Rewards for Not Paying Attention

Should people be rewarded for not paying attention or for pretending they didn’t know about dangers that have been well publicized to the point that they are common knowledge? 

First, a less dire example of well-known information: a study hitting the Internet and the airways recently revealed that “Washing your hands under running water may be a better way to stop the spread of infections than using a hand sanitizer.” The hand sanitizer can be nearly as effective as washing hands for removing flu viruses, provided both are done properly. It just takes longer.

In laboratory experiments “it took about 30 seconds for the sanitizer to eliminate all the flu virus in the saline samples, but more than 4 minutes for the sanitizer to get rid of flu in the mucus samples.” From the lab tests they moved to a more real-life situation by putting mucus directly on people’s fingertips. When it was given time to dry (for 40 minutes), the hand sanitizer killed the flu virus within 30 seconds. But in a more realistic situation where the mucus was still moist, it took about 4 minutes of rubbing for the flu virus to be completely eliminated.

Proper hand washing removed traces of the virus in both cases in about 30 seconds, whether the participants used soap or not. The benefit is not from the soap, but from the rubbing under running water. 

No one is likely to rub the hand sanitizer for 4 minutes or alternatively to let their hands dry after sneezing for 40 minutes, but neither do many people spend half a minute scrubbing under running water. When a sink is not available the alcohol is a good option. 

That’s what we know today, but we had substantially the same information 10 years ago. From Live Science in October 2009: “Hand washing with ordinary soap and water is the most effective way to remove germs. But when you're on the go, alcohol-based hand sanitizers are tremendously effective in preventing the spread of the seasonal flu.” They gave 20 seconds for washing and 15 for the sanitizer, so the latest study just worked a little on the details. It wasn’t really news.

This is just one everyday example of how the media likes to present old news as some brand new revelation wrapped in the cloak of the latest study.

In light of that consider the opioid epidemic. Within the last two weeks, “OxyContin maker Purdue Pharma LP filed for bankruptcy protection…succumbing to pressure from more than 2,600 lawsuits alleging the company helped fuel the deadly U.S. opioid epidemic.” Nearly every state, numerous cities and counties and many others insist that the company “aggressively marketed prescription painkillers while misleading doctors and patients about their addiction and overdose risks.”

Any money awarded will not bring back even one of the 400,000 lives lost between 1999 and 2017, but the various levels of government hope to be able to confiscate money from drug company profits to remedy the situation rather than taking from tax payers.

My question is: what are they going to do with this money? Treatment is no doubt an option. Perhaps they will fund stocks of Naloxone (sometimes sold under the brand name Narcan). 

Of course, awareness will surely be part of the plan. But with the opioid epidemic in the news daily, with current Public Service Announcements and with the subject sure to come up in the upcoming presidential campaigns, what more can they do to get the word out? The company may have been playing fast and loose with the truth in the past, but now their website clearly states, “OXYCONTIN® exposes patients and other users to the risks of opioid addiction, abuse, and misuse, which can lead to overdose and death.” 

With so much information available, should compensation be available to everyone who becomes addicted from now on? At what point does society expect people to recognize and deal with the danger? In the case of cigarettes it has taken decades – people are still suing tobacco companies over risks that have been widely known for 50 years or more, but they claim to be victims. 

If risky or irresponsible behavior continues to be rewarded even well after the risks are known, problems will never be solved.

Only People Have Money

A key to economic understanding is the concept that only people have money.  Other entities pass around the money and may hold it for a while, but when you “follow the money,” as the expression goes, it always eventually comes back to individual wallets and bank accounts.

Thomas Piketty, a well-respected French economist, professor and author of several books on income inequality, made the point clearly in a 2009 essay.  He wrote, “Let’s also recall that no taxes are paid by businesses: ultimately, every euro of tax is always paid by households…there is unfortunately nobody except physical, flesh and blood people who can pay taxes.”

He goes on to say, “Inevitably, firms pass on everything they pay to their workers (by reducing their wages), or to their shareholders (by reducing dividends or accumulating less capital in their name) or to consumers (by raising prices).”  Higher (or lower) corporate taxes means one or more of these entities is going to be affected.

In fact, this economic principle is not limited to taxes.  Any action that affects every company in the US or all companies in a particular industry – whether it be regulations, union bargaining, tariffs, or external events such as weather – feeds back to the end consumer.  This is true because when a cost affects every company, it takes competition out of the equation.  In this case each company can pass along those costs directly without fear of falling behind.  

It works in both directions: companies pass along costs to the three categories of people but their revenue also comes from people.  After they make sales and pay expenses, they must decide how much of the difference to reinvest in the business, making shareholders happy; how much to lower the price, hoping to get more customers and grow the business; or how much to increase wages, hoping to attract and retain the best workers.

So when CBS reports, as they did early last month, that Apple, Amazon and Google made a load of money in the last quarter of 2017, we must understand that those billions came from our wallets. And no one forced anyone to buy an iPhone or order items on line.  Facebook had similar positive results, but they forced no one to log in or click on the ads.  All these companies got their money from individuals (households) by providing goods and services that they valued.  Unlike the case of corporate taxes where every company gets to pass along added costs, all these companies, and any other company that wants to stay in business, must compete every day to provide the best service or product at the best price. When they do, they attract customers. That’s where their money comes from.

Some politicians want you to hate the rich.  But, barring those who inherited their wealth, it was people who made them wealthy by willingly giving them money in return for something of value, either directly (Jeff Bezos at Amazon) or indirectly (Warren Buffett investing in successful companies).

This dynamic works very well unless the government gets involved.  When certain companies are favored due to their relationships rather than their ability to provide the best for the least, their incentive shifts from satisfying customers to influencing politicians.  They no longer compete for our business where we voluntarily trade our money for their products.  Instead they compete for money that was taken from us involuntarily by the government (in taxes) and paid out in grants and subsidies.  It’s easy to see how this can skew the system, replacing an emphasis on added value with efforts to influence politicians.  This shift ends up costing the entire economy in the long run as less efficient companies stay in business through government favors.

Economic understanding helps voters to step back and look objectively at some of the actions and promises of elected officials, sorting through fact and fiction by following the logical path to and from households – wallets and bank accounts.  As a current example, when all the cities and states sue drug companies over the opioid epidemic, the money they (and their lawyers) collect will ultimately be an indirect tax levied on households through higher drug prices just as tobacco lawsuits translated into higher cigarette prices.

Some Odd Thoughts for the New Year

1.  The opioid epidemic rages.  “More than 63,600 people died from drug overdoses in 2016” with 66% of those deaths coming from opioid abuse.  The most publicized initiatives are:  increasing availability of naloxone (narcan) to revive people who have overdosed; and needle exchange programs to reduce the risk factors for AIDS and hepatitis.

This New York Times article explains the first.  “Every day across the country, hundreds, if not thousands, of people who overdose on opioids are being revived with naloxone. Hailed as a miracle drug by many, it carries no health risk; it cannot be abused and, if given mistakenly to someone who has not overdosed on opioids, does no harm. More likely, it saves a life.”

Perhaps an important question to ask is whether these programs are doing anything to change behavior.  One FDA study from a few years back, when the problem wasn’t as widespread, estimates that almost one in five patients are receiving naloxone not for the first time.  This was based on EMT data.  With it now available to many private citizens, spouses and roommates, such incidents could be higher.  Some people are so seriously addicted that a brush with death is insufficient disincentive, while some taxpayers are asking how many second chances should be allowed.

Needle exchanges are likewise controversial.  Some programs recommend a one-for-one swap, but don’t enforce it.  Others receive objections from neighbors about an increase in discarded needles on the street.

But this from the LA Times almost 4 years ago:  “Alcohol is responsible for about 88,000 deaths in the U.S. each year, according to a new government report on the toll of excessive drinking.”  That’s 88,000 compared to 63,600. 

What's the deal?  Why is only one considered a crisis?  Is it because alcohol is legal?  Is it because we have been fighting (and losing) the war on drugs since 1970 but quit fighting a war on alcohol in 1933?  Is it because an overdose death is immediate but an alcohol-related death is often gradual?  Or is it just another instance of "shark attacks" where what makes the best headlines gets attention?

2.  Back in November I wrote that when looking for reasons to be offended, some people aren’t satisfied citing ordinary matters.  They will dig deep and use plenty of imagination to uncover the most obscure examples.  In mid-December we learned of a Boston University professor “who has researched the origins of the popular Christmas carol ‘Jingle Bells’ [and] says she has found proof that the seemingly-innocent song is steeped in racism.”  Why not add White Christmas to the list, pretending it doesn’t snow around Boston?  Forget white; a quick search of the Internet reveals that using the C-word to describe the holiday is not politically correct and may be offensive.

3.  A few weeks ago the New York Times reported that the pentagon spent $22 million on the Advanced Aerospace Threat Identification Program to investigate UFO sighting.  A pet project of former Senate Majority Leader Harry Reid, the funds were hidden in the budget.  Coincidentally, most of the money went to an aerospace research company run by one of his personal friends.  Shouldn’t revelations of such waste and abuse of power be as disturbing as a senator mock-fondling an actress?  Yet it goes in and out of the news cycle with almost no comment except for a few lame UFO jokes.

 A couple of other comments on the UFO investigations:  one on cost, the other on value.  First, I heard in one report that the program was discontinued in 2012, but the government employee running it resigned only this year - good work if you can get it.  Second, with cell phone cameras everywhere and the tendency to take pictures of and post every unusual (or ordinary) event, what is the likelihood of having aliens in our midst without evidence being spread all over social media?

4.  Wildfires in California have burned about 300,000 acres of mostly trees and brush.  The Governor conceded that this kind of devastation will become a new normal due to changing weather patterns.  How would the situation improve if the State and the people who so loved trees allowed logging companies to harvest a reasonable number to build new houses instead of leaving them all in place to help spread the fires and to act as fuel, destroying occupied houses?  The Governor’s real message is that they are consciously choosing to continue yesterday's policies, knowing they will get the same result.  Critical thinking, anyone?