Dean Baker's Blog, page 346

Assessing Neil Irwin's Assessment of Ben Bernanke

Ben Bernanke has definitely down some things right in dealing with the downturn, most importantly having the Fed act more aggressively than many other central banks in trying to boost the economy, however his record has far more blemishes than Neil Irwin notes in his how history will judge piece.

First of all, Ben Bernanke was less of an innocent bystander than Irwin implies. While he had been a Princeton academic before becoming Fed chair, that was not immediately before becoming Fed chair....

Drug Patents Lead to Corruption #54,187

The NYT had a great piece about how drug manufacturers contribute money to charities that help people meet co-payments on drugs. The way the deal works is that a drug company will charge a very high price, let's say $50,000 a year, for a drug that may be of limited value compared to lower cost competitors. To discourage its use insurers require a 20 percent co-payment, which would mean patients have to cough up $10,00 a year.

This sort of co-payment would keep most people from using the drug....

Great Piece By Thomas Edsall on Loser Liberalism

Thomas Edsall does a very nice job of making a distinction between a political agenda focused on providing basic needs for the poor (known in these parts as "loser liberalism") and an agenda focused on structuring the economy so that growth benefits everyone rather than just those at the top. This point is a central, if often overlooked, theme of political debate. (See also my new book with Jared Bernstein on Full Employment. While getting to full employment is a policy decision, leaving tens...

The Young Uns Won't Send Obamacare Into a Death Spiral

If you didn't hear about a new report from the Kaiser Family Foundation making this point, then you should be upset about a news outlet near you. There have been numerous reports about the need to get young healthy people into the insurance pools in order to keep costs down. The argument was that if too few young people signed up for insurance, then costs would rise. Insurers would then be forced to raise their premiums to maintain profit margins. This would then lead more people to opt out o...

Does NPR Work for Fix the Debt?

That's what millions of listeners must be asking after hearing its reference to the budget deal in a top of the half hour news segment on Morning Edition (sorry, no link). The segment told listeners that the deal did little to reduce the deficit.

That is perhaps true, but how did NPR decide that this was the most important piece of information to give listeners in this short piece. It could have told listeners about its impact on much more important problems. For example, due to lack of deman...

The FHA Has Played a Positive Role in the Housing Market, but Let's Not Overdo It

My friend and co-author Jared Bernstein used his NYT blogpost to defend the Federal Housing Authority (FHA). I am mostly sympathetic to his case. The FHA has played a positive role in the recovery, helping to support the housing market when private funding had largely disappeared. However, I was struck by his reference to a study by Moody's Analytics which purportedly finds that house prices would have fallen by another 25 percent had the FHA not been there to support the market.

I didn't act...

When Does the NYT Plan to Start Putting Budget Numbers in Context?

That is what millions are asking after reading this piece on the prospects of the recent budget deal in the Senate. At one point the piece tells readers:

"Under the budget deal, spending on defense and nondefense programs would rise from the $967 billion slated for this fiscal year to $1.012 trillion, mitigating the impact of across-the-board spending cuts and allowing congressional lawmakers to draft detailed spending plans for the first time in several years. Spending in fiscal 2015, which...

UK Finance Minister George Osborne Boasts About Negative Productivity Growth

That may not have been his intention, but when you boast about an economy with 30,000 million employed workers generating 60,000 jobs a month, with a GDP growth rate of 1.9 percent, then you're boasting about negative productivity growth. Back in the days when arithmetic mattered in economic policy, people might have pointed out that job creation of 60,000 a month implies annual employment growth of 2.4 percent. Assuming no changes in average hours worked, this means that productivity in the...

Robert Samuelson Hasn't Heard About the Downturn

You know about that recession that began six years ago following the collapse of the housing bubble? Apparently Robert Samuelson doesn't. In a column complaining about the new budget deal, Samuelson told readers:

"Recall: The central issue is the mismatch between government’s spending promises and its willingness to tax."

Those who noticed the recession might think the central issue is that the economy is still operating at a level of output that is close to 6 percent below its capacity accor...

Patent Monopolies Lead to Corruption #54,123

The NYT has an excellent piece on how drug companies have hyped "attention deficit disorder" so that millions of children and a rapidly growing number of adults are now taking drugs to treat the disease. The piece presents the views of several doctors, including one who first identified the syndrome, who complain that the vast majority of these people are not benefiting from taking drugs.

This is yet another example of drug companies pursuing harmful practices in pursuit of patent rents. Thi...