I came across both of these posts in the last week, and they both highlight the problem of bad legislation. I recommend both – which is not to say that I don’t think some things should be free at point of use… but is to say, beware of perverse incentives and unintended consequences.
Drugs Vs Chairs
Here’s the start:
EpiPens, useful medical devices which reverse potentially fatal allergic reactions, have recently quadrupled in price, putting pressure on allergy sufferers and those who care for them. Vox writes that this “tells us a lot about what’s wrong with American health care” – namely that we don’t regulate it enough:
The story of Mylan’s giant EpiPen price increase is, more fundamentally, a story about America’s unique drug pricing policies. We are the only developed nation that lets drugmakers set their own prices, maximizing profits the same way sellers of chairs, mugs, shoes, or any other manufactured goods would.
Let me ask Vox a question: when was the last time that America’s chair industry hiked the price of chairs 400% and suddenly nobody in the country could afford to sit down? When was the last time that the mug industry decided to charge $300 per cup, and everyone had to drink coffee straight from the pot or face bankruptcy? When was the last time greedy shoe executives forced most Americans to go barefoot? And why do you think that is?
The problem with the pharmaceutical industry isn’t that they’re unregulated just like chairs and mugs. The problem with the pharmaceutical industry is that they’re part of a highly-regulated cronyist system that works completely differently from chairs and mugs.Scott Alexander – Drugs Vs Chairs on Slate Star Codex
Pay toilets and NYT: a free market microcosm
Nicholas Kristof in Sunday’s New York Times asks a pressing — often quite pressing — question. Why are there no public toilets in America? He is right. He calls for a federal infrastructure plan to fix the problem: “Sure, we need investments to rebuild bridges, highways and, yes, electrical grids, but perhaps America’s most disgraceful infrastructure failing is its lack of public toilets.”
Now, put on your economist hat. Or even put on your reporter hat. Ask the question why are there no public toilets in America?
I hope that didn’t take too long. Answer: Because it’s illegal to charge for toilets. There were once abundant public toilets in America, as there are in many other countries. And you pay a small fee to use them. A small fee that everyone in Nicholas’ stories would have been delighted to pay.John Cochrane – Pay toilets and NYT: a free market microcosm on The Grumpy Economist