Economics @ ITT

Why Are American Health Care Costs So High?

Posted in economics, Policy Issues by ittecon on September 20, 2013

Well,

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Big Unemployment, the New Normal?

Posted in economics, employment, macroeconomics, Policy Issues, Regulation, Taxation by ittecon on July 9, 2013

I tried to respond to a post by Don Peppers responding to this article, but LinkedIn limits the character count. I quote Don’s post here for context.

It’s common knowledge that LESS government, LESS regulation, and LOWER marginal tax rates will all improve employment. Unfortunately, the politics of envy is irresistible to some, and there are very few politicians on either side of the aisle who will vote for less of anything related to the government.

It may be common knowledge that less of these things might increase employment, but this favours a local maxima at the expense of a global maxima. It is the typical short-term benefit with a long-term detriment. Still, this argument and its subarguments are specious. I won’t even give any more attention to the dubious official unemployment figure definition and methodology.

Less government is a vague term. What government? Fewer dog-catchers? Interesting how, ad reductio, this becomes an argument for anarchy.

As for regulations, business favours regulations that shield it from the public and markets; intellectual property “rights” come to the top of my mind. Government (or a quasi-government acting entity) are necessary so as not to devolve into a situation where warlords rule. Afghanistan comes to mind. I could imagine a football match with no rules or regulations. Even rugby and UFC have rules, as do wars.

In economic terms, the lower marginal taxes argument is patently false (without even delving into marginal verse effective territory). Laffer’s concept is not false in and of itself, but it fails on two accounts. First, we can agree that at some point lowering marginal tax rates will create positive incentives, but it doesn’t follow this is true at all levels. Empirically, we can easily determine that we are below that point. On a practical level, this not only means that a reduction with not have positive effects; there will be negative effects. Second, the primary driver to hiring is demand for products or services (or at least the prospect thereof). A marginal tax rate of zero has no impact if no one is purchasing what I am offering.

Surprise! Inflation is too low almost everywhere on earth

Posted in economics, macroeconomics, Policy Issues by ittecon on May 18, 2013

The leading economies of the industrialized nations may not have a lot in common, but they are all afflicted by this: Inflation is too low.

via Surprise! Inflation is too low almost everywhere on earth.

Is Capitalism Dying?

Posted in economics, externalities, Policy Issues, Regulation by ittecon on May 8, 2013

It’as not very often that I agree with a large part of an article published by Forbes, but here is one.

Capitalism has been the dominant economic system in the Western world for, give or take, 400 years. And in that virtual eye blink in the grander scheme of things it has produced more wealth than all the prior economic systems put together.

via Is Capitalism Dying? – Forbes.

Markets Are Not Stable, Efficient, or Self-Correcting

Posted in economics, macroeconomics, Policy Issues by ittecon on May 3, 2013

“In analyzing the most recent financial crisis, we can benefit somewhat from the misfortune of recent decades. The approximately 100 crises that have occurred during the last 30 years—as liberalization policies became  dominant—have given us a wealth of experience and mountains of data.  If we look over a 150 year period, we have an even richer data set.”

via The Lessons of the North Atlantic Crisis for Economic Theory and Policy | iMFdirect – The IMF Blog.

Inequality: The Elephant in the Room

Posted in economics, Policy Issues, progressive taxation, Taxation by ittecon on April 30, 2013

Robert Reich discusses the elephant in the room and advocates Keynesian economics over supply-side austerity.

Sundown in America

Posted in economics, macroeconomics, Policy Issues by ittecon on March 31, 2013

Whilst I agree with parts of Chicken Little’s David Stockman’s OpEd piece, it is quite reductionist and misses as many points as it hits.

Over the last 13 years, the stock market has twice crashed and touched off a recession: American households lost $5 trillion in the 2000 dot-com bust and more than $7 trillion in the 2007 housing crash. Sooner or later — within a few years, I predict — this latest Wall Street bubble, inflated by an egregious flood of phony money from the Federal Reserve rather than real economic gains, will explode, too.

via Sundown in America – NYTimes.com.

The Supreme Court Has the Constitutional Power to Hike Medicine Prices to 5x Their Cost?

Posted in antitrust, economics, Policy Issues, Regulation, Taxation by ittecon on March 30, 2013

U.S. pharmaceuticals get a very good deal from the federal government. For every new drug they produce, they get rewarded with long-term patents that grant them exclusive rights to market and sell the product for as much as 20 years – which guarantees them billions in profits and no competitors in the marketplace. Drug companies claim that they must be allowed to profit off of products they nurtured with expensive research and development. In reality, taxpayer-funded research from academia or the National Institutes of Health account for the vast majority of vital drugs brought to market every year, and R&D is a small fraction of the overall drug company budget. What’s more, drug companies routinely use their monopoly power to jack up pharmaceutical prices, which cost far more in the U.S. than anywhere in the world.

via Where Does It Say the Supreme Court Has the Constitutional Power to Hike Medicine Prices to 5x Their Cost? | Alternet.

Should smokers pay more for health insurance?

Posted in economics, environment, externalities, Policy Issues by ittecon on March 29, 2013

The answer, should you want to know, is an unqualified yes.

Like lots of people who enjoy their vices, smokers like to invoke their constitutional right to light up. I don’t dispute that. So feel free to get lung cancer, American freedom fighter, but don’t forget that the rest of us are sucking up your second-hand smoke and helping foot your considerably heftier medical bills.

via Should smokers pay more for health insurance? – latimes.com.

Bye, Bye American Dream! Economic Inequality Is Permanent

Posted in economics, Income Redistribution, Policy Issues, Taxation by ittecon on March 23, 2013

A new study by a team of economists in academia and the government has concluded that economic inequality is a permanent—not temporary—feature in the United States, based on an analysis of 350,000 federal income tax returns between 1987 and 2009.

via Bye, Bye American Dream! U.S. Economic Inequality Is Permanent, Study Finds | Alternet.