One of my smartest friends once told me that the economic basis for modern medicine is corrupt - you pay your doctor when you are sick instead of paying him when you are healthy.
There has been no innovation in the market of health for over a century since it became regulated by government.
Look I’m no friend of government interference in medicine, but are you saying we are still doing surgery and medicine like the days before penicillin?
I believe Stranger implied that there was no innovation in organizing health care for the people (or something like that). Not that quality of medicine didn’t improve.
Yes I assume he means no innovation in the distribution of medicine.
Ok maybe so, just like there’s been no innovation in the distribution of peanut butter, or paper clips or vodka.
Pretty much you choose your provider of choice, you pay him money and get the service. If he does a good job you go back and he gets rich.
No innovation needed.
Now he might argue that the FDA and the DEA and the licensing laws have made medicine less accessible- I agree. The only innovation I want is for government to step out of the way.
Stranger, what’s wrong with paying your doctor when you’re sick? He provides the services to make you better, and you voluntarily pay for it. And why do you say you don’t pay your doctor when you’re healthy? They charge for routine checkups too.
The problem is that your doctor doesn’t have an incentive to make you better, he has an incentive to keep you on medicine.
Ooooooh but now you’re going to tread on dangerous ground:
If your doctor only gets paid while you are healthy, and when you get sick I assume he has to treat you at his own expense…he has no incentive to keep you alive!
Think about it, he is never going to make money from you again, but if you die, he can stop losing money.
Dont be telling the free markets how to do their business- there is always a consequence.
Neither does your car salesman have an incentive to sell you a car that works for a long time, he has an incentive to keep you buying cars. Actually it’s the case in most industries. Your bus driver doesn’t have an incentive to get you closer to where you want, your gardener wants your plants to require watering more often, and what about the advice in the electronics store.
There are market forces that counteract this. One has been mentioned, that the incentive for short-term profit is often outweighed by the incentive to make business in the future. If your customer consistently gets a bad product he will take his money somewhere else. So you might have a rational incentive to screw your customers over in every separate transaction, but your greater interaction with him over many years provides the incentive to do a good job.
Then there is competition. If you don’t offer proper service, somebody else will. Socialists like the zeitgeist people often forget that. They theorize what incentives an individual capitalist has outside of competition, and then they conclude that what happens in the free market is the sum of those decisions. But of course capitalists don’t operate outside of competition, their actions are shaped by competition and not what their individual incentives would lead them to do in a vacuum.
And there are often different incentives at work than money. In many industries your reputation matters, so you’ll do a good job for the sake of your reputation. If your customer finds out you screwed them over he might be pissed. So you’ll do a good job to avoid a conflict. And then there’s always honor and the feeling you get from doing a good job. As society gets richer people rather have a pleasant experience at work than to screw customers over to earn a little more.
But in the end the answer is that this does happen in a free market. People do give you bad advice and sell you the most expensive product. But still it’s more efficient than any alternative. Because central planning is in so many more ways inefficient that it outweighs that. That the free enterprise system is imperfect does not argue that it is the worse alternative.
All the answers are in this nice book:
http://mises.org/books/prohibition.pdf
Have I mentioned it’s free? It mostly concerns the Prohibition of the '20s but it’s perfectly applicable to drug prohibtion of today.
You are right this misinformation does indeed happen in the market. What statists forget is that the same faults and moral failings of people persist in a state. A statist might argue that doctors have an incentive too keep you sick (which is sometimes true and sometimes not true, as you mentioned with other examples) and then conclude that is why we need government run medical care. But the statist commits the fallacy of assuming that the state will be free from the very same criticism. The doctors in a state run medical system will have the same incentive - even more so since they are protected from competition.
Neither does your car salesman have an incentive to sell you a car that works for a long time, he has an incentive to keep you buying cars. Actually it’s the case in most industries. Your bus driver doesn’t have an incentive to get you closer to where you want, your gardener wants your plants to require watering more often, and what about the advice in the electronics store.
No one ever called me crazy for not taking the advice of a car salesman, and no one ever declared me incompetent to make my own car purchase decisions.
“What I meant was, why did you bring up marginal value in this context?” - Emperor Nero
Because that’s exactly what he’s ignoring. Or if you prefer, the current crop of drugs and treatments and their relatives prices are the systemic consequences of the marginal deicisions made on the market every day over time. The market reveals preference, it doesn’t determine it, therefore the products and prices that the market produces can’t be failures by definition anymore than getting rain on one day sun the next is a ‘failure’ of weather. People who claim market failure in such instances are doing so by substituting their judgement as superior to that of all others and saying, “The market failed because it did not deliver the goods and services I want at the prices I deem reasonable.” By failing to separate the market process of revealing preference from the preferences of market agents themselves he’s making a moral/ethical judgement about a system which merely revealed the preferences of other people, and it is those preferences he has a problem with, not the system which revealed them. Hence my statement about marginal revolution; products and prices are driven by demand and what people are willing to forego. If people are willing to forego a cure for cancer to reliably get hard and grow hair, then that’s the way it is. Changing it means arguing with them though, not with or against the system that did nothing but reveal their priorities.
“He is substituting his categorical judgement…for everyone else’s marginal judgement…”
xahrx, that superbly encapsulates the cognitive error of central planners.
"“He is substituting his categorical judgement…for everyone else’s marginal judgement…”
xahrx, that superbly encapsulates the cognitive error of central planners."
I know. (c: I was quite proud of myself when I articulated that sentence some time ago, been using it ever since. And if it’s unique to me, more strokes for my ego. But I doubt that, someone has to have said or written it sometime in the past or something close enough for me to be paraphrasing.