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2019-05-08 07:00 by Karl Denninger
in Federal Government , 243 references Ignore this thread
The Open, Notorious Felony System
[Comments enabled]

Once again I heard it.

In the media today was news of a "new therapy" for a quite-rare but crippling condition that impacts kids.  The "new therapy" promised to resolve it, and the expectation is that it will be priced at $2 million per patient, with the question being asked "how much is a life worth?" in justification.

How is this possible?

Only through felony.

Let me explain.

There are two boundaries on any price in a market for any reasonably-fungible good or service.

The lower boundary is the cost of producing that good or service. To sell below that price for any material amount of time you must commit a felony criminal offense.  15 USC Chapter 1 makes clear that any attempt to monopolize or restrain trade, whether individually or collectively, is a felony.  It does not matter how you do it or how you price at the time.  In other words that consumers for some period of time get a lower price doesn't make it not a criminal offense.

Why must there be a criminal offense whenever you sell below that price for any material amount of time?  Because you can't sell below cost forever; no matter how much you start with you will eventually run out of money.  Therefore your goal must be to damage or destroy competition; that is, to force others out of business by selling below cost.

If you cross-subsidize one line of business that is unprofitable with another that is profitable that's illegal too.  It's illegal because your only motivation to sell intentionally at a loss is to destroy competitors.

Capitalism has at its core the intent to make a profit.  That doesn't mean you will always make a profit, of course, but the intent has to be there or your action is felonious as its intent is to destroy competitors rather than make a profit.

Again I note that 15 USC Chapter 1 says nothing about some certain percentage of a market you have to have before it becomes a criminal matter.  The mere attempt to monopolize trade or fix prices is a felony in every case.  Period.  Neither the DOJ or anyone else has the right to change the clear text of the law.  Only Congress can do that.

The upper boundary on any price in a market is the perceived value to the end-user of the product or service.  Above that price the only way you can sell any of said product or service is to commit a felony; that is, to force a consumer to buy.  Said acts of force are crimes; whether the coercion comes in the form of extortion or a literal gun-up-the-nose they are all forms of criminal activity.

Now here's the punchline:

All prices in a market economy will always wind up somewhere a bit above the cost of production.  If they do not it is nearly certain that a criminal felony is being committed by the sellers and marketers because 15 USC Chapter 1 makes it such that the only means by which you can enforce same, to maintain a monopoly or restrain trade, is a criminal offense.

What's "a bit above"?  That's open to some interpretation, but it's always a positive margin over cost in the intermediate and longer term with one exception -- a firm that's going out of business, either entirely or in that particular line of product or service and thus is liquidating inventory at a loss and doesn't care because it is about to cease to exist.

A good "rule of thumb" is that about a 10% gross margin indicates a healthy, competitive market.  In areas where very fast innovation is taking place you can sustain more of a margin for a while -- indeed, in some fast-growing markets you can see gross margins in the 30 or even 40% area so long as rapid product and service innovation is taking place.

But the idea of selling something at 10 or 100x cost -- or more -- isn't possible in anything approaching a "market" for said good or service.  It is only possible to do without committing felonies in the case of a bespoke item or service that is fundamentally irreplaceable in form or function.  That is, you can certainly have a piece of art that cost the artist $1,000 to make but sells for 1,000 times that.  There's only one; it's irreplaceable and by definition bespoke.

But a drug therapy is not bespoke -- ever.  If you try to price such a therapy at $2 million dollars you will make almost-exactly zero sales and thus it is impossible to make a profit at all unless you can force at gunpoint someone other than the consumer to pay for it because irrespective of the desire to buy nearly nobody has that sort of money available to pay and the odds of a Bill Gates or Jeff Bezos being the one who needs same is indistinguishable from zero.

Nor is an operation in a hospital or a vial of snakebite anti-venom bespoke.  Ever.  The only way you can charge $10,000+ for a vial of medicine that across a border, produced by the same process and colluding firms, costs $200, or which has a median price of about $1,000 here in the US is to commit felonies.

In this specific case the hospital screwed the patient because she'd been bit by a snake.

Realize this -- that this specific story ended with the family not getting buttrammed directly doesn't matter.  You still got screwed; that $100,000+ tab that "insurance" paid comes out of your butt.  Every penny of it.  The insurance company has every incentive to have that tab be $100,000 instead of the $10,000 or less it would be under a competitive system.  Why?  Because it's a regulated company and can only make a certain percentage of profit, as governed by state regulators -- typically 10%.

If you're an insurance company do you want to make 10% of $10,000 or 10% of $100,000?

THAT is their motive; it's transparent.

Incidentally colluding to make that bill $100,000 instead of $10,000 so you can make 10x as much money as an insurance company is also a felony as that's not exempt as part of "the business of insurance" under McCarran-Ferguson -- so said the US Supreme Court in Royal Drug in 1979.

S.3782 was introduced by Senator Daines in 2018 on this exact point.  But that bill is not only unnecessary it's stupid as group purchase and negotiated discounts -- or the converse that as an insurance company you "love" as it grossly raises the revenue that passes through your firm -- were already ruled out of bounds of McCarran-Ferguson and thus illegal under Royal Drug!  So is anything else, under that Supreme Court decision, that bears on contracts or agreements between insurance companies and entities outside of the insurance industry itself such as agreements between insurance firms and HOSPITALS, DRUG COMPANIES and HEALTH PROVIDERS.

Here is the actual text from the decision in 1979 which makes this absolutely clear:

(d) The legislative history of the Act confirms the conclusion that the "business of insurance" was understood by Congress to involve the underwriting of risk and the relationship and transactions between insurance companies and their policyholders, and no legislative intention is disclosed to exempt agreements or transactions between insurance companies and entities outside the insurance industry. 

**** you people in the health and health insurance business and **** YOU ALL IN THE GOVERNMENT TOO who have a clear duty to the Constitution and the faithful execution of the laws of this nation to bring felony charges and prosecute these jackasses, throwing them ALL in prison.

Every single piece of CRAP in the Federal Government who has FAILED to do so in EACH AND EVERY SUCH CASE is in violation of their oath of office and deserves to be arrested, tried and hanged for conspiracy to extort and STEAL more than $3 trillion dollars a year from US Citizens, the sum of which has and does flow through these cartels, none of which are supposed to be able to get away with ANY of this crap under 100+ year old Federal Law.

Approximately $25 per US Citizen, per day is stolen via this mechanism in the United States.

15 USC Chapter 1 is not a civil statute.  It contains criminal penalties including ten years in prison for each person who violates said law in each instance.

We need no new law -- not S.3782 or anything else.  In fact such "legislation" is a waste of time and effort by our Congress since there is utterly no reason to believe the US Attorney General, the FBI or for that matter STATE attorneys general or the crapfaces employed by same will enforce a new law ANY MORE THAN THEY HAVE ENFORCED THE 100+ YEAR OLD LAW THAT HAS ALREADY BEEN CHALLENGED ALL THE WAY TO THE US SUPREME COURT AND FOUND TO BE VALID AND APPLY TO THESE EXACT CIRCUMSTANCES!

Tell me again why the people of this nation should be put up with any more of this crap.

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Ktrosper
Posts: 3468
Incept: 2010-04-06

ft collins co
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KD: Tell me again why the people of this nation should be put up with any more of this crap.

I think it's several things.
1/2 the nation is below average on the IQ bell curve.. Are they paying attention or thinking on ANY of this?
20 Million are employed by the Gov w/ great insurance and don't feel any of this pain or give a ****..
50+ Million are on some kind of Gov assistance. Do they give a ****?
90 Million are in private sector. Do they feel the pain/care?
10 Million self-employed.. They are the ones that feel the most pain, right?

3% of the population.. These folks probably feel the most pain and are payin attention.

I dunno. I'm not smart enough give you an answer but I suspect is partly because most of population has been decoupled from the "pain" and don't even think on this subject and most are also morally bankrupt and shrug.

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The unexamined life is not worth living.-Socrates
The only stable state is the one in which all men are equal before the law.-Aristotle
Liberty exists now in the spaces government has not yet chosen to occupy.-Doc Zero
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Keenan
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Western PA
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In this specific case the hospital screwed the patient because she'd been bit by a snake.

In such instances the patient is twice bit: First by the reptile, then by the medical monopoly. The symbol of the caduceus with its intertwined serpents certainly conveys an accurate message.
Jal
Posts: 697
Incept: 2009-03-25

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The web makes it possible to be informed.
Before the web, we were (comparatively), ignorant.
So ....
You are making it obvious that knowledge is not powerful enough to make changes.


Hummmm .... or the scammers are also using that knowledge to make things worst for everyone and better for themselves.

From your explanations and calculations of the math, change is on the way within a few years.
Asimov
Posts: 111162
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Quote:
3% of the population.. These folks probably feel the most pain and are payin attention.


If each of those people get two buddies involved, you have the same percentage of the population that wanted prohibition enacted. 90% of the population was either indifferent or against prohibition being passed. Yet we all know what happened.

90%


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It's justifiably immoral to deal morally with an immoral entity.

Festina lente.
Johnnyb
Posts: 53
Incept: 2014-10-21

Tulsa, OK
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Don't disagree with you materially at all, but one caveat - there are indeed reasons for selling below cost that are not felonious.

https://mindmatters.ai/2019/04/can-we-ma....
Tickerguy
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@Johnnyb -- Except that the innovation leads to you not selling below cost.

The problem is that if your intent in selling below cost originally is to put the tube maker out of business before you come up with the innovation it's a felony -- whether or not later on you come up with the innovation. The alleged "innovation" you might find later is speculative; your motive RIGHT NOW is to destroy a competitor and that motive is, by definition in 15 USC Chapter 1, felonious.

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Winding it down.
Thorvold
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NY
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"The 'new therapy' promised to resolve it, and the expectation is that it will be priced at $2 million per patient, with the question being asked "how much is a life worth?" in justification."

Another question needs to be asked but never is. How much do we have to pay the executives of the pharma companies/hospitals before they will do something to save a life?
Tickerguy
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How much do they steal before the rope comes out? Ever?

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Winding it down.
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