Paul Krugman's Blog, page 623

The AMA - as good guys????

If you know anything about the history of health care in America, you know that the American Medical Association has played a consistently nefarious role. It helped block Truman's plan for national health insurance, in alliance with Southern politicians who feared that a national system would force them to integrate hospitals. It sponsored Operation Coffee [...:]

"At a time like this"

Kevin Drum does a righteous smackdown of Bryan Caplan for arguing that we should oppose the House health reform bill because it would raise taxes in the midst of a recession. As Kevin points out, the provisions wouldn't take effect for several years; it takes real chutzpah, given that obvious point, for Caplan to accuse [...:]

The oh-so-useful 70s

Matthew Yglesias marvels at the extent to which stagflation in the 1970s - which was bad, but not remotely as bad as the Depression - was used to sell the idea Keynes bad, free markets good. Actually, it's even broader than he suggests: the 70s have become an all-purpose stick with which to beat liberal [...:]

Deficits saved the world

Jan Hatzius of Goldman Sachs has a new note (no link) responding to claims that government support for the economy is postponing the necessary adjustment. He doesn't think much of that argument; neither do I. But one passage in particular caught my eye:
The private sector financial balance-defined as the difference between private saving and private
investment, [...:]

A trivial but telling example

Example of what? Of the absurdity of the US health care system.
Today's mail brought a letter from Princeton: all faculty members must supply copies of their marriage licenses and of their 2008 tax forms if they want to have their spouses continue to receive health benefits. I don't know exactly what that's about - are [...:]

A $1 trillion bargain

OK, so the CBO score for the 3-committee House health care plan is in: $1 trillion over the next decade for 97 percent coverage of legal residents.
That's a bargain: the catastrophe of being ill without insurance, the fear of losing insurance, all ended - for much less than the Bush administration's useless $1.35 trillion [...:]

Multiplier muddles (wonkish)

Greg Mankiw asks why two New Keynesian analyses - by Eichenbaum et al and by Cogan et al (both large pdfs, neither written in English) - reach such different conclusions about the size of the fiscal multiplier.
One main answer, I think, is that in Eichenbaum et al fiscal policy is modeled as a response to [...:]

Vegematic policy advocacy

Like Brad, I'm not too happy with the policy justifications we're getting from the administration. It's perfectly clear that the stimulus was too small; I think they know that too. But they've made a political judgment that (a) they can't push another round through and (b) the thing to do right now is defend the [...:]

Palin-Noonan

Brad DeLong points out that everything Peggy Noonan says about Sarah Palin could also have been said about Ronald Reagan. But he's going too far back. Ms. Noonan praised George W. Bush for exactly the qualities she disses in SP:
Now:
Here's why all this matters. The world is a dangerous place. It has never been [...:]

Marginal thinking about fiscal stimulus

The figure above is the way economists are taught to think about, well, everything. Greg Mankiw:
Rational People Think at the Margin.
A rational decision-maker takes action if and only if the marginal benefit of the action exceeds the marginal cost.
Yet when it comes to fiscal stimulus, there doesn't seem to be a lot of marginal [...:]