CIAO DATE: 01/2010
Volume: 4, Issue: 4
Winter 2009/2010
Pharmacide: The Pharmaceutical Industry's Self-Destructive Effort to Loot America
Cassandra Clark
Pharmaceutical industry executives are frequently accused of greedily putting "profits before patients" (as if drug companies could profit by means other than serving patients). This accusation would be unjust if these executives were after profits. Unfortunately, however, today's pharmaceutical executives are not after profits. They are after loot. They seek to gain, through legislation, money coercively taken by the government from American citizens. But, unbeknownst to these executives, their looting is self-destructive. In fact, by aiding and abetting the government in its violation of individual rights, the pharmaceutical industry is committing suicide. To see why, let us begin by examining some of the ways in which the industry calls for the violation of rights and receives loot as a result. Then we will turn to the reasons why this practice is killing the pharmaceutical industry.
Consider the industry's support for the Medicare Modernization Act of 2003 (MMA). The MMA expanded Medicare to include coverage of prescription drugs for Americans over the age of 65 and was the largest expansion of welfare in America since the creation of Medicare itself.1 When the Act took effect in 2006, it made the U.S. federal government the single largest purchaser of prescription drugs in America.2
In 1999, years before this bill had been conceived, Alan Holmer, then president of Pharmaceutical Research and Manufacturers of America (PhRMA), the industry's lobby group, made clear in a trade journal the industry's view that "the question is not whether, but how, to expand Medicare coverage of prescription drugs."3 In 2000, Holmer testified before the Senate Finance Committee that at "some point in the not-too-distant future, a Congress will pass, and a President will sign, legislation to expand drug coverage for Medicare beneficiaries. . . . Expanded drug coverage for seniors will be a positive development." Holmer emphasized:
The pharmaceutical industry strongly supports . . . expanding Medicare coverage of prescription medicines. . . . Medicare beneficiaries need high-quality health care, and prescription medicines often offer the most effective therapy for them. We believe that the best way to expand prescription drug coverage for Medicare beneficiaries is through comprehensive Medicare reform.4
The pharmaceutical industry got its desired "reform," and when the MMA became law, the government not only began dictating the terms by which private insurers would provide prescription drug coverage to Medicare beneficiaries, it also began spending tens of billions of dollars annually to subsidize that coverage.
From where does the U.S. government get this money? The government does not create wealth; it does not produce anything. Every penny the government spends on drugs (or anything else) comes from taxpayers. The government gets this money by taking it under threat of force from hard-working Americans (or by printing or borrowing it, which is deferred taxation). This is legalized theft; the money taken by force is loot. And when the government spends this loot on prescription drugs for the elderly, the loot is passed on to the pharmaceutical industry.
Now, merely receiving loot from the government does not in and of itself constitute the moral crime of complicity in the government's coercion. But the pharmaceutical industry is not merely receiving money from the government as a result of the MMA. The industry advocated this socialist scheme of forced wealth redistribution from the start, supported it at every stage of development, and is now receiving the loot as planned. Although the industry exchanges drugs for the loot, the entire arrangement on the part of taxpayers whose money is taken by force to buy the drugs is involuntary. Taxpayers do not choose to fund the industry in this way; they are forced to do so-by a law that the pharmaceutical industry enthusiastically helped to create. . . .
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Antitrust with a Vengeance: The Obama Administration's Anti-Business Cudgel
Eric Daniels
Not yet a year into its term, the initially popular Obama administration has plummeted in popularity. In light of Washington's escalated meddling in the economy, many Americans are expressing deep concerns and anger about the statist direction in which this administration is steering the country. Unfortunately, however, few Americans are aware of-and the media is ignoring-one of the administration's most serious threats to our freedom: its stated intention to bolster antitrust enforcement.
Since May, Christine Varney, the newly appointed assistant attorney general for the Justice Department's Antitrust Division, has conducted a speaking tour promoting the Division's new mandate under Obama and affirming the president's many campaign promises to "reinvigorate antitrust enforcement." Varney and her counterpart at the Federal Trade Commission, Jon Leibowitz, are publicly threatening "possible investigations" of businesses ranging from Google to Monsanto to IBM. In response to this new climate, antitrust advocates from Senator Charles Schumer to the American Booksellers Association have called on Varney to undertake new prosecutions. And New York Attorney General Andrew Cuomo recently joined the push by filing a suit against Intel.1
Americans should not only be aware of this ominous trend; they should be up in arms about it. Antitrust laws violate the rights of American businessmen and consumers, thwart economic development, and stifle our quality of life in myriad ways. To see why, we must first understand what antitrust law is.
During the second half of the 19th century, as American companies grew and acquired assets around the country, they found themselves in a difficult position. Although companies could achieve economies of scale by acquiring smaller firms and unifying their efforts, state laws prevented them from doing so. Whereas some state legislatures imposed special taxes on out-of-state corporations doing business in their states, other legislatures forbade corporations in their state from holding the stock of companies based elsewhere. (Legislators established such restrictions in the hope that they would force successful companies to incorporate-and thus pay taxes-in their state.) In response to these restrictions on acquisitions, C. T. Dodd and John D. Rockefeller of Standard Oil created a new form of business using the device of a legal trust, which enabled them to hold the stock of dozens of companies and thus effectively manage vast productive assets.2 The operational and financial advantages of this novel corporate structure were immense, yet critics alleged that the newly created trusts were "odious monopolies," charging them with "making competition impossible," "raising prices," and "disregarding the interests of the American consumer."3
Critics condemned this new legal device as a "problem" and branded businessmen who employed it as "robber barons." Yet these businessmen used this legal device to create their vast fortunes by increasing competition, lowering prices, and providing American consumers with more and better products.4 The problem was not that their novel form of business had generated economic inefficiencies-it had done the opposite. Rather, the problem was a political one. Because these businesses were becoming fabulously successful and their owners enormously wealthy, egalitarian-minded and envious Americans pressured politicians to "do something," and politicians, seeking approval, got "tough" on the issue.
A solution to the trust "problem" came in the form of the Sherman Antitrust Act of 1890. Senator John Sherman and his colleagues claimed that trusts were "combinations that affect injuriously the industrial liberty of the citizens of these States."5 Critics of the trusts claimed that their high profits were achieved-not through the entrepreneurial, managerial, and productive genius of men such as Rockefeller, Edison, and Carnegie-but by "the few extorting the many."6 Because of the "public outcry on the trust question" and the alleged need to protect the "interests of the consumer," Sherman and his colleagues advocated the creation of a broad law that outlawed "monopolization" and "restraint of trade." That law was the Sherman Antitrust Act, and since its passage in 1890 Congress has added five other antitrust laws to the books, prohibiting dozens of supposedly "anticompetitive" business practices.7 . . .
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What the "Affordable Health Care for America Act," HR 3962, Actually Says
John David Lewis
The California Coastal Commission: A Case Study in Governmental Assault on Property Rights
Paul Beard
Imagine the following:
1. A couple improves their oceanside backyard with tables and benches, a barbecue pit and kitchenette, an outdoor shower and restroom, and a beautiful flower garden. Thirty years later, government officials inspect the yard and declare that the amenities are ugly and out of character with the surrounding area, and that, because the amenities underscore the fact that the yard is private, they have a detrimental psychological effect on the public traversing the adjacent beach. The government orders the couple to clear out their yard and restore it to its "natural" condition, or face stiff penalties.
2. A man purchases a vacant lot along the Pacific coast with the dream of building his residence there, but when he submits his building plans to the local government, he is told that the size and location of his structure would sully boaters' views of the coastline. The government demands that he reduce the size of his proposed home to one-quarter its planned size and place it in a geologically hazardous corner of the lot.
3. A family that has been cramped for years in a mobile home on their 143-acre ranch wants to build a house large enough to accommodate them, but when they apply for a building permit, the government tells the family that, in exchange for permission to build, they must agree to a perpetual agricultural easement over almost all of their land-an "agreement" that would force the family and future generations to farm the property forever.
Unfortunately, we need not imagine any of these scenarios, because they are true stories of real people suffering at the hands of a real tyrant. Even as you read, these and other such abuses are occurring in California. The tyrant in question is the California Coastal Commission, a state bureaucracy with near-limitless authority over people's property and, thus, their lives.
Although the Commission's power to dictate how property owners may use their property is limited to certain regions in California, similar commissions exist in other states, and the Commission's endeavors provide an ideal case study regarding how and why governmental bodies at all levels across America are increasingly violating property rights. Let us begin our study by looking at the history and nature of the Commission. . . .
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The Barbary Wars and Their Lesson for Combating Piracy Today
Doug Altner
Over the past few years, Somali pirates have attacked numerous ships, hijacking more than forty in 2008, holding more than six hundred seafarers for ransom that same year,1 and extorting more than $150 million in ransom payments from December 2007 to November 2008.2 More troubling is that, as of September, reported pirate attacks for 2009 have already surpassed the total number reported in 2008-a strong indication that the problem of piracy is only worsening.3
Because of these attacks, shipping companies must choose between navigating dangerous waters and taking costly alternate routes in order to protect their crews and goods. In November 2008, Maersk, one of the world's largest container shipping companies, announced that, until there are more convoys to protect its ships from attacks, some of its fleet will avoid taking the most direct sea route to the East through the Suez Canal, which leads to pirate-infested waters.4 By taking the next best route from Europe to the East-around South Africa's Cape of Good Hope-shipping companies such as Maersk will add an average of 5.7 days and three thousand miles to each trip. The average annual cost of this route change to such a shipping company will range in millions of dollars for each of its ships that uses the alternate route,5 not to mention short- and long-term expenses from additional wear on its vessels. And, of course, given the integrated nature of the economy and the amount of goods shipped to and from the East, such route changes negatively affect all industries, directly or indirectly.
Although the piracy threat has been well known to those in the shipping industry for a few years, it became manifest to most Americans in April 2009 when Somali pirates hijacked the Maersk Alabama and captured twenty U.S. sailors. Although the sailors soon regained control of the ship,6 four pirates took Captain Richard Phillips hostage on a lifeboat. The three-day standoff that ensued ended when a team of navy SEAL snipers rescued the captain.7 Fortunately, neither the captain nor any sailors were seriously harmed during this attack-but it is disconcerting that a small gang of third-world pirates dared to attack an American ship and abduct its captain. Why were the pirates not afraid of a standoff with the most powerful navy on earth?
To determine what is motivating these pirates and how the U.S. Navy should best combat their attacks, many policy analysts, historians, and defense experts are looking to the Barbary Wars-two wars the United States fought in the early 19th century to end North African piracy-for guidance. These experts are wise to look here, for the situation surrounding the Barbary pirates of the revolutionary era is similar in important respects to the situation surrounding the Somali pirates of today. Like the Somali pirates, the Barbary pirates attacked trade ships, stole goods, took prisoners, and demanded ransom from wealthy nations with strong militaries. And like the Somali pirates, the Barbary pirates got away with their thievery for some time. But unlike the Somali pirates, who continue their predations, after the Second Barbary War the Barbary pirates stopped assaulting U.S. ships-permanently.
Toward establishing a policy that can bring about this same effect with regard to the Somali pirates, it is instructive to examine those aspects of late-18th- and early-19th-century U.S. foreign policy that were effective against Barbary piracy and those that were not. In particular, it is instructive to identify why the First Barbary War failed to end the pirate attacks but the second succeeded. Let us consider the key events surrounding these two wars. . . .
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Objective Moral Values
Craig Biddle
Author's note: This is chapter 4 of my book Loving Life: The Morality of Self-Interest and the Facts that Support It (Richmond: Glen Allen Press, 2002), which is an introduction to Ayn Rand's morality of rational egoism. Chapters 1-3 were reprinted in the prior three issues of TOS. In the book, this chapter is subtitled "Basic Human Needs."
We have seen that human life is logically the standard of moral value-and that each individual's own life is logically his own ultimate value. Here we turn to the question of the human means of survival. What things do we need in order to live? What actions must we take in order to gain and keep those things? And, most importantly: What makes those actions possible?
All living things have a means of survival. Plants survive by means of their automatic vegetative process known as photosynthesis. Animals survive by means of their automatic instinctive processes such as hunting, fleeing, and nest building. Human beings, however, do not survive by automatic means; our means of survival is not instinctual, but volitional. Since we have free will, we choose to live or not to live-and if we choose to live, we must also choose to discover the requirements of our life and to act accordingly.
While the choice to live is up to us, the basic requirements of our life are determined by nature. In order to live, we must take a specific course of action; random action will not do. We cannot survive by eating rocks, drinking Drano, or wandering aimlessly in the desert; and we cannot achieve happiness through procrastination, promiscuity, or pot. If we want to live and enjoy life, we have to discover and act in accordance with the actual, objective requirements of our survival and happiness. What are they? . . .
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Goddess of the Market: Ayn Rand and the American Right by Jennifer Burns
Robert Mayhew
Heaven and Earth: Global Warming, the Missing Science by Ian Plimer
Gus Van Horn
Al Gore, the Weather Channel, "environmental activists," and many politicians claim there is a worldwide "consensus" among scientists that the earth's climate is about to change drastically due to human activity. On the basis of this alleged consensus, governments are considering coercive measures to head off catastrophe-rationing fuel, regulating carbon dioxide emissions, dictating the kinds of lightbulbs we can buy, and so on. Of course, the idea that man is responsible for impending climatic doom has its detractors. Some say the science is not settled; some say it is settled, and that human activity is not warming the planet; and some say that even if human activity were warming the planet, that might be good. But who among us truly understands the scientific arguments alleged to support the various claims? Wouldn't it be nice if a scientist wrote a book carefully documenting and explaining, in layman's terms, the cases for and against man-made global warming? Then, we could determine for ourselves which claims are supported by evidence and logic.
Based on favorable publicity from conservative media and politicians, Ian Plimer's Heaven and Earth: Global Warming, the Missing Science would appear to be just such a book. Plimer claims to present an "integrated scientific understanding of the environment," and the book-chock-full of figures and graphs and containing more than 2,300 footnotes in its 504 pages-certainly makes a powerful first impression. Add to that EU President (and noted climate-change skeptic) Vaclav Klaus's statement that the work is "clear, understandable, and very useful," and a good grasp of the arguments for and against man-made global warming would seem to be just a few hundred pages away.
Unfortunately, Heaven and Earth utterly fails to deliver on its promise. Rather than clearly presenting the anthropogenic global warming hypothesis and specifying the kind and scope of data necessary to evaluate it, Plimer presents the reader with a disorganized hash of poorly-presented data; repeatedly mocks climate models without providing sufficient evidence or argument to warrant such mockery; dismisses the Intergovernmental Panel on Climate Change (IPCC) as a bogeyman "unrelated to science" (p. 20), without adequately explaining why this is so; and generally presents an incoherent argument against a straw-man version of the anthropogenic global warming hypothesis. . . .
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Red Hot Lies: How Global Warming Alarmists Use Threats, Fraud, and Deception to Keep You Misinformed by Christopher C. Horner
Daniel Wahl
I'm an environmental scientist, but I've never had time to review the "evidence" for the [man-made] causes of global warming. I operate on the principle that global warming is a reality and that it is human-made, because a lot of reliable sources told me that . . . Faith-based science it may be, but who has time to review all the evidence? (p. 318)
That is just one of many astonishing statements by global warming alarmists that Christopher C. Horner catalogs and analyzes in Red Hot Lies: How Global Warming Alarmists Use Threats, Fraud, and Deception to Keep You Misinformed. Horner amply demonstrates that the acceptance of such "faith-based science" is the modus operandi of many activists, journalists, and politicians-who want you to accept it too.
Horner exposes the tactics alarmists use to sell you on the faith and keep you ignorant of the facts surrounding alleged global warming. One such tactic is simple, premeditated deception:
Consider the example of Gore's co-producer Laurie David, who followed [Gore's documentary, An Inconvenient Truth] with a book aimed at the little ones. . . . [In the documentary] one ought to have suspected that Al Gore was up to something when he ran two lines [for CO2 concentration and temperature change] across the screen . . . claimed a cause-and-effect relationship, and then forgot to superimpose them. . . . Gore was correct to insist there was a relationship between the temperature line and the CO2 concentration line, as measured over the past 650,000 years. . . . The relationship, however, was the precise opposite of what he suggested: historically, it warms first, and then CO2 concentrations go up.
Gore's wording and visuals were cleverly deceptive-he implied, without stating . . . that CO2 increases are followed by temperature increases. The reason he didn't source his claim is that the literature doesn't support it.
Somehow believing only the young would bother to open their [book] targeting children, David and [co-author Cambria] Gordon weren't so clever. Their book included the two lines, but dared superimpose them, and even stated the phony relationship more outlandishly than Gore did in his film. The reason that temperature appeared to follow CO2 proved to be because they reversed the labels in the legend (pp. 199-200).
Horner shows that such deceptions are typical, not just of documentary producers and author-activists seeking to spread the faith, but also of so-called scientists and purportedly scientific organizations including, for instance, the UN's Inter-Governmental Panel on Climate Change (IPCC). Of the IPCC, Horner writes:
The unsupportable advocacy from these supposed sages of science begins with their threshold dishonesty of putting forth a lurid and alarming "summary," drafted by a few dozen people who often are activists-and encouraging claims that these conclusions represent the consensus of thousands of "the world's leading scientists" from the world over (p. 294).
These summaries, Horner shows, are written before scientists have submitted data. Even worse, it "appears that the IPCC intends to make the scientists . . . change their findings if they depart from the summary in order to bring them in line with it" (p. 304). The IPCC's "Lead Authors" edit out inconvenient findings, such as the following two, which, according to one scientist, had intentionally been "included at the request of participating scientists to keep the IPCC honest." . . .
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Islamic Imperialism: A History by Efraim Karsh
Andrew Lewis
Since 9/11, cultural critics and religious apologists have argued the question of Islam's militaristic nature: Is Islam inherently violent, or is it a peaceful religion corrupted by today's Islamic terrorists? Efraim Karsh does not argue that Islam is necessarily more inclined to violence than any other religion, or that today's terrorists have perverted Muhammad's message. Rather, he claims, Islamic culture has always been (and potentially always will be) associated with and spread by bloodshed and violence. This, he believes, is less because of the fundamental tenets of Islam than because of the fact that the religion's leaders and adherents have always been motivated by delusions of imperial grandeur achievable only by force.
In trying to explain the motivation behind the attacks of 9/11 and the militancy of today's Islamists in general, Karsh documents Islam's history of political violence. He tells the story of Islam, from Muhammad's rise to power in the early 7th century, through the rule by caliphates of the medieval period, through the rise and fall of the Ottomans, up to today's "renewed quest," headed by terrorists such as Osama bin Laden, for a universal Arabic-Islamic empire.
In Karsh's view, Islamic violence has always been driven more by political and imperial ambition than by religious fervor. Recounting key aspects of Islamic history, from Muhammad's many raids; through the persecutions, assassinations, and wars of conquest that followed; through the resurgent violence in the last century, Karsh leaves the reader with no doubt that Islam's past and present have been riddled with violence, and that its future likely will be too.
Karsh explains that Islam developed on a foundational premise of an "inextricable link between religious authority and political power," established by Muhammad himself (p. 13). What "made Islam's imperial expansion inevitable" is that Muhammad's umma (community of believers) accepted a credo that combined a universal religion with the necessity of territorial conquest to establish political rule to enforce that faith (p. 18).
Islamic Imperialism: A History is not a comprehensive or straightforward history of Islamic empires or culture. Rather it is a history of Islamic leaders' dream (Karsh's word) of achieving a global empire and the actions they have taken toward realizing that dream-a dream that, Karsh argues, can never become a reality. . . .
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The Israel Test, by George Gilder
Daniel Wahl
According to George Gilder, Israel's defenders have failed to make a compelling case for the country's right to exist-though not for lack of trying. Gilder cites, as one example, Alan Dershowitz, who has contributed two books offering "over thirty chapters of evidence against [anti-Israel] propaganda."
Dershowitz cogently contests the proposition that Israel is a racist bastion of apartheid, a genocidal expansionist power, and a crypto-Nazi perpetrator of "massacres." He ably refutes the verdict of the relevant UN committee that Israel is "the world's primary violator of human rights" . . . [And he] even takes the trouble to answer charges of the ineffable Iranian president Mahmoud Ahmadinejad as if the ruler were moved by legal niceties and resourceful argument (pp. 20-21).
But, although Gilder acknowledges that Dershowitz's arguments refute the typical charges made against Israel, he says that this defensive posture is an all-too-typical mistake. "The central error of Israel's defenders is to accept the framing of the debate by its enemies. . . . Locked in a debate over Israel's alleged vices, they miss the salient truth running through the long history of anti-Semitism: Israel is hated above all for its virtues" (pp. 21-22).
For all its special features and extreme manifestations, anti-Semitism is a reflection of the hatred toward . . . capitalists that is visible . . . whenever an identifiable set of outsiders outperforms the rest of the population in an economy. This is true whether the offending excellence comes from the Kikuyu in Kenya, the Ibo and the Yoruba in Nigeria . . . [or] the over 30 million overseas Chinese [throughout] Southeast Asia (p. 36).
In The Israel Test, Gilder zeros in on both the source of Israel's success and the source of hatred toward the nation, making a strong case for why the nation's continued existence should be both supported and celebrated. . . .
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