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Home Publications Blogs Beat the Press Birthday Boasts: Round II

Birthday Boasts: Round II

Saturday, 13 July 2013 07:12

No, I won't bother everyone with the list again. Those who are interested can see the original. But I thought I should do an update on the 5 things I said that I would be proved right about in 5-10 years. Here's the list:

1) Patents Are an Incredibly Inefficient Way to Finance the Development of Prescription Drugs

2) We Will Need Alternative Mechanisms to Copyrights to Finance Creative Work

3) Medical Trade Will Help to Keep Down Health Care Costs in the U.S. If We Don’t Fix the Health Care System

4) Countries Can Finance Much of the Debt Issued in the Downturn by Central Bank's Holding of Assets

5) Financial Speculation Taxes Will Make the Financial System More Efficient

How much progress have we seen on these items? Not very much, I'm afraid.

There was this great piece on patents being an impediment to growth by Michele Boldrin and David Levine, a version of which also ran in the Journal of Economic Perspectives. There is at least some appreciation among economists and people in policy circles that patents are a monopoly that leads to major economic distortions.

On the ground there was a huge victory against patent abuses when India's supreme court rejected the patent in the Gleevec case. The implication is that India will provide more limited patent protection than the United States and Europe. This will provide far more scope for its booming generic industry, which now looks to be a power in its own right, providing low cost drugs throughout the developing world.

Not much good news on copyrights. The entertainment industry wants to use trade agreements to overcome its defeats in 2012 on SOPA and PIPA, and in this way deputize the whole world as junior copyright cops. (No, you don't get to carry a gun.)

The idea is get SOPA and PIPA type wording into an E.U.-U.S. trade agreement and/or the Trans-Pacific Partnership Agreement. Then, when the final deal comes to a vote, the media will hype the huge gains from the deal. Anyone who opposes it will be denounced as a knuckle-scraping protectionist. With a few hundred million dollars for campaign contributions and lobbying fees it is virtually a guaranteed winner. So far, it certainly looks like the media part at least is very much on track  

There's not a lot new to report on the medical trade front. It is striking that almost all of our favorite free traders get blank looks on their faces when the topic of medical trade comes up. It really should not be too hard to understand. Operations that cost $100,000 to $200,000 in the United States may cost $15,000 to $25,000 in top rate facilities in India, Thailand and elsewhere. The huge gap in prices means there are possibilities for large gains from trade. That is true even if we throw in $10k or so in air fares and hotel bills for the patient and immediate family members. And, since the vast majority of such procedures are not done on an emergency basis, there should be ample opportunity to plan the travel.

But it is unlikely you will see measures to facilitate medical travel (e.g. rules on legal liability or international licensing standards) in trade agreements any time soon. This is because doctors, hospitals, and other health care providers are much more powerful lobbies than autoworkers or textile workers. And the economists will therefore all get blank stares on their faces when the issue comes up.

There still is remarkably little discussion of the possibility of central banks deliberately holding assets as a way to keep down interest burdens in the years ahead. Interestingly, Adiar Turner, who has held a variety of top financial posts in the U.K., went a step further in explicitly arguing for printing money as a way to finance deficits. It actually gets to the same issue, since at some point when the economy recovers, presumably we will be concerned about inflation. At that time, do we consider raising reserve requirements as a way to slow the economy, which would allow us to have a much higher amount of interest free debt in existence than if we kept reserve requirements constant?

In the latter case, we would need more contractionary fiscal policy. I would prefer the higher reserve requirement route (yes, I know this is an implicit tax on bank deposits), but it seems it is worth some public discussion. Anyhow, we'll have to wait until at least next year.

As far as financial transactions taxes, these are now in the mainstream. Even the Center for American Progress included it in its monster policy paper last month. Unfortunately the Obama administration has positioned itself firmly on the side of Wall Street, energetically lobbying in Europe to prevent 11 EU countries from establishing a tax. This is shaping up as a clear case of intellectual arguments versus economic power. We'll see how that one turns out.

Anyhow, I hope that i will be able to report more progress on my next birthday. Progress is always difficult. Economics is much more a matter of authority and inertia than evidence and logic.

I recall being at a meeting with some I.M.F. officials a few years back assessing why they failed to see and warn of the collapse. At one point, one of the I.M.F. people there complained that they should not have to listen to gadflies (i.e. me) rather than the received doctrine from on high. Of course the argument was never that anyone should have to take an argument from someone like me on authority, but rather they should be able to listen to it and evaluate it themselves for its soundness.

Unfortunately, there are very few people in positions of authority who have both the willingness and ability to engage in such thinking. Hence we will likely have to contend with the wreckage from long disproved doctrines for many years in the future. But hey, we have to keep trying.  


Comments (15)Add Comment
written by liberal, July 13, 2013 8:38
Happy B-day, Dean.
written by fuller schmidt, July 13, 2013 8:41
Best wishes and many more!
nyt trade pact cheer leading now by editorial board, not just business section
written by JaaaaayCeeeee, July 13, 2013 8:54

You linked to a July 8, 2013 nyt article touting TTIP as a prize to increase economic growth, which it will barely affect. The article at least mentioned that public interest groups said corporate interests were too strong.

Today's editorial simply asserts that a transatlantic trade pact will boost growth, trade, and jobs by reducing tariffs and harmonizing regulations.

I guess now that some policymakers and economists recognize monopolistic patent distortions, and how little pacts will increase growth, news media will just promise us anything, if we rush to implement TTIP by 2014.
Happy birthday!
written by Jennifer, July 13, 2013 9:07
It's true there is little talk about patent reform in American, mainstream circles. But people in international medicine are actively pushing for "de-linkage" i.e. separating the processes of traditional drug processes. These groups are pushing for a prize system and international agreements that allow for more open access and protecting people's right to access. There is considerable grassroots opposition in the Pacific rim countries to the Trans-Pacific Partnership Agreement which will dramatically decrease access to life-saving medicine. It's possible the Trans-Pacific Partnership Agreement could go down on that end.
The financial transaction tax is moving to the mainstream. I only became recently aware that here is an entire organization devoted to it and there is even a bill in the house (it appears to be the same thing?) www.robinhoodtax.org/.
Significant change runs at two speeds, very slowly or not at all. But if the IMF is really waiting for their own people to tell them everything, that's depressing. Almost by definition the "gadflies" tend not to function in those organizations. The people who do flourish there are those who do what they are told. It also tells you a lot about the social sciences. I can't imagine a chemist, physicist, biologist, dismissing a finding out of hand solely from who produced it. Certainly things are weighted accordingly, and things always "need more research". But people will always listen.
Warning to Dean Baker: DRM Takedown Notice for Illegal Use of Happy Birthday
written by Last Mover, July 13, 2013 9:23

You have not been granted permission to boast using our copyrighted version of happy birthday. Submit $100 per boast immediately for each use of the unauthorized version and $1000 each for each use of the counterfeit version.

Also submit a written affadavit swearing that these payments to IP trolls in no way suppress your incentive to demonstrate how IP rights protection create major distortions of economic efficiency and boast about it in ways other than commission of a capital crime.
off topic
written by bill alrich, July 13, 2013 12:43
Is there a search option for Beat the Press? I often refer to previous blogs and need a quick way to find them. The Search panel on the page does a generic Google search.
written by NWsteve, July 13, 2013 12:50
Dr. Baker: happiest of birthdays, sir...

while the past 12-months or so have seen too many of
vis-a-vis *whistleblowers* of every stripe...

your version(s) of same are among the few that assist the *99%* in making our way through each day...

our indebtedness to you cannot in any measurable way be overstated...

as an addition to Last Mover:

a small reminder that some folks are still attempting to swim against all currents:


this seems to be most appropriate on your birthday...

best possible GOOD wishes...
written by Richard Genz, July 13, 2013 1:09
Happy Birthday Dean, you're the indispensable economics gadfly. Thanks for another year of sharp writing, and please keep it coming.
Joyeux Anniversaire!
written by Carl Weetabix, July 13, 2013 4:33
Thank you for all your excellent work!
Happy Birthday Dean!
written by geraldmcgrew, July 13, 2013 6:07
There's no one else like you.
Hard enough to find a doctor
written by denise, July 14, 2013 2:00
in my home town. How am I supposed to find one in Thailand?
written by jonny bakho, July 14, 2013 7:02
Happy BDay.

The Supreme Court did set limits last month when it ruled that human genes cannot be patented. It was unanimous.
written by Guy Noir, July 14, 2013 11:46
Happiest of Birthdays Dean! Your writing is truly a diamond in the rough of policy blogging these days. Your clarity, simplicity, and dedication to the public good are invaluable. I just hope that your stuff can get a wider circulation on the Hill and in DC policy circles, which appear to be the only places where opinions really matter. Fighting the status quo can be very frustrating, but keep up the good work!
written by SomeCritter, July 15, 2013 12:19
Happy birthday, Dean!

Have been an avid fan of Beat the Press for a long time.
You're a gem!
P.S. Just a minor quibble: Would you consider changing the blog title to Beat Up the Press? ;;
written by SomeCritter, July 15, 2013 12:34
Woops, I meant Beat Up on the Press.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.