6 ms·

How Bad Antitrust Enforcers Kill People

92 points by 0xd3adbeef 7y ago

monadic2 7y ago
I'm genuinely curious, which individuals has this article convinced of financial advice? Why did this particular crisis, as opposed to any other, change your mind?
downerending 7y ago
I thought this was going to be overzealous Feds put useful business out of business, reducing supply, but it's actually underzealous Feds fail to block merger, which ended up reducing supply.
- eej71 7y ago
  I have to imagine there is a substantial amount of regulatory capture that makes it incredibly difficult for an upstart to sell into this space.
  - deleted 7y ago
    [deleted]
  - cosmodisk 7y ago
    It's medical equipment + all sorts of special deals with hospitals/ doctors= almost impossible.
- jdashg 7y ago
  Also hamstrung Feds must negotiate contracts with both hands tied behind their backs, hence the inability of the government to send the already-approved designs and schematics along to another company for manufacture.
dantheman 7y ago
I think the monopoly that the FDA has on approving medical equipment and tests has had far more of an impact than any commercial concerns.
- luckydata 7y ago
  that's nonsense. It's like saying the monopoly of the FBI in enforcing federal law is a public safety issue.
  - James_Henry 7y ago
    If there aren't checks and balances, then what do you expect?
    - jdashg 7y ago
      Legislation and regulatory oversight oversight. Everyone answers to someone.
      - hpoe 7y ago
        But if everyone answers to everyone, eventually no one answers to anyone because everyone was held up by someone else who was waiting for someone else.
  - missedthecue 7y ago
    It's not nonsense. A couple years back, the FDA had a press release where they admitted they killed 1 million people. They had finally cleared a heart attack prevention drug for sale in the US that had already been legal and approved and prescribed in the EU for 10 years prior. In the press release, the FDA said that as a result of their benevolent approval, the drug would save 100,000 people a year.
    - CodeAndCuffs 7y ago
      Wasn't there a drug that all of Europe said was super safe, but the FDA held out on for years, and it ended up causing terrible birth defects? It's easy to say that a group is unnecessarily cautious/reckless until that cautiousness/recklessness saves lives or kills people. Hindsight 20/20 and all.
hpoe 7y ago
So in my younger days I was a full blooded libertarian especially economically, I was 100% against all government regulation. "You don't want lead in your meat, well then you do your research and stop buying meat with lead in it", I took positions that were pretty extreme by most standards, and I would stay I am probably still a little more out there than most people when it comes to opposing government regulation. My reason for this was rooted in a deep and abiding belief in the supreme importance of individual liberty, "the government should only stop me from doing something that directly hurts somebody otherwise all government power leads to tyranny in one form or another at the end of the day" was the train of my thoughts at the time. I extended this to the economy because I viewed the government regulating business as a violation of my right to conduct my business however I want, "I own the business, I own the assets, it is my money that has been used to build up this business and some useless paper pushing bureaucrat can go shove it all for telling me how to run my business, its my property to use how I want." and I still hold to that to a large extent. However recently I have been reflecting on the situation of powerful corporations recently, especially monopolies (which are more often aided and abated by government involvement than kept in check) and I think that I have discovered a fallacy in my thinking. I agree to live in a society and enjoy the benefits of a society in exchange for choosing to surrender my ability to exercise all possible freedoms I have. Implicit in this agreement however is that if I choose to violate the principles of this agreement by harming someone else for example, I will then be held accountable for that action and whatever comes from it. With corporations that is not the case, when a corporation violates someone's enjoyment of life, liberty, or property there is no real accountability on anyone. There is no one to actually take the fall, they may be fined, but there is no one that is directly accountable, not the CEO, no the Board, the closest thing to an accountable group is the shareholders, which really just means random people's 401ks held under the trust of one of the three big money managers. Ultimately it all comes back to the idea that a corporation has personhood, should a corporation be given personhood, and as extension the same liberties as a person if they do not also share the same accountability. We could say if a corporation breaks the rules that results in someones death then we "kill" the corporation by forcing it into bankruptcy, but that ends up punishing hundreds of innocent people that had nothing to do with the fact that Bill the VP of Product line X, who bribed regulators to sign off on shampoo that causes cancer. I would welcome some pushback or opinions though on that train of thought, it just seems to me as long as no one faces significant personal risk, there should be no one allowed to exercise the same rights as an individual.
creddit 7y ago
Matt Stoller's analyses are usually a mixed bag for me. I generally agree with him that the US needs a focused Industrial Policy but analyses like this one seem relatively weak. A few things that I feel should be addressed but weren't: 1) If Newport had this huge deal (40,000 ventilators * $3,000 price = $120M), why would Covidien not continue it? What about this would have been against their interest? It seems like if it's both better AND cheaper, they would dominate the market globally. Unless Newport had a novel invention under patent for a few years, presumably competitors could have also done this. Even if they were concerned with significantly decreased margins at the $3k price tag, why not try an $8k price tag using the same, better machine and still steal the global market? It's hard for me to understand why Newport was this advanced but Covidien just destroyed their product and this isn't even questioned in the article. I don't think these are unreasonable questions. 2) Matt talks about a monopoly on purchasing. There's actually a standard term for this, "monopsony". I would love to see Matt write about how unions end up with monopsony power selling their labor and how bad that is. I don't expect it any time soon. That said, he does make interesting points on how monopsony works against producers. The weird contradiction here, though, is that this drives down producer surplus and profit of the exact same big businesses that Matt is usually upset about having too high of producer surplus/profit. This seems to me a bit to be arguing against his general purpose. 3) "The contracting officers in government should have mandated as a part of the contract that Newport Medical give the government all its research and proprietary information on the product, and put in safeguards to ensure that the product would be delivered." I totally agree with the latter half of this statement, ensuring the delivery of the product is a must. However, the first part that Newport hand over its research and proprietary information on the product seems like a huge governmental overreach. What can justify this? Now, it may be that the government funded this research directly (ie a grant or loan to specifically develop the product). If this were the case, then I understand that. However, it seems, according to the article, that the US government was simply contracting to procure the new ventilators. Demanding a company hand over their entire IP portfolio as a part of purchasing their product at market prices seems ridiculous to me. What's to stop the government from then taking that IP to another producer and getting them to produce it for them. That producer has way better margins what with not having to do anywhere near the same load of R&D. Not, that said, I may be misunderstanding this particular case. 4) Matt repeatedly calls the merger illegal. He does a bit of describing his theories for why it should've been found illegal but until a court or someone with the oversight authority makes this determination, this is opinion.
abvdasker 7y ago
I like that this writer seems to have some awareness of the utter impotence of antitrust enforcement in the US. But in his Wired article, Matt Stoller writes: > The coronavirus relief bill, however, is an explicit takeover of Main Street-level activity by the state. It’s hard to wrap your mind around the ideological change that has taken place. Before this disease, Democrats were deeply skeptical of power grabs by the Trump administration. Today, Democrats are angry the President isn’t more aggressively commandeering private corporations and forcing them to make medical supplies. Think about what it means in a capitalist society for the government to take over the means of production. Now think about what it means for Democrats to demand that Trump seize more executive authority. Both of those things just happened. This is so wildly ignorant of socialism and the law at hand that I wonder if American journalists should forever be banned from writing about the subject. The law itself includes something like $500 billion in forgivable business loans, some of which is earmarked for specific industries. The government isn't taking over anything — it's just handing mountains of cash to corporations which were too irresponsible to plan for a rainy day. It doesn't give the government direct control over these corporations in the way taking an ownership stake would. We're not living in a command economy any more than we were in 2008. It's just the government socializing the losses of irresponsible corporations in the wake of gross mismanagement of the crisis by the Trump administration. Incompetence is expensive.

92 points by 0xd3adbeef 7y ago

I'm genuinely curious, which individuals has this article convinced of financial advice? Why did this particular crisis, as opposed to any other, change your mind?

downerending 7y ago

I thought this was going to be overzealous Feds put useful business out of business, reducing supply, but it's actually underzealous Feds fail to block merger, which ended up reducing supply.

eej71 7y ago
I have to imagine there is a substantial amount of regulatory capture that makes it incredibly difficult for an upstart to sell into this space.
- deleted 7y ago
  [deleted]
- cosmodisk 7y ago
  It's medical equipment + all sorts of special deals with hospitals/ doctors= almost impossible.
jdashg 7y ago
Also hamstrung Feds must negotiate contracts with both hands tied behind their backs, hence the inability of the government to send the already-approved designs and schematics along to another company for manufacture.

dantheman 7y ago

I think the monopoly that the FDA has on approving medical equipment and tests has had far more of an impact than any commercial concerns.

luckydata 7y ago
that's nonsense. It's like saying the monopoly of the FBI in enforcing federal law is a public safety issue.
- James_Henry 7y ago
  If there aren't checks and balances, then what do you expect?
  - jdashg 7y ago
    Legislation and regulatory oversight oversight. Everyone answers to someone.
    - hpoe 7y ago
      But if everyone answers to everyone, eventually no one answers to anyone because everyone was held up by someone else who was waiting for someone else.
- missedthecue 7y ago
  It's not nonsense. A couple years back, the FDA had a press release where they admitted they killed 1 million people. They had finally cleared a heart attack prevention drug for sale in the US that had already been legal and approved and prescribed in the EU for 10 years prior. In the press release, the FDA said that as a result of their benevolent approval, the drug would save 100,000 people a year.
  - CodeAndCuffs 7y ago
    Wasn't there a drug that all of Europe said was super safe, but the FDA held out on for years, and it ended up causing terrible birth defects? It's easy to say that a group is unnecessarily cautious/reckless until that cautiousness/recklessness saves lives or kills people. Hindsight 20/20 and all.

hpoe 7y ago

So in my younger days I was a full blooded libertarian especially economically, I was 100% against all government regulation. "You don't want lead in your meat, well then you do your research and stop buying meat with lead in it", I took positions that were pretty extreme by most standards, and I would stay I am probably still a little more out there than most people when it comes to opposing government regulation. My reason for this was rooted in a deep and abiding belief in the supreme importance of individual liberty, "the government should only stop me from doing something that directly hurts somebody otherwise all government power leads to tyranny in one form or another at the end of the day" was the train of my thoughts at the time. I extended this to the economy because I viewed the government regulating business as a violation of my right to conduct my business however I want, "I own the business, I own the assets, it is my money that has been used to build up this business and some useless paper pushing bureaucrat can go shove it all for telling me how to run my business, its my property to use how I want." and I still hold to that to a large extent. However recently I have been reflecting on the situation of powerful corporations recently, especially monopolies (which are more often aided and abated by government involvement than kept in check) and I think that I have discovered a fallacy in my thinking. I agree to live in a society and enjoy the benefits of a society in exchange for choosing to surrender my ability to exercise all possible freedoms I have. Implicit in this agreement however is that if I choose to violate the principles of this agreement by harming someone else for example, I will then be held accountable for that action and whatever comes from it. With corporations that is not the case, when a corporation violates someone's enjoyment of life, liberty, or property there is no real accountability on anyone. There is no one to actually take the fall, they may be fined, but there is no one that is directly accountable, not the CEO, no the Board, the closest thing to an accountable group is the shareholders, which really just means random people's 401ks held under the trust of one of the three big money managers. Ultimately it all comes back to the idea that a corporation has personhood, should a corporation be given personhood, and as extension the same liberties as a person if they do not also share the same accountability. We could say if a corporation breaks the rules that results in someones death then we "kill" the corporation by forcing it into bankruptcy, but that ends up punishing hundreds of innocent people that had nothing to do with the fact that Bill the VP of Product line X, who bribed regulators to sign off on shampoo that causes cancer. I would welcome some pushback or opinions though on that train of thought, it just seems to me as long as no one faces significant personal risk, there should be no one allowed to exercise the same rights as an individual.

creddit 7y ago

Matt Stoller's analyses are usually a mixed bag for me. I generally agree with him that the US needs a focused Industrial Policy but analyses like this one seem relatively weak. A few things that I feel should be addressed but weren't: 1) If Newport had this huge deal (40,000 ventilators * $3,000 price = $120M), why would Covidien not continue it? What about this would have been against their interest? It seems like if it's both better AND cheaper, they would dominate the market globally. Unless Newport had a novel invention under patent for a few years, presumably competitors could have also done this. Even if they were concerned with significantly decreased margins at the $3k price tag, why not try an $8k price tag using the same, better machine and still steal the global market? It's hard for me to understand why Newport was this advanced but Covidien just destroyed their product and this isn't even questioned in the article. I don't think these are unreasonable questions. 2) Matt talks about a monopoly on purchasing. There's actually a standard term for this, "monopsony". I would love to see Matt write about how unions end up with monopsony power selling their labor and how bad that is. I don't expect it any time soon. That said, he does make interesting points on how monopsony works against producers. The weird contradiction here, though, is that this drives down producer surplus and profit of the exact same big businesses that Matt is usually upset about having too high of producer surplus/profit. This seems to me a bit to be arguing against his general purpose. 3) "The contracting officers in government should have mandated as a part of the contract that Newport Medical give the government all its research and proprietary information on the product, and put in safeguards to ensure that the product would be delivered." I totally agree with the latter half of this statement, ensuring the delivery of the product is a must. However, the first part that Newport hand over its research and proprietary information on the product seems like a huge governmental overreach. What can justify this? Now, it may be that the government funded this research directly (ie a grant or loan to specifically develop the product). If this were the case, then I understand that. However, it seems, according to the article, that the US government was simply contracting to procure the new ventilators. Demanding a company hand over their entire IP portfolio as a part of purchasing their product at market prices seems ridiculous to me. What's to stop the government from then taking that IP to another producer and getting them to produce it for them. That producer has way better margins what with not having to do anywhere near the same load of R&D. Not, that said, I may be misunderstanding this particular case. 4) Matt repeatedly calls the merger illegal. He does a bit of describing his theories for why it should've been found illegal but until a court or someone with the oversight authority makes this determination, this is opinion.

abvdasker 7y ago

I like that this writer seems to have some awareness of the utter impotence of antitrust enforcement in the US. But in his Wired article, Matt Stoller writes: > The coronavirus relief bill, however, is an explicit takeover of Main Street-level activity by the state. It’s hard to wrap your mind around the ideological change that has taken place. Before this disease, Democrats were deeply skeptical of power grabs by the Trump administration. Today, Democrats are angry the President isn’t more aggressively commandeering private corporations and forcing them to make medical supplies. Think about what it means in a capitalist society for the government to take over the means of production. Now think about what it means for Democrats to demand that Trump seize more executive authority. Both of those things just happened. This is so wildly ignorant of socialism and the law at hand that I wonder if American journalists should forever be banned from writing about the subject. The law itself includes something like $500 billion in forgivable business loans, some of which is earmarked for specific industries. The government isn't taking over anything — it's just handing mountains of cash to corporations which were too irresponsible to plan for a rainy day. It doesn't give the government direct control over these corporations in the way taking an ownership stake would. We're not living in a command economy any more than we were in 2008. It's just the government socializing the losses of irresponsible corporations in the wake of gross mismanagement of the crisis by the Trump administration. Incompetence is expensive.