systems. Wait! Don’t forget to subscribe to our channel here. And watch these other videos. And check back next Wednesday for a new Dead Wrong from Free To Choose Network.


  1. Hmmm so much to say. Education cost in the US are going up because of the government student load scheme not because of staff costs. The cost of health care in the US is going up because of supply side restrictions on new doctors and hospitals (plus the US odd tax treatment of employer based health insurance). But the most obvious issue with this video is it doesn't mention the other real big issue – HOUSING

  2. I have to say it seems something was overlooked here. I think that the artificial choke on the supply of medical professionals and medical facilities MUST contribute to the rising costs. I'd be open to understanding why that's not the case, but I haven't read the study myself. Could you consider posting sources?

    The patterns of government intervention, price increase, in both education and medicine are just overwhelming to me. I've study the charts from primary sources myself and I've gone and looked up what policies were implemented just prior to changes in trajectory and it would take some compelling data to change my mind about what I personally clocked the hours discovering.

  3. Very interesting. I'd heard of this recently, and there is a certain sense to it. I suspect, however, that less labor-intensive approaches to healthcare and education are retarded by lobbying from the medical industry and teachers' unions.

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