Damien Pouzo, "A Framework for Modeling Bounded Rationality: Mis-specified Bayesian-Markov Decision Processes" http://events.berkeley.edu/?event_ID=74254&date=2014-02-18&tab=all_events
Janet Yellen: Humphrey-Hawkins Testimony:
Chairman Hensarling, Ranking Member Waters and other members of the Committee, I am pleased to present the Federal Reserve's semiannual Monetary Policy Report to the Congress. In my remarks today, I will discuss the current economic situation and outlook before turning to monetary policy. I will conclude with an update on our continuing work on regulatory reform.
Instead of addressing a subtle and complicated issue with (at least!) two sides, the law’s critics keep turning it into a single-sided moral diatribe about the work ethic and the supposed damage Obamacare is doing to it. A perfect illustration is a recent New York Times Economix column by Casey Mulligan.... The genesis of Mulligan’s article is the surprisingly famous appendix to that CBO report—the part where the agency predicts that the Affordable Care Act will be associated with a reduction in the workforce of the U.S... voluntary job leaving by those who have been “locked” into their jobs by fear of losing health insurance... those who are deterred from working by higher marginal tax rates....
What We Do This Week:
Begin Problem Set 2... Read Essentials, chapter 9 "Externalities and PubliC Goods"
Alicublog: New Realities: "Remember when conservatives considered Costco as American as cheeseburgers and credit default swaps?...
The basic idea was [that] large stores selling large lots at large discounts... excited the Common Man and that was what conservatism was all about. (Rick Santorum tried to split the difference in his last Witchfinder General campaign by calling his chosen people "Sam's Club and Costco folks.")... NROniks like Jennifer Graham sneered at a feminist who didn't want to have kids and wind up shopping at Costco.... Larry Kudlow protested John Kerry's NAFTA stance as "trade protectionism" that "undermines the living standards of the near 135 million Americans who shop at Wal-Mart, Kmart, Costco, Target, Home Depot, and Best Buy." This schtick persisted into the early Obama era... added Costco to the honor roll of big companies "in Obama’s crosshairs" for high socialist taxation.... Mitt and Ann Romney went shopping at Costco and gushed about all the stuff they'd bought and would keep in a shed till the election was over and they could quietly get rid of it.
But this week, National Review's Alec Torres headlines,
Costco: The Arugula of Chain Stores
Arugula--the most dreaded of conservative curse-words!
Washington Center for Equitable Growth: Afternoon Must-Read: CBO: Frequently Asked Questions About CBO’s Estimates of the Labor Market Effects of the Affordable Care Act:
Q: Will 2.5 Million People Lose Their Jobs in 2024 Because of the ACA?
We would not describe our estimates in that way. We wrote in the report: “CBO estimates that the ACA will reduce the total number of hours worked, on net, by about 1.5 percent to 2.0 percent during the period from 2017 to 2024, almost entirely because workers will choose to supply less labor.”…
Because the longer-term reduction in work is expected to come almost entirely from a decline in the amount of labor that workers choose to supply in response to the changes in their incentives, we do not think it is accurate to say that the reduction stems from people “losing” their jobs.
Dugald Stewart: Account of the Life and Writings of Adam Smith:
Adam Smith, author of the Inquiry into the Nature and Causes of the Wealth of Nations, was the son of Adam Smith, comptroller of the customs at Kirkaldy, and of Margaret Douglas, daughter of Mr Douglas of Strathenry. He was the only child of the marriage, and was born at Kirkaldy on the 5th of June 1723, a few months after the death of his father. His constitution during infancy was infirm and sickly... but it produced no unfavourable effects on his temper or his dispositions.... Among these companions of his earliest years, Mr Smith soon attracted notice, by his passion for books, and by the extraordinary powers of his memory. The weakness of his bodily constitution prevented him from partaking in their more active amusements; but he was much beloved by them on account of his temper, which, though warm, was to an uncommon degree friendly and generous. Even then he was remarkable for those habits which remained with him through life, of speaking to himself when alone, and of absence in company. From the grammar–school of Kirkaldy, he was sent, in 1737, to the university of Glasgow, where he remained till 1740, when he went to Baliol college, Oxford, as an exhibitioner on Snell’s foundation.
Dr Maclaine of the Hague, who was a fellow–student of Mr Smith’s at Glasgow, told me some years ago, that his favourite pursuits while at that university were mathematics and natural philosophy....
Chris Cilizza is one of the best reporters the Washington Post has now that the Wonkblog crew is heading off to Vox Media. Chris Cilizza also sees nothing odd or ironic in writing:
Chris Cilizza: Why the CBO report is (still) bad news for Democrats: My job is to assess not the rightness of each argument, but to deal in the real world of campaign politics in which perception often (if not always) trumps reality…
Note the assumptions here:
And at this point, all you can do is quote extensively from Plato’s Republic, the passage on the Allegory of the Cave, and urge Jeff Bezos to immediately change the culture of the Washington Post completely so that it can at least try to step up its game...
The University of Michigan's Chris House appears to suffer from the searching-for-false-balance disease.
It's not a big deal.
But it is a neat, clean, and comprehensible example of the damage done by the opinions-of-shape-of-earth-differ disease that Chris House and many others have: the net effect is to excuse the bad faith, ideological partisanship, and failure to do their homework on the part of those working to degrade the quality of our public sphere--and to aid in the drip-drip-drip eroding-away at the influence of those working hard to improve it. Not good. Not good...
Chris House: The Wisdom of Laureates: "Ed Prescott... [has the] most people talking...
is quoted as saying:
It is an established scientific fact that monetary policy has had virtually no effect on output and employment in the U.S. since the formation of the Fed....
Prescott is wrong. It is NOT an established fact the monetary policy has no effect on economic activity. The balance of the evidence suggests the opposite. Monetary policy seems to have clear measurable effects on the economy....
Should we grant Ed Prescott, or Paul Krugman, or Robert Lucas, or Peter Diamond much more credence than other smart observers?... Nobel Prize winners have typically devoted their entire careers to a rather narrow study of a particular area.... They are also often radical thinkers.... Academics are rewarded... for having path-breaking ideas.... An academic who has one or two... might well be viewed as... worthy of a Nobel, even if most of their ideas are crazy.... The price we pay for having unusual insights might be that we often have unorthodox approaches.... Prescott didn’t win the Nobel Prize for having a balanced assessment.... This isn’t limited to Prescott. Even Paul Krugman has been known to say some rather nutty things at times.
The biggest bit that is idiocy is the claim that Nobel Prize winners in general are prone to say "rather nutty things" because saying such is closely linked to what makes them Nobel Prize-caliber. Prescott says nutty things--very nutty things, hugely nutty things, completely nutty things--about what is supposed to be the core area of his expert knowledge on a regular basis. But Krugman? Diamond? Lucas might come within two orders of magnitude of Prescott, but not one (or, if every one, only very rarely). And I see whatever wrong things Krugman and Diamond says as at least three orders of magnitude less than Prescott on the nuttiness scale.
So I (and others) asked Chris House where his ideas were coming from: what evidence made him generalize from Prescott; to the quartet of Prescott, Lucas, Krugman, and Diamond; and then to the quartet of Nobel Prize winners in general?
The conversation did not go terribly well. Samples:
Hi Section 101, 104...
My hrs will likely be: Monday 10-11 am right after section and Thurs. 9-10 am right before section. I am working on securing a room, so I'll announce that very soon. Otherwise, I'll hold office hours at a cafe until them - email me.
What We Do This Week:
Read Essentials of Economics, chapter 4 "Price Controls and Quotas: Meddling with the Market". Finish and hand in Problem Set 1
From: Gillian Lester
Subject: Suzanne Scotchmer
Berkeley Law Community,
It is with deep sorrow that I write to share the news that our colleague, Suzanne Scotchmer, passed away yesterday afternoon. Suzanne is survived by her partner, Steve Maurer, and her brother, Alan Andersen.
President Googly: Google Bus Protests:
In the past month, the situation with the tech buses has gone from mildly annoying to slightly worrisome to bone-chilling. I've heard every side of this argument six different ways by now and I'm really quite hopeless that the root causes can ever adequately be addressed. Furthermore, I've never seen the DFH contingent so thoroughly stink up an issue (i.e., the housing shortage not the damn bus stops) that genuinely calls for a vigorous progressive response.
The most interesting part to me is how unhinged the whole debate is becoming and the weird interaction between a genuine public policy dilemma and a semi-professional Left that's piling on with all kinds of non-answers. This is probably old hat for Bay Area natives, but I'm a neoliberal from back East and I'm not accustomed to finding myself on the "conservative" side of an issue. Also, if you click through to the details of the "protest" at a random Google employee's house in Berkeley, the details are really, really creepy and it is not at all unreasonable to fear for this guy's personal safety.
From my perspective, this bunch of protesters is important to have because they make it impossible to sustain with good faith the argument that neoconservatives have no point at all. They do have a point.
"The central role of beer taxes had revolved around the attractive combination of ease of collection (at a small number of breweries) and inelastic demand. But consumer behavior changed after the mid-seventeenth century as distiller spirits... tea and coffee.... The milling tax rose as the beer tax fell..."
Back last August, Jim Tankersley on the erosion of the "Obama=Policy Uncertainty=Depressed Economy" argument:
‘Uncertainty’ isn’t a problem anymore: Another month, another dive in the Stanford/University of Chicago Economic Policy Uncertainty Index. It’s now down to its lowest level since 2008. The index seeks to measure the effect of policy uncertainty, including pending regulations and expiring tax provisions, on the economy. As you may have heard once or twice over the last few years, many conservatives blame uncertainty for holding back hiring and growth in this recovery. Those lawmakers love to cite this index as proof of elevated uncertainty.
According to the index, the decline of uncertainty this year is clear. And the hiring boom that was supposed to follow? Well…
The LRB says:
You are invited to read this free book review from the London Review of Books. Register for free and enjoy 24 hours of access to the entire LRB archive of over 12,500 essays and reviews.
In the London Review of Books:
Ferdinand Mount: reviews ‘Memoirs of Walter Bagehot’ by Frank Prochaska · LRB 6 February 2014: "There used to be a room in the National Portrait Gallery devoted to portraits of late Victorian sages by G.F. Watts. Inspissated in that painter’s incurably muddy tones, they peered out from behind straggly beards and whiskers with sad, rheumy eyes – Matthew Arnold, Carlyle, Swinburne, William Morris, Leslie Stephen, Tennyson – giving off a steamy despair.
They had heard the melancholy long withdrawing roar of faith, and they did not like the sound of it. Today relegated to a wall in a side room, these literary men seem to take second billing to the wall where the giants of Victorian science are gathered – Darwin, Huxley and Lyall, each whiskered too but each with an unmistakable half-smile playing about his lips. There’s not much doubt which is the winning side.
And misleadingly titled--it's not five, but more like forty:
Joel Suss: Your new book is titled “The Great Escape: Health, Wealth and the Origins of Inequality”. What is the great escape? What are the origins of inequality?
Angus Deaton: The great escape is two things: First, it is one of the basic movies that everybody knew and everybody watched in which some people break out of a German prisoner of war camp in World War II and, you know, they are very sophisticated and they dig tunnels and they make passports and fake documents and all this. And then more than 200 people get out through these tunnels and head for home. Not very many of them make it, which is something we might come back to but it was the great escape. So I use that as a sort of running analogy for the real great escape of the book which is people escaping from a sort of prison of early death, destitution, having very little – living as slaves, no democracy, no education. All the things we take for granted today, at least in some of the world, people didn’t have and so they’re escaping to freedom from the sort of “unfreedoms” of those things.
Joel Suss: The fact that some have escaped necessarily creates inequality, you point out. So the fact that there’s inequality shows that progress is happening for some. You also discuss the ‘dark side’ of inequality.
Angus Deaton: It’s complicated, right? Because it’s not, in the first instance, just bad. I mean, you don’t think that the people who got out of the prisoner of war camp made it that much worse for the people that were in. But let me give you an analogy which I think shows the ambiguity of the problem. In 1964 there was a very famous report in the United States by this surgeon general which was the first to many Americans definite evidence that smoking was really bad for your health. And, you know, that saved a lot of lives because people, they made their escape from addiction to cigarettes because they knew this new information. But one story I tell in this book is that this surgeon general, who’s a gentleman called Luther Terry, was chain smoking on his way to the press conference where he was going to introduce the surgeon general’s report. His aide was sitting next to him in the car and said “Dr Terry, I should prepare you for this, you’re not going to like it but the first question you will be asked is ‘do you smoke’?” and Luther Terry says “that’s ridiculous! That’s a private question, that’s nothing to do with public health”, you know, how dare they? And the aide said “Well, you know, I’m just telling you” and the first question was “Do you smoke” and Luther Terry said “No, I do not smoke” and they said “When did you quit?” and he said “20 minutes ago!”
Turning that story on its head; here’s the surgeon general, he’s a physician and quit within 20 minutes of his own report. Most physicians quit pretty quickly after that too. Most educated people followed. Most wealthy people followed. So then what you had was the people left behind. Now you don’t think that’s bad because you know, OK a lot of people did better, no one’s worse off that they were before, why is the world a worse place? But 50 years later when those inequalities are still there does that seem such a good thing? There’s some structural inequality there which is very – seems very hard to erase and it seems morally very ambiguous. So that’s one sort of inequality that seems really problematic. There are many others.
Joel Suss: In your book you say that inequality perpetuates itself, especially when the very rich have no stake in public health or public education. Can you elaborate on that a bit more?
Angus Deaton: So that’s the dark side of inequality. On the bright side, if the returns for going to school go up then there’s a big incentive to go to school and that brings you up and that seems terrific. On the other hand if you don’t have the talent to go to school you get left behind and there’s nothing you can do about it. And that sort of inequality doesn’t seem like such a good inequality and the people who don’t have that talent are relatively worse off than they were before. But the really dark side is what you just talked about, which is this issue when you get extreme income inequality and these people that are very very wealthy. They’re so wealthy they hardly need any government. They don’t need government education, they don’t need healthcare, they may not even need the police or the law courts because they can buy lawyers and policemen or whatever. They’re relatively independent of these things that the rest of us really need and so they have no interest in paying taxes. So it’s very much in their interests to undermine the provision of public goods.
You know the government shutdown that recently ended in the United States? The fact that it was fought over the healthcare extension, and the fact that that strategy was developed wealthiest people in the United States is a very good illustration of the sort of themes I’m talking about.
Joel Suss: You are concerned about the future of democracy because of this growing inequality. Can you elaborate on this?
Angus Deaton: I think it’s worse in the United States that it is in the United Kingdom because of the pervasive importance of money in politics. But the lobbying that’s become very important in the United States is not just the buying of politics, you can do that anywhere. I think it’s much less important in the UK still, but, before Brits get too complacent about “this would never arise here”, it didn’t use to be very important in the United States either. There’s been an enormous increase in it. In fact the real problem from an economist’s point of view is why isn’t there more of it? Because the rewards for lobbying can be ginormous and the cost of lobbying is way smaller than the rewards so why isn’t there a lot more? I think Gordon Tullock was the first to raise that question of why isn’t there more money in politics? That’s the real puzzle. Basically if the rich can write the rules then we have a real problem.
A couple colleagues of mine have recently written books in which they studied voting patterns in the US Congress and matched them up with the preferences of the constituents of those Congressmen. And they’re very closely aligned with the preference of their wealthy constituents and not at all aligned with the preference of the poor constituents. So there’s a real movement of democracy in the direction of plutocracy and that is something to worry about. On the other hand I don’t think the game is over yet. We may or may not already be at half time or something. If you think about the last election in the United States, one of my favourite stories is that, you know the plutocrats really thought they’d won and they had bought enough polls in pleasing direction to believe themselves that Romney was going to win. Apparently you could not park your private jet in Boston because every fat cat in the country who contributed to the Romney campaign had parked there for the victory party, which of course never took place. So that’s a case where the money did not overcome democracy in that way. And so, the more recent crisis is some attempt to come back at that and so there’s an endless battle over those issues going on but I don’t think we’re done yet.
Joel Suss: The book focuses on two aspects which are important for “the good life” which you say are material well-being and health – why do you look at these together?
Angus Deaton: Because I think you make a terrible mistake if you don’t. My regret is that I don’t know enough or couldn’t write a big enough book to bring other aspects of freedom in there like democracy, education, the ability to migrate, for instance, which is something I don’t really talk about at all and I think is very important. We’ve become very specialised, so economists are left to think about income, doctors left to think about health, and political scientists to think about politics. “That’s your business, this is my business” sort of idea. But if people get richer but they’re totally disenfranchised, that doesn’t seem like such a good deal. If people get richer and their health gets worse, or someone else’s health gets worse as a consequence of them getting richer, it doesn’t seem like such a great idea either.
Even in just the most mundane policy planning, health is becoming more and more expensive, so people are developing cures for cancer but they involve drugs that cost the earth. Are we going to give those to people? If you’re in Britain that would be paid for collectively. But there’s a real cost, so do you really want to, you know, give up people’s pensions for example in exchange for a few months extra life from leukemia for instance? There are some real hard choices there to be made there and you can’t think of them as, you know, “we should just do everything we can to extend people’s lives” or “we should keep people as rich as possible”.
Joel Suss: Now that the top 1% or top .1% continue to amass an ever greater share of society’s wealth – where are we headed? Are you pessimistic or optimistic?
Angus Deaton: The future is enormously hard to predict, as you know! I think there’s a lot of danger and some days I’m pessimistic and other days it seems like…there are forces on both sides of this and you know, people don’t really like being messed around with. One thing we haven’t talked about is the slow down in economic growth in the United States and other rich countries too, and I think that makes all of this that much more poisonous because if the pie’s growing you can give people extra slices without hurting what you have. But when the pies not growing, the only way I’m gonna get something is by taking away from you guys.
Joel Suss: In your new book you write that “foreign aid is doing more harm than good and it is undermining countries’ chance to grow”. Can you explain your argument?
Angus Deaton: The dominant fact for me about most poor countries is that the social contract, the contract between the government and the governed, is not there. It’s very weak and it’s very unsatisfactory and you know in many cases the government is preying on the people, not helping them. It’s what you call an extractive regime rather than a sort of helping, promoting regime. The problem is that if you’re in a country, say in Africa, where there are pretty weak institutions to begin with and you bring in a lot of foreign aid so that the leaders can run the country without ever consulting the voters or the public.
We have also got ourselves into the situation where the donors have to give money even more than the guys have to receive it. Because guys at the World Bank don’t get paid if they don’t shift the money! I think it’s much the same in the UK’s Department for International Development (DFID). I think they have very strong incentives to keep the aid flowing. Of course the people receiving it know that very well and they can behave badly and with impunity. I think that really does make this contract very fragile.
Let me clarify just a little bit though, the real point in my argument is that that mechanism is always there if you’re taking money into the country. It doesn’t mean that you wouldn’t necessarily want to do it if other things are strong enough. The strongest case is possibly that there’s millions of people alive today because of anti-retrovirals who’d otherwise be dead, and those are paid for by foreign aid essentially. Saving those lives counts for a lot, and maybe undermining the government in those circumstances is OK – but your still undermining the government so that’s really what I want to pay attention to.
And finally, “aid”, it’s become clear to me, is used in very different senses. So for instance, if we were in the United States or you here were to develop a new pharmaceutical that made it much easier to deal malaria. Some people would count that as foreign aid. But it doesn’t fall into my definition. My argument is to do with giving money to the country and undermining the government. You don’t do that when you invent a cure for malaria or a vaccine for HIV/AIDS.
Joel Suss: Could you create conditions for the aid money that goes in? Ensure that it is focused in a way that improves upon or establishes institutions that aren’t there?
Angus Deaton: Well that’s the counter argument, I was at DFID recently and they were actually much more receptive than I thought they would be. Many of these arguments are fully familiar to them, which tells me that it’s a very good aid agency. They’re people who don’t have their heads buried in the sand.
People say, ”we’re working really hard to improve institutions”. I’m a little bit sceptical that people from the outside can improve the institutions that a country should have. I give an example in the book of how would Americans react if the Swedish government came and said “we’ll pay for medicare for the next 50 years but you’ve got to legalise gay marriage and let all black people out of jail”. Of course when I was at Princeton I said that and everybody in the room said “I’ll go for that”. But the majority of Americans really would not be so keen on that.
There really is an issue about undermining sovereignty, especially in situations where the country may not have all that much choice. But on conditionality, I would love it, I think that conditionality would be great if you could make it stick but it’s just not credible because the inconstancy problems: once they misbehave you don’t actually want to do it. And secondly because there’s not just one aid agency, there’s thousands of them and if you don’t get it from the US you can get in from Germany or from Britain or from Australia – or in the end you can get it from China.
Joel Suss: In your book’s introduction, you say: “Those of us who were lucky enough to be born in the right countries have a moral obligation to reduce poverty and ill health in the world”.
Angus Deaton: The moral obligation is important because I don’t want it to sound like I’m a heartless bastard who has no interest in this partly because there’s just this: these people are hurting and if you can help them you ought to help them. Secondly, some of their hurt is to do with us, you know the colonial programme was not a great success. It might have been a great success for the Brits, it was not a great success for what happened in India. So we owe them big.
I have students I meet at Princeton who come to me and say “I want to devote my life to making the world a better place” and “I want to dedicate my self to reducing global poverty” and I say there are two ways: one is impossibly hard but I know at least one person who did that, some other people have done it. You go to Sierra Leone, you go to India or wherever. You become a citizen, you use your skills to help local groups agitate. You don’t take any money from outside, you just become like them and you use the skills and knowledge you’ve learnt here to help them. My friend Jean Drèze is an activist in India who’s been incredibly successful in doing this. He had to renounce his Belgian citizenship, it was very hard for him to even get that done. He lives without money because he’s frightened of being compromised by that and he’s been enormously successful. But it’s like the camel going through the eye of the needle right? It’s hard.
The other thing I tell my students to do is go to Washington and tell them to stop selling arms to poor countries. These are very very articulate smart kids who are going to be national leaders and god knows what else. You may not think you have much power now but you really do – go and get high positions, go and put pressure on these bastards to stop doing this. There’s a lot of stuff about aid but not that much publicity for debt relief. What about publicity about Britain selling arms? Fighting on those causes is something that people in our, rich countries have the legitimacy and standing to do because they’re citizens of those countries.
Joel Suss: Will the ‘Great Escape’, the recent exiting of many people in the world from the scourges of poverty and ill health, have a happier ending than the movie that inspired the metaphor?
Angus Deaton: I hope so! I think that I say that there are real threats there, global warming being the most obvious. But there are lots of political threats, from China, from the US. Things could go badly wrong. Bad politics has a long record of destroying human progress for long periods of time. So you want to worry about that. If you were a clear-eyed, reasonable but sceptical person you might easily think that this 250 years of progress could be just a flash in the pan, like what happened in China in the 11th century.
However, I think people always want to make the great escape and even if you have terrible setbacks, you can fill in all the tunnels but you can’t stop people knowing how to dig tunnels. Maybe you can eventually, maybe if you went back into the Stone Age people would forget how to forge documents or whatever you need to do to get out. But there’s an asymmetry there, which if you build some project and you don’t tend it the roads get all weeded up and you can’t use it after a while. But the knowledge that boiled water is safer than not boiled water is not going to evaporate in five minutes. Even if the world came to an end and we were all wandering around my mother would still be telling me to wash my hands!
John Maynard Keynes: Letter to Roy Harrod, July 4, 1938:
Tilton, Firle, Lewes.
4 July 1938
My dear Roy,
There is no doubt that your Presidential Address [to the British Economic Associaton] which I have sent to the printer [for the next issue of the Economic Journal], is very interesting; and it will provoke plenty of thought. Indeed it is much the best Presidential Address for many years. I am very glad to print it in full; but I would remind you that it will take considerably over an hour to read at a reasonable pace.
Introduction to Economic History: Economics 210A
Brad DeLong (firstname.lastname@example.org OH M 1-2 W 11-12) and Barry Eichengreen (email@example.com OH Tu 1-3)
Spring 2014; University of California, Berkeley; Wednesday 1:00-3:00 p.m.; 597 Evans Hall
Readings are available either on the web or, where there exists no web-based copy, at Graduate Services (http://www.lib.berkeley.edu/doemoff/grad/index.html) at 208 Doe Library. Access to readings available through JSTOR and other proprietary sources may require you to log on through a university-recognized computer and enter your Calnet ID. There can be high demand for the readings on reserve at peak times, and the library can make available only limited numbers of copies. In past years some students have found it useful to purchase some of the books from which material is assigned through their favorite online book seller and to assemble the materials for reproduction at a local copy shop.
So I was reading:
Jagadeesh Gokhale, Ph.D., and Angela C. Erickson: The Effect of Federal Health Care ‘Reform’ on Kansas General Fund Medicaid Expenditures
and I ran across this graph:
and the paper's accompanying conclusion:
By 2023, 21 percent of the Kansas population is projected to be on Medicaid under the PPACA—up from 13 percent currently. Kansas Medicaid expenditures are projected to grow by an additional $4.7 billion (29 percent) beyond the increase projected without PPACA.... With ongoing court and congressional challenges, the final chapter of the PPACA law and state Medicaid spending has yet to be written. However, since a federal court judgment has declared PPACA unconstitutional, Kansas lawmakers should vigorously oppose the implementation of PPACA’s health exchanges and other administrative and operational infrastructure...
And then there is, by Gokhale alone, a 2013 update on the Cato Institute's website:
and the paper's updated conclusion:
Kansas’ lawmakers face a crucial decision about whether to expand Medicaid according to the dictates of the ACA. That decision would expand the program and possibly improve health outcomes for low income households. However, that benefit must be weighted against the lost opportunities to spend on other budget programs that are also valuable.... The incremental 10-year cost to the Kansas general fund from expanding Medicaid of $625 million would arise “at the margin”.... It may be better to spend the $625 million on other Kansas budget items...
But there is one number that I cannot find on either graph or in either version of the policy brief:
That $8 billion is the amount of federal dollars the U.S. government will commit to match 100% of extra costs for the first three years and 90% for the next seven if Kansas expands the Medicaid program as ObamaCare envisions. And that is money that will not flow to Kansas if Medicaid is not expanded by Kansas.
The argument that Kansas has better things to spend its $625 million on over the next decade than on expanding Medicaid rings a little hollow when you reflect that cutting $625 million over the next decade from ACA-projected levels reduces what Kansas can buy by not $625 million but rather $8.625 billion. Kansas would have to get 14 times as much state welfare out of a dollar spent elsewhere than out of a dollar spent on its Medicaid program for that argument to apply.
But, I suppose the honchos of the Cato Institute and of the Kansas Policy Institute think, if you don't mention and certainly don't stress the $8 billion number, maybe Kansas's Republican state legislators won't understand what they are doing in rejecting Medicaid expansion.
Here's the context of all mentions of this $8 billion over the next decade--all mentions of the word "match" in the 2013 version of the policy brief:
That's it. No $8 billion number anywhere I can find.
I could go on. I could point out that Gokhale's claims that sustaining the high match rate that produces the $8 billion number is "infeasible" are grossly overstated--and that we will see whether they are true or not in two years, when we will see whether Gokhale's claim that the "100 percent match rates specified for the first three years of the ACA's implementation" are "simply not feasible". That applies to his (12), (10), (7), (6), (3), (2), and (1). I could point out that his claim that federal Medicaid spending would not boost the Kansas economy rests on a bizarre and empty assertion that in the health care sector and the health care sector alone supply curves do not slope upward. That applies to his (11), (10), and (4). I could point out that his claim that federal lawmakers recognize that "such generous matching of new state Medicaid spending on account of Medicaid expansion is, in reality, infeasible" is simply a lie--a misrepresentation of the meaning of proposals and counterproposals in failed 2011 Supercommittee negotiations. That takes care of his (12), (10), and (6).
Now the federal government does have the power to break its deals with states: no congress can fully bind any future congress. But only in Cato Institute-land does the fact that circumstances may change and the optimal level of Medicaid funding for a state may fall in the future carry the implication that the optimal level of state Medicaid funding for a state is low now.
But the thing that strikes me the most is how anxious both Cato and the KPI appear to be to direct attention away from the numbers: that by failing to commit $625 million, Kansas is losing $8.625 billion.
It's as if they fear that their verbal case would simply dry up and blow away if they were to even whisper the terms of the deal being offered...
Jeff Sachs once told us younglings that the Financial Times was "the real newspaper... the newspaper you all need to be reading if you want to become economists..." IMHO, he was correct.
Here we have Emiko Terazono writing about supply, demand, market equilibrium--and the consequences of a shift in preferences that strengthens demand: the dance between nut-snackers in the North Atlantic's, China's, and India's middle classes, cashew traders and brokers, and the cashew farmers of Africa:
Emiko Terazono: Courted for cashews, west African farmers gain strength: "Under the darkness of midnight in Seketia, a farming village in western Ghana, cashew traders and middlemen go knocking from door to door looking for supplies of harvested nuts.
“During the peak harvest, they visit us late at night, trying to get us to sell,” says David Enkamah, a cashew farmer.
Worldwide demand for cashew has grown about 7 per cent a year over the past decade on the back of healthy snacking habits. The treenut, along with sesame seeds (favoured by the Japanese, South Koreans and Chinese) and pigeon peas, a common ingredient in Indian kitchens, are among a number of crops where the balance of power has tilted a little towards African farmers. Growers of cashew, buoyed by demand from India and China as well as resurgent consumption in Europe and North America, are among those defying the stereotype of smallholder farmers in developing countries rendered powerless against the might of multinational companies and market forces.