Wednesday, July 1, 2009

Theoretical example and alternative consideration

So, I got to thinking about how economists limit their ability to rationally cope with challenges (something that may present as problematic given the current economic situation) and thought of the Pareto possibilities curve. The Pareto possibilies curve is supposed to indicate a maximum (Pareto) efficiency division between two economic units, we'll call them people, that shows every possible allocation combination; with the main assumption being that when efficiency has been reached, you cannot allocate any more to one person without taking that amount from the other.

Now, let us consider a situation where the above assumptions create unnecessary limits.
Healthcare is a good topic presently under scrutiny from the public that we could base an analysis on. Many healthcare providers would argue that they are operating at maximum capacity and thus could not provide care to any additional patients without reducing care to existing patients. If they were opearting at Pareto Efficiency, this maybe the case, however if a provider was to allocate greater resources to diagnostic and preventative care they could essentially serve more patients in the long run without reducing quality of care to existing patients. Through elimination of many of the most costly and time consuming proceedures efficiency could be increased. Unfortunately the present healthcare system is not efficient, it's not even operating in a capitalist market, the present system is much more like a centrally-planned ogilopoly, which could also be defined as a cartel- an economic system that is actually illegal in the U.S.

Hummm,
I wonder why providers are not eager to replace specialized and extremely costly proceedures with less expensive and less invasive diagnostic and preventative care measures? Maybe because that's not profitable. OK, it suddenly becomes clear, economists are not interested in material efficiency their interested in marginal profits. Well here's the first piece of evidence that this "science" in its present form is not serving humanity, but rather serving those who look to maximize fiscal profits.

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