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The problem is how does the free market test these kinds of things when there is every incentive to cut corners? We're not talking about toasters. How many pe

The problem is how does the free market test these kinds of things when there is every incentive to cut corners? We're not talking about toasters. How many people have to die before the market reacts? How much research into individual company's testing should a person do in order to buy an epipen?

grandalf 10y ago
> The problem is how does the free market test these kinds of things when there is every incentive to cut corners? The same incentive that makes the iPhone or Model S such poor quality? We don't know the name of the epi pen manufacturer because it does not need to develop a brand reputation, all it needs to do is reach a deal with regulators and collect profits. There is much room for a combination of public and self-interested private watchdog groups. There is no reason why we must rely on only one quality control approach. If things go poorly it can simply sell the patent to another firm who can repeat the same strategy, the only risks being that someone will come up with a better treatment or that regulators will take a dislike to the company... The second of these risks can be reduce through revolving door strategies and the standard regimen of fancy meals, etc.
clarkmoody 10y ago
Let's talk about a free market. > every incentive to cut corners Do you continue to patronize businesses that cut corners when you expect good customer service or a good product? The free market ruthlessly punishes businesses that do not meet consumer demands. Only through government interference are substandard businesses sustained. Profits are the signal that a business is doing something right. Ok, but the EpiPen is a life-or-death product. We must have coercive government regulation, right? > How many people have to die As far as a quick search could turn up, it looks like the discovery and isolation of epinephrine was entirely the product of private ingenuity -- in 1901. Government did not have some large project to find this wonder compound that could save lives. So private initiative already has saved countless lives without the direction of the government. So here is a compound that has been around for 115 years, and somehow we're looking at $600 for a two-pack of injectors. There is no way that situation arises from free-market processes. Government has been heavily involved in healthcare for a while, granting monopoly privilege to favored parties, effectively eliminating competition. Additionally, if a company sells a product purporting to save your life in a dire situation, shouldn't they be held liable if their product doesn't work? Not only will people cease to trust said company (forcing them out of business) but competitors will also arise -- and survive -- based on how well they serve consumers.
- clavalle 10y ago
  >The free market ruthlessly punishes businesses that do not meet consumer demands. True. But only as ruthlessly as the market approaches the free market ideal (readily available and accurate information on products, other users, choice at time of purchase etc). And we know there are no true free markets and that markets can drift far from the ideal even absent of government interference. Who is the first to try out a newly released epipen? >Only through government interference are substandard businesses sustained. Now THAT is a very strong statement. Information asymmetry that has nothing to do with government is one category of ways a sub-standard business can thrive. Are we to believe that information asymmetry is all rooted in government interference? > Profits are the signal that a business is doing something right. Most of the time. An abundance of sustained profits is also a signal that the business is doing something wrong (or taking advantage of a market failure of some kind) or competitors would be jumping in and eating away at them.
  - clarkmoody 10y ago
    > markets can drift far from the ideal even absent of government interference But only government interference can lock the market in that state in perpetuity, eliminating the corrective forces of price and competition. > Are we to believe that information asymmetry is all rooted in government interference? Of course not. But businesses that are able to satisfy more consumers through better transparency are going to win market share and increase profits. Asymmetry exists in most business situations though. That's the whole point of specialization in the economy: some people have greater knowledge, skill, or training in a certain area and are able to provide more value to the consumer. It is worthwhile for the consumer to trade money in exchange for the specialized service rather than spending years to learn that craft to perform the service herself. The cornerstone of the free market is satisfying consumer demand. Firms that fail to do so are destroyed quickly and effectively when the consumer stops purchasing their product. > abundance of sustained profits is also a signal that the business is doing something wrong What? Please explain.
    - clavalle 10y ago
      >But only government interference can lock the market in that state in perpetuity, eliminating the corrective forces of price and competition. Again a very strong statement with only faith that government is bad to back it up. Market power can become dominant in such a way that it can lock market distortions in as well. See: monopoly >But businesses that are able to satisfy more consumers through better transparency are going to win market share and increase profits. What about businesses that poison the environment in secret? This is also an information asymmetry that can exist that will earn greater profits right up until they are caught, if that day ever comes. I was using information asymmetry as one unavoidable aspect of pure markets that can lead to severe distortions completely apart from any kind of government interference since you asserted that only the government can sustain negative market distortions. >> abundance of sustained profits is also a signal that the business is doing something wrong >What? Please explain. If there is a great profit being made in a theoretical market approaching perfection then theory says competitors will enter that market, chipping away at that enormous profit until it is at a level that is still profitable but only so much as it is not worth it to further competitors to enter that market to capture even more. In other words, in a well functioning market profits tend toward (but never reach) zero. If this is true then an abundant profit sustained over time is an aberration and evidence that the business is doing something wrong in terms of the health of the market (threatening or buying off potential competitors, for example).

grandalf 10y ago

> The problem is how does the free market test these kinds of things when there is every incentive to cut corners? The same incentive that makes the iPhone or Model S such poor quality? We don't know the name of the epi pen manufacturer because it does not need to develop a brand reputation, all it needs to do is reach a deal with regulators and collect profits. There is much room for a combination of public and self-interested private watchdog groups. There is no reason why we must rely on only one quality control approach. If things go poorly it can simply sell the patent to another firm who can repeat the same strategy, the only risks being that someone will come up with a better treatment or that regulators will take a dislike to the company... The second of these risks can be reduce through revolving door strategies and the standard regimen of fancy meals, etc.

clarkmoody 10y ago

Let's talk about a free market. > every incentive to cut corners Do you continue to patronize businesses that cut corners when you expect good customer service or a good product? The free market ruthlessly punishes businesses that do not meet consumer demands. Only through government interference are substandard businesses sustained. Profits are the signal that a business is doing something right. Ok, but the EpiPen is a life-or-death product. We must have coercive government regulation, right? > How many people have to die As far as a quick search could turn up, it looks like the discovery and isolation of epinephrine was entirely the product of private ingenuity -- in 1901. Government did not have some large project to find this wonder compound that could save lives. So private initiative already has saved countless lives without the direction of the government. So here is a compound that has been around for 115 years, and somehow we're looking at $600 for a two-pack of injectors. There is no way that situation arises from free-market processes. Government has been heavily involved in healthcare for a while, granting monopoly privilege to favored parties, effectively eliminating competition. Additionally, if a company sells a product purporting to save your life in a dire situation, shouldn't they be held liable if their product doesn't work? Not only will people cease to trust said company (forcing them out of business) but competitors will also arise -- and survive -- based on how well they serve consumers.

clavalle 10y ago
>The free market ruthlessly punishes businesses that do not meet consumer demands. True. But only as ruthlessly as the market approaches the free market ideal (readily available and accurate information on products, other users, choice at time of purchase etc). And we know there are no true free markets and that markets can drift far from the ideal even absent of government interference. Who is the first to try out a newly released epipen? >Only through government interference are substandard businesses sustained. Now THAT is a very strong statement. Information asymmetry that has nothing to do with government is one category of ways a sub-standard business can thrive. Are we to believe that information asymmetry is all rooted in government interference? > Profits are the signal that a business is doing something right. Most of the time. An abundance of sustained profits is also a signal that the business is doing something wrong (or taking advantage of a market failure of some kind) or competitors would be jumping in and eating away at them.
- clarkmoody 10y ago
  > markets can drift far from the ideal even absent of government interference But only government interference can lock the market in that state in perpetuity, eliminating the corrective forces of price and competition. > Are we to believe that information asymmetry is all rooted in government interference? Of course not. But businesses that are able to satisfy more consumers through better transparency are going to win market share and increase profits. Asymmetry exists in most business situations though. That's the whole point of specialization in the economy: some people have greater knowledge, skill, or training in a certain area and are able to provide more value to the consumer. It is worthwhile for the consumer to trade money in exchange for the specialized service rather than spending years to learn that craft to perform the service herself. The cornerstone of the free market is satisfying consumer demand. Firms that fail to do so are destroyed quickly and effectively when the consumer stops purchasing their product. > abundance of sustained profits is also a signal that the business is doing something wrong What? Please explain.
  - clavalle 10y ago
    >But only government interference can lock the market in that state in perpetuity, eliminating the corrective forces of price and competition. Again a very strong statement with only faith that government is bad to back it up. Market power can become dominant in such a way that it can lock market distortions in as well. See: monopoly >But businesses that are able to satisfy more consumers through better transparency are going to win market share and increase profits. What about businesses that poison the environment in secret? This is also an information asymmetry that can exist that will earn greater profits right up until they are caught, if that day ever comes. I was using information asymmetry as one unavoidable aspect of pure markets that can lead to severe distortions completely apart from any kind of government interference since you asserted that only the government can sustain negative market distortions. >> abundance of sustained profits is also a signal that the business is doing something wrong >What? Please explain. If there is a great profit being made in a theoretical market approaching perfection then theory says competitors will enter that market, chipping away at that enormous profit until it is at a level that is still profitable but only so much as it is not worth it to further competitors to enter that market to capture even more. In other words, in a well functioning market profits tend toward (but never reach) zero. If this is true then an abundant profit sustained over time is an aberration and evidence that the business is doing something wrong in terms of the health of the market (threatening or buying off potential competitors, for example).