Exporting Drug Prices
In "Exporting Drug Prices" (May), Jacob Sullum points to a real problem with proposals to lift the statutory ban on importing price-controlled Canadian drugs: Once the ban is lifted, drug companies may simply raise the prices of the drugs they sell in Canada, or limit supplies so as not to undermine their far larger and more profitable American market. Because all countries, save the U.S., negotiate low-price agreements with drug companies, Americans end up paying a vastly disproportionate share of the research and development costs for new drugs, while the rest of the world rides largely free. That arrangement persists only because the ban prohibits price-controlled drugs from flowing into the U.S.
Free marketers like myself have urged lifting the ban universally, or at least with regard to the developed world. Were that done, companies wishing to continue market segmentation and price discrimination would have to resort to no-resale agreements or supply limits, which might or might not work. Lifting the ban only for the tiny Canadian market, however, is folly. That doesn't stop Congress, of course. In fact, most proposals would prohibit companies from "gaming" the system —i.e., raising prices in Canada or limiting supplies there. That would indeed amount to importing foreign price controls, controls Congress is reluctant (so far) to impose directly.
Vice President for Legal Affairs
Assault Behind Bars
Cathy Young's column "Assault Behind Bars" (May) attempts to answer some reasonable questions about prisoner rape by consulting a rather unreasonable source. Young's piece relies heavily on the research of Mark S. Fleisher, a former employee of the Federal Bureau of Prisons and the author of a much-disputed report in which he asserts that prisoner rape is an anomaly.
As Young notes, Fleisher's preliminary report created controversy because of his strained effort to downplay the problem of sexual violence behind bars. The document—which Fleisher personally released to the press while the sponsoring agency, the National Institute of Justice, insisted that it was not final—failed to meet basic scientific research standards, such as being peer reviewed and including a review of existing academic and scientific literature. Moreover, Fleisher, an anthropologist, did not study prevalence but purported to provide a "cultural and social analysis" of prisoner rape. As a result, his research cannot support his conclusion that prisoner rape is rare.
Reputable scholars and government agencies have found the prevalence, as well as the physical and psychological consequences, of prisoner rape to be tragically significant. The Bureau of Justice Statistics found that in 2005 alone more than 6,000 reports of sexual violence in detention were filed. Since this estimate included only cases in which inmates chose to report assaults to corrections officials, the number is just the tip of the iceberg.
Young accuses advocacy organizations of being prone to exaggerating the problems they are trying to solve. Unfortunately, by relying on Fleisher's flawed research, Young herself produced an "unreliable narrative" about prisoner rape.
Stop Prisoner Rape
Los Angeles, CA
Cathy Young replies: I am mystified by Durfield's letter. Any reader of my column should be able to see that, far from "relying" on Fleisher's research, I discuss it in a highly critical manner. I point out that his interview methods are unlikely to produce a reliable estimate of the prevalence of sexual assault in prison and that his conclusions about the rarity of prison rape are based on a puzzling acceptance of the sexual norms of prison culture, in which submission to threats of violence is equated with consent.
At the end of my column, I state that the lowest estimates by correctional organizations place the annual number of sexual assaults in America's prisons at 20,000 to 40,000 and that "those are figures no civilized society should accept." Durfield evidently is irked by my suggestion that activist groups such as hers are prone to exaggeration. (They have cited numbers as high as 1 million prison rapes a year.) But the implication that I am minimizing the issue, or that I am touting Fleisher's report as an accurate portrayal of prison rape, is not only incorrect but baffling.
An Epidemic of Meddling
I take exception to one thing in "An Epidemic of Meddling": lumping smoking into the category of personal choices that don't hurt anyone but the chooser. There is the well-understood theory (in the same way evolution is a well-understood theory, I would say) that secondhand smoke is harmful to others not doing the smoking. A personal choice to smoke isn't harmful to anyone else, but only if the smoker produces no smoke.
Until smokers produce no smoke at all, they are not able to choose that health risk only for themselves. They're choosing for the rest of us too.
Jacob Sullum replies: I can't agree that Jan Foley has a right to demand a smoke-free environment wherever she goes. In a free society, smokers should be able to light up on their own property (in their homes, for example) and on other people's property (in bars and restaurants, say), provided they have the owners' permission. Visitors can then decide whether they want to enter a home or business where the owner has decided to allow smoking. That way the smoke is not forced on anyone.
In any event, smoking is not considered a "public health" issue simply because of its possible effects on nonsmoking bystanders. It is considered a "public health" issue, first and foremost, because of its impact on people who choose to smoke. In that sense the dangers of smoking are analogous to other voluntarily assumed risks, such as those associated with drinking, overeating, or motorcycle riding.
The Folly of Southern Hospitality
John F. Sugg provides an excellent critique of the subsidies many Southern cities and states offer companies ("The Folly of Southern Hospitality," May). But the problem is not confined to the U.S. South.
When Intel built its first wafer fabrication plant in Ireland in the 1990s, its decision to invest $2.5 billion was facilitated by tax breaks, free land, and other incentives worth about half that amount. Irish government officials to this day maintain that it was money well spent. In the 1990s, Brazilian states embarked on a ruinous competition to get international car companies to build new factories, with incentives that in several cases exceeded $300,000 per job created, at a time when the average auto worker's annual salary was about $12,000. Studies of Botswana's generous investment incentives showed a higher failure rate among companies receiving incentives than among nonbeneficiaries.
Some countries have learned valuable lessons from these experiences and curtailed these subsidy programs. Both Canada and Brazil have passed laws banning incentive-based competition among states and provinces. Botswana scrapped its entire program.
Sadly, though, the lessons and the way forward are not so clear. Investors, even reputable ones, have become adept at pressuring state and national governments. Despite countless surveys and studies indicating that investors looking for a location consider subsidies and incentives only at the margin, if at all, the margin can exert a very strong pull. In 2005 Ireland, under pressure from the European Union, refused to give Intel a €100 million grant. The semiconductor giant instead built the factory in Chandler, Arizona, notwithstanding more than a decade of policy reforms and tax cuts that have made Ireland the most competitive business location in Western Europe.
We are pleased to announce that Michael C. Moynihan has joined our staff as an associate editor. Prior to his move to Washington, D.C., Moynihan was a fellow at the Swedish free market think tank Timbro.
We are also happy to announce the promotion of Kerry Howley to senior editor.
This is our annual double issue. The next issue subscribers receive will be dated October.