Post Office Default, Do We Really Need USPS?

In what seems to be great news the Post Office announced that it will default on its $5.5 billion payment for future retiree health benefits. The United States Post Office (USPS) will also owe $1.5 billion in workers compensation and millions in interest payments. As I have pointed out here, here, and here despite the USPS best efforts of cutting jobs, talking about cutting back services, and closing down certain facilities USPS will lose $14 billion this year. What is even worse is that since the inception of the United States Post Office has lost $33 billion and counting since the founding in 1789. This figure actually understates the true amount spent since USPS is exempt from paying taxes on things like vehicles, tires, and other goods they purchase.

Technology like e-mail, online payments, and even cheap cell phones made sending things snail mail obsolete. If grandparents want a picture of their grand children parents no longer have to go to Eckerd’s (now CVS) or Walgreens to develop pictures and then send them in a package to their loved ones. Today in a few seconds people can snap a picture and e-mail it without any postage. Banks and payment transfer companies are also to blame since they developed ways for people to transfer money electronically. The Federal Government is going to stop mailing paper checks next year for people who receive Social Security and instead pay direct deposit or by debit cards.

Why USPS is still operating is beyond me. People worry if USPS was no longer in business who would deliver the mail. My answer would be FedEx, UPS, DHL along with other logistics providers. Cities or neighborhoods could decide who they wanted as their provider.  Have you ever heard about how great of an experience someone had with USPS? Profit seeking companies like FedEx and UPS have to make sure they not only deliver in an efficient manner but also create shareholder value which makes employees accountable. USPS employees are not held accountable and not until 2008 was an employee actually laid off.  USPS has 546,000 employees in 2012 which is a large decrease from the 752,949 employees it had in 2002. If USPS were to disband other companies like FedEx, UPS, and DHL could absorb these employees and would need more since they would have more things being delivered. Profit seeking companies would also want to make sure people in rural areas got their mail or else they couldn’t make profit. Given how inefficient USPS is not only would profit seeking companies need more help they would be hiring workers who would be paying more in taxes, and the companies themselves would have more profit which means they would pay more in taxes.

Do people really even need mail besides for sentimental things considering people e-mail, scan, fax, or call us if they really need something important? Not having to get all those advertisements in the mail would be a positive thing but of course we just trade off those for spam.  I really can’t understand why anyone with a pulse would want USPS to still exist given the billions that is wasted, the inferior service, and the lack of accountability.

Lowest Blood Supply in 15 Years and How General Blood Can Help

I saw this recent headline that the blood supply was at its lowest level in 15 years. This is quite interesting because our population has only grown dramatically since 1996. The article blames the low supply on the weather and the fact that Fourth of July fell in the middle of the week which of course is utter nonsense. Donations of blood have been increasing at 3% per year while demand has been increasing closer to 6%-8% per year.

What the article failed to mentioned was how the American Red Cross has a monopoly on the supply of blood. I go back to one of the basic principles of economics: when there is a shortage look to incentives to determine the cause. A few weeks ago while waiting in a doctor’s office I read this article about how a company called General Blood is trying to change that. General Blood buys blood cheap from blood centers and then distributes them overnight to hospitals all over the United States. Blood is also worth different prices in different markets. For example a pint might be worth $210 in Wisconsin while $265 in New Jersey.  

The market for blood is a $4.5 billion business and currently the Red Cross controls 44% of this. As a result every year 1.3 billion pints of blood go to waste (between 5%-14%). Apparently 1 pint of blood can save three lives. So in theory the amount of wasted blood adds up to 3.9 billion people. Surgeries One thing the blood market doesn’t have is an exchange which would make it much more efficient to match types of blood, what areas need blood first, and the best way to get blood to where it needs to go in the shortest amount of time possible.  The federal regulations with blood are burdensome ridiculous and should be scaled back since real people are suffering and even in some cases dying because they are unable to get blood in a timely fashion.

One hope this is on the horizon is artificial blood. This article claims that artificial blood could be here within the next decade or so but I won’t hold my breath. The blood would just be a temporary place holder for people in emergency situations which would be positive.

The position the government takes on regulation the sale of organs, blood, and everything else under the sun causes more harm than good. As I mentioned in this post about bone marrow, this post about kidneys, and this post about organ donation the government only gets in the way of people making voluntary choices about their own body. As economist Dr. Walter E. Williams would say the true test of whether you own something is whether or not you can sell it. According to the government we do not own our own body since we are able to be compensated for our own body parts or organs and create a market for them. 

Regulation Nation

H/T Ron Paul Facebook

Russ Roberts: How To Talk About Liberty (Israel)

Here is a recent video (May 2012) of EconTalk's Russ Roberts giving a speech on how to talk about liberty. Russ Roberts and Dr. Walter Williams do the best job of taking something explaining economics and the principles of liberty.

GlaxoSmith $3 Billion Fraud, Off-Label Use, and Dr. Drew

I woke up this morning and read a story about GlaxoSmith paying out $3 billion in a fraud settlement. At first I was thinking some plaintiff must have been injured however when I read the story I learned that GlaxoSmith was ordered to pay out billions of dollars simply because they were marketing drugs for what is known as “off-label” uses. Off-label use occurs when say a drug is approved for cancer but a doctor prescribes it for something else because they believe it will help. In Glaxo’s case they had a drug Paxil which was used for treating depression however wasn’t approved for treating in depression in anyone under 18. This is somewhat bizarre considering it is treating depression for different age group. How exactly is this an “off-label” use? The other drug was Wellbutrin which was approved for depression however GlaxoSmith promoted from 1999 until 2003 for ADHD, weight lost, sexual dysfunction, and substance addictions. Speaking of substance addiction Dr. Drew was actually linked to this case as he was paid $275,000 for in the 1990’s for being involved in a two year project that looked at intimacy and depression.

What is curious however is that this was labeled as fraud yet how many consumers where hurt? Actually many people were hurt by not being allowed to use the drug for off-label use that could have benefitted them. Patients are not going to take something for an off-label use unless they first go to an American Medical Association approved doctor and then have that doctor write a prescription for a drug that was approved for some other use (which cost the drug company $1 billion to make and at least ten years of research.  The reason there is so much off-label use is because the FDA is zealously over regulates even approved drugs. Even if a FDA drug is approved for one illness it has to go through the whole FDA process again to get approved for another illness. This increases the cost to the drug company which is just passed on to the consumer in the form of higher drug prices.

As I have said many times two things that would drastically decrease the price of health care is getting the American Medical Association out of the business of determining who becomes a doctor and getting rid of the FDA. In a free-market consumers would decide whether or not a drug was effective. If a drug company sold people drugs that didn’t work the drug companies would still get sued. Fraud is frowned upon in free-markets since companies do have reputations which affect the value of the company. The effect of having the FDA regulate drug companies to death is only a few companies with blockbuster drugs.  If the FDA was abolished there would be more drug companies, more options, which would in time lead to more effective and safer drugs.

Top Ten Free Market Ways to Fix Healthcare in America

 Here are my top ten ways to fix healthcare in America...

1. Allow drugs that pass Phase I testing from FDA to be used by patients and allow them and their doctors to determine if they are effective. This will dramatically reduce the price and number of people suffering since many of the costs occur in Phase II and Phase III (and there are even costs are the drug is approved Phase IV). Allowing patients to experiment and share information with others will work wonders in understanding how drugs affect the body to see if they really work. No two bodies are alike.

2. Get rid of the deductibility of health insurance for corporations. Health insurance is a benefit that employees get for working for a company. Companies get a deduction for this however employees really are stuck with whatever plan their company has and if the employee leaves their healthcare benefits are lost as well. A better solution would be for companies to give the employees the compensation as cash and allow them to go out and negotiate individual policies which would allow employees to carry their insurance wherever they go. The market would allow people to buy insurance policies against pre-existing conditions as well

3. Get rid of the AMA (American Medical Association) and their cartel. The AMA restricts who can become a doctor and who can’t become a doctor which drastically increases the cost of healthcare

4. Allow nurses to see and treat patients

5. Remove the barriers to entry regarding opening privately owned hospitals.

6.  Allow insurance companies to sell across state lines. Premiums would no doubt decrease if this happened as insurance companies have so much paperwork and costs related to complying with each every state’s insurance law

7.  Reduce the regulations and barriers to entry regarding getting into the insurance business. How many new insurance companies have there been in the past 5 years?  Allowing more insurance companies into the game would increase the number of options and reduce prices

8. Legalize the use of medical marijuana in order so the health benefits can be studied.

9. If people want free healthcare they must trade their medical information for the government to study in order to get free healthcare. The government can then study that information and share with medical researchers, doctors, and the public.

10. Allow the United States to import doctors from other countries