Tuesday, March 31, 2015
We have to start looking at these drug monopolies as if they were John D. Rockefeller land. They may be temporary monopolies but when 5 million Hep C patients can use a new drug that costs $84,000 a treatment that adds up to $400 billion+ for one treatment of one ailment.
Steven Brill reports the government paid for the initial research on the med but when the researchers smelled money they switched to private funding. Brill says 1/10 the price would be reasonable. The endocrinologist at the heart of the research made $440 million for himself.
If you can go to India and stay 12 weeks you can do the same course of treatment for $1,000 (maybe you can sneak the pills back; don't know if that'd be legal -- why not?). Wouldn't it make the point if Medicare did something outlandish (I wont say crazy) like approving payment for the Indian trip to save tens of thousands of dollars (I've seen an estimate of $54,000)?
Sunday, March 29, 2015
The big thing -- and it is a very big thing -- that progressive economists (I could understand if it were CATO) perpetually leave out of minimum wage/employment discussions is any acknowledgement of the tradeoff between the proportion of the wage gain and the proportion of the possible job losses. Simply, if we double the min wage and some of the jobs are automated out (in Australia the customer may operate her own order on the key pad) the workers are way (way!) ahead. This should be at the center of every discussion or we are leaving out what could be -- literally -- the most important factor.
Another huge factor -- which I don't expect individual store owners to grok (they might)-- but which should be the alpha and omega of progressive economists' thinking, is how the income shift of, say, 45% of employees getting an $8,000 average raise ($15 min) will affect the demand at the businesses those employees work in (and don't forget the businesses/employees whose wages get pushed up as a secondary result).
Toughest case: fast-food? Doubt it. The 25% increase in prices (33% labor costs) may not even be noticed by the 65% of customers coming through Ronald's drive-thrus if they don't listen hard before they pop the plastic -- what are they going to do, bring peanut butter sandwiches? When Illinois raised its min wage pretty quickly from $5.15 to $8, I and retired teacher who were regulars in the Ronald's across the street from me noticed a pickup in what we might call the third-world end of the business, mostly Mexican. Now the new owners across the street have just raised prices on many items 20-25% seemly because they think they can get away with it -- didn't seem to worry them.
The 35% coming through the doors will have more money to spend -- which wont cost the consumers of businesses they work in very much -- SORT OF A "MAKE-BELIEVE" MULTIPLIER. Un-toughest example: Walmart. $15 min wage raises Walmart prices 4% (7% labor costs). Wonder how many jobs lost at Walmart -- unless their newly flush low income buyers decide to move upscale -- Walmart can always move their merch upscale.
When people argue whether the economics profession knows what it is doing on macro-micro theory -- way above my (NY-Chi-SF cab driver) pay grade. But when economists perpetually leave out the most important labor market factors (to people actually in the labor market!) I wish they would plant their feet more solidly on terra firma.
Sunday, March 22, 2015
JUST HAD AN IDEA THAT MIGHT LIMIT THE DAMAGE OF THESE PHONEY ONLINE COLLEGES (pardon shouting, but I think it's justified):
Only allow government guaranteed loans (and the accompanying you-can-never-get-out-of-paying) IF a built for that purpose government agency APPROVES said loan.
The threshold step should be to allow bankruptcies. This is not costless and clearly limits "moral hazard." Think of it as amnesty -- we goofed and went in the wrong direction (in more ways than one -- don't forget exponentially rising tuition, and for profit pirates) -- time to reverse what's looking more and more like irreparable harm to the newest generation.
Friday, March 20, 2015
Insofar as Right-to-Work legislation under-prices a state’s labor – extracts less than consumers would be willing to pay – it draws down the income a state receives from the 49 other states, either from exports to or visitors from.
I understand there’s a lot of chicken/or egg-six/half-dozen in economics – but before legislators agree to Right-to-Work legislation, I think this concept would be a good place to start. If you build what they want, they will come and buy.
* * * * *
Another conundrum: states will abate billions in tax giveaways in the hope of drawing thousands of jobs – but the very same states refuse billions in Medicaid giveaways (er, actually returning their own tax dollars) from the federal government which would fund tens of thousands of high quality medical jobs – not to mention bringing unquestionably needed health care.
* * * * * *
Illinois governor Rauner wants to squish the incomes of the bottom 50% of employees (keep the minimum wage low; wage war on unions public and private) who take 10-12% of overall income share – to make the state more competitive (with where: Bangladesh?). Poorer people get less education, become a lot less competitive, more educated people want to emigrate out of such an unproductive milieu.
Wisconsin governor Walker wants to cut straight to the chase on cutting education: $300 million off the state university.
Both Republican governors want to turn their big industrial states into South Carolina.
Friday, March 13, 2015
Why do economists never look at the medical industry as the growth industry of the future -- the un-exportable growth industry?
When it comes to products that come in shiny packages we want growth, growth, growth. But, when it comes to not being sick there isn't the same natural intuition. Last week I read of a doctor saying medical knowledge doubles every two years.
Here's an article from yesterday: Alzheimer's 'breakthrough:' noninvasive ultrasound technique restores memory in mice
This readable online professional mag has several new such articles daily: http://www.medicalnewstoday.com/
Of course most economists are still working age and therefore young enough not to think of the volume of medical care. I took my mom to the cardiologist yesterday -- I'm seeing my PCP this afternoon. Which brings up another growth prospect: as medicine keeps patients alive longer it creates an ever larger consumer base for itself (take that John D. Rockefeller). Medical jobs pay better than average too -- the new (unexportable, rust-belt proof) factory.
Okay, okay; American (that is American, not medical science-an which latter is universal) cost twice as much as it should. I read Brill. I would not worry about what (most) doctors make; their pre-tax is only 10% of overall costs (dental folks seem to have doubled their prices in real terms over the last 20 years w/o justification -- probably watching medicine double and figured nobody would notice if they did too). If Germany wants to pay pilots more than surgeons then Germany has a problem.
Once we get drug and medical device and insurance bureaucracies costs under control then we can welcome growth in the real new high-tech economy.
BTW; nothing like this will ever take place without a German/Danish style labor union take over. May be just around the corner. Once RICO and Hobbs cases begin (if they ever begin) against union busting, all the union busters will cease and desist until they see the outcome of these cases. In the time it will take for these cases to go through the courts we can have the whole country organized.
[Late note: looking at health care as a (rust-proof, non-off-shorable, non-polluting, even robot-resistant) growth industry, no state or locality has any advantage over any other. That in turn has the potential to build broad based support for government based payment which would insure equal employment opportunity in every state (think bomber built in 50 states).]