Martin Shkreli, and companies' moral duties

[KingsGambit]

Most of us probably saw Martin Shkreli's infamous testimony before Congress the other day. His unprofessional demeanor aside, I actually found it fascinating. Congressmen from both parties were grilling him on his business practices and their implications for patients. However, what he did simply isn't illegal (of course, he has been charged with criminal activity apart from this). As he said last month, his job is to maximize his profits for his shareholders, and his only regret is that he did not raise his prices further.

In essence, this is the goal of capitalism - to maximize profits. Most people hold this as one of the great aspects about America, yet Shkreli has found himself "the most hated man in America". My questions are: Have Americans adopted contradictory sets of values? And does a company have any moral duties other than to maximize the profits of its shareholders?

http://www.usatoday.com/story/money/...ices/79808004/
http://www.forbes.com/sites/dandiamo.../#175ad04d1964

[Bill the Cat]

Most of us probably saw Martin Shkreli's infamous testimony before Congress the other day. His unprofessional demeanor aside, I actually found it fascinating. Congressmen from both parties were grilling him on his business practices and their implications for patients. However, what he did simply isn't illegal (of course, he has been charged with criminal activity apart from this). As he said last month, his job is to maximize his profits for his shareholders, and his only regret is that he did not raise his prices further.

In essence, this is the goal of capitalism - to maximize profits. Most people hold this as one of the great aspects about America, yet Shkreli has found himself "the most hated man in America". My questions are: Have Americans adopted contradictory sets of values? And does a company have any moral duties other than to maximize the profits of its shareholders?

http://www.usatoday.com/story/money/...ices/79808004/
http://www.forbes.com/sites/dandiamo.../#175ad04d1964

I think there's a moral difference between maximizing profits and gouging your customers.

[KingsGambit]

I think there's a moral difference between maximizing profits and gouging your customers.

By definition, maximizing means getting the most you possibly can. What's to stop that from including price gouging?

[Chaotic Void]

By definition, maximizing means getting the most you possibly can. What's to stop that from including price gouging?

Well, sooner or later someone's bound to undercut you... which is apparently happening already. I recall Liberal sites were undulating with glee when they found out there was a San Diego company planning to fill the exact same prescription for $749 a pill LESS than what Shkreli is charging ($1 a Pill, basically).

Barring items of genuinely worthy quality where you spend less long-term by spending more short-term (for instance, these $165 Boots have lasted me over a year. That's longer than any other pair of inexpensive $30-$40 boots I've purchased, save for one) or Kool-Aid Swilling levels of customer fidelity, most people will go for the cheaper price.

[Rational Gaze]

By definition, maximizing means getting the most you possibly can. What's to stop that from including price gouging?

In a genuinely free market, people who do that go out of business. Of course, the US is not genuinely free market. Business and trade are heavily regulated, and those goes even more so for healthcare, which is a mass complex of government regulation, subsidisation, etc.

[Leonhard]

In a genuinely free market, people who do that go out of business.

Ah yes... that true free market.

Also, curious about how you imagine it would work. You've got a guy, he buys a patent to a cancer curing drug, and jacks up the price by a factor a 100.

What's to prevent that?

[Catholicity]

He comitted a moral sin. Obviously the competition was going to dry him out sooner or later. When I realized that this was about a life saving drug and the only one of its kind I felt sick to my stomach. Clearly it was an example of what happens when a person has no interest in the common good, but only an interest in themselves. It was likely not about their shareholders but about "let me prove a point and I don't care how many people die in the process" that kind of free market and true communism are just as bad. They both kill people and have no interest in the common good of others. I wonder how he sleeps at night. NVM it takes a psychopath to do what he did.

[Catholicity]

In a genuinely free market, people who do that go out of business. Of course, the US is not genuinely free market. Business and trade are heavily regulated, and those goes even more so for healthcare, which is a mass complex of government regulation, subsidisation, etc.

Yes but this was a clear example of how UNREGULATED health care is in the US. He just got caught. Essentially he did commit a crime by causing the drug to be so unaffordable it was causing the death of others

[Rational Gaze]

Ah yes... that true free market.

Also, curious about how you imagine it would work. You've got a guy, he buys a patent to a cancer curing drug, and jacks up the price by a factor a 100.

What's to prevent that?

For one thing, there would no longer be such things as 'patents' or 'intellectual property', because these things hamper free-market trade:
http://fee.org/articles/how-intellec...e-free-market/

[Rational Gaze]

Yes but this was a clear example of how UNREGULATED health care is in the US.

I think you are using a very different definition of the term 'unregulated', then. For one thing, despite the 'lack of regulation' rival companies lowered their prices. So, what did this guy gain from jacking the price up? Nothing. In a free market system, if you raise your prices too high, you will go out of business, and your competitors will profit at the expense of your downfall. Secondly, I fail to see how a lack of price controls negates the long list of the ways in which the US healthcare system is heavily regulated:
https://mises.org/library/myth-free-market-healthcare
https://mises.org/library/economics-us-healthcare
https://mises.org/library/socialized...laws-economics

[Littlejoe]

I think you are using a very different definition of the term 'unregulated', then. For one thing, despite the 'lack of regulation' rival companies lowered their prices. So, what did this guy gain from jacking the price up? Nothing. In a free market system, if you raise your prices too high, you will go out of business, and your competitors will profit at the expense of your downfall. Secondly, I fail to see how a lack of price controls negates the long list of the ways in which the US healthcare system is heavily regulated:
https://mises.org/library/myth-free-market-healthcare
https://mises.org/library/economics-us-healthcare
https://mises.org/library/socialized...laws-economics

True, BUT in a truly free market, the deepest pockets win. The rival company sells the product way below cost for so long you go out of business then they corner the market and charge what they want. Before anti-trust laws, that was perfectly legitimate.

[Rational Gaze]

True, BUT in a truly free market, the deepest pockets win. The rival company sells the product way below cost for so long you go out of business then they corner the market and charge what they want. Before anti-trust laws, that was perfectly legitimate.

Monopolies simply cannot exist in a free market. The market is self-regulating in a way that central planning can never be.

[Rational Gaze]

[Leonhard]

Monopolies simply cannot exist in a free market. The market is self-regulating in a way that central planning can never be.

Is there any evidence of this, as in, has there been such a market and it was clear that the emergence of monopolies was impossible?