Dean Baker's Blog, page 384

Actually, It Is Easy to Design Monetary Policy for the Euro Zone

A NYT story on the rise in the euro zone unemployment rate to 12.1 percent noted the sharp differences in unemployment rates across the euro zone and told readers:

"The divergence makes it difficult for the E.C.B. to craft a monetary policy that is appropriate for all members."

Actually this is not true. The euro zone needs expansion everywhere. It also needs re-balancing with the peripheral countries (e.g. Spain, Greece, and Portugal) becoming more competitive relative to the core countries...

WAPO Confronts "Political Reality" When It's Enforced by Seniors, Bows to It When Enforcers Are Bankers

That's what readers of its editorial on reforming Fannie Mae and Freddie Mac learned today. This is quite literally what the paper said in its partial endorsement of a complex hybrid proposal for a new system of guarantees for mortgage backed securities proposed by Senators Mark Warner and Bob Corker, describing the plan as "an obvious bow to political reality."

It's touching that the Post feels the need to bow to the financial industry's power rather than pushing for more economically effici...

Steve Rattner Documents How Patents Lead to Cesspool of Corruption in Pharmaceutical Industry

Rattner shows how a small drug company, Jazz Pharmaceuticals, is making a fortune by charging as much as $60,000 a year for a drug it purchased which is a treatment for narcolepsy. As Rattner outlines, government-granted patent monopolies, by allowing companies to charge prices that can be several hundred or thousand times the free market price, provide an enormous incentive for corrupt practices.

Is the Washington Post Too Pinocchio Happy When It Comes to Ads Criticizing Republicans Over Medicare?

Glenn Kessler, the Washington Post's fact checker, dished out the maximum four pinocchios in reference to ads by Democratic pacs criticizing Arkansas Representative Tom Cotton over his support of the Republican Medicare plan. This is not the first time such ads have drawn four pinocchios from Kessler or comparable criticism from PolitiFact and FactCheck.Org, the other major media political fact checking sites. 

The essence of the criticism is that the ad cites complaints against an earli...

Investing In Research and Registering a Drug Are Independent Decisions

According to the New York Times drug companies are confused about how requirements for getting drugs approved affect the profitability of their investment decisions. In an article about efforts to increase disclosure of test results it told readers that European Union requirements for full disclosure of test results could discourage drug companies from investing in Europe.

"Others warned that such a policy could discourage drug companies from investing in Europe. 'If you, on the other hand, s...

Did President Obama's Climate Change Speech Pass the Market Test?

It would be wrong to place too much emphasis on short-term movements in stock prices. As a practical matter they can be moved by almost anything, in either direction. Nonetheless, some folks were anxious to note a plunge in stock prices while President Obama was giving his speech on global warming as evidence that the President really meant business. For example, Andrew Revkin told readers:

"But if you doubt the reality of this shift [away from coal], just look at the news coverage from Monda...

The Social Security and Medicare Cutters are Very Unhappy

Who can blame them? The vast majority of people across the political spectrum oppose their plans to cut these programs. Furthermore, improved budget projections (partly because of cuts that are very bad news) have drastically reduced both current deficit projections and projections for longer term deficits. Finally, one of their main props for the urgency of deficit reduction turned out to be nothing more than a Harvard Excel spreadsheet error.

No, things have not gone well for those wishing...

Niall Ferguson Tries to Promote Generational Warfare from the Land of the Excel Spreadsheet Error (Harvard)

Niall Ferguson, who was last seen predicting soaring interest rates and hyperinflation as a result of the Obama stimulus and Fed's QE policy is now calling for generational warfare as the best route to rescue the country's young. In a piece for the Daily Beast, Ferguson complains about the lack of social mobility in the United States, noting that it now trails many other wealthy countries in the percentage of low income children who move up into higher income quintiles.

Ferguson goes through...

Thomas Edsall on Richard Burkhauser and Inequality

Thomas Edsall has a lengthy blogpost on a new measure of income developed by Cornell University Professor and AEI fellow Richard Burkhauser. Burkhauser's measure reverses the widely reported finding that inequality has increased substantially over the last three decades.

While Edsall went to great lengths to include extensive comments from other economists (including me) on Burkhauser's methodology and concluded himself that Burkhauser's methodology doesn't measure up, readers may still be le...

Honest Piece by Casey Mulligan on Medicaid Expansion

Some applause please for Casey Mulligan. Mulligan has been a strong opponent of the Affordable Care Act and the expansion of Medicaid provided under the act. However he used his column today to dispel a misunderstanding of a study of the health impact of increased Medicaid enrollment in Oregon.

The study was written up in an article in the New England Journal of Medicine which noted that the study found no statistically significant impact of Medicaid enrollment on health care. However Mulliga...