I'm Siding With Our Corporate Overolords on Pharmaceuticals, For Once

I was surprised to find myself siding with corporations and the Supreme Court on their recent decision on generic drugs.

Specifically, the NY Times states that:

The four dissenting moderate liberals argued persuasively that the company could, in fact, comply with state law without changing the drug’s label or ingredients. It could continue to sell the drug and pay compensation for any harm it caused as a cost of doing business, or it could remove the drug from the market.

Let us be clear about something. Every pharmaceutical is dangerous. I remember reading an academic article on how a very large number of deaths in the Spanish Flu were due to aspirin overdoses. The advantages of making these dangerous chemicals available at low prices through generics vastly outweighs the ease of liability suits of keeping them branded and thus accountable. Given very slim margins in the generics industry it would be highly likely that branded drugs would dominate to a far greater extent if generics companies had complete liability.

However, the FDA does seem to get this. The end of the Times article makes this clear:

For a more permanent solution, the F.D.A. told the high court it was considering a rule that would allow generic manufacturers, like brand-name manufacturers, to change their labeling in some circumstances. That could once again make them liable — and rightly so — for harm and allow consumers to sue them if they failed to warn of dangers.

 This is a first step towards what is necessary. Generics exist in a peculiar space, they are copying compounds proven to work by others. Except where the harm is caused by inactive ingredients or the flaws in the manufacturing process it is very difficult to see how they have individual liability for their products.

Where we should be going towards is holding the industry as a whole liable for these problems. Why should Mutual be held accountable when if the patient had instead taken a drug manufactured by Mylan, Sandoz, or Ranbaxy the result would have been the same? It simply isn't a case of individual responsibility, the responsibility accrues to the industry as a class. Mutual did nothing it could be individually held accountable for, regulation and liability is shared by all participants functioning under the same set of rules. This is simply another example of where the American impulse to individualize issues simply doesn't work with how the industry actually functions.

Mechanization and Jobs in the Industrial Revolution

Very quick post, but I happen to disagree a bit with Krugman's gloss of history in his recent column (though it doesn't detract from his point about modern times).

Specifically:

Mechanization eventually — that is, after a couple of generations — led to a broad rise in British living standards. But it’s far from clear whether typical workers reaped any benefits during the early stages of the Industrial Revolution; many workers were clearly hurt. And often the workers hurt most were those who had, with effort, acquired valuable skills — only to find those skills suddenly devalued

I don't disagree with Krugman regarding skilled workers, it actually took a very a long time for skilled workers to regain their previous standing, but the early stages of the industrial revolution rather clearly benefited average workers. People flocked to cities from the poverty stricken countryside. However, this additional competition from unskilled and semi-skilled workers gutted the early-modern middle class of skilled workers. It was eventually replaced by a middle class of non-manual knowledge workers but this took a rather long time.

Of course modern technological change isn't having a similar impact of raising the income of the lower classes like the industrial revolution did. But I do think it is important to point out that the story of the rise of the middle class isn't really all that accurate for describing the industrial revolution, that came later. The early industrial revolution had its largest impact on raising the standards of the lower classes, which is the exact opposite of what we are seeing today.

In the end, however, I don't really see rising inequality as being about technological change. Instead, I see it as being about the political and economic power of modern economic elites.* I don't see any particular elements of technological change that should drive this, instead I see political entities ceding decision making to elites; who predictably do what elites do.

* The power wielded by corporations and employers more generally is a form of political and social power, in addition to economic, even though it is not formally a part of government; a big problem I see in many analyses is the failure to recognize informal forms of power even when it plays a greater role in our daily lives than formal institutions do. Most of us will face far more coercion and petty bureaucracy from our employers than we will ever face from our government; and with far less say and even less means of recourse.