The Des Moines Sunday Register published a lead article (Page 1) titled, “The rich keep getting richer”. (See link below.) Included were a number of misleading statistics or misleading conclusions based on the statistics. For example, according the think tank, Iowa Policy Project, the median hourly wage in 2016 was $16.04 per hour. 37 years ago, the average wage, adjusted for inflation, which is fair, was $15.91. The Register concluded, “This means a typical wage earner working 40 hours per week for a full year would have seen a real increase of $270.40 over a 37 year span.” While the statistics are technically true, you cannot logically conclude and that any specific person or group of people did not move themselves from a lower wage to a significantly higher wage. I’m sure it is true some people moved down while some people moved up. An interesting study would be to see how wages correlate to the number of years in the employment market. It would be interesting to know the median starting hourly rate for a young inexperienced worker versus and an experienced worker who has been in the labor market to 30 years. The fact that the average stays about the same my be a problem, but almost no one stays at the average wage for 37 years.
Another statistic was that the number of people who earned $1 million or more during specific years increased from 5,031 in 2010 to 8,325 in 2015. Their “slice” of the state’s total adjusted gross income grew 37%. Meanwhile, the number of Iowans claiming gross incomes of $40,000 to $99,999 climbed by 23% while their slice of the state’s total adjusted gross income fell 2%. First, I would venture to guess that a significant majority of the $1 million+ earners are people who sold their businesses or had other one-time income. So, again,there is no logical reason to presume that the $1 million+ club is made up of the same people year-after-year. At the same time, from 2010 to 2015 the Iowa economy was generally continuing to improve, so values and prices of businesses likely climbed. Also, in the case of an “expanding pie”, the fact that any group gets a smaller percentage of the total does not mean that their real income is not increasing.
Finally, the Register reported that their analysis of U.S. Census data showed that the bottom fifth of earners saw practically no growth in household income – going from $13,798 in 2006 to $13,848 in 2016, again adjusted for inflation. Here again, there is no logical reason to believe that the specific group of people who were in the bottom 20% in 2006 are the same people who were in the bottom 20% 10 years later. It would be interesting to know what percent of the people in the bottom 20% in 2006 were still in the bottom 20% 10 years later. My guess is there would be some, but not a majority.
As a society we need to make sure we don’t put hurdles in front of people who are trying to improve their lot in life. In many cases this means removing government created regulatory barriers to entry into certain jobs. The Register has done very good work exposing job licensing regulations that are in place more to protect existing businesses from competition and to protect the profits of licensing education businesses, than to protect the public. Yet, the Iowa Legislature has done precious little to address this real problem for low income workers who are trying to work their way up in our economy.
Link to Register article: https://www.desmoinesregister.com/story/money/business/2017/11/25/most-iowa-wages-have-stagnated-but-rich-keep-getting-richer/818770001/
The title to an essay by A.J. Spiker’s recently published in the Des Moines Register was, “Republicans must ignore pleas to raise our taxes”. (11/262017 – see link below.) The essay advocated for not raising tax rates on carried interest income – bonuses earned by hedge fund managers and real estate development managers. He urged our Senators to make sure the tax bill did not get rid of the special low capital gains tax rate for carried interest. Regular people who earn the same type of bonuses pay taxes at ordinary Earned Income tax rates. For years, carried interest has been tax at this lower special rate and those who benefit from it simply don’t want to lose it. (The same seems to be true for people in every special interest group that gets politically favored tax breaks. The ask our elected representatives to get rid of all the special tax breaks… except for mine… which is vitally important to job creation!)
I thought that a stated goal for tax reform is to simplify our 70,000+ page the tax code. In large part, this means getting rid of the many many special interest tax breaks, and then lowering the tax rates for all. If certain individuals lose their precious special interest tax breaks and actually have to pay more in taxes, so be it. They should feel lucky for what they got in the past. This is part of “draining the swam” that our President has called for. I urge our elected federal representatives to resist the tremendous pressure that they are under from those who received the tax breaks and their lobbyists, and proceed to get rid of the carried interest and many other special interest tax breaks, and lower general tax rates for all.
The November issue of Reason magazine included the article below by Katherine Mangu-Ward. I think it is an excellent example of how our government can screw things ups, no matter how good the intentions.
At the end of August, the U.S. Department of Agriculture bought 11 million pounds of cheese—that’s a cheese cube for every man, woman, and child in America—in order to bail out the nation’s feckless cheesemongers.
Secretary of Agriculture Tom Vilsack touted the aid package, worth $20 million, as a win-win: “This commodity purchase is part of a robust, comprehensive safety net that will help reduce a cheese surplus that is at a 30-year high while, at the same time, moving a high-protein food to the tables of those most in need.” (Most of the federal government’s new stockpile will go to food banks.)
This bailout of Big Cheese came on top of an $11.2 million infusion earlier in the month to dairy farmers enrolled in a 2014 federal financial aid scheme. The deal comes after months of lobbying by the National Farmers Union, the American Farm Bureau, and the National Milk Producers Federation, who were too antsy to wait for their next big cash cow to come ambling in with the farm bill.
The same week, Sen. Chuck Grassley (R–Iowa) wrote a letter to the pharmaceutical company Mylan, demanding an explanation for why EpiPens, the epinephrine auto-injectors that severely allergic people carry in case of an emergency, have quadrupled in price since 2007. Grassley cited constituents paying $500 to fill their prescriptions.
Hillary Clinton issued a statement about the price increases as well: “Since there is no apparent justification in this case, I am calling on Mylan to immediately reduce the price of EpiPens.” Donald Trump used the occasion to score points, tweeting out a story about hundreds of thousands of dollars in donations to the Clinton Foundation from the disgraced company. Sen. Amy Klobuchar (D–Minn.) echoed Clinton’s sentiment in a letter to the Federal Trade Commission: Lamenting that “antitrust laws do not prohibit price gouging,” she asked the regulatory body to look into whether Mylan has used “unreasonable restraints of trade” to keep prices high.
The summer’s cheese bailout and EpiPen price scandal are ideological Rorschach blots.Where one observer sees only the evils of the profit motive, another looks at the same fact pattern and sees the perils of an overweening regulatory state.
Vox sided solidly with the profit shamers, declaring: “We are the only developed nation that lets drugmakers set their own prices, maximizing profits the same way sellers of chairs, mugs, shoes, or any other manufactured goods would.” But pseudonymous blogger Scott Alexander of Slate Star Codex responded with a tidy reverse Voxsplanation: The cronyist Food and Drug Administration (FDA) and other government forces have squelched nearly every effort to compete with Mylan’s EpiPens, distorting the market beyond recognition via a process he chronicles in painful detail.
Mylan acquired the EpiPen from Merck in 2007, by which time the product was already 25 years old, which means the question of paying back research costs was moot. In 2009, Teva Pharmaceuticals tried to enter the market—and Mylan sued. Teva managed to get its product to the FDA anyway, only to be told that it had “certain major deficiencies,” unspecified. In 2010, Sandoz Inc. tried its luck and got bogged down in the courts, where the case still dwells. In 2011, the French drug company Sanofi made a bid to gain approval for a generic, which was delayed for years because the FDA didn’t like the proposed brand name. Which brings us to this year, when Adamis decided to sell plain old pre-filled epinephrine syringes directly to patients without the fancy injector. Cue an FDA recall, on the rather vague basis that insufficient study had been done on standard administration of a drug whose medical properties have been known since the turn of the last century.
And sometimes the tangled, dysfunctional relationship between big business and big government gets even more personal. The CEO of Mylan, Heather Bresch, is the daughter of U.S. Sen. Joe Manchin (D–W. Va.), which probably makes things awkward in the Senate cafeteria. But Manchin has joined his colleagues in saying that he is “concerned about the high prices of prescription drugs,” which probably makes things awkward at Thanksgiving. Then again, Mylan spends over a million dollars a year lobbying, which likely goes a long way toward smoothing things over.
In 2014 Congress passed the School Access to Emergency Epinephrine Act, which Grassley mentions in his letter. The law, he writes, “provides an incentive to states to boost the stockpile of epinephrine at schools.” It was co-sponsored by Klobuchar, the same senator who now wants to sic the antitrust dogs on Mylan. That law was a top lobbying priority for Mylan that year, along with new rules that reduced competition for generics.
Grassley also notes that the taxpayers are picking up the tab for kids who are getting EpiPens while on Medicaid or the state-level Children’s Health Insurance Program, and he adds that some 47 states require or encourage schools and other public institutions to stock EpiPens. In other words, Congress created a huge new class of price-insensitive EpiPen customers and now wonders why the price has gone up.
Meanwhile, the prescription laws still require you to get a special piece of paper from a doctor every single time you want to buy an EpiPen. If the doctor writes a brand name on that paper, it’s illegal for the pharmacist to give you a cheaper generic.
The story of the government cheese is just as convoluted. It’s easy to be lulled by Vilsack’s sell: Helping farmers and the hungry? Sounds great! But you know what else helps move a glut of cheese off the shelves and into the hands of poor people, without requiring taxpayer dollars? Lowering the price.
That’s something the industry isn’t willing to do, and—given all the pricing rules and production quotas that have been distorting dairy markets since the 1930s—mostly can’t do. With Americans eating a record 34 pounds of cheese a year, the problem isn’t an unexpected drop in demand.The problem is a failure to allow the laws of supply and demand to function at all.
Eleven million pounds of cheese may seem like small potatoes (to mix culinary metaphors), and it is in the larger scheme of federal spending and meddling. What’s another $20 million when the debt is already $20 trillion, after all? But our typically cheerful acceptance of central control of compressed curds and injectable epinephrine shows how widespread and insidious such conditions are in our lives.
What would real free market reforms look like, and how would they come about? In this issue, you’ll read what Libertarian Party nominees Gary Johnson and Bill Weld would do in the (very unlikely) event that they won the presidency and vice presidency (page 30). Reason TV’s Jim Epstein reports on the millennial libertarian activists in Brazil who brought down a corrupt populist president (page 50). And in Detroit, an American city where public services are essentially nonexistent, we detail how residents are building DIY alternatives (page 65).
In the meantime, there is no reason to think either the tale of the EpiPens or the saga of the cheese would play out any differently under President Trump or President Clinton. Taxpayer-funded sops to farmers are as bipartisan as it gets, and there is precisely zero chance that a president from either major party would discontinue the practice. Likewise, the iron grip of the FDA on the drug approval process—and the opportunities to purchase influence in that powerful bureaucracy—will not diminish one iota, regardless of which major-party candidate becomes America’s Big Cheese in January.
The Des Moines Register recently recently ran an editorial advising us to not buy into the idea that Iowa farmers “feed the world”. As the Register documented, “Only half of one percent of U.S. agricultural exports went to a group of 19 undernourished countries that includes Haiti, Yemen and Ethiopia.” Some farmers and their supporters have a vested interest in making sure that fellow citizens hold them in a special position because they produce the food we eat. They perpetuate that meme in order to get special treatment by our government, for example by not having to either stop or pay for polluting our waters, and by receiving a 60% subsidy on their crop/revenue insurance premiums, among many others.
Every week, most of us buy food from all over the world at our local grocery stores. It may be wonderful to be able to buy local fresh food, but it is not a necessity. International voluntary free trade is what has allowed us, and much of the rest of the world, to avoid starvation when local producers fail for any reason. Farmers should be given no more credit than other producers of all kinds of products. As Adam Smith wrote in 1776 in his book, The Wealth of Nations, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.”
Link to Register editorial: http://www.desmoinesregister.com/story/opinion/editorials/2016/10/09/editorial-dont-expect-iowa-farmers-feed-world/91735242/
Many of us feel very dissatisfied about having to choose between the lesser f two evils for president. Many think that Hillary Clinton is dishonest and has been bought and paid for by large special interests, and many think that Trump is unqualified in international affairs and a braggart bully with no substance on the issues. We shouldn’t have to make the least bad choice.
Gary Johnson, former governor of New Mexico and the Libertarian Party candidate for President, is a good choice. Johnson is a down-to-earth, common sense person who believes in fiscal responsibility, social tolerance, strong defense international good will, and individual liberty. Socially, he has a live-and-let-live philosophy – you should be able to do pretty much whatever you want as long as you don’t initiate force or fraud against others, and don’t put others in danger. Fiscally, he believes the federal government should play a much smaller role in our lives. He does believe there is a proper role for government – to help protect our lives, our liberty, and our justly acquired property. He is against crony capitalism. He knows that a welfare state creates dependency. He believes that we should work together, cooperatively and voluntarily, to solve our common problems.
If you are polled about who you would support or vote for President, tell them that you are for Gary Johnson, the Libertarian candidate for president. At least that might get him into the national debates and give us a chance to learn about an alternative to the the lesser of two evils.
In the Register today, 1/30/2015, Daryl Bouwkamp, with the Vermeer Corp., advocated that the Export-Import Bank (Ex-Im Bank) be reauthorized by Congress to help exporters, such as Vermeer Corp. He wrote, “Vermeer currently serves customers in more than 60 nations – some of whom could we could not reach without financing support from the Ex-Im Bank.” I don’t understand why couldn’t Vermeer provide the financing or the guarantees needed? Are there no banks that would loan money to Vermeer or its customers if Vermeer guaranteed that the loans will be paid back? If not, why should taxpayers be on the hook?
This is a chance for Republicans to show whether or not they really mean what they say when they talk about ending crony capitalism. It appears that the exporters and bankers that use the Ex-Im Bank have become dependent on the taxpayer guarantees. We need to get back to true free market capitalism, where both the risks as well as the rewards are are kept in the private sector. If Republicans allow the Ex-Im Bank to be reauthorized, it will send a clear signal that crony capitalism is alive and well in America.
Link to article:
The Des Moines Register reported that the Iowa Department of Transportation, at the urging of the Iowa Automobile Dealers Association, has stopped Tesla Motors from allowing Iowans to test their all-electric car. Under Iowa law, it is illegal to sell new cars without going through a dealer. Auto dealers have a strong lobby in the Iowa Legislature. They want to use the force of government to prevent free market competition and voluntary free market transactions. Just like they lobby to keep it illegal for a dealer to be open on Sundays. Nobody wants these laws except the dealers. Let your Iowa legislator know what you think.
Link to Register article: http://www.desmoinesregister.com/story/money/companies/2014/09/25/tesla-test-drives-iowa-dot-west-des-moines-laws-illegal/16192477/
Today, 9/16/2014, The Des Moines Register once again reinforced the idea that there is something inherently wrong with increasing income inequality. (See “Ag economy cited in study showing growth in rich-poor gap” – link below.) In a free market, where government does not interfere except to stop fraud and force, people only become wealthy by producing things that others value and purchase voluntarily. Under free market capitalism, voluntary trade only makes every participant richer.
Unfortunately, we don’t have a free market in much of our agricultural sector. So, an important question is how did the wealthy gain their wealth. If they gained their wealth by receiving subsidies from our government, then they gained their wealth by making others poorer. Today, farmers receive various kinds of government subsidies, both directly and indirectly. For example, crop insurance premiums are subsidized 60% by taxpayers, regardless of the income or wealth of the farmer. And, crop insurance not only covers losses from natural disasters, it also covers loss of profits due to lower crop prices. There should be no subsidy at all for crop insurance, but it is particularly distasteful when the subsidy goes to the rich. So, we must blame our own government’s policies for at least some of the unjust and immoral aspects of income and wealth inequality.