Pharma's Tea Partiers in a lather

The right wing came out in force last week, expressing outrage at our proposal to stimulate the economy by tripling the multibillion fines against pharma companies that violate the law.

As a group they express loud and gaseous support for the sanctity of the so-called "free market." These market jihadists in pharma's holy land blatantly ignore the fact that the industry relies on government-bestowed patents, a workforce largely educated at government schools and universities, and consumers who receive government support to purchase pharma's products through programs such as Medicare and Medicaid.

Their righteous calls for returning to a halcyon of unregulated markets disregard the fact that US actually was a laissez market economy from its founding until the mid-19th century.  Many of those same market-über alles policies such as weak regulations and anti-labor laws persisted into the early 20th century.  Far from enjoying a Friedman/Reagan garden of Eden, the US under laissez faire suffered from exploitive robber barons, starvation wages, deplorable working conditions, recurring financial panics and regular depressions.  But pharma's Tea Partiers remain ignorant of this history.  Instead they swallow whole the Friedmanite prescription for abandoning regulation in today's world, apparently oblivious to the fact that their retrograde policies would create economic catastrophe and give the country entirely to the corporate oligarchs.

One commenter believes big government regulation and oversight are to blame for pharma losing its moral compass.  Such belief constitutes pure idiocy.  Big corporations were venal in the early 1900s when the federal government was much smaller and less pervasive than it is today.

Another commenter rolls out the discredited chestnut where he claims substantially larger fines against pharmas that violated the law would cause more layoffs.  Businesses have been making that threat for centuries against taxes, regulation, clean air and water requirements and every other effort to push them toward responsible citizenship.  Their shrieks still comprise as large a sack of lies today as ever.

The market jihadists' loudest wails are mainly for poor, beleaguered pharma, a industry that in their view is unfairly bound and pummeled by a deplorable government.  They must be unaware of a U.S. Senate Committee report (see here) that showed the profit margins for pharmaceutical companies were four times greater than those of other companies, while the price increases imposed by pharma were six times greater than the general rate of inflation between 1980-1992.

US policies have been so punitive to pharma that they provided the industry with a windfall and made drug prices exorbitantly higher here than in other countries.  For example, the 2006 Medicare Part D law offers prescription drugs to seniors but it explicitly forbids the federal government from negotiating drug prices with pharmaceutical companies.  This obliges Americans to pay the highest prices in the world for prescription drugs.  Periodic efforts that would permit Medicare to negotiate drug prices have been stymied in the Republican-controlled House and by threats of a Senate filibuster.

Consider some other consequences of America's hands-off, let-the-market-decide approach to prescription drugs (see here).  The average American spent nearly twice as much for prescription medicine in 2009, compared to a decade earlier, while approximately 48 million Americans in 2010 were unable to afford prescription medications.  American patients pay roughly twice as much as their counterparts in the UK, Australia, the Netherlands and France for 30, top-selling prescription drugs.

The excessive drug prices here have actually created medical tourism industries for Canada and Mexico.  More than one million Americans travel to Canada each year to fill their prescriptions, while pharmacists in Mexico estimate that 70% of their business consists of US tourists who wish to avoid the unconscionably high prices here.

Pharma's Tea Partiers are actually too blinded by their hatred of President Obama and his policies to recognize that he is actually a tepid conservative who shares many of their views on political economy.  For example, the president uses a velvet glove to advance the Republican/Tea Party argument that large budget deficits constitute the country's major economic problem.  By failing to treat this Republican/Tea Party claim with the scorn it deserves, the president and his specific concessions to Republican deficit hawks legitimate this phony argument when, in fact, the deficit has been shrinking as a share of the national economy.

As another example, President Obama conceded as part of his "grand bargain" (more accurately, a "grand sellout") to reduce future increases in Social Security payments.  Now the Republicans' Wall Street masters have tried to privatize Social Security for several decades because they prefer to gain control of the fund's trillions of dollars.  The market jihadists are not even dissuaded from their faith by the fact that such privatized control would have impoverished millions of seniors during the 2008-09 financial meltdown created by the investment bankers.  Nor does it register with them that Social Security doesn't deepen the deficit.  To the contrary, its surpluses have been funding many of the government's other programs.

Obama would leave Social Security as a government program, but his deference to Republicans would just strangle it slowly.  That would occur because his plan calls for calculating payment increases through a "chained" price index that assumes people can choose less costly alternatives when prices rise.  Such a premise is entirely wrong.  Seniors spend a disproportionately large share of their incomes on health care and those costs, while rising faster than other living expenses, do not easily permit opting for cheaper alternatives.

Rising healthcare costs are the major reason economists expect the deficit to increase in future years.  To address this, President Obama again assents to right wingers by looking for various ways to cut Medicare.  A Republican approach that he endorses involves means testing, in other words, decreasing the benefit for seniors with higher incomes.  Although that may seem reasonable at first glance, it would effectively turn Medicare into a Medicaid for seniors, that is, a program mainly for the poor.  As such Medicare would cease being a third-rail that all seniors vehemently defend.  Instead it would become something for the powerless poor that will be an easy target for elimination.

Rather than exposing the right's attacks on Medicare as the fraud that they are, Obama basically buys into their position that the program requires substantial cuts, despite its vastly greater efficiency than private insurance programs.

Within a larger historical context, the laissez faire drivel espoused by the Friedman/Reagan jihadists has created a Southernization of American politics.  That is because the entire range of policies preferred by the free-market reactionaries -- including low-wage economic policies, voter disfranchisement, stingier, privatized social insurance, and minimal environmental regulation -- have historically been those of the Southern business elite.  Even prior to the establishment of the United States as an autonomous, sovereign nation in 1789, the Southern business elite maintained these fundamental policies.  Of course, during most of American history, this policy portfolio was firmly tied to white supremacy.  Nevertheless, the Southern objective has always been about creating cheap and powerless labor; race baiting and suppression were essentially a strategy for achieving that goal.  Now that the US is less racially discriminatory, the corporate elite throughout the country have adopted the classic Southern goals of low wages, low taxes, and a decentralized government.

So pharma's market proponents adopt the discredited policies of slavemaster traitors, exploiters and financial manipulators.  Just so long as that's clear, they're free to express their transparently deceptive views.

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