In honor of the first week in our Healthcare Economics class, and the beginning of a 6 week session on healthcare via OLLI, here is an interesting report from The New York Times.
National health spending rose a slight 3.9 percent in 2010, as Americans delayed hospital care, doctor’s visits and prescription drug purchases for the second year in a row, the Obama administration reported Monday.
The recession, which lasted from December 2007 to June 2009, reined in the growth of health spending as many people lost jobs, income and health insurance, the government said in a report, published in the journal Health Affairs.
from The New York Times
There are a couple of takeaways from this news.
First, the reduction in spending on healthcare could mean a welcome, albeit temporary relief to those governments and organizations that pay for healthcare….BUT…no real relief for state and local agencies which provide/finance healthcare for poor people. Recessions, of course, result in greater numbers of people qualifying for government-supported care.
The other point is a reminder that some portion of healthcare services are discretionary. When healthcare spending was growing by 10 percent or more each year in the 1980s, that growth probably wasn’t driven by an increase in the need for services. Likewise the slower growth over the last several years is probably not due to the population getting healthier and needing fewer services. Instead, people moderated their demand for healthcare. They put off diagnostic tests, or did not follow through on treatments or prescriptions. Going in the other direction, hospitals routinely see increases in elective surgeries near the end of a calendar year, as people have already met insurance deductibles, and decide to seek care before those deductibles are reset in the new year.
Is this good news? Not necessarily. To the extent the people put off truly necessary tests and treatments, those delays may cost us more in the long run. To some extent, though, tough economic times force us to be more cautious about discretionary spending, and there may be very little impact on long run health status. There is the old saying that if you get a cold, it will take 7 days to go away, but if you see a doctor you’ll be cured in a week! One important element of effective healthcare reform is to introduce that sense of caution in our population. It is a delicate balance – not wanting to interfere with early testing and early, cost-effective treatment, but also discouraging care that has less impact on long term health.
Prices for medical care services and supplies also stayed roughly on par with general inflation during this last year, which is a change from the decades of the 1980s and 1990s where the medical care component of the consumer price index routinely outstripped regular price increases.
I wouldn’t have to polish my crystal ball very much to predict that spending increases for healthcare will pick up speed as the economy recovers. This remains the single most important issue in our nation’s federal deficit struggles.
Was it Popeye’s friend, Wimpy, who kept asking for a hamburger on credit? Today’s credit markets are anything but robust, with reduced demand and supply for borrowed funds. Always eager to find obscure terms for modern dilemmas, economists refer to this condition as a liquidity trap. With a little prodding from Facebook friend and neighbor, Patrick, we’ll give the concept a once over.
Jumping to the conclusion (and resisting the academic approach of a slow, careful warm-up) there is bad news and good news about liquidity traps. The bad news is that they make it difficult for the Federal Reserve to execute monetary policy. Creating 100s of billions of dollars has a muted impact on our economic recovery. The good news is that the liquidity trap dampens the significant inflation we might expect with the creation of all that money.
OK, back to the beginning. During times of slow or no growth and high unemployment the Federal Reserve can create/inject money, largely by increasing reserves that banks have in their accounts with the Fed. They can do this by buying U.S. treasury bonds on the open market, or even by buying troubled/toxic assets from banks. This increase in the supply of money allows interest rates to fall, which in term spurs demand for more consumption and investment. This is classic monetary policy. With mild downturns this is often enough to increase growth and kick start the economy. For the most recent 2007-2009 recession the Fed took these actions, a number of times in a number of ways, and those actions were not sufficient. Now the target short term interest rate – the Fed Funds rate – is essentially at zero. The Fed can’t lower the interest rates any further. Here’s a graph of the Fed Funds rate since 1980. The big peak at the beginning of the graph was the result of aggressive Fed action to contain inflation. Now, though, the rate has sunk to the very floor.
Fed Funds Rate - St. Louis FRED database
One thing that is happening is that while reserves are building up in our financial system, the banks are holding on to them rather than increasing their lending. Some argue that the banks are using the added funds to improve their balance sheets, which were hurt by the dramatic loss in value of securitized mortgages and other derivative assets, and to build up enough cash to pay executive bonuses. The banks argue that demand for credit by qualified borrowers is low. I don’t put much credence in the latter explanation. One apt analogy for this situation is that the Fed is trying to push on the end of a string, in order to get the economy going.
There is another layer to the liquidity trap concept, and that has to do with the buying public’s (people and business) expectation for inflation. The theory goes that if buyers expect inflation in the future, they will increase buying now. They expect the value of their cash or savings to go down during inflationary times, so they seek to use it now, while its value is still high. This works with traditional monetary policy where an injection of money would be expected to increase inflationary pressures.
On the other hand if purchasers believe that inflation will be controlled, then there is less pressure to buy now. That’s what is happening now. Despite what some politicians suggest, inflation is not right around the corner, and buyers are in no hurry to convert their cash into goods. We see evidence of this with the continuing low interest rates on U.S. bonds. Expectations of high inflation would push those interest rates up. Low inflation expectations, even in the face of increasing money supply is another symptom of a liquidity trap.
This scenario played out, to grim effect, in Japan in the 1990s, as their central bank poured money into the banking system and no one responded. Their “lost decade” was one of almost zero growth.
This paper by a New York Federal Reserve staff economist explains things in more detail, complete with impenetrable equations.
My first childhood visit to Washington, DC included a visit to the Bureau of Printing and Engraving. There you can watch paper currency running off the printing presses, being inspected, sliced, and bundled. In the gift shop you can buy bags of shredded, rejected currency, or a sign that says, “The Buck Starts Here.”
Well, in addition to the Bureau, your local community banks also create money. They do it through the system of fractional reserve banking. I just recorded a video clip, available through my PlainSenseEconomics channel on YouTube. It’s for my Macro econ students. And you can watch it, too.
I find that the older I get the more interested in history I become. Perhaps that’s because more events described in history texts are ones that I either experienced or knew about in contemporary times. Or, perhaps history is just comforting. Today we note some parallels with the European Debt/Monetary crisis and the early years of the United States.
In his Nobel Prize speech this past Thursday, 2011 laureate Thomas Sargent made a very interesting link between the multi-country crisis in Europe and a similar situation in America’s infancy, bringing together 13 independent states. The speech itself is oddly uninspiring, and starts with some of the math for which Sargent was recognized in being award the Nobel Prize, but you can watch it here for extra gems I may have missed.
Original 13 States
Sargent noted that the new American country faced an economic crisis in the late 1780s. The first U.S. Constitution, the Articles of Confederation, left the original 13 states largely independent, with a weak, and poor Federal Government. The states and the Federal government had collective debts totaling over 40% of GDP. The 14 different governments found that investors were very skeptical of government bonds, which meant very high interest rates, and those bonds being sold in the secondary market for deep discounts. (Jump forward to 2011 to a nearly identical problem faced by the European countries.) Sargent’s observation; “Fiscal crises often produce political revolution.” This was apparent in 1787 as the United States lurched into an uncertain future.
Alexander Hamilton
Alexander Hamilton, a 32 year old Secretary of the Treasury, joined President Washington and other founding fathers in framing a new, more permanent U.S. Constitution. As part of this legal realignment, Hamilton proposed a solution to these lingering, expensive debts:
The Federal government would assume all of the states’ debts (i.e. a bailout.)
All trade and most fiscal policies would be centralized in the Federal government.
The Federal government would have an enhanced ability to tax.
There was essentially no monetary policy at the moment. The U.S. minted a silver dollar – similar to other silver pieces minted in Europe. Its value was tied to the value of silver. In essence the U.S. was on a silver standard for the first decades of its existence.
Sargent noted the results of Hamilton’s moves:
The creditors, who held the old bonds, were kept whole and rewarded the new Federal government with more lending capacity.
The government bonds were no longer sold at a discount, and interest rates fell to manageable levels.
There was increased liquidity – i.e. improved availability of credit for businesses and government
The Federal government enjoyed significantly greater tax revenues.
Not right away, but eventually the Federal government signaled that it would no longer bail out state or local governments for their debts, and in quick succession, states passed balanced budget amendments to their state constitutions.
Now, let’s make the links to the European debt crisis. For a variety of reasons many European governments are faced with the same challenges as the fledging United States in the 1780s. Some countries, most notably Greece, mismanaged their fiscal policies, with generous government spending and lackluster tax collection. Some countries rode the surf wave of the financial bubble, allowing local banks and sometimes sovereign funds to speculate heavily. (Ireland comes to mind here.) Others, like Spain, are almost innocent bystanders with modest debt but heavily hit by the housing/credit crisis. All of these countries face investor skepticism towards their sovereign debt, which means they need to pay high interest rates if anyone is interested in buying their bonds.
As we have discussed in an earlier post, the countries who share the Euro currency have no independent monetary policy. That power is held by the European Central Bank which has been reluctant to be a lender of last resort or the source of monetary stimulus. Germany, as the strongest economy on the continent, and to some extent France, have struggled with the question of bailouts to troubled countries, maintenance of the Eurozone community, and their own political concerns at home.
Angela Merkel
In a marathon negotiating session this past week, German Chancellor Angela Merkel drove a resolution to this crisis which involves greater fiscal policy discipline and coordination among the European countries, and the strengthening of a multi-national lending fund to help struggling countries. As an interesting side note Great Britain, which has been a party of past European treaties but did not join the Euro currency, rejected the new treaty and will be on its own.
In his Noble speech, Sargent left the conclusions to his audience. Are we seeing Europe following the path of the original 13 states of the U.S. in the formation of a much more centralized Europe? Will the global investment community reward this action with lower interest rates on European debt? Will the member countries change their behavior, with the example of bailouts fresh in their memory?
The pharmaceutical giant, Pfizer, watched its main source of revenue and profits, Lipitor, lose its patent protection this week, and now faces competition from generic equivalents. In 2010 Lipitor was the second highest selling prescription drug with $5.2 billion in sales in the U.S. alone. (source: Drugs.com). Now, in the next year, prices of the generic drug, Atorvastatin, should drop dramatically. The Lipitor saga gives us an opportunity to see market forces in action, but it also points out the problems when insurance coverage is involved.
Lipitor Brand
Generic Lipitor
Like most first world countries, the United States uses the patent system to encourage research and development. If a pharmaceutical company can develop a new drug, they can maintain a government approved monopoly on the sale of that drug for up to 17 years. Monopolies drive higher prices, which helps the inventor, Pfizer in this case, recoup their research costs, and return a handsome income to their shareholders. Once the patent runs out, other manufacturers can apply to produce the drug. This increased competition then quickly drives down prices. So far, this is a classic example of market forces at work.
Pfizer has been planning for this day for a number of years, and with annual sales figures like those in 2010, this is vital to the company’s fortunes. The company has triggered a number of legal and regulatory efforts to delay the arrival of generic equivalents. For a compilation of news articles on Lipitor, see this page in The New York Times.
Two particular strategies twist prescription drug coverage in favor of the brand name. Many prescription drug plans have incentives to encourage patients and their physicians to use generic drugs. Often this is done with a lower co-payment on the part of the patient. The lower co-payment provides an incentive for the patient to accept a generic equivalent, and the insurance plan saves money by paying the lower, generic price. Pfizer (and other drug companies facing similar out-of-patent challenges) is trying to subvert this incentive. Here’s a hypothetical example.
These figures are illustrative – made up – but make the point.
Typical Brand vs. Generic Comparison for a Drug Plan
Brand: Patient Copay: $30 – Total Cost of Drug: $200 – Insurance Pays: $170
Generic: Patient Copay: $10 – Total Cost of Drug: $50 – Insurance Pays: $40
Now Pharmaceutical Company Offers a Copay Discount
(Pfizer discounts its price of the brand drug to cover reduced copay)
Discount Brand: Patient Copay: $8 – Total Cost of Drug: $178 – Insurance Pays $170
With this discount arrangement the patient is happy, the drug store doesn’t lose any money, but the insurance company still pays the larger cost. This puts upward pressure on insurance premiums.
Another strategy – Pfizer offers a significant discount on the price of brand name Lipitor to pharmacy chains as long as they agree to not provide generic equivalents. The chains save money, and can pass some of that on to patients, but the insurance plans that pay for the drugs don’t enjoy any savings.
Is this legal? The second, discounting strategy with pharmacies, smells a lot like restraint of trade/anti-trust concerns to me. The earlier example, offering a discount on copays, seems legal. Are either of these good social policies? Not a chance.
These creative approaches illustrate one of the problems that insurance introduces into a market. In healthcare, patients have enough discretion that they can alter their buying behavior, based on prices they face. Yet the patients don’t see or feel the full price of their purchase decision. In a regular market the patient balances the benefit of the purchase against the price, and makes a good decision on allocating resources. That good decision helps society. With insurance the patient sees only a small fraction of the total price, and may make a decision that is not socially optimal. This breakdown in market forces is one of the challenges our healthcare reform goals face. Ideally we would like patients to be full partners in the decisions made about their care. Insurance blunts that participation.
In Macro class today we talked about what is really a dual decision. First, should our national policy encourage spending or saving? Second, should government actions favor consumption or investment?
First, some definitions and a smidgen of theory. There is a simple dichotomy over how a family or a nation uses their income. They can spend it (i.e. consume) – which means purchasing goods and services that provide benefits right now. Or they can save it – by putting it in the bank or paying off debts, or even purchasing stock with it. Presumably the savings will improve things in the future (more on that later in this post.) Personal savings (excluding business and government action) have declined as a percent of income since 1980 and probably longer. The personal savings rate was 3.6 percent as of September 2011 (source: FRED). That meant we spent or consumed 96.4 percent.
Savings fuel investment. When households save, businesses save, and the government runs a surplus, this provides funds which can then be borrowed for investment purposes. Done correctly those investment activities will reap economic benefits in the future. If the government operates with a deficit, this adversely offsets personal and business savings. Government borrowing removes funds from the investment pool – a term called “crowding out.”
So, should we encourage people to spend or save right now? Saving brings up good images of a frugal nation, putting aside current desires for a better future. On the other hand, saving does nothing to stimulate demand right now as we struggle to return to full employment. For an extreme example consider Japan in the 1990s, which suffered what is sometimes called “the lost decade.” A real estate bubble popped, causing a typical recession, but then even with low interest rates businesses and families saved rather than spent. They entered what Paul Krugman calls a liquidity trap. Robust economic growth didn’t return for 10 years.
Were someone to ask me this first, spend or save, question, I would recommend incentives to spend – in the short and medium run. Restoring economic activity to its full potential is our most important priority right now – more important than the national debt and more important than future investment. A program to encourage more personal savings would be counter productive. As the economy starts growing on its own steam, we could then switch to more emphasis on savings.
Consume or Invest?
Now to our second, related question. As government considers fiscal policy (government spending and taxation) it would be wise to target those efforts strategically. Some government spending and some tax cuts will encourage consumption. This can be an appropriate goal during recessionary times, because the added consumption will add directly to GDP. In econ-jargon we call this shifting aggregate demand higher (to the right). If we were considering tax cuts, then targeting low and middle income families will yield the most effective bang for the buck. Lower income families spend more of new income on consumption. Higher income families, having met many of their day-to-day requirements put proportionately more of that new income to saving (including stock purchases.)
Let’s consider what to do once the economy is starting to grow on its own. Do we continue to encourage consumption, or should we shift to investment? I prefer the latter. Investment means putting off the benefits or happiness of current consumption, and directing resources to a better future. Using our tax cut scenario from above, we could argue that cuts should go to higher income families, since they are more likely to save, which in turn should encourage investment. Unfortunately for the advocates of this position there is theory but not much in the way of verifiable results to support this approach.
So, if the economy is growing or starting to regain its momentum, our other choice is to use government spending on thoughtful investments. Pushing aside some of the political wordsmithing, President Obama’s preference for spending on infrastructure fits with this goal. It asks a lot of Congress and the White House to choose investment projects wisely – the lobbying wolves are seldom at bay. There’s an old saw in the grant funding world, that if money is going to support more pigs, successful applicants learn to become pigs. This makes it difficult to thoughtfully target that spending.
My take on this is to be skeptical of general tax cuts – particularly those that funnel most of the money towards higher income families. Tax cuts will fuel consumption at all levels of income, though more consumption among lower income families. And there is scant evidence that money kept by higher income families truly generate savings that lead to thoughtful investment in our future.
The phrase The Wisdom of Crowds is the title of a book by James Surowiecki, a staff writer for The New Yorker. In 2004 Surowiecki wrote that large groups of average individuals can predict outcomes with greater precision than smaller groups of experts. Intrade.com is a real-life, functioning demonstration of this claim.
First, a quick refresher. Anyone can start an account on the Intrade web site. You add a modest amount of money to your account using a credit card. Then you go to a specific event/market which predicts some outcome. The outcome is easy to verify, eventually. For example, there is a market for the outcome that President Obama is re-elected as president in 2012. Eventually that outcome will either be yes or no. As I write this on November 12, 2011 the prediction for this event is 52.1%. If I think it is likely that Obama will be re-elected I can buy a share in this event for $5.21. If I am right, and hold on to this share until the election I will receive $10.00 – a profit of $4.79. If I am wrong, and hold on to the share I lose my $5.21. If others feel optimistic with me the “price” gets bid up. If events alter my prediction, I can either buy more shares for the positive outcome or sell my shares.
Here is a graph of this particular prediction and how the Intrade investors have evaluated the President’s chances.
Intrade.com - Probability of President Obama being Re-Elected
You can click on the graph to see more information on this prediction. You can see that Intrade investors have gotten more pessimistic about the President’s chances over the last six months. An important thing to note is that anyone can play in this market. It is not a poll of political experts or those horrid talking heads we hear/see on broadcast media.
A Competitive Market
For my microeconomics students this is an example of a special form of a competitive market. There are many sellers (almost 2,000 to date) and an equal number of buyers. They all have approximately the same amount of information (no insider trading advantage in this case.) It is very easy to enter this market, and to leave it. There are few market imperfections – no monopoly, no obvious cartel. If we assume, like Adam Smith did 240 years ago, that buyers and sellers will act in their own self-interest (making as much money as possible) then the market price will reach an equilibrium. That equilibrium price will change as new information arrives. For example, when Rick Perry forgets which federal agency he wants to close, some people may judge that Obama’s chances of re-election are slightly higher. They will bid the price up from $5.21 (52.1%) to something higher.
As an exercise consider Surowiecki’s claim that this large number of regular investors will more accurately predict the final outcome that a panel of experts.
Just a quick update on my previous post – about the Greece debt crisis.
Pundits and observers, who are no smarter than you or me, are assuming that Greece will default on its sovereign debt. This is as if the United States decided not to pay off our U.S. bonds one day.
To avoid a total market meltdown, the “grownups” in the European community would probably insist that the private banks holding Greek bonds accept cents on the euro. If Greece owes me $100 on a bond I purchased last year, I would only receive $45.
Haircut for Greece Creditors?
The term of art for this reduction in the payoff is a haircut. Lots of figures rattling around the news sphere. I’ve seen suggestions/estimates of a write down of 30 to 60%. That qualifies as a buzz cut.
So, who cares about the Greek debt crisis? It’s a small country, a long ways away.
Answers:
Greece as a Country: “We care!”
The Euro currency countries: “We care!”
Europe Generally: “We care!”
U.S. and International Financial Community: “We care!”
Stock Investors: “We care!”
All right, already. Here’s why they care.
The background
Through a series of missteps over the last 10 years the Greece government amassed a large government (or sovereign) debt, and then disguised it from its citizens, lending institutions, its Euro partners, and international financial organizations. The recession exacerbated the problem, threatening to push the Greece government into bankruptcy. Annual deficits as a percent of GDP or total national debt as a percent of GDP are higher but not that different from the United States, but in contrast to the U.S. the global investment community has very little confidence in Greek bonds and the ability of the government to repay them. That means Greece has to pay much higher interest rates on its debt, if it can borrow money at all.
What Can Greece Do?
When faced with larger government deficits, policy makers typically turn to two economic “levers” – fiscal policy and monetary policy. On the fiscal side the government can cut spending and/or raise taxes. Both of these actions have met strong resistance in a country used to heavy subsidies of middle class citizens and notoriously poor tax collection records.
Monetary policy can be an effective tool – often because it does not require the approval of the legislature or the voters. Normally a central bank can inject funds into the economy (electronically “printing” money) and use that to pay debts. This injection of money can also lead to the devaluation of the local currency. While devaluing doesn’t sound appetizing it can be very effective, since it encourages more exports and more tax revenues, and because it makes it easier to pay off debts denominated in the local currency.
BUT, Greece can’t execute its own monetary policy. It is a member of the Eurozone – using the Euro as its currency rather than the drachma. As a result Greece cannot unilaterally change the supply of its currency. It does not have control over monetary policy. To make matters worse for Greece, the Euro has held a fairly high value against other world currencies – just opposite of the direction Greece needs to help with its problems.
Euro
How Does the Crisis Affect the Euro?
The Euro is a common currency, currently used by 22 European countries. Decisions on the supply of the Euro are made by a representative body at the European Central Bank.
When a member country, like Greece, threatens to default on its loans, global investors pull funds out of Greece and the Eurozone. This reduces the demand for euros, and causes the value of the euro to fall. This is a mixed blessing. Countries often prefer a strong currency, but a weaker one can encourage exports. Europe is an export driven continent.
Joining the Eurozone initially, countries have to prove that their economies and government budgets are healthy. It is like welcoming someone new onto a lifeboat. You prefer the new person to be healthy. It appears that Greece hid or obscured its economic reports when applying for membership and now its fellow lifeboat members are not happy.
Commentators, such as Paul Krugman, have argued that Greece should never have been allowed in the Eurozone. They also argue that the Euro common currency is flawed if monetary policy is directed centrally, but fiscal policy remains with individual countries. Macroeconomic theory suggests that both need to work in concert, and the slow, deliberative and political style of the European Central Bank is not well suited to crisis management. Here’s one of many Krugman posts on the crisis.
Why the Large Bailouts by European Governments?
Other European countries, particularly those who share the use of the euro currency, want to stabilize the currency in their own self-interest. In addition many of the large banks and financial institutions in Europe hold Greek debt. If Greece defaults on that debt, those institutions are in trouble. France and Germany have been two of the largest contributors. French voters have been relatively quiet about the bailout, but German politics are much more sensitive to the issue. Chancellor Merkel of Germany has to balance the need to preserve the Eurozone economy against the indignation of German taxpayers who feel little affection for Greece.
European policymakers also worry about other members of the Eurozone – including Spain and Ireland. These two countries have stressed economies for reasons different than Greece. Neither of them had profligate government spending, but both have been hit particularly hard by the recession. Additional stresses on Europe could tip these countries further into trouble.
Why the International Community and Stock Investors Worry
The source of concern in the stock markets and among international investors is mostly fear of default. Large financial institutions and other holders of Greek debt would be seriously hurt. If a Greek default pushed other European countries like Spain and Ireland over, the impact grows significantly.
If we can peel away the political posturing, there is an important argument in the issue of how best to generate a recovery in our country’s economy. Put simply, the question is whether producers (employers) are the answer and we should do everything we can to encourage them, or whether we should do something to encourage demand for their products.
Jean-Baptiste Say gets naming rights for the law that says that production will encourage demand and thus more production. Proponents of Say’s Law argue that producers can ramp up production which will in turn foster demand for those products, and that demand will flow to greater production elsewhere. The law assumes that business will not hoard capital funds, but will invest them in greater production. In today’s dialogue, when we hear calls to reduce business taxes or relieve business of the uncertainty or burden of government regulation, it is the ghost of Say who is speaking. This position holds that unfettered business will invest in more production and growth, and that will, in turn, generate new jobs and economic opportunity. It is roughly accurate to put the label of supply side economics with this group.
In the other corner is John Maynard Keynes. Keynes argued that the economy depends on the demand for goods and services, and that when necessary the government should encourage that demand through added spending or tax cuts. Keynes felt that encouraging demand, by placing more money in the hands of consumers, would stimulate businesses to ramp up production, which in turn increases employment. Today, Keynesian proponents argue for more government spending, and broad based tax cuts (not the kind of cuts targeted only at businesses).
Both approaches have some grounding in economic theory. The Keynesian approach has a better track record in real life, and there are signs in our current, sluggish recovery, that business is not following the assumptions built into Say’s Law. When President Hoover was faced with the early years of the Great Depression, his advisers followed the main stream economic thinking of the time, which was Say’s Law. In addition, main stream economic thought in the late 1920s/early 1930s felt that the economy was naturally cyclical and would eventually mend itself. Hoover pressed his political base, the producers and manufacturers, to ramp up production. They would have none of it. President Roosevelt took his cue from Keynes’, adding government spending and employment to Federal policy, as a way to pump money into the hands of consumers, which then increased demand for goods and services. For the Great Depression, the Keynesian approach seemed effective while the Say’s approach was not.
Today, many commentators note that corporate America is sitting on large cash reserves, and that they are waiting for consumer demand to strengthen before investing in more production or growth. If that is the case, then more business tax cuts or incentive programs are not likely to speed up the recovery.
As students and citizens, we will do well to consider the conflicting economic theories at work here, and ignore the emotional baggage that hinders civil dialogue.
If you are a student (or just interested...) and are looking for descriptions of basic economic concepts, see the categories on the left. Choosing "Macro Concepts" or "Micro Concepts" will display a list of descriptive posts. The "Issues" posts are more timely and are applications of some of the concepts described here.
Author – Doug Gentry
I teach principles of economics courses and a course in the economics of healthcare at Southern Oregon University.
I teach principles of economics courses and a course in the economics of healthcare at Southern Oregon University.
