The General Economics Thread

Part of it is because the government is not given any negotiating power for most major drug purchases, another part is over-restrictive intellectual property law which allows companies to patent "drug that does X" instead of a specific chemical compound, creating a few decades of a monopoly before generic drugs are allowed to be created.

Given medicare price-negotiating power over drugs would strike a huge blow.

You'd be surprised — one of the NHS's funding issues is paying for new drugs.

Thought this was funny, oil tycoon Harold Hamm claims he can't afford to pay a $1 billion divorce settlement to his ex-wife because the falling oil prices have affected his finances.

edited 1st Jan '15 6:18:41 PM by tclittle

I feel so sorry for him.

The idea that an individual human being could seek — or receive — $1 billion in a divorce is only slightly less ludicrous than that an individual human being could have that much money in the first place.

The only being I could never be suprised to have that much money is Scrooge McDuck, but he's a fictional anthropomorphic duck.

Pish. These days, a billion is the new million.

Be nice. Usually, that first billion was honestly earned. It's just that when people get billions, they start compounding that money.

Thomas Piketty rejects Legion D'Honneur

3edgy5me

Piketty is just so dreamy. And his work in Capital is brilliant and beautiful.

With all the talk about STEM (Science, Technology, Engineering, Mathematics) and its importance, is it at risk of becoming overcrowded due to lots of people rushing to get in thinking that's where the money is?

No because these programs are really good at weeding out people who can't hack it.

We are already below what is needed because:

1) We don't have as many people trying

2) We're not lowering our standards, and we shouldn't.

That's one thing that the States is trying to deal with. We have many positions being filled by international applicants instead of domestic applicants simply because not enough domestic applications meet the bar.

edited 2nd Jan '15 8:05:07 AM by Gabrael

Well, in my country they are apparently drawing away people from other jobs, creating labour shortages there.

(The New Yorker) Interview with James Heckman: Of note is even Milton Friedman thought too many people latched onto Rational Expectations, going full ca-ca with it, and canonized him for it, instead of focusing the data, which he prefered to do at the end of the day.

New evidence shows Sam Brownback’s tax cuts not wooing jobs to Johnson County (By Yael T. Abouhalkah of the Kansas City Star)

The Odds of Greece leaving the Euro have never been higher. (Matt O'Brien of the NYT)

The article basically explains Greece's Syriza party wants more spending for food aid programs, health care, and restoring electricity; To renegotiate their debt since, at this point, most of it will never ever be repaid realistically. But Germany will allowthis to happen, because if they did, Podemos in Spain and the Five Star Movement in Italy would demand similar concessions.

However, Germany can let Greece leave now since the ECB is covering the bonds issue that was poisoning the well 3 years ago. Meanwhile, Greece has enough of a surplus in its coffers that bailing out its banks and leaving the Euro are mangable disasters.

I do think Matt O'Brien makes the important point with his closing paragraph:

There's always the option of defaulting and not leaving the Euro. Does Germany even have the strength to throw Greece out?

The problem with not leaving the Euro is that Greece is at the mercy of the other nations and the ECB to stay solvent. I'm not even sure it can default under the current terms of the Eurozone. Having control of its own currency is the only way that Greece can escape austerity and gain the ability to conduct fiscal policy.

Of course, the problem there is that Greece could very well enter a hyperinflationary spiral if it lacks sufficient domestic production to sustain its people.

edited 3rd Jan '15 8:34:04 AM by Fighteer

Under the terms of reality, Greece can facts-on-the-ground default, i.e not pay the existing debts, and at some point everyone will write them off; kicking them out of the eurozone would take active action by the Eurozone countries, which is why I asked if Germany could rely on, say, France to back them up. I mean, I think the US Supreme Court issued a decision that said that Argentina couldn't pick and choose which debts to pay, but that was a spectacular example of the Supreme Court not living in the real world.

As you noted, the real problem is that Greece's primary surplus is very small (though it exists now, which it didn't years ago) and Greece can't spend drachma to buy goods priced in euro.

At the end of the day, no, you don't have to pay off your debts to anyone, but at the same time, nobody is under any obligation to lend to you either, and as much as some rightists love to crow about fiscal self-sufficiency, it's never worked. Credit makes the world go 'round.

Of course, the greed in the financial industry means that a group as large as a country being universally shunned by lenders is unlikely. Somebody, somewhere, would be willing to take that risk on.

It will be interesting to see if the EU can actively scare Greek voters into backing either the New Democrats or at least the pro-bailout Socialists, e.g. scare them away from Syriza. That will be an acid test of the EU's internal clout.

Yeah, but the fact is that Greece may just have to restart their checkbook from scratch. State bankruptcies happen, and if Syriza can show a plan for getting the Greek economy growing, I imagine Greece will be able to get loans again after the initial shock. Argentina did it, though obviously it took wading through a decade-long mess before they could.

And as much as I support the EU as an institution, I very much hope that the Greek voters defy them on this.

edited 3rd Jan '15 11:18:26 AM by Ramidel

The problem is, from the sounds of it, Germany and European Bankers will ignore any declarations of default, or do everything to make it not stick. The words default and debt forgiveness are considered "non-options".

edited 3rd Jan '15 11:55:17 AM by PotatoesRock

As we've seen with other nations, the only way to compel payment is to invade, and that doesn't seem very likely.

The thing is: How will the Eurosceptic parties within the EU — especially the newer ones — react to that?

That is the case. Failure of the Euro is a "non-option". Especially in the current European Political climate.

Militarily, Greece might just be stronger than Germany right now.

edited 3rd Jan '15 2:12:46 PM by Greenmantle

In this context, "non-option" means that they will stick doggedly to a broken idea until it tears their nations down around them.

Not entirely broken. From that one article Potatoes linked, it seemed like the ECB has half the solution in hand. The heart of the Eurocrisis is that old phenomenon where fear of a thing: in this case the PIIGS exiting the Eurozone, almost made the thing happen, because fear of their exit prompted interest rate spikes in those countries, driving up debt service and making their financial situations less sustainable without a sovereign currency, but then the ECB became a buyer for, especially, Spanish and Italian debt on an unlimited basis, forcing rates back down to something safer.

The trouble, as is often the case, comes from the Very Serious People, who feel that implementing that policy as a permanent thing would merely encourage the spendthrift Mediterranean lifestyle that got those countries into their messes in the first place (which also has a bit of fun ethnic undertones too, yay!), rather than being the thing that would keep the Eurozone functioning.

One would think export-happy Germany would encourage the ECB to keep up its "whatever it takes" policies for the purchase of government debt: they get to have a weaker currency without Germans themselves really feeling the drawbacks of having a weaker currency as much. With ECB serving in an institutionalized role as a stabilizer for bond interest rates, the "united monetary policy" arm is strengthened, and allows individual governments to engage in fiscal policy as necessary, though realistically guidelines would need to be put in place to prevent abuse.