I enjoyed these two debates. Its always interesting to talk with someone that has such fundamentally different views.
@madmike Likewise! Thanks for taking the time to debate :)
So in the debate, my criticism was that the government buying the cure at $20k was only "efficient" in the long run (based on the provided scenario), but that it wasn't the "most efficient" way of handling the situation. Let me offer what a more efficient scenario would look like.Oversimplification in 3... 2... 1...: in the absence of government, the price of the cure would go down for two reasons. First, the pharmaceutical companies wouldn't know exactly how much money each customer has (unlike the government), and there's no guarantee the customer will buy/afford it (again, unlike the government) which would incentivize them create a price that would maximize their profits. So for example, selling a million dollar cure to 20 people is not as profitable as a $1k cure to a million people. Whatever that price is in the end, it'll almost certainly be more competitive than the offer they give to the government. Even with competition, if the pharmaceutical companies know that the government is a guaranteed buyer with deep pockets, they'll just inflate the price.So rather than just receiving the longterm efficiency of keeping members of society healthy (which would save society money), the other big benefit is that the remaining $19k (or however much would be saved due to market prices) could be spent on other things thereby maximizing economic efficiency.Again, the market is very paradoxical and not intuitive to the laymen. By not guaranteeing everybody a smartphone... everybody can now afford a smartphone.
@bubbles But isn't it true that serving the basic needs for the bottom of the pyramid wouldn't be profitable for corporates? Hence they would just die on the streets? And you can see the government as a secure client for corporates or you can also consider them having huge leverage to negotiate prices given that they are their main customer. The problem is when corporates govern countries through lobbying, campaign contributions etc hence government puts their interests first and just say yes to everything
@gigi If that were true, Red Robin would be more profitable than McDonalds or Ferrari over Toyota. Although it's true, individually, people from the bottom pyramid have less, they tend to be more numerous meaning they have a combined purchasing power greater than the middle class. There's a reason why so many real estate developers push for condos and apartments rather than expensive single-family homes. It's less profitable building a single home when you can collect rent from 30-50 people in a 5 story building.Negotiating prices is a non-issue when the government gets out of the patent business and removes barriers to market entry. Do we ever have to "negotiate" with any of the car companies? No, because if either of them overcharge, consumers will go elsewhere. If you expand competition, having to collectively bargain is a non-issue.
@bubbles The opposite.. my point is that if we care about profitability only, there wouldn't be a Robin Hood exactly cause serving the poor is not more profitable. And if you were right and the bottom of the pyramid was attractive for for profit orgs the we wouldn't need charities and NGOs, right? It's only recently that for private corporates organizations started being interested in the bottom of the pyramid due to technology and the potential to start making money out of them (e.g. telco/ financial services in Africa).Council type condos are not meant for the bottom of the pyramid/ people in poverty, they are just for low income people. And even in these cases you see the real estate developers taking complete advantage just to generate profit (look at Grenfell Tower in London...)Completely agree with you that government should not be involved with "luxury" industries like automotive; free market will do a better job. I am only referring to basic human needs e.g. health care, education, electricity, water etc. which is essentially where taxes should go