"make this a different thread"
I will do it if you have an idea what the question/topic should be. When I ask myself what's the central big picture issue here, I think it's not using cash. Cash, even if it's gold coins, is already an abstraction of value. It's not viscerally obvious that that gold coin is worth a day's worth of work, a laptop, or whatever. If we trade numbers on a screen, it's even more abstract.

I think many of the issues we're talking about would improve if we only had cash. Customer would walk in with coins. The owners took some of them to pay vendors, and handed people their pay in coins, and kept the rest if there were any left. Then people, in this bizarre fantasy, would walk over to the FICA desk and hand over a big chunk of them, and then hand over more to the Social Security desk. They could optionally hand some to the health insurance company, all the while watching their takehome pile get smaller. If they get sick, they pay the doctor's office, which keeps coins and pays the same as all employers. You could file a claim and get some of the coins back from the insurance company. Yet get the idea.

This is obviously not practical, but I think many problems would go away if there were an obvious visual way to track the flow of value. It would be viscerally obvious that those coins represent a day of work, and you can give one to someone who spends all day installing a furnace, and you have no choice but to give some to the gov't. It's not just the typical scenario of having insurance paid by an employer, and then you swipe one card for insurance and another card for credit card, which eventually gets paid by ACH from a bank account, where your direct deposit goes. That system allows people to forget that money is the means by which people relate to one another on a free basis.

I read your comment a few days ago and thought you ment Cyprus i hope this is what you were referring to as this thread is long .


First, where is Cyprus? Cyprus is located in the Eastern Mediterranean Sea, east of Greece and South of Turkey. It’s one of those sleepy countries that frankly isn’t large enough for most of the investing world to care about. According to the CIA Factbook, the country has a population of 1.1 million - about as many people as the state of Rhode Island. The country is 77% Greek, 18% Turkish and 5% other ethnicities with a median age of 35.


Its land mass is about 7,800 square miles - roughly the size of New Jersey. This doesn’t sound like a country that would become the subject of international headlines, but there’s a lot more to the story.

It’s Greece All over Again

Until 2009, Cyprus had turned its economy around. After a deficit of 6.3% in 2003, it implemented a series of austerity measures that gave it a surplus of 1.2% in 2008. When the recession hit, Cyprus fell back on hard times because of its large exposure to Greek debt. In 2012, the country contracted by 2.3%.


The country was downgraded numerous times in 2012 with agencies like Fitch giving it a BB- rating and warning of further downgrades. This drove Cyprus’ borrowing costs higher.

A Closer Look at the Banks

According to CNBC, the Cypriot banking sector is about eight times the size of the economy with almost $19 billion, or one-third of all deposits, coming from Russian sources. Dmitry Rybolovlev, the largest Russian investor, has almost a 10% stake in the Bank of Cyprus equaling $8 billion to $10 billion.

The Canadian Press reports that the Russian elite use Cypriot banks to avoid political uncertainty and corruption in Russia. In addition, money earned through illegal means is often funneled to Cyprus because of its policy of turning a blind eye. Russia estimates that $49 billion was illegally wired to foreign accounts last year - 2.5% of Russia’s GDP.


There’s concern that if Cyprus imposes capital controls, Russian banks could face losses equal to 2% of the country’s GDP because Russian banks have loaned Cyprus-based companies of Russian origin $40 billion. Although Russian officials may show outward discontent for the practice, their actions prove that it’s as Russian as the cosmonaut.

What’s the Story on the Bailout?

Cyprus was systemically damaged due to its exposure to Greece. It, like Greece and so many other countries, was forced to ask the European Union for a bailout but this time the EU didn’t reluctantly say yes, as it repeatedly did with Greece.


Instead, the EU said, “If we’re going to help you, you can first help yourself.” That was the beginning of a controversial and unprecedented move to force everybody with money deposited in a Cypriot bank to pay for the bailout.


Imagine if you woke up Sunday morning to an email from your bank saying, “As a result of an agreement with government officials, 6.75% of your bank account will be withdrawn before the beginning of the business day.” You would reconsider keeping your money in any bank. That’s the fear going forward. How safe is a person’s money in any bank around the world if this precedent is set?

Read more: The Cyprus Crisis 101 | Investopedia https://www.investopedia.com/articles...
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Yes, but I was not describing Greece, I will have to dig up the articles, it was a smaller country and what they were doing was scarier than the greeks by a mile...

Patents are unusual in that they are limited in time, not just Drug patents. They are also unusual in that they give you the right to the product of another person's creativity -- if they independently come up with the same idea you did.

You mean Greece freezing bank accounts not too many years ago?

As for the computers, yes the technology that developed so spectacularly in freedom because bureaucrats didn't understand what was happening to know to control it is now being hijacked for "1984" -- NSA et al, the Equifax symptom of Big Data, monitoring of financial transactions for intrusive "reporting requirement", etc. etc is all exploding. Most people don't realize how pervasive and intense it already is. Snowden gave them a big clue, but few understood or looked at the document dumps enough to realize what they are doing and how inherently insecure the internet is. They don't realize the pressure from Washington to ban cryptographic protection and the significance of that.

All property rights are implemented in law. Patents are not unusual because they are defined and implemented in law. Drug patents are artificially short because of political pressure to violate property rights through appeals to "need".

Statistical averages have already been discussed. They do not mean that every pill has to cover the average. Marginal profits on sales outside the US are just that, marginal. They do not have to cover the development costs. If similar price controls are imposed by our own government the we lose all of it. This all been discussed previously.

True, the scary part is as they did in Malta I believe, or maybe Cyprus, where they locked the access to accounts and then imposed a tax on all bank accounts. Once you do not have physical control of your money, you are now at the mercy and control of whoever is controlling the computers.

It's an unusual property right because it is entirely described by government regulation -- and limited by that. The government grants the owner a limited time monopoly. So is it confiscation when the time ends?

In any case, in doing the math you have to estimate how many pills you are going to be able to sell, calculate the cost of production, marketing and administration, add in the development cost and divide to get a minimum price per pill. Sell them for less than that and you lose money, more and you make a profit -- of course you have to guess that number correctly. if you guess high you could still lose money.

Once you've taken care of that with your primary market your subsidiary market can still be profitably serviced without factoring in R&D since you've covered that cost. They may not be able to pay the U.S. price but they can still be profitably serviced because increasing the volume beyond the original calculation changes the economics.

There is no such thing as "base intrinsic value". That is not what costs are and costs do not determine value to the consumer.

If the company cannot make a profit after all costs, including the enormous development costs, it will not produce them and no one will get them at all. That is the "exorbitant price" we pay for what is not produced as a result of government controls.

Patent rights are property rights, not a monopoly.

The role of development costs has already been discussed. There is no development cost per pill. The cost of development is already spent when the pills begin to be sold. That cost must be paid for by the total sales, not price per pill. "Price controls in Canada don't tell you anything about an 'intrinsic' value or costs, only that the company can afford to sell something [under the price controls] because it is still marginally adding to profits..." That is in addition to the business in the US. There is no uniform price per pill that must be charged. Allocating prior costs on average is only a statistical average.

The cashless society the government is now moving towards replaces cash with digital transaction, not the complete elimination of money.

The complexity with drugs is that there is a marketing and production cost and a development cost. Once the drug goes on the market, the development cost is fixed and must be recovered over the period you have a monopoly. But how much you have to recover per pill depends on how many pills you sell.

So your price per pill becomes how much it costs to market and produce plus that pill's share of development. Once you've established a price that will break even or profit in the U.S. market, you can sell pills in foreign or special markets without allocating development costs to them and increase your net profit. You only have to pay the development costs once no matter how many pills you sell.

Since the development cost is very high, this often means it is profitable to sell the pills at much less overseas as long as you can maintain the U.S. pricing structure to cover development.

Intrinsic value would be my label for the base costs of something, manufacturing, R&D, profit markup, so that you make a minimal profit. I don't know of a term that describes it. However, I do think a company will not sell below that level, unless there is some other forms of compensation or writeoff.

Well, that is one of the scary things when they want to go to a cashless society as well, it gives them total control to do what they want.

Those statist societies involve much more than money. Banning money bans freedom of trade and production along with banning choice of values. Any society depicted as being without money -- other than a primitive tribe -- is fiction.

There is no such thing as a "base intrinsic value" or intrinsic anything. Prices depends on the values of both the producers and buyers within whatever economic context exists. Prices in different geographical regions may differ with or without different regulations.

The costs of the producer are not just the cost of making a pill. They are trying to earn back the costs of years of research and development, which includes attempts to develop other products that did not succeed, and artificial costs imposed by bureaucracy. They are artificially limited in how much time they have to do it because the patents are artificially time limited and other potentially competing products may appear. For advanced drugs useful for rarer diseases there is also a much smaller market.

The market does not cease to function under government interference, it is distorted from what it otherwise would have been. That includes costs, availability, and demand of and for the product and competing products. But the laws of economics don't stop functioning just because there is government interference resulting in a mixture of freedom and controls. Even in extreme cases black markets arise.

Price controls in Canada don't tell you anything about an "intrinsic" value or costs, only that the company can afford to sell something because it is still marginally adding to profits either by itself or in combination with some required combination of products. You don't know what the price of something would be in the US without price controls in Canada. It may but not necessarily be lower. You don't what the price of anything would be with less government controls, only that everyone would generally be better off under freer conditions affecting everything.

I do agree with that sentiment. In fact, I think it was anidea that Gene Rodennberry tried to implement in Star Trek and Star Trek The Next Gen, where they made several statements of that there was no need for money anymore. Even then, they could not reconcile a social structure that could work with that, and constantly fell back on using money as a driving force in several episodes. Deep Space 9 tossed it out completely with Quark and his obsession with money and profit. I am not even sure AR had a good way to show a path to such a state, the sheer mechanics of defining value would require a complete change in our standard.

I agree with that point, my point is that government forces can effect what is defined by value in the current structure, but imposing price restrictions. If someone buys a pill for 50 in Canada, because it is regulated, and 1000 in the US because it is unregulated, don't you see how the "value" is compromised? So, one then asks, are they selling it below cost? Is the person in the US paying an exorbitant price?The "base" intrinisic value would be what it costs to produce, distribute and sell, plus a profit, correct? At least that is how I understand value establishment for standard things. So, government can influence that by forcing a company to sell at a specific price, which may or may not represent a value to the company. If it costs 25 to make the pill, then it is making a profit , but more and it is a loss, and so to sell it would be to undermine its intrinsic value. By value, I am using currency value only, to a person who can pay it 2000 a pill may be a value to them. I fail to see how your first defined point of value can function if the state interferes, and that is where I see the conflict. Your statement of low prices is correct and that is what I mean, as far as the disparity goes. There is no balance in the transaction of exchange, if you know you can get the same thing in Canada for 95% less than the US.

The monetary value of something is a matter of choice by those who want it and those who have it to offer. There is no 'base' intrinsic value. The broader market with competition is not the starting point of morality, it is the result of freedom, which is the context by which someone can set or offer a price that changes over time depending on people's needs and wants (both buyer and seller) and what else is available. Artificially low prices forced by government do not represent a value.

It isn't restricted to advanced medicine. Billions of people are in poverty, with many of them sick and dying, all over the world. They can't "meet the costs" of living like we do. They have no moral claim on anyone to be provided for with or without government enforcement, but If a relatively few minds in civilization had not thought and produced what they did in their professions over a small and recent fraction of human existence, everyone would be in that situation. No quandaries over morality and "need" would replace what had not been thought of and produced by individual rational minds. In the Christian era of the Dark and Middle Ages dominated by mysticism and moral injunctions to serve god and neighbor the human condition declined into primitive nightmare. Rationality of the individual human mind is the base of morality, not need.

Concern for improving human life, including those still living in primitive conditions, is certainly valid. In critical situations you can help others when it appears they are worthy of your efforts and it is not a sacrifice to you. Drug companies provide advanced medicine at reduced or no cost to those who cannot afford it, which is partially in accordance with that principle, but also corrupted by altruism.

But the way to improve the conditions of humanity everywhere is to further advance civilization, encouraging and rewarding those with the best minds to produce while protecting the rights of the individual, which requires doing so as a matter of principle, not subject to ignoring it for Pragmatist expedience. That takes spreading the ideas of reason, logic, science, individualism and protection of the rights of the individual (which is something that Bill Gates and his foundations operating in Africa, for example, are not doing as they pour money into medical care that is temporary).

Ayn Rand's ethics based on reason and the freedom and choice to use it as the fundamental requirement of human life makes it unnecessary for anyone to live in a permanent moral dilemma.

I still have the issue with costs/production cost/profit, as an equation in medicine. How much is established value, vs how much is miking the medical system? I do not have a good answer, but selling a drug for 1000 a pill in the US and selling the drug for 10 a pill somewhere else debases the value claim, I know a lot of it is government control, but it shows the skewed nature of government controlled medical vs free market. Maybe it also explains why most companies will initially market in the US where they have the patent protections and no controls. But it also shows the moral breakdown of multiple societal controls and the skewed results. It is also seen in the total costs in different countries you see for the same item as you add in taxes, fees and the infamous VAT. The drug and medical cost scheme is one I can never reconcile, as it seems to have unique moral implications, unless it is assumed no one has a claim to anything unless they have the money for it, and pay whatever the seller wants. Yet then you get down to what really goes on, is everyone thinks they have a valuable service, and others will undercut them, which then leads back into the corruption, laws, regulations etc that get used to control that, often disguised with "for the peoples good", or "for the environments good". Although I still think we would be a lot better off if there was no government interference in medical at all, and businesses could offer health care if they wanted to, as part of getting good people, or not, depending on their needs. Pretty soon McDonald's would have no people, or could charge more, depending on their value, or offer more pay and health care to get better ones. Market forces. Human nature seems to skew a basic fair system every time.

Not arguing that point and I agree it is correct. I just do not have a good morally framed response to the issue of drugs and costs. While true that they have every right to charge whatever they get get (in which case it would establish the base "value" of the product) I have yet to reconcile that with what happens when you have people who may die as a result of not being able to meet that cost. While I would never want to say the government should help those, it is a dilemma for me that I will probably never be able to resolve satisfactorily. The Rearden Metal point is true, and is correct, no one has a right to dictate value, it is something between each individual to establish.

"Exceptions" for whatever property rights you decide you want to steal based on "need" is a fundamental disagreement with the premise of individualism itself. You have no right to what someone else invents and produces. Property rights is not a synonym for "monopoly", which requires government coercion to maintain. The difference between government protection of property rights versus initiation of force to sacrifice for "needs" is fundamental. It is a central point of Atlas Shrugged. They "needed" Rearden metal, too, and you read what happena based on that premise.

ewv, we just have a fundamental disagreement on this issue, which is fine. I can see your point, and I would agree with you apply the points in almost any other scenario. My problem is reconciling the fact someone may have invented a drug that might save a persons life, and yet demands a huge sum of money for a dose just because it is a monopoly. I also understand the aspect of value and exchange for value, it is my one exception to value for value.

We do need to probably make this a different thread, with such diverse opinions. Later...