Live by government regulation, die by it too

Teresa Nielsen Hayden, a blogger and much-respected figure in the
science-fiction community, is staring at the ruin of her life, and
she’s enraged
about it. And rightly so. As her husband Patrick explains, she’s a
narcoleptic, and the FDA has just banned the only drug that keeps her

I’m not personally friendly with the Neilsen-Haydens, but I’m friendly
towards them. They’re part of several communities in which I’m invested.
They do good work. I don’t like to see them hurt. I feel for Teresa.

But I also think her anger seems curiously misdirected. She’s
wishing death on Ralph Nader and his “Public Citizen” group, but it
isn’t Nader who banned Cylert. The FDA did that. And it isn’t Nader
who has the authority to jail pharmacists who sell the drug and harass
companies who make it. It’s the FDA. More generally, what’s at fault
here is not just any one pressure group, it’s the entire political
system that gives government control of what adults put in their
bodies in the privacy of their homes.

I don’t know the Neilsen-Haydens well, but I’m fairly sure their politics
are conventional for elite coastal-liberals of the NPR-listening variety;
good-government leftism underpinned by a conviction that people need to be
regulated for their own good. And even if I’m wrong about them, that
certainly describes a lot of the people who have been offering them

Teresa, even as I feel your pain, I’m wondering if you’re going to learn
the right lesson. The Cylert ban isn’t an accidental failure of the
system, it’s an essential one. It wasn’t perpetrated by villains, but
by well-intentioned people working the levers of a system designed to
elevate “public safety” above individual choice. That system
functioned as designed; it’s the design that’s broken.

I may have your politics wrong, and if so I apologize…but my gut
reaction when I read your enraged post was “those who live by
regulation get to die by it too”. Welcome, Teresa, to the ranks of
those who have been royally screwed by “good government”. You’re now
one with every homeowner who’s been raped by eminent domain, every gun
owner, and every overtaxed working stiff in the United States.

UPDATE: Great Ghu, it’s an Instalanche!


  1. I think there’s plenty of blame to go around. I’m no fan of the FDA – if Canadian drug imports are so hazardous, then where are all the dead Canadians? – but, on balance, I think we’re better off with them than without them.

    In this case, they were led by the nose by a demagogue’s tame attack dog organization, purely so he could make political hay out of “protecting the public health!” while actually d estroying it for a subset of the folks who were taking it. Whether or not the FDA is itself a Bad Idea does not change the fact that Ralph Nader is scum.

  2. I have often wondered what an effective alternative to the FDA could be.

    I share many of this lady’s frustrations, and your own I’m sure, and am infuriated that I cannot go straight to the pharmacy and buy some percocet, or some antibiotic, or a frickin’ nasal allergy spray, without a doctor’s prescription…at added expense…that’s not simply regulation, that’s a cartel.

    As for the regulatory role the FDA currently plays…how many sick people may have benefitted from making their *own* decisions about which new medications to take, under advisement from their doctor perhaps, and the risks they would be subjecting themselves to.

    Drug companies spend *years* (what does it average? 15?) getting one drug, from many, through an exhaustive trials process…only to be sued sh!tless when, *shock horror*, somebody has an adverse reaction. What kind of incentive is that? Allowing such legal mayhem panders to a rather moronic ‘zero cost’ mentality, and is of serious detriment to the rest of us, not to mention the pharmaceutical industry!

    Perhaps the FDA (or an independent, privatized likeness) could exist as an established standards repository? Drugs could be produced without FDA ‘certification’, but would leave the producer exposed to the full wrath of the legal profession should anything untoward happen. Conversely, auditable adherence to FDA standards should accomplish two things – (1) Full public disclosure of data, and (2) protection from lawsuits *within the purview* of the standards.

  3. Considering the veracity with which the “legal profession” will go after anyone who produces a destructive drug, I don’t believe any coercive agency like the FDA is required. Actually, can’t a drug company say, “We followed all the FDA requirements” and be free of responsibility for not taking some obvious step to avert a problem? Much like Hooker Chemical who buried all those toxic chemicals in “Love Canal” perfectly legally according to the laws of the time.

    Without the FDA, standards of conduct will be followed by drug makers affiliated with reputable industry organizations. I expect the standards will be as strict or more than the FDA, simply to instill confidence in the organizations members products. Or you could get a remedy from Grandma Chow down the street that she says are Tiger Scrotum and essence of Bear, unmolested by the polypragmatoi.

  4. As Justice Louis Brandeis said:

    “Experience should teach us to be most on our guard to protect liberty when the government’s purposes are beneficial. The greatest dangers to liberty lurk in insidious encroachment by men of zeal, well meaning but without understanding.”

  5. In many of the (often nice) odd countries of the world (Mexico is the closest that fits into the following class), prescriptions are required only for tranquilizers and narcotics. Antibiotics, hormones, what have you are at your request. Is there widespread ‘penicillin abuse’? I think not. Do people ‘pop’ migraine meds? Nope. Are there lawyers under every bush? Perhaps every hundredth. Regular meds are available (yes, often at rather low prices), pharmacists are smarter, doctors are for more important stuff, and things work out pretty well. It would work here, with a bit of re-education.

  6. I am certainly no expert on the current “letter of the law” regarding FDA requirements, Curt…I did not think it was legally permissable to release a drug onto the market *without* FDA oversight.

    Given our government’s constitutional obligations regarding the administration of our nation’s system of law, I can actually see a reasonable argument *for* the presence of an FDA-like entity, but with *drastically* limited powers…basically, sufficient powers to enable it to effectively provide legal input. This could be privatized, but would it be perceived as more or less susceptible to corruption? Could it be any worse? ;-)

  7. I think she has every right to be angry at Public Citizen. Maybe not Nader, who I read somewhere is no longer involved with the day to day workings of the group, but the FDA didn’t just wake up one day and decide to ban her medication. If Public Citizen advocated for the removal of Cylert, they don’t get off the hook because someone else ultimately made the decision. Advocacy groups apply pressure if you don’t see things their way, and they often provide the rationale that government agencies end up relying on when the decision is made. If those arguments are short-sighted and harmful, sure, be upset at the FDA for buying them. But the people who made them deserve scorn as well.

  8. Shorter version of ESR’s post:

    “The man who trades [pharma] freedom for security does not deserve nor will he ever receive either. ”

    Ben Franklin

  9. I have long felt that an Underwriter’s Laboratories model would work well to replace the FDA. Private firms could choose to sell only medications with certain agency approvals. (UL itself is bureaucratic enough to be a government entity, but the idea of private recommendations stands).

    My “dog in this fight” is that I have MS and suggest that FDA bureaucracy and Naderesque lawsuits chase capital out of the Pharmaceutical sector.

  10. I have often wondered what an effective alternative to the FDA could be.

    Assuming you mean an alternative that doesn’t use coercion to be effective, then the crucial point to recognize is that the information of adverse drug reactions and a precise description of the context and setting of those reactions should be disseminated to those who are interested in such things. A verifiable clearinghouse of drug-patient interaction data, accessible to both health care consumers and professionals, would do the job fine. To cover the costs of such a service, either you’d pay per-use fees, yearly subscriptions, or have it rolled into your health care insurance plan.

    Regarding Mrs. Hayden, my thoughts echo Mr. Raymond’s, albeit with less sympathy.

  11. I’ve often thought a tiered system would work so much better than what we have now. Something along the lines of:

    Approved — equivalent to “today’s” FDA approval
    Passed — has passed all required studies and research requirements, but is NOT sanctioned by the FDA
    Experimental — probably like it is now; still undergoing studies and no known / unreported negative effects

    Legal liability could be drastically reduced for drugs within the 2nd/3rd tier whereby the drug company / producer isn’t liable for anything provided they met each term of the requirements

  12. “””Is there widespread ‘penicillin abuse’? I think not.”””

    Yes, actually there is.

    An aquaintence of mine–a nurse–used to (in the 60s) take 1 tablet of Penicillin every night to ward off infection.

    This continued until she got a penicillian resistant infection.

    All over Asia (increasingly strong) antibiotics are routinely prescribed for things like colds (virus), increasingly leading to antibiotic resistant bacteria.

    Note the increase in anti-biotic resistent Hepatitis among f****** junkies. They’d get Hep, take half their meds, feel better and go back to sharing needles–and this is WITH the nominal supervision of a doctor.

    I wouldn’t doubt that something similar happens in places where medical knowlege is lacking and access to antibiotics is cheap. In general people DO NOT understand the important differences between viral, bacterial, (whatever the heck it is that gives you yeast infections, crotch rot, atheletes foot etc.) and ringworm. The average IT worker, graphic designer, CHEF, WAITRESS, etc. would take whatever the doctor recommended *last time* when they got sick.

    This is not to say I agree with the existence or adequacy of the FDA, nor the government war on painkillers and etc., but this is a really hard problem–how to prevent dangerous abuse by Government on one hand, and by average people on the other.

    It is *very* clear how the abuse of certain drugs (the antibiotics) by one or a small number of people can lead to a significant problem for LOTS of others.

  13. And lo, the black market doth grow a little bigger, and it’s purse a little fatter, each year.

    Methandrostenalone was banned 16 years ago, along with a suite of other steroids, due to liver and cholsterol concerns. You think it really went bye-bye? Have you *seen* Ron Coleman?

    A sad corollary is that the criminal class grows each year, too. Mrs. Hayden now has a choice between being legal and nonfunctional, or criminal and able. Not an enviable position.

  14. Whether it’s the UL model or something else, we need a fix because this kind of thing is only going to get worse. But one should first understand that just setting up a private-label outfit to do what the FDA does now is not going to fundamentally change anything.

    The underlying reason, ironically enough, is the vastly INCREASED specificity and effectiveness of modern medications. Time was when most medications were developed via what I call “casino chemistry” – drug companies screened tens of thousands of compounds before randomly stumbling upon even one that MIGHT deal usefully with the target problem.

    Then came clinical trials to establish dose, efficacy and side effects. Side effects were fairly common and, often, fairly significant. Clinical trials usually caught these. The FDA’s clinical trial requirements are based on this old “casino” model of drug research in which both the search and the range of effects of the things eventually found were, for the most part, crudely random.

    Over the years the industry has learned to do many things to both improve the efficacy and reduce the incidence and – usually – the severity of side effects. One such thing is refining and/or redesigning production processes to eliminate unwanted “mirror image” molecules in the output when it is only the right- or left-handed version that produces the desired effect. The recent contributions of genomics, proteomics and computational chemical simulation have continued to drive pharma research further away from the “casino” model and toward engineering-style precision and predictability. Most modern drugs have molecular structures that were not found through random tests of everything in the biochemical closet, but of much smaller numbers of similar compounds that all correspond, approximately, to a molecular shape and composition worked out analytically in advance. This is possible owing to our current much greater grasp of chemico-physical fundamentals than that enjoyed by the predecessors of today’s researchers. This body of knowledge continues to grow quickly.

    The upshot of all this is that modern medications are much LESS likely to produce large numbers of disabling or lethal side effects than the medications of a generation or two ago. The joker in the deck is that, as such side effects are reduced in incidence, they – with mathematical inevitability – become more difficult to spot early in limited clinical trials with small or even not-so-small numbers of test subjects.

    Think of it like political polling. Each side effect is a “party.” When most parties are fairly large, it’s easy to do accurate polling from small samples. If there are parties with very small membership bases, however, polling results for these parties will be less accurate or even missed entirely by small-sample polling.

    Current FDA clinical trial guidelines are based on the old “large party” assumption. If the side effects of a present-day drug prospect affect, say, a percentage of the total population roughly equal to the current voter registration totals of the Green Party, then it will still be turned up by the old clinical trial tools. If the effect is limited to, say, a sub-population no larger than the paid-up membership of the Revolutionary Communist Party, then things are dicier. If the effect is so uncommon as to correspond to the paid-up membership of, say, a royalist party that still regards a descendant of the late Emperor Norton as the rightful hereditary ruler of North America, then we almost certainly have a problem.

    Conventional clinical trials are increasingly likely to fail their primary function as drugs get better and side effects less common. Changing the letterhead or putting an “Under New Management” sign up at the FDA can do nothing to change this.

    At some point – probably within a generation or so – we should have improved our knowledge of the human body’s chemical environment and driven down the cost of gene sequencing enough to make the cataloging of individual genomes and proteomes affordable procedures. This should, in turn, allow the analytical simulation of a given drug’s effects on any individual patient using the vastly greater and cheaper computation power that will also be available. Doing so would allow identification of the few who will respond fatally to any drug which is beneficial to the vast majority. At that point, the FDA can be sunsetted because it’s main job will be obsolete.

    The rub is – what can we do until we get to the much-desired point just described? Continuing down the current path is only guaranteed to do three things:

    1. Shower ever more undeserved wealth on trial lawyers.

    2. Produce ever more restrictive and expensive mandates from an FDA that may be reliably counted upon to enter a more or less permanent state of CYA thrash.

    3. Still fail to prevent rare, but fatal, surprises as new drugs come on-stream.


  15. You nailed it, dude. (Eh, I should ‘probly say: X-ring!)

    The problem is that a lot of folks have come to believe that the social world can be perfected, by perfect regulations perfectly enforced.

    And that belief illustrates the essential difference between a contemporary liberal and a contemporary conservative, IMHO. The liberal thinks it’s a game plame for getting to utopia. The conservative recognizes it as the fatal fallacy.

    I’m a conservative. I figure it’d be tragic to surrender the liberty our ancestors bought with blood, for a handful of vain promises of material security.

  16. Patrick Nielsen Hayden wrote in a comment to at January 04, 2006, 11:30 AM:

    “Thanks to the many, many people here who have suggested useful approaches to this problem. Obviously we’ll be following up on many of these in the days to come.

    No thanks to people who want to use this as a springboard to argue for “tort reform,” or post snippy comments about the supposed wholesale evil of lawyers. In my view, while there are plenty of problems with our legal system, the “tort reform” movement is largely a con job by the strong against the weak. I’ve written about this before and I may do so again. At the moment, in this thread, I’m not interested, and neither is Teresa. Further infestation of this thread with “tort reform” discussion will be met with draconian measures.”

    I sincerely, genuinely hope that Teresa is able to obtain a supply of Cylert/pemoline, which she needs to continue to function normally.

    In addition, I sincerely, genuinely hope that Teresa never develops liver disease as a result of taking this drug. Liver disease is nasty stuff, even when not fatal.

    That said, I also hope that if Teresa *does* develop liver disease (unlikely but possible), that the Nielsen Haydens do not sue the manufacturer of the drug.

  17. Yeah, having access to just about any “prescription drug” without a prescription sure was a perk of living in Brazil. …

  18. Oh, she has a right to be mad at Public Citizen, all right–I’m sure she’s got fury enough to go around.

    It is important to note that this outcome is indeed an inescapable outcome of a nanny-state system. That’s where the ultimate blame lies.

  19. Curt asks:”Actually, can’t a drug company say, “We followed all the FDA requirements” and be free of responsibility for not taking some obvious step to avert a problem?” Nope. Otherwise, why would there be Vioxx suits?

    Bill asks: “Is there widespread ‘penicillin abuse’? I think not.” According to my wife, an MD, there are some nasty drug-resistant strains of bacteria coming up from Mexico and the other countries where antibiotics are OTC. This is one area where OTC availability is problematic as there are society-wide direct effects from uninformed individual use.

  20. The Cylert ban isn’t an accidental failure of the system, it’s an essential one. It wasn’t perpetrated by villains, but by well-intentioned people working the levers of a system designed to elevate “public safety” above individual choice. That system functioned as designed; it’s the design that’s broken.
    Then again, as Abramoff shows, truth may point to a villain.
    Paraphrasing the Joker, the US gubmint needs an enema.

  21. Dean, thank you. Yep. Hopefully I at least spelled it correctly…

    Edmond Hack, Of course, I will keep that in mind. I wonder, doesn’t that further demonstrate that the FDA is actually a huge waste of time, money and freedom, simply because it cannot actually achieve what it proposes to do, as evidenced by just such lawsuits?

    Even “antibacterial soap”, all the rage now in households with children, does the same pruning of weaker strains leaving only the resistant strains. Humanity continues to do with technology rapid evolution that biology cannot keep up with.

  22. Considering that people are failing to notice how to spell Nielsen Hayden, not Hayden or Nielsen-Hayden I wonder how many people are close readers of black label warnings?

    Perhaps the market would provide a useful solution if somebody would just demonstrate that the drug improved performance in fighting dogs or racing pigeons or some such? Animal medications are an interesting grey market even in the U.S. of A..

  23. This same thing happened to my sister. She had to have her colon removed because the only drugged that controlled her disease was banned (Litronix, I think it was called).

  24. perhaps she is too young to remember those pictures of deformed thalydomide babies fromthe use of that drug in the 50s and 60s…

    look at those pictures and then tell me drug regulation is a bad thing

  25. Thalidomide is a bad exmple. It’s a perfectly benign drug, except when administered to pregnant women who are also suffering from B-vitamin deficiency. Clinical trials have a tendency not to catch funny edge cases like that.

  26. “According to my wife, an MD, there are some nasty drug-resistant strains of bacteria coming up from Mexico and the other countries where antibiotics are OTC.”

    Actually, the mean resistant bugs, like clostridium difficile, in the new lately, seem to be coming from hospitals.

  27. Curt, I’m entering this a little late, but as I remember, the most recent data on ‘Love Canal’ showed no elevated health risk from living there. Along with Rachel Carson’s ‘Silent Spring’ another shibboleth that should bite the dust seems to live on.

  28. I’ll second that antibiotics should be prescription-only. In hospitals, they use a system of growing and culturing a pathogen to determine which antibiotic is appropriate. They will start a broad-spectrum med first (a common one is vancomycin), but will often change once the cultures identify the pathogen. This isn’t a process that even an informed public should replace. As some have spoken of already, resistant strains are on the rise, and millions of people shooting blindly with ineffective drugs will only speed that process. Some patients already demand antibiotics when it is clear they have a viral cold, and too many doctors give them what they want, as it is.

  29. To play devil’s advocate for a second, if the FDA were removed, would the average consumer really want to, let alone be able to, pore over the studies (eg. scrutinise the method, crunch the data, etc.) for each drug just to be sure? Of course, consumers could ask for expert advice, but would they, and how would anyone know if that were not tainted by kickbacks from the pharmaceutical industry? I’d like to think everyone would be all responsible and so on, but I have a feeling that after ten years of public laziness and Darwinianism, there’d be a lot of calls for the return of the FDA, and more calls for it than against it. Of course, at first, it would be a whole lot more efficient, not to mention more accountable and responsive, but over time, everything would be back to exactly where it is now.

    I just don’t think most people in any society actually want to be free or they actually would be free. If people didn’t really want government agencies then there wouldn’t be government agencies. I think the problem is that people want their cake and they want to be able to eat it too — they want to have a good healthcare system, but they don’t want to take responsibility for that themselves, yet they whine when someone else who makes decisions for them makes one they don’t like. Put up or shut up I say. Democracy, being the tyranny of the masses, doesn’t particularly help those who do want to be free though.

    On another note, am I the only one to notice the irony of someone who has a problem with ‘well-intentioned people working the levers of a system designed to elevate “public safety” above individual choice’ when it pertains to public health, yet who doesn’t regard the War on Terror or War on Iraq with the same sort of cynicism? Looks like someone’s having his cake and eating it too yet again…

  30. so,, esr… you say Thalidomide is a bad example because “Clinical trials have a tendency not to catch funny edge cases like that” By this are you saying that…
    1. attempts at regulating drugs are futile or
    2. that the methods used are imperfect

  31. There were no thalidomide babies born in the U.S.

    The real question is, “Who shall bear the costs?” In the old days, the answer was simple: The patient, every time. Likewise the buyer of defective merchandise: the manufacturer had no liability because there was no privity of contract, and the seller had no liability because the defect was not apparent to him.

    In the current structure, the costs are more distributed: manufacturers bear some, sellers others, patients others, fourth parties still others. The overhead of this is higher, of course, just as the overhead of courts and lawyers is always higher than the alternatives — until the bill comes due.

  32. There is already a proven model for privately regulating food safety. Orthodox Jews (disclosure: I count myself among them) eat only kosher food.

    Until the 1960s or so, many observant Jews would just read the ingredients on food labels. This became increasingly problematic for many reasons. There was a 2% threshhold for being listed (something not recognized by halacha – Jewish law), and with the increasing sophistication of offerings, a whole science food manufacturing developed. Various organizations formed offering kosher certification of food offering by companies. From the start, these certifications were NEVER solicited, as that would tarnish the reputation of the organization. A company seeking certification had to go through a very rigorous process, as did its suppliers, on down the line.

    There are dozens of organizations just in the United States alone. And there are hundreds of thousands of certified products available today.

    This model exists and is in daily practise worldwide.

    While originally intended for observant Jews, there many non-Jews who seek out certification, for varying reasons. Strict vegetarians can be certain that something that is “parve” has absolutely no dairy or meat content whatsoever, while something labeled “non-dairy” can in fact legally contain a small amount of dairy material.

    There are also all sorts of additives from various animal sources that are below the threshhold of labeling laws, or use names that people aren’t aware of, that will never appear in a kosher food product.

    Just like libertarians preach, this model works. Reputation matters and spreads by word of mouth. Some certifying organizations are just known to be unacceptable by observant Jews and avoided. It is even possible to find out what the problem is with a certifying organization, if someone wanted to take the trouble.

    When products are mislabeled (either having a kosher symbol when they shouldn’t, or marked parve, instead of dairy, etc.), bulletins are sent out nationwide, and are made available immediately on many web sites. In fact, recalls are sometimes ordered and can be enforced by law, since the offending products carry a registered trademark that is licensed for use.

    There is absolutely no reason that the FDA cannot be entirely replaced with such a system. The kosher certifying companies can even provide the training necesary.

    The same principle applies to drugs as well. Each drug could have a symbol on it indicating which company provided the certification, and consumers could easily determine the standards of the certificate. People would rapidly determine which symbols to trust and which to avoid.

    Just like in the kosher world, products can have multiple symbols (in Israel, it’s not uncommon for products to have 3 or more).

    When you see symbols like the “OU,” “OK,” “Star-K” etc, (to mentions 3 of the most common) that means that the product is certified kosher by the owner of the symbol (which is trademarked).

  33. What I meant to point out about Thalidomide is this: it’s a bad argument for the proposition that regulation based on clinical trial results is a net gain.

  34. Curt Howland & Dean:
    The word that makes the most sense in the given context is ‘voracity,’ which means ‘having or marked by an insatiable appetite for an activity or pursuit; greedy.’

    (If you’re going to correct somebody, get it right.)

  35. Love Canal was a dump site for industrial waste. That’s what it was for. Hooker used it for many years to dump its industrial waste, properly sealed in impermeable clay. Nobody was ever harmed in any way by this. Is there any law in force now that would have prevented Hooker from doing so? Should there be? What exactly was Hooker supposed to do with the stuff, if not that?

  36. I think “ferocity” fits the context of the quote better than “voracity”. But there’s room for disagreement. I concede that “veracity” is much more likely as a typo when someone means to write “voracity” than when the intended word is “ferocity”. So the lesson of the misuse is surely that, before you use an obscure word, be sure that it fits the context so unambiguously that if you make a typo readers can figure out what you must have meant.

  37. I just want to throw this out there: believe me, pick any drug in the world that you think you’ve succeeded in eliminating, and you’ve failed. Google for “kitchen chemist” some time. You’d be amazed (enraged?) by what people can and do culture in their own homes.

    I’m tellin’ ya, take a look at the failure of the “war on steroids.” Steroids are a huge, fat political target, and the only thing to receive more law-enforcement attention might be cocaine. And the underground market for steroids keeps producing more product, at a higher quality and a lower price. There’s even a sort of cottage-cheese FDA in that community, with independent chemists testing the purity of underground products.

    Steroids have got to be one of the most hated class of drugs in the public’s eye. And they are also ridiculously easy to obtain.

    So, yes, regulating out of existence a drug for which there is high demand is absolutely, unequivocaly futile. It has not, does not, will not ever work. Moralize all you want, but the utilitarian fact is that it is an abysmal failure.

    As for the feasibility of FDA replacements, see the above example of kosher food. It most certainly can work. To argue that a lot of people won’t care enough about their health to make use of such facilities is to miss the point — I see no reason to mandate X level of health for US citizens. That is *way* more fascist than anything Dubya has tried to push down the pipe. People should be free to go to heck in their own way, because if you try to make it impossible for people to harm themselves, you end up harming other people.

  38. Pete: I agree that no one should legislate what someone does to his or her body, but like I said, if the FDA disappeared, within a decade (or two at most) there would be calls for a new FDA by the majority of people who are too lazy or stupid to take personal responsibility because people wouldn’t be able to handle the anarchy. The tyranny of the masses would then win out… After all, like I said, if people really didn’t want government there wouldn’t be government. It’s that simple. If people actually have free will, then they’re either choosing not to exercise it, or they’re exercising it in a paradoxical way and having their say in the market by saying they don’t want the market.

    As for the kosher model, I don’t believe that would work across the whole population for two simple reasons. Firstly, Orthodox Jews (or anyone following a very strict ideology) are very dedicated. The majority of people out there aren’t, because like I said, otherwise they’d be free. Does the U.S. population really care about its health? Apparently not given its status as fattest nation on earth (although a few other English speaking countries such as Australia and Britain are trying their best to catch up).

    Secondly, the supposed “independent” agents, pharmaceutical industry and media would lie through their teeth and be knee deep in corruption within six minutes. The tiny number of people standing by their principles and trying to bring the truth to light would be swamped by much bigger marketing campaigns or be completely ignored by the media. Thus, the average person would be none the wiser. Say it ain’t so. Yeah, I know, the truth will win out in the end, which is why big government and its cronies keep getting bigger and in the meantime, libertarians or libertarian principles fail to get a guy elected to local dog catcher, let alone actually influence anything of any importance in politics.

  39. @htom
    Treatment of narcolepsy was indeed a non-original (and likely off-label, since I never heard of it being approved for such) use of Cylert. I wondered why she wasn’t on Provigil, a drug designed specifically for us nacrolepts–then I read the blog (she apparently has many more problems than I do–I admit to being somewhat lucky). Granted, even that is being used off-label, or for non-original purposes to “pep” people up–people whom instead should either get treated for a (lack of) sleeping disorder (as opposed to those of us whom can’t stay awake even when well rested) or start a minor revolution for having to work 3 jobs just to feed themselves.
    Before I saw a neurologist (and was finally able to get treated for what I really have, instead of what somebody was getting paid oodles of money to pretend I had–long angry story to go with that), I was on ritalin for a while to “help me stay awake.” Now, since I’m one of those folks whom isn’t awakened by a strong cup of tea (I don’t drink coffee), what may have made this supposed medical doctor think that ritalin (same family of chemicals as caffine and amphetamine) would work worth a damn is beyond me.
    Now that I’ve been diagnosed correctly (it took nearly 10 years for that to happen), my woes continue anyway. Part of the reason for this is because sleep disorders are largely ignored in the USA (people would rather just classify you as lazy, since that gives them a short-term benefit), and the other reason is off label uses of the medication that I’m on. Apparently some people (whom don’t need this drug) have been trying to get high on it. Goddamnit will somebody give them their booze and pot back (and them provide a decently accepting and “safe” environment for them to bake their minds–free from persecution that is) so that only the really sick fuckers ruin things for people whom need drugs that just might work as a magic stimulant/depressant for somebody else just to function “normally”! So what are my problems? Well first off, my health insurance company wanted so bad not to have to pay for my medication that they first time I tried to get signed up for a primary care physician (goddamn managed care plans) that they “lost” my paperwork long enough to not have to pay for it for two whole months (that’s $253 USA a each month out of my pocket). That and I have to pay yet another neurologist to see me more often than either of us think is necessary just to keep the paperwork flowing and the insurance nutjobs happy. If I had high blood pressure like everyone else I wouldn’t have to do this extra song and dance all of the time.
    I have a lot more to say (about this and other things…..), so it is probably time for me to set up a blog of my own for it. Now I just need to either get the phone company to spit up the DSL they promised me a year ago or to run the damn thing off of a machine at work (oh the great wonders of working for an educational institution). I will, however note that I usually think our highly acclaimed ESR here is a little nuts–and this is no exception. Yet at the same time I’m glad that his heart is in the right place even if we can respectfully disagree on the size firearm that should be used to eradicate the problem.

  40. I think the questions I have… and granted I’m new here, so I hope ya’ll don’t pile on too much… But..
    I believe I’m rather a libertarian regarding personal issues…I don’t want the govt telling me how to live, wear a seatbelt, stop smoking, make sure I wear my booties when it’s raining…. But I have a strong distrust of business… corporate america looks out for its own interests, not mine. Sure, we might depend on the market to correct the excesses of some, but in the meanwhile.. a lot of damage can be done by unscrupulous people before the “correction” takes place. And didn’t we try “laissez-faire” capitalism in the past..?

    And isn’t that possibly the reason why we have gov’t oversight today?

  41. rick – The economic libertarian position on issues such as these tends to boil down to the assertion that free markets are consistently better at minimizing the effects of corporate corruption than government regulation is, or that they would be if we weren’t all indoctrinated to believe that everything on the market is safe because the government makes it so. This would probably not be true in a completely chaotic system with no forms of oversight, but remember that economic libertarians do generally consider coercion (which, in the form of fraud, tends to be the stuff that makes up that sort of corruption) punishable in some way.

    I am not completely convinced that this is accurate in all cases, but it does seem to work fairly well in general. The specific case of the FDA has been covered by previous comments.

  42. “But I have a strong distrust of business… corporate america looks out for its own interests, not mine. Sure, we might depend on the market to correct the excesses of some, but in the meanwhile.. a lot of damage can be done by unscrupulous people before the “correction” takes place. And didn’t we try “laissez-faire” capitalism in the past..?”

    Remember they can afford more lobbyists than you can. Any legislation is more likely to shore up their monopoly than help the little guy, at least when is gets through the lobby filter.

  43. As near as I can tell, Clyert was approved for use with attention deficit disorder, not narcolepsy. Therefore, given there are many new drugs for attention deficit disorder, and that it has a signficant chance of killing the child using it, the FDA banned the drug.

    FDA/not FDA is an interesting question. Let’s just talk about the “effectiveness” part of the equation. Remember Laetril? Ground up apricot pits supposedly cure cancer. Now imagine you are the parent of a dying child. How much money are you willing to pay what doctors don’t know how to cure? Would you not be willing to try laetril? You can see how the use of unproven drugs opens the door for all kinds of criminal predation. How are you going to solve it? Use the courts? The courts obviously have a lot of problems, not least of all is that courts would slow down drug development as money is siphoned off to layers like James Sokolov. As a selfish individual, I think I would rather use the government method.

    Getting back to Clyert, it sounds like Abbot doesn’t feel there is enough market to warrant it. If there are significant numbers of people who need the drug such that it makes economic sense to produce it, they would. I maintain that for a reputable company like Abbot, it is cheaper to have the FDA than not, so regardless they wouldn’t produce it.

  44. Pete: Of course, but you have also noted that historically, societies based upon libertarian ideals have been as rare as hens’ teeth.

    “Remember they can afford more lobbyists than you can. Any legislation is more likely to shore up their monopoly than help the little guy, at least when is gets through the lobby filter.”

    Cayte: They would also be able to afford better marketing campaigns under a laissez faire system. Likewise, they’d be able to bully their smaller, more honest opponents via a war of attrition. I don’t think much would be different. They might have to try different strategies, but why would they just let their power slip away and actually help the little guy? The only way out might be for someone to live as part of some very insular, self-sufficient type community, but would have its own tyrannies and inefficiencies.

  45. >corporate america looks out for its own interests,

    You’re right, Rick. But corporate America is at least disciplined by the market — companies that don’t sell anything people want to buy go out of business. Governments experience no such discipline; votes are a relatively ineffective lever against entrenched bureaucracy. And market failure is bad, but political failure is worse. So, even though corporations are often venal and self-seeking, they are less to be feared than government.

  46. The marketing machine of Corporate America has proven devastatingly effective at convincing people they want to buy things they otherwise wouldn’t. And remember, economics is politics by other means: once the corporations have amassed enough wealth they can simply buy the government that best serves their own interests. So when you consider who are the pimps and who are the hos in American governance, it’s indeed enough to engender a healthy distrust of big business.

  47. I know you don’t classify yourself as a Christian, Eric, but do you realise you’re blog post title is a derivative of a quote from Jesus Christ. “Live by the sword, die by the sword” to Peter, I believe. Haha, I got ye on that ‘en!

    Aaron Kinney

  48. Caleb: you’re neglecting something in your analysis. In a free market, competition keeps companies honest. Let’s say that you have a situation where multiple companies are producing a product. Something gets invented which makes the product cheaper to produce. From what you’ve written above, I think you would say that no company would voluntarily pass those savings on to the customer. That’s not right, though. Let’s say that the cost reduction has increased the profit margin by $1. If one of the companies cuts its prices by $0.50, that makes the product more profitable to them by $0.50, AND it makes their product cheaper to the customer, so their market share will grow. But the thing here is that the other companies aren’t going to sit back and let their market share drop. They, too, will lower their prices by $0.50.

    Free markets create a tragedy of a socially bad commons. In this case, two wrongs *do* make a right.

  49. Russ: That’s true if that’s the only factor to consider. I agree that it would make sense to pass savings onto the customer.

    What if it’s a matter of economics versus morality whereby in order to secure or produce a cheaper product it was necessary to interact with tyrannical foreign governments or terrorists, participate in child-slavery rackets, etc.? I’m sure we can find some real life scenarios where if people had to go and see how and why they were getting a cheap product they’d be appalled. I’m not talking about whether said scenario would really be as bad as it would seem intuitively to the public. What I’m saying is that it’s pretty easy to whitewash the whole thing and make it go away by a quick PR job and by throwing a whole lot of money at a media campaign. Surely you’re not saying that that doesn’t already happen and that it wouldn’t continue to happen?

    Or what about the idea of killing the goose that lays the golden egg? Let’s say there’s a finite resource of something or something that will replenish itself over time but not if harvested too quickly, eg. a particular fish colony. Obviously, the two most sensible options would be to either harvest the fish at a sustainable rate, but provide a smaller supply, or else to try to develop aquaculture alongside the fishing industry, so as to meet the current demand. In the short term though, that may be too expensive for the fishermen involved, and there’s probably the philosophy of “if I pour my money into developing a more expensive, yet better long term industry it will give my competitors an edge now that could put me out of business before my long term plan gets off the ground”. I have to admit that I haven’t done a lot of research into fishing, but I’ve heard that many of the world’s major fishing resources are in major decline or on the brink of collapse towards extinction. Yet the market keeps buying up fish from unsustainable fishing. I know some would say that if said fish stocks become extinct then we will just develop something else to replace them, but I have problems with such an argument along the lines of “if a Rembrandt gets destroyed we can always get someone else to paint a new painting.” I know a lot of environmental “issues” are totally overblown, but a lot aren’t either, and they’re not always the fault of government, although plenty are. However, most people are completely unaware about their involvement in the problems because they get some slick TV ad campaign showing how some greenie came to his senses and realised the best way to save the environment from oil companies was to go and work for one. It’s all smiles and warm fuzzy feelings, and everyone goes back to forgetting about the issue. Of course, in an ideal world, people would investigate both the pro and anti agenda of any issue, but the reality is that they only deal in thirty second soundbytes or TV ads. That is largely the reality of the marketplace, and I don’t know that it pertains that much to truth.

    I’m not saying that government control is better than market forces, but I am saying that there can be limitations to the argument for market forces and that people aren’t anywhere near as active in civics, etc. as many would have us believe. I think it’s all too simplistic. I honestly don’t know what the solution is anymore.

  50. Caleb,

    Markets do not absolutely eliminate the possibility of undesirable outcomes. But if you want to examine the very worst things that have happened or could happen on the market, the appropriate basis for comparison is the set of the worst things that have happened or could happen due to government misbehavior.

    Incidentally, I don’t believe any species of animal that people bought and sold has ever gone extinct. The argument about switching is a little different than your Rembrandt example depicts. As fish become more rare, the cost of fishing for them will go up and people will switch to some other food. I would speculate that the price of any species of fish will be high enough to motivate switching well in advance of that species going extinct.

    Finally, there is never an issue of economics versus morality. Morality is an economic good, something that cannot be had for free. Ultimately, we all make allocative tradeoffs between morality and “all other goods” whenever we devote resources such as time, money and labor toward any end besides making the world more moral. Such an analysis may be aesthetically displeasing but it falls squarely within the domain of economic analysis.

    Jeff Read,

    You write, “The marketing machine of Corporate America has proven devastatingly effective at convincing people they want to buy things they otherwise wouldn’t.”

    It seems that to make such a claim you would need to know what people would want to buy in the absence of advertising, holding constant the availablity and the knowledge of the availability of the same set of consumables. I don’t believe that you have such knowledge a priori and I also find it vanishingly unlikely that you have established this through an empirical analysis with control and treatment groups.

    Supposing that you actually had such knowledge, your claim that I quoted above would only be an argument against markets and in favor of intervention if you could show that an interventionist state would be less devastatingly effective at convincing people that they want to support policies that they otherwise wouldn’t.


    We’ve tried near laissez-faire in the past and even today in some markets (computer hardware, print media, fitness centers), partial interventionism in many (drugs, financial services, broadcast media), and total nationalization in others (education, resolution of legal disputes, military defense). However, the US has never been the land of thoroughly free markets that some rightists yearn to return to and that some leftists cite as an example of a failed experiment.

  51. esr:
    > companies that don’t sell anything people want to buy go out of business

    The FDA only requires companies to demonstrate a candidate drug is safe and effective. In other words, the FDA limits the US market to safe and effective drugs. It’s not as if they are producing something the end user consumes, per se, unlike the welfare department, social security department, transportation department, etc.

    As I mentioned before, what are the alternatives to the FDA? You could use the courts, but that’s also a government service, and one which I suspect would be much more expensive (at least in its current form) than the FDA. Then there is the loss of life that would occur, and how to quantify that?

  52. Incidentally, I don’t believe any species of animal that people bought and sold has ever gone extinct. The argument about switching is a little different than your Rembrandt example depicts. As fish become more rare, the cost of fishing for them will go up and people will switch to some other food. I would speculate that the price of any species of fish will be high enough to motivate switching well in advance of that species going extinct.

    Species may not go extinct, but if the ecosystem they’re part of has it’s shape substantially changed by the reduction of the numbers of certain species (or even groups within those species), they may not come back to anything like the old equilibrium – something like this has happened to the Grand Banks cod afaik. Also, governments are heavily involved in subsidising the fishing industry in many countries, fishermen being concentrated in certain areas and likely to vote. There’s huge overcapacity chasing declining stocks all over the place.

  53. You’re right, Rick. But corporate America is at least disciplined by the market — companies that don’t sell anything people want to buy go out of business. Governments experience no such discipline; votes are a relatively ineffective lever against entrenched bureaucracy. And market failure is bad, but political failure is worse. So, even though corporations are often venal and self-seeking, they are less to be feared than government.

    Trouble is, through campaign contributions corporations have *much* more input to the legislative process than any unorganised collection of voters can even dream of. They’re the real citizens of what we’re pleased to call our democracies, IMO. Then there are the corporations that sell directly to the government…

  54. Caveat emptor, y’all.

    Politicians and social activists are selling products that enhance their interests, just like business. The only difference is the individual citizen cannot refuse to buy their stuff. Caveat voter.

  55. “I don’t believe any species of animal that people bought and sold has ever gone extinct.”

    1. The passenger pigeon went extinct due to overhunting for the market. They were once so numerous that market “hunting” consisted simply of putting up nets in the air at certain spots and collecting thousands of birds.

    2. The dodo was a flightless bird from one small island in the Pacific. With no natural predators, the dodo was so unaware of it’s surroundings that you could just walk up to them with a net or a club. It went extinct a few decades after the island was “discovered” by Europeans. Dead and stuffed dodos were bought and sold as curios, with the market getting more and more frantic as live ones became hard to find.

    Note that in both cases, the market failure was simply that no one owned the live animals. The solution to the tragedy of the commons is usually to convert the commons to property – then the owners will take care of their property to ensure future income. E.g., the European bison (aurochs) may be the ancestor of domestic cattle, but the original wild stock was driven to extinction over 2,000 years ago. The American bison is now a ranch animal, and in no danger whatsoever of extinction. (Unlike a dozen or more species of horses, camels, sheep, mammoths, etc., that were hunted to extinction long before the white men brought their ideas of private property to the Americas.)

    And I can think of no non-profane comment for those who think that the extinction of a couple of especially bird-brained species is a greater tragedy than the many government-engendered human tragedies.

  56. Since the question of drug addicts has come up I’d like to ask the question. Is addiction real?.

    I claim no.

    I claim “addiction” is just self medication for undignosed conditions.

    BTW there is lots of medical research to support my position. I provide links to the research in the links provided in the above article.

  57. Ok, plenty of grist for the mill today…..

    First on the list:

    Teresa, even as I feel your pain, I’m wondering if you’re going to learn the right lesson. The Cylert ban isn’t an accidental failure of the system, it’s an essential one. It wasn’t perpetrated by villains, but by well-intentioned people working the levers of a system designed to elevate “public safety” above individual choice. That system functioned as designed; it’s the design that’s broken.

    I agree, this failure is indeed an essential one–but one must understand the history of the FDA (and why it is no longer performing its original task) to understand the minimal (and most easy to achieve) solution.
    The FDA was created to protect people from others, and not from themselves. This is the first point that must be made clear. Granted, it was quickly re-tasked to deal with opium addiction–but that is beside the point (an issue for further argument later on as well). Also, we all clearly know that in its current state the FDA spends more time protecting the individual interests of corporations and politicians (religious wars over birth control, for instance) than anything else–including protecting individuals from themselves. Thus duly noted, the FDA acts more like the property of those whom it claims to regulate than as an entity of the commons.
    (I will quickly note here that most people seem to think that they don’t own their government, and therefore I have worded the preceeding claim to suit.)
    If indeed the people took more ownership of their government there is the possibility that the FDA could be fixed without major calamity–I am not expecting this to happen any time soon. (Indeed I admit that any solution which leaves an FDA of one form or another in place would not be satisfactory to most libertarians–but I am not one myself, so it is a prospect which doesn’t enter too strongly into my thought processes.)
    So, in short, should the FDA protect people from themselves? My answer is no. Should it protect individuals from each other? I say yes–but the degree to which such an action should be taken is debatable.
    Example: I favor the legalization of marajuana in large part because while it may affect the economic engine of a country (namely, slowing down the existing legal economy a little–while drying up a whole other illicit trade system and replacing it with one truly in the open for scrutiny) due to the effects it has on the individual user it is also often the case that those effects are limited to the user and nobody else. (Contrary to popular belief fueled by the “reefer madness” infected media, pot users don’t often do things like drive while they are “under the influence”–long term effects ignored for the same reason that those caused by alcohol often are: we have no decent cause/effect benchmark.) There are cases where regualtion is required however–the case of antibiotics comes to mind (what I do with them doesn’t just affect me, it could affect the whole world).

    Next: markm said:

    Note that in both cases, the market failure was simply that no one owned the live animals. The solution to the tragedy of the commons is usually to convert the commons to property – then the owners will take care of their property to ensure future income. E.g., the European bison (aurochs) may be the ancestor of domestic cattle, but the original wild stock was driven to extinction over 2,000 years ago. The American bison is now a ranch animal, and in no danger whatsoever of extinction. (Unlike a dozen or more species of horses, camels, sheep, mammoths, etc., that were hunted to extinction long before the white men brought their ideas of private property to the Americas.)

    While I agree that individuals often take better care of things that they own–I will also make note that this observation is made in a society in which most members hold the belief that man should be able to own things that he cannot create (or mitigate/control/spur/initiate the creation of). The “white man” idea of private property is not and should not be seen as a panacea. There is at this point no solid proof for/against the more “native” americans having a hand in the known major extinctions in the americas of large mamals (as for birds, plants, and smaller animals the jury shal likely never reach a conclusion).
    That noted, the idea of ownership can apply to metaphysical things quite well. The lobster fisheries in (and on the seacoast of) Maine are a good example of this. The actual fisheries are considered a commons (shared territory in this case)–but the future of the industry is something every lobsterman has a stake in. Thusly the lobster fisheries are some of the most successful in the world in implementing a sustainable pattern of use due to the fact that the lobstermen themselves as a group are responsible for synthesizing input from many sources (including previously disparaged environmentalists) into a mutually acceptable plan one to several times per year.
    This is the type of model I think that many of us wish could work for economic areas such as those under FDA oversight. While it would truly be great, it would be asking a hell of a lot of the common person to take all of the deeply technical information required to to synthesize a coherent decision and process it all.
    (BTW, the DNA studies have determined that the ancestor of all modern cattle is closest in nature the modern cattle of the Serengeti region. Goats and sheep are from the middle east, as apparently are pigs as well. The horses of North America went extinct long before modern man arrived on earth.)

    (M. Simon)

    Since the question of drug addicts has come up I’d like to ask the question. Is addiction real?.

    I claim no.

    I claim “addiction” is just self medication for undignosed conditions.

    BTW there is lots of medical research to support my position. I provide links to the research in the links provided in the above article.

    I respectfully bring up the possibility that you have somewhere misunderstood the problem of addiction and at the same time misread a great deal of medical research literature. An addiction is not solely that you do something to satisfy some craving–it is that you do so to the detriment of all other motivations. Based on this commonly accepted definition, your self medication argument falls apart. I do not, however, assume that the individual in question does not have some undiagnosed condition–I am meerly making note of the fact that the presence of an addiction does not make it a forgone conclusion that there is some other undiagnosed condition. Therefore, the presence of another condition makes the addiction itself no less real.
    There are those whom would take the above and use it as a claim that addictions are good enough reason for the FDA to protect people from themselves–but they are missing the point. If the addiction itself (and any other conditions hidden by it) is seen as a seperate medical condition it becomes obvious that the FDA need not be protecting individuals from themselves–and that usage and abuse of substances is indeed a matter of public health instead of a matter of morality.

    For now, I’ll leave it there and get some work done for the day…..

  58. James: I’m not saying that markets do always produce desirable outcomes. I’m also not absolving government for its incompetence or willful destruction. I’m not even advocating government. All I am doing is noting that there are times when the market can be grossly inadequate. It seems to me that when pro-market advocates run into a complete stuff up by the market (which is ultimately a stuff up by individuals multiplied over and over), they make the excuse that that’s just the way the cookie crumbles sometimes. That’s fine, though it doesn’t actually do anything about the stuff up.

    I also don’t accept your argument that as the fish become rarer, the price of searching for them will go up, therefore, people will search for something else. The price will simply go up. I’d be willing to bet that if truffles can sell for ridiculous amounts of money, you’d have someone who would be willing to pay an equivalent silly amount to eat the last fish of a particular species.

    The thing that has been mentioned by adrian is that this can have flow on effects to the rest of the ecosystem, and this can even occur right on the other side of the world in a whole range of areas. It would seem to me that the whole thing is incredibly complex and the usual pro-market argument of making restitution against anyone whose person, property or livelihood has been affected couldn’t even begin to analyse this situation, let alone deal with it. Maybe in one hundred years or more we might (emphasis on the might) have a really good working model of how species and ecosystems are intricately tied in to one another, and could then include them in the picture. However, the market model currently doesn’t have even a fraction of that data.

    As I mentioned before, I’m not advocating government intervention or control. I would hope that we could develop a much better market model. However, in the meantime, it seems to me that a lot of people/industries/countries get away with all sorts of ridiculous behaviour because there’s no way to account for their behaviour. If and when government does this sort of stuff, pro-market advocates start whining very loudly.

    As far as economics versus reality goes, I think you’ve missed my point. I agree with you that there are tradeoffs between morality and other goods. However, I don’t agree that people are always aware of all the variables and tradeoffs, and that if they were, they’d quite possibly make different decisions. If people make the choice one way or another, then that’s fair enough. What I’m saying though is that when governments keep information to themselves, people get all upset about such behaviour, but big business (and not all big business is bad) is not necessarily held to the same level of account by a lot of pro-market advocates. Yeah, government is corrupt, lies to people and so on. I just think it’s incredibly naive to think that without government there’d be no powermongering, or even that government is the problem as such. Politicians are PR and advertising men paid for by big business and government is just another part of big business’ marketing department. Otherwise, there wouldn’t be campaign contributions, and big business would ultimately stamp out government. I just think it’s part of the larger, eternal issue of human nature regarding power.

  59. “Politicians and social activists are selling products that enhance their interests, just like business. The only difference is the individual citizen cannot refuse to buy their stuff. Caveat voter.”

    Brett: I’m not so sure that’s true anymore. I mean that people cannot refuse to accept politicians, but they can choose with business (if that’s what you’re saying).

    In a sense, yes they can. They can go self-sufficient (which is what I’d like to do eventually), though I think that’s largely impossible for huge urban settlements. Anyhow, let’s be realistic about the situation here. If all the oil companies get together and fix prices (and who is to say they don’t?), they can charge what they like, market be damned. What, are people going to just not drive cars anymore? It may be that one day, this won’t be the case because there will be a range of alternatives available, so people won’t be saddled with whatever the oil companies decide on, although I don’t think such companies would just willingly cede their power like that. This is true of any product. If all the milk companies wanted to double the price of milk, what could people do? They could stop drinking milk I suppose, but let’s be realistic about that too. People aren’t going to give up driving cars, drinking milk or using any of the other products or services that are integral to our modern, urban/suburban way of living, so whomever controls such things has them right over a barrel.

    Further to the point is that even if most people wanted to, they couldn’t do anything about this anyway. On the one hand, there’s the combination of a high level of technology in our modern society with the average person (myself included) in our society having been dumbed down to such an extent that he or she cannot reasonably repair (let alone build alternatives) to most of what is considered as integral to the modern way of life. On the other hand, the average person (myself included) in our society could not even live the life of those two or three generations ago. Our grandparents and great-grandparents used to grow some of their own food, know how to preserve it, etc. A lot of these skills have been lost, and others would take a considerable time to relearn.

    I’m no more free from government than I am from big business out there, even though I’m nowhere near as consumeristic as most people. Both offer me the illusion of choice though.

  60. > However, the market model currently doesn’t have even a fraction of that data.

    That data isn’t necessary.

    People don’t kill a golden goose that they own. They take care of it so they can keep selling eggs to folks who want eggs. Other people notice the income from selling said eggs and start trying to get their own golden goose. That’s how the egg market keeps owned golden geese from going extinct.

    As far as “short-sighted” goes, this theory seems common only among folks who who aren’t in a position to make long term investments. I know 80 year-old orchard owners who are planting trees that won’t be profitable for 20 years. Are they different? Daft? Or do people in that position behave differently than people who aren’t in that position can imagine?

  61. Caleb,

    re: “I also don’t accept your argument that as the fish become rarer, the price of searching for them will go up, therefore, people will search for something else. The price will simply go up.”

    I happen to believe that as the price of something goes up, people buy less of it. To date, no economist of any ideological stripe has observed a commodity with a price elasticity of demand equal to zero. If you believe you have found an example, I suggest you document your findings in a paper and submit it to the American Economic Review. You will be the first.

    re: econmics vs morality (reality?)

    Maybe you mistyped? If you meant morality, I stand by what I said earlier. If you meant reality, economic analysis is not wedded to the assumption of perfect knowledge.

    At any rate, free market advocates and even those that detest free markets hold big business to a much higher standard than governments. We cease to do business with businesses when we don’t perceive a benefit from exchanging what they ask for they have to sell. Governments become violent when held to the same standard as businesses, so it’s nearly impossible to hold governments to the same standard as firms.

  62. Everybody — go read Price Theory by David D. Friedman. Google for it, you can read it online for free. Go now, and learn economics if you don’t already. There’s some pretty absurd ideas getting bandied about here.

  63. Andy: Trying to assert that someone could possibly own part of what is in the oceans is ridiculous since the oceans, by the nature that they’re water, are not a static resource. Things move around within them. Things move into them. Things move out of them. All of this happens in incredibly complex ways that humans have little control over or understanding of. As a tiny example, just how on earth are you going to say who owns what fish? What if they’re eaten by sharks or birds owned by someone else, or if someone changes the mineral content or water temperature or who knows what else on some remote corner of the world? The sharks or birds don’t follow a pattern of market commerce and due restitution for eating fish and it’s next to impossible to account for every possible variable that can affect another in the oceans.

    I’m not denying that there are times when people do make long term investments. However, there are plenty of times when people grab all they can grab in the short term because they figure that if they don’t, someone else will, and they don’t want to miss out before it’s all gone. You’re trying to take one instance of human behaviour (as common as that may be) and extrapolate it to all human behaviour, which simply isn’t the case.

    James: I’m sorry, I’m not familiar with your terms. Never the less, people will still use a resource, even if it does become rarer and rarer. Maybe the average person won’t, but there are people who will partake of something simply because it is rare (and expensive), and therefore gives them some “elite” status.

    What exactly do you mean by “economic analysis is not wedded to the assumption of perfect knowledge”? I know in a sense we can’t know anything for certain, and that no scientific theory is ever fact since there’s always the possibility of a counter-example to disprove it. It sounds like a “Get Out of Jail Free” card for when a problem or counter-example arises.

    No, I don’t think pro-market advocates hold big business to a much higher standard than governments because there’s not a fraction of the whining about big business that there is about big government, even though the two are often in cahoots with one another. I know governments become violent and I’m not arguing in favour of government (I’m saying the system, or perhaps human nature, is screwed), but governments also do the dirty work of big business so big business doesn’t have to do it itself. Do pro-market advocates get a list of anyone who has contributed to a political campaign fund or received any form of corporate welfare and boycott such businesses? I’m sure some do, but I doubt it for most. It’s impossible for pretty well anyone who isn’t living on a rural property living self-sufficiently or operating at a barter level type economy. That’s probably because, as you mentioned, they perceive a benefit from doing business with such businesses, namely all the perks of twenty first century living. That makes such people morally bankrupt because they will complain about government, yet still do business with those who contribute to, or benefit from, such government. That may be an economic necessity in our world, but it’s still moral bankrupcy.

    It might be liberating to stop viewing government as some isolated entity and as merely one arm of the monster, and just like someone who has lost an arm is inconvenienced by the fact, but can still function fairly adequately, if government ceased to exist, the powermongers would still get by and we wouldn’t necessarily be free (in fact, I don’t even think most people want to be free).

  64. I think the issue is that unlike a static resource such as oil or gold, fish stocks have value while still in the ocean. The reason is because fish reproduce. So obviously 2 fish now = 4 fish later. The problem occurs because unutilized fish resources have value, but cannot be owned or bought. (Obviously an angler cannot say, “I’ll pay you X dollars to stay away from these fish right here.”) The result is that fish ends up being scarcer than it should be, because individual fishermen have no incentive to preserve this common resource. Anyone reminded of the Tragedy of the Commons?

  65. Caleb,

    Re: “Never the less, people will still use a resource, even if it does become rarer and rarer. Maybe the average person won’t, but there are people who will partake of something simply because it is rare (and expensive), and therefore gives them some “elite” status.”

    Yeah, and as the cost of using something rises, people will use *less* of it, the point of my original response to you, which you denied earlier claiming that the price “will simply go up.”

    By “economic analysis is not wedded to the assumption of perfect knowledge”, I mean that economic analysis does not depend on the assumption that the actors being analyzed are “always aware of all the variables and tradeoffs.”

    Re: “No, I don’t think pro-market advocates hold big business to a much higher standard than governments BECAUSE THERE’S NOT A FRACTION OF THE WHINING about big business that there is about big government, even though the two are often in cahoots with one another.”,

    By restricting your measure to that activity which you pejoratively label “whining,” you can’t help but reach this conclusion. However, expressing dissatisfaction is only one way of holding some entity to a given standard. Refusal to do business is another, but you leave it out of your analysis. (Why?) Include this and it becomes apparent that firms are held to a far higher standard than states.

    That said, the tendency of businesses to actively engage in activities that make for bad governments is certainly no illusion. While many or most free market people see the government as some separate evil entity, not all of us believe this. See, for example, any of the free market literature in antitrust, industrial organization, regulation, public choice, etc. The predominant free market theory now is that bad government intervention tends to come from bad business influences. Ideas just take time to work their way out from academe.

  66. James,
    Although it is true that people will fish less as the costs of fishing rise, under the current system they will not reduce their use enough. This is because fish, because they reproduce, have an alternative use, that is, being left in the water to multiply. This alternative use clearly has a non-zero value as I showed above. You see, the problem is that people, because they cannot acquire unutilized fish resources, treat it as valueless. Thus they continue an activity beyond the point at which it would be less profitable were this value accounted for.

  67. Indeed, the ideal fishing rate can be determined using Net Present Value (NPV). Suppose I have two choices, fish now or fish in one year. If the growth rate is above the cost of capital (i.e. interest rate) then it will always be better to wait. If the NPV of the fish is less than the current value of the fish, then of course it is obviously better to fish now.

  68. I’m angered by this post. Let’s have the alternative! This smacks of the kind of crap I’m used to from liberals. “LOOK here is the ONE case where someone is inconvienced (not to make light of narcolepsy) or screwed. CHANGE THE WHOLE SYSTEM affecting 300 Million people!”

    Before anyone should take this post seriously, lets look to the underpinnings.

    1. OK, there is a problem. What is it? One person in the US is inconvinienced.

    2. What’s the alternative? None is offered. Let’s have a clear alternative, so instead of just saying “Oh yeah, that’s terrible,” there is something to compare to. My guess, the alternatives are far worse.

    3. I HATE anecdotes. The entire US media uses this ridiculous formula to sway public opinion. Out of context crap. Let’s have some facts here.

    Come on ESR, decide if you want to be a serious thinker or preen your feathers.

  69. “Yeah, and as the cost of using something rises, people will use *less* of it, the point of my original response to you, which you denied earlier claiming that the price “will simply go up.””

    In some cases (provided there is a reasonable alternative), people will use less of it. However, as happens with some things, as the resource becomes rarer, people will use it precisely because it is rare (and thus, having access to it provides some sort of “elite” status), regardless of the price going up, down or sideways. If truffles were dirt cheap, I might eat them (once anyway). The fact that they’re very expensive prevents me from doing so, however. This would seem to fit into your argument, but it’s not the whole picture. However, there are still people out there eating truffles, and I’d venture to say there would be people who don’t particularly like truffles but eat them for social reasons. Why do people pay crazy prices seceral times the face value of the ticket to scalpers to see a show? I think there are plenty of counter-examples to your argument. Perhaps it’s because I’m not part of the inner circle, but from where I sit, it seems that much of what passes for “high culture/society” is based solely on the idea that something has value precisely because of its exclusivity, and it’s exclusive because it’s expensive and around we go in a circle. Fame is another thing like that. People would almost die to be elite or famous. In fact, the higher the price, the better.

    Okay, I see what you mean by people not being aware of all the variables and tradeoffs. I think that’s the problem with “the market” though. If government is bad because it interferes in such variables and tradeoffs, then surely there’s a problem with individuals interfering with such variables and tradeoffs also, which is my original point about people not being free to make decisions or choices and that they’d have moral issues if they had access to all the information. At the end of the day, people who have power want to maintain it, regardless of the means to that end. This is true regardless of whether it’s politicians or businessmen. If someone is lying to someone else or trying to manipulate that person, I don’t see that it matters whether the person doing the lying is a public or private entity.

    I don’t see how you’re going to measure whether people hold business to greater or lesser standards than they do government. People will vote for or against governments/political parties/politicians, contribute time or money to election campaigns, write letters and lobby. How do we measure any of this though and compare government to business?

    The reason I call it whining with regard to government is because if it is true that people do hold business to more account in terms of the actions those people take, then why complain about government, why get online and write a bunch of pro-market/anti-government rhetoric if such people are never going to actually put their money where their mouths are and take on government? Obviously, it would be silly to admit to not paying tax, etc. (which is why I wonder how we could measure this). However, a lot of pro-market advocates/libertarians are still very much tapped into feeding the beast. I just want to see people put their money where their mouths are. If they’re in favour of a market system, then stop feeding Leviathan.

    “The predominant free market theory now is that bad government intervention tends to come from bad business influences. Ideas just take time to work their way out from academe.”

    As I’ve said though, why would the guys with power want to give up their power? I think it would take a revolution to overthrow this cabal of politicians and their cronies in the private sector. Playing fair via the market won’t work I don’t think as these guys won’t play fair and will use any advantage they have to make sure the market isn’t free.

  70. Caleb doesn’t know a thing about economics and it shows. Anyone hoping to debate him is going to be, in effect, forced to teach him price theory. This, of course, would require him to be willing to learn the subject, and I wouldn’t bet on that.

    I don’t think he’s actually interested in discovering the truth. To wit, when he says “I’m saying the system, or perhaps human nature, is screwed,” I think he proves my point. Undoubtedly, we have all thought that at one time or another, but what separates us from Caleb is that we sought out the veracity of this hypothesis, and discovered it wanting. To try and demonstrate this for him will likely be, a long, painful, and unrewarding experience.

  71. Pete: I’m offering counter examples (which would seem to show that the economic theory you talk of is at odds with the reality of human behaviour), yet you won’t show me why they’re wrong according to you, you’ll just say how much more clever you are. I would say you’re as dogmatic as you claim I am. You say I don’t know a thing about economics. Well, I say you don’t know a thing about human nature then. Snap.

  72. Caleb doesn’t know a thing about economics and it shows.

    Whoever called it the dismal science was only half right. Published economic theories are often quite good at explaining what happened last time, but their predictive power – which is what one expects of a science – is severely limited, not least by the fact that the theories themselves feed back into the behaviour of economic actors, with chaotic results. Fair enough, you can get some linear relationships which work well over certain ranges, but come to a cusp and you’re on your own.

    I have an impression that some people think economics – particularly as applied to free markets – reflects some deeper reality about human nature. Smells like faith to me.

  73. adrian: Precisely. The whole episode spacks of the ivory tower building and self-congratulation that goes on quite often in the social sciences. “Never mind that you’ve come up with a counter-example, are you telling me that you don’t know psychoanalytic theory? You don’t know psychoanalytic theory? Haha! What a moron! Hey Bob, this guy doesn’t know psychoanalytic theory, what a moron! We know psychoanalytic theory and he doesn’t. Nah nah na nah na.”

  74. No, you’re just willfully ignorant. I don’t think you’ll claim to know how to build a particle accelerator without studying physics. Yet, you claim to know how people will achieve their objectives, without studying the science of how people will achieve their objectives — that is, economics.

    If you think that economics could not possibly be anything but worthless, then you forfeit the merit of anything you have to say on the subject of how people will achieve their objectives, because you just deemed the science of how people achieve their objectives to be worthless. If you think that there is a problem with a certain economics principle — welcome to science. But you have to actually know something of the subject in order to achieve this.

    You won’t see me trying to pound endocrinology into the head of someone crying bloody murder over steroids. Likewise, I’m not going to sit here and pound price theory into your noggin because you’re spouting nonsense. There’s an entire book on the subject available on the web *for free.* If you were more interested in the pursuit of truth than in your pessimism, you’d read it and think about it. Instead, you sit here and blabber. It’s not interesting anymore.

  75. Pete: First of all, economics, like any social science is not in the same league as physics. Give me a break here. This is precisely why hard scientists (such as physicists and chemists) laugh at those trying to claim scientific status who aren’t scientists (eg. those from most branches of psychology (neuropsych might be considered something else, for example), as well as the other soothsaying fields of expertise such as sociology and economics). It’s also why most social science departments at universities have real chips on their shoulders about being a real science.

    Secondly (and related to that), your argument is problematic for the following reason. You’re trying to make scientific claims on the predictions made by economics, dealing with the realm of human behaviour. Humans are not atoms or programmed machines that will always react in a predictable way. I’m sorry, but if you believe that economics, psychology or any other project of the social sciences is up to that task, then you’re really living in a fantasy.

    Obviously though, if there’s a counter example to a true science, one of three things happens (aside from being blatantly unscientic about it — you’d have been great in the time of Galileo). The first is that the scientific theory and its community of adherents refutes the counter example (you’re making a lot of noise, but you’re not refuting anything). The second is that the theory is modified to incorporate and explain the counter example. The third is that the theory falls flat on its head and disappears, or at least loses its status as a true science.

    Your economic argument may in fact be logically valid (ie. the premises entail the conclusion) or it may not be (that’s actually not what I’m on about here), but that doesn’t necessarily mean it is logically sound (ie. that the premises are true in addition to entailing the conclusion). What you’re essentially doing though is what all priesthoods throughout time have done: whenever someone has pointed out some glaring counter examples in the belief system, that person has been denounced as not being privvy to the inner circle or not knowing enough about the theory. Just what would be enough?

    If I were to start spouting about a particular theory in the social sciences that you knew nothing about, should that stop you from pointing out where the theory was obviously at odds with human nature? Surely you’d laugh at me if I were to suggest that because you hadn’t read it you couldn’t point out the counter examples. I tell you what, I’ll say Carl Jung’s theories of Archetypes and the Collective Unconscious are the bees’ knees. What, you haven’t read his collected works? Then you’re in no position to comment on anything he had to say or throw up a counter example.

    The reason this isn’t interesting anymore for you is because you continue to accuse me of being dogmatic, yet you dogmatically refuse to engage in either a debate about the epistemological limitations of the social sciences as compared to the hard sciences or a debate about the structure of logic and the implications or limitations of that structure. I’m not claiming a monopoly on truth here, I’m asking you for some answers. It’s telling that you won’t offer any.

  76. I’m claiming that you’re not willing to put in the effort to get the answers. You counter that I’m being priestly. You are wrong. Your premise is that economics is sufficiently unlike physics so that a layman is qualified to dismiss economics off hand if he can come up with a contradiction. That’s wrong.

    Obligatory Physics Example

    Any student of elementary kinematics knows the answer to the trick question: which object has more friction with the floor? A 1 kg cube with dimensions of 10 cm per side, or a 1 kg rectangular prism with base dimensions of 5 cm by 5 cm. The intuitive response is that the cube, having more in contact with the floor, has more friction. The correct answer, however, is that both objects have the same amount of friction, which is determined by mass times force of gravity times coefficient of friction. In fact, this principle is so widespread it borders on being common knowledge.

    I, Joe Gearhead, notice one day that if this were true, then car tires should be made thinner to save on production costs. I further note that professional racers use tires that are significantly wider than the consumer brand. My own experience tells me that wider tires provide better friction. Therefore, I assert that physics is wrong, and that friction is directly related to surface area.

    Am I right? As it turns out, no. While wider tires do indeed provide better traction than their narrower counterparts, this can be explained using much more sophisticated physics. The problem is that I only knew about the simplified model used primarily for pedagogical reasons. I was completely ignorant of the physics of deformation. So, the contradiction I “discovered” has more to do with my own ignorance than with any shortcoming of physics.

    How this Relates to Economics

    You are arguing over the validity of very, very, very rudimentary economics in real life situations. That makes no sense. Economics, like physics, starts with the simple, then proceeds to the complex. If you want to know about the predictive power of economics in complex situations, you’re going to have to learn up to that level of economics.

    There are, in fact, problems with your arguments. But the problem with me explaining them to you is that it will take a very long time to do it. Given that there are already books available on the subject, I see little point in reinventing the wheel for the benefit of some anonymous guy in internet land. In fact, as I said before, there is an entire book on the matter available for free on the web. Price Theory: An Intermediate Text, by David D. Friedman. Here’s the link:

    Given all the above, it follows that if you refuse to read this freely available book, but rather, require that I (in effect) transcribe it for you in the comments section of a blog, you are less interested in the pursuit of truth than arguing, or pushing your agenda, or being pessimistic, or whatever your objective is.

    In pointing out the flaws in your argument, all I’m going to do is invoke what I know about economics, which I’ve learned from several books on the matter (the above being one of them). I’m not inclined to spend a lot of time on it, so the quality of my posts is not going to be as good as passages in the book. Why not just take your arguments directly to the source? There’s no logical reason to insist on my being the middleman here.

    How this Relates to the Thrust of Your Argument

    The reason this isn’t interesting anymore for you is because you continue to accuse me of being dogmatic, yet you dogmatically refuse to engage in either a debate about the epistemological limitations of the social sciences as compared to the hard sciences or a debate about the structure of logic and the implications or limitations of that structure. I’m not claiming a monopoly on truth here, I’m asking you for some answers. It’s telling that you won’t offer any.

    I submit that I haven’t accused you of being dogmatic.

    As for the epistemological limitations of the social sciences as compared to the hard sciences, see above.

    As for a debate about the structure of logic — I didn’t know we were in the midst of one. What’s your beef?

    I’m a Nice Guy. Really.

    From the introduction to Price Theory, here’s something on the definition, validity, and utility of economics:

    Economics is based on the assumption that people have reasonably simple objectives and choose the correct means to achieve them. Both halves of the assumption are false; people sometimes have very complicated objectives and they sometimes make mistakes. Why then is the assumption useful?

    Suppose we know someone’s objective and also know that half the time that person correctly figures out how to achieve it and half the time acts at random. Since there is generally only one right way of doing things (or perhaps a few) but very many wrong ways, the “rational” behavior can be predicted but the “irrational” behavior cannot. If we predict this person’s behavior on the assumption that he is rational, we will be right half the time. If we assume he is irrational, we will almost never be right, since we still have to guess which irrational thing he will do. We are better off assuming he is rational and recognizing that we will sometimes be wrong. To put the argument more generally, the tendency to be rational is the consistent (and hence predictable) element in human behavior. The only alternative to assuming rationality (other than giving up and concluding that human behavior cannot be understood and predicted) would be a theory of irrational behavior–a theory that told us not only that someone would not always do the rational thing but also which particular irrational thing he would do. So far as I know, no satisfactory theory of that sort exists.

    There are a number of reasons why the assumption of rationality may work better than one would at first think. One is that we are often concerned not with the behavior of a single individual but with the aggregate effect of the behavior of many people. Insofar as the irrational part of their behavior is random, its effects are likely to average out in the aggregate.

    Suppose, for example, that the rational thing to do is to buy more hamburger the lower its price. People actually decide how much to buy by first making the rational decision then flipping a coin. If the coin comes up heads, they buy a pound more than they were planning to; if it comes up tails, they buy a pound less. The behavior of each individual will be rather unpredictable, but the total demand for hamburger will be almost exactly the same as without the coin flipping, since on average about half the coins will come up heads and half tails.

    A second reason why the assumption works better than one might expect is that we are often dealing not with a random set of people but with people who have been selected for the particular role they are playing. Consider the heads of companies. If you selected people at random for the job, the assumption that they want to maximize the company’s profits and know how to do so would not be a very plausible one. But people who do not want to maximize profits, or do not know how to, are unlikely to be chosen for the job; if they are, they are unlikely to keep it; if they do, their companies are likely to become increasingly unimportant in the economy, until eventually the companies go out of business. So the simple assumption of profit maximization plus rationality turns out to be a good way to predict how firms will behave.

    A similar argument applies to the stock market. We may reasonably expect that the average investment is made by someone with an accurate idea of what companies are worth–even though the average American, and even the average investor, may be poorly informed about such things. Investors who consistently bet wrong on the stock market soon have very little to bet with. Investors who consistently bet right have an increasing amount of their own money to risk–and often other people’s money as well. Hence the well-informed investors have an influence on the market out of proportion to their numbers as a fraction of the population. If we analyze the workings of the market on the assumption that all investors are well informed, we may come up with fairly accurate predictions in spite of the inaccuracy of the assumption. In this as in all other cases, the ultimate test of the method is whether its predictions turn out to describe reality correctly. Whether something is an economic question is not something we know in advance. It is something we discover by trying to use economics to answer it.

    As you can see, it would take me a long fraggin’ time to come up with something like that when you complain about the uselessness of economics. And really, that’s just the tip of the iceberg. That doesn’t provide any examples of the theory in action, or being used in real life. As I’ve said before, someone has already done this work for me, I’m not going to do it again. If you insist that it must be me doing the presentation, then I conclude that your objective is not the pursuit of truth.

    Reductio ad Abusrdum

    Pupil: I have a question, and I seek an answer. Can you help me sifu?
    Sifu: The answer you seek is in this scroll.
    Pupil: But that’s a scroll. Why can’t you answer my question?
    Sifu: I can, but the scroll will do a better job. Besides, I’m tired, and it would take a really long time.
    Pupil: You’re dodging the question.
    Sifu: Just read the scroll.
    Pupil: Why should I have to read the scroll? If you really knew the answer, you’d just tell it to me. You won’t tell me because you can’t. That scroll is BS.
    Sifu: Why don’t you read it and find out, eh?

  77. Pete:

    I’ll answer a couple of your questions first. Okay, maybe dogmatic was the wrong word for me to use. You’re accusing me of being lazy and implying that I’m (stubbornly) avoiding pursuing the truth because I’m not interested in the truth. I would consider that a claim to a kind of dogma (a sort of anti-truth dogma). I could be wrong on that though, so I’m willing to give that to you.

    The epistemological problems between the hard and social sciences are very real, not imagined. The social sciences are dealing with human behaviour which is a whole other ball game to the hard sciences. As far as I know, the hard sciences are fairly robust. The social sciences are not, as evidenced by the passage you quoted that talks about rational behaviour being able to be predicted and irrational behaviour not being able to be predicted. How can you predict that a particular person will act rationally or irrationally? How can you predict when someone is going to go postal, or when someone is going to spend money wisely or splurge? Based on past behaviour? Yet people do crazy stuff all the time and people who know them shake their heads and say, “this is so unlike him. He’s never done this before.” You can perhaps try to apply some law of averages as per that theory, but what does that tell us that’s useful to specific circumstances? With chemical reactions or the laws of gravity, there’s neither rational behaviour nor irrational behaviour involved. These things simply are what they are and they do what they do, and there are no choices involved, and that’s the difference between the hard and social sciences.

    As to a debate about the structure of logic, perhaps we’re not in one, but perhaps I should elaborate. That was my fault. I’m not sure if you know this (so apologies if you do), but an argument is considered valid if the premises entail the conclusion. That’s only concerned with the structure of the argument, not as to whether the premises are actually true. If an argument is valid and the premises are true, then it is considered sound or cogent. What I’m saying is that for me, the issue isn’t the validity of your arguments, it’s whether they’re sound or not. You’re offering all sorts of really big assumptions about human behaviour as your premises, but they are just really big assumptions and some are blatantly untrue.

    If this is the best you’ve got then this is bullshit. It’s in the same league as Freud in making a whole lot of assumptions about human behaviour.

    For example:

    “Insofar as the irrational part of their behavior is random, its effects are likely to average out in the aggregate.” Then, the argument regarding hamburger buying behaviour with tossing coins. People’s behaviour doesn’t average out as explained in this theory. People, small communities, whole nations, they all end up with really bizarre cultural practices, including our own, and often these are far more important than maximising economic outcomes. That’s what the whole field of anthropology (amongst other areas of study) is about. That’s the whole thing that economics misses, that sometimes people and groups of people are just quirky because they like being quirky or that’s just what they’re used to, not because it’s rational or irrational. I know, all these other things people do can be considered goods in an economic model, but that seems to miss the point in the same way that saying the effects and appreciation of different types of music can be reduced to, or explained via, physics. It’s all about wavelengths after all.

    Likewise, the argument about heads of companies and maximising profits. Heads of companies don’t have to maximise profits. They can do a lousy job and still walk away with huge payouts into a new job. In the main they do (have to) worry about maximising profits, but this isn’t always the case, and they can get away with it. It reminds me of a line in Dostoyevsky’s Crime and Punishment where the protagonist (Raskolnikov) is debating with the policeman (Porfiry) about the extra-ordinary man. Raskolnikov is talking about how the extra-ordinary man should be allowed to get away with wading through blood (if I remember correctly, it’s a direct or indirect reference to Napoleon). Porfiry asks him how one distinguishes between the extra-ordinary and ordinary man (and presumably punishes the ordinary man for his crimes). Raskolnikov says that the extra-ordinary man is extra-ordinary by virtue of the fact that he gets away with it. This is true of the heads of companies also. Sometimes, the rules don’t apply to them because they’re just clever, charismatic bullshit artists who can get away with stuff. A rather long way of saying that I know, but that “conversation” in Crime and Punishment always tickles my fancy when I think of it.

    Finally, this quote seems perfect, though not in the way intended:

    “In this as in all other cases, the ultimate test of the method is whether its predictions turn out to describe reality correctly. Whether something is an economic question is not something we know in advance. It is something we discover by trying to use economics to answer it.”

    Counter-examples abound. You simply claim that we need make reference to a more complex theory. Look, maybe that does work, but it seems quite disingenuous to me. Okay, so I need to learn up to a complex theory to be able to deal with complex problems. By that reasoning though, I can’t call a Marxist on his bs unless I’ve read the entire critical theory repertoire, studied all of history, etc. I can’t challenge an environmentalist or anti-environmentalist until I have read the entire scientific body of research. Hell, neither of us can even discuss my above Dostoyevsky example unless we’ve written a PhD thesis on the guy and slaved over thousands of pages of Russian literature. This is absurd. People can’t function in every day life like that.

    You’re asking me why I won’t read it and find out. By that reasoning, any form of internet debate would simply just be a matter of a complex series of name dropping or citations. Where’s the fun/point in that? If I run into a Christian in the street and he starts trying to convert me and I provide a counter example or objection, does he hand me a Bible and tell me to read the whole thing based on one question I have? That would be a way of fobbing me off. If he can provide me with a passage then we can debate the validity of that passage and go from there. Otherwise every internet debate would be really brief like this:

    Person 1: Read Famous Theory or Theoretician 1.
    Person 2: I counter that by telling you to read Famous Theory or Theoretician 2.
    Person 1: Yes, but I think you need to read Famous Theory or Theoretician 3.
    Person 3: Have either of you considered reading Famous Theory or Theoretician X?

    I’m asking you questions and you keep dodging them, saying that I have to go and read your damned book. Now that you’ve gone to the trouble of cutting and pasting a section here (thanks for the effort), I’m still not convinced. If anything, what I am convinced of is that I’m glad I didn’t waste a whole lot of time wading through that to get to the drivel you provided. If that’s honestly the best you can offer as to why economics is in the same realm as physics, then that’s piss poor. High school students could slap together a better defence or explanation of the theory, surely.

  78. On Assumptions

    If I’ve made a bunch of large and absurd assumptions about human behavior, I haven’t noticed. I only assume that people have simple objectives, and that they act rationally to achieve them, with the knowledge that these assumptions are false, and can only be classed as tendencies. However, they yield powerful predictive power in the form of economics.

    Quirkiness as a Good

    Populations will act quirky when the cost of quirkiness is less than its benefit, where the benefit in this case is how it pleases them. In a world of multiple societies, quirkiness which imposes real costs on prosperity will result in the relative decline of that society. Thus, in the long run, only “benign” quirkiness can exist.

    Observe the collapse of the USSR, the general trend of the world toward capitalism and the rule of law, and the monumental increases in the standard of living around the world. Sure, America has slipped backward in some respects, but the fact that we can’t buy dianabol (for instance) is miniscule compared to the fact that the vast majority of Europe and Asia is no longer ruled by fascist and/or communist governments.

    In fact, that collectivist economies will fade and capitalist economies thrive is a natural prediction of economics. Thus far, it seems to be holding up.

    Succesful Companies must Maximize Profit

    Similar to the argument about quirkiness above, in the long run, companies which don’t maximize profit will be pushed aside by companies which do. This is because, in the long run, there will be no profit in a price-taker market. Companies which did not implement the methods of efficiency which maximized profit prior to market homeostasis will be unacceptably inefficient in equilibrium, and will fold. Therefore, on average, companies will select leaders which maximize profit.

    The lifespan of startup is an example of this cycle in action. In the initial phases, a startup is technology oriented. When the profits start to roll in, competition takes note. The startup then seeks to sell or go public. Upon selling, the new owners install traditional business leaders for profit maximization as long as such as possible. On going public, the board of directors institutes a similar structure. From VisiWeb to Google, there is a plethora of examples of this life cycle in the startup field. This is another successful prediction of economics, BTW.

    Crime and Punishment is a (Boring) Work of Fiction

    It is as irrelevant as Robert Heinlein’s character of Lazarus Long is. This statement did not require a PhD to form.


    Religion is not science, nor does it claim to be. The predictions it makes can’t be validated or invalidated by the living. Some will assert it exists outside the bounds of logic. A priest who tells you that you’ll go to heck when you die if you don’t accept Jesus as your savior is making an assertion which is untestable — in this way, religion is singularly different from any science, and thus a poor comparison for your purposes.

    On the Whole

    I don’t claim that economics is in the same field as physics — I only claim that it is a rather effective tool for predicting how people will tend to behave, on average, in a given environment. In other words, one person acting irrationally does not prove that an economic prediction about the way 100 million people will act is wrong. Probability theory asserts that any given number of coin flips should come up in roughly equal numbers of heads and tails. If I flip a coin twice, and it comes up heads both times, it does not follow that probability theory is a sham. Like economics, probability theory gets better as the numbers get larger.

    You don’t Have to Know it All, Just what You’re Talking About

    Your generalization of my suggestion doesn’t work — and it’s not at all what I’m suggesting, evidenced by the fact that I didn’t type it up (you did). What claim is a Marxist going to make that will require knowledge of all Marxist canon in order to refute? I’m very familiar with Marxism, probably because I once was a Marxist myself, and I can’t think of anything that would meet this criteria.

    If you wanted to call Marxism complete BS, then I think you’re going to have know something about it. If you can’t even define the concept, how do you hope to refute it? How is person 2 going to know that his theory refutes person 1’s if he hasn’t even read what person 1 had to say? I have no clue where you’re going with this.

    It’s Called Elasticity

    Your claim which started all of this was a flat out denial of the law of supply in demand, which flies in the face of the most elementary logic. If the price of peanut butter went up to $100/oz, you suggest that there will be no effect on consumption? What about $1,000,000/oz? What if it literally cost you on arm and a leg? Your first born? Your life? It just flies right in the face of reason, and you shouldn’t need economics to know that it is entirely wrong.

    You seem to be arguing that people will continue to consume something regardless of the price increase if it has some kind of luxury value. Have you noticed that there are a lot less Lambourghinis on the road then Porsches? And that there are less Porsches than Lexus? And less Lexus than Honda? Or that there are many fewer engagement rings with huge diamonds than small ones? Once again, this is just blatantly, blatantly obvious stuff.

    If you still deny that an increase in price results in a decrease in demand, then let’s just agree to disagree and move on. Otherwise, continue on:

    The demand for some goods is very closely linked to the price of them. Generally speaking, this occurs with goods for which there are readily available substitues. For instance, if the price of Coke were to double, Coca-Cola corporation can expect to see all of its revenue for that product directed to Pepsico, who will undoubtedly be delighted. High luxury goods — ones which can’t get much more expensive without requiring the bulk of its consumers to forego essentials to obtain — also tend to experience much less demand with increased price. These kinds of goods are called “elastic.”

    On the opposite end of the spectrum are “inelastic” goods. As you might guess, these are goods for which the demand changes relatively little in response to price changes. Gasoline is a prominent example of this. However, as far as anyone knows, there is no such thing as a perfectly inelastic good — that is, a good for which demand remains the same regardless of price. As gasoline prices rise, at some point it will cost more for most people to continue driving their existing cars than to switch to more fuel efficient cars. This prediction of economics was validated by the explosion of economy cars in the eighties, following the gasoline price “crisis” of the seventies.

    Oh, that “What Now.”

    You’ve been exposed to quite a few slivers of economics now, and if you still think it is utterly BS, then once again, let’s just agree to disagree. There are probably (should be, in fact) plenty of other questions on your mind that you want answered, but as I’ve said before, I just don’t have the energy to keep this up.

    I once again encourage you to read Price Theory. Libertarians tend to think economically, and being a libertarian, ESR is going to have a lot of other libertarians commenting in this blog. Logically, there’s going to be a lot of debates founded on economic principles in the comments here. If you reject economics, then essentially every debate you get into is going to be an argument over the validity of economics over, and over, and over again — not fun for anyone. I think your energy would be better invested in writing a comprehensive rebuttal to economics in general.

    On the other hand, if you decide that economics is a useful tool, then you can get involved in the much more interesting debate of what the correct application of economic theory is in a given situation. Or whether a given situation is even an economic one at all.

    At the very least, learning economics will help you in the pursuit of truth. Likewise, your knowledge of the subject will help us all as we embark on that same quest. You’ll also be stronger, taller, and faster. Promise.

  79. The system of private ownership of resources only works well if a genuine cost-benefit analysis shows that it is more profitable _for_the_owner_ to engage in sustainable use than to engage in nonsustainable use. This is not always the case- it may be more profitable to clearcut a stand of trees and sell the land to a developer than to keep doing sustainable logging for the next twenty or thirty years. And yet, if this is done on a large enough scale, everyone, including the loggers, suffers.

    Economics is full of examples where every person acting to maximize their own personal interests also maximizes other people’s interests. However, there are also plenty of cases where each person doing what looks best FOR THEM leads to an outcome that is _not_ best for _anyone_.

    Markets don’t weigh externality costs well- see Tim Hartmann’s “The Undercover Economist” for reference. Externalities like the pollution caused by running a factory or the noise caused by blowing your car horn in heavy traffic tend not to cost the $*@(&*$ creating them as they should in a completely honest market. And there’s no ‘natural free market’ way to resolve this externality problem.

    To preserve a genuine market, there must exist an entity outside the market (i.e., the government) whose necessary functions of government involve (a) preventing coercion from breaking the market (which may frequently involve things like anti-trust regulations); (b) forcing marketeers to recognize and deal with the externality costs of their actions; and (c) making sure that gaps in information and other related problems don’t break the market.

    Unfortunately for the libertarian perspective, this is a broader mandate than many people would like.

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  81. Peter, I’m reading Price Theory right now just as you suggested, however, I found some circular logic right at the first page. Friedman defines rationality as that people tend to achieve their goals. But people choose goals that look achievable from their current starting point! Therefore when they actually achieve it proves nothing of being rational. I think most people don’t have fixed-end goals – they don’t want a certain amount of money, health or beauty but simply want to be as rich, healthy and beautiful as they can, without any fixed end.

    I go back reading this book, but such a circular logic right at the beginning does not promise much about the rest…

  82. I was diagnosed with dyslexia 20 years ago by a Doctor specializing in dyslexia in New York.
    – Today, dyslexia can be referred to as ADHD.
    – 20 years ago, I used Cylert which was the most effective drug ever prescribed. Unfortunately, Cylert was taken off the market due to potential issues/problems to the liver. I never had any problems which were confirmed by the blood test taken every 6 months. Ralph Nader and his Public Citizen group claimed credit for petitioning the FDA for the drugs removal.
    – Conducting research to see if Cylert is used outside of the United States and if so, then I am sure that the countries that are using this drug have valuable research to prove its’ value in terms of how it helps people deal with specific disorders.

    – Then, I used the prescription Dexedrine (GlaxoSmithKline) Brand Name for 15 years and never had any problems. Took 20mg daily and never had to increase or decrease the dosage. Continued the blood tests every 6 months and never a problem, but it was also taken off the market. Cylert and Dexedrine provided clarity of thought, ability to process information/cognition/comprehension/analytical ability, clarity of vision, ability to organize and ability to articulate clearly what I was thinking or feeling.

    – Previous to finding the answers to my questions, I knew something was wrong and I knew that I was an intelligent human being, but was treated by others as if I was stupid. I went to hundred’s of doctors and so-called experts but they could not find anything wrong and had no suggestions on what steps to take to find out what was wrong. When I explained what I was experiencing they looked at me as if I was crazy.

    – I overcompensated for every aspect in life to make up for the areas where I was having issues/problems such as reading, writing, comprehension, ability to remember, ability to understand, thought processes, informational recall, all forms of cognitive functions/abilities, etc. I overcompensated by outlining all information that I read, then I tape recorded it, then I listened to the tape recording over and over again until I knew the information frontwards and backwards. Overcompensating was extremely exhausting and I know that I needed additional help and was bound and determined to find it. Unfortunately, my parents ignored by request for help, so I was on my own and in search for an answer.
    – I thank God for finding the doctor that put a name to the disorder and provide medication to deal with it. Now I pray to God to help me find ways to get people to stand up to the pharmaceutical companies and the FDA (Government) in regard to re-establishing the Brand Name drugs that actual work for the disorder that I live with as well as the millions of others who live with the same disorder. We need to become very visible and we need to make noise about what we need and want because there is “Power in Numbers.” It is a known fact the majority of people suffering with this disorder are above average intelligence. So, I say let’s put our brains together to achieve something that all of us can benefit from while making the world a better place to live.

    The original Brand Name Dexedrine was produced and sold until it was available to market in a Generic Form so GlaxoSmithKline stopped making it because they were not going to make all the Millions and Billions that they used to make on this drug. On the other side of this spectrum, millions of people requiring this “specific drug” are continuing to suffer as a result of GlasoSmithKline’s financial decision.
    – The pharmaceutical companies have put in tons of so-called “fillers” into the generic form of drugs which seems to have destroyed the true and actual chemical composition of the drug. Generics provide a slightly lower priced drug that continues to bring in Millions and Billions of dollars in revenue to the pharmaceutical companies. Unfortunately, the generic does not work for millions of people, but they keep taking it in hopes that it might work, but it never does works.
    – In regard to generics, I tried every generic form of drug for ADHD and/or drugs for dyslexia on the market and NOT ONE of them worked. NOT ONE of them took away the feeling of living/functioning in a cloudy haze which made it difficult to think, understand, comprehend, analyze, organize, communicate, etc. Cylert and Dexedrine are the only drugs that help to correct my disorder.

    – It is also my understanding that the FDA also wanted the original Brand Name Dexedrine off the market due to drug abusers who were abusing the drug. Anyhow, GlaxoSmithKline created a time released form that was supposedly the same as the original name brand Dexedrine but in a time released form to make it difficult for the drug abuser to abuse it. Well excuse me, but the druggies so-to-speak are desperate people and desperate people will find new ways to take a time released capsule and recreate and formulate it into their favorite illegal drug of choice “Meth.”.

    – GlaxoSmithKline created a Dexedrine spansules that is supposed to be the same as the original Brand Name Dexedrine, but in a time released form. I called GlaxoSmithKline and explained to them that something was wrong because within six (6) months or less, I noticed that the drug stopped working. If it was the same as the original, then it should work and function as the original and I should be able to take it and not have to increase it or decrease it or stop taking it because it does not work. I took the original Dexedrine for 15 years and never had a problem and now I have a problem with GlaxoSmithKline and their inferior spansules product. GlaxoSmithKline suggested that I was the reason that it did not work and this infuriated me beyond infuriation because if it happened to me then I know that it is happening to many others also. To further my point about their inferior product, I went to the doctor’s to discuss Dexedrine Spansules inability to work and Lord and behold another patient came in with the same problem/issues and wanted to talk with the doctor about the same inferior product. Needless to say, I lost total respect for GlaxoSmithKline.

    – I asked GlaxoSmithKline how does anyone know about the process of filing a complaint about inferior products if no one has ever been told about the process nor read about it nor able to read such small print nor informed in any way shape or form about the complaint process? I then asked GlaxoSmithKline how they can keep accurate records on what products work and what products don’t work if no one really knows that there is a formal procedure to follow? Again, they suggested that the person should read the information provided with the prescription. Again, I ask them if they meant the information that was printed in the smallest of smallest font that no one could read even with a magnifying glass? They continually repeated that that this information was the information provided with the medication.

    In essence, the Pharmaceutical Companies believe that they are not responsible for communicating information in numerous and various forms of communications/media other than in information provided in extremely small print. Pharmaceutical companies seem to suggest that are only responsible if someone figures out the process by enlarging the print on the extremely tiny font used to explain about the drug and complaint process or if someone takes responsibility, asks questions, makes phone calls to ask more questions and continues to ask questions to understand if a process is in place and then calls the company to file a complaint. .

    My discussion with GlaxoSmithKline continues to go downhill because they suggested that if anyone calls to file a complaint, then an expert records the information which will be sent to the FDA and the FDA will keep a record of the complaint. GlaxoSmithKline could not explain what the FDA does with the information other than that the FDA records it. From the sound of it, one could assume that these records could be stored in a big black hole for all eternity just sitting there rotting. If the FDA could conduct an analysis of everyone and I mean everyone treated with Cylert and Dexedrine (not the time released capsules), then the FDA would re-activate the prescription medication/drug for use resulting in millions and millions of productive tax paying citizens who would have even greater potential to make the world a better place to live,.

    – Has anyone thought about implementing one (1) global process that would be communicated throughout all forms of media throughout the whole world whereby every human being would be trained on the process knowing how to file complaints and/or successes into this system so that all actual data can be collected and analyzed in order to determined actual/factual/accurate successes and/or failures of any drug or medical procedure. Instead, we have some type of a system that needs to be communicated more effectively on how to use it, who can or cannot use the system, what exactly is the process, what kind of information and types of information can be provided. How can the FDA provide any type of analysis when only bits and pieces of data is provided.

    By reading this information, you are now aware and informed. You can no longer say that you did not know the process of filing formal complaints about inferior/ineffective drugs. Every pharmaceutical company has a toll free phone number listed on their web site or call 1-800-555-1212 and ask for the company’s toll free phone number or call your doctor and tell them that you want and require the toll free number and do not stop asking until you get the phone number and make the call.

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