
How Bad Antitrust Enforcers Kill People - 0xd3adbeef
https://mattstoller.substack.com/p/how-bad-antitrust-enforcers-kill
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downerending
I thought this was going to be _overzealous Feds put useful business out of
business, reducing supply_ , but it's actually _underzealous Feds fail to
block merger, which ended up reducing supply_.

~~~
eej71
I have to imagine there is a substantial amount of regulatory capture that
makes it incredibly difficult for an upstart to sell into this space.

~~~
cosmodisk
It's medical equipment + all sorts of special deals with hospitals/ doctors=
almost impossible.

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dantheman
I think the monopoly that the FDA has on approving medical equipment and tests
has had far more of an impact than any commercial concerns.

~~~
luckydata
that's nonsense. It's like saying the monopoly of the FBI in enforcing federal
law is a public safety issue.

~~~
missedthecue
It's not nonsense. A couple years back, the FDA had a press release where they
admitted they killed 1 million people.

They had finally cleared a heart attack prevention drug for sale in the US
that had already been legal and approved and prescribed in the EU for 10 years
prior. In the press release, the FDA said that as a result of their benevolent
approval, the drug would save 100,000 people a year.

~~~
CodeAndCuffs
Wasn't there a drug that all of Europe said was super safe, but the FDA held
out on for years, and it ended up causing terrible birth defects?

It's easy to say that a group is unnecessarily cautious/reckless until that
cautiousness/recklessness saves lives or kills people. Hindsight 20/20 and
all.

~~~
BurningFrog
There are two kinds of errors an FDA type agency can make:

A: Approve a drug that turns out to be a "cure worse than the disease", and
shouldn't have been approved.

B: Not approve a drug that would have cured many sick and/or saved a lot of
lives.

You can never fully know beforehand which error a decision will have. So the
FDA will always gamble a bit in their decisions.

And here is the gigantic problem:

With a type A error, patients taking the new drug dies, there is an uproar in
the media, the agency takes a big beating, and careers are ruined.

With a type B error, a lot of people who could have been saved dies. But that
is no change from before, no one notices, and the careers of FDA officials are
unharmed.

Given these incentives, it is not surprising that the FDA overwhelmingly errs
on the side of type B errors. It's hard to compute, but the number of lost
lives from this is probably in the millions since the 60s.

~~~
dantheman
In type A, people have a choice. They could be informed there is a risk. In
type b, they have no choice.

~~~
sharemywin
And who provides the neutral informed accessible information? and there's the
rub with modern society. No one could possibly be expected to be an expert in
every field and sub field.

~~~
BurningFrog
Drugs are prescribed by a doctor, who should be an expert in this exact field.

~~~
sharemywin
And you hear all the time about getting test you don't need and all kinds of
other conflicts of interest.

~~~
dantheman
And clearly the FDA has a bias on not making a decision that could be wrong.
They lose nothing by delaying, and lose a lot by approving the wrong drug. So
what happens, everything takes longer, drives up costs, and delays treatment
-- they have no incentive to deal with the problems they create.

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abvdasker
I like that this writer seems to have some awareness of the utter impotence of
antitrust enforcement in the US. But in his Wired article, Matt Stoller
writes:

> The coronavirus relief bill, however, is an explicit takeover of Main
> Street-level activity by the state. It’s hard to wrap your mind around the
> ideological change that has taken place. Before this disease, Democrats were
> deeply skeptical of power grabs by the Trump administration. Today,
> Democrats are angry the President isn’t more aggressively commandeering
> private corporations and forcing them to make medical supplies. Think about
> what it means in a capitalist society for the government to take over the
> means of production. Now think about what it means for Democrats to demand
> that Trump seize more executive authority. Both of those things just
> happened.

This is so wildly ignorant of socialism and the law at hand that I wonder if
American journalists should forever be banned from writing about the subject.
The law itself includes something like $500 billion in forgivable business
loans, some of which is earmarked for specific industries. The government
isn't taking over anything — it's just handing mountains of cash to
corporations which were too irresponsible to plan for a rainy day. It doesn't
give the government direct control over these corporations in the way taking
an ownership stake would.

We're not living in a command economy any more than we were in 2008. It's just
the government socializing the losses of irresponsible corporations in the
wake of gross mismanagement of the crisis by the Trump administration.
Incompetence is expensive.

------
creddit
Matt Stoller's analyses are usually a mixed bag for me. I generally agree with
him that the US needs a focused Industrial Policy but analyses like this one
seem relatively weak.

A few things that I feel should be addressed but weren't:

1) If Newport had this huge deal (40,000 ventilators * $3,000 price = $120M),
why would Covidien not continue it? What about this would have been against
their interest? It seems like if it's both better AND cheaper, they would
dominate the market globally. Unless Newport had a novel invention under
patent for a few years, presumably competitors could have also done this. Even
if they were concerned with significantly decreased margins at the $3k price
tag, why not try an $8k price tag using the same, better machine and still
steal the global market? It's hard for me to understand why Newport was this
advanced but Covidien just destroyed their product and this isn't even
questioned in the article. I don't think these are unreasonable questions.

2) Matt talks about a monopoly on purchasing. There's actually a standard term
for this, "monopsony". I would love to see Matt write about how unions end up
with monopsony power selling their labor and how bad that is. I don't expect
it any time soon. That said, he does make interesting points on how monopsony
works against producers. The weird contradiction here, though, is that this
drives down producer surplus and profit of the exact same big businesses that
Matt is usually upset about having too high of producer surplus/profit. This
seems to me a bit to be arguing against his general purpose.

3) "The contracting officers in government should have mandated as a part of
the contract that Newport Medical give the government all its research and
proprietary information on the product, and put in safeguards to ensure that
the product would be delivered." I totally agree with the latter half of this
statement, ensuring the delivery of the product is a must. However, the first
part that Newport hand over its research and proprietary information on the
product seems like a huge governmental overreach. What can justify this? Now,
it may be that the government funded this research directly (ie a grant or
loan to specifically develop the product). If this were the case, then I
understand that. However, it seems, according to the article, that the US
government was simply contracting to procure the new ventilators. Demanding a
company hand over their entire IP portfolio as a part of purchasing their
product at market prices seems ridiculous to me. What's to stop the government
from then taking that IP to another producer and getting them to produce it
for them. That producer has way better margins what with not having to do
anywhere near the same load of R&D. Not, that said, I may be misunderstanding
this particular case.

4) Matt repeatedly calls the merger illegal. He does a bit of describing his
theories for why it should've been found illegal but until a court or someone
with the oversight authority makes this determination, this is opinion.

~~~
secabeen
I'm not an MBA or Business expert, but I think the answer to #1 is probably
the same answer to the question "why are big businesses often less innovative
and nimble than small ones?" Common answers to this question are not-invented-
here syndrome, legacy costs, risk aversion, regulatory capture, etc.

On #2, I think we can agree that unions do often end up with a monopsony on
labor, and that can be bad. Generally, the best things unions have done over
the years have been the things that have generalized to the entire labor
force, not just union members, so there's that. That said, there is
competition between unions for some locals, so a monopsony is not necessarily
the end state. For example, there are state employees represented by dedicated
state employee unions, and other state employees represented by the Teamsters,
despite no connection to the teamster's traditional members in the
transportation industries.

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hpoe
So in my younger days I was a full blooded libertarian especially
economically, I was 100% against all government regulation. "You don't want
lead in your meat, well then you do your research and stop buying meat with
lead in it", I took positions that were pretty extreme by most standards, and
I would stay I am probably still a little more out there than most people when
it comes to opposing government regulation.

My reason for this was rooted in a deep and abiding belief in the supreme
importance of individual liberty, "the government should only stop me from
doing something that directly hurts somebody otherwise all government power
leads to tyranny in one form or another at the end of the day" was the train
of my thoughts at the time. I extended this to the economy because I viewed
the government regulating business as a violation of my right to conduct my
business however I want, "I own the business, I own the assets, it is my money
that has been used to build up this business and some useless paper pushing
bureaucrat can go shove it all for telling me how to run my business, its my
property to use how I want." and I still hold to that to a large extent.

However recently I have been reflecting on the situation of powerful
corporations recently, especially monopolies (which are more often aided and
abated by government involvement than kept in check) and I think that I have
discovered a fallacy in my thinking. I agree to live in a society and enjoy
the benefits of a society in exchange for choosing to surrender my ability to
exercise all possible freedoms I have. Implicit in this agreement however is
that if I choose to violate the principles of this agreement by harming
someone else for example, I will then be held accountable for that action and
whatever comes from it.

With corporations that is not the case, when a corporation violates someone's
enjoyment of life, liberty, or property there is no real accountability on
anyone. There is no one to actually take the fall, they may be fined, but
there is no one that is directly accountable, not the CEO, no the Board, the
closest thing to an accountable group is the shareholders, which really just
means random people's 401ks held under the trust of one of the three big money
managers.

Ultimately it all comes back to the idea that a corporation has personhood,
should a corporation be given personhood, and as extension the same liberties
as a person if they do not also share the same accountability. We could say if
a corporation breaks the rules that results in someones death then we "kill"
the corporation by forcing it into bankruptcy, but that ends up punishing
hundreds of innocent people that had nothing to do with the fact that Bill the
VP of Product line X, who bribed regulators to sign off on shampoo that causes
cancer.

I would welcome some pushback or opinions though on that train of thought, it
just seems to me as long as no one faces significant personal risk, there
should be no one allowed to exercise the same rights as an individual.

~~~
salawat
You've now rediscovered one of the primary controversies around the concept of
the Limited Liability Corporation. Though they were more focused around
financial debt/consequences at the time, people were also perturbed at the
possibility that the corporation could be found to have done wrong, and
seemingly no one would be able to held to account.

The way this is worked around today, is that a second criminal case has to be
brought against individuals in the corporation. The corporation has no right
against self-incrimination; and the ideaisthere should be enough evidence
capable of being raked up to hold people accountable.

Corporate legal counsel are "held hostage" in the sense that if it is found
they refused to comply with legal requests, they can be disbarred, but that
doesn't mean that companies won't go out of the way to not record things or
surreptitiously lose evidence.

At the end of the day, the super power of the corporation is that when it dies
no one else goes along with it. On the other hand though, it does take extreme
vigilance and will to pierce the corporate veil to prove wrongdoing.

It's a tough nut to crack satisfyingly to be sure.

~~~
gowld
What do you mean, "were"? This is still the major problem of corporations,
that the let criminal conspiracies limit their liability.

