Tags: Emerging Threats | Healthcare Reform | Venezuela | finance | committee | hhs | sanders

Grassley, Committee Fall for Price Controls Fallacy

sen chuck grassley republican of iowa
On June 26, 2019, U.S. Senate Judiciary Committee member Chuck Grassley, R-Iowa speaks during a Senate Judiciary Committee nominations hearing on Capitol Hill in Washington, D.C. (Manuel Balce Ceneta/AP)

Friday, 23 August 2019 05:37 PM Current | Bio | Archive

Economic ignorance: one small vice for a man, one giant vice for mankind.

No matter how many times price controls leave shortages, rationing, and misery in their wake, the idea never dies.

The currently fashionable vehicle for wallowing in price control delusions is the topic of pharmaceutical drug prices. Drug companies, it appears, provide a useful foil for politicians to loudly attack.

It's no surprise the Democratic primary is the venue for some of the most asinine rhetoric — what, with Sen. Bernie Sanders, D-Vt., and his merry band of Socialist pranksters leading us all on a debate season that feels like it's happening on Ken Kesey's kaleidoscope school bus.

That much we expected. It's the wrong-headed, opportunistic, and too clever by half embrace from certain Republicans that's more disappointing.

The proposals vary like chintzy items for sale at a tourist trap — expertly designed to briefly grab your attention, but built only just well enough to make it past the checkout line. All price controls share a fatal conceit, which is the notion that the world will go on behaving, statically, just as before the rules changed, instead of adapting, rapidly and organically, as the market's millions of participants continually re-evaluate what their best move is.

For example, last month the Senate Finance Committee passed a bill with its own little spin on price controls: it would fine drug companies if they increase the price of a drug at more than the rate of inflation.

The proposal, the brain child of far-left Sen. Ron Wyden, D-Ore., and saved from a Republican rebellion by the squishy Republican chairman of the committee, Sen. Chuck Grassley, R-Iowa, is at once laughably deficient in achieving its purported aims and yet bound to cause a wide variety of what would otherwise be economically irrational behavior to work around it.

For example, penalizing narrow, sudden price spikes — likely the work of an evil, conniving CEO laughing maniacally as he strokes his cat, or, hear me out, possibly due to unexpected supply chain shortages or other common hiccups in the business world —creates an incentive for broad, gradual price increases. Companies concerned the new penalties will make it difficult to adapt to changes in the market are encouraged to secure their annual permitted price increase, or else lose the opportunity altogether.

And so, the price controls encourage the opposite of their stated goals, all while creating additional compliance burdens for good actors, while the proverbial price gouging maniacs simply spread the pain to their whole product line.

The amendment to strip price controls from the bill failed by a 14-14 vote, with Grassley and Sen. Bill Cassidy, R-La., joining all of the panel's Democrats to stave off every other Republican. On final approval of the bill, price controls intact, Republicans voted 9-6 against, with Sens. Mike Crapo, R-Idaho, Pat Roberts, R-Kan., Mike Enzi, R-Wyo., John Thune, R-S.D., Richard Burr, R-N.C., Johnny Isakson, R-Ga., Pat Toomey, R-Pa., Tim Scott, R-S.C., and James Lankford, R-Okla., all siding heroically with truth, justice and the American way.

The other major price controls proposal, even more cartoonish than Wyden's crumpled-receipt-in-your-pocket of a bill, is what I like to call the International Socialist Index (official name: International Pricing Index). I'm loathed to call it by the official IPI moniker simply because the name itself is an assault on reason, a misleading misnomer.

Prices are something set by supply and demand, not government whim. The IPI is composed almost entirely of the rates governments with socialist, single-payer healthcare systems deigning to pay the American companies that invented the life-saving medicines they now covet.

And if anyone in this game is "getting away with murder" it's these bozos — the Brussels bureaucrats who've been keeping their womb-till-the-tomb* healthcare systems financially afloat by setting steeply discounted fiat prices.

(*Terms and conditions apply. Waiting periods may be measured in years. Socialist governments not responsible for the quality of care received; all rights to decide a given treatment is not worth paying for reserved.)

Who do  you think invents new medicines?

It used to be the Europeans, until they decided to forsake all future medical innovation for a quick hit of entitlements. Nowadays a large majority of the world's medicines are invented and brought to market by American firms, vastly disproportionate to our population size or any other metric.

And yet somehow the geniuses working sinecures at HHS — which proposed the IPI —decided to hitch the fate of a key sector of the American economy and practically all of medical innovation for the next 50 years on the shoulders of socialist Francophiles!

In the words of our president, "America will never be a socialist country!"

Thanks, but no thanks. Take a field trip to Venezuela if you need further assistance, price controls are working "wonders" down there, I hear.

Price controls have never worked in any country to solve any problem and have invariably made the exact problems they set out to remedy decidedly worse. It's already enough work keeping the left-wingers from getting any bright ideas without the help of squishy "moderate" Republicans. Senators like Grassley should know that conservatives are not pleased with his latest work on this at all.

Julio Rivera is a small business consultant, political activist, writer and Editorial Director for Reactionary Times. He has been a regular contributor to Newsmax TV and columnist for Newsmax.com since 2016. His writing, which is concentrated on politics, cybersecurity and sports, has also been published by websites including The Hill, The Washington Times, LifeZette, The Washington Examiner, American Thinker, The Toronto Sun and PJ Media and many others. For more of his reports, Go Here Now.

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Price controls have never worked in any country to solve any problem and have invariably made the exact problems they set out to remedy decidedly worse.
finance, committee, hhs, sanders
Friday, 23 August 2019 05:37 PM
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