Re: One-Handed Applause (Josh Cohen & Brink Lindsey)
I have been indoctrinated with enough neo-classical economics to view the notion that the U.S. market subsidizes pharmaceutical research as intuitively plausible. Raising the potential for profits increases investment. If 90% of men inexplicably went bald in the next two months, then companies would become more interested in finding a cure for baldness. Libertarians often cite some European country that paid regular citizens to paint. No supply and demand -- just creating a painting would get you a flat fee. Well, of course it increased art (or "art") production because... that's where the money is. This seems utterly basic.
The problem is really a question of how much and what kind of innovation we want. We do not want innovation for the sake of innovation, especially if it comes at the expense of welfare. One obvious way the government compels innovation (contra the free market) is by granting temporary monopolies on ideas. One obvious way the government could increase innovation is by making those monopolies permanent instead of temporary. And therein lies the problem: what are the welfare effects of granting permanent monopolies?
Brink Lindsey, fast becoming my favorite libertarian (or liberaltarian), makes a significant concession. Perhaps he still favors a freer market than I do, but our values are fundamentally the same: improving overall outcomes. The problem with too many libertarians is that they are doctrinaire in their beliefs, and here I'm talking specifically about the fools whose beliefs find some Randian/Bastard Lockean version of natural rights as axiomatic. In those cases any sort of empirical investigation is a secondary consideration, if one at all. (It's no surprise the two classical liberals favorably mentioned in this diavlog are economists.)
Agreeing on what I think are basic moral values, we can have an adult discussion. The strongest argument in favor of keeping big pharma's profits sky high is that by innovating more people in the long run will benefit, even if at the expense of the American public. And I just don't buy it.
Too often libertarians and conservatives overlook the public sector's critical role in subsidizing basic research and development. Finally, there's always the problem over what the free market values -- and it's ability to pay. There's more money to be made in anti-aging, hair loss, and boner pills than malaria. What you have are huge anti-human distortions, where the cosmetic afflictions of first world countries demand more investment and attention than deadly diseases in the third-world.