Month: July 2024

A gunman apparently tried to assassinate Donald Trump at a rally in Pennsylvania today. Responses from the right came quickly. Noted without comment.

This is apropos of nothing in particular. I just happened to run into it this afternoon:

The contribution of wives to family income steadily increased until 2010 and then leveled out. Both men and women exited the labor force following the 2010 recession, so this probably isn't due to fewer wives working. More likely it's because women's earnings relative to men increased strongly from 1980-2010 but then slowed down after 2010.

I don't know for sure how accurate this is—it's crowdsourced—but it seems to match other estimates of housing prices in big city centers:

This is one reason I'm so skeptical of urbanist arguments about American cities being uniquely expensive due to restrictive building rules and a car-centric culture. As you can see, there's nothing really very unusual about American cities. London is as expensive as New York. Paris is as expensive as San Francisco. Copenhagen is as expensive as Los Angeles.

All over the world, big cities in advanced countries are expensive because lots of people want to live there but residents have a limit to how much crowding and congestion they'll put up with. Good transit can help, I suppose, but London and Paris both have great subway systems (as does New York) and Copenhagen is famously bicycle friendly. That doesn't make them any cheaper than US cities with lousy transit systems.

Allowing more freedom of construction would probably help, but possibly not as much as many urbanists believe. I suspect that certain cities are essentially infinitely attractive: build more apartments and prices will go down, but that will immediately attract new residents and cause prices to go back up. If you could double or triple housing that might finally have a permanent effect, but this isn't really feasible. In the ordinary range of 10-30% housing growth, I'll bet prices wouldn't change much.

The Heritage Foundation's Project 2025 has gotten lots of attention lately, though it's mostly just standard movement conservative wet dreams. One interesting piece is its usual right-wing hatred of the Federal Reserve:

A core problem with government control of monetary policy is its exposure to two unavoidable political pressures: pressure to print money to subsidize government deficits and pressure to print money to boost the economy artificially until the next election. Because both will always exist with self-interested politicians, the only permanent remedy is to take the monetary steering wheel out of the Federal Reserve’s hands and return it to the people. This could be done by abolishing the federal role in money altogether....

In the absence of the Fed, Project 2025 makes two recommendations, both of which are essentially returns to the gold standard. But let's take a look at US monetary history with and without active Fed management:

I don't know about you, but given the massive boom/bust cycles of 1870-1940, I think I prefer the modern era of active Fed control. It's hard to understand how anyone can look at this very basic chart and conclude that weak or nonexistent central control of money is a cure for everything that ails us.

And this doesn't even account for the fact that gold is no longer stable in value. If, for example, the dollar were defined as one-thousandth of an ounce of gold, here's what inflation looks like over the past four decades:

Which world do you prefer? Over the past 40 years, the CPI has gone up 204%. Gold has gone up about 450%. It's not exactly a stable source to base a currency on.

This is hardly the most important part of Project 2025, but it's an issue of longtime puzzlement for me. Why are conservatives so suspicious of the Fed? And why are they such gold bugs? Gold has never prevented inflation, and in recent decades its value has gyrated wildly. Meanwhile, during the postwar era the Fed has been responsible for an outstanding record of steady growth, reasonable inflation, and very few serious recessions. Even accounting for its mistakes, what's not to like?

Following up on my earlier post about drug price negotiation:

"Price controls." This is an odd usage. What Medicare is planning to do is just the opposite: they want to negotiate the price of drugs, the way you do in a free market, instead of being forced by law to pay whatever drug providers tell them to. It's a cap on public subsidies, not a cap on prices.

And there's another common blind spot at work here. Medicare boosts prescription drug spending in the US by about half. This is all taxpayer funded, and it hugely expands the prescription drug market since much of it would be unaffordable if seniors were left on their own. So what's the idea here? That the government should massively subsidize drugs with no questions asked? That hardly seems tenable.

Price controls in a free market might be—well, not demonic, but maybe bad policy. But that's not what we have here. A true free market in elderly health care would involve seniors paying for all medical care, including prescription drugs, out of pocket. Short of that, you can't have it both ways. If you want public subsidies in order to spur pharma R&D, you have to accept some limits on how much taxpayers are asked to contribute. That's both democracy and the free market at work.

Last Friday, in the wake of Joe Biden's miserable debate performance, Axios ran this blind quote:

Annie, Ashley and Anthony create a protective bubble around POTUS. He's staffed so closely that he's lost all independence. POTUS relies on staff to nudge him with reminders of who he's meeting, including former staffers and advisers who Biden should easily remember without a reminder from Annie.

Goodness. Who are these people?

Anthony is Anthony Bernal, a longtime aide to Jill Biden. The New York Post says he is Joe Biden's "Rasputin," complete with this picture to make sure you get the point:

Ashley is Ashley Williams, a Biden staffer so obscure she doesn't have a Wikipedia page. Even I have a Wikipedia page.

And Annie is Annie Tomasini, another longtime member of Biden world who was recently promoted to become one of his deputy chiefs of staff.

This seems like an unlikely trio to be running the White House, but not so unlikely that they've escaped the notice of James Comer, the room temperature IQ congressman who spent years trying to impeach Biden. He has subpoenaed all three in yet another effort to weaponize the House Oversight Committee:

Our research indicates that these are the three people that have been pulling the strings for quite some time in the White House. These are the three people that have been trying to cover up the fact that Joe Biden hasn’t been mentally or physically able to perform the job of president.... These three people, their names keep popping up as the gatekeepers, in addition to Hunter Biden.

"Our research" is apparently Comer's name for "an anonymous quote in Axios."

These guys just can't quit. Ever since Newt Gingrich radicalized Congress, Republicans have used oversight committees as brass knuckles to bludgeon Democratic presidents. They did it to Bill Clinton. They did it to Obama. They did it to Hillary Clinton. And they're doing it to Biden.

And why not? Going after Clinton probably gave us George Bush. Going after Hillary probably got us Donald Trump. Going after Biden has a good prospect of giving us Trump yet again. Gingrich may have been a vicious SOB, but that doesn't mean his politics of personal destruction don't work.

An op-ed in the Wall Street Journal today says that Joe Biden's plan to have Medicare negotiate drug prices via the Inflation Reduction Act is a disaster. Tyler Cowen links with the following comment: "It is worth noting this kind of academic research has not been effectively rebutted, rather what you usually hear in response is a bunch of snarky comments about Big Pharma and the like."

I don't have the PhD necessary to credibly rebut academic research, but I'm going to take a crack at this anyway, entirely free of snark. First, with apologies, here's a fairly long excerpt from the op-ed:

The law’s price controls are likely to raise annual out-of-pocket costs for 3.5 million Medicare beneficiaries who take price-controlled medicines, according to an analysis commissioned by the Pharmaceutical Research and Manufacturers of America.... Its mandated changes [have] already reduced the number of Medicare drug plans from which seniors can choose and increased the average premiums they pay. This year, the number of stand-alone Part D plans available to seniors dropped by 11%.... That drop is 25% since Donald Trump’s final year in office. In addition, premiums for Part D plans are up 21%.

....The law’s price controls will also deter companies from developing new medicines. A study I co-authored estimated that 135 fewer drugs will come to market through 2039 because of the Inflation Reduction Act.

....Dozens of life-sciences companies have announced cuts to their research and development pipelines because of the 2022 law. These announcements have come in earnings calls and filings with the Securities and Exchange Commission—where deliberate misstatements would expose executives to civil and criminal penalties—so they can’t be chalked up to political posturing.

And now for the rebuttal:

• The Pharmaceutical Research and Manufacturers of America—PhRMA—is an industry lobbying group. It's not snark to say that their estimates can't really be taken seriously.
• The number of standalone Part D plans is indeed down, but that's because seniors have defected in droves to Medicare Advantage plans:
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• Likewise, it's true that premiums are up in standalone plans—though by less than the amount Social Security is up—but premiums in MA plans are both lower and decreasing:
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• Negotiation of drug prices doesn't begin until 2026. It's implausible that it's had any effect yet.
• In any case, drug companies already negotiate prices in virtually every country in the world and also with private insurance companies in the US. The addition of very limited and modest price negotiations for Medicare is, perhaps, more than a drop in the bucket, but not a lot more. It's really not possible to rigorously forecast how this is going to affect drug introductions into the far future.
• IRA also penalizes firms that raise certain drug prices by more than inflation. However, the penalty for the vast majority of drugs is zero, and the remainder are almost all less than 1%.
• The author of the op-ed is Tomas Philipson, a dedicated longtime movement conservative who was chair of the CEA under Donald Trump. Before IRA even passed, he warned that it would produce "losses" of nearly $4 trillion per year. That's 15% of GDP! This is implausible in the extreme and speaks poorly of Philipson's other claims.
• The idea that CEOs are super honest on earnings calls due to fear of criminal penalties is—I promised not to be snarky, didn't I? But this is just laughable. Come on, man.
• Objective estimates of pharma R&D show it climbing through 2023 and projected to keep climbing for the next five years.
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Philipson is an accomplished economist, so it's vanishingly unlikely that any of this is an accident. He failed to adjust premiums for inflation. He failed to mention Medicare Advantage. He took PhRMA and CAHC data at face value instead of citing academic studies. He failed to explain how much drug price negotiation was likely to affect worldwide pharma revenue. He made a laughable claim about how virtuous pharma CEOs are on earnings calls and ignored serious evidence about R&D spending.

There's just nothing here. It's a sodden stew of exaggerations, cherry picking, ideology, and a few outright lies. This is, unfortunately, par for the course for the Journal editorial page.

This is Hilbert rolling around on our front porch. He's the true rolling cat in the family. Charlie rolls around sometimes and tolerates having his tummy rubbed, but Hilbert adores having his tummy rubbed. All you have to do is reach out and get close and he immediately starts up a roaring purr.

Here's an interesting thing. Samuel Perry recently posted a chart from his 2022 book about Christian nationalism. It basically asks if you'd be OK with manipulating election laws to ensure that your side has an easier time winning. By far the biggest agreement came from Christian nationalists:

Curiously, the second highest agreement came from their exact opposites, atheists. Apparently both ends of the religion spectrum feel under threat from our current electoral system.

The least likely to approve of fiddling with elections is those who don't just pay little attention to the news, but don't even know if they follow the news. That's some serious ignorance.

Yesterday I mentioned in passing the Producer Price Index. Here's the latest:

PPI is the inflation rate of inputs to consumer goods. It's what corporations pay for the raw materials used to make the stuff they sell to us.

As you can see, for a full two years PPI has averaged less than it did before the pandemic. At the same time, hourly earnings were only slightly higher than they were before the pandemic:

During this entire time companies continued to raise prices even though there was little justification for it. They just did it to see how much they could get away with.