The front page headline of the Des Moines Register on October 210, 2017 read: “Hoping To Break Even” The sub-heading read, “Iowa farmers are facing their fourth year of possible losses as they head into this year’s harvest season”. (See link below.)
The story mostly about the worries of some farmers. It painted a picture of farmers on the brink of bankruptcy for reasons that were out of their control.The Register reported, “For a good number of farmers, it will be a fourth year of losses.”
I don’t doubt that a “good number” of farmers will lose money, but it may be due to their own fault rather than factors that are out of their control… just like businesses in many other industries. There was one telling fact that contradicted the mostly emotional report: “Since 2013 Iowa farm income has dropped from $5.72 billion to $2.6 billion in 2016…” That fact makes it pretty clear that a lot of farmers are still making a substantial profit, and are not losing money.
Farmers are working very hard to make sure that they don’t lose their federal subsidies, even though they have more wealth and higher incomes than most U.S. citizens. When the current Farm Bill expires in 2018, we need to sharply reduce farm welfare subsidies.
Contrary to the opinion of almost every person who already has a government required license to work, many of the licenses required by the State of Iowa are not only unnecessary, their primary purpose seems to be to protect existing licensees against competition, rather than to protect the public.
I am sure that certain state licensing requirements do help to ensure the safety and quality of the service provided, but in almost all cases, private certification programs could serve the same purpose without involving the use of force by government, and without giving government backed protection to existing licensees. A great example of this is Certified Financial Planners (CFPs). Financial professionals who want to hold themselves to a higher standard can get this private certification, and then advertise that fact. The same is true of Realtors.
I’m sure that many licensed professionals also have various college degrees, private certifications, and other professional credentials. In many cases, these private credentials should be sufficient. Those who have them should advertise the fact, and not ask government to prohibit others from competing against them.
If President Trump wants Mexico to pay for The Wall, he can not do it by putting a tariff on imports from Mexico to the U.S. A tariff on imports is a tax paid for by U.S. consumers in the form of higher prices. If the tariff stops the imports, it will allow the higher prices to be charged for U.S. made products. It will be a “win” for the company and its workers who get the protection, but it will be paid for by U.S. citizens, not Mexico.
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.
In 1862 California passed the, “Act to protect free white labor against competition with Chinese coolie labor, and to discourage the immigration of Chinese into the State of California.” Some things never change. Even though we are not that many generations away from our own ancestor immigrants, once we get settled, we don’t want others to come in and change things.