Sunday, August 04, 2013

The Exorbitant Price of Health Care in the USA as Another Example of Trade Protection via Trade Policy, Patents and FDA Restrictions

Elisabeth Rosenthal has the story at the New York Times in In Need of a New Hip, but Priced Out of the U.S..

Patents and the Home Field Advantage: Is an ESSENTIAL Patent Worth Less Than a Frivolous Patent? Obama Administration Overturns ITC Import Ban of Apple Products Violating Foreign Patents

When is a patent worth MORE
and when is a patent worth LESS?

Well, if you follow the patent wars closely, you find that ESSENTIAL patents, i.e. real inventions that are essential to technology are, surprisingly, worth LESS

while

frivolous patents of questionable authenticity are, again surprisingly, worth MORE.

What other conclusion can be drawn from the Obama administration

overturning an ITC import ban of certain Apple products for patent violations, a decision based on the argument that the patents in question are ESSENTIAL to technology,

while leaving intact a billion-dollar judgment in California -- in favor of Apple -- based on a frivolous NON-ESSENTIAL "bounce back, rubber-band" patent, obvious as it was, and arguably stolen as it was, from Atari's PONG anyway.

Beyond that elementary patent distinction, we have a divided opinion on this executive patent action of the Obama administration.

We have been writing for quite some time now at LawPundit about the absurdity of permitting the ITC, a non-judicial agency, to issue import bans based on their interpretation of patent infringement, since we regard the interpretation of the validity and infringement of patents to be an area ONLY within the jurisdiction of courts of the U.S. judiciary. See Constitutional Law: Non Article III Courts Encroaching Upon Essential Attributes of Judicial Power Contrary to U.S. Supreme Court Precedents : ITC Again Plays Judge and Jury on Patents.

The current state of affairs was thus predictable, given the increasing number of import bans issued by the ITC. One ban was inevitably bound not to hit foreign industry, but rather to have a strong impact on a domestic company.

But we find clearly that this was the WRONG case for the executive branch to clamp down on the ITC and to say that enough is enough.

They should have done that long ago when the ITC started to meddle in the patent field.

As it is, this whole thing again smacks not of LAW, but rather of government by the home field advantage, much as the woeful Apple patent cases in their own back yard in Cupertino. A travesty of law and justice.

The above cited Financial Times FT article by Richard Waters on Obama overturns Apple import ban quotes lawyer Susan Kohn Ross, who reportedly stated:
"It could be viewed as the US favouring US companies. Frankly, every other country does it, so why shouldn’t the US?"
So, there you have it, "economic trade protectionism" using the "home field advantage" under the guise of patent law.


Detroit and the Lack of Corporate and Union Responsibility in the USA: Update to the Last Posting

In reply to some criticism of our last posting, let us say that we already stated previously and agree completely that outrageous pensions are a serious financial problem everywhere, not just Detroit. No one doubts that.

Our point in the last posting, however, was not to use pensions as a convenient scapegoat for mismanagement at the corporate, municipal, state or national level, or to excuse corruption at private and public institutions.

Detroit owes $18 billion.
Unfunded pension liabilities are $3.5 billion.
Both are outrageous sums.
But you also have to talk about the $14.5 billion,
not just the pension liabilities.

And you have to talk about an auto industry that has escaped southward, just like the "snow birds". Not just the pensioners are basking in southerly sunshine, so also is the auto industry.

One glance at the Wikipedia article on the United Auto Workers (UAW) reveals a variety of factors that played a big role in the demise of Detroit, including inexcusably incompetent management in the auto industry and also in the echelons of local, regional, state, and national governments.

However, our criticism here is NOT political or economic.
We are not taking "sides" politically.

We are staunch supporters of entrepreneurial capitalism and venture capital.
We also strongly support the working world. We are FOR both.

You will not find us criticizing "the take" of entrepreneurs such as Larry Page and Sergey Brin of Google, nor the venture capitalists that fund these kinds of enterprises. We are FOR them too. But THEY are not the problem.

What we oppose is what amounts to nearly outright thievery in the corporations by paid employees, whether through outrageous pensions via union agreement or through outlandish compensation packages via executive contracts -- which today is the name of the game in business, in our opinion.

At the Wikipedia article on Executive compensation in the United States we find written:
"Since the 1990s, CEO compensation in the US has outpaced corporate profits, economic growth and the average compensation of all workers. Between 1980 and 2004, Mutual Fund founder John Bogle estimates total CEO compensation grew 8.5%/year compared, compared to corporate profit growth of 2.9%/year and per capita income growth of 3.1%.[23][24] By 2006 CEOs made 400 times more than average workers—a gap 20 times bigger than it was in 1965.[25] As a general rule, the larger the corporation the larger the CEO compensation package.[26]

The share of corporate income devoted to compensating the five highest paid executives of (each) public firms more than doubled from 4.8% in 1993-1995 to 10.3% in 2001-2003.[27] The pay for the five top-earning executives at each of the largest 1500 American companies for the ten years from 1994 to 2004 is estimated at approximately $500 billion in 2005 dollars.[28]


As of late March 2012 USA Today's tally showed the median CEO pay of the S&P 500 for 2011 was $9.6 million.[29]


Lower level executives also have fared well. About 40% of the top 0.1% income earners in the United States are executives, managers, or supervisors (and this doesn't include the finance industry) — far out of proportion to less than 5% of the working population that management occupations make up.[30]"
Our point in the previous posting, and the facts clearly support our analysis, is thus that near outright thievery -- sanctioned by stupid laws -- is widespread at all levels, and that is why it is wrong to single out vastly inflated pensions as the scapegoat for modern financial problems at institutions.

The flawed legal and economic structure of executive compensation, the related phenomenon of the crisis at financial institutions, including things such as outrageous bonus payment at banks, and the devastation of the resulting income inequalities in society are much greater problems that must be solved to maintain a peaceful, functioning nation.

More and more people are taking more and more OUT of the pot and putting less and less back INTO the pot, and that is a formula that ultimately leads to an EMPTY pot, and to economic disaster and political upheaval.


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