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March 8, 2013

Latest Posts from Economist's View


Latest Posts from Economist's View


Posted: 04 Mar 2013 12:33 AM PST
Continuing the conversation on "how you can tell if Republicans (a) are philosophically inclined toward a smaller government, or (b) rent-seekers working on behalf of the wealthier members of society":
Mooching Off Medicaid, by Paul Krugman, Commentary, NY Times: Conservatives like to say that their position is all about economic freedom, and hence making government's role in general, and government spending in particular, as small as possible. And no doubt there are individual conservatives who really have such idealistic motives.
When it comes to conservatives with actual power, however, there's an alternative, more cynical view of their motivations — ...it's all about comforting the comfortable and afflicting the afflicted, about giving more to those who already have a lot. And if you want a strong piece of evidence in favor of that cynical view, look at the current state of play over Medicaid. ...
Last year's Supreme Court decision upholding Obamacare also opened a loophole that lets states turn down the Medicaid expansion if they choose. And there has been a lot of tough talk from Republican governors about standing firm against the terrible, tyrannical notion of helping the uninsured.
Now, in the end most states will probably go along with the expansion because of the huge financial incentives... Still, some of the states grudgingly allowing the federal government to help their neediest citizens are ... insisting that it must be run through private insurance companies. And that tells you a lot about what conservative politicians really want. ...
Don't tell me about free markets..., privatizing Medicaid will end up requiring more, not less, government spending, because there's overwhelming evidence that Medicaid is much cheaper than private insurance. ...
You might ask why, in that case, much of Obamacare will run through private insurers. The answer is, raw political power. Letting the medical-industrial complex continue to get away with a lot of overcharging was, in effect, a price President Obama had to pay to get health reform passed. And since the reward was that tens of millions more Americans would gain insurance, it was a price worth paying.
But why would you insist on privatizing a health program that ... does a much better job than the private sector of controlling costs? The answer is pretty obvious: the flip side of higher taxpayer costs is higher medical-industry profits.
So ignore all the talk about too much government spending and too much aid to moochers who don't deserve it. As long as the spending ends up lining the right pockets, and the undeserving beneficiaries of public largess are politically connected corporations, conservatives with actual power seem to like Big Government just fine.
Posted: 04 Mar 2013 12:03 AM PST
Posted: 03 Mar 2013 11:02 AM PST
Christina Romer on the minimum wage (the article explains her arguemts in more detail):
The Business of the Minimum Wage, by Christina Romer, Commentary, NY Times: Raising the minimum wage, as President Obama proposed in his State of the Union address, tends to be more popular with the general public than with economists.
I don't believe that's because economists care less about the plight of the poor... Rather, economic analysis raises questions about whether a higher minimum wage will achieve better outcomes for the economy and reduce poverty. ...
[M]ost arguments for instituting or raising a minimum wage are based on fairness and redistribution. Even if workers are getting a competitive wage, many of us are deeply disturbed that some hard-working families still have very little. ...
It's precisely because the redistributive effects of a minimum wage are complicated that most economists prefer other ways to help low-income families. For example, the ... earned-income tax credit... This approach is very well targeted — the subsidy goes only to poor families — and could easily be made more generous. ...
So where does all of this leave us? The economics of the minimum wage are complicated, and it's far from obvious what an increase would accomplish. If a higher minimum wage were the only anti-poverty initiative available, I would support it. ...
But we could do so much better if we were willing to spend some money. A more generous earned-income tax credit would provide more support for the working poor and would be pro-business at the same time. And pre-kindergarten education, which the president proposes to make universal, has been shown in rigorous studies to strengthen families and reduce poverty and crime. Why settle for half-measures when such truly first-rate policies are well understood and ready to go?
The point of the argument that the minimum wage and EITC are complements rather than substitutes (i.e. they fill different needs and hence work together) is to avoid setting one against the other in a political fight. The minimum wage costs the federal government nothing, while an expansion of the EITC would requite an increase in federal spending. My fear is that opponents of the minimum wage on the right will team up with well-meaning Democrats to say yes, we agree, the EITC is much, much better way to help the poor -- that's what we should do -- and use it as an excuse to block minimum wage legislation. Then, when it comes time to fund the EITC, we'll here that it's a good idea, but with the budget the way it is, we just can't afford it right now.
There was a time when I would have joined the "let's use the EITC rather than the minimum wage to attack this problem," but I've been convinced the minimum wage and the EITC really are complementary, and the political reality right now is that if we are going to help the poor at all in an environment where the right has whipped up so much fear of the government debt as a way of reducing support for social programs, the best bet is the minimum wage.
Posted: 03 Mar 2013 10:25 AM PST
Poor Mitt just couldn't get minorities to like him:
Romney Says He Failed To Reach Minorities, by Jessica Holzer, WSJ: Mitt Romney said Sunday that he believes a failure to connect with minority voters doomed his quest last year for the presidency.
"We weren't effective in taking my message primarily to minority voters–to Hispanic Americans, to African Americans, other minorities," Mr. Romney told Fox News's Chris Wallace in his first interview since the election. "That was a real weakness." ...
Here's a clue to his and his Party's problem:
But pressed by Mr. Wallace, the former GOP candidate didn't put forth any ideas for bringing such voters into the Republican fold in the future.
He also admits to another problem, saying things he (says he) didn't believe:
Reflecting on his campaign, Mr. Romney expressed remorse over comments he made during the campaign suggesting that 47% of Americans were dependent on government and therefore firmly in the Democratic column. The remarks were secretly recorded during a private dinner where Mr. Romney was addressing his donors.
It was "a very unfortunate statement that I made," he said. "It was very harmful. It is not what I believed."
I think we call that lying. Ann Romney is still upset:
Mrs. Romney said she was still frustrated that "people didn't really get to know Mitt for who he was"
Yes, it's really too bad people thought he was telling the truth about the 47%. If the 47% had known his true nature -- someone willing to lie for votes -- they surely would have trusted him to work on their behalf. Especially since, as noted above, he has zero ideas to help them.

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