Student loan forgiveness and price controls are advocated by those who think money is some magical thing that creates goods and services.
As pointed before, that works by pretending that there are no experts recommending doing in specific circumstances, it is only when ideological blinders are present that one can’t see that there are cases where one has to consider it, the sick greediness of medicine manufacturers in the US is one.
Some insulin producers blame insulin’s prices on the cost of innovation. However, Mayo Clinic hematologist S. Vincent Rajkumar dismissed this claim in a paper published by Mayo Clinic in January 2020. Rajkumar wrote that limited innovation exists when it comes to insulin, and that what matters more is affordability. This sentiment was echoed in the April 2019 House hearing when Rep. Mckinley (R-West Virginia) said, “Innovation is supposed to drive prices down, not up.”
The bipartisan United States Senate Finance Committee staff report, “Insulin: Examining the Factors Driving the Rising Cost of a Century Old Drug,” that was released Jan. 14, 2021, stated, “Eli Lilly reported spending $395 million on R&D costs for Humalog, Humulin, and Basaglar between 2014 and 2018, during which time the company spent nearly $1.5 billion on sales and marketing expenses for its insulins.”
The report also cited instances of 100-year-old drugs still going up in price. Every time a pharmacy dispenses therapeutic insulin, manufacturers pay PBMs administrative fees as high as 5 percent of the drug’s wholesale acquisition cost, the Senate staff report states.
In essence, it is what I pointed in other threads, there is a perverse incentive in some industries to be as greedy as they can be, and it is now clear that it is mostly the Republicans that want those perverse incentives to continue.
One more thing: As the cites I made show, the CEOs and corporations are the ones that do think that they are doing magic, for them and their shareholders.
“It’s the economy stupid” was created by James Carville in 1992. Right now people are struggling to survive financially.
Of course, then one would expect the Republicans to be concerned about it too…
Nah…
I read a book recently titled Doom: The Politics of Catastrophe by Niall Ferguson (Ferguson is a conservative writer and is employed as a Fellow at the Hoover Institution.) I don’t agree with all of Ferguson’s conclusions in the book, and he has written about some of them recently in op-eds.
However, I do think he is incredibly astute in one of his prime observations: people really like to explain things with narratives. He calls it the “narrative” fallacy. He points to how it is often historians and political observers who attempt to create these narratives, and then they generally get popularized into the culture. He points to, for example, the breakout of WWI–which genuinely surprised foreign policy experts across the Western world, very quickly a narrative formed laying blame for most of it to the German decision to begin a naval buildup in the late 1890s, and everything that followed after that was all a consequence of this decision. This was and to some degree even still is the popular narrative.
Another instance he points out is the 2008-09 crash of the subprime mortgage market and the resultant great recession, an event which, again, confounded almost all the experts of the time. The narratives around this event are not quite as well formed yet, in part because different partisan groups have developed different narratives. However, a popular narrative that emerged quickly explains it all as being the end of a chain of decisions starting with Ronald Reagan’s deregulatory instincts in the early 1980s. The nice thing about this narrative is it allows people who are prone to do so, to lay blame at the feet of Republicans and big business.
Are either of these narratives false? Ferguson doesn’t come down really hard on either point, his larger point is that what is false is the belief that you can explain them with simple narratives, he promotes a theory that complex human relationships have become so incredibly complex that it is very rare and usually wrong to believe a single narrative explains them. In a recent op-ed, he ties his argument into the current inflation to point out that (and he’s tooting his own horn) he predicted when the pandemic was starting that because of how complex our societies have become, a pandemic was going to have a cascade of catastrophes to follow. Most of which we would be ill equipped to understand or respond to in real time, and that this was going to have resulting political and economic consequences.
I think this is a pretty good explanation. I think inflation is heavily tied to the pandemic, but not in the simple narrative way people like @Sam_Stone attempt to paint it (he is trying to do the classic political narrative, paint it as the result of bad Democrat decision making.) The reality is the pandemic disrupted the economy, and the economy is so complex we don’t know how to respond to it. For an idea as to how complex the economy is–the weather is monstrously complex, it requires multiple supercomputers to make weather predictions. These predictions are quite often wrong. But they are actually often correct. The Federal Reserve and top economic research institutions around the world have complex economic models to try and understand economics. They have a worse track record of predicting inflation and recession since 1970 than we do of predicting severe weather. And severe weather forecasts are frequently wrong.
This isn’t because economists are stupid (or meteorologists), the underlying systems are just massively complex. That means it is extremely difficult to create a model that can predict their behavior with accuracy. We have actually done a better job of it with weather than with the economy.
The idea that anyone actually knows what is going to happen next with inflation is fairly facetious, frankly. When the best economists in the world using the best models get it wrong more often than not, it is ego to assume you can explain it with a simple politicized narrative.
A simple narrative is that we pumped money into the economy so that causes inflation. That ignores that the pandemic also massively disrupted JIT supply chains, which caused supply shocks and rapid price increases. That ignores that there is a decent chance the pandemic directly contributed to Russia invading Ukraine. Vladimir Putin has been reportedly deathly afraid of covid exposure, and lives in a bunker like mentality with almost no regular contact with outsiders; it has been widely reported he has become obsessed with Imperial Russian restorationist literature and whatever forbearance and guile he once have may have been diminished by a couple years of paranoid obsessing in the Kremlin; which may have been the final straw that pushed him into deciding on a very risky and likely-disastrous no matter the outcome invasion.
The pandemic has also challenged the way the PRC’s leadership governs the country and led to stubborn Xi to cling mightily to his concept of Zero Covid largely as an act of administerial ego, this has directly affected the economy and inflation.
The involvement of both Russia and Ukraine in the present war is particularly disastrous–between them they represent a big chunk of the world’s supply of fertilizer, exported oil and gas, and wheat. All of these are vital inputs into the global economy.
TLDR–this shit is complex, and it is probably not something pundits focused on politics are going to correctly predict and if they do it will almost certainly be out of sheer luck, not any actual understanding of what’s happening.
The best thing about inflation is it gives the left opportunities to point out the problems that are hardwired into capitalism. That does, however, require strong unions and organizers and parties and organizations to make the case, and those have been savaged over the last 45 years. There are signs of real activity and awakening, though!
People are always struggling to survive financially. Right now most people in America are not struggling all that much. Unemployment is low, foreclosures are fairly low, as of June 2022 the household saving rate in America had continued a string of monthly increases.
Again, people are always struggling. But looking at aggregate data we aren’t yet in a period of particularly high struggle. High prices are bad, but it appears household budgets are largely able to absorb them. There is no guarantee that trend continues.
And given the #1 driving principle behind all economics is psychology, these predictions very likely make themselves come true.
Respectfully disagree to suggest the driving principle of most mainstream economics is to justify and maintain “exploiting the workers! By ‘angin’ on to outdated imperialist dogma which perpetuates the economic and social social differences in our society. If there’s ever going to be any progress…”
I agree with a lot of what you posted, but there is a nitpick here, While Reagan played a part, I do remember that part of the blame landed on President Clinton and the way he listened to the neo-liberals and past economists that wanted to continue the removal of regulations to the banks.
As smiling_bandit and others commented then:
I normally find Ferguson to be extremely offputting, but there may be a grain of truth in that depending on how far he takes it. I think it’s more a fault of political commentators than historians, though. Each generation of historians make their bones by upending all the narratives of the previous generation. I can’t say that I’ve ever seen a consensus that WWI is based on the German naval buildup; every history I’ve read likes to find a different pathway, and the number of historians who find the British as root cause is surprisingly large.
Almost all online discourse (sorry) is based on the premise that you can explain the world with simple narratives. (As you say, the inflationistas in this thread are an example of the “if your solution is a hammer, then all problems look like a nail” school.) I find that exasperating at best. Worse, anyone trying to introduce complexities gets ignored or steamrolled.
Weather predictions are an interesting example, but perhaps not in the way you think. Forecasting models have improved enormously in my adult years, because of more computer power and improved data collection. Most weather can be given out many more days than when I was young, when even a day or two tasked their capabilities. Models, however, depend on future cause and effect being similar to past cause and effect. Ordinary day-to-day weather falls into this category. Climate change, however, tends to make what once were low probability events - events which were generally thrown out of models as outliers - higher probability. Forecasters now have to decide whether to include what were once, say, 1% events because they are now, say, 5% or 10% events. And they generally do not have sufficient data to know this. That’s a major reason why severe weather predictions seem to fail.
The economy is also changing. What were once basic cause and effect predictions now have a new mixture of causes and new sets of effects. This does not imply that historical data is no longer useful. Indeed, we’ve learned much about the necessity for heading off destructive spirals before events like 2008 can reoccur.
Making annual forecasts of economic disaster is like making annual forecasts of hurricane disaster: sooner or later you will be right. But you almost certainly will not be able to predict a specific location and time or the specifics of the disaster.
It’s somewhat easier to say what won’t happen. We won’t see hurricanes over the Great Lakes. We won’t see disaster because the Fed has been “printing money.” Almost everything else is too complex to talk about. The fundamental paradox is that the future can’t be predicted yet every move should be made based on our predictions of what the future will be like. That his paradox cannot be resolved gives rise to most of the dissatisfactions in the world.
The economy was much better under Trump than Biden. We were energy independent. Biden’s solution is to beg Saudi Arabia for oil and make them richer instead of producing it at home where it provides jobs and taxes.
Biden is useless and this thread is a weak attempt to put lipstick on a pig.
Yes, the Trump presidency ended in 2019. All the best historians agree on it.
We had some of the largest increases in unemployment and largest falls in equity prices in history under Trump. Were you unaware of this? The economy has largely grown every month that Biden has been in office and the unemployment rate has steadily gone down and the labor force participation rate has steadily gone up. [By the way, I’m simply debunking your wrong comments, I don’t blame Trump for the covid economy and I don’t actually credit Biden much for the post-shutdown era recovery. As always, the effect of the President on the economy is magnified probably 100x versus reality in these threads and in popular discourse.]
This is not factual and can be disproven by even extremely simple Google searching. We also produce more energy right now than we did at any point in Trump’s Presidency–the Department of Energy actually has an information agency that puts this stuff out, it isn’t a matter of opinion.
And I stopped just there.
https://www.cnn.com/2022/03/15/politics/energy-independence-fact-check/index.html
For example, in both periods, the US exported more crude oil and petroleum products than it imported. It also produced more primary energy than it consumed.
But none of that means that the Trump-era US did no energy importing at all. From the beginning of Trump’s term to the end, the US very much relied on oil and gas from abroad.
In 2020, Trump’s last full year in office, the US imported about 7.9 million barrels per day of crude oil and petroleum products. That was down from prior years – the US imported more than 10 million barrels per day in 2016, President Barack Obama’s last full year – but still a whole lot of foreign energy.
In fact, contrary to prominent Republicans’ suggestions over the last month that the US had just recently started consuming Russian energy under Biden, US energy imports from Russia spiked during the Trump presidency.
And that isn’t the only thing Republicans have gotten wrong.
So, nah X10
The other hilarious thing about the falsehood is energy production had decreased rapidly under Trump after its 2019 peak. Everyone knows why, and it has nothing to do with politics. Unlike in a video game world, shutting down oil wells, gas fields, and shuttering excess generation capacity that was not needed due to the sudden economic pullback of the pandemic isn’t like flipping a light switch. It literally took the last 18 months for them to get things back up and running–it wasn’t even until preliminary data for right now that we seem to be hitting our total energy (in quadrillion BTUs or “quads” as the EIA calls it) production from pre-pandemic, and that is despite massive demand–there are limits out in the real world to how fast business can move.
It takes real human beings to go and restart this stuff and get things going again, many of whom decided to take early retirements during the pandemic.
Just as it’s silly to blame Trump for the decline in energy production (which he largely had no control over), it is equally silly to blame Biden for it taking more than a year and a half for production to start to hit where it was pre-pandemic.
We have a (1) lot of refineries, and (2) many more refineries that can handle sour crude than most countries do. It’s been the case for many years that we import crude, refine it, and export the finished product. So to point to our petroleum imports, as you do, and claim that it’s evidence of energy dependence, is both specious and ignorant.
You actually show that it is very important to not look at the bigger picture and accept the exaggerated and misleading talking points by the Republican “leadership” by not reading the cite that I already made.
https://www.cnn.com/2022/03/15/politics/energy-independence-fact-check/index.html
Multiple reasons for foreign imports
Amid the US boom in oil and gas production from hydraulic fracturing, better known as fracking, the quantity of US imports of crude oil and petroleum products has been trending downward since early in the second term of President George W. Bush. But there are numerous reasons why the US doesn’t just stop importing entirely.
One key reason is that there is a mismatch between many of the refineries in the US, which were designed to handle heavy crude oil, and the lighter crude that is produced in the US through fracking.
Another reason is that domestic energy production isn’t sufficient to fulfill the needs of all US refineries – for which it can be profitable to buy low-cost unfinished energy from abroad, turn it into higher-value petroleum products, and then export some of those products. Colgan noted in an email that even at moments when the US is a net exporter of oil, “it remains tightly integrated into the world market for oil, constantly exporting some grades of oil to foreign customers while importing other grades of oil into the United States. Same for oil products like gasoline and diesel.”
Geographic factors are also at play. For example, refineries in California have relied on imports, some from Russia, because importing has been cheaper than getting oil shipped from various parts of the US, such as the Permian Basin in the Southwest, to which California has no pipeline connection.
Unless the US shifts completely to renewable or nuclear energy, Krane said in an interview, “we are going to be tethered to supply lines that stretch halfway around the world whether we like it or not.”
Incidentally, knowing that the claim of energy independence came from Trump, it should have been one big reason to doubt his claims, as it is everything that came/comes from him.
Anyone with about 3 hours of actual study, and thought, about oil flows in the capitalist world, would understand that you can easily produce more oil than you consume and import oil at the same time. Just as you can be short on your production and still export.
I mean, XON signs a 10-year contract in 2013 to refine Bolivian oil in Houston. That’s an import. Just because America becomes ‘energy independent’ in 2018, whatever that means, doesn’t mean that XON will cancel that contract. So they’re still importing oil.
To be fair, I am not even sure what the argument is here?