Bio-Colossus 3-David Mach

Nevertheless, the topic is so popular on the block and strategists are looking for the best roadmap to create a biomedical matrix to compete in the new economic league. It is understandable, because as members of The Stockholm Network point out,

“Biomedical innovation, including advances in biopharmaceuticals, medical devices and diagnostics, is at the heart of human society, not least because this type of innovation helps to save lives and to improve the quality of life. Furthermore, it is one of the major drivers of the modern market economy”.

In From Test Tube to Patient –National Innovation Strategies for the Biomedical Field, authors offer several recommendations to those public policy officials who want to create or improve their opportunities to establish a proper environment for the development of the biomedical sector. We can summarize the main ones:

1. To set up a quality research and development infraestructure, in terms of human capital, technology and facilities.

2. To promote R&D in the biomedical field and to favour basic research and technology transfer.

3. To protect Intellectual Property and provide a legal framework which do not constrain the work with hard regulatory procedures or public intervention.

4. To promote private investment in R&D on the biomedical field. Authors believe public support should not restrain entrepreneurs and researchers free initiative.

I could add another one: do not think about celebrating any Copenhagen Summit over the global development of the biomedical sector.

Death and Taxes, by Curious Spider in Flickr

Taxes! Taxes! Everybody hates them but they are as necessary as the air we breathe. However, it is hard to know taxation is growing all the time, beyond the good or bad economic environment. Modern Democracy is a thirsty monster who always asks for more money, more civil servants, more resources. Although we constantly create new public needs to solve public problems, the middle taxpayer feels things could be better. In fact, citizens believe public budget should be managed more efficiently. It is not an easy task as officials  keeping the money depend on the increase of resources to survive. To play a political role is nowadays a professional career and no one wants to retire at 45. I would like, but I am not a politician. Therefore, the main problem is related to the impossible mission of cutting public spending when fiscal policy is managed by politicians who have to balance public interest and party commitment. Polls, popularity and reelection are in the core of the problem. The Social Market Foundation of the United Kingdom has analysed the issue in this country and finds that the fiscal policy projections Government makes is biased and cause serious deviations and mistakes in the British public finances.

“In the UK, fiscal policymaking has traditionally been highly centralised and discretionary, with all fiscal projections and decisions emanating from HM Treasury. The Government is right to argue that the global financial crisis of 2007-9 was an unforeseen external shock that caused the public finances to deteriorate. But it is also clear that excessively loose fiscal policy in the years preceding the crash has left the UK in a more difficult fiscal position than it might have been, and threatened the creditworthiness of the government”.

The authors of Forecasting Independence: Taking the politics out of fiscal projections think “that the most appropriate reform to the institutions of fiscal policymaking would be the creation of an independent Office for Fiscal Analysis (OFA), separated from fiscal decision-makers in government, that would undertake all official fiscal Statistics Authority, would ensure that it was entirely free from the risk or perception of organisational bias”.
The British case is so common all over Europe. The lack of realistic projections on the evolution of the public finances, specially during the crisis has contributed to a huge increase of the public debt. We will be paying for years. It is true that nobody previewed the dimension of the economic collapse, but it is also clear that a neutral analysis and decision making over the future fiscal situation could save several billions. Politicians must introduce the issue of fiscal neutrality in the policy agenda.

Kropotkin according to SergeyRod

We can decide whether to maintain our old and no perfect market economy or looking for new paradigms. It is not an easy task as Masters of the Universe prefer to live in cyclical crisis which is very profitable for them. If economy shows a positive balance, they win. If economy is going down to the Hell, they win. On the contrary, ordinary people do not perform very well. They are being pushed to run in a bigger wheel of consumption and debt that is causing domestic bankruptcy for generations. And do not mention the rampant public debt. May be capitalism is better than other economic systems and it is as old as the human society. However, it is raising its limits. Two years of recession after the happy wave of globalization are pointing out the real need to conquer other economic scenarios. We cannot be confident of politicians that think in the short time a make poll-government. In fact, they do not think anything. They apply the old receipts and highlight the poor debate between keynesians and libertarians. No one of these approaches is going to recover our prosperity.
As usual, we have to watch at the horizon and learn from the emergent trends that show other ways to path the way to economic progress. I think you should read the last report from the Copenhagen Institute of Futures Studies, which carefully analyzes the economic perspectives of the Internet Economy. In Anarconomy, they go far from the technological bubble of the 2000 and examine the successful examples of a reinvented manner of establishing economic and commercial relationships. Like good sellers of ideas, they use a contradictory brand to name the phenomenon, but it is not paper philosophy. It is real experience that happens at this moment, when I write this post to share my reflections with somebody.

Over the past few years, we have witnessed and are witnessing a pronounced flourishing of free content and services on the internet. This free content is created and distributed by the users themselves in voluntary networks accord- ing to rather anarchic principles: Wikipedia, open source software, books, music, films, and design, which the creators make freely available, are all examples of this phenomenon. All of this challenges and supplements traditional commercial companies by offering non-commercial alternatives. This is the anarconomy. In the future, anarconomy will move from the internet and radically change economy in the physical world.

The report studies the evolution of open source a open content  and argues that their collaborative basis is not an obstacle for some people making a living of it. You have to remember that successful business like Google have and anarchist framework in the strategy they apply. Property rights are losing space in the market and giving a role to free licensing. It does not destroy the economic principle of ownership. In fact, it is promoting a different approach to the creation of value.

Intellectual property rights are so central to the modern economy that it can be hard to imagine a world without them. However, it isn’t impossible. In fact, we have an example of anarconomy – open, decentralized development and interchange of knowledge products – which has worked well for centuries, namely the universities of the world.

The example of the old universities is worth also for current economics. But where is the benefit? “In a future without intellectual property rights, professionals must increasing- ly make a living on unique solutions and experiences – things that can’t easily be copied or mass-produced”.
Authors draw two possible scenarios in 2025. In one of the them, Rebels versus Cartels, champions of property rights achieve a highly regulated Internet, where people can only operate if they have a legal license to do so. In the other, The Age of Empowerment, the free exchange of products and knowledge is the dominant practise in the virtual and the physical economy. What do you believe? What do you prefer?

1. The military balance is complex. There is not any other superpower, but the world’s Sheriff has to compete with new players: new nuclear countries, strong poverty, uncontrollable terrorists and a decay of the US miltary forces. Examples of complexity: “During his first six months, the U.S. has suffered more combat casualties than his five predecessors at the outset of their terms. The armed services also have grown considerably in cost, eating into the post-Cold War peace dividend.” “Peace and security depends not just on common defense but on the political and economic stability of individual countries. Conversely, abject poverty is a security challenge as well as a humanitarian one”.

2. Climate change is not a joke. “The concentration of greenhouse gases is creeping upward toward a level that scientists believe will cause the increase in the mean temperature of the planet to trigger a perfect storm of irreversible and catastrophic consequences unless somehow checked or countered”

3. The nightmare of the weak economy. “The fall-off in productive output, spending, and employment is the worst – by far – since the Depression. Most experts believe the unemployment rate will continue to rise for the rest 2009. Unlike previous recent downturns, virtually no region of the U.S. has avoided job losses. Nearly all American homeowners have experienced significant declines in the value of their homes. Public debt as a percentage of GDP has now exceeded even Reagan-era levels, thanks to recent years of high debt and the massive spending of the stimulus package”.

4. A honeymoon with voters, at the moment. “Confronted with such ironies, dilemmas, and stresses, how does the public feel its government is doing? Remarkably, so far, so good. Obama’s first six-month job approval numbers are impressive. But he should note that several of predecessors also got the benefit of the doubt—for a while”. “Obama’s ability to sustain that optimism and trust will depend on his ability to nudge the more objective indicators in the right direction”.

What do you think about that? I do not watch any positive scenario in the in the horizon. Optimism will be short.

Eternal Return According to Darkahla

The mistake of fueling the economy with public monetary resources is showing his real face. It does not stimulate the system. On the contrary, the only thing which is increasing is public debt, a bill we will paying for years. Economists from the Heritage Foundation have released a report on the matter. They point out that Keynesian policies Governments are implementing all over the world are ineffective and are another new proof of the perils of growing public budgets, as it happened in the 1960s and 1970s. The key findings of the paper Keynesian Fiscal Stimulus Policies Stimulate Debt-Not the Economy are:

• “The federal government has poured extraordinary amounts of fiscal stimulus into the economy two years running, yet unemployment continues to rise with the national debt. This recent experience with Keynesian deficits is fully consistent with past episodes at home and abroad”.
• “This is no longer an experiment in economic policy. The results are in: Keynesian stimulus does not work”.
• “Keynesian stimulus fails because government must borrow money to finance deficit spending. That borrowing reduces the savings available for domestic investment, or increases the savings imported from abroad along with a similar increase in the net imports of goods and services”.
• “Total demand is unaffected, so total output is unaffected”.
• “The counterargument that borrowing to finance Keynesian stimulus soaks up and cycles “idle” savings back into productive use is invalid for an economy supported by a modern financial system”.

The report examines monetary policies different governments have applied in the last forty years and argues that all the time emerge the same result. Economy does not recover because of the public spending. Public debt becomes the main obstacle to return to a healthy economic environment. The sad conclusion of the paper is that officials do not want to learn from the past. Today they are taking the wrong decisions and tomorrow will do the same. As the author, J.D. Foster, writes

“Bad policy ideas rarely go away forever. Circumstances change, memories fade, political fashions come and go. The current global experiments with Keynesian fiscal stimulus will fail as they have failed before. Unfortunately, the price of learning this lesson yet again is an unnecessarily prolonged recession, a weaker recovery, and millions more lost jobs—and, of course, the massive increases in public debt”.

Chain, a photograph by Shoothead (http://www.flickr.com/photos/leecullivan/)

I cannot explain better:

“The specter of protectionism is rising.  It is always a dangerous and foolish policy, but it is especially dangerous at a time of economic crisis, when it threatens to damage the world economy.  Protectionism’s peculiar premise is that national prosperity is increased when government grants monopoly power to domestic producers.  As centuries of economic reasoning, historical experience, and empirical studies have repeatedly shown, that premise is dead wrong.  Protectionism creates poverty, not prosperity. Protectionism doesn’t even “protect” domestic jobs or industries; it destroys them, by harming export industries and industries that rely on imports to make their goods.  Raising the local prices of steel by “protecting” local steel companies just raises the cost of producing cars and the many other goods made with steel.  Protectionism is a fool’s game”.

Meanwhile, Western Governments are becoming champions of the stimulus and fathers of the long and long term public debt. Who loses the game? The same people who is severely suffering from the crisis. They were not rich during the boom and now, being also poor, they have to pay the huge bill.

More information in Freedom to Trade. Please read it and sign up. In this situation, the only serious thing we have is to fiercely protect our individual freedom and our right to discuss and protest.

• A limit on house price-income ratios of possibly to 3.5 times joint incomes.
• A halt to self-certified mortgages which do not require documentary support.
• The restriction of buy-to-let mortgages to a maximum of 75% of property value.

Some people are not very able to accept more control on the marketplace, but the crisis has demonstrate once again that we do not manage very the invisible hand. May it does not matter for other lending schemes, but it has been terrible for the house market. No country is free of the collapse. Professor Hammet also offer other recommendations that you can read in the paper.

It is always Africa. The forgotten continent. It could be an empty lost planet, like Mars, but there are millions and  of persons fighting to survive in its beautifully sad lands. You can see the metaphor of Africa in a sequence of The Constant Gardener, when people run away through the desert as bandits come to rob and kill them. While white men could get on the plane, black people only have the choice of running faster than their captors. The support of the white man is only an illusion because if times go harder, like in the movie, there is no chance to save Africans.

In the last fifty years we have supposedly been helping Africa to leave from poverty and conquer prosperity. Another mirage. If you see at all the action Western countries have taken, no one has helped to really relieve the economic disaster of a majority of countries. And it seems we do repeat the same mistakes every time we propose a plan to save Africa. According to Marian L. Tupy from the Cato Institute, the last experiment, set up in 2005 in Gleneagles (Scotland) has fail like every other in the past decades.

“In response to persisting poverty in Africa, representatives from the world’s eight leading industrialized nations — Germany, Canada, the United States, France, Italy, Japan, the United Kingdom, and Russia — met in Gleneagles, Scotland, in 2005 and agreed on a three-pronged approach to help Africa. They would increase foreign aid to the continent, reduce Africa’s debt, and open their markets to African exports. Unfortunately, aid has harmed rather than helped Africa. It has failed to stimulate growth or reform, and encouraged waste and corruption”.

In her report The False Promise of Gleneagles she points out that the summit had very unrealistic expectations. The problem is not only about debt, but also is related to he institutions and policies of the African countries, which are contaminated of corruption, public waste and the difficulty to support property rights. There are several highlighted points that deserve to be considered:

1. “Sub-Saharan Africa lags behind the rest of the world in most indicators of human well-being”
2. “Between 1975 and 2005 Chinese and Indian incomes rose by 888 percent and 174 percent respectively. In Africa, incomes fell by 5 percent”
3. “The priorities set out by the G8, which put aid and debt relief ahead of trade, are misguided”.
4. “Aid has not led to economic reforms in Africa”.
5. Aid undermines democratic accountability in Africa, because the governments find themselves answerable to donors, not to the public.
6. “Something around 40 percent of Africa’s military spending is inadvertently financed by aid.”
7. “The high level of debt shows that aid failed in its primary task of generating economic growth”.
8. “Africa is one of the most protectionist regions”.

Do you agree? May be not. However, read the report as it offer a good range of eloquent arguments and data.