Quotulatiousness

February 13, 2016

QotD: Education

Filed under: Bureaucracy, Humour, Quotations — Tags: , — Nicholas @ 01:00

I put the donkey ears on “teaching” to this purpose. I do own a tweed jacket, though as a priestly colleague has pointed out, it lacks the regulation elbow patches. That is about the extent of my formal credentials as a pedagogue, yet by unlikely fate I have found myself “teaching” sometimes, at the “post-secondary” level, on a variety of topics — from development economics, to science and scientism in Hellenistic times, to the elements of typography, to the prehistory of modern journalism, to proper English Lit — and these days will do almost anything for money.

My father was also reduced to teaching, on several occasions — medicine, for instance — in addition to art, when it was discovered in a certain developing country that he actually knew some anatomy, and had access to a nursing textbook belonging to my mother.

From him, I learned to cite Hippocrates: “First do no harm.” The young, shall we call them, have almost invariably greater capacities for learning than will be revealed in modern schools. This is not only because their wee minds are therein seldom teased nor challenged. It is also because subjects are taught to them in a methodically lethal way, dispensed in cubes from the intellectual freezer, by teachers who, as a general rule, know nothing of the subjects themselves. (They have specialized degrees in “education.”)

I retain vivid memories of a Canadian high school where best efforts were made to kill my budding interests in poetry, theatre, music, art, biology, physics, math, &c.

There are, as George Bernard Shaw once counted, two basic methods of teaching. One is “education through art,” in which the student learns essentially through mimesis, by doing and making, gradually unfolding himself, as a flower to the sun in the moist air, feeding upon the nutrients beneath him — rich soils collecting through time. And the other is through torture. Each has its own standards. (I’m not against torture as a last resort.)

The expression “education through art” could easily mislead the literal-minded, who may not realize that science is an art. One acquires science by doing science, starting at the most rudimentary level, with small children, magically enthralled. Moreover, the various subjects are entwined. To master biology, for instance, one must learn to draw, in order to observe with precision. Physics, which naturally pairs with math, also pairs with music, which turns to pair with dance. The art of writing requires the art of reading, but vice versa equally so. And as throughout this world, while body and soul stay united, form has everything to do with content; meaning everything to do with style. Neither, and nothing, can be “prioritized”: until it comes time for the waterboarding.

“First do no harm.” God has set before every teacher this anciently humane instruction. Even if he should fail to do a student any good, at least do no evil. Do not repel him from the book forever; nor clutter his head with falsities. Even the torture should be carefully administered, leaving a prospect of some better way, and the happier alternative of following it.

David Warren, “Sigrid Undset”, DavidWarrenOnline.com, 2014-12-04.

January 4, 2016

QotD: The Science Czar

Filed under: Bureaucracy, Media, Quotations, Science — Tags: , , — Nicholas @ 01:00

I have noticed a tendency of mine to reply to arguments with “Well yeah, that would work for the X Czar, but there’s no such thing.”

For example, take the problems with the scientific community, which my friends in Berkeley often discuss. There’s lots of publication bias, statistics are done in a confusing and misleading way out of sheer inertia, and replications often happen very late or not at all. And sometimes someone will say something like “I can’t believe people are too dumb to fix Science. All we would have to do is require early registration of studies to avoid publication bias, turn this new and powerful statistical technique into the new standard, and accord higher status to scientists who do replication experiments. It would be really simple and it would vastly increase scientific progress. I must just be smarter than all existing scientists, since I’m able to think of this and they aren’t.”

And I answer “Well, yeah, that would work for the Science Czar. He could just make a Science Decree that everyone has to use the right statistics, and make another Science Decree that everyone must accord replications higher status. And since we all follow the Science Czar’s Science Decrees, it would all work perfectly!”

Why exactly am I being so sarcastic? Because things that work from a czar’s-eye view don’t work from within the system. No individual scientist has an incentive to unilaterally switch to the new statistical technique for her own research, since it would make her research less likely to produce earth-shattering results and since it would just confuse all the other scientists. They just have an incentive to want everybody else to do it, at which point they would follow along.

Likewise, no journal has the incentive to unilaterally demand early registration, since that just means everyone who forgot to early register their studies would switch to their competitors’ journals.

And since the system is only made of individual scientists and individual journals, no one is ever going to switch and science will stay exactly as it is.

Scott Alexander, “Reactionary Philosophy In An Enormous, Planet-Sized Nutshell”, Slate Star Codex, 2013-03-03.

December 28, 2015

QotD: Nuremburg revised

Filed under: Bureaucracy, Humour, Law, Quotations — Tags: — Nicholas @ 01:00

It takes a while, sometimes, for news to reach me from Kampala, Uganda. But a correspondent alerts me, this morning, to the result of the Review Conference of the International Criminal Court, declared on Saturday, 12th June, 2010. It is big news indeed: signatories have agreed to make starting a war into a grave international criminal offence. Henceforth, anyone who starts one goes straight to The Hague, to be disciplined for his improper behaviour. This means he could face years of hearings. Surely, knowing that will stop aggressors dead in their tracks.

How relieved one feels, to know there will be no more wars.

As my correspondent mentions, this may seem a small thing in the labour of ages. But it is a first step, a “baby step,” decisively in the right direction.

I entirely agree, and look forward to further efforts by the United Nations, on behalf of the ICC. For I think they should also have laws against earthquakes, floods, and tornadoes.

David Warren, “Nuremberg revised”, DavidWarrenOnline.com, 2014-12-05.

December 24, 2015

Repost – Hey Kids! Did you get your paperwork in on time?

Filed under: Bureaucracy, Humour — Tags: , — Nicholas @ 03:00

If you hurry, you can just get your Santa’s Visit Application in before the deadline tonight!

December 13, 2015

The TPP is pretty far from being a genuine “free trade” deal

Filed under: Bureaucracy, Business, Economics, Environment — Tags: , , , — Nicholas @ 03:00

Last week, Kevin Williamson attempted to explain why the Trans Pacific Partnership isn’t all that similar to an actual “free trade” agreement (and why that’s so):

Prominent among the reasons to look askance at TPP is that its text calls for the incorporation — sight unseen — of whatever global-warming deal is negotiated at the conference currently under way in Paris. It is one thing for a trade deal to incorporate changes to environmental practices — regulatory differences are an inhibitor of truly liberal trade — but there is a world of difference between incorporating specific environmental policies and incorporating environmental policies to be named later.

It would be preferable if we could simply enact a series of bilateral “Goldberg treaties,” so called in honor of my colleague Jonah Goldberg, who argued that an ideal free-trade pact would consist of one sentence: “There shall be free trade between …” But the unhappy reality is that the snouts of the nations’ sundry regulatory apparatuses are so far up the backsides of various industries and economic sectors that sorting them out requires thousands of pages of text. Consider, for example, the problem of defense-acquisition practices. Some countries have rules mandating that defense procurement be restricted to domestic firms, and some countries don’t. Coming up with a harmonized, one-size-fits-all approach is difficult; we Americans, accustomed as we are to operating in an economy that produces the best of almost everything in the world, sometimes forget that there are countries with no domestic aerospace industry or sophisticated manufacturers of military materiel. Of course Kuwait goes abroad for military gear; if memory serves, at one point their air force uniforms were made by Armani.

[…]

All of which is to say, we should expect trade deals, especially multi-lateral trade deals, to be complex, and we should expect environmental and labor standards, along with government procurement procedures and the like, to be part of the accord. There’s no getting around it. And, again, there is nothing wrong in principle with using trade accords, which have real economic bite, as a critical instrument for enforcing environmental rules and other regulatory reforms that are incorporated into trade relationships. But using TPP to commit the United States to whatever is cooked up in Paris, without an additional vote in Congress, is a poor tradeoff. It’s not often that I will turn up my nose at a trade deal — even far-from-perfect trade pacts are generally desirable — but here we should draw the line. TPP was negotiated, Congress and the public have had a chance to review the text, and Congress should reject it. That’s the system working, not the system failing to work. It’s why we have votes.

December 12, 2015

The US government’s no-fly list

Filed under: Bureaucracy, Government, USA — Tags: , , , , , — Nicholas @ 02:00

Kevin Williamson on the travesty that is the no-fly list:

There are many popular demons in American public life: Barack Obama and his monarchical pretensions, Valerie Jarrett and her two-bit Svengali act, or, if your tastes run in the other direction, the Koch brothers, the NRA, the scheming behind-the-scenes influences of Big Whatever. But take a moment to doff your hat to the long, energetic, and wide-ranging careers of three of our most enduring bad guys: laziness, corruption, and stupidity, which deserve special recognition for their role in the recent debates over gun control, terrorism, and crime.

The Democratic party’s dramatic slide into naked authoritarianism — voting in the Senate to repeal the First Amendment, trying to lock up governors for vetoing legislation, and seeking to jail political opponents for holding unpopular views on global warming, etc. — has been both worrisome and dramatic. The Democrats even have a new position on the ancient civil-rights issue of due process, and that position is: “F— you.” The Bill of Rights guarantees Americans (like it or not) the right to keep and bear arms; it also reiterates the legal doctrine of some centuries standing that government may not deprive citizens of their rights without due process. In the case of gun rights, that generally means one of two things: the legal process by which one is convicted of a felony or the legal process by which one is declared mentally incompetent, usually as a prelude to involuntary commitment into a mental facility. The no-fly list and the terrorism watch list contain no such due process. Some bureaucrat somewhere in the executive branch puts a name onto a list, and that’s that. The ACLU has rightly called this “Kafkaesque.”

Here’s where our old friends laziness and stupidity play a really prominent role: The no-fly list is not composed of identities, but merely names. Lots of people share the same name. So, for instance, the late Senator Ted Kennedy ended up on the no-fly list, because somebody had used his name (or a similar name) as an alias. Among people called “Kevin Williamson,” we find myself, the famous Scream screenwriter, a notable Scottish politician and political activist (he is also the author of Drugs and the Party Line), a Canadian entertainment journalist, a fine woodworker who sells his wares on Twitter, and a famous underwear model for whom I am unlikely to be mistaken. If a trip to the DMV or the IRS one day eventually sends me over the edge into full-on barking mad durka-durka-Mohammed-jihad territory, those other Kevin Williamsons are going to suffer simply because we share a name.

And, of course, every third actual dirtbag terrorist has the same name as a million other ordinary schmoes, because Arabic names tend to be a little repetitive. (Is there a Mohammed al-Mohammed in the house? Seriously, go to LinkedIn and see how many graphic designers and accountants walking this good green Earth share that name.)

December 10, 2015

QotD: Freelance writing

Filed under: Bureaucracy, Media, Quotations, USA — Tags: , , — Nicholas @ 01:00

A few years ago, I was called upon to inform the IRS that a former employee of mine would have liked to be paid more than I had paid him. Given that I have never met a freelance writer who thought he was being paid enough, I thought it a strange request, but I eventually understood the IRS’s line of thinking: The gentleman in question, who was in his 80s at the time, had retired from his former occupation and worked as a freelance writer. His beat involved a great deal of travel, and he deducted the expenses for which he was not compensated — which, the state of the newspaper industry being what it is, was all of them, at least as far as my editorial budget was concerned. The IRS suspected that his writing gig was somehow phony, something he had invented simply for tax deductions. In truth, he was just a freelance writer who didn’t make a lot of money — i.e., a freelance writer indistinguishable from about 88.8 percent of all freelance writers.

Kevin D. Williamson, “Mottos for Miscreants”, National Review, 2014-11-20.

December 3, 2015

Medical charities and their prime mission

Filed under: Bureaucracy, Health — Tags: , , — Nicholas @ 05:00

David Warren is rather a skeptic on the long-term usefulness of big medical charities (and not just because, like any big bureaucracy, sooner or later the primary goal becomes for the organization itself to survive and grow rather than pursuing whatever they were originally created to do):

Medical “research” does similar direct damage. Huge foundations are created to “fight” every imaginable human ailment, and find new ones on which to build fresh fundraising efforts, should any of the old ones go stale. Grand sums are expended on “public awareness” campaigns, to encourage hypochondria and psychosomatic disorders. (I suspect, for instance, that the chief cause of lung cancer today is grisly health warnings on packets of cigarettes.) Money is raised in billions to “find a cure” for whatever. (Snake oil sales were on a much smaller scale.)

At the most elementary level, people should try to understand cause and effect. Vast numbers come to rely upon the metastasis of these soi-disant “charitable” bureaucracies. And if a cure is ever found, they will all be out of their overpaid jobs. Moreover, it is almost invariably some isolated, eccentric, unqualified and unfunded tyro, who makes the fatal discovery. That is why one of the principal tasks of any large medical foundation is to locate these brilliant “inventor” types, and sue them into surrender.

Does gentle reader know that almost all the increase in human longevity, over the last century or so, can be attributed to people washing their hands and taking showers? And most of the rest to better sewage disposal? Or that it took until almost the middle of the last century for life expectancy in the West to rise to levels last seen in the parish records of the Middle Ages? Which was when “modern” hygienic practices were last observed. (Large, centralized hospitals are the most efficient spreaders of infection today.)

Painkillers are nice, and I’m inclined to keep them, only if we realize that the blessing is mixed. They turn our minds away from futurity; they displace faith in God, to faith in doctors. They create the mindset that embraces “euthanasia.”

Of course, the main focus of contemporary liberal “philanthropy” is not on saving lives at all; rather on killing off babies — in Africa, by first choice. It is what the proggies used to call “population control,” until they invented better euphemisms. That is what truly gladdens the peons in the foundations of all the Bills and Melindas; and lights the corridors of the United Nations. That and the (still historically recent) “climate change” agenda.

November 25, 2015

Food labelling laws and craft brewing … not a match made in heaven

Filed under: Bureaucracy, Business, Health, USA — Tags: , — Nicholas @ 03:00

Eric Boehm on how well-intentioned laws can still have significant and unforeseen negative side-effects:

Brewers are facing the prospect of spending potentially thousands to determine calorie counts for every variety of beer produced. Unless they spend the money to provide the information, breweries may never get their products into chain restaurants, like Buffalo Wild Wings and Applebee’s.

As is often the case with regulations, smaller breweries stand to lose the most.

“A regional craft brewer or a major brewery can spread the cost over a much larger volume of sales and it’s not so unreasonable for them,” said Paul Gatza, a former brewer who now heads the Boulder, Colorado, based Brewers’ Association, an industry group.

“Smaller guys that are just trying to sell a keg or two here or there, they have a decision to make on whether it is worth the additional cost to try to get their beers into chain restaurants,” Gatza told Watchdog.

The Food and Drug Administration is in the process of finalizing menu labeling rules that were part of the Affordable Care Act. Intended to make Americans more aware of their dietary choices, the rules are subject to controversy on several fronts, and the FDA announced in September that implementation of the new rules would be pushed back one full year, until December 2016, as the feds try to work out the kinks.

My favourite local brewery isn’t even a micro-brewery (they’re somewhere between a pico- and a nano-brewery): every week when I drop in, there are three or four new batches ready to sample (and it’s rare that there’s anything left of last week’s offerings). If they had to spend hundreds or even thousands of dollars to comply with detailed labelling requirements for every small batch they brewed, they’d never stand a chance of making a profit. I understand the urge to ensure that people have a chance to avoid ingredients that might make them ill, but this is the sort of regulation that tilts very heavily toward the big companies that have regional or national markets. A thousand dollars per product isn’t even a drop in the bucket to them, while to a small local business, that might be more than their profit margin when you require it be done for everything they produce.

November 20, 2015

Here’s a very disturbing economic issue

Filed under: Bureaucracy, Business, Economics, USA — Tags: , — Nicholas @ 03:00

At Coyote Blog, Warren Meyer shares his concerns about the constantly increasing regulatory burden of American business:

5-10 years ago, in my small business, I spent my free time, and most of our organization’s training time, on new business initiatives (e.g. growth into new businesses, new out-warding-facing technologies for customers, etc). Over the last five years, all of my time and the organization’s free bandwidth has been spent on regulatory compliance. Obamacare alone has sucked up endless hours and hassles — and continues to do so as we work through arcane reporting requirements. But changing Federal and state OSHA requirements, changing minimum wage and other labor regulations, and numerous changes to state and local legislation have also consumed an inordinate amount of our time. We spent over a year in trial and error just trying to work out how to comply with California meal break law, with each successive approach we took challenged in some court case, forcing us to start over. For next year, we are working to figure out how to comply with the 2015 Obama mandate that all of our salaried managers now have to punch a time clock and get paid hourly.

Greg Mankiw points to a nice talk on this topic by Steven Davis. For years I have been saying that one effect of all this regulation is to essentially increase the minimum viable size of any business, because of the fixed compliance costs. A corollary to this rising minimum size hypothesis is that the rate of new business formation is likely dropping, since more and more capital is needed just to overcome the compliance costs before one reaches this rising minimum viable size. The author has a nice chart on this point, which is actually pretty scary. This is probably the best single chart I have seen to illustrate the rise of the corporate state:

decline-of-new-business-employment

November 18, 2015

A maple-flavoured world’s first?

Filed under: Bureaucracy, Business, Cancon, Government — Tags: , — Nicholas @ 04:00

On the Mercatus Centre site, Laura Jones points out an unexpected Canadian first:

Canada recently became the first country in the world to legislate a cap on regulation. The Red Tape Reduction Act, which became law on April 23, 2015, requires the federal government to eliminate at least one regulation for every new one introduced. Remarkably, the legislation received near-unanimous support across the political spectrum: 245 votes in favor of the bill and 1 opposed. This policy development has not gone unnoticed outside Canada’s borders.

Canada’s federal government has captured headlines, but its approach was borrowed from the province of British Columbia (BC) where controlling red tape has been a priority for more than a decade. BC’s regulatory reform dates back to 2001 when a newly elected government put in place policies to make good on its ambitious election promise to reduce the regulatory burden by one-third in three years. The results have been impressive. The government has reduced regulatory requirements by 43 percent relative to when the initiative started. During this time period, the province went from being one of the poorest-performing economies in the country to being among the best. While there were other factors at play in the BC’s economic turnaround, members of the business community widely credit red tape reduction with playing a critical role.

The British Columbia model, while certainly not perfect, is among the most promising examples of regulatory reform in North America. It offers valuable lessons for US governments interested in tackling the important challenge of keeping regulations reasonable. The basics of the BC model are not complicated: political leadership, measurement, and a hard cap on regulatory activity.

This paper describes British Columbia’s reforms, evaluates their effectiveness, and offers practical “lessons learned” to governments interested in the elusive goal of regulatory reform capable of making a lasting difference. It also offers some important lessons for business groups and think tanks outside government that are pushing to reduce red tape. These groups can make all the difference in framing the issue in such a way that it can gain wide support from policymakers. A brief discussion of the challenges of accurately defining and quantifying regulation and red tape add context to understanding the BC model, and more broadly, some of the challenges associated with effective exercises in cutting red tape.

While I’m a huge fan of reducing the regulatory burden in theory, I can’t help but expect to be disappointed about the implementation in reality… (however, should the federal bureaucracy somehow manage to perform nearly as well as the BC experiment, it’ll be Justin Trudeau getting the credit for it, rather than Stephen Harper — but better that the country benefits as a whole rather than the former PM gets boasting rights.)

November 14, 2015

The US government has morphed from being part of “us” to being “them”

Filed under: Bureaucracy, Government, History, Liberty, USA — Tags: , , , , — Nicholas @ 04:00

Charles Murray explains why so many Americans are feeling alienated from their own government:

I have been led to this position by what I believe to be a truth about where America stands: The federal government is no longer “us” but “them.” It is no longer an extension of the people through their elected representatives. It is no longer a republican bulwark against the arbitrary use of power. It has become an entity unto itself, separated from the American people and beyond the effective control of the political process. In this situation, the foundational principles of our nation come into play: The government does not command the blind allegiance of the citizenry. Government is instituted to protect our unalienable rights. The more destructive it becomes of those rights, the less it can call upon our allegiance.

I won’t try to lay out the whole case for concluding that our duty of allegiance has been radically diminished — that takes a few hundred pages. But let me summarize the ways in which the federal government has not simply become bigger and more intrusive since Bill Buckley founded National Review, but has also become “them,” and no longer an extension of “us.”

[…]

In 1937, Helvering v. Davis explicitly held that the federal government could spend money on the “general welfare,” establishing that the government’s powers were not limited to those enumerated in the Constitution. In 1938, Carolene Products did what the Ninth Amendment had been intended to prevent — it limited the rights of the American people to those that were explicitly mentioned in the Constitution and its amendments. Making matters worse, the Court also limited the circumstances under which it would protect even those explicitly named rights. In 1942, Wickard v. Filburn completed the reinterpretation of “commerce” so that the commerce clause became, in the words of federal judge Alex Kozinski, the “Hey, you can do anything you feel like” clause.

Momentous as these decisions were, they were arguably not as crucial to the evolution of the federal government from “us” to “them” as the decisions that led to the regulatory state. Until the 1930s, a body of jurisprudence known as the “nondelegation doctrine” had put strict limits on how much power Congress could delegate to the executive branch. The agencies of the executive branch obviously had to be given some latitude to interpret the text of legislation, but Congress was required to specify an “intelligible principle” whenever it passed a law that gave the executive branch a new task. In 1943, National Broadcasting Co. v. United States dispensed with that requirement, holding that it was okay for Congress to tell the Federal Communications Commission (FCC) to write regulations for allocating radio licenses “as public convenience, interest, or necessity requires” — an undefined, and hence unintelligible, principle. And so we now live in a world in which Congress passes laws with grandiose goals, loosely defined, and delegates responsibility for interpreting those goals exclusively to regulatory agencies that have no accountability to the citizenry and only limited accountability to the president of the United States.

The de facto legislative power delegated to regulatory agencies is only one aspect of their illegitimacy. Citizens who have not been hit with an accusation of a violation may not realize how Orwellian the regulatory state has become. If you run afoul of an agency such as the FCC and want to defend yourself, you don’t go to a regular court. You go to an administrative court run by the agency. You don’t get a jury. The case is decided by an administrative judge who is an employee of the agency. You do not need to be found guilty beyond a reasonable doubt, but rather by the loosest of all legal standards, a preponderance of the evidence. The regulatory agency is also free of many of the rules that constrain police and prosecutors in the normal legal system. For example, regulatory agencies are not required to show probable cause for getting a search warrant. A regulatory agency can inspect a property or place of business under broad conditions that it has set for itself.

There’s much more, but it amounts to this: Regulatory agencies, or the regulatory divisions within cabinet agencies, operate as self-contained entities that create de facto laws that Congress would never have passed on an up-or-down vote. They then act as both police and judge in enforcing the laws they have created. It amounts to an extra-legal state within the state.

I have focused on the regulatory state because it now looms so large in daily life as to have provoked a reaction that crosses political divides: American government isn’t supposed to work this way.

October 28, 2015

Reducing the costs of regulation

Filed under: Bureaucracy, Government, Health, USA — Tags: , , — Nicholas @ 04:00

Henry I. Miller discusses a worthwhile regulatory change that would increase the availability of medicines in the US marketplace without reducing public safety:

The FDA would be a good place to start. Bringing a new drug to market now requires 10-15 years, and costs have skyrocketed to an average of more than $2.5 billion (including both out-of-pocket and opportunity costs) – largely because FDA requirements have increased the length and number of clinical trials per marketing application, and their complexity.

The detrimental effects of FDA delays in approving certain new drugs already available in other industrialized countries are well-documented and deserve as much attention as drugs’ high costs. An example is the three-year delay in the approval of misoprostol, a drug for the treatment of gastric bleeding, which is estimated to have cost between 8,000 and 15,000 lives per year.

[…]

A practical workaround to overcome regulators’ risk-aversion and capriciousness would be “reciprocity” of approvals with certain foreign “A-list” governments, so that an approval in one country would be reciprocated automatically by the others. That would make more drugs available sooner in all of the participating countries, increasing competition and putting downward pressure on prices.

Such an innovation would also help to alleviate another critical problem: The United States is experiencing shortages of certain critical pharmaceuticals, many of which have been essential in medical practice for decades. The majority are generic injectable medications commonly used in hospitals, including analgesics, cancer drugs, anesthetics, antipsychotics for psychiatric emergencies, and electrolytes needed for patients on IV supplementation. Hospitals are scrambling to assure adequate supplies of drugs that are in short supply, or to find substitutes for them. Reciprocal approvals would make numerous alternatives available.

As referenced yesterday, the FDA regulations also create temporary monopoly situations where only one company has the permit from the regulator to produce this or that medicine, so there’s nothing standing in the way of massive price increases if there are no close substitutes to provide price competition.

October 27, 2015

Update on that $750 pill and the regulatory system that made it inevitable

Filed under: Bureaucracy, Business, Health — Tags: , , — Nicholas @ 05:00

Tim Worstall follows up on all-world scumbag Martin Shkreli and his enabled-by-the-regulator insane price increases for a decades-old drug:

We have an interesting and important economic lesson for public policy here: markets, they work. More accurately, we don’t have to worry about someone attempting to exploit their possession of a contestable monopoly. We only have to worry, possibly take action, if someone has an uncontestable monopoly. And given that there’s very few of them that we don’t create ourselves for other reasons, this means that monopoly is just one of those things we can keep a wary eye upon but not worry over excessively.

Our example comes from Martin Shkreli. The basic background is that this entrepreneur thinks he’s found a pretty cool business model. There’s a number of pharmaceuticals out there that are well out of patent but still have small and useful markets. FDA regulations (no, we’ll not go into the details of how or why this happens) mean that it’s not as easy as one might think to produce generic versions of these out of patent drugs. So, as a business plan, buy up the rights to the permit-ed (as in, with a permit, not just those allowed, as in permitted) generics and as a result of the difficulty someone else will have in getting into the same market, some pricing power is available. You can then raise the price and start to bank your considerable profits.

This caused outrage when Shkreli announced that this was exactly what he was doing:

    Turing Pharmaceuticals, the company that last month raised the price of the decades-old drug Daraprim from $13.50 a pill to $750…

A 5,000% price rise certainly indicates that Turing thinks it has pricing power and thus that it has considerable monopoly power.

[…]

Markets, they work. As Mr. Shkreli is just finding out:

    Turing Pharmaceuticals, the company that last month raised the price of the decades-old drug Daraprim from $13.50 a pill to $750, now has a competitor.

    Imprimis Pharmaceuticals, Inc., a specialty pharmaceutical company based in San Diego, announced today that it has made an alternative to Daraprim that costs about a buck a pill — or $99 for a 100-pill supply.

This is not the same drug: it’s a slight variation, a close substitute. But it’s close enough that Turing isn’t going to be making much money from what it thought was monopoly pricing power. Because it was a contestable monopoly, not an absolute one.

October 22, 2015

QotD: The historical triumph of public health

Filed under: Bureaucracy, Government, Health, History, Quotations — Tags: , — Nicholas @ 01:00

… the great public health achievements between roughly 1850 and 1960. Doctors and public health experts were given extraordinarily broad powers by the government, and they used them to eliminate the scourges that had made cities into pestholes from time immemorial. They built gleaming sewers and water treatment plants to wipe out virulent water-borne pathogens that used to regularly claim thousands of lives. Contact-tracing and quarantine of airborne and sexually transmitted diseases turned former plagues like smallpox and syphilis into tragic but sporadic outbreaks. Changes in building codes helped beat back mass killers like tuberculosis. Poison control cut down on both accidental and deliberate deaths. The Pure Food and Drug Act, and similar ordinances in other countries, reduced foodborne illness, and also, the casual acquisition of opiate or cocaine addictions through patent medicines. Malarial swamps were drained. Environmental toxins were identified and banned. Then they went and invented antibiotics and vaccines and vaccination laws, and suddenly surgery was as safe as a long-haul flight, TB was curable, and childhood illnesses that used to kill hundreds of people every year were a quaint footnote in your 10th-grade history textbook.

Having seen public experts work these miracles through the heavy hand of the state, people understandably concluded we could use miracles in other areas. They had a metaphor, so to speak. The metaphor wasn’t very good, as is often the case, but it took a while to find out that you couldn’t solve a problem in your steel supply chain with the same system that was so good at tracing cholera outbreaks to tainted pumps.

[…]

This is an overreaction to a terrible failure, for two reasons. First, big bureaucracies fail all the time, especially in the face of novel threats. A large institution is like a battleship: hard to sink, but also hard to turn. Public health experts of earlier eras made grave mistakes, like dumping London’s untreated sewage into the Thames; public health experts of the future will too. The more important question is whether they correct themselves, as it seems to me the CDC is now doing.

The second is that this is not your grandfather’s public health system. Public health experts were, in a way, too successful; they beat back our infectious disease load to the point where most of us have never had anything more serious than Human papillomavirus or a bad case of the flu. This left them without that much to do. So they reinvented themselves as the overseers of everything that might make us unhealthy, from French Fries to work stress.

As with the steel mills, these problems are not necessarily amenable to the organizational tools used to tackle tuberculosis. The more the public and private health system are focused on these problems, the less optimized they will be for fighting the war against infectious disease. It is less surprising to find that they didn’t know how to respond to a novel infectious disease than it would have been to discover that they botched a new campaign against texting and driving.

Megan McArdle, “Will Ebola Be Good for the CDC?”, Bloomberg View, 2014-10-20.

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