Dean Baker's Blog, page 129

The High Price of Cancer Drugs: We Could Pay for the Research in Advance

The NYT had a piece on prices being charged by drug companies for new types of treatment for cancer, which can run as high as $1 million a year. While the piece noted the argument of one industry critic, Dr. Aaron Kesselheim, that we don't pay firefighters when they show up at a fire, based on how many lives they save, it didn't carry through the logic of this point.

The alternative implied by Dr. Kesselheim's remark is that we could pay for the research upfront, as we already do to some...

Revising Our Thinking on Retirement Income

C. Adam Bee and Joshua Mitchell, two economists at the Census Bureau, recently released an analysis of retirement income that qualitatively changes our understanding of the well-being of retirees. The analysis matched administrative data (essentially tax filings) with the reported income in the Current Population Survey (CPS), which has been the standard basis for the measurement of household income, including retirement income.

Bee and Mitchell found that the income of households in the admi...

Drug Company Seeks to Hide Behind Native American Tribe to Protect Patent Monopoly

If you thought the pharmaceutical industry couldn't possibly sink any lower in its pursuit of profits Allergan just proved you wrong. The geniuses at Allergan came up with the brilliant idea of turning over one of its patents on the dry-eye drug Restasis to the Mohawk tribe. The tribe will then lease the patent back to the Allergan.

The reason for this silly trick is that the Mohawk tribe, based on its sovereign status, is disputing the right of generic competitors to pursue a case before the...

The Washington Post is Worried About Too Many People Having IPhones and Too Much Government Debt

Okay, they haven't written anything about too many iPhones that I know of, but the paper continually displays its irrational fear of too much government borrowing.It did so yet again in a discussion of plans to temporarily raise the debt ceiling and possibly to get rid of it altogether. The piece presents the views of the Peter Peterson funded Committee for a Responsible Federal Budget that the country faces a serious debt and deficit problem.

The evidence of a problem with debt and deficits...

The Problem With the ECB's Concern Over the Weak Dollar: The Dollar Isn't Weak

The New York Times told readers this morning that the European Central Bank (ECB) would like to cut back on its quantitative easing program but is reluctant to do so because of the weak dollar. The piece notes that a weak dollar reduces the euro zone's trade surplus with the United States. Also by making low-cost imports available, it undermines the ECB's effort to raise inflation to its 2.0 percent target.

The piece explains the weak dollar:

"There’s not much Mr. Draghi can do about the wea...

Trump's Threat to End U.S. Trade Deal with South Korea: Where's the Beef?

In listing bad things that Donald Trump is doing for the economy, Washington Post business reporter Heather Long included his threat to end the trade deal with South Korea. The piece noted that U.S. beef exports to South Korea topped $1 billion last year. While this is intended to be a big deal, it is not clear that it is.

This amount is roughly 1.5 percent of total beef production. More importantly, it is wrong to imply that this output would just sit and rot if the trade deal were cancelled...

That $8 Billion for Hurricane Harvey Relief Would be Equal to 0.2 Percent of Total Spending

Just in case you were wondering how big a deal this is for the budget. Put another way, it is equal to about $25 for every person in the country. It might have been helpful to include such information in this NYT piece given the paper's commitment to putting numbers in context.

Are the United States' Leading Tech Companies Run by Morons?

That seems to be the argument by Rana Foroohar in a Financial Times column (sorry, behind paywall). The argument is that because recent changes to the patent law have made it easier to challenge inappropriately granted patents, inventors are unable to benefit from their inventions. She argues that this is causing companies to shift their research to other countries where their patents enjoy more protection.

There are two problems with this story. The first is that the United States has a noto...

Minnesota Decides to Subsidize Insurers in Exchanges $1,700 Per Person

A NYT article, headlined "Minnesota finds way to slow soaring health premiums," reported on how the state is now paying insurers $270 million in each of the next two years to keep down the cost of premiums in the health care exchanges. It may not have been entirely clear from reading the piece that the reduction in premiums is the result of a state subsidy of $1,700 per patient per year.

Thanks to Robert Salzberg for calling this to my attention.

Playing With Numbers to Make Wage Growth Look Better

The average hourly wage has risen by 2.5 percent in the last year. We have that on pretty good data from Bureau of Labor Statistics. That's okay in a context of inflation around 1.7 percent (it translates into 0.8 percent real wage growth), but hardly great. It is not keeping pace with trend productivity growth and is not allowing much catch-up from the bad years in the Great Recession and the immediate aftermath. It also indicates no acceleration from the last two years in spite of unemploym...