Immigrants strengthen the American economy. The research is clear. East Texas Baptist University awarded federal grant for economic development. The Economics of Drug Discovery and the Impact of Patents. Fed chair Jerome Powell faces a precarious balancing act amid criticisms from Republicans and Democrats.
Sources:
https://www.deseret.com/opinion/2024/08/01/immigration-helps-the-american-economy/
https://www.kltv.com/2024/08/02/etbu-awarded-federal-grant-economic-development-east-texas/
https://www.rstreet.org/commentary/the-economics-of-drug-discovery-and-the-impact-of-patents/
https://fortune.com/2024/08/01/fed-chair-rate-cuts-jerome-powell-democrats-republicans-economy-election-inflation-unemployment/
Outline:
(00:00:00) Introduction
(00:00:40) Immigrants strengthen the American economy. The research is clear
(00:03:38) ETBU awarded federal grant for economic development in East Texas
(00:05:58) The Economics of Drug Discovery and the Impact of Patents
(00:09:56) Fed chair Jerome Powell faces a precarious balancing act amid criticisms from Republicans and Democrats who claim he 'gave in to bullying'
Simply Economics
The Economic Benefits of Immigration and the Impact of Patents on Drug Discovery
Immigrants strengthen the American economy. The research is clear. East Texas Baptist University awarded federal grant for economic development. The Economics of Drug Discovery and the Impact of Patents. Fed chair Jerome Powell faces a precarious balancing act amid criticisms from Republicans and Democrats.Sources:https://www.deseret.com/opinion/2024/08/01/immigration-helps-the-american-economy/https://www.kltv.com/2024/08/02/etbu-awarded-federal-grant-economic-development-east-texas/https://www.rstreet.org/commentary/the-economics-of-drug-discovery-and-the-impact-of-patents/https://fortune.com/2024/08/01/fed-chair-rate-cuts-jerome-powell-democrats-republicans-economy-election-inflation-unemployment/Outline:(00:00:00) Introduction(00:00:40) Immigrants strengthen the American economy. The research is clear(00:03:38) ETBU awarded federal grant for economic development in East Texas(00:05:58) The Economics of Drug Discovery and the Impact of Patents(00:09:56) Fed chair Jerome Powell faces a precarious balancing act amid criticisms from Republicans and Democrats who claim he 'gave in to bullying'
- Duration:
- 13m
- Broadcast on:
- 02 Aug 2024
- Audio Format:
- mp3
Good morning and welcome to Simply Economics. It's Friday, August 2nd. On today's show, immigrants are shown to strengthen the American economy while ETBU is awarded a federal grant for economic development in East Texas. Plus, we'll discuss the economics of drug discovery and the impact of patents. This coverage, and more, up next. I'm David, and you're listening to Simply Economics. We start off with a look at the economic impact of legal immigration. Immigration has been a hot-button issue in recent election cycles, with rhetoric from both sides of the aisle often painting a negative picture of those seeking to enter the United States legally, but is this perception accurate? Here to discuss is our Simply Economics correspondent. So what does the data actually show about the effects of legal immigration on the U.S. economy? Well, David, despite the heated political rhetoric, numerous studies have found that legal immigration provides a net positive for the U.S. economy. Immigrants, both skilled and unskilled, help drive economic growth by filling critical gaps in the labor market, starting businesses, and contributing to innovation. In fact, research from the National Academies of Sciences, Engineering, and Medicine found that immigration has an overall positive fiscal impact at the federal level and on the economies of most states. That's interesting. Can you give some specific examples of how legal immigrants contribute economically? Absolutely. Like the tech industry, for example, immigrants have founded many of America's most valuable tech companies like Google, Tesla, and Intel. Over half of U.S. startup companies valued at $1 billion or more have at least one immigrant founder. These companies create thousands of jobs and generate significant economic activity. Additionally, sectors like agriculture, construction, and health care rely heavily on immigrant labor to meet their workforce needs. But what about concerns that immigrants take jobs from native-born workers or depress wages? Research shows that for the most part, immigrants and native-born workers tend to have different skill sets and therefore often complement each other rather than compete directly. A report from the Bipartisan Policy Center concluded that immigration has a minimal impact on the wages and employment levels of native-born workers. In some cases, the presence of immigrant workers can actually boost wages and create more jobs as businesses expand to meet increased demand. As we head into another election season with immigration likely to remain a contentious issue, this economic data is important context for voters to keep in mind. While border security is certainly a legitimate concern, portraying legal immigration as inherently harmful to the country is not supported by the evidence. That's right, David. The heated campaign trail rhetoric often fails to capture the nuanced economic reality, crafting a balanced immigration policy that secures the border while welcoming those who come to the U.S. legally to work hard and contribute is not an easy task, but it's a challenge policymakers will need to grapple with based on facts rather than fear if the goal is to maximize the economic potential of immigration for the country. Thanks for that insightful analysis. Clearly, when it comes to legal immigration, there's more to the story than what fits into campaign soundbites. Appreciate you breaking it down for us today. Now shifting gears to some positive economic news out of East Texas, East Texas Baptist University has been awarded a significant federal grant aimed at boosting economic development in the region. The $475,000 grant from the U.S. Department of Commerce's Economic Development Administration is expected to have a major impact on workforce training and job growth in East Texas. For more on this story, we turn to our correspondent at Simply Economics. What can you tell us about how this grant will be used? The nearly half a million dollar grant will fund specialized courses at ETBU focused on enhancing workforce skills in areas like technical abilities, interpersonal skills, and communication. The university says the training will help uplift the economy and citizens in Marshall, Harrison County, and the broader East Texas region. While the grant is centered on those specific areas, ETBU emphasizes that the benefits will extend to communities across East Texas. It sounds like the goal is really to invest in the existing workforce and help people advance in their careers. Is that the main focus of these training programs? Absolutely. ETBU wants to help businesses develop the talent they already have on staff by providing the skills training that will help employees elevate their careers within their organizations. This could include things like resume writing, interview preparation, and other professional development to help workers be competitive for higher level positions. The idea is to create opportunities for people to build lives and careers in East Texas. When will these grant-funded courses be available, and how can those who are interested find out more information? The specific courses have not been officially posted yet on the ETBU website. However, the university says that anyone who wants to learn more about the program and when the classes will be offered can contact Scott McCurdy, the Assistant Vice President for Advancement and Administrative Affairs to get those details directly. Investing in workforce development is so critical for regional economies. It will be interesting to see the impact of this program in East Texas in the coming years. Thank you for that update. Now let's shift gears and discuss another important economic topic. The pharmaceutical industry's reliance on patents to incentivize innovation. This has far-reaching implications for drug discovery, pricing, and public health. While patents provide crucial incentives for companies to invest billions in research and development, they also create a system that can sometimes prioritize revenue protection over innovation. Here to discuss the economics of drug discovery and the impact of patents is our simply economics correspondent. Can you start by explaining the drug discovery process and why it is so expensive? Bringing a new drug to market is a very costly and time-consuming process. Pharmaceutical companies typically screen 5,000 to 10,000 chemical compounds for each new drug ultimately approved. This involves high-throughput screening against biological targets, followed by detailed studies on promising candidates. The compounds then have to go through a rigorous FDA approval process involving three phases of clinical trials to establish safety and efficacy. Only about 12 percent of drugs that enter clinical trials end up getting FDA approval. One study found that the cost to bring a single new drug to market ranged from $161 million to $4.1 billion, reflecting differences in therapeutic targets, development complexity, and firm size. In 2019, the U.S. pharmaceutical industry spent $83 billion on research and development. Those are staggering costs. How do patents and market forces influence the economics and incentives around drug discovery? Patents allow pharmaceutical companies a period of exclusivity, typically 20 years from the application filing date, to recoup their large upfront investments. However, by the time a drug reaches the market, it usually has only 12 to 15 years of patent protection left. This makes the remaining exclusivity period crucial for generating profits. At the same time, companies have to navigate the lengthy FDA approval process, which further cuts into the effective patent life. Competition also plays a big role, as firms consider not just the potential market for a new drug, but the likelihood of rival products emerging. This dynamic often encourages companies to invest in extending their existing drug portfolios to create new patents that may delay competition, rather than pursuing entirely novel therapies. It's a complex system with a lot of moving parts and competing incentives. The high costs of drug development are often cited as justification for strong patent protections and high drug prices. But you mentioned a recent study that found little correlation between R&D spending and treatment costs for a sample of FDA-approved drugs. What other factors shape the economics of the pharmaceutical industry beyond the direct costs of drug discovery? Market size and dynamics play a huge role in profitability calculations, sometimes even more so than the costs of R&D. Factors like the size of the patient population, severity of unmet medical need, insurance coverage, and negotiated rebates and discounts all influence the revenue potential for a new drug. This means pharmaceutical firms are incentivized to invest in therapeutic areas with large potential markets, where they believe they can maintain a competitive advantage, which doesn't always align with the areas of greatest medical need. The patent system and FDA regulations create a complex framework of push and pull factors that shape the direction of pharmaceutical innovation. Thanks, Michael, for the enlightening discussion on the economics of drug discovery and the role of patents. It's a complicated system with major implications for innovation and public health. On the topic of economic policy, Federal Reserve Chair Jerome Powell is facing political pressure from both sides of the aisle as he navigates the central bank's monetary policy decisions. Democrats are urging Powell to cut interest rates, which didn't happen at Wednesday's Fed meeting, while Republicans want the Fed to hold off on any moves before the upcoming election. Here to provide more insight is our simply economics correspondent. So what's the significance of these political pressures on the Fed Chair? The Federal Reserve is supposed to operate independently from political influence, making decisions based solely on economic data and market conditions. However, the current political climate has put Chair Powell in a challenging position. Democrats argue that cutting rates would stimulate the economy and help average Americans, while Republicans are concerned that any major moves before the election could be seen as politically motivated. It's a delicate balancing act for Powell, who must maintain the Fed's credibility and independence while also responding to the evolving economic landscape. Powell addressed these concerns at Wednesday's meeting, saying he was absolutely convinced that even the widely anticipated September rate cut could be made without political considerations. How important is it for the Fed to maintain this stance of independence? It's crucial for the Federal Reserve to remain independent and make decisions based on objective economic factors rather than political pressure. If the public perceives the Fed as being influenced by politics, it could undermine confidence in the institution and its ability to effectively manage monetary policy. Central Bank independence is a key pillar of modern economics, as it allows the Fed to make sometimes unpopular but necessary decisions to promote long-term economic stability. Powell's emphasis on the Fed's apolitical approach is an important signal to markets and the public that the Central Bank remains committed to its mandate. Looking ahead, what challenges does Powell face as he tries to navigate these competing political pressures while also responding to economic conditions? Powell and the Fed will need to carefully balance the demands for rate cuts from some quarters with the need to maintain flexibility in the face of uncertain economic conditions. If the economy shows signs of weakening, the Fed may need to act decisively to support growth even if it means facing criticism from those who see such moves as politically motivated. On the other hand, if the economy remains resilient, Powell will need to resist pressure to cut rates unnecessarily, which could lead to imbalances and instability down the line. Ultimately, the Fed's credibility and effectiveness will depend on its ability to make data-driven decisions and communicate its rationale clearly to the public, regardless of the political noise surrounding its actions. As always, the Federal Reserve's monetary policy decisions will be closely watched in the coming months, thanks to our simply economics correspondent for that analysis. And with that, we wrap up our stories for today. Thanks for listening to Simply Economics. We'll see you back here tomorrow. [MUSIC] [BLANK_AUDIO]