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Dennis Ferguson
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I'm not fond of the definition of "progressivity" used in this article, particularly in the second graph time series. If I'm understanding the dimensions of the Gini coefficient correctly it seems to be using the gross amount of income (as a fraction of the sum of everyone's income) that is transferred down the income ladder by fiscal policy as the measure of "progressivity". Given an already-progessive tax-and-spend system there are hence two ways a country can increase "progressivity": increase the progressiveness of the fiscal system, so that a bigger fraction of each rich person's income is transferred down, or increase inequality, so that there are a larger number of richer rich people to take income from and a larger number of poorer poor people to receive it. The measure doesn't discriminate between these two mechanisms, both cause an increase in "progressivity" and are hence are both equally good if you think increased "progressivity" is good. If you can increase inequality fast enough you may be able to increase net "progressivity" even while decreasing the fraction of each individual rich person's income you take. A country where inequality is decreasing would appear to be becoming more regressive even in the absence of fiscal policy changes. As the Gini tells you the fraction of total income that is available to be transferred down the income ladder by fiscal policy (and is what increases with inequality) I think a better measure of the effect of fiscal policy alone would be to normalize the difference between pre- and post-fiscal Gini by the pre-fiscal Gini to show how much of what is available to be transferred is being captured.
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It seems clear that the accounting identity, that at any point in time what comes out of the consumer's pocket to pay for a worker's output will exactly equal what ends up being distributed among the worker's, capitalist's and government's pockets, must always be true at that moment so if you assume the consumer's payment and capitalist's share per worker is fixed then what the government loses will exactly equal what the worker gains. I hence agree with Robert Waldmann that 1/(1 - t) is expressing the ratio of (long term) wage gains to (short term) government losses, to which the accounting identity need not apply. What I don't understand is why knowing that particular ratio is useful for anything. It also seems fairly clear that the ratio of short term wage gains to short term government costs is likely to be 0; if the workers were willing to produce their $50,000 in output for a $25,000 wage on the day before the tax cut there doesn't seem to be a reason why the same workers would not be willing to produce the same stuff for the same wages on the day after. In the short term the tax cut is a windfall for the capitalists, and it is the imbalance of that excess profit that we expect to drive us to the long term rebalancing. Where the ratio ends up in the long term (in both the numerator and denominator), that is how it changes in time from its initial value of 0, seems to me to be a whole lot harder to predict with any certainty, as is the length of time it will take to reach this long run nirvana(?). Would it be inappropriate to repeat the observation that in the long run we are all dead? I have no confidence that what, of necessity, starts off as a windfall for capitalists will necessarily evolve into something else in any time frame I care about, nor am I convinced that the combination of windfall plus sticky expectations is precluded from turning this into the new long term normal.
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Unfortunately health care accounts for 17% of the nation's income so it is guaranteed that a significant fraction of individuals are somehow going to be spending >17% of their own income on health care. Fiddling with health insurance doesn't change the 17%, it only hedges your downside risk (wrt 17%) against your upside potential (wrt 17%). Also the nice thing about the ACA is that, as I understand it, the coverage provided by silver and bronze plans is nominally identical and it is only how you pay for it that changes; price comparisons become much more fraught when you can no longer be sure you are comparing apples to apples. To address the cost of health care one really needs to address the 17%. Most advanced countries seem to be able to match US health outcomes at 10% or 12% of their GDP so this is clearly possible, but fiddling with private insurance options is pretty much a zero sum game having little to no effect on the efficiency issues that get us to the 17% that, on average, everyone is going to end up paying.
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This doesn't sound far-fetched to me. It would be interesting if the CBO would score the bill based on this possibility. It seems like the availability of "insurance" that costs precisely the amount of the tax rebate would go far towards reducing the 24 million increase in the uninsured towards zero, or perhaps even to negative territory. While that "insurance" might be useless, free is the right price even for useless and it does avoid the 30% surcharge if you get sick and want something useful (in the unlikely event you can afford something better, but Americans are often optimists). The problem of the uninsured is fixed! The difficulty with this is that, as I understand it, the current CBO estimate that the AHCA will be deficit-reducing depends significantly on those 24 million uninsured forgoing their tax credits. If they instead all find something to spend the credits on then I think the bill's cost will go deeply into the red paying for rich peoples' tax cuts, which I understand would disqualify the bill under the budget reconciliation rules and require 60 Senate votes when even 50 seems like a stretch.
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With respect to the "Medicare for All" op-ed, I just hate it when an article which reaches a conclusion I might be sympathetic with begins that argument by simply abusing the only numbers offered to support the position into something that is just false. The article notes that $2.6 trillion was spent on healthcare in 2010, and 3.2 trillion in 2015. It then attributes the entire $600 billion spending increase over the period to the 21 million newly insured due to the ACA and says that is a lot of money for just 21 million people. The counterfactual implication is that absent the ACA and those 21 million people the spending in 2015 would have still been $2.6 trillion, so the ACA is clearly ineffective at cost control. That counterfactual is stupid; there hasn't been a 5 year period in my lifetime where healthcare spending didn't increase. A better one might be that if nothing changed in 2010 the growth of healthcare spending would have returned to the pre-Great-Recession trend (4.2%/year in constant dollars), in which case we still would have ended up spending $3.2 trillion in 2015 without the ACA's extra 21 million keen new insurance users. To the extent the ACA caused the actual outcome it has so far been an unqualified cost-curve-bending success. This certainly doesn't mean that there isn't something fundamentally wrong with healthcare in a country that spends 17% of its rather wealthy-per-capita GDP to achieve results no better than other countries spending a fraction of that, but one shouldn't have to make up numerate fantasies about the effectiveness of the ACA to make that point.
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P.S. Sprint doesn't contradict the first paragraph's story by much, however. It is the progeny of the railway company that gave it the first three letters of its name.
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FWIW Sprint's corporate headquarters was in Overland Park, KS last I visited (or paid attention). Did they move?
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I know next to bupkis about history, but I think this story limits itself to a slightly too small North American continent and, in doing so, mischaracterizes the activities of the French (though perhaps not the Spanish). The French seem to have been as determined as the British to secure there own "manifest destiny" on the continent via agricultural settlement, settlement that grew inland along the St. Lawrence. They had no need to colonize the rich center of the continent from the gulf, and turn New Orleans into a big city, because they already had cities with easy water access to the rich center from the north via the great lakes watershed, as the abundance of French place names along the great lakes and the northern Mississippi attests. New Orleans served only to exclude competitors, not as a base for exploitation, as they already had the infrastructure to accomplish the latter from the north. Why this didn't work out is not from a lack of wanting to, as far as I can tell, but rather that the British took the established agricultural colonies from them in the mid-18th century, stunting their growth and leaving no economic base from which to grow into the interior. In an alternate universe where they managed to hang onto Acadia and Quebec they might have been able to develop the continent's middle themselves, rather than being forced into a fire sale to the lesser of two evils, leaving the Americans with a much more contested path away from the Atlantic coast. So I don't think the French decided not to settle the interior on their own, that was decided for them by the British. Of course, I could be all wrong...
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I find David Brooks to be exceedingly entertaining, but there's no need to wait a year to find the entertainment value. Just skip all the opinion stuff (everyone has one) and instead scan looking for the facts selected to support whatever the opinion is; you are almost guaranteed to find something amusing. The most recent column on Bernie and the socialist Danish has a nice example, related to healthcare. Here's a sentence with a fact in it: "[Sanders'] approach would also, as in Europe, reduce the rate of medical progress, increase the rationing of care, increase the wait times for patients, induce many doctors to retire and centralize decision-making." So one could debate just how factual all that is, perhaps influenced by the observation that most people who have used European health care (including me) seem fairly happy with the service they got, but for the sake of argument let's just assume at least some of those assertions are facts. Note, however, that Denmark spends about 1/9 of its GDP on healthcare to provide universal coverage, while the OECD average healthcare spending is closer to 1/11 of GDP. In contrast the US spends a whopping 1/6 of its (larger per-capita) GDP on its health care industry to provide not-so-universal coverage, so if you can afford to pay the price for US healthcare it would be shocking if you did not receive better service when you needed it. As it seems that there must a positive correlation between the service you get and the price you are willing to pay, getting down to European spending levels would almost certainly require balancing service trade offs. Granting that, here's the very next sentence, which also includes a fact: "[Sanders' proposal] might reduce health care costs by $6 trillion over the next decade". That $6 trillion is quite small, it is no where near the 35% you'd expect to save by dropping to Denmark spending levels, but if you read the linked study (I don't recommend it) you'll find that it isn't unreasonable given the underlying assumptions they make. In particular, and oversimplifying a bit, they assume that the service provider segment of the healthcare industry will continue on pretty much as it is now so the only major cost savings will be the administrative costs eliminated by replacing the plethora of private insurers, all wanting a piece of the action, with a single insurer operating at cost. Since the only savings are the overheads, while the spending on the service you get would continue apace at the 1/6-of-GDP level, there's no reason to think that service would change at all under the assumptions that produce the $6 trillion number if you (or someone) can continue to pay for it. So there are 2 consecutive sentences with 2 separate-but-related facts. The fact in the first sentence could be true. The fact in the second sentence could be true. It is just that there's no way that both facts in both sentences could be true simultaneously. Excellent.
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Feb 8, 2016