Stephen Moore Was a Threat to Groupthink at Fed

(p. A15) The following declaration may shock many of my academic colleagues: I support the nomination of Stephen Moore to the Board of Governors of the Federal Reserve.

I say so despite being immersed in the “professor standard” Herman Cain recently decried. I received my doctorate in economics from the Massachusetts Institute of Technology and did postdoctoral work at Harvard, was a professor of business economics at the University of Chicago, and for the past 43 years have taught finance at the University of Pennsylvania’s Wharton School.

The truth is that “professor standards” change. Early models of gross domestic product emphasized John Maynard Keynes’s model of aggregate demand—the amount of goods consumers and businesses’ desire to buy—as the source of national prosperity. Today, the vast majority of economists recognize that it is the supply side—increases in productivity driven by technological innovation—that creates long-term economic growth.

. . .

I’ve been supportive of Fed policy since the financial crisis. But any organization, even a great one, can easily fall victim to groupthink.

. . .

Mr. Moore’s appointment will not itself revolutionize policy-making at the Fed. He will be only one of 12 voting members of the Federal Open Market Committee who, along with seven regional Fed presidents, deliberate on monetary policy. But his presence would serve to remind Fed governors that there are many ways to interpret economic data. The hallowed corridors of our central bank deserve a breath of fresh air.

For the full commentary, see:

Jeremy J. Siegel. “A Professor For Stephen Moore; I don’t always agree with him, but he’d help solve the Federal Reserve’s groupthink problem.” The Wall Street Journal (Monday, April 29, 2019): A15.

(Note: ellipses added.)

(Note: the online version of the commentary has the date April 28, 2019, and has the same title as the print version.)

Obamacare Architect Ezekiel Emanuel “Will Be Satisfied” with 75 Years

(p. A13) Ezekiel Emanuel, a 61-year-old oncologist, bioethicist and vice provost at the University of Pennsylvania, says he will be satisfied to reach 75. By then, he believes, he will have made his most important contributions, seen his kids grown, and his grandkids born. After his 75th birthday, he won’t get flu shots, take antibiotics, get screened for cancer or undergo stress tests. If he lives longer, that’s fine, he says. He just won’t take extra medical steps to prolong life.

“People want to live to 100 but your horizon of what life is becomes much, much narrower,” he says.

For the full story, see:

Clare Ansberry. “TURNING POINTS; The Advantages—and Limitations—of Living to 100.” The New York Times (Tuesday, May 21, 2019): A13.

(Note: the online version of the story has the date May 20, 2019, and has the same title as the print version.)

Fear of Malpractice Suits Increases Useless Medical Care by 5%

(p. B4) Researchers from Duke and M.I.T. . . . offer what is perhaps the most precise estimate of how much defensive medicine matters, at least for care in the hospital. They found that the possibility of a lawsuit increased the intensity of health care that patients received in the hospital by about 5 percent — and that those patients who got the extra care were no better off.

“There is defensive medicine,” said Jonathan Gruber, a health economist at M.I.T. and an author of the paper, which was published in draft form Monday [July 23, 2018] by the National Bureau of Economic Research. “But that defensive medicine is not explaining a large share of what’s driving U.S. health care costs.”

Mr. Gruber and Michael D. Frakes, a Duke economist and lawyer, looked at the health care system for active-duty members of the military. Under longstanding law, such patients get access to a government health care system but are barred from suing government doctors and hospitals for malpractice. Their family members can also use the military hospitals, but they can sue for malpractice if they wish.

Their study looked at what happened to the hospital care that military members received when a base closing forced them to use their benefits in civilian hospitals, where it was possible to sue. Spending on their health care increased, particularly on extra diagnostic tests.

They also found that, even within the military hospitals, family members who could sue tended to get more tests than those who could not.

For the full commentary, see:

Margot Sanger-Katz. “Doctors’ Fear of Lawsuits May Hit Patients in the Wallet, Study Hints.” The New York Times (Tuesday, July 23, 2018): B4.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date July 23, 2018, and has the title “A Fear of Lawsuits Really Does Seem to Result in Extra Medical Tests.”)

The Frakes and Gruber working paper, mentioned above, is:

Frakes, Michael D., and Jonathan Gruber. “Defensive Medicine: Evidence from Military Immunity.” National Bureau of Economic Research, Inc., NBER Working Paper # 24846, July 2018.

$15 Minimum Wage Equals Income About Twice Federal Poverty Level for Household of Two

(p. B1) The legal minimum wage in the United States is $7.25 per hour, . . .

The minimum wage roughly meshes with federal poverty guidelines. According to the guidelines, a two-person household with a total annual income below $16,910 is considered to be living in poverty. To clear the poverty line, one of those two people would have to make $8.13 an hour or more. At least 17 states have minimum wages higher than that. The $15-per-hour minimum wage in New York City, for example, translates to an annual income of $31,200, which is almost twice the federal poverty level for a household of two.

For the full story, see:

Eric Ravenscraft. “Do You Earn a ‘Living Wage’? Cut Through the Confusion.” The New York Times (Saturday, June 8, 2019): B1 & B5.

(Note: ellipsis added.)

(Note: the online version of the story has the date June 5, 2019, and has the title “What a ‘Living Wage’ Actually Means.”)

Cost of Housing Is Main Driver of Migration from Superstar Cities

(p. B1) Last month the Census Bureau confirmed a confounding dynamic taking hold across the American landscape: Superstar cities, the nation’s economic powerhouses, hotbeds of opportunity at the cutting edge of technological progress, are losing people to other parts of the country.

For the first time in at least a decade, 4,868 more people left King County, Wash. — Amazon’s home — than arrived from elsewhere in the country.

Santa Clara County, Calif., home to most of Silicon Valley, lost 24,645 people to domestic migration, its ninth consecutive annual loss.

The trend is becoming widespread. Eight of the 10 largest metropolitan areas in the country, including those around New York, San Francisco, Los Angeles and Miami, lost people to other places in 2018. That was up from seven in 2016, five in 2013 and four in 2010. Migration out of the New York area has gotten so intense that its total population shrank in 2018 for the second year in a row.

. . .

(p. B5) Research by Peter Ganong from the University of Chicago and Daniel Shoag of Harvard suggests that housing costs are a principal driver of the change in migration decisions: As the highly educated have flocked to superstar cities, they have pushed housing prices way beyond the reach of people earning less. Continue reading “Cost of Housing Is Main Driver of Migration from Superstar Cities”

“Nimble” Entrepreneurs May Succeed at Fusion, Where Government “Behemoths” Have Failed

(p. B1) The fusing of hydrogen atoms requires incredible heat and pressure, and for decades fusion research has been the exclu-(p. B7)sive province of big science, like ITER, a 35-nation thermonuclear project in the south of France that covers 100 acres and is expected to ultimately cost more than $20 billion.

Such initiatives, though, have made slow progress toward the ultimate goal of building a machine that generates more power than it takes in.

Fusion is now attracting science-minded entrepreneurs and investors willing to make a long bet. They see small companies as more nimble than government-funded behemoths. They are sensitive to rising alarms over the impact of climate change. They want to create a power source with enviable possibilities: millions of times the energy potential of oil and gas and substantially more than nuclear power, without the carbon emissions of fossil fuels.

Fusion proponents also say that it is free of most of the risks of contemporary nuclear plants — which are powered by splitting, not joining, atoms — and that it has advantages over wind and solar, whose output is variable and whose turbines and panels require enormous space.

“There is no doubt in my mind that humanity will eventually succeed in making fusion energy happen,” said Robin Grimes, a professor of physics at Imperial College, a public research university in London. “We’ve got no choice.”

For the full story, see:

Stanley Reed. “Fusion Powers the Sun. Can It Run Your Oven?” The New York Times (Tuesday, May 14, 2019): B1 & B7.

(Note: the online version of the story has the date May 13, 2019, and has the title “The Fusion Reactor Next Door.”)

Australia’s 28 Years With No Recession Challenge Business Cycle Cliches

(p. 6) I had flown 16,000 miles . . .  to study . . .  the remarkable resilience of the Australian economy, which has gone nearly 28 years without a recession.

. . .

America is on the verge of its own economic milestone: The current expansion is on track to reach its 10th birthday this summer, which would also put it on record as the nation’s longest streak without a recession.

During the decade I’ve spent chronicling that growth as an economics writer, a persistent whisper has been: How long can it go? The run has been uneven, underwhelming and repeatedly on the verge of unraveling, including scary moments in 2010, 2015 and this past December. Seemingly every commentator without a good cliché blocker has referred to it as “long in the tooth.” Continue reading “Australia’s 28 Years With No Recession Challenge Business Cycle Cliches”