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For many patients and their families, hospital fees are already complicated, opaque and stressful. The Kingsburys show just how little control consumers have.

None of this has been clear to consumers—until this year. Hospitals and insurers have long set prices through confidential negotiations. Starting Jan. 1, hospitals were required to make their prices public under a Trump administration policy that sought to expose the sector’s pricing to greater market pressure.

Compliance with the rule has been spotty, but the available data show that prices vary widely among the plans that negotiate contracts with hospitals. While the data remains difficult for consumers to use, knowing the full range of rates could ultimately help patients negotiate their bills.

Healthcare economists note that prices in other sectors, such as airlines, can also vary for the same service, but hospitals’ steep prices mean the dollar difference between the highest and lowest rates can amount to tens of thousands of dollars. “The order of magnitude of healthcare costs is different,”

Even within an insurance plan, prices aren’t consistently low or high. A plan’s prices for one service can be among the lowest a hospital negotiates, but among the highest for another,

A person insured by Minnesota-based HealthPartners would have received the most favorable price for a hospital stay because of back problems, but the cost of an emergency room visit with the same insurance was among the highest, according to the Journal’s analysis of the data.

When insurance didn’t cover some treatments, the Journal found, Avera McKennan Hospital set its own prices that ranked among the highest anywhere in the U.S. in the Journal’s analysis.

The LifeShield price of about $780 amounted to a discount of 53% off the hospital’s charge. Ms. Kingsbury paid all of it because her plan’s benefits didn’t cover the rest of the bill. The insurance was exempt from some federal rules that protect healthcare consumers. LifeShield didn’t respond to requests for comment.

Ms. Kingsbury earned roughly $17,700 last year, tax records reviewed by the Journal show. Her husband, who is retired, received about $22,800 in yearly income from Social Security. They bought insurance in 2019 from LifeShield National Insurance Co.

The range of prices is the product of a complex interplay of multiple payers and hospitals, and a lack of competitive pressure to hold down costs, economists said. Rates have been determined by trade-offs at the bargaining table between hospitals and insurers—such as an offer of cheaper prices in return for more business—and by market power, with higher prices where hospitals dominate.

Hospitals and insurers ultimately bargain for prices to meet financial targets for revenue and profit, said David Dillon, a healthcare actuary with the consulting firm Lewis & Ellis Inc. “It is kind of as simple as both sides of the table have their revenue requirements,” he said.

“The market for healthcare just doesn’t look at all like the market for tomatoes because somebody else is literally negotiating and purchasing on your behalf,” Mr. Cooper said.

The cost for the scan under LifeShield was $1,497, almost half the price charged under Avera. However, Ms. Kingsbury’s plan at LifeShield was exempt from Affordable Care Act rules to prevent gaps in coverage. LifeShield didn’t cover this scan. So Avera charged Ms. Kingsbury the price it sets for patients not covered by insurance, at $8,451, one of the highest prices in the Journal’s analysis of publicly available rates nationwide.

“Healthcare is a service and it can be an expensive service, especially for a serious condition. That’s why health insurance exists,” said Avera spokeswoman Ms. Meyers. “It is important for consumers to understand what they are buying and the coverage it provides.”

The Journal compared Avera McKennan’s 2019 PET CT price for Ms. Kingsbury with the price Medicare would pay, as calculated by price-comparison startup Turquoise Health Co. The hospital’s cash price for Ms. Kingsbury in 2019 was 5.7 times the Medicare rate, according to the Journal’s analysis using newly public data collected by Turquoise. That’s one of the highest multiples of any of the more than 1,200 U.S. hospitals in the analysis.

In just about every other consumer market you can think of, the Internet, by making prices instantly available and comparable, has resulted in prices that are lower, more uniform and more closely tied to costs. But in health care, where pricing remains opaque, prices are rising faster than inflation, faster than costs and faster than the incomes of the people paying for it

The new rules would require hospitals (and the doctors whose practices are owned by hospitals) to publish, in an easy-to-use format, their minimum and maximum rates for 300 common services, along with the amount the hospital is willing to accept from someone without insurance. The aim is to make it easier for uninsured patients, or insured patients with co-payments and deductibles, to shop around for the best value.

More controversial, however, is a second rule that would require health insurers to create an interactive website that would tell customers what their out-of-pocket cost would be for a service at any provider, whether in network or out, as well as the price it has negotiated for that service with in-network providers. The effect would be to let every hospital and insurer know the rates negotiated between every other hospital and insurer — rates that under current contracts must be kept secret.

Within minutes of these regulations being announced, the hospitals and the health insurers announced their opposition, warning the rules would result in higher prices for consumers

Their argument is that if negotiated rates were made transparent, then the hospitals offering the deepest discounts would feel compelled to stop doing so out of fear that they would be forced to offer similar discounts to all insurers. In highly consolidated hospital markets — which at this point describes two-thirds of the country — there is also concern that allowing hospitals to share price information would make it easier for them to tacitly collude and keep price competition to a minimum.

major hospital chains and insurance already have a pretty good sense where they stand relative to their competitors in terms of pricing. A number of firms — including one owned by United Healthcare, the nation’s largest insurer — already gather and analyze pricing data and sell it to both hospitals and insurers. The only parties who are really in the dark are the consumers and employers who ultimately pay the bills.

if it is true that transparency will lead the lowest-price hospitals to raise their bids, then logically it should be also true that it will lead the insurers now paying the highest prices to demand better deals. Given that the market for health insurance is now as consolidated as the market for hospital services, the possibility of collusion is high on both sides.

Indeed, if transparency has any effect on prices, the most likely outcome is to eliminate the outliers at both the top and bottom of the price range, reducing the enormous variations in prices. And to the degree that transparency causes average prices to move in any direction, the more likely direction is down, not up

Such a positive outcome is suggested from experience in New Hampshire, the first state to establish a website listing how much customers of different insurance plans would be charged at different hospitals and labs for medical imaging such as X-rays, CT scans and MRIs. Zach Brown, an economist at the University of Michigan, found that the cost of imaging declined by an average of 4 percent for insurers and 5 percent for consumers, rising to 11 percent after five years.

Statewide, the range between the highest and lowest negotiated prices shrunk by 15 percent.

In today’s highly consolidated health-care markets, the goal for hospitals and insurers isn’t so much to lower costs as to shift costs onto someone else. When dominant insurers use their market power to extract lower prices from hospitals, the hospitals’ natural response is to try to extract higher payments from smaller insurers to cover their costs and meet their profit targets.

As this cost-shifting plays itself out, small insurers and small hospitals find themselves squeezed as they are forced to pay more and charge less.

The dirty little secret is that neither side in these hospital-insurer negotiations really wants to drive down prices. What matters to either side is not what price they pay or receive in an absolute sense — in general, both hospitals and insurers profit more when prices and premiums are high. The thing they really care about is whether they are getting a better price than their competitors

The reason insurers and hospitals are prepared to use whatever legal muscle they have to fight price transparency is the same reason pharmaceutical companies and pharmacy benefit managers fought a similar proposal by the Trump administration on drug pricing — because it would expose this con game.

Given the anti-regulatory tilt of the federal courts, the inevitable legal challenge is likely to succeed. Which means the only way Americans are likely to get genuine price competition in health care is if transparency rules are written into law by a Congress not captured by business interests and free-market ideology.

U.S. natural gas is far less damaging to the environment than coal. It has become so cheap that it is displacing coal in electricity generation, driving down emissions. To others, Cove Point is an environmental catastrophe. Natural gas is still a fossil fuel, and burning it releases lots of greenhouse-gas emissions, which cause climate change. Both arguments are right.

society must eliminate its carbon dependency. It cannot burn vast amounts of any fossil fuel for “decades and decades,” as Mr. Farrell hopes, unless there is a revolution in emissions capture technology. Even in the short term, U.S. emissions are rising, despite the restraint that stepped-up natural-gas burning has provided. The government must demand more change, more quickly.

One objection is that carbon pricing is not powerful enough. The European Union’s carbon pricing program has not worked well. But that is a failure of design and political will. A carbon price equal to the challenge would start high and rise higher, sending a much stronger price signal.

carbon pricing is still the best first-line policy

A high-enough carbon price would shape millions of choices, small and large, about what to buy, how to invest and how to live that would result in substantial emissions cuts. People would prioritize the easiest changes, minimizing the costs of the energy transition. With a price that steadily rose, market forces would steadily wring carbon dioxide out of the economy — without the government trying to dictate exactly how, wasting money on special-interest boondoggles.

The Intergovernmental Panel on Climate Change found last year that an average carbon price between 2030 and the end of the century of $100, $200 or even $300 per ton of carbon dioxide would result in huge greenhouse-gas emissions cuts, could restrain warming to the lowest safety threshold of 1.5 degrees Celsius and would almost certainly prevent the world from breaching the traditional warming limit of 2 degrees Celsius

Republicans never embraced the market-based idea, even though conservative economists admit its appeal, because they never accepted the need to act at all. Some environmentalists, meanwhile, are increasingly wary of carbon pricing. The Democrats’ Green New Deal, which is noncommittal on the policy, reflects the accelerating drift from the obvious.

Another criticism is that carbon pricing hurts the poor, who would suffer most when prices rose. But the revenue from carbon pricing could be recycled back to Americans in a progressive way, and most people would end up whole or better off.

A third objection is that carbon pricing is politically impossible, because it reveals the cost of fighting global warming in the prices people pay

This is a leadership challenge, not a policy challenge. More than 40 governments globally, including several states, have found the political will to embrace carbon pricing programs, which is the only option that would plausibly be bipartisan.

One objection does have merit: Though carbon pricing would spur huge change in infrastructure and power generation, that alone would not be enough. It would not stimulate all the innovation the nation needs in the climate fight, nor would it change behaviors in circumstances where the desired price signal is muted or nonexistent

Start with carbon pricing. Then fill in the gaps.

, economists know that companies that invest in research and development do not get rewarded for the full social value of their work. Others benefit from their innovations without paying. Consequently, firms do not invest in research as much as society should want

It would take only a small fraction of the revenue a carbon pricing system would produce to fund a much more ambitious clean-energy research agenda. Basic scientific research and applied research programs such as ARPA-E should be scaled up dramatically

The government must also account for the fact that not all greenhouse-gas emissions come from burning the fuels that a carbon pricing program would reach — coal, oil and gas. How would the government charge farmers for the methane their cows emit or for the greenhouse gases released when they till their soil? How about emissions from cement, ammonia and steel production? The federal government would have to tailor programs to the agricultural and industrial sectors, which might include judicious use of incentives and mandates.

only government can ensure adequate mass transit options. Local governments could help with zoning laws to encourage people to live in denser, more walkable communities. The federal government should also press automakers to steadily improve fuel efficiency.

That starts with making sure that emissions-cutting efforts at home do not have unintended consequences. If the United States puts a price on greenhouse-gas emissions, other countries would lure U.S. manufacturers with the promise of lax environmental rules. Relocated manufacturers could then export their goods to the United States. The net effect would be no benefit for the planet but fewer U.S. manufacturing jobs.

One response is a kind of tariff on goods entering the country from places with weaker carbon-dioxide policies. That would both eliminate the incentive to offshore manufacturing and encourage countries to strengthen their own rules.

Participating in the agreement would give the United States a forum — and a basis — to press other nations to reduce emissions.

Foreign aid to prevent deforestation could be among the most cost-effective climate-preserving measures. Helping other countries to replace archaic cooking stoves that produce noxious fumes would help cut emissions and improve quality of life across the developing world.

There are a lot of bad ideas out there.

The Green New Deal that some Democrats have embraced is case in point. In its most aggressive form, the plan suggests the country could reach net-zero greenhouse-gas emissions by 2030, an impossible goal

that would be more spent every three years than the total amount the country spent on World War II.

At the same time, the Democratic plan would guarantee every American “high-quality health care” and “a job with a family-sustaining wage, adequate family and medical leave, paid vacations, and retirement security.” These expensive aspirations, no matter how laudable, would do nothing to arrest greenhouse-gas emissions.

Massive social reform will not protect the climate. Marshaling every dollar to its highest benefit is the strongest plan.

ast summer hospitals said it was too hard to comply with the new rule while they were dealing with the pandemic. They still managed to continue the appeal of their lawsuit against the measure, which failed in December. The rule took effect, but the penalty for not complying is just $300 a day — a pittance for hospitals — and there is no meaningful mechanism for active enforcement. The hospitals have asked the Biden administration to revise the requirement.

In September his health secretary, Alex Azar, certified that importing prescription medicine from Canada “poses no additional risk to the public’s health and safety” and would result in “a significant reduction in the cost.” This statement, which previous health secretaries had declined to make, formally opened the door to importing medication. Millions of Americans, meanwhile, now illegally purchase prescription drugs from abroad because they cannot afford to buy them at home.

Finally, shortly before the election, Mr. Trump issued an executive order paving the way for a “most favored nation” system that would ensure that the prices for certain drugs purchased by Medicare did not exceed the lowest price available in other developed countries. The industry responded with furious pushback, and a court quickly ruled against the measure.

The Trump administration’s attempted market-based interventions shined some light on dark corners of the health market and opened the door to some workarounds. They are not meaningful substitutes for larger and much-needed health reform. But as Americans await the type of more fundamental changes the Democrats have promised, they need every bit of help they can get.

Biden may want to continue the previous administration’s efforts to lower drug prices and make medical costs transparent.

But the Trump administration did attempt to rein in some of the most egregious pricing in the health care industry. For example, it required most hospitals to post lists of their standard prices for supplies, drugs, tests and procedures. Providers had long resisted calls for such pricing transparency, arguing that this was a burden, and that since insurers negotiated and paid far lower rates anyway, those list prices didn’t really matter.

ut the drug lobby will no doubt prove a big obstacle: The Pharmaceutical Research and Manufacturers of America, an industry trade group, filed suit in federal court in November to stop the drug-purchasing initiatives. The industry has long argued that importation from even Canada would risk American lives.

“This is something that European politicians and consumers didn’t want to admit for quite a long time. It sounds terrible, but that’s the reality. In wartime the economy is mobilized. The decisions are made by the governments, not by the free market. This is the case for Europe this winter,” she said, adding that we may see forced rationing, price controls, the suspension of energy markets and shutdowns of whole industrial sectors. “We are not actually talking about extremely high prices, but we are talking about physical absence of energy resources in certain parts of Europe.”

I think you would see Russia continue to restrict gas exports and maybe cut them off completely to Europe — and a very cold winter. I think a combination of those two things would mean sky-high energy prices.

Europe has been finding all the supplies that it can, but governments are realizing that’s not going to be sufficient. There are going to have to be efforts taken to curb demand as well and to prepare for the possibility of really severe energy rationing this winter.

If things become really severe this winter, I fear that you could see European countries start to look out for themselves rather than one another.

I think we could start to see governments saying, “Well, we’re going to restrict exports. We’re going to keep our energy at home.” Everyone starts to just look out for themselves, which I think would be exactly what Putin would hope for.

it would be wise to assume that Russia will use every opportunity it can to turn the screws on Europe.

It’s increasingly clear that Vladimir Putin is using gas as a weapon and trying to supply just enough gas to Europe to keep Europe in a perpetual state of panic about its ability to weather the coming winter.

governments will have to ration energy supplies and decide what’s important.

Since Russia invaded Ukraine and maybe until very recently, I’ve had the sense that the European public and the public beyond Europe, as well as policymakers, have been a little bit sleepwalking into a looming crisis.

here was some unrealistic optimism about how quickly Europe could do without Russian gas. And we took too long to confront seriously just how bad the numbers would look if the worst came to pass.

I think there was continued skepticism that Putin would really cut the gas supply. “It might be declining. It might be a little bit lower,” people thought. “But he’s not really going to shut off the supply.” And I think now everyone’s recognizing that’s a real possibility.

Putin has the ability to do a lot of damage to the global economy — and himself, to be sure — if he cuts oil exports as well.

There’s no extra oil supply in the world at all, as OPEC Plus reminded everyone by saying: No, we’re not going to be increasing production much, and we can’t even if we wanted to.

For all the talk about high gasoline prices and the rhetoric of Putin’s energy price hike, Russia’s oil exports have not fallen very much. If that were to happen — either because the U.S. and Europe forced oil to come off the market to put economic pressure on Putin or because he takes the oil off the market to hurt all of us — oil prices go up enormously.

That’s because there’s just no extra supply out there today at all. There’s a very little extra supply that the Saudis and the Emiratis can put on the market. And that’s about it. We’ve used the strategic petroleum reserve, and that’s coming to an end in the next several months.

it depends how much he takes off the market. We don’t know exactly. If Russia were to cut its oil exports completely, the prices would just skyrocket — to hundreds of dollars a barrel, I think.

We’re heading into a winter where markets might simply not be able to work anymore as the instrument by which you determine supply and demand.

if prices just soar to uncontrollable levels, markets are not going to work anymore. You’re going to need governments to step in and decide who gets the scarce energy supplies — how much goes to heating homes, how much goes to industry. There’s going to be a pecking order of different industries, where some industries are deemed more important to the economy than others.

a lot of governments in Europe are putting in place those kinds of emergency plans right now.

if the worst comes to pass, governments will, by necessity, step in to say: Homes get the natural gas, and parts of industry get dumped. Probably they would set price caps on energy or massively subsidize it. So it’s going to be very painful.

Worryingly for the European economy, this may mean that factories that can’t switch fuels will go dormant.

Today, before winter comes, gas prices in Europe are around $60 per million British thermal units. That compares to around $7 to $8 here in the United States

if the worst comes to pass, the market, as a mechanism, simply won’t work. The market will break. The prices will go too high. There’s just not enough energy for the market to balance at a certain price.

don’t forget, the amount of liquid natural gas that Europe is importing today — Asia is competing for those shipments. What happens if the Asia winter is very bad? What happens if China and others are willing to pay very high prices for it?

I think we’re in a multiyear potential energy crisis.

one thing that hasn’t gotten enough attention and that I worry most about is the impact this is having on emerging markets and the developing economies, because it is an interconnected market. When Europe is competing to buy L.N.G. at very high prices, not to mention Asia, that means if you’re in Pakistan or Bangladesh or lower-income countries, you’re really struggling to afford it. You’re just priced out of the market for natural gas — and coal. Coal is incredibly expensive now,

I think that that is a real potential humanitarian crisis, as a ripple effect of what’s happening in Europe right now.

right now, the price of gas in Europe is about four times what it was last year. Russia has cut flows to Europe by two-thirds but is earning the same revenue as it did last year. So Putin is not being hurt by the loss of gas exports to Europe. Europe’s being hurt by that.

this situation could last for several years.

Could the energy crisis bring about a change of heart, in which European countries withdraw some of their support or even begin to pressure Ukraine to negotiate a settlement? Is it possible that could even happen in advance of this winter?

you would imagine that, over time, when you don’t see Ukraine on the front page each and every day, eventually people’s attention wanes a bit and at a certain point the economic pain of high energy prices or other economic harms from the conflict reach a point where support may start to fracture a bit.

Whether that reaches a point where you start to see the West put pressure on Ukraine to capitulate, I think we’re pretty far away from that now, because everyone recognizes how outrageous and unacceptable Putin’s conduct is.

most economists see global trade as a win-win proposition, but resource limitation turns it into a win-lose, zero-sum contest. “The faster China grows, the higher grain prices go, the more people in China or India who upgrade to meat, the higher the tendency for Africa to starve,” he said.

Grantham argues that the late-18th-century doomsayer Thomas Malthus pretty much got it right but just had the bad timing to make his predictions about unsustainable population growth on the eve of the hydrocarbon-fueled Industrial Revolution, which “partially removed the barriers to rapid population growth, wealth and scientific progress.” That put off the inevitable for a couple of centuries, but now, ready or not, the age of cheap hydrocarbons is ending. Grantham’s July letter concludes: “We humans have the brains and the means to reach real planetary sustainability. The problem is with us and our focus on short-term growth and profits, which is likely to cause suffering on a vast scale. With foresight and thoughtful planning, this suffering is completely avoidable.”

“E.D.F. is educating people that dealing with climate change will be good for the economy and job creation. One of Jeremy’s insights is that we can make headway on the market side because higher commodity prices will enforce greater efficiency.”

When he reminds us that modern capitalism isn’t equipped to handle long-range problems or tragedies of the commons (situations like overfishing or global warming, in which acting rationally in your own self-interest only deepens the harm to all), when he urges us to outgrow our touching faith in the efficiency of markets and boundless human ingenuity, and especially when he says that a wise investor can prosper in the coming hard times, his bad news and its silver lining come with a built-in answer to the skeptical question that Americans traditionally pose to egghead Cassandras: If you’re so smart, how come you’re not rich?

Grantham believes that the best approach may be to recast global warming, which depresses crop yields and worsens soil erosion, as a factor contributing to resource depletion. “People are naturally much more responsive to finite resources than they are to climate change,” he said. “Global warming is bad news. Finite resources is investment advice.”

“Americans are just about the worst at dealing with long-term problems, down there with Uzbekistan,” he said, “but they respond to a market signal better than almost anyone. They roll the dice bigger and quicker than most.”

Grantham, the public face of a company that manages more than $100 billion in assets, the very embodiment of a high-finance insider in blue blazer and yellow tie, has serious doubts about capitalism’s ability to address the biggest problems facing humanity.

Grantham says that corporations respond well to this message because they are “persuaded by data,” but American public opinion is harder to move, and contemporary American political culture is practically dataproof. “The politicians are the worst,” he said. “An Indian economist once said to me, ‘We have 28 political parties, and they all think climate change is important.’ ” Whatever the precise number of parties in India, and it depends on how you count, his point was that the U.S. has just two that matter, one that dismisses global warming as a hoax and one that now avoids the subject.

Grantham, who says that “this time it’s different are the four most dangerous words in the English language,” has become a connoisseur of bubbles. His historical study of more than 300 of them shows the same pattern occurring again and again. A bump in sales or some other impressive development causes people to get excited. When they do, the price of that asset class — South Sea company shares, dot-coms — goes up, and human nature and the financial industry conspire to push it higher. People want to hear good news; they tend to be bad with numbers and uncertainty, and to assume that present conditions will persist. In the financial industry, the imperative to minimize career risk produces herd behavior.

So it’s news when Grantham, who has built his career on the conviction that peaks and troughs will even out as prices inevitably revert to their historical mean, says that this time it really is different, and not in a good way. In his April letter, “Time to Wake Up: Days of Abundant Resources and Falling Prices Are Over Forever,” he argued that “we are in the midst of one of the giant inflection points in economic history.” The market is “sending us the Mother of all price signals,” warning us that “if we maintain our desperate focus on growth, we will run out of everything and crash.”

here’s the short version: “The prices of all important commodities except oil declined for 100 years until 2002, by an average of 70 percent. From 2002 until now, this entire decline was erased by a bigger price surge than occurred during World War II. Statistically, most commodities are now so far away from their former downward trend that it makes it very probable that the old trend has changed — that there is in fact a Paradigm Shift — perhaps the most important economic event since the Industrial Revolution.”

When prices go up and stay up, it’s not a bubble. Prices may always revert to the mean, but the mean can change; that’s a paradigm shift. As Grantham tells it, oil went first. For a century it steadily returned to about $16 a barrel in today’s currency, then in 1974 the mean shifted to about $35, and Grantham believes it has recently doubled again. Metals and nearly everything else — coal, corn, palm oil, soybeans, sugar, cotton — appear to be following suit. “From now on, price pressure and shortages of resources will be a permanent feature of our lives,” he argues. “The world is using up its natural resources at an alarming rate, and this has caused a permanent shift in their value. We all need to adjust our behavior to this new environment. It would help if we did it quickly.”

Grantham is taking the Malthusian side in an ongoing debate about growth and commodity prices­. The argument often circles back to the bet made in 1980 between the biologist Paul Ehrlich, who foretold catastrophic scarcity caused by overpopulation, and the economist Julian Simon, who argued that any short-term increase in resource prices caused by population growth will stimulate inventors and entrepreneurs to find new ways to exploit those resources, lowering prices in the long run. The two men picked five commodities and wagered on whether their prices, taken as an indicator of scarcity, would be higher or lower in 1990. Simon won, 5-0, even though the world’s population grew by 800 million during that decade. Malthusians have been trying to live down that defeat ever since, but, as Grantham points out in his July letter, if we extend the original bet past its arbitrary 10-year limit to the present day, Ehrlich wins the five-commodity bet 4-1, and he wins big if the bet is further extended to all important commodities.

He’s an impassioned environmentalist not only for the usual reasons but also because he believes humanity’s vexed relationship with the planet is the great economic story of our time. “This commodities thing may turn out to be the most interesting call of my career,” he told me. “I have no doubt we’re going to have a bad hundred years. We have the resources to gracefully handle the transition, but we won’t. We apparently can’t.”

“Whether the stable population will be 1.5 billion or 5 billion,” he said to me, “the question is: How do we get there?”

Unfortunately, epinephrine is inherently unstable. Research shows that it degrades pretty quickly over time, and it’s recommended that EpiPens be replaced every year.

Mylan stopped selling individual EpiPens and began to sell only twin-packs.It also raised the price.

Kids need them in many places. They need them at home. They need them at school. They need them at camp. They may even want to stash one at Grandma’s house. So people often need to buy quite a few.More revenue for Mylan. And it raised the price.

Then in 2010, federal guidelines changed to recommend that two EpiPens be sold in a package instead of one

People in anaphylaxis need a full dose every time. They therefore need to replace all their EpiPens every year, again and again.

In 2013, the government went further. It passed a law that gave funding preferences for asthma treatment grants to states that maintained an emergency supply of EpiPens. As the near sole supplier of the devices, Mylan stood to make even more money. Advertisement Continue reading the main story That year, Mylan raised the price again.

Of course, competition would bring the price down. But it’s very hard to bring such a device to market.

setbacks, all in the last year, have once again left Mylan with a veritable run of the market. It raised the price of EpiPens again. As of this May, they cost more than $600 a pack. Since 2004, after adjusting for inflation, the price of EpiPens has risen more than 450 percent.

An alternative still exists. The Adrenaclick, while still not cheap, is back and less expensive than the EpiPen. Some think it’s harder to use, though. It’s not on the accepted list for many health insurance plans. More important, few physicians think of it. Because of that, they write prescriptions for EpiPens. Since the Adrenaclick is not a generic version of the EpiPen, pharmacists can’t substitute one for the other. A prescription for an EpiPen must be filled with an EpiPen, regardless of what consumers might want.

you could argue that they’re an alternative when the “Cadillac” EpiPens are financially out of reach. Write A Comment But those are unsatisfactory arguments. Epinephrine isn’t an elective medication. It doesn’t last, so people need to purchase the drug repeatedly. There’s little competition, but there are huge hurdles to enter the market, so a company can raise the price again and again with little pushback. The government encourages the product’s use, but makes no effort to control its cost. Insurance coverage shields some from the expense, allowing higher prices, but leaves those most at-risk most exposed to extreme out-of-pocket outlays. The poor are the most likely to consider going without because they can’t afford it.

EpiPens are a perfect example of a health care nightmare. They’re also just a typical example of the dysfunction of the American health care system.

“What we saw was the single largest demand event in history,” said Peter Keavey, managing director for energy products at CME Group, owner of the New York Mercantile Exchange, where U.S. crude futures trade.

Prices have since somewhat recovered. But those jarring moves of the spring added urgency to arguments about whether benchmarks used since the 1980s adequately reflect the modern oil market

The crash rippled through the physical market, where, for example, Saudi Arabia sets prices for exports to the U.S. using an assessment tied to futures prices.

The pricing system based on three benchmark crudes—West Texas Intermediate in the U.S., Brent in Europe and Dubai in the Middle East—has broadly stayed the same.

WTI futures show no sign of being displaced as the primary gauge of U.S. crude prices, said CME’s Mr. Keavey. “Crude-oil infrastructure in the U.S. still revolves around Cushing,” he said. “The Gulf Coast is certainly an emerging price point, but it is still a secondary benchmark.”

That means the price of the contracts typically converges with oil prices at Cushing in the run-up to their last day of trading.

“We need to open up the benchmarks to be more reflective of global oil prices,” said Greg Newman, chief executive of U.K.-based Onyx Capital Group, which specializes in oil swaps. “How can it be accurate if you’re focusing on one tiny localized area?”

Even before coronavirus, there was growing interest in assessing the price of crude at the Gulf Coast, home to other U.S. trading hubs.

there has been a boom in U.S. oil exports since a four-decade embargo on its shipments ended in late 2015.

Crude oil comes in dozens of varieties that differ by density and sulfur content. WTI, Brent and Dubai act as reference points against which other grades are priced. They also are the basis for financial contracts that allow players in the oil market to hedge against and speculate on price swings.

“Benchmarks always reflect flows,”

They all face the same challenge of needing to hedge their sales of gas and electricity to cover price differences across different markets.

In a statement explaining the decision to provide Uniper with extra financing, Fortum said that European gas prices reached “unprecedented levels” in December.

In Germany, the price for energy to heat and power homes in November rose more than 101 percent from a year earlier, the country’s official statistics office, Destatis, said.

In Britain, the sudden price rise has led to the collapse of several smaller energy suppliers.

Global demand for energy jumped last year, after the world economy reawakened from widespread shutdowns aimed at slowing the spread of the coronavirus pandemic. When many economies started up again last spring, the need for natural gas shot up. Natural gas is crucial for generating electricity, running factories and heating homes across the continent.

European countries normally stock up on gas in the summer, when prices are relatively cheap, but the pandemic and a cold winter last year drew down levels of stored gas, leading to the wild swings in prices.

Prices for natural gas have risen about sixfold, to record levels. The surge means the wholesale price of electricity has reached stratospheric levels, making headlines across Europe as consumers, battered by the pandemic, are now hit by big increases in their home energy bills. Many European countries have tried to buffer the shock to consumers with price caps, subsidies and direct payments.

These high costs are also undermining the economics of companies that make fertilizer, steel, glass and other materials that require a lot of electricity.

The effects of rising food prices have been felt unevenly around the world. Asia has been largely spared because of a plentiful rice crop. But parts of Africa, the Middle East and Latin America that are more dependent on imported food are struggling.

But economists and agricultural experts say that while these efforts help at the margin, there may be little the government can do to combat a phenomenon that is both complex and global.

In the United States, food prices rose 6.3 percent in December compared with a year ago, while the price of restaurant meals rose 6.0 percent and the price of meat, poultry, fish and eggs jumped 12.5 percent, according to the Bureau of Labor Statistics.

Joseph Siegle, the director of research at National Defense University’s Africa Center for Strategic Studies, estimated that 106 million people on the continent are facing food insecurity, double the number since 2018.

Overloaded shipping companies have been refusing to send their steel boxes to the Midwest to pick up agricultural products, instead preferring to ship them back to Asia to carry more lucrative cargo.

With both their costs and their sales prices increasing, many farmers are making similar margins to what they earned before, Mr. Edgington said. But “huge swings” in the price of corn, soybeans and fertilizer were still putting their finances at risk.

“We usually do about two storage deals a day,” said Mr. Barsamian, who runs a company in Princeton, N.J., called the Tank Tiger, a nod to the local university’s mascot. “We have done about 120 in the last couple of weeks.”

People in the energy industry say they have never seen changes happening at the speed and magnitude that are occurring because of the coronavirus.

The first major downturn in demand occurred in February when China, the world’s largest energy consumer, shut down much of its economy in an effort to stabilize the spread of the coronavirus. Now, the slowdown is rolling across the world, with much of Europe and major parts of the United States in lockdown.

The price war between Saudi Arabia and Russia has exacerbated the situation. The Saudis are slashing prices and threatening to ramp up oil output by about 25 percent to 12 million barrels a day, beginning in April. The surplus, IHS Markit forecasts, could add up to a tank-busting one billion barrels or more.

Not only does oil need a place to go, but the state of the oil market has provided traders with an opportunity to make money. They are taking advantage of a market where prices in the future are much higher than current levels. For instance, a barrel of light, sweet U.S. crude is priced at about $25 a barrel for May, about $6 lower than August. So a trader or an oil company can make easy money by buying oil at today’s depressed prices, selling it on the futures market and pocketing the difference minus storage and other costs — a situation known as contango.

Knowing how much oil is stored around the world is a key metric to “understanding the health of the oil market,” said Hillary Stevenson, an analyst at Genscape, a market intelligence firm. But, she warned, “capacity is finite; the safety net is only so big.”

One sign of a glut: The volume of oil placed on ships to wait for better days has grown by about 25 percent in March. According to Mr. Booth, about 81 loaded tankers — an unusually high number — are loitering off coasts around the globe.

The fact that oil is being put on ships, a more costly proposition than storage on land, implies that the world is running out of room, at least in some places, Mr. Booth said. Chinese buyers, perhaps seeing current prices as a bargain, continue to import at high levels, he said. Mr. Booth estimated that three-quarters of a billion barrels of usable storage capacity remained around the world — not enough room for the buildup in supplies some forecasters are predicting.

In the wake of price-cutting by Saudi Arabia and other countries, oil companies in the United States are being paid less. On Tuesday, Enterprise Products, an Oklahoma company, posted prices for various grades of crude that ranged as low as $7.61 a barrel.

Space is running out in western Canada, whose 40 million barrels of storage is now more than three-quarters full, according to Rystad Energy, which estimates that producers will need to slash production by 11 percent

Indexing has gone big, very big. For nine in 10 companies on the S&P 500, their largest single shareholder is one of the Big Three. For many, the big indexers control 20 percent or more of their shares. Index funds now control 20 to 30 percent of the American equities market, if not more.

The problem is that the public markets have been cornered by a group of investment managers small enough to fit at a lunch counter, dedicated to quiescence and inertia.

Passively managed investment options do not just outperform actively managed ones in terms of both better returns and lower fees. They eat their lunch.

Let’s imagine that a decade ago you invested $100 in an index fund charging a 0.04 percent fee and $100 in a traditional mutual fund charging a 1.5 percent fee. Let’s also imagine that the index fund tracked the S&P 500, and that the mutual fund ended up returning what the S&P 500 returned. Your passively invested $100 would have turned into $356.66 in 10 years. Your traditionally invested $100 would have turned into $313.37.

Actively managed investment options could make up for their higher fees with higher returns. And some do, some of the time. Yet scores of industry and academic studies stretching over decades show that trying to beat the market tends to result in lower returns than just buying the market. Only a quarter of actively managed mutual funds exceeded the returns of their passively managed cousins in the decade leading up to 2019,

What might be good for retail investors might not be good for the financial markets, public companies, or the American economy writ large, and the passive revolution’s scope has raised all sorts of hand-wringing and red-flagging. Analysts at Bernstein have called passive investing “worse than Marxism.” The investor Michael Burry, of The Big Short fame, has called it a “bubble,” and a co-head of Goldman Sachs’s investment-management division has warned about froth too. Shortly before his death in 2019, Bogle himself warned that index funds’ dominance might not “serve the national interest.”

One primary concern comes from the analysts at Bernstein: “A supposedly capitalist economy where the only investment is passive is worse than either a centrally planned economy or an economy with active, market-led capital management.”

Active managers direct investment dollars to companies on the basis of those companies’ research-and-development prospects, human capital, regulatory outlook, and so on. They take new information and price it into a company’s stock when buying and selling shares.

Passive investors, by contrast, ignore annual reports and market rumors. They do nothing with trading-floor gossip. They make no attempt to research what to invest in and what to skip. Whether holding international or domestic assets, holding stocks or bonds, or using a mutual-fund structure or an ETF structure, they just mirror the market. Big U.S.-stock index funds buy big U.S. stocks just because they’re big U.S. stocks.

At least in a Soviet-type centrally planned economy, apparatchiks would be making some attempt to allocate resources efficiently.

Passive management is merely a giant phenomenon, not an all-encompassing one. Hundreds of actively managed mutual funds are still out there, as are legions of day traders, hedge funds, and private offices buying and selling and buying and selling. Stock prices still move around, sometimes dramatically, on the basis of new data and new ideas.

Still, passive investing may well be degrading the informational content of the markets, messing up price signals and making business decisions harder as a result.

When one of these commodities ends up on an index, the firms that use that commodity in their business see a 6 percent increase in costs and a 40 percent decrease in operating profits, relative to firms without exposure to the commodity, the academics found

Their theory is that ETF trading shifts prices in subtle ways, making it harder for businesses to know when to buy their gold and copper. Corporate executives “are being influenced by what happens in the futures market, and what happens in the futures market is being influenced by ETF trading,”

More broadly, the Bernstein analysts, among others, worry that index-linked investing is increasing correlation, whereby the prices of stocks, bonds, and other assets move up or down or sideways together.

the price fluctuations of a newly indexed stock “magically and quickly” change. A firm’s shares begin to move “more closely with its 499 new neighbors and less closely with the rest of the market. It is as if it has joined a new school of fish.”

A far bigger concern is that the rise of the indexers might be making American firms less competitive, through “common ownership,” in which the mega-asset managers control large stakes in multiple competitors in the same industry. The passive firms control big chunks of the airlines American, Delta, JetBlue, Southwest, and United, for instance

The rise of common ownership might be perverting corporate behavior in weird ways, academics argue. Think about the incentives like this: Let’s imagine that you are a major shareholder in a public widget company. We’d expect you to desire—insist, even—that the company fight for market share and profits. But now imagine that you are a major shareholder in all the important widget companies. You would no longer really care which one succeeded, particularly not if one company doing better meant another company doing worse. You’d just care about the widget sector’s corporate profits, which would go up if the widget companies quit competing with one another and started raising prices to pad their bottom line.

one major paper showed that common ownership of airline stocks had the effect of raising ticket prices by 3 to 7 percent.

A separate study showed that consumers are paying higher prices for prescription medicines because generic-drug makers have less incentive to compete with the companies making name-brand drugs.

Yet another study showed that common ownership is leading retail banks to charge higher prices.

Across firms, executive compensation seems to be more closely linked to a company’s performance when its shareholders are not invested in the company’s rivals, the study found. In other words, firms stop paying managers for performance when owned by the same people who own their rivals.

The market clout of the indexers raises other questions too. The actual owners of the stocks—not the index-fund managers but the people putting money into index funds—have little say over the companies they own. Vanguard, Fidelity, and State Street, not Mom and Dad, vote in shareholder elections

In fact, the Big Three cast roughly 25 percent of the votes in S&P 500 companies.

In an interview with The Wall Street Journal, the chief executive officer of State Street said he thought it was “almost inevitable, when you see this kind of concentration, that it probably will make sense to do something about it.”

But figuring out what the appropriate restrictions are depends on determining just what the problem with the indexers is—are they distorting price signals, raising the cost of consumer goods, posing financial systemic risk, or do they just have the market cornered? Then, what to do about it? Common ownership is not a problem the government is used to handling.

, thanks to the passive revolution, a broad variety and huge number of firms might have less incentive to compete. The effect on the real economy might look a lot like that of rising corporate concentration. And the two phenomena might be catalyzing one another, as index investing increases the number of mergers and makes them more lucrative.

In recent decades, the whole economy has gone on autopilot. Index-fund investment is hyperconcentrated. So is online retail. So are pharmaceuticals. So is broadband. Name an industry, and it is likely dominated by a handful of giant players. That has led to all sorts of deleterious downstream effects: suppressing workers’ wages, raising consumer prices, stifling innovation, stoking inequality, and suffocating business creation

The problem is not just the indexers. It is the public markets they reflect, where more chaos, more speculation, more risk, more innovation, and more competition are desperately needed.

Factcheckers have pointed out that the main cause of increasing gas prices over the past year is disruptions to global supply and demand following the coronavirus pandemic. Only a 10th of the Keystone XL pipeline was complete when Biden cancelled it and it was not likely to become operational until 2023 at the earliest.

Ed Rogers, a political consultant and veteran of the Ronald Reagan and George H W Bush administrations, said: “‘It’s the economy, stupid.’ Biden is going to own whatever the economy is come November. Republicans don’t have to do anything to make that happen. People feel it for themselves, they observe for themselves.

Bardella, a former senior adviser for Republicans on the House oversight committee, added: “Republicans were so vocal about how the Biden administration needed to do sanctions on Russian oil and then they start attacking him. You can’t win because everything that they do is basically an illustration of how they operate in bad faith.”

He added that Republicans, in thrall to “big oil”, have spent the past two decades opposing the very measures that would have made America less dependent on foreign oil and fossil fuels in general. Green technology would have shielded the US from the effects of the Ukraine crisis on global markets.

“You don’t have to remind people too much of gas prices and overall inflation is a big macro political issue. Doing well as an incumbent is all about peace and prosperity, and prosperity is being eroded by inflation, with gas prices being a focal point.”

Democratic strategists are aware that the issue could weigh heavily on midterm voters. Bob Shrum acknowledged: “The facts don’t matter much here. If gas prices are really high, that becomes a problem for Democrats in the midterms because they’re in office. It’s just a natural tendency to blame someone under those circumstances.”

“Pricing carbon correctly is a concrete and cost-effective way to slow climate change. We are wasting an opportunity to steer our economics along a low-carbon growth path and losing precious time with every day that passes.”

An abundance of carbon credits and exemptions for major emitters has plagued emission-trading systems in Europe and California, making credits cheap and hindering their effectiveness

A series of recent developments, though, have provided a glimmer of hope for would-be carbon taxes. The United Kingdom’s adoption of a carbon tax in the power sector produced a 58 percent drop in emissions from 2012 to 2016.

The biggest development of all may be in China, the world’s largest greenhouse gas emitter, which has taken steps toward its own emissions trading program. China’s move has the potential to narrow the gap between global carbon prices and climate costs to 63 percent in the early 2020s, OECD found.

The OECD report compared effective carbon rates—taxes on fossil fuels, carbon taxes and emission-trading credits—against estimated climate costs, which it projected at €30 ($35) per ton of carbon. The result is a carbon pricing gap, the difference between actual carbon rates and climate costs.

The organization found that countries with larger carbon pricing gaps tend to have more energy-intensive economies. Russia and China, for instance, have gaps of 100 percent and 90 percent, respectively, OECD found.

Less energy-intensive economies, by contrast, have less ground to make up. OECD measured the gap in Spain at 51 percent, Ireland at 42 percent and France at 41 percent

The carbon pricing gap in the United States, the world’s second-largest emitter, was 75 percent.

spent $7.44 million on lobbying during the third quarter alone, a nearly 25% increase from the same period last year.

But a small cadre of Democratic holdouts appear to be enough to have stopped the proposal in its tracks.

Most were among the top recipients of money from the pharmaceutical industry.

But it’s also “very good at knowing exactly how many votes they need to kill pieces of legislation, and figuring out a way to get those votes.”

Senate Finance Committee Chair Ron Wyden also said he was continuing to have conversations on the drug pricing issue

It would allow Medicare to negotiate prices—but only for medications used in outpatient services, and only after the drugs’ patents expire.

It stands in sharp contrast to the more sweeping plan favored by Sen. Bernie Sanders and other Democrats that would allow the government to negotiate in Medicare Part D, which covers far more drugs.

On Thursday, he called the omission of the drug pricing provision in Biden’s framework a “major problem.”

He argued that just because the prescription drug pricing provision has been popular among voters doesn’t make it the right policy.

If Democrats end up passing any proposal, even a modest one, that gives the government the power to negotiate drug prices, it would mark a historic shift.

If Democratic lawmakers end up with no drug pricing proposal in this wide-ranging spending bill, they not only leave millions of Americans struggling to afford their medicines, they also miss the best chance they’ve had in decades.

The third factor is the speed with which higher interest rates pass through to homeowners. The biggest risk is to borrowers on floating-rate mortgages

not all fixed-term loans are alike. In America the bulk of them are fixed for two or three decades. In other countries, even fixed-rate borrowers will face soaring mortgage costs soon enough

all the ingredients for a deep housing slump are in place. This time, though, it is likely to be led not by America, but by Canada, the Netherlands, Australia, New Zealand and Norway

First-time buyers and recent borrowers are especially vulnerable. Many stretched their finances to buy a home, leaving less spare cash to cover a jump in mortgage costs

First-time buyers have also had less time to accumulate equity. Oxford Economics estimates that a 15% drop in house prices in America over a year would cancel out two-thirds of the housing equity they have accumulated since the start of the pandemic

the housing squeeze will have profound consequences. “The housing cycle IS the business cycle”, wrote Edward Leamer of the University of California, Los Angeles, in a paper published in 2007

The link between the two cycles arises because housing confers “wealth effects” on owner occupiers. When house prices rise, people feel good about their financial situation, so borrow and spend more.

It noted that housing slowdowns had preceded eight of the past ten recessions in America

2019 research by the Bank of England found that a 10% increase in house prices raises consumption by 0.35–0.5%

Another important channel between the housing market and the rest of the economy is investment. Capital spending associated with housing, especially house building, can be extremely volatile—and is often the difference between a growing or shrinking economy.

Some people see an upside to a housing crash. They hope lower prices will allow young folk to buy their first houses. These hopes are almost certain to be dashed. In housing corrections, and sometimes for years after, home ownership rates tend to fall, rather than rise

Economic conditions that cause house prices to fall simultaneously imperil the chances of would-be homeowners. Unemployment rises and wages decline. If interest rates jump, people are able to borrow less and mortgage lenders tend to become more skittish about lending

The biggest effect of a housing downturn may be in politics

In countries where home ownership is seen as a rite of passage, lower prices without any increase in affordability will rub salt in already sore wounds. “Falling to what? Falling to absurdly grotesque prices instead of just unthinkable?”

For years more established homeowners took comfort in the thought that, even if real-wage growth was terrible, at least the price of their house was rising. Those days are over. Even baby-boomers, the great winners from a decade of price growth, now face the prospect of living off a smaller nest-egg in retirement, as downsizing becomes less lucrative

All this means rising interest rates will have unpredictable political repurcussions, as people who once benefited from the status quo discover what it feels like to lose out.

Do not be surprised, then, if policymakers launch enormous rescue operations

Socially, cryptocurrency is a coordination game; people want to have the coin that other people want to have, and some sort of abstract technical equivalence doesn’t make one cryptocurrency a good substitute for another. Social acceptance—legitimacy—is what makes a cryptocurrency valuable, and you can’t just copy the code for that.

A thing that worked exactly like Bitcoin but didn’t have Bitcoin’s lineage—didn’t descend from Satoshi’s genesis block and was just made up by some copycat—would have the same technology but none of the value.

Here’s another generalization of Bitcoin: Satoshi made up an arbitrary token that trades electronically for some price. The price turns out to be high and volatile. The price of an arbitrary token is … arbitrary?

it’s very interesting as a matter of finance theory. Modern portfolio theory demonstrates that adding an uncorrelated asset to a portfolio can improve returns and reduce risk.

To the extent that the price of Bitcoin 1) mostly goes up, though with lots of ups and downs along the way, and 2) goes up and down for reasons that are arbitrary and mysterious and not tied to, like, corporate earnings or the global economy, then Bitcoin is interesting to institutional investors.

In practice, it turns out that the price of Bitcoin is pretty correlated with the stock market, especially tech stocks

Bitcoin hasn’t been a particularly effective inflation hedge: Its price rose during years when US inflation was low, and it’s fallen this year as inflation has increased.

The right model of crypto prices might be that they go up during broad speculative bubbles when stock prices go up, and then they go down when those bubbles pop. That’s not a particularly appealing story for investors looking to diversify.

one important possibility is that the first generalization of Bitcoin, that an arbitrary tradeable electronic token can become valuable just because people want it to, permanently broke everyone’s brains about all of finance.

Before the rise of Bitcoin, the conventional thing to say about a share of stock was that its price represented the market’s expectation of the present value of the future cash flows of the business.

But Bitcoin has no cash flows; its price represents what people are willing to pay for it. Still, it has a high and fluctuating market price; people have gotten rich buying Bitcoin. So people copied that model, and the creation of and speculation on pure, abstract, scarce electronic tokens became a big business.

And consolidation is continuing. Professor Gaynor counts more than 1,000 hospital system mergers since the mid-1990s, often involving dozens of hospitals. In 2002 doctors owned about three in four physician practices. By 2008 more than half were owned by hospitals.

hospitals raise prices by about 40 percent after the merger of nearby rivals.

recent evidence suggests that health care costs are not being driven by intensive use of high-tech procedures as much as by rising prices for even the most humdrum treatments, which are today among the most expensive in the world.

Other studies have found that hospital mergers increase the number of uninsured in the vicinity. Still others even suggest that market concentration may hurt the quality of care.

the rising health care spending of Americans under 65 in the last two years has been driven entirely by rising prices; not by more use. The unit price of inpatient care jumped 5.9 percent last year, while the price for outpatient services increased 9.6 percent.

Corporate America could help more. Large companies, like Wal-Mart Stores, Lowe’s and PepsiCo, have cut deals with hospitals like the Mayo Clinic or the Cleveland Clinic to provide specialized care, including cardiac care or spinal surgery, for all their workers across the nation. This will allow them to get around the market power of local hospitals. Others could follow their example.

The Affordable Care Act could help reduce prices too. Forced to compete on price, plans in the new health insurance exchanges will pressure medical providers to limit costs, much as H.M.O.’s did briefly in the 1990s. The “Cadillac tax” on high-end health plans will also encourage some companies to drop high-priced policies.

Merger activity has jumped in anticipation of the law’s coming fully into effect. “Hospitals want to maintain their revenue streams and enhance their bargaining leverage,” said Professor Gaynor. “This is a way to do so.”

He tries to break free of narrow specialization and cross the boundaries between scientific disciplines. Expeditions beyond economics’ borders and its connection to history, philosophy, psychology, and ancient myths are not only refreshing, but necessary for understanding the world of the twenty-first century.

Reality is spun from stories, not from material. Zdeněk Neubauer

“The separation between the history of a science, its philosophy, and the science itself dissolves into thin air, and so does the separation between science and non-science; differences between the scientific and unscientific are vanishing.”

The study of the history of a certain field is not, as is commonly held, a useless display of its blind alleys or a collection of the field’s trials and errors (until we got it right), but history is the fullest possible scope of study of a menu that the given field can offer.

History of thought helps us to get rid of the intellectual brainwashing of the age, to see through the intellectual fashion of the day, and to take a couple of steps back.

That is the reason for this book: to look for economic thought in ancient myths and, vice versa, to look for myths in today’s economics.

stories; Adam Smith believed. As he puts it in The Theory of Moral Sentiments, “the desire of being believed, or the desire of persuading, of leading and directing other people, seems to be one of the strongest of all our natural desires.”

“The human mind is built to think in terms of narratives … in turn, much of human motivation comes from living through a story of our lives, a story that we tell to ourselves and that creates a framework of our motivation. Life could be just ‘one damn thing after another’ if it weren’t for such stories. The same is true for confidence in a nation, a company, or an institution. Great leaders are foremost creators of stories.”

contrary to what our textbooks say, economics is predominantly a normative field. Economics not only describes the world but is frequently about how the world should be (it should be effective, we have an ideal of perfect competition, an ideal of high-GDP growth in low inflation, the effort to achieve high competitiveness …). To this end, we create models, modern parables,

I will try to show that mathematics, models, equations, and statistics are just the tip of the iceberg of economics; that the biggest part of the iceberg of economic knowledge consists of everything else; and that disputes in economics are rather a battle of stories and various metanarratives than anything else.

Before it was emancipated as a field, economics lived happily within subsets of philosophy—ethics, for example—miles away from today’s concept of economics as a mathematical-allocative science that views “soft sciences” with a scorn born from positivistic arrogance. But our thousand-year “education” is built on a deeper, broader, and oftentimes more solid base. It is worth knowing about.

is a paradox that a field that primarily studies values wants to be value-free. One more paradox is this: A field that believes in the invisible hand of the market wants to be without mysteries.

mathematics at the core of economics, or is it just the icing of the cake, the tip of the iceberg of our field’s inquiry?

we seek to chart the development of the economic ethos. We ask questions that come before any economic thinking can begin—both philosophically and, to a degree, historically. The area here lies at the very borders of economics—and often beyond. We may refer to this as protoeconomics (to borrow a term from protosociology) or, perhaps more fittingly, metaeconomics (to borrow a term from metaphysics).

The more important elements of a culture or field of inquiry such as economics are found in fundamental assumptions that adherents of all the various systems within the epoch unconsciously presuppose. Such assumptions appear so obvious that people do not know what they are assuming, because no other way of putting things has ever occurred to them, as the philosopher Alfred Whitehead notes in Adventures of Ideas.

I argue that economic questions were with mankind long before Adam Smith. I argue that the search for values in economics did not start with Adam Smith but culminated with him.

We should go beyond economics and study what beliefs are “behind the scenes,” ideas that have often become the dominant yet unspoken assumptions in our theories. Economics is surprisingly full of tautologies that economists are predominantly unaware of. I

argue that economics should seek, discover, and talk about its own values, although we have been taught that economics is a value-free science. I argue that none of this is true and that there is more religion, myth, and archetype in economics than there is mathematics.

In a way, this is a study of the evolution of both homo economicus and, more importantly, the history of the animal spirits within him. This book tries to study the evolution of the rational as well as the emotional and irrational side of human beings.

I argue that his most influential contribution to economics was ethical. His other thoughts had been clearly expressed long before him, whether on specialization, or on the principle of the invisible hand of the market. I try to show that the principle of the invisible hand of the market is much more ancient and developed long before Adam Smith. Traces of it appear even in the Epic of Gilgamesh, Hebrew thought, and in Christianity, and it is expressly stated by Aristophanes and Thomas Aquinas.

This is not a book on the thorough history of economic thought. The author aims instead to supplement certain chapters on the history of economic thought with a broader perspective and analysis of the influences that often escape the notice of economists and the wider public.

Progress (Naturalness and Civilization)

The Economy of Good and Evil

from his beginnings, man has been marked as a naturally unnatural creature, who for unique reasons surrounds himself with external possessions. Insatiability, both material and spiritual, are basic human metacharacteristics, which appear as early as the oldest myths and stories.

the Hebrews, with linear time, and later the Christians gave us the ideal (or amplified the Hebrew ideal) we now embrace. Then the classical economists secularized progress. How did we come to today’s progression of progress, and growth for growth’s sake?

The Need for Greed: The History of Consumption and Labor

Metamathematics From where did economics get the concept of numbers as the very foundation of the world?

All of economics is, in the end, economics of good and evil. It is the telling of stories by people of people to people. Even the most sophisticated mathematical model is, de facto, a story, a parable, our effort to (rationally) grasp the world around us.

idea that we can manage to utilize our natural egoism, and that this evil is good for something, is an ancient philosophical and mythical concept. We will also look into the development of the ethos of homo economicus, the birth of “economic man.”

The History of Animal Spirits: Dreams Never Sleep

Masters of the Truth

Originally, truth was a domain of poems and stories, but today we perceive truth as something much more scientific, mathematical. Where does one go (to shop) for the truth? And who “has the truth” in our epoch?

Our animal spirits (something of a counterpart to rationality) are influenced by the archetype of the hero and our concept of what is good.

The entire history of ethics has been ruled by an effort to create a formula for the ethical rules of behavior. In the final chapter we will show the tautology of Max Utility, and we will discuss the concept of Max Good.

The History of the Invisible Hand of the Market and Homo Economicus

We understand “economics” to mean a broader field than just the production, distribution, and consumption of goods and services. We consider economics to be the study of human relations that are sometimes expressible in numbers, a study that deals with tradables, but one that also deals with nontradables (friendship, freedom, efficiency, growth).

When we mention economics in this book, we mean the mainstream perception of it, perhaps as best represented by Paul Samuelson.

By the term homo economicus, we mean the primary concept of economic anthropology. It comes from the concept of a rational individual, who, led by narrowly egotistical motives, sets out to maximize his benefit.

the Epic of Gilgamesh bears witness to the opposite—despite the fact that the first written clay fragments (such as notes and bookkeeping) of our ancestors may have been about business and war, the first written story is mainly about great friendship and adventure.

Even today we live in Gilgamesh’s vision that human relations—and therefore humanity itself—are a disturbance to work and efficiency; that people would perform better if they did not “waste” their time and energy on nonproductive things.

is a story of nature and civilization, of heroism, defiance, and the battle against the gods, and evil; an epic about wisdom, immortality, and also futility.

But it is in friendship where—often by-the-way, as a side product, an externality—ideas and deeds are frequently performed or created that together can altogether change the face of society.19 Friendship can go against an ingrained system in places where an individual does not have the courage to do so himself or herself.

started with Babylonians—rural nature becomes just a supplier of raw materials, resources (and humans the source of human resources). Nature is not the garden in which humans were created and placed, which they should care for and which they should reside in, but becomes a mere reservoir for natural (re)sources.

To be human seems to be somewhere in between, or both of these two. We

The entire history of culture is dominated by an effort to become as independent as possible from the whims of nature.39 The more developed a civilization is, the more an individual is protected from nature and natural influences and knows how to create around him a constant or controllable environment to his liking.

The epic captures one of the greatest leaps in the development of the division of labor. Uruk itself is one of the oldest cities of all, and in the epic it reflects a historic step forward in specialization—in the direction of a new social city arrangement. Because of the city wall, people in the city can devote themselves to things other than worrying about their own safety, and they can continue to specialize more deeply.

“The chief thing which the common-sense individual wants is not satisfactions for the wants he had, but more, and better wants.”47

If a consumer buys something, theoretically it should rid him of one of his needs—and the aggregate of things they need should be decreased by one item. In reality, though, the aggregate of “I want to have” expands together with the growing aggregate of “I have.”

the Old Testament, this relationship is perceived completely differently. Man (humanity) is created in nature, in a garden. Man was supposed to care for the Garden of Eden and live in harmony with nature and the animals. Soon after creation, man walks naked and is not ashamed, de facto the same as the animals. What is characteristic is that man dresses (the natural state of creation itself is not enough for him), and he (literally and figuratively) covers52 himself—in shame after the fall.53

Nature is where one goes to hunt, collect crops, or gather the harvest. It is perceived as the saturator of our needs and nothing more. One goes back to the city to sleep and be “human.” On the contrary, evil resides in nature. Humbaba lives in the cedar forest, which also happens to be the reason to completely eradicate it.

Symbolically, then, we can view the entire issue from the standpoint of the epic in the following way: Our nature is insufficient, bad, evil, and good (humane) occurs only after emancipation from nature (from naturalness), through culturing and education. Humanity is considered as being in civilization.

The city was frequently (at least in older Jewish writings) a symbol of sin, degeneration, and decadence—nonhumanity. The Hebrews were originally a nomadic nation, one that avoided cities. It is no accident that the first important city57 mentioned in the Bible is proud Babylon,58 which God later turns to dust.

is enough, for example, to read the Book of Revelation to see how the vision of paradise developed from the deep Old Testament period, when paradise was a garden. John describes his vision of heaven as a city—paradise is in New Jerusalem, a city where the dimensions of the walls(!) are described in detail, as are the golden streets and gates of pearl.

Hebrews later also chose a king (despite the unanimous opposition of God’s prophets) and settled in cities, where they eventually founded the Lord’s Tabernacle and built a temple for Him. The city of Jerusalem later gained an illustrious position in all of religion.

this time Christianity (as well as the influence of the Greeks) does not consider human naturalness to be an unambiguous good, and it does not have such an idyllic relationship to nature as the Old Testament prophets.

If a tendency toward good is not naturally endowed in people, it must be imputed from above through violence or at least the threat of violence.

If we were to look at human naturalness as a good, then collective social actions need a much weaker ruling hand. If people themselves have a natural tendency (propensity) toward good, this role does not have to be supplied by the state, ruler, or, if you wish, Leviathan.

How does this affect economics?

us return for the last time to the humanization of the wild Enkidu, which is a process we can perceive with a bit of imagination as the first seed of the principle of the market’s invisible hand, and therefore the parallels with one of the central schematics of economic thinking.

Sometimes it is better to “harness the devil to the plow” than to fight with him. Instead of summoning up enormous energy in the fight against evil, it is better to use its own energy to reach a goal we desire; setting up a mill on the turbulent river instead of futile efforts to remove the current. This is also how Saint Prokop approached it in one of the oldest Czech legends.

Enkidu caused damage and it was impossible to fight against him. But with the help of a trap, trick, this evil was transformed into something that greatly benefited civilization.

By culturing and “domesticating” Enkidu, humanity tamed the uncontrollable wild and chaotic evil

Enkidu devastated the doings (the external, outside-the-walls) of the city. But he was later harnessed and fights at the side of civilization against nature, naturalness, the natural state of things.

A similar story (reforming something animally wild and uncultivated in civilizational achievement) is used by Thomas Aquinas in his teachings. Several centuries later, this idea is fully emancipated in the hands of Bernard Mandeville and his Fable of the Bees: or, Private Vices, Publick Benefits. The economic and political aspects of this idea are—often incorrectly—ascribed to Adam Smith.

Here the individual does not try anymore to maximize his goods or profits, but what is important is writing his name in human memory in the form of heroic acts or deeds.

immortality, one connected with letters and the cult of the word: A name and especially a written name survives the body.”77

After this disappointment, he comes to the edge of the sea, where the innkeeper Siduri lives. As tonic for his sorrow, she offers him the garden of bliss, a sort of hedonistic fortress of carpe diem, where a person comes to terms with his mortality and at least in the course of the end of his life maximizes earthly pleasures, or earthly utility.

In the second stage, after finding his friend Enkidu, Gilgamesh abandons the wall and sets out beyond the city to maximalize heroism. “In his (…) search of immortal life, Gilgamesh

The hero refuses hedonism in the sense of maximizing terrestrial pleasure and throws himself into things that will exceed his life. In the blink of an eye, the epic turns on its head the entire utility maximization role that mainstream economics has tirelessly tried to sew on people as a part of their nature.81

today remember Gilgamesh for his story of heroic friendship with Enkidu, not for his wall, which no longer reaches monumental heights.

the eleventh and final tablet, Gilgamesh again loses what he sought. Like Sisyphus, he misses his goal just before the climax

The very existence of questions similar to today’s economic ones can be considered as the first observation. The first written considerations of the people of that time were not so different from those today. In other words: The epic is understandable for us, and we can identify with it.

We have also been witnesses to the very beginnings of man’s culturing—a great drama based on a liberation and then a distancing from the natural state.