Profit-Driven Disasters
On Wednesday, March 10, Richard J. Ablin, the person who in 1970 discovered P.S.A. – prostate specific antigen – in an op-ed in the New York Times entitled The Great Prostate Mistake bemoaned the $3 billion spent on PSA tests each year. He argues that the test is no more accurate in predicting prostate cancer than a flip of the coin. Rather than helping, it ends up subjecting millions of men to painful and unnecessary biopsies. (I’ve had three so far, so I know what he means!)
He describes the situation as a “profit-driven public health disaster.” In other words, so many businesses have a financial interest in the use of PSA testing, that the entire process has become corrupt. Those with financial interests use money and influence to convince the stakeholders – doctors, labs, specialists etc – to keep the test alive despite overwhelming evidence to the contrary.
This raises for me the question of the limits of the for-profit enterprise. When is it best not to rely on profit-driven companies to sell certain goods or services? Asked another way, are some goods and services such that it is a mistake to trust their distribution by companies who primary objective is profit maximization?
A more glaring example of this problem is tobacco. Tobacco is a legal product produced and sold by profit making corporations. The tobacco company, like any other company, has one goal – profit maximization. The way it does that is to sell more of what it makes, even though the public policy of our country is to discourage cigarette smoking because it is a deadly product. In reality, it is, as it should be, public policy to convince people to stop smoking. Tobacco companies should be operating to put themselves out of business by discouraging and ultimately eliminated the use of the product they make.
I believe that tobacco is the best example of a case where the production and distribution of a product should not be incentivized by allowing profit. It is absurd that tobacco companies simply work to sell more cigarettes – it is the business they are in. The government should step in and either eliminate the profit incentives from selling cigarettes; or require the tobacco businesses be spun off into non-profit companies. The cost of our failure as a society to step up to obvious problems – smoking being the most obvious – is a disaster of enormous proportions. The toll has been in lives of millions.
And to those who argue that we should rely on market solutions -- let me tell you a story. A number of years ago I found myself sitting next to David Greenberg, an old acquaintance from my consumer days with Ralph Nader at a luncheon event. I hadn’t seen David in years. He had worked as legislative director of the Consumer Federation of America before leaving to practice law. He then went to work for Phillip Morris and then Altria to sell cigarettes. During our luncheon we talked about the then pending multi-billion dollar settlement against Big Tobacco. He laughed it off, and said that they would pay for it by raising prices, and with higher prices, make more profits. And I mean he laughed.
The one and only value in business seems to be in the bottom line. It is an either-or world – either the product is legal and the company sells as much as it can; or it should be made illegal. This false dichotomy promoted by big tobacco and its allies has tied the Government and the courts in knots because no-one is willing to say that money isn’t the right value or measuring stick in these cases.
Ultimately, there are structural problems in our economic and legal infrastructure. The incentive to make profits from the sale of certain products creates a perverse incentive when the public interest is the reduced use or elimination of the product. The dilemmas are great when billions of dollars of sales and executive bonuses are based on more profit and greater sales. The problems are confounded when the Supreme Court grants civil and human rights to corporations, thus limiting the tools the Government has to regulate the problem.
Solutions exist but to get to them, we as a culture have to value more than money. As Jim Wallis suggests in his new book “Rediscovering Values”, the market and the money it generates has become the Golden Calf of our time. We desperately need legal and public policy based as much on the common good as the highest profits.
