![]() Plenty of other research shows that price controls results in shortages. ![]() ![]() They would never have been able to jack their prices so high if they had any competitors, and there are companies dying to compete with them, but they have been stuck in the FDA 'backlog' for years. This was demonstrated recently with the Epipen controversy. In any other market if a company increased prices even 25-50% they would put themselves out of business because a competitor would step in to offer a better price. Despite the fact research points to gov-backed monopolies being the primary cause for drug price fluctuations, sometimes increasing prices 2000% at a time. I see it all the time on HN and Reddit too.Ī perfect example of this recently is all of the calls for price controls in pharma - prices are a great example of distributed knowledge systems. Instead of figuring out the root-cause and actually solving problems the default instinct of all modern state-heavy economies is always to add more layers on control. Yet centralized control is the hammer that everyone turns to whenever there is a problem. Hayek’s point in his famous essay of 1945, “The Uses of Knowledge in Society”, is that central planning cannot work because it is trying to substitute an individual all-knowing intelligence for a distributed and fragmented system of localised but connected knowledge, much of which is tacit.
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