Lessons of childhood…
What Is The US Trade Deficit? Donald Trump Will Make It Look Bigly
The administration of President Donald Trump has planned to widen the appearance of America’s trade deficit, measured as total exports minus total imports, by changing the method used to calculate it.
The new calculation would count items known as “re-exports” — products first imported into the U.S. and then transferred, unchanged, to neighboring countries — as imports, but not exports. That would effectively exaggerate the deficit total, the Wall Street Journal reported Sunday…
Economists expressed worries that the new method would steer trade data away from a preferred level of “symmetry” in the way exports and imports are accounted for, as former Bureau of Labor Statistics Director Steve Landefeld put it in an interview with the paper.
Trump has previously declared himself a lover of debt and “the king of debt,” and suggested that the U.S. should take advantage of rising bond yield rates — which come hand-in-hand with falling bond prices — to “buy back government debt at a discount,” or simply “print the money” needed to cover the deficit.
All the fiddling that Republicans accuse Democrats of doing.
Total government debt, a cumulative measure of yearly deficit amounts — which includes government securities held by the citizens, companies, local and state governments and the Federal Reserve, along with money owed to foreign governments and beneficiaries of federal programs, such as Social Security — has been on track to reach $20 trillion.
The IBTimes repeats the Republican canard that Social Security [usually adding in Medicare] is part of their debt worries. Only if Congress steals the money from funds contributed by American individuals in the form of FICA payments. They are, in fact, insurance programs. Differing essentially from private insurance in their efficiency. They require less than a quarter of the administrative cost our corporate insurers claim is necessary.
Congressional pimps for privatization usually follow this up with whines of the imminent collapse of both. Imminent meaning a decade or so. Then, whines about raising the percentage going into FICA appear – conveniently ignoring the fact that there is a cut-off point above which wealthier Americans cease to pay into the fund. Removing that cap gets rid off another 50 years or more of 2-party craptastic lies – while working folks receive the benefits we paid for.
Everyone think the inflation in education costs is justifiable?
This is the article the graph came from. Wander into the comments section at your own risk. The article is entitled CONSIDERATIONS ON COST DISEASE. A bit pedantic; but, a worthy read.
Hospitals buy up doctors’ practices — we get screwed with higher charges
Imagine you’re a Medicare patient, and you go to your doctor for an ultrasound of your heart one month. Medicare pays your doctor’s office $189, and you pay about 20 percent of that bill as a co-payment.
Then, the next month, your doctor’s practice has been bought by the local hospital. You go to the same building and get the same test from the same doctor, but suddenly the price has shot up to $453, as has your share of the bill.
Patients around the country are getting that unpleasant surprise, as more and more doctors’ offices are being bought by hospitals. Medicare, the government health insurance program for those 65 and over or the disabled, pays one price to independent doctors and another to doctors who work for large health systems — even if they are performing the exact same service in the exact same place.
This week, the Obama administration recommended a change to eliminate much of that gap. Despite expected protests from hospitals and doctors, the idea has a chance of being adopted because it would yield huge savings for Medicare and patients.
In the dry language of the annual budget, the White House asks Congress to “encourage efficient care by improving incentives to provide care in the most appropriate ambulatory setting.” In normal English, that means reducing financial incentives that are causing many doctors to sell their practices to hospitals just to take advantage of extra revenue.
The heart doctors are a great example. In 2009, the federal government cut back on what it paid to cardiologists in private practice who offered certain tests to their patients. Medicare determined that the tests, which made up about 30 percent of a typical cardiologist’s revenue, cost more than was justified, and there was evidence that some doctors were overusing them. Suddenly, Medicare paid about a third less than it had before.
But the government didn’t cut what it paid cardiologists who worked for a hospital and provided the same test. It actually paid those doctors more, because the payment systems were completely separate. In general, Medicare assumes that hospital care is by definition more expensive to provide than office-based care.
You can imagine the result: Over the past five years, the number of cardiologists in private practice has plummeted as more and more doctors sold their practices to nearby hospitals that weren’t subject to the new cuts. Between 2007 and 2012, the number of cardiologists working for hospitals more than tripled, according to a survey from the American College of Cardiology, while the percentage working in private practice fell to 36 percent from 59 percent. At the time of the survey, an additional 31 percent of practices were either in the midst of merger talks or considering it. The group’s former chief operating officer once described the shift to me as “like a migration of wildebeests.”
Cardiologists are not the only doctors who have been migrating toward hospital practice. In the last few years, there have been increases in the number of doctors working for hospitals across the specialties. And spreads between fees for office services exist in an array of medical services, down to the basic office visit.
RTFA for more disheartening details. The crux remains, Obama and Congress in those first couple of years managed to get changes through to lower costs for some healthcare. The lawyers, lobbyists and other professional creeps working for the medical-industrial complex figured out a way around the changes – and increased profits to boot. Doctors around the country lined up to join the money parade. Not all of them. There remains a principled class in the corner here and there.
But, who noticed the changes? Who did anything about it? Certainly not Congress. They may be elected to represent the people of America, every state; but, they only listen to the Sound of Money riffling into their bank accounts.
It’s taken Obama till the last half of his second term to stand up and notice the change, propose new legislation to sort the problem. How much of a chance do you think we have of getting regulations through a Congress controlled by greenback conservatives, both Republican and Democrat – and restore a human focus to healthcare and family practice?
Paul Krugman lectures the hawks who persist in crying wolf
According to a recent report in The Times, there is dissent at the Fed: “An increasingly vocal minority of Federal Reserve officials want the central bank to retreat more quickly” from its easy-money policies, which they warn run the risk of causing inflation. And this debate, we are told, is likely to dominate the big economic symposium currently underway in Jackson Hole, Wyo.
That may well be the case. But there’s something you should know: That “vocal minority” has been warning about soaring inflation more or less nonstop for six years. And the persistence of that obsession seems, to me, to be a more interesting and important story than the fact that the usual suspects are saying the usual things…
The Times article singles out for special mention Charles Plosser of the Philadelphia Fed, who is, indeed, warning about inflation risks. But you should know that he warned about the danger of rising inflation in 2008. He warned about it in 2009. He did the same in 2010, 2011, 2012 and 2013. He was wrong each time, but, undaunted, he’s now doing it again…
The point is that when you see people clinging to a view of the world in the teeth of the evidence, failing to reconsider their beliefs despite repeated prediction failures, you have to suspect that there are ulterior motives involved. So the interesting question is: What is it about crying “Inflation!” that makes it so appealing that people keep doing it despite having been wrong again and again?
Well, when economic myths persist, the explanation usually lies in politics — and, in particular, in class interests. There is not a shred of evidence that cutting tax rates on the wealthy boosts the economy, but there’s no mystery about why leading Republicans like Representative Paul Ryan keep claiming that lower taxes on the rich are the secret to growth. Claims that we face an imminent fiscal crisis, that America will turn into Greece any day now, similarly serve a useful purpose for those seeking to dismantle social programs…
But while easy money may in principle have mixed effects on the fortunes (literally) of the wealthy, in practice demands for tighter money despite high unemployment always come from the right. Eight decades ago, Friedrich Hayek warned against any attempt to mitigate the Great Depression via “the creation of artificial demand”; three years ago, Mr. Ryan all but accused Ben Bernanke, the Fed chairman at the time, of seeking to “debase” the dollar. Inflation obsession is as closely associated with conservative politics as demands for lower taxes on capital gains.
It’s less clear why. But faith in the inability of government to do anything positive is a central tenet of the conservative creed. Carving out an exception for monetary policy — “Government is always the problem, not the solution, unless we’re talking about the Fed cutting interest rates to fight unemployment” — may just be too subtle a distinction to draw in an era when Republican politicians draw their economic ideas from Ayn Rand novels.
Which brings me back to the Fed, and the question of when to end easy-money policies…
But the last people you want to ask about appropriate policy are people who have been warning about inflation year after year. Not only have they been consistently wrong, they’ve staked out a position that, whether they know it or not, is essentially political rather than based on analysis. They should be listened to politely — good manners are always a virtue — then ignored.
Freshly-educated, modern economists completely ignore, wholly reject the crap that is economic dogma for Republicans. Whether they are social moderates or the more fascist-minded.
Another organic tie between modernists like Krugman and political progressives is dedication to the needs of the mass of American workers and their families. We are the real source of value created to make a cushy life for the one-percenters. We deserve more than a minimal safety net or education barely-sufficient to moderate an obedient class of producers.
Germany’s Gold Delusion
Germany’s gold is on the move. For the first time since official gold transactions became more transparent, the Bundesbank has given notice that a significant portion of its holdings will be transferred home from France and the United States. Ostensibly, this is just a matter of monetary housekeeping. But why now?
One possibility is that German policymakers believe that we are approaching an every-country-for-itself scenario – and only gold guarded by one’s own police is worth anything.
But this is more than far-fetched. The world in which financial trust breaks down completely between Germany and France or Germany and the US is one in which we have much bigger problems than where a country’s gold is located. International trade would collapse, and major global companies would struggle to sell their products. Having more gold at home, rather than in the vaults of the New York Fed, would be neither here nor there in such a situation…
Perhaps German central bankers sense a longer-term shift in international preferences away from the dollar and want to be ready in some fashion. This is plausible in terms of a future decline in the dollar’s importance as a reserve asset and safe haven. Reserve holdings of dollar assets (primarily by central banks) were worth around 2% of US GDP in 1948 and about the same in 1968. Today, such holdings are at least 15% of US GDP – with some estimates as high as 30%…
But moving Germany’s gold is hardly helpful in this regard. What would help is to turn the euro around – in the sense of convincing investors that the common currency has a bright future, because it is underpinned by a stronger monetary, fiscal, financial, and political union. When seen in this light, the physical location of gold is purely a distraction…
…Moving gold does nothing to keep inflation under control or change the behavior of central banks. The link between currencies and gold was irrevocably broken in 1971, when US President Richard Nixon decided to suspend the convertibility of dollars into gold for central banks. We have lived in a purely fiat money system ever since – meaning that our money’s value is not backed by gold or any other physical item…
German politicians would thus seem to be suffering from some serious delusions about the importance of gold and the effects of shifting its location. But they are right to worry about the ECB’s policies: Providing unconditional credit to eurozone governments is unlikely to make these governments more careful…
The German fascination with gold is a red herring. Its fear of wayward monetary policy is not.
Regular readers of this blog are aware of my dedication to Project Syndicate. I owe no loyalty to any unifying credo at the site. I’m not certain you could describe one – other than a predilection for modern and up-to-date economic analysis and thought.
I’m drawn back most often by the quality of writing and understanding of economics. Many of these Doctors of the science of economics [whatever that might mean] are individuals whose opinions frankly serve as fodder for discussion around a portion of our extended family. Whether the provocation be political, philosophical or directly concerned with economics – these functions served by a nation’s commerce within and without borders illuminate the bedrock foundations of how our society progresses.
Medicare spending is not out of control
It’s the season of holiday cocktail parties, demanding intelligent chit-chat over Chardonnay. In such data-free environments it is always safe to say, “Medicare spending is out of control!” Wise heads will nod, because it is a credo with wide currency.
After all, as I explained in my previous post, traditional Medicare, which still attracts about 75 percent of all Medicare beneficiaries, affords its enrollees free choice of providers and therapy. In the jargon of health-policy wonks, it is “unmanaged.” Thus, it would not be surprising if unmanaged Medicare spending were, indeed, out of control.
But some caution is in order. A really wise guy in the crowd, one familiar with relevant data, might challenge you with: “Oh, really? In what sense is Medicare spending out of control?”
These data, most of which have been published by the Office of the Actuary, Centers of Medicare and Medicaid Services, of the Department of Health and Human Services (see Table 16), show that in most periods Medicare spending per Medicare beneficiary has risen more slowly than per-capita spending under private health insurance.
The exceptions are the period 1993-97, when private managed-care plans appeared to be able to hold down their outlays on health care better than did Medicare, and 2002-7, because there was a jump in spending as Medicare began, in 2006, to cover prescription drugs under the Medicare Prescription Drug, Improvement and Modernization Act of 2003.
So anyone claiming that “Medicare spending is out of control” can fairly be asked to explain on what data that assertion is based…
These columns…hardly support the assertion that Medicare spending is out of control. Relative to private insurance, the opposite appears to be the case…
With very few exceptions, Medicare pays prices to providers of health care below those paid by private insurers, which individually negotiate prices with each provider…
Critics of Medicare — notably private health insurers — contend that the higher prices for health care paid by private insurers can be explained by a “cost shift” from government, notably Medicare, to private payers. This view reflects the idea that the providers of health care are to be “reimbursed” for whatever costs they incur in treating patients, rather than budgeting backward from whatever revenue they are “paid,” like other sellers (e.g., hotels or airlines), which can charge different prices to different customers for the same thing.
The cost-shift hypothesis appears to have widespread, intuitive appeal, especially among employers and their agents, private insurers. Economists, this one included, do not find it persuasive, as can be seen in this review of the economics literature on the cost-shift hypothesis and this summary. Economists believe that what is denounced as “cost shifting” in health care is mainly just good old-fashioned, profit-maximizing price discrimination…
Most of the anti-Medicare discussion is based on lies. Most of it is crammed, distorted into a fit determined by class-based ideology that says working people deserve nothing more than the lowest possible wage for their labor – even as they create the wealth of a nation. Programs funded by taxpayers still must be diminished, cut to the minimum, or the politicians who bow and scrape before the wealthiest class in this land will be shamed.
Screw ’em all.
Japan takes a step forward
For three years economic policy throughout the advanced world has been paralyzed, despite high unemployment, by a dismal orthodoxy. Every suggestion of action to create jobs has been shot down with warnings of dire consequences. If we spend more, the Very Serious People say, the bond markets will punish us. If we print more money, inflation will soar. Nothing should be done because nothing can be done, except ever harsher austerity, which will someday, somehow, be rewarded.
But now it seems that one major nation is breaking ranks — and that nation is, of all places, Japan.
This isn’t the maverick we were looking for. In Japan governments come and governments go, but nothing ever seems to change — indeed, Shinzo Abe, the new prime minister, has had the job before, and his party’s victory was widely seen as the return of the “dinosaurs” who misruled the country for decades. Furthermore, Japan, with its huge government debt and aging population, was supposed to have even less room for maneuver than other advanced countries.
But Mr. Abe returned to office pledging to end Japan’s long economic stagnation, and he has already taken steps orthodoxy says we mustn’t take. And the early indications are that it’s going pretty well…
…While getting out of a prolonged slump turns out to be very difficult, that’s mainly because it’s hard getting policy makers to accept the need for bold action. That is, the problem is mainly political and intellectual, rather than strictly economic. For the risks of action are much smaller than the Very Serious People want you to believe…
Enter Mr. Abe, who has been pressuring the Bank of Japan into seeking higher inflation — in effect, helping to inflate away part of the government’s debt — and has also just announced a large new program of fiscal stimulus. How have the market gods responded?
The answer is, it’s all good. Market measures of expected inflation, which were negative not long ago — the market was expecting deflation to continue — have now moved well into positive territory. But government borrowing costs have hardly changed at all; given the prospect of moderate inflation, this means that Japan’s fiscal outlook has actually improved sharply…
Whatever his motives, Mr. Abe is breaking with a bad orthodoxy. And if he succeeds, something remarkable may be about to happen: Japan, which pioneered the economics of stagnation, may also end up showing the rest of us the way out.
I’m not familiar enough with the political side of Japan’s culture to understand what inhibited the administration immediately preceding Abe’s from implementing the sort of Keynesian reforms most modern economists understand and endorse. I presume they hadn’t confidence in their authority – perhaps parliamentary opposition was infected with the same demagogue’s disease as our own Congress, e.g., self destructive class loyalties.
Regardless. Change is already perceptible. Both the business community and working class families have a bit more hope. Shinzo Abe’s party is as capable of screwing up reform as any other assembly of conservatives; so, the jury will be out for a while.
The process is worth a wry smile from this side of the Pacific since neither party parked next to the Potomac has sufficient courage or understanding to try the same.
EU Parliament member confuses oral sex and economics
Daylife/Reuters Pictures used by permission
France’s ex-justice minister Rachida Dati mixed up the words “fellatio” and “inflation” – which sound similar in French – during a TV interview.
She told Canal Plus: “I see some [foreign investment funds] looking for returns of 20 or 25% at a time when fellatio is close to zero.”
Within hours, the video was an internet hit on websites such as YouTube.
Ms Dati, now a Euro MP, later laughed off the whole episode saying she had spoken too quickly…
The French word for fellatio is “fellation”, which sounds similar to the word “inflation”.
Ms Dati left the government last year amid criticism of her management style, and gossip about her clothes and love life.
She is now an MEP and serves as mayor of Paris’s seventh arrondissement.
At least she sees the humor of mispronouncing a word – and doesn’t try to pass it off as a neologism.
The American rightwing still has the market cornered on infallible.