Thursday, March 23, 2017

Since 2009, 21 US Cities Of The 100 Largest Became Majority Renters Versus Owners: Chart

From Bloomberg, "Renters Now Rule Half of U.S. Cities: The American Dream increasingly involves a lease, not a mortgage." by Patrick Clark:
Fifty-two of the 100 largest U.S. cities were majority-renter in 2015, according to U.S. Census Bureau data compiled for Bloomberg by real estate brokerage Redfin. Twenty-one of those cities have shifted to renter-domination since 2009. These include such hot housing markets as Denver and San Diego and lukewarm locales, such as Detroit and Baltimore, better known for vacant homes than residential development.
Source: Bloomberg

Tuesday, March 21, 2017

Why Drug Prices Are Different Internationally: My Comment To WSJ Commentary

From The Wall Street Journal, Opinion, Commentary, "How ‘Price Discrimination’ Helps Less-Affluent Countries: The Supreme Court takes up a patent-law case with repercussions far beyond U.S. borders." by Daniel Hemel and Lisa Larrimore Ouellette:
If this case were only about printer cartridges, we might not be worried about the outcome. Yet the Supreme Court’s decision will also apply to pharmaceutical products now sold for a discount in less developed countries. And it will apply to educational products like the low-cost XO tablets manufactured by Sakar International and distributed to schoolchildren world-wide.

If the patent laws cannot be used to prevent such products from being resold in the U.S., then you can bet that prices elsewhere will begin to rise toward U.S. levels. In countries where people live on a fraction of what Americans do, consumers might soon be required to pay ever greater shares of their income for medicine, for example. Even worse: Since pharmaceutical companies are subject to price controls in many countries, they might respond by pulling their drugs from some overseas markets.
My too short, due to WSJ character count limitations, posted comment to the above WSJ Commentary:
The article misunderstands how all companies price products internationally. US companies in non-US markets price products based on local competitive conditions, local consumer preferences and willingness to pay. Even software companies discount their software in foreign markets, in a very similar manner as drugs are discounted. Quickbooks regularly sells its online US Quickbooks Plus for Small Business at $40 per month, now on sale for $28 per month. Quickbooks UK website sells the same accounting software for 25 British Pounds, on sale now for 10 British Pounds. 25 Pounds is US $31.14, a 22 percent discount from the $40 US price. 10 Pounds is US $12.50, a 55 percent discount from the US sales price. Profit maximization is occurring and not charity. If importation is allowed, new domestic and international prices will be reset to maximize profits, based on local factors. That new price is dependent on local customer price sensitivity. The direction and amount of change is a guess.

Monday, March 20, 2017

Government Vs Market Management Of Health Care: Rationing Health Care Versus Resource Allocation By Prices

The following is a reprint of a currently relevant blog post I wrote almost 8 years ago on August 29, 2009, "Rationing Health Care Versus Resource Allocation By Prices:"
Many people ... who are worried about more government involvement in health care, cite rationing as a likely outcome. Their argument is that there will be a decision maker who decides what medical procedures are approved and what are not, or that in the alternative, the government will limit the amount of funds available for health reimbursement, which will force doctors or government officials to limit the availability of medical procedures, i.e., ration health care.

Those in favor of current proposals [in 2009, included at that time, the Affordable Care Act] for reforming our health system say the medical market already rations health care because many people cannot afford health insurance or are otherwise uninsured.

Functioning medical markets do not ration!

Markets set prices and producers and buyers make individual decisions based on these prices. Markets do not prevent anyone from producing a good or service if they are willing to invest the resources to do so. Likewise, markets do not prevent people from buying goods and services within their budgets. The individuals decide how they will spend their money. Individuals decide if they spend their money on a new car every few years or if instead they want some elective surgery, a new lcd tv versus a new computer, a fillet Mignon in a fancy restaurant versus a Big Mac, etc. The whole process is how an economy allocates resources based on peoples' preferences.

In a rationed economy, such as that proposed for health care reform, the government or some other decision maker decides how much the producers produce of an item and they also decide how much individuals can buy or use. The governing body artificially sets prices, and these prices are not signals to users or producers. There are no profit motives to create efficiency incentives or to reallocate resources to meet excess demand with extra production.

One of the differences between rationing and a market is that rationing creates tremendous inflexibility and rigidity in production and use that does not respond to changing needs, demands and resource availability and scarcity. Black markets often spring up to compensate.

If government only bakes bread instead of making pasta, you will eat a lot of bread and no pasta. A market-based system will never allow something like that to happen. A government-planned system could. Just visit Cuba or read about Russia thirty plus years ago.

Anyone who says our capitalistic system rations because something is expensive does not understand markets and market pricing or they are just trying to make health care reform look better based on incorrect logic.

Many have written much about how our current system of health and tax laws distorts the health marketplace. The employer tax deduction grossly distorts the price signals to the users and to the suppliers. Restrictive licensing laws and limited medical school enrollments curtail the supply of available doctors to meet the ever-growing demand.

The list goes on and on, but the President [Obama] and Congress are not willing to propose anything that will restore accurate pricing signals to the health market place or increase the supply of medical providers to meet demand and lower costs. A normal price signaling mechanism and removal of unnecessary barriers to entry into the medical field, as exists for almost every other product, would end most of the problems we see in health care today.

This post is derived from a comment I left on August 11, 2009, on Megan McArdle's blog post, "Rationing By Any Other Name" on the Atlantic, Asymmetrical Information Blog.

Monday, March 13, 2017

CBO Did Not Analyze (Dynamically Score) Macroeconomic Effects Of Repeal Of Obamacare, Including Unrelated Taxes, And Passage Of American Health Care Act: Removal Of Unrelated Taxes Likely Has a Positive Macroeconomic Effect.

From CBO, "American Health Care Act," March 13, 2017, Cost Estimate:
Macroeconomic Effects
Because of the magnitude of its budgetary effects, this legislation is "major legislation," as defined in the rules of the House of Representatives.1 Hence, it triggers the requirement that the cost estimate, to the greatest extent practicable, include the budgetary impact of its macroeconomic effects. However, because of the very short time available to prepare this cost estimate, quantifying and incorporating those macroeconomic effects have not been practicable. [Footnote omitted.]
***
Other parts of the legislation would repeal or delay many of the changes the ACA made to the Internal Revenue Code that were not directly related to the law’s insurance coverage provisions. Those with the largest budgetary effects include:
  • Repealing the surtax on certain high-income taxpayers’ net investment income;
  • Repealing the increase in the Hospital Insurance payroll tax rate for certain
    high-income taxpayers;
  • Repealing the annual fee on health insurance providers; and
  • Delaying when the excise tax imposed on some health insurance plans with high premiums would go into effect.
Removal and delay of the above-listed taxes likely would increase net business investment, employee hours worked and labor-force participation. Each of which, separately and together, would have a positive macroeconomic effect on the US economy and employment.

Complete Text Of CBO Cost Estimate Of American Health Care Act

From CBO, "American Health Care Act," March 13, 2017, Cost Estimate:
CBO and JCT estimate that enacting the American Health Care Act would reduce federal deficits by $337 billion over the coming decade and increase the number of people who are uninsured by 24 million in 2026 relative to current law.

American Health Care Act CBO Cost Estimate by Milton Recht on Scribd

Wednesday, March 1, 2017

Americans Own Fewer TVs: No TV Households Has Doubled

From Ars Technica, "Americans have fewer TVs on average than they did in 2009: And the number of households with no TVs at all grew." by Megan Geuss:
The latest data shows that in 2015, 2.6 percent of households had no TV at all, a jump from the previous four surveys in 2009, 2005, 2001, and 1997 in which a steady 1.2 to 1.3 percent of households didn’t own a TV. The 2015 data also showed that the number of people with three TVs or more dropped in 2015. That year, 39 percent of households had more than three TVs, whereas 44 percent had more than three TVs in 2009.

1997 - 2015 Chart of TVs Per Household
Source: Ars Technica

Interestingly, the number of households with one or two TVs increased in 2015 to 58 percent, from 54 percent in 2009.