Dean Baker's Blog, page 423

NPR Makes the Case Against Patent Monopolies in Prescription Drugs

Morning Edition had a nice piece on the large and growing black market in prescription drugs as people increasing turn to sellers outside of the United States to buy drugs at prices that are far lower than the patent protected prices in the United States. As the piece explains, the drugs purchased through these channels are of uneven quality. This is exactly how economic theory predicts people would respond to a government intervention that raises drug prices by many thousand percent above t...

The NYT Thinks that Medicare Should Lead to Intergenerational Conflict

That's what Catherine Rampell told readers in her Economix blogpost today. The piece comments:

"From an economic standpoint, it’s actually a bit surprising that Americans don’t see greater tensions between the generations. Medicare and other public spending on the elderly (such as public pensions at the state level) has been gobbling up an increasing share of government budgets, which crowds out spending on the young and raises their future tax burdens."

Americans probably recognize that the...

Michelle Rhee's Failing Report Card

Michelle Rhee gained notoriety as the chancellor of DC's public schools under Adrian Fenty's administration from 2007 to 2011. Her conduct in this position was one of the main reasons he was not re-elected. Among other things, she publicly took pleasure in firing large numbers of teachers and administrators. Incredibly, she also claims not to have realized that high stake testing would provide incentives for teachers or administrators to cheat on the scoring of exams.

Since she left the DC sc...

Rewriting History: James Buchanan and the National Debt

It is customary not to say bad things about people when they die, but that is not a reason to construct an alternative reality, as the NYT appears to have done in its obituary for James Buchanan. The obituary tells readers:

"Dr. Buchanan partly blamed Keynesian economics for what he considered a decline in America’s fiscal discipline. John Maynard Keynes argued that budget deficits were not only unavoidable but in fiscal emergencies were even desirable as a means to increase spending, create...

Thomas Edsall Says America's Businesses Have Their Backs Against the Wall

I'm not kidding, he notes the sharp redistribution from labor to capital over the last four decades then tells readers;

"Although the stars are lined up in favor of the anti-corporate left, American business, when its back is to the wall, has historically proved to be extraordinarily resourceful."

Seriously, it's a thoughtful piece, but it's difficult to see the rising anti-business tide that Edsall discerns. From where I sit it looks like the country is controlled by two parties dominated by...

Are Profits Making Us Sick? The Case of the Health Care Industry

Good questions raised in this column by Eduardo Porter. We're number one by a large margin, but unfortunately it's in the category of costs. We're nowhere close in terms of outcomes.

Lessons on Global Warming and the Debt for Thomas Friedman

Thomas Friedman apparently believes that global warming and the government debt are problems of the same nature, with a looming crisis getting worse every day it is neglected. This is wrong for two obvious reasons.

First, Thomas Friedman apparently doesn't follow the news closely, but the budget deficit is getting more attention than anything else in the world. In fact, Congress and President Obama have already taken substantial steps to reduce the debt, in contrast to the incredibly limited...

David Brooks Pushes His Protectionist Line on Health Care Again

David Brooks is very upset about the possibility that the cost of Medicare will prevent the United States will be as large a military force in the world in the future as it has been in the past. He tells readers:

"Medicare spending is set to nearly double over the next decade. This is the crucial element driving all federal spending over the next few decades and pushing federal debt to about 250 percent of G.D.P. in 30 years. ...

So far, defense budgets have not been squeezed by the Medicare...

Bad News on Social Security: We're Going to Live Longer

That's what Gary King and Samir Soneji tell us in a NYT column this morning. The gist of the piece is that the authors have assessed trends in mortality rates from a variety of factors and concluded that the Social Security Administration is underestimating life expectancy. Therefore the program will cost more than is projected, meaning that the long-term funding gap is larger than projected.

Before dealing with the scary prospect of living longer let's first address some trivia. The piece te...

The Blame the Community Reinvestment Act Industry

One of the major occupations for economists these days is blaming efforts to help poor people for the housing bubble and bust. The main villains in this story are Fannie Mae, Freddic Mac, the Federal Housing Authority (FHA) and the Community Reinvestment Act (CRA). A reader recently sent me another work in this proud tradition.

I just did a quick reading of the paper, but it seems that the smoking gun in this one is that banks subject to the CRA appeared to do more lending in CRA tracts in th...