Competition is only thing that keeps human beings striving for improvement: businessmen striving to please their customers, funds flowing to research and development. The fear of your lunch eaten by the competition and your customers deserting you is what drives people onward to build better products, and what leads to good customer service. In a competitive market, everyone operates in a constant state of anticipating the next improvement - and investors, researchers, and business owners toil to try to ensure that they themselves are the ones offering that improvement.
This is true in every market, be it shoes, computers, or medical technology. The shoe marketplace is free, cutthroat, and churning with innovation, for example - the arms race of earnest competition provides wide choice and good prices for customers. The market for medical technology is, sadly, a very different story. This is a critical time in the evolution of biotechnology and medical science. Enormous advances are possible in the years ahead, including significant extension of the healthy human life span, yet this marketplace is not open and competitive. Everywhere is the hand of government, suppressing competition, forbidding all that is not expressly permitted, and dragging the potential for progress down into the gutter.
A recent Ludwig von Mises Institute daily article consisely and clearly explains some of the more important aspects of the way in which governmental power is dooming the prospects for rapid progress in applied biotechnology. Research and development is a long connected chain of ventures, stretching from the lab to the clinic. If any part of that chain is oppressed, or has costs imposed upon it, then all the links suffer:
The problems of the American healthcare system are caused entirely by the fact that the government subjects the system to massive interventions ... by the early 1990s only about 10% of all American hospitals were private, for-profit enterprises. Socialism characterizes at least 90% of all hospitals.
The effect of this vast government takeover of the hospital industry, Friedman documented, is what any student of the economics of bureaucracy should expect: the more that is spent on hospital care, the worse the quality and quantity of care become, thanks to the effects of governmental bureaucratization. According to Friedman, as governments took over an ever-larger share of the hospital industry (being exempt from antitrust laws), hospital personnel per occupied hospital bed quintupled, as cost per bed rose tenfold.
Friedman also once suggested a syllogism to explain the bizarre spectacle on display today of responding to problems caused by healthcare socialism with even more healthcare socialism.
The syllogism goes as follows:
1. Socialism has been a failure everywhere it has been tried;
2. Everyone knows this; and
3. Therefore, we need more socialism.
Physicians have long enjoyed a degree of monopoly power derived from state legislatures that delegate to the American Medical Association (the doctors' union) the "right" to limit entry into medical schools through accreditation. Only graduates of accredited (by the AMA) medical schools are licensed to practice medicine. The AMA has used these state-granted privileges to limit both the number of medical schools and the number of medical-school graduates. The reduced supply of doctors drives up the price of medical care and the income of AMA members. Hundreds of other health professions limit entry with the help of occupational licensing regulation, the primary effect of which is to create monopoly profits, not to ensure quality of care.
Government regulation of pharmaceuticals and medical devices, primarily by the Food and Drug Administration (FDA), increases healthcare costs, denies the benefits of myriad helpful drugs and devices, and creates monopoly power. ... FDA bureaucrats are extremely risk averse: On the one hand, it costs them nothing personally to delay a life-saving drug for years, if not decades, by demanding test after test. On the other hand, if they permit a drug to enter the marketplace that turns out to be dangerous, it is a public-relations disaster for the agency, which it does not want to be associated with. Consequently, the entrance of new drugs and medical devices onto the market is often delayed by years, costing many lives and inflicting much needless pain on those already suffering, while driving up prices.
The damage done to the rate of progress in applied biotechnology is enormous - we look at what is going on in the labs under present circumstances and are impressed by progress. What we don't see is what might have been in the absence of overwhelming regulation and FDA roadblocks. If there is little or no prospect for profit at the end of the day, vast swathes of privately funded research simply don't take place. If competition is suppressed, then bad products, poor customer service, and little effort put towards improvement become the order of the day.
Think of the damage done to our prospects for longer, healthier lives; this too is considerable. I think we all see the direction the wind is blowing these days - towards worse rather than better. More controls, more regulation, less freedom, less competition, less progress. I suspect that the future of medicine will be based upon what can be salvaged - in terms of knowledge and infrastructure - from today's Western research communities and carried away to less restrictive regions for commercial development.