Why Drug Companies Can't Just Raise Prices in Canada
Drug prices in other countries are lower in Canada than in the U.S.--hence the shameful push for drug reimportation.

So why don't drug companies simply raise their prices in Canada? They can't. Blame Canada. And blame the U.S. government for the international agreements it has made. Kevin Hassett mentions the trouble with TRIPS agremeents.

TRIPS is an acronym for Trade-Related Aspects of Intellectual Property Rights; the official text is here.

"[The] current international agreement for drug trade (the so-called TRIPS agreement) essentially handcuffs our drug companies when they negotiate with other countries. It allows a country to violate a drug patent — steal the new drug — if the country is unable to negotiate a contract at "reasonable commercial terms."

UPDATE: Here is one analysis from the Thomson corporation that discusses compulsory licensing under TRIPS. It provides a reference to relevant paragraphs covering pharmaceutical patents.

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Longer, Fewer School Days?
A member of the Wisconsin House has proposed giving government school districts the options of holding fewer, but longer school days during the year. The idea is to save on expenses for heating, busing, food service, and other variable costs.

Good idea? I don't know. The teachers union is against the idea--which may or may not make it a good idea. They say that there's a danger in cramming too much information in one day. Perhaps. School and state officials ought to, before tinkering with schedules, consult the Six Habits of Fiscally Responsible Public School Districts.
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The Governor Turned, At Least Partly
Somehow I missed this yesterday, but Governor Jennifer Granholm is now advocating that Michigan delay a scheduled decrease in the individual income tax rate. "All she's talking about is a pause," says a spokesman for the governor. But as Free political reporter Dawson Bell reminds us, the decrease--last of several that were planned back in 1999--"was intended to help change Michigan's high-tax reputation and make the state a more attractive destination for new business and professionals." If that's going to still be the case, the guv ought to, at the very least, set a date certain at which the decrease will go into effect. A better idea, though, would be to go through with the decrease on January 1, as scheduled.
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Economic Incentives Work--Even In Europe
In general, European countries have a much more extensive welfare state than the U.S. does. But now one country, France, is recognizing the fact that the safety net can become a hammock.

The unemployment rate now stands at just under 10 percent, and it is projected to increase next year. According to a report in The Scotsman, the new plans include sanctions to ensure that "jobseekers should not be able to turn them [job offers] down forever if the offers are appropriate for them in terms of qualifications and salary.” Currently, unemployed workers can get up to 75 percent of their former salary. For as long as two years. Unions, predictably, are planning a fight.
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Doctor, Doctor, Give Me the News
This post doesn't have much to do with policy, though it is about one of my favorite essays on higher education and status. Jay Nordlinger wrestles with this question: should you call a person with a Ph.D. a doctor, or is that an affectation?

I'm thinking of this on the occasion of fellow policy guru David Hogberg earning his Ph.D. this week. (Look over to "Cornfield Commentary" in the left side of this page.)

Here are some of my favorite lines from the Nordlinger essay.

• "First, the Times seldom refers to any Ph.D. as “Dr.” The head of Mt. Sinai Hospital, yes; the Nobel Prize winner in physics, perhaps. But an English prof or a sociologist or a drama teacher or something? Unusual."



• "Arthur Schlesinger Jr. — by the way, again — has fought all his life against being called “Dr.” He never earned a Ph.D., having been made a Harvard professor without one. Come to think of it, this may speak well for a Ph.D.)"



• "As for the Wall Street Journal, the stylebook says that a Ph.D. is called “Dr.” “if appropriate in context and if the individual desires it.” The editorial page, however — always independent and (gloriously) contrarian — won’t give you “Dr.” unless you wear a white coat and stethoscope."



• "The queer practice of “Dr. Castro” lives on among certain leftists .... Of course, absolute rulers are always lavishing titles on themselves (including “General,” although, as many have noted, it’s strange that Col. Qaddafi never moved himself up)."



• "In 1986, the Times achieved something of a stylistic breakthrough, assenting to “Ms.” This allowed Gloria Steinem to utter what must be the best line of her career: “Now I don’t have to be ‘Miss Steinem from Ms. magazine.’”



• "Condoleezza Rice, the current national security adviser, is “Ms. Rice” — her choice. Yet White House spokesmen routinely refer to her as “Dr. Rice.”



• Many years ago, another NR senior editor, Rick Brookhiser, surveying all the mail sent to Bill Buckley, adjudged that the most interesting letters were those from prison. And the least interesting? The ones from people who signed themselves “Ph.D.”

Two personal comments. First, I've been close enough to the work required for a Ph.D. that if someone who earned it wants to be called "doctor," I've got no problem with that. (I would, though, agree with Buckley's comment about preferring the rule of a random selection of citizens pulled from the phone book over that of the Harvarad faculty.) Second, I spent a week in Vienna some time ago. The Ph.D. came, of course, from the Germanic world. Even so, I was surprised at how many times I encountered Herr Doktor. A few weeks ago, at a meeting in a small town in Michigan, I met the director of the Hayek society in Vienna. Of course--she was a Ph.D.
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Is There Ethics in Government?
The Illinois legislature voted 167-1 (House and Senate combined) on a series of ethics reforms. Well and good. The package does seem to have some useful measures, such as creating an office of inspector general for each constitutional office.

But three things give me pause:
First, nearly all unanimous votes mean that the item under discussion is meaningless (such as congratulating a sports team for its victory).

Second, changing laws may help, but more important is the culture of corruption that has surrounded the state's politics. That's going to take longer to change.

Finally, people are going to be involved in politics as long as politics has goods worth having. To reduce the influence of money and personal gain-seeking in government, there's only one sure cure: reduce the size of government.
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Don't Cry for schools Just Yet
Government-run schools in Michigan face losing $196 per pupil in state funding. But the Detroit News reports that together, they have $1.84 billion in "rainy day" funds.

The president of the teachers union says "All along, districts were supposed to be spending that money on programs and clearly they haven't. It makes it difficult for us to lobby legislators for additional funds for public education when they can look at us and say, 'that's why you have so many districts with so much money in the bank.'

That pretty much sums it up.
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Political Games With Ballots in (Where Else?) Illinois
Illinois law requires all candidates to be on the ballot by August of next year. But the Republican convention to formally nominate George W. Bush won't take place until September--meaning that by law, the president of the United States would not be on the ballot in Illinois.

Democrats in that state's legislature are willing to change the requirements of the law--for a price. That includes erasing some campaign-related fines imposed on high-ranking Democrats, and counting "hanging chads" as votes.

Now you see why I don't spend a lot of time talking about politics.
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The Road Tolls for Thee
The Detroit Free Press' transportation beat writer says that the goal of having 90 percent of Michigan's roads in "good condition" by 2007 won't be met. Matthew Helms agrees with Governor Granholm that the state should therefore not expand its road network. It sounds plausible--don't expand until you maintain what you have. But it is rooted in a false choice. Michigan should expand its road system and upgrade its current one. And it can, if it uses tolling to construct some of the new roads.
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Ag Extension Services: Funding by Localities Next?
Agricultural extension services are a social welfare, research, and porkbarrel all wrapped in one. The Michigan version runs 4-H programs, conducts agricultural and environmental research, operates a "master gardener programs, and badgers parents to "eat healthy."

Most of this is mildly beneficial. But is this "helpful nanny" model of government desirable in a time of tight budgets? When newspapers, magazines, and Oprah implore ply parents us with information about nutrition, is a government effort to do so necessary? I have my doubts.

The anachronistic nature of an agricultural extension service is seen in the fact that it's got office in nearly every one (all?) of Michigan's counties, including such heavily urbanized counties as Wayne (Detroit); Kent (Grand Rapids); and Oakland (wealthy, suburban Detroit).

Yet such services do provide some form of social network for less populated counties. Two such counties now level local taxes to pay (in part) for extension services. At current funding levels--in rural Alger county, $55,000 in local money supplements $180,000 in state and federal money--local funding won't support the entire system as is. But that's just as well. If such a service is to be of benefit in the future, it's probably going to be in less populated counties, who ought to pay for it themselves. Or perhaps the whole thing ought to be scrapped altogether.
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Want This Old House? Buy It Yourself
Since I'm on a roll with the Tribune, how about one more story? "Historic preservation" is yet another form of unfunded mandates. The owner of a building with a "
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More on Chicago Fire (Not the soccer team)
Poking around the Chicago Tribune website, I find that my favorite Trib columnist, John Kass, wrote about the fire and the political questions a few weeks ago.
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What's a State Fire Marshal For?
A reader of the PolicyGuy blog sends in a pointer to a story in the Chicago Tribune (registration required) about some questionable spending.

Here's what happened, as I understand it. There was a fire at the Cook County administrative building back in July. Six people died. The state has a fire marshal who might otherwise investigate this. Actually, at the time he was (and still is) the acting fire marshal. Gov. Rod Blagojevich hired a former FEMA (Federal Emergency Management Agency) official to do the investigation. For a cool $1 million.

Members of the state senate are now asking: why? Considering the state's budget situation, that's a fair question. I have no idea how much it should cost to investigate a fire such as this, so I can't say if the amount was exobitant or not. But it certainly seems to be a waste of taxpayer dollars to not use the resources already on the state payroll. I am all for contracting out when it makes sense; but somehow, it doesn't sound right in this case.
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Michigan Budget Cuts, Round 2
Michigan Governor Jennifer Granholm continues to stress budget cuts as the way to address the state's ongoing budget woes (current calculations: $920 million in the red.)

Meanwhile, a survey of 600 likely voters conducted by Mitchell Research & Communications, Inc. for the Michigan Chamber of Commerce shows that 68 percent of those surveyed prefer budget cuts; only 17 percent opted for tax hikes. On the other hand, only 32 percent said that current taxes were too high, signaling that there is support for a fairly expansive government.

Granholm concedes that "protests on the lawn of the Capitol because of cuts" are likely. She hasn't ruled out a subtle tax increase--the personal income tax rate is scheduled to decline from 4 percent to 3.9 percent on January 1, and there is take of pushing that off to a future date--but she has not talked it up, either. It's unlikely that the legislature would go along with that, in any case.

While Granholm's emphasis on tax cuts is admirable, I have yet to see any evidence that she has used the crisis as an occasion to fundamentally reform state government by shedding official functions, such as operating a State Fair.
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City to Drain Lake for a Wal-Mart
City officials in Arvada, Colorado, want to seize a lake and give it over to Wal-Mart. Through an abuse of the eminent domain principle, city officials may declare the lake "blighted" and then let the retail giant drain the lake and use it for a store. Why? To feed the ever-increasing appetite for tax revenues. The Rocky Mountain News finds this development an appalling one.

It used to be that condemnation through eminent domain required a clearly visible "public purpose", such as a road, airport, or something similar. Today, the model of hyperactive government has defined "public purpose" to simply mean the fattening of the government treasury.
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(No) Smoking in the Boys Room, or Anywhere Else
The City of Wauwatosa has become 16th first city in Wisconsin to enact a smoking ban. Taverns are exempt--at least for now. The city's council president is unfazed by criticism:

"We regulate businesses all the time .... We don't allow restaurants to serve bad food or impure water. We determine how late they can stay open."

How's that for an explanation of the "nose under the tent" theory of governance?

Here's an alternative: if you don't like smoky restaurants, don't patronize them.

It's an odd day when "choice" is the rule when it comes to the question of whether to end human life through abortion ("if you don't like abortion, don't have one," is a common retort to the pro-life argument), but not in whether a person will eat (or work) in a smoke-filled room or not.

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Illinois Legislature to Take off Tax Caps
Tax and spending measures can be powerful tools for restraining the growth of government. But they can be gutted as well (see: California).

Local government bodies in Illinois were placed under tax caps (no more than a 5 percent increase per year, if I recall correctly) in the mid-1990s. Illinois has more local government bodies--library districts, mosquito abatement districts, park districts, not to mention villages and cities--than any other state in the country. The legislature voted this week to allow the Cook County (Chicago) and several suburban park districts to raise their tax burdens--without first getting voter approval, which would normally be required under the tax caps.

What do these 15 park districts have in common? They "had not maxed out their tax rates for taxpayer-backed loans before caps went into place in."

Lesson for local officials: get your tax rates as high as you can before tax caps are imposed. You may get relief from the cap later, but it may take a few years.
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Rearranging the Deck Chairs
Detroit Mayor Kwame Kilpatrick wants the State of Michigan--which took over the Detroit Public Schools in 1999, after years of mismanagement--to return control of the DPS to Detroit. Specifically, to him.

Kilpatrick deserves some credit for partially bucking the status quo-oriented teachers union when he initially backed charter schools. But he was unable (or was it unwilling) to broker an agreement that would have poured millions of dollars of private money into city charter schools.

The desire to return authority back to the city is understandable--how many suburban or outstate residents would like to see the duties of their local government school board taken away and handed to a group appointed by the state?

But such measures--the takeback, or the giveback--are merely rearranging the deck chairs on the sinking ship of government-run schools. They may make people feel better, and perhaps actually do some amount of good. But they're no substitute for enhanced parental choice in schooling.
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Agricultural Extension Programs Face Elimination
As Michigan legislators and the governor grapple with a continued budget deficit, one possible target for cost savings is the Michigan State University Extension Service. The mayor of Ludington, a small tourist town in an agricultural county, is against it: “They do a lot with families and kids. They teach about nutrition and parenting skills, and that ties into the 4-H program."

Hmm. Aren't family members, churches, friends and the like supposed to be the ones teaching people about "parenting skills"?
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Feds Bail Out States, but For How Long?
In an editorial today, The Oklahoman (registration required) says that the Oklahoma Health Care Authority will spend $34 million of a $99 million federal bailout to increase payments to doctors and other health care providers in Medicaid. Some physicians are currently getting only 72 percent of the going rate for Medicare; they will soon get 90 percent.

(Medicaid, Medicare, yes, confusing. Medicaid is the program for the poor; Medicare, for the elderly. Medicare has tremendous power through the rates it sets.)

This is all and good--if we are going to have a government program, better that the costs be explicitly known and paid for through taxes, rather than lowballing the businesses that provide services to the government. The Oklahoman applauds the decision to increase the low reimbursement rates. But, the paper asks, what happens when this federal windfall runs out?

The headline of the article is "Medicaid Buys Time With Fee Boost." But more fundamental reform is required, as the Oklahoma Council of Public Affairs has noted in article written by your truly and Merrill Matthews. As The Oklahoman concludes its editorial, "A crisis-plagued Medicaid system has just gotten a major boost, but the next crisis could be just around the corner. " Make that WILL be around the corner.
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How About an Aggressive-Driver Campaign?
The campaign to compel seatbelt use got another boost from a federal report. Police in Michigan are also launching a new campaign to go after people for not wearing seatbelts. Arguably, the person in greatest peril from an unbelted motorist is ... the unbelted motorist.

Another danger which more obviously touches on law enforcement is aggressive driving--quickly weaving in and out of traffic at high speeds, for example. Perhaps police ought to go after those folks first.
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We're from the Government, and We Know Better Than You
Governor Jim Doyle is planning to veto a measure to liberalize the process whereby citizens can carry concealed weapons. Like a good politician, he knows the value of a photo-op, so he's going to have some sheriffs on hand when he carries out a public veto ceremony.

Most peace officers do a fine job. But they can't be everywhere. That's only one reason why conceal carry measures are important. It's a shame to see some of them go along with this political stunt.
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Community Service as Alternative to Jail
Criminal acts must be dealt with in some ways. Sometimes that means long prison terms. But it doesn't have to mean that, either. Waukesha County, Wisconsin has seen 161 jail inmates participate in community service programs this year. Inmates who perform community service reduce their sentence on a one-to-one ratio: one day out of jail sooner for every 24 hours of service.

The Salvation Army is a common place for inmates to volunteer. Some inmates have worked out so good as volunteers that the Army is looking for a way to hire them once they are released.

Says Mareth Kipp, a member of the county board, "It's saving jail days and we're silly if we don't think about that."

It also metes out community sanctions while allowing the inmates to do something for the community rather than sit around and watch TV.
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Rube Goldberg to Fix Health Care--Again
In a measure to game the Medicaid system (and taxpayers in other states) the Illinois General Assembly is considering a measure to tax hospital bed stays. Thanks to federal matching funds, the hospitals get the money back, and more, while insurers pay most of the initial tab. The goal is to bump up Medicaid payments, which are historically low, to hospitals, without spending any more state money. (For more details, see here).

The Assembly is also considering a similar scheme to promote insurance coverage, especially in rural areas. In brief, local governments take money already in the budget and transfer it to the state. The state records the money as "state effort" dollars, thus attracting federal money. The state takes the old, local money, and new, federal money, and gives it over to not-for-profit, local corporations. The new corporations sign up a bunch of people in such numbers that they form an insurance group. The corporations, using the new federal money, subsidize the insurance policies, so employers and employees can buy into the new insurance at a discount.

You have to give some credit to the first person who came up with this idea--credit, at least, for creativity.

But this is simply another Rube Goldberg operation, tinkering with and playing in the same old broken system of third-party payers and government programs.

There are many ways to make insurance more affordable, besides playing such games. Of course, boosting incomes through economic growth (better schools, lower taxes, etc.) would help, though these are long-term solutions. More directly, significant tort reform would lower the cost of medical care. Opening up Association Health Plans to all states would be a private sector-friendly alternative to a new government group. Liberalizing the use of Medical Savings Accounts would help out. So would legalizing basic insurance (that is, not filled with mandates). Tax parity between employer-sponsored and individually-purchased insurance would remove a hidden subsidy to third-party payers. Letting people buy insurance from a company licensed in any state--not just Illinois--would spur competition.

As the above list suggests, state policy makers have limited options. The biggest problem in health care is the discrimination against individual health insurance in the tax code--at the federal level. But there are options for the state as well--options that don't rely on (yet again) scheming the federal rules.
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Private Libraries Allow More Parental Control than Public Ones
Public libraries have long since left the books-only age, and now offer Hollywood flicks. There are, of course, private film libraries, such as Blockbuster Video.

Parents may hesitate about getting a library card for minor children, though, if they want to control what movies fall into the hands of their offspring.

As the Daily Herald puts it, "Even though they'd have to be at least 17 or be accompanied by a parent to see these [R-rated] movies in theaters, children don't need fake ID cards to take home the video versions -- only their library cards." The DH says that some libraries even hand out NC-17 (near porn) films to minors--films they could not get into at the local cineplex.

I'll give you two seconds to figure out what librarians think of this policy: They're all for it. Intellectual freedom, you see.

Actually, a few libraries in suburban Chicago do place limits on what kids can check out. Perhaps their head librarians don't belong to the American Library Association, which looks askance at librarians actually, exercising judgment.

The ALA does have one leg to stand on, though--most are, after all, government employees, and government restriction on free speech (and access to speech) is not highly esteemed in constitutional law.

There ought to be some middle ground though. Minors are, after all, legally dependent on their parents (though that distinction is being steadily chipped away) for all sorts of things, including a library card. Why don't libraries simply customize cards according to parental choice? If daddy doesn't want junior to check out "Silence of the Lambs," well, put a "No R movies" restriction on junior's account.

Then again, when libraries have become government-operated versions of Blockbuster, one must ask: why have taxpayer-funded libraries anyway?
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Beware Town Meetings
Writing in the Detroit Free Press, Dawson Bell warns not to read too much into the results of Governor Jennifer Granholm's "deficit tour." While the Guv should get credited for her skillfull maneuvering between fiscal conservatives in the legislature and government employee unions, the people who show up to her televised public forums tend to favor higher taxes--it's in their best interest.

Granholm's studio audiences were representative, Bell says "in the sense that they were of different races, genders, vocations, etc. But they were unrepresentative in one really critical area -- almost all were the kind of people who pay attention to and care about state government. Local elected officials, community leaders and those with a direct stake in state spending (like Merit Award scholarship kids) were present in numbers way out of proportion to their share of the electorate. To conclude, as many have, that their in-studio support (when Granholm asked for a show of hands) for raising the income tax to help solve the crisis gives her or lawmakers a green light is just short of cuckoo."
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Retirement and Health Costs Loom Large for Local Government
Milwaukee county governments, already with short-term troubles, is facing a long-term crisis in retirement and health care costs. That's the word from a series in the Journal-Sentinel, which begins today.

Says the paper, "While governments typically set aside and invest money ahead of time for pensions, fewer than one-fifth of state and local governments in the United States - and none in Milwaukee - have done so for retiree medical coverage." The result: an unfunded liability of anywhere from $2.1 to $2.9 billion. The cost to taxpayers: double-digit tax increases for as long as 30 years, if the money is found only through tax increases and no other changes are made.

The situation is only going to get worse, when, in 2007, the Governmental Accounting Standards Board, will require local and state governments to list the costs for retiree health insurance as a liability--meaning they will be paid off at once (unlikely), or carried as debt.

Similar accounting changes in the private sector have contributed to the rise of defined-contribution plans, which shift some of the risks, and decisions, to employees

The reason for the liability: soaring costs for health care. While the wages of unionized workers have risen four-fold since the 1970s, the cost of health care has risen 12 times.

The unions may play this in a "pity us" mode--their wages have not kept up with health care inflation. Yet health care coverage, like wages, is a form of compensation.

The head of the local chamber of commerce describes the problem well: "Because public employees pay so little for insurance, cost is not an issue when buying medical care. We have created an army of rotten consumers that have helped drive up medical costs. Private companies are also part of the problem, but the public sector is a significant contributor."

And of course, standing in the way of any changes are the lawyers.
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