3 ms·

> This is easy to measure, but there are a great many other incredibly valuable things that don't involve large visible changes in the economy. Technically the

> This is easy to measure, but there are a great many other incredibly valuable things that don't involve large visible changes in the economy. Technically there is still an implicit money transfer in those cases, it's just the debt is settled immediately. Remember, money is an IOU – used when you promise to give something that you cannot deliver on right now. Business seeks to deliver value at a scale that would make it impractical for all the debts to be settled in the moment, thus money (promises owed to the business) does become a reasonable measure of how well it is scaling. Things that are incredibly valuable to society do benefit from being scaled up to provide that benefit to more and more people. > A company can become worth an absolute mountain of money while making society materially worse. No company becomes worth mountains of money without making society better in some way. Every act comes with negative externalities, of course.

UncleMeat 3y ago
> No company becomes worth mountains of money without making society better in some way. A pharmaceutical company that concludes that they can increase the price of their drug by 10x and only lose 3/4 of the sales is going to be a more valuable company. It will have increased revenue and profit and that will be reflected in its stock price. This decision makes the world materially worse. It only looks like an improvement when we measure based on revenue and profit rather than the amount of health improvement that the business provides to the world.
- randomdata 3y ago
  A pharmaceutical company raising their prices 10x indicates that there is some kind of scarcity. That may be scarcity of a natural resource that cannot be overcome, but in this case I expect the scarcity is in not having other people providing the same drug. So, we're back to someone withholding value that they could be providing to society. What I expect you are really trying to get at is that society has created rules that prevents others from providing that value, thus creating artificial scarcity. That is definitely true, but that's on society who created those rules and not truly related to the discussion taking place.
  - vlovich123 3y ago
    > So, we're back to someone withholding value that they could be providing to society. The point OP is making is that value to society and money are only loosely correlated. Sometimes it correlates well but often not so well. That’s because there’s externalities in any marketplace that aren’t captured by the marketplace itself. So in the presented hypothetical case, the externality of “provide life saving treatment” is not captured in the costs side of the drug company’s balance sheet, so treating 75% fewer people for 10x more per unit cost makes the company look even more financially positive even though the change is a societal negative. And this externality shift in the balance sheet need not be a conscious “evil” decision. It could simply be market dynamics and competition playing out with the players not even realizing that they’re just making money from an externality and not providing any benefit. Your argument that it’s the legal system is flawed on several counts: 1. The US (and many places) have regulatory capture so the legislation preventing future competitors is written by today’s competitors. So while it’s the law on one hand, it’s the current set of players that’s the real problem. 2. There’s no collective buying power in places where this is a problem (eg you don’t see the cost of penicillin being an issue in countries where single payer healthcare is a thing). We’re starting to see this with insulin where non profits and California are getting into the game, but it takes a while to ramp up production so even if the price does come back down, the companies involved have managed to make a lot of money in the short term at the cost of lives and financial health of many households.
    - randomdata 3y ago
      > it’s the current set of players Yes, that's right. Because others who could be playing cannot, in this case because society has decided they don't want more players, for whatever reason. However, the original premise still holds true given the constraints the actors are operating in. The 10x represents the additional value offered to society to operate within those rules created by society. So while, again, all acts have negative externalities, we cannot deny that society sees great value in having a limited set of players. In fact, society sees so much value that, in this example, it is willing to pay 10x more and accept that some people will not have access to drugs in order to maintain the benefits.

UncleMeat 3y ago

> No company becomes worth mountains of money without making society better in some way. A pharmaceutical company that concludes that they can increase the price of their drug by 10x and only lose 3/4 of the sales is going to be a more valuable company. It will have increased revenue and profit and that will be reflected in its stock price. This decision makes the world materially worse. It only looks like an improvement when we measure based on revenue and profit rather than the amount of health improvement that the business provides to the world.

randomdata 3y ago
A pharmaceutical company raising their prices 10x indicates that there is some kind of scarcity. That may be scarcity of a natural resource that cannot be overcome, but in this case I expect the scarcity is in not having other people providing the same drug. So, we're back to someone withholding value that they could be providing to society. What I expect you are really trying to get at is that society has created rules that prevents others from providing that value, thus creating artificial scarcity. That is definitely true, but that's on society who created those rules and not truly related to the discussion taking place.
- vlovich123 3y ago
  > So, we're back to someone withholding value that they could be providing to society. The point OP is making is that value to society and money are only loosely correlated. Sometimes it correlates well but often not so well. That’s because there’s externalities in any marketplace that aren’t captured by the marketplace itself. So in the presented hypothetical case, the externality of “provide life saving treatment” is not captured in the costs side of the drug company’s balance sheet, so treating 75% fewer people for 10x more per unit cost makes the company look even more financially positive even though the change is a societal negative. And this externality shift in the balance sheet need not be a conscious “evil” decision. It could simply be market dynamics and competition playing out with the players not even realizing that they’re just making money from an externality and not providing any benefit. Your argument that it’s the legal system is flawed on several counts: 1. The US (and many places) have regulatory capture so the legislation preventing future competitors is written by today’s competitors. So while it’s the law on one hand, it’s the current set of players that’s the real problem. 2. There’s no collective buying power in places where this is a problem (eg you don’t see the cost of penicillin being an issue in countries where single payer healthcare is a thing). We’re starting to see this with insulin where non profits and California are getting into the game, but it takes a while to ramp up production so even if the price does come back down, the companies involved have managed to make a lot of money in the short term at the cost of lives and financial health of many households.
  - randomdata 3y ago
    > it’s the current set of players Yes, that's right. Because others who could be playing cannot, in this case because society has decided they don't want more players, for whatever reason. However, the original premise still holds true given the constraints the actors are operating in. The 10x represents the additional value offered to society to operate within those rules created by society. So while, again, all acts have negative externalities, we cannot deny that society sees great value in having a limited set of players. In fact, society sees so much value that, in this example, it is willing to pay 10x more and accept that some people will not have access to drugs in order to maintain the benefits.