A Rising Tide Lifts Some Boats

January 23, 2019

“A rising tide lifts all boats.” This phrase, attributed to John F. Kennedy but actually coined by a regional New England chamber of commerce, is a common way to express the notion that economic growth is by definition good for all.  It’s certainly an appealing metaphor, and when thought of literally appears unassailably true.  But is it?

A recent study from the National Bureau of Economic Research and reported by the Washington Post, suggests not.  In an earlier era, the basis for this “rising tide” analogy was that growing businesses generate more jobs and higher wages, which help the people who have those jobs.  However, experience in the past few decades has shown that business growth does not necessarily translate to growth in either jobs or wages, and corporate profits have grown markedly faster than wages for workers.  Another rationale for the rising tide lifting all boats arose in an era where, thanks to the prevalence of defined contribution retirement plans like 401(k), the majority of households own stock.  Corporate profits are returned to shareholders in the form of dividends and higher stock prices.  One way to increase profit is to raise prices.  Such higher prices that could hurt consumers should be offset if those same consumers were also shareholders.

Again, facts trump theory.  Using data from several US government sources, researchers found that because consumption and equity ownership are unequally distributed, rising prices serve to shift resources from low- and middle-income individuals to the wealthy.  Lower income consumers pay far more in the higher prices than they get from any equity increase.  The net effect of this reverse Robin Hood effect was a shift in 3% of national household income from poor to rich in 2016.

Think about that the next time a pharma company jacks up the price of an Epi-Pen or some other life-saving drug.  Watch how much higher the corporate yacht floats.


Kids in America

January 2, 2019

I always look forward to the holiday issue of BMJ, one of the foremost medical journals in the world, which typically includes light-hearted and satirical articles such as the recent randomized controlled trial of parachutes to prevent death from jumping out of airplanes, and my all-time favorite article about comparing apples and oranges.  However, this year my enjoyment was overshadowed by an anything-but-satirical article in the holiday week New England Journal of Medicine.  (Thanks to my colleague Yoav Messinger for alerting me to it.)

Researchers at the University of Michigan published a study of the major causes of death in US children and adolescents over the past 20 years.  Given the omnipresent collection boxes to support St. Jude’s Research Hospital, you’d be tempted to think that cancer is at the top of the list.  Not so much.  In 2016, the most recent year for which data are available, it came in a distant third, accounting for 9% of deaths in children age 1-19 years.  Leading the list are motor vehicle crashes and firearms.  All injuries, both intentional and unintentional, make up over 60% of all childhood deaths.  Moreover, among injuries, unintentional injuries were most common (57%), but almost half of injured kids were victims of suicide (21%) or homicide (20%).

Let that sink in for a minute.  In 2016, 2560 children took their own lives, and 2469 were killed by someone else.  That’s 97 dead kids each week, or one every 104 minutes.  Each year in this country we lose some 750,000 person-years of life due to childhood injuries alone.  If we really want to save lives, you would think gas stations would have those little plastic coin boxes with pictures of shot up or strangled children.  I haven’t found one of those yet.

Reading the article, it’s hard to know what is most upsetting: how much worse we in the US are compared with other wealthy countries (and many poor ones), or the enormous disparities within our own nation, or the notable lack of progress in reducing these deaths over the past two decades.  Motor vehicle crashes are a major exception, with the death rate in 2016 just about half that in 1999.  However, for both motor vehicles and firearms, death rates have actually increased in the past 3 years.

An accompanying editorial points out that the problem is not about deficiencies in medical care.  It is about the sickening prevalence of nearly universally preventable traumatic injuries.  I recently wrote about firearms specifically, but the notion that we need to pay more attention to preventing injuries if we want to save children’s lives is clearly broader (suicide by suffocation, for example, is slightly more common than suicide by gun).

Now, I have nothing against St. Jude’s or any other children’s charity.  But when it comes to causes of death, we need to focus efforts and resources where they will have the greatest impact.  In this context, comparing cancer to injuries is like comparing walnuts and elephants.


%d bloggers like this: