Three Reasons We're Poor: Housing, Healthcare, Competition

Americans aren't poor because they don't work hard enough. They're poor because three industries have been legally allowed to rob them.

If you've ever wondered why you can't afford things your parents took for granted—a house, healthcare, a comfortable middle-class life—the answer isn't complicated.

Three industries have captured the American economy. They've used regulation, zoning, and political power to extract wealth from everyone else. And they've done it so thoroughly that most people don't even realize they're being robbed.

Let's break down the heist.

Reason #1: Housing

Housing is the biggest wealth transfer in American history—and it's ongoing.

In 1967, the median home cost 3.2 times the median household income. Today, it costs 6 times the median income. That's not inflation. That's not "demand." That's policy.

The Mechanism

Starting in the 1970s, cities and states made it progressively harder to build housing:

• Single-family zoning: Made it illegal to build apartments in most residential areas
• Downzoning: Reduced allowed density in areas that already had it
• Environmental review: Added years to approval processes via laws like CEQA and NEPA
• Community involvement: Gave existing residents veto power over new construction
• Prop 13: Locked in low property taxes for existing owners while raising the bar for new buyers

The result? Housing supply couldn't keep up with population growth. Prices exploded. And the people who owned homes before the changes got rich—at the expense of everyone who came after.

The Numbers

Home prices have grown nearly twice as fast as incomes. Every dollar of that gap is a dollar transferred from workers to landowners, from young to old, from renters to owners.

Reason #2: Healthcare

The US spends 18% of GDP on healthcare—about $15,500 per person per year. Other wealthy countries spend around 12% and get better outcomes.

That 6 percentage point gap is roughly $1.7 trillion per year. Money that could be wages, investments, consumer spending—instead, it's absorbed by a healthcare system that produces worse results than its peers.

Where the Money Goes

American healthcare doesn't cost more because Americans are sicker or use more services. It costs more because prices are higher:

• Administrative overhead: 7% of healthcare spending goes to administration—billing, insurance paperwork, regulatory compliance. That's $370+ billion annually.
• Hospital consolidation: Local hospital monopolies can charge whatever they want. There's no competition.
• Physician cartels: The AMA limits medical school seats, artificially restricting physician supply.
• Pharma pricing: The US is the only developed country that doesn't negotiate drug prices.
• Regulatory capture: The FDA, hospital associations, and medical boards are run by the industries they regulate.

The Tax You Don't See

Most Americans don't realize how much healthcare costs them because it's hidden:

• Your employer pays for "benefits"—but that's money that would otherwise be your wage
• Medicare and Medicaid come from taxes you pay
• High deductibles and copays hit when you actually need care

Add it all up and the average American family pays roughly $25,000-30,000 per year for healthcare through some combination of premiums, taxes, and out-of-pocket costs. In other countries, it's half that.

That $12,000-15,000 difference is a hidden tax—extracted by a healthcare system that has captured its regulators and eliminated competition.

Reason #3: Lack of Competition

Since the 1980s, American industries have consolidated dramatically. Competition has declined. And without competition, companies can raise prices, suppress wages, and extract wealth from everyone else.

The Consolidation Wave

Some numbers that should alarm you:

• 75% of US industries saw increased concentration since the 1980s
• Corporate profits grew from 5% to 15% of GDP since 1980—tripled
• Public companies dropped from 7,887 in 2000 to 4,947 in 2021
• Health insurance: top 5 firms now hold 99.4% of revenue (up from 71.9% in 2000)
• Internet retail: top firms hold 94.2% of the market

How Consolidation Hurts You

Higher prices: Without competition, companies can raise prices without losing customers. Those "markups" are money taken from you and given to shareholders.

Lower wages: When there are fewer employers, workers have less bargaining power. Wages stagnate even as productivity rises.

Less innovation: Dominant companies have less incentive to innovate. They can buy or crush competitors instead of competing.

Political capture: Concentrated industries spend more on lobbying. They write the regulations that protect them from competition.

The Antitrust Collapse

How did this happen? The government stopped enforcing antitrust law.

In 1978, the DOJ reviewed 13.6% of mergers. By 2018, that dropped to 2.4%. Companies learned they could merge with impunity. So they did.

The Chicago School of economics convinced policymakers that consolidation was fine as long as consumer prices didn't immediately spike. This ignored the long-term effects: reduced competition, higher barriers to entry, regulatory capture, and the slow extraction of wealth from workers and consumers.

The Combined Effect

Housing, healthcare, and consolidation don't operate in isolation. They reinforce each other:

• Hospital consolidation → higher healthcare costs → harder to afford housing
• Housing scarcity → workers can't move to better jobs → lower wages
• Lower wages → less consumer power → companies can charge more
• Higher profits → more lobbying → regulations that protect incumbents

It's a doom loop. Each extraction makes the others worse. And the people doing the extracting use their profits to buy political protection from reform.

Why This Persists

If these problems are so obvious, why don't we fix them?

The beneficiaries vote. Homeowners vote against new housing. Healthcare workers vote against reforms that might reduce their income. Shareholders vote for politicians who protect their industries.

The victims are dispersed. Everyone pays a little more for housing, healthcare, and consumer goods. No single person loses enough to organize around. The costs are diffuse; the benefits are concentrated.

The system is self-protecting. Industries that extract wealth have money to spend on lobbying, campaign contributions, and regulatory capture. They use that money to prevent reform.

The problems are "normal." If you've never known affordable housing or healthcare, you don't know what you're missing. The extraction has been gradual enough that each generation accepts slightly worse conditions as normal.

What Would Fix This

The solutions aren't mysterious. They're politically difficult, but they're known:

Housing:

• Eliminate single-family zoning (some states are doing this)
• Streamline environmental review for housing
• Override local vetoes of state-approved housing
• Tax land values instead of improvements

Healthcare:

• Allow Medicare to negotiate drug prices (recently started)
• Break up hospital monopolies
• Increase medical school capacity
• Simplify billing and reduce administrative overhead
• Allow more competition from nurse practitioners, pharmacists, etc.

Competition:

• Enforce antitrust law aggressively
• Block mergers that reduce competition
• Break up existing monopolies in tech, healthcare, and finance
• Reduce regulatory barriers to entry

None of this is radical. It's basically "return to the policies that made America prosperous in the first place."

The Choice

We're not poor because resources are scarce. We're not poor because we don't work hard. We're poor because three sectors of the economy have been legally allowed to extract our wealth.

Housing policy made homes unaffordable. Healthcare policy made medicine unaffordable. Competition policy allowed corporations to consolidate and raise prices.

These are policy choices. They can be changed. The question is whether we'll summon the political will to change them—or keep pretending that unaffordability is somehow natural and inevitable.