25 July 2010

That's expensive.

I'm trying out a new wheelchair. I've actually tried out a lot of different wheelchairs. People probably think that my new hobby is trying out wheelchairs.

When I first got a new non-hospital type wheelchair to test drive my family and friends were really impressed by how sporty it looked. But by the fifth test model I'm sure they were thinking, "How's that different from the first, second, or fourth one?" Well, when you have to sit in a chair from morning to night, you want the chair to be perfect, because you have to sit, sit, sit, sit. Until I found the chair that stands.

Those in the spinal cord injury world may already know what I'm talking about, but for those of you that don't I'm providing a few links: Levo Standing Wheelchair, Hero Standing Wheelchair, and if you google 'standing wheelchair' you'll see others.

Standing up is not only cool, but it also has a lot of health benefits like stemming muscle loss and improving kidney and bladder function. This time, people didn't look bored with my newest test model. I got a lot of positive comments but the comment that stuck with me most was, "That looks expensive."

"Well, of course it's expensive. It's high tech," I said, "and it makes me stand up." And it is expensive, about 450,000YEN (about 4,500USD) and it does make me stand up, but I wasn't really convinced about my own statement. So since I have a lot of time, I did a little rethinking about this 'high tech' wheelchair.

You've all seen a wheelchair, so let's be realistic; depending on the all the bells and whistles the frame is no more high tech than a bicycle, and you wouldn't pay $4500 for a bicycle. The 'high tech' standing mechanism is a hydraulic lift (which have been around for a few hundred years).

Of course we all know the basic economics answer to this question. One unit is expensive because there is no volume of sales. Answer number one; correct!

Answer number two is more complex. We all know about another supposed theory of prices, the "what-the-market-can-bare" theory, but is $4500 really "what-the-market-can-bare"? In the case of wheelchairs it seems to be "what-the-insurance-providers-will-tolerate". In many cases, private or public insurance companies do help pay the massively high costs for these low-tech machines, so the inflated cost ends up subsidized by the premiums of the non-wheelchair using community.

In cases where a public or private insurance will not help pay the costs of the chair, the "what-the-market-can-bare" price system completely collapses because with a 63% unemployment rate (USA) the non-insured cannot afford the price, making the market smaller and again pushing up the price.

But this blog is about stem cells not wheelchairs. But before I get criticized for changing the focus of this blog, I'd like to first discuss the ACME Cooking Company of France for a really quick economics lesson.

John Q asked ACME to come up with a new gastronomical delicacy. He was so desperate to satisfy his palette that he agreed to not only pay for the costs of any ingredients that the company would need to create the new dish (whether used or not in the final creation) but to pay for the education of all ACME's chefs and other employees. Most importantly, it was John Q gave money to the company so that they could hire and pay for some big name (and smaller name) chefs.

After many years the ACME company had finished the creation and John Q was ready to eat. When he had heard that the new dish was in it's completion stage he purposely began to starve himself so he could truly enjoy this delicacy. Finally, he seated himself at a fine table decked out on his Sunday best. The president of the ACME company would serve the dinner himself on the fanciest china with diamond studded silverware. As the president approached carrying a silver-lidded tray John Q could hardly contain himself.

What came next truly stopped his heart. As the president uncovered the tray and the contents were unveiled to him he saw that the only thing that was being presented was an enormous bill. He knew that he would have to pay something, but having funded the whole project, he felt that he wouldn't have to pay THIS much. He couldn't afford this and when he spoke up to ask about the exorbitant price he was shocked what he heard. 

The ACME president informed John that since it was he himself who took the risk to create this food extravaganza the price was more than fair. 

John retorted, "I paid for this already. It was me who kept you all working and paid in the years before you invented anything." The ACME president now stunned John. He simply left. John was left with an empty stomach and emptier pockets.

Now a really quick poll. How many think that John got ripped off?

Maybe there is no need to go on to stem cell research in today's blog. Don't want to hit anyone over the head.

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