Originally published via Armageddon Prose Substack:
“The cynic knows the price of everything and the value of nothing.”
-Oscar Wilde
This week in “incentives are all wrong,” hot on the heels of news that children are now being injected with patented weight loss drugs as a novel solution to the obesity crisis, the stock market vultures have gotten in on the Ozempic grift.
Via Reuters:
“U.S.-based Eli Lilly and Denmark’s Novo Nordisk (NOVOb.CO), opens new tab have struck gold with their weight-loss drugs, sending their shares to stratospheric levels and putting them on par with some high-growth tech stocks.
Retail and institutional investors alike have flocked to the two stocks in the past year, as they bet on explosive demand for the companies’ obesity drugs, called GLP-1 agonists, in a market that some analysts expect could breach $100 billion.
Shares of both companies trade near record highs, with their valuation multiples at a significant premium to their healthcare peers and almost matching those of high-flying technology and growth stocks.
Lilly shares trade 56.17 times the earnings estimates for the next 12 months, while Novo has a price-to-earnings (PE) multiple of 35.84, according to LSEG data.
The S&P 500 healthcare sector (.SPXHC), opens new tab has a PE multiple of 18.7, according to LSEG Datastream. Meanwhile, popular growth stocks – Tesla (TSLA.O), opens new tab and Nvidia (NVDA.O), opens new tab – trade at a PE multiple of 57.78 and 33.89, respectively.
‘We believe that Eli Lilly and Novo Nordisk are properly called growth stocks even as they inhabit the large-cap pharmaceutical space, which is more typically a home for value stocks,’ said Jason Benowitz, senior portfolio manager at CI Roosevelt.”
As I have consistently said before, I am not opposed in principle to a free market, which would put me in the indefensible position of being definitionally in favor of an unfree market, designed and planned by some governing authority in the mold of the Soviet states of yesteryear.
(The free market I am unopposed to, by the way, and which Adam Smith envisioned in The Wealth of Nations, does not exist in the United States and never has; the game’s always been rigged to one degree or another. But that’s a story for another day.)
No one, in this day and age, save for perhaps the fringes of the fringes in academia or Antifa, truly believes a centrally planned economy is a good idea.
Even pseudo-communist nation-states like China and Vietnam, although retaining the vestiges and symbolism of communism, long ago adopted the market economy as an engine of prosperity and national prestige. Indeed, as I examine in my memoir, Broken English Teacher: Notes From Exile, these countries are often, in certain regards, more capitalistic than nominally capitalistic states of the West.
That said, as one Armageddon Prose reader pointed out recently, and as I have in various other contexts, the problem highlighted by the above Wall St. feeding frenzy is one of incentives — more specifically, the perverse incentives that drive the pharmaceutical and financial industries, which gleefully sacrifice human well-being if a single red cent can be added to the bottom line on quarterly reports.
Related: Corporate Libertarianism vs Libertarian Libertarianism
I have neither the hubris nor the economic expertise to claim to offer the blueprint for any systemic reforms that could realistically correct this mess without generating more poverty and other social maladies in the process.
But I know this: any viable solution starts and finishes with an active, skeptical, and adamant population that rejects the poison on offer from the Public Health™ authorities and the biomedical profiteers, and looks elsewhere for value.
Without a concentrated, disciplined, bottom-up check on powerful interests — one that has the teeth to enforce its will — the best-laid plans of mice and men succumb to corruption, as they always have and always will.
Ben Bartee, author of Broken English Teacher: Notes From Exile, is an independent Bangkok-based American journalist with opposable thumbs.
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