Who is John Galt?
Interests: Politics, Economics, History, Philosophy, Foreign Language
Favorite Book: Atlas Shrugged by Ayn Rand
Favorite Nonfiction: The Wealth of Nations by Adam Smith
Favorite Academic Author: Thomas Sowell
Favorite Politician: Ronald Reagan
Favorite Music: Metal and old rock- Slayer, Iced Earth, Deicide, Morbid Angel, Cannibal Corpse, Death, Led Zeppelin, Pink Floyd, the Rolling Stones, the Who, Queen, Lynyrd Skynyrd, GWAR, AC/DC
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Thursday, November 25, 2004
Haven't posted in a few days, thought I'd throw something up here before my laziness gathered too much inertia.
In recent news, a man in Wisconsin shot eight and killed six men, after being told to stop hunting on private hunting grounds. A basketball player did much the same thing...only without guns or anything. President Bush's Secret Service leader got in a tussle with Chilean security, resulting in a really cool picture of Bush pulling his Secret Service officer into the room by the shirt collar.
I'd also like to talk about price controls. If you watch the news or listen to the radio, likely you'll hear a tale of rising drug prices, and the need to combat them. You'll likely also hear one of two solutions: price controls or outright socialization (maybe not in those words, but those ideas).
Socialization is an argument for a different post. Let's deal with price controls now. The main problem with price controls is the difference between "price" and "cost". Prices cover costs; they are not incosequential little details we can simply wave away through government fiat.
Essentially, the left says "it only costs $0.25 to make a pill yet you're selling it for $2, this is unfair, drug companies." The fallacy is that they're only looking at the material costs of producing a pill. It costs $800 million to produce a new medicine- their "price" has to cover the "cost" of producing, though expensive research and trial and error, an effective pill.
Pfizer, for example, goes through several thousand tests of compounds in a year, of which 6 will make it to final testing. This costs a lot of money! If the price of the final successful drug- which has to make up the costs of all the potentially successful drugs- is artificially restricted, no one wil invest in new drug research. One might see this in the fact that the great majority of new drug research is done in the US, which has limited government intervention in this area, while a pittance of medical research is done in the rest of the world, which has much greater intervention.
Controlling prices will not control costs- it has to go the other way around. The best way to reduce costs is to do what conservatives have been calling for for ages and get to some tort law reform. The problem is not that silly lawsuits are actually awarded to the plaintiff- though they are, sometimes- but rather that it costs the plaintiff little or nothing to sue and costs the drug companies or doctor's offices millions. Rather than pick up the cost of stupid lawsuit after stupid lawsuit, the companies simply settle out of court- which becomes a get-rich-scheme for hundreds of people.
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