On Innovation and Inequality

At National Review Online, Kevin Williamson explains that with health care as with other goods, it’s natural for the rich to be able to afford the best, cutting-edge technologies.  In a prosperous free market economy, those new technologies often come down in price and become commonplace over time, but they would never have existed if there weren’t very wealthy people to make it worth it to develop them in the first place.

Innovation is expensive, and much of it requires very high levels of investment in production facilities and other capital. Sometimes those costs can be recaptured through the development of a broad mass-market product, but very often innovative products enter the market through the high end.

So if we don’t like the fact that rich people get better health care, and we try to use the coercive power of government to “fix” that, it will necessarily result in less innovation.  As in other areas, state-mandated equality will turn out to be more an equal sharing of miseries—killing the goose that laid the golden eggs, if you will.  Or, as Williamson puts it,

the central structure of the ACA regime is an attempt to control the price side of the equation — with little or no attention to what effects that will have on the more important supply side of the equation. The inevitable long-term outcome of that model is the inhibition of innovation, meaning lower-quality care and higher real prices for everybody in the long term. You can blow up the gold-plated Rolls-Royce, but you can’t drive the pieces.

“The Gold-Plated Ambulance: The necessity of innovation and the social value of gazillionaires.”