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August 17, 2012

Latest Posts from Economist's View


Latest Posts from Economist's View


Posted: 15 Aug 2012 12:33 AM PDT
Bruce Bartlett:
Blaming Obama for George W. Bush's Policies, by Bruce Bartlett: ...Mitt Romney released an important document last week ... that deserves more attention than it got. It is an audacious attempt to blame Barack Obama for the economic mistakes of George W. Bush and Republicans in Congress.
The document is attributed to economists Glenn Hubbard..., N. Gregory Mankiw..., John B. Taylor... and Kevin Hassett... Reading it,... one is left with the impression that the recession occurred on President Obama's watch because of policies he is responsible for. ...
But what about ... the squandering of budget surpluses ... under President Bush. ... Because of the large deficits Mr. Bush bequeathed Mr. Obama ... Congress was deeply reluctant to enact a stimulus larger than $787 billion, even though President Obama's economic advisers thought that one at least twice as large was necessary to turn the economy around. The opposition of every Republican to the 2009 stimulus was a major factor in its inadequate size.
By way of analogy, suppose you go to your doctor with an illness. He ... prescribes the right medicine, but ... you are given a dosage only half as large as required..., enough to improve your condition, but not enough to cure you. You remain sick ... until you finally get a full dosage ... or your body is able to cure itself, which might take years.
Note that ... the medicine was properly prescribed; only the dosage was wrong. It would be incorrect to blame the medicine because you are still sick. The Republican economists nevertheless blame the medicine itself for the failure of the economy to respond to President Obama's prescription.
But it was Republican policies during the Bush administration that brought on the sickness and Republicans in Congress who have denied the economy an adequate dosage of the cure. Now they want to implicitly blame President Obama for causing the recession and the failure of stimulus to fix the problem, asserting that fiscal stimulus is per se ineffective.
There is a word for this: chutzpah.
Posted: 15 Aug 2012 12:06 AM PDT
Posted: 14 Aug 2012 12:21 AM PDT
Dani Rodrik:
Are Americans better off than the Dutch?, by Dani Rodrik: For a lot of questions, comparisons of per-capita GDP yield the correct answer to a first-order of approximation. ... But what about the following question: Are Americans richer than the Dutch? The average income in the U.S. is about 20 percent higher in the U.S. (...adjusting for cost-of-living differences). So our inclination may be to answer in the affirmative. But when average incomes do not differ by a large margin, income distributions do matter a lot. It turns out that the answer to the question depends very much on where in the income distribution we look at.
The following chart shows the average incomes of different income groups in the two countries. In each country, population is split into 20 equally-sized groups ("ventiles"), ranked from the poorest to the richest.

The two distributions cross, roughly at the middle. The bottom 40% or so of the population is better off in the Netherlands, especially as we go lower in the distribution of income. The bottom 5% have nearly double the income in the Netherlands. The top 50%, by contrast, are significantly better off in the U.S.
So are the Americans better off than the Dutch? I cannot tell you. But I can say that per-capita GDP or aggregate productivity numbers cannot answer the question.
By the way, these data on income distribution come via Branko Milanovic. Check his book and web page. ...
Posted: 14 Aug 2012 12:15 AM PDT
Robert Reich says to spread the word about who really wants to gut Medicare:
Whose Plan Destroys Medicare — Obama's or Romney-Ryan's?, by Robert Reich: Stumping in Florida today, Mitt Romney charged President Obama's Affordable Care Act will "cut more than $700 billion" out of Medicare.
What Romney didn't say was that his running-mate's budget — approved by House Republicans and by Romney himself — would cut Medicare by the same amount. The big difference, though, is the Affordable Care Act achieves these savings by reducing Medicare payments to drug companies, hospitals, and other providers rather than cutting payments to Medicare beneficiaries.
The Romney-Ryan plan, by contrast, achieves its savings by turning Medicare into a voucher whose value doesn't keep up with expected increases in healthcare costs — thereby shifting the burden onto Medicare beneficiaries, who will have to pay an average of $6,500 a year more for their Medicare insurance, according an analysis of the Republican plan by the non-partisan Congressional Budget Office.
Moreover, the Affordable Care Act uses its Medicare savings to help children and lower-income Americans afford health care, and to help seniors pay for prescription drugs by filling the so-called "donut hole" in Medicare Part D coverage.
The Romney-Ryan plan uses the savings to finance even bigger tax cuts for the very wealthy.
Spread the word. Don't allow the GOP to get away with this demagoguery.
Yes, don't let Republicans get away with this. [See also: The Republican ticket's big Medicare myth, by Ezra Klein.]

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