Moon of Alabama Brecht quote
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March 30, 2006
Supply / Demand

<snark>
Medicare is not allowed to negotiate prescription drug prices. Indeed it would catastrophic if Medicare could do so. Some people have questioned the reasoning  for this important statute. But it is quite simple to understand.

If Medicare would negotiate prescription prices, it would lead to changes in supply and demand. Demand causes something to happen and supply would go up. The supply causes prices to go up.

That is democracy by the way. Indeed it is the most pure form of democracy.

You do not get that? Here are the valuable words of a prominent MBA holder explaining it in precise language:

One of the most — one of the most pure forms of democracy is the marketplace, where demand causes something to happen. Excess demand causes prices to — the supply causes prices to go up, and vice versa. That stands in contrast to governments that felt like they could set price and control demand.
President Discusses Democracy in Iraq with Freedom House, March 29, 2006

</snark>
Who handed that guy a diploma?

Posted by b on March 30, 2006 at 12:58 UTC | Permalink
Comments

And hot air sinks. Or so the feeling goes, anyway.

Posted by: mats | Mar 30 2006 14:08 utc | 1

It was the oil embargo of 1973 that impressed me with the fact that oil companies could earn more money with a supressed supply than with increased demand.
Adam Smith’s “invisible hand” was slapping us in the face: it works fine for his theoretical pin factory, but not when it comes to strategic resouces.
And the health of a nation’s population is a strategic resource.

Posted by: ralphieboy | Mar 30 2006 14:34 utc | 2

Wow, they’re handing out MBAs to anybody who can cough up the dough to get in the door these days. Didn’t this doofus understand from his Business Econ classes that rising prices are supposed to call forth increased supply. At least that’s what all of the charts I studied in B-school showed me. What this pharma exec didn’t want to address was why the increased prices didn’t seem to have led to increased supply. I suppose it wouldn’t have anything to do with the monopoly power the pharma firms exercise, courtesy of the US voter and government. Oh, BTW, they managed to get those monopolies extended a few additional years several years ago too. Government on sale to the highest bidder.

Posted by: PrahaPartizan | Mar 31 2006 5:13 utc | 3

PP,
is it not amazing that the most vocal proponents of “free markets” come from industries that are highly dependent on government regulation & intervention, such as defense, energy, transportation, agriculture and pharamceuticals?

Posted by: ralphieboy | Mar 31 2006 14:47 utc | 4

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