Dean Baker
Truthout, September 28, 2015

It must be nice to have a trade group that is so powerful that it can get newspapers like the Washington Post to parrot your line even when it is not true. The folks at Pharma will presumably be toasting a Wonkblog piece that told readers:

"The drug industry trade group keeps reminding the public that drug spending has been holding steady for years, at about 10 percent of the total health-care pie. They point to that as evidence that drugs are a special area of the health care industry, unlike almost any other sector, where competition occurs and prices actually go down over time."

That's great, we're supposed to debate why drug prices have been holding steady as a share of total health care spending. That will be a classic Washington Post debate, since drug prices have actually been rising considerably faster than overall health care spending. As noted last week:

"According to the National Income and Product Accounts (Table 2.4.5U) prescription drug spending increased at average annual rate of 6.3 percent over the years from 2004 to 2014, rising from $203.6 billion in 2004 to $374.7 billion in 2014 (Line 122). By contrast, spending on health care services rose at annual rate of 4.7 percent over this period, going from $1240.1 billion in 2004 to $1954.0 billion in 2014 (Line 168)."

Furthermore, over the last five years the gap in growth rates is even larger, with prescription drug spending rising at a 6.2 percent annual rate and spending on health care services rising at just a 3.7 percent annual rate.

So we can follow the Washington Post and debate why 3.7 percent is the same as 6.2 percent or we could talk about developing a more efficient and less corrupt method of financing drug research. We don't need to hand out government granted patent monopolies to finance research, we can pay for the research upfront.

Dean Baker
Al Jazeera America, September 28, 2015

Three batches of Hillary Clinton’s emails have now been released and, though many emails are heavily redacted, we’re starting to get a clearer picture of how Clinton handled major international developments during her tenure at the State Department. One o

Dean Baker
The New York Times, September 23, 2015

Mark WeisbrotAl Jazeera America, September 22, 2015

Dean Baker
Truthout, September 21, 2015

Dean Baker
The Guardian, September 21, 2015

The Washington Post ran an editorial yesterday worrying about the end of globalization. It told readers:

"Freshly released data from the World Trade Organization and other economic forecasts show that the world is on course for its third consecutive year in which growth in global trade will be lower than overall economic growth, which is itself anemic, according to the Wall Street Journal. The last such three-year streak ended in 1985."

There are several aspects to this that are striking. First, the comparison with the three years ending in 1985 is interesting since the U.S. economy grew very rapidly from 1982 to 1985. The economy had been in the middle of a steep recession in 1982. It had a sharp recovery over the next three years with growth averaging 5.4 percent. If the U.S. economy suffered from this period of weaker trade, it's difficult to see how.

The second point is a simple question of logic and arithmetic. When trade barriers are removed we expect to see rapid growth in trade. Once most barriers have been removed, the rate of growth is likely to slow, since trade is already very large. It is unlikely that we will see rapid growth in trade between the 15 original members of the European Union, since most of the barriers to trade were removed more than twenty years ago.

The third point concerns relative prices. In the United States, trade has fallen very slightly as a share of GDP from 2011 to 2014 (from 17.7 percent to 17.67 percent) even though real exports and imports both grew far more rapidly than real GDP over this period. Exports grew by 9.9 percent, while imports grew 7.3 percent. By comparison, GDP grew 6.3 percent.

Joe Nocera seems to be obsessed with promoting the Export-Import Bank. Today he put out at least his fourth column on the topic, although this time he did refrain from calling his opponents "idiotic."

His story is that Republican opponents of the bank are "job-killers." (I'm not sure if this also applies to us non-Republican opponents.) Let's think this one through for a moment.

The basic story is that we have huge companies like General Electric and Caterpillar that get the vast majority of the subsidized loans from the Ex-Im Bank. Does that sound like handouts to huge companies? Nope, Nocera tells us just because these huge companies get all the money doesn't mean that they are the beneficiaries:

"'At a time when we want to compete around the world, it is hard to believe what is happening in the U.S. Congress,' said Jeff Immelt, the chief executive of General Electric.

"'The ultimate irony is that we are on the verge of an American manufacturing renaissance,' bemoaned Jim McNerney, the chairman of Boeing. 'Yet this action is causing companies to start looking outside the U.S. instead.'

"'People complain that the bank only helps big companies,' said Doug Oberhelman, the chairman and C.E.O. of Caterpillar. 'A lot of our suppliers are small. They don’t export, but we do. And if we aren’t exporting, they aren’t selling to us.” He added, “I find it staggering that we would put highly paid export-oriented jobs at risk.'

"What Oberhelman finds 'staggering,' Immelt finds 'hard to believe' and McNerney finds ironic is the refusal of Republican extremists — led by the House Financial Services Committee’s chairman, Jeb Hensarling — to allow a vote on the reauthorization of the Export-Import Bank of the United States, a vote that would pass in a landslide."

Okay, this argument has the form of the government should give me money because it is not really about helping me, I will spend the money on a car, on clothes, and on restaurant meals. If the government doesn't give me money, then I won't spend this money and all the people who would have been employed by this spending will be out of jobs. So it's really about helping them, not me.