Brin: Regulatory Burden Discourages Health Entrepreneurs

(p. A13) Earlier this month, at a private conference for the CEOs of his portfolio companies, venture capitalist Vinod Khosla interviewed Google co-founders Sergey Brin and Larry Page, asking them if the company might jump into health care. “It’s just a painful business to be in,” Mr. Brin replied, later noting that “the regulatory burden in the U.S. is so high that I think it would dissuade a lot of entrepreneurs.”
Mr. Brin is right. As a neurosurgeon-scientist and entrepreneur who co-founded a bioelectronic medicine company that deploys implantable technology to supplant drugs, I wish he were wrong.
. . .
. . . entrepreneurs should be allowed to carve out their own turf and let patients choose their own level of risk.
Consider the case of Goran Ostovich, a burly, 47-year-old truck driver from Mostar, Bosnia. Mr. Ostovich has suffered from long-standing rheumatoid arthritis and needed near-permanent bed rest. With his hands and wrists swollen and aching, he could no longer hold on to a wheel or even play with his small children. He tried a variety of medications. None worked.
When I met Goran at his doctor’s office in 2012, however, he didn’t seem at all afflicted with the disease. That’s because, one year earlier, he had been offered the opportunity to be the first participant in a clinical trial of a new therapy based on my invention. He received a bioelectronic implant and rapidly improved.
. . .
Since news of this clinical trial’s success became public, people from all over the U.S. stricken with rheumatoid arthritis have emailed, called and sent letters pressing for their shot at potentially effective–but not yet FDA-approved–treatments.
. . .
Some patients are very willing to take a calculated risk, . . .

For the full commentary, see:
KEVIN J. TRACEY. “Let Patients Decide How Much Risk They’ll Take; Take a tip from Sergey Brin: The health-care regulatory burden stops entrepreneurs from getting into the game.” The Wall Street Journal (Mon., July 28, 2014): A13.
(Note: ellipses added.)
(Note: the online version of the commentary has the date July 27, 2014, and has the title “Let Patients Decide How Much Risk They’ll Take; Take a tip from Sergey Brin: The health-care regulatory burden stops entrepreneurs from getting into the game.”)

How a Chavista Uses Her Chávez T-Shirt

(p. A1) CARACAS, Venezuela — Mary Noriega heard there would be chicken.
She hated being herded “like cattle,” she said, standing for hours in a line of more than 1,500 people hoping to buy food, as soldiers with side arms checked identification cards to make sure no one tried to buy basic items more than once or twice a week.
But Ms. Noriega, a laboratory assistant with three children, said she had no choice, ticking off the inventory in her depleted refrigerator: coffee and corn flour. Things had gotten so bad, she said, that she had begun bartering with neighbors to put food on the table.
“We always knew that this year would start badly, but I think this is super bad,” Ms. Noriega said.
Venezuelans have put up with shortages and long lines for years. But as the price of oil, the country’s main export, has plunged, the situation has grown so dire that the government has sent troops to patrol huge lines snaking for blocks. Some states have barred people from waiting outside stores overnight, and government officials are posted near entrances, ready to arrest shoppers who cheat the rationing system.
. . .
One of the nation’s most prestigious public hospitals shut down its heart surgery unit for weeks (p. A12) because of shortages of medical supplies. Some drugs have been out of stock for months, and at least one clinic performed heart operations only by smuggling in a vital drug from the United States. Diapers are so coveted that some shoppers carry the birth certificates of their children in case stores demand them.
. . .
The shortages and inflation present another round of political challenges for President Nicolás Maduro, who has vowed to continue the Socialist-inspired revolution begun by his predecessor, the charismatic leftist Hugo Chávez.
“I’ve always been a Chavista,” said Ms. Noriega, using a term for a loyal Chávez supporter. But “the other day, I found a Chávez T-shirt I’d kept, and I threw it on the ground and stamped on it, and then I used it to clean the floor. I was so angry. I don’t know if this is his fault or not, but he died and left us here, and things have been going from bad to worse.”

For the full commentary, see:
WILLIAM NEUMAN. “Oil Cash Waning, Venezuelan Shelves Lie Bare.” The New York Times (Fri., JAN. 30, 2015): A1 & A12.
(Note: ellipses added.)
(Note: the online version of the commentary has the date JAN. 29, 2015.)

Rich Slaveholders “Posed as Plucky Populists”

(p. 267) As Hamilton tangled with Lansing, neither knew that Virginia had on June 25 become the tenth state to ratify the Constitution. Like their New York counterparts, antifederalists there posed as plucky populists, even though their ranks included many rich slaveholders. Patrick Henry, the leading antifederalist, warned delegates who supported the Constitution, “They’ll free your niggers.” George Washington noted the hypocrisy of the many slaveholding antifederalists: “It is a little strange that the men of large property in the South should be more afraid that the Constitution will produce an aristocracy or a monarchy than the genuine, democratical people of the East.”

Source:
Chernow, Ron. Alexander Hamilton. New York: The Penguin Press, 2004.

Most of Benefits of Minimum Wage Increases Do Not Go to the Poor

(p. A11) A higher minimum wage raises wages of low-wage workers, and even though most evidence points to job losses from higher minimum wages, the evidence doesn’t point to widespread employment declines. Thus, consistent with a recent Congressional Budget Office report, many more low-wage workers will get a raise than will lose their jobs. But that argument is about low-wage workers, not low-income families. Minimum wages are ineffective at helping poor families because such a small share of the benefits flow to them.
One might think that low-wage workers and low-income families are the same. But data from the U.S. Census Bureau show that there is only a weak relationship between being a low-wage worker and being poor, for three reasons.
First, many low-wage workers are in higher-income families–workers who are not the primary breadwinners and often contribute a small share of their family’s income. Second, some workers in poor families earn higher wages but don’t work enough hours. And third, about half of poor families have no workers, in which case a higher minimum wage does no good. This is simple descriptive evidence and is not disputed by economists.
A historical perspective is instructive. Assembling Census Bureau data over nearly seven decades, Richard Burkhauser and Joseph Sabia have shown that in 1939, just after the federal minimum wage was established, 85% of low-wage workers (those earning less than one-half the private-sector wage) were in poor families. Such a high percentage implies that, in that year, the new minimum wage targeted poor families well. However, as the public safety net expanded, family structure changed and more people in families began working, this percentage fell sharply over time–to around 17% by the early 2000s.
In contrast, as of the early 2000s 34% of low-wage workers were in families that were far from poor, with incomes more than three times the poverty line. In other words, for every poor minimum-wage worker who might directly benefit from the minimum wage, two workers in families with incomes more than three times the poverty line would benefit.

For the full commentary, see:
DAVID NEUMARK. “Who Really Gets the Minimum Wage; Obama’s $10.10 target would steer only 18% of the benefits to poor families; 29% would go to families with incomes three times the poverty level.” The New York Times (Mon., July 7, 2014): A11.
(Note: the online version of the commentary has the date July 6, 2014.)

For more of Neumark on minimum wages, see:
Neumark, David, and William L. Wascher. Minimum Wages. Cambridge, MA: The MIT Press, 2008.

Recovery Slows When Start-Ups Are Taxed to Pay for Bailouts of Failed Firms

Vernon Smith, whose views are quoted below, won the Nobel Prize in economics in 2002.

(p. A11) The rescue of incumbent investors in the government bailout of the largest U.S. banks in the autumn of 2008 has been widely viewed as unfair, as indeed it was in applying different rules to different players. . . .
. . .
The rescue, . . . , had a hidden cost for the economy that is difficult to quantify but can be crippling. New economic activity is hobbled if it is not freed from the burden of sharing its return with investors who bore risks that failed. The demand for new economic activity is enlarged when its return does not have to be shared with former claimants protected from the consequences of their risk-taking. This is the function of bankruptcy in an economic system organized on loss as well as profit principles of motivation.
. . .
Growth in both employment and output depends vitally on new and young companies. Unfortunately, U.S. firms face exceptionally high corporate income-tax rates, the highest in the developed world at 35%, which hobbles growth and investment. Now the Obama administration is going after firms that reincorporate overseas for tax purposes. Last week Treasury Secretary Jack Lew wrote a letter to the chairman of the House Ways and Means Committee urging Congress to “enact legislation immediately . . . to shut down this abuse of our tax system.”
This is precisely the opposite of what U.S. policy makers should be doing. To encourage investment, the U.S. needs to lower its corporate rates by at least 10 percentage points and reduce the incentive to escape the out-of-line and unreasonably high corporate tax rate. Ideally, since young firms generally reinvest their profits in production and jobs, such taxes should fall only on business income after it is paid out to individuals. As long as business income is being reinvested it is growing new income for all.
There are no quick fixes. What we can do is reduce bureaucratic and tax barriers to the emergence and growth of new economic enterprises, which hold the keys to a real economic recovery.

For the full commentary, see:
VERNON L. SMITH. “The Lingering, Hidden Costs of the Bank Bailout; Why is growth so anemic? New economic activity has been discouraged. Here are some ways to change that.” The Wall Street Journal (Thurs., July 24, 2014): A11.
(Note: last ellipsis in original, other ellipses added.)
(Note: the online version of the commentary has the date July 23, 2014.)

“If You Want to Find Something New, Look for Something New!”

(p. D8) Yves Chauvin, who shared the 2005 Nobel Prize in Chemistry for deciphering a “green chemistry” reaction now used to make pharmaceuticals and plastics more efficiently while generating less hazardous waste, died on Tuesday [January 27, 2015] in Tours, France.
. . .
He confessed that he was not a brilliant student, even in chemistry. “I chose chemistry rather by chance,” he wrote, “because I firmly believed (and still do) that you can become passionately involved in your work, whatever it is.”
Mr. Chauvin graduated from the Lyon School of Industrial Chemistry in 1954. Military service and other circumstances prevented him from pursuing a doctoral degree, which he said he regretted. “I had no training in research as such and as a consequence I am in a sense self-taught,” he wrote in his Nobel Prize lecture.
He worked in industry for a few years before quitting, frustrated by an inability to pursue new ideas. “My motto is more, ‘If you want to find something new, look for something new!’ ” Mr. Chauvin wrote. “There is a certain amount of risk in this attitude, as even the slightest failure tends to be resounding, but you are so happy when you succeed that it is worth taking the risk.”
He found the freedom to choose his research when he joined the French Petroleum Institute in 1960, and it led to his breakthrough on metathesis.
“Like all sciences, chemistry is marked by magic moments,” Mr. Chauvin wrote. “For someone fortunate enough to live such a moment, it is an instant of intense emotion: an immense field of investigation suddenly opens up before you.”

For the full obituary, see:
KENNETH CHANG. “Yves Chauvin, Chemist Sharing Nobel Prize, Dies at 84.” The New York Times (Sat., JAN. 31, 2015): D8.
(Note: ellipsis, and bracketed date, added.)
(Note: the online version of the obituary has the date JAN. 30, 2015.)

Few Founding Fathers Toiled Harder Against Slavery than Hamilton

(p. 211) The magnitude of southern slavery was to have far-reaching repercussions in Hamilton’s career. The most damning and hypocritical critiques of his allegedly aristocratic economic system emanated from the most aristocratic southern slaveholders, who deflected attention from their own nefarious deeds by posing as populist champions and assailing the northern financial and mercantile interests aligned with Hamilton. As will be seen, the national consensus that the slavery issue should be tabled to preserve the union meant that the southern plantation economy was effectively ruled off-limits to political discussion, while Hamilton’s system, by default, underwent the most searching scrutiny.
Few, if any, other founding fathers opposed slavery more consistently or toiled (p. 212) harder to eradicate it than Hamilton–a fact that belies the historical stereotype that he cared only for the rich and privileged.
. . .
(p. 213) The issue surged to the fore with the peace treaty that ended the Revolution. At the prompting of Henry Laurens, article 7 placed a ban on the British “carrying away any Negroes or other property” after the war. This nebulous phrase was construed by slaveholders to mean that the British should return runaway slaves who had defected to the British lines or else pay compensation. The British, in turn, claimed that the former slaves had been freed when they crossed behind British lines. Conceding that Britain may have violated article 7 on technical grounds, Hamilton nevertheless refused to stand up for the slaveholders and invoked a higher moral authority:

In the interpretation of treaties, things odious or immoral are not to be presumed. The abandonment of negroes, who had been induced to quit their masters on the faith of official proclamations, promising them liberty, to fall again under the yoke of their masters and into slavery is as odious and immoral a thing as can be conceived. It is odious not only as it imposes an act of perfidy on one of the contracting parties, but as it tends to bring back to servitude men once made free.

This fierce defender of private property–this man for whom contracts were to be sacred covenants–expressly denied the sanctity of any agreement that stripped people of their freedom.

Source:
Chernow, Ron. Alexander Hamilton. New York: The Penguin Press, 2004.
(Note: italics in original.)