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Tuesday, November 02, 2010

"Government Isn't Always the Problem"

Sometimes government is the solution:

Maxine Udall: ...My own personal favorite example of the government being an important part of the solution is penicillin, an antibiotic that has saved many lives.
In 1940, Howard Florey and Ernst Chain, at Oxford University, produced enough stable chemical from a mold, penicillium, to test on mice infected with streptococcus. Of eight infected, 4 were treated and recovered rapidly. "Eureka!," you say. "The rest is history, yes?"
Well, no. Not quite.
Florey and a colleague packed up their penicillin and their results and took them to major pharmaceutical companies in the UK, the US, and Canada. None wanted to invest the capital in scaling it for production, mainly because there were signs that bacteria were becoming resistant to the sulfa drugs they were already manufacturing. Even if penicillin were effective for a while, it would eventually become ineffective and demand would dwindle. Where's the profit in that, they rightly asked?
So how did we the people get penicillin (and the many subsequent antibiotics...)? The US government stepped in. The US military pushed a bit on this. After all, who better to sense on the eve of war the potential gains from a new antibiotic? Roughly half of all deaths in at least one previous war had been from infection.
It was a group of government scientists at the US Department of Agriculture who scaled production and increased the drug's efficacy four-fold. And in record time. Imagine. Guvmint scientists produced something quickly, efficiently, and made it (and us) better... The private sector and "markets" would not have developed and delivered penicillin without help from US taxpayers and the US government. ...

    Posted by on Tuesday, November 2, 2010 at 12:31 AM in Economics, Market Failure | Permalink  Comments (18)


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