Broken markets create broken politics

THE MYTH OF CAPITALISM
Monopolies and the Death of Competition

These are some selected key messages from the book:

Capitalism without competition is not capitalism.

Competition matters because it prevents unjust inequality, rather than the transfer of wealth from consumer or supplier to the monopolist. If there is no competition, consumers and workers have less freedom to choose. Competition creates clear price signals in markets, driving supply and demand. It promotes efficiency. Competition creates more choices, more innovation, economic development and growth, and a stronger democracy by dispersing economic power. It promotes individual initiative and freedom. Competition is the essence of capitalism, yet it is dying.

Competition is the basis for evolution. An absence of competition means an absence of evolution, a failure to adapt to new conditions. It threatens our survival. There are fewer winners and many losers when there is less competition. Rising market power by dominant firms has created less competition, lower investment in the real economy, lower productivity, less economic dynamism with fewer startups, higher prices for dominant firms, lower wages and more wealth inequality. The evidence from economic studies is pouring in like a flood.

As you may imagine, what the authors do is precisely to show the evidence of the monopolist and oligopolist activities in the US markets. Our close markets are in the same situation and antitrust authorities are failing to preserve competition. Unfortunately, recent legislation has not helped to reverse the trend. Higly recommendable book.

The author 6 years ago at TV3:

Ill-prepared for the arrival of new medicines

Pharmaceutical Innovation and Access to Medicines

While in the last years the number of new drugs in the market has been limited, this trend has changed and countries may expect larger bills in the next future. The OECD report explains the main challenges of pharmaceutical innovation and says:

Despite a slowdown in growth in the 2000s, pharmaceutical spending has nevertheless increased sharply in some therapeutic areas, such as oncology and certain rare diseases where many new medicines target small population groups and command high prices. While these may well address unmet needs, they often have prices that may not be justified by the health benefits they confer.

Countries may be ill-prepared for the arrival of novel medicines targeting wide  population groups. In 2013, the first of a new class of very effective but expensive
drugs known as direct-acting anti-virals (DAAs) for hepatitis C created a shock due to the potential budget impact of treating all infected people. Many countries initially restricted access to the most severely affected patients, creating frustration among patients and clinicians alike. Although subsequent entries of alternative products have created competition on prices and allowed payers to expand eligibility to treatment, the initial shock highlighted the lack of readiness of payers for such events.

In some countries, sudden, large price increases for off-patent medicines have made important treatments unaffordable for patients.

Finally, innovation is lacking in certain areas of high-unmet need, such as new antimicrobials, non-vascular dementia, and some rare diseases.

The report summarises different proposals and measures that would be helpful for a government that cares about citizens' welfare. Unfortunately, this is not our case.

Exhibition at Foto Collectanea

The charade of doing well by doing good

Winners Take All
THE ELITE CHARADE OF CHANGING THE WORLD

Anand Ghiridhas has done a great job with his new book. He has set up the context for understanding the duality government elites. I've picked only several key statements. The whole book is well written and gives a lot of examples (US-based of course).

Many millions of Americans, on the left and right, feel one thing in common: that the game is rigged against people like them. Perhaps this is why we hear constant condemnation of “the system,” for it is the system that people expect to turn fortuitous developments into societal progress. Instead, the system—in America and around the world—has been organized to siphon the gains from innovation upward, such that the fortunes of the world’s billionaires now grow at more than double the pace of everyone else’s, and the top 10 percent of humanity have come to hold 90 percent of the planet’s wealth.

Some elites faced with this kind of gathering anger have hidden behind walls and gates and on landed estates, emerging only to try to seize even greater political power to protect themselves against the mob. But in recent years a great many fortunate people have also tried something else, something both laudable and self-serving: They have tried to help by taking ownership of the problem.

What is at stake is whether the reform of our common life is led by governments elected by and accountable to the people, or rather by wealthy elites claiming to know our best interests. We must decide whether, in the name of ascendant values such as efficiency and scale, we are willing to allow democratic purpose to be usurped by private actors who often genuinely aspire to improve things but, first things first, seek to protect themselves. Yes, government is dysfunctional at present. But that is all the more reason to treat its repair as our foremost national priority.