[rayiner]

I’ll address your second point first because I think it’s important for framing the debate. Worldwide profits for publicly traded pharmaceutical companies adds up to $200 billion. That’s 2.7% of worldwide health spending, and 5.7% of US health spending even if you allocate all worldwide profits to the US alone.

As to your first point: what is the limiting principle to your theory? If the government can efficiently run an industry as complicated as drug development, shouldn’t it be able to efficiently run every other industry as well? If you could squeeze out Facebook’s 30% profit margins by nationalizing the web tech industry, without any adverse consequences, I fail to see why you wouldn’t do so.

The fact that prices are inelastic (and they’re often not) doesn’t get you all the way there. That tells you that the government may need to play a role in regulating prices in the extreme case. But the elasticity of price has nothing to do with the government’s competency to run a nationalized industry.

Nobody dies if Facebook imposes unreasonable impingements in privacy. But is that the dispositive fact for why the government wouldn’t be competent to run the web tech industry?

[amelius]

> If the government can efficiently run an industry as complicated as drug development, shouldn’t it be able to efficiently run every other industry as well? If you could squeeze out Facebook’s 30% profit margins by nationalizing the web tech industry, without any adverse consequences, I fail to see why you wouldn’t do so.

I think the answer lies outside the realm of the economy. Many people seek meaning and purpose in their lives and jobs, and for instance many universities in the world are essentially state-run. You can't really ignore the effectiveness of this arrangement.

I think the same would hold for medical/pharmaceutical institutes, whereas something like Facebook would, in this light, be a totally different thing.

[rayiner]

Except the university departments that do produce technology generally are tightly integrated with industry. How many Stanford and MIT professors and graduate students launched startups? And what would happen to that system if there was no exist into the private sector?

[amelius]

This might be true in the US, but in Europe there are far less ties between industry and academia.

[s1artibartfast]

I think the more relevant example is how the US manages investment in critical transportation infrastructure, and that doesnt even require innovation.