“I don’t expect you to understand this, but…”
I seldom push advice on people, but I offer this: If anyone ever attempts to use the above words to begin a conversation with you, just walk out of the room. Never return to the room or to the person in question. Delete the person from your phone. You get the idea.
The words were written by Martin Shkreli, the “Pharma Bro”, as he launched into a condescending, inaccurate and far too reverent attempt to explain a house-of-mirrors distortion of market economics to someone who criticized his company (now former company) for raising the price of an anti-parasitic medication from US$13.50 pre tablet to US$750 per tablet. I expect he begins a lot of his sentences with, “I don’t expect…”
Shkreli is sort of kind of in the news again, auctioning off chances to punch him, and knock the smirk off his face for charity. I say, just give the money to charity, and skip the self-promoting middle man, hereinafter referred to as SPMM, for the same reason this is likely the last time I will ever reference, by name or well-known nickname, this particular SPMM. I don’t wish to risk helping, in however tiny a way, to create another sociopathic self-promoting Donald Trump type.
While even anarchists, of SPMM’s generation or any other, intentionally or not, incorporate some form of market economics into their endeavors (and do well to be aware of this, if they don’t wish to undermine their loftiest goals), I would not recommend turning any human endeavor into the monetize-everything-and-everyone, make-almost-nothing, money-moving roulette game that SPMM’s entire generation has now been raised in, placed in charge of, crushed by; etc. I also wouldn’t recommend replacing anyone’s spiritual cosmology with anything written by Adam Smith. I don’t think Smith would make such a recommendation either.
I respect your intelligence, dear reader, and expect you to understand that I mention Smith because Smith’s An Inquiry into the Nature and Causes of the Wealth of Nations, usually just referred to as The Wealth of Nations, is the work so often directly and indirectly referenced in condescendingly wrong explanations of markets, a work published at the dawn of The Industrial Age, when economies were very concerned with actually making wanted and needed stuff. This is why I hope that, at some point in life, the people who are fond of offering such explanations might pick up a copy of TWON, and consider maybe actually reading and understanding it, instead of just smirking and highlighting the out-of-context passages that will rationalize the callousness in which they take such smug pride.
The first thing for a market econ super genius (in the Wile E. Coyote sense of the phrase) needs to realize is that, when trying to make the case for gouging to an angry public, one is talking to the very market to which one refers, and of which one has very likely run afoul. One has also, then, run afoul of any stockholders whose interests one claims to be defending. Hence, the need to explain what is not expected to be understood, and is already not understood by the person attempting to instruct. Perhaps phrases like “all the traffic will bear” need to be expanded to include what should be implicit in them, so that they read more like, “all the traffic will bear, without the traffic and often, the stockholders wanting, not just to smack the smirk off your face, but to rip off your head and spit down your neck.” It’s subtle, so I can see why this part often gets missed. Making people want to do awful hard-to-clean-up-after things to one’s head and neck is not good marketing, which should be of concern to anyone competing in the, um, marketplace, you super geniuses, you.
To correct a few other misconceptions:
It is not true that the moral high ground has no place in market economies, and that greater social good need never be the concern of people in business. In fact, the entire purpose of TWON was to argue that, to a great extent, self interest and the greater good coincide, but implicit in this argument is the argument that, to the extent self interest does not coincide with the greater good, the greater good should win. Lots of people and businesses (often comprised of people) actually do their marketing at an altitude well above the slime. They make honest livings and honest bucks, noxious as those things may seem to some.
Yes, there’s such thing as needlessly cumbersome and needlessly anti-competitive regulation, but there’s also such thing as reasonable, pro-competitive regulation that protects buyers, sellers, the public, the environment…It’s simply naive to believe that The Invisible Hand and deregulation magically remove all long-term and short-term perverse incentives from markets. History, as well as the present state of the world’s least regulated economies, demonstrates otherwise. It’s amazing that there are supposedly savvy grown-ups who need to be told this, often while their alleged savvy has them responding to every perverse incentive available to them. Maybe the limited dexterity of The Invisible Hand just hasn’t been packaged and sold to the savvy SBBM grown-ups correctly. Or maybe those particular grown-ups don’t really care what’s incentivized, as long as they get a chance at the big grab.
Conversely, even SPMMs don’t live according to their frequent contention that all positive incentives disappear unless the rules are removed and opportunities for immediate short-sighted profiteering are maximized. Where there is money to be made, someone tries to make it, without much regard for whether more could conceivably be made, if only any and all reasonable constraints (and taxes and payment of the costs of externalities) were removed.
SPMMs like to blame sensible regulation of drugs, and virtually every other form of regulation for “distorting” markets, as if an appreciation of both honest market principles and the need for reasonable regulation are mutually exclusive –but Smith did not call for markets that are essentially a busy road network with no traffic signals, traffic cops or rules of the road. No responsible market capitalist would call for the end of civilization and a might-makes-right marketplace. Reasonably unfettered market activity certainly does not involve allowing dangerous and fraudulently ineffective medications or other products onto markets, or leaving the sick and injured to suffer and die, until such time as the market finds it profitable to prolong life and alleviate misery with reasonably safe medications. If the market cannot address such problems, someone and something else must.
The operation of societies, even societies that incorporate market economies, does involve consideration of the public good, and of the costs of externalities. It’s Smith who added those phrases to the popular lexicon, not a bunch of impractical flower children (who are not to be confused with some eminently practical flower children I know).
So to the SPMMs of the world and their bros-in-arms, I say: put down the dog-eared Milton Friedman and Ayn Rand paperbacks, and all those other attempts to fit a complex world onto a single index card; quit confusing market economies with market societies; quit confusing reasonable self interest with sociopathy; and quit trying to position the latter as somehow being the basis for any kind of viable system of economics or governing or living. Beyond that, I expect you’ll understand what you want to understand.