Thursday, October 28, 2021

Morning Reality in Five Simple Points:

SHORT TAKES: The 15% Corporate Minimum Tax; We Already Have Government Drug Price Control; Europe--No Inflation Panic; Vaccines For Poor Go Wanting; Bad Scene for The Poor In Global Work Recovery

Jonathan Tasini

Oct 28

LONG TAKE

Your Morning Reality in Five Simple Points—alright, perhaps not simple but concise. It can be a pretty desultory, if not, maddening time, eh? I’m with you—I mean, c’mon, how is it possible, in any normal world, that these yokels won’t give Medicare the power to negotiate down drug prices, which is hugely popular across every party identification label, and deny more big, outrageous profits to one of the most corrupt industries ever to operate on the planet?

So, the overriding message in these points below, mainly the last one, is to hold on to the meaning of “progressive”—it is a derivative of the word PROGRESS, not a derivative of “wishful” thinking or “magical” thinking or “temper tantrum”.

So:

1. To state the obvious, the infrastructure bill is much, much weaker than what progressives would like—and, more important, what people need (aside: repeating from some weeks ago—whoever came up with “Build Back Better” should never have a job in communications again).

This is uncontestable. You’all know this: free community college (gone) would have meant a life-time of promise for millions of folks, especially within working-class families and communities of color; 12 weeks of paid family leave (now chopped down) is still way behind the world’s standard in other advanced economies; money for broad climate change efforts like expanding electric vehicle use (a note: EVs are not issue-free—as in, the electricity to charge the cars has to come from somewhere!); and, see below, lowering drug costs.

2. The media, as usual obsessed by the political gamesmanship, has done an unconscionably superficial job (surprise!) talking about the details of the bills—partly because of laziness and ignorance, and partly because of a knee-jerk reflexive defensiveness to admit failure and learn from its mistakes. Horrendous is too kind a word.

Because they don’t read and have a casual relaitonship with economic facts, they regurgitate the nonsense about “inflation threats” and fail to put any numbers in a regular context. Say:

$3.5 trillion over a decade sounds big to people but it is a trivial amount if you also say, in the same sentence, that a decade from now, the entire annual U.S. economy will be about $32 trillion—for fuck’s sake)
Or as others have correctly pointed out, the defense budget for fiscal year 2022—ONE YEAR—will be $778 billion.

So, there is no revenue or spending problem. There never has been.

IT’S A PRIORITIES PROBLEM.

If you try to raise this with most traditional reporters, they dismiss it or deflect it—as so many did in looking at the media’s role over the rush to war in Iraq, support for really bad trade policies and on and on.

We have, generally speaking, a traditional media infrastructure run by people who just have very little interest in actual policy or facts. It’s one big gossip trading space. Ask a cable news talking head or news outlet dobbie to explain any policy element and they can’t, they go mute. “Amazing reporting” translates into “I caught Joe Manchin in the hallway and asked him—for the 1,000th time—what he wants. Scoop!!!!”. Pathetic.

3. I harp on this again…Mind-blowingly among the many specifics, giving Medicare the power to negotiate drug prices is out—an idea that would save people collectively hundreds of billions of dollars a year and is hugely popular among every political stripe.

For context, via Public Citizen:

U.S. sales of the 20 top-selling drugs worldwide totaled $101.1 billion while sales to the rest of the world totaled nearly $57 billion. In other words, the U.S. spent almost double what the rest of the world combined did on these top 20 drugs.
For 17 of the 20 top-selling drugs worldwide in 2020, pharmaceutical corporations made more money from U.S. sales than from sales to all other countries in the rest of the world combined.
For 11 of the 20 top-selling drugs worldwide, U.S. sales revenue was double revenue to the sales of the rest of the world or more.
11 of the 13 pharmaceutical companies selling these top drugs made more money in the United States from these drugs than they did in the rest of the world combined.

For context, a taste of some juicy pay packages in 2020:

Gilead Sciences CEO Daniel O’Day: $19 million (his base pay went up 34 percent; the previous year he made a total of $29.1 million)
Abbott Laboratories CEO Robert Ford: $20 million (In fact, the top seven executives at Abbott Laboratories received on average a compensation package of $11 million)
Merck CEO Kenneth Frazier: $27.6 million
Johnson & Johnson CEO Alex Gorsky: $30 million

4. We know why #3 is happening: deeply corrupt politics allowing big corporations to buy off politicians (as an aside, why does almost every media report I’ve seen on the undercutting of the power of Medicare to negotiate drug prices fail to mention how Joe Manchin’s daughter is a former CEO of a big drug company who walked away with millions of dollars right after astronomically raising the price of the life-saving Epi-Pen?)

5. Here’s where all the above leads to, the take-away, with the vote reality and the numbers that exist in Congress, with the foremost question: do you sink the bills over what isn’t in the bill today and almost guarantee having no power after the 2022 elections?

My answer is no.

Because to be a Progressive partly means trying to make Progress.

Back in June, I wrote about progressive blind spots and the muddying of long-term thinking. And this is such a moment to consider the issue again.

Yes, sure, take the anger about the Manchin/Sinema/Schrader et. al. caucus and pour it into *credible* primary challenges or, better yet, into electing more political types at every level who actually care about people, not corporate donors.

But, the truth is that if you make the argument that the bills are weak and, thus, “there is no difference between the parties”, you either need to show what your plan is to make alternative progress OR you are pretty much guaranteeing no power to do anything after the 2022 mid-term elections and opening the door back to the troglodytes (which is a bit unfair to the pre-historic troglodytes).

I am not prepared to do that—and force millions of people to live with the consequences.

SHORT TAKES

A short point about the minimum 15 percent tax on corporations which is part of how the Build Back Better bill gets paid for. I’ve said before it was a really unwise decision for the president to promise, way back during his campaign, not to raise taxes on anyone paying less than $400,000-a-year; it was a political play to appeal to people in the suburbs and the like but it makes zero economic sense to let people who earn health six-figure salaries (say, $300,000-per-year) off the hook from paying more.
The 15 percent minimum tax on corporations is good and bad. As Steve Wamhoff at the Institute for Taxation and Economic Policy says:

The proposal would ensure that the roughly 200 biggest corporations pay federal income taxes equal to at least 15 percent of the profits that they report to shareholders. These companies are technically subject to the 21 percent statutory corporate tax rate, but under current tax rules they often pay nothing, as the Institute on Taxation and Economic Policy has found time and time again.
In 2020, as the world suffered under the pandemic and the resulting economic recession, 55 large corporations reported profits to their shareholders but paid no federal income taxes.

And:

The Senate proposal is not perfect. It would not affect many of the zero-tax corporations identified by ITEP because it would only apply to corporations with profits exceeding $1 billion annually. (The bill uses each corporation’s average profits over the past three years.) There is no reason corporations reporting hundreds of millions, but not billions, of dollars in profits to their shareholders should be allowed to avoid paying taxes. Nonetheless, the corporate minimum tax is a huge step forward and a valuable component of the Build Back Better plan.

Earlier this year, I wrote about “The Tyranny Of Big PHARMA: Morally *and* Economically Foolish”, with the main theme being this: Big Pharma makes astounding profits for one reason—these companies get *lengthy* monopoly protections for medicines, tests and the technologies used to produce the medicines and tests. That’s one reason people have opposed bad global trade rules for years—these deals set up massive lists of rules that allow corporations to control money, capital and, in this case, patents to make piles of money at our expense.
So, when you read people like Joe Manchin and Rep. Scott Peters opposing a broad power for Medicare to negotiate down drug prices partly arguing the government should not be in the business of manipulating drug prices—forgetting as an aside that the Veterans Administration already does just that—the rejoinder should be: bullshit.
The government *already* grants that power—except it’s the power of patent monopolies that drug companies have to, in fact, set prices and gouge consumers.
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My colleague and comrade Dean Baker, who has dug deep into corporate intellectual property control, which he estimates costs the people $1 trillion a year (not just because of drug price control but the broader control over patents and copyrights), makes this point succinctly:
The government already controls drug prices by granting companies patent monopolies and related protections. As a result, drug companies can charge prices that are often several thousand percent above the free market price. In the absence of these protections, we would likely be spending less than $100 billion a year on drugs, for a saving of $400 billion annually.
In the short term, some sanity is prevailing across the pond within the hallowed walls of the Continent’s central bank. While here the baseless cries about “inflation!” are being used to both eviscerate badly needed social spending (see dictionary for definition of foolishness under “Manchin”) and egg on interest rate hikes (which will hurt regular people by taking more money out of their pockets), the European Central Bank is taking a more measure approach:
Via the Financial Times today (subscription):

The European Central Bank said it will keep its vast bond-buying programme running at a high pace despite rapidly rising inflation, setting it apart from other major central banks that are shifting towards tighter monetary policy.
After a two-day meeting of its governing council, the ECB said on Thursday that its €1.85tn pandemic emergency purchase programme (PEPP) would continue at “a moderately lower pace” than the €80bn-a-month level it ran at until last month.

The ECB is not an angel, trust me, and is typically used by the richer countries of the European Union to impose austerity on poorer countries. But, in this case, wise move. I am solidly on the side—duh!—of those who see short-term inflation being annoying but disappearing once people get back to work throughout the world… Of course, this depends largely on getting control over the pandemic in 2022, which does require much deeper, broad vaccination throughout the globe (see below).

You may have caught the news that Merck has granted a royalty-free license to a pill that lessens the effects of COVID infection which would, then, allow 105 countries “mostly in Africa and Asia, to sublicense the formulation for the antiviral pill, called molnupiravir, and begin making it.”
This is good, if limited (a lack of testing is still a deep problem in poorer countries which limits the ability to respond quickly to infections). But, the bigger picture of the divide between rich and poor nations when it comes to access to vaccines is woeful.
Per Oxfam (the reference to COVAX is short for COVID-19 Vaccines Global Access, a worldwide initiative aimed at equitable access to COVID-19 vaccines):

Our analysis shows that:
• Almost half (49 percent) of the vaccines sold by AstraZeneca, Pfizer/BioNTech, Moderna, and Johnson and Johnson have been delivered to high-income countries, even though such countries only comprise 16 percent of the world’s population.

• The countries of the African Union (AU) collectively have a population that is three times larger than the countries of the EU. Yet the African Union Vaccine Acquisition Trust, a vaccine procurement platform, has only been able to purchase 100 million doses from Pfizer/BioNTech and Johnson and Johnson. By contrast, the EU has been able to purchase nearly 1.5 billion doses from AstraZeneca, Pfizer/BioNTech, Moderna, and Johnson and Johnson, or approximately 15
times the number of doses compared to the AU.

• Via their bilateral deals Moderna has sold an estimated nine of every ten doses to high income countries. Pfizer/BioNTech has sold eight times as many doses to high-income countries compared to doses sold to low and low-middle-income countries.

• None of the four companies or partnerships (AstraZeneca, Pfizer/BioNTech, Moderna, and Johnson and Johnson) have sold more than 25 percent of their vaccine supply (agreed through contracts) this year to COVAX. Pfizer/BioNTech sold only one percent of its contracted supply to the initiative, Moderna only 3 percent; and Johnson and Johnson and AstraZeneca have sold 25 and 19 percent of their supply to COVAX respectively.

• Moderna has delivered an estimated 84 percent of its supply to high-income countries while the company ignores low-income countries. To date, AstraZeneca, Pfizer/BioNTech, Moderna, and J&J have collectively delivered 47 times as many doses to high-income countries compared to doses delivered to low-income countries.

And the above on the vaccines is directly related to this—a new report from the International Labour Organization tells a grim picture of the pandemic’s draining of work in middle-income and poor countries, in large part because people don’t have enough vaccine protection in poorer countries so they are either getting sick and/or the workplaces can’t reopen safely.
ILO:

The latest global estimates and country-level data confirm the unequal employment impact of the COVID-19 crisis in 2020, as well as the fragile, and often diverging, recovery trends over the first half of 2021. The number of people employed and participating in the labour force has not fully recovered and “labour market slack” remains significant in many countries. Young people, especially young women, continue to face greater employment deficits, while the situation continues
to be lagging in middle-income countries.

And:

Notwithstanding the resumption of global economic growth, overall recovery in hours worked is now flatlining significantly below pre-pandemic levels, and with a “great divergence” between advanced and developing countries. In low- and middle-income countries, fiscal constraints and slow vaccination progress are hindering recovery, compounded by additional downside risks including debt distress and global supply chain bottlenecks. Global action, including financial and technical support, provides the key for a human-centred recovery. In this regard the recent, and unprecedented, allocation by the IMF of US$650 billion in special drawing rights offers a major opportunity. To mobilize and facilitate these global efforts, the ILO will support national tripartite dialogues in Member States and convene a major international policy forum with multilateral institutions and other key actors.

A graph tells a clear story—