Archive

  • Horror Show at USA Today

    In an article that discusses a serious issue, the laibility of state governments for retiree health benefits, USA Today also tosses in a bit of holiday fearmongering. It tells people that the liability of all levels of government for retirement pension and health benefits is at least $57.8 trillion, or $510,000 per household. So as to avoid ruining anyone's holiday spirit, income by the same measure is projected to be around $1,000 trillion or more than $10 million per household. This context should have been included in the story, but I guess they couldn't find the room. One other important point, about two-thirds of this projected liability would disappear if health care costs only increase due to aging and otherwise rise at the same pace as per capita income. This is yet another disaster that is predicated on exploding health care costs. If we ever fix our health care system, then most of the basis for this scare story disappears. (Thanks to Peter Hart from Fairness and Accuracy in...
  • The NYT Nails the Drug Industry Yet Again

    According to the NYT , drug giant Eli Lilly knew that Zyprexa, a drug used to treat schizophrenia, had a number of serious side effects, but decided not to trouble doctors with this information. The NYT has done a great job over the last decade uncovering cases where the pharmaceutical and medical supply industries have engaged in unethical behavior to promote use of their products. This usually has meant concealing evidence of potential harm, but they also engage in a wide variety of unethical sales practices that often take the form of kickbacks to doctors for prescribing their products. What has been largely missing from the NYT coverage is any economic analysis of this issue. As anyone who has ever sat through an intro econ class should recognize, these sorts of abuses are exactly what we would expect when the government gives companies patent monopolies that allow them to charge prices that are far above the cost of production. Most readers will see this last sentence and comment...
  • Unnecessary Instances of Breast Cancer, Yet Another Dividend of Patent Financed Drug Research

    Most people probably saw the news about the sharp fall in the incidence of breast cancer. This was attributed to a drop in the use of hormone replacement treatment for menopause. And why were so many women getting hormone replacement treatment? Well, the pharmaceutical industry pushed it as a way of combatting aging. That is the incentive structure created by the system of patent financed research. Government patent monopolies give drug companies huge mark-ups on each prescription they sell, which means that they have enormous incentive to try to get their drugs used as widely as possible. The fact that they may not be entirely safe is secondary. CEOs don't get $100 million paychecks for saving lives, they get this money by boosting the bottom line (and putting their friends on the compensation committees). --Dean Baker
  • If There Is Inflation, the Problem Isn't Wages

    Real wages have risen less than 2 percent over the last five years. Because of the sharp drop in gas prices over the last four months, real wages have grown rapidly over this period. Of course, once oil prices stop falling (as they already have) real wages will be growing in the range of 1.0-1.5 percent annually, well below the 2.7 percent rate of productivity growth of the last five years. Since real wage growth is clearly trailing productivity growth, why are reporters so obsessed with the idea that wage growth is causing inflation? If there is cause for concern about inflation in the current economy, it is due to the fact that productivity growth may have slowed back to its pre-1995 rate or that the falling dollar is leading to rising import prices. These are topics that deserve more attention. The media should be discussing these issues instead of obsessing that workers may finally be getting a share of productivity growth. --Dean Baker
  • Yet Another Protectionist Rant at the NYT

    Suppose Wal-Mart had to certify that it could not find any adequate shoes/pants/toys/toasters etc. made in the United States before it was allowed to purchase these items from a foreign supplier. Suppose further that the company and its managers could be fined and possibly jailed if they lied. Odds are that Wal-Mart would not buy much from abroad. This is the law now for firms that want to hire bright and well-qualified professionals from the developing world, many of whom would be happy to work for less than half the wage of their U.S. counterparts, just as is the case with manufacturing workers. In other words, as BTP regulars know, professionals in the U.S. are protected from competition, less educated workers compete on the world market. Why is this so hard for the people who write in major media outlets to understand? Someone should ask Thomas Edsall . --Dean Baker
  • SCHOOMAKER: I AM NOT A SHILL!

    SCHOOMAKER: I AM NOT A SHILL! I caused a bit of a kerfuffle on my blog today when I suspected General Peter Schoomaker , the Army's chief of staff, of shifting his views on whether or not the Army is breaking under the strain of current deployment to suit the tenure -- and now departure -- of Donald Rumsfeld. After I wrote the post, I spoke with Lieutenant Colonel Gary Kolb, Schoomaker's spokesman, who "absolutely" denied that pleasing Rumsfeld played any role in his shifting stance on the health of the Army. "I'll personally vouch that General Schoomaker will tell you what's on his mind, and he'll be blunt and candid," Kolb told me. Kolb emphasized that what Schoomaker is worried about is the Defense Department's policy regarding how long after a deployment a National Guard or Army Reserve unit can be certified as fit to redeploy, without what's called "cross-leveling" -- that is, taking soldiers from other units to get the full unit back up to deployment readiness. And in Schoomaker...
  • CATASTROPHE KEEPS US FROM THE DEMOCRATIC NOMINATION.

    CATASTROPHE KEEPS US FROM THE DEMOCRATIC NOMINATION. As someone who has long been a proponent of " Hillary Myth #2 ," I was very interested in the data adduced by Garance . I do think that Matt Yglesias gets at a couple of possible limitations. First, I definitely agree that Clinton won't be perceived by Democratic primary voters as substantially more liberal than her reputation, but whether this will be true of the general electorate remains open. And second, I also agree that Clinton probably won't be seen as more liberal than an African-American Senator from Illinois, but it does seem to me that there would be a major gap in perceived versus actual progressivism when comparing Clinton to, say, John Edwards . Still, given the likely dynamics of the 2008 election, I concede that Clinton being perceived as an arch-liberal may well not be a significant problem. This theory, however, comes with a very large downside. Given that the Iraq war will still be raging and almost certainly...
  • The Death of Inflation Is Greatly Exaggerated

    I have never been one to lose sleep over modest rates of inflation (2 percent to 4 percent), but I think that some of the reporting may have overplayed the low inflation in the November CPI. Both the overall and core CPI were flat, which brings the annual rate of inflation to -3.9 percent over the last three months, and just 1.6 percent in the core. While the negative rate in the overall CPI is obviously due to a one-time drop in energy prices, there were unusual factors pushing the core rate lower as well. For example, airfares (a core component that is largely driven by energy prices) fell by 4.8 percent in November. They have fallen at a 27.1 percent annual rate since July. Car prices, which account for 10.2 percent of the core index, fell 0.8 percent in November and have fallen at a 5.7 percent annual rate over the last three months. This is attributable to heavy discounting by the big three trying to pare their inventories of unsold cars. This pace of decline will not continue...
  • JUST POSTED ON TAP ONLINE: EXCESS BAGGAGE

    JUST POSTED ON TAP ONLINE: EXCESS BAGGAGE . Greg Anrig reports on how the incoming Democratic majority will face an uphill battle to undo the damage done during conservatives' years in power. It is crucial to understand that it�s not merely Republicans� incompetence or political pandering that has left the government in shambles. Rather, many of their acts of sabotage were premeditated, often hatched in right-wing think tanks. The central if unstated mission of those idea factories, and their leading funders, is to weaken the public sector in order to minimize its capacity to tax and regulate the private sector. But because the general public doesn't actually share conservatism's deep hostility toward government, their most effective tactics rely on subterfuge and operate in ways that can't be easily detected. Now, Anrig writes, it's up to the Dems to shine a light on these practices, and connect the federal government's failures since 2001 with the conservative ideology out of which...
  • THE BUSH-MCCAIN WAR...

    THE BUSH-MCCAIN WAR PLAN. The New York Sun 's Eli Lake reports some interesting news on John McCain 's problematic Iraq war proposal : Unless the president's new strategy proves a clear success by the beginning of 2008, Mr. McCain could find his judgment on matters of national security being called into question. The chairman of the American Conservative Union, David Keane, said yesterday that Mr. McCain risks having opponents in the 2008 campaign refer to the new war strategy as the "McCain-Bush plan." And the editor and publisher of the Rothenberg Political Report, Stuart Rothenberg, called Mr. McCain's war position "risky." "He is not purely the guy offering the criticism now. Democrats and his fellow Republicans could criticize him for owning the policy," Mr. Rothenberg said. Mr. Bush has kept mum on any details of the new Iraq strategy, which he will unveil next month. But administration officials say he is planning to spurn the advice of his top commanders and call for up to 30,...

Pages