Today, researchers compete for government grants at increasingly shorter intervals and with diminishing chances of success: Less than 1 in 5 grant applications succeeds. This inhibits risk taking.
By contrast, private investment in medicine has kept pace with the aging population and is the principal engine for advancement. More than 80% of new drug approvals originate from work solely performed in private companies. Note that such drug approvals come on average 16 years after the beginning of clinical trials, which typically cost $2.5 billion from start to finish. Even if grant-subsidized academics wanted to create a new drug, economic reality prevents it.
International trade is not like a sports event where one “team” wins and the other loses. Once we stop thinking in terms of countries being like teams and start thinking about the individuals and organizations who are engaging in mutually beneficial trade, we can understand how the CEO’s perspective misses the point.
Moving away from the “country as team” view also enables us to see the problem with Trump’s emphasis on getting “better deals.” The US economy is not an organization with a single purpose as is one of Trump’s firms.
As it turns out, the right’s fascination with economic protectionism and the left’s fascination with “buying locally” arise from the same flawed notion. They only differ on where to draw the line between favored and disfavored exchange. If we really believed their nonsense, then we would only consume things that we make for ourselves in our own homes. Beneath the political rhetoric, though, trade is nothing more than two people exchanging what one can produce well for what the other can produce well. That many people work for companies is irrelevant to the economics; it’s all trade between people. And if trade between people is good – which it clearly is – then it’s good regardless of whether those people live in different households, different cities, or different countries.
Dan Mitchell exposes the flaws in the GOP’s “border-adjustable” tax plan. See also here. (HT Lyle Albaugh)
Senator Cotton rightly tells us to pay attention to the law of supply and demand but then promptly ignores demand. Immigrants boost demand by buying goods and services, which create more jobs than are occupied by the immigrant workers themselves according to research by Gihoon Hong and John McLaren. If immigrants are removed from an area they take their purchasing power, and the jobs that their purchases support, with them.