Woe is Medicaid

Medicaid’s open-ended matching grants to the states have led to huge cost growth, but not better health care. Congress should give each state a fixed amount of funding and free them to experiment with better ways of providing care for the needy. Limiting annual growth in the block grant to five percent would save $760 billion.

Secure Social Security

Social Security has huge unfunded obligations, and it causes ongoing damage by reducing personal savings and harming labor markets. Meanwhile, spending on federal disability programs has soared as the number of recipients has multiplied.

America should move to a system of personal accounts for retirement and disability, but meanwhile we would save $640 billion by indexing initial benefits to prices, modestly raising the retirement age, and trimming the disability rolls by one quarter.

Save the Earth, Save Some Bucks

The Earth Institute of New York’s Columbia University conducted a survey and published their results on how clueless consumers are in regards to saving energy. The study noted that switching to more efficient technologies was more effective than behavior change, something few consumers realized.

In other words, switching the lights off will save very little energy. Making the right buying decisions when purchasing new appliances is far more cost-effective in the long run. Households could reduce energy consumption by up to 30 percent by choosing energy efficient appliances.

X-mas Spending

Data predict a 1.7% to 2.4% increase in holiday retail spending this year. So why have retailers considered this a bad thing?

Well, the population has increased, so even if individual Americans spend less in 2013 than they spent in 2012, the number of people spending money will be greater, thus somewhat offsetting this year's decline in per-capita spending.

In fact, population growth is a key reason holiday retail spending almost always rises. According to National Retail Federation, the average increase in holiday retail spending over the past decade has been about 3%. In a good year, sales will rise by 4% or better, and in a not-so-good year, by 2% or less. By that reckoning, this is not a banner year.

Medical Waste

In a fine recent volume entitled “Best Care at Lower Cost”, the Institute of Medicine of the National Academy of Sciences deconstructed medical waste in America. The chart below, adapted from the report, enumerates the sources of estimated waste.

Of course, these numbers are merely the study panel’s best estimates and clinical judgments. One can imagine a lively debate over some of the estimates, especially the estimated $210 billion spent on “unnecessary services” or the estimated $105 billion attributed to “excessively high prices". And yet, it is almost certain that American costs are significantly higher than those in other developed nations, such as Canada.

Elasticities and Energy

A recent study has established that employment is affected by oil prices in a very particular way.  

Elasticities of Employment w/r to Oil Prices

Total U.S. Employment	-0.02
Coal Mining	0.24
Oil and Gas Extraction	0.40
Oil Field Machinery	0.29
Refining	-0.03
Petrochemicals	0.36

In other words, though a doubling in the price of oil would decrease employment in America by 2%, it would increase employment within most sectors of our oil production matrix by leaps and bounds. If accurate, this might shed light on some perverse political incentives.

Turkey Exports

Turkey exports began rising sharply in the early 1990s, and are expected to account for 12.2% of this year’s total U.S. supply.

According to the National Turkey Federation, Mexico is the biggest market for U.S. turkey, importing 412.7 million pounds last year, Canada is next at 31.2 million pounds and Hong Kong is third at 26.6 million pounds.

CEPR - Graphical Economics

Want to know what's been happening with trends in housing, labor, wages, prices, etc....? Then place this graphical economics page from the Center for Economic and Policy Research among your bookmarks and check back regularly.


The page provides simple, clean, graphical analysis with lucid and concise interpretations, and it is updated promptly and regularly.

Disability System Disabled

The combined spending on Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) has risen to a huge $200 billion a year, and it seems many of the nearly 12 million Americans who receive such benefits are merely scamming the system, a system that will soon run dry, provided that taxes on working people are not raised substantially.

The abuse and overspending in government disability programs is so bad that even National Public Radio and 60 Minutes have taken notice.

Trade in North America

Metropolitan areas in the United States, Canada, and Mexico contain 77 percent of the three countries’ total population but generate 86 percent of their combined GDP.

These 432 metropolitan areas, with populations of at least 100,000, generate even higher shares of national and continental output in key advanced manufacturing sectors—aerospace, automotive, electronics, machinery, pharmaceuticals, and precision instruments.

Furthermore, North American trade accounts for 28.9% of total U.S. global trade.

The 47%, or 43%, or...

Recall Mr. Romney's silly utterance regarding taxes? Well, if not, you'll find a nice little video primer below that summarizes his folly fairly succinctly.

Income Redistribution

This paper considers how Social Security’s many benefit and tax features have redistributed income across groups over time.

Using Current Population Survey data from 1970 through 1994 and micro-simulation projections from the Urban Institute’s DYNASIM3 model, research found that for many decades, Social Security redistributed from African-Americans, Hispanics, and other people of color, to whites.

And these transfers will likely to continue in future decades, as findings suggest that future reforms that place the burden of Social Security reform solely on younger, more diverse generations may have undesired distributional consequences if the aim of the program is to provide greater relative protections to more vulnerable groups.

Who Pays Income Taxes?

At left, is a typical distribution table for federal income taxes in 2013 from the Tax Policy Center, a joint venture of the Urban Institute and the Brookings Institution, that generally follows the Treasury’s methodology. These data do not include other taxes such as the payroll tax, corporate tax or estate tax.

The table shows the share of total income taxes paid; a negative number indicates that a particular income group gets a net refund from programs like the earned income tax credit. In aggregate, households earning less than $50,000 pay no federal income taxes and those making more than $1 million pay 34.2 percent of all federal income taxes.

Who Pays Corporate Taxes?

Most economists agree that the burden of the corporate income tax falls on labor to some extent, but there is disagreement over the degree.

While Treasury economists conclude that 82 percent of the corporate tax falls on capital and 18 percent on labor, all assumptions may be called into question when dealing with any specific tax reform proposal.

For example, a change in depreciation allowances is mainly going to affect manufacturing companies, whereas a change in the taxes on foreign-source income will have an impact only on multinationals.

And Oxford University economist, Li Liu and a Rutgers economist, Rosanne Altshuler, argue that labor bears most of the burden of the corporate tax. They empirically examined wages among industries and concluded that labor bears about 60 percent of the corporate tax burden. That is, a $1 increase in corporate taxes will reduce wages by about 60 cents.

So, the incidence of corporate income tax remains, for the moment, an open question.

U.S., Oil Exporter

While federal law bars overseas shipments of most U.S.-produced oil, refiners can export petroleum products created from that crude, including gasoline, diesel and jet fuel.

In July, U.S. refiners shipped a record 3.8 million barrels of products a day to places as far flung as Africa and the Middle East, according to the monthly data from the Energy Information Administration. That volume is nearly 65% above the 2010 export level, when the U.S. oil boom was still in its infancy.

U.S. Energy Evolution

Though many seem unaware, there has been a dramatic change in the energy fortunes of the U.S. – the country is poised to shift from a net natural gas importer to a net natural gas exporter by 2020 and its dependence on oil imports is projected to fall from 60 percent in 2005 to 34 percent in 2019.

Clinical Trials Are A Gamble

In a famous 2005 paper published in The Journal of the American Medical Association, Dr. Ioannidis, an authority on statistical analysis, examined nearly four dozen high-profile trials that found a specific medical intervention to be effective. Of the 26 randomized, controlled studies that were followed up by larger trials (examining the same therapy in a bigger pool of patients), the initial finding was wholly contradicted in three cases (12 percent). And in another 6 cases (23 percent), the later trials found the benefit to be less than half of what was first reported.

It wasn’t the therapy that changed in each case, but rather the sample size. And if more rigorous, follow-up studies were actually done, the refutation rate would likely be far higher.

Doctors Wrong 20% of the Time

Remarkably often, physicians get things wrong. Studies have shown that up to one in five patients are misdiagnosed.

In the United States and Canada it is estimated that 50,000 hospital deaths each year could have been prevented if the real cause of illness had been correctly identified.

NFL Fights Cancer...8%

According to a report from Business Insider, approximately 8 percent of sales from pink NFL merchandise go toward cancer research.

The league uses the color on its jerseys and other apparel to raise money for breast cancer research, but the breakdown of how revenue from sales of the apparel gets distributed is as follows: 50 percent to the retailer; 37.5 percent to the manufacturer; 8.1 percent to the American Cancer Society for research; 3.24 percent to the administration at the Society; and 1.25 percent to the NFL.

If fans want to show support for their team and for breast cancer awareness, that's great. But if the point is to actually help fight cancer, fans would have a much bigger impact if they skipped the NFL and donated directly to the ACS.

Learn More, Earn More

In the last six years, American higher education institutions conferred nearly 3.5 million more degrees than they had over the previous six years. By last year, 29.8 percent of men and 37.2 percent of women ages 25 to 29 possessed four-year college degrees.

In time, it is likely that these young college graduates will find work and earn pay that is significantly higher than they would have earned had they not gone to college.

In 2012, two-year-degree holders earned close to $7,000 more per year than their high-school-diploma-only counterparts. Someone with a four-year degree earned roughly $15,000 more than that same someone with an associate degree. And a professional degree reaped nearly $35,000 more than a four-year college degree, according to the Department of Labor.