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I'm not an economist...and I don't actually know how to define value, but I know that fewer people taking medicine while more money gets made is /not/ creating value because it means there's more pain and suffering in the world. I think we, more than anything, need to realize that the definition of value is something that isn't settled.

Sorry if this isn't what you were expecting. Ultimately, the money we have to spend is the best money we spend...but if there aren't systems in place to drive down the costs of those needs, we will spend everything we have on them. Those sources of extreme value: health, education, and housing being the big ones, can't be treated as if every drop of value should be extracted because, if that happens, the person will be impoverished by that system.

Check out Mariana Mazzucato's work wherever you can find it.
https://marianamazzucato.com/

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Good morning, John. It's Friday.

Somebody recently asked me a good question: What's the best money you ever spent? I like this question.

And as you do, I thought about it maybe a little bit too much?

First, I thought about my guitar, which has brought me, like, endless hours of enjoyment and self-improvement. And then I thought about my car, which, ten years in, no problems, still kickin'— it got rear-ended so hard once that their airbags went off...! Not a scratch on the car!

If Honda Civic is looking for a brand ambassador, you probably don't want me because I don't care very much about cars. Sometimes I see commercials for the Honda Civic, and I'm like, that is deeply not the relationship I have with my car. This is like, Honda Civic, drive superiority. I'm like, Honda Civic... drive. To work!

So I kept thinking about it, and I came up with an answer that is absolutely the true answer. Like there's no doubt in my mind about it. Prescription drugs.

So between graduating from grad school (and thus losing my insurance) and when Obamacare was enacted, was about a three year period, and during those three years, I spent a little over $10,000 on prescription drugs. And those drugs helped me not be in constant pain, they helped my body take in nutrition, stop bleeding into itself, and those pills made it so that I didn't have a lifelong decrease in my physical ability.

The drug went from around $250 to $400 while I was taking it— I'm still taking it! I now— If I didn't have insurance it would cost $1700 a month.

And I would pay that! Because when you're paying for the use of your own body, you will pay what you can.

It's the best money I've ever spent, but... yeah, I'm not happy about it.

I'm not an economist, but I listen to some, and a lot of 'em are convinced that we have made a massive mistake.

As an example, since I graduated from high school, the cost of insulin has increased a thousand percent. And an economist in our society right now would thus say that the value of insulin to the economy has increased a thousand percent.

Except that, of course, it hasn't. The value delivered by the insulin is the same now as it was twenty years ago. It's a healthier, longer life. And that... is so much value. I... am so thankful... for the medicine that I take.

It's been a tr— It's been a tremendous gift to me a-and to my family, to the people I love, like... Life would be much harder for them if it weren't for that. And like, it's the best money I've ever spent! But that value is created whether or not we turn it into dollars. And the current system doesn't accept that.

According to prevailing economic theory, if they double the price of my medication, and that means that 25% of people who are currently taking it can't afford it anymore, they have created more value. Because they're making more money!

But they're not, obviously, because there're fewer people being served by the medication! They are creating less value.

And the argument that we hear is often that, like, they need the money in order to develop more drugs. Well, leaving aside the fact that in the last ten years, prescription drug companies have spent more money buying back shares of their own stock to inflate their stock price, than they have on research and development, 75% of revolutionary new drugs were funded by the National Institutes of Health. By public money. By our tax dollars. That is money well spent.

Prescription drug companies, on the other hand, have spent an awful lot of their research and development dollars figuring out how to turn existing medications into very similar but slightly different medications, so that they can extend their patents. Because they, I think, believe that creating more money is the same as creating more value.

As long as business leaders keep believing the lies they were told in Econ 101, we're gonna be destroying value when we think we're creating it.

And now, John, I'm going to hold up this thousand-dollar savings bond that I got when I graduated from college. It's 'cause I want a good thumbnail for the video so that people will watch it.

John, I'll see you on Tuesday.

If you want to read or think more about what I've been talking about in this video, check out Mariana Mazzucato's The Value of Everything (it's a book) or just any podcast where she has been interviewed or given a talk. I like what she has to say.