- Fed Watch: No Clothes
- "I'm not talking about Medicare, I'm Talking about Socialized Medicine"
- links for 2010-08-30
- Robert Barro's Questionable Claim
- FRBSF Economic Letter: The Effect of Immigrants on U.S. Employment and Productivity
- "This is Pretty Weak Evidence"
Posted: 31 Aug 2010 12:42 AM PDT
Tim Duy is "anything but" reassured by Ben Bernanke's recent speech outlining the Fed's possible policy actions, and what it will take to put them into action:
Posted: 31 Aug 2010 12:36 AM PDT
Maxine Udall is enlightened and discouraged by a conversation with an elderly relative:
...[T]he spectre of "socialized medicine" prevents us moving to single payer, where the incentives for prudent life cycle management of risk across all age and income groups would be better aligned. Why, when we already have what is in effect single payer for the elderly and the poor, do some believe that single payer is "socialized medicine" and why do they fear it so?
I gained some insight into this recently when an elderly relative started complaining about "Obamacare" and how it would lead to "socialized medicine." Knowing the person had heart surgery courtesy of Medicare and was receiving ongoing monitoring and care, I said, "I didn't realize you were so unhappy with Medicare." To which I received the reply: "I'm not talking about Medicare, I'm talking about socialized medicine."
"How is Medicare different from socialized medicine?" I asked.
"Medicare isn't socialized," came the reply. "I pay for it. I pay every month and when I've had surgery, I've had to pay some of it. Medicare is like any other insurance."
"Well," I said, "I know you're paying a premium for Part B and I know there are copayments and deductibles, but Medicare is a government run health insurance program."
To which the reply was: "But I'm talking about socialized medicine. You know that whenever the government gets involved in anything, it never does a good job."
"I had no idea you were having problems with Medicare." said I. "I always had the impression you were pretty satisfied with it. And with the VA, too. I know you've used the VA for some care recently. What problems have you had with Medicare or the VA?"
"Well, none with Medicare or the VA, but I'm not talking about Medicare. I'm talking about socialized medicine."
"So you're happy with Medicare?"
"Would you mind if your [adult] children could buy into it? Your son is unemployed. Would it be OK if he could buy into Medicare?"
"Well, sure. As long as he has to pay like I do."
You were all wondering how someone could say, "Keep your government hands off my Medicare?" Well, there you have it. Now that I've told you, I'm still not sure I understand it. It was one of the most frustrating and at the same time enlightening conversations I have had in a long time. The person with whom I was conversing is intelligent, educated, and not senile.
I'm just not sure how to use the above information. I was unable to persuade my elderly relative. I confess that since the conversation, I have despaired that the national conversation will ever be much better.
Posted: 30 Aug 2010 11:01 PM PDT
Posted: 30 Aug 2010 07:00 PM PDT
Robert Reich is unhappy with Robert Barro:
The Obscenity of the Right-Wing Professoriat, by Robert Reich: ...Harvard Professor Robert Barro ... opined in today's Wall Street Journal that America's high rate of long-term unemployment is the consequence rather than the cause of today's extended unemployment insurance benefits. ...
In point of fact, most states provide unemployment benefits that are only a fraction of the wages and benefits people lost when their jobs disappeared. Indeed, fewer than 40 percent of the unemployed in most states are even eligible for benefits... So it's hard to make the case that many of the unemployed have chosen to remain jobless and collect unemployment benefits rather than work. Anyone who bothered to step into the real world would see the absurdity of Barro's position. ... Right now, there are roughly five applicants for every job opening in America. ...
A record number of Americans is unemployed for a record length of time. This is a national tragedy. It is to the nation's credit that many are receiving unemployment benefits. This is good not only for them and their families but also for the economy as a whole, because it allows them to spend and thereby keep others in jobs. That a noted professor would argue against this is obscene.
Alex Tabarrok is unimpressed with Barro's work:
Barro v. Barro, by Alex Tabarrok: Robert Barro today in the WSJ, The Folly of Subsidizing Unemployment, estimates that UI extensions have increased the unemployment rate by 2.7 percentage points.
Arnold Kling says that if incentive problems exist for unemployment -- and he's right to be skeptical of the claim -- there's more than one way to fix them:
...Robert Barro ... claims that the unemployment rate would be much lower now if Congress had not passed any extensions of unemployment benefits. I have not gone through his analysis, but I suspect that I, like Alex Tabarrok, would not find it persuasive. Nonetheless, I think there is a case to be made for allowing people to continue to collect unemployment benefits after they find a new job, until their benefits are scheduled to expire. We can argue about how generous the unemployment benefits should be overall, but for any level of benefits it is possible to reduce the disincentive to find work.
Calling Barro's claim questionable, as in the title, was probably too generous.
Posted: 30 Aug 2010 01:31 PM PDT
What effect does immigration have on U.S. job markets? "Data show that, on net, immigrants expand the U.S. economy's productive capacity, stimulate investment, and promote specialization that in the long run boosts productivity. Consistent with previous research, there is no evidence that these effects take place at the expense of jobs for workers born in the United States":
The Effect of Immigrants on U.S. Employment and Productivity, by Giovanni Peri, FRBSF Economic Letter: Immigration in recent decades has significantly increased the presence of foreign-born workers in the United States. The impact of these immigrants on the U.S. economy is hotly debated. Some stories in the popular press suggest that immigrants diminish the job opportunities of workers born in the United States. Others portray immigrants as filling essential jobs that are shunned by other workers. Economists who have analyzed local labor markets have mostly failed to find large effects of immigrants on employment and wages of U.S.-born workers (see Borjas 2006; Card 2001, 2007, 2009; and Card and Lewis 2007).
Figure 2 Capital intensity, hours per worker, and total factor productivity
Figure 3 Communication/manual skills among less-educated U.S.-born workers
Posted: 30 Aug 2010 10:05 AM PDT
Karl Whelan identifies the questionable assumptions used by Jean Claude Trichet to support his calls for austerity:
Trichet must know that the evidence for Ricardian equivalence is pretty shaky, and he must know that one or two papers with questionable results hardly offsets the build of the evidence pointing in the other direction. Yet the best case he can build revolves around those points. That tells you what you need to know about the strength of his argument.
Let me also add this from the "said my bit" link above:
The Enduring Influence of Ireland's 1987 Adjustment, by Karl Whelan: When I was a junior economist in short trousers, the first research I ever did was inspired by Ireland's successful 1987-89 fiscal adjustment. Many international researchers looked at Ireland and decided that our successful adjustment stemmed from consumers stepping into the breach filled by the government spending cuts. The story was that increased consumer confidence, fueled by expectations of lower future taxes, was the key to the recovery.
From the research I did on this topic (both on my own and with John Bradley) I came away fairly convinced that this was not what had happened. Rather, the 1987 boom seemed to be fueled more by strong exports to the UK thanks to Nigel Lawson's tax cutting exercise.
However, Ireland's 1987 experience continues to pop up in discussions of fiscal austerity. I have to admit that I've not been too impressed by Alberto Alesina's work (here and here) on how fiscal adjustment can be expansionary—work that has had a lot of influence this year. Well, sure enough, Paul Krugman now cites work from Arjun Jayadev and Mike Konczal showing that the only country that ever cut its way to growth in a slump was, you guessed it, Ireland in 1987. The power of this datapoint endures.
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