Tuesday 2011-05-17

Once upon a time, there was a land with much economic wealth and scientific prosperity. Public health had improved much due to clean water and milk supplies, vaccinations against diseases, and also the development of many different forms of antibiotics.

Then one day, there was a great commotion in the executive offices of the biggest antibiotics company, their chief scientist had discovered that all of their wonderful antibiotics, which had worked so well in the past, were no longer working as well. "Within the next decade, most if not all, of our antibiotics will be worthless." Fear seized the minds of the executives, for they knew that not only would their jobs be at stake, but also the health of their countrymen. Many old people would not live as long as they do now, and many babies would not grow up into small children.

Suddenly, the bravest executive spoke, "We can not keep this to ourselves. We must inform our wise rulers." Another brave executive agreed, and before you know it, the entire committee had agreed to send the two brave executives to tell the rulers of the land. Lickety-split, the two brave executives sped through the land, spirited by technology we can only dream of. Arriving at the palace of the rulers, they were admitted immediately, for the wise rulers knew that when two executives from a large firm arrive as fast as they did, it's best to listen.

The brave executives had summarized their talking points while en route, and quickly explained the problem to the wise rulers. Instantly, the wise rulers understood the problem, and sent one trusted aide out through a side door. Moments later, the aide returned, his face ashen, and confirmed the rulers' worst fears that other drug companies had seen the same problem.

The wise rulers then understood that they had a choice: they could tell the people that antibiotics were not working as well, which would cause people to distrust antibiotics and cause sales of antibiotics to plummet, shortly forcing the antibiotics companies out of business. Or they could keep this information quiet, so that the companies could keep making money which they would use to try to find new ways of fighting diseases, and naturally the rulers would also help out by directly research funds towards the companies.

The wise rulers knew that doing what was best for the people meant sometimes doing things that would hurt some people today in order to save many more people in the future. Drawing in amongst themselves, as is required when momentous decisions need to be made, they decided < turn page > to keep quiet and not broadcast the news throughout the land.

The rulers knew that their decision would go down in history as either great wisdom or even greater folly. However, from time to time, such is the lot of rulers, wise or not.

Kinda funny how antibiotics parallels banking and sovereign debt. Because banks require the confidence of the public, few people in the government or the banks will talk about how governments lowered rates, so that banks could earn more money and recapitalize. The same governments realize that they need to delay sovereign debt defaults until they can unwind them in an as orderly manner as possible without destroying the banks. So they both keep quiet and all we hear is the yammering of the press, who have figured out that something is wrong.

It's not a very parallel parallel. There's not much harm in trying an antibiotic that has, say, a 70% chance of working. Drug companies have plenty of money and aren't developing enough new antibiotics. --Rehana

well, if there's no harm in letting the public think that the state of antibiotics is fine, then why risk causing a commotion? antibiotics seemed mined out, all the methods of action exhausted. so we have to spend much more in order to find a brand new method of action. we'll probably end up paying a premium for orthogonality. will we end up paying for a new banking system? or will the current gambit work?

It's not that the state of antibiotics is fine--the doctors know it's not, and will tell the patients that if they need to--it's that in any individual case, it's better to use what you have than do nothing. And if the first one you try doesn't work, you probably switch to a more expensive one.