A Billionaire's Thoughts on the Minimum Wage

In the words of Warren Buffett, in an article he wrote for The Wall Street Journal, America's widening wealth gap is not a result of the rich being incredibly rich, but an "inevitable consequence of the of an advanced market-based economy", explaining that America's "economic engine" constantly "requires more high-order talents while reducing the need for commodity-like tasks". This basically means that highly educated workers are in demand and uneducated workers are not. One unfortunate result of this is nearly 15 percent of the U.S. population below the poverty line. Buffett says that the solution to this problem is not education however. Though quality schools should be available to all, in reality there is a limited number of positions for tech geniuses like Steve Jobs or economic experts like Buffett himself. Education is a much more complex, and longer term solution to the wealth gap than what Buffett believes should be done: "a carefully crafted expansion of the Earned Income Tax Credit (EITC)".

The current EITC is a not doing enough. It is a refundable federal income tax credit for people of  middle to lower income that averages just below $3,000 a year per family. Three thousand dollars a year is little money compared to the amount that nearly doubling the minimum wage (to $15 an hour as some groups propose), however, the problem with doubling the minimum wage is that almost all companies would have to reduce employment, crushing many of the workers possessing only basic skills, as Buffett puts it. Some would be happy with there $15 an hour, but many would be unemployed entirely. Buffett proposes that minimum wage workers get more back from the government in the form of an EITC, saying that this provides an "incentive for workers to improve their skills" (because, unlike welfare programs, this requires a source of income) and more importantly, "does not distort market forces, thereby maximizing employment".

It sounds great. The government gives people more money, and with business left unaffected, everybody has a job and the economy can grow unhindered. It sounds too great. The glaring question is: where will the money come from and what will suffer because of it? It is how politicians can respond to this question that will determine whether or not an expansion of the current EITC can be successful. Ideally, the result of a successful expansion will be so beneficial to the economy that no government programs will be negatively impacted. Government money lost due to EITC will be made up for with money saved on other welfare programs. And as Buffett put it: "America will deliver a decent life for anyone willing to work".

Business's Influence Over Science

As part of my Junior theme research, I uncovered the influence that the pharmaceutical industry can have over the conclusions of scientific studies. Through my research, I found that scientific studies funded by the pharmaceutical industry disproportionately support drugs companies. For instance, in 2006, GlaxoSmithKline payed all eleven of the authors of the study that influenced the FDA's approval of their drug, Avandia. Four of the authors were even companies employees who held company stock (Washington Post). Because of that conflict of interest, the evidence used to prove Avandia's safety is incredibly biased.

This is not a problem isolated to the pharmaceutical industry however. Companies in the sugar industry also heavily compensate scientists that research the health effects of high amounts of sugar consumption. According to a segment from John Oliver's Last Week Tonight,  88.3 percent of independent studies on the relationship between sugar and weight gain have found direct links between the two. However, "the vast majority of studies" that have received funding from companies in the sugar industry find "the exact opposite of that". Other studies corroborate this bold claim. One such study from PLOS Medicine reveals that a study with funding from a food or drink company is five times more likely to not support the connection between sugar and weight gain than a study without funding.  While it seems unfair to jump to the conclusion that large corporations such as CocaCola or PepsiCola are manipulating science, clearly the money they spend funding scientific research must have some impact because the majority of science disagrees with them.

Nobody can blame CocaCola for defending themselves, but the motive is there: the company has funded scientists directly in response to accusation that CocaCola's products contribute to America's obesity crisis. Luckily in 2015, the majority of consumers understand that excessive sugar consumption is bad for health. It should not be a concern that food and drink companies are tricking people in this way. The concerning part is that food and drink companies have the ability to influence science in this way. If companies can cause researchers to contradict a claim as widely accepted as sugar causes obesity, then they could certainly influence lesser known or emerging health knowledge. I wonder what else food and drink companies might not want the public to know.

The Ethics of Maternity Leave

As a result of the Civil Right Act of 1964 and the Pregnancy Discrimination Act of 1978, women were not allowed to be discriminated against in the workplace due to pregnancy. This was a tremendous step forward at the time, guaranteeing women job security during a mandated unpaid leave. However, the protection of pregnant women's rights has not come very far since then. According to a segment from John Oliver's Last Week Tonight, the only countries in the entire United Nations that do not promise women paid maternity leave are the United States and Papua New Guinea. In the United States, even the federally mandated unpaid leave is fairly limited. It only applies to companies which have 50 or more employees and to employees who are full-time, salaried, and have been with a company for over a year.  Of course, many women are provided with paid maternity leave by their employers, but according to Oliver that number is only about 60 percent of women.

This means that many of the new mothers of this remaining 40 percent are forced back into work early for financial reasons. These mothers must immediately learn to juggle a newborn child in addition to their full-time job. But, it shouldn't be like that.

Last year, the Democratic party created the Family and Medical Insurance Leave Act (FMIL), which specifically outlines that workers receive that workers receive 12 weeks of paid family leave (maternity and paternity) at two thirds of normal monthly wages. However as of the end of last year,  it hasn't been passed as zero Republicans have offered their support so far. As Oliver explained it, this is because many people believe that at this point in time "'the country's businesses are saddled with two many regulatory burdens'", and republicans believe the bill is "'anti-business'" and "'anti-growth'". This seems insensitive but there must be some truth behind it. Only three states, California, Rhode Island, and New Jersey, currently mandate paid maternity leave. Even if the plan of the FMIL act is so harmful to business, is that the kind of country that America wants to live in? 

Should business come before family values? Or should the United States join the rest of the world and mandate paid maternity leave for new mothers to welcome their children to the world?

The Over Usage of Medical Care

While modern medical breakthroughs have saved millions of lives, the reality may be that certain medical treatments are also widely overused. According to a recent New Yorker article, "Overkill", in 2010, "the Institute of Medicine issued a report stating that waste" or unnecessary healthcare services "accounted for thirty per cent of healthcare spending". Such unnecessary services include diagnostic tests, pharmaceuticals, and procedures. The result is more Americans spending tremendous sums of money out of pocket when they don't need to, and more money going to Medicare when it could be going to education, for instance.

According to the article, this trend has two primary causes, the first of which is a mentality shared by both doctors and patients. The author of the piece, Atul Gawande, a tumor surgeon, believes that doctors feel an obligation to test for every possibility of illness, saying that "as a doctor, I am far more concerned about doing too little than too much". This is a mentality that might reasonably come along with being in the healthcare field. People take their health very seriously, as they should, and it often leads to unnecessary precautions both issued by doctors and willingly accepted by patients.

The other cause of healthcare waste come not from caution but ignorance. As explained by Gawande, it is what economists call "information asymmetry", and is simply the truth that doctors know far more about treatment and procedures options than patients do. Because of this, many patients tend to blindly follow doctor's advice regardless of whether a doctor truly believes it is in a patient's best interest, a doctor is mistaken, or because it will "enhance a doctor's income". While it may not be entirely malicious, the result of this power that doctors hold causes an over diagnosis of disease. The United States is "treating hundreds of thousands more people each year for diseases", "yet only a tiny reduction in death if any, has resulted".

This trend is directly paralleled with prescription drug usage. As I have learned from my extensive Junior Theme research, although prescription drug use has increased nearly 50 percent in the last decade and a half, America is getting statistically sicker. This increase is in large part due to pharmaceutical industry making it in the best interest of doctors to prescribe their medications by paying them to promote drugs to other doctors and even directly paying them kickbacks for prescriptions. The glaring conflict of interest does not stop their apparently.

What, if anything, should be done to change the way that the medical profession is run? What can be done to make the medical industry more consumer friendly?

The Creation of the Wealth Gap

Recently on Last Week Tonight with John Oliver, there was a segment examining the growing income disparity in America, which is currently at its highest level since the 1920s. According to Oliver, the highest earning 1% of Americans is currently making nearly 20% of all available income, and controlling 35% of all wealth. The numbers are staggering, however, the more interesting aspects of this income inequality are the reasons why it exists.

Oliver claims that such inequality exists because of policies in America that benefit wealthier people. These include "cutting income tax and capital gains tax for the richest in half". He believes that these policies, which favor the few over the majority, exist because of "one of America's greatest qualities: optimism". This is a broad and general claim, however, Oliver backs it up. He explains that, according to a poll from Pew Researcher, 60% of Americans believed that they can "get ahead" if they are "willing to work hard".

Supporting low capital gains tax perfectly exemplifies American's confidence in hard work. According to a Wall Street Journal article, some experts believe that the low capital gains tax should stay low because it encourages investments in growing businesses by increasing the payoff. This may make both business owners and investors happy, but it really only effects people of the middle upper to upper echelons of society. There is a very low portion of individuals receiving direct benefits from a lower capital gains tax. So who voted for it?

Maybe this is where John Oliver's theory comes in. As he sarcastically put it, people know "the game is rigged" and believe that is "why it's going to be so sweet when [they] win the thing", meaning that people understand that low capital gains tax favors few people, but they don't care, because 60% of Americans believe they will "get ahead" once they start working hard. However, that is an unrealistic expectation for Americans. With nearly 15% of Americans beneath the poverty line, and the upper class drifter farther and farther from the middle, perhaps American voters should convert a little bit of their optimism into realism.

How Drug Companies Cheat the Patent System

According to the New York Times, Teva Pharmaceutical Industries recently payed $512 million to settle claims that the company was paying off generic drug companies to keep their cheaper products off the market. The drug company's intent, as explained by the article, was to be able to keep selling their sleep disorder drug, Provigil, for hundreds of dollars without competition from generic copycat drugs. While this would obviously be great for Teva, the reality is that American consumers are forced to pay ridiculous sums for their medications for far longer . When the release of generic drugs is delayed, many ill people must simply forgo medication that much longer.

This is not the first time this practice has been seen in the industry. The New York Times also cites an instance in 2011 in which Cephalon "paid generic drug manufacturers more than $200 million" to delay sales of their generic drugs until 2012. It also says that drug purchasers argued that "were it not for deals with generic companies, the drug [in this instance] would have faced competition in 2006", meaning that Cephalon's pricing remained absurdly high for six years longer than it should have.

According to former Federal Trade Commission policy director, attention being brought to this issue is "a great result for consumers". But, paying off generic companies is not the only way that Big Pharma companies can use their money to slip past the system. Companies such as GlaxoSmithKline, Pfizer, and Johnson and Johnson have all payed sums greater than a billion dollars to settle claims for offenses such as off-label promotion and paying "kickbacks" to doctors. Hopefully, raising awareness about the Teva incident will subsequently raise awareness about these questionable business practices as well.