…The 0.5 percent growth contribution for “capital intensity” estimated for the period from 2007 through 2016 is less than half that seen in the periods from 1995-2000 and 2000-2007. The slowdown can be largely attributed to the sluggishness in net investment…. There are surely many factors that have contributed to the pronounced slowdown of growth of labor productivity. Given the complex set of forces that affect productivity, projecting its medium-term trend is problematic. Still, data suggest capital formation has played a role and the odds of a rebound in productivity are reduced if the weakness in investment spending continues.
…Under Obamacare, a state had to pass a law in support of the proposed waiver, which meant legislatures had to give their approval before the state could experiment with novel approaches to health insurance. The Senate bill would cut legislatures out of the equation. Governors, together with their insurance commissioners, could devise new health care plans on their own. (They would only have to “certify” that they have the authority to implement the plan—a low hurdle.) The federal government must then review the waiver request on an expedited basis. And once a waiver is granted, the Senate bill says that the federal government cannot terminate the waiver, no matter what. It is hard to overstate how unusual—even unique—this is. When the federal government offers money to states, it places conditions… to prevent state abuse of federal funds. The Senate bill… says that a waiver “may not be cancelled” before its expiration. If state officials blow the Obamacare money on cocaine and hookers, there’s apparently nothing the federal government can do about it. At the same time, the bill expands the duration of waivers from five years to eight years. The upshot, then, is that the next president won’t be able to renegotiate any waivers granted during the Trump administration, no matter how badly a given state might have abused its waiver…
Must-Read: David Anderson: Reading the BCRA CBO Score: “The Congressional Budget Office is due to release their score on the Senate’s BCRA bill at some point today. Here are a few things to remember as you read the score… https://www.balloon-juice.com/2017/06/26/reading-the-bcra-cbo-score/
…Look at the effects at 10 years and beyond: The bill is designed to push the Medicaid cut backs to the right hand side of the budget window and then accelerate those cuts compared to the AHCA. Senator Murphy (D-CT) has asked and received assurance that the CBO will score coverage losses past 10 years. I think that topline coverage losses will be a bit less from Medicaid in window but match AHCA within two years out of window.
Is the 6 month auto-denial period being scored?: This is the Senate Republican replacement of the individual mandate. It was not written into the bill released on Thursday. If CBO scores it. how do they score it against both the individual mandate and the 30% single year premium bump? The CBO thinks the individual mandate is reasonably effective at keeping healthier people in the pool, while the 30% premium bump is an adverse selection magnet.
What are they projecting with the 1332 waivers on steroids?: Current law places strong guidelines on approval of state waivers. States must meet or beat default ACA on coverage, actuarial value, benefits and cost. Senate BCRA only requires a 1332 waiver to beat default coverage on federal cost. These make the MacArthur/Upton amendments simple modeling exercises How do they project market functionality in extreme 1332 states?
Must-Read: Benjamin D. Sommers, Atul A. Gawande, and Katherine Baicker: Health Insurance Coverage and Health: “Perhaps no research question better encapsulates this policy debate than, ‘Does coverage save lives?… http://www.nejm.org/doi/full/10.1056/NEJMsb1706645#.WUriDI_R7Z4
…Beginning with the Institute of Medicine’s 2002 report Care without Coverage, some analyses have suggested that lack of insurance causes tens of thousands of deaths each year in the United States…. The Oregon study… was limited by the infrequency of deaths in the sample. The estimated 1-year mortality change… confidence interval of −82% to +50%…. Several quasi-experimental studies using population-level data and longer follow-up offer more precise estimates…. Compar[ing] three states implementing large Medicaid expansions in the early 2000s to neighboring states that didn’t expand Medicaid… a significant 6% decrease in mortality over 5 years of follow-up… [with] the largest decreases were for deaths from “health-care–amenable” conditions such as heart disease, infections, and cancer…. Massachusetts’ 2006 reform found significant reductions in all-cause mortality and health-care–amenable mortality… particularly [among] those with lower pre-expansion rates of insurance coverage… a “number needed to treat” of 830 adults gaining coverage to prevent one death a year. The comparable estimate in a more recent analysis of Medicaid’s mortality effects was one life saved for every 239 to 316 adults gaining coverage….
[Why] the nonsignificant cardiovascular and diabetes findings in the Oregon study?… First… hypertension, dyslipidemia, and elevated glycated hemoglobin levels are important clinical measures but do not capture numerous other causes of increased risk of death. Second… hundreds of thousands of people gaining coverage over 4 to 5 years of follow-up, as compared with roughly 10,000 Oregonians gaining coverage and being assessed after less than 2 years. It may take years for important effects… to manifest in reduced mortality…. Third… changes in self-reported health—so clearly seen in the Oregon study and other research—are themselves predictive of reduced mortality over a 5- to 10-year period… a 25% reduction in self-reported poor health could plausibly cut mortality rates in half (or further) for the sickest members of society, who have disproportionately high rates of death. Finally, the links among mental health, financial stress, and physical health are numerous,45 suggesting additional pathways for coverage to produce long-term health effects…
…Making an example of China’s wealthiest tycoons can… rein in overly aggressive business practices endangering the stability in China’s overleveraged and under-regulated financial sector. But the political benefits… are likely to be even more significant. A large number of these tycoons had made their immense fortune before Mr Xi’s ascent to the top in late 2012…. For example, Wu Xiaohui, Anbang’s chairman who has recently been detained, is married to a granddaughter of Deng Xiaoping…. Connections, once priceless assets, have become dangerous political liabilities now that the same officials have either retired or fallen victim to Mr Xi’s anti-corruption campaign. By cleaning out China’s financial system, Beijing is able not only to restore some semblance of order in this vital sector, but also to get rid of tycoons with dubious political loyalties. Carrying out such a purge is relatively easy. Since many Chinese tycoons depend on state-owned banks for funding, the simplest way of pushing them under is to order the banks to cut off credit….
This crackdown will be discriminating. A large number of Chinese tycoons will be sitting ducks because of their enormous wealth and questionable political allegiances. Others will be left alone or forced to prove their loyalty. When it is over, we should expect a complete re-ordering of China’s economic oligarchy. The move against Anbang, Dalian Wanda and others is only the opening shot in this campaign…
Brantly Callaway and William J. Collins: Unions, Workers, and Wages at the Peak of the American Labor Movement: “A novel dataset compiled from archival records… http://www.nber.org/papers/w23516.pdf
Sergio Espuelas: The inequality trap. A comparative analysis of social spending between 1880 and 1930: “Using social transfers as an indicator of redistribution and three alternative proxies for inequality… http://onlinelibrary.wiley.com/doi/10.1111/1468-0289.12062/full
Christopher Meissner and John Tang: Japan’s entry into world markets during the first age of globalisation: “The Japanese experience after the liberalisation of the 1850s suggests that trade costs, destination market demand conditions, and product specific factors played key roles…” http://voxeu.org/article/japans-entry-world-markets-during-first-age-globalisation
Should-Read: Alberto Alesina, Stefanie Stantcheva, Edoardo Teso: Intergenerational mobility and preferences for redistribution: “Americans are generally thought to view the economic system as fair and see wealth as a reward for ability and effort… http://voxeu.org/article/intergenerational-mobility-and-preferences-redistribution
…while Europeans tend to believe that the economic system is unfair, and that wealth is the result of circumstances. This column tests this using new evidence on beliefs about intergenerational mobility in four European countries and the US, and confirms that Europeans do indeed tend to be overly pessimistic about moving up the social ladder compared to reality, while Americans are overly optimistic. These perceptions have important implications for how redistribution and equal opportunity policies will be received…
Should-Read: Brantly Callaway and William J. Collins: Unions, Workers, and Wages at the Peak of the American Labor Movement: “A novel dataset compiled from archival records… http://www.nber.org/papers/w23516.pdf
…circa 1950. Such data are extremely rare for the early post-war period when U.S. unions were at their peak. After describing patterns of selection into unions, we measure the union wage premium using unconditional quantile methods. The wage premium was larger at the bottom of the income distribution than at the middle or higher, larger for African Americans than for whites, and larger for those with low levels of education. Counterfactuals are consistent with the view that unions substantially narrowed urban wage inequality at mid-century…
…It seemed that innovation in mobile devices was beginning to slip away from Silicon Valley…. That all changed abruptly when Steve Jobs stepped onstage at Moscone Center in San Francisco and asserted he was introducing “three revolutionary products” in one package—the iPhone…. Four members of the original development team will discuss the secret Apple project, which in the past decade has remade the computer industry, changed the business landscape, and become a tool in the hands of more than a billion people around the world…
This is a weekly post we publish on Fridays with links to articles that touch on economic inequality and growth. The first section is a round-up of what Equitable Growth published this week and the second is the work we’re highlighting from elsewhere. We won’t be the first to share these articles, but we hope by taking a look back at the whole week, we can put them in context.
Equitable Growth round-up
Discrimination in the U.S. labor market is a very real thing. Looking at new research on racial differences in bail bonds, Heather Boushey writes about the unfortunate power of stereotypes in decision making.
The Federal Reserve hiked interest rates last week believing that inflation will soon increase as the U.S. labor market is already quite tight. But if this forecast—based on the Phillips Curve—a good guide these days? Doesn’t seem like it.
In the latest installment of Equitable Growth in Conversation, Heather Boushey talks to former Administrator of the Wage and Hour Division of the U.S. Department of Labor David Weil about his research on the “fissured workplace,” the influence of monopsony power, and his experience in government.
Links from around the web
Senate Republicans introduce a health care bill this week that will make significant changes to the current law, the Affordable Care Act. Margot Sanger-Katz writes how the new bill, if enacted, will shift money from the poor to the rich, increasing inequality. [the upshot]
The proposed acquisition of Whole Foods Market Inc. by Amazon.com Inc. has the potential to reduce prices for consumers in the short run. That would make it seem like a success under current antitrust law. Lina Khan argues that standard no longer makes sense. [nyt]
Amazon is well known for its propensity to quickly invest in a number of services and products in an attempt to try something new. Comparing Amazon to the more reticent General Electric Co., Grep Ip argues the U.S. economy needs more companies will to take a flyer on investment. [wsj]
“Ultimately, the Fed sees the risks associated with undershooting the natural rate of unemployment as greater than those of low inflation,” writes Tim Duy in a discussion of the Federal Reserve’s confusing U.S. labor market projections. [bloomberg]
The United States is on the precipice of some significant demographic changes as the U.S. Census Bureau projects the population will get older and less white. What part of the country looks most like our demographic future? According to Jed Kolko, it’s Las Vegas. [fivethirtyeight]
Friday figure
History of Labor Participation Interactive
An interactive look at participation in the labor force by age
Click an area on the chart to isolate that category. Slide along the GDP growth graph under the chart to look at a different time period.
Slide to pick a year (recessions are shaded), red lines indicate a major change to the CPS survey.
Note: This chart is updated monthly. Data is from the Census Bureau's Current Population Survey. Basic monthly data are used and all months are averaged together for each year. The survey was revised in 1989 and 1994; changes to both question wording and survey weights result in discontinuities in these years that may not be attributable to real changes in the economy. GDP data from: US. Bureau of Economic Analysis, Gross Domestic Product [GDP], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/GDP. Recession data from: Federal Reserve Bank of St. Louis, NBER based Recession Indicators for the United States from the Period following the Peak through the Trough [USREC], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/USREC, March 1, 2016.
