Dean Baker's Blog, page 506

Inefficiency and Corruption: The Predictable Result of Patent Monopolies

The NYT reported on a new government regulation that will require drug companies to disclose payments they make to doctors. The reason is to expose potential conflicts of interest that could influence their research, public statements, and prescription writing.

It would be helpful to include some comment from economists on this new regulation. The sort of corruption associated with patent protection for prescription drugs is exactly what economics predicts would result from a system of...

And Where Did the Complexity Come From? Nocera on Financial Reform

Joe Nocera's column today argues that the financial industry may have a legitimate complaint when it says that the Dodd-Frank financial reform bill is too complicated. While the law is complicated in many areas, it is important to recognize that in many cases the industry was the source of the complication.

For example, there was a widely held view following the experience of AIG, which had issued hundreds of billions of dollars worth of credit default swaps outside of the purview of any...

NYT Strikes Out in Making the Economic Case Against Hungary

Hungary is being led by a right-wing populist government that seems to have a questionable commitment to democracy. The steps it has taken to end the independence of the judiciary and undermine the fairness of future of elections are ominous. However, the NYT's efforts to construct an economic case against the government fall badly short of the mark.

The NYT tells us that:

 

"Hungary serves as a cautionary tale for those who argue that Greece could regain competitiveness by reintroducing its...

Powell's Books is a Union Store

That might have been worth mentioning in an NYT piece that reported on people turning to smaller alternatives to Amazon as a matter of principle. Some of these people object to Amazon's labor practices. Such people would likely appreciate the opportunity to buy from a unionized bookseller like Powell's.

The Invisible European Central Bank: A Missing Part of the Euro Zone Crisis

The NYT had a mostly good piece discussing the gap in competitiveness between the northern and southern European countries that lays at the heart of the debt crisis in the euro zone. One item that would have been worth adding is the fact that European Central Bank is making any potential adjustment process far more difficult by not having more expansionary policies and by refusing to act as a lender of last resort.

Forcing heavily indebted countries to meet tough deficit targets, at the same ...

The Average 12-Year-Old is Taller Than the Average 6-Year-Old: The Post Gets Desperate in Making the Case Against an Inequality Problem

The Washington Post has consistently used both its news and opinion pages to try to convince readers that the main threat to their well-being and that of their children came from older people getting fat Social Security checks and generous Medicare benefits. This position has become harder to maintain, both because the economic collapse has made these benefits more important than ever to middle and lower income families and also because the fact that rich are making off with the bulk of the b...

Is Thomas Edsall the High Priest of Loser Liberalism?

Thomas Edsall does the classic caricature of the debate between liberals and conservatives telling readers:

"Looked at another way, the two sides are fighting over what the role of government in redistributing resources from the affluent to the needy should and shouldn't be."

This is absolutely not true. The government decides how to structure the market. It decisions in this area swamp the impact of the redistributive policies that liberals and conservatives often fight over.

For example...

The Washington Post's Tortured Logic On the Fed's Housing Proposals

The lead Washington Post editorial noted (and excused) the Fed's complete failure to understand the dangers posed by the housing bubble (the economy is soooo complicated) and then somehow used this failure as an argument against its housing proposals. The Fed's main housing proposals were that Fannie and Freddie should make it easier for underwater homeowners to refinance and also that they should look to convert some of their foreclosed properties to rental units. The Fed also suggested...

Does the Post Have to Call Trade Deals "Free Trade" Deals?

Reporters always complain about space constraints. Therefore it is difficult to understand why they feel the need to add the word "free" when reporting on trade deals, as the Post did in a piece talking about the possible implications for trade of President Obama's plans for restructuring the Commerce Department.

Of course the deals in question (recent pacts with South Korea, Colombia, and Panama) were not free trade agreements, since they increased barriers in some areas, most obviously...

Why Rich People Prefer Cuts to Their Social Security Over Tax Increases

In an article on the richest one percent of families in the country, the NYT told readers that:

"they may prefer facing cuts to their own benefits like Social Security than paying more taxes."

The average income among the richest one percent is roughly $1.5 million. The maximum Social Security benefit for a retired couple is around $45,000. If we assume that the everyone in the one percent gets the maximum benefit (which would certainly be an overstatement of their benefits), then completely ...