## For the Weekend...

IMHO, the major thing wrong with Her as a set of changes on 'Pygmalion" was the absence of the Alfred P. Doolittle character...

## Econ 2: Further Reading: John Maynard Keynes's Definition of What Economics Should Be

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.

Continue reading "Econ 2: Further Reading: John Maynard Keynes's Definition of What Economics Should Be" »

## Econ 210a Readings (Spring 2014; UC Berkeley)

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.

## The Cato Institute Tries to Make Kansas Poorer and Close Its Safety-Net Hospitals: The View from The Roasterie LXXXVII: January 31, 2014

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:$8 billion.

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: 1. "This assumes that the federal government maintains its match of state Medicaid expenditures, hardly a guarantee given the federal government’s extremely unsound financial condition." 2. "Despite promises of generous federal matching in the short and medium term, a decision to expand Medicaid as prescribed by the ACA would risk an escalation of Kansas’ general fund health expenditure commitments beyond affordable levels." 3. "It is unclear whether this matching rate schedule will be maintained beyond 2020 and even whether the schedule prescribed under the ACA through 2020 can be sustained." 4. "The high currently-promised match rate is intended to suggest that state general-fund commitments for Medicaid expansion would be a relatively small portion of the total increase. and that federal matching funds for Medicaid expansion would help spur economic growth in states' health-care sectors and to state economies generally. The latter claim, however, is rather weak because the supply of health-care goods and services is unlikely to keep pace with the growth in demand." 5. "The 'Mandate Effect' line and the 'with ACA' line begin to diverge in 2017 when the federal match rate for newly-eligible individuals is reduced to below 100 percent." 6. "The Federal offer of free coverage to state residents (under a 100 percent match rate) together with the promise of almost feee coverage (at least a 90 percent match rate) through 2020 and possibly beyond.... Federal lawmakers are fully aware that such generous matching of new state Medicaid spending on account of Medicaid expansion is, in reality, infeasible." 7. "The federal government's fiscal condition is so poor--with rising debt and deficits projected "as far as the eye can see" and debt projected to climb close to 100 percent of annual GDP--that sustaining a 90 percent match rate for state Medicaid expansion (or even the 100 percent match rates specified for the first three years of the ACA's implementation) is simply not feasible." 8. "Even with the federal matching promised under the ACA, post-2016 growth in Kansas' outlay for Medicaid expansion will be quite rapid." 9. "Once the federal matching rate stabilizes after the year 2019, the annual cost growth is estimated to be about 8 percent per year." 10. "This calculus may remain valid, despite the federal government's promise of sizable matching funds, especially if Kansas' policymakers properly discount future federal dollars, recognizing the large uncertainties attaching to those promises." 11. "The additional federal dollars from the generous matching rate promised for Medicaid expansion is unlikely to result in any significant expansion in economic activity in the state." 12. "The generous federal offer of matching funds for Medicaid expansion may tempt some lawmakers into opting for Medicaid expansion. However, the federal government's financial condition his extremely unsound and recent Medicaid funding policy proposals by the Obama administration... reveal the unsustainable and time-inconsistent nature of the generous federal promise." That's it. No$8 billion number anywhere I can find.

## Things to Read on the Evening of January 25, 2014

1. Mark Thoma sends us to: Dean Baker: When Someone Says Paul Krugman Called for Greenspan to Create a Housing Bubble Back in 2002, They are Trying to Say That They are Either a Fool or a Liar: "Paul Krugman is a very smart person who does a fine job of defending himself. But he has enough detractors who repeat the same nonsense enough times that some reasonable people may actually be deceived. For this reason, I will briefly intervene to point out that the people claiming Krugman called on Greenspan to create a housing bubble in 2002, like Bret Stephens in the Wall Street Journal today, are just making stuff up..."

2. Bill C.: Twenty-Cent Paradigms: Rodrik on Our Science-ish-ness: "Dani Rodrik offers offers a number of characteristically interesting thoughts on the topic, including.... 'Economics is really a toolkit with multiple models--each a different, stylized representation of some aspect of reality. The contextual nature of its reasoning means that there are as many conclusions as potential real-world circumstances. All economic propositions are “if-then” statements. One’s skill as an economic analyst depends on the ability to pick and choose the right model for the situation... a craft rather than a science'.... As Keynes said: 'Economics is the science of thinking in terms of models joined to the art of choosing models which are relevant to the contemporary world'."

3. Review of The Second Machine Age: Technology and work: Learn ‘n’ go: "The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies. By Erik Brynjolfsson and Andrew McAfee. W.W. Norton; 320 pages; \$26.95. IN 2012 Erik Brynjolfsson and Andrew McAfee took a ride in one of Google’s driverless cars.... Only a few years earlier, 'We were sure that computers would not be able to drive cars'.... Machines have mastered driving. And not just driving. In ways that are only now becoming apparent, the authors argue, machines can forecast home prices, design beer bottles, teach at universities, grade exams and do countless other things better and more cheaply than humans.... Information technology... is... exponential... explosive... recombinant.... This will have one principal good consequence, and one bad. The good is bounty. Households will spend less on groceries, utilities and clothing; the deaf will be able to hear, the blind to see. The bad is spread. The gap is growing between the lucky few whose abilities and skills are enhanced by technology, and the far more numerous middle-skilled people competing for the remaining jobs that machines cannot do, such as folding towels and waiting at tables."

Continue reading "Things to Read on the Evening of January 25, 2014" »

## Morning Must-Read: Dylan Scott: 60% Of KY GOPers Buck McConnell, Support Medicaid Expansion

The Foundation for a Healthy Kentucky... found that 60 percent of self-identified Republicans said they support expansion. In total, 79 percent of Kentuckians agree.... McConnell spokesman Robert Steurer dismissed the findings. 'Most new Obamacare enrollees are not on private plans, but are added to the state’s struggling Medicaid program', he said, 'where one hundred percent of these costs will be picked up by taxpayers and where there is already a shortage of physicians accepting Medicaid patients'. More than 120,000 Kentuckians have enrolled in Medicaid through the state's Obamacare website since it launched in October...