Paying More for Worse Outcomes

One particular frustration for me is products where we pay more for something worse. There are some who like to pretend that people, especially in the aggregate, behave entirely rationally. Plenty of economists and corporate consultants worship efficiency, the best product for the lowest cost. Usually this is an excuse to fire people. But counterexamples are everywhere.

The one in my daily life that always baffles me is razors. Cartridge razors are a bad product and a bad business model. Each cartridge seems designed to get clogged up, necessitating a new one, and it incorporates a bunch of unnecessary plastic so that the manufacturer can have something to patent, forcing you to use only that manufacturer's cartridges with the package you initially bought.

Double-edge razors are better, cheaper, and more environmentally friendly than cartridge razors. You may spend a few extra dollars on the handle (ask me for my recommendation!) initially, but replacement blades are cheap, usually less than 25 cents compared with several dollars for a cartridge. Different companies all make nearly identical blades that can be used in any handle, so it's actually a competitive market. Plus, because they're easier to clean, each blade lasts longer. When a blade dulls, there's no plastic, just one slim piece of steel metal, easily recycled. There are even devices to rehone them if you really want. I don't nick myself any more often with a double-edge than with a cartridge razor, but I guess it's slightly more dangerous when you are changing blades, but I've never cut myself doing that. I truly don't know why we've accepted a worse and more expensive product as the default, other than marketing.

It's not a one-off situation either. This business model, named for Gillette, is everywhere now, another annoying culprit being printer manufacturers, who go to extraordinary lengths to force you to use their ink. They put all sorts of fancy tech in their printers devoted entirely to making other ink not work, and they try to get legislators to make it illegal to circumvent those protections. Plenty of "disruptive" companies are actually just trying to get in on the Gillette grift.

We pay more for worse safety net policies too.

Every other developed country has some version of universal healthcare, and they collectively have better outcomes than the US does, and they pay a lot less for those outcomes. This isn't esoteric knowledge either. Every form of insurance generally benefits from being universal, because you eliminate the problem of adverse selection. It's why we require all car-owners to have liability insurance. It's insurance 101. Not to mention how our existing medical insurors are rent-seeking, profit-maximizing organizations who go to great lengths to pay out as little in claims as possible. See, e.g., https://www.propublica.org/article/cigna-pxdx-medical-health-insurance-rejection-claims

Every municipality that experiments with just providing housing for the homeless population finds that the cost of doing so is more than paid for by savings from reduced need for other social services and increased tax revenue from their ability to find work when these folks have stable housing. But instead we choose to spend more and make public spaces less inviting by the use of hostile architecture, making everyone's experience worse.

I could go on. These failures to behave "efficiently," something to which proponents of austerity like to claim they're committed, demonstrate what is actually an ideologically extreme commitment to misery for the marginalized.

Any financial advisor who's truly committed to the well-being of their clients and their community must advocate for universal safety net policies. Universal health coverage would protect clients from financial catastrophe and improve the health of all communities far more cheaply than existing systems. It's a brilliant investment.

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The postings on this site are my own and don't necessarily represent Belpointe's positions, strategies or opinions.