Some of the failings of capitalism

The poor health care we have in this country is a prime example of how health care should have never been a free market item. It simply doesn't work. It may work in very isolated instances, but overall, the rest of the world has seen its failings and we are late in coming to the party.

It struck me recently that another great example of this "competition failure" is the cell phone industry. If you believe that providing reasonably good cell phone service to urban areas and interstate corridors is the purpose of cell phones, then by golly, we have a good system.

Here are some problems:

1. There is no interoperability between many of the cell phone providers. You have to buy a phone that will work only on a particular network. If you want to switch providers out of competitive dissatisfaction, you have to buy a new phone, so this system discourages competitive pressure.

2. Providers provide only service to the biggest, most densely packed customer locations. It means putting up independent towers for each provider or letting them duke it out over how to share an existing tower. I'm not sure how this actually works, but I do know that coverage is VERY different for the many different providers.

3. Customers in low-population areas are simply out of luck. If you travel away from your urban location, it is a crap shoot as to whether you can get a connection. You can have a breakdown on an isolated rural road and be out of luck.

4. Cell phone quality is simply hit or miss. If a network is overloaded, call quality and call reliability drops dramatically. The fact that you can reliably make a call at a low-traffic time doesn't help when you actually need to make a call at a high traffic time. Requirements for excess capacity is a government regulation function that is simply missing in this competitive environment.

It is looking like Verizon is taking over in the US. They have the largest network since the merger with Alltel. They now have competitive prices, but don't hold your breath when they approach monopolistic power. They'll behave like Microsoft, who charges a ton of money for their operating system since it is the only game in town. Once Verizon has the only game in town, they'll start acting like Pfizer since you won't have a choice. How would you like paying $10 a pill when it costs them $.05 to make?

I read a study some time ago talking about deregulation of the airline industry. The author points out that the sum total of costs to make a trip, adjusted for inflation, are now about the same as when regulated. This is because business travelers pay an outrageous fee to buy a ticket a day or two before the flight as opposed to 2 weeks before the flight. It's the same flight with the same costs, but the price differential can be staggering. The airlines know that businesses have to make spur of the moment trips and they take advantage. It is gamesmanship with money and pricing policies, not actually a good return for customers.

In addition, regulated flights once called for more non-stops. The idea was to get people more places faster. Now, flights are to switching centers like Atlanta where you change planes for the final leg of your flight. Airlines found that approach was a cheaper way to operate and the impact on customer arrival times meant nothing. After all, competition in this case made things worse for the consumer.

The US, in addition to having poor health care, has poor broadband internet service compared to other nations. I measured a download speed in Canada recently at 8MBytes/Sec, a speed unheard of here. We have cell phones that connect in fewer places than other countries. We are behind technologically in so many ways because we do it our way. In many ways, we do it the worst possible way....all in the name of captitalism and the ills it brings with it in many arenas.