That Which Is Not Seen

In That Which Is Seen, and That Which Is Not Seen, Frederic Bastiat helps us overcome our inability and/or unwillingness to consider the hidden costs of our actions. The classical example of the "broken window" explains why acts of vandalism do not create new jobs. Shifting our focus on the "unseen" may also help us understand why the net result in saving lives of the current system of Food and Drug Administration regulation is not a positive one.

Perhaps pharmaceutical corporations do not have much of an incentive to discover cures. After all, chronically ill people such as my diabetic wife make the best customers. They will buy your product again and again. Any drug manufacturer, however, can only make money if its products save and/or improve the quality of his customers' lives. The huge investments necessary to succeed in that market create the right incentives for businesses to consider long-term outcomes above the possibility of making a quick buck. Concerns for reputation force drug companies to test carefully and to reject any new substance that could harm their patients, reputations, and profits.

What is the incentive of an FDA bureaucrat to release in a timely manner (or at all) an effective drug? None. He gets no bonuses or other benefits for approving more good drugs. Yet, with each new substance he sets free on the market, he increases the chances that people will get hurt, his career ruined, and his name covered in shame for the rest of his life.

Yes, the FDA is saving thousands of lives. That is, Which Is Seen. That Which Is Not Seen by our domestic economophobes is the fact that the FDA saves those lives by killing hundreds of thousands and letting millions more suffer unnecessarily. Oh, and let's not forget the biggest beneficiaries of government regulation---the established giant pharmaceutical companies get insulated against competition by the astronomical costs of developing new drugs.