Saturday, October 12, 2013

Chesterton meets Friedman

Here Megan McArdle argues against those who think that the middle-men in the prescription drug business can be easily disposed of and replaced by governments at little or no cost. The case in point is the widespread belief among progressives that drug companies are simply taking the discoveries of university researchers and slapping labels on them and selling them for exorbitant profits. As a believer in free-markets she argues that if there is someone out there providing a service that the market supports then there is probably a reason for that service and that in a competitive market the private firms that are providing the service are probably providing it as efficiently as it probably can be.

The interesting addition she makes to this standard argument is the Chesterton fable of the fence that no one the reason for. The typical reformer reasons that since he doesn't know the reason for the fence the reasonable thing to do is to get rid of it. The wise reformer reasons from the same facts to the opposite conclusion, that you should not get rid of the fence. The people that put it there in the first place can be presumed to have been reasonable as well and so if you don't know what that reason was it is reasonable to assume that the reason is still valid.

Finding Good Drugs Is Harder Than It Sounds - Megan McArdle

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