Friday, March 31, 2017

The Four Sub-Economies Inside Our Overall Economy

  To learn how to best run an economy, you do well to study its parts. If you would reform one large segment of the economy -- I speak of the health care industry -- you would do well to observe the forces at play.
   I cannot think of another industry that is so much a proxy economy. Instead of the buyer reaching into his own pocket and paying right on the spot, the money is dispensed by a third party (a proxy), it usually being either insurance or government. And, note this: The third party's pockets are hugely deeper than those of the person receiving the help.
   We could divide our economy into at least four sub sectors, dividing them by who initially pays the bill. First, there are those who have always been around, those who pull the money out of their own pockets.
  Second, there are those who pay gratis on behalf of the person receiving the product. They require no reimbursement, paying at a loss to themselves. In the health-care industry, this includes charity organizations and, largely, government programs such as Medicaid and Medicare. Insurance also often fits into this category, as sometimes the money paid out is beyond what the premiums ever cover.
   Third, there are those who pay the initial bill while, though, those receiving the products eventually reimburses them. Lenders.
   Forth, there are those who pay for items they have obligation to provide to others. Landlords paying for electric bills, for example. The need to place this in a separate category comes from the recognition that it is the renter running up the bill and thus dictating how large it will be while it is the landlord who must pay out. Thus, the person paying the bill does not have full control as to how large the bill becomes.
   Thus, our overall economy is made up of proxy sub sector, a charity sub sector, a lender sub sector, and -- what shall we call the last one? -- a landlord sub sector.

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