All Commentary
Wednesday, October 25, 2017

Entrepreneurship Can Succeed Where Politics Fails

Entrepreneurship does more to safeguard liberty than government action ever could.

I have always maintained that black markets are the best way to alleviate poverty. They are also proving themselves the best way to preserve freedom. Two interesting cases came to my attention last week to illustrate beautifully how entrepreneurship does far more to defend life and liberty than all political action combined.

Make Your Own Medicine

Bio-hacker Michael Laufer has done far more to make life-saving medicines cheaply accessible. High drug prices are a huge problem in the US. Because government grants monopolies to pharmaceutical companies, a pill that costs only 5 cents in India costs $750 in the US. That’s a one and a half million percent difference in price. It also leads to stuff like EpiPens costing $600.

Politicians have been ranting about it. From Bernie Sanders to Donald Trump, everyone says that drug prices are too high. Advocacy groups have been telling Congress to lower drug prices. But none of that has yielded results.

In contrast, bio-hacker Michael Laufer has done far more to make life-saving medicines cheaply accessible. He created the EpiPencil, a cheaper version of the EpiPen, which costs only $35. Laufer also has plans to launch what he calls the “Apothecary Microlab”, which is a chemical reactor costing $100. That, along with free recipes, would enable people to make their own medicines at home.

Now there are some risks to doing this. Medicines require chemicals to be mixed in a very specific manner and quantity. A few micrograms off could mean the difference between life and death. It is important to note that none of this is Laufer’s fault.

If the United States government could learn something from its Indian counterpart and stop supporting monopolies, drug prices would instantly come down and people could just buy them cheaply. The Food and Drug Administration was established to ensure that drugs are safe. Ironically, by backing pharmaceutical monopolies, they might just make drugs a lot more dangerous.

There are possible market solutions that will emerge, however. One is that cheap DIY testing kits could be made available to ensure that homemade medicines are safe. Another alternative is that small-scale, black market manufacturers could crop up in each locality, with the technical know-how to test the drugs they produce.

Rendering Gun Control Useless

Defense Distributed founder Cody Wilson has been innovating in a similar spirit. The self-described “crypto-anarchist” is selling a milling machine, called the “Ghost Gunner”, for $1,600. The machine allows the user to fabricate their own metal guns at home. Wilson says the user simply has to download open source design files onto their computer, and use a point and click interface to get started. No expertise required.

This also means serial numbers are not required (they are required only when selling guns) so users can evade detection by the government. Background checks, waiting periods, permits, and paperwork cannot be enforced any longer. This will be useful not only in the US, but also in developing countries where the police are corrupt and ineffective, and people would rather defend themselves.

The machine itself cannot be regulated. In Wilson’s own words:

“It’s just as regulated as a hammer — so good luck, there’s nothing you can do,” he [Wilson] said. “It’s just a mill. It’s agnostic. It’s not like it’s specially designed for gun stuff, it’s just that we also write gun software for this mill that we make. So, by breaking up these components, there’s no way of getting in-between any of it and stopping it from proliferating.”

Contrast Wilson’s entrepreneurship with what the NRA does. The NRA is portrayed as the number one threat to gun control. That’s nonsense. It would interest younger people to know that for most of the 20th century, the NRA was the main advocate for gun control, and even helped draft the first gun control laws in America. Even today, the NRA can and does support gun control legislation when it feels like it.

Cody Wilson has, in four years, done far more to protect gun rights than the NRA has done in its entire history.

Business vs. Politics

The approach of business is scalable and easily replicable, which makes it more effective than political action. What makes Laufer’s and Wilson’s strategy more effective than political action? The main reason is that instead of pleading with politicians to do something, entrepreneurs just do it themselves and innovate out of the mess. As Mike Munger also points out, it is better to ask for forgiveness than permission.

Had Laufer and Wilson lobbied the government to allow their activities, they would have been flat-out denied. Now that they have already done it and posted the know-how online, it is impossible to put the genie back in the bottle. Government cannot do anything to control guns or keep drugs expensive for much longer.

It is also very profitable, as seen in Wilson’s case, meaning many more entrepreneurs will copy the business model and improve upon it. The approach of business is scalable and easily replicable, which makes it more effective than political action. That is why I trust a single entrepreneur over entire political lobbies to preserve freedom in society.

  • Jairaj Devadiga is an economist. His work mainly deals with public policy and economic history. Apart from FEE, his writings have been published by the Centre for Policy Studies, the Institute of Economic Affairs and Pragati among others. He is on twitter @JairajDevadiga. Readers can also email him at [email protected].