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Bloomberg's Moral Myopia


Bloomberg View (the editorial page) has an article today entitled: "When Market Incentives Undermine Morality" by economists Daniel Friedman and Daniel McNeill, authors of Morals and Markets: The Dangerous Balance, of which the piece is an excerpt.

The article claims to offer an example of how "markets" can "degrade" our "moral behavior." The particulars concern anemia drugs that have made billions but which may not do any good for kidney patients and may actually cause harm. The authors describe a system in which drug companies pay for a government issued  patent on a substance, then spend an average of $1 billion getting FDA approval, after which they enjoy a government enforced monopoly. Older drugs not approved for the specified use and in particular natural substances, which cannot be patented and are therefore  ineligible for FDA approval, may not make any disease claims or otherwise compete. If anyone violates the monopoly, they may face not just fines, but jail.

None of this has anything to do with the "market." We haven't had a real market in healthcare for decades. Yet Friedman and McNeill don't hesitate to  blame the resulting inefficiency, deceit, and corruption on the "market" or "market incentives."This is truly Alice In Wonderland thinking. How can anyone confuse a market system with a government run crony capitalist monopoly system run by the FDA, which is itself increasingly funded not by taxpayers but directly by drug companies, whose staff hopes to move on to highly paid drug company jobs, and whose expert panels are full of drug company "consultants."

McNeill is also the author of a book called Fuzzy Logic, which presumably he is against. But confusing markets with government enforced monopoly is not just fuzzy logic. It is complete moral myopia.

Hunter Lewis is author of twelve books, including The Secular Saints: And Why Morals Are Not Just Subjective, Economics in Three Lessons & One Hundred Economic Laws, Where Keynes Went Wrong, and Crony Capitalism in America 2008-2012, and has contributed to the New York Times, the Washington Post, the Times of London, The Atlantic and many other magazines and web sites including Mises.org and LewRockwell.com. Lewis is also co-founder of Against Crony Capitalism.org as well as co-founder and former CEO of Cambridge Associates, a global investment firm. He has served on boards and committees of fifteen not-for-profit organizations, including environmental, teaching, research, and cultural organizations, as well as the World Bank.

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