The Scourge of Big Pharma

by Serban V.C. Enache

You can employ more people, build more living space, make new gains in science, technology, and productivity – but so long as you tolerate the leech, you will never stamp out disease, end poverty, or homelessness. The company Gilead is one such parasitical entity. Its drug called Truvada prevents and treats HIV and AIDS. For a month’s treatment, this drug costs between 1600 and 2000 dollars. Robert Grant used 50 million dollars in Federal grant money to do research, research which showed that Truvada, an old prescription drug, prevented HIV infection. Gilead shareholders get all the profits. The US Treasury gets none of it. And consumers end up paying an outrageous markup [over 26,000 and over 33,000 percent] on a drug that costs 6 dollars to make.

We have a similar case for Gilead’s miracle pill that treats Hepatitis C, which they priced at over 1000 dollars. The CEO of Turing Pharmaceuticals takes the cake, who raised the price of Daraprim [an anti-parasite drug, how ironic] from 13 dollars to 750 dollars a pill [that’s over a 5000 percent increase]. In other countries, a dose of Daraprim costs as little as 10 cents. This parasite’s name is Martin Shkreli. When a Congressman pleaded with him to think of those suffering and in need of the drug, Shkreli displayed a child-like smile, as if it was all fun and games, as if he had done or seen no evil, and then nodded in a sarcastic manner in reply to the words he heard. See it for yourselves here.

These drugs and the research behind them were made possible by the intellectual labor of scientists – labor and equipment funded almost entirely by the State, by the community at large. As such, the nation as a whole should reap the benefits, not a handful of private agents [be they firms or persons]. We need stakeholder capitalism to move forward, not shareholder capitalism. Socio-economic and technological progress is stifled by the usurer, rent-seeker, patent-holder, war profiteer classes.

Patents don’t make society richer, but poorer and should be abolished! And, if you want history, in the US, for most of the 1800s, the medical profession considered patents on pharmaceuticals unethical. If a team of scientists discovers a miracle drug, that formula should be free for any manufacturer to use – and you’d have saner markups, like 20 or 25 percent or even less. And there would be no problem if the Government paid a premium or a special pension to researchers who break barriers in these vital fields.

Today, we have a castrated political class catering to a Feudal and Financial oligarchy, while the masses remain largely passive, drugged, and intoxicated. The State is a vehicle that receives only enough fuel to drive the idle, owner class forward at the expense of everyone else; and this fuel is not composed of money or material resources, but willpower. In other words, political will is only mustered for the benefit of oligarchs and the means of death [wars], not the rest of humanity and the means of life.

Argentinian Depression

by Serban V.C. Enache

Leaving aside Venezuela for a moment, I thought we’d focus on the situation in Argentina. This article will contain a lot of graphs, so please bear with me. We will look at the symptoms and then formulate a diagnosis.

When looking at the inflation rate, we see that things started going erratic with 2014. And with 2016, it went from bad to worse.

Next, we’ll look at the Unemployment Rate and the Labor Force Participation Rate. These two graphs paint a contradictory picture. The latter went up a bit, which is good, while the former went up as well, which is bad.

How about Industrial Production? Nightmare stats for 2018 and the beginning of 2019.

Let’s get a wider view on Industrial Production. It’s a nightmare.

What about overall capacity utilization? Monstrous.

What about Monetary Policy? The Central Bank’s key interest rate is in the double digits and its highest peak in 2018 was at about 75 percent.

The interbank rate, the rate at which banks lend reserves to each other short-term, is similar to the previous graph, as is normal.

Argentina’s minimum wages graph also sheds important insight, as we see the reactive picture to the economic and financial ailments outlined previously. Labor Unions in Argentina are very powerful, and often strike during negotiations. We see that between 2010 and 2012, and between 2012 and 2014, minimum wage growth follows the same speed, more or less, but it accelerates between 2014 and 2016, and it goes even faster in the next years.

Let’s look at Argentina’s foreign exchange reserves. FX reserves have been going up dramatically compared to the 2014-2016 period. In January this year, Argentina had 60.3 billion US dollars in reserves. This situation is due to the Government obtaining money from the IMF.

Household debt to GDP tells us that from 2017 it started to grow, reaching a peak of almost 7.5 percent of GDP in 2018.

How about gasoline prices? Not what you’d expect. It actually went down by a bit in recent years.

Tax-wise, things have stayed the same. The company tax, the personal income tax, the sales tax, and social security taxes have remained unchanged. Exports remained relatively stable, while imports grew between 2017 and 2018. Argentina’s imports tend to decrease on the heels of each year.

Can’t find faults in the macros here. The Argentinian Domestic Private Sector has been building equity year-after-year since 2011. In 2017, it incurred a slight deficit of 0.9 percent. Unfortunately, the macro numbers for 2018 aren’t available yet.

Was the weather different? If you suspected something like a drought, you nailed it. During the 2017-2018 season, the country experienced drought-level moisture and high temperatures. The national average yield was almost 30 percent worse than in the previous year, with losses calculated at about 3.4 billion dollars.

Conclusion

We have a bad harvest, a collapse in industrial production and overall capacity utilization, rising unemployment, a financial bottleneck due to high interest rate monetary policy, households taking on 2 extra percentage points of GDP in debt, the negative current account almost doubling in size in one year [2017], and the minimum wage rising faster than usual due to the high inflation. Note: changes in the minimum wage impact the entire wage structure at varying degrees according to specific circumstances. Note: we should take the official stats with a grain of salt, particularly the labor figures. My friend from Buenos Aires, Diego Lattes, would be first to say so, and I’d say the same about Romania.

The Government of Mauricio Macri is an outright disaster. Inflation and economic contraction made Macri turn to the IMF. Last year his Government agreed to a 56.3 billion dollar loan, accepting in turn strict [arbitrary] targets set by that vulture institution. Mauricio Macri is center right, so that tells you all you need to know about his policies; ditto if he was center left. I reiterate, Macri’s Government is a disaster. Argentinians should reject his so-called reforms and plan to balance the budget, and should vote him out at the next election. This mess can only get worse with him in office.

Argentina requires investment. And it needed it yesterday. The mainstream media and alternative media, outlets like Zerohedge, all like to invoke the Government printing money and corruption as the cause for Argentina’s ailments. Most countries on earth print money [a crude way of saying they run fiscal deficits]. Most countries on earth are corrupt, including the developed ones, including the super powers. But how did they develop? Surely they didn’t develop by “abolishing” corruption, for lack of a better word. No. They developed through investment, through credit – they didn’t first make the output and then come up with money for it, but vice-versa. Argentina needs better policies and better people in Government.

For more information on the inflation problem, see The Cure For Hyperinflation. Solutions are found at the end of that article.

Self-seeking economists & their fans

by Serban V.C. Enache

A year ago, on Twitter, I called Ann Pettifor incompetent and Frances Coppola a bitch. I got a lot of flack because I stated my mind. I personally didn’t make a big deal of it, even though Steve Keen hopped on the thread, swearing at me, trying to get me to apologize and then blocking me and encouraging others to block me as well. Patricia Pino jumped in too to claim that I owe those two respect because reasons. And Stephanie Kelton contributed a single word, saying “shame” to me.

Now it’s been brought to my attention that there’s a big split between the heterodox camps. Pettifor and Coppola calling MMT a cult [well, there are cultists in every organization or behind any leader or set of ideas], picking various beefs with MMTers. Hacks like Jo Mitchell employing strawmen and ad hominems against people like Bill Mitchell via proxy. That sort of thing. People tried to do that to me too, labeling me a sexist because of the language I employed and the jokes I cracked. One can’t criticize the #METOO political phenomenon without being in league with the rapists, it seems. And apparently I was ruining MMT and being a racist too because I invoked Oswald Mosley’s Birmingham proposals in this post as evidence that he was one of the founders of modern money – and inside those quoted paragraphs, Mosley refers to modern money theory. I wonder if Friedman got such flack when he said “We are all Keynesians now.” As a result of all this, MMTers blocked me, many of them. And I blame them for why it’s no longer raining in Bucharest [drip, drip, rain].

Anyhow, due to this conflict on social media among and between self-seeking economists and their fanboys and fangirls, I thought I’d explain why I portrayed Pettifor as incompetent and Coppola a bitch.

Firstly, Pettifor wrote this tweet in 2015, “The concept of sectoral balances belongs to the sphere of accounting, not economics. I am not comfortable with it [using the equation in economic analysis].” I never heard a dumber thing from a professional economist. I thought she had taken down that nonsense, but she didn’t. In interviews or articles, she could never bring herself to say ‘deficit spending’ or ‘fiscal debits’ when talking about how a currency issuer funds its spending. She used expressions like “loan finance” [wuut?]. She claims “The sale of gilts provides the government with finance for investment and expenditure.” So the currency issuer funds itself by selling someone Gov debt in exchange for Gov debt? This claim violates logic and accounting. The sale of gilts has nothing to do with funding. Funding is secured through spending. I place an obligation on the public in sovereign fiat, I spend [purchasing labor and materials necessary for my goals], then I tax a portion of what I spent. Selling gilts is about draining liquidity from the buyers of the gilts and rewarding them with interest.

In one of her articles, Pettifor tries to address the issue of asset price inflation. She calls for a Tobin tax and for higher property taxes. A Tobin tax won’t fix the problem, it may dampen it by a soft measure, but it won’t stop or seriously curb speculation. Property taxes are regressive, as they penalize property owners who invest to develop their property. Property taxes incentivize idleness: less value in the property, smaller tax bill. Pettifor claims that higher land values dampen productivity. That is only partially correct, or partially incorrect. Untaxed land values are the problem. Privatized land values are the problem. But I don’t expect economists today, be they left, right, or center, orthodox or heterodox, to distinguish between Capital and the Natural Commons. It’s better to just conflate the two for some reason.

As for why I called Coppola a bitch? Well, isn’t it obvious? Because of her fake outrage. Because of the way she sets people up for drama, so she can get hits on her blog and become ‘important’ on social media. Arrogant. Preachy. Her self-entitled feminism, or faux feminism [depends on how one defines contemporary feminism]. Sore loser. Virtue signaler. The way she exaggerates things to make it seem like something extraordinary happened on her watch and only she had the wits to see it. Click-baiting. Like when she falsely advertised a few years ago that some person was debunking MMT in her blog’s comments section – but then Stelios Xanthopoulos had a looksy and it was all a bunch of strawmen. He asked where’s the actual debunking, and all Coppola was able to do was deflect – a ‘go ask him’ type of response. As for the plight of the WASPI women, Coppola’s answer “Go get a job.”

I could go on, but this is enough. At the end of the day, I have no stake in it. I don’t have books to sell you on finance and economic theory. I don’t have a career in this field, I don’t have steps to ascend. So notoriety of any kind on this subject matter earns me zero dimes. I’m not chasing University positions, book deals, or government positions. I can think, and feel, and say whatever I wish. And I hope that more people would think for themselves, instead of living their life as fanboys and fangirls, attending an endless game of soccer politics, engaged in permanent tribalism.

Land-Value Taxation & Farming

Dan Sullivan, from Saving Communities, talks on LVT and farming on his stay in Sweden in November 2014. Sullivan brings in a wide array of keen observations in terms of methodology and socio-economic consequences. Labor efficient and land inefficient firms vs land efficient ones. The different types of farmers. The different type of farms. The different interests among farm owners. Incentives and penalties. Land trusts. Appealing assessments. And much more. The video quality is only 240p, but the sound is clear.

Part 1
Part 2
Part 3

The folks from Saving Communities get everything right, especially from a moral standpoint, with a tiny observation in terms of banking operations, issue which can be tackled via asset side discipline reforms instead of full reserve banking, which has a regressive effect (doesn’t discriminate between lending for wealth creation and lending for wealth extraction) unlike the former. But I won’t get into that here – instead, I will quote their view on Money as a Common Medium and conclude this post with their Call To Action.

“Money is a common medium of exchange, without which modern production and exchange methods are impossible. Government, which demands money in taxes or as payment against necessary privileges, violates its charge if it forces taxpayers to resort to privately created money, and further violates its charge if it guarantees the value of privately created money or credit. Government’s demand for money requires that it issue enough money to satisfy the demand for money, and that newly issued money be distributed in a way that is fair to all citizens.

Government should issue enough money to maintain stable prices, with neither significant inflation nor deflation. However, it is even more important that government issue money directly into circulation rather than lending it to banks or granting banks the privilege of lending money they do not actually have.

Once money is rightfully issued, the exchange of that money is private matter, and the money itself is morally private property until it is redeemed by government.”

Justice Begins with You

“Each of us has an obligation, not only to advocate justice, but to be personally just toward ourselves and toward those with whom we interact. In this regard, charity without justice can be a device for sustaining injustice. That is, if you demand justice and another thing, you will get the other thing, and only the other thing.

In the aggregate, there is no such thing as ‘more than fair.’ That is, it is impossible to be more than fair to some without being less than fair to others, or to yourself. In every human interaction, other than that of punishment or restraint against those who had violated the rights of others, all parties should come out ahead. That is the minimum standard of justice.”

SavingCommunities.org