Tag Archives: markets

Safety and Efficacy

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Scott Gottlieb and Mark McClellan had some thoughts on drug trials in the context of the current Wuhan Virus (my term, not theirs) situation. For the most part, they’re right. There’s one aspect of their op-ed, though, that I want to comment on.

…if we don’t know what works, and what doesn’t, we’ll waste time and money on treatments that won’t help and may harm. Even if a vaccine is discovered and approved, the pandemic won’t end unless most Americans get vaccinated, which will require confidence in the product’s safety and efficacy.

The FDA currently must determine both safety and efficacy. That’s misplaced, though, and it misuses both time and money, and it misidentifies the money involved.

The FDA should be intimately involved in determining a drug’s or vaccine’s safety; we don’t need a market of snake oil salesmen claiming the safety of their wares.

But we don’t need Government involved in free markets. The free market here is that of patients and their doctors; they should be free to use—an extension of the Right to Try concept—drugs to mitigate the virus’ infection or likelihood of infection, and they should be free to use vaccines to achieve longer-term protection from the virus as soon as those chemicals have been shown safe.

The right to try given safety also would answer one of Gottlieb’s and McClellan’s concerns about numbers of trials and trial size: there are lots more patients and doctors in the market than would be participating in FDA-supervised trials, every one of those patients and doctors would be volunteers, and their data would be both more broadly based and available much faster than via an FDA-supervised trial or the series of them that might be necessitated by questions arising from a given trial.

Another of Gottlieb’s and McClellan’s concerns is that waste of money. Their concern proceeds from the assumption that it’s the government’s and pharmaceutical companies’ money being wasted. In Gottlieb’s and McClellan’s paradigm, that’s true. But in a free market—those patients and doctors—it’s the patients’ money being spent; it’s their assessment of whether their money is being wasted. Pharmaceutical companies will recoup much, if not all, of their expenses through their sales, and Government need not be involved at all.

Apple vs Epic

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Some of you may have heard of the video game Fortnite, which Epic makes for the cell phone market and sells through Apple’s app store. Associated with that is Epic’s move to make in-app sales—purchases of other products made from within an app—without having to pay the 30% commission Apple charges for in-app purchases via an app that was sold through Apple’s app store.

Some of you may have heard of Apple’s subsequent decision to block Fortnite sales through its app store and of the ensuing antitrust hoo-raw over Apple’s move.

The hoo-raw is centered on government intervention into what should be a free market: government antitrust law and the use of the government judiciary branch to press the beef.

That’s wrong, however legal the beefing might be.

I consider Apple’s use of its facility, here its app store, to be entirely withing Apple’s right to control its property, regardless of how widespread third-party use might be. Walmart, for instance, is not legally required, nor is it morally obligated, to sell any particular third-party product that wants shelf space. To provide space, or not, is a purely business decision, whether the space is physical for physical goods or virtual for electrons.

On the other hand, there’s nothing preventing Epic from selling its output through other facilities than one provided by Apple. There’s nothing preventing Epic or other app producers from forming their own individual app stores or from banding together to form a collective app store or collection of app stores.

Along with that, there’s nothing wrong with app developers selling their output exclusively to or through Android device producers and eschewing Apple device compatibility altogether.

That’s what a free market does. It’s what should be occurring here. Don’t bother with antitrust litigation; instead, set up separate app stores.

As an aside, Alphabet’s Google Play charges the same 30% for the same in-app purchase process, but the current beef only involves Apple. If there is a legitimate legal beef here, maybe it’s in the two biggest players in the app sales business charging the same price. It’s hard to believe that the two entities have sufficiently identical cost structures that they would arrive, naturally, at the same market price.

Tyranny of the Left

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Los Angeles Mayor Eric Garcetti (D) says he’ll cut off the power and water to those homes and businesses

that are in violation of gathering regulations as a means to “shut these places down permanently.”
“By turning off that power, shutting off that water we feel we can close these places down, which usually are not one-time offenders but multiple-offenders[.]”

Never mind that draconian lockdowns damage the economy to the point of doing more harm than the Wuhan Virus. Garcetti, in addition to permanently destroying businesses—and the lives of those business’ owners, operators, and employees—fully intends to destroy homes and homeowners, also.

This is the tyranny we can expect from a Progressive-Democrat Federal administration, empirically demonstrated.

Tax Misallocation

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The misallocation, this time, is not in the way our tax monies are being spent.

It’s in what our money is not being spent on in lieu of paying those taxes in the first place.

According to a 2018 Bureau of Labor Statistics survey—before the 2017 tax reform bill had been able to percolate into our economy in any serious way—we Americans spent more on the taxes Government exacts from us than we did on food, clothing, and health care combined.

That survey found the average American unit, which consists of both shared and single households, spent an average of $9,000 on federal income taxes last year. Americans also spent an average of $5,000 on social security, more than $2,000 on state and local taxes, and another $2,000 for property taxes.

That’s $3,000 more than we spent on those aggregated necessities.

Aside from a low, flat personal income tax without the exceptions froo-froo currently present, as suggested for corporate taxes (see nearby),  the next tax reform target needs to be on Social Security—whose Trust Fund will be exhausted in a few years, leaving the stark choice of raising payroll taxes (or increasing taxation from other sources) to cover the shortfall, or lowering the payouts to fit within the existing (payroll) tax structure—a roughly 30% reduction in payout for each recipient.

That reform, as I’ve written before, needs to be an elimination of the payroll tax altogether—more wage money left in the hands of the earner, which is especially important for those earning the lowest wages—and privatizing both Social Security and Medicare, and making the payouts for the future benefit of the saver and his family rather than immediate payout to utter strangers. That will leave the saver responsible for his own money and, with his skin on the line, he’ll do a far better job of managing those monies than even the most well-intentioned collection of government bureaucrats ever can.

Oh, yeah: privatization also would eliminate the employer’s payroll tax bite, leaving him more money for R&D, marketing,…

Byzantine Taxing

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Many companies, sitting on billions of dollars of tax credits, want to be able to cash them in promptly.

For example:

Duke has been unable to use all the corporate-research and renewable-energy credits it accumulated because it has been using accelerated tax deductions for capital investments to lower its taxable income, said Dwight Jacobs, the company’s chief accounting officer. That bumped it up against tax-code rules that limit tax credits, leaving $1.8 billion in unused credits on Duke’s books. Under the proposal, the company could get that within months instead of years.
The proposal “would give us more cash today and that would cause us to avoid borrowing money that we would otherwise have to borrow,” said Mr Jacobs.

And

Under the tax code, companies can claim credits for activities encouraged by the government. Among the largest are credits for conducting corporate research, funding low-income housing, and producing renewable energy….
Unlike deductions, which lower taxable income, credits reduce a company’s tax bill directly. But there are limits. Companies can generally offset only 75% of the taxes they owe by using credits. Any leftover credits can be used for one previous year or up to 20 years in the future.

Sound complicated? That’s the point. This isn’t a matter of helping out Duke, et al., with a particular section of the tax code. This is a matter of a too-complicated tax code.

We need, badly, to simplify it. A single, low rate, with no deductions, subsidies, credits, or other froo-froo would be suitably simple.

Better, would be eliminating corporate taxes altogether. In the end, the taxes a business pays are just costs passed on to customers in the form of higher prices; the taxed business doesn’t itself pay very much of its tax liability.

Either move would be doubly beneficial: more money left in the company’s coffers for R&D, marketing, capital improvement, jobs, wage increases from the reduced/eliminated taxes. More money also would be left in the company’s coffers for R&D, marketing,… from the reduced/eliminated tax compliance costs.

And all of that adds up to lowered prices for the company’s customers.