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51. Private Equity Buyouts in Healthcare: Who Wins, Who Loses?

Author:
Eileen Appelbaum and Rosemary Batt
Publication Date:
03-2020
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
Private equity firms have become major players in the healthcare industry. How has this happened and what are the results? What is private equity’s ‘value proposition’ to the industry and to the American people -- at a time when healthcare is under constant pressure to cut costs and prices? How can PE firms use their classic leveraged buyout model to ‘save healthcare’ while delivering ‘outsized returns’ to investors? In this paper, we bring together a wide range of sources and empirical evidence to answer these questions. Given the complexity of the sector, we focus on four segments where private equity firms have been particularly active: hospitals, outpatient care (urgent care and ambulatory surgery centers), physician staffing and emergency room services (surprise medical billing), and revenue cycle management (medical debt collecting). In each of these segments, private equity has taken the lead in consolidating small providers, loading them with debt, and rolling them up into large powerhouses with substantial market power before exiting with handsome returns.
Topic:
Economics, Privatization, Health Care Policy, Health Insurance, and Private Equity
Political Geography:
United States

52. How Much Can the U.S. Congress Resist Political Money? A Quantitative Assessment

Author:
Thomas Ferguson, Paul Jorgensen, and Jie Chen
Publication Date:
01-2020
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
The extent to which governments can resist pressures from organized interest groups, and especially from finance, is a perennial source of controversy. This paper tackles this classic question by analyzing votes in the U.S. House of Representatives on measures to weaken the Dodd-Frank financial reform bill in the years following its passage. To control as many factors as possible that could influence floor voting by individual legislators, the analysis focuses on representatives who originally cast votes in favor of the bill but then subsequently voted to dismantle key provisions of it. This design rules out from the start most factors normally advanced by skeptics to explain vote shifts, since these are the same representatives, belonging to the same political party, representing substantially the same districts. Our panel analysis, which also controls for spatial influences, highlights the importance of time-varying factors, especially political money, in moving representatives to shift their positions on amendments such as the “swaps push out” provision. Our results suggest that the links between campaign contributions from the financial sector and switches to a pro-bank vote were direct and substantial: For every $100,000 that Democratic representatives received from finance, the odds they would break with their party’s majority support for the Dodd-Frank legislation increased by 13.9 percent. Democratic representatives who voted in favor of finance often received $200,000–$300,000 from that sector, which raised the odds of switching by 25–40 percent.
Topic:
Economics, Political Economy, Elections, Democracy, Finance, Legislation, and Money
Political Geography:
United States

53. Profits, Innovation and Financialization in the Insulin Industry

Author:
Rosie Collington
Publication Date:
03-2020
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
The list prices of analogue insulin medicines in the United States have soared during the past decade. In the wake of high-profile cases of prescription medicine “price-gouging”, such as Mylan’s EpiPen and Turing-acquired Daraprim, actors across the insulin supply chain are today facing growing scrutiny from US lawmakers and the wider public. For the most part, however, the role of shareholders in the insulin supply chain has been overlooked. This paper considers the relationship between profits realized from higher insulin list prices, pharmaceutical innovation, and the financial structures of the three dominant insulin manufacturing companies, which set list prices. It shows that despite claims to the contrary, insulin manufacturers extracted vast profits from the sale of insulin products in the period 2009-2018, as insulin list prices rose. Distributions to the company shareholders in the form of cash dividends and share repurchases totaled $122 billion over this period. The paper also considers the role of other actors in the insulin supply chain, such as pharmacy benefits managers (PBMs), in the determination of list prices. The data and analysis presented in the paper indicates that financialization could be considered in tension with not only the development of new drugs that will be available to patients in the future, but also the affordability of products that already exist today.
Topic:
Economics, Health, Health Care Policy, Finance, and Price
Political Geography:
United States

54. Payroll Share, Real Wage and Labor Productivity across US States

Author:
Ivan Mendieta-Muñoz, Codrina Rada, Ansel Schiavone, and Rudi von Arnim
Publication Date:
04-2020
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
This paper analyzes regional contributions to the US payroll share from 1977 to 2017 and the four major business cycles throughout this period. We implement two empirical exercises. First, we decompose the US payroll share across states. Utilizing a Divisia index decomposition technique yields exact contributions of real wages, employment structure, labor productivity and relative prices across the states to the aggregate change in the payroll share. Key findings are that the decline in the aggregate (i) is driven by decoupling between real wage and labor productivity; and (ii) is initially driven by the rust belt states, but subsequently dominated by relatively large states. Second, we employ mixture models on real wages and labor productivity across US states to discern whether distinct mechanisms appear to generate these distributions. Univariate models (iii) indicate the possibility that two distinct mechanisms generate state labor productivities, raising the question of whether regional dualism has taken hold. Lastly, we use bivariate mixture models to investigate whether such dualism and decoupling manifest in the joint distributions of payroll shares and labor productivity, too. Results (iv) are affirmative, and further suggest a tendency for high performing states to have relatively high payroll shares initially, and low payroll shares more recently.
Topic:
Economics, Political Economy, Labor Issues, Productivity, and Workforce
Political Geography:
United States

55. The dynamic impact of FX interventions on financial markets

Author:
Lukas Menkhoff, Malte Rieth, and Tobias Stöhr
Publication Date:
03-2020
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
Evidence on the effectiveness of FX interventions in the prevailing higher frequency approaches leaves a gap at horizons going beyond a few days. This is addressed by identifying a structural vector autoregressive model for the daily frequency with an external instrument. Using Japanese data, we find that FX interventions significantly affect exchange rates, although the effect is smaller than in emerging markets, and this impact persists for up to a year. There is no major effect on interest rates, but stock prices increase in line with currency devaluation, in particular those of large (exporting) firms. The results qualitatively hold for US and UK interventions.
Topic:
International Political Economy, Exports, Data, and Models
Political Geography:
United States, Japan, and United Kingdom

56. Seventy years of NATO: Is the Alliance still needed?

Author:
Krševan Antun Dujmović
Publication Date:
04-2019
Content Type:
Working Paper
Institution:
Institute for Development and International Relations (IRMO)
Abstract:
This year the North Atlantic Treaty Origination (NATO) marks seventieth anniversary of its creation. Back in 1949, the founding nations gathered around the United States as the leader of Western liberal democracies, establishing NATO as a military and political alliance that was to serve as a barrier against the Soviet Union, ‘’’’ serve as a counterbalance to NATO and the era of the Cold War gained full sway, with clearly established division in Europe between the capitalist West and communist East, and with only a handful of European countries opting for neutrality. Thus, a bipolar system of world order was established, with defined territories and its export of communism throughout the continent. Just six years later, Moscow assembled the Warsaw Pact together with other Eastern European communist countries, excluding Yugoslavia. The Warsaw Pact was to and frontiers of the two global adversaries, and the Cold War pertained until the collapse of the USSR in 1991. From 1991 onwards, fifteen new independent states emerged from the disintegrated Soviet Union, with the newly founded Russian Federation as its legal successor and a permanent member of the United Nations Security Council. Subsequently the Warsaw Pact had collapsed, and Eastern European countries used a transition period that was to bring them closer to the West, ultimately to NATO and the European Union. The collapse of the Soviet Union was the single most important event in history after the World War II and the world entered into a new era. Back in early nineties, it seemed that Russia and the West have buried the tomahawk of war for an indefinite time, and many political theorists and politicians, in both NATO member states and in Russia, have stated that without its archrival NATO no longer had raison d’etre.
Topic:
Foreign Policy, NATO, International Cooperation, and Military Strategy
Political Geography:
United States, Europe, North Atlantic, and North America

57. Venezuela: First episode of the new Cold War?

Author:
Slobodan Pajovic
Publication Date:
07-2019
Content Type:
Working Paper
Institution:
Institute for Development and International Relations (IRMO)
Abstract:
Since the beginning of 2019, Venezuela has been in the focus of international politics because of its political and institutional crisis, together with its economic and social collapse generated in 2013, transformed into a regional and international crisis. The exit of some estimated three to four million emigrants mostly to neighboring countries of human rights and democratic values, the authoritarian regime of socialist orientation, the current American strategy of strengthening its political and strategic influence in Latin America, the presence of significant non- regional emerging global factors, as well as the cyclical changes of political parties in power in this part of the world. Accordingly, this crisis tests the hemispheric and global leadership of has additionally deepened the contexts of theUS, the influences of emerging global powers the regional crisis including also the security aspect. In short, the crisis can be described as oscillating between the issues of defense like China, Russia, India or Turkey, recently, and the potential of Latin American regionalism and political consensus.
Topic:
Imperialism, Migration, Regional Cooperation, and Financial Crisis
Political Geography:
United States, Latin America, Venezuela, and North America

58. Armenia’s Colourless Revolution

Author:
Jan Cingel
Publication Date:
10-2019
Content Type:
Working Paper
Institution:
Institute for Development and International Relations (IRMO)
Abstract:
Armenia is a landlocked country situated in the South Caucasus region. History of the region was shaped by the clash of three major empires: Ottoman, Persian and Russian trying to win control over it. The modern history of Armenia began in 1991, when the country seceded from the crumbling Soviet Union. Those were difficult years as the fledgling country was in ongoing war with its new post-USSR neighbour – Azerbaijan. The war was waged over “Nagorno- Karabakh”, a region that was mostly populated by ethnic Armenians, however was formally part of the Azerbaijan Soviet Socialist Republic within the USSR. In the international arena, Armenia joined the UN in 1991, the Russia-led defence pact called the Collective Security Treaty Organisation (CSTO) in 1994, and also in that year, NATO’s Partnership for Peace (PfP). Armenia became part of the EU’s Eastern Partnership (EaP) in 2009 and until September 2013 had been negotiating the EU’s Association Agreement (AA), which included a free trade agreement. Two months before the intended completion of negotiations, and after a visit of then President Serzh Sargsyan to Moscow, Armenia announced that it would cancel negotiations with the EU on the AA and that it was going to join the emerging Russia-led Eurasian Economic Union (EAEU) instead. Armenia joined the EAEU in 2014.
Topic:
NATO, Post Colonialism, United Nations, and Revolution
Political Geography:
Russia, United States, Europe, Soviet Union, Armenia, Azerbaijan, and Ottoman Empire

59. Volodymyr Zelensky’s Sweeping Victories: Is Ukraine’s Turn Toward the West Definite?

Author:
Krševan Antun Dujmović
Publication Date:
12-2019
Content Type:
Working Paper
Institution:
Institute for Development and International Relations (IRMO)
Abstract:
For more than half a decade Ukraine has been one of epicenters on the map of geopolitical crises in the world and consequently drawn a lot of international attention worldwide. Ever since it gained its independence form the crumbling Soviet Union in 1991, Ukraine was a of the country also changed. Ukraine has been dominated by Russia as the Russian Empire penetrated deep toward the Black Sea in the 17th century, and the position of inferiority towards Moscow was also the case in the USSR. The first upheaval dubbed the Orange Revolution sort of buffer zone between the West and East, between the United States and European allies on the one hand, and the Russian Federation on the other. With the change of political elites and their political preferences, the orientation in 2004, brought to power Viktor Yushchenko, who tried to conduct reforms and bring Ukraine closer to the West, but the effect of his Presidency were ephemeral. President Viktor Yanukovych turned Ukraine’s sight towards Russia again, but also kept the process of EU association alive before suddenly deciding not to sign the Association Agreement with the EU just days before the planned signing ceremony on 29th November 2013. This Yanukovych’s abrupt turn from EU in favor of stronger ties with Russia triggered the wave of massive public demonstrations which later become known as the Euromaidan and subsequently the Ukrainian revolution in February 2014. The Euromaidan Revolution toppled Yanukovych and the new pro-Western government was formed. Russia soon reacted to the change of tide in Ukraine by annexing the Crimean peninsula in March and soon the armed conflict between the pro- Western government in Kiev and Russia backed rebels in Donetsk and Luhansk Oblasts broke out. Ever since the spring of 2014, Ukraine has been engulfed in a brutal conflict in the east of the country that is hampering its efforts to reform and get closer to the EU. Nonetheless, Ukrainian leadership is under the new President Volodymir Zelensky is striving to forge stronger links with the West and the EU.
Topic:
Foreign Policy, Diplomacy, Military Strategy, European Union, and Geopolitics
Political Geography:
Russia, United States, Europe, Ukraine, Eastern Europe, and Crimea

60. Electric Vehicle Charging in China and the United States

Author:
David Sandlow and Anders Hove
Publication Date:
02-2019
Content Type:
Working Paper
Institution:
Center on Global Energy Policy (CGEP), Columbia University
Abstract:
At least 1.5 million electric vehicle (EV) chargers have now been installed in homes, businesses, parking garages, shopping centers and other locations around the world. The number of EV chargers is projected to grow rapidly as the electric vehicle stock grows in the years ahead. The EV charging industry is a highly dynamic sector with a wide range of approaches. The industry is emerging from infancy as electrification, mobility-as-a-service and vehicle autonomy interact to produce far-reaching changes in transportation. This report compares EV charging in the world’s two largest electric vehicle markets -- China and the United States – examining policies, technologies and business models. The report is based on more than 50 interviews with industry participants and a review of the Chinese- and English-language literature. Findings include: 1. The EV charging industries in China and the United States are developing largely independently of the other. There is little overlap among the key players in the EV charging industries in each country. 2. The policy frameworks with respect to EV charging in each country differ. The Chinese central government promotes the development of EV charging networks as a matter of national policy. It sets targets, provides funding and mandates standards. Many provincial and local governments also promote EV charging. The United States federal government plays a modest role in EV charging. Several state governments play active roles. 3. EV charging technologies in China and the US are broadly similar. In both countries, cords and plugs are the overwhelmingly dominant technology for charging electric vehicles. (Battery swapping and wireless charging have at most a minor presence.) China has one nationwide EV fast-charging standard, known as China GB/T. The US has three EV fast charging standards: CHAdeMO, SAE Combo and Tesla. 4. In both China and the United States, many types of businesses have begun to offer EV charging services, with a range of overlapping business models and approaches. A growing number of partnerships are emerging, involving independent charging companies, auto manufacturers, utilities, municipalities and others. The role of utility-owned public chargers is larger in China, especially along major long-distance driving corridors. The role of automaker EV charging networks is larger in the United States. 5. Stakeholders in each country could learn from the other. US policymakers could learn from the Chinese government’s multiyear planning with respect EV charging infrastructure, as well as China’s investment in data collection on EV charging. Chinese policymakers could learn from the United States with respect to siting of public EV chargers, as well as US demand response programs. Both countries could learn from the other with respect to EV business models. As the demand for EV charging grows in the years ahead, continued study of the similarities and differences between approaches in China and the United States can help policymakers, businesses and other stakeholders in both countries and around the world.
Topic:
Science and Technology, Infrastructure, Green Technology, and Electricity
Political Geography:
United States, China, Asia, and North America