- Elizabeth Warren: Speech to Americans for Financial Reform and Roosevelt Institute Audience <–The view on financial reform of the Democratic wing of the Democratic Party…
- Brad DeLong Analytical Failure Weblogging: Chapter CCXII: Brad DeLong: “We Are Hiding in Our Burrows Right Now…”: Wednesday Hoisted from the Archives from Four Years Ago <–My failed prediction as to when I would once again become a short-run deficit hawk…
Month: November 2013
In a Good World, Would We Have to Deal with “Global Imbalances”?
Attention Conservation Notice: 3500 words noting Dani Rodrik’s belief that countries with large positive or negative current-account balances are imposing costs on others in our world economy, and reposting Barry Eichengreen’s and my piece telling you why you should read Charlie Kindleberger’s World in Depression. Also Manias, Panics and Crashes: A History of Financial Crises.
The extremely smart Dani Rodrik is meditating this morning on export-led growth miracles, and alternatives: The large, dangerous external imbalances that underpin the fastest-growing economies’ performance:
Led by China… [some] developing countries have registered record-high growth rates over recent decades… [plus] advanced economies… such as Germany and Sweden. “Do as we do,” these countries’ leaders often say, “and you will prosper, too.” Look more closely, however, and you will discover that these countries’ vaunted growth models cannot possibly be replicated everywhere, because they rely on large external surpluses to stimulate the tradable sector and the rest of the economy… not all countries can run trade surpluses at the same time.
In fact, the successful economies’ superlative growth performance has been enabled by other countries’ choice not to emulate them. But one would never know that from listening, for example, to Germany’s finance minister, Wolfgang Schäuble, extolling his country’s virtues…. As the Financial Times’ Martin Wolf, among others, has pointed out, the German economy has been free-riding on global demand.
Continue reading “In a Good World, Would We Have to Deal with “Global Imbalances”?”
Things to Read on the Evening of November 12, 2013
Must Reads:
- *Ezra Klein’s slam of the Halperin-Heilemann political gossip book, *Game-Change Double-Down All-in and exaltation of Sides-Vavreck
- Gary Richards: Traffic jams paralyzing [San Francisco] Bay Area <–urban infrastructure is vitally important for growth, but fracking hard when your metro area has an enormous bay smack in its middle…
Should Reads:
- Erik Loomis: Did Occupy Change the Conversation About Economic Inequality? <–not really…
- Eric Holthaus and Ritchie King: How to fix global warming before it’s too late <–our diminishing options…
- Ed Kilgore: “Take MARTA To Cobb and Rob” <–Why Georgia Cobb County’s Republican Chair Joe Denby might oppose the move of the Atlanta Braves’s stadium…
- Austin Frakt: A promising start for ACOs. Will they stick the landing?: “It’s far too early to make anything like a complete judgement as to whether accountable care organizations (ACOs) will help address cost and quality issues in the U.S. health system. But it is about the right time to check the early returns. Based on them, I’d say ACOs are off to a promising start, but with no guarantee of long-term success…”
Should Be Aware of:
- Olivier Blanchard and Daniel Leigh: Growth Forecast Errors and Fiscal Multipliers <–A 1.5 fiscal multiplier at the interest-rate zero-lower-bound for open European national economies goes with a 2.5 multiplier for a largely-closed economy like the United Stats…
- Jonathan Sperber: Karl Marx: A Nineteenth-Century Life <–Best Karl Marx biography I have seen…
- John Sides and Lynn Vavreck: The Gamble: Choice and Chance in the 2012 Presidential Election <–It ought to be a game-changer for campaign coverage…
- Josh Marshall: WaPo Publisher [Katherine Weymouth] Calls Cohen Column ‘Brilliant’ <–Come, Jeff Bezos, Come as Fast as Possible to Fifteenth Street! Plus bonus: Amanda Hess: Lara Logan 60 Minutes scandal: Washington Post’s Paul Farhi reports on her sexy Halloween costume
Oh Dear: Megan McArdle Relies on John Cochrane, and so Goes Badly Astray…

We find Megan McArdle writing: Why It’s So Hard to Kill Keynesianism:
We all know how stimulus works, right? The government spends money, and then the people who get that money spend it again, which increases gross domestic product and makes us all richer.
The interesting thing about this model is that economists abandoned it more than 30 years ago, as John Cochrane points out:How many Nobel prizes have they given for demolishing the old-Keynesian model? At least Friedman, Lucas, Prescott, Kydland, Sargent and Sims. Since about 1980, if you send a paper with this model to any half respectable journal, they will reject it instantly.
But people love the story. Policy makers love the story. Most of Washington loves the story. Most of Washington policy analysis uses Keynesian models or Keynesian thinking. This is really curious. Our whole policy establishment uses a model that cannot be published in a peer-reviewed journal. Imagine if the climate scientists were telling us to spend a trillion dollars on carbon dioxide mitigation–but they had not been able to publish any of their models in peer-reviewed journals for 35 years.
Continue reading “Oh Dear: Megan McArdle Relies on John Cochrane, and so Goes Badly Astray…”
Cheaper and Better Ways than Expanding Medicaid to Get Health Insurance Coverage to the Working Poor?
The excellent health-care weblog The Incidental Economist: argues with itself on the best route forward for Medicaid:
First:
Austin Frakt:
Start by paying a primary-care physician $80 a month to see each [Medicaid] patient, whether he is healthy or sick. That’s what so-called concierge doctors charge, and it would give Medicaid patients what they really need: first-class primary-care physicians to manage their chronic cardiovascular and metabolic conditions. […]
Then throw on top of that a $2,500-a-year catastrophic plan to protect the poor against financial ruin. The total annual cost of such a program would be $3,460 per person, 42 percent less than what Obamacare’s Medicaid expansion costs.
-Reihan Salam, National Review Online quoting Avik Roy
Interested in what health policy wonks and primary care providers think of this proposal…
How Much Should We Fear the Debt When Interest Rates Are Low?: Tuesday Focus

Over at Bloomberg News, the smart and very industrious Carmen Reinhart lays out why she fears the debt–thinks that expansionary fiscal policy to rebalance an economy is unwise even when monetary policy is hobbled by the zero lower bound on interest rates and even when long-term interest rates remain low:
Carmen Reinhart: Of Debt, Growth, Interest Rates and History:
Continue reading “How Much Should We Fear the Debt When Interest Rates Are Low?: Tuesday Focus”
Things to Read on the Evening of November 11, 2013
Things You Must Read:
- Izabella Kaminska: Greenspan’s dilemma revived <–A very optimistic take on what the U.S. economy’s real short- and medium-run problems are…
- David Warsh: Home Alone II?: “Evidence is accumulating that Obama is simply not a good manager of the immensely complicate government over which he presides. (An unnamed White House aide solemnly avers to the Post team that the president ended every meeting with his health care staff with the admonition, ‘All that is well and good, but if the Web site doesn’t work, nothing else matters’) but a good manager would not just say it, but would also make it so…”
Things You Should Read:
- **Simon Wren-Lewis: The view from Germany: “In a currency union, the only feasible outcome is for German inflation to run ahead of the rest of the EZ by a significant and persistent amount for a number of years. If the ECB was willing and able to target 2% inflation, then that would mean future German inflation significantly and persistently above 2%… excess demand in Germany…. The problem arises because the ECB is unwilling or unable to target 2% inflation. That in theory allows Germany to attempt to force the EZ as a whole to make the required internal adjustment without inflation in Germany exceeding 2%. It can do this by a restrictive fiscal policy. This is exactly what it has done…”
- Sabrina Tavernise: Cuts in Hospital Subsidies Threaten Safety-Net Care <–Another side effect of John Roberts, C.J.: when he rewrote the Affordable Care Act from the bench, he did not know enough about the law to understand that if he were to rewrite the law to give states the option to not-expand Medicaid he very much needed to also rewrite the law’s Subsidy and Disproportionate Share Payment provisions…
- Philippines Storm Kills Estimated 10,000
- Jared Bernstein: Recent Fiscal Policy: Its Impact on the Economy and the People in It
Things You Should Be Aware of:
- Joseph Newhouse et al.: Free for All?: Lessons from the Rand Health Insurance Experiment
- Brink Lindsey: Why Growth Is Getting Harder
- Paul Waldmann: Why Isn’t Everyone More Worried about Me? Lori Gottleib’s most ridiculous Obamacare “victim” story yet <–In the New York Times
- Charlie Stross: Catching a Blighty <–Properly remembering Armistice Day
Do Parents and Children Constitute a Rent-Seeking Special-Interest Group?
Matthew Yglesias appears surprised by Greg Mankiw this lunchtime: Mankiw on babies: They’re not Porsches.:
Greg Mankiw brings a variety of considerations to bear against the Affordable Care Act in a new post, including the idea that it’s unfair to transfer financial resources from non-parents to parents:
But having children is more a choice than a random act of nature. People who drive a new Porsche pay more for car insurance than those who drive an old Chevy. We consider that fair because which car you drive is a choice. Why isn’t having children viewed in the same way?
Continue reading “Do Parents and Children Constitute a Rent-Seeking Special-Interest Group?”
Yet Another Fruitless Plea for Our Reporters to Look Not at Flash and Noise But at Substance and Signal…
Anybody who has been on the inside of any event subjected to the Woodward or perhaps the White treatment knows three things:
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Of the new things reported in Halperin and Heilemann book with the self-parody title–Double-Down Game-Change All-in Political-Gossip-Fest MMXIII–one-third are true, one-third are badly mischaracterized and misleading, and one-third are flat-out lies.
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Readers cannot tell what in Halperin-Heilemann is what because the authors do not know either.
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The prominence of the Halperin-Heilemann reporting style degrades governance and reduces public understanding, for the signal about politicians’ true beliefs and orientations is drowned by the sensationalist noise, and the fact that politics is graded not as an effort to construct win-win deals but as a zero-sum sporting contest helps, via an observer effect, to turn it into such.
“If You Like Your Current Health Insurance, You Can Keep It”: DeLong Analytical Failure Weblogging, Chapter CCXI
Nicholas Bagley: is flummoxed at Obama’s current thinking about his “if you like your current health insurance, you can keep it” misspeaking:
Obama pairs apology with perplexing proposal: Now that the President has apologized for not being exactly straight… when he said… no one would lose their insurance… he wants to make it up…. But what exactly does the administration have in mind?…. I’m completely stumped. The Obama administration can’t just issue tax credits because it feels bad… only ‘applicable taxpayers’ can get tax credits… an ‘applicable taxpayer’ is defined as a taxpayer with household income between 100 and 400 percent of poverty. Nor can the administration delay…. Starting on January 1, 2014, all plans, whether on the exchanges or off, have to cover the ‘essential health benefits package’. That package includes cost-sharing requirements, a particular sticking point for most of these canceled plans…
I confess that that particular talking point simply hadn’t registered on my brain at the time.
It should have.
And I confess if it had registered I would probably have thought: “ACA creates exchanges and so improves opportunities for individuals and small businesses, and ACA provides subsidies. Why should anybody lose their health insurance?”
If I had been not-stupid back then, I would have noted that under the ACA:
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The subsidies to insurance companies for the disappointing Medicare Advantage–i.e., Medicare HMO–plans were going away since Medicare Advantage seemed to be costing the U.S. Treasury a lot of money and yet delivering few if any health-sector benefits. Medicare beneficiaries who liked their Medicare Advantage–as they should: it’s heavily subsidized–and did not want it to go away would be pissed.
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Insurers would have to step up their games and make sure all the plans they offered provided genuine comprehensive health insurance. This was a good piece of the ACA: the government is committing subsidies and operating the exchange, and so it needs to take on a quality standards-enforcing role.
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Insurers would have to incorporate cost-sharing in their plans–would have to give insurance purchasers appropriate “skin in the game”. This has been a long-time right-wing demand for health insurance reform: that patients-to-be need to be made to think twice by feeling the pain of undertaking procedures not just in the hassle and the time and the anxiety and the… well, the pain; but also in their wallet.
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In the new, changed health insurance marketplace, some of the plans insurers had offered would no longer be profitable from a marketing point-of-view.
If you had asked me a year ago and actually gotten me to think about the issue, I would have said that (1) was the thing to worry about, and the place where Obama had been significantly misleading. (2) I would have called a nothingburger: plans that aren’t really insurance would be replaced by plans that were insurance, and with the subsidy pools almost everybody would get a better deal. (3) I would have said was unlikely to be a step that would do much to improve the system but would not produce any Washington ripples, for (3) was something that both mainstream Democrats and all Republicans were invested in, with only left-wing Democrats whimpering about how rationing-via-pocketbook by means of copays was probably not a good idea. And I would have missed (4) completely.
And now I am, with Nicholas Bagley, flummoxed at Washington’s reaction. For nobody is worrying about (1), and everybody is worrying about (2), (3), and (4). Fixing (4) would require that we mandate that insurance companies keep offering their old plans at roughly their old prices: that would seem to have been ruled out by the initial decision to preserve health insurance companies’ role in the reformed system. (2) is really not something we want to fix. And (3)–well, that is a goal of reform for everybody except the whimpering left, even though Joe Newhouse taught me long ago that you often do not like what happens when people find their health care rationed-by-pocketbook via copays and other cost shares.
Any way to get this part of the conversation closer to the track it ought to be on?
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