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Article Artículo

Why Aren't the Democrats Talking About Ending Patent Financed Drug Research?

(This post orginally appeared on my Patreon page.)

Many of the leading Democratic candidates, especially Sanders and Warren, have been putting forward bold progressive plans in a wide variety of areas. Sanders and Warren have both supported a quick transition to a universal Medicare program, with no premiums, co-pays, or deductibles. Several candidates have supported a Green New Deal, which in some versions would guarantee every worker in the country a decent paying job.

Such policies are really big deals. They would both have a huge impact on people’s lives and also pose serious problems of implementation. The willingness of Democrats to think big in other areas makes their determination to think small on prescription drugs surprising. Replacing government-granted patent monopoly financing of research is both a huge deal and one that can be implemented gradually without threatening massive disruptions in a transition process.

Free Market Drugs Are a Really Big Deal

First, it is necessary to realize that having drugs available at free market prices, without patent monopolies or other forms of exclusivity, would have an enormous impact on the economy and the health care system. On the first point, we will spend more than $460 billion on prescription drugs in 2019. Without patent protection, these drugs would almost certainly sell for less than $80 billion, implying a savings of more than $380 billion.[1] 

To put this $380 billion figure in context, it is more than five times the annual food stamp budget. It is more than twice the size of the Trump tax cut. If we project out the savings over the course of a decade, they would come to more than $5 trillion. That is more than three times the amount that is projected to be needed to cover the cost of full forgiveness for outstanding student loan debt. This is more than $30,000 per household. In short, there is huge money at stake by any measure.

CEPR / July 05, 2019

Article Artículo

Brazil

Latin America and the Caribbean

US Foreign Policy

World

Americans Deserve a Foreign Policy Debate

The first two Democratic Party presidential primary debates in Miami covered a lot of foreign policy ground — but it is a stretch to say the candidates’ statements rose to the level of a real “debate.” They tended to agree with one another and merely emphasize different priorities.

There were two exceptions to this consensus:

  1. Four candidates (former congressman of Maryland John Delaney, Senator Amy Klobuchar of Minnesota, former HUD secretary Julián Castro, and Congressman Tim Ryan of Ohio) called China one of the US’s greatest geopolitical threats, while two candidates (former Colorado governor John Hickenlooper and entrepreneur Andrew Yang) argued for a new relationship with China built on cooperation.

  2. Ryan argued for maintaining US engagement in Afghanistan, while Hawai’i Congresswoman Tulsi Gabbard and former vice president Joe Biden called, without reservations, for withdrawal.

Very little in these debates shed light on the differences among these candidates in how they would approach foreign policy if elected. However, given the great range of foreign policy issues raised, one can hope that the candidates will engage in a more robust conversation on foreign policy as the field winnows—including talking about many issues that have thus far been left out.

Here were some of the foreign policy issues the candidates discussed:

Climate

These debates marked a major shift in the extent to which presidential candidates have addressed climate change, with two candidates (California Senator Kamala Harris and Washington Governor Jay Inslee) referring to a “climate crisis.”

CEPR and Colin Brineman / July 02, 2019

Article Artículo

There are Still Good Paying Jobs for People Without Skills, Just Read the Washington Post Opinion Page

No folks, it's not a rerun of the Three Stooges, it is Washington Post columnists pretending to say wise things about economic policy. They apparently decided to work overtime to criticize the more progressive Democratic candidates, which is what Jeff Bezos pays them to do. (No, I have no idea if Bezos is especially pernicious among rich people, but if the Washington Post was owned by people who were not rich Steven Pearlstein, Charles Lane, and Fred Hiatt would not be getting paid to spout ignorance on its opinion pages.) I don't have time to deal with all the misinformation in these three columns, but let me just take some highlights from each.

Pearlstein is very unhappy about the Democrats' big plans. For example, he is upset that a Medicare for All program will lead to some inefficient hospitals closing and some people losing jobs. Of course, we will not be getting less health care, so this is just a story of people moving from one hospital to another facility.

That can be traumatic, I would never minimize the seriousness of job loss, but almost 1.8 million people lose their job every month, and this is in an economy with 3.6 percent unemployment. How much does Pearlstein think Medicare for All will add to this?

Similarly, he is angered about the job loss from a Green New Deal. He tells us that the new jobs won't replace the lost jobs in the coal mines. This is true, and we currently have just over 50,000 people working in coal mines. We lost 3.4 million manufacturing jobs due to the explosion of the trade deficit in the last decade, sparking very little concern on the Post's opinion pages, but the risk to 50,000 jobs in coal mining is worth berating the Democratic contenders over.

Of course, the loss of jobs attributable to the trade deficit was associated with an upward redistribution of income. A Green New Deal may lead to more equality.

Charles Lane is lecturing us again about the debt and deficits. Let's just deal with this one quickly. Lane says not a word about the trillions of dollars of patent/copyright rents (much of it for prescription drugs) that the government has committed the public to pay with its grant of monopolies. If Lane doesn't understand that these rents are equivalent to future taxes then he is far too ignorant to take seriously on the topic of debt. Alternatively, he is simply a dishonest propagandist.

CEPR / July 02, 2019

Article Artículo

A Little Honesty May Help Sell the Green New Deal

(This post originally appeared on my Patreon site.)

The Washington Post had two columns last week that told us much more than their authors likely intended. The first was a piece by E.J. Dionne, that told readers about the need to “tame” capitalism, because of the damage caused in recent decades by the untamed version.

The second piece was by Catherine Rampell. From France, she told us of the difficulties of imposing taxes on carbon, even in a country that is ostensibly fully committed to the Paris Agreement and reducing greenhouse gas emissions. Both pieces were fascinating for what they left out of the picture.

While Dionne’s piece is focused on the need to address the growing inequality of the last four decades (its theme is the pseudo-mea culpa of the Wall Street funded group, Third Way), the gist of it is that it was a mistake to let the market run amuck. In other words, the upward redistribution of the last four decades was something that happened, not something that folks like the Third Wayers did.

This is an important distinction from a logical, moral, and most importantly, political standpoint. It matters hugely whether most of the country was left behind due to the natural development of the market, as opposed to being left behind because the folks with political power structured the market to redistribute income upward.

People familiar with my writing know that I have long argued that the upward redistribution was by design. Just to take the most obvious example, we are routinely told that manufacturing workers in the United States and other wealthy countries were destined to get whacked for the simple reason that there are hundreds of millions of people in the developing world who are willing to do the same work for a fraction of the pay.

In that story, the downward pressure on the wages of manufacturing workers was an inevitable outcome of globalization. Unless we want to block globalization, we can’t have manufacturing workers in the U.S. and Europe getting $40 and $50 an hour in pay and benefits when workers in China, Vietnam, and elsewhere will do the same work for less than one tenth of this amount.

The loss of these high-paying jobs for workers with less education is just an unfortunate side effect of globalization. The downward pressure on the wages of less-educated workers more generally that results from the loss of manufacturing jobs is also just another bad side-effect. But hey, these people are all better off than the under-employed workers in the developing world, so it would be greedy and wrongheaded to try to stop globalization to protect less-educated workers in rich countries.

The fact that there are hundreds of millions of workers in the developing world who are prepared to work for much lower pay than our manufacturing workers is true, but there are also millions of bright and ambitious people in the developing world who would be happy to train to U.S. standards and work as doctors, dentists, lawyers and other elite professions at a small fraction of the pay of the people who currently hold these jobs.

CEPR / June 27, 2019

Article Artículo

United States

Workers

The Lazy Father Saga

This post originally appeared on University of Massachusetts Amherst's Care Talk blog.

The lazy father is enshrined in popular culture. Google up the term and there he is: Homer Simpson snoring on the couch. Unfair caricature, especially on Fathers’ Day!

So, it’s easy to see why a short essay by Robert VerBruggen in defense of fathers caroomed through social media this week, boosted by a link from Ross Douthat’s regular New York Times opinion column.

But is laziness really the issue? Serious complaints about the gender division of labor seldom boil down to finger-wagging accusations of moral turpitude. They point instead to economic inequalities between moms and dads that result from social institutions — public policies, employer practices, and cultural norms.

Mr. VerBruggen is skeptical of such inequalities, suggesting that those who emphasize them are…well, lazy. They have ignored the facts revealed by the American Time Use Survey.

CEPR and Nancy Folbre / June 25, 2019