Month: May 2014

Sarah Kliff: The former Obamacare czar wants to make single-payer happen: “Don Berwick last job was running Obamacare’s implementation at the Department of Health and Human Services…

…where Republicans berated the former doctor for supporting the British health service. His next goal: bringing single-payer health care to Massachusetts. The former Medicare administrator is the only candidate in the Massachusetts governor race running on a single-payer platform. He says he settled on the idea when he was thinking through the different goals he wanted to achieve–slower health care cost growth, better quality care–all seemed most attainable when the government was the one paying everybody’s health care costs.

I began to list the policies I wanted to pursue, and then I came to the payment side…and I started to talk to the people who helped shape Vermont, looked at Vermont, and I just said, ‘oh my, there is just one straight shot here, it’s going to single-payer’. At that point it was more about thinking about putting it on the table. Now it is the entire table….

Austin Frakt does the math:

If the study of the impact of RomneyCare in Massachusetts on mortality “amenable to health care” had had the power of the study of the impact of the Medicaid lottery in Oregon, the Massachusetts study would have concluded that the effects of RomneyCare on mortality were not “significant”. A whole host of commentators would then have said that the study’s failure to find “significant” effects–never mind that effects would have had to be at least five times as large as an optimist would find plausible to be “significant”–was a point that should strengthen your belief that RomneyCare was a waste of money.

This really is not rocket science, people!

Continue reading “Why Oh Why Can’t We Be Good Bayesians?: Austin Frakt Compares the Power of the Massachusetts RomneyCare and Oregon Medicaid Studies” →

Should-Reads:

1. David Wessel: All You Need to Know About Fed Policy in Three Questions: “Larry Summers… boiled the Fed’s current situation down to three simple questions…. 1. How much slack remains in the U.S. economy?… Today, economists disagree…. Janet Yellen [sys]… ‘There may be more slack in labor markets than indicated by the unemployment rate’…. If she is right, then the Fed should hold off on tapping the brakes because a lot of those long-term unemployed will go back to work when there are more jobs. 2. Once the economy returns to normal, say 5.5% unemployment, where should the Fed expect short-term interest rates to be?… In their latest forecast, Fed officials foresee an inflation-adjusted interest rate of 2% when all the slack is gone. But they’re hedging…. 3. What else should the Fed take into account?… Avoiding financial crises by acting before dangerous bubbles or excesses develop… the elaborate game between the Fed’s monetary policy and the fiscal policy…. And then there’s the rest of the world…”

2. Josh Gans: A thousand cuts and the last mile problem: “At the heart of the problem with competition on the Internet… is the ‘last mile’… a single ‘pipe’ running into dwellings and premises. To have more than one is not cost effective. And that ‘pipe’ will always be owned by someone and that someone will have monopoly access to the consumer…. So what are the options?… 1. Regulated prices…. 2. Privatisation…. What if, instead, the customer owned the last mile… customers are surely the natural owners here anyway. 3. Municipal broadband…. There may be other options…. It is time for the US to start thinking beyond letting regulation in the form of Net Neutrality do all the work for what is fundamentally a structural issue…”

Should Be Aware of:

Continue reading “Things to Read on the Morning of May 7, 2014” →

https://www.icloud.com/iw/#keynote/BAIKZqoaOhfEcfv4MJaBhaEE-i4USJ6TcE-F/20140506_Mr._Piketty_and_the_%22Neoclassicists%22–A_Suggested_Interpretation.key

Continue reading “Slides for: Mr. Piketty and the “Neoclassicists”: A Suggested Interpretation: Wednesday Focus: May 7, 2014″ →

It has been very clear to me for three decades what needs to be done in economic theory. Start with Paul Krugman’s observations this morning:

Paul Krugman: Paradigming Is Hard: “We have a body of economic theory built around the assumptions…

…of perfectly rational behavior and perfectly functioning markets. Any economist with a grain of sense–which is to say, maybe half the profession?–knows that this is very much an abstraction, to be modified whenever the evidence suggests that it’s going wrong. But nobody has come up with general rules for making such modifications….

Continue reading “In What Sense Does Economics Need a “New Paradigm”?: (Updated) Tuesday Focus: May 6, 2014″ →

Jared Bernstein: More on the Important New Blanchflower/Posen Paper: “B&P’s finding that including labor force inactivity in their wage analysis…

…helps explain some of the variation (in a particularly important way I’ll show below) has a very important implication. If the depressed labor force is a statistically identifiable contributor to slack, then some of the current labor force inactivity can be reversed, much the same way unemployment comes down in the face of strengthening labor demand. Or, put differently, part of the decline in the labor force is just slack that’s not measured by the unemployment rate…. Yellen… [says] as much: ‘…some “retirements” are not voluntary, and some of these workers may rejoin the labor force in a stronger economy… a significant amount of the decline in participation during the recovery is due to slack…’. P&B add their view that ‘…many individuals who are not actively searching for work under current labor slack conditions remain attached to the labor market.’  All of which leads to their key punchline: ‘A substantial portion of those American workers who became inactive should not be treated as gone forever, but should be expected to spring back into the labor market if demand rises to create jobs.’ Obviously, that has important implications for both the living standards of working-age households and macroeconomic growth…

Should-Reads:

1. Austin Frakt: Improving Health Through Coverage Expansion: “How certain are we that health insurance reduces mortality rates? Weeks before the Patient Protection and Affordable Care Act (ACA) became law, a provocative column in The Atlantic [by Megan McArdle] posed this question… drew on an unrepresentative subset of the literature… including a 2009 study by Kronick. Others have asserted, on the basis of studies with designs inappropriate for causal inference, that Medicaid coverage causes worse outcomes than no coverage. Such claims that health insurance is not good for health have fueled political opposition to the ACA’s subsidized coverage expansion, including nearly half of states opting out of Medicaid expansion. These claims are incorrect…. A growing body of work… has exploited the coverage expansion in Massachusetts… Courtemanche and Zapata… Van der Wees and coworkers… Sommers and colleagues…. The likely pathway… is clear: Coverage expansion is associated with improvements in measures of access to care…. Although some health care does not substantially improve health, much of it does…. What is unreasonable and, in my view, unconscionable is to leverage a selective reading of the evidence on the benefits of health insurance in an argument to deny assistance to Americans who cannot afford to purchase basic coverage.”

2. Harold Pollack: Could Obamacare save 24,000 lives a year?: “Ten years of Romneycare data offer solid evidence that the Affordable Care Act could reduce the nation’s mortality rate…”

Should Be Aware of:

Continue reading “Things to Read on the Morning of May 6, 2014” →

David Beckworth: The Seesaw Approach to Monetary Policy: “‘A NGDP target aims to stabilize total dollar spending.

It is one target that has embedded in it both the supply of and the demand for money (i.e. total dollar spending = money supply x velocity of money). The beauty of a NGDP target is that the Fed does not need to know what is exactly happening to the money supply or money demand. All the Fed only needs to worry about is the product of the two components. There is no need to track the money supply or estimate money demand. By focusing on total dollar spending, the Fed will be fostering a stable monetary environment where movements in money supply and money demand are offsetting each other.

Another way of saying this is that if the Fed targets the growth path of NGDP it will be taking a seesaw approach to monetary stability. That is, endogenous changes in the money supply will be automatically offset by changes in money velocity and vice versa…. Now to be clear, most money is inside money–money endogenously created by banks and other financial firms–and the Fed only indirectly influences its creation. However, it does so in an important way by shaping the macroeconomic environment in which money gets created…. By successfully stabilizing the expected growth path of total dollar spending, the Fed will be causing this seesaw process to work properly…. Even though the Fed was not officially targeting NGDP, it effectively seem to be practicing the seesaw approach to monetary policy over much of the Great Moderation period…. One way, then, to view the Fed’s job is that it should aim to keep the monetary seesaw process working properly. For a long time it did that, but failed spectacularly in 2008-2009. It would be whole lot easier going forward if the Fed explicitly adopted a NGDP level target.