Can it be a requirement that major budget pieces include at least two sentences on the budget’s impact on growth and jobs. This may not be important to balance budget worshippers, but this does matter to the people who have to work for a living.
Can it be a requirement that major budget pieces include at least two sentences on the budget’s impact on growth and jobs. This may not be important to balance budget worshippers, but this does matter to the people who have to work for a living.
Read More Leer más Join the discussion Participa en la discusión
Read More Leer más Join the discussion Participa en la discusión
The New York Times ran a front page piece warning readers that the cost of treating dementia is “soaring.” The piece tells readers of the findings of a new study by the Rand Corporation that shows the cost of dementia doubling by 2040 from its 2010 level.
Are you scared? Are you shaking in your boots? Thinking about pulling the plug on these costly old-timers?
Well our friend, Mr. Arithmetic, reminds us that the Congressional Budget Office projects that the size of the economy is projected to roughly double over this period. This means that the Rand study’s finding implies that dementia will impose pretty much the same burden on the economy in 2040 as it does today.
This story follows a common practice among the Washington elite. They continually highlight and exaggerate costs associated with an aging population. Of course as a practical matter there is little that we can do about these costs, although we can redistribute the burden. The implicit and explicit intent behind much of this discussion is that the elderly and their children should bear more of these costs, as opposed to the government.
Keeping the costs of an aging population front and center in public debate obstructs discussion of the massive upward redistribution of income over the last three decades. This upward redistribution has shifted roughly ten percentage points of GDP ($1.6 trillion annually) to the richest one percent of the population at the expense of the rest of the population. The impact of this upward redistribution on the living standards of the bulk of the population dwarfs the impact of any taxes that might be associated with caring for an aging population through Social Security, Medicare, and other government programs.
If issues were treated in proportion to their importance to the public we would be seeing daily pieces on proposals for breaking up the big banks, taxing financial speculation, ending patent monopolies for prescription drugs, free trade in health care services and other measures that would reverse the upward redistribution of income over the last three decades. However, importance to the public is apparently not a major criterion for determining news coverage. Hence we get misleading front page pieces in the NYT on the cost of dementia.
The New York Times ran a front page piece warning readers that the cost of treating dementia is “soaring.” The piece tells readers of the findings of a new study by the Rand Corporation that shows the cost of dementia doubling by 2040 from its 2010 level.
Are you scared? Are you shaking in your boots? Thinking about pulling the plug on these costly old-timers?
Well our friend, Mr. Arithmetic, reminds us that the Congressional Budget Office projects that the size of the economy is projected to roughly double over this period. This means that the Rand study’s finding implies that dementia will impose pretty much the same burden on the economy in 2040 as it does today.
This story follows a common practice among the Washington elite. They continually highlight and exaggerate costs associated with an aging population. Of course as a practical matter there is little that we can do about these costs, although we can redistribute the burden. The implicit and explicit intent behind much of this discussion is that the elderly and their children should bear more of these costs, as opposed to the government.
Keeping the costs of an aging population front and center in public debate obstructs discussion of the massive upward redistribution of income over the last three decades. This upward redistribution has shifted roughly ten percentage points of GDP ($1.6 trillion annually) to the richest one percent of the population at the expense of the rest of the population. The impact of this upward redistribution on the living standards of the bulk of the population dwarfs the impact of any taxes that might be associated with caring for an aging population through Social Security, Medicare, and other government programs.
If issues were treated in proportion to their importance to the public we would be seeing daily pieces on proposals for breaking up the big banks, taxing financial speculation, ending patent monopolies for prescription drugs, free trade in health care services and other measures that would reverse the upward redistribution of income over the last three decades. However, importance to the public is apparently not a major criterion for determining news coverage. Hence we get misleading front page pieces in the NYT on the cost of dementia.
Read More Leer más Join the discussion Participa en la discusión
The New York Times ran a piece with a headline complaining “public misconception of government benefits makes trimming them harder.” The piece goes on to explain that the cost of the Medicare benefits received by a typical beneficiary vastly exceeds the taxes they will have paid into the system using standard discount rates. The piece tells readers that most readers do not recognize this fact, so they get upset at the idea of cutting benefits.
The desire expressed in the piece to cut Medicare benefits indicates a misconception by the NYT and the experts cited on the nature of Medicare costs. The United States pays more than twice as much per person for its health care as the average for other wealthy countries. If it paid the same amount as Germany, Canada, or any other wealthy country with comparable health care outcomes, most or all of the gap between taxes and benefits would disappear.
This enormous gap in expenditures is not associated with better care, it is the result of the fact that doctors, hospitals, medical equipment suppliers and other providers get paid far more in the United States than in other countries. In effect, the NYT and the experts cited in the piece want to see Medicare beneficiaries accept lower quality care because we pay too much to doctors and other providers.
It is likely that most people would find their policy prescription somewhat perverse. It is hard to see why Medicare beneficiaries should feel guilty because the specialists who treat them can make $500,000-$600,000 a year. The more obvious response would be to force doctors and other providers to accept compensation that is more in line with world standards. (We could also give beneficiaries the option to buy into lower cost systems in other countries and split the savings.)
Of course the route of cutting payments to providers would mean confronting powerful interest groups. Many policy experts are reluctant to pursue this path.
The New York Times ran a piece with a headline complaining “public misconception of government benefits makes trimming them harder.” The piece goes on to explain that the cost of the Medicare benefits received by a typical beneficiary vastly exceeds the taxes they will have paid into the system using standard discount rates. The piece tells readers that most readers do not recognize this fact, so they get upset at the idea of cutting benefits.
The desire expressed in the piece to cut Medicare benefits indicates a misconception by the NYT and the experts cited on the nature of Medicare costs. The United States pays more than twice as much per person for its health care as the average for other wealthy countries. If it paid the same amount as Germany, Canada, or any other wealthy country with comparable health care outcomes, most or all of the gap between taxes and benefits would disappear.
This enormous gap in expenditures is not associated with better care, it is the result of the fact that doctors, hospitals, medical equipment suppliers and other providers get paid far more in the United States than in other countries. In effect, the NYT and the experts cited in the piece want to see Medicare beneficiaries accept lower quality care because we pay too much to doctors and other providers.
It is likely that most people would find their policy prescription somewhat perverse. It is hard to see why Medicare beneficiaries should feel guilty because the specialists who treat them can make $500,000-$600,000 a year. The more obvious response would be to force doctors and other providers to accept compensation that is more in line with world standards. (We could also give beneficiaries the option to buy into lower cost systems in other countries and split the savings.)
Of course the route of cutting payments to providers would mean confronting powerful interest groups. Many policy experts are reluctant to pursue this path.
Read More Leer más Join the discussion Participa en la discusión
Read More Leer más Join the discussion Participa en la discusión
It’s always fun when major news outlets look at the same economic situation and come up with directly opposite conclusions. Hence we had the Washington Post telling readers,
“European industry flocks to U.S. to take advantage of cheaper gas,”
on the same day that the NYT had a piece headlined,
“Rumors of a cheap-energy jobs boom remain just that.”
When it comes to data, the NYT clearly wins the case. The Post piece has people whining about high gas prices in Europe, but little evidence of jobs actually coming to the United States. The NYT piece makes the obvious point that in most industries gas prices are a small share of total costs. Even in the most energy intensive industries labor is almost certain to be a higher share of total costs than natural gas.
Furthermore, the drop in gas prices in the U.S. is likely to be reflected elsewhere. This means that third countries that have cheaper labor, like Mexico, are also likely to have comparable natural gas prices.
In fact, the large differences in prices between the United States and Europe that are the central feature of the Post article are not likely to persist since the United States is likely to export surplus gas to Europe. The Post notes the likely impact of exports on U.S. natural gas prices, but it doesn’t acknowledge their likely impact on prices in Europe. While the Post may have missed this tendency towards equalizing prices through trade, manufacturers that are considering moving their operations almost certainly are aware of this likely outcome.
It’s always fun when major news outlets look at the same economic situation and come up with directly opposite conclusions. Hence we had the Washington Post telling readers,
“European industry flocks to U.S. to take advantage of cheaper gas,”
on the same day that the NYT had a piece headlined,
“Rumors of a cheap-energy jobs boom remain just that.”
When it comes to data, the NYT clearly wins the case. The Post piece has people whining about high gas prices in Europe, but little evidence of jobs actually coming to the United States. The NYT piece makes the obvious point that in most industries gas prices are a small share of total costs. Even in the most energy intensive industries labor is almost certain to be a higher share of total costs than natural gas.
Furthermore, the drop in gas prices in the U.S. is likely to be reflected elsewhere. This means that third countries that have cheaper labor, like Mexico, are also likely to have comparable natural gas prices.
In fact, the large differences in prices between the United States and Europe that are the central feature of the Post article are not likely to persist since the United States is likely to export surplus gas to Europe. The Post notes the likely impact of exports on U.S. natural gas prices, but it doesn’t acknowledge their likely impact on prices in Europe. While the Post may have missed this tendency towards equalizing prices through trade, manufacturers that are considering moving their operations almost certainly are aware of this likely outcome.
Read More Leer más Join the discussion Participa en la discusión
The Washington Post ran a piece titled, “the April Fool’s Economy,” that began by telling readers:
“The economic recovery has faked us out before.”
It continued:
“In 2012 and 2011, seemingly strong momentum in the first half of the year gave way to summer slumps. Will the third try be the charm? Or is this just another prank — one that’s getting old fast.”
Huh?
In 2011 the economy grew at a 2.5 percent annual rate in the second quarter and just a 0.1 percent rate in the first quarter for a first half average of 1.3 percent. This is way below the trend growth rate, which is between 2.2 percent and 2.5 percent. Job growth was a bit better, averaging 196,000 a month, but that’s only slightly better than the average of 180,000 jobs a month for all of 2011 and 2012. It’s not clear what people who saw strong momentum in the first half of 2011 could have been looking at.
The beginning of 2012 was somewhat stronger, with job growth averaging 240,000 a month from October to March. GDP growth also looked better over this period, growing 4.1 percent in the 4th quarter and 2.0 percent in the first quarter. But serious analysts noted at the time that the job growth data was inflated by better than usual winter weather, which would lead to slower growth in the spring.
Maybe if the Post relied on analysts with a better understanding of the economy it wouldn’t be so susceptible to April Fool’s jokes.
The Washington Post ran a piece titled, “the April Fool’s Economy,” that began by telling readers:
“The economic recovery has faked us out before.”
It continued:
“In 2012 and 2011, seemingly strong momentum in the first half of the year gave way to summer slumps. Will the third try be the charm? Or is this just another prank — one that’s getting old fast.”
Huh?
In 2011 the economy grew at a 2.5 percent annual rate in the second quarter and just a 0.1 percent rate in the first quarter for a first half average of 1.3 percent. This is way below the trend growth rate, which is between 2.2 percent and 2.5 percent. Job growth was a bit better, averaging 196,000 a month, but that’s only slightly better than the average of 180,000 jobs a month for all of 2011 and 2012. It’s not clear what people who saw strong momentum in the first half of 2011 could have been looking at.
The beginning of 2012 was somewhat stronger, with job growth averaging 240,000 a month from October to March. GDP growth also looked better over this period, growing 4.1 percent in the 4th quarter and 2.0 percent in the first quarter. But serious analysts noted at the time that the job growth data was inflated by better than usual winter weather, which would lead to slower growth in the spring.
Maybe if the Post relied on analysts with a better understanding of the economy it wouldn’t be so susceptible to April Fool’s jokes.
Read More Leer más Join the discussion Participa en la discusión
The austerity gang who are trying to wreck Europe’s economy must be furious at the NYT. They managed to get the unemployment rate up to 12.0 percent, a truly historic achievement. Europe had not seen unemployment reach this level since the Great Depression, more than 70 years ago.
However in its article reporting on the new data, NYT told readers:
“The European labor market has now declined for 22 straight months, making this the worst downturn since the early 1990s, Jennifer McKeown, an economist in London with Capital Economics, wrote in a note.”
Come on, unemployment in the euro zone countries peaked at 10.9 percent in 1994. That downturn can’t come close to the damage done by the current austerity crew. I trust that they will demand a correction from the NYT.
The austerity gang who are trying to wreck Europe’s economy must be furious at the NYT. They managed to get the unemployment rate up to 12.0 percent, a truly historic achievement. Europe had not seen unemployment reach this level since the Great Depression, more than 70 years ago.
However in its article reporting on the new data, NYT told readers:
“The European labor market has now declined for 22 straight months, making this the worst downturn since the early 1990s, Jennifer McKeown, an economist in London with Capital Economics, wrote in a note.”
Come on, unemployment in the euro zone countries peaked at 10.9 percent in 1994. That downturn can’t come close to the damage done by the current austerity crew. I trust that they will demand a correction from the NYT.
Read More Leer más Join the discussion Participa en la discusión
The Post told readers that drug companies would try to punish India for a Supreme Court ruling that denied Novartis, a Swiss drug company, a patent for its cancer drug, Glivec. The court determined that the drug involved only a minor modification of an earlier invention and therefore was not entitled to a patent monopoly. As a result, generic producers in India are able to produce and sell the drug for less than one-tenth its patent protected price.
In discussing the implications of the decision, the piece told readers:
“Many international drug companies have said that the Novartis trial was crucial to addressing the rapidly growing perception around the world that India’s patent protection system for drugs is weak. Such perceptions, many patent advocates say, will adversely affect foreign investment in India, especially by global drug companies that are eyeing the huge market in this nation of 1.2 billion people.”
There is no economic reason that this court decision would affect the drug industry’s investment at all. Drug companies will get the exact same patent protection for their drugs in India and every other country in the world regardless of where they conduct their research. If India was the most profitable place for a drug company to conduct its research before this patent decision then it is still the most profitable place for a drug company to conduct its research.
The only basis for shifting investment would be to punish India, presumably with the hope that if enough investment shifts India may change its patent laws. This means that drug companies and their shareholders (e.g. university and foundation endowments and public sector pension funds) are foregoing profits today in the hope that they can inflict enough punishment on India to change its patent laws. That is a striking claim and the Washington Post did its readers a service by calling it to public attention, even if the Post may not have understood the implications of what it printed.
The Post told readers that drug companies would try to punish India for a Supreme Court ruling that denied Novartis, a Swiss drug company, a patent for its cancer drug, Glivec. The court determined that the drug involved only a minor modification of an earlier invention and therefore was not entitled to a patent monopoly. As a result, generic producers in India are able to produce and sell the drug for less than one-tenth its patent protected price.
In discussing the implications of the decision, the piece told readers:
“Many international drug companies have said that the Novartis trial was crucial to addressing the rapidly growing perception around the world that India’s patent protection system for drugs is weak. Such perceptions, many patent advocates say, will adversely affect foreign investment in India, especially by global drug companies that are eyeing the huge market in this nation of 1.2 billion people.”
There is no economic reason that this court decision would affect the drug industry’s investment at all. Drug companies will get the exact same patent protection for their drugs in India and every other country in the world regardless of where they conduct their research. If India was the most profitable place for a drug company to conduct its research before this patent decision then it is still the most profitable place for a drug company to conduct its research.
The only basis for shifting investment would be to punish India, presumably with the hope that if enough investment shifts India may change its patent laws. This means that drug companies and their shareholders (e.g. university and foundation endowments and public sector pension funds) are foregoing profits today in the hope that they can inflict enough punishment on India to change its patent laws. That is a striking claim and the Washington Post did its readers a service by calling it to public attention, even if the Post may not have understood the implications of what it printed.
Read More Leer más Join the discussion Participa en la discusión
Anyone who thought David Stockman’s screed in the Sunday NYT against fiat money and the New Deal was an isolated incident has to contend with Roger Farmer’s call for bringing back the housing bubble in the Financial Times. It’s obviously nutty season at the major news outlets.
So boys and girls, get out those columns calling for a universal currency, the switch to seashell standard, and 28 cent a gallon gasoline. The major media outlets are waiting.
Anyone who thought David Stockman’s screed in the Sunday NYT against fiat money and the New Deal was an isolated incident has to contend with Roger Farmer’s call for bringing back the housing bubble in the Financial Times. It’s obviously nutty season at the major news outlets.
So boys and girls, get out those columns calling for a universal currency, the switch to seashell standard, and 28 cent a gallon gasoline. The major media outlets are waiting.
Read More Leer más Join the discussion Participa en la discusión
