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Westlake Legal Group > Posts tagged "free market"

FREE ConservativeHome Live event with Daniel Hannan on the future of freedom

Following our successful inaugural ConservativeHome Live event last month, I am delighted to announce that the second event in the series will feature Daniel Hannan – author, campaigner and ConservativeHome columnist.

Daniel and I will be discussing The Future of Freedom in front of a live Zoom audience at 7pm on Wednesday 15th July.

After months of lockdown restrictions, unprecedented extensions of the state into the market, and amid a rising tide of puritanical ‘woke’ censorship, what does the future hold for individual liberty, freedom of expression, and private enterprise? How can Conservatives reassert the values and principles of a free society?.

Thanks to the generosity of our sponsor, Thorncliffe, this online event will be completely free to view. Audience members will have the chance to put your questions to Daniel as part of what promises to be another lively and fascinating evening of discussion and debate.

Click here to register for your free tickets.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Ryan Bourne: Why Tyrie’s attempt to make the Competition Authority more like Which? magazine was wrong

Ryan Bourne holds the R Evan Scharf Chair in Public Understanding of Economics at the Cato Institute. 

Shelves lay barren, yet the price stickers read “Buy 1 Get 1 50% Off.” Hand sanitiser was like gold dust here in Washington DC in March. Demand surged after the Covid-19 hand hygiene advice. Unsurprisingly, stores rapidly emptied of existing stock.

More surprising was the shortages’ duration. Prices usually rise with prolonged elevated demand, encouraging new supply and making consumers rethink “unnecessary” purchases or hoarding. Markets ultimately clear – providing more at higher prices.

But no adjustment came. Big chains worried about reputational risks of raising prices in a pandemic. DC’s emergency “anti-price gouging law,” meanwhile, meant small outlets opted not to bother selling at higher prices, lest they be punished for charging “more than normal.” So prices remained notionally low, but sanitiser was unavailable.

Economists oppose anti-price gouging laws for this reason. Price controls denying market realities harm economic welfare. It might seem in consumers’ interests to keep prices low by government decree to prevent “rip-offs.” But if consumers are unable to get products they’re willing to pay more for, they can be worse off collectively than with market pricing.

I remember thinking at the time that I’d never heard of such bad pricing laws in the U.K. Just two days’ later, Andrew Tyrie’s Competition and Markets Authority warned it would use existing powers to “consider any evidence that companies may have broken competition or consumer protection law, for example by charging excessive prices” during the pandemic [my emphasis].

Last week, the CMA confirmed it is investigating four pharmacies and local convenience stores for “suspected charging of excessive and unfair prices for hand sanitiser.” Under current law, the CMA must prove these retailers have abused a dominant market position.

Given none of these businesses seem likely to much affect market realities, this is really an attempt to stop price gouging by spooking retailers. The CMA wants to make an example of them to show it is “pro-consumer,” focusing on local outlets in all likelihood because consumers had fewer options to shop elsewhere, especially those without internet accdess, giving some semblance of credibility to the idea of dominance.

This absurd use of resources is befitting of Tyrie’s legacy as CMA chairman. The former Treasury Select Committee chair resigned last week, frustrated that his demand for ever-more expansive CMA powers from government went unanswered.

But, importantly, Tyrie aimed to shift the emphasis of the CMA’s role away from its bread-and-butter role of helping to regulate economic competition (such as breaking up BAA for airport competition, or blocking the merger of Asda and Sainsbury), towards beefing up its consumer protection role as well.  He synthesised by pledging that the CMA should champion the “consumer interest.”

A Social Market Foundation speech last May outlined his vision. An address on the limits of competition law quickly descended into an analysis of public perceptions about capitalism, with a sort of call to arms that the CMA should bend the knee to “what most concerns ordinary consumers,” lest it be swept away by populism.

Tyrie acknowledged he was potentially exiting his lane, but didn’t care. Competition experts – who see the most important CMA role as protecting consumer welfare through effective competition law – bemoaned his “grandstanding,” in private.

Despite his denial, Tyrie’s vision was clearly strongly influenced by a new U.S. anti-monopoly movement that says big is bad, more competitors in a market is good, and consumers face constant threats of exploitation. Economists challenge all such claims empirically. But Tyrie puts huge weight on sentiment. Consumers “feel” they are being ripped off. Even where they pay nothing, for social media, they feel terrified about data harvesting. “We are all vulnerable now,” he concluded.

Such generalisations bode ill as a guide even to the CMA’s primary role. Amazon is regarded as one of the most reputable brands in the country, as is Google. Digital advertising has lowered advertising costs for social media’s true customers, so advertising spending has plunged as a share of GDP.

Platform users meanwhile have the option of free services that economic studies find generate big benefits to them. Even on the supposed “big is bad” opposition to tech acquisitions such as Whatsapp by Facebook and YouTube by Google, opponents ignore the many more acquisitions that don’t work or consumer welfare gains from better products when they do.

But that’s the point: Tyrie wasn’t primarily animated by the idea the competitive process protected consumers’ welfare. No, what he envisaged in championing the “consumer interest” was a more populist body with huge discretionary powers marauding around stamping out practices unfavorable to some consumers, or which consumers disliked in other more subjective ways than conventional consumer welfare analysis considers.

This distinction between “consumer welfare” and “consumer interest” is crucial. Consumer welfare can be assessed and debated using facts about the structure of the market, pricing, and evidence on innovation. Consumer interests are defined by slipperier concepts of “fairness.” Someone caring about consumer welfare might consider higher prices an unfortunate reality in a pandemic market when demand rises; someone animated by the “consumer interest” might see it as unfair to some vulnerable consumers.]

A “consumer interest” champion looks at higher prices some loyal customers pay for utilities, and sees an unfair penalty. Those interested in overall consumer welfare muse that teaser rates for new customers encourage switching, pressuring companies to remain efficient to the benefit of consumer welfare. A competitive market allows companies to compete on pricing strategies too.

A consumer interest lens, then, could sometimes actually harm competition, by eliminating businesses’ opportunities to profit where reputational constraints bind on large firms or where consumer welfare-enhancing pricing strategies exist. The CMA’s ham-fisted intervention on Covid-19 prices almost certainly prolonged shortages of numerous household products, and encouraged supermarkets to remove pro-poor discount deals instead.

Now whether Tyrie is a symptom of a within-CMA attitude shift or its cause, I’m not sure. But his tenure overall accelerated a worrying push towards such discretion. On the audit market, the CMA bypassed the standard market investigations reference process designed to investigate new anti-competitive practices.

His proposals for new CMA powers, meanwhile, would have stripped protections from companies and heightened the risk of wrongful punishments. In short, he wanted the CMA to be an aggressive consumer champion and decision-maker simultaneously – “too much prosecution, judge, and jury” according to some experts.

Tyrie now promises to push his agenda strongly in the Lords. But with so much important competition activity coming the CMA’s way post-Brexit, this “consumer interest” shift couldn’t come at a worse time.

Thankfully, the Government has resisted Tyrie’s demand for power – hence his resignation. It should now select a new chair intent on returning the competition regulator to its primary role, rather than becoming the governmental arm of Which? magazine.

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Neil O’Brien: The balance of power between economic and social conservatives may be shifting to the latter

Neil O’Brien is MP for Harborough.

Are free markets and social conservatism friends, or enemies? For most of the 20th century it seemed obvious: the two were allies, up against the same common foes.

The Soviet Union and China were command economies but also command societies. They attacked private property, but also religion and tradition. If you didn’t starve in the Great Leap Forward, you could be shot in the Cultural Revolution.

By contrast, the good guys were fighting on both fronts: Solidarity trade unionists pinned to the gates of Gdansk shipyard not just their industrial demands, but pictures of the Pope. Later that decade, the Berlin wall fell and Stalin’s mocking question about how many divisions the Pope had was answered definitively: “more than you, mate”.

Today, although the Conservative Party remains the home of both social and economic conservatism, the two can have a somewhat scratchy relationship. Most Conservatives are a bit of both, though of course there are libertarian types who want to legalise drugs and tear up red tape on the one hand, and on the other there are “post liberal” types, more interested in fighting social breakdown than shrinking the state.

Where do social conservatives differ from free marketeers? They want to reduce immigration, not have free movement.

They worry that other aspects of globalisation undermine the nation state, democracy and even our security.
They worry that market forces are taking their toll on family life. People work so hard they don’t see their kids, and work email intrudes at home. That in the name of social mobility and a dynamic economy kids end up living a long way from their family.

They hate Treasury attempts to force up the number of double earner households at the expense of individual choice – whether it is the UK’s highly individualistic tax system, or childcare vouchers that don’t help stay at home parents.

They hate unbridled commercial culture. Why so many adverts pushing gambling at us? Wasn’t sport better before it go so commercial? Can’t we stop big tech firms trying to hook our kids’ eyeballs all the time? Although they hate the BBC’s left-wing bias, in theory they quite like the idea of a non-commercial British broadcaster if it could be made more neutral.

What to make of these arguments?

On migration there is some tension. My view is that we can have a lively free market with a lower level of migration. Yes, we need some people coming in and out, but the levels we have been running at really are unprecedented, and we had higher rates of growth in periods when it was much lower.

You don’t have to be super socially conservative to think that 642,000 people a year arriving over the last year (240,000 more than left) is really quite a lot.

On globalisation and trade, discovering that we have to rely on Huawei for 5G technology has spooked many people. On that very specific argument, I’m prepared to trust the Prime Minister and the security services when they say they can control any risk.

But more generally, I think we need to retain certain national capabilities: I’m concerned that we now live in a country that has to beg the French, Chinese or Koreans to build us a nuclear power station: Gordon Brown was wrong to sell off Westinghouse.

But we need to be clear about what capabilities we need to hold onto as a nation without falling into the French trap of declaring a “strategic yoghurt policy” and intervening all over the place.

On family life, I’m not so sure of the social conservative argument. The average employee works substantially fewer hours than we used to, so there’s more scope for family life, albeit that work does intrude at home more for professionals.

Though family life has changed a lot, it’s not obvious that free market economics is mainly responsible.

There’s no doubt that more secure work and higher employment is generally good for family life: its easier not to fall out with your husband/wife/children if you are not desperately stressed. I also want more secure work, but the balancing act is to avoid regulating the labour market so much that you end up with fewer jobs and less security.

When it comes to vouchers and other tied support for childcare, I actually see both libertarians and social conservatives making the case for just putting the money in people’s hands: having a tax allowance for children rather than support tied to formal childcare (the 30 free hours, tax free childcare) would give people more freedom to arrange their own affairs.

Yes, there would be “deadweight”, and pound for pound the response in terms of employment and GDP would be lower than with policies which incentivise dual earning. But if you choose to stay home, or use the money to pay for granny’s petrol so that she can pop over, then why should the state object? Perhaps both libertarians and social conservatives are really fighting fiscal conservatives here.

Some similar arguments might apply to individual versus family taxation. Just the other day CARE published a report pointing out that one-earner couples face much higher marginal tax rates in the UK than most other developed countries because our tax system doesn’t recognise children. But that’s a political choice, not the free market.

On the argument about market forces taking children away from parents – well, much of that is not about the free market, but about the UK state funding a huge expansion of residential higher education. Thanks to Tony Blair nearly half of young people move away at 18, and lots won’t ever go back. Other countries have local community colleges and put more emphasis on technical education.

Courtesy of the Institute for Fiscal Studies, we now know that for nearly half of university students taxpayer subsidy for their course will be a net negative for the exchequer. If we rebalance resources towards technical education that would make sense in itself, but also level up poorer places and also keep extended families together more.

When it comes to the commercialisation of culture, my sympathies are with social conservatives. And I’ve met too many young people who have been sucked into problem gambling. If there is one good thing the BBC does, it is CBeebies, the one part of kids’ TV that has some sort of values, and doesn’t overtly or covertly try to turn your children into agents of “pester power”.

Against that, free marketeers might reply that a big state, institutions like the BBC and public sector trade unions tend to be the bulwarks of social liberalism: and state employees are more likely to get sent on hopelessly flawed schemes like “unconscious bias” training than people who work in your local chippy.

Does reducing state power help social conservatism? It depends. On the one hand, where the state has loosened the leash a bit in schools with academy schools, it has generally allowed (more effective) small-c conservative methods to come back. On the other hand, the US has private universities, and despite being free of the state they are hardly hotbeds of conservatism.

Across the world, there’s been a shift in the voters who support parties of the Right. In general, the balance of the Republican and Conservative voter coalitions has shifted a little from economic to social conservatives. We lost Putney, but gained loads of poorer seats in the north and midlands.

That’s highlighted the tensions. For me, social and economic conservatism still mainly belong together. But where the two do conflict, the balance of power may be shifting. In the years since 1979, economic conservatism has more progress while for much of the time social conservatives have been fighting a rearguard action. Could a revitalised social conservatism finally be coming off the back foot? Only time will really tell.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Brexity Hezza and Lawsony Javid

“The Treasury as an institution should be the engine that drives this new agenda,” Sajid Javid told the Commons yesterday during his resignation statement.  Those words matched others reported earlier this month on ConservativeHome: “The Treasury fights back. How it plans to drive radical reform – and become “the Government’s internal think tank”, we reported.

The story and the former Chancellor’s view will have gone down badly in Downing Street, not least with Dominic Cummings.  It offers a broader context in which to see his resignation.  Thus was not simply the consequence of a row about Special Advisers.  Rather, it was about their place in a broader Treasury team that had aspirations to drive this Government.  In particular, Javid did not see eye to eye with Boris Johnson about public spending.

So in retrospect, the former’s resignation is less surprising than it seemed at the time.  We believe that Javid had no choice but to quit, given the ultimatum offered him – and are dubious about merging Number Ten and the Treasury at the top.  It is in the nature of Number Ten to want to spend taxpayers’ money, especially under this “Brexity Hezza”, and in that of the Treasury to want to restrain the flow.  Which is as it should be.

But the second can’t drive the first. “Two stars keep not their motion in one sphere, / Nor can one England brook a double reign / Of Boris Johnson and Sajid Javid”, as Shakespeare almost put it.  Or read “Downing Street and the Treasury” if you prefer.  At any rate, the choice that the latter must now make is one of those that are simple, but not easy.

First, he can decide to bend the knee, and take his cue from the parts of his statement yesterday that praised the Prime Minister and his successor.  That means keeping a low profile; popping up now and again to make supportive statements when these will count, and hoping that, like Penny Mordaunt, James Brokenshire and John Whittingdale in the last reshuffle, he can return to government in the next one.

Second, he can plant the standard of rebellion by becoming the spokesman for a cause.  It’s not hard to see what this could be. “I am a proud, low-tax Conservative, and I always will be. Already, our tax burden is the highest it has been in 50 years,” he told the Commons yesterday.  “The fiscal rules that we are elected on are critical.”  If Johnson is a Brexity Hezza, the former Chancellor could aim to be a Lawsony Javid.

Third, he could decide that he’s had enough and, after a decent pause, leave the Commons at the next election and go off to make more money.  If Family Javid wanted him to do so, one could scarcely blame them.  We hope he doesn’t.  There is a gap in the Tory market for a free market champion and, for all his stress on social mobility during last year’s leadership election, dry economics has always seemed to us what suits him best.

Javid is unlucky in his timing.  The impact of the coronavirus will mean that the Budget should legitimately be even more expansionary than would otherwise have been the case (given Brexit).  It is against the normal rules of the political cycle not to load the nasty stuff – tax rises – into the first Budget of a Parliament.  But as in so many aspects of political life, Boris Johnson stands ready to break the rules.

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Gareth Lyon: To end “fake recycling” bring in the markets and save the planet

Cllr Gareth Lyon is a councillor in Rushmoor and the Chairman of the Aldershot and North Hants Conservative Association.

Rushmoor Borough Council takes environmental issues extremely seriously. It is currently embarked on a tree planting programme which will see thousands of new trees planted throughout the borough, but particularly in the new Southwood Country Park which has just opened to the west of Farnborough. It is looking at ways to reduce carbon emissions, make it easier to walk and cycle and of course to make it easier to recycle.

Recycling has historically been a challenge in Rushmoor. We have a high proportion of residents who live in flats and who therefore share bins between dozens or hundreds of people. This means that a recycling bin can very easily become “contaminated” and end up being rejected by the recycling depot.

Rushmoor is also part of a Hampshire-wide recycling contract which means that materials are only collected for recycling when there is a genuine market for the materials – so that the local authorities can be sure that what is collected actually gets re-used. The alternative, employed by many authorities, is to collect a huge range of materials and effectively take it on trust.

What happens to the rest in Rushmoor is not landfill or ocean dumping but incineration to produce power – thereby at least getting some further value out of these materials.

What this means is that Rushmoor has a relatively low recycling rate – but one which is much more robust and defensible as “real recycling.”

Not that this nuanced picture has stopped local opposition parties using this as a stick with which to beat Rushmoor and to claim that the council doesn’t take its environmental responsibilities seriously.

It therefore came as no surprise to us at all when numerous newspapers earlier this year were filled with reports of recycling collected from British homes being dumped in oceans and generally disposed of in some of the most ecologically damaging ways imaginable.

This vindication came with no sense of satisfaction for Rushmoor – and of course the council will continue to explore other materials which may be genuinely recyclable when the contract with the current provider comes up.

There are however broader lessons here which could benefit all councils across the country.

Firstly, we are right to be bringing political pressure to bear to increase our recycling rates and improve our overall environmental stewardship. But we must also be realistic and not obsess about the figures alone. It makes for a more difficult job for the opposition but they and we ought to be looking at our systems, seeing how we can improve them and asking the difficult questions about long-term sustainability. This means avoiding setting unrealistic targets then celebrating when they are miraculously met. In local government even more so than elsewhere, if something looks too good to be true it often isn’t true at all.

Secondly, the role of the market is key. Not just the demand side, making sure we listen to what the market is telling us when deciding what to collect. But also the supply side. Nearly every council around the country has one recycling depot they deal with when the waste is collected. As in Hampshire, many of these depots are shared by local authorities and run by the same companies across the country. This means that the operators are in extremely comfortable positions and have little incentive to innovate, to seek out new markets or even to develop them. If instead there was genuine competition throughout the recycling collection and processing sector we would surely see a greater range of products becoming economically viable for recycling over time – leading to truly sustainable growth in recycling.

This ought to remind us of the fact in politics, the concept of free and competitive markets is one that we can and should consistently reuse and recycle.

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David Gauke: Why I believe that Parliament must stop a No Deal Brexit this week

David Gauke is a former Lord Chancellor and Justice Secretary, and is MP for South West Hertfordshire.

Following Nicky Morgan’s return to the Cabinet, the Editor of this website (and my esteemed former colleague in George Osborne’s Shadow Treasury team) asked if I would like to be a regular columnist. My role, as I understood it, would be to demonstrate that all strands of Conservative Party thinking was represented on this site and, in doing so, I should therefore stir it up a bit. I gladly accepted.

It hasn’t passed my notice that my views are not entirely in harmony with the majority of ConservativeHome readers when it comes to Brexit. And, given that this article is being published at the beginning of one of the most contentious and important weeks in the Brexit saga – and I have found myself somewhat in the thick of it – this is not likely to be a gentle introduction.

Before turning to the events of the week ahead, I should say a little about the evolution of my thinking. Like most Conservatives of my generation, I came to political age in the era of Margaret Thatcher. I admired her determination to transform the British economy, her willingness to take on vested interests, her belief in the free market, free trade, sound public finances, low inflation and the need for a pro-business tax and regulatory environment.

I also shared her instincts on Europe. I was opposed to our membership of the Exchange Rate Mechanism, feared that the Delors European Commission was trying to reverse her supply-side reforms and always believed that the UK should stay outside the single currency. Throughout the 1990s and early 2000s, I feared that, in the end, we would have a choice as to whether to become part of a United States of Europe or leave the EU altogether. If it came down to that choice, I would be a Leaver.

When I entered Parliament in 2005, I joined a small group of Eurosceptics who chipped in a contribution from their Parliamentary Staffing Allowances to pay for a researcher to ensure we were ever vigilant against the advance in Euro-federalism. I even had a spell as Treasurer of this organisation, called – accurately enough – the European Research Group.

It would be fair to say that the ERG and I drifted in different directions over the years. I came to the view that the UK could be part of the EU without being destined to be part of an EU superstate.

I also came to accept that it is only possible to bring down trade barriers on the basis of co-operation with other countries. There is a trade-off between regulatory autonomy and the openness of markets and I am a free trader.
By the time we got to the 2016 referendum, I was firmly in the Remain side. Not a starry-eyed, Ode to Joy-singing Europhile, still concerned about EU overreach but, nonetheless, a believer that, on balance, our interests were best served by continued EU membership.

I was on the losing side. Having provided a referendum, we had a duty to implement it. Failure to do so would ensure our politics would be scarred by the politics of betrayal.

The only responsible way to do so was with a deal, ensuring that we entered into a deep and special partnership and that we would have a smooth and orderly departure from the EU. But the problem with this is that leaving the EU was always going to be complex. It was never possible to maintain exactly the same benefits of EU membership whilst walking away from the institutions and the rules. Leaving in the abstract was one thing; the specifics of leaving – where detailed trade-offs have to be made – is another.

The Leave campaign made big promises in terms of our independence from EU institutions. It also reassured the public as to the minimal impact on businesses and sectors trading with the EU. The problem is that it is impossible to deliver on both sets of promises at the same time.

Theresa May tried and, in my view, got a good deal – a compromise that struck a pragmatic balance. But, as measured by the absolutist hopes of some Brexiteers, it fell short of delivering the dreamed for ‘independence’. Any deal will. But the cost of failing to reach a deal – in terms of our prosperity, security and the integrity of the UK – is far too high.

Leaving with a deal remains much the best outcome. But, given that Parliament has three times rejected a deal, this is not going to be easy. The Prime Minister clearly wants a deal but he has set out one big red line – the replacement of the Northern Irish backstop.

Will the EU change their position? The purpose of the backstop is to ensure that there is no hard border between Northern Ireland and the Republic of Ireland. This is an important and legitimate objective, and it is unrealistic to think they will abandon the backstop unless there is an alternative that works.

The Prime Minister has accepted that it is for the UK to propose a workable replacement to the backstop. To succeed, it must have the confidence of the people and businesses on both sides of the Irish border. If we engage positively in that endeavour, the EU has always said they would work constructively with us. But if we fail to come up with credible plans, threats of a no deal departure (which will obviously impact the UK more than the EU) will not force the EU to abandon its long-held position.

Assuming a deal is reached (and that is a very big assumption), the deal then needs to get through Parliament. It may well face opposition from a significant number of Conservative MPs who want wider changes to the Withdrawal Agreement. The more my colleagues say they want wider changes, the more remote it appears any kind of deal could be delivered.

Even with the numbers, there is the question of time. The European Council is on 17 October and the Queens Speech debates will conclude on 22 October. Is anyone seriously suggesting that a Withdrawal Agreement Bill can be concluded in nine days? All stages in both the Commons and the Lords in just over a week? Those of us who served in the previous Cabinet will recall that those responsible for managing House business would advise us that the Withdrawal Agreement Bill would take two to three months to complete.

The conclusion is clear. If the Prime Minister is sincere that we leave on 31 October ‘do or die’ (and I believe he is sincere) the overwhelming likelihood is that, unless Parliament intervenes this week, we will leave without a deal. Some may welcome that. But for those of us who believe that this would be a tragic mistake, Parliament will have to step in.

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Pharma Regulations Bite Worse Than Snakes

Overregulation is killing competition in the pharmaceutical industry. Rather than letting markets work, companies are essentially allowed monopolies that drive prices to astronomical heights. Take anti-venin for example. Chances are you’re not going to be bitten by a poisonous snake or scorpion but, if you are, that’s just the first bite. The next one is out of your wallet.

Here’s how it works. You get bitten, you go to the hospital because you don’t want to die. You are injected with 4-6 vials of  CroFab (the recommended starting dose), and it saves your life with few of the side effects that used to plague anti-venins. Then you get the bill. It turns out that the wholesale price for that medicine is more than $3,000 per vial. Once they get enough in you to save your life and you pay the consumer price? Let’s hope you aren’t stuck with a price tag of nearly $68,000. It’s happened before.

It should be good news for bite victims, then that there’s something new on the market- Anavip.However, pharmaceutical regulations are such that competition isn’t likely to bring the prices down significantly. Anavip seems less expensive at $1,220 per vial but, with a recommended initial dose of 10 vials, the price is pretty equal.

Robin Feldman, a professor at University of California, Hastings College of the Law in San Francisco, who specializes in pharmacy law told NPR “When we allow a system of perverse incentives to flourish, this is the result we get.” It’s the generic drugs which really bring down drug prices, and bureaucracy is making it just about impossible for anti-venins to enter that market.

NPR reports:

In the U.S., even when the FDA approves another drug, the maker can manipulate the patent process to keep competitors out. A patent allows a drug manufacturer to claim ownership of certain product information and bar others from making, using or selling a drug based on the protected content for 20 years. This gives manufacturers a powerful edge – they can sue potential competitors for patent infringement.

“The most creative activity in the drug company should be in the lab, not in the legal department” says Hastings law professor Feldman, paraphrasing a former FDA commissioner.

One solution? The 340B medical drug pricing plan which provides life-saving medications cheaper for lower-income Americans at no cost to taxpayers. At Banner Health in Arizona, scorpion bites are more common than in other parts of the country, and their 340B pricing program saves lives without breaking the bank.

Page Smith, director of Banner’s 340B program, explains:


The post Pharma Regulations Bite Worse Than Snakes appeared first on RedState.

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Senate’s Proposed Drug Price Controls Will Harm Patients, Stymie Innovation

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This week, despite months of strong opposition from conservative and free-market advocates, the Senate Finance Committee unveiled their drug pricing plan containing multiple provisions allowing for still more government interference into our healthcare system.

Beyond being disappointing, these policies are dangerous, as they will immediately reduce innovation without addressing costs – all while putting our system on the slippery slope towards even more government control of our healthcare system.

Let’s look at the facts.

The Senate Finance Bill, introduced by Chuck Grassley of Iowa Ron Wyden of Oregon, includes a provision which requires the U.S. Department of Health and Human Services to impose a “Civil Monetary Penalty” on drug manufacturers whose prices rise above the Consumer Price Index, or the rate of inflation. This “penalty” will be a new tax on the industry.

On its face, this sounds harmless. No one wants prices to rise.

But, put differently: this is a tax which amounts to a price control.

This is a blunt, misguided and ultimately damaging requirement which uses arbitrary benchmarks to impose what amount to price caps into our healthcare system.

Importantly, this tax does nothing to address the cost of drugs at the pharmacy counter.

Worse, price controls, such as a threshold tied to the rate of inflation, have a chilling effect on any industry. Price controls create an imbalance in what private companies expend on research and development and what they can recoup on that investment. This disparity then results in a reduction in research and development to find a new equilibrium below the government imposed cap.

In healthcare, that means fewer cures or longer delays in bringing new medicines to market.

We need look no further than Europe for clear evidence of this effect playing out. According to Milken Institute data on the global, pharmaceutical industry, “During the 1970s, the four largest European countries were responsible for 55 percent of NCEs [new chemical entities] produced by major nations. But over the decade from 2001 to 2010, the U.S. share jumped to 57 percent.”

What happened? Europeans adopted government price controls and other, Socialist policies. The result has been reduced innovation from our European counterparts and increased innovation from the U.S. market.

The same report found that in 1990 “the United States accounted for 38 percent of the total biopharmaceutical R&D spending of leading nations. However, by 2004, the U.S. share was 55 percent of biopharmaceutical R&D spending.”

These increases are also mirrored in other metrics, such as venture capital invested in new cures. In 2007 U.S. investment accounted for 68.3 percent of total venture capital investment in the life sciences among OECD nations.

The results are startlingly clear: when governments interfere in or control healthcare, markets react accordingly and reduce innovation. This means fewer new cures for patients and, in human terms, that is a result we cannot accept.

Conservatives have been consistent in calling for free-market policies which will bring transparency and competition into our healthcare system. That is the way to bring down prices.

U.S. Secretary of Health and Human Services Alex Azar has explained that the Trump Administration has three goals for its healthcare agenda as “changing health care financing, improving value and boosting public health.”

Imposing penalties based on the rate of inflation does nothing to achieve these goals. It does nothing to improve value and, due to its chilling effect on innovation, will be detrimental to public health. It does not help patients and it does nothing to address the real drivers of cost in our healthcare system.

Given these facts, let’s hope principled Conservatives stand up for the free-market and stop this further injection of Socialism into our healthcare system.

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The DOJ Opens a “Broad” Anti-Trust Review of Big Tech Companies As Concerns Mount

Westlake Legal Group bill-barr-smiling-620x317 The DOJ Opens a “Broad” Anti-Trust Review of Big Tech Companies As Concerns Mount Social Media Section 230 review Politics Partisan Suppression Open Platforms monopolies Front Page Stories Front Page Free Speech free market Featured Story doj discrimination collusion bill barr big tech anti-trust

Attorney General William Barr appears before a Senate Appropriations subcommittee to make his Justice Department budget request, Wednesday, April 10, 2019, in Washington. (AP Photo/Andrew Harnik)

The DOJ opened what it calls a broad anti-trust review of major big tech companies, a move that’s been threatened by President Trump in the past.

This comes in response to more and more questionable behavior by big tech companies, including accusations of partisan speech suppression and even evidence of Google working with China.

The U.S. Department of Justice said on Tuesday that it’s opening a broad antitrust review of big tech companies, sending shares of Amazon, Alphabet and Facebook lower in extended trading.

While the DOJ didn’t disclose specific company names, it’s launching the review based on “new Washington threats” from Facebook, Google, Amazon and Apple, according to a report by the Wall Street Journal. The agency will examine practices of online platforms that dominate internet search, social media and retail services, the DOJ said in a statement Tuesday.

The DOJ put out a statement, highlighting some of the issues they’ll be investigating.

The DOJ said in Tuesday’s release that it’s looking into competition, “stifled innovation” and the impact on consumers.

“Without the discipline of meaningful market-based competition, digital platforms may act in ways that are not responsive to consumer demands,” said Makan Delrahim, assistant Attorney General of the Justice Department’s antitrust division, in the statement. “The Department’s antitrust review will explore these important issues.”

This will likely cause a split within conservative thought. There are some that say big tech companies should be free to do as they please, no matter what that entails. In theory, that sounds good and principled. I’m not sure how workable it is in reality and that’s something that’s going to have to be grappled with. Everyone is fine with the status quo until the status quo eats them and the tech companies are only becoming more illiberal in their policing of speech and suppressing content.

As I’ve argued before, I see no contradiction, nor do I consider it “big government” to make tech companies live by the same rules as other publishers of content. What makes a social media platform different than a news website that can be sued for copyright infringement? Technically, there is no difference. We’ve just allowed big tech to pretend there is while simultaneously operating as curators of content. Section 230 was originally meant for ISPs, not websites like Facebook. If Facebook would like those protections, I see no reason they can’t simply operate as a public utility and open platform.

Obviously, there are other issues at play. Some will claim Section 230 never mandated neutrality. I’m not sure that’s true given it’s intent, but regardless, there is still a problem to be dealt with. Laws can be changed and I see absolutely no issue with telling big tech to not discriminate or face the same environment everyone else does on the internet in terms of liability. No new regulation or government control is needed. They can simply face the free market of lawsuits and see how they fare.

The issue of anti-trust laws takes things a step further though, possibly breaking up big tech companies that are colluding, participating in monopolistic behavior, and/or discriminating on partisan grounds. We are in uncharted waters in regards to this issue. It’s not enough to just appeal to principle when a company like Google can literally erase history with their machinations. There are very legitimate concerns that a few big tech companies could have near complete control of the flow of information.

I’m not sure I agree that anti-trust laws have been broken, but that’s the point of a review. Perhaps it will at least put pressure on these companies to take a step back. If that happens, it’ll be a good thing.


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Alan Mak: Conservatism 4.0 – We must ensure that no-one is left behind by the Fourth Industrial Revolution

Alan Mak is MP for Havant and Founding Chairman of the All-Party Parliamentary Group on the Fourth Industrial Revolution.

Stanley Baldwin said the Conservative Party stood for “real England” – a Party defined by voluntary organisations and Christian patriotism, little platoons and big national causes.

His Conservative Party of the 1920s faced an upstart opposition in a Labour Party that had usurped the Liberals to become the second party of British politics. Outlining the growing threat from Labour, Baldwin described them as being for a nation of class divisions and over-mighty trade unions.

Under Jeremy Corbyn, Labour has come full circle and is once again challenging the success and legitimacy of our free-market economy.

A century on from Baldwin, and despite being the natural party of government, our Party has often struggled to break out from its vote base of shire counties and market towns. It’s over 30 years since we won a majority of over 21 at a general election.

But there are signs of change. Our electoral success in recent years has been driven by securing more votes in Labour’s industrial heartlands. Dudley, Mansfield, Copeland and Teesside have all elected Conservatives in recent years, whilst the West Midlands and Tees Valley have elected Conservative Mayors on a region-wide basis.

This Conservative momentum in areas once dominated by trade unions and the Old Left shows that our message of hope, personal freedom and low taxation can re-define our path to a majority.

Yet our progress in these Labour heartlands is not concrete and shouldn’t be taken for granted. A pro-Leave electorate that has trusted another party for so long will be looking to the Conservatives to not only deliver Brexit, but ensure they are not left behind by the next big technological revolution either. As I said in yesterday’s article, this commitment must be a central tenant of Conservatism 4.0 – Conservative ideology for the Fourth Industrial Revolution [4IR].

The last time our country went through a technological revolution we had a strong leader with a firm ideology. The computing revolution of the 1980s powered Britain to economic success – and political success for Thatcherism. Through deregulation and an unwavering belief in the free market, the City of London prospered from the Big Bang, and our economy was transformed into a services-based powerhouse. From the stuttering, strike-crippled, state-dominated closed market that Thatcher inherited, the foundations were laid for rapid economic growth and the business-friendly, pro-innovation environment we enjoy today.

Our next Leader will also find themselves at an inflection point. They will have to harness the Fourth Industrial Revolution (4IR) as artificial intelligence, big data and automation change our economy and society beyond recognition – and ensure that every community and region benefits from the wealth that it creates. Whilst Margaret Thatcher’s transformation of Britain’s economy for the better is undeniable, there are mining and industrial communities who felt they were left behind as other parts of the country raced ahead. To win a majority at future elections, today’s Conservatives need to attract working class and northern votes, so we cannot allow the positive impact of the 4IR to be absent from any region or for its benefits to be inaccessible to any social group.

The 4IR will radically change how we work, regardless of sector or industry. Instead of dockers and miners being at risk of automation, in the near future it will be call centre operators, lorry drivers and factory workers. With a path to electoral victory that increasingly runs through industrial towns, every factory closure or job lost to robots without alternatives emerging, will make a majority harder to achieve for our next leader.

That’s the reason why, whilst we still have an opportunity to shape the 4IR, our policies must be focussed on creating an Opportunity Society centred around social mobility powered by lifelong learning, high-quality education and skills training for everyone at every stage of their lives. Our Opportunity Society must be more than just a short-term policy objective. It has to be an integral part of the future of capitalism and a key part of Conservatism 4.0.

As robots slowly replace human workers, many on the radical-left are arguing for a Universal Basic Income (UBI), a minimum wage paid by the Government to every citizen regardless of their productive capacity. Every single country that has trialled UBI – from Kenya to Finland – has found it expensive and ineffective. Research by the International Labour Office has estimated that average costs would be equivalent to 20-30 per cent of GDP in most countries. In Britain, this would be more than double the annual budget of the NHS, yet John McDonell says a Corbyn-led Labour Govnement would trial it. These are just two of the reasons why we Conservatives should reject UBI as the solution to growing automation in the 4IR.

The truth is work has always paid, and work for humans will always exist. Work drives our economy, multiplies and makes the world richer. It takes people out of poverty and gives them purpose, and this will continue to be the case in the 4IR. In fact, many more new jobs are likely to be created than are lost to robots because the technology of the 4IR will drive economic growth, which in turn will create new and more interesting jobs, especially in new tech sectors such as advanced manufacturing, 3D printing, precision medicines and AI-powered creative industries.

Not enough is made of our job creation miracle since 2010, which has seen our economy put on three million new jobs. As we enjoy the lowest unemployment rates since the 1970s, we need to re-emphasise the value of work and the benefits to be derived from a good job. A UBI would be defeatist, signifying that humans had ceased to be useful in a world of machines, and be the antithesis of social mobility – there would be no need to work hard to move upwards on the income and living standards scale if we are all paid to stay at the same level. A UBI would also stall our economy through either crippling debt on the public purse or new taxes imposed on innovation. Similarly, Jeremy Corbyn’s proposed Robot Tax would simply mean a left behind country – a nation that fails to attract foreign investment and which becomes known for its anti-innovation approach to technology.

Instead, true devolution must be at the heart of delivering an Opportunity Society and making sure no community or individual is left behind. Our next Prime Minister must invest in the Northern Powerhouse and Midlands Engine so regional economic growth is put in the hands of regional leaders. The benefits of the 4IR, from new start-ups to overseas investment, must be enjoyed beyond the “Golden Triangle” of London, Oxford and Cambridge. As Juergen Maier who led the Government’s Made Smarter Review, argued, it’s about creating an “innovation climate” in regions such as the North.

We cannot expect the heavy industries of the past to return, but instead our focus should be on ensuring the new technologies of the future are exploited in every area of the country to create new jobs and rising skills levels in every community. The Liverpool City Region understand this, and have already taken the initiative. They have launched LCR 4.0, an ambitious plan to support manufacturing and advanced engineering organisations in the region by funding practical support to transform businesses through digital innovation. By helping traditional manufacturers upgrade their technology, they enable firms to stay in business and keep their workers employed by becoming more productive. Conservatism 4.0 should support more initiatives like this.

Moving towards a system of local business rates retention will also encourage further investment in skills and business support from local authorities as they reap the rewards of encouraging local growth. There should also be more scope for local taxation and decentralisation as a central tenet of Conservatism 4.0 to empower local areas to evaluate their workforces and set-up true long-term strategies for delivering local economic growth, building on the work of existing Local Enterprise Partnerships and new Local Industrial Strategies.

Conservatism has always evolved and must do so again as we enter a new technological age by putting social mobility and reginal devolution centre stage. They are the two key building blocks to ensuring that every community and region can benefit from technology-driven economic growth. While Thatcherism delivered for the Third Industrial Revolution, we need a new brand of Conservatism to build an Opportunity Society for the Fourth. My final article in this series, published tomorrow, will set out the four principles that should guide us as we re-calibrate Conservatism in the Fourth Industrial Revolution.

This article is the second in a three-part series explaining why adapting to a society and economy shaped by technology is key.

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