mattlantz

Brad DeLong Hits the Nail on the Head

Brad DeLong gets it right why conservatives are afraid of a public plan.  And lays it out in economics-ese:

The arguments against a public plan are two:

1. It would be able to provide people with better health care more cheaply, and would drive the private-insurance companies out of business, and their executives would lose their jobs and be sad, and their shareholders would lose their money and be sad, and their lobbyists would lose their jobs and be sad, and their tame legislators would lose their campaign contributions and be sad.

2. Mankiw's argument that a public plan will inevitably receive large and wasteful federal subsidies no matter what the initial law says.

Lobbying and Health Care Reform

Nate Silver at fivethirtyeight.com on the impact of lobbying money on health care reform:

Brad DeLong's Rule

And once again I am reminded of the two rules for understanding the world:

1. Paul Krugman is right.

2. If you ever think Paul Krugman is wrong, refer to rule #1.

Boom & Bust Cycles

James Fallows article on Nouriel Roubini in the July 2009 issue of The Atlantic makes an important point about boom & bust cycles:

The damage done in these boom-and-bust cycles, Roubini says, is greater than politicians and the media usually acknowledge. Stock-market averages eventually recover, as all buy-and-hold investors now keep telling themselves. (Except in Japan, where the main stock index stood near 39,000 in the late 1980s and is around 9,000 today.) But that doesn’t take into account the damage done to the real economy by the swings up and down. “These asset bubbles are increasingly frequent, increasingly dangerous, increasingly virulent, and increasingly costly,” he said. After the housing bubble of the 1980s came the S&L crisis and the recession of 1991. After the tech bubble of the 1990s came the recession of 2001. “Most likely $10 trillion in household wealth [not just housing value but investments and other assets] has been destroyed in this latest crash. Millions of people have lost their jobs. We will probably add $7 trillion to our public debt. Eventually that debt must be serviced, and that may hamper growth.”