Dean Baker's Blog, page 92

Who Could Have Imagined that Government Granted Patent Monopolies on Drugs Like OxyContin Could Lead to Abuses?

Every student who has taken an econ 101 class knows how a 20 percent tariff leads to corruption. So why is anyone in the world surprised that the patent monopoly the government gave to Purdue Pharma on OxyContin lead the company to ignore evidence that the drug was being misused?

Hey folks, people respond to incentives. If we give them a patent monopoly that allows them to sell a drug at a price that is several thousand percent above its free market price then drug companies will try to push...

How Does the Washington Post Know Trump's View of National Security?

It is absolutely bizarre how the media continually feel the need to tell us what politicians think. The Washington Post was on the job today in an article that discussed Donald Trump's threat to impose 25 percent tariffs on imported cars for national security. The article told readers:

"The president holds an expansive view of national security, describing imported products like steel or passenger sedans as worrisome threats to the United States."

Really? How does the Post know that the pre...

Washington Post Headline Writer Hypes Trucker Shortage

The headline of the Washington Post article should have us all worried, "America has a massive truck driver shortage. Here's why few want an $80,000 job." That sounds pretty dramatic.

The article does begin by telling us about Joyce Brenny, who runs a trucking business in Minnesota, who supposedly pays many of her drivers more than $80,000 a year. (It doesn't indicate if she is the source for this number.) However, folks who read a few paragraphs down discover:

"A few drivers told The W...

UK's Problem Is Robots Are Not Taking Jobs

Peter Goodman had a very good NYT piece detailing how budget cutbacks are undermining the welfare state in the United Kingdom. However, at one point the piece warns that the UK's experience could be a wider warning for a future where "robots [are] substituting for human labor."

Actually, the UK's problem has been just the opposite. It has had extremely low productivity growth. Since the Great Recession, productivity growth has averaged less than 1.0 percent annually according to the OECD. Thi...

Unemployment and the Trade Deficit: It Really Isn't That Complicated

For some reason, there seems to be a big market in efforts to confuse the public about the relationship between unemployment and the trade deficit. Robert Samuelson gives us yet another example in his column today.

"By now, it must be obvious that US trade deficits are connected loosely, if at all, with the unemployment rate, which is now 3.9 percent — the lowest since 2000. Meanwhile, the US trade deficit in 2017 was $566 billion.

"The explanation for the apparent paradox is the dollar’s ro...

Elon Musk Wants Lots of Money for Running Tesla

Roger Lowenstein had a column in the Washington Post criticizing Elon Musk for his new contract as Tesla's CEO that could net him $50 billion. I see the story somewhat differently.

Lowenstein essentially is blaming Musk for being incredibly greedy and notes that most other trailblazing entrepreneurs of the past and present have not needed lavish paychecks to provide them with incentive. While I totally agree with this point, there is a deeper issue that I see here. How is Musk able to get a c...

The Problem of Protectionism and the Broken US Health Care System

We all know that protectionism is bad. If someone proposes a 20 percent tariff on steel or cars the news pages will be filled with economists and other serious sounding people hyperventilating about how this tax will devastate the economy. Unfortunately, these voices are completely absent from discussions of the much more costly protectionism that allows our broken health care system to rip us off for hundreds of billions annually, and cost lives.

NPR and ProPublica gave us a fascinating acco...

The Problem of Protectionism and the Broken U.S. Health Care System

We all know that protectionism is bad. If someone proposes a 20 percent tariff on steel or cars the news pages will be filled with economists and other serious sounding people hyperventilating about how this tax will devastate the economy. Unfortunately these voices are completely absent from discussions of the much more costly protectionism that allows our broken health care system to rip us off for hundreds of billions annually, and cost lives.

NPR and ProPublica gave us a fascinating accou...

In Trashing Elon Musk, Bret Stephens Indicates He Has Never Heard of China

Bret Stephens rightly takes Elon Musk to task for his buffoonish attacks on his critics, dubbing him "The Donald of Silicon Valley." (I prefer my line, "the Donald Trump of futuristic entrepreneurs," but the point is the same.) Like Trump, Musk apparently is unable to accept criticism and lashes out at the integrity and competence of his critics. Also like Trump, he is apparently unable to run a profitable company.

However, where Stephens goes badly astray is in telling his readers that elect...

Lessons for Washington Post on Obamacare Costs: Levels Matter, Not Just Rates of Change

The Washington Post's analysis of projected increases in the cost of health care plans in the exchanges created by the Affordable Care Act (ACA) is seriously confused. Paige Winfield Cunningham seems to think she found a contradiction between Democrats who minimized the importance of price increases during the Obama presidency, but now highlight smaller increases projected under the Trump administration. Rather than being a contradiction, this reflects confusion on Cunningham's part.

The orig...