Thursday, September 23, 2010

Seriously?

Dean Baker, with whom FLG almost always disagrees but does so with knowledge that Mr. Baker understands the underlying economics, gets a little crazy today:
The Washington Post told readers that President Obama's health care plan leaves drug prices to the market. This is not true.The plan leaves in place government issued patent monopolies that raise prices by many times above their competitive market price.

Fair enough point, FLG guesses. But this is one of those places where pretty much everybody agrees that the market price would be too low to support innovation. Those who innovate need to recoup their investment and make a profit. Consequently, you issue them a monopoly for a limited time through a patent. Not exactly bleeding edge economic theory. It's pretty much common sense. The Founders, for example, wrote this power into the Constitution. It's right there in Section 8, which gives congress the power:
To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;

FLG isn't exactly sure what Baker's point is. Because the government issues patents it interferes with the market? Okay. So, in for an penny, in for a pound? Go ahead and set prices?

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