Capitalism is based on the premise that profits reflect work that people want done, which is also worth more than the costs of its inputs.
The problem with this theory is that it often just isn’t so; the work being done involves a misallocation of resources.
Take pharma, for example. It is more profitable to sell someone a pill a day than to cure them.
This is simply inescapably true in most cases.
A man who needs erection pills, a person who needs insulin, are much better customers than someone who needs a single round of the latest antibiotic.
If you do have an actual cure, since you can’t keep charging forever, you want to charge as much as possible for it. So you raise the price for a Hep C cure (the majority of the research actually having been done with public money) to six figures, when it costs about a $100 to produce.
And a lot of people die or suffer who don’t have to.
The profit motive is a very blunt instrument, and it’s unnecessary for a lot of work. To be sure, no one wants to pick up garbage, but plenty of people want to be medical researchers, because it’s interesting work which does good for humanity, and a lot of people want to do good. Give them a salary sufficient to support their family and a lab, and most of them will be fine with that.
The actual manufacturing is not so fun, but that could easily be done by a range of contracting companies or even by the government.
And in such a situation, suddenly the emphasis is on cures.
If you must have big payouts, make them bounties: “Cure X, and we give you a billion dollars.”
Pharma does do a lot of research, but it wants a pill a day, it wants extensions of already profitable drugs, or it wants hugely pricey cures. It wants to create new forms of addictive drugs, like opiates, rather than just using, oh, morphine and various other forms of painkiller which work perfectly well and already exist and which can’t be patented.
None of this is hard to figure out. There’s a place for private pharma, to be sure, mostly to act as a cost check on public pharma, but as it exists now, what it’s doing is massively misallocating resources.
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