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I was disappointed by this sentiment by the author >And really, one can’t blame the drug companies. These are profit-making companies. We can’t expect drug com

• reutinger 8y ago
  It's important to note that institutions respond to outside forces, not the will of the people in those institutions. I'm sure plenty of the top bankers donate to the Sierra Club, but they still invest in fuel pipelines and oil projects. No one can blame the drug companies for operating as an institution and it's hard to pin that blame on the individuals operating in it, too. You're right that the incentives that form these companies haven't been around forever and we should seek to find ways towards a better solution.
• seanmcdirmid 8y ago
  What kind of room is there for not optimizing profits in a publicly traded or even a professionally managed private company? How does one decide the morals that the company should abide by when it isn’t their investment/retirement/etc... at stake. Actually, I’m not sure when this hasn’t been the case. Can you point out any good examples of corporations acting selflessly in the past that wouldn’t occur today?
  • manifestsilence 8y ago
    I think the only way corporations can reliably act morally is if that is in their best interests. PR, in other words, has to have monetary value, whether it be the appearance of morality to the customers, or an internal increase in their ability to hire and keep good workers. If customers and workers judge a company on its ethics and take their talent and business elsewhere, that will drive the market. Edit: I think this is also an argument for unions. If a group of workers all agree to hold firm on an ethical standard and block the talent pool, that has power. Without this layer of organizing power, there will always be someone willing to subvert the ethical standards for a quick buck.
    • kolbe 8y ago
      Corporations are just a reflection of their owners/management. There are some of them in the hands of good people (e.g. Patagonia). It's hard for them not to become profit-maximizers, but not necessary.
• onlyrealcuzzo 8y ago
  Companies are going to, and should, maximize for _something_. The most natural thing for that to be is profit. The biggest problems are: we don't properly regulate monopolies, and price signals are broken because we don't properly price in negative & positive spillovers. As a society, we are MUCH better off having healthy and educated citizens. And as of recently, funding in these areas is being viewed as a cost center, rather than an economic multiplier. At the same time, we're destroying the environment with carbon and subsidizing fossil fuels. Capitalism only works when price signals work. And price signals won't work without competition, and they'll be inaccurate without spillovers taxed accordingly.
  • village-idiot 8y ago
    Historically in America you could only make a joint stock company if there was some obvious common good component, such as the creation of a common canal to improve trade. The concept of a profit maximizing corporation is the creation of the late 19th century, at least in America. Prior to that most Americans held the independent worker in higher regard than the corporate salaried worker.
  • r00fus 8y ago
    That’s only because the government removed the requirement of corporations to have a social benefit in their charter of incorporation. If we reinstate this it would make that “something” be identified and other than just money.
    • emptysongglass 8y ago
      This is news to me. I thought we created these monsters with their mandates to make only money from the beginning. I'd like to see Social Purpose Corporations become the default but sadly it's non-obvious how to go about creating one. Stripe's Atlas defaults to the monster. Can we get an anti-Atlas that makes it easy to bootstrap ethical corps?
• dcolkitt 8y ago
  As long as you have free and open competition, then profit-maximizing companies will always out-grow companies that leave money on the table. It's the same concept as natural selection. It'd be great if organisms didn't struggle all the time to maximize their reproductive fitness. But any organism that falls behind will be out-competed. Even if every current organism decides to "play fair", it won't be long until a hyper-competitive mutant takes advantage of the lull to destroy his counterparts.
• rayiner 8y ago
  I agree with the general sentiment, but I think it's often abused to obfuscate a very destructive idea. Companies should follow the law and behave ethically, even if that doesn't maximize profits. On the other hand, behaving ethically shouldn't involve an obligation to take over charitable or government functions. To give a very simple example: I think it's really important for everyone to have access to a smart phone. That doesn't impose an ethical obligation on smart phone makers to release subsidized cell phones for low-income people. Indeed, that would be a bad thing--it would effectively create a cross-subsidy where cell phone buyers are shouldering a special tax to pay for a government welfare service. That is distortionary, and hurts the cell phone market relative to other industries. To achieve the result of universal cell phone access, the government should pay market prices out of general tax dollars. The drug business should be the same way. It is a high-tech, risky, capital- and talent-intensive business, and should produce profits and returns comparable to similar industries. We shouldn't use ethical obligations as a way to force drug companies to accept a lower return just because they make products that are important to society. That is also bad, because in the long run it drives capital away from this socially important industry into more lucrative, but less important industries. So while you're right that profit-seeking shouldn't be an excuse for engaging in illegal or immoral conduct, at the same time, holding companies accountable for ethical behavior shouldn't become a tool for extracting hidden concessions and subsidies from industries. And a lot of folks use "ethical behavior" as a cover for demanding exactly that.
  • Retric 8y ago
    > the government should pay market prices out of general tax dollars. That a horrific idea, that destroys the incentive to make low cost cellphones. Smart phones can be sold at a profit for ~20$ No need for any kind of special government intervention. If you feel people deserve a minimum quality of life then hand them enough money to do so and they will choose a lifestyle. Picking some set of goods as some god given right ends up with a host of horrible incentives.
    • tptacek 8y ago
      As you may have already noticed from your long time sharing this site with him, it's likely Rayiner agrees with you about giving money vs. giving goods. He's talking about the source of funding, not about the precise mechanism.
• stickfigure 8y ago
  >The notion that corporations should only work for the maximization of shareholder value is relatively modern Eh? Not since Adam Smith, at least: It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our necessities but of their advantages. Really, he took a quite a dim view of the moral character of businessmen: People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices ...and: To widen the market and to narrow the competition, is always the interest of the dealers…The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.
  • sunshinelackof 8y ago
    Corporations insulate individual actors from the market in return for a corporate wage. The baker enters the market to pursue his own interests, but when USA Bread Corp. hires thousands of bakers, those bakers are no longer perusing their own interests but instead the interests of the shareholders of USA Bread Corp. With this perspective it's reasonable to expect that a corporation that has every available advantage over the independent worker should serve and improve some common good.
    • SkyBelow 8y ago
      And when bakers hire an assistants, those assistants are no longer perusing their own interest but instead the interest of the bakers. The scale is different, but generally scale alone does not change the ethical or moral designation of an action.
      • 8y ago
• hjk05 8y ago
  The drug companies are in a situation where lowering the prices will mean they have to lower rebates, which means they won’t get picked up by insurances where the competition is on rebates not on list-price, this in turn means they reach fewer patients.. Drug companies can lower prices but it doesn’t help anyone because they aren’t selling directly to consumers at the list prices unless they decide to completely ignore the entire insured population. Which is basically the same as just straight up announcing that they are closing shop. Imagine if Apple tomorrow announced that they where going to stop selling phones to anyone who has a medical insurance in order to provide cheaper phones to those who aren’t insured. Imagine how fast their stock and company would implode. The drug companies want to reach the uninsured population however so they are pushing for things like selling biosimilars under different price schemes or selling cheap alternatives directly to consumers. Drug producers do have a social responsibility, but that responsibility has to be seen in the light of reaching the patients. Right now the consumer market in the US is split into insured/uninsured and through the list-price/rebate shenanigans the middlemen are controlling access to both segments. And the structure of the rebates has put them in a situation where they aren’t representing the consumers in negotiations because higher prices allow higher rebates which never get passed on to the consumers.
  • JudgeWapner 8y ago
    > they aren’t selling directly to consumers then they don't need to market directly to consumers.
    • jVinc 8y ago
      > they don't When you take parts of a quote out of context it changes it's meaning. That's rather bad practice, so please refrain from doing that. As for the marketing. Do you think Audi should stop marketing its cars to consumers because everyone buys their car through a dealership?
      • JudgeWapner 8y ago
        car dealerships are a horrible example because they're a cartel that only exist to keep a non-essential industry in business. Tesla had a hell of a time getting around this regulatory capture. The prescription model exists because drugs are deadly if not precisely administered. Also, I highlighted a true and non-misleading fragment of your sentence that does not change the meaning. Drugs are not sold directly to consumers. I'm responding specifically to that true statement.
• kolbe 8y ago
  It's not exactly an easy thing to fix. Between the bystander effect of having millions of shareholders, and the mere consequence of markets allocating assets to people who can extract the most amount of value from them, I don't know if there is any high-level way to stop it. At best, we can hope the legal system steps up its game and does better with whack-a-moling unethical corporate behavior.