SImple economics & drug prices

There's a lot in the blogosphere that's got my blood running this morning. One was a report on Arizona Congress Watch. I was thinking that I post too often on everyone else's blog and not enough on my own...so, I'm going to start posting my replies here too. I posted the following in response to the ACW entry:

Jim Pedersen is the world’s fattest and ugliest raging idiot. He LIKES the fact that the State is suing over high drug prices? OK, let’s do a little simple economics for you socialists who have no clue. PROFIT is the incentive behind EVERYTHING. If you take the profit out of something, the incentive to do it goes away. So, if you want pills to cure your ills, you need to PAY for what you want so that others will have an INCENTIVE to provide for your needs. So, if you take the profit motive out of the creation of new drugs…you won’t have any. This lawsuit will do nothing but stagnate the pharmaceutical industry.

If you draw a simple supply and demand chart, if you artificially depress the price with litigation and the like, you’re going to depress the supply as well. Why? Because you’re trying to force companies to produce things for less than they’re willing to make things for. They simply don’t want to work for those wages. Sound familiar to you socialistic union types?

Look, profit and loss can only happen when the market is off equillibrium. At the mythical market equillibrium, producers break even. When a market is flooded, prices for goods are low and companies take a loss. Conversely, if there are not enough goods in a market, prices are going to be high because demand is high. THAT is where all the profit is made.

So, if the price of drugs is high, it’s because there are too few drugs on the market and there are not enough manufacturers in the market. If you want to encourage more drugs to be made, or if you want more manufacturers to make drugs, you HAVE to allow prices to be high.

If you do not understand this, you are hopeless, and you are doomed to think socialism and communism are great economic theories. Pedersen is one of the ones who have no clue.

Wanna know what else will help bring down the costs of drugs? Reducing regulation and halting litigation. Who do you think pays ALL a company’s expenses? The CONSUMERS. Regulation and litigation only drives up the cost of drugs to CONSUMERS. So, by suing the pharmaceutical companies at every time you get a hangnail, and by being blithely pro-government, you are increasing the price of drugs. Who do you hurt the most by regulating and litigating? The poor.