Drug Re-Importation and Israel

February 8, 2010 at 10:29 pm

Allowing the "re-importation" into America of medicine sold abroad is one of those perennially debated issues. I've tended to oppose it on the grounds that it would wind up reducing innovation and decreasing the discoveries of miracle drugs by importing foreign-government-imposed price controls into the American drug market. But I can also see the free-trade argument, and it irks me as an American taxpayer and consumer that we're essentially paying top retail dollar for medicine while the rest of the world gets a discount. Some recent press on the issue indicates that the Obama administration wants to push re-importation only after a health-care overhaul is passed, so the House and Senate bills don't touch the issue -- in fact, advocates of re-importation, led by Senator McCain, lost a vote in the Senate. The issue usually comes up in connection with Americans importing cheaper drugs from Canada. But now some enterprising Israelis are getting into the online pharmacy business, undercutting Canadian prices. MagenDavidMeds.Com is the site. The American pharmeceutical industry already has its patent issues with Israeli generic powerhouse Teva. The idea that an Israeli pharmacy is targeting American consumers with lower-priced versions of American drugs is sure to drive the Pfizers and Mercks of the world nuts.

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Orszag's Shove or Sunstein's Nudge?

February 8, 2010 at 10:09 pm

In the New York Review of Books, Dr. Jerome Groopman has a terrific article on behavioral economics and health care. Among his key points is that federal standards for best practices shouldcbe imposed, if at all, in ways that allow doctors, patients, and health-care-providing institutions freedom of choice, because what the federal goverment decides is the best practice may turn out not to be:

Over the past decade, federal "choice architects"—i.e., doctors and other experts acting for the government and making use of research on comparative effectiveness—have repeatedly identified "best practices," only to have them shown to be ineffective or even deleterious.

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Too Rich For a Fair Trial?

February 8, 2010 at 9:48 pm

So long as we are on the topic of stereotypes against the rich, the American Lawyer has an article on the problems facing white collar defendants these days. It runs under the headline, "Too Rich to Get a Fair Trial? How To Combat Prejudice Against White-Collars." Among the details: polling data indicating that "the public holds corporate executives in lower esteem than politicians"; and a jury consultant who says "the prejudice she found against wealthy defendants was the highest she has ever seen in more than 25 years as a consultant." The consultant's example was a potential juror who said "that she believed that rich people who wanted to get richer were committing a crime." All kinds of defendants face potential prejudice from jurors, not just white collar defendants. And some white collar defendants are guilty and deserve to go to jail. Still, under the rule of law, all defendants deserve to have their cases heard and decided on the merits of the facts and the law, not on the basis of preconceived notions relating to their professions or other aspects of their identities.

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Obama and the Stock Market

February 8, 2010 at 5:00 pm

"The markets are now stabilized," President Obama announced on January 27 in his State of the Union address. "Retirement funds have started to gain back some of their value." The S&P 500 stock market index is down about 3% since he said that. If Mr. Obama gets credit when the stock market goes up, does he also get blamed when it goes down?

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Rove, Hubbard Back Tax Increase

February 8, 2010 at 11:46 am

The chairman of President Bush's Council of Economic Advisers, Glenn Hubbard, has an op-ed piece in today's Wall Street Journal calling for a "better way forward." He writes, "the president and the Congress need to present a credible path toward lower deficits and more effective government. Such a plan should have three elements." The third element? "Confront and propose significant, broad-based tax increases...To raise the revenue for the president's welfare-state ambitions, the tax increases must necessarily be broad-based, as, for example, with a broad-based consumption tax." President Bush's former aide Karl Rove, on Twitter, calls this a "great piece." Maybe I am mis-reading Mr. Hubbard or Mr. Rove, or maybe I missed the "change-of-course" memo from President Bush, who came into office campaigning for tax cuts. But are we really at a point where we want the government taking more of what we earn? Mr. Hubbard and Mr. Rove sound like Nancy Pelosi.

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Inside the Mind of the Left

February 8, 2010 at 11:20 am

The second-person ("you") seems to be in style these days, not just at the New York Times, as noted earlier, but at the New Yorker, where James Surowiecki writes:

The bailout of the auto industry, after all, was as unpopular as the bailout of the banks, even though it was much tougher on the companies (G.M. and Chrysler went bankrupt; shareholders were wiped out, and C.E.O.s pushed out), and even though the biggest beneficiaries of the deal were ordinary autoworkers. You might have expected a deal that helped workers keep their jobs to play well in a country spooked by ballooning unemployment. Yet most voters hated it.

Similarly, the failure of free markets during the financial crisis might have led people to think that the government should be more involved in the economy. Instead, the percentage of Americans who think government is trying to do too much is higher than it's been since the late nineties.

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Hancock Lumber's Kevin Hancock on the Death Tax

February 8, 2010 at 10:50 am

The Heritage Foundation has a video interview with Kevin Hancock, part of the sixth generation of the family that owns Hancock Lumber, with 15,000 acres of timber and 3 sawmills in Maine: "It makes no sense to have a capital gains tax at 15% and an estate tax, say, at 45%. In that example, if you sell your company, you get a 15% tax. If you try to keep your company, keep working, keep going, you get a 45% tax. What the federal government is effectively doing is offering a major tax discount to sell your family business as opposed to keep it. I can't think of any tax structure more backward than that." I could do without the references to Wall Street and Hollywood at the beginning of the video and without the environmental scare that the estate tax is going to force the Hancocks to sell off their timberland to housing developers, but it's interesting stuff, and pretty compelling overall.

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A Chinese Billionaire on State Power

February 8, 2010 at 10:16 am

Zhang Xin, a 44-year-old Chinese real estate developer who the Financial Times says is worth $3 billion, has a fascinating interview with the Financial Times. The FT says her comments help "to explain how private business is constrained in the communist country":

When it comes to strategy, for example, Ms Zhang suggests that her options are limited. "Strategy? I am afraid we don't have a strategy and we only know we must respond to government's initiatives," she explains.... "After all, my personal power is nothing compared with the power of the state."

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The Value of the Dollar

February 8, 2010 at 9:51 am

"For all the concern over the $1.6 trillion U.S. budget deficit and record debt load, the dollar is as valuable now as 35 years ago," Bloomberg News asserts. This is just silly. The article bases its assertion on comparing the dollar to "a basket of currencies from the Group of 10 nations." But most Americans, when they go out shopping, aren't trying to buy a basket of currencies. They are trying to buy a house, or a car, or health insurance. If the geniuses at Bloomberg really think 2010 dollars are the same as 1975 dollars, let them all sell their houses for what they would have cost in 1975, and let them all take their salaries in what they would have earned in 1975, and then let them re-write the story based on what they find out.

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The New York Times on Eli Broad

February 8, 2010 at 9:11 am

The New York Times has an odd article today about Eli Broad, odd because the point of it seems to be to depict him as some sort of unusually pushy new money type and to fault him for actually keeping track of what is happening with the money he gives away. The article sets up a false distinction between Los Angeles and New York: "While money in New York is generally concentrated across a few miles of Manhattan, Los Angeles wealth is spread across hundreds of miles among people with diffuse interests, many with few longstanding ties to the city. That has meant that young donors can quickly gain access to big-name things..." With the Wall Street Journal reporting last week that New York's Metropolitan Museum of Art just elected a 32-year-old to its board of trustees, the idea that it's just in Los Angeles that young donors can quickly gain access seems strange.

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Capital Is Mobile

February 7, 2010 at 9:53 pm

"In 2004 New Jersey was one of the first states to adopt a 'millionaires' tax, imposing an 8.97% rate on income over a half-million dollars," Forbes reports. The consequence? "In all, the state suffered a $70 billion net outflow in wealth from 2004 through 2008, compared with a $98 billion net inflow in the prior five years. The Garden State's reversal in fortune was due to a large drop in the number of wealthy households entering the state and a moderate increase in the number of wealthy households leaving." The Forbes article is based on a study (pdf) conducted by Boston College's Center on Wealth and Philanthropy for the Community Foundation of New Jersey and the Enterprise Trust at the New Jersey State Chamber of Commerce. There's an estate tax angle, too — New Jersey has a particularly fierce death tax. It's harder to flee America than it is to move to Pennsylvania or Florida from New Jersey. But the basic insights — that capital is mobile and that taxes affect behavior — apply at the national level just as they do in the laboratory of the states.

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N.Y. Will Knock Down a Housing Project

February 7, 2010 at 9:11 pm

Seven years after an editorial in the New York Sun suggested it, New York City will begin knocking down its public housing projects, the New York Times reports. A lot of what government does -- or should do -- is undo its own mistakes.

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What Bill Gates and I Have in Common

February 6, 2010 at 11:14 pm

We're both learning from Jerry Muller. FutureOfCapitalism.com a few days ago reviewed Professor Muller's new book, Capitalism and the Jews. Now Microsoft founder Bill Gates reports on his blog that he's been watching Mr. Muller's lectures for The Teaching Company on Thinking About Capitalism. The lectures are "excellent," Mr. Gates reports. I had a similar high opinion of Mr. Muller's book.

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The Story Behind the Hayek-Keynes Rap Video

February 5, 2010 at 2:56 pm

When Russell Roberts, an economics professor at George Mason University and a fellow at its Mercatus Center and at the Hoover Institution, was approached last April out of the blue by a total stranger, filmmaker John Papola, and asked if he wanted to make a movie, he replied, "Well, that'd be fun."

But, Mr. Roberts told FutureOfCapitalism.com in a phone interview, he wasn't sure the movie would actually happen – he'd been approached before by other people for similar ventures only to see them sputter out.

And indeed, the project that became the Hayek vs. Keynes rap "Fear the Boom and Bust" had some false starts. The economist and the filmmaker started out with the idea of a situation comedy about John Maynard Keynes coming back to life as a financially struggling assistant professor or high school economics teacher, to the tune of the Bee Gees disco song Stayin' Alive from Saturday Night Fever.

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More on Paulson's On the Brink

February 5, 2010 at 1:31 pm

A few readers had responses to yesterday's publication of the FutureOfCapitalism.com review of Henry Paulson's book On the Brink. One made the point that Mr. Paulson's story is an example that makes a broader argument against government involvement in the economy: It so often ends up as a single individual with more ego than brains catering to those he wants to please. Another suggested linking to some of the New York Sun editorials at the time Mr. Paulson was committing his ambushes. So here are a few: Wealth Transfer, Bailout Baloney, Paulson's Pretext, and Paulson's Seizure.

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