Economic Policy

Financial bubbles breed accounting fraud. Those of us who warned of the stock bubble in the late nineties were not surprised by the Enrons and WorldComs that surfaced when the bubble deflated. Bubbles make it possible to paper over all sorts of questionable accounting or outright fraud. When the bubble deflates, these practices can no […]

In econ 101, we teach that when the government intervenes in a market to keep prices above marginal costs, it will encourage all sorts of undesirable and harmful rent-seeking behavior. This is one reason that all right-thinking economists are strong opponents of tariffs and quotas that can raise the price of things like shoes, shorts, […]

I believe that the Washington Post has a copyright on combining the words “Medicare” and “Social Security” in a single sentence. Anyone who writes on these issues on their editorial pages always seems to do it. Again folks, the numbers are real clear. Medicare is a big problem because U.S. health care costs are projected […]

There is plenty of room to debate what the Federal Reserve Board’s monetary policy should be, but the necessary prerequisite for a serious debate is the knowledge of how monetary policy works. Readers of the Post would be badly misled on this topic by an article in today’s paper. The article correctly reports that the […]

The NYT had a good article this morning highlighting a new Brookings report that details how people living in inner city areas often pay far more for goods and services than people living in more affluent areas. The report is worth reading and the NYT gets credit for calling attention to it. Unfortunately, the report […]

The NYT had a very good piece about how the shift of 6 million Medicaid beneficiaries into the Medicare drug benefit program may increase drug company profits in 2006 by $2 billion. According to the article, under the new program the drug companies get to sell the same drugs at higher prices. It doesn’t get […]

The NYT had a good piece this morning reporting on how the medical supply industry pays top hospital executives thousands of dollars for advice on how to market their products. This is what you expect to happen when government patent monopolies allow these firms to sell their products at prices that are several hundred percent […]

NPR had a piece this morning warning of a shortage of agricultural workers in California. It reported that some crops may rot in the field, if farmers there can’t get more workers by the end of the summer. Those of us who believe in markets would suggest that the farmers try raising wages. It is […]

Back in the days of the Soviet Union, key facts were often excluded from historical accounts in order not to put the regime in a bad light. The NYT seems to be experimenting with this journalistic style. Today’s article on the G-8 summit in St. Petersburg included a passing reference that described Russia’s 7-year long […]

The Times had an interesting piece discussing the impact of more than $1.2 trillion in adjustable rate mortgages resetting in the next two years. The article points out that many homeowners may find their rates increasing by as much as 2 full percentage points when their lock-in period ends on an adjustable rate mortgage. The […]