Thursday, May 30, 2024

McHugh David: Can we really end our drug dependence on China?

by BIZ Magazine

A pharmaceutical issue, wherein brand-name drugs for every day maladies were in short supply, has caused a new wrinkle amid the COVID-19 crisis.

The United States must end its reliance on China.


According to testimony, the United States imports almost 80% of their supply of pharmaceuticals from China.

A fact which has already been brought to the attention of federal lawmakers.

According to an article from Politico, the Department of Health and Hospitals testified in 2019 before the Senate about the dangers of being so heavily reliant on Chinese imports. At the time, it was theorized that the Chinese could withhold those goods or, worse, contaminate them.

No one considered, at the time, that the supply chain of healthcare goods could stop for very reason they were created – a pandemic.

The China Chamber of Commerce for Import & Export of Medicines & Health Products states that China is the world’s largest producer of generic drugs. More than 90 percent of China’s 4,300 API and pharmaceutical manufacturers produce generic products. As with other industrial sectors, China’s strength is in its scale.

In all, the Chinese’s pharmaceutical exports valued $64.4 billion in 2018.

Also in 2018, U.S. imports from China account for 21.2% of overall U.S. imports.

Congressman Garret Graves led the call for reliance on China to be, at the very least, reduced in the coming years. It’s a fair rallying cry, considering the massive amount of economic backlash that came when one of the largest producers of goods, in the world, suddenly shut down for 30-60 days (don’t forget the coronavirus pandemic immediately followed Chinese New Year).

But is it simple?

Of course, the answer is no. Years of economic growth and dependence on cheaper Chinese goods in many markets has caused a reliance on those widgets.

Take pharmaceuticals, for example. A recent report showed that wages in the United States have grown at a relatively linear rate, compared with the exponential growth of new vehicles, healthcare, education, and food.

The only markets that remained stagnant? Those which were involved with China and could sell cheap goods – specifically widgets that were designed to be sold through places like Walmart.

But, you might say, healthcare has gone up exponentially? Yes, and without cheap pharmacueticals from China, how much more costly would it be? We’ve all heard the stories about itemized lists from hospitals to support the outrageous bill that comes later, and tucked in there in the $30 beside Tylenol dose.

How much would that be if those pharmacueticals were made in America?

But, this is the fate of any industrialized country. We know this because China is going through a very similar renaissance. While many of their factories continue to operate inside Chinese borders, they are focused on higher-end materials and products, outsourcing the production they became rich upon to places like Thailand and Taiwan.

The American renaissance saw so many jobs automated, that the blue collar worker became more of an overseer than anything else. Watching machines and making sure they continue to function appropriately.

What happens in a country that has roughly 1 billion less people than China and must find a way to survive?

For the most part, people shift to being integral pieces of small business, or the service industry. Louisiana is, especially, reliant on the service industry.

As my late father used to say – “We’re on our way to a point where everyone’s selling hamburgers to each other.”

And what COVID-19 has done is exposed issues in that economic mindset. A recent study through the Dave Ramsey Foundation showed that less than 50% of adults are saving at all for retirement.

In order to keep the economy running, at least as far as we hope it will, the government is injecting $2.2 trillion in just a few weeks. That’s 10% of the country’s total gross domestic product, for social distancing in some places for 4 weeks, and perhaps a combination of social distancing and stay at home in others for 8-12 weeks. In many cases, larger American factories and companies are still producing – albeit a bit slower.

If that doesn’t raise red flags, what will?

Credit of all types – personal, government, and commercial – is at its highest level, per capita, ever. It’s the extra cushion the economy uses to keep the slow-growth wages in line with exponentially growing costs.

And kids? In the vast majority of cases, requires a two-person, working household.

But, again, COVID-19 exposes that issue.

So the country has to choose – are we going to go all-in on this ‘globalization’ thing and adjust our local production and job availability to match?

Or, are we going to go all-in on the American worker? Read that again – the American worker.

This is not about companies making more money, but developing a solvent economy which has always been driven by Americans spending money on things.

There is a middle ground, but part of that ground is accepting that the United States will have to shift values of products in order to be able to convince new workers to enter that field.

That’s a hard sell in a world where Tylenol is worth about four cents a pill.

If the country is going to continue to push the ‘American Dream’ than we either have to accept that the dream is different than it was in the past, and only achievable performing certain work, or we have to refocus our efforts on training future generations with skills that can be used in any utility for monetary gain – think the return of local economies, with Bill down the street making tables and chairs again.

Because right now, those skills are lacking and, if social media is any indication, those $1200 checks aren’t going to fuel the economy – they’re going to be used to survive.

And if that’s not a red flag, I don’t know what is.

J. McHugh David is editor and publisher of the Livingston Parish News.

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