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The Schizophrenic State

From the Mises Blog; archived comments below.

Poor government. It tries to encourage hybrid cars with tax breaks and penalties. Then those cars are threatened by people using the government’s grants of artificial patent monopolies. Poor state.

The state tries to keep pharmaceutical companies from charging too-high prices for drugs like Cipro–prices which are too high because of the state’s artificial patent monopoly system in the first place; so the state threatens same companies with the loss of the state-granted monopoly if the companies actually use this monopoly when it would embarrass same state. Almost makes you feel sorry for the poor little state, don’t it? The state is all-powerful–not subject to normal laws like we are–so it should be able to have its cake and eat it too, no?

Archived comments:

{ 11 comments… read them below or add one }

Michael A. Clem January 13, 2006 at 9:06 am

Good points on the irony or contradictory efforts of the government, but correct the typos: ‘pharmaceutical’, and ‘have its cake and eat it too’.


Keith January 13, 2006 at 10:44 am

The examples are endless. We need to import less oil, but we won’t drill for it. We need to lower gasoline prices, but tax gasoline like crazy. We need to feed the poor, but large percentages of the poor are obese. Etc., etc., etc.


tz January 13, 2006 at 11:40 am

The only difficulty is that other systems are worse – in other states, you have an even more incestous relationship to create pharmaceuticals or medical devices since the state is the consumer.

But there is no reason that chemistry and biochemistry, and even mechanics or other engineering can’t be done on an opensource model. I don’t know if it would work, but I would have trouble imagining it would be worse than what we have now.

Creativity doesn’t work well with the standard market forces or even the standard management techniques. They even tend to be counterproductive. But I think the market has a role, but it might require something more like symbiosis rather than I reward or punish based on if you can come up with good ideas.


Roy W. Wright January 13, 2006 at 11:41 am

Ha, also good examples.


Roy W. Wright January 13, 2006 at 11:45 am

Er, I was referring to Keith.


The State January 13, 2006 at 12:47 pm

The state is all-powerful–not subject to normal laws like we are–so it should be able to have its cake and eat it too, no?

We don’t have to answer that question.


Larry N. Martin January 13, 2006 at 12:56 pm

Er, I was referring to Keith.

That’s funny! Sorry, tz.

Creativity doesn’t work well with the standard market forces…

So you say…


Curt Howland January 13, 2006 at 2:47 pm

Creativity doesn’t work well with the standard market forces or even the standard management techniques.

You haven’t used Linux recently, have you? Or Edison’s Invention Factory? How about FedEx abd WalMart?

Creativity works wonderfully in a free market, because not only is novelty one of the great selling points, creative ways to increase the efficiency of production/distribution of commodities is the how and why prices generally decrease over time.

The “starving artiste” bemoaning how the “market” doesn’t reward his “creativity” is also a myth of the lazy. Having seem someone get lots of money for wrapping an island in red plastic and calling it “art”, or one of the Great Works of Modern Art is a statue of some guy on the toilet… Hey, it might even be a really good statue, but “creativity” not rewarded? Feh.

Imagine the rewards if potential patrons didn’t have 7/8 of their wealth stolen at gun point by taxation and regulation.


Vince Daliessio January 13, 2006 at 3:32 pm

What they said. Let’s get rid of all this silly IP nonsense. As an unfortunate comparison, check out Hollywood’s MP in the Canadian Parliament;


The underlying problem here is government. I was thinking about it the other day – government solutions invariably over or undershoot any given problem, then the government overcorrects, then undercorrects, until the program looks nothing like what it was supposed to originally, and; is still totally ineffective at the stated goal, while becoming more and more successful at the unstated goals of growing government and enriching special interests.


Michael A. Clem January 14, 2006 at 1:11 pm

Vince, let’s expand on that just a little bit for those who might critize the “government is the problem” arguments. Because government solutions involve the use of involuntary coercion, because it’s a political solution instead of a market solution where people voluntary choose to trade or not trade, government bureaucrats and politicians can’t get good feedback or information about how effective their solutions are, and have little incentive to come up with an appropriate solution.
So it’s not so much that government is the problem, but that government’s use of coercion is the problem. It bypasses economic information that naturally exists in a free market.


Vince Daliessio January 18, 2006 at 9:52 am

Of all people, Milton Friedman once gave an excellent analysis of the process I described;


But I must concede that Michael is right – government’s biggest problem is that it takes resources by direct and indirect coercion, and applies them in an uneconomic, unaccountable manner through agents that stand to benefit. There could not be a system designed to be as faulty and inefficient as this one.

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