Pessimism v. Optimism

[kandrathe]

I was optimistic that this thread would not turn into a Kandrathe/Jester/Pete/etc political discussion that we have in every other thread. :D
I've now become a pessimist and believe that all threads in The Lounge sub forum will turn into the same discussion. :P
;):P

I'm sorry GG. I tried to restrain myself, but I couldn't do it. Jim hit a nerve, and it was late and I got into a free thought zone where my brain just dumps into the keyboard. A simple idea turns into a manifesto. I'm optimistic it will remain a positive conversation though. Think of it this way... We get to recycle and reuse an otherwise dead post.

[Jester]

I was optimistic that this thread would not turn into a Kandrathe/Jester/Pete/etc political discussion that we have in every other thread.

I've now become a pessimist and believe that all threads in The Lounge sub forum will turn into the same discussion.

They actually call that philosophy "realism". :lol:

-Jester

[Occhidiangela]

They actually call that philosophy "realism". :lol:

-Jester

You mean fatalism, right? :whistling:

[--Pete]

Hi,

You mean fatalism, right? :whistling:

More like flatulentism, IMHO;)

And now we've introduced chaos into the discussion :w00t:

--Pete

[Jim]

Hi :)

Atlas Shrugged by Ayn Rand is one fo my favorite books. However it was Big business that revolted against a Corrupt Goverment and the Looters/People. Ayn Rand must be turing in her grave seeing that Big business is now the Looter.:P

Galt describes the strike as "stopping the motor of the world" by withdrawing the "minds" that drive society's growth and productivity; with their strike these creative minds hope to demonstrate that the economy and society would collapse without the profit motive and the efforts of the rational and productive.

Rand set out to create a work of fiction that explored the role of the mind in man's life and the morality of rational self-interest, by exploring the consequences when the "men of the mind" go on strike, refusing to allow their inventions, art, business leadership, scientific research, or new ideas to be taken from them by the government or by the rest of the world.

http://en.wikipedia.org/wiki/Atlas_Shrugged

"In Atlas Shrugged, Rand tells the story of the U.S. economy crumbling under the weight of crushing government interventions and regulations. Meanwhile, blaming greed and the free market, Washington responds with more controls that only deepen the crisis. Sound familiar?"

Yaron Brook, "Is Rand Relevant?"
The Wall Street Journal, March 15, 2009

[kandrathe]

Atlas Shrugged by Ayn Rand is one of my favorite books. However it was Big business that revolted against a Corrupt Government and the Looters/People. Ayn Rand must be turning in her grave seeing that Big business is now the Looter.:P

Mine as well. :) I'm not sure I'm seeing the big business looter that you are, but corporate welfare perhaps. Which industry are you thinking about? The bailout banks and AIG maybe? From what I remember from summer 2008 to spring 2009 there was much arm twisting by the government for some of the rescues. Chrysler is gone, and GM was forced into government ownership. There were many veiled threats. Also, I would say that the corrupter of government has been and remains the influence that money can buy, and corporations are tainted here. It takes two sides though; those who are buying the favors and those who are selling them.

It's a pretty popular Washington tactic to demagogue "Big Business", mindless greed and their huge profits. But, when you look into the truth of the matter, its just some politician with an axe to grind or making political hay to get the blood pressure up within their constituency and deflect blame to convenient scape goats. Like the big health insurance companies which are by and large non-profit corporations now, and those that are for profit can hardly stay solvent. Or, the tobacco/alcohol companies (now I detest smoking and there are many social ills from alcoholism, but I uphold peoples freedom to have vices).

[Jester]

Like the big health insurance companies which are by and large non-profit corporations now, and those that are for profit can hardly stay solvent.

This is slightly exaggerated (3.3% profits on a very large industry is not "non-profit"), but the sense of it is true: health insurance companies are not making high profits. The argument for getting around them is that they are inefficient parasites on health care provision, not that they are making massive profits.

The pharmaceutical companies, on the other hand, are making a killing.

-Jester

[kandrathe]

This is slightly exaggerated (3.3% profits on a very large industry is not "non-profit"), but the sense of it is true: health insurance companies are not making high profits. The argument for getting around them is that they are inefficient parasites on health care provision, not that they are making massive profits.

The pharmaceutical companies, on the other hand, are making a killing.

I was thinking specifically of Blue Cross/Blue Shield which provides health insurance for about 100 million Americans. But, even looking at the for profit side, do you really think 3.3% profits for a group of companies (some are higher, some are lower) trading publicly held stock is viable? Remember that the group health scheme exists because of the last health care overhaul in Washington (1973). HMO's were created to enforce the governments rules to keep health care providers from jacking up prices. Would we think then that "government" is going to be able to administer health care more efficiently than HMO's who are struggling to eek out a very small profit?

As for pharmaceuticals... Again, you can read the laws of supply and demand, coupled with federal intervention. "Moving a drug through laboratory studies and then animal and human testing requires on average 12-15 years and more than $800 million in direct and indirect costs." Due to FDA requirements, there is a constriction in the funnel of what drugs can get to market. The barriers to entry for bringing a new idea to market are high, limiting the competition. Then, what they are selling is innovation, so with a patent, they get a de facto monopoly on their product for a number of years. It has certainly been aided in the past few decades by the Bayh-Dole Act, and the Hatch-Waxman Act. Finally, because we are so worried about drug testing, we create a barrier to foreign competition increasing the power of American drug manufacturers. They have protected monopolies in the US, and can also attempt to compete in the global economy as well. One thing that might help would be to open up the US market to foreign competition, by trusting some non-US drug testing regulatory apparatus.

Edit: Also, I found this article on misrepresentation of Drug company profits helpful. 15% to 18% is not obscene.

[Jester]

Edit: Also, I found this article on misrepresentation of Drug company profits helpful. 15% to 18% is not obscene.

You're correcting a mistake I didn't make. My link said 16.5%, right in line with yours. Variance is one thing, but that's still a very profitable industry. If that was just legitimate profits, I would have no problem with it. But much of it is rents, accumulated from the bizarre US system, which generates major incentives to overperscribe, and almost no ability for bargaining at the provider level.

For pharmaceutical companies, money could be saved by reducing their rents. For HMOs, money could be saved by simply eliminating that entire step in the process.

-Jester

[Jim]

Hi :)

Being a Randest means your pro Big Biz. Rand's writtings are about Good big biz not the looters like the Health industry who's profits are the result of customer grief.

A good read :wub:

http://www.realclearmarkets.com/articles/2...in_the_san.html

February 27, 2009
The Ayn Rand Factor In the Santelli Revolt.

In January, Stephen Moore caused a stir by arguing, in the Wall Street Journal, that the current crisis is turning Atlas Shrugged "from fiction to fact." And those who are warning that increased government restrictions will cause the nation's most productive workers to withdraw their talents have taken to calling this the "John Galt Effect," a reference to the hero—and the main plotline—of Atlas Shrugged.

It is no coincidence that the strongest resistance to a government takeover of the economy is coming from people influenced by Ayn Rand. She has long functioned as a stiffener of resolve and as the fountainhead of pro-free-market ideas.

[kandrathe]

You're correcting a mistake I didn't make. My link said 16.5%, right in line with yours. Variance is one thing, but that's still a very profitable industry. If that was just legitimate profits, I would have no problem with it. But much of it is rents, accumulated from the bizarre US system, which generates major incentives to over-prescribe, and almost no ability for bargaining at the provider level.

For pharmaceutical companies, money could be saved by reducing their rents. For HMOs, money could be saved by simply eliminating that entire step in the process.

-Jester

Another solution would be to amend the law to create a 4th type of patent. Drugs for human treatment could be protected for a shorter period of time, but that time period starts after FDA final approval for sale to the public begins. I fear the result would be fewer inventions, however.