Week Seven Course Update

Some Items That Caught Our Attention

The Horsehoe, Trump’s America is Socialist: “President’s plans on drug pricing echo themes of Zohran Mamdani, democratic socialist running for mayor of New York.”

TrumpRX! “Trump and Mamdani share a fondness for strong-arming private companies that raise prices. Mamdani wants to freeze rents on New York apartments subject to rent control. Trump just negotiated a deal with Pfizer to lower prices in return for sparing it tariffs on pharmaceutical imports. He regularly berates and threatens companies that raise prices in response to his tariffs.”

But if Trump isn’t pursuing literal socialism, it certainly isn’t free-market capitalism as Republicans once understood it. Republicans attacked the Affordable Care Act as socialism, though what its online marketplace does for health insurance is similar to what TrumpRx purports to do for drugs. Like drug companies, Republicans once opposed Medicare negotiating prices as a form of price control.

Price controls, like rent controls, are popular. But just as rent controls are why apartments in New York are scarce, controlling drug prices, even indirectly, could limit medical innovation and the access Americans enjoy to the resulting drugs.

I have argued before that Trump practices a hybrid between capitalism and socialism akin to “state capitalism,” popular in China and elsewhere, in which the state tells nominally private companies what to do. Sometimes, this involves taking a position in a company such as Intel or U.S. Steel. This week the administration said it is taking an equity stake in mining company Lithium Americas and its Nevada mining project, restructuring a federal loan agreement.

More often, Trump simply uses threats and rewards to direct business behavior: Pfizer promised lower prices and more investment in the U.S. to avoid tariffs; Apple did something similar. Coca-Cola changed the source of its sugar, and Cracker Barrel dropped a new logo. ABC briefly took comedian Jimmy Kimmel’s talk show off the air after Trump officials threatened its broadcast licenses over his remarks around the killing of right-wing activist Charlie Kirk.

To be clear, Trump isn’t a socialist. He genuinely likes business and has no problem with profits. Yet he has this in common with socialists: He thinks the country runs better when he tells companies and their shareholders what to do.”

America’s Socialist Health Care System: “the Organization for Economic Cooperation and Development (OECD) reports that in the United States, government controls 84% of health spending. In fact, government controls a larger share of health spending in the United States than in 27 out of 38 OECD-member nations, including the United Kingdom (83%) and Canada (73%), each of which has an explicitly socialized health-care system. When it comes to government control of health spending, the United States is closer to communist Cuba (89%) than the average OECD nation (75%).”

Ummmmmm … NO. If this is capitalism, no wonder why we hate it.

Have Political Views Affected College Choices? “Our choice experiment results reveal that both liberal- and conservative-identifying students are willing to pay more to attend a college with more students of the same political leaning (up to $1,162/year) and, especially, fewer students of the opposite leaning (up to $2,617/year).”

What Was Happening on the Day You Were Born?

Traffic Noise Hurts: "We calculate the aggregate economic cost of traffic noise at $110 billion nationwide. The economic burden is disproportionately borne by lower income and minority households, suggesting that the externality is regressive.

Who’s Hitting the Psychedelics Hardest?

The Bastille Has Been Stormed … and there is nothing left in it. “The longer the system persists, the more absurdities emerge from it. In the public sector, where salaries have been largely frozen for more than a decade, you often hear of situations where senior retired bureaucrats earn more in inflation-adjusted pensions than their waged successors. In education, French teachers are very poorly paid by European standards. Where is the money going? Pensions again. The state artificially props up the total employment cost it pays for teachers only to send the difference to cover for pensions. Everywhere you dig into France’s public spending, you find more hidden pension spending. Thanks to these artificially pumped up social contributions — which go towards former soldiers’ pensions — France’s Ministry of Defence can claim it reaches Nato’s 2% of GDP target. France’s pensioners unintentionally saved their country from Donald Trump’s wrath”

Oh, they Plan to Storm the Bastille Some More … thirsty for an 8% wealth tax … per … year