So Much Ignorance, So Little Time

I got involved in a "Facebook discussion" part way through. And yeah, I should know better. You can’t fix stupid, but you can try to enlighten its practitioners sometimes. This was one of those times. Let me set the stage: A friend, a lifelong Republican, published a letter he’d written to the Republican National Committee in which he explained civilly and, in some detail, why he was no longer a Republican. It drew mostly measured responses, but as is so frequently the way with the Book of Face there were several who reeled in stunned disbelief.

The first was a response to another  friend’s statement regarding the exorbitant cost of college and of medical care. He dared to opine that perhaps the health of our citizen, all our citizens should be “not for profit.”

Here’s the response:

“That is probably the dumbest thing I’ve ever heard. Of course, it should be for profit! How else would you ever get advances in treatment be it with medicine or technology! If it wasn’t for the capitalism and the free market, we wouldn’t have half of what we have now.

The earlier discussion had focused significantly on drug pricing. I responded:

       “XXXXX, where do you think most "new drugs" come from? No, it isn't any one or only, Big Pharma corporation(s). At one time they rationalized high drug costs as a result of their number one expense being research and development, and at one time (decades ago) that was true. Of course, Jonas Salk “gave away” the polio vaccine, as just a reminder that not all research is profit driven.

       A prime example of how wrong this is (the correlation between price and research cost) is the recent ultra-price gouging by the manufacturers of the Epi-Pen. Epinephrine (Pseudo-Adrenaline) was first synthesized in 1904. There is no patent on the substance! The amount in an Epi-pen is about $1.50 worth. yet we saw the price as high as $600 until popular outrage prevailed. Why so high? Simply because Insurance companies cover most of the cost for the insured patient. So, who paid the high price? Every single Medicare patient, because Part D (Bush 43's love letter to Big Pharma) bans Medicare from ever negotiating drug prices! There was/is Zero R& D, except for a $4.50 per unit delivery system. (do the friggin' math)

        The United States and New Zealand are the only two nations in the world which allow DTC (direct to consumer) drug advertising. Accordingly, advertising is now the number one cost item for every major Big Pharma company in America. R & D is second. “Lobbying” is close to a tie with R & D for some companies. Much (around half) of "new drug research and development" in America is funded not by Pharma, but by National Institute of Health Grants! By the numbers, in 2017 alone, our tax dollars (NOT private money) in the amount of $11 billion plus!!! went to about 16,000 drug/treatment University research grants.

        Oddly enough, if a researcher (college professor, for example) develops a new drug (like Harvoni, developed at Emory University with an NIH grant) he can do initial trials and sell the patent to a private firm (and keep the money!). In the case of Harvoni, that was a $4 million-dollar payday from Gilead pharma, who promptly made that investment back in about six months selling (and advertising) "their" new drug at, initially, $92,000 per course of treatment. Harvoni is now down to about "only" $34,000 with insurance, but in India, where Gilead sells the generic, it is $127. Do you really think they're selling in India at a loss?

        Drug companies spent more than $3 billion a year marketing to consumers in the U.S. in 2012, (double that by 2016!) but an estimated $24 billion more marketing directly to health care professionals. These numbers seem low by 2017 standards, as we are all bombarded with an ever-increasing number of drugs for diseases we've never heard of with side effects which ought to scare us shitless! Since 2012, there has also been a shift toward more DTC ads, as I'm sure you've noticed.

       I guess what I'm getting at is that many Americans know little or nothing in factual data about what drug companies do, or that they are by a landslide the highest NET profit (after taxes) corporations in the USA, at around 25-30% annually for the top 6 or 8. (most corporations would jump for joy at 6%) Unfortunately this ignorance usually doesn't stop them from saying things which are monumentally ludicrous in their "wrongness."

       Regarding the con that private enterprise is responsible for most of the tech we have today, the truth is that, again, government grants drive much of this research, as so much of is related to, or “spun off” from, the space program and military research. Quick examples. Location services are part of almost every electronic communications device. Say “Thank you, military Navsat program. Your internet? DOD research (darpanet). Digital devices of all sorts? Thanks, space program. So there!

       This, then,  in response to another  member joining the thread and opining that Trump has done little substantively and the Russians were involved somehow)  

       XXXXX: “So how are they doing that? Did the Russians tell the president to lower tax rates to jump start our economy? Did they tell him to attack the fed chairman who wanted to raise rates to choke off a booming recovery? Or maybe they told him to go make peace with the North Korean government?”

Ignoring the “peace with North Korea” comment as simply too stupid to waste ink on, I addressed economics instead:

       Me: XXXX; Taxes lowered to jump start the economy? Trickle- down theory? Supply Side? Bush 43 and Reagan both lowered taxes. Both left with hugely increased deficits. So, tell me again how that worked. And The economy didn't need "jump starting" since by 2015 it was already back to where it was at the Bush 43 peak before the housing bubble collapsed. If the economic growth curve had stayed at about the exact slope it had while Obama was president after the recession cleared it would still be where it is today. There is no “Trump miracle," just continued growth. 

        Regarding taxes: One of the strongest growth periods in our history was at a time when the marginal tax rate was as high as 91%. It worries me when people make statements based on not knowing what they don't know. And it really doesn't matter who tells Trump what, because if he has demonstrated anything, it is that he doesn't listen to those who are competent (what few there were) among his appointees. Can you possibly think that Trump is right and all the people who have abandoned him are wrong? You reveal a staggering a lack of economic and geo-political understanding in such a short space. Nothing to even debate.

His response:

“Another one (Ooh!he means me!) that believes Obama brought us out of this. No trickle-down economics here. If you don't know how lowering the corporate tax rate did wonders for the economy, we have nothing to even debate.” The important issue here, is that he is disavowing that tax cuts on the wealthy are “trickle down” economics (also known to Reagan as supply side theory). I attempted to educate him:

       Me: XXXX, “Only ever in the short term. (I’m referring to tax cuts here) It's simple history. The theory is that money not spent in lowered taxes will be reinvested and multiplied. That's not debatable, but it is, apparently what you need to believe. That's Supply-Side doctrine reduced to simplest terms, and supply side is simply the pig of Trickle-Down Theory with a new coat of lipstick. Now, since you insist tax cuts are not “Trickle-down theory”, here’s the definition from my economics text: "Trickle-down economics, also called trickle-down theory, refers to the economic proposition that taxes on businesses and the wealthy in society should be reduced as a means to stimulate business investment in the short term and benefit society at large in the long term." Not my words, but those of a real economist.

       “Now if we both knew something of economics, I'd ask you how much (as a percentage, by actual data historical analysis) of those unspent tax revenues actually are plowed back into the economy and what actually has been the percentage (real numbers) of that money, multiplied through the economy. It's surprisingly enough, just a not-so-whopping 17%! Here's the reality: "A study by the National Bureau of Economic Research found precise figures on how much revenue will be recouped by tax cuts. For each dollar of income tax cuts, only 17 cents will be recovered from greater spending.

Corporate tax cuts do a little better. Each dollar cut returns 50 cents to revenue. This shows that, over the long-term, the revenue lost by tax cuts will be only partially regained. Without a decrease in spending, tax cuts lead to an increase in the budget deficit. That harms the economy over time." Reagan, Bush 43, and now Trump have proven this yet again.  And finally, yes, the economy did somewhat better under Bush cuts briefly, ....wait for it.....because the FED lowered the interest rate from 6% to just over 1%. Not a real good permanent fix, huh?

      So, at best, tax cuts only produce less than half of the supply sider's most heuristic promises. Real data, remember. Not what you think, but what we know. That study also points out that tax cuts are seldom evenly felt and of far less benefit to the lowest 40% of the nation (for who you obviously have little concern anyway. In private moments, economists sometimes refer to supply side/trickle down, as “The rich pissing on the poor.” Not a bad analogy.

There was no response.