America: where luxuries are cheap and necessities expensive

The phrase has appeared in several articles recently, most recently, this AP article which recently appeared in the Albuquerque Journal. The complaint behind the article is that “luxuries” like Iphones, cars, televisions, and computers are dropping in price while everyday expenses like health care and education are going up. The author seems oblivious, but quotes former CBO director Douglas Holtz-Eakin who notes that “colleges and hospitals — unlike automakers — rarely compete on price.”

That is a nice way of saying that education and health care are government-dominated while consumer products are generally produced in something approaching a free market. The image below illustrates the trend nicely.

Rather than the old line that “X is too important to be left to the private sector,” it would seem that essentials like education and health care are too important for the government to continue to play such a large (and increasing) role in their provision.