Dean Baker's Blog, page 390

Health Care Costs: Don't Blame the Free Market

The NYT has a very interesting piece documenting how much more people in the United States pay for a wide variety of medical procedures and drugs. While the article provides much useful information, it badly errors in telling readers (in a quote from David Blumenthal, the President of the Commonwealth Fund) that the cost problems stem from a free market.

In fact, one of the main reasons that the United States pays so much for health care, including the items listed in this article, is precise...

In Spite of Washington Post's Warnings, Military Cuts Don't Appear to be Devastating DC Area Economy

Last year the Washington Post was anxious to highlight claims from the military industry that the military side of the sequester would have severe economic consequences especially in the DC area (e.g. here and here). Thus far it doesn't seem to have worked out that way. Industry groups tend to exaggerate the general impact of policies that will hurt them directly. Unfortunately the Post apparently is not aware of this fact, at least when it comes to defense related industries.

 

Addendum...

Post Gives Us the Bad News on Medicare, Good News May Reduce Pressure for Change

The Washington Post long ago eliminated any distinction between news and opinion in its reporting on Social Security and Medicare. Keeping with this pattern, it ran a front page editorial that gave us the bad news from the Medicare and Social Security trustees reports released yesterday.

"And on Friday, analysts worried that the sunnier projections, together with an improving economy and a rapidly shrinking federal budget deficit, could serve to further dampen enthusiasm in Washington for tac...

Capital Gains Are Causing Income to Exceed Output and Economists Are Surprised

Ok folks, this one is a little nerdy, but there are some important issues here. In the last year or so the Bureau of Economic Analysis' measure of national income growth has exceeded its measure of GDP growth. This has led some analysts to jump on the income numbers and say that the economy is actually growing somewhat more rapidly than the GDP measures that were routinely follow, which are measured on the output side.

Just to backtrack for a moment, in principle we should be able to measure...

Growth, Debt, and Assets: Why Politicians are Better at Economics Than Economists

The wealthy countries of the world have spent the last three and half years falling off a 90 percent debt-to-GDP growth cliff that we should now all be able to agree does not exist. While I am happy to see that economists have been able to demonstrate conclusively that the world is not flat, I will just quickly explain again why I always knew this fact.

As I have explained numerous times, in addition to debt, governments also have assets. In fact, governments routinely sell assets, not just o...

The United States Already Has Cuddly Capitalism

Thomas Edsall devoted his blogpost yesterday to a paper by Daron Acemoglu claiming that the United States can't follow a path like Sweden and have "cuddly capitalism." By this Acemoglu is referring to a welfare state that protects most people from the risks in a market economy.

However what Edsall, following Acemoglu, overlooks in his discussion is that the United States already has cuddly capitalism. The difference between the United States and Sweden is who gets cuddled. While Sweden's welf...

NPR Should Have Found Someone Who Could Think of an Alternative to Austerity In Europe

NPR had a useful piece on the limited retreat from austerity in the euro zone now that the policy has been shown to be a failure. However the piece likely left readers with the impression that there were/are no alternatives to austerity.

This is of course not true. The European Central Bank could have supported an aggressive policy of fiscal stimulus led by Germany and other countries with trade surpluses. This would have boosted the economies of the euro zone as a whole.

It is arguably true...

NPR Should Have Found Someone Who Could Thnink of an Alternative to Austerity In Europe

NPR had a useful piece on the limited retreat from austerity in the euro zone now that the policy has been shown to be a failure. However the piece likely left readers with the impression that there were/are no alternatives to austerity.

This is of course not true. The European Central Bank could have supported an aggressive policy of fiscal stimulus led by Germany and other countries with trade surpluses. This would have boosted the economies of the euro zone as a whole.

It is arguably true...

Ross Douthat Stands to the Left of Barack Obama

At least he does on many key economic issues. In his blogpost today he comes out explicitly for breaking up the big banks, for an immigration policy that is focused on bringing down the wages of high-end wage earners (I'm going to put words in his mouth and assume that he means doctors and lawyers and not lower paid STEM workers), and for reducing protections like copyright (I'll read in patents also) that benefit special interests.

He also commits himself to a monetary policy that is conside...

How Do You Spell "Potemkin?" G-8 Plans to Deal With Downturn

I wish I could take credit for making this one up.