Kevin Drum

Alex Tabarrok says today that pharmaceutical companies are undervalued because "pharmaceutical innovations earn only a fraction of the value that they create." For this reason, he opposes the Medicare price controls in the Inflation Reduction Act.

Trying to quantify innovation is hard. Instead, let's just look at profitability:

Pharma is the most profitable major industry group in the world, earning nearly double the amount of most other industries. The only one that's close is software, which has even more enviable production costs (zero) than pharma.

My view is that it's hopeless to try to quantify things like innovation or value to humanity. Penicillin and birth control didn't earn their inventors a penny. Instead, simply look at financial returns when there's true competition. This tells you that the average competitive large company has earnings that are about 8% of revenue. In the pharma industry it's 14%.

Real competition instead of artificial (and unpredictable) patent rights would be the best thing for the pharmaceutical market. Failing that, price controls seem pretty reasonable for an industry that takes very profitable advantage of its favored status.

Hurricane Hilary was something of a bust, producing far less rain and wind than predicted. But it turns out that our true reckoning with Hilary was delayed a bit: a huge spike in the mosquito population thanks to pools of water left behind by the storm. And it's one specific mosquito doing most of the damage:

Like a typical rising pop icon in L.A., it’s often referred to by its first name: Aedes. And it’s the Aedes — Aedes aegypti in particular — that’s really popping off right now....All was going well on the containment front until Hilary struck in late August...

Our native Culex mosquitoes apparently prefer birds to humans, so it's the Aedes variety that's most annoying. And annoying it is: Marian and I have both been covered with mosquito bites over the past month. Now I know why.

When will this all go away? Not until December, according to our local vector control boffins. Crap.

Here is the history of new one-family home sales in a nutshell:

Over the past 60 years, new one-family homes have been built and sold at an average rate of 2,500 per million population. We exceeded that average by a cumulative 2.8 million homes during the boom of 1995-2006, and then lagged it by 4.0 million homes during the bust of 2007-2019.

And we're still below average. Even during the 2020-21 boom we only slightly exceeded it for a grand total of six months before falling below again.

President Biden is offering a sorta-kinda-amnesty to half a million Venezuelan refugees who are currently in the country:

Biden officials told reporters that Venezuelans who had entered the United States by July 31 would be eligible for temporary protected status, a designation that will shield them from deportation and speed up their ability to obtain U.S. work permits. The announcement was the largest expansion of temporary protected status to date, and more Venezuelans have received the designation than any other nationality, government data shows.

But what I found most remarkable about the story was this:

More than 6 million Venezuelans have left the country during a decade of political and economic turmoil in their homeland.

I didn't know this. That's 6 million out of 30 million, or 20% of the population. It's as if 65 million Americans had fled the country because of political turmoil. Remember that when anyone complains about the current cankerous politics of the United States. It could be a lot worse.

The fine folks at dappGambl are here to answer the question on everyone's mind: Whatever happened to NFTs, anyway?

The hype around NFTs peaked in the 2021/22 bull run that saw nearly $2.8 billion in monthly trading volume recorded in August 2021....In July 2023, [trading was] just 3% of its peak back in August 2021. So what happened?

....Of the 73,257 NFT collections we identified, an eye-watering 69,795 [95%] of them have a market cap of 0 Ether (ETH)....We would estimate that 95% to include over 23 million people whose investments are now worthless.

We all like to think we've gotten smarter over the years, but at least the tulip bubble folks ended up with some pretty flowers. NFTs, by contrast, never made sense even in theory. We are still just a bunch of idiots.

Federal spending will clock in at about $6.4 trillion this year. Meanwhile, in Congress, Republicans are threatening to shut down the government because of a disagreement over next year's level of discretionary spending: $1.47 trillion vs. $1.59 trillion. This means that Republicans are squabbling over a difference of 1.9%.

This is about like agreeing to head over to the dollar store and then, when you get there, having your granddad start yelling about how he wants to go to the 99-cent store instead. Maybe everyone should calm down over this and just pass a damn budget?

This is somebody's bed at the palace of Versailles. I don't remember whose. Not Louis himself, though. Maybe some favored mistress?

Greg Ip says the UAW strike may be misguided when you look at the big picture:

Since 2009, manufacturing output per hour in the U.S. has grown just 0.2% a year....In motor-vehicle manufacturing, the picture is especially bad: From 2012 through last year, productivity plummeted 32%, though some of this was no doubt due to pandemic disruptions.

Um, yeah. Pandemic disruptions. So let's skip the pandemic years since no one knows if they represent a long-term trend. And instead of cherry picking the peak year of 2012 for a starting point, let's just use Ip's original year of 2009. Here's what you get:

This produces a somewhat different picture. Labor productivity in the auto sector was up 15.8% before the pandemic compared to 2009. That's about 1.5% growth per year, which is fine if not spectacular.¹

As a side note, centrists and conservatives who write about the UAW strike all express concern about the UAW's outsized demands. And it's true that they're asking for a lot. But I assume this is just like any other labor negotiation: workers start high and bosses start low, and then eventually they meet somewhere in the middle. Auto workers are asking for 40% raises and a 32-hour workweek, but they're unlikely to get them. Likewise, management is offering 20% raises and no change to the workweek, and they're unlikely to get that. So maybe we end up at 27.8% raises and a 38-hour workweek. Or something. But let's not worry too much about aggressive demands until we find out what everyone is actually willing to settle for.

¹Productivity subsequently dropped 16 percentage points in 2021 and 2022, but that doesn't tell us anything because the reason production was down had nothing to do with workers. It had to do with supply chain issues (largely chips) and reduced demand during the pandemic. It will be a couple more years before we know what the real trend is.

This is a couple of days old, but it's still worth a brief mention. When the House Freedom Caucus put out its demands for a budget bill, one of them was passage of border legislation:

The stopgap bill includes a House-passed border security proposal that orders construction of the border wall to resume, boosts the ranks of Border Patrol agents and tightens asylum rules. The plan included in the continuing resolution, though, leaves out a provision of the immigration bill related to E-Verify, which allows employers to confirm the eligibility of employees to work in the U.S.

Of course it does. Republican border plans routinely include lots of crowd-pleasing provisions that have little prospect of working (walls, more agents, etc.) while leaving out the one thing that probably would: E-Verify. Granted, E-Verify isn't the answer to our newfangled problem of asylum seekers, but it's sure the answer to our old-fashioned problem of illegal immigrants: if you can't prove you're legally allowed to work, you can't get hired. If you get hired anyway, the company that did it is liable to big fines. That would work.

And that's precisely the problem. The money wing of the party, which tolerates social conservatives only as long as they don't interfere with business, opposes any border proposal that requires action on their part and might actually be effective. They want to be left alone to hire all the cheap immigrant labor they want.

Business Republicans know that walls are just hot air, so they don't object to Donald Trump and his acolytes using them to feed the base some red meat. But E-Verify? That would actually constrain their ability to hire undocumented workers—and that's why Republicans generally stay quiet about it.

I know that South Carolina is famously hostile toward unions, but still:

“I think Ronald Reagan gave us a great example when federal employees decided they were gonna strike … You strike, you're fired. Simple concept to me.”

— Sen. Tim Scott (R-SC), when asked if he would insert himself into the issue of the United Auto Workers strike pic.twitter.com/bZPFtD63o7

— The Recount (@therecount) September 19, 2023

Seriously, wtf? Does Tim Scott really think that unions should be outlawed? That's basically what his remark means, since a private-sector union with no ability to strike is essentially useless.

This is yet another example of the rightward trajectory among Republicans. In the '50s, Republicans accepted unions, if grudgingly. By the '80s they were thoroughly and persistently anti-union, but didn't literally want to eliminate them. Today, there are mainstream Republicans who think the whole concept of organized labor ought to be done away with. What's next on their "populist" agenda?