The problem with this theory is that now you're paying someone to do the work, someone to supervise the person doing the work, and someone else in the government to check and make sure the work was done correctly. I also don't buy the "Private business does a better job" argument. I work in the private sector and what I see is a lot of businesses run by people who are truly dumber than a box of rocks. I firmly believe that many "entrepreneurs" are people who start their own business because they're not good enough to be employees. Don't get me wrong, I'm not speaking of all business owners, just most of the ones I've dealt with. Most recently I was filling in as a receptionist at a real estate company because the previous one quit with no notice. They went through a long, very thorough hiring process and in the end hired the boss's favorite waitress. Never mind that they just wasted vast quantities of our time to hire an incompetent employee, he got who he wanted and that's all that matters. In the public sector jobs I've worked in this kind of thing would not be tolerated. In the public sector there is a greater accountability because people are watching because it's their money being spent. In the private sector there is almost no accountability.
I don't want to address the stereotypical and anecdotal examples but the last two paragraphs make me spin with amazement. You say this guy hired the wrong person based on your perspective, then go on to say that private sector is not accountable of money being spent. That real estate agent is paying that receptionist out of their business costs. They will directly pay the costs of both their payroll and their lack of skills. How are they not accountable? I couldn't care less who the waitress is working for, doesn't effect me one bit. They are literally the ONLY one's accountable for their poor choices unless you want to share details how this person now needs to go out and hike up their commission rates to make up for the lack of productivity due to their reception choices which might be tough if they don't get their client's calls in a timely manner or at all. Working public sector, you are not spending your money. Your portion of the budget is literally to the tune of 1/1M. You are spending other people's money. People never spend other people's money as carefully as their own. One guy you worked temporarily for one business making a poor choice with their money hiring the wrong person hardly discounts this fact.
No, I am saying that the incentive of the private sector is to act in their own interests, and that this does not necessarily overlap with the customers' interests. Perhaps the term "screwing" the customer was a bit sweeping but at the extreme end you can get a culture that writes Ford Pinto Memo's, so to speak. That does not necessarily put customers off buying, unless they get to read such memos and they generally don't (it's bad for business). Instead customers are wooed with strategies that carefully play on the psychology of purchasing decisions. Sometimes consumers know that and consciously enjoy the courtship of commerce; other times they get taken advantage of. People are easily influenced by style over substance; by what they desire over what they need. Good point, and I should say something to that but my brain is taking it to its lair for further study and telling me to come back later. MyeahOK, that was a bit badly thought through by me. The drawback of public sector services is that there is no tangible incentive either way; not to excel nor to offer choice through competition. This is the bit that (mainly conservative) politicians try to address by introducing free market principles into public services. On the other hand, economical incentives are only part of the picture. Research shows that when you eliminate income as a concern (i.e. people earn enough not to have to worry about money), then purpose, autonomy and mastery become their own reward. People start to excel because they enjoy it, because it feels good and meaningful. That might be a principle on which public services work. Unfortunately I suspect that it is not that simple. It requires that people see themselves as autonomous, capable and purposeful in the first place and that mindset is of a maturity that I suspect (for various long-winded reasons) 40% of the population does not have. It is a way of looking at things that our Western culture does not possess. For the remaining 60% public sector services are often a frustrating and stifling bureaucracy trying to apply, as you say, simplistic rules and strategies to cover a huge number of different complex problems --and thus preventing a huge number of different creative solutions. The same can be said for the private sector: just because their own money is on the line does not necessarily make them sensible, effective and efficient. Of course market forces should result in their auto-darwination but people can cheat. And even if they are sensible, effective and efficient from a business perspective that may not necessarily overlap with customer needs.
All well said sir. Once again, we are finding level ground which totally bums my must-fight-with-nexxo-mode which is my own fault seeing how I keep it at 11 most of time. But to the point of Ford Pinto Memo's I only have two points. 1)wikileaks - supposedly altruistic public servants saying one thing to their constituancies one thing and doing something else altogether. 2)Unsafe at Any Speed - A work of virtual fiction on behalf of a self-proclaimed altruistic champion of the people under the auspices of protecting the people from mean ol' multi-national corporations while bringing the author to the forefront with all the honors and privilages thereof. The founder of modern economics, Adam Smith, established the principle that people do more good to society working in their self interest than if it were their explicit role in excruciating detail in his mammoth tome "Wealth of Nations". He held no high regard for business men, and I tend to agree with him. My point is that it doesn't matter if the interest of a company overlaps with the interest of the consumer. That would require a miraculous alignment of the solar system. You can't get inside everybody's head and dial in your actions accordingly (but the business of market research is the pursuit of damn well trying). But consumers find what works for them when there is a choice. Sometimes the do make poor choices (so do companies). I have, but I'm much wiser for it - I no longer buy decoder rings from the back of Superman comics. I don't lament about how much of a percentage of the public is properly knowledgeable in what their needs are, but how the ratio can be moved more in their favor. We obviously have disagreements, but at least they are mutually respectful.
And I must stop posting from an iPhone. Working on a tiny screen with a fiddly keyboard makes my prose (and hence my thinking) blunt. Yeah... apart from the fact that the Ford Pinto's failings (and the role of the memo in Ford's business decisions) has been rather exaggerated, the two examples you quote neatly illustrate that the weakest link in any system is the human element. People can get carried away with their own success. Deep down aren't we all narcissists? On the other hand it is that narcissism that drives surgeons to be top performers in their field. Balance, balance... In that regard I believe in Alexander Pope: "Do good by stealth". Or Andy Grove: the price of pride is complacency, then arrogance, then downfall. So the best guarantee of good, efficient services is informed consumer choice and a dependency of services on their custom. It's the informed bit that I think is tricky...
Please bare with me while i reel off a thought that occurred to me last night. Eddie_dane is arguing the private sector has to operate more efficiently to survive than the public sector and provides an eloquent argument for why this is so and cites examples from the US medical system. IIRC Eddie stated in the thread about Obama's medical reforms he has little faith in the US governments ability to deliver on large scale publicly funded projects. Eddie If i've interpreted you wrongly I apologise. In the UK I think we have the opposite problem and our government is unable to engage properly with the private sector I will cite the Private Finance Initiative, or PFI model as an example. PFI's were created to enable private investment and expertise in major public works such as building schools, hospitals and transport infrastructure. The idea being that the private sector could provide these services cheaper and more efficiently then the public sector. These deals are widely believed to have been an expensive mistake which the wikipedia article goes into some depth about. A notable example would be the Skye bridge, the first PFI project to be completed in the UK. The bridge was originally priced at £15m but eventually cost £93m and the deal forced the closure of the existing ferry link removing the only competition the bridge had. The resulting toll for crossing the bridge was £11 making it the most expensive toll road in Europe and effectively holding the islanders to ransom. More relevant to this tread are extracts from the article in regards to PFI built hospitals. I am sure there are numerous successful PFI schemes we never hear about which been good value for money but the above examples may help to explain the distrust a lot of us have over privatisation of the NHS.
Adam Smith's belief in the self-regulating market was either naive or disingenuous. Markets are not self regulating. Most of the time, instead of a race to the top, where companies compete to offering the best product at the best price, we see a race to the bottom, where they compete on offering the cheapest product at the highest price for maximum profit. Not to mention, that "free-market" economics have a tendency to lead to monopolies and oligopolies, none of which are in the interest of society.
Yes, I will say that you have summarized my thoughts/concerns regarding our approach. Having not dug very deep into the PFI experiment and basing merely on the data you provided here I guess my questions would be what are the root causes of the higher costs beyond the immediate judgement that it must be profits. That question should actually be easy to answer. It should just be a matter of comparing the actual profits to the overages. And compare that to past examples of totally public projects. Many times, even with the overages, it would still be more cost effective than the alternative but provides great political rhetoric. The same scenario exists in the US when dealing with things like highway construction (I suspect the same situation exists in the UK). The states don't actually build anything, all the work is contracted out to the lowest private bidder. It's a cliche that it almost always cost 2x what the proposed cost was in the bid. But in a large number of cases it is due to the fact that the contractor is subject to beureaucratic management of the work leading to endless work stoppages, some are just unforeseen events, and some are just that the contractor simply mismanaged the system. But the same scenario exists when you hire a contractor to work on your house and the state is not involved in any way. They quote something and you hire them and it almost always cost more. Sometimes it's natural when they discover something that couldn't be seen in the original evaluation. My roof needed underlying repair that wasn't included in the original budget because it wasn't apparent during the initial inspection but revealed once the work started and shingles were actually peeled back. On the whole, I'm in favor of just what works. I'm not a slave to one convention of thought. So long as a genuine examination of all the costs are observed. When politicians are involved, costs have a nasty way of being hidden or diluted or "redistributed" and other factors are effectively blamed. You get my drift.
That's a pretty subjective take on economics (that, and I never said they were "self-regulating") but I'll try to clarify my argument with some actual examples to make my point. I probably opened a new can of distracting worms. Running the risk of butchering this: Adam Smith's work in "The Wealth of Nations" was not his subjective commentary on the social benefits of free market economies - the documentation of the benefits are there but that is not the thrust of the work. You have to put it in the context it was written - 1776, economics as a modern scientific study was simply not established. 75% of the book was his study of successful elements in the economy in which he lived (a highly regulated feudal society). Simple elements that we take for granted because they have evolved so much since then had not been identified or truly understood. His interest in the subject was based on theories of the French Physiocrats who established the theory of the natural order of free market economies as opposed to them being chaotic which was the theory of the time (and stubbornly still prevails to some degree). They created the term laissez-faire, which Smith is known for only because his work is much more well known compared to the physiocrats. In observing and documenting successful economic factors he identified elemental things like the division of labor. His example was the production of nails. A shop owned by a "businessman" or "merchant" that has 5 workers trained in the skill of working metal in fabricating nails. The traditional method was for each worker to fabricate the nail from beginning to end. He observed other shops that had innovated the process by dividing the labor where each person specialized in one facet of the process. One might be best at creating the rod, another hammering the shape, another creating the head, you get the idea. The result was a ten fold increase in production and a substantial improvement in both the quality and consistency of the product. Where it enters into the social implications is how the state and the roll of the merchant falls into the mix. The man who owns the shop has no inherent social value. He found many of these people to be unscrupulous people who simply wanted to make more money. But the result was that he was able to make more money by selling his higher quality nails at a lower cost. His profit margin was the same but he made a lot more money via overturn and volume (i.e. productivity). Customers benefited because they were getting a higher quality product for lower cost and his employees were the highest paid in their trade. Here's a guy who may have no redeeming personal qualities but is indirectly contributing to society in his pursuit for more profit. The role of the state comes in when his competitors using antiquated, traditional methods see the new process winning over their customers. Because they are part of the established trade structure, they have influence with the government of their area. They arrange for the manufacturing of nails to be made by licensed trade members by decree. They are working in their self interest as well but by using the force of the existing government. The end result as far as societal implications are that the consumer is left with a more expensive, lower quality nail. If you extrapolate this efficiency factor found in the first merchant across the entire economic scale to people who deal with other resources like: lumber, stone working, and other building materials, you create an environment where people who could not afford to build a house, or a wagon or the infinite other items people needed to conduct their business pursuits could now afford to do so, and with better quality materials. This was not his subjective take on what should be, these were observations that he was making and documenting in critical detail for the first time. The book is 900 pages and not the easiest book to read. A simplified metaphor of this principle in a more modern context and on a global scale was effectively made by economist Milton Friedman in the "pencil analogy" http://www.youtube.com/watch?v=R5Gppi-O3a8 This may not sound like it has any relevance to contemporary times but the principles play out again and again. In the 1970's when Japanese steel was theatening the US manufacturing of steel. The US government intervened with tariffs to keep the price of Japanese steel high for US consumers. In doing so, it kept the price of all steel in the US high which cascaded into everything made with steel higher. The initial goal of this intervention was to protect US steel jobs. But independent studies of that policy concludes that for every US steel job it protected, it cost 3000 jobs in the rest of the US economy. Consumers of steel did not receive any increase of quality and paid an artificially high price for steel. Another fairly contemporary example is the Scottish ship building industry. In an effort to retain the dominance of the Scottish shipbuilding, the government subsidized the industry with tax money. The result was that other countries could buy Scottish built ships much cheaper than they could build them themselves resulting in the Brittish people paying for other countries to buy high-quality Scottish-built ships. I am not categorically opposed to regulation. I am vehemently opposed to politically expedient action that is portrayed as "regulation" in an effort to influence the economic behaviors of consumers and producers based on social goals and self-serving political ideals. These are fraught with classic examples of unintended consequences and hidden costs. On the other side of the argument for regulation is the aspect of "external costs". These are costs that everyone but the producer pays, like smoke coming out of a smokestack or waste going into a river. These costs are not that difficult to deal with and can be done very efficiently via guidelines and law enforcement. That said, people who wholly depend on the government to protect them from every form of external costs like saying "Without the EPA, we wouldn't have clean air". Ignore significant historical lessons. The most polluted era of both Brittish and American history was during the industrial revolution. Virtually all of the improvements in quality of life and the air and water quality from external costs were due to technological improvements by private enterprises and they happened in a time when there was virtually no government intervention on part of the state. When John D. Rockefeller (one of the most villified industrialists in US history) started standard oil, there was no market for gasoline, it was a byproduct in the production of kerosene and refined machine oil. He used gasoline to fuel his refining process instead of coal because it was a cheap resource no one had any use for. This provided both a cheaper and cleaner means of producing kerosene. The market for kerosene was mainly for household lamps. Prior to kerosene, whale oil was used. The modern refinement of kerosene virtually killed the whale oil industry. The ability to make kerosene efficiently brought the ability to safely light houses within reach of the everyday consumer. Again, better product, saved the whales and lowered the costs. Later, the automobile was introduced. Henry Ford innovated with mass production bringing high-quality automobiles within reach of the common population (before-hand, autos were only affordable to the elite rich). On a side note, the advancement of the automobile, while considered a major polluter today, solved an even more grave pollution problem in cities like New York which depended on a population of 400,000 horses. A situation that had all kinds of dire pollution issues effecting health in the city including 40M tons of waste a month that need to be dealt with. I will spare you the details of how it was dealt with but, I assure you, it wasn't good. Consequently, Ford's employees where among the highest paid in the industry. Returning back to Rockefeller now that the car exists, his innovations in distributing oil in custom-made railroad tanker cars created great efficiencies and resulted in lower oil prices. Refineries that dealt exclusively in barrels of oil got the government involved in anti-trust cases that declared that railroads can not provide discounts to Rockefeller's company even though moving oil via tanker cars cost them a lot less money than the traditional method of loading barrel after barrel onto cars. Once again, the state "regulates" an industry, not in a way that benefits society but a selected few looking after their own interests that have political influence. The result is that the consumer pays for the costs of "regulators" taking action with no measurable improvement in products quality, availability or affordability. Andrew Carnegie is another classic villain from that era. His improvements in the steel making process (and his partnership with Mellon - the aluminum process) resulted in higher-quality steel at a lower price which paved the way for western expansion in the building of railroads which lowered the cost of access to that resource to everyday people. Back to the pollution and the social good of "regulated" vs "non-regulated" economies. You say it is a race to the bottom. The two most regulated economies on the planet right now are China and India. These are two of the worst polluters on the planet, so "regulating" can be very subjective based on what social ideology is driving the priorities of your regulation. Since freeing up their economies and lowering "regulation" thresholds, China has risen an average of 1,000,000 people out of poverty a month. The facts are simple. Regulation does not improve water and air quality, it simply states that it should happen. Technology produces the actual improvements. The most productive means of innovating technology is a free market. On the topic of monopolies, I can't name a single one in all of history (and my scope of knowledge is limited to the US unfortunately) that wasn't subsidized, sanctioned or outright created by the government. Even then, they never succeeded long-term using their monopoly as the basis of their business model. By definition, competition is the antithesis to monopolization. The closest thing to a full-on oligopoly that I can name is the OPEC cartel which is a product of government activity, not free market activity. If you notice, the overwhelming number of members of OPEC are countries where the oil market is nationalized and the agreement is not between privately-held companies but whole countries. Hardly a product of a free market. Sorry for the marathon post but I felt that eddtox deserved a more fleshed-out response and this topic mainly because I felt that I had misrepresented Adam Smith's work. And this discussion has come up again and again in multiple threads and I felt it appropriate to address it as thoroughly as I can in one sitting.
On a more personal and more modern example that allows me to do what I do is the history of cameras. Historically, the best cameras were made by the Germans and the Swiss. In the 1930's, the Leica company set the standard that they retained well until the 50's. The problem was that Leicas were fine pieces of machinery and very expensive. In the states, companies like Graphlex made great cameras, but again, were really only within reach of professionals, mainly reporters. Products like the Brownie camera and Kodaks came into the picture for the everyday person but the quality of these products were very inferior. Then comes post-ww2 Japan and it's wildly unregulated economy. Nikon more or less reverse engineered the classic Leica german design but at a fraction of the cost bringing quality of that caliber to regular people. Later the Japanese industry didn't just copy but innovated the market with things like the SLR design. Meanwhile, the most regulated large economy in the world, Russia, also copied Leica designs, all they could manage with their resources was to mass produce them and have made no measurable improvements on camera technology in 50 years. Russian cameras are collected today not as paragons of performance but hulking reminders of a by-gone era. Today, I use a modern Nikon camera that allows me to work professionally at a humble level and yet is a marvel of modern imaging technology. Leica's and other brands like Hasselblad still exist and still set the standard for quality but cost several times the price of Nikon's. I would love to use a Leica camera in my work but it is financially out of my reach. Without a Nikon, my options are severely limited. I have no idea who the head of Nikon Corporation even is, much less know what his personal intents are regarding society. Nor do I care.
Regulations are an interesting one, as they can have both good and bad effects. I think a good example of this is the pharmaceutical industry. One set of regulations, those requiring rigorous trials clearly has benefits in helping to ensure the safety of drugs. Add NICE and their cost vs benefit requirements and you clearly have a set of regulations which is of great benefit to the consumer, as it prevents (or catches if evidence later appears) dangerous drugs (or ones whose risks outweigh the benefits) entering the market. On the other hand, you have the patent laws, which help no-one except the drug company. The problem is twofold. First, this makes drugs that are still under patent much more expensive. Drug companies argue that they need this to cover development costs, but still are one of the most profitable businesses in the world. Secondly, I can't help but feel that these laws do more to stop innovation. Companies will often spend time developing a drug which is basically the same as an existing one that is under patent, just so they can offer their alternative. Remove the patents and this can be spent either developing completely new drugs or improving manufacture, thus making the drug cheaper. An excellent example of this is diabetic drugs. There were two existing classes of drugs (sulphonylureas and biguanides) which worked very well and had few side effects, however the drug companies wanted more money, and as a result, thiazolendiones were invented. The fun thing about these is that whilst effective, these had more side effects (in fact one of them was recently withdrawn due to a significant increase in the risk of cardiac events). Sorry for going a bit off topic, but the gist of my point is that regulations can be a mixed bag, good or bad, and each regulation needs to be looked at individually in order to assess it, there is no simple answer to whether or not something should be regulated. You can cherry pick arguments either way all day long and get nowhere. Edit: On second thoughts, of course things should be regulated, as safety is paramount. but there should not be excessive regulation which harms the consumer, otherwise it is self-defeating. This is even more important in healthcare than anywhere else.
While I'm in the process of "monopolizeing" this conversation, I feel compelled to go back to a great point above by Nexxo. I am a living example of this principle. Yes, I firmly believe that removing all external incentives does make you more productive and fulfilled. Unfortunately we live a world full of real-world constraints. In a former life, I worked for a very successful company doing jobs that gave me no satisfaction. Through a sense of duty to my family to be a provider and pay for real-world obligations (constraints), I worked there for 10 years. The company provided all the incentives I could ask for from their standpoint. But I still left. I wanted to be a photographer. I wanted to use my talents in a way that suited my desires more than I wanted to help people sell VoIP products. Now that I am a photographer, I need to get someone to pay me to do what I want to do. This requires me to convince them that I am the best person to satisfy their needs in a photography sense. In regards to my intentions to my society and whether I am doing "good" does nothing for my business. Yes, I volunteer at the local food bank and help my community through my church and have shot weddings for free for couples having an extraordinarily humble start (I'm doing one in March). But my customers have absolutely no knowledge of my acts. Not one time during consultations has a customer asked about anything regarding the social implications of my professional behavior. They have a requirement at a certain price that the need fulfilled. Unless I can convince them that I can provide exactly what they want for what they are willing to spend, I will not get the job. And if I win their business, I will never get any repeat business unless I prove to them that I can deliver the goods and making them satisfied if not, delighted. I spend virtually all of my non-working time figuring out ways to put myself in front of people looking for services that I provide. Believe me there is an enormous amount of competition that provides me with constant feedback whether I am providing the right combination of skills, talents and products given all the choices that are out there. I can try all kinds of shennanigans to trick people into considering me, but when the check needs to be written, there is nothing I can do to get that check but to convince them that I am the right choice. If I really pull the wool over their eyes and screw them. The damage to my reputation can be fatal. I have seen it happen to others. So back to the original point. I agree, but you can't remove yourself from the real world. That is, essentially an academic utopian ideal. But, it can be incorporated into your life as much as possible to yield as much satisfaction as possible. Basically, a compromise must be made. And yes, given my experience, it seems to be directly related to maturity.
I see where you are coming from but I have a hard time swallowing (pun) the argument about innovation. Not only do the profits from successful drugs pay for the R&D of that drug, but they also pay for the R&D of all the drugs that never made it to market (the failures). You can't compartmentalize costs in a corporation. It is rare for a drug company to develop just one drug, so all the costs of business are reflected in all the products they sell. Company's have come and gone who had too many failures and could not recoup their costs depriving the public of any benefit they may have produced because they failed too many times. Literally billions of dollars go into R&D of modern drugs. I don't think you will find many investors to front that bill if the drug went immediately into a patent-free market where you will sell the drug, by definition, at a loss. If another company has access to all the R&D work done by another, who's going to be the one to step up and take the financial risk? Even if you have one head of a company willing to do it, that person will have a hard time finding thousands of individual investors to follow suit. A more likely, and common, scenario is convincing wealthy individuals and institutions to suppliment the costs of people to buy drugs. Drug companies themselves do this quite a bit through customer programs. You could probably find researchers willing to work without financial incentives. But you still need to provide an environment that allows them the resources to do their work going way beyond the willingness of just a few setting aside those incentives. If you could successfully could gather the needed researchers, labs, and manufacturing, you would blow the existing market out of the water. It is telling that in the history of the industry, that hasn't happened. There are weird anomalies like a Bill Gates on a personal crusade to spend vast amounts of personal wealth to try to eradicate malaria. But even then, Bill Gates is bringing resources to bear from a patented operating system and he is employing a company like Intellectual Ventures to solve the problem in innovative ways. Intellectual Ventures is the worlds largest single patent-holder. He chose them based on their past ability to provide proven results. All these factors are not exclusive. On a side note, they are coming up with some amazing solutions. I'm not trying to be a putz. I get that your point is that the companies are charging more than is needed, but to put it bluntly, pharmaceutical companies make money off of drugs because people are buying them. A drug developed that has too high a price that no one buys will die regardless of the benefits or the greedy intentions of the company that developed it. Again, not trying to be a putz, but to say "safety is paramount" is a slope I'm not comfortable riding blindly on a rocketsled (if that were even considered acceptably safe). A crude example that if people that are unsatisfied with auto-related deaths given all of the traffic laws, seatbelts, construction mandates, safety tests, airbags etc you could just ban cars reducing the number ot zero in the name of safety. I know that sounds like I'm taking the logic to an irrational extent. But there are trade-offs in the name of every action. To illustrate my point, there is a movement here in the States against the FDA which is the beholder of all things medically-safe because they have blocked certain drugs unessicarily dangerous due to side effects. But to the people who suffer from fatal illnesses and conditions, they are willing to take the risk given their limited alterntatives. In other words, you can't make something "paramount" where different degrees of trade-off's exist. Safety is more important when someone is taking something for a headache vs someone who has a life-threatening disease. It sound elementary but this scenario is being played out right now. A whole lotta wacked out s$%@ has been done in the name of safety. I referenced the book "Unsafe at Any Speed" earlier in this thread, it's a good example.
I agree with most of what you said. I think that at the moment, each side of the debate on the patent laws just says their piece and sits back, expecting the logic to do the arguing. Problem is, both sides of the argument are logical, and so to reach a conclusion one would have to delve deep into facts, figures and statistics. Maybe a thorough independent review of the laws. I suspect the best solution would be to shorten the patent period. And yes, "safety is paramount" was probably an overstatement. However, I did also state that the whole of the pharmacological industry is a question of whether the benefit outweighs the risks. We are not very good at designing drugs, so the all have some degree of side-effects. However, back to my main point, which was the necesity of regulation, and I feel that you have backed up that point quite nicely in the previous post.
I agree with you on the point that there is no reason not to scrutinize the patent process. On the US side, it is overwhelmed and there's not a lot of hope in site. I'm not advocating "constant fiddling" though. If you keep tweaking with incentives, you make it hard for people to make long-term decisions based on risk. Stability and predictable rules are fundamental to development. But I totally get what you are saying. I knew picking apart the "paramount" word was a bit snarky but I think it was a valid point to make. Perfect drugs are few and far between. I think the closest is good ol' asprin and that was a long time ago. I think another point worth making regarding patents and profits that company's make is our patience as a society. Economists regularly bring up the fact that the standard of living creates a weird scenario of accellerated expectations. If you look at what was unavailable to everyday people only a generation ago that are taken for granted now: TV's, automobiles, air-conditioning, computers, etc. We enjoy medical technology that didn't even exist back then: MRI's, various drugs and surgical techniques, etc. Technology is a blessing but it also breeds discontent to want things under unrealistic terms. The standards have risen dramatically. We do tend to want to compress all the forces at play unrealistically or to rewrite them altogether to accommodate our immediate needs which, history proves, that virtually all these things come within reach of masses amount of people given time. We do tend to want what we want when we want it, especially if we can manage to get someone else to pay for it.
Aspirin, not really. Pretty good, but don't forget the gastric ulcers. Current advice is don't even take the low dose that reduces cardiovascular risk unless necessary. Interestingly, in the US, paracetamol is often prescribed more as it has fewer side effects (I think the only real problem is the risk of overdose), whereas here, aspirin is used more. Offf topic, but an interesting aside. Other than that, I can't fault a single thing you have said in that post. Have some rep for recurrent informative, interesting and well thought-out posts.
recurrent for sure. Thanks. (and regarding Asprin, that's what I get for speaking on topics I don't know as much about.)
Reading through all this (with the aid of copious cups of tea) I keep coming back to the idea that the most effective market regulation occurs through informed customers. Some drugs may have risky side-effects and dubious benefits, but if customers know about that then they can make up their own minds and drugs will succeed or fail on their own merits. A logical extension of this can be found in how governments deal with illegal substances. Most governments choose to outlaw them (i.e. regulate them intensely) because they are harmful and addictive, spending huge amounts of resources in the process of trying to eradicate their use with the undesirable consequences of criminalising essentially harmless citizens and pushing the illegal drug economy into the hands of an unscrupulous and unregulated criminal market. Meanwhile prices spiral while quality of the drug is so unreliable that it could kill you long before any addictive effects could. A few more governments (the Netherlands and Portugal) have taken the radical, but possibly more enlightened step of de-criminalising (i.e. deregulating) illegal drugs and letting people work out their kinks for themselves, so to speak. Help is still there for people who want it but the message essentially is: use at your own risk. This keeps the market out in the open, where it is relatively safe and self-regulating and so is information and debate about drug use. Hence people are more informed consumers. You don't get better weed than in Holland; it is organically grown. Consequently one could argue for the deregulation of all drugs and letting informed patients make up their own mind. The problem is this: people are neither that informed nor rational. Information about drug effectiveness and risk is complex; it takes a sound understanding of statistics to interpret experimental research findings. There is also the problem of lies, damn lies and statistics: drug companies who are motivated to make a sale can misrepresent the facts. Of course sooner or later they get found out but by that time lives may have been lost. People on the whole are also not that bright, and being in pain, or ill, or in fear of dying is rarely a condition which is conductive to rational decision making. Look at the Autism-by-MMR movement; distraught parents misunderstand the science behind their personal tragedy (which incidentally is mispresented by a researcher with his own professional and financial interests) and are vulnerable to exploitation by people touting other bad science as a potential 'cure'. This one is going to rage for another 50 years before people work out that they have been had --and they work out that Mumps, Measles and Rubella are actually far from harmless childhood illnesses. Of course the MMR issue is caused by government regulation of herd immunity in the first place. People feel distrustful of authorities that dismiss their fears. Had the choice been left to parents, perhaps there would have been a less vehement backlash; then again, had the choice been left to parents we would not have had herd immunity and vaccinations would have been pretty useless. The tragedy with a free market is that people need to use that freedom wisely. With great freedom comes great responsibility, and all that. But the reality is that many people are lousy at that because they are essentially immature. In an unregulated market many people drink themselves to death (and may kill a few others along the way), but as soon as you artificially hike up the price of alcohol, the drinking goes down. People seem to need parenting. I think that paradoxically the accelerated improvement in quality of life only manifests this problem more. Ian Steward and Jack Cohen argued that all technological advances in human history are basically driven by the desire to realise the childlike fantasy of instant wish fulfilment. When we are babies and toddlers, we live in an egocentric world where our parents rush to instantly fulfil our every need (usually). When we start to grow up, real life imposes: we have to delay gratification and deal with disappointment, hurt and limitation. This is not a fairy-tale world where a wave of a magic wand and a spell fulfils your every heart's desire. We never got over that. Everything we invented since is about that magic instant wish fulfilment. We want light: we just flick a switch. Magic! We want water: we just turn a tap. We have supermarkets with shelves of sugary and fatty foods: a feast for any small child. We have cars to carry us in safety, warmth and comfort. We have music, stories, entertainment on demand, beaming from satellites and piping down the cable into our home as if by, well, magic. And although for instance cancer still reveals us as frightened little children clutching a make-believe magic wand, we also have the almost-magic spells and rituals of medicine. Most people are children. That is why they drink too much, eat too much, fight in nightclubs and on football pitches, give in to road rage, get into massive debts. A free market is an adult transaction.
[what Nexxo said] You just made me weep a little. I had a very elaborate conversation several years ago with a friend I respect and is much more intelligent than me about legalization of drugs (generally speaking, he's a genius, he has no special knowledge regarding drugs). He was "deregulate everything" and I was "you can't do that, people will kill themselves". Recently, the topic came up again and we found that we had nearly completely crossed paths. He had seen a documentary on the destruction of Crystal Meth in the US and came to the conclusion that this crap has to be eradicated. I had come to the conclusion that if drugs like pot and cocaine were more available, there would be no such drug as crystal meth. It's very nature is the ease of manufacturing and payoff. He thought that was a great point and we found ourselves crossing each other over again. It's a sticky issue. I have come to the conclusion that the prohibition probably costs more than the benefits but things change in your head when it comes time to open the barn door. I think the war on pot is pretty absurd. But when you look at pharmaceuticals it's a lot more complex. The other factor that is commonly brought into the argument is how much it costs society if you legalized it and everyone becomes a burden on society. Because the government has spent so much saving so many people from themselves, the reflex is to automatically consider the impact on social services. It's a Catch-22. Personally, I think if you want to play with the toys, you should be prepared to suffer the bloody nose. It would require a recession of bailing people out. Just like you said, with freedom comes responsibility. There is a lot of people that could not just sit back and watch it happen. It is very much like children, sometimes the only way they will learn is via the skinned knee. My kids are both entering adulthood and I'm living that in vivid 3D right now. I think your assessment of the maturity of society is spot-on. In the end, I want my government to treat me like an adult rather than a child. Otherwise, we will never grow up. Milton Friedman when addressing the concerns of a free-market always included the caveat that, of course, you have to take care of children and madmen. I don't like my government herding the population into either one of those categories. As my wife (who is also much more intelligent that me) says: "We're not raising children, we are raising adults"
On this specific topic. The US experimentation with alcohol regulation, prohibition, was tragic. Obviously, banning something outright is the extreme and there are more subtle measures like playing with price controls. But during prohibition, the quality of alcohol dropped and the quantity consumed skyrocketed. Counties across the country that were completely dry prior to prohibition found bootleg liquor popping up all over. People are weird and respond in unexpected ways when you try to corral them.
