Category Archives: markets

Drug Price…Foolishness

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President Joe Biden (D) and his associates over in Medicare have identified the drugs of which he’s willing to pretend to negotiate the price. The particular drugs aren’t important; what matters is the precedent being set regarding the Progressive-Democrat-run administration’s view of what constitutes negotiation in Party’s lexicon. Readers interested in which drugs are targeted for now can find the list at the end of the linked-to article.

What’s important here is this.

The naming of the 10 drugs subject to price negotiations kicks off a lengthy process. Drugmakers have until October 1 to say whether they will join in the negotiations.
If they don’t negotiate or accept the price resulting from it, companies face a tax of up to 95% on a medicine’s US sales, or they can pull all of their drugs from Medicare and Medicaid coverage.

And this:

Drug makers that don’t participate or reject the government’s price will incur a crippling daily excise tax that starts at 186% and eventually climbs to 1,900% of the drug’s daily revenues. This is extortion, not a negotiation.

That’s not negotiation, that’s “Take our price, or pay even more through our usurious, if not confiscatory, taxes.” The outcome will be a stifling of medical (not just for medicinal) innovation in the US. Instead, innovation, such as might remain, will be pushed overseas, in large part to nations that don’t themselves innovate very much, having come to rely on American developments which they then heavily subsidize for their own citizens.

Some of those drugs, too, will be pulled from Medicare/Medicaid coverage, along with all of the other drugs a company makes available through those programs, which will price them out of reach of those most in need—those with the ailments being treated by those medicines and who lack the money to pay the full price.

That is, until Party takes the next obvious step and taxes those medicines’ sales revenues earned outside of Medicare/Medicaid, to be followed by Party’s diktat that those medicines must be offered through Medicare/Medicaid.

Which will result in those medicines no longer being manufactured in the US at all and no longer being sold at all in the US, regardless of their manufacture.

Increasing Choice

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New Jersey’s Progressive-Democratic Party Governor Phil Murphy’s Newspeak definition of increasing choice as he applies it to vehicles he will permit his subjects the citizens of New Jersey to buy goes like this:

“There’s a lot of misinformation about what this order does,” his climate director Catherine Klinger said in an interview with ROI-NJ that was published this week. “It requires that new vehicle sales in the state are zero emission by 2035. More than 50% of vehicles that are sold in the state are used. And there is absolutely no change to the used vehicle market.”
If you like your Jeep Cherokee, you’ll still be able to buy a used one….

While supplies last.

No, Murphy’s proclamation, made through his climate director, is nothing more than a cynical variation on Henry Ford’s marketing slogan of a century ago:

The customer can have any color they want as long as it’s black. A New Jersey citizen can have any vehicle he wants, as long as it’s electric. Never mind whether he can afford one.

SEIA’s Response to Bidenomic’s Tariffs

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The Wall Street Journal‘s editors correctly noted the internal—and intrinsic—contradictions in the Biden administration’s “renewable” energy demands and its trade policy. The administration is pushing ever harder to shift our economy, for good or ill (mostly ill IMNHO), to energy sourced to non-carbon-based, but renewable only—nuclear need not apply—producers. Then comes Gina Raimondo, Commerce Secretary, and her decision, backed by that same Joe Biden, to apply tariffs as high as 254% to solar power-related products imported from five People’s Republic of China enterprises, never minding that these companies are American domestic solar power producers’ primary sources of the needed articles.

But the Solar Energy Industries Association’s whine about the administration’s tariff policy leaped out at me.

It will take at least three to five years to ramp up domestic solar manufacturing capacity and the global supply chain will be vital in the short-term.

But would SEIA’s members actually ramp up domestic production without the tariffs, or would they simply continue buying from an enemy nation? SEIA is being disingenuous.

I’m not convinced that Commerce’s tariffs are the way to go—in general, they’re being applied as protectionist barriers rather than as foreign policy tools, and Commerce’s tariffs here are no exception—but SEIA’s plaints seem nothing more than excuse-making. After all, those members already have had those three to five years, and more, during which to ramp up domestic solar manufacturing capacity, and they’ve chosen not to do so.

Chip Manufacturing

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The Biden administration is bent on bringing computer chip manufacturing back into the United States. On its face, that would seem beneficial. However, the administration team he’s formed to oversee the matter and its $39 billion of taxpayer dollars allocated to the program is populated with

investment bankers, private-equity investors, and management consultants.

And apparently no chip engineers or anyone familiar with supplying chip factories.

Uh, huh.

The Manhattan Project and the crash program to develop treatments for the Wuhan Virus were populated, strongly preferentially, with experts in the field, and they just as strongly deemphasized the moneybags experts.

That’s not the case with Biden’s nightmare dream team of money allocators. This isn’t a true crash program, certainly, but it’s still an effort to rapidly guts something up. It needs experts in the field to do the gutsing, it does not need politically connected money handlers.

Biden’s Tightrope

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That’s what the editors over on The Wall Street Journal calls President Joe Biden’s (D) move to bar US investments in certain People’s Republic of China technologies and enterprises.

President Biden’s executive order on Wednesday restricting US investment in Chinese military technologies tries to balance national security and business interests. The problem is that Beijing doesn’t distinguish between the two, which is why business risk in China is rising.

This is the fallacy of the editors and of Biden: since the PRC does not distinguish between national security interests and business interests—does not separate out military utility from civilian utility—when it comes to technology there is no balance for our government to seek. All tech, in the PRC’s eyes, has military utility, therefore all tech American businesses and those of our friends and allies might sell or otherwise transfer into the PRC has military utility, and all such American sales and transfers should be barred, and those of our friends and allies should be jawboned against. The transfers threaten our national security as well as that of our friends and allies.

The White House concern is that the Communist Party will weaponize US venture and private-equity investment in technologies such as artificial intelligence.

In a heartbeat the CPC will. Biden’s bar reflects some understanding of PRC President Xi Jinping’s avowed goal, which he facilitates by eliminating

barriers between civilian and commercial sectors and military and defense industrial sectors, not just through research and development, but also by acquiring and diverting the world’s cutting-edge technologies, for the purposes of achieving military dominance.

But then Biden shied away from taking the full step.

open global capital flows create valuable economic opportunities and promote competitiveness, innovation, and productivity.

And:

Auto makers will still be able to invest in Chinese self-driving systems. Drug makers can join with Chinese companies to develop new drugs.

Never mind that self-driving technology has obvious uses in the PLA’s mechanized/armored ground forces, the PLA’s air forces, the PLA’s naval forces. Never mind, either that the tech used in developing new drugs supports the PLA’s ability to develop drugs for treating PLA diseases and casualties and to develop drugs and other biologics for offensive use.

The editors join him in that failure to follow through:

A complete de-coupling of the US and Chinese economies probably isn’t possible, or desirable, given their interdependence.

Yes, it is, and it’s more than desirable, it’s critical to our national economic and military security, and so to our political security. There will be some economic disturbances as our businesses relocate their supply chains—from ore and minerals in the ground up through final assembly components and end products—out of the PRC, and there will be some economic disturbances as our businesses buy and sell technologies with other customers than the PRC. Those temporary disturbances, though, need to be balanced against the long-term costs of being dominated by the PRC.

There’s no tightrope here, except in Biden’s timidity.