Belief is a powerful thing. Often belief in something can be sustained despite overwhelming evidence to the contrary. In 1919, the Hungarian Georg Lukacs, one of the leading 20th century theoreticians of Marxism, discussed this phenomenon. He celebrated the fact that even if every event of history proved that communism didn't work, communism would still be the "truth". According to him, facts shouldn't be allowed to get in the way of ideology.
There are many modern-day examples of Lukacs's maxim in action. For instance, there remains the belief that the solution to Africa's endemic poverty is simply more aid from rich countries. The performance of those Asian countries that have liberalised their economies, against those in Africa that have not, is explained away as a "special case".
International aid agencies have proved notoriously reluctant to entertain a role for the free market. And those agencies working in the health field have been among the worst.
In Sydney this week at an international conference on HIV/ AIDS, there was the latest effort to elevate ideology over evidence. Such meetings are usually the arena for non-government organisations to plead for the abolition of the intellectual property rights held by pharmaceutical firms, and this week was no exception.
The argument is that the only way expensive medicines can get to the world's poor is if governments compulsorily acquire the patents for those medicines. The medicines can then be produced more cheaply by governments. Such proposals are not hypothetical. Earlier this year the military junta government of Thailand did exactly that in relation to a number of AIDS and heart disease drugs.
The claim that saving lives is more important than the intellectual property rights of multinational companies is emotive, but it's wrong. Many AIDS medicines certainly are expensive, and in poor countries they are beyond the reach of the majority of the population. But while compulsory acquisition of patents will drive down drug prices in the short term, in the long term the effects would be disastrous. When governments collectivise or nationalise private property they seldom bother to ask the obvious question. What happens next? If individuals and companies can't make a profit on an activity they won't undertake it.
Governments have no capacity to do what is required to produce new medicines. In many countries with a high incidence of HIV/ AIDS, governments struggle even to ensure that roads are repaired. It's not clear what makes people think that a government that can't maintain its roads can somehow develop the next generation of pharmaceuticals.
Instead of blaming the ills of the world on capitalism and its multinational companies, international development agencies could more profitably tum their gaze to the failure of government. The World Health Organisation reported last year that taxes and charges could contribute more to the final price of a medicine than the manufacturer's price. On top of this is the cost of regulatory delays. South Africa, which has one of the highest rates of AIDS infection in the world, also has one of the slowest approval processes for new drugs.
The World Health Organisation could not have been more clear. "It is very obvious that the elephant in the room is not the current price of drugs. The real obstacle is the fragility of the health systems. You have health infrastructure that is dilapidated, and supply chains that do not exist". It doesn't matter whether medicines are expensive or cheap if they require refrigeration and there's no electricity available.
It is only beginning to dawn upon Australians that HIV/ AIDS is an issue for the region. Twenty per cent of the world's 40 million cases are in the Asia Pacific region, with a rapidly growing proportion of our foreign aid budget being devoted to HIV/ AIDS prevention, particularly in Papua New Guinea. At the Sydney conference, Foreign Minister Alexander Downer announced an increase of $400 million in the Australian government's spending on HIV/ AIDS, taking our total commitment to $1 billion over the next three years.
Such a move is laudable. The only problem is that there is no guarantee that this money from the Australian taxpayer will not end up funding the campaigns of non-government organisations against free markets and property rights. A major partner of Australian government aid agency AusAID is Oxfam Australia Oxfam Australia has been a vocal supporter of the compulsory acquisition of pharmaceutical patent rights.
It appears there might be a little way to go before evidence replaces ideology in the debate about international aid.
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