What If Summers and Romer Are Wrong Again?

I hope this gets passed around the White House like an Atul Gawande article!

Watching PBS NOVA last night, I am still amazed that there are still defenders of the efficient market hypothesis in a pure form. I am 50 years old and remember stagfaltion, the crash of 87, the S&L debacle, the internet boom/bust and our current fiasco. Who is so out of touch that they do not recognize these events for what they were and are: disastrous macroeconomic and microeconomic events casued by oh so 'inefficient' humans?

I an still dumbfounded to hear that conservatives still think that the business leeches will act in the best interests of their companies. They will act in their own best interests, period. And if that means earning $100 million as they ride their company into the ground? Hey, they still have their $100 million.

Greenspan, still such an Ayn Rand dupe, that he still seems to think, exclusive of his mea culpa last year, that we can count on people to act in the ultimate interest of themselves and all will be well. Voltaire's "Best of all possible worlds," for the uber-capitalist set.

Read the Article at HuffingtonPost

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Much Cheaper, Almost as Good: Decrementally Cost-Effective Medical Innovation — Ann Intern Med

Much Cheaper, Almost as Good: Decrementally Cost-Effective Medical Innovation — Ann Intern Med

Under conditions of constrained resources, cost-saving innovations may improve overall outcomes, even when they are slightly less effective than available options, by permitting more efficient reallocation of resources. The authors systematically reviewed all MEDLINE-cited cost–utility analyses written in English from 2002 to 2007 to identify and describe cost- and quality-decreasing medical innovations that might offer favorable “decrementally” cost-effective tradeoffs—defined as saving at least $100 000 per quality-adjusted life-year lost. Of 2128 cost-effectiveness ratios from 887 publications, only 9 comparisons (0.4% of total) described 8 innovations that were deemed to be decrementally cost-effective. Examples included percutaneous coronary intervention (instead of coronary artery bypass graft) for multivessel coronary disease, repetitive transcranial magnetic stimulation (instead of electroconvulsive therapy) for drug-resistant major depression, watchful waiting for inguinal hernias, and hemodialyzer sterilization and reuse. On a per-patient basis, these innovations yielded savings from $122 to almost $12 000 but losses of 0.001 to 0.021 quality-adjusted life-years (approximately 8 hours to 1 week). These findings demonstrate the rarity of decrementally cost-effective innovations in the medical literature.

From Drs. Nelson, Cohen, Greenburg and Kent in Annals of Internal Medicine.

Interesting article explicitly making the argument for more research to figure out where we reach diminshing marginal returns in specific treatments for specific conditions.

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Health Care Cost Increase Is Projected for New Law - NYTimes.com

Health Care Cost Increase Is Projected for New Law - NYTimes.com

But Mr. Foster said, “Overall national health expenditures under the health reform act would increase by a total of $311 billion,” or nine-tenths of 1 percent, compared with the amounts that would otherwise be spent from 2010 to 2019.

In his report, sent to Congress Thursday night, Mr. Foster said that some provisions of the law, including cutbacks in Medicare payments to health care providers and a tax on high-cost employer-sponsored coverage, would slow the growth of health costs. But he said the savings “would be more than offset through 2019 by the higher health expenditures resulting from the coverage expansions.”

The report says that 34 million uninsured people will gain coverage under the law, but that 23 million people, including 5 million illegal immigrants, will still be uninsured in 2019.

Sounds like success to me. Uwe Reinhardt used to estimate it would cost an additional $100 billion a year to cover everyone. This doesn't seem to far off from that estimate.

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A Conservative Accidentally Makes The Case For Social Democracy | The New Republic

A Conservative Accidentally Makes The Case For Social Democracy The New Republic

So, let's look at a straight-up measure. How did the United States perform in comparison with European social democracies? Well, since 1980, the original 15 members of the European Union saw their real per capita income grow by 58%. Real per capita GDP in the United States grew by... 63%. And that measure actually overstates the difference. The European Union does not include Switzerland, Norway or Iceland -- three countries that clearly qualify as European social democracies. Those three countries had 71% growth in per capita GDP since 1980 -- thanks to Isha Vij of the Center for American Progress for pointing this out to me -- which, if added to the EU 15, would bring the growth record of the United States and the social democracies even closer to parity.
Interestingly, Manzi concedes in his essay that social democracy provides superior social cohesion. His essay simply assumes that it inherently produces dramatically lower growth. But now that we can see his assumption doesn't hold up, he's actually making the case for social democracy. To be sure, I'm not a social democrat, but Manzi has inadvertently softened my skepticism. If instituting a social democracy in the United States would dampen growth only very slightly, and create greater social cohesion and economic equality (meaning, for people who aren't very rich, higher living standards), why not give it a try?

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