Dean Baker
Sacramento Bee, July 27, 2017

July 28, 2017

July 28, 2017 (GDP Byte)

Dean Baker
HuffPost, July 27, 2017

The June 4 governor’s election in the State of Mexico (or Edomex), the most populous state in Mexico, came close to ending the Partido Revolucionario Institucional’s (PRI) nearly nine-decade-long control over the state.

Throughout the campaign and its aftermath, PRI’s illegal election interference, or what the New York Times called “business as usual in the State of Mexico,” ¹ was widely documented by independent observers. Even as PRI-controlled election monitors proclaimed their candidate the victor with a slim plurality, evidence of extensive irregularities undermined the results’ legitimacy. The absence of a clear mandate produced a scandal and strengthened the prospects of the leading opposition party ahead of the 2018 presidential elections.

It wasn’t the Partido de Acción Nacional (PAN), the right-wing party that had interrupted the PRI’s grip on the presidency with the elections of Vicente Fox in 2000 and Felipe Calderón in 2006, that threatened PRI’s stranglehold on the state. Rather, a new political force, the Movimiento Regeneración Nacional (Morena), emerged as the most credible challenger to the PRI.

Last week four prominent Republican economists, John Cogan, Glenn Hubbard, John Taylor, and Kevin Warsh released a short paper arguing that it would be possible to have substantially more rapid growth if we cut taxes and reduced regulation. A big part of their story was that we would see substantially more labor force participation if workers faced lower tax rates, and therefore got to keep a larger share of their pay.

While there are many factors that affect people’s decision to work other than tax rates, such as before tax pay and access to child care, it is worth looking at what happened to employment in the years following the tax cuts put in place by President George W. Bush in 2001. This is an interesting question because President Clinton raised taxes in 1993, although the tax increase almost exclusively affected upper income people. Nonetheless we can compare a higher tax period, 1993-2001, with a lower tax period, 2001-2012. Taxes for high-end earners rose in 2012.

Dean Baker
The Hankyoreh, July 25, 2017

July 2017, Dean Baker, Arjun Jayadev and Joseph Stiglitz

Binyamin Appelbaum had an interesting discussion of inflation in the NYT yesterday. As he notes, it has been below the Fed's target throughout the recovery and, contrary to expectations, it has been falling in recent months. This suggests that the economy could be operating at a higher level of output with more employment. That would put more upward pressure on wages and lead to somewhat higher inflation. That suggests that the Fed may have been wrong in its recent interest rates hikes which were intended to slow growth.

There are a few other points worth noting about inflation while we are on the topic. While it is common to say that inflation hurts investment, at least in the U.S. this does not appear to have been the case.

 

As can be seen the investment share of GDP peaked in the late 1970s and early 1980s when inflation was also running at its most rapid pace in the post-World War II era. Investment has been considerably lower as a share of GDP in the last three decades of moderate inflation. The one exception when investment got close to its peak of the high inflation era was at the end of the 1990s during the stock bubble.

In an article about Ecuador’s presidential transition that appeared in Bloomberg View, Mac Margolis claims that “Moreno takes over as Ecuador heads into its second year of recession.” However, this is not true.Looking at quarterly GDP data for Ecuador, we

Dean Baker
Truthout, July 24, 2017

You know the person who commits murder and the dead person really are both victims in Robert Samuelson land. His latest column on health care shows his great expertise in obscuring everything he touches to say it's all just so complicated.

He tells readers:

"Still, there’s no moral high ground. Some Democrats have wrongly accused Obamacare opponents of murder. This is over-the-top rhetoric that discourages honest debate. It’s also inconsistent with research. Kaiser reviewed 108 studies of the ACA’s impact and found that, though beneficiaries used more health care, the 'effects on health outcomes' are unclear."

Yes, Kaiser was being very careful in its comments. The Affordable Care Act has been in effect for three and a half years. There is a lag between research and publication, that means that at this point in time we still have limited solid measurements of outcome measures. We do have data on diagnoses and treatment.

The study reports:

"Many expansion studies point to improvements across a wide range of measures of access to care as well as utilization of some medications and services, including behavioral health care services. Some research shows that improved access to care and utilization is leading to increases in diagnoses of certain chronic conditions and in the number of adults receiving consistent care for a chronic condition."

So we have evidence now that people with conditions like heart disease and cancer are being diagnosed earlier and getting treatment. We are not going to have good data on mortality rates at this point since the vast majority of people with heart disease and cancer do not die immediately from these conditions. But, if we make the huge leap that treatment might affect survival, then we can infer that the ACA is keeping people from dying.

But hey, we want to be cautious, unlike those irresponsible Democrats who are accusing the Republicans of murder. After all, it is possible that all the money we spend on treating heart disease and cancer is totally worthless.