Sunday, July 26, 2009

Is healthcare a true market ??

(Opinion) (Draft) Well, it is a little late, but the US is starting to debate whether the US healthcare system is a true market or not. And if they are subject to market force, will they respond in the optimal way. Can we design the right incentives ??

Many economists, both on the left and the right, believe that markets allocate goods in the most optimal fashion compared to other systems(such as cronyism, a dictator or communism)

However, the real question is whether there is a working "market" for healthcare ??

From econ 101, we define markets as 1) having lots of buyers and sellers with no buyer or seller being able to influence the market. 2) Perfect information. 3) 4). In real life there are few, if any, perfect markets, but it does not matter. Goods and services are allocated very efficiently.

However, in health care, there is notable lack of market fundamentals.

I don't believe the healthcare system can work as efficiently as government run program.

1) Size matters
2) Profit is the wrong incentive in healthcare
2) Profit costs someone
3) Government is efficient enough

Other examples: Police, Army, Courts


Kaiser Family Foundation

The Kaiser Family Foundation is a non-profit foundation focused on US health care system research. It collects, analyzes and publishes statistics and polls on US health system.

Probably the best site on the web for true health care information.

Organization for Economic Cooperation and Development

The Organization for Economic Cooperation and Development or OECD is the leading source for comparison statistics on the the world's developed economies. It collects information on economic, finance, trade, development, healthcare, agriculture, tax and technology indicators. Key members include US,France, Germany, Japan, UK, Italy, Canada, Mexico and Australia.

When a country joins the OECD, it is considered to have "arrived" in terms of 1st world development. Mexico was admitted in 1994; Korea and Poland were admitted in 1996. BRIC (Brazil, Russia, India and China) countries have been invited to join.

The organization has a reputation for promoting free market policies.

Headquarters is in Paris, France.


Presidential News Conference on Healthcare

I listened closely to the President's news conference on Healthcare. It was quite a masterfully performance compared to his predecessor. Obama comes off as very "teacher" like when he is explaining his point of view.

I am happy he continues to mention a government option to compete with private healthcare insurance. He continues to bring up the poll tested, feel good answers answers like: "it won't add to the deficit","We will pay for it by getting ride of waste", and "everyone can used the doctor of their choice." And he wants to cover everyone.

There was no mention of mandated coverage for small businesses. We will have to wait and see on that one.

I also like how he, in the great political tradition, completely dodged the question about what the American people would have to give up. The answer is simple: either pay more or give up the gold-plated healthcare we currently have. And who knows, we might be healthier in the long run if healthcare is limited by price or policy. At least we won't be broke.

The preseident and many healthcare economists and cost analyst frequently reference the OECD's health care data set. You can view some of the OECD Healthcare Data Here

Tuesday, July 21, 2009

Bad for Economy; Good for Economists

Well, the economy is still bad. The next national unemployment situation release is August 7th, 2009 by the BLS. This next report could be critical. May's report was for a loss of 322,000 jobs but June's unemployment report showed an acceleration of 467,000 job losses. If the new report of losses is above 467,000 (June), consumer confidence will take a hit. Above 322,000 is still very bad but less of a danger to the economy. My guess is for something around 350,000.

And the big question is when we will start with job creation ? When the the job numbers go positive ?? And in which sectors ??

We will also get a preview of unemployment situation on July 29th, 2009 with the release the Local Area Unemployment Statistics (LAUS)which measures unemployment in the 310 largest metropolitan areas in the US.

Meantime, it is a great time to be an economist or economic commentator. Business is booming. Economists and economic stories are the stop stories now. Check the Economist cover story on economics. And Jack Welch has been replaced by Paul Krugman as the economy's chief commentator. Economic news is top of mind right now. People are starting to understand some of the basic principals of economics. Soon everyone will have a basic understanding of economic issues. And the country will better for it.


Tuesday, July 14, 2009

Bureau of Labor Statistics

The Bureau of Labor Statistics the main US government collector of economic and labor statistical data. The BLS is part of the United States government department of labor and is based in Washington, DC. The BLS collects and employment data for the united states including the "official" unemployment rate and the consumer price index.

National Bureau of Economic Research

The National Bureau of Economic Research (NBER is a non profit research organization based in Cambridge, MA, USA. Its primary focus is on the economy and business cycles of the United States.

The NBER is known for it's business cycle dating committee. The committee determines when a recession and expansion “officially” begin and end. It is also know for the large number of nobel prize winning economists who have conducted research at NBER.

Long term unemployment rate and averages

Ok, Here is a chart of the unemployment rate since January, 1948. The data is the unemployment percentage of the civilian population for all persons 16 and older. It is taken from a data series at the Bureau of Labor Statistics.

This charts highlights a lot of interesting topics.
1) The current recession is longer than previous recessions. At 18 months, it is the longest recession since the great depression. The unemployment rate is about 4% over it's long term average.
2) The long-term unemployment averages (60, 30, 20 and 10 year averages) are generally between 5.2% and 6.1%. The current unemployment rate, 9.5%, is about 3.4-4.3% higher than the long term averages for unemployment
4) In the 80's, 90's and 00's the recessions were relatively mild and short.
5) There have been recent times, when the unemployment rate was low. In April and September of 2000 the unemployment rate was below 4% and in October 2006 is was below 4.5%.

Thursday, July 9, 2009

Recession has almost wiped out all the job gains of past 8 Years

The jobs picture is getting very scary out there. It looks like the current recession has almost wiped out all of the job growth since the last downturn in 2001. And current recession looks like it will continue for another year or so.

Recessions are generally defined as two consecutive quarters of decline in the gross domestic product (a measure of domestic production). But the recession dating committee from National Bureau of Economic Research (NBER) is adding more weight to employment numbers. According to the NBER the recession started in December 2007 when non farm payroll reached it's peak.

From, November 2001 (the end of the last downturn) to the beggining of the current recession, the US has added over 7 million jobs. Now the current recession has wiped out 6.5 millon jobs. It will pass 7 millon mark in the next two months if the average monthly loss (-330,000) jobs continues.

Tuesday, July 7, 2009

Employment numbers drop again; unemployment up

Figure 1. General Unemployment Rate

The Bureau of Labor Statistics released it's monthly unemployment report for June on July 2, 2009. The big news was that non farm payroll employment dropped by 467,000 in June versus 322,000 in May. A 31 percent increases in job loses over the prior month. A sign pointing to a longer and deeper recession.

Figure 2. Non farm payroll

The general employment rose 0.1% to 9.5 while the Black employment rate decreased by 0.2% to 14.7% from 14.9%.

Figure 3. Black unemployment rate

Monday, July 6, 2009

Ghana Radio Ads supports Obama's visit

The government of Ghana is running radio before US president Obama's visit to the west african nation.

One ad says, ""First black president of the United States of America, you have become a shining star, and despite the height of your achievement you are still proud to be called a black man. Barack Obama is coming home. He is coming to Ghana, Gold Coast, the center of the world."

Obama's arrives in Ghana on Friday.

And the winner is: GHANA !!!

President Obama's first sub-sharian trip in African will be to Ghana. The other possible destinations were Nigeria, Kenya and South Africa. But Kenya had a vicious ethnic battle and South Africa has plenty of time with the coming world cup and no real ploitical advantage. The race was really between Nigeria (150 Million) and Ghana (22 Million). And Ghana won.

Ghana, has several advantages over Nigeria that better fit the presidents agenda. It is a stable economically and politically. Ghana enjoys a high economic growth rate: 6.3%, per capita income and standard of living compared to the rest of Africa. Politically, Ghana recently completed the transition of power from one party to a another. Also there is oil.

Nigeria has a record of corruption, military repression and oil fueled violence.

In an exclusive interview with a journalist from website, Obama said, "part of the reason is that Ghana has now undergone a couple of successful elections in which power was transferred peacefully, even in a very close election. President Mills has shown himself committed to the rule of law, to the kinds of democratic commitments that ensure stability in a country. I think that there is a direct correlation between governance and prosperity. "

Basically, they had a close election. They transitioned power peacefully and they should be rewarded for their success. Nigerial and Kenya had the opposite action when they held recent elections.

Obama arrives Friday Evening, July 10th, 2009 and will stay for a 24 hour period.

Sources Used:

News Sources

From time to time we are asked about our sources

Version 5 as of January 6th, 2010

LA Times
Jamaica Gleaner
China Daily

Black Daily Sources
The Root
black talkers
Maynard Institute for Journalism
All Africa

Black Weekly Sources

Google Alerts
unemployment, jobs, training, Blacks, education, unions, Hispanics, Latinos
Africa, Asian, race, labor, economics


The daily voice
The black world today
Philadelphia Tribune
Amsterdam News
NY Carib News
Jamaica Gleaner



Foreign Policy
New Yorker

Think Tanks

Government Sites

Consulting Companies

Academic Journals


Black Blogs
The root


The library of Economics and Liberty - Conservative

Wednesday, July 1, 2009

Social Compact: Inner City Market Development

I just heard about Social Compact, a consulting company, on NPR marketplace. They produce market justification studies for corporate clients. They examine the "hidden" spending power of inner city and minority neighborhoods. The studies are paid for by foundations hoping to lure national chain stores into city neighborhoods. They hope the big chains will provide jobs, lower cost and higher quality goods, and increased local taxes.

Supreme court attacks anti-discrimination practices


Supreme court decision in New Haven Firefighter case deals a blow to protection against discrimination in hiring and promotion.

On June 30th, 2009, the United States Supreme court found that white fire fighters were discriminated against when the City of New Haven discarded their test results. The court decided that fear of a lawsuit by minority fire fighters was not sufficient justification to reject test results with a disparate impact.

The ruling was decided 5-4 by the conservative majority. The conservative court seems to delight in narrowing or overturning civil rights legislation. The also actively hunt for cases linke this to narrow the intent of the legislated law.

The court decided that New Haven erred when it threw out the fire fighters test results. The test results plus the current New Haven civil service policy would have led to only one member of a minority group being promoted to officer level. A clear disparate impact in a city that is greater than 50% minority. The court also ignored testimony regarding the test itself. The test was skewed toward written answers rather than oral answers. Traditionally, Blacks do better on the oral part than on the written part.

However, the court failed to consider the long history of employment discrimination in government and fire fighting. Reading the disent, the history of anti-discrimination laws were extend to state and local governments because of the acute disrimination in police and fire fighting ranks.

"In the early 70s, when New Haven was 30% Black, only 3.6 percent of firefighter were Black. At the command level things were far worse. Only one officer of 107 was Black. Currently the city is over 50% minority but the senior ranks are 9% Black and 9% Hispanic.

The exam was also problematic. During testimony to the city of New Haven, the exam was

I have always been curious why fire houses have been so slow to integrate while other branches of state and local government are very diverse. I suspect fire fighting is one of the last of the "easy" jobs still controlled by nepotism and cronyism. I would propose reducing pay while increase the workload. Then we will see how quickly they hire minorities.

If you want to see the real truth, read Ginsburg's dissent starting on page 55. Also check out Griggs v. Duke power the most important case on employment testing.



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