Fred Clark has two excellent posts (here and here) about the Republican vision of the “ownership society.” I can’t help but quote this:
Sen. Majority Leader Bill Frist, R-Tenn., began his speech Tuesday at the Republican National Convention by talking about his father. “My dad, a family doctor in Tennessee for 50 years,” he said.
That would be Thomas Frist Sr., the founder of Columbia/HCA — a giant chain of more than 500 for-profit hospitals, outpatient centers and home health care agencies. HCA is worth about $20 billion.
So your basic Tennessee country doctor then.
Or this:
… The Republicans’ agenda … potentially involves a historic restructuring of the American system of government. Roughly two-thirds of taxable income is paid to workers in the form of wages and benefits. The other third goes to reward capital, or accumulated savings, in the form of corporate profits, dividends and interest payments. If Bush’s economic agenda was fully enacted, the vast bulk of these payments wouldn’t be taxed at all, and labor would end up shouldering practically the entire burden of financing the federal government.
In a new book, “Neoconomy: George Bush’s Revolutionary Gamble with America’s Future,” Daniel Altman, a former economics reporter for the Times and The Economist, describes what such a system might look like. “The fortunate and growing minority who managed to receive all their income from stocks, bonds and other securities would pay nothing — not a dime — for America’s cancer research, its international diplomacy, its military deterrent, the maintenance of the interstate highway system, the space program or almost anything else the federal government did. … Broadly speaking, that fortunate minority would be free-riders.”
That is President Bush’s goal and agenda for the next four years. Sound good to you?
Why is the National Review promoting as one of its “Editor’s Picks” a book on Islam by the spokesman for the indicted Bosnian Serb war criminal Radovan Karadzic? Are they crazy? If you will remember, Karadzic is charged with genocide of Bosnia’s Muslims.
Tariq Ramadan has a column about his visa denial. If you didn’t follow Daniel’s link to Scott Martens on this subject, it’s well worth your time.
Dennis Hastert, Speaker of the House, recently suggested that George Soros, financier and funder of liberal causes, might have gotten his money from illegal drug cartels. Soros has demanded that Hastert either back up his accusation or apologize. Hastert, manfully, will do neither.
John Feehery, a spokesman for Hastert, said, “George Soros has an agenda. He supports the legalization of drugs, and the statement stands. [Hastert] has been fighting Soros on this for years because it is a character flaw. The Speaker thinks legalizing drugs is wrong.”
Soros was unavailable for comment.
Documents filed with the Securities and Exchange Commission (SEC) say that no company official in Soros’s investment fund is involved in a criminal proceeding or a party to a civil proceeding.
I support drug legalization. Last night, I went out to dinner with some friends. Did the money come from drug barons? We just don’t know.
UPDATE: Hastert won’t apologize, but he doesn’t believe what he said. “Of course the Speaker doesn’t think he gets money from drug cartels,” said Hastert’s spokesman. He just suggested it because…. it’s funny? What?
{ 28 comments }
Matt McGrattan 09.01.04 at 7:06 pm
From this side of the Atlantic the political situation in the USA, amply illustrated by the comments by Hastert and Frist above, just seems to have parted company with anything even remotely approaching a sane, rational perspective on the world.
I mean these guys are the Speaker of the House and the Senate Majority Leader. Are they putting something in the water in Washington DC?
[I mean rational here in some normative sense. Clearly its an open question, from a purely pragmatic/instrumental view, whether acting like a lying and/or deluded, venal scumbag may in fact
be effective…]
Chris Lawrence 09.01.04 at 7:07 pm
America’s cancer research is paid for (mostly) by patent royalties on drugs; are stock-invested Americans somehow going to become immune from disease?
International diplomacy is cheap, in the grand scheme of things; it could be paid for out of tariff revenues and passport fees.
The space program? Talk about a luxury good, sheesh.
And, last I checked, maintenance of the highway system was paid for from gasoline taxes, which nobody’s talking about getting rid of (and a lot of Republicans actually want to increase).
I mean, at least he could come up with some better examples of federal programs that have substantial budget impact, like “post-secondary education subsidies,” “Medicare,” and “block grant programs that aid the poor,” some of which actually manage to have public good qualities and are actually funded from personal and corporate income-based taxes.
(Of course, a substantial portion of the adult population already pay little or nothing toward these things, since they make too little to pay income tax and receive public benefits and refundable tax credits like the EITC.)
Ted Barlow 09.01.04 at 7:32 pm
Well, I suspect that the author was trying to come up with a list of benefits that even wealthy citizens would continue to enjoy under the Republican plan. They don’t really get much out of block grant programs or post-secondary education grants.
There is a considerable public investment in medical research, specifically cancer research. It’s fine if you don’t like that on libertarian principle- maybe the drug industry would do better without federal money. I can’t prove it wouldn’t. But it isn’t right to pretend that this funding doesn’t exist.
“With taxpayers’ money,, NCI funded the R & D for the anticancer drug Taxol manufactured by Bristol-Myers. Following completion of expensive clinical trials, the public paid further for developing the drug’s manufacturing process. Once completed, NCI gave this industry exclusive right to sell Taxol at an inflationary price, about $5 per milligram, over 20 times the cost of production.
Taxol is not an isolated example. Taxpayers have funded NCI’s R & D for over two-thirds of all cancer drugs now on the market.”
And the “military deterrent” isn’t likely to be referring to international diplomacy; it’s much more likely to be referring to, you know, the military.
nolo 09.01.04 at 7:33 pm
OK, Chris– how about the defense budget?
jif 09.01.04 at 7:38 pm
The only thing in the water around here is lead, the cost of the removal of which one would presume comes from something other than drug patent royalties.
Ted Barlow 09.01.04 at 8:03 pm
Sory, Chris, I misread you- I thought that you were referring to the military deterrent as international diplomacy.
NancyP 09.01.04 at 8:05 pm
ted barlow is quite correct about federal funding of medical research. Drug companies only start spending money on research after the basic ideas have been generated and experiments showing proof-of-principle have been done, USING NIH/NCI MONEY. Furthermore, the drug companies are more interested in finding copycat drugs providing marginal new advantage (aside from patentability) than they are in finding drugs working on a new principle and potentially having major advantages. Truly innovative drugs are much more risky in terms of potential side effects, and profitability, though greater, is by no means assured. I believe Marcia Angell has just written a book on this topic of Pharma.
Lynne 09.01.04 at 8:09 pm
Republic to empire in a few easy steps.
Sebastian Holsclaw 09.01.04 at 8:16 pm
Hmm. I wonder if people on this site have heard that corporations get taxed and that dividends are paid from corporate earnings.
I’m not even a supporter of the proposal in question, but can we at least not pretend that such people would be totally avoiding taxation?
Sven 09.01.04 at 8:30 pm
America’s cancer research is paid for (mostly) by patent royalties on drugs
I’d like to see a cite for that claim. Meanwhile, take a look at Section III of this report (PDF) for an interesting look at the role public financing plays in drug research.
bob mcmanus 09.01.04 at 8:50 pm
“If Bush’s economic agenda was fully enacted, the vast bulk of these payments wouldn’t be taxed at all, and labor would end up shouldering practically the entire burden of financing the federal government.”
This is still a tactic, not a goal. The purpose is to move the tax burden to large voting middle class, so as to make tax increases very difficult. As inflationary pressures increase the cost of the welfare state, the end goal is the destruction of the social programs
and safety net.
A conservative might describe this as making the people who receive the benefits of Medicare and Social Security actually choose whether they want to pay for those benefits. As far as public or common goods, or the general benefits of these economic stabilization measures, I don’t conservatives believe there are many common goods, and obviously never heard of the Great Depression or Joseph Schumpeter.
baa 09.01.04 at 9:19 pm
nancyp and sven: I know that it has become common of late to claim that NIH grants provide “proof of principle,” at which point pharma cos swoop in to reap obscene profits. And there are certainly cases where industry has ripped off the government. Taxol, as Ted points out, is probably one such case. But as a general description of pharmaceutical development, I do not believe it is accurate. Of course, I would say that, because I’m in the industry. But consider:
Let’s say we grant that academic labs validate targets, and provide drugs that hit those target (they don’t, but let’s say), then if proof of principle means “point at which you are ~50% certain that a drug attacking a given target will actually work,” then academic labs do not provide proof of principle. More than 50% of new drugs fail during clinical trials [Here’s one source, but you can find others]. And academic/government funded clinical development is rare.
But, alas, the academic/govenrment work doesn’t even get us this far. Even if academic labs and government grants are solely responsible for identifying and validating targets (they aren’t, but let’s pretend), these labs almost never provide drugs themselves — actual “chemical matter” that both a) hits the target, and b) seems like it could actually be given to human beings. If “proof of principle” means “finding a drug that will hit the appropriate target and also be suitable for testing in humans,” then again, these sources do not provide proof of principle. This gentleman is a medical chemist who in 10+ years has *never* worked on a compound that made it to market. That’s typical.
There’s a grain of truth in the argument here, which is that government grants and academic provide basic research than immensely benefit all life science, and in particular pharmaceutical science. But the work done doesn’t take all the risk out of drug development, or (except in very, very rare cases) constitute proof-of-principle that a drug (or even an approach) is going to work out. If I may offer a (strained) analogy, DARPA money helped seed the internet. Do we then believe that the innovations the internet companies (Yahoo/Netscape/Amazon) were provided by the government. Well, in some sense, yes, I suppose so. But no one ever uses this as evidene for the parasitism of tech companies.
Robin Green 09.01.04 at 9:27 pm
Sebastian, corporation tax is a cost of doing business. It’s not something which investors would directly pay for out of their own earnings.
Robin Green 09.01.04 at 9:36 pm
Sebastian, corporation tax is a cost of doing business. It’s not something which investors would directly pay for out of their own earnings.
Do we then believe that the innovations the internet companies (Yahoo/Netscape/Amazon) were provided by the government. Well, in some sense, yes, I suppose so. But no one ever uses this as evidene for the parasitism of tech companies.
Actually, Noam Chomsky has implied that, IIRC.
Matt Weiner 09.01.04 at 10:08 pm
From this side of the Atlantic the political situation in the USA, amply illustrated by the comments by Hastert and Frist above, just seems to have parted company with anything even remotely approaching a sane, rational perspective on the world.
From this side of the Atlantic, it looks like this is wrong: The comments by Frist are garden-variety faux-populism. And the comments by Hastert are an indication that the political situation in the USA has parted company with anything even remotely approaching a sane, rational perspective on the world, but it didn’t just happen.
Matt McGrattan 09.01.04 at 10:22 pm
Matt Weiner:
Yeah, point taken with respect to Frist. It’s an example of a particularly egregious and outrageous lie in the service of populism though.
It’d be like describing the boss of Walmart as a local shopkeeper or the head of the Joint Chiefs of Staff as a footsoldier…
Robin Green 09.01.04 at 10:24 pm
We do lying a little differently over here in the UK. Ocassionally when a minister or prime minister tells a real whopper or few, the government announces an “independent” inquiry, and then emerges from it announcing full vindication, or at any rate “no-one is to blame”. Works every time.
More usually a lie is “re-clarified” (i.e. adjusted) once, twice… or as many times as necessary until the media simply get bored of the issue.
Hmm, maybe it’s not so different after all.
Sven 09.01.04 at 10:24 pm
I wasn’t trying to make a case about “parasitism of drug companies.” I’m simply questioning the specific claim that “America’s cancer research is paid for (mostly) by patent royalties on drugs” and the broader implication that public financing plays only a minor role in health research.
Giles 09.01.04 at 10:35 pm
“Sebastian, corporation tax is a cost of doing business. It’s not something which investors would directly pay for out of their own earnings”
Yes, and income is a cost of going to work – its not something poor children pay directly out of their breadwinners earnings.
Capital is taxed twice and is taxed more heavily in the US than many other developed countries. With population aging its also a mistake to think that capital income accrues mainly to the rich.
baa 09.01.04 at 10:52 pm
sven,
Sorry to attribute the wrong position to you! If the proposition were instead that the majority of cancer *drug development* is paid for by patent royalties, would you be similarly suspicious? The idea that government provides “proof of principle” for drug development (or medical device development) is currently a common trope in American policy discourse, and it seems to me misinformed. I would concur that NIH funding plays an substantial role in health research, considered broadly.
Robin Green:
Nice to know about Chomsky, thanks. However, I bet you’d find the “one drop” arguement for government research responsibility advanced far more commonly (and in more mainstream venues)against pharmaceuticals than against high tech/software.
Matt McGrattan 09.02.04 at 12:35 am
Robin: also a good point :)
Derek Lowe 09.02.04 at 2:29 am
Baa is correct. It’s only been in the past few months that I’ve heard this line about drug companies ripping off NIH. I can tell you, as someone who works for a drug company, that this statement causes nothing but incredulous looks and outright laughter among those who actually discover and develop drugs.
Suggesting a possible target is not the same as making a drug for it. There are many years of work (and many hundreds of millions of dollars) in between those two. NIH-funded research is very interesting and very important. But so is ours.
The only thing that Baa got a bit off in his comment was that not only have I never worked on a marketed drug (in 15 years of research), I have yet to work on any project where the final compound has even made it past a sick person’s lips. I wouldn’t even want to think of the millions upon millions of dollars that I have personally disposed of while searching for a drug that works. I’m still at it.
baa 09.02.04 at 2:49 am
D’oh!
Derek, you should come work for a small biotech. We give *everything* to patients.
Those looking for a locus classicus for the ‘NIH does the heavy lifting’ argument, should take a look at the work of Merrill Goozner. I say a bit of his most recent CPSAN talk, the point of which I might mean-spiritedly summarize as “med chem is easy, target validation is hard.” (and all the target validation is done on the NIH dime, naturally).
Robert 09.02.04 at 2:58 am
Netscape grew out of Mosaic. Mosaic was developed at the University of Illinois at Urbana-Champlaign. This is one of a handful of supercomputer centers in the U.S. They get federal funding. And the Internet itself was developed by federal funding. The idea back in 1968 was to have a network that would survive nuclear war.
Steve Reuland 09.02.04 at 3:16 am
Baa is correct. It’s only been in the past few months that I’ve heard this line about drug companies ripping off NIH. I can tell you, as someone who works for a drug company, that this statement causes nothing but incredulous looks and outright laughter among those who actually discover and develop drugs.
Suggesting a possible target is not the same as making a drug for it. There are many years of work (and many hundreds of millions of dollars) in between those two. NIH-funded research is very interesting and very important. But so is ours.
I think the point is that the government, using tax dollars, has an indispensible role in cancer research. As one of those academic researchers, I certainly wouldn’t downplay the role of drug companies in drug development. But it remains that their work rests on a pedestal of basic research that the NIH funds, and most of that consists of identifying particular targets that drug companies can develop inhibitors against in the first place. Correct me if I’m wrong, but as far as I know, our knowledge of the mechanisms apoptosis and angiogenesis come entirely from academic labs, yet these are some of the most popular targets for new cancer drugs.
So I don’t think it’s too far of a stretch to say that if public involvement in cancer research were to be slashed, then the pharmaceutical industry would be extremely hard hit. Either their own research would suffer greatly, or they would have to sink billions of their own money into basic research, with all the free-rider and/or duplicate efforts that would imply.
So if we all agree on the importance of the public sector in funding basic cancer research, then the question of who pays for it (wage earners vs. people who live off of unearned income) is relevant as a matter of morality.
Sebastian Holsclaw 09.02.04 at 7:05 am
“Correct me if I’m wrong, but as far as I know, our knowledge of the mechanisms apoptosis and angiogenesis come entirely from academic labs, yet these are some of the most popular targets for new cancer drugs.”
You say ‘targets’ not ‘marketed drugs’.
Which is kind of the whole point.
JamesW 09.02.04 at 10:06 am
Historical analogies for exempting the propertied classes from tax:
– Louis XIV and the French nobility. Made political sense at the time as compensation for political emasculation of the class after the Fronde and relegation to a life of cultured idleness, but a big contributor to France’s defeat by Britain for imperial primacy, and of the French Revolution; Britain was a corrupt landed oligarchy that nevertheless taxed itself.
– Mediaeval exemption of the Church and monasteries: justified originally by a general belief that prayer by holy men bought others time off purgatory, but self-defeating as wealth extinguished holiness in short order; long-term result: the Reformation.
I can’t see any comparable shreds of justification for the Republican drive to exempt capital from tax entirely, it’s just a grab.
Did pre-1917 Russian landowners pay tax?
Matt Weiner 09.02.04 at 11:00 pm
Steve Reuland:
“Correct me if I’m wrong, but as far as I know, our knowledge of the mechanisms apoptosis and angiogenesis come entirely from academic labs, yet these are some of the most popular targets for new cancer drugs.â€
Sebastian Holsclaw:
You say ‘targets’ not ‘marketed drugs’.
Which is kind of the whole point.
Sebastian, I don’t get the importance of this distinction. The original issue runs like this: Should the well-off minority be exempt from paying taxes that support cancer research, which they benefit from?
It was then questioned whether our taxes do support cancer research.
Well, if our taxes support reserach that lays out the processes that cancer drugs must target, and private enterprise produces those drugs, then aren’t people who use those drugs benefiting from tax-funded cancer research? The issue is whether taxes are necessary for the development of the drugs, not whether they’re sufficient.
And as I understand it, identifying the targets isn’t just saying “Hey! It would be great if we had a cancer drug!”; it’s actually mapping the processes that the drugs act on.
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