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From: nrh@inmet.UUCP
Newsgroups: net.politics.theory
Subject: Re: Re: The free market (and lemons)
Message-ID: <28200387@inmet.UUCP>
Date: Sat, 14-Dec-85 15:44:00 EST
Article-I.D.: inmet.28200387
Posted: Sat Dec 14 15:44:00 1985
Date-Received: Tue, 17-Dec-85 05:43:41 EST
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Nf-From: inmet!nrh    Dec 14 15:44:00 1985


>/* Written 10:48 am  Dec 12, 1985 by bob@pedsgd in inmet:net.politics.t */
>...
>Here is situation in which a believe government can be a solution to a
>problem. I have heard on 2 TV programs ( 'Adam Smith's Money World' and
>'Innovation') that a successful drug is NOT a cure or a vaccine, it is
>a treatment.  In other words, it is more profitable to create a drug
>which allows patients to live with their condition than one which prevents
>or permanently remedies it with few applications. This seems intuitively
>clear. However, I submit it is in the best interest of the overwhelming
>majority of the citizens that cures and vaccines be invented. Therefore,
>this seems to me to be an appropriate arena for government.

I disagree: it seems to me that here is a case where the "prisoner's
dilemma" situation works in the public interest: if there are two
or more outfits with the technology to come up with a cure who have
been providing a treatment, then either outfit can better its competitive
situation by coming out with a cure first and screwing the other outfit
for its own competitive advantage.

This is particularly obvious in the case of a vaccine.

It's also worth worrying about the effects of government's entry
into the arena.  Precisely how should it be established?  Offer
a prize for a cure?  Threaten to kill people if they don't come up
with a cure?  Give out research grants to folks who say they're
working in an area that might result in a cure?  This last is the
way these things are accomplished now, but it's not clear to me
that this works better than the competition, and it strikes
me as likely to reward the folks who are best at dealing with
governments rather than the folks who are best at research
results (conceded that one is not entirely independent from the
other).  

That a treatment is more "successful" than a cure doesn't mean that
people can afford to offer it instead of a cure.  

Further, that government intervenes in the medical area doesn't mean
that it will intervene on the side of a cure: One case in point where
the government has interfered on the side of TREATMENT rather than
cure is dialysis -- Reason magazine once ran a pretty interesting article
by someone who'd been cured (by transplant) of kidney failure about
the "horrors of a well-intentioned program".  The author argues that
the transplant costs the patient about as much as a year of dialysis
to provide, but because of government incentives, doctors have a
financial interest in retaining dialysis patients -- there's more
profit in dialysis than in transplantation -- so that the alternative
is not emphasized.

(I could be wrong on the "one year dialysis cost = one kidney transplant
cost" identity as I'm working from memory).

As I've argued before: just because the government in theory (or any
beneficent, disinterested, arms-bearing force) could "solve" this sort
of problem doesn't mean that the historical outcome will be a solution.
A powerful government bears all our own imperfections (in the 
transplant case, probably sloth, greed, and ignorance) magnified.