16 Dec 2015


Potpourri, Tom Woods, Tyler Cowen 10 Comments

==> Tyler Cowen lobs a softball, and his clever critics in the comments throw their backs out they swing so hard. Very entertaining all around.

==> Gene Callahan at his blog has been posting some provocative things on the conventional view of how (natural) science progresses.

==> Surely anthropogenic climate change can be used to justify a new land tax? Wrong.

==> Speaking of climate change, Tom Woods invites the “heretic” Judith Curry onto his show.

10 Responses to “Potpourri”

  1. E. Harding says:

    Speaking of Cowen and Krugman, take a look at this post of mine:


    And notice how thoroughly my comments have been scrubbed from the MR thread.

  2. Harold says:

    On the land tax, one commenter noted that subsidised flood insurance is a subsidy on coastal land. We seem to be discouraging adaptation. The Netherlands pays for coastal defences from taxation, but not from coastal areas only. In The Netherlands the land does not sllope upwards from the coast, so all areas are threatened.

  3. Craw says:

    What’s provocative about Callahan’s post? It sounds like something Feynman would say. Look up his discussion in The Nature of Physical Law.

  4. Tel says:

    Hey Bob, I know you have been tangling with more important stuff lately, but I’d appreciate if you can get one of your doctor buddies to answer this, or one of the many libertarian medical experts who frequent this site.

    Quick history: the β-Lactam family of antibiotics most famously includes Penicillin of course (containing sulphur) but a more commonly available variation is Amoxicillin (with a similar structure but no sulphur). This antibiotic is widely used and Amoxicillin is out of patent and available cheaply as a generic drug.

    The problem is that many bacteria produce a β-Lactamase enzyme to defend them selves against β-Lactam antibiotics (this enzyme destroys Amoxicillin). As the next step is the “arms race” happening here, drug companies started mixing a β-lactamase inhibitor to block the enzyme and thus leave the antibiotic operational in a form still dangerous to the bacteria. To this end, Amoxicillin is mixed with Clavulanic acid (also from the β-Lactam family). The way this works, the Clavulanic acid forms a false target for the β-Lactamase enzyme, and in the process both the Clavulanic acid molecule and the β-Lactamase are destroyed (a mechanism known as a “suicide inhibitor”). This two-part mix is sold under the name Augmentin, and it bypasses at least one class of antibiotic resistance.

    So now the economics: check the prices:


    You can see that for your generic (out of patent) Amoxicillin, it sells very cheaply, but once mixed with Clavulanic acid the price goes up by approximately a factor of 10. Presumably there is a patent still in operation here. You can see that additional research effort was required to make improvements in the “arms race” against antibiotic resistance, and the patent allows the drug companies to cash in on the improvement. That’s all well and good providing the end-user has a free choice in whether they want to pay for this.

    Now, so I’m told by a doctor, in Australia you used to be able to buy the intravenous form of Amoxicillin, for use in hospitals, but since it went out of patent protection and the price fell, this has no longer been available (maybe same in the US, I note on the drugprice website, no IV form is listed for Amoxicillin). However, the intravenous form of Augmentin is available and it comes at a high price. That means doctors do NOT have the choice of using the generic in this situation, they just have to use the more expensive drug. The people explaining this to me were using it as an example of how private industry cannot be trusted to produce what people need… see how they won’t produce generics because there isn’t enough profit margin in it? All the fault of the free market you understand, if only we would get more government involvement into the medical industry.

    I pointed out that they DO sell generic brand aspirin tablets for about 10c a tablet, so the margin must be thin on those, especially after it’s gone through the packaging, delivery, chemist shop, etc. Apparently this doesn’t count as an acceptable counter-example because aspirin is too common. Anyway personally I don’t believe the free market would refuse to produce low margin goods… we have low margin goods all over the place.

    So I wonder who really made the decision to make IV Amoxicillin unavailable? The commonly used socialist economic interpretation “there isn’t enough profit” simply doesn’t make sense… with no one else making it, the margin can be quite large, you clearly have a factor of 10 to play with before you get up to the price of Augmentin. Let’s suppose at the same price, everybody would choose to buy Augmentin, but if the price factor was 2, at least some people would buy generic Amoxicillin and on the cost side you are already making a good profit on that.

    Can we discover some government intervention blocking the use of the generic? Are doctors avoiding it, or have they been told not to use it?

    I will point out, you can certainly buy the generic tablet form, for taking orally. I’m only talking about availability of the IV form, for doctors to use on hospital patients.

    • Craw says:

      Intravenous drugs are evil. Ask any Republican or Democrat.

      It’s available IV almost everywhere else.

    • Tel says:

      Astounding what you can find when you search (ignorance is optional in this day and age). Here in Australia we have a government department specially for the task of documenting and reporting medicine shortages. It does appear that they have recognized the shortage of IV β-Lactam family antibiotics, and there’s a webpage for this information:


      We can see two different suppliers of generic Amoxycillin for IV use (both listed as “Available” but the doctor talking to me yesterday was complaining they are NOT available, perhaps her knowledge might be slightly out of date, if the status has recently changed, or perhaps government websites tend towards optimism):

      “IBIAMOX amoxycillin 1g (as sodium) powder for injection vial”

      — Juno Pharmaceuticals Pty Ltd

      “AMOXIL amoxycillin 1g (as sodium) powder for injection vial”

      — Aspen Pharmacare Australia Pty Ltd

      Searching on those companies Juno has a website:

      Juno Pharmaceuticals is a global health care company dedicated to introducing a range of innovative pharmaceutical products to Australasia.

      With a primary focus on the hospital market channel, Juno has access to a range of injectable presentations across multiple therapeutic areas including biosimilar products An extensive global network of manufacturers allows us to source niche, life saving products for our Australasian customers.

      Our experienced Hospital based Key Account Management team offers our partner companies alternate portfolio solutions for a range of maturing products.

      Juno is also engaged in bringing to market patent protected products.

      OK, sounds reasonable. The other supplier is Aspen seems a bit larger:

      Aspen Australia commenced operations in May 2001 with a portfolio of products generating sales of around $10 million. After the acquisition of the Sigma pharmaceutical business in February 2011, current annualised sales are close to $900 million in Australia and New Zealand. Aspen Australia is also responsible for a growing business in a dozen countries in Asia accounting with a projected $139 million in in-market sales for FY 2016.

      Besides marketing and distributing products owned by the Aspen Group, we also license in products from other companies, and are focused on meeting the needs of our licensors.

      Of course this is evidence that the explanation “private companies just won’t produce it, because profits are too low” is just plain wrong. There are two private companies supplying this market.

      However, that said, we have two established suppliers producing generic out-of-patent drugs, and they are listed and known to the government, presumably 100% legitimate channels given how heavily regulated the Australian hospital system it. We are a wealthy 1st world nation, with any technology you like, and yet there are documented shortages that have been significant enough to be interfering with the work of doctors.

      I’ve never in my life found myself unable to buy new underpants and socks in this country. I’ve never stumbled into a national Coca-Cola shortage. When it comes to aged Scotch whisky or VSOP Cognac, there’s always some available on the shelf… always! If you want a tap washer, there are a dozen places to get them from, without even looking at mail order. I’ve never found it even slightly difficult to buy fresh meat, fresh fish, fresh fruit and vegetables.

      So why would we have a medicine shortage? Not just one shortage, by the way, on that government website you can find they track a whole bunch of shortages. This should be fascinating to economists I think… there’s a mystery here.

      Using my Austrian Economics 101, shortages are usually connected with price ceilings. The signal of rising prices should stimulate more production, and at the same time discourage consumption. If this signal is blocked, shortages can result.

      • Tel says:

        More information, I found a news item:


        “And I think it’s important also that governments, when setting prices for medicines, also need to take into account making sure the viability of supplying that medicine and making sure that medicines can be supplied in Australia and indeed manufactured in Australia.”

        So basically, we do have price controls in operation… and shortages should be no surprise. OK, there’s the answer I guess.

        • Craw says:

          “The problem isn’t communism, it’s shortages.”
          John Chancellor, NBC news anchor at the time, on the USSR.

          • guest says:

            “In conclusion: What, then, do we say about Marxism? I say this: There is nothing noble or attractive about Marxian Socialism.

            “Let me be clear, if I haven’t been, already: Marxism is, by definition, totalitarian and genocidal by motive, design, practice, and result.

            “The political goal of Communism is to anihilate freedom in all realms of life – economic, social, and intellectual.

            By philosophical design, Marxism, in power, must always use force to achieve its ends.

            “Any government that expropriates and redistributes private property; Any government that seeks to centrally control and regulate an entire economy; Any government that violates the natural and civil rights of its citizens on a daily basis; Any government that seeks to reconstitute human nature; will, and must, use force as a matter of course.

            “Thus, Socialism and force are synonymous in theory and practice. The fact of the matter is that the Marxist moral ideal necessarily leads to censorship, secret police, reeducation camps, Gulags, and genocide, in practice. Its violent and bloody history is evident for all to see.

            “Marxian Socialism begins and ends with violence and destruction. …”

            “… The problem with Marxism is Marxism.

            C. Bradley Thompson

            • Tel says:

              I see you have been to Australia then.

              Look, a lot of people make the same complaints, but the beaches are nice.

              I must admit, seeing such basic medical shortages landing close to home in a nominally wealthy nation does feel a bit more immediate than reading about it in a history book, or text book.

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