Sunday, January 04, 2004

Pundits amazed by market at work!

After the Possum post, I thought I'd drop by my favorite North Carolina paper, the Raleigh News and Observer (aka The NOBS), and see what was roiling the turgid waters of the "liberals with a twang". Aside from some continued whistling past the graveyard where Sen. John Edwards presidential campaign is buried, there were the following gems. I lack the gumption to comment on 'em in detail, but you'll get the idea.

Upstart brands hurt Big Tobacco: As cheap cigarettes sell, states' tobacco payments drop
KEYSVILLE, VA.--Mac L. Bailey's cigarette manufacturing plant, a one-story building longer than two football fields laid end to end, looks out of place next to a country road in the middle of nowhere. But for two 10-hour shifts a day, four days a week, this plant hums, making up to 20,000 cigarettes a minute.
Across the United States, there are hundreds of other little cigarette companies like these. In four years, their market share has multiplied more than tenfold, from 0.5 percent of cigarettes sold in the United States in 1998 to 6.5 percent in 2002, according to the National Association of Attorneys General, which says the numbers for 2003 will be more startling.

Their growth, driven primarily by low prices, is causing consternation not only in Big Tobacco boardrooms but also in state capitals, because it is eroding multibillion-dollar payments the states won as part of a historic settlement with the industry in late 1998.
The "Tobacco Settlement" was basically a judicially imposed selective tax on large cigarette makers for the benefit of state governments (not to mention the windfall for trial lawyers). But small cigarette companies that sell in only a few states were imperfectly covered in the agreement that the great legal minds came up with, and they are now blowing past the big companies by means of lower prices. But not to worry:
The big tobacco companies and attorneys general across the country are now working feverishly to close the loophole with new legislation.
I.e. what was a selective tax will become a general tax. But there are some problems along the way - RJR bill doesn't get far. Of course, the best part was the lip service that the settlement cash was to be used to pay smoker's health bills and fund smoking cessation campaigns. That went by the wayside as soon as the governments got their hands on the cash.

What's the solution for the shortage of shots? A scarcity of flu vaccines has brought intense scrutiny to a problem-plagued immunization system.
Part of the problem is that low profit margins, complex manufacturing and a challenging regulatory environment have driven vaccine makers from the business. Thirty years ago, there were 25 vaccine makers. Today, there are five.
The major purchaser of vaccines is the Federal Government, thanks to Hillary, and guess what? They decide what the "fair price" for vaccines is. We all know how well that works. So what to do:
Among the recommended remedies: requiring health insurers to provide vaccine benefits, government vouchers for the uninsured, and new federal incentives to spur vaccine production.

The Centers for Disease Control and Prevention is pursuing a similar path. It has asked Congress for $100 million for reforms aimed at seeking faster ways to make vaccines, better estimating of how many shots are needed, and persuading more drug companies to make vaccines.
Snort! The "incentives" are amusing though. "You can't charge more than a fixed price, but here are some bucks on the side." Leave it to the government to create a problem where none existed previously and then try to fix it with layer upon layer of bandaids.

UPDATE: And speaking of which - check out the Curmudgeon's Dumb Stuff.