The Progressive Ensign

insights and analytics to build an economy that works for all

Author: Patrick Hill (Page 1 of 15)

Ignorance Over the Common Good? Blind Governance is Dangerous!

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Photo: washingtonpost.com

Something’s not right.  My grandson is not playing soccer and POTUS nominates a coal lobbyist to lead the EPA?

We all feel it.  Right in the pit of our stomach, here in Northern California, while we are being hurt by the effects climate change.  While not completely to blame, the Butte County fire storm was compounded by global greenhouse gas effects and as a possible cause a spark from an electricity wire.

Something is not right.  As we experience in the Bay Area our eighth day of unhealthy air from the Camp Fire in the Sierra foothills. Those with lung diseases are shut away in their homes, people are not going out. Businesses that depend on foot traffic are seeing losses of 10 – 20 %. Football games like the Big Game, between Stanford and California are being rescheduled to December 1st – the first time that game has been rescheduled since the assassination of President Kennedy in 1963. Local universities and colleges are closed for classes: Stanford, University of California, Santa Clara University, De Anza College and many secondary school districts.

Yet, our President nominates a coal lobbyist to head up EPA?  The mission is in the name Environment Protection Agency, Not Environmental Destruction Agency.  Coal is a fossil fuel contributing to massive amounts of gas emissions warming our earth. Heating the planet every day.  Here is the path we are on toward 1.5  degrees C and eventual extinction of the human race:

Sources: The Wall Street Journal, The Daily Shot – 11/15/18

My grandson’s soccer game was cancelled last Saturday and will be cancelled again tomorrow due to unhealthy smoke in the air.  Is this the new normal?  We don’t have to support this heresy destroying our environment, our families and our lives anymore!

Why in the world is a coal lobbyist heading up EPA?  Something is very wrong with this picture. Maybe the House Progressive Caucus has it right to camp out at Nancy Pelosi’s office the other day demanding climate change legislation.

We have accepted the status quo too long on climate change.  Industry priorities must come second to clean air, water and the planet period.

The sheer ignorance, lack of wisdom and understanding of science is killing our people, making life a struggle for thousands, shortening life expectancies and reducing the sales of legitimate businesses – all so coal companies that should be shifting their business from fossil fuels to renewables have not made the transition.  We should not be paying for coal company executive mistakes.

We need to be asking at what cost do we keep coal? It is clear the cost is too great.  We need to quit accepting the platitude  ‘it saves jobs’ and replace it with we want ‘live saving jobs’ for all. We can’t accept this environmental spiral downward for the ourselves and our planet. We must return to the Paris Climate Change agreement, renew investments in renewables, focus on clean jobs training and development.  Get on with it now, future generations and our planet are depending on us to make sound decisions and not accept blind governance one day longer.

Rents Need to Be Stabilized Now – An Innovative Approach

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Photo: newsregistrysf.com

Since 2007 there has been a 20 % increase in the number renter households while the number of owner – occupied households has barely increased.  Why?   Right after the Great Recession home lending took a nosedive as foreclosure homes were worked off the inventory and lending standards were tightened.  Builders focused on construction of multi-unit buildings where the market was more lucrative.  Banks stepped back from mortgage lending, now the federal government backs about 70 % of all home loans.

Sources: The Federal Reserve Bank of St. Louis, The Wall Street Journal, The Daily Shot – 10/24/18

So, prospective home buyers saw few opportunities for them to buy homes, while wages for the 80 % in income were stagnant they had no choice but to rent.  When the economy started to recover builders focused on high margin, luxury homes that were priced why out of the budget for first time buyers.

As cities focused on bringing more jobs into their business center building homes or apartments were a secondary priority because businesses provided more tax revenue.  By 2011,  there was a 37 % increase in the number of households paying more than 50 % of their income in rent.  There were almost 11 million households paying more than 50 % of their income in rent, that is a staggering number of people who are financially squeezed.

Source: Joint Center for Housing Studies, Harvard University – 2016

While the economy was taking off inflation increased much faster than the price of homes.  Wages were not keeping up with the rate of home price increases which averaged about 6.7 % per year. The divergence between wages and  home prices only continues to widen to the highest level since 2007.

Source: The Federal Reserve Bank of St. Louis – 2016

Between 2000 and 2018 the rate of inflation was 2.12 % versus 3.09 % so the greed factor for landlords was about 45 %.  Why are rents moving up higher than the rate of inflation?  Lack of affordable alternatives is one reason.  In places like the San Francisco Bay Area and many metro areas, there is a huge jobs versus housing imbalance. In cities like Palo Alto there is a 20 to 1 jobs to household imbalance. With little competition in under housed growing metro areas landlords can charge any price they want. There just is not enough competition to keep an apartment building owner from raising rents.

Lack of homes means renters don’t have an alternate. Landlords have control because there  are no other cheaper units nearby and the buying a home alternative is not an alternative for most working class folks with the home affordability index at its worst level in 8 years.

This lack of competition economists don’t seem to understand when rent price controls are proposed.  When there is little competition apartment owners can just keep raising rents because there is nothing stopping them from gouging the renter.

Next Steps:

Most rent initiatives usually require a cap on rents as a way to deal with the problem. The problem with this approach is it penalizes the efficient property managers with the inefficient and greedy ones. We suggest a more innovative approach to tax the behavior we don’t want and give incentives for the behavior we do want.  So if a landlord raises the rent above the normal cost of housing index by more than 1 % for a county then property taxes on the amount over would increase by 2x.  This takes away the benefit raising the rent too high, the money won’t go to the landlord it goes to the city.  If the apartment owner keeps the rent below the cost of living index by 2 %, they would receive a lower property tax by 4 % for that year, the money goes right to his pocket for running an efficient multi-unit business.  In terms of building new units, these models can be used to come up with reasonable profits to attract investors while placing the focus on high quality property management.

Purchasing a home is crucial to providing competition to landlords.  We have proposed in the past that the federal government provide incentives for builders to build less expensive homes with smaller square footage for the working class.  Cities need to set aside land for homes, not businesses and quit being so greedy about the tax revenue they would get from a potential business taking the land.  We need our leaders to make it a national priority for all families that want to own a home to be able to purchase a home on working class wages.  When people own homes, they improve the home and the yard, the neighborhoods look better and values go up.  People care more about their neighborhoods, schools and local services than when they rent an are likely to move somewhere else if the rent goes up.

Our Economic Security is Threatened By Data Breaches

Image: npr.org

Six months ago the EU General Protection of Data Regulation (GDPR) was implemented setting major fines if user data was not adequately protected.  The GDPR required that users be able to ‘opt in’ for their use of their data – which is why users see cookie permission screens when they access a web site.  The regulation gives users primary control over their data, and where it is stored.  Information on a user must be stored in a non-identified manner.  Breaches must be immediately fixed and reported within 72 hours.  Companies are required to have a Data Protection Officer person who is responsible for GDPR enforcement and support to users. Users can require that their data be erased at any time. Individuals can request a portable copy of their data as well. Violators of the GDPR can be fined up to 20 million Euro or 4 % of their annual revenues.

Seer Interactive has surveyed both EU and U.S. sites and found that EU sites were much more secure than U.S. sites.  Using simple Google index commands experts were able to glean usernames, addresses, phone numbers, and dollar figures of purchases or donations.

Source: Statista – 2018

Data breaches reached a peak in 2017 at 1,579 incidents with over 178 million records accessed.  A super incident occurred at Yahoo with over 1 billion records accessed in 2017.  In 2015 Experian, suffered a data breach exposing 15 million records. About 1 year ago, Equifax was hacked exposing over 143 million user records including social security numbers, addresses, phone numbers and bank account information.  Hearings were held by Congress but nothing happened. Except that Equifax tried to fix the problem and eventually gave into offering a free account freezing service after major backlash at charging for the service.  Identity theft is a huge issue it is the most common type of data breach at 59 % of all data incidents. There are reports of a new trend in identity theft by perpetrators sending  a ransom email after an account has been hacked showing a user’s account and password, then threatening to post private information unless a major sum is not transferred to a Bitcoin account immediately.

Next steps:

Senator Mark Warner – (D-VA) declared after the Equifax incident, “It is no exaggeration to suggest that a breach such as this — exposing highly sensitive personal and financial information central for identity management and access to credit — represents a real threat to the economic security of Americans,” We agree data breaches of the Equifax and Yahoo magnitude are a real threat to the economic security of all Americans.

So, what has Congress done about making corporations running the Internet accountable to users for their lack of data protection?  Nothing. Though two Democratic senators have tried to get legislation passed to protect users.

Senator Elizabeth Warren – (D-MA) and Senator Warner introduced legislation in January of this year to hold credit reporting agencies accountable for data breaches and user data protection.

The bill, called “The Data Protection and Compensation Act”  would hold credit reporting agencies (CRAs) accountable for safeguarding all consumer information.  The bill establishes oversight by the FTC on cyber security at CRAs.  In addition, when breaches occur penalties are awarded $100 per consumer and an additional $50 per consumer personal identification record exposed.  In the Equifax case, the penalty would total $1.5 billion. The FTC is instructed to use 50 % of the award to compensate consumers who were victims of the breach.  In addition we believe that provisions should be inserted in every User Agreement requiring that the service provider be accountable to the user, make good any harm done and report directly to the user that their account has been hacked within 24 hours.

We do have a new House of Representatives being sworn in this January, where Democrats hold a majority, so it is possible that transforming legislation like the Warren – Warner bill could be introduced.  Yet, the Senate looks to be controlled by the GOP next year so any likelihood of passage with President Trump in power is nil.  Yet, we need to keep this issue in front our our political leaders and continue the national discourse because today Internet corporations are too complacent and will continue to be until penalties have teeth to wake them up to the priority of protecting user data tightly.

Voter Turnout Highest in 100 Years As Citizens Start to Care

Photo: daytondailynews.com

Last weeks’ midterm election had the highest level of eligible voters participating in 100 years.  We need to go back to 1914 to find a comparable time when almost 50 % of the eligible voters did vote.  The turnout was higher than the presidential election of 2016 by 13 %.

Sources: The Wall Street Journal, The Daily Shot – 11-12-18

The remarkable shift is in large part due to the Trump presidency making clear that nothing short of the character of our democracy is at stake when we make choices about who our House and Senate representatives will be.

Will we go back to policies borne out of the 1930s toward nationalism, isolationism and trade wars (which led to WWII)?  Or will we move ahead, building a global community, where nations focus policies on a partnership of win – win for all, in peace.

Yet, as the ballots have been counted (though some continuing to be counted and recounted in Florida and Georgia), the political rhetoric between the newly empowered Democratic House and POTUS has started.  Hurling charges and counter charges and threats of investigations right and left.

In spite of the unacceptable behavior our politicians in Washington citizens have turned out in mass to make their concerns known with an ever more diverse House and a few new leaders in the Senate. With a diverse electorate beginning to make its voice known we can begin to build a consensus around the common good.  It is clear that we can’t move our country ahead in many areas including an economy that works for all if we don’t have people engaged.

While campaigns are often heated, with more heat than light on both sides of an issue, at least we see that people care. When people care, and get out and vote they are staking a claim in the future of our country.  That is a good thing and makes us hopeful for the future, even as torturous as it maybe to get to a better place for all in our democracy.

‘Facts’ Can’t Be Ignored in XL Pipeline Decision

Photo: commondreams.org

In a win for all those interested in using facts, science and in depth analysis to make policy decision, a federal court held in a 54 page decisions that the Trump administration had disregarded the facts prepared in a 14 volume report by the Obama administration in 2014.  In January of 2017, President Trump executed a memorandum to approve the XL pipeline project and move it along.  The State Department which has jurisdiction in the pipeline project because it crosses the US – Canadian border surprisingly used the 2014 findings to justify its conclusion that the pipeline environmental damages were ‘inconsequential’. The court held that the Trump Administration had provided no supporting evidence for their argument.

Judge Brian Morris, sitting on the Montana federal court found the government must complete a through, fact based environmental review before approving the project.  There is long standing environmental and procedure law dating back to the 1970s which federal judges have found the GOP administration trying to short-circuit to make a policy shift toward fossil fuel development. Judge Morris provided additional related findings:

  1. The State Department is issuing the approval failed to analyze the climate change impact of greenhouse gas emissions.
  2. The Department acted without complete information on the impact of the project on Indian territory and culture.
  3. The Department failed to use a ‘fact based’ set of reasons for the reversal of previous law and policy of the previous administration.
  4. The Department needed a ‘reasoned explanation’ for its finding that their were no climate change impacts from the project.

The environmental review is likely to take at least a year, the Administration is likely to appeal the ruling.

Let’s step back here a moment, the project taps thick oil from Canada oil field and pipes the oil to refineries in Oklahoma and the Gulf Coast.  Why do we need this project?  We are trying to reduce green-house gas emissions.  We know that the latest UN report on climate change estimates that within 12 years the planet will be 1.5 degrees Celsius hotter if present climate regulations and changes are implemented.  Yet, even at that level the impact would be monumental causing more damage to the planet with hotter oceans, intense rainstorms, drought, wildfires, and rising seas engulfing valuable shore line and displacing millions of people. We are already experiencing, more category 5 hurricanes than ever, wildfires that create their own windstorms racing through cities nearby in seconds, coastal areas flooding on a continuous basis and the list goes on.

Sources NRDC, The International Energy Agency -2013

Experts predict significant degree increasing impacts based on Keystone plans as outlined.  If Keystone was implemented at the 4.6 million per barrel level by 2030 there would be a 6 degree global impact. This level of global warming can’t be justified compared to the UN findings.

We applaud legal efforts of the Sierra Club, Natural Resources Defense Council, The Indigenous Environmental Network and others who focused their efforts on protecting our planet and our lives.  Maybe Jefferson and Madison’s faith in the people of this country ‘in a reasoned’ manner based on truth and facts making decisions will win out over corporate inertia and politicians that are bought off by corporate campaign contributions.

Higher Ed Fading for Low Income Students

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Photo: qz.com

Public colleges and universities have been the foundation of our society opening new opportunities for better lives, careers and mobility for students at all income levels.  Yet, for low income students the dream of a higher education degree and a better job is fading fast.  A non- profit research organization, New America, just released a report noting how low income students continue to struggle with the rising cost of education. It is true that the cost of higher education for all students has accelerated, in particular since the Great Recession. However, for lower income families the price increases have been especially acute.

Sources: New America, U.S. Department of Education – 10/31/18

The cost for low income students rose by at least $1000 in four years from the 2010 – 2011 to 2015-2016 periods for about 50 % of the public universities in the study. The report further notes a disturbing trend:

“The number of public universities that charged in-state freshmen with family incomes of $30,000 or less at an average net price under $10,000, has fallen from 361, or 62 percent of the schools examined, to 279 or 48 percent.”

Students at all income levels now carry a debt load of over $1.5 trillion dollars – the highest debt load recorded over the past twenty years.  This debt is keeping students from being hired if they have a poor credit record, purchasing a home or moving out from their parents’ home to an apartment.  New household formations are continuing to decline over the past 5 years. Unlocking the potential of our students to ensure they can begin their careers and families with a good financial start is crucial to the long term economic growth of our country and the happiness of our young people.

Next steps:

We believe that education in the U.S. is actually the Fifth Estate after The Press, and the three major branches of federal government.  We noted our concern about access to education in June post, “Funding Education to Common Good Levels Will Increase Prosperity and Reduce Civil Conflict.”  The National Center for Children in Poverty estimates that 40 % of all children aged 12 – 17 years old in the U.S. or 9.7 million are living in low income families.  This is a huge number of our young people not reaching their full potential while we miss their contributions and boost to our economy.

In that post we observed funding needs to be at magnitudes greater than today to make up for almost a 50 % reduction in state funding since 1975:

The key factor in how well education is building the common good across all income levels is funding.  Since 1975 funding by state and local governments for higher education has dropped from 60.3 % to to 34.1 % in 2010. The last eight years has seen this figure continue to drop close to 24 %. Public colleges and universities have coped with the unprecedented drop in state and local funding by raising tuition year after year to the point where students are now carrying the highest level of student loan debt ever at $1.5 trillion. Families can’t keep up with the tuition increases.”

We saw federal funding as necessary to balance the inequity across states:

“Total education US federal funding accounts for only 14 % of education spending vs OECD countries where national general funding is allocated across regions at 54 %. “

Or New America recommends that all federal higher education programs be combined together to support families and students based on a families’ ability to pay for their child’s higher education:

“At New America, we have also offered a much more ambitious approach. In our 2016 report Starting from Scratch, we proposed replacing the country’s federal financial aid system—Pell Grants, federal loans, and higher education tax credits—with a new federal-state partnership program that would eliminate unmet financial need for all students. Instead, the price students would pay would be limited to their Expected Family Contribution, the amount the government determines a household can afford to contribute toward the education of their children. Federal, state, and institutional funds would make up the difference between students’ EFC and the net price at the participating institution. “

We need high quality alternatives to a college education as well.  A study by the National Center for Education Statistics showed that 46 % of low income students did not attend college, many for financial reasons but also due to lack of interest or to start working.  From all income levels many high school graduates are not interested in a traditional college education, we need an empowering and certified apprenticeship program along the model that Germany has established to better meet the needs of corporations and give all non-college graduates opportunities for a well-paying job and career.

We as a society need to take responsibility for providing an education framework, access and funding so that all citizens can learn, progress and contribute fully to our society. Certainly this is the essence of a democracy our founding fathers envisioned of a well-educated citizenry building our country and economy that works for all.

Memo To CEOs: Invest in the Company, Not Yourself

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Photo: wikipedia.org

To: CEOs – S & P – 500

From: The Progressive Ensign

Subject: Stock Buybacks Are Out of Control

Date: November 5, 2018

Congratulations, this past quarter you knocked earnings out of the park, profits were higher in particular, though revenues lower and you did well by raising stock prices to new highs in September via stock buybacks.

Source: Standard & Poors – 11/4/18

Ok, you did well on stock compensation too with soaring stock prices.  You can take that trip to Cancun, buy a boat and a villa for extended stays.  You have worked hard, your team has gone all out to make your companies successful, and worked harder.  Remember, while you were traveling and making decisions on sales, financing, product development and marketing they are actually designing, building, shipping, selling and supporting your products and services.

Sources: The Labor Department, The Wall Street Journal, The Daily Shot – 11/5/18

Next, you have not been making the investments in capital equipment , R & D and innovation to move companies along and be prepared for more overseas competition or increase productivity. Thanks for moving wages higher for less than high school educated workers recently they still aren’t enough to keep up with inflation though. If you can increase productivity we can give workers raises without it hitting the bottom line an increasing cost, and earning would be stabilized or even get better. You wouldn’t need to use financial gimmicks like stock buy backs to take stock off the market, and goose the price so earnings look better on a per share basis.  Between 2010 and 2017 S & P companies spent 51 % of their operating earnings on stock buy backs.  That’s money just hyping stock nothing else.  Note that business investment is continuing to decline with lower highs and investments flat since 1998.

Sources: The Wall Street Journal, The Daily Shot – 11/5/18

Your joy ride on $1 trillion of stock buybacks needs to end.  We want to see a plan by the end of the month on how you will use that $1 trillion dollars in meaningful long term ways such as raising wages, job training, purchasing new equipment and systems, and innovating new products.  You are basically taking away the future of your workers and the country for your short term gain. Show by quarter how you will implement the plan and get your businesses actually growing again (in real dollars not financial gimmicks), workers supporting their families in sustainable lifestyle and making America stronger.

P.S. By the way, it is time to end your constant borrowing, rates are going up, and you spent most of the money on stock buybacks or other goodies not investing in the company.  You are mortgaging the future of the business by taking on a record amount of debt.  Please submit a plan for retiring this debt as part of your financial plan for investing in the company by the end of the month.

P.P.S.  For those of you ( a minority) who are not doing stock buybacks, thank you, and you who are spending on capex and raising wages thanks a lot!  Just submit a set of graphs showing your investments so we can show the other CEOs how it is done – as a best practice.

Dignity of Presidency We Can Agree On

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Image: YourLittlePlanet.jpg

A recent survey by the Public Religion Research Institute, showed that nearly 70 % of all Americans agreed that the dignity of the presidency had been damaged by  POTUS.  Even, GOP members agreed with this finding by 40 %.  Another point most Americans agree on is that the President should be more consistent with previous presidents by a wide margin of 69 %, the majority of GOP members agreed by 57 %.

We look to our Chief Executive to set the tone for national discourse on critical issues facing the country – not abusive language, mocking, and divisive rhetoric most of which is untrue.  It is heartening to see that most Americans see what is happening today as being out of bounds in the dignity and behavior of the present Chief Executive.  Americans still have respect, and support a President who is seen as fair, truthful and exemplifying dignity.

If we can’t get the building of civil national discourse going at the top – let’s start building from the grass roots up.  The following observations on building service in our lives is attributed to Mother Teresa:

“If you are kind, people may accuse you of selfish, ulterior motives. Be kind anyway, What you spend years building, some could destroy overnight.  Build anyway.  The good you do today, people will often forget tomorrow. Do good anyway.  Give the world the best you have, and it may never be enough. Give the world the best you have got anyway. You see, in the final analysis it is between you and your God…anyway.”

Over 80 % of Americans believe in God or some higher spiritual force.  Maybe we start with the universal understanding that as spirit beings we need to be building our communities, families and relationships with each other.

Let’s start building regardless of whether we receive a positive response in return or our motives are suspected.  The world needs nothing less than the best we have to give today to bend the arc of universal justice toward equality and peace.

Administration Drug Price Reduction Plan – Good Start

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Image: blog.medicareright.org

The GOP Administration has announced a new drug price reduction program that will use a basket of prices that 16 nations pay for certain drugs in the Medicare Part B Plan (hospital and health services plans) to determine the price the federal government will pay.  Biotech drugs which are extremely expensive, yet have high efficacy are to be targeted.  The price reductions will be phased in over a 5 year period.

The difference between what the U.S. pays for many often prescribed medicines is huge as the following chart shows:

Sources: Bloomberg, The Washington Post – 10/26/18

How did U.S. prices get so much higher than other nations?  Simply, the other countries negotiated  tougher than we did. The pharma industry lobby in Washington spends tens of millions of dollars every year to persuade lawmakers and the White House to give drug makers complete pricing freedom.  In effect, Americans are paying for the low prices other countries receive where the drugs are being sold with low margins or below margin.  Pharma companies do not have a problem with this inequitable situation as long as they make money.

For example, in the U.S. Genentech, a division of Roche, prices a single dose macular degeneration drug Lucentis at $1000 while the same exact bio medicine – Avastin costs 10 times less.  The firm says that the extra testing for the eye version requires a higher price.  This premise disputed by scientists who worked in the Lucentis division and left in part due to the greed of management.

The administration is also planning on developing ways to give the private sector more leverage in negotiating prices with drug makers.  Plus, HHS wants to create new policies that would reduce incentives for doctors to prescribe expensive drugs.

Next Steps:

We applaud the GOP Administration for taking on the drug companies and their money making over all else approach to drug pricing.  The pharma companies most affected are stung by the plan and charged it with ‘socializing medicine’.  We don’t see their gouging prices to Americans as fair and equitable, so controlling prices to reasonable margins is common sense not a value shift of the health industry.

A good place to start cutting costs is to end prescription drug TV advertising like over 100 countries worldwide ban – that would allow the firms to cut billions off prices each year.  Next, they need to end stock buybacks which take shares off the market to increase share price.

Sources: Leerink Group, Market Watch – 10/30/18

These are the top 6 of all pharma firms wasting money on goosing their stock price with stock buybacks to increase stock compensation to executives while patients get hit with soaring drug prices.  Nearly $100 billion dollars spent in the last year would go a long way to bringing down the price of drugs.  When the industry cries it does not have funding for research it needs to start here and drug advertising if they tried harder to find the money they could.  The executives just don’ want to take a pay cut and run their firm with reasonable margins, yet are fine with driving patients into bankruptcy or adding thousands of dollars of debt to patient accounts.

The GOP plan does not go far enough, all medicines purchased by Medicare and HHS should be negotiated.  The negotiating authorization for HHS has been in numerous bills in Congress repeatedly defeated in by the drug lobby.  Congress needs to pass the bill, and get moving with a fair drug pricing model, with complete transparency from insurers and pharmacies to patients.  The federal government can learn from the assertive approaches many states are taking by looking a efficacy based pricing to bring prices within reason as well.

It is time the pharma industry took a hard look at its financial engineering and redesign a more equitable pricing and reasonable profit model for patients, hospitals and suppliers.

Our Leaders Set the Tone of Civility, Yet We Can Change It

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Photo: cityofhomer-ak.gov

It is next to impossible to have a national conversation toward the Common Good when our POTUS is using threats, invective, fear, hate, mocking and inciting violence as political tools.  The national media repeats all these negative, destructive emotions which invite and give permission to those who would breed and support divisiveness and lack of compromise.  We need to wake up to the fact that the combination of authoritarian politics and instant media will undercut the voices of reason and compromise creating hurricane force headwinds for any reasonable proposal.

Our founding fathers saw that compromise was a critical element in the success of the American experiment which is why they designed a ‘compromise forcing’ structure to our government – Congress, Supreme Court, and President.  They did not want to create a parliamentary democracy as a structure because they saw the majority wielding too much power in both the legislative and executive. Yet the Elite minority and mega corporations run the show in Washington. We have a borderline authoritarian Executive branch, an uncompromising Congress and lifetime conservative appointments to the Supreme Court.  The Electoral College system undermines our democracy by allowing a President to be elected without  a plurality of votes.  The installation of a President who does not represent the selection of the majority of the people sets the stage for more divisiveness because the majority feels their ideas have been left out of the political process. Even worse is the loss of legitimacy toward the Executive branch and the policies and programs it implements.  Citizens then go after these illegitimate policies and those administering them with even more angst applying uncivil tactics to be heard.  Accosting our elected officials, and agency leaders in restaurants by heckling them or otherwise making their normal day to day life miserable is not the way to build bridges of communication, understanding and respect.

What is the antidote to this incivility?  There are at least two things we can do.  First, Melanie Rudd, an assistant professor of marketing t the University of Houston found in her studies on happiness that people felt better after they had done something kind or good for someone else.  This observation makes sense as we all can experience this feeling in our lives particularly if we grew up in a family where our parents demonstrated how service and acts of kindness made our lives happier.  Or, at work when our company leaders support charitable causes ‘doing the walk for cancer research’ etc.

Second,  as in our family or at work our identification with a group doing good things helps to create ‘kindness contagion’.  Jamil Zaki, assistant professor of psychology at Stanford University has studied kindness contagion in depth. He found that kindness can be transmitted , “We find that people imitate not only the particulars of positive actions, but also the spirit underlying them.”

So maybe by doing good things in service to others, in a group we can change the underlying spirit today toward civility, compromise and consensus moving our country forward.

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