Things to Read on the Evening of March 1, 2014
Must-Reads:
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Uwe Reinhardt: How the Medical Establishment Got the Treasury’s Keys: “The proponents of Medicare… were anything but stupid…. Confronted by the health care sector with a harsh trade-off between their cherished vision for health care, on the one hand, and a sensible payment policy, on the other, they let their vision override economically sound payment policy. Millions upon millions of America’s senior citizens are indebted to them for a program that remains highly popular to this day. Younger leaders of medicine and the hospital industry would do well to recall this dubious social contract struck by their predecessors to appreciate that the countless amendments to Medicare and the ever-new regulations emanating from the program are just the byproduct of many skirmishes in a protracted and tenacious war over possession of the keys to the Treasury…. The fiercest generals in this war on the government’s side have been Republican stalwarts… Reagan and George H.W. Bush. Desperate over the ever-escalating costs of Medicare during the 1970s and ’80s, both presidents resorted to what has been described as a Soviet-style payment policy for Medicare: administered prices set by the central government for the whole country…. But the war over the keys to the Treasury will probably never be fully concluded…. In retrospect, it would have been better all around to cut a more rational deal from the outset.”
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Glenn Greenwald: On the Meaning of Journalistic Independence: “This morning, I see that some people are quite abuzz about a new Pando article ‘revealing’ that the foundation of Pierre Omidyar, the publisher of First Look Media which publishes The Intercept, gave several hundred thousand dollars to a Ukraininan ‘pro-democracy’ organization…. This, apparently, is some sort of scandal…. That several whole hours elapsed since the article was published on late Friday afternoon without my commenting is, for some, indicative of disturbing stonewalling…. The Pando article adopts the tone of bold investigative journalism that intrepidly dug deep into secret materials…. But as I just discovered with literally 5 minutes of Googling, the Omidyar Network’s support for the Ukrainian group in question, Centre UA, has long been publicly known: because the Omidyar Network announced the investment at the time in a press release and then explained it on its website…”
Should-Reads:
- Mike Lofgren: Essay: Anatomy of the Deep State
- Adam Bonica et al.: Why Hasn’t Democracy Slowed Rising Inequality?
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Kevin O’Rourke: Whither the Euro?: “Europe is now defined by the constraints it imposes on governments, not by the possibilities it affords them to improve the lives of their people. This is politically unsustainable. There are two solutions: jump forward to a federal political Europe… or return to a European Union without a single currency…. The latter option will require capital controls, default in several countries, measures to deal with the ensuing financial crisis, and agreement about how to deal with legacy debt and legacy contracts. The demise of the euro would be a major crisis, no doubt about it. We shouldn’t wish for it. But if a crisis is inevitable then it is best to get on with it…. Whichever way we jump, we have to do so democratically, and there is no sense in waiting forever. If the euro is eventually abandoned, my prediction is that historians 50 years from now will wonder how it ever came to be introduced in the first place.”
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Lisa D. Cook: Violence and Economic Activity: Evidence from African American Patents, 1870 to 1940: “This paper uses the rise in mass violence between 1870 and 1940 as an historical experiment for determining the impact of ethnic and political violence on economic activity, namely patenting. I find that violent acts account for more than 1100 missing patents compared to 726 actual patents among African American inventors over this period. Valuable patents decline in response to major riots and segregation laws…. Patenting responds positively to declines in violence.”
Matthew C. Klein: China’s Central Bank Gets Its Yuan On | Sahil Kapur: Poof! The GOP’s Disappearing Promise To Vote To Replace Obamacare | Ricardo Hausmann: Rising violence over the course of the “Bolivarian Revolution” | Neil Buckley and Roman Olearchyk: Ukraine: On the edge | Heidi Shierholz: The Vast Majority of the 5.8 Million Missing Workers Are Under Age 55 | David Remnick: Putin Goes to War in Crimea |
Should Be Aware of:
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Bob Tita: Corporate Economists Are Hot Again: “Many companies had corporate economists on staff in the volatile 1970s and ’80s, but dropped them when the U.S. economy was steady and strong. Information from government agencies, such as industrial output from the Federal Reserve, was plentiful, along with research from private consultants, including Macroeconomic Advisers LLC in St. Louis and IHS Global Insight of Englewood, Colo. ‘The reaction in the corporate world was: “I can get my average GDP forecasts from anybody. Why do I need an economist in my shop?”‘ said Ellen Hughes-Cromwick, chief economist for Ford Motor Co. The key to the revival of in-house economists, companies and economists say, is the need to digest huge amounts of data—from production volumes in overseas markets to laptop usage in urban areas—to determine opportunities and risks for companies’ business units, not just in the U.S. but around the world.”
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Kevin Drum: Relearning the Past: Yes, Rising Inequality is Bad for Economic Growth: “Does high income inequality lead to lower economic growth?… As inequality rises, the rich increasingly need to find good places to invest all the money they’re accumulating. Eventually concrete business opportunities start to become scarce, so they look around for other places to put their money to work. In practice, this means the rich become net lenders to the middle class…. So the rich lend money to the middle class, which is an eager recipient because their incomes are stagnant. But as the debt load of the middle class increases, this lending becomes ever more Byzantine and ever more risky. Eventually, the middle class simply can’t take on more debt and the whole system comes to a screeching halt. The result is an economic recession as consumers try to work themselves out from under the mountain of debt they’ve run up. There’s an intriguing amount of evidence to back up this theory, and in a new report released yesterday a team of IMF researchers [Ostry, Berg, and Tsangarides] provides another reason to believe it. They find that high inequality is indeed associated with slower growth, but the mechanism for that slower growth comes in reduced growth spells…”
And:
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Joseph Stiglitz: Stagnation by Design | Curtis Gans: Midterm Signals and Noise |