18 April 2012

Republican Hypocrisy


This is no doubt how Mitt Romney and other wealthy people would like the public to see the debate. However the reality is that the government has implemented a wide range of policies that have led to a massive upward redistribution of before tax income over the last three decades. These policies have affected every corner of the market economy.
Just to take a few biggies, the fact that drugs are expensive is entirely due to government-granted patent monopolies. We spend about $300 billion a year on drugs that would cost less than$30 billion a year in a free market. The difference of $270 billion a year is close to 5 times what is at stake in extending the Bush tax cuts to the richest 2 percent of the taxpayers. (There are alternative mechanisms for financing drug research.)

If Republicans, and conservatives, are going to complain about welfare costs, they would do well to take a close look at corporate welfare.  It’s just as insidious as individual welfare, it’s extremely costly, it’s undoubtedly unconstitutional, and it provides perverse behavioral incentives.  While I have no love for welfare queens or for the pathologies that federal and state welfare programs generally encourage, it seems hypocritical to me to complain about one group of welfare recipients but not the other.  Big business is not special or irreplaceable, and if mega-corporations need government to survive then perhaps it would be better to let them die.  At any rate, principle demands that opposition to one form welfare be accompanied by opposition to all other forms of welfare.  Hopefully Republicans pick up on this point and work to end corporate welfare.

4 comments:

  1. Ron Paul was a Republican who wants to end corporate welfare but his own party along with the media do their best to marginalize him.

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  2. @Anon.- Ron Paul as the exception to general GOP condemnations pretty much goes without saying around here.

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  3. The expensive drugs would not be available at all without intellectual property. They would not exist.

    Anon.

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  4. @Anon.- your blanket statement is false. There are several drugs that have existed without the protection of IP. I'm assuming you're new to the blog, and thus have not read any of my prior takes on the market distortions caused by offering monopoly powers to pharmaceutical companies. In short, the monopoly power granted drug companies leads to malinvestment because drug companies spend lots of time and resources to find cures to diseases that are rare and/or difficult to cure when, in the absence of such market protections, they would not do so. While the platitudinous among us might be inclined to say that saving just one life justifies the expenditure of billions of dollars and thousands of man-hours, the simple fact of the matter is that resources are not infinite, which is why prices exist in the first place. My point in all this is that being able to cure rare diseases, though technically impressive, is actually quite uneconomical.

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