A Highly Recommended Source for Economic Analysis
Dean Baker of the Center for Economic and Policy Research writes a weekly newsletter that provides economic commentary on stories in the NY Times and Washington Post. Some examples in the latest newsletter:
This article reports on the new budget approved by California's legislature. It reports the assertions from California's governor, Gray Davis, that the state had not "devised a way to protect itself from the effects of falling stock markets," noting that capital gains tax revenue had fallen from $17 billion in 2000, to $6-$7 billion in the current fiscal year. It would have been worth noting that it was an extraordinary failure of planning to assume that capital gains tax revenues would continue at the levels of a stock bubble peak. A competent budget planner would have anticipated a sharp decline in capital gains tax revenues and adjusted budgets accordingly.
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These articles report a drop of more than 50 percent in the number of foreign medical students entering residency programs since the government began requiring a clinical skills test in 1997. This test, which is only administered in Philadelphia and costs the applicant $1,200, is only required of foreign medical students, not medical students trained in the United States. This is exactly the sort of restriction that would be eliminated if the United States pursued free trade in physicians' services in the same way it has pursued free trade in manufactured goods and other areas.
As a result of such protectionist barriers, doctors in the United States receive much higher pay than doctors anywhere else in the world. The costs of these barriers are far larger than the costs resulting from most other trade barriers, such as the steel tariffs recently imposed by President Bush.
The United States spends roughly four times as much on doctors each year as it does on steel. If doctors in the United States were paid the same as doctors in other rich nations, the savings would be approximately $80 billion a year. This is at least ten times as large as the highest estimate of the cost of the steel tariffs.
While the steel tariffs have been the subject of many major stories in both the Post and Times, the protectionist measures excluding foreign doctors have gone almost completely unnoticed. These articles are both wire service stories buried deep in the middle of the paper. Also, the articles themselves never discuss the discriminatory tests imposed on foreign medical students as a form of protectionism, nor do they mention the costs that this protectionism imposes on the U.S. economy or consumers.
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This article discusses the Bush Administration's relationship with organized labor. At one point it refers to President Bush's belief in "free-market capitalism." Mr. Bush has frequently supported measures that are directly at odds with a belief in free market capitalism. For example, he is a supporter of strong copyright and patent protections-which are enormous obstacles to the working of the free market; he has supported special tax breaks for people who invest in the stock market; and he wants the government to subsidize insurance for large real estate projects by providing free terrorism insurance. While Mr. Bush may find it politically helpful to be labeled as a believer in free-market capitalism, this view is not reflected in his policy agenda.
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The article also includes an assertion that many unions may support President Bush because his energy policies, such as drilling in the Arctic Wildlife Refuge, will create more union jobs. In fact, serious estimates show that these projects will lead to relatively few union jobs. Most, if not all, unions will stand to lose more members through unfavorable decisions by President Bush's National Labor Relations Board than they can possibly hope to gain from such energy projects. It is far more plausible that some unions have supported President's Bush's energy agenda in the hope of getting some other political benefit.
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This article reports on the status of a set of tax breaks for large investors that President Bush is reportedly considered. The first paragraph of the article characterizes this tax package as being "aimed at boosting the stock market." As the article later points out, the impact of the tax package on the stock market is not clear. It is clear that the tax package will give tax breaks almost exclusively to high-income families. Since it is not clear that the package will actually help the stock market, it is inaccurate to describe this as the purpose of the tax breaks.
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