The NYT ran a column that discussed the massive corruption in the pharmaceutical industry and using a water pistol to rein it in. The basic story is straightforward. As a result of government provided patent monopolies (i.e. not the free market), drug companies can sell drugs for hundreds or even thousands of dollars per prescription. In most cases these drugs would sell for a few dollars in a free market.
According to textbook economics, the enormous gap between the price and marginal cost of these drugs gives their manufacturers an enormous incentive to lie, cheat, and steal and find other ways to get more people to buy their drugs. This is the point of the column, the industry is spending a fortune trying to mislead doctors about the safety and effectiveness of their drugs so they will prescribe them more widely.
In a normal world we would be talking about alternative mechanisms for financing prescription drugs. If research was not supported by patent monopolies then drug companies would not spend tens of billions of dollars each year trying to mislead doctors about the quality of their drugs. But it is too great a leap to talk about changing the structure of incentives so instead we get the water pistol:
“The pharmaceutical industry figured that out decades ago, deploying tens of thousands of sales representatives, or “detailers,” to promote their products directly to doctors in their offices. For years, my colleagues and I have been using a similar approach through the nonprofit Independent Drug Information Service, now financed by the governments of Pennsylvania and the District of Columbia. Our “academic detailing” program assesses the medical literature in a non-product-driven way and then deploys a “docent service” of pharmacists and nurses to visit doctors in their own offices and guide them through the resulting therapy recommendations.”
Yeah, somehow I don’t think this crew will be up to the task.
The NYT ran a column that discussed the massive corruption in the pharmaceutical industry and using a water pistol to rein it in. The basic story is straightforward. As a result of government provided patent monopolies (i.e. not the free market), drug companies can sell drugs for hundreds or even thousands of dollars per prescription. In most cases these drugs would sell for a few dollars in a free market.
According to textbook economics, the enormous gap between the price and marginal cost of these drugs gives their manufacturers an enormous incentive to lie, cheat, and steal and find other ways to get more people to buy their drugs. This is the point of the column, the industry is spending a fortune trying to mislead doctors about the safety and effectiveness of their drugs so they will prescribe them more widely.
In a normal world we would be talking about alternative mechanisms for financing prescription drugs. If research was not supported by patent monopolies then drug companies would not spend tens of billions of dollars each year trying to mislead doctors about the quality of their drugs. But it is too great a leap to talk about changing the structure of incentives so instead we get the water pistol:
“The pharmaceutical industry figured that out decades ago, deploying tens of thousands of sales representatives, or “detailers,” to promote their products directly to doctors in their offices. For years, my colleagues and I have been using a similar approach through the nonprofit Independent Drug Information Service, now financed by the governments of Pennsylvania and the District of Columbia. Our “academic detailing” program assesses the medical literature in a non-product-driven way and then deploys a “docent service” of pharmacists and nurses to visit doctors in their own offices and guide them through the resulting therapy recommendations.”
Yeah, somehow I don’t think this crew will be up to the task.
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A NYT blog post on the impact of the rise in interest rates on the economy commented:
“Many real estate analysts say that homes are so affordable that even a considerable rise in interest rates would not do much to undermine the housing recovery, especially if the economy is growing at a healthy rate.”
Actually homes are not especially affordable. Inflation adjusted house prices nationwide are more than 15 percent higher than their long-term trend. They are still down considerably from their bubble peaks, but that hardly means that prices are low. Of course even with the recent rise in mortgage interest rates, mortgage rates are still at extraordinarily low levels.
A NYT blog post on the impact of the rise in interest rates on the economy commented:
“Many real estate analysts say that homes are so affordable that even a considerable rise in interest rates would not do much to undermine the housing recovery, especially if the economy is growing at a healthy rate.”
Actually homes are not especially affordable. Inflation adjusted house prices nationwide are more than 15 percent higher than their long-term trend. They are still down considerably from their bubble peaks, but that hardly means that prices are low. Of course even with the recent rise in mortgage interest rates, mortgage rates are still at extraordinarily low levels.
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In an article on the recent pick up of growth in Japan the Post told readers that Japan’s government plans a sales tax increase next year:
“The tax increases are needed to cope with a growing public debt that already is more than twice the size of Japan’s economy.”
In spite of having a very high debt-to-GDP ratio, Japan’s interest payments are less than 1.0 percent of GDP. This is due to the fact that interest rates are extraordinarily low. If there is some importance to having a lower debt to GDP ratio, then Japan can simply repurchase long-term bonds at sharp discounts when interest rates rise, as is generally projected. That would be a costless way to reduce the debt to GDP ratio.
In an article on the recent pick up of growth in Japan the Post told readers that Japan’s government plans a sales tax increase next year:
“The tax increases are needed to cope with a growing public debt that already is more than twice the size of Japan’s economy.”
In spite of having a very high debt-to-GDP ratio, Japan’s interest payments are less than 1.0 percent of GDP. This is due to the fact that interest rates are extraordinarily low. If there is some importance to having a lower debt to GDP ratio, then Japan can simply repurchase long-term bonds at sharp discounts when interest rates rise, as is generally projected. That would be a costless way to reduce the debt to GDP ratio.
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Not all readers would necessarily have this fact in their head when they see the Post telling them:
“China remains the largest contributor of carbon dioxide into the atmosphere, with about a quarter of global emissions.”
On a per person basis, the United States swamps China in terms of emissions. If there is any country that people concerned about global warming should be angry at, the United States would top the list by a long shot.
Not all readers would necessarily have this fact in their head when they see the Post telling them:
“China remains the largest contributor of carbon dioxide into the atmosphere, with about a quarter of global emissions.”
On a per person basis, the United States swamps China in terms of emissions. If there is any country that people concerned about global warming should be angry at, the United States would top the list by a long shot.
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What other possible interpretation could anyone give to S&P’s downgrade of U.S. government debt two years ago? The question that S&P is supposed to answer with its rating is whether bonds will be paid off as scheduled. The United States issues debt denominated in dollars, which it has the ability to print in whatever number it desires. Therefore the downgrade can only have been taken to mean an increased probability that the country would forget how to print dollars.
It would be good to point this fact out in news articles that report on the rating agencies’ plans to reverse this downgrade. Otherwise readers might be led to believe that S&P assessments are actually based on the risk that the United States will default on its debt.
What other possible interpretation could anyone give to S&P’s downgrade of U.S. government debt two years ago? The question that S&P is supposed to answer with its rating is whether bonds will be paid off as scheduled. The United States issues debt denominated in dollars, which it has the ability to print in whatever number it desires. Therefore the downgrade can only have been taken to mean an increased probability that the country would forget how to print dollars.
It would be good to point this fact out in news articles that report on the rating agencies’ plans to reverse this downgrade. Otherwise readers might be led to believe that S&P assessments are actually based on the risk that the United States will default on its debt.
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Bruce Bartlett has a nice column showing both the explosion in the size of the financial sector and the evidence that it has become both a major drag on economic growth and generator of inequality over the last three decades. That would seem to be a pretty good argument for a financial transactions tax like the one they have had on stock trades in the UK for the last three centuries. Of course this sort of tax on the sector faces an uphill battle in Washington because, in addition to being a major drag on economic growth and generator of inequality, the financial sector is also a major source of campaign contributions.
Bruce Bartlett has a nice column showing both the explosion in the size of the financial sector and the evidence that it has become both a major drag on economic growth and generator of inequality over the last three decades. That would seem to be a pretty good argument for a financial transactions tax like the one they have had on stock trades in the UK for the last three centuries. Of course this sort of tax on the sector faces an uphill battle in Washington because, in addition to being a major drag on economic growth and generator of inequality, the financial sector is also a major source of campaign contributions.
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Jaron Lanier must have won an award for most ridiculous idea on the digital economy with the grand prize being a lengthy column in the NYT. The great gift of the Internet is that it can costlessly deliver massive amounts of information and creative material almost anywhere in the world.
So what is Jaron Lanier’s brilliant idea? He wants to set up a tollgate charging for every bit of information. What a great idea — maybe if we give Mr. Laner more time to develop ideas he will come up with a new tax on the printing press.
There are simple ways to fund creative work that don’t require an information tax on every item transferred (here’s mine), but it requires that people think slightly creatively. I know that it is nearly impossible among an intellectual class that thought Reinhart-Rogoff’s work on debt and growth was serious economics, but that is the world in which we live.
Note: typo fixed.
Jaron Lanier must have won an award for most ridiculous idea on the digital economy with the grand prize being a lengthy column in the NYT. The great gift of the Internet is that it can costlessly deliver massive amounts of information and creative material almost anywhere in the world.
So what is Jaron Lanier’s brilliant idea? He wants to set up a tollgate charging for every bit of information. What a great idea — maybe if we give Mr. Laner more time to develop ideas he will come up with a new tax on the printing press.
There are simple ways to fund creative work that don’t require an information tax on every item transferred (here’s mine), but it requires that people think slightly creatively. I know that it is nearly impossible among an intellectual class that thought Reinhart-Rogoff’s work on debt and growth was serious economics, but that is the world in which we live.
Note: typo fixed.
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The “grand bargain” to cut Social Security and Medicare is looking increasingly dead these days. Projections for future deficits have fallen sharply because of the sequester, higher than expected tax revenues (although with slower than expected growth), and much slower projected health care cost growth.
This situation has made the Post very unhappy. It ran a front page piece with the headline, “urgency on the debt fades with big issues unsolved.” Of course this is not true.
The big issues have been solved, we will maintain Social Security and Medicare pretty much in their current form. The Post doesn’t like this fact, but this is a position that is supported by the vast majority of people across the political spectrum.
We haven’t decided how we will make up projected shortfalls in these programs in the decades ahead, but so what? There is no obvious reason why we have to schedule tax increases decades ahead, we have often in the past raised taxes with little or no notice. (In 1993 Congress actually raised taxes retroactively, since the income tax increase applied to calendar year 1993, but wasn’t passed into law until the summer.)
To express its unhappiness with Congress’ unwillingness to adopt its agenda, the Post turned to both the Concord Coalition, which was founded by Peter Peterson and the Committee for a Responsible Federal Budget, which is funded by Peter Peterson. There was no one cited in the article who has been a vocal proponent of addressing the jobs crisis, who could have pointed out that the deficit hawks have been shown 180 degrees wrong in their predictions about interest rates and inflation.
Remarkably, while the piece complained about Congress’ inaction on cutting Medicare costs, it neglected to mention that the projected shortfall in the program has been reduced by almost 70 percent since 2008. One of the factors behind this drop is the cost control measures in the Affordable Care Act.
The “grand bargain” to cut Social Security and Medicare is looking increasingly dead these days. Projections for future deficits have fallen sharply because of the sequester, higher than expected tax revenues (although with slower than expected growth), and much slower projected health care cost growth.
This situation has made the Post very unhappy. It ran a front page piece with the headline, “urgency on the debt fades with big issues unsolved.” Of course this is not true.
The big issues have been solved, we will maintain Social Security and Medicare pretty much in their current form. The Post doesn’t like this fact, but this is a position that is supported by the vast majority of people across the political spectrum.
We haven’t decided how we will make up projected shortfalls in these programs in the decades ahead, but so what? There is no obvious reason why we have to schedule tax increases decades ahead, we have often in the past raised taxes with little or no notice. (In 1993 Congress actually raised taxes retroactively, since the income tax increase applied to calendar year 1993, but wasn’t passed into law until the summer.)
To express its unhappiness with Congress’ unwillingness to adopt its agenda, the Post turned to both the Concord Coalition, which was founded by Peter Peterson and the Committee for a Responsible Federal Budget, which is funded by Peter Peterson. There was no one cited in the article who has been a vocal proponent of addressing the jobs crisis, who could have pointed out that the deficit hawks have been shown 180 degrees wrong in their predictions about interest rates and inflation.
Remarkably, while the piece complained about Congress’ inaction on cutting Medicare costs, it neglected to mention that the projected shortfall in the program has been reduced by almost 70 percent since 2008. One of the factors behind this drop is the cost control measures in the Affordable Care Act.
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