Cato Daily Dispatch for December 22, 2004
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Report Questions Benefits of Drug ReimportationMicrosoft Loses European Court Appeal
Top Executives Leave Fannie Mae
Report Questions Benefits of Drug Reimportation
"Drug reimportation won't save much money overall and might hinder incentives for companies to develop new drugs, according to a government report issued Tuesday," CBS Marketwatch reports.
"The report's authors also said the policy would cut drug industry revenue and stifle reinvestment into the research and development of new medicines. In fact, the report estimated that drug reimportation could cause a 10 percent yearly reduction in new therapies."
In "Drug Reimportation: The Free Market Solution," Roger Pilon, vice president for legal affairs, writes: "Americans end up paying for most of the costs of drug R&D while the rest of the world rides free -- and that is politically unsustainable... The current ban should be lifted, therefore, not to encourage reimportation, but to allow the incentives to surface that will 'force' wider use of market practices and the international trade regimes that reflect such practices."
Microsoft Loses European Court Appeal
"Microsoft Corporation lost a major appeal today in a European court, which ruled that the world's largest software company must comply with sanctions imposed by regulators and strip features from its Windows product," the New York Times reports.
"It must also share information about its products with other software companies and pay a $665.4 million fine imposed by the European Commission in March, when it found that Microsoft had abused its virtual monopoly of Windows."
In "The EU Microsoft Ruling: A Welfare State for Aggrieved Market Losers," Cato senior fellow in constitutional studies Robert Levy writes: "Far from promoting consumer interests, the latest EU order transforms antitrust regulation into a corporate welfare program for market losers. The implications will not be confined to the Microsoft case. Without some semblance of regulatory consistency, companies competing globally will not be able to satisfy the dictates of divergent legal regimes. That means special interests pursuing their favorite antitrust forum in an effort to exercise the most political clout. The real costs: fewer jobs, less innovation, inferior products and higher prices.
Top Executives Leave Fannie Mae
"Franklin D. Raines stepped down yesterday as chairman and chief executive of Fannie Mae, and J. Timothy Howard, the company's longtime chief financial officer, also is leaving," the Washington Post reports.
"The departures come less than a week after the Securities and Exchange Commission directed the giant mortgage-funding company to make accounting corrections that could erase $9 billion of past profit."
In "Fannie Mae, Freddie Mac, and Housing Finance: Why True Privatization Is Good Public Policy," New York University economist Lawrence J. White, a former Freddie Mac board member, argues in favor of the privatization of Fannie Mae and its sister corporation Freddie Mac.
"The special governmental links that apply to Fannie Mae and Freddie Mac yield little that is socially beneficial, while creating significant potential social costs," White argues. The best way to cut down on those costs and risks is privatization, he adds. "This would imply that the two companies would no longer enjoy any special privileges, but would no longer be restricted to their current narrow slice of the financial world. How these companies and their owners would fare in that scenario would then be a matter for markets, and not the Congress or [the Office of Federal Housing Enterprise Oversight], to decide."
Jonathan Block, editor, jblock@cato.org
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