Beware the Crisis of High Drug Prices

bby Jean Taylor

We’re currently seeing a spate of stories about the crisis of high prices for pharmaceuticals, and that should make consumers and voters wary. We all should remember Rahm Emanuel’s admonition to never let a crisis go to waste. Unfortunately the solution to crises just happens to be more and more government intervention which, government being as it is, ultimately leads to a worse outcome than the original problem. And the crisis of high drug prices will be no exception.

Take the Vox article as an example. The reason credited with responsibility for high drug prices is the fact that the US government cannot negotiate drug prices. Many other countries around the world do negotiate drug prices, and their costs are lower. Therefore the solution to high drug prices is to put bureaucrats in charge of negotiating with the pharmaceutical companies.

It doesn’t take a whole lot of reflection to see where that will go. If the cost of a medication is too expensive, the bureaucrats will have no problem forcing the drug to be sold below cost which will eventually cause producers to stop supplying that particular drug. This has already happened with several inexpensive generic drugs used in cancer treatment. Or perhaps more likely the bureaucrat will determine some other formulation to be just as effective as the more expensive drug, and so permit coverage only of the cheaper version. Bear in mind the FDA and insurance companies insist that generics are identical to name-brand medications, but the FDA permits generic drugs to contain anywhere from 80%-125% of the active ingredient in the name-brand version. Only a bureaucrat could say, with a straight face, that 80% is identical to 100%. Fortunately bureaucrats are known for their lack of a sense of humor.

The crisis of high drug prices is set to be used like all other crises, and that would be to expand centralization and government power. Ordinary people are never, ever well served by centralization, but the top of the economic pyramid grows fat on it.

The true reason for high drug prices is our irrational health insurance system, but that’s a topic for another column.

http://www.vox.com/2016/8/23/12608316/epipen-price-mylan

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Stock Market Update 8/24/16

bWe are headed into the historically weakest time of the year. Most market crashes have occurred between about now through the middle of October. The Bank of Japan, their central bank, practically owns their stock market. Central banks, including the Federal Reserve, either own outright or through surrogates more stock than most can fathom.

Expect an outright world wide effort to keep U.S. equity prices from falling during this fragile time. There are virtually no buyers other than those just mentioned and corporations buying their own stock. There are also short sellers to squeeze.

Can they pull it off again? Odds are, yes. Central banks do not have all the money in the world but they can counterfeit as much as they need.

If they cannot support the market, it will crash. I honestly don’t know which it will be but this is an absolutely critical time period.

 

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It Is Not Hillary’s Fault!

bbMy sons have heard this thousands of times.

“When a lie is told there are two guilty parties. There is the liar of course but also the one for whom the truth is not good enough'” James Quillian

Hillary Clinton is just milking the herd. Seriously, what do people expect her to do?

Out of the basic incentive is self interest, other incentives have evolved. One is the profit motive of which economists speak. Another is the quest for power. Both are stand alone incentives. One leads to the other so there are many who pursue both simultaneously. Power for some is the most fulfilling.

Hillary is doing what comes natural to Hillary. Most of the country is literally sucking the lies right  out of her mouth.  Just like the lies were honey.

Politicians come and go but the love of lies is always with us.

 

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All Presidents Have Common Ground

 A president is a sociopath with a high IQ. Sadly, in any democracy citizens project their own personality characteristics onto their public officials. All through school, democracy is treated like a happy system where all the animals have friendly debates, elect leaders then skip off holding hands knowing all is well and for the best.

In the real world democracy is a brutal blood sport and running for president is the world’s most competitive event. Only sociopaths have the manipulative skills to compete in such a vicious system. Truth gets morphed out of the competition early because if one candidate tells the truth, the other one will make an embellishment. If citizens like the truth, there is a version that they will like even better. Campaigns turn into liars contests so easily these days, the truth is avoided from the beginning. Citizens will take out any candidate who focuses on the truth.

Any candidate who wants to win will only tell lies. Citizens will not tolerate the truth and will ridicule any candidate who uses it. Life and happiness are centered around fantasy. Citizens will die for the sake of their fantasies. When lives are lived in line with fantasies, the fantasies can only be removed from by force or severe suffering.

All presidents are sociopaths. So are their opponents in opposing parties. Members of both houses of congress are sociopaths as well.  Any competitive election in a democracy can only be won by a sociopath.

Whoever ends up being president will be a sociopath. It takes that type of personality to win.

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How to Legalize Marijuana

aaIt is a myth, that laws get changed by politely petitioning representatives, thinking that the representatives will champion a cause if they can see that it is the right thing to do. Marijuana laws are kept on the books because the proponents of prohibition work outside of the formal system. The proponents are organized crime, the pharmaceutical industry, lawyers, private prisons and others who benefit  from the laws. The laws do absolutely nothing to reduce usage. The laws do maintain profit margins of the proponents as well as create business for them. The public gains nothing. It is less than helpful that groups like NORML waste so much time and effort focusing on ineffective representation based efforts.

I have studied arrest records in Texas and have discovered that far more than half of arrests for cannabis are what I call add on charges. Some kid gets a DWI for beer or gets arrested for shop lifting. The drug charges are applied because offenders commit other crimes and are dumb enough to have marijuana on them at the time. Getting busted at home is a complete rarity. Stoners are the biggest advocates of legalization but they are doing the most to keep it illegal. They get caught far more than necessary. Stoners are an unsympathetic lot and they need to stay out of the back seat of police cars. By smoking away from home and getting busted, they keep law enforcement focused on the issue. Make no mistake, fines for marijuana create a lot of revenue for municipalities and create fees for lawyers. The more crime there is the more reasons there are to put more funds into  law enforcement. Drug arrests create a lot of revenue for proponents of prohibition. If there was a way to keep stoners out of sight, legalization would come a lot quicker. Taxpayers and medical users suffer from prohibition just as much as stoners do.

Human beings mostly copy one another and only deal in packaged ideas. That doesn’t get folks very far when trying to get laws repealed. Citizens are told things such as state referendums are not worthwhile and won’t get laws changed.  While a statewide referendum might not work, certain types of referendums at the local would have a very high impact. City councils cannot repeal state laws. They can dictate which laws get priority for enforcement. Citizens at the municipal and county levels can pass referendums insisting that the police force give low priority to marijuana arrests and that resources be focused more on other crimes. There are countless laws all across the United States that never get enforced. Some of them are completely forgotten. Cannabis laws could become this type of law.

Another way is to make prosecution the laws too expensive. Most marijuana charges are resolved with a plea bargain. Local pro-legalization groups could start picking a poster child case every month, provide free defense and take the case as far up the legal chain as possible, while publicizing the effort to the max the whole way. Instead of politely begging for help from from elected representatives, groups like NORML could educate the general public on jury nullification and encourage the practice. Despite what one might be told, there is absolutely nothing a judge can do to force a juror to vote to convict. Otherwise there would be no point in having a trial in front of a jury.

Citizens often complain about expensive laws that have no purpose but will never think outside the box to try to get anything changed. I am particularly offended by laws that stay on the books as social statements. For a law to be successful, a minimum of a plurality must be offended by the behavior a law is meant to prevent. Otherwise the law is impossible to enforce. This is the case with marijuana laws. The expense is staggering. Most who are waiting for these and other bad laws to repealed may be dead before that happens, unless they get more aggressive in fighting the laws.

There are those who will say, “We can’t legalize marijuana because children will have access to it?” As a retired teacher I can say with complete confidence, any child can get marijuana anytime he wants it as it is. The marijuana laws prevent nothing but cost communities a fortune.

 

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Thinking is a Second Choice

bestI have already made the case that work is a distant second choice. Is thinking work? If thinking was not work, more people would enjoy doing math problems.The process of thinking is very tiresome. For people who don’t normally think, the mind tires very quickly. Attention wanders off into daydreams and fantasies. Just being awake and conscious is easy. Concentration is very taxing. Ask a human being to concentrate and he might leave the room, order another beer or smoke a joint. Chances are he will pretend to think as long as someone is watching. Thinking is very tiresome so it is much more preferential to let someone else do it.

The natural aversion to thinking is one of the reasons democracy is so hard to maintain. People vote their fantasies instead rather than come up with a rational choice. The brain grabs sound bites. The mind records them like a tape recorder. The human then adopts these notions as personal original thoughts. Voters almost never have any substance to their opinions. The opinion of a voter has about as much originality as a parrot babbling on a perch.

Back in the days when I drove a taxi cab I would always chat with passengers. This was during the Monica Lewinsky scandal so there was a lot to talk about. I would watch the news at home and hear talking points by one side or the other. Very frequently the phrase, “The American people want…………” would be spoken. The next day I would pick up passengers at the airport. It never failed, people would say “The American people want…….” whatever was said on the news the night before, would be repeated as if it was an original idea. These passengers were not day laborers. They were executives, attorneys, professors and other professionals. In their jobs, they probably relied on tired old dogma, conventional wisdom and manipulative skills to get by.

Thinking is very rare. Thinking is work. Those of us who engage in thinking have built up our mental stamina over many years. Thinking for about 30 seconds is all most minds can tolerate. Citizens line up behind candidates when their world view or some of their sensibilities appear to be supported. Usually political views reflect more of how a voter wants to appear to his peers. People believe they’re thinking. They seldom do. They copy.

There is a lot luck involved in electing a president. It appears that Americans have been terribly unlucky for most of history. Democracy was initiated with the belief that citizens would think and make the best choice, and then oversee the elected leaders’ performance in office. Unfortunately it doesn’t happen that way.

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Work is a Second Choice

b

19th ­century French economist Frederic Bastiat often mentioned that when possible men would live off the efforts of others. As simple as this is, economics as a discipline assumes the opposite. I not only acknowledge that work is a second choice, that simple acknowledgment is a pillar of my work.

Not only is work a second choice, it is a distant second choice. Mankind is not near as industrious as mainstream economists would have you believe. Is mankind part of the Animal Kingdom? Most prefer to think that he is not. Perhaps not but where efforts to survive are concerned, man follows the same patterns as the beastly predators. Admittedly, man’s behavior is more complex but the patterns are the same.

Lions and hyenas are natural enemies. Hyenas are most often pointed out as scavengers and thieves. Lions, like hyenas, only hunt if they can’t find a dead carcass. Then before chasing down an animal, lions will look for smaller animals feeding on prey, run them off and steal their food. If there is nothing to scavenge or steal, lions will hunt. The same behavior applies to mankind but there is more to build on. Often it appears that humans are completely industrious and chomping at the bit to be productive. The is because working and living off others is not an option from the get go. When opportunities occur, a human being will live at surprisingly low levels before working to get paid.

Out of the preference for living off of others, grow many common practices such as using government to rig markets and taking welfare payments. The rich show a definite preference for investing in the business of others so as to not do any labor themselves. Some are born with great herding instincts. Those individuals figure out ways to create aggregations of people and extract profits off of their behavior. In the old days, land owners were called rentiers or rent seekers. This practice did not mean buying houses and renting them out. It meant collecting money for doing absolutely nothing, and extracting money out of society as a whole. When assets can no longer increase in value based on fundamentals, the rich lobby government for policies that will cause their property to increase in value independently of profitability. This is the function of the Federal Reserve. The Federal Reserve has not done one thing since its inception in 1914 that has benefited the country as a whole. It has been an invaluable tool for the rich to commander others’ resources.

The rich are no different than the poor when it comes to the principle of work as a second choice. Generally they are more intelligent than the poor and thus more adept at taking from others while appearing productive.

One modern tool for getting something for nothing is the corporate stock buyback. When the Federal Reserve increases the money supply to levels that have no utility to the economy, corporate insiders find it much easier to get paid just by running up the price of their stock. They want to get paid as much as possible as soon as possible and that is what stock buybacks accomplish. Buybacks can be seen as gifts to them from the taxpayers. Although the relationship is not direct, it turns out that way in the end. When the rich get paid for doing nothing, they fail to innovate. In a real sense, innovation is the good the rich do for an economy. When their innovation function is lost, the economy suffers.

So, it works out that just acknowledging work is a second choice is critical to making any kind of forecast or policy recommendation. Of course, economists who work in the private sector get paid for justifying the case their employers want them to make. Government economists, such as Federal Reserve Open Market Committee members, get paid to carry out the political agendas of the politicians who appoint them.

Notice that I make no case for right or wrong nor do I lobby for change. I am just observing human behavior and notice how nature’s tools for survival are used. Human nature only changes over thousands of years. Now, if we want the economy to grow and provide benefits for everyone, all opportunities to get something without doing productive work must be eliminated for the rich as well as the poor. Otherwise productivity is seriously diminished and prosperity for everyone is lessened.

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How Low Are You Willing To Go?

bLets say you have $300,000 cash and you don’t want to risk it in the stock market. Today the highest CD rates in the country are about 1.25%. That pays you $312 per month.  If you were not being robbed blind by Federal Reserve policy, you would receive about 3.25% on your savings or $813 per month. This is because no bank in the world will pay you what your money is worth if they can get the same from the Federal Reserve for next to nothing. I ask you, are you happy with that? Everybody has to decide for himself how low he is willing to go.

Are you in awe of Janet Yellen and the other Federal Reserve members? I am telling you, these people are no more honest than crack dealers. They have lower morals than crack whores. But, people love and respect them. For what, God only knows. They have no competence whatsoever. You think they do? All they have done is wreak havoc on the economy and rob you blind. If you love them anyway, you are crazy. A group of astrologers would do better by leaps and bounds. Never in the history of the world has a central bank successfully kick started an economy. But, people love and respect them anyway. Would you respect a thief who broke into your house and stole your silver? Perhaps you would, if you are crazy. O.K., so you are satisfied to earn a paltry 1.25 % on your savings? If you are, you are crazy.

What is worse, Federal Reserve policy has wrought so much havoc on the economy the whole system is going to collapse. Chances are good you will lose the savings on which you’re earning no more than 1.25%. And, will you still love the Federal Reserve? Perhaps, but you are crazy if you do.  Do you think Federal Reserve members are good economists? Even if they grasp the concepts, they are too dishonest to be good at anything.

The Federal Reserve System was established by Congress in 1914. During all of its years it has impoverished countless human beings and has not had one successful program. Just since 2008 they have stolen unfathomable amounts from honest hard working Americans. Still Americans love and worship these people. An act of Congress can also eliminate this destructive institution in the same way it was created. The Federal Reserve Members belong in handcuffs, but that won’t happen.

Have I been too harsh? Well, this is as harsh as I can possibly be. If I could be even more harsh, believe me, I would.

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Short Stock Market Update 07-17-16

The spike in etf volume means that tomorrow an organized attempt to move the market higher.

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There have been no articles about how bad the market looks. There may be few who are willing to go short. For friends of the fed to remain active, their guaranteed profits must not disappear. The will. Keep watching for the cut and run.

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Saving the Planet

aWhat could be finer than having all of the government leaders in the world get together and save the planet. Just imagine all of the world leaders holding hands, singing save the planet songs while all or the worlds citizens blow kisses at them. What a wonderful thing to have social consciousness elevated to the previously inexperienced? Oh, it just gives me the giggles thinking about it.

This I guarantee. The more time, energy and resources government expends in the name of saving the planet, the faster it will be destroyed. How do I know? My reasons are always simple. They are always based on human nature. Human nature prevents government from solving this kind of problem, if there is a problem.

Self interest is the only incentive in play with respect to government. There is an imaginary incentive that is assumed to be relevant. Although assumed to be present there is no incentive to serve. Government is a means to an end, first last and always. There are no exceptions. As soon as a government initiative is begun, a feeding frenzy based on self interest begins and grows like bacteria in in a petri dish. The government money is a brand new business opportunity and a new source of revenue for the powerful. The worse the problem gets, the more money there is to be made. A huge ‘save the planet’ lobby forms to make sure the problem never gets solved, and more and more government money gets thrown in the pot. This will be the result of commissioning government to save the planet. Government action is far more dangerous than global warming.

Rest assured when government is commissioned the save the planet, we will be doomed at a much faster pace than if we just went ahead and let the destruction take its course. That is, if there actually is a threat. There is a profit opportunity. We do know that.

 

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