It’s time to Break It Down!
Words matter; any number of words can be used to signify the Pathos of American culture. However, perhaps none does so more aptly than Capitalism. It is arguably, the spirit, zest, and emotion that propel us to so frequently achieve greatness. There are most certainly terms that better reflect the American Ethos, and our sometimes, slippery connection to communal ethics. In addition, we can point to more poignant vessels to accurately capture the Logos that is the essence of the way we in America reason. Today’s word, however, is Capitalism, so perhaps we will examine those other elements of persuasion at another time.
In this election season especially, a number of politicians are poised to place an extra fine point on the distinction between Capitalism and other primary systems of organizing and managing government’s economies. The term Capitalist means owner of capital. Capitalism is an economic system that emphasizes that trade, industry, and the means of production are largely or entirely privately owned and operated for profit. Central characteristics include private property, capital accumulation, wage labor and, in some situations, fully competitive markets. In a capitalist economy, the parties to a transaction typically determine the prices at which they exchange assets, goods, and services.
The degree of competition, the role of intervention and regulation, and the scope of state ownership vary across different models of capitalism. These models include laissez-faire or free market capitalism, welfare capitalism, crony capitalism, corporatism, “third way” social democracy and state capitalism.
The American Way, purists will insist, is punctuated by free enterprise. At its core, in a free enterprise system, business is governed by the laws of supply and demand; not restrained by government interference, regulation or subsidy. This apparatus is also referred to as free market.
The American combination of Capitalism and Free Enterprise is considered to be one of the most successful economic experiments in the history of the world. The United States is the world’s largest national economy, representing 22% of nominal global GDP and 17% of global GDP (PPP). The United States’ GDP was estimated to be $18.124 trillion as of Q2 2015. The U.S. dollar is the currency most used in international transactions and is the world’s foremost reserve currency. Several countries use it as their official currency, and in many others it is the de facto currency. The United States has a mixed economy and has maintained a stable overall GDP growth rate, a moderate unemployment rate, and high levels of research and capital investment. Its seven largest trading partners are Canada, China, Mexico, Japan, Germany, South Korea, and the United Kingdom.
The US has abundant natural resources, a well-developed infrastructure, and high productivity. It has the world’s ninth-highest per capita GDP (nominal) and tenth-highest per capita GDP (PPP) as of 2013. Americans have the highest average household and employee income among OECD nations, and in 2010 had the fourth highest median household income, down from second highest in 2007. It has been the world’s largest national economy (not including colonial empires) since at least the 1890s. It’s abundantly clear that our national economic bona fides are firmly entrenched and indelibly established.
The numbers are not just staggering on the macro level. The United States, not surprisingly, also has a number of incredibly wealthy individuals. Our Country has more billionaires than any other. As of 2015, the U.S. was home to more than twice as many billionaires, 536, as the second closest Country, People’s Republic of China, 213. In fact, to sharpen the focus to an even higher degree, the State of California has more billionaires than every Country, except China and the U.S.
California spawned 23 new billionaires over the past year, bringing its total count to 131 — or nearly a quarter of America’s 10-digit club. It not only has more billionaires than any other U.S. state, but also tops Germany, India, Russia and the UK. In fact, if California were a country, it would be home to the third-highest number of billionaires in the world, surpassed only by the United States and China. California’s billionaires own a combined $560.1 billion in wealth, which is more than the GDP of 49 countries, including Argentina, Poland and Taiwan. All in all, it is fair to say, that is good!
Not surprisingly, the United States is home to the world’s wealthiest man. In 2014, Bill Gates, the Microsoft Tech Titan, was the world’s richest man, according to Forbes. As of July 2015, Gates remains at the top of the list.
While you have undoubtedly heard of Bill Gates, the name of a very wealthy man that has bludgeoned its way into the consciousness of Americans this week is Martin Shkreli. He is the CEO of a company known as Turing Pharmaceuticals, which bought the 62-year-old drug called Daraprim in August of this year. The company immediately raised the price of one pill from $13.50 to $750. Just for the record, I’ll submit, that is bad!
This increase drew protests in the medical community from those concerned that many patients will no longer be able to afford the drug. According to Mr. Shkreli, however, the move is simply a smart business decision.
“Why was it necessary to raise the price of Daraprim so drastically?” CBS News correspondent Don Dahler asked Shkreli.
“Well, it depends on how you define so drastically. Because the drug was unprofitable at the former price, so any company selling it would be losing money. And at this price it’s a reasonable profit. Not excessive at all,” Shkreli responded.
Daraprim was developed in 1953 as a treatment for toxoplasmosis, an infection caused by a parasite. It comes from eating under-cooked meat or drinking contaminated water, and affects those with compromised immune systems, like AIDS and cancer patients.
As one might imagine, there were stark economic repercussions stemming from Mr. Shkreli’s “reasonable profit” motive. When Turing Pharmaceuticals raised the price of Daraprim to $750 per tablet, the average cost of treatment for patients rose from about $1,130 to $63,000. For certain patients, the cost can go as high as $634,000.
While Shkreli acknowledged that the move might look “greedy,” he said there are “a lot of altruistic properties to it.”
“This is a disease where there hasn’t been one pharmaceutical company focused on it for 70 years. We’re now a company that is dedicated to the treatment and cure of toxoplasmosis. And with these new profits we can spend all of that upside on these patients who sorely need a new drug, in my opinion,” he added.
Oncologist and CBS News medical contributor Dr. David Agus disagreed.
“Patients shouldn’t be taxed and charged for future research and development. Patients should pay for the drug they’re getting and what they need in the situation that they are” Agus said.
“It’s predatory practice and it’s inappropriate,” he added.
The topic entered the political debate on Monday, with Democratic presidential candidate Hillary Clinton tweeting: “Price gouging like this in the specialty drug market is outrageous.”
Her rival Bernie Sanders sent a letter to Shkreli demanding information on the price increase and called the rate hike “…the latest in a long list of skyrocketing price increases for certain critical medications.”
Sanders and Congressman Elijah Cummings have been investigating drugs that have seen jumps in prices.
Suffice it to say, Mr. Shkreli got the message. The 32-year-old Shkreli has been called everything from a boy genius to a vulture. Take your pick, but one thing the wealthy Capitalist is not is slow on the uptick.
Turing’s increasing the price of Daraprim from $13.50 to $750 a pill represented an increase of over 5,500%. Democratic Presidential candidate Hillary Clinton generously called that drug “price gouging.” OK, you knew it was coming; that is ugly!
The Daily Beast declared Shkreli the “most-hated man in America,” surpassing the dentist who killed Cecil the Lion.
Mr. Shkreli insists he has heard the outcry.
“We’ve agreed to lower the price of Daraprim to a price that is more affordable,” Shkreli said on ABC World News Tonight.
He didn’t say what that “affordable” price would be, but stressed that the company already gives away the drug for free to about half the patients who use it and that Turing plans to expand its charitable drug program.
In a somewhat ironic confluence of circumstances, Pope Francis (Jorge Mario Bergoglio), the former Cardinal of Buenos Aires, and the 266th Roman Catholic Pope is visiting the United States this week, week stops scheduled in Washington DC, Philadelphia, and New York. While there is no real expectation that Pope Francis will delve into or weigh in on Shkreli-gate, the Pontiff is a well-known critic of Capitalism.
In fact, this Pope’s Socialist posture, and his affinity for an array of issues including Climate Change/Global Warming, Restoration of formal Cuban-American relations, abolition of the death penalty, and a duty to the poor and marginalized has resulted in many Conservative politicians, a number of whom are seeking the GOP Nomination for the Presidency, to openly state their opposition to positions taken by the Pope. This just heightens the irony for a number of folks who happen to be Catholic, but do not bond with the 266th Pope.
Neatly summarized, there you have it…”Capitalism: The Good, The Bad, & The Ugly!”
I’m done; holla back!
Read my blog anytime by clicking the link: http://thesphinxofcharlotte.com or http://thesphinxofcharlotte.blogspot.com. Find a new post each Wednesday.
To subscribe, click on Follow in the bottom right hand corner of my Home Page at http://thesphinxofcharlotte.com; enter your e-mail address in the designated space, and click on “Sign me up.” Subsequent editions of “Break It Down” will be mailed to your in-box.
Consult the links below for more detailed information on a variety of aspects relating to this post: