Article on Basic Principles of Economics Assignment Help
Choose an article published in the last two weeks in one of these three resources (Wall Street Journal, Business Week, Economist). Discuss how the article relates to one or more of the Ten Basic Principles of Economics: The article titled as "tax reforms as remedy for outsourcing".
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Governments can sometimes improve the market outcomes :
Government can improve the market outcomes by taking up proper interventions in the right time and in the right manner. It is one of the ten basic economics principles. The recent article in the Wall street journal dated, 25th June, 2019, titled, "Tax reforms remedy for outsourcing" illustrates the same in the wake of uncompetitive market for pharmaceutical industry and subsequent outsourcing (WSJ, 2019). Right from the days of Obama, there are several pharmaceutical companies working out to do outsourcing or mergers or acquisitions to face the America's uncompetitive corporate tax rate. Chicago based Abbvie has offered to buy Allergan for $63 billion in cash and stock. Abbvie is based in Dublin and the merger is expected to provide some allowance for Abbvie in tax benefits as it is already facing competition with the fall of market for its cash cow products. Pfizer and Abbvie sought to take up similar measures in the past for taking up the mergers to get the tax savings. Outsourcing is of no benefit to US, as it will impact the economic benefits, loss of employment for the companies. In this connection, GOP tax reforms have reduced the perverse business incentives to relocate abroad by lowering the corporate rate 21% from 35% and the rate on foreign income generated by US intellectual property to 13.125%. These changes consolidate the market outcomes for US pharmaceutical companies, now they are as competitive as other global pharmaceutical companies. Now they have better margins and savings to spend on finding remedies for cancer and to mitigate the age wrinkles.
Big pharma is one of the political targets for the country. However every intervention need not be impactive over the pharma operations, there is considerable scope for the US government interventions to impact the US phama in a positive manner. There is considerable scope to consolidate and to sustain the health of the US pharma industry considerably by promoting better competition in the market and by proactive interventions. The episode of GOP tax reforms is a good example to emphasize the "Government potential to bring out the better market outcomes".
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