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When Government Plays Doctor


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You said that "government regulation of pharmaceuticals is what leads to the high costs of medicine." That is incorrect. New medical technology and drugs are expensive themselves, NOT because of regulations.

 

You claim that regulation hinders competition. Do you have any evidence of that? The truth of the matter is that only the large companies can really afford the R and D costs of the pharmaceutical industry anyways. It's not like a cottage industry is going to spring up that creates miracle cancer drugs. (actually...the "free market" did lead to a cottage industry that made miraculous claims...they were called quacks and they peddled miracle elixirs.)

 

And actually . . . a free market solution is by definition not regulated. How exactly is the government interfering now? By requiring the testing of drugs before they are marketed to make sure that they don't do more harm than good? How is that not a positive? You are thinking big theories, when the reality is that the consumer would suffer if your ideal was reached.

 

No offense carlfense, but you are incorrect. Yes, the technology and drugs themselves may be expensive but regulations that require companies to conform to higher standards, procedures and all other red tape they wouldn't normally adhere to does cause the price of production to rise. When this happens, the producers don't just eat the extra costs, they send them on to the consumers in the form of higher prices. So yes, you're right about technology and drugs being expensive, but the extra cost of the regulation is what causes the prices to rise even more.

 

As far as regulation hindering competition what kind of evidence do you need? It should be fairly obvious that if regulations are enacted that only companies with adequate money/materials/manpower are able to comply with, competition will be driven away. Yes, the cost of research and development are high because of the many regulations being forced to comply with. Why do you think the richest pharmaceutical companies are the biggest lobbyist? They have the money to adhere to the new regulations, they help create, while their less rich competition is forced to quit because they can't comply. This leads to wiping out the competition and the ability of the remaining companies to price as they please. Here's a report taken from the South African Competition Commission about restrictions in adversting and its affects on competition in SA, the EU, Ireland, India and the US. Rules of ConductThis is just one area in which the regulations hinder competition and if those aren't good enough examples let me know and I'll send you more examples.

 

Also, you can check out Henry Hazlitt's Economics in One Lesson for a more clearer understanding of economics and the fallacies that are often associated with many policies and regulations.

 

Likewise, no offense, but the advertising market is a far cry from the medical market. The costs of failure in medicine are too high to lay on the average consumer. If failures occur in advertising, profits are lost. If failures occur in medicine, lives are lost.

 

Those regulations (your demonic "red tape") are mostly requirements that drugs be adequately tested before they reach the market. Are you suggesting that we not test drugs and let the people "test" them themselves...with their lives?

 

And if you think that regulation is the cause of high research and development costs...well, you've already lost at that point. How many times do we all need to point out that these technologies are expensive in and of themselves? If we dropped regulations tomorrow do you think you'd be able to buy a pacemaker on the open market for $100? If so, that's absolutely ridiculous.

 

I don't need economics lectures; I remember those well. Here we are not dealing with pure economics though, we are dealing with morality. You can't just separate the issue into a theoretical exercise that supports your free market argument. (Let's do a reductio ad absurdum: If you want the cheapest medical plan possible, shoot anyone who is sick. I know that you aren't calling for that, it's just an example that we must weigh the morality of the issue when dealing with medicine.)

 

I think our main difference here is you are approaching medicine as just another player in the economic market place; it's not, and it can't be.

 

(And finally your Hazlitt excerpt focused on governmental price fixing, not on regulations that increase the safety of pharmaceuticals.)

 

Nonetheless, it is about regulation and its hindrance on competition. That is what we were talking about, wasn't it? We weren't talking about the differences between advertising and healthcare, for everyone can surely see the differences between the two. Also, what about the competition that never evolves because of regulation? How many companies never even start because they don't want to deal with the regulation or the cost of it? Can you prove to me that regulation doesn't hinder competition?

 

You keep bringing up the cost of technology and drugs as so expensive but haven't proven that regulation isn't what is making them so expensive. You keep saying they are expensive by themselves, but never once factor in the extra costs of complying with regulation? Does that not matter in the carlfense world of prices? Does that not make them more expensive? Regardless of whether they are expensive or not, the cost of complying with regulation obviously makes them more expensive. As for the price of products without regulation, I'm not a psychic so I couldn't tell you how much they would cost, but they would definitely be cheaper than those produced with regulation. If you think otherwise, please prove to me how you would know?

 

As for medicine being another player in the market, they most definitely are. We all are. To think otherwise is naive and the very reason people call for unnecessary and consequential regulation that lead to situations like we are in today. If regulation is so great, shouldn't things be just fine because surely we have enough of it. If not, how much more do we need? Maybe we only need one drug company, one doctor and one insurance policy, we can call him Uncle Sam. Would that be enough regulation to help solve our healthcare problem. Obviously it doesn't work and that is proven by the current state of health care in the US today.

 

Contrary to popular belief, the free market has never been given a chance, ever. So for you to say that it wouldn't work is a false assumption on your part. Nobody said we are dealing with a pure economics situation. In fact it is quite the contrary, for if you don't think the decisions we make about our economic freedom don't also affect our personal (and moral) freedom you are living in a dream world.

 

(Actually what I posted was a series of lessons from Hazlitt. Yes, one section had to do with government price fixing but there are 25 other lessons that focus on many other things. Nothing as specific as pharmaceutical regulations but plenty of other lessons to get the point across. Read it, you just might learn something they didn't teach you in your economics classes. :) )

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The problem with a free market in pharmaceuticals is that change will only come as a result of terrible consequences. (i.e., drug companies will lose customers and sales only after causing deaths and birth defects.) In that way the free market WILL create change, but it will only change following suffering.

 

The system of regulations we have now PREVENTS (most of the time!) the harm from occurring. This is especially important because the terrible side effects of many drugs aren't readily apparent, and some don't occur until they manifest as birth defects in a subsequent generation.

 

Check out the case of DES as one prominent example:

http://www.descancer.org/timeline.html

 

Read enough of these cases (unfortunately I've had to) and you might change your ideas about not needing regulations.

 

(And who are the special interests that are supposedly pushing for more and more regulation? Drug testing facilities? A lot of the time those are research universities...)

 

Thank goodness for regulation, because we surely don't have any suffering now, that's for sure. :sarcasm

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The cost of health care continues to rise, in large part, because government backed health care benefits, specifically Medicare and Medicaid, dictate to health care facilities and providers how much treatment and/or procedures will cost.

 

In other words, Medicare and Medicaid, through their CoP, or conditions of particpiation, tell health care providers that they will only reimburse $1,000 for procedure x and often times the actual cost, to the health care provider is more.

 

For example, if procedure x costs $1,300, and Medicare and Medicaid only reimburse for 1,000, where, or how, do you think that the health care providers are going to recoup that 300? If you said they'll raise prices on everything else then you get the gold star for being correct.

 

Our health care system is broken there's no denying that...but like everything else in life more government intervention, regulations, etc are not the answer.

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The cost of health care continues to rise, in large part, because government backed health care benefits, specifically Medicare and Medicaid, dictate to health care facilities and providers how much treatment and/or procedures will cost.

 

In other words, Medicare and Medicaid, through their CoP, or conditions of particpiation, tell health care providers that they will only reimburse $1,000 for procedure x and often times the actual cost, to the health care provider is more.

 

For example, if procedure x costs $1,300, and Medicare and Medicaid only reimburse for 1,000, where, or how, do you think that the health care providers are going to recoup that 300? If you said they'll raise prices on everything else then you get the gold star for being correct.

 

Our health care system is broken there's no denying that...but like everything else in life more government intervention, regulations, etc are not the answer.

 

:yeah Couldn't have said it better myself.

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Sorry, but at some point morality needs to trump profit. The current system is bad enough but further removal of government from medical care will take us on a time trip. Cant afford the new drug that will cure your disease? Off to the cemetery with you. Do you find this acceptable? I dont. But that ddug company wouldnt have a second thought about it, after all there is no profit in it.

 

Paper work has been a leading cause of doctors not wanting to go into general practice, and that is as much the fault of the insurance industry as the gov, and the current administration wants to change that.

 

Profits. The real core problem of everything. What is a reasonable profit anymore? If you have the same profit two years in a row is now considered to a bad thing, and not stable. And will then drop the price of the stock. If company A made $100 million, and competing company B makes $125 million, company A gets considered to be a bit of a failure, which is absurd. So Company A's stock drops. And stock price is really the only thing that matters to businesses.

 

Unrestricted Capitalism, like every other 'ism', ONLY works on paper. In all the 'isms' there is no thought to human nature.

 

This reads for you Strigori The Function of Profits You'd probably be best served reading the rest of the book also. Maybe it would help dispel many of the fallacies you currently harbor about free market economics. Also maybe read up about Austrian Economics which doesn't look so much into empirical data gathering and econometrics but more into human action and the deductive reasoning of axiomatic truths.

Talk about a dated article. GM a successful operation...

 

Anyway I think you missed my point. I'm not anti profit. Or 'excessive profit' for that matter. What I;m against is this notion that you have to make more every year, and make the most, or you are a failure and your stock will go down. And nothing matters like stock prices. There is such a culture greed and one ups manship that permeates everything anymore. To say nothing of the insulated self congratulatory mindset of upper management in business that views any thought not in lockstep with the company line is being 'negative' and shouldnt be thought about much less said.

 

And I dont know how much experience you have inside a giant corp, but from how things are split up and dysfunctional, any idea that things flow with those idealized concepts in those articles is simply a joke. The men in charge of most of these companies are paid in such a way that losing the job isnt the disaster it is for the average worker. And there are a great many job sectors that no longer pay for the better workers, its more of a race to the bottom, with hard capped pay structures that have little bearing on what a person actually does, just what the title is. And they tend to view employees as nine digit numbers that are easily replaced. Watch the news, see these giant companies failing (many of which didnt really get into trouble til after their industry was deregulated) its not the men who were running them that lost anything. With the golder parachute set ups they have now, there is no risk, no danger.

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The problem with a free market in pharmaceuticals is that change will only come as a result of terrible consequences. (i.e., drug companies will lose customers and sales only after causing deaths and birth defects.) In that way the free market WILL create change, but it will only change following suffering.

 

The system of regulations we have now PREVENTS (most of the time!) the harm from occurring. This is especially important because the terrible side effects of many drugs aren't readily apparent, and some don't occur until they manifest as birth defects in a subsequent generation.

 

Check out the case of DES as one prominent example:

http://www.descancer.org/timeline.html

 

Read enough of these cases (unfortunately I've had to) and you might change your ideas about not needing regulations.

 

(And who are the special interests that are supposedly pushing for more and more regulation? Drug testing facilities? A lot of the time those are research universities...)

 

Like I said before, a free market doesn't mean no regulation. It just means the government or some other force is not interfering with the transactions between consumer and producer.

 

How do you know that the free market doesn't have an answer to government regulation? You automatically assume that without the government regulating, the pharmaceutical companies will go hog wild and there would be absolutely no accountability. Ever heard of the NFPA? There was once a time when the same was thought about the fire industry, until several underwriters came together and created some preventive standards. Taken directly from their website - "an international, non-profit organization" and "The world's leading advocate of fire prevention and an authoritative source on public safety, NFPA develops, publishes, and disseminates more than 300 consensus codes and standards intended to minimize the possibility and effects of fire and other risks." The codes aren't government regulations and no one is required to comply, it merely brings credibility to those who do.

 

Yes, fire departments and cities around the world voluntarily adopt and enforce NFPA codes to bring about accountability and proper standards as it pertains to building construction and fire systems. By adopting the codes, cities and departments bring credibility and accreditation to those they are serving. How do you know the pharmaceutical industry wouldn't create their own standards and do the same? Does it require a government entity to do this, absolutely not. In the case of the NFPA, the insurance companies did it. So why could they not also do it for the pharmaceutical industry? The standards would be created and consumers would be able to see if a company voluntarily adopted and enforced the standards. Most likely the companies that did would be the ones who would succeed. If consumers chose to ignore the standards and instead went with the cheaper drugs from an unaccredited company, they are obviously taking a risk and should be held responsible for their actions. That may sound harsh but that's the truth.

 

I think what we are seeing is a complete lack of personal responsibility on the part of society and for some reason everyone seems to be ok with it. Everyone's content with the government being responsible for them, making sure they are taken care of from the cradle to the grave. It's all pay for this and restrict that, there's no accountability on the part of the people and if our current condition is any type of signal, the government doesn't seem to be doing a very good job of it either. Luckily for us who enjoy our personal freedom, the nanny state is broke and won't be operating much longer in its current state. When it crashes, we will all be forced to take responsibility for our actions, and believe me, that's a good thing.

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Sorry, but at some point morality needs to trump profit. The current system is bad enough but further removal of government from medical care will take us on a time trip. Cant afford the new drug that will cure your disease? Off to the cemetery with you. Do you find this acceptable? I dont. But that ddug company wouldnt have a second thought about it, after all there is no profit in it.

 

Paper work has been a leading cause of doctors not wanting to go into general practice, and that is as much the fault of the insurance industry as the gov, and the current administration wants to change that.

 

Profits. The real core problem of everything. What is a reasonable profit anymore? If you have the same profit two years in a row is now considered to a bad thing, and not stable. And will then drop the price of the stock. If company A made $100 million, and competing company B makes $125 million, company A gets considered to be a bit of a failure, which is absurd. So Company A's stock drops. And stock price is really the only thing that matters to businesses.

 

Unrestricted Capitalism, like every other 'ism', ONLY works on paper. In all the 'isms' there is no thought to human nature.

 

This reads for you Strigori The Function of Profits You'd probably be best served reading the rest of the book also. Maybe it would help dispel many of the fallacies you currently harbor about free market economics. Also maybe read up about Austrian Economics which doesn't look so much into empirical data gathering and econometrics but more into human action and the deductive reasoning of axiomatic truths.

Talk about a dated article. GM a successful operation...

 

Anyway I think you missed my point. I'm not anti profit. Or 'excessive profit' for that matter. What I;m against is this notion that you have to make more every year, and make the most, or you are a failure and your stock will go down. And nothing matters like stock prices. There is such a culture greed and one ups manship that permeates everything anymore. To say nothing of the insulated self congratulatory mindset of upper management in business that views any thought not in lockstep with the company line is being 'negative' and shouldnt be thought about much less said.

 

And I dont know how much experience you have inside a giant corp, but from how things are split up and dysfunctional, any idea that things flow with those idealized concepts in those articles is simply a joke. The men in charge of most of these companies are paid in such a way that losing the job isnt the disaster it is for the average worker. And there are a great many job sectors that no longer pay for the better workers, its more of a race to the bottom, with hard capped pay structures that have little bearing on what a person actually does, just what the title is. And they tend to view employees as nine digit numbers that are easily replaced. Watch the news, see these giant companies failing (many of which didnt really get into trouble til after their industry was deregulated) its not the men who were running them that lost anything. With the golder parachute set ups they have now, there is no risk, no danger.

 

Yes, the book was written in 1946 and at that time GM was a successful operation. Talk about a case of government intervention going entirely south or was that the fault of deregulation of the auto industry too?

 

The book may have examples in it that are outdated, but the very ideas of it ring so true today. Did you expect that he would have a section entitled the Economic Collapse of 2008, would be nice huh?? One reknowned economist, Walter Block, wrote about the book in 2008 "I am still amazed at its freshness. Although the first edition appeared in 1946, apart from a mere few words in it (for example, it holds up to ridicule the economic theories of Eleanor Roosevelt, about which more below) its chapter headings appear as if they were ripped from today's headlines. Unless I greatly miss my guess, this will still be true another 60 years from now, namely in 2068. Talk about a book for the ages." Maybe you need to read it to better understand the ideas he's supporting.

 

And as far as the dysfunction in business today, you are correct. And obviously are also correct about many of the businesses failing. However you contradict yourself about his ideas not working. You say that his "idealized concepts" are a joke, yet you point to the companies that are failing, while using business techniques opposite of what Hazlitt says, as models for your argument. Hazlitt says that productive companies need to hire productive workers and pay them well to keep them productive. As you pointed out, the companies that are failing are doing just the opposite. They don't care about the workers or the consumer and guess what, they are failing. How does that make Hazlitt's "idealized concepts" a joke. If anything it proves him correct. Business needs to be run a certain way or it won't work. Obviously, we are seeing the results of that today. You're ideas of government intervention only furthers the problem.

 

You complain about the "golden parachutes" and executive pay, but guess what? The bailouts and government intervention you support are what is paying those salaries and only making matters worse. If companies were allowed to fail, we wouldn't have the problems you bring up and it definitely wouldn't be the end of the world as some pundits would have you believe. To say that these companies weren't in trouble until deregulation is flat out not true. In fact, the truth is quite the opposite. They are failing because of too much regulation and because they weren't/aren't using proper business techniques. If you think otherwise, I'd like to see proof on how you come to your conclusion.

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you're so pro-free market that it's unfathomable. and you can't be dissuaded.

 

Yep, it's the only way!!!

 

 

And therein lies the rub...a true free market doesn't work because when left to their own devices the individuals running a company always put profit ahead of everything else: responsibility, the environment, workers rights, etc.

 

In other words they can't be trusted to act ethically on their own.

 

On the other hand...

 

If government runs the industry it becomes excessively complicated because it is mired in needless beauracracy and regulations.

 

So what's the solution here? Is there a solution? Is there a middle ground between socialism and a pure free market economy?

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you're so pro-free market that it's unfathomable. and you can't be dissuaded.

 

Yep, it's the only way!!!

 

 

And therein lies the rub...a true free market doesn't work because when left to their own devices the individuals running a company always put profit ahead of everything else: responsibility, the environment, workers rights, etc.

 

In other words they can't be trusted to act ethically on their own.

 

On the other hand...

 

If government runs the industry it becomes excessively complicated because it is mired in needless beauracracy and regulations.

 

So what's the solution here? Is there a solution? Is there a middle ground between socialism and a pure free market economy?

 

We might disagree on a lot of things Jen, but you nailed this one. I don't think there really is a good solution. Purely profit regulated business won't work (in medicine anyways) . . . but excessive government intervention bogs everything down. The tough questions provide unsatisfactory answers.

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you're so pro-free market that it's unfathomable. and you can't be dissuaded.

 

Yep, it's the only way!!!

 

 

And therein lies the rub...a true free market doesn't work because when left to their own devices the individuals running a company always put profit ahead of everything else: responsibility, the environment, workers rights, etc.

 

In other words they can't be trusted to act ethically on their own.

 

On the other hand...

 

If government runs the industry it becomes excessively complicated because it is mired in needless beauracracy and regulations.

 

So what's the solution here? Is there a solution? Is there a middle ground between socialism and a pure free market economy?

 

How do you know this? Can you provide proof for this statement? Every example I've seen brought up so far only shows that individuals armed with the force of government are able to achieve what you describe. Just because somebody is greedy doesn't mean they can disregard all else and still make a profit. In a free market, without the fear of force, it is even more of a requirement for the producer to appease the consumer or else he/she has no chance to ever make a profit. What you describe is a world without rules, or one with one ruler. Contrary to what you might think, even the free market relies on rules, it's called the rule of law. Government should only be used to uphold those laws.

 

I will totally agree with you about your stance on government intervention. It has been played out all too often; never has it been shown to work and never does it end gracefully. The free market on the other hand has never been given a chance and now might be the time to start.

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you're so pro-free market that it's unfathomable. and you can't be dissuaded.

 

Yep, it's the only way!!!

 

 

And therein lies the rub...a true free market doesn't work because when left to their own devices the individuals running a company always put profit ahead of everything else: responsibility, the environment, workers rights, etc.

 

In other words they can't be trusted to act ethically on their own.

 

On the other hand...

 

If government runs the industry it becomes excessively complicated because it is mired in needless beauracracy and regulations.

 

So what's the solution here? Is there a solution? Is there a middle ground between socialism and a pure free market economy?

 

We might disagree on a lot of things Jen, but you nailed this one. I don't think there really is a good solution. Purely profit regulated business won't work (in medicine anyways) . . . but excessive government intervention bogs everything down. The tough questions provide unsatisfactory answers.

 

Where is your proof for this? Has it ever been tried? Please try and show me an example of the free market failing because of its own undoings. 100% of the time you will also uncover the truth, that government intervention is what ruined it.

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i was reading up on the free market and well-known free market supporter said that pure free-market can't exist because of corporations ability to coerce their shareholders with a majority vote. so, that alone defeats the concept.

 

martin whitman is his name i believe.

 

he also said "a free market situation is probably also doomed to failure if there exist control persons who are not subject to external disciplines imposed by various forces over and above competition."

 

reasons cited were

" 1. Very exorbitant levels of executive compensation… 2. Poorly financed businesses with strong prospects for money defaults on credit instruments… 3. Speculative bubbles… 4. Tendency for industry competition to evolve into monopolies and oligopolies… 5. Corruption."

 

he also cited the US economy, saying that in some areas, it isn't regulated enough and others, over-regulated.

 

and before you say anything, yes it's wikipedia

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