reducing the cost of labor

============ Prices, costs, and profits are three separate, although related, topics.

Given the amount of automation, and the low labor content of almost all [production] pharmaceuticals, it is difficult for me to see how the cost of labor has much [actual] affect on the retail price, let alone 50% more. The allocation of G&A, marketing, and executive bonus charges is something else.

On the other hand, the opportunity for "transfer pricing" and tax evasion may have a big impact.

While not exactly tax evasion, corporations do not pay federal [US] income tax on profits generated by operations in Puerto Rico until those profits are "repatriated" to the US. Given the huge expansion of off-shore operations, there is little need to ever repatriate the profits, and this provides yet another tax payer subsidized incentive for off-shore production and the elimination of additional US jobs.

Unka' George [George McDuffee]

------------------------------------------- He that will not apply new remedies, must expect new evils: for Time is the greatest innovator: and if Time, of course, alter things to the worse, and wisdom and counsel shall not alter them to the better, what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman. Essays, "Of Innovations" (1597-1625).

Reply to
F. George McDuffee
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That 10% has done enough damage to the economy.

Reply to
Michael A. Terrell

Sorry again. Just after I posted the above I read the newspaper. It appears that contrary to previous printed reports the government HAS decided to allow the manufacture of patented medicines under a "Compulsory Licensing" (CL) law.

The article goes o to say that the EU confirmed the legality of Thailand's action and it was allowed by WTO rules.

Bruce-in-Bangkok (correct email address for reply)

Reply to
Bruce in Bangkok

I don;t know either but up until last week the paper said that the government was considering action, but as I wrote in another post today the paper announced that the Government Pharmaceutical Organization was constructing a factory to make several drugs under the CL laws (or agreements).

So much for "News" papers.

Bruce-in-Bangkok (correct email address for reply)

Reply to
Bruce in Bangkok

I suppose it is really a matter of where you are looking from. From the purchaser's point of view cheap is better. But from a structural point of view you are correct. My question is whether the U.S. public and more important the companies who took advantage of NAFTA or the free trade or most favored trading partner agreements that the government agreed to and now discover that their goods are going to have a big penality applied to them are going to stand for it.

Example: Walmart, from all I read, became the largest retailer in the world by selling cheap (mostly imported) goods. Assume that the government proposers a law to add (lets say ) 300% import duty to chinese made shirts so that they sell for the same price as a US made shirt. What does WalMart think about that?

How much political power does a company like WalMart, and all the other companies that have moved offshore, have? And how much would they use that power in the next election? And what is the reaction of any political party in the world to the news that the opposition is going to have all the money in the world to contest the next election?

I don't think that whether it is the correct solution or not isolation, or protective tariffs will work.

Bruce-in-Bangkok (correct email address for reply)

Reply to
Bruce in Bangkok

Companies like that have resources that the common man just can't possibly match.

FOr instance, they can make significant campaign donations to BOTH candidates, therby ensuring that they have the winner in their pocket.

I can't do that.

Can you?

Richard

Reply to
cavelamb himself

Unions are only about 10 percent of the work force. So why do you blame them?

----------

If the liberals can believe Algore when he says that a world population that fits on a relative pinhead the size of Rhode Island can affect the entire world's environment........

......why won't they believe that a much larger ten percent slice of a group can wreak more havoc and do much more damage?

Reply to
*

Too_Many_Tools wrote in article ...

Actually the United States is becoming a third world country.

Remember the housing bust?

Our assets are depreciating quickly and there really is no end in sight.

Then consider the national debt...the United States is technically broke at this time and is selling assets to maintain the cash flow.

Note that it is happening under a Republican Administration.

TMT

----------

I believe the U.S. checkbook and Visa Card is under the control of Congress

- the majority of which is Democrats.

Reply to
*

I don;t make contributions to any of them.

Bruce-in-Bangkok (correct email address for reply)

Reply to
Bruce in Bangkok

I wouldn't believe *that* one, either. d8-)

This is not something that we want to get into, I think, unless you really like getting tangled in the pharma business. CLs are a political hot potato, but, by any definition, they're legalized piracy. Some people think the piracy is OK. Most of us don't. When Thailand pirates a patent, we pay even more in the US. This doesn't bother the EU, because they've already squeezed their prices out with price controls so that the US is the only place one can make up the loss.

If you want to hear a squeel, try renegotiating a drug price in France to pay for a patent loss in Thailand, after France votes to allow the CL...ha!

-- Ed Huntress

Reply to
Ed Huntress

If they're the ones that also told you Thailand doesn't have price controls on drugs, they're worth their weight in birdcage liners. d8-)

-- Ed Huntress

Reply to
Ed Huntress

Oh, it shouldn't be a surprise. As you say, economics and politics make a sort of religious mix. Healthcare, on the other hand, is one of the very few fields in which people have a gut recognition that markets don't always work:

Doctor: "We have a good chance to save your life if we act quickly. The operation will cost $20,000."

Patient: "Whoa, doc! That's 'way too pricey. I think I'll wait until prices come down."

This is the little voice that tells us market forces aren't always the answer.

I think you're putting a lot of faith in the "board's" ability to make an objective analysis. I have no such faith.

My son is in his sophomore year of acquiring a degree in economics. He's already knocking me off some of my perches with what he's learning. I'm just going to wait two more years and have him explain it all to me.

-- Ed Huntress

Reply to
Ed Huntress

No, that was actually the Chulalongkorn University pharmacy department people that told me that and I tend to believe them as from my own experience prices vary between shops or in various provinces.

This is not to say that distributors don;t try to do some price fixing though.

I do know, however, that there are some kind of control as some medicines aren't sold in pharmacies. Fosamax 1 a week was one I remember. The one a day tabs were sold in pharmacies but the one a week weren't. you had to get them at a hospital.

Bruce-in-Bangkok (correct email address for reply)

Reply to
Bruce in Bangkok

Well, the word from the international pharma marketing sources is that Thailand has price controls, but that they're basically too corrupt and incompetent to enforce them very effectively. Only a few are enforced.

There are two agencies involved, and the Thai FDA appears to be the place that politicians send their idiot nephews for high-paying jobs. Like most smaller countries, Thailand just copies what's going on at the US FDA and European FDAs, runs a pseudo research and "certification," and then rubber-stamps what the big guys are doing. This keeps the revenue flowing and avoids the problem of having to do anything that demands real effort.

We get cynical after a few years of working in the pharma business. But we call it being realistic. d8-)

-- Ed Huntress

Reply to
Ed Huntress

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> Note that the country that Ricardo used as an example [Portugal

=============== I think that on a conscious level #5 [propaganda] is a major contributing factor. Even more dangerous is the sub-conscious "cherry picking" of information to justify doing what you want to do and your acquisition/possession of enormous wealth.

This is by no means unique to "economics," but includes other areas such as sociology [e.g. The Bell Curve]

IMNSHO we have the flourishing of a secular religion, complete with prophets and scriptures, arcane theology, and promoters from the "pop" TV preachers [TV talk shows] to the pope [head of the Fed]. As in most [all?] religions, the assumptions, tenets, etc.

*BY DEFINITION* are based on "matters of faith" and not "matters of fact," and to complete this analogy we have repeated examples of "human sacrifices" to "propitiate the gods of the market and avoid their wrath."

The problem on the macro basis seems to be that no one examines the data, and then comes to conclusions using accepted and proven techniques, such as multiple regression or canonical analysis, rather the opposite where the assumptions are made and the data sifted/pencil-whipped to provide support and "evidence."

This is greatly amplified by what appears to be the case that the increasingly complex macro economic structures/organizations are not determinant but rather are random, much like the weather. To be sure trends can be seen, such as it gets hot in the summer and cold in the winter.

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What is not at all clear to me is why the belief persists that it is somehow a "sin" against the "gods of the market," (and likely to bring down their wrath) to introduce and enforce prophylactic economic/financial measures such as "loan reserve requirements," FASB accounting standards, and the provisions of Sarbanes-Oxley, but it is now generally religiously acceptable to introduce and enforce public health measures such as the pure food and drug laws, and compulsory immunizations. Indeed, anesthesia during childbirth is now acceptable to most people.

On the micro level, the problem appears to be that people do not [always] act logically/rationally. For example, Governor Spitzer, proving once again that it is indeed possible to lose your head over a little piece of tail?.

What is urgently required (but will never happen) in the current economic crunch is that a board of enquiry or inquest, with the power to compel document production and testimony under oath, be convened, and then the evidence to be sifted and evaluated on a "zero based" no-prior-assumptions basis. Too many people already "know" the answers, and even more are making money from the situation for this to occur.

Unka' George [George McDuffee]

------------------------------------------- He that will not apply new remedies, must expect new evils: for Time is the greatest innovator: and if Time, of course, alter things to the worse, and wisdom and counsel shall not alter them to the better, what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman. Essays, "Of Innovations" (1597-1625).

Reply to
F. George McDuffee

Its not really a bust, but a greatly over inflated balloon that popped

Mine arnt.

That happened in 1932

Shsssss! Dont confuse him with facts.

Gunner

Reply to
Gunner

============== A follow-up to my follow-up.

The "masters of the universe," have just done it again, by assuming they could predict/control random events.

In spite of the best economics advice and political clout that money could by, Carlyle Capital Corporation, the hedge fund subsidiary of the Carlyle Group, is in default/bankruptcy, despite owning 16.6 [others articles indicate 21.7] billion $US of AAA rated GSE [US government sponsored enterprise] bonds.

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hedge fund Carlyle Capital all but collapsed last night, stunning investors with the speed of its fall from being one of the biggest-name investment vehicles spawned by the late credit bubble to its latest victim. Bloomberg reports the public company said late Wednesday it has defaulted on $16.6 billion in debt after its banks withdrew their money from the fund. Carlyle?s pleas to its lenders failed to prevent them from issuing margin calls (requirements to put up more collateral for investment loans) because of the plunging value of Carlyle?s investments, which spiraled uncontrollably until it wiped out all of the company?s cash.

As if to prove Bundy right, three more hedge funds shut down or blocked investors from withdrawing their money in the last twenty-four hours or so, the FT reports. Drake Management, which has $12 billion in assets, said it would allow investors to vote on liquidating three of its hedge funds after more than half tried to withdraw their money. A $900 million Amsterdam hedge fund called Global Opportunities Capital shut down investor withdrawals for a year, and Blue River Asset Management of Colorado also shut down. ===========

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The Japanese CDS [credit debt swap] derivative market is going bananas.
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In a normal world or in a world where the derivative is closely tied to the underlying cash security, if the price of the derivative became utterly divorced, market operators would step in to trade away the difference, Mr Fisher adds.

But volumes in the credit derivatives market exploded precisely because most of the bonds hardly trade at all. At Goldman Sachs, for example, for every three dollars of trading in bonds, the firm trades $97 in credit default swaps.

===========

The dollar worth less than 100 yen, oil over 110$US/bbl and gold over 1,000$/ounce

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And these are the people that want to dictate how the US economy operates.....

Unka' George [George McDuffee]

------------------------------------------- He that will not apply new remedies, must expect new evils: for Time is the greatest innovator: and if Time, of course, alter things to the worse, and wisdom and counsel shall not alter them to the better, what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman. Essays, "Of Innovations" (1597-1625).

Reply to
F. George McDuffee

That's going to depend on how much they have to stand for. It also depends upon how they, collectively, link jobs and industrial prosperity to controlling trade. If they think it's necessary to save jobs and/or to cut our government debt load, they'll probably go along.

You're probably aware that the cost-advantage margins in most products imported here from Asia are not nearly as great as the disparity in incomes and costs. Some, however, are quite high: high-volume consumer goods can sell for less than 50% of their price if made in the US, Europe, or Japan.

Overall, though, the advantages rarely exceed 30% and they're falling, as the US dollar's value falls and as China eases up its controls on its currency, the gap may tighten. Some economists and politicians are counting on it to solve our problem.

A few years ago I wrote a series of three 5,000-word articles on trade, two of them exclusively about China, and I spent almost a year researching the three. One thing I learned then disturbs me now: the prices on goods from China are artificially high, and have an enormous amount of room on the downside for re-adjustment, should it become necessary for them. I don't know how that situation is viewed now, by the people who really know those things, but I doubt if it has changed. This suggests to me that small changes at the margins are not going to result in a qualitative change in our trade situation. Without that, we have to find another way to get out of the debt-financed economy we're in, and I have no idea what the prospects are for that.

Wal-Mart, as you may know, is not very well liked by many segments of the American population, so they may find that their political throw-weight is not that great, if the public perceives they're working against our overall interests. But I don't see 300% duties in any case. I see "voluntary restrictions," then quotas, and then tariffs -- fairly modest ones. That is, if it's necessary. If the dollar keeps dropping, it won't be. d8-)

Collectively, quite a lot. Individually, they'd be vulnerable.

All they could. But it would be reported all over the place. If they got too rough their reputations would go to hell.

New election-finance laws.

Well, they'd certainly work, in the sense that we could limit the growth of our deficit. Whether they would produce a desirable result is another question altogether. We could easily wind up killing our economy in the process if it simultaneously killed our exports, which is a real risk.

Protectionism in this age has real limitations for a highly developed country. The only place it seems to be relatively invulnerable is in agriculture, and that's under serious fire everywhere.

Reagan used limited protections to good effect. It was one of the brighter spots in his economic management. I visualize something like that happening again.

-- Ed Huntress

Reply to
Ed Huntress

You mean something like managing our trade rather than just letting the chips fall where they may? You mean we decide what industries we want to keep for the good of the country and figure out what we are willing to do to keep them healthy? We might even plan which areas we want to allow free trade to operate in and which areas that we think that would be a bad idea for the majority of Americans. In other words a system that is not free trade.

Free trade is like the honor system, it's a game where if everyone plays by the rules some get ahead but the majority get the shaft. With a game like that is it any wonder why nobody is playing by free market rules? There are just too many losers in real free trade for very many to want to play that game. The fact is the US was able to win the global economic competition game for many years, so we loved it. But now others are coming up to compete with us and they are actually beating us, say, like the Japanese automakers are destroying the American ones. Now if we played by the free trade, free competition rules we will lose that industry just like we lost consumer electronics and several others. Do we want to let our automakers be destroyed in the global market or do we want to fix the game just enough so that we can keep playing?

That's what it is all about, staying in the game economically. Those countries that want to keep industries protect them and the countries that don't want to keep them don't. Free trade is simply global competition for business. If there are no barriers it will be just like free market capitalism everywhere. There will be a few big winners and a lot of losers. That is the outcome of free market capitalism everywhere it's been tried. Whether it's Standard Oil, Wal-Mart, or the old AT&T, free market competition winds up with a monopoly, duopoly, or oligopoly and all the other competitors are put out of business. A great example of this is the American car market. Eighty years ago there were over 100 car manufacturers in the US. Eventually, there were three. That is what happens in a free market and when you expand that market to include the whole world you will get the same thing. All the countries know this and that's why they don't want to play free market capitalism unless they believe they are one of the few countries that can come out on top. Most of them know they won't so they protect what they want to keep. Except for us. Because of the free market utopians in charge here we've allowed our markets to become too open to unfair competition, and now we've got the worst trade deficits in the world. When something like free trade isn't working for you it's time to go with what does. The successful countries all use protectionism in one form or another. As soon as we start using the same tactics the sooner our trade deficit will start coming down, and probably the dollar will start going back up. Free trade has been a bust for us except for a lucky few. It's time to go back to what all of our competitors are using; protection for the industries that are critical for the welfare of our nation. Which is something we should have done years ago but with republicans in charge that wasn't possible. If we can get rid of them maybe we can make the changes necessary to turn things around. I think we all know where we're going to be if we keep doing things like we have during Bush's term in office.

Hawke

Reply to
Hawke

Yes, gently, and carefully.

Absolutely not. If you need a cautionary tale regarding "industrial policy," look to Japan's MITI and how they blew up Japan's chip business. And MITI is one hell of a lot better at it than anything we're likely to paste together.

The idea is to limit the *velocity* of change, not its magnitude. You can give an industry and the people who work for it some time to adjust, in a world in which an industry can be devastated in a couple of years, but if you hothouse that industry, you're soon going to have a useless, bloated, and noncompetitive clunker of an industry.

I think what we want is for the Japanese automakers to become more American than Japanese. And that seems to be what's happening. d8-)

Hmm. When was the last time you saw a French car in the US? Protecting is usually bad. Giving a temporary shield, a delaying tactic, may sometimes be good. It's not easy to do to good effect, and it rarely is. But sometimes it's necessary.

That kind of thinking is what may cause me to vote for McCain. If you're going to tamper with markets, you'd better be damned sure of what you're doing. What others are doing is of little help to us in deciding what *we* should do. We can't be mercantilists like the Chinese or the Asian Tigers. Europe is not a model we would accept. Japan has run out of gas and they're no shining example.

We need trade but we need something cautious, backed by a more conservative monetary policy and a more balanced fiscal policy. Trade will have to be slowed down for a while. We have to re-invest in infrastructure. That means a willingness to accept some real pain to get things back on track.

-- Ed Huntress

Reply to
Ed Huntress

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