printIn a free market, consumers direct supply and demand. And in a free market, increased demand leads to increased supply, as producers compete with one another to meet the demand.
We are being told that there is a “shortage of crucial medicines including cancer drugs,” and that “President Barack Obama on Monday signed an executive order aimed at remedying the shortage.”
Remedying? Really? At least one of Mr. Obama’s regulatory sleights of hand will increase the scarcity it seeks to remedy: hounding drug sellers for “charging exorbitant prices for scarce medicines.” High prices for scarce goods are what help to harmonize supply and demand.
Alas, “You can’t fix stupid”. The reported shortages in 178 drug—most involving older, generic, cancer drugs administered by injection, as well as antibiotics to treat infections and nutritional drugs for patients who can’t eat—would have been rectified in an unimpeded market:
The shortfall of supply has obviously followed a sudden urgent demand for these drug. Large demand and short supply would initially send the prices of these drugs rocketing. Profits in an unhampered pharmaceutical market would signal to the many drug makers that it’s time to enter into production.
Mr. Obama, however, has taken further action to shortcircuit the street signs of the market—profits.
When there is a shortage of a good in a highly regulated market such as ours, it is safe to say that it is a result of government incursion into the economy. Somethings gets between the market and the consumer—in the case of these drugs, the culprits are Food and Drug Administration regulations and the patent system, which gives a drug company a lengthy monopoly over manufacturing.
Our president would rather see equality in poverty rather than inequality in prosperity. Of course, he would see to it that he exempts himself and his family from the so-called “equality.” If his daughters needed one of these drugs, is there any doubt that they would not suffer from shortages?
Much like the old nomenklatura of the defunct Soviet Union, some people are more equal than others.