Dean Baker's Blog, page 343

Jamie Dimon Says American Businesses Suffer from Skills Gap at the Top Levels

That is not exactly what he said, but that is what his comments in a Washington Post interview mean. Dimon said that the United States is suffering from a skills gap where firms can't find workers with the skills they need. Dimon claimed that this skills shortage could be raising the unemployment rate by 1-2 percentage points.

In a market economy when there is a shortage of particular item, in this case skilled workers, the price is supposed to rise. There is no substantial sector of labor ma...

For Employer Provided Insurance the Healthy Already Subsidize the Sick

Sarah Kliff has a useful discussion of the changes in the insurance market brought about by Obamacare. It points out that Obamacare will end discrimination based on pre-existing conditions. While there will still be substantial differences in cost based on age, people will pay the same premiums regardless of their health.

However the piece is a bit misleading in its exclusive focus on the individual insurance market. The vast majority of the working age population gets insurance through their...

Finance and the Rich Country Curse

Simon Johnson has a good post on how a bloated financial sector is often a curse to rich countries like the United States. The piece can use a small correction.

It gives South Korea as an example of a middle income country in which manufacturing still is a dominant force. South Korea really should be viewed as an advanced country. It's per capita income is higher than Italy's and only about 10 percent lower than the United Kingdom's.

Do the Euro Zone Countries Really Want Fewer Net Exports?

That's what readers of a NYT article on Latvia entering the euro would assume. The piece presented it as good news that the euro had risen against the dollar over the last year. This increase will make the goods and services produced by euro zone countries less competitive in the world economy, reducing their exports and increasing their imports. With nearly all of the euro zone countries operating at levels of output well below potential GDP, it is difficult to see why they would view this l...

Stock Prices and Future Returns

The media were filled with euphoric accounts about the run-up in the stock market in 2013. This was certainly good news for the people who own lots of stock, less so for everyone else. (The generational warriors who yap about government debt hurting our kids would also be yelling about the stock market run-up transferring resources from young to old, if they were honest.)

Anyhow, it would be reasonable if this reporting included some discussion of the implications of higher stock prices for...

Evidence of Intelligent Life in a David Brooks Column: The Discovery of Kludgeocracy

To the amazement of millions David Brooks had an interesting observation in his column today. He picked up an article by my friend Steve Teles which outlines the story of kludgeocracy.

Steve's idea is that we often end up advancing policy goals in incredible indirect and inefficient ways because this is the only way to move forward. The Affordable Care Act could be the poster child for this point. We got an incredibly complicated and unnecessarily expensive system because the insurers, the dr...

Robots and the Demographic Crisis

Do you remember back when we were worried that robots will take all of the jobs? There will be no work for any of us because we will have all been replaced by robots.

It turns out that we have even more to worry about. AP says that because of declining birth rates and increasing life expectancies, we face a huge demographic crunch. We will have hordes of retirees and no one to to do the work. Now that sounds really scary, at the same time we have no jobs because the robots took them we must a...

The Folks at National Public Radio Can't Imagine Alternatives to Patent Financing for Prescription Drugs Either

Morning Edition picked up the theme of patent protection for prescription drugs providing a trade-off between affordability and innovation seen in the NYT today. This is an inaccurate description of the issues, since there are other more efficient mechanisms for financing research. The patent system for financing drug research both leads to bad health outcomes and is a substantial drag on growth and job creation since it pulls hundreds of billions of dollars out of consumers' pockets every ye...

U.S. Tries to Force India to Accept Medieval Patent Rules

That would have been a reasonable headline for a NYT article on India's resistance to U.S.-type patent rights on expensive drugs. The focus of the piece is Herceptin, a cancer drug that costs $18,000 for a single round of treatment, which makes it unaffordable to almost anyone suffering from cancer in India. A generic version of this drug would likely cost two or three percent of this price.

As a result of the enormous price difference between patent protected drugs and free market drugs the...

That $24 Billion for Extending Unemployment Benefits Is a Bit Less Than 0.7 Percent of the Budget

That's the calculation for those of you who didn't know offhand whether $24 billion is a big deal to the federal government. It takes about two seconds to do this sort of calculation on CEPR's nifty keep Responsible Budget Reporting Calculator.