American Elephants


The Business of Business. They Respond to Incentives Too. by The Elephant's Child

Everyone responds to incentives, the people will recognize the incentives that work for them; but in many a law or many a regulation there are incentives that are not at first apparent. When you write up over two thousand pages of regulations, there are bound to be a lot of incentives that may astound those who put the thing together.

U.S. pharmaceutical giant Pfizer Inc. wants to buy AstraZeneca not just because the British company has a pipeline of cancer drugs. Acquiring AstraZeneca would give Pfizer shareholders relief from a U.S. corporate tax rate that is among the world’s highest. Pfizer can get a better return paying $100 billion or so to buy a foreign company than  paying punitive rates to return its money to the U.S.

Pfizer Chairman and CEO Ian Read told securities analysts that the primary drivers behind his merger attempt are “improved growth prospects in innovative businesses and redundancies they can take out.” The combined firm would aim for leading positions in immunology, oncology, vaccines and chronic diseases. The Wall Street Journal  said “this is what companies always say, and it may turn out to be true.” Pfizer also noted that the deal would be “structured to achieve an efficient tax structure.” The combined state-federal corporate income tax rate in the U.S. is nearly 40% while it is only 21% in the UK.

Pfizer is a U.S. company, but more than 70 of its cash— amounting to more than $35 billion—is sitting overseas. Bringing it home would cost the shareholders a bundle. Incentives. Unplanned by those who thought a 40% tax rate was fine for evil corporations.

A group of Walgreens’ investors are urging the company to ‘re-domicile’ overseas to lessen its U.S. corporate income tax hit. Walgreens has purchased nearly half the Swiss-based Alliance Boots, a health and beauty, and is scheduled to buy the rest next year. Boots tax rate would be about 20% in Switzerland. Walgreen’s earnings per share could be increased by 75%.

U.S based Questor Pharmaceuticals was recently purchased by Mallinckrodt, which is based in Dublin, Ireland, where the corporate rate is 12.5%.

ObamaCare is creating uncertainty about how much programs like Medicare and Medicaid will pay for new medicines. ObamaCare wants to sign people up, get them dependent on the program, and then cut costs dramatically so they can afford the program they created. Pharmaceutical companies original ideas often don’t pan out, but companies eventually succeed because the learn from each step of discovery, but the process is expensive and often long.

Toyota just announced that they are moving their corporate headquarters from California to Texas. Taxes and regulation. Incentives. California, Illinois, New York, states run by Democrats, are all losing businesses—and jobs—to states the have lower taxes and fewer punitive regulations.

After I wrote this, I heard someone discussing Walgreens and Pfizer on the radio, and going on about the corporations having no loyalty, and they had an obligation to stay in this country and pay higher taxes. That it was somehow ignoble to consider moving for mere money. Is it then wrong for Toyota to move from California to Texas to avoid punitive taxes and regulations? Or is it a message to California that they are killing business and jobs with their unwise policies. I’ll vote for the latter.

The Obama administration has been advised frequently that their corporate taxes are the highest in the world, and that it would be helpful to business and for job growth to reduce the tax to a more moderate level, and ideally to remove the corporate tax entirely. Corporations don’t pay those taxes, they are passed on to consumers, and simply raise the cost of living.



A Political Disease: Running Off At the Mouth! by The Elephant's Child

Yesterday, in a press statement,  the pompous Mr. Kerry pronounced “I will not allow my commitment to Israel to be questioned by anyone.” On Friday, the Secretary of State spoke to a room of influential world leaders in a closed-door meeting of the Trilateral Commission and reportedly said “A two-state solution will be clearly underscored as the only real alternative. Because a unitary state winds up either being an apartheid state with second-class citizens–or it ends up being a state that destroys the capacity of Israel to be a Jewish state.”

(Rule One for politicians: Nothing is ever private or off the record. period.)

In his press statement, Kerry said  “I have been around long enough to also know the power of words to create a misimpression, even when unintentional, and if I could rewind the tape, I would have chosen a different word to describe my firm belief that the only way in the long term to have a Jewish state and two nations and two peoples living side by side in peace and security is through a two state solution.”

Mr. Kerry is simply following instructions. Obama made his ideas clear in his 2009 Cairo speech. His views were formed from his friendship with Palestinian firebrand Rashid Khalidi and Bill Ayers. Ayers, Obama friend and neighbor in Chicago, former and unrepentant Weatherman terrorist, joined other tenured faculty in signing an anti Israel petition, accusing Israel of apartheid, and calling for academic boycott, disinvestment and sanctions. Khalidi speaks with a raging, uncontrolled hatred for Israel.

According to Obama’s Cairo speech, it was “undeniable” that for sixty years the Palestinians has suffered in pursuit of a homeland, endured the pain of dislocation, and been confined “in refugee camps in the West Bank, Gaza, and neighboring lands,” waiting, ever waiting for “a life of peace and security that they have never been able to lead.” This is the worst kind of nonsense.

The “poor, suffering refugees living in squalid refugee camps” is probably an appealing image in the faculty lunchrooms, but when Palestinians turned down Israeli citizenship, the Palestinians were turned down by Jordan, though they are the same people, and by the Egyptians, who share a border with Gaza, and who use complete brutality to keep them out of Egypt.

Palestinians don’t want a separate state, they want Israel destroyed. They teach their smallest children to hate Israel, how to be jihadists. The Arabs have turned down every offer to create a Palestinian state, over and over.

Obama came to office convinced that the entire reason for “violent extremism” in the Middle East was Israel. His goal was to restart the peace process, and by forcing Israel to give in to the poor refugee Palestinians, there would be peace in the Middle East, and Obama would deserve to get another Nobel Peace Prize.

Andy McCarthy, whose book The Grand Jihad, clarifies the problems of the Middle East, offers an excerpt to explain Kerry’s embarrassing statement, and what it really means. It’s helpful to look at the Cairo speech in the current situation. Looking back, it’s a strange speech. As McCarthy says: “I do not understand how anyone who heard Obama’s Cairo speech could be remotely surprised by Kerry’s “apartheid” remarks.”



Chien drole mange a table by The Elephant's Child
April 29, 2014, 3:10 pm
Filed under: Entertainment, Fun n Games, Humor, YouTube | Tags: , ,

(h/t: Maggie’s Farm)



Sanctions, Strategic Pivots, Peace Processes: Nothing’s Working! by The Elephant's Child

From the front page of the New York Times:

TOKYO — President Obama encountered setbacks to two of his most cherished foreign-policy projects on Thursday, as he failed to achieve a trade deal that undergirds his strategic pivot to Asia and the Middle East peace process suffered a potentially irreparable breakdown.

Mr. Obama had hoped to use his visit here to announce an agreement under which Japan would open its markets in rice, beef, poultry and pork, a critical step toward the Trans-Pacific Partnership, the proposed regional trade pact. …

In Jerusalem, Israel’s announcement that it was suspending stalemated peace negotiations with the Palestinians, after a reconciliation between the Palestine Liberation Organization and the militant group Hamas, posed yet another obstacle to restarting a troubled peace process in which Secretary of State John Kerry has been greatly invested.

From the Wall Street Journal:

The U.S. and the European Union imposed more sanctions on Russia Monday and both the ruble and Moscow stock index rallied, the latter up 1.5% The markets didn’t take this response to the Kremlin’s war on Ukraine seriously, and neither will Vladimir Putin.

The Journal added:

Sanctions only make sense if they cause enough economic pain to make Russians begin to question the wisdom of Kremlin imperialism. Otherwise they make the West look weak and disunited. This is exactly what Mr. Putin is counting on, and so far he’s been right.



Oh What a Tangled Web We Weave, When We Get All Excited About the Climate by The Elephant's Child
April 28, 2014, 4:48 pm
Filed under: Politics | Tags: , ,

102663325_265637c (photo by Dan Kitwood)
This is how absurd it gets in climate alarmist politics. Considered Britain’s biggest CO2 polluter, Drax in North Yorkshire is suing the UK government after they have lost a lucrative contract when a media investigation revealed that they had stopped burning coal and are burning wood pellets from US forests as a “green” alternative to coal. The government had agreed to pay double for power generated this way, but withdrew the offer when it was made public that it was shipping biomass pellets 3,000 miles from North Carolina forests.

Environmentalists say endangered species, habitats, greenhouse gases.

Ministers have withdrawn their promise to guarantee profits for the part of the plant using biomass.

That wiped £400 million off the company’s share price and prompted the company to start legal action.



IPCC Author Claims Government Meddling in the Summary for Policymakers by The Elephant's Child

A lead author of the UN’s Intergovernmental Panel on Climate Change (IPCC) has publicly disassociated himself with the report after government officials forced him to change a highly influential scientific report on climate change to suit their own political interests.

Harvard professor Robert Stavins said that officials representing “all the main countries and regions of the world” insisted on changes to the report in a late night meeting at a Berlin conference center two weeks ago. Three quarters of the original version ended up being deleted.

Professor Stavins’ chapter of the 2,000 page document concerned ways countries can cooperate to reduce carbon emissions. He is a Harvard professor of Business and Government, and was one of two coordinating lead authors of a key report published by the IPCC’s Climate Change report earlier this month.

The theory is that IPCC reports are scrupulously independent and give scientific advice to governments around the world to help them shape policy.  The “Summary for Policymakers” is a condensed version that the world media and politicians rely on for evidence that what they want to do is actually a good idea. Governments of all sizes have enthusiastically embraced global warming as something which they can “fight” to impress their citizens, and the ‘Summary for Policymakers’ provides the evidence. It is the “consensus” that warmists embrace.

Professor Stavins told the Daily Mail that he had been especially concerned by what happened at a special ‘contact group.’ Two Summary authors were surrounded by 45 or 50 government officials who made clear that “any text that was considered inconsistent with their interests and positions in multilateral negotiations was treated as unacceptable.” Many of these officials were themselves climate negotiators working on a new treaty to replace the Kyoto Protocol in negotiations set to conclude next year.

Professor Stavins said, “This created an irreconcilable conflict of interest. It has got to the point where it would be reasonable to call the document a summary by policymakers, not a summary for them, and it certainly affects the credibility of the IPCC. The process ought to be reformed.”

Two weeks earlier, Sussex University’s Professor Richard Tol demanded that his name be removed from the summary of an earlier volume of the full IPCC report. He said:

The IPCC does not guard itself against selection bias and ‘group think’ —Alarmism feeds polarization. Climate zealots want to burn heretics of global warming on a stick.

The IPCC has always been a political operation. It was founded to be a political operation. Look up Maurice Strong on Google. The IPCC does not do science themselves, but assembles reports from chosen scientists. It has been often criticized over the years, but the Summaries are over-relied on by policy makers.

Our own government has been involved in wind farms; solar arrays; deepwater drilling; offshore drilling; fracking;  pipelines; refineries; coal mining, processing, transportation and fueling power plants; electric cars; regulations on everything from lightbulbs to shower heads and toilets; gasoline additives, ethanol, biofuel; mpg regulations; solar cell manufacturing; and environmental battles over everything previously mentioned with endangered species thrown in as a bonus. The funding, grants, contracts, subsidies, tax credits involved add up to enormous unknown totals wasted on changes in climate that many consider a natural process not amenable to human control. And there has been no warming at all in 17 years and 8 months.



Another Unaccountable Agency With Vast Powers. by The Elephant's Child

The Affordable Care Act’s Independent Payment Advisory Board has been so heavily criticized as an unaccountable body with the power to effectively ration Medicare services that even many congressional Democrats no longer support it. Ordinary people didn’t pay too much attention until Sarah Palin called it a “death panel.”

IPAB’s 15 supposed experts (yet to be nominated) are completely unaccountable and are there to preserve Medicare in its current form by making it cost less. Uh huh. This is traceable to Obama’s chosen health care advisors and their admiration for Britain’s NHS and that organization’s recognition that most of the expense driving up the cost of health care comes in seniors’ final years. Why should we waste all this money on old folks who are about to die anyway?

The unstated yet clear agenda is to impose stricter price controls within Medicare. The history of such price regulation in Medicare and around the world clearly reveals that such controls cut costs only by lowering quality and adding rationing (queues and long waits for service), as well as eliminating participants.

This is Democrats normal modus operandi. Lots of carrots to sell a policy or program, but the carrots always cost too much and one way or another the costs must be cut back. Medicare is not sustainable in its current configuration.

There are enormous amounts of fraud in Medicare. It is quite possible to find ways to reduce costs that do not assume that doctors are all too rich and charge too much. If you honestly look for ways to be more efficient, they are there to be found. That’s how American productivity keeps growing. Ideological assumptions about unearned wealth and an ever increasing need for more control by more bureaucrats prevents efficiency from being found. The assumption that unaccountable bureaucrats can run the medical profession better than those who have spent years in training to learn how to preserve life and heal the afflicted seems a little odd when looked at straight on.

The IPAB’s little-known cousin the Center for Medicare and Medicaid Innovation has managed to escape the political radar. Its seemingly innocuous mission is promoting new and more efficient “payment systems” and “models of care.” This agency is just as dangerous as the IPAB. It is an agency run by the president’s political appointees, but never has to go back to Congress to get an appropriation. Obama provided it with $10 billion up front, to cover its costs for 10 years. At the end of that time the agency will get another $10 billion appropriation.

The big infusion of funding has allowed the CMMI to grow from 60 employees in 2012 to a planned 440 full-time workers in 2015. Ten percent of the funding is devoted to personnel and administrative expenses. Congress usually requires agencies to return to Congress to request a new appropriation each year, which at least gives the illusion of competency being reported and checked.

The premise is that government bureaucrats are best positioned to lead an effort in innovation in medical delivery. (stop laughing!) The history of Medicare’s payment systems over four decades is one of politicized decision-making by regulators who know little about what they are regulating, protection of incumbent providers and roadblocks to new technologies or new ways of doing business. Inefficiency is rampant, and made far worse by government attempts to direct doctors’ time and practice. They will routinely try to cut costs by eliminating the highest and lowest-cost providers.

There has never been an industry, a profession or a product that has not been improved by competition. Politicians policy prescriptions are based on the implicit assumption that government is full of wise platonic guardians who automatically recognize market failures and instinctively recognize the remedies for such failures. Democrats don’t like competition anyway. It’s not fair.

Both agencies should be shut down at the earliest opportunity.




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