It seems as though someone must be preventing a discussion of the patent system. The NYT Magazine has a lengthy piece on the slowdown in the development of new drugs. It focuses on one scientist’s struggles to perfect a new treatment for diabetes, a process that is likely to take well over twenty years, even in a best case scenario.
One of the issues that contributed to this delay is the fact that a single scientist held the patent on the original innovation, which meant that no other scientists could contribute to the development process. By contrast, if the research had been funded up front and the government had not granted a patent monopoly, anyone would have been able to offer their expertise to help develop a usable treatment.
This piece provides a useful example of how patent protection can impede the development of drugs compared with alternative funding mechanisms, but the issue is never once mentioned in this piece. Of course ending patent monopolies would also eliminate the incentive of drug companies to push their drugs for inappropriate purposes and to misrepresent their effectiveness and safety. But hey, if the Chinese government doesn’t want the NYT to raise these issues, its readers will never hear about them.
It seems as though someone must be preventing a discussion of the patent system. The NYT Magazine has a lengthy piece on the slowdown in the development of new drugs. It focuses on one scientist’s struggles to perfect a new treatment for diabetes, a process that is likely to take well over twenty years, even in a best case scenario.
One of the issues that contributed to this delay is the fact that a single scientist held the patent on the original innovation, which meant that no other scientists could contribute to the development process. By contrast, if the research had been funded up front and the government had not granted a patent monopoly, anyone would have been able to offer their expertise to help develop a usable treatment.
This piece provides a useful example of how patent protection can impede the development of drugs compared with alternative funding mechanisms, but the issue is never once mentioned in this piece. Of course ending patent monopolies would also eliminate the incentive of drug companies to push their drugs for inappropriate purposes and to misrepresent their effectiveness and safety. But hey, if the Chinese government doesn’t want the NYT to raise these issues, its readers will never hear about them.
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The Washington Post called for further cuts to the Postal Service and implicitly cuts in pay and benefits in an editorial today. There are two points worth noting on its proposed agenda.
First, the Postal Service has already experienced enormous downsizing. It employed more than 900,000 workers in 1999. In the most recent data it employed 587,600, a decline of 35 percent. This downsizing has been associated with substantial gains in productivity, so it is wrong to imply that it has not been changing with the times.
The other point is that the Postal Service could improve its finances by expanding rather than contracting. Specifically, it can return to providing basic banking services, as it did in the past and many other postal systems still do. This course has been suggested by the Postal Service’s Inspector General.
This route takes advantage of the fact that the Postal Service has buildings in nearly every neighborhood in the country. These offices can be used to provide basic services to a large unbanked population that often can’t afford fees associated with low balance accounts. As a result they often end up paying exorbitant fees to check cashing services, pay day lenders and other non-bank providers of financial services.
A postal banking system would provide competition for the private financial system, which undoubtedly explains why so many politicians are unwilling to consider it as a route to addressing the Postal Service’s financial issues. In the past politicians have often intervened to protect the private sector so that it would not lose business to the Postal Service. For example, in 1999 many members of Congress intervened on behalf of FedEx and UPS, who were concerned that they were losing business due to an effective ad campaign by the Postal Service. (They also sued to stop the ad campaign.)
The Postal Service has been placed in a nearly impossible situation where it is expected to be profitable on a strict business basis, but it is prevented from pursuing potentially profitable paths by the political power of the businesses with whom it would be competing. This is the core problem facing the Postal Service which is not mentioned by the Post.
Thanks to Robert Salzberg for calling this one to my attention.
The Washington Post called for further cuts to the Postal Service and implicitly cuts in pay and benefits in an editorial today. There are two points worth noting on its proposed agenda.
First, the Postal Service has already experienced enormous downsizing. It employed more than 900,000 workers in 1999. In the most recent data it employed 587,600, a decline of 35 percent. This downsizing has been associated with substantial gains in productivity, so it is wrong to imply that it has not been changing with the times.
The other point is that the Postal Service could improve its finances by expanding rather than contracting. Specifically, it can return to providing basic banking services, as it did in the past and many other postal systems still do. This course has been suggested by the Postal Service’s Inspector General.
This route takes advantage of the fact that the Postal Service has buildings in nearly every neighborhood in the country. These offices can be used to provide basic services to a large unbanked population that often can’t afford fees associated with low balance accounts. As a result they often end up paying exorbitant fees to check cashing services, pay day lenders and other non-bank providers of financial services.
A postal banking system would provide competition for the private financial system, which undoubtedly explains why so many politicians are unwilling to consider it as a route to addressing the Postal Service’s financial issues. In the past politicians have often intervened to protect the private sector so that it would not lose business to the Postal Service. For example, in 1999 many members of Congress intervened on behalf of FedEx and UPS, who were concerned that they were losing business due to an effective ad campaign by the Postal Service. (They also sued to stop the ad campaign.)
The Postal Service has been placed in a nearly impossible situation where it is expected to be profitable on a strict business basis, but it is prevented from pursuing potentially profitable paths by the political power of the businesses with whom it would be competing. This is the core problem facing the Postal Service which is not mentioned by the Post.
Thanks to Robert Salzberg for calling this one to my attention.
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That is what millions are asking after reading its piece on the financial status of Detroit’s pensions following its bankruptcy. At one point the piece tells readers:
“Contributions to the system will not be nearly enough to cover these payouts, so success depends on strong, consistent investment returns, averaging at least 6.75 percent a year for the next 10 years. Any shortfall will have to ultimately be covered by the taxpayers.”
Actually the returns to the pension do not need to be consistent, they need to be on average 6.75 percent a year. Having a year or two of low or even negative returns does not matter as long as they are offset by years of stronger than average returns. The assumed 6.75 percent nominal return is in fact considerably lower than the long-term average for public pension funds, although given current stock valuations, it may be a bit on the high side. (High price to earnings ratios imply lower future returns.)
It would also have been worth noting the extent of the pension cuts that Detroit workers already incurred. Workers agreed to a 4.5 percent across the board cut in pensions. In addition,they gave up a 2.25 percent annual cost of living adjustment. For a retiree who collects her pension for twenty years, this amounts to an almost 18 percent cut in benefits.
That is what millions are asking after reading its piece on the financial status of Detroit’s pensions following its bankruptcy. At one point the piece tells readers:
“Contributions to the system will not be nearly enough to cover these payouts, so success depends on strong, consistent investment returns, averaging at least 6.75 percent a year for the next 10 years. Any shortfall will have to ultimately be covered by the taxpayers.”
Actually the returns to the pension do not need to be consistent, they need to be on average 6.75 percent a year. Having a year or two of low or even negative returns does not matter as long as they are offset by years of stronger than average returns. The assumed 6.75 percent nominal return is in fact considerably lower than the long-term average for public pension funds, although given current stock valuations, it may be a bit on the high side. (High price to earnings ratios imply lower future returns.)
It would also have been worth noting the extent of the pension cuts that Detroit workers already incurred. Workers agreed to a 4.5 percent across the board cut in pensions. In addition,they gave up a 2.25 percent annual cost of living adjustment. For a retiree who collects her pension for twenty years, this amounts to an almost 18 percent cut in benefits.
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Zachary Goldfarb raises this possibility in a Wonkblog post today. Certainly there is evidence that many voters were unhappy about stagnating incomes, and the payroll tax increase associated with the end of the payroll tax holiday in 2013 contributed to this stagnation.
However as a practical matter, it appears that few people noticed the tax increase at the time it took place. While 28.9 percent of respondents correctly answered a poll saying that their payroll tax was increased in 2013, 19.8 percent said that their taxes were increased in 2014, when there was actually no change in their tax rate. If the 2014 answer gives us the percentage of the population who would have said their taxes increased regardless of what happened, less than 10 percent of the population recognized the tax increase in 2013.
The implication is that voters were upset about income stagnation. The tax increase contributed to this stagnation (although it was just reversing a prior tax cut), but the tax increase was not directly the cause of voter anger because people did not know about it.
The piece also at one point dismisses the idea of any further tax cuts, commenting:
“given the long-term fiscal problems facing Washington, that seems fanciful.”
Actually the sharp downward revisions to projections of health care cost growth in recent years had made the projected deficits even for the long-term considerably smaller than they had been prior to the downturn. There is no economic reason that these projected deficits should preclude stimulus to the economy now, even though many may use them as a political excuse for their opposition.
Zachary Goldfarb raises this possibility in a Wonkblog post today. Certainly there is evidence that many voters were unhappy about stagnating incomes, and the payroll tax increase associated with the end of the payroll tax holiday in 2013 contributed to this stagnation.
However as a practical matter, it appears that few people noticed the tax increase at the time it took place. While 28.9 percent of respondents correctly answered a poll saying that their payroll tax was increased in 2013, 19.8 percent said that their taxes were increased in 2014, when there was actually no change in their tax rate. If the 2014 answer gives us the percentage of the population who would have said their taxes increased regardless of what happened, less than 10 percent of the population recognized the tax increase in 2013.
The implication is that voters were upset about income stagnation. The tax increase contributed to this stagnation (although it was just reversing a prior tax cut), but the tax increase was not directly the cause of voter anger because people did not know about it.
The piece also at one point dismisses the idea of any further tax cuts, commenting:
“given the long-term fiscal problems facing Washington, that seems fanciful.”
Actually the sharp downward revisions to projections of health care cost growth in recent years had made the projected deficits even for the long-term considerably smaller than they had been prior to the downturn. There is no economic reason that these projected deficits should preclude stimulus to the economy now, even though many may use them as a political excuse for their opposition.
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The NYT likely misled readers in the concluding paragraph of an article on projections for enrollment in the health care exchanges next year. It concluded:
“In a brief analysis of coverage trends, the Department of Health and Human Services said Monday that ‘most of the new marketplace enrollment for 2015 is likely to come from the ranks of the uninsured,’ rather than from people who previously bought insurance on their own outside the exchanges.”
Actually, people routinely go between being uninsured and insured primarily because they find and leave jobs that provide insurance. Every month roughly 4.4 million workers leave a job. Many of these workers are leaving jobs with insurance and becoming uninsured. If these people sign up for the exchanges after going two or three months without insurance, should they be viewed as uninsured or as people who previously had insurance from another source? It’s not clear that this distinction is very meaningful.
The NYT likely misled readers in the concluding paragraph of an article on projections for enrollment in the health care exchanges next year. It concluded:
“In a brief analysis of coverage trends, the Department of Health and Human Services said Monday that ‘most of the new marketplace enrollment for 2015 is likely to come from the ranks of the uninsured,’ rather than from people who previously bought insurance on their own outside the exchanges.”
Actually, people routinely go between being uninsured and insured primarily because they find and leave jobs that provide insurance. Every month roughly 4.4 million workers leave a job. Many of these workers are leaving jobs with insurance and becoming uninsured. If these people sign up for the exchanges after going two or three months without insurance, should they be viewed as uninsured or as people who previously had insurance from another source? It’s not clear that this distinction is very meaningful.
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The NYT told readers misled readers in its description of the Trans-Pacific Partnership (TPP). It told readers:
“The American plan [the TPP] would require each country to open even some of its most fiercely protected markets to foreign goods and services, which could produce a surge in trade.”
While the agreement is pursuing some trade openings, notably in agriculture, it is not clear how far they will go since there is much political resistance to these openings. On the other hand, it also calls for increased protectionism in the form of stronger patent and copyright monopolies. These will raise prices; they are equivalent to privately imposed taxes.(Generic drugs can sell for less than one percent of the patent protected versions, implying a tax equivalent of more than 10,000 percent on the free market price.)
By raising prices and reducing purchasing power the result can be a reduction in trade. Without seeing the final deal, the NYT has no ability to assess whether the trade increasing aspects to the deal will be larger than the trade impairing aspects of the deal. In other words, the “surge in trade” is just making stuff up.
The NYT told readers misled readers in its description of the Trans-Pacific Partnership (TPP). It told readers:
“The American plan [the TPP] would require each country to open even some of its most fiercely protected markets to foreign goods and services, which could produce a surge in trade.”
While the agreement is pursuing some trade openings, notably in agriculture, it is not clear how far they will go since there is much political resistance to these openings. On the other hand, it also calls for increased protectionism in the form of stronger patent and copyright monopolies. These will raise prices; they are equivalent to privately imposed taxes.(Generic drugs can sell for less than one percent of the patent protected versions, implying a tax equivalent of more than 10,000 percent on the free market price.)
By raising prices and reducing purchasing power the result can be a reduction in trade. Without seeing the final deal, the NYT has no ability to assess whether the trade increasing aspects to the deal will be larger than the trade impairing aspects of the deal. In other words, the “surge in trade” is just making stuff up.
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David Leonhardt had an Upshot piece that discussed the prospects for future wage growth in which the only two “experts” cited were Gene Sperling and Roger Altman, both Clinton administration officials with strong ties to Wall Street. While the piece includes assurances from Gene Sperling that no mix of the policies he advocates are likely to lead to wage growth any time soon, it is worth noting that a policy he likely opposes is likely to offer near-term benefits.
Specifically a lower valued dollar could reduce the trade deficit by making our goods and services more competitive internationally. This could get us back to full employment which would allow workers at the middle and bottom of the wage distribution to share in the gains of economic growth.
The Clinton administration explicitly pursued a high dollar policy which led to a massive trade deficit. This deficit created a gap in demand which could only be filled with the demand generated by the stock and housing bubbles. Wall Street tends to prefer a higher dollar both because it increases its power internationally and reduces inflation.
It is amazing that Leonhardt relied on such a narrow range of sources when so many experts with differing views were readily available to speak on this issue.
David Leonhardt had an Upshot piece that discussed the prospects for future wage growth in which the only two “experts” cited were Gene Sperling and Roger Altman, both Clinton administration officials with strong ties to Wall Street. While the piece includes assurances from Gene Sperling that no mix of the policies he advocates are likely to lead to wage growth any time soon, it is worth noting that a policy he likely opposes is likely to offer near-term benefits.
Specifically a lower valued dollar could reduce the trade deficit by making our goods and services more competitive internationally. This could get us back to full employment which would allow workers at the middle and bottom of the wage distribution to share in the gains of economic growth.
The Clinton administration explicitly pursued a high dollar policy which led to a massive trade deficit. This deficit created a gap in demand which could only be filled with the demand generated by the stock and housing bubbles. Wall Street tends to prefer a higher dollar both because it increases its power internationally and reduces inflation.
It is amazing that Leonhardt relied on such a narrow range of sources when so many experts with differing views were readily available to speak on this issue.
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The NYT might have tried to find someone who could have made this point in a Room for Debate segment on Spotify and streaming music more generally. The question being posed is whether these services help or hurt musicians and recording artists.
As several of the comments indicate, most musicians are finding it increasingly difficult to earn any substantial amount of money from their recordings. While some blame Spotify and other streaming services, because of the difficulty of enforcing copyrights in the Internet Age without repressive laws, it is unlikely that these services make much difference in the amount of money available to recording artists. Without streaming services there would simply be more use of unauthorized copies, from which the artist gets zero. They may sell a few more downloads, but the net is unlikely to be very different.
The most logical path going forward is to develop an alternative mechanism for paying recording artists that gives the money upfront and takes advantage of the Internet, rather than trying to bottle it up. My preferred mechanism is a system of individual vouchers, under which people would effectively have a refundable tax credit of some size (e.g $75) to pay to support musicians, writers, movie makers etc. All the work these people produced would then be freely available without copyright protection.
By making it an individual voucher we wouldn’t have to fight over the people that the Corporation for Public Broadcasting or National Endowment for the Arts or equivalent government agencies were opting to support. People would be able to make this judgement for themselves as they did when they paid for copyright protected work.
The NYT might have tried to find someone who could have made this point in a Room for Debate segment on Spotify and streaming music more generally. The question being posed is whether these services help or hurt musicians and recording artists.
As several of the comments indicate, most musicians are finding it increasingly difficult to earn any substantial amount of money from their recordings. While some blame Spotify and other streaming services, because of the difficulty of enforcing copyrights in the Internet Age without repressive laws, it is unlikely that these services make much difference in the amount of money available to recording artists. Without streaming services there would simply be more use of unauthorized copies, from which the artist gets zero. They may sell a few more downloads, but the net is unlikely to be very different.
The most logical path going forward is to develop an alternative mechanism for paying recording artists that gives the money upfront and takes advantage of the Internet, rather than trying to bottle it up. My preferred mechanism is a system of individual vouchers, under which people would effectively have a refundable tax credit of some size (e.g $75) to pay to support musicians, writers, movie makers etc. All the work these people produced would then be freely available without copyright protection.
By making it an individual voucher we wouldn’t have to fight over the people that the Corporation for Public Broadcasting or National Endowment for the Arts or equivalent government agencies were opting to support. People would be able to make this judgement for themselves as they did when they paid for copyright protected work.
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Washington Post Fact Checker gave President Obama three Pinocchios for claiming in a press conference that the Affordable Care Act was responsible for the slowdown in health care costs overall and the slowdown in Medicare costs in particular. This seems more than a bit harsh.
First, there are some clear misstatements, Obama referred to savings on Medicare and Medicaid, even though he just said “Medicare.” Also, he was referring to projected savings in 2020, even though his comments implied that these were the savings that we are seeing today. However these were off the cuff comments in a press conference, as Kessler notes. In prepared speeches Obama has presented these number accurately.
However Kessler’s main complaint is that Obama seems to be implying that the ACA is responsible for the slowdown in health care cost growth when at most it was an important contributor. The point is reasonable, but the question is whether this is a three Pinocchio misrepresentation.
After all, the vast majority of health economists do believe that the ACA has been an important factor in slowing cost growth. The main competing explanation is the recession. That is a plausible explanation for slowing growth in 2008, 2009, and possibly even 2010, but it really is not plausible in more recent years. People may put off care when they lose their jobs, which would explain a one-time reduction in cost growth. However this can’t explain continued slow growth. After all, we don’t think more people are putting off care in 2014 than in 2010.
Furthermore, health care cost growth has continued to undercut projections even in more recent years when the projections were made with the full knowledge of the recession. In this respect, it is worth noting Kessler’s reference to a projection that health care costs in 2014 would rise 5.6 percent from their 2013 level. In the first three quarters of 2014, spending on health care services (roughly 90 percent of spending) is up by 2.8 percent from 2013 levels. Plausible projections of fourth quarter spending are likely to push the year over year increase slightly above 3.0 percent, but this is still well below the growth rate that was projected last year.
It is fair to call President Obama on the carpet for claiming the ACA did more to contain costs than is actually the case, but can anyone doubt that if health care costs had risen more rapidly than in the past that the ACA would get the blame in the public mind, even if other factors were clearly more important? In the context of modern politics, President Obama’s claims about the cost-savings from the ACA seem like relatively minor exaggerations, not a three Pinocchio offense.
Washington Post Fact Checker gave President Obama three Pinocchios for claiming in a press conference that the Affordable Care Act was responsible for the slowdown in health care costs overall and the slowdown in Medicare costs in particular. This seems more than a bit harsh.
First, there are some clear misstatements, Obama referred to savings on Medicare and Medicaid, even though he just said “Medicare.” Also, he was referring to projected savings in 2020, even though his comments implied that these were the savings that we are seeing today. However these were off the cuff comments in a press conference, as Kessler notes. In prepared speeches Obama has presented these number accurately.
However Kessler’s main complaint is that Obama seems to be implying that the ACA is responsible for the slowdown in health care cost growth when at most it was an important contributor. The point is reasonable, but the question is whether this is a three Pinocchio misrepresentation.
After all, the vast majority of health economists do believe that the ACA has been an important factor in slowing cost growth. The main competing explanation is the recession. That is a plausible explanation for slowing growth in 2008, 2009, and possibly even 2010, but it really is not plausible in more recent years. People may put off care when they lose their jobs, which would explain a one-time reduction in cost growth. However this can’t explain continued slow growth. After all, we don’t think more people are putting off care in 2014 than in 2010.
Furthermore, health care cost growth has continued to undercut projections even in more recent years when the projections were made with the full knowledge of the recession. In this respect, it is worth noting Kessler’s reference to a projection that health care costs in 2014 would rise 5.6 percent from their 2013 level. In the first three quarters of 2014, spending on health care services (roughly 90 percent of spending) is up by 2.8 percent from 2013 levels. Plausible projections of fourth quarter spending are likely to push the year over year increase slightly above 3.0 percent, but this is still well below the growth rate that was projected last year.
It is fair to call President Obama on the carpet for claiming the ACA did more to contain costs than is actually the case, but can anyone doubt that if health care costs had risen more rapidly than in the past that the ACA would get the blame in the public mind, even if other factors were clearly more important? In the context of modern politics, President Obama’s claims about the cost-savings from the ACA seem like relatively minor exaggerations, not a three Pinocchio offense.
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