Thursday, October 16, 2014

Politics in Our Healthcare

In 2011, Gilead Sciences, a major biotech firm, purchased another company called Pharmasset for over $10 billion.  Pharmasset had been losing money, as its experimental drug for hepatitis C was still in late-stage testing and had not yet been approved by the Food and Drug Administration (FDA).

For such a large amount of money, this acquisition seemed really risky for Gilead Sciences.  But in our world of politicized healthcare, it is not so much about serving customers as it is about hiring good lobbyists with political connections.

Gilead hired Joseph Grogan, who previously lobbied for another biotech firm.  He also was a senior policy advisor for an FDA commissioner during the previous administration.  Grogan was also the executive director of an advisory council that included the CEO of Gilead.  It is amazing how almost everyone and everything seems to be connected in Washington DC.

In addition to Grogan, Gilead also hired several lobbying firms with strong connections in DC.  The lobbyists went to work quickly.

Not only did Gilead need to get FDA approval for its drug, but they also needed a recommendation from the U.S. Preventive Services Task Force so that the federal government and insurers would pay for screenings.  Gilead needs to find a good customer base for a drug that costs about $1,000 per pill.  (And we wonder why healthcare and insurance are so expensive?)

Playing Politics With Medicine

Unfortunately, the government – and this would include government at all levels – is completely entrenched in our healthcare system today.  There is very little left in the way of a true free market.

It is not a completely socialist system, but it is a mostly fascist system.  The federal government is the main insurer for most people over 65.  For everyone else, it dictates most of the rules.

The U.S. healthcare system was already a mess before Obamacare.  It is just an even bigger mess now, with one more layer of rules and bureaucracy.

For these big pharmaceutical companies to survive, they basically have little choice but to lobby Congress, FDA officials, and anyone else that matters.  They can spend a few million dollars in lobbying in order to make billions.  This isn’t really a matter of defending what they’re doing, or even condemning it.

It is a matter of pointing out this is a corrupt system.  Unless the political power is significantly reduced, the corruption and favor trading is going to continue.  If Gilead Sciences doesn’t do it, then another company will.

The FDA should be abolished.  The private marketplace can do the job of testing and certifying the safety of drugs more effectively and far cheaper.  At the very least, a step in the right direction would be to make the FDA advisory instead of mandatory.  People should be able to make their own choices on whether to take a drug.  They can take into account the possible risks and the possible benefits.

Of course, government needs to get out of the healthcare business altogether.  It should not serve as an insurer and it should not dictate what insurance companies should and shouldn’t cover.

The reason that healthcare and the associated insurance are so expensive is because there is almost no element of the free market left.  While the 1950s was far from perfect, the healthcare system in the U.S. was far superior to what we have now in terms of cost and service.  The technology is obviously better now, but everything else is far worse.

As long as there is great political power in the healthcare industry, we should expect to see lobbyists and political favors dictate profits and losses far more than voluntary consumers.

Wednesday, October 15, 2014

Volunteering Is Not Allowed

One of the recent outrages from government comes from a winery.  Bill and Jill Smyth are closing the doors of their small operation – Westover Winery – after getting fined $115,000.

So what crime or violation did they commit?  Were they selling wine that was dangerous to drink?  Were they selling wine under a false label?  Were they selling to minors?  Was there a safety hazard in their workplace?

No – it was none of those things.  They are being fined $115,000 because they committed the horrible act of allowing volunteers to work in their winery.

Yes, that is right.  The Smyth family owes a six-figure fine and is being forced to shut its doors because it is not paying the minimum wage to people helping out.

It should come as no surprise that this is coming from the left coast of California, one of the least business friendly states in the U.S.  The winery was issued a citation in July for not paying workers the minimum wage and the associated insurance premiums and taxes.  The citation and fine came without a warning being issued first.

One state official said, “People should be paid for their labor.  The workers’ compensation violations are very serious.  What happens if someone has a catastrophic injury at the winery?”

We can be sure that the government officials are looking out for the best interest of the volunteers and do not selflessly care about getting tax money or exerting power over others.

Minimum Wage, Maximum Pain

The state officials are missing a key point in all of this and that is the word “volunteer”.  The people working at the winery were not being forced to do it.  They wanted to do it, even though they weren’t getting paid.

This is a small winery that is only open 10 hours per week and which profits about $11,000 per year.  But some people wanted to work there, even for no wages.  They were excited about the opportunity to learn about making wine and operating a business.  One volunteer said he dreams of opening up a winery one day, so this was a great learning opportunity for him.

Isn’t this the same as an internship?  Why do people do internships that are unpaid?  They do them to learn and to gain experience.  They can potentially lead to employment and business opportunities that do pay.

But the Department of Industrial Relations in California does not like any volunteering in a for-profit business.  If you are going to volunteer, it should be for something that “serves” the people, such as the government.

These bureaucrats really have nothing else to do but to make the lives of other people miserable.  They are putting the owners out of business, they are wrecking the opportunity of volunteers to learn about something that interests them, and they are denying customers the chance to buy wine from this place.

In addition, other wineries have taken note of what happened.  Any wineries with volunteers are quickly letting them go.  They do not want to experience the same fate.

It actually amazes me that there are any businesses left in the state of California.  As long as there is not widespread outrage over stories like this, then the anti-business policies will likely continue.

If vineyards were more common in Texas and Florida, then many of these wineries would probably be moving there by now.

Wednesday, October 8, 2014

Labor Participation Rate Helps Unemployment Numbers

The latest jobs report came out on Friday.  The big news is that the unemployment rate went down to a six-year low of 5.9%.  There was a surge in hiring in September, as employers added 248,000 jobs.  The July and August numbers were also revised upward.

Obama wasted no time in celebrating the numbers, claiming that part of the good news is due to decisions that he and his administration made early on in his presidency.

Of course, things are a bit more complicated than that.  Before we get excited about an improving economy, we need to consider some factors.

These are the government’s job numbers, so we have to consider that they are somewhat biased.  There are over 7 million people who are working part-time jobs, but who would prefer full-time work.

We must also consider that real wages are stagnant at best.  If you consider the disastrous healthcare system, including Obamacare, health insurance premiums are skyrocketing.  So if you include this into salaries, then overall wages are going down quite a bit.

In other words, if wages are going down, then the market should clear to at least some extent.  It is certainly better for people to be working and making less than not working at all, but this is not some great celebration when you take it in context.

We must also consider than the Federal Reserve has quintupled (five times) the money supply over the last 6 years.  It has also maintained a policy of near zero interest rates.  This has certainly fueled something of an artificial boom, meaning that some of the jobs created are likely a misallocation of resources based on false signals.  In other words, it will likely reverse at some point when the artificial boom is exposed.

Labor Participation Rate

Perhaps the most shocking thing about these statistics is the labor participation rate.  The number of adults in the United States who are working has fallen to just under 63 percent.  That is down from about 66 percent before the 2008 recession.

This low rate is the lowest it has been since 1978.  For 36 years, the percentage of adults working has been higher up until now.

So how is there such a low labor participation rate and yet an unemployment rate that has gone down below 6%?  Obviously, there are more people who are not officially looking for jobs, which actually helps bring down the unemployment rate.

The problem here is that we don’t know why there are so many less people interested in working.  Is it because spouses are making so much more money?  This would have to be a small minority of people, since wages are stagnant.

Is it mothers choosing to stay home and homeschool?  Is it people working jobs under the table and just not reporting it?  Is it people going back to school full time?

I imagine that it is a combination of many of these things.  I can imagine a scenario where a mother might be able to get a low paying job, but she decides to stay home with her kids and save the daycare expense, assuming that the family can get by with her husband’s income alone.

There is always a cost-benefit analysis and most families will do it, even if not formally on paper.  Why would a mother work for $60 per day when it costs $40 per day to send her child to daycare?  It is a rational decision not to work.

While we may be able to celebrate that there are a few more mothers staying home with their young kids, we have to ask if it is happening naturally or because of government.

The government and central bank are to blame for the unemployment, the low wages, and the lack of job availability.  The government has managed to get millions of Americans who no longer want to work because they see more of a benefit of not working.  Or they can find better work that doesn’t get reported to the IRS.

The unemployment/ jobs picture is a lot different than what is being played in much of the so-called mainstream media.  The unemployment has improved a bit from 5 years ago, but that isn’t saying much.  It is not as rosy as it sometimes appears.

This is not to blame it all on Obama, although he certainly shares a large part of the blame.  He definitely shouldn’t be going around bragging about the low unemployment rate.  By the time he is unemployed, the numbers may look worse than they already are.

Sunday, October 5, 2014

Student Loan Forgiveness For Those Already Getting Taxpayer Money

Richard Blumenthal, the Democratic senator from Connecticut, has put forth a proposal to help those with student loan debt.  But this would only apply to those who get a job at a qualifying nonprofit organization, which would include government jobs.

Certain employees would see a gradual decrease in their outstanding student loan debt, with total forgiveness coming after 10 years.

It should be no surprise that a politician wants to buy votes.  But it is especially interesting that he wants to offer this vote-buying program only to those who choose not to work for a private, for-profit company.

Blumenthal stated, “Teachers, police officers, public health workers and other public servants should be applauded and supported – and not drowned in debt to pay for the degrees many such jobs require.”

So if this is the senator’s stance, then I guess he believes it is acceptable for private sector workers to drown in debt in jobs that require a degree.

One of the reasons that many cities and states are in so much trouble financially is because of promises made to government workers.  In particular, it is the huge pensions that are being paid to those who worked in professions such as teachers and police officers.

In other words, Blumenthal wants to hand over more taxpayer money, in the form of government loan forgiveness, to those who already are sucking the taxpayers dry.

Free Market Wages

Some people think I am against teachers, firefighters, and librarians, but I’m really not.  Some people think they are overpaid and some think they are underpaid.  I don’t really think either way, but the high demand for these occupations seem to indicate that they are generally overpaid by market standards.  But I’m sure there are some really great teachers and firefighters who should probably make more, and would make more in a free market.

The problem is that these are mostly government occupations.  The wages paid to the government employees are somewhat arbitrary.  The wages are not being determined through a free market pricing system, the way that other wages are determined.

It is no surprise that a Democratic senator in Washington DC wants to praise government work and buy votes.  It is no surprise that he considers them public servants, while he implies that private sector employees aren’t serving.  In reality, he has it mostly backwards.

If his proposed law became a reality, then it would be an added benefit for government employees.  This means it would be an added expense for taxpayers.  Since the free market isn’t determining the wages of these employees, it is easy for some windbag senator to come in and attempt to arbitrarily add benefits.  Who is to say whether this is deserved?  It certainly isn’t the free market.

Government Solutions

This is another case of where the government creates a problem and then just creates more problems by trying to solve the previous one.

It is the government that has encouraged and subsidized student loans, which has also contributed to the enormously high tuitions.  Now that the economy is weak and wages are down (thanks to the government and central bank), many young people are in over their heads with student loan debt.  It is mostly a government-created problem.

So the solution is obviously more government.  Just forgive the student loans and put the taxpayers on the hook for paying it back.  And only give this benefit to those who are in the nonprofit sector, particularly those who already get their full salary and benefits from the taxpayer.

Ultimately, I don’t think this proposed legislation will pass.  It is too blatant of a vote-buying program.  Sometimes the politicians need to learn to be a little more subtle.

Friday, October 3, 2014

The US Forest Service Backtracks

The U.S. Forest Service has a proposed directive that requires a permit for taking photos or videos under certain circumstances in wilderness areas.  This would apply to millions of acres of federal lands.

It was first reported that these rules would apply broadly, making exceptions only for coverage of breaking news.  With expensive permits and possible fines up to $1,000, this story started getting some traction.

Many opponents of the announcement are saying that it would violate 1st Amendment rights to free speech.

After the criticism picked up some steam, the U.S. Forest Service quickly backtracked.

The U.S. Forest Service Chief Tom Tidwell stated, “The U.S. Forest Service remains committed to the 1st Amendment.  To be clear, provisions in the draft directive do not apply to news gathering or activities.”

They are now claiming that the proposed directive would apply to those doing commercial filming in wilderness areas and that no permit is needed for journalism or recreational photography.

It is easy to think of reasons that the original intent may have been to limit all photography and filming.  It is an act of control.  It is a way to stop bad press.  Government agencies don’t like bad press.  If there is some kind of land mismanagement (which there certainly is), then the bureaucrats managing it certainly don’t want to be questioned or exposed.

Of course, at up to $1,500 per permit, the government can always use some extra cash in its pocket too.

The First Amendment and Property Rights

While I certainly side with those that fight government secrecy and those that quote the Bill of Rights, I think the argument of the 1st Amendment is overused.

In this particular case, there is certainly an element of free speech and free press.  But in most cases where the 1st Amendment is cited, it is usually an issue of property rights, or a lack of property rights.

It is said that you should be able to speak freely except in certain situations, such as yelling “fire” in a movie theater, when there is no fire.  But it really comes down to who owns the movie theater and what his policy is regarding this.

In most movie theaters, the owner doesn’t want you falsely yelling “fire”.  In fact, he probably doesn’t want you yelling anything unless there is an actual emergency.  If you are disrupting other customers, the owner of the movie theater (or a manager on his behalf) may tell you to leave, and it should be his right to do so.  It is his property, so he gets to dictate the terms of the speech.

When property rights are existent and respected, then there usually isn’t any issue about free speech.  It is up to the owner of the property.

So you can see the problem in the case of the U.S. Forest Service.  The problem comes about because it is so-called public land.

Why does the federal government own millions of acres of land?  It owns a large piece of the western United States.  If the land under the U.S. Forest Service’s domain were owned privately, then this problem wouldn’t exist.

In addition, a lot of other problems probably wouldn’t exist, as property owners tend to take care of their property a lot better than the government takes care of property.  It is no coincidence that most of these raging wildfires occur on government owned land.

In conclusion, it is positive news that this directive was brought to light and highly criticized.  It is positive news that it forced the agency to backtrack.  Now we need to get the government to start selling off some of this land, for the sake of our liberty and our environment.

Thursday, October 2, 2014

SWAT Team Raid Impersonator and Finds Drugs

There was recently a strange story out of Peoria, Illinois, although not strange in terms of the government’s use and abuse of power.  It started with Jon Daniel, who set up a fake Twitter account to make fun of the mayor, Jim Ardis.

Since the politician in question naturally didn’t like that someone was imitating him and making fun of him, he sent in the SWAT team last April.  It was done in the name of “false personation”.

But the story took a twist when the authorities found marijuana.  But it didn’t belong to Daniels, the purported Twitter impersonator.  It belonged to Jacob Elliott, Daniel’s roommate.

So naturally, the authorities seized the drugs and arrested Jacob Elliott.  He now faces felony charges for marijuana possession.

This past week, a judge in Peoria ruled that the raid was legitimate and that the police had probable cause in looking for the electronic devices that were the source of the parody Twitter feed.  Unfortunately, this means that Elliott, who as far as we know had nothing to do with the fake Twitter account, is still on the hook for criminal charges for drug possession.

Government Gone Wild

This is just another example of an out of control government.  It just so happens that in this case, it is in a town of about 120,000 people.  There are so many things wrong with this case, it is hard to know where to begin.

First, what if this had been a celebrity that was being imitated?  Would the celebrity have been able to call in the SWAT team so quickly?

Politicians really hate being made fun of, so it is no surprise that this mayor sought revenge.  But ironically, because of the incident, there are now supposedly as many as 15 parody Twitter accounts of the mayor.

The second thing that sticks out to me is the level of force that was used.  Do you really need to send in a SWAT team?  Is that what taxpayer resources are going to?  If the authorities suspected it was Daniel doing it, why couldn’t they have picked up the phone and said something to him?  Wouldn’t that have been enough?

And if he refused to stop, then at least let a court decide on whether his actions were legal.  Did they really need to raid his house?  There is no indication that Daniel has denied the allegations.

Of course, the third thing that sticks out to someone who actually cares about liberty is that the drug war strikes again.  Jacob Elliott had nothing to do with the incident for which the warrant was issued; yet he is the one in trouble.  He did not harm anyone or incite anything.  He is guilty of possessing a plant.  He is another victim of the nation’s drug laws that convicts millions of non-violent people.

Meanwhile, Jon Daniel is getting help from the ACLU to sue the city for a civil rights violation.

If there is one good thing that comes out of this story, it is that the town’s mayor looks like a thug to the many thousands of people who have seen the story.  The original Twitter parody had very few followers and had almost no influence.  But because of the mayor’s ego and his lust to exercise power over others, he now faces far more heat than any fake Twitter account could have done to him.

The internet has been a great thing for exposing corrupt and lying politicians (which are many), but we should also expect them to use their power in an attempt to stop it.

Monday, September 29, 2014

Watching the Cops

With the recent death of Eric Garner at the hands of the NYPD, a bit more attention has been placed on the police in America lately.  The incident in Ferguson, Missouri has also helped people realize that the police are not always the great heroes they are made out to be.  Actually, it is the reaction of the police to the protests in Ferguson that has been even more glaring.

Like anything in life, there are good cops and bad cops.  The problem is that they hold a legal monopoly on the use of force.  And this often leads to a lack of accountability.  How many times do we see wrongdoing of cops, only for them to go on administrative leave (usually paid), while their own buddies supposedly investigate?

It usually takes a really serious incident with absolute proof before the other police will finally turn on their own.  It is only at that point that the person might be fired.  It is rare that there are criminal charges.

Personally, I think the police should be held criminally liable for their actions, even when on duty.  Some say this will restrain them from doing their job.  But that is the point.

If Eric Garner had been in a shopping mall or some other event with a private security firm, do you think it would have ended the same way?  Private security guards tend to want to de-escalate situations.


In 2011, Jose LaSalle witnessed the abusiveness of some cops in Harlem.  His stepson, who was only 16 at the time, was stopped by NYPD officers and had the sense to record the incident.  The police officers threatened the boy with physical harm, and even used racial slurs.

Frustrated with the incident and others like it, along with the lack of accountability, LaSalle later took matters in to his own hands.  He fought back with video cameras and volunteers.

He formed a group called CopWatch, which involves a small group of people going out on the streets to film the police, particularly when they are doing their stop-and-frisk activities.

LaSalle’s organization does not directly file complaints on behalf of victims of police abuse.  However, the work of him and his group has a strong deterrence effect.  It is amazing the difference in behavior of some cops who know that they have a camera recording their words and actions.

Technology and Civil Liberties

Many people today believe that our world of advanced technology is a detriment to our liberty.  Just look at the NSA and the revelations by Edward Snowden.  The federal government is collecting most of our electronic data.  We really don’t have any privacy from the government when it comes to email, phone calls, and any other computer-based communications.

However, I believe that technology, while playing both a positive and negative role towards liberty, is a net positive overall.  This story about CopWatch is a perfect example of where technology is on our side.

The majority of people in the U.S. now have a cell phone.  Most of the new cell phones have video cameras.  So most people walking around are walking around with a video camera available in their pocket.  They can usually turn it on in less than 10 seconds.

Politicians like to say that if you have nothing to hide, then you shouldn’t be afraid.  This usually applies to each new invasion of our privacy and civil liberties.  While it is a completely false and absurd statement, it is more accurate when it comes to the police.

If the police have nothing to hide, then they shouldn’t mind having cameras on them.  The good police officers have nothing to worry about as long as they keep doing their job and acting in a professional and non-abusive manner.  It is the bad cops who should be afraid of the camera.

Ironically, the NYPD recently announced its own plans to have some officers where video cameras while on duty.  This may just be to quell opposition.  But this should really be a goal of liberty activists and those concerned with police abusing their power.

Let’s have all police where cameras, or at least audio recorders, at all times while working.  Technology is cheap enough now that it is feasible.

Aside from privatizing the police, I can’t think of a better way to significantly reduce the abuse of power and to hold the police more accountable.  We can fight back with technology on our side.