Member Rara Avis
God forgive me if I had 5 of everything, and sat on my riches while the people below me die going with out.
How many pairs of shoes do you own, Janet? Maybe you're atypical, but most women I know own far more than five. And what most women pay for those shoes would feed an African family for six months.
I am NOT saying owning shoes is a bad thing. You could give up all your shoes and go bare foot in the winter and it wouldn't be a teardrop in the ocean compared to all the suffering in the world. But when you ask for limits on what the rewards of success and hard work are, you have to wonder who will set those limits. You and I? Or a starving mother in a third world country? Excess is always defined as a lot more than the person doing the defining.
I saw the 20/20 special on the issue, too... and I thought I remembered them saying that the prescription drug industry is the most profitable inustry in the U.S.
I'm not sure if it's the most profitable, but the 18.6 percent of revenue I quoted earlier has to put them pretty close. Most Fortune 500 companies average around 4 to 5 percent. But then again, General Foods doesn't gamble $800 million every time they want to bring out a new breakfast cereal either. Economically, financial risk MUST be balanced by the potential for equal financial gain. When risk outweighs gains, investments move somewhere else. You don't go to the race track and bet on an old nag without getting 50 to 1 odds.
But here's the key point.
When gains outweighs risk in a free market, there is an immediate influx of competition. I see an industry that can manage an 18.6 percent return on revenue, and sister, I'm ready to open me a manufacturing plant tomorrow! The pharmacy industry should be FLOODED with competition, which would very quickly lower prices until the proper risk/gain balance was reached again. If prices dropped too far, as sometimes happens, the risk would soon outweigh gains and investors would move somewhere else. It's a balancing act, all handled silently and almost perfectly by the simple laws of economics. It is the beauty of capitalism.
Trouble is, it only works in a free marketplace and the pharmacy industry does NOT operate in a free marketplace. I can't open a manufacturing plant tomorrow, not without FDA approval. I can't even import drugs from another country and resell them here. Because the federal government is regulating competition, it has NO CHOICE but to also regulate profit margins. That's part of the stupidity I mentioned in my earlier post. They have interfered with a natural balance, just as if they had killed off a predator in the wild and then found themselves overrun with the vermin it once preyed upon. And they're apparently not smart enough to go get a shotgun to restore the natural balance they upset.
Unfortunately, in my opinion, they're probably not smart enough to restore the balance without tilting it too far in the other direction. Yes, I believe 18.6 percent return is too high. But no one has any real idea what it should be. If the government stopped limiting competition, the natural economical laws would set the risk/gain balance perfectly. Drug prices would be as low as they could possibly go and still insure the development of new and better drugs. If the government steps in, though, as it otherwise must do, and sets the prices too low as has happened in most other countries, all of the benefits will be very short term. In ten years, there will be no viable pharmaceutical industry because all of the investment money will have moved elsewhere. Drugs that could save lives will never be discovered. Anyone here from California? This is exactly what happened in the electric power industry and is why California now goes begging in other states for power. When government tries to manipulate supply and demand, they mess it up every single time.
I understand all of the things you are saying... but it seems to me that that leads down a road to the cold equations of social darwinism...
Amy, I understand your pain. And your anger. I sincerely hope you will forgive me, though, for suggesting that maybe you're seeing the glass half-empty. If your mother is having 80 percent of her medical bills paid, she's a lot better off than many. Yea, it could be improved. But in any other system this world has ever tried, it was usually a whole lot worse. And, far more importantly, your mother has available to her one of the best health care systems in the world. Maybe one of our Canadian friends will pop into this thread and describe the long waits to see a doctor there, where health care is far more socialized. One of the nice things about capitalism is its inherent simplicity. Reward people for becoming doctors and you have a lot of doctors. Take away those rewards, and twenty years later you'll have a shortage of doctors. No one will willingly invest ten very grueling years of their lives so they can make maybe $2,000 more a year than the local plumber.
Capitalism certainly isn't perfect. But the only alternatives are communism, which hasn't worked anywhere it's been tried, and socialism, which has had less than stellar success. In virtually every civilized country, pure capitalism has been tempered with some degree of socialism, such as Medicare and Social Security in America. Other countries, like Canada and England have gone further and, judging from the shortages they experience, it may have been too far. It's a balancing act to provide for those who can't provide for themselves, without removing the incentives for others to continue providing for everyone. We're not talking about social Darwinism, Amy. We all WANT to help your mother and the tens of thousands like her. But history, economics, and political science have shown rather conclusively that if we do it wrong, the ill won't just be broke. They'll be dead. Quality health care cannot be mandated. Someone has to pay for it, and continue paying, else it will cease to exist.
Redistribution of wealth is a solution with limited application. If handled through taxes, I think it can offer "some" relief. But carried to extremes, as we saw in the Soviet Union, it removes all incentives and results only in homogeneous mediocrity. You may cringe at the thought of sprawling estates and luxury yachts, but every single one of us NEEDS the rich. It is their money, in the form of investments, that gives us new drugs, better medicine, and life-saving inventions. Tell the rich they can't become richer, and all of that goes away.
The answer, I believe, is not to redistribute the wealth, but to increase the wealth. America has been steadily doing that for most of a hundred years. Inventions, business practices, and management have driven productivity beyond anything possible in the 1800's, and the poorest citizens today live better and longer than the middle class of any other era. That trend must continue and spread throughout the world, until there are no third world countries, and every human being has the personal resources to live prosperously and happily. It is the ONLY solution that need not bring more harm than good.
A pipe dream? Personally, I don't think so. Stop war tomorrow and all the money spent on defense would buy the entire pharmacy industry a hundred times over. Invent a process for clean nuclear fusion next week and in ten years our whole economy would be reshaped into something approaching magnificence. Realistically, of course, I expect it to take longer. I probably won't see. Amy's mom probably won't see it. Maybe, just maybe, Amy might. But only if we do it right.