"We as a nation..."

An excerpt from a letter to the editor from today's Washington Post by Canadian Chris Hounsome:

I have followed The Post's articles about the importation of prescription drugs from Canada and elsewhere by Americans looking for bargain prices. As The Post pointed out, the main reason drugs are cheaper in Canada is that we bargain with the drug companies collectively, as a nation. [...]

The rest of the letter is critical of drug companies' advertising budgets, but that is a separate issue. What I want to focus on is the last sentence quoted above, which is a gross distortion of the English language. Believing that Canadians enjoy lower drug prices because of 'bargaining' is a farce.

One way to realize this is to consider what would happen if a drug company like Pfizer tried to sell its drugs to a Canadian citizen for the equivalent of the US price, i.e., higher than the Canadian government prefers. For one, the Canadian government would probably try to fine Pfizer, and if jurisdictional issues arise, would threaten to break Pfizer's patents and start manufacturing those drugs on its own. Similarly, the Canadian citizen on the other end of the exchange would likely be charged with 'smuggling' or some such nonsense and face fines or possible jailtime.

Bargaining is what happens when you go to the store and try to obtain the lowest price possible, while the vendor tries to obtain the highest price , and you two reach a mutually agreed upon price for the exchange. Price controls on the other hand have nothing to do with bargaining; they are a top-down imposition against free exchange backed by the threat of the use of force.

It is this same bastardization of the English language that dresses up violence in feel good terms such as "democracy", "will of the people", and "fair trade".

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Sounds like someone has been

Sounds like someone has been reading a little Orwell lately...

My favorite line from the above mentioned piece:

    In our age there is no such thing as ?keeping out of politics.? All issues are political issues, and politics itself is a mass of lies, evasions, folly, hatred, and schizophrenia.

I agree Jon, but I point out

I agree Jon, but I point out that this only follows if we recognize IP. Otherwise voiding the patents and maufacturing the drugs on their own is not aggression.

oh please stop with the

oh please stop with the "threat of the use of force" hooey. Property rights, fraud, Murder laws- whatever it is that libertarians want defended will have to ultimately be backed up by force. It's that simple. Criticizing things as being backed up by force is not much of a critique at all.

As for your example of "bargaining"- it looks like things work out after all. If Canada's "price controls" are too high, then they will lack Pfizer's drugs and suffer a loss. Then they will correspondingly lower price barriers (or eliminate them) if noone comes along. Supposing, though, that IP creates oligopsony power (an assumption that doesn't seem very far-fetched), then prices won't be at market levels- you'll need an authority to artificially cap them.

All this ignores the simple fact that US taxpayers are responsible for paying a huge amount of R&D for pharmeceutical companies. That means it could be our right to demand a massive discount, proportional to our investment. Or, as has been suggested, we could just up public funding for this stuff to 100% (we already fund the basic science and such, which is a huge piece) and then charge nothing but production costs for it. Boom.

matt, oh please stop with

matt,

oh please stop with the "threat of the use of force" hooey. Property rights, fraud, Murder laws- whatever it is that libertarians want defended will have to ultimately be backed up by force. It's that simple. Criticizing things as being backed up by force is not much of a critique at all.

Is there a difference between a mugger and his victim?

Matt, do you ever wonder why

Matt, do you ever wonder why the US produces the overwhelming majority of the world's drugs? Is it because US taxpayers pay so much more than taxpayers in other countries? Or might there be some other factor explaining this discrepency?

And you make a leap of logic here:

All this ignores the simple fact that US taxpayers are responsible for paying a huge amount of R&D for pharmeceutical companies. That means it could be our right to demand a massive discount, proportional to our investment.

This would not be our right at all. If I give you a chemistry set as a gift for your birthday and you use this set to discover some new medical breakthrough, can I legitimately claim a portion of the proceeds?

We can argue about whether a portion of scientific research should be socialized (as you well know, I don't believe any of it should be). But even if we do decide to use taxpayer money to fund research, we do not have the moral right to forcibly take from the proceeds of pharmeceutical companies just because those companies may have benefited from the publicly available socialized research.

Now, if you want to argue against IP, that's fine. Just don't pretend that pharmeceutical owe us anything for the gifts we give them freely.

yes, jonathan, there is. I

yes, jonathan, there is. I am pointing out that you are making the argument about what laws should be, not about whether we can back things up by force. Saying "it's backed up by force, therefore bad" is a very lazy argument. "Microsoft doesn't enforce their policies with guns like gov'ts do"- seems like I heard that a while ago. That stuff is just begging the question though- ask proudhon (property is theft) whether microsoft uses "men with guns" to enforce illegitimate things. Just don't fool yourselves into assuming that you aren't taking a moral stance.

Micha, as a condition for giving the chemistry set you can stipulate such things. Or as a condidion for future chemistry sets you could "freely contract" with them to lower prices. But since we're on the subject... wouldn't you feel a little miffed about giving someone a chemistry set and then having them charge you when you needed hydrogen peroxide for a cut on your foot?

yes, jonathan, there is. I

yes, jonathan, there is. I am pointing out that you are making the argument about what laws should be, not about whether we can back things up by force. Saying "it's backed up by force, therefore bad" is a very lazy argument. "Microsoft doesn't enforce their policies with guns like gov'ts do"- seems like I heard that a while ago. That stuff is just begging the question though- ask proudhon (property is theft) whether microsoft uses "men with guns" to enforce illegitimate things. Just don't fool yourselves into assuming that you aren't taking a moral stance.

Of course I am taking a moral stance. The 'very lazy argument' is in not distinguishing between agressive force and defensive force. A price cap is clearly agression against voluntary exchanges.

Micha, as a condition for

Micha, as a condition for giving the chemistry set you can stipulate such things.

I agree. If the government wants to say to the pharmeceutical companies, "give us a discount or we will stop funding publicly available scientific research," I don't have a problem with that. But the government cannot say, "since you benefited from taxpayer funding, we demand that you give us a discount."

But since we're on the subject... wouldn't you feel a little miffed about giving someone a chemistry set and then having them charge you when you needed hydrogen peroxide for a cut on your foot?

I'm more miffed that the government takes my money and spends it on research that I don't want or need. And even when it spends it on things I do want and need, I want to have the choice of where to buy it from; I don't like to be forced into these kinds of arrangments under some far-fetched justification of "implied consent". Talk about nonsense on stilts, to borrow a phrase from Bentham.

Micha Gertner, "We" don't

Micha Gertner,

"We" don't "give" R&D money to Big Pharma. At least *I* certainly don't remember giving them anything "freely." We have the money stolen from us by the State, acting on behalf of Big Pharma.

matt,

The use of force is not the same as a "law." A law is the initiation of force by a State, which claims a monopoly on legitimate violence in a specific geographical area. And it claims a right to initiate force at will within this area for the "public good" or "general welfare." Anarchists, on the other hand, deny that ANYONE has the right to initiate force, or to coerce anyone else into doing things against their will.

Any group of people, of any size, can freely associate for mutual defense. But they do not have the right to impose their defense "services" on those who don't want them, or collect fees by force from unwilling participants. The latter is what a government does.

John T. Kennedy,

I agree, patents are completely illegitimate. "Breaking a patent" is actually CEASING to use force to uphold a grant of monopoly privilege.

That being said: threatening to do so SELECTIVELY, against firms that displease the government, while continuing to uphold the privilege for favored firms, is a different matter.

That being said: threatening

That being said: threatening to do so SELECTIVELY, against firms that displease the government, while continuing to uphold the privilege for favored firms, is a different matter.

Yes, it's the selective nature of the breaking that I find distasteful.

I agree that the flaw in

I agree that the flaw in this article is that it eschews Canada's hard line with pharmaceutical companies, but embraces the un-Libertarian concept of drug patents.

It is a higher measure of freedom for Canadians (of which I am one) if we don't give those companies unchecked price-gouging monopolies because of some silly regulations passed in another country, and the US has some of the most pro-corporate, anti-capitalist patent laws in the world. Kudos to my government for sending the message "sell your wares for cheaper, or we'll make our own".

Paul

Of course I am taking a

Of course I am taking a moral stance. The 'very lazy argument' is in not distinguishing between agressive force and defensive force. A price cap is clearly agression against voluntary exchanges.
oh, please. I hope condaleeza Rice's NSS hasn't gotten you convinced that anything you do is defensive, and anything anyone else does is aggresive. It would take about 2 seconds of thought for you to see that Price Caps "defend" the consumer from unjust prices, when you look at it from a different perspective. Argue to you're blue in the face about whether that is a legitimate defense, but don't try to take the moral high ground here by assuming that existing private property is a given and the right of a corporation to set prices to whatever they damn well please is sacrosanct.

If the government wants to say to the pharmeceutical companies, "give us a discount or we will stop funding publicly available scientific research," I don't have a problem with that. But the government cannot say, "since you benefited from taxpayer funding, we demand that you give us a discount."
fair enough: we don't have a right to demand, ex post facto, reparations. I wasn't suggesting such a thing at all. A price cap would just say "as a condition of doing business in America (and receiving benefits like gov't support) you must agree not to sell your goods beyond price x." Who suggested any reparations?

I'm more miffed that the government takes my money and spends it on research that I don't want or need.
isn't it even worse when you do want or need it, but are effectively charged twice?

justification of "implied consent". Talk about nonsense on stilts, to borrow a phrase from Bentham.
yeah, I don't think there's a good difference between the social contract nonsense and "voluntary exchange" nonsense that von mises yammers on about.

"We" don't "give" R&D money to Big Pharma. At least *I* certainly don't remember giving them anything "freely." We have the money stolen from us by the State, acting on behalf of Big Pharma.
interesting... I wonder how this would apply to the Intellectual Property rights that you guys are discussing... If B and C conspire to steal A's money, aren't they both liable? (and isn't that practically a quote from you?) Looks like you might be a social reformer after all, bro.

The use of force is not the same as a "law." A law is the initiation of force by a State, which claims a monopoly on legitimate violence in a specific geographical area.
yeah, yeah. If you wanna keep this violence around for "national defense," "enforcement of contracts," and "enforcement of fraud laws"- then you have no right complaining about this "monopoly on violence" - your only business is in talking about what the violence should be used for.

You guys worship at the austrian school of economics alter right? Doesn't it follow, a priori, that these monopolies will be unsustainable- and we'll have competing "states" that offer violence at a cheaper rate and drive the monopoly out of business?

Any group of people, of any size, can freely associate for mutual defense. But they do not have the right to impose their defense "services" on those who don't want them, or collect fees by force from unwilling participants. The latter is what a government does.
so then you're opposed to a gov't role in national defense? Or to taxation at all? What about the nasty free-rider problems we've heard so much about?

I might do well to repeat

I might do well to repeat what is so often overlooked by neoclassicists: if the market is not efficient, and/or has oligopsony, oligopoly (or the less likely "mono...") then price caps can obviously do desirable things.

It would take about 2

It would take about 2 seconds of thought for you to see that Price Caps "defend" the consumer from unjust prices, when you look at it from a different perspective.

But no one familiar with basic economics takes this argument seriously anymore because the concept of "unjust prices" is incoherent. It implies that there is some objective price, above which it is unjust to charge. Since prices are completely subjective, dependent on the costs of production and the preferences of consumers, any notion of objective price is rubbish.

A price cap would just say "as a condition of doing business in America (and receiving benefits like gov't support) you must agree not to sell your goods beyond price x."

Now you are changing the argument. First you claimed that the government is justified in demanding reduced prices from pharmeceutical companies on account of the indirect subsidies given to them through research (even though they never agreed to this exchange). Now you are claiming that the government can set whatever conditions it chooses, "as a condition of doing business in America."

This is not the kind of argument I expect from an anarchist, socialist or otherwise. What gives government the legitimate authority to make such a condition?

I don't think there's a good difference between the social contract nonsense and "voluntary exchange" nonsense that von mises yammers on about.

I don't see the connection. A voluntary exchange is observable; a social contract is not. We can go out and see two people exchanging labor with each other: I mow your lawn, you clean my teeth. How is this nonsense?

If you wanna keep this violence around for "national defense," "enforcement of contracts," and "enforcement of fraud laws"- then you have no right complaining about this "monopoly on violence" - your only business is in talking about what the violence should be used for.

I agree. But if you notice, Kevin Carson is not a minarchist, so he doesn't want to keep this violence around for minarchist purposes.

You guys worship at the austrian school of economics alter right? Doesn't it follow, a priori, that these monopolies will be unsustainable- and we'll have competing "states" that offer violence at a cheaper rate and drive the monopoly out of business?

I am not (yet) an Austrian. I don't think anything, especially in this context, follows a proiri. But whether you intended to or not, you've highlighted one of the primary debates between minarchists and anarcho-capitalists: whether or not private law enforcement will remain stable as a competitive industry or whether it will condense into a monopoly.

so then you're opposed to a gov't role in national defense? Or to taxation at all? What about the nasty free-rider problems we've heard so much about?

The nasty free-rider problems will exist regardless. Government itself suffers from massive free-rider problems: who will watch the watchmen? Why is it in people's interest to become knowledgable voters when the benefits of gathering this knowledge go mainly to the group as a whole, while the costs are borne by the individual?

I might do well to repeat what is so often overlooked by neoclassicists: if the market is not efficient, and/or has oligopsony, oligopoly (or the less likely "mono...") then price caps can obviously do desirable things.

But even in cases where there is not perfect competition, and there exists a theoretical intervention that would increase efficiency (Note: Austrians will disagree with this concept), the more relevant question is whether or not the government has the knowledge, proper interest and contrained power to properly diagnose the situation and prescribe the correct remedy. Interestingly, many economists, even among the left, have been gradually moving away from these forms of intervention.

But no one familiar with

But no one familiar with basic economics takes this argument seriously anymore because the concept of "unjust prices" is incoherent. It implies that there is some objective price, above which it is unjust to charge.
I disagree- if economics is just exchnage, then maybe you're right. I don't think "basic economics" has to mean Bastiat though. Didn't you say you're in a history of economic thought course? These ideas were heavily contended.

What about medicines, when the demand curve is vertical, let's say? And IP creates and oligarchical market... Charging 20 billon dollars per cancer-cure pill is just? This is the kind of silly stuff that mainstream economics just has to swallow. It has to claim that everything, tautologically, that occurs in markets is just.

Now you are changing the argument. First you claimed that the government is justified in demanding reduced prices from pharmeceutical companies on account of the indirect subsidies given to them through research (even though they never agreed to this exchange). Now you are claiming that the government can set whatever conditions it chooses, "as a condition of doing business in America."
no i didn't. I said "it could be our right" to demand a massive discount proportional to our investement. This demand could be made a precondition to further gov't money- no inconsistancy there. Though using John T. Kennedy's "if a and b conspire..." argument you could conclude reparations are adequate as well.

This is not the kind of argument I expect from an anarchist, socialist or otherwise. What gives government the legitimate authority to make such a condition?
my argument isn't that government has the right to do it- but that is has more right than private corporations do. Government can be used as a tool for dismantling private power.

I don't see the connection. A voluntary exchange is observable; a social contract is not. We can go out and see two people exchanging labor with each other: I mow your lawn, you clean my teeth. How is this nonsense?
we've been over this before. Anyway, what about (from mike huben) a restaurant- is this an observable exchange?

Government itself suffers from massive free-rider problems: who will watch the watchmen? Why is it in people's interest to become knowledgable voters when the benefits of gathering this knowledge go mainly to the group as a whole, while the costs are borne by the individual?
sure- ours is set up with a reasonable amount of popular control (which is usually potential control)- so the people have better means to watch over watchmen.