Two years ago, I suggested that the U.S. economy is riddled with strangely high costs in key sectors of the economy. Now, more and more people seem to be zeroing in on this problem. On Slate Star Codex, blogger Scott Alexander has a long, excellent rundown of high costs in five areas --- K-12 education, college, health care, infrastructure and housing.
He's right. Americans pay much more for a university education than do people in Europe or East Asia. They pay about twice as much for health care and infrastructure, without any clear difference in quality.
I'd add one more sector: finance. Retirement saving is dominated by managers who charge fees that seem small but end up taking a huge chunk of people's lifetime savings. Real estate agents typically get commissions equal to about 5.5 percent of the sale price of a home, compared to smaller commissions in most other rich countries - 1.5 percent in Sweden, Singapore and the Netherlands, for instance.
The glaring difference between the U.S. and its peers in all of these areas casts doubt on the two usual suspects -- government intervention and Baumol's cost disease.