Dean Baker's Blog, page 261

Would Doctors Benefit from Globalization that Lowered Their Pay and the Cost of Health Care?

Better yet, would economists say they had benefited? The reason for the question is that this is essentially the question that the University of Chicago's Initiative on Global Markets (IGM) asked its group of elite economists about trade with China. It asked:

"Trade with China makes most Americans better off because, among other advantages, they can buy goods that are made or assembled more cheaply in China."

This question could be taken to be saying that most Americans are better off because...

The Patent Theory of Knowledge

For thousands of years we have seen people develop knowledge and skills, make discoveries, and advance science. The overwhelming majority of this work was not motivated by the hope of getting a patent monopoly. Yet somehow, the ostensibly serious people at the Association of University Technology Managers think that patent monopolies are the only way to support the development of new drugs, or so it would seem from a speech to them by Joseph Allen.

Mr. Allen took issue with my suggestion that...

Ezekiel Emanuel's Unnecessary Originality on New Drugs

It's always exciting to read an interesting new idea in the NYT opinion section. It's less exciting to read an idea that is not new, but presented as such. Hence my lack of joy when reading Ezekiel Emanuel's proposal for a prize fund for the development of new antibiotics.

Emanuel wants the government to put up a $2 billion prize for the first five companies that get regulatory approval for a new antibiotic. He writes his piece as though a prize fund for developing drugs is a new idea. It isn...

Who Considers the Trans-Atlantic Trade and Investment Pact a Cure for European Stagnation?

The NYT won't name names, but obviously these people don't know much economics. In a generally useful article about differences in regulatory policy between the European Union and the United States the NYT told readers:

"The talks [on the Trans-Atlantic Trade and Investment Pact] are considered more of a priority for Europe, which is mired in deflation and high unemployment, than the United States, where the economy is recovering."

An analysis by the Centre for Economic Policy Research in the...

Robert Samuelson on History, Inequality, and Productivity

Robert Samuelson was inspired by a graph in the new Economic Report of the President to tell readers that the real problem for the middle class is not inequality but rather productivity growth. His point is that if we had kept up the Golden Age (1943-1973) rates of productivity growth it would have mattered much more to middle income families living standards than the rise in inequality since 1980.

This is true in the sense of if I were six feet five inches, I would be taller than I am, but i...

What Does "Keep a Lid on Spending" Mean to the NYT and the Troika?

That's the question that millions of readers of the NYT will be asking after seeing an analysis of the deal between Greece and the European Union that told readers:

"Moreover, the finance ministers made clear that Greece will not get any more cash until it satisfies them it can keep a lid on spending."

In fact, Greece has already cut government spending by almost 15 percent in real terms from 2008 to 2014, according to the International Monetary Fund (I.M.F.). This spending cut is equal to al...

The Young Invincibles Are Back from the Dead at the WaPo

The myth of the "young invincibles" has come back to life in the editorials of the Washington Post. Folks may recall that this was the story where Obamacare would live or die depending on whether young healthy people signed up for the program. The small grain of truth to the story is that the premium for young people was slightly higher than an actuarially fair premium while the premium for those in the oldest Obamacare age band (ages 55-64) was slightly lower. This means that as a group, the...

Stocks and Flows and the Value of China's Currency

The NYT reported that efforts by rich Chinese to get some of their wealth out of the country have led to downward pressure on the value of the country's currency. It noted that the central bank is trying to counteract some of this pressure by selling some its foreign exchange reserves to buy up yuan. It then tells readers:

"A weaker renminbi could produce greater tensions with the United States, by widening that trade imbalance. The Obama administration is in a tricky position, however. It ha...

Lost in Numbers In Illinois

The NYT completely abandoned its commitment to put numbers in context in an article on the budget cuts proposed by Illinois' new governor, Bruce Rauner. The piece tells readers that the governor had proposed cuts of more than $6 billion. Since most NYT readers are not familiar with the size of Illinois' budget, this is not providing very much information. In fact, the cuts (actually $6.7 billion) would be equal to approximately 17.5 percent of baseline spending (see page 2-23). It refers to a...

Washington Post Plays Dumb on Currency Manipulation

To paraphrase a line from an iconic American toy doll, "currency values are hard." That is probably the best way to describe the Washington Post's editorial against including rules on currency values in trade agreements.

The Post's essential argument against including rules on currency values is that some measures whose main purpose is not to affect currency values may nonetheless affect currency values. Its example is the Fed's quantitative easing (QE) policy, which by lowering interest rate...