Contains "Iron Fist" spoilers.
Following Netflix’s captivating TV shows Daredevil, Jessica Jones, and Luke Cage, and set within the same Marvel Cinematic Universe, Iron Fist disappoints with a mediocre story, which has led to widespread negative critic reviews. Like most Marvel fans, I probably enjoyed the show more than critics but still felt underwhelmed with its story.
Iron Fist neglects how businesses have incentives to innovate.
In particular, the show reflected a poor understanding of economics, business and the law of unintended consequences.
In Iron Fist, after a plane crash fifteen years earlier, Danny Rand returns to New York City as Iron Fist and seeks to crush his arch-enemy, the evil organization the Hand. In Daredevil, the Hand reveals itself to be depraved, enslaving people and willing to wage war with a ninja army. In contrast, despite cult-like behaviors, kidnappings and murders, Iron Fist’s central indictment of the Hand is that the black-market organization seeks to mass produce and sell heroin. The Hand has infiltrated Danny’s company, Rand Enterprises, to use its resources to promote illegal heroin trafficking.
With no characters questioning the desirability of heroin’s illegality, Iron Fist presents a drug cartel as its supervillain. By doing so, it neglects how businesses selling products, including drug cartels selling heroin, have incentives to innovate and create better societies because their profitability depends on consumers choosing to purchase their products.
Overall, if Iron Fist had not intervened, the Hand, as if guided by an invisible hand, would have produced widespread socially beneficial results through its heroin business in a way that, in the long-term, would have undermined the sustainability of its criminal enterprises.
Innovation in the Heroin Market
To earn a lot of money selling to heroin users, the Hand produces a new, innovative form of heroin. Unlike existing heroin, the Hand’s heroin prevents people from building a tolerance towards it, making each use feel just like a heroin user’s original use. Moreover, people use the Hand’s heroin like a temporary tattoo, requiring them to stamp it on their arm without the need for a syringe. The Hand believes its heroin can take over the heroin market because the innovative experience and method for using it make it uniquely desirable to drug users.
Every character in the show presents this innovative heroin as socially harmful. Yet, as presented, the Hand’s heroin seems less harmful than existing, normal heroin and solves serious social problems.
Currently, intravenous drug users contract diseases like HIV/AIDS, Hepatitis C and similar diseases at particularly high rates because they share syringes, facilitating the spread of these diseases. For some numbers describing the harm from dirty needles:
An estimated 50 to 60 percent of New York City’s 200,000 to 250,000 needle-drug addicts have already been infected, and AIDS was their leading cause of death by 1985. Today, as an official at the Federal Centers for Disease Control told me, "Dirty needles are the way the virus is spreading."
Infected addicts, in turn, transmit the virus to their sexual partners, a process already responsible for the overwhelming majority of non-Haitian heterosexually transmitted AIDS cases . . . Dr. André Nahmias of Emory University said that nearly all of the AIDS-infected infants born in the United States, estimated at between 2,000 and 4,000 a year, are the offspring of i.v. drug users.
The criminalization of drugs has made it difficult to access clean syringes, making the drugs more dangerous.Thus, in Iron Fist’s setting of New York City, over half of existing intravenous drug users have been infected with diseases, largely from dirty syringes. After their infections, they spread the diseases to their sexual partners and, sometimes, newly-born infants.
Particularly in the United States, governmental criminalization of drugs has often also made it difficult to access clean syringes, making the drugs more dangerous and easier to spread. As in many other ways, the drug war makes drug use more dangerous and compounds drug problems by making the use of dirty needles much more widespread than if drugs were legal.
With the government making heroin use more dangerous and the frequency of conveniently sharing needles regardless of the accessibility of clean needles, the Hand’s innovative heroin solves a major social problem—the spread of diseases among intravenous drug users. Through the Hand’s product, heroin users could easily protect themselves from now commonly spread diseases by using heroin like a clean tattoo, ending the danger of dirty needles. By providing a higher quality, safer product, the Hand’s innovative heroin would save many lives and reduce a lot of misery.
Additionally, the Hand creates a second, unambiguously wonderful innovation in the heroin market: a cure for heroin addiction. Though heroin addiction may be caused by social factors in addition to biological ones, the Hand produced a drug people can use to end their heroin addictions.
For some reason, Iron Fist depicts a cure for heroin addiction as cruel, manipulative, and evil. After the Hand loses its grip on Rand Enterprises and Harold Meachum seeks to copy the Hand’s business model, Harold in a villainous depiction remarks: “Either way heroin's a big money-maker, Ward. Oh, not to mention that cure your, uh, buddy Bakuto has. Now we'll get rich both ends.” Thus, in Iron Fist, evil people make money by both selling a demanded product and a cure for its side effects.
Without explanation, no character in Iron Fist marvels at the amazing medical discovery. Heroin primarily ruins people’s lives when the addiction eventually destroys them. By innovating a solution to heroin addiction, the Hand transforms heroin into an expensive pleasure without the harmful side effects, solving many of the other harms of heroin.
The Hand’s Heroin Market
Imagine this hypothetical alternative reality: Danny dies in his plane crash and never returns to New York City as Iron Fist, no other superheroes or government organizations intervene to stop the Hand’s heroin trade, and the Hand's plot succeeds. How would the world have looked?
In this alternative reality, the Hand starts mass producing its heroin. With its better quality and easier use, heroin addicts choose to purchase the Hand’s innovative product instead of their existing heroin. Immediately, the rate at which diseases like AIDS spread among heroin addicts falls substantially because, without needing syringes, heroin addicts stop endangering themselves with potentially dirty syringes.
The Hand’s heroin solves major social problems and will likely not cause other problems.
With respect to addiction rates and other harms, Iron Fist does not provide clarity on the likely effects. The only character who provides insight into the withdrawal symptoms, Ward Meachum, also suffers from a severe prescription drug addiction and other psychological problems, making his state following his use and withdrawal of heroin unhelpful in measuring the effect of the heroin alone. Addiction rates may actually fall following the introduction of the Hand’s heroin because, without building a tolerance, heroin addicts would not need to continually have more and more heroin to achieve the same high. As ambiguous, the evidence of the Hand’s heroin spreading to existing non-addicts is limited to a handful of unseen anecdotes, making the real effect difficult to judge.
With this ambiguity, suppose for a short time that addiction and use rates likely increase because of the drug's increased potency and appeal. After being on the market for around a year, the number of addicts and deaths may increase a little but probably not much as the initial appeal of a new kind of heroin wanes. General trends in use, like the sudden substantial increases in heroin deaths in recent years unrelated to any new kind of heroin, probably continue to overwhelm the effect of the Hand’s product in determining use, addiction and death rates from heroin. Thus, a year or so from the Hand’s mass production spreading, the Hand’s heroin trade almost definitely solves the major social problems involving dirty syringes and may, but likely will not, cause notable other problems.
Shortly after releasing its new heroin, the Hand secretly provides Rand Enterprises with a cure, allowing it to make money both from the distribution of heroin and the cure of the addicting effects. Thus, seemingly miraculously, Rand Enterprises announces to the world that it has a cure for the new heroin outbreak.
Unfortunately, a powerful supervillain stops the Hand from curing heroin addictions. After spreading disease among Americans from its earliest years, the Food and Drug Administration (FDA) prevents Rand Enterprises from curing heroin addiction. To overcome this supervillain, Rand Enterprises spends around ten years and hundreds of millions of dollars to get its cure for heroin addiction approved by the FDA. While black markets would have quickly spread the cure, the legal method takes around a decade and a significant amount of money. With such governmental obstacles, the Hand needed a huge corporation like Rand Enterprises for its plan.
To address the immense regulatory cost, Rand Enterprises receives a twenty-year patent on the cure.
In the meantime, despite the Hand’s best efforts to provide consumers with both unusually safe to use heroin and an off-switch to the harmful side effects, the federal government prevents the Hand from mass producing the off-switch and cruelly condemns heroin addicts to unnecessary suffering for about a decade. Over this course of time, the Drug Enforcement Agency (DEA) and state governments continue to mass incarcerate drug users. As Danny Rand realized when one of the government’s 80,000, primarily drug-related, SWAT raids per year wrongly targeted him for drug trafficking, the police officers perform their raids in military gear that makes these warrior cops largely indistinguishable from the Hand's soldiers. Thus, the federal government continues to arrest hundreds of thousands of people for heroin offenses and to spread suffering to many more by both denying sick people a cure for their addictions and then arresting these sick people for not having found a different way of addressing their addictions. Relatively wealthy and well-connected people likely find black market access to the cure to heroin addiction in one way or another, while the other heroin addicts suffer.
After ten years, the FDA approves Rand Enterprises' cure for heroin addiction. To address the immense regulatory cost, Rand Enterprises receives a twenty-year patent on the cure, preventing competitors from also selling it. With restrictive medical competition and with healthcare and health insurance regulations, Rand Enterprises charges considerably above cost for their drug. With its legalization, heroin users pay high costs for both illegal, black market heroin and for the cure to heroin addiction. (Or maybe with highly regulated health insurance regulations, the high cost of Rand Enterprises’ drug is spread across the public as a whole through higher health insurance premiums). With the Hand's involvement in Rand Enterprises, the government’s competitive restrictions bolster the Hand’s finances for twenty years.
As if Crushed by an Invisible Hand
Up to now, the government’s criminalization of heroin has prevented the Hand’s potential competitors from selling legal alternatives. Moreover, the FDA and patent process have prevented competitors from selling and reducing the price of the cure for heroin addiction. Beyond this point in time, the government handout for the Hand starts to lose its grip as the law of unintended consequences and the invisible hand of the market begins to crush the Hand’s finances more effectively than an iron fist.
With heroin’s legalization, the Hand's black market financing would be crushed by its more economically efficient legal competition.
With Rand Enterprises’ release of a cure for heroin addiction, the public has a public policy epiphany: If heroin addictions can be cured instantaneously and painlessly, why should heroin be illegal? The public begins realizing that a momentary pleasurable use of heroin without side effects is just an expensive habit, not something to be criminalized. Whatever justifications people had for outlawing heroin before Rand Enterprises’ miracle drug, curing heroin addictions fundamentally changes people’s minds.
The public policy change begins slowly. Just as recent majority support for legalizing marijuana has yet to cause this change nationwide, a cure for heroin addiction does not immediately cause the legalization of heroin. The first state legislature to legalize heroine probably takes five to ten years to do so. For better or worse, the state legislature figures out how it would like to regulate heroin sales. The regulations prevent people under 18 or 21 from legally buying heroin, impose very high taxes on its sale, and impose many other restrictive regulations. Perhaps politicians require the bundling of heroin with the drug that cures its addition, forcing legal purchasers to buy both together. After a handful of States legalize heroin and determine how to address political concerns and priorities, the rest of the States copy their framework after another ten or so years in a surprisingly quick cluster of legalization, culminating definingly with federal legalization.
Due to these public policy changes, the DEA and similar state agencies stop regularly ruining people’s lives with their criminalization of heroin. The warrior cops scale back.
Moreover, with heroin’s legalization, the Hand's black market financing begins getting crushed by its more economically efficient legal competition. Just as Mexican drug cartels struggle against legal marijuana producers, the Hand has difficulty competing against legal businesses, and the invisible hand of capitalism starts dwindling the Hand's resources. Through Rand Enterprises, the Hand now relies financially on its patent for curing heroin addiction.
After its twenty-year term, the Hand’s patent expires. Though the Hand could use political pressure to continue restricting competition, at some point, the patent’s expiration facilitates the production of generic cures for heroin addiction, substantially reducing the selling price. To the extent not already widely accessible to poorer people, these affordable generic cures bring an end to heroin addiction. Competition substantially reduces the price of Rand Enterprises’ drug and largely bankrupts the Hand.
As one of the Hand's leaders, Bakuto, says, "The world we live in now is run by corporations, not governments." Without Iron Fist and after overcoming governmental barriers , corporations guided by an invisible hand destroy the Hand where it matters—at a financial level.
The Iron Fist of Government Protects Drug Cartels
In the words of Nobel prize-winning economist Milton Friedman: “See, if you look at the drug war from a purely economic point of view, the role of the government is to protect the drug cartel. That’s literally true."
Though unintended, the Hand’s black market business practices would have solved serious problems.
Over the course of Iron Fist, the Hand engages in many indefensibly evil acts, such as kidnapping and threatening the daughter of the chemist who made the innovative heroin to force him to work for the Hand. Yet, the most villainous organizations that, if possible, Danny would have been a true hero for destroying were the DEA, the FDA and the other government organizations that restrict competition to makes the Hand’s evil black market methods financially profitable. The government’s war on drugs and its regulatory agencies protect the Hand from competition and bolster the Hand’s drug cartel enterprise, making it lucrative.
As economic reasoning shows, the Hand’s intentions to make money through heroin sales diverge sharply from the unintended consequences of its actions. Though unintended, the Hand’s black market business practices would have solved serious problems among current heroin users and fostered social policy changes to reduce the heavy hand of the state. By stopping the Hand’s heroin trade, Danny prevented the Hand from solving these serious social problems and from unintentionally ending the war on drugs (at least with respect to heroin).
Therefore, with its poorly considered underlying economic reasoning, Iron Fist’s plot disappoints by depicting heroin trafficking as the Hand’s principal evil and presupposing without question that heroin should be illegal. Without Danny Rand’s Iron Fist and freed of the government’s iron fist, the invisible hand would have saved the day.