Home » Opinion » Book review
We condemn medical fraud but not capitalist plunder
By Wan Lixin |
May 22, 2010, Saturday
|
Print Edition
Print Edition
A RECENT scandal plaguing the nation's much-criticized medical sector concerned an anti-cancer drug.
The asparagus pills procured from the maker at 15.50 yuan (US$2.30) a bottle are then sold for 213 yuan to the patients, at a major hospital in Hunan Province.
So far much of the public outrage has been directed at the hospital, not profit-driven market forces that continue to be embraced as a panacea for the low efficiency that once characterized state-funded medical service providers.
Today nearly all hospitals in China are partly financed by the medicine they sell.
It's easy to blame the doctors for preferring overpriced drugs because they are more profitable, but are doctors more greedy and callous than real estate developers, bankers, stock brokers, tobacco makers, or some of the management at state-owned enterprises?
The funny thing is, when a drug -- which might be efficacious -- is known to have been marked up 14 times, most people become indignant.
But when investment bankers collect millions of yuan in paychecks for cooking up arcane financial products -- many of them toxic -- we usually admire the bankers as geniuses.
Financial products naturally lend themselves to hype and superstition because they are invisible and complex.
Similarly when housing prices soared 1,000 percent over the past 10 years, the increase is perceived as appreciation, not as plunder.
When money is the sole measure of all worth, decision making becomes easier, and efficiency soars.
In the past 30 years ago, the worship of profit has conquered one sector after another in China, leaving behind chaos, complaints, discontent, and misery.
And there is no letup in the drive.
The latest issue of the Caijing magazine carries an article focused on how the graying of the population can be harnessed to serve employment, tax revenue, consumption, and investment.
As Roger Bootle explains in "The Trouble with Markets: Saving Capitalism from Itself," the "Great Implosion" of 2007-2009 showed that "Efficient Market Theory" is incorrect and that unfettered capitalism is a recipe for chaos.
Bootle's conclusion is particularly trenchant because, as a City of London insider, he is a self-hating economist.
As we can now see, not a few Chinese policy makers have realized the destructive potency of unregulated market forces, but to reclaim the right to regulate proves much more difficult than to renounce it.
When crisis occurs, it is easier to condemn the villains for bringing about the meltdown, but in our vehemence we usually forget to expose proponents of free market ideology who were once -- and still are -- hailed as revolutionary.
On Tuesday GOME boss Huang Guangyu, once China's richest man, was sentenced to 14 years in prison.
One less noted report said that prior to the trial Huang had been trying, in vain, to block the control of his empire by Bain Capital, a private equity firm that aspires to control China's home appliances supply market through GOME.
Plundering by controlling the production and supply chain is much easier than old-fashioned sacking and looting.
Germany's decision on Wednesday to ban naked short selling of certain financial instruments is the latest sign that financial fraudsters, instead of being humbled, have emerged stronger from the implosion, thanks to bailouts by their government friends.
"I have been troubled by the increasing dominance of markets over business relationships, liquidity over commitment, and greed over public purpose," Bootle observes.
Observe also how Chinese real estate developers can extort the government and dictate its policies.
Bootle sums up six things that are wrong with the markets.
1. Conventional wisdom rules: Human nature programs each person to think just like everyone else, and contrarian views are not tolerated.
2. Social benefit is an afterthought.
3. Bankers make too much money. Too much.
4. Finance drains too many resources. "Enormous resources of effort and talent" are expended in a zero-sum game, as in a casino.
5. Fraud is a fact of life.
6. Financial markets distort the rest of the economy.
As a matter of fact, our society as a whole has already been sacrificed on the altar of profit making.
The asparagus pills procured from the maker at 15.50 yuan (US$2.30) a bottle are then sold for 213 yuan to the patients, at a major hospital in Hunan Province.
So far much of the public outrage has been directed at the hospital, not profit-driven market forces that continue to be embraced as a panacea for the low efficiency that once characterized state-funded medical service providers.
Today nearly all hospitals in China are partly financed by the medicine they sell.
It's easy to blame the doctors for preferring overpriced drugs because they are more profitable, but are doctors more greedy and callous than real estate developers, bankers, stock brokers, tobacco makers, or some of the management at state-owned enterprises?
The funny thing is, when a drug -- which might be efficacious -- is known to have been marked up 14 times, most people become indignant.
But when investment bankers collect millions of yuan in paychecks for cooking up arcane financial products -- many of them toxic -- we usually admire the bankers as geniuses.
Financial products naturally lend themselves to hype and superstition because they are invisible and complex.
Similarly when housing prices soared 1,000 percent over the past 10 years, the increase is perceived as appreciation, not as plunder.
When money is the sole measure of all worth, decision making becomes easier, and efficiency soars.
In the past 30 years ago, the worship of profit has conquered one sector after another in China, leaving behind chaos, complaints, discontent, and misery.
And there is no letup in the drive.
The latest issue of the Caijing magazine carries an article focused on how the graying of the population can be harnessed to serve employment, tax revenue, consumption, and investment.
As Roger Bootle explains in "The Trouble with Markets: Saving Capitalism from Itself," the "Great Implosion" of 2007-2009 showed that "Efficient Market Theory" is incorrect and that unfettered capitalism is a recipe for chaos.
Bootle's conclusion is particularly trenchant because, as a City of London insider, he is a self-hating economist.
As we can now see, not a few Chinese policy makers have realized the destructive potency of unregulated market forces, but to reclaim the right to regulate proves much more difficult than to renounce it.
When crisis occurs, it is easier to condemn the villains for bringing about the meltdown, but in our vehemence we usually forget to expose proponents of free market ideology who were once -- and still are -- hailed as revolutionary.
On Tuesday GOME boss Huang Guangyu, once China's richest man, was sentenced to 14 years in prison.
One less noted report said that prior to the trial Huang had been trying, in vain, to block the control of his empire by Bain Capital, a private equity firm that aspires to control China's home appliances supply market through GOME.
Plundering by controlling the production and supply chain is much easier than old-fashioned sacking and looting.
Germany's decision on Wednesday to ban naked short selling of certain financial instruments is the latest sign that financial fraudsters, instead of being humbled, have emerged stronger from the implosion, thanks to bailouts by their government friends.
"I have been troubled by the increasing dominance of markets over business relationships, liquidity over commitment, and greed over public purpose," Bootle observes.
Observe also how Chinese real estate developers can extort the government and dictate its policies.
Bootle sums up six things that are wrong with the markets.
1. Conventional wisdom rules: Human nature programs each person to think just like everyone else, and contrarian views are not tolerated.
2. Social benefit is an afterthought.
3. Bankers make too much money. Too much.
4. Finance drains too many resources. "Enormous resources of effort and talent" are expended in a zero-sum game, as in a casino.
5. Fraud is a fact of life.
6. Financial markets distort the rest of the economy.
As a matter of fact, our society as a whole has already been sacrificed on the altar of profit making.
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