[PEN-L:3935] more on teaching comparative economic systems today
A couple of further comments on this:\ 1) Although it was implicit in my earlier remarks on this topic, let me make it explicit. No one should teach this course today without covering in a serious way the case of the Peoples' Republic of China. I shall not say what you should say, but simply note that China itself is important as the world's fastest growing economy and now one of the world's largest along with possessing many interesting unique features of its economic system including a substantial residue of socialism and the unique entity of the TVEs. 2) In discussing socialism one should cover the history of socialist movements and their interrelationships, not just Marxian LTV or the standard pap on planning debates. This is one of the few places where students can learn about utopian socialism, anarchism, revisionism, Trotskyism, Maoism, etc. 3) I also feel that for individual cases the historical, cultural and institutional backgrounds of nations should be covered. Obviously there are all sorts of tradeoffs that anybody teaching this course faces. Barkley Rosser Dept. of Economics James Madison University Harrisonburg, VA 22807 USA tel: 540-568-3212 fax: 540-568-3010 e-mail: [EMAIL PROTECTED]
[PEN-L:3936] RE: the CPI
D Richardson wrote: . . . the substitution bias is always positive. The answer is from the micro theory textbook: as relative prices change people substitute toward the now less expensive goods and away from the more expensive. . . . Now the actual size of this bias is not large . . . Two guesses, based on 1 minute of thought and a total ignorance about price indexes: 1) It seems the substitution bias only has a systematic impact on the CPI if goods that are LOW priced in the base year tend have their relative price FALL in later years. If a low priced good experiences an increase in its relative price (and the high priced good does not), then buyers will shift to purchasing the HIGH priced good. If a fixed weight is used for consumer purchases, then the shift of consumer purchases to the higher priced (but relatively cheaper than before) good will be unrecognized. In this case, the CPI will UNDERSTATE inflation. That is, is it true that the substitution effect is positive ONLY if low priced goods experience a fall in their relative prices? 2) An additional reason the size of this bias is small is how a price index is constructed: it is not constructed from all prices and all quantities but for fairly large commodity groups. Most substitution between commodites, however, takes place WITHIN broadly defined commodity groups. As relative prices of different types of autos changes, auto buyers will shift the particular car they buy. However, the total number of cars they buy and the price of autos (as a large commodity group) relative to bus transportation will not be much affected despite relatively large shifts between different types of cars. Therefore, a price index based upon average price of all cars and total car purchases will not really be much biased even with large changes in the relative prices of different types of cars and much substitution within the auto commodity group. The substitution effect only becomes relevant for a price index when the relative prices of large commodity groups (which are substitutes for each other) change. Conclusion: the importance of changes in relative prices is less important for generating a price index than "economic theory" would suggest. Eric .. Eric Nilsson Department of Economics California State University San Bernardino, CA 92407 [EMAIL PROTECTED]
[PEN-L:3937] Re: Re: CPI
Dave writes that: I think that the small size of the substitution effect is the reason that Jim, subjectively, feels that he does not substitute. I don't want to take too much of Dave's time away from figuring out how to improve the CPI's measurement ;-), but this is not what I said. Rather, I said that substitution can impose pain on consumers. A price index which does not hold weights constant -- such as the personal consumer spending deflator misses -- this pain. I definitely substitute in response to price changes. I just don't like doing so in all cases. in pen-l solidarity, Jim Devine [EMAIL PROTECTED] Econ. Dept., Loyola Marymount Univ. 7900 Loyola Blvd., Los Angeles, CA 90045-8410 USA 310/338-2948 (daytime, during workweek); FAX: 310/338-1950 "It takes a busload of faith to get by." -- Lou Reed.
[PEN-L:3938] RE: the CPI
More concise statement of my last message: 1) If a high priced good falls in price, and the low priced good does not: shift in consumption toward the HIGH priced good will occur. In example, high priced good (A) falls from 150 to 100 and consumers shift to buying it: year 1 |year 2 good P rel P Q z PrelP Q A 150 3 10 z 100 214 B 50 1 10z 50 1 6 CPIyear 1150x10+50x10 = 2000 year 2100x10+50x10 = 1500 using fixed weights But, expenditures in the two years year 1 150x10+50x10 = 2000 year 2 100x14+50x6 = 1700 using actual buying patterns That is, in this example the substitution to relatively cheaper (but absolutely higher priced) good causes the CPI to understate the true expenses of consumers. How likely is such a thing? I don't know. 2) The price elasticity of demand between broad classifications of commodities is much lower than the price elasticity of demand for good within these broad classifications of commodities. As the CPI uses broad classifications of commodities, it is no surprise that the substitution bias is fairly small empirically. Eric .. Eric Nilsson Department of Economics California State University San Bernardino, CA 92407 [EMAIL PROTECTED]
[PEN-L:3939] Israel: The Hijack State (X)
CONNIVANCE IN CRIMES AGAINST THE PEOPLE OF THE MIDDLE EAST Once again, the state of Israel is carrying out the pre-set agenda of U.S. imperialism by committing crimes against the people of Palestine and Lebanon. Within this situation it is the connivance of Arab reaction which is the most shameless. Egypt is calling for peace and that is all. The same is the case with others, telling U.S. imperialism and Israel that they are going to do nothing about it. It is really obscene to see Jordan engaging in joint air exercises with the U.S., allowing Jordan to be used as the staging ground for U.S. imperialist fighter planes to fly forays into Iraq. Meanwhile, at the same time, the state of Israel, financed, armed and encouraged by the same U.S. imperialists, is clobbering Lebanon into submission. U.S. imperialism and the state of Israel have concocted the logic of an assassin: submit peacefully and we will stop attacking you. To demand that the Lebanese and Palestinians stop fighting for their lands is to call upon them to have no dignity whatsoever. It is the state of Israel that has occupied southern Lebanon for 18 years. It is the state of Israel which has financed and protected the militia against the people of Lebanon. How can the people of Lebanon stop resisting unless the state of Israel leaves Lebanon and promises not to violate its sovereignty in any way, shape or form. Thinking people resolutely condemn the state of Israel and U.S. imperialism for their fresh crimes against the Palestinians, Lebanese and other Arab peoples. At the same time, thinking people equally condemn Arab reaction, which with folded arms colludes in these crimes. We call on the people of the region to throw the foreigners out and settle matters amongst themselves on the basis of undoing the injustices of the past. Shawgi Tell University at Buffalo Graduate School of Education [EMAIL PROTECTED]
[PEN-L:3940] RE: the CPI
At 1:24 PM 4/24/96, Richardson_D wrote: While I usually enjoy EPI material, their comment on CPI biases, as it appeared on the Washington Post op-ed page, was an exception. It was a political, not a technical analysis, and was filled with attacks on the motives of the people who were pushing to fix the CPI. Admittedly many of these people are misanthropes, yet the economic/statistical analysis stands. Dean Baker of EPI has written quite a bit more on this issue than the Washington Post op-ed piece (which I never saw). Before you dismiss his arguments as merely "political," why don't you give him a call and see what he has to say. He's at 202-331-5525. While you're at it, you might want to read the testimony of your former commissioner, Janet Norwood. Among other points, Norwood argued that bigger car engines were considered a quality improvement in the 1960s, offsetting that era's price increases, and then smaller engines were considered improvements from the mid-1970s onward. Should we now go back and revise the 1960s? Or now that oil is cheap again, should we revise the last 15-20 years? No matter how you slice it, the price of cars in terms of the average wage unit (i.e. the number of hours required for the average worker to earn enough pretax dollars to pay for the average new car) rose nearly 70% between 1973 and 1995, a time when the CPI auto index claims that the price of new cars rose less than the rate of general inflation. Doug -- Doug Henwood Left Business Observer 250 W 85 St New York NY 10024-3217 USA +1-212-874-4020 voice +1-212-874-3137 fax email: [EMAIL PROTECTED] web: http://www.panix.com/~dhenwood/LBO_home.html
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[PEN-L:3944] RadioHenwood
On my radio show, Thursday, Apr 25, 5-6 PM NYC time, WBAI New York 99.5 FM: * Jennifer Hunt, a Yale economist on leave at Stanford, discussing wage mobility in the U.S. and its relation to inequality * Jared Bernstein of the Economic Policy Institute, discussing the same, plus reactions to recent income propaganda coming out of the Dallas Fed, the Clinton Council of Economic Advisors, and the National Association of Manufacturers * Alexander Cockburn, discussin his new book, co-authored with Ken Silverstein, Washington Babylon (Verso) * Lorna Salzman, Bernardo Issel, and Vicente Alba, discussing the NRDC's promotion of an environmentally destructive paper mill in the South Bronx - which will kill plans for an environmentally friendly intermodal rail yard - bad for NYC air, bad for the people of the South Bronx, but good for a very well-connected real estate developer. Doug -- Doug Henwood Left Business Observer 250 W 85 St New York NY 10024-3217 USA +1-212-874-4020 voice +1-212-874-3137 fax email: [EMAIL PROTECTED] web: http://www.panix.com/~dhenwood/LBO_home.html
[PEN-L:3945] RE: CPI
I would like to make two points in the CPI discussion. First, we should not lose sight of the political origin of the national examination of this issue. It seems clear that it surfaced as part of the attack on Social Security. The story was that the elderly have been doing much better than they deserve, getting raises each year tied to the CPI and thus improving their lot faster than inflation. Second, with respect to adjusting the CPI for "improvements" in quality. This obviously is the correct thing to do, however feasible or unfeasible it is. But there are significant instances of decreases in quality that the CPI does not pick up either. For example, the component of the CPI, airline fares, which I have looked at -- and had conversations with BLS people about -- is not adjusted for quality. And for this component the "quality" has clearly gone down. Seats are physically smaller. Rows are closer together. The carriers have made a strong effort to minimize the use of wide-body planes on domestic flights, decreasing comfort. And it is more difficult to fly from one place to another without visiting a hub. All of these could theoretically be adjusted for (and there are others as well.) So not every product or service is improved and thus the bias is not unidirectional.
[PEN-L:3946] Re: FW: BLS Daily Report
Dave Richardson posted the following bit: Among the books reviewed by Business Week (April 22, page l5) is "The Case Against Immigration" by Roy Beck, Washington editor of "The Social Contract", a quarterly that deals with immigration issues. Aaron Bernstein's review (Bernstein covers workplace issues for Business Week) is titled "Huddled Masses Yearning for Your Job?" The nub of Beck's case is: Large immigration flows have a tremendous impact on U.S. labor markets. And the pain has been felt by the bottom half of U.S. workers, whose wages have declined for 2 decades. Meanwhile, employees have benefitted from cheaper and plentiful labor. George Boyes, Harvard University, and others conclude that immigration has been responsible for up to a quarter of the increased pay gap between high- and low-skilled workers. And new arrivals may have been responsible for up to half of the collapse in the wages of high school dropouts since l973, other studies have shown. Beck also argues that immigration may play a role in overall U.S. wage stagnation. Sluggish productivity growth since l973 has been a central factor in holding down pay. However, productivity may have been affected by the surge in immigration that began in the l970s. At the same time, baby boomers and women flooded the market, boosting the supply of labor. This held down the growth of capital investment per worker, sapping gains in efficiency. "Congress picked a terribly inappropriate period of U.S. history to be increasing the number of U.S. workers through immigration," Beck writes. Coyle: I haven't read Beck's book but I did attend a lecture he gave locally. He is a very clever and effective speaker and also dishonest and deceitful. He has a number of tricks of exposition and debate that lured his audience into concluding that immigrants are a fearful threat to their livelihoods and environment. The books/articles blaming immigrants for the failure of the economy serve a familiar political purpose. I look forward to the strong rebuttals that I know can be put forward.Gene Coyle
[PEN-L:3941] Re: need a reading
Gary Teeple (Sociology and Anthropology at Simon Fraser Univ) has a new book called GLOBALIZATION AND THE DECLINE OF SOCIAL REFORM published in Canada by Garamond Press Toronto, and in the US by Humanities Press, Atlantic Highlands N.J. 1995. Teeple's analysis is Marxist but he writes quite simply and would never be published in RETHINKING MARXISM! Kotz, McDonough,and Reich put out SOCIAL STRUCTURES OF ACCUMULATION (Cambridge U Press, 1994). It has a great selection of readings but perhaps some might be a bit difficult for undergraduates. For your purposes though I think that Teeples book is more clearly on target. Cheers, Ken Hanly
[PEN-L:3947] RE: CPI
At 12:43 AM 4/25/96, Eugene Coyle wrote: I would like to make two points in the CPI discussion. First, we should not lose sight of the political origin of the national examination of this issue. It seems clear that it surfaced as part of the attack on Social Security. The story was that the elderly have been doing much better than they deserve, getting raises each year tied to the CPI and thus improving their lot faster than inflation. As I think I said in an earlier post, an experimental BLS price index for the elderly showed their inflation rate to be higher than average, so it's doubly perverse so use CPI revisions to cut their SS payments. In his testimony before the Boskin commission on the CPI, Zvi Grilliches said that he found himself deeply embarrassed by his adopted country for its attack on the old, poor, and sick. This part of his analysis has, of course, not been reported (except in LBO). For example, the component of the CPI, airline fares, which I have looked at -- and had conversations with BLS people about -- is not adjusted for quality. And for this component the "quality" has clearly gone down. Seats are physically smaller. Rows are closer together. The carriers have made a strong effort to minimize the use of wide-body planes on domestic flights, decreasing comfort. And it is more difficult to fly from one place to another without visiting a hub. All That's not the way I see it at all. The airfare component of the CPI has, since dereg, increased at almost twice the rate of overall inflation - a sharp contrast with declines in real fares per seat mile that apologists love to cite. (Actually, real fares per seat mile declined by the same amount or more in the 1960s and 1970s as they have since dereg.) CPI boss Pat Jackman says this is precisely because of adjustment for declines in quality of just the sort Eugene Coyle mentioned. When I brought this up to Alfred Kahn, the "father" of airline dereg, he said he couldn't believe it. Doug -- Doug Henwood Left Business Observer 250 W 85 St New York NY 10024-3217 USA +1-212-874-4020 voice +1-212-874-3137 fax email: [EMAIL PROTECTED] web: http://www.panix.com/~dhenwood/LBO_home.html
[PEN-L:3948] Re: RadioHenwood
At 12:42 AM 4/25/96, Doug Henwood wrote: * Lorna Salzman, Bernardo Issel, and Vicente Alba, discussing the NRDC's promotion of an environmentally destructive paper mill in the South Bronx - which will kill plans for an environmentally friendly intermodal rail yard - bad for NYC air, bad for the people of the South Bronx, but good for a very well-connected real estate developer. Doug: unfortunately I can't get WBAI out here. Is there anything written about this story (above) that I could get from you or Lorna Salzman et al.? Or a tape of the show (for which I could reimburse tape, time and postage...)? Thanks in advance either way. On another matter altogether: I spoke with Greg Smith of SOCIALIST REVIEW yesterday about my forthcoming article and he asked me if I could relay to you an invitation from SR to write for them. He thought, given that LBO only has short articles, you might appreciate the opportunity to write a longer piece. He mentioned an upcoming issue topic which I apparently neglected to note, but also said they'd be interested in discussing anything you wanted to suggest. I told him you were writing a book. Anyway, contact them if you like: [EMAIL PROTECTED] Blair Blair Sandler [EMAIL PROTECTED] 415-282-2163 80 Duncan St. #1 San Francisco, CA 94110
[PEN-L:3949] Re: dsanet: US Health Care
I recommend the following: Canham-Clyne, Woolhandler, Himmelstein, _The Rational Option_ Pamphleteer's Press, 1995. Vicente Navarro, _Dangerous to Your Health: Capitalism in Health Care_, Monthly Review Press, 1993. There are more, but these are a good start. WJM member Colorado Coalition for Single Payer I am sick to death of hearing that the USA has "the best health-care system in the world". Can anyone supply me with good cites/stats which refute this claim? Email to the list or to me privately will both do just fine. Peter [EMAIL PROTECTED]
[PEN-L:3950] Real Wages the CPI
One way to get a handle on whether the real wage has fallen or not (or when it has fallen and when risen) would be to use the BLS's standard budgets that define the poverty level, a moderate standard of living, etc. (I don't have these data available.) One would have to use the bench-mark years for these rather than those which are updated using the CPI, since the whole point is to avoid use of the CPI. Then divide these nominal budgets by the nominal wage, to get the number of hours needed to pay for the nominal budget. (This is an extension of Doug's calculation with cars.) problems: (1) The wage misses the advantage of benefits such as health insurance. One might want to divide the nominal budgets by nominal total compensation (which includes benefits) to check the above. However, one of the problems with benefits is that, at least for health care, the prices have risen much faster than for other wage-goods, so that real health benefits haven't risen much. (2) The official poverty-line budget hasn't been updated in the face of increasing needs. However, I understand that Patricia Ruggles and others have made good estimates of alternative poverty-line budgets. in pen-l solidarity, Jim Devine [EMAIL PROTECTED] Econ. Dept., Loyola Marymount Univ. 7900 Loyola Blvd., Los Angeles, CA 90045-8410 USA 310/338-2948 (daytime, during workweek); FAX: 310/338-1950 "It takes a busload of faith to get by." -- Lou Reed.
[PEN-L:3951] RE: CPI
Doug mentions airline prices, which makes me think of airline quality. We hear about all sorts of corrections for quality increases, but none about quality declines. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 916-898-5321 E-Mail [EMAIL PROTECTED]
[PEN-L:3952] Noll/Ma Bell Rises Again? (fwd)
== Los Angeles Times, April 24, 1996, p. B-9 Aren't We Glad They Broke Up Bell? o Mergers: Consumers will be losers as we appear headed back to a Ma Bell-type monopoly, but without any regulation. By A. Michael Noll The Baby Bell family seems to be ridden with incest and cannibalism. This week, the union of two Baby Bell sisters, Bell Atlantic and NYNEX, was finalized. Less than a month ago, SBC Communications cannibalized its sister Baby Bell, Pacific Telesis. These mergers make no sense strategically or synergistically. The only rationale seems to be that bigger is better, perhaps in the belief that one or a few "maxi" Bells are financially stronger to take on ATT in a battle over long distance. But these two mergers are only the beginning: The old Bell System seems to be rising from the ashes of the 1984 ATT breakup. The telephone operations of US West would make a perfect geographic match to the new SBC formed by the acquisition of Pacific Telesis and hence it would be no surprise if SBC and US West's telephone operations merged to create a maxi Bell West. Bell South would seem to be a prefect partner to join the Bell Atlantic/NYNEX merger and create maxi Bell East. This would then leave Ameritech partnerless and in a quandary whether to join the West or the East, or to act as the glue containing all into a single maxi Bell. Such a gigantic combination would have the financial strength to purchase ATT and recreate the Bell system, but without the old manufacturing arm, Western Electric, which ATT will set loose this year as Lucent Technologies. These mergers and scenarios have been put in motion in the name of competition, under the protection of the new telecommunications legislation that was signed into law in February and supposedly intended to stimulate increased competition. Rather than fostering competition, the new legislation seems to have unleashed the Baby Bells in a feeding frenzy on one another. When this period of cannibalism is over, I suspect they will devour either ATT or the cable television industry or both. In the old Bell System, strong central direction by ATT kept the local telephone companies in line. Now, the Baby Bells have become uncontrollable in their ambitions. Although ATT could have blocked the apparent plans of the Baby Bells to monopolize all telecommunication, it missed the real threat from the Baby Bells. ATT must now obtain a national presence in the provision of national telecommunications service to counter the moves of the Baby Bells. The only way for this to happen would be for ATT to acquire GTE, which offers local telephone service nationwide. Management of the communications industry seems unable to offer anything more creative than acquisitions, mergers and directive as the way to shape the future. A few years ago, Bell Atlantic attempted to acquire the cable TV giant TCI, but saner financial reason prevailed and the deal fell through. Now Bell Atlantic wants to merge with NYNEX. A real question is why anybody would want to be involved with NYNEX and its problems. NYNEX has one of the lowest productivities of the seven Baby Bells because it hasn't been able to trim its surplus employee rolls. Although Bell Atlantic reduced its number of employees by 14.5% in 1995, NYNEX cut only 6.8%. The larger number of employees at NYNEX is reflected in higher operating expenses and a lower net income compared to Bell Atlantic. Bell Atlantic's after-tax profit margin for 1995 is about 14%; NYNEX's is only 8%. NYNEX's long-term debt is about 50% larger than Bell Atlantic's. NYNEX is an unproductive, low-profit, debt-ridden operation compared to Bell Atlantic. A single maxi Bell providing local telephone service through the nation is not necessarily bad. However, such an all-encompassing operation would be impossible to regulate by the individual states, and some form of federal control of local telephone service would be required. Since telephone service should be universal, perhaps such federal regulation would not be a bad idea. Indeed, I continue to wonder whether the provision of telecommunication service is a natural monopoly. Any attempt to force competition would then only be contrived, and if left alone, the cohesive forces of natural monopoly would cause the entities to coalesce, just as seems to be starting to happen today. Monopoly is not inherently evil. What can be evil is unregulated, unfettered monopoly, and this unfortunately is what seems to be evolving at the local Baby Bell level. Ultimately, the "bell" will go off at the Justice Department. A. Michael Noll is a professor at the Annenberg School for Communication at USC. His new book, "Highway of Dreams: A Critical Approach to the Information
[PEN-L:3953] SOCIALIST MAGAZINE WEBSITE (fwd)
Date: Tue, 23 Apr 1996 16:55:01 CDT Reply-To: Paul Graham [EMAIL PROTECTED] From: Paul Graham [EMAIL PROTECTED] Subject: SOCIALIST MAGAZINE WEBSITE Canadian Dimension, a magazine whose politics are best described as being socialist, feminist and green, has just established a site on the World Wide Web. Point your web browser to: http://www.canadiandimension.mb.ca/cd/index.htm and check it out. In solidarity, Paul Graham Canadian Dimension
[PEN-L:3954] RE: CPI
At 9:27 AM 4/25/96, Michael Perelman wrote: Doug mentions airline prices, which makes me think of airline quality. We hear about all sorts of corrections for quality increases, but none about quality declines. Exactly. No one has looked at any reason the CPI might be understating inflation; the only attention has been paid to possible reasons for overstatement. Everyone points to Sam's Club as one of these wondrous innovations uncaptured by the CPI; is driving a half-hour to line up at some huge boxy warehouse to save a few bucks on durables piled up in the aisles *really* an improvement in quality over a neighborhood store you might even be able to - zounds! - walk to? Doug -- Doug Henwood Left Business Observer 250 W 85 St New York NY 10024-3217 USA +1-212-874-4020 voice +1-212-874-3137 fax email: [EMAIL PROTECTED] web: http://www.panix.com/~dhenwood/LBO_home.html
[PEN-L:3955] Re: RadioHenwood
At 6:57 AM 4/25/96, Blair Sandler wrote: [...a bunch of personal stuff to Doug...] Sorry folks: hit that reply button without thinking. Blair
[PEN-L:3957] RE: the CPI
Forgive possible double posting, but my message from yesterday never appeared on pen-l. In any case, I've revised it to make it more clear. D Richardson wrote: . . . the substitution bias is always positive. The answer is from the micro theory textbook: as relative prices change people substitute toward the now less expensive goods and away from the more expensive . . . I disagree. The sign of the substitution bias is an empirical matter and not a "theoretical" matter. The sign of the substitution effect can be negative or positive. Example: Assume two goods (A and B) experience price increases between year 1 and 2. Assume good B increases in price faster than good A. Therefore, people shift to buying more of good A in year 2 compared to year 1. year 1 |year 2 good P rel P Q z PrelP Q A 150 310z 300214 B 50 110z 150 1 6 CPI: year 1150x10+50x10 = 2000 year 2300x10+150x10 = 4500 =225% increase using fixed weights (from year 1) But, expenditures in the two years are year 1 150x10+50x10 = 2000 year 2 300x14+150x6 = 5100 = 255% increase using actual buying patterns That is, in this case the CPI UNDERSTATES the rate of inflation experienced by consumers: CPI indicates 225% inflation rate while expenditures by consumers go up by 255%. Why? In this case the good that has its relative price falling between years 1 and 2 is the HIGHER priced good. A shift to a good whose relative prices has fallen need not be a shift to a lower priced good. The substitution bias only has a systematic downward impact on the CPI if goods that are LOW priced in the base year tend have their relative price FALL in later years. But there is no theoretical reason for this to occur. In fact, there are likely good reasons to suppose that goods that have their relative prices fall were HIGH priced goods to begin with. Conclusion: "theory" does not imply that the CPI necessarily overstates "true" inflation rates (based on the substitution effect). Eric .. Eric Nilsson Department of Economics California State University San Bernardino, CA 92407 [EMAIL PROTECTED]
[PEN-L:3958] US Health Care
This material was originally posted to a health care reform list in 1994 by Steve Gupta M.D. The situation with respect to Canada has altered somewhat since then in that there have been cutbacks in the system. Cheers, Ken Hanly I have read several surveys of patients in Canada and USA. ALL of them show that Canadians are far more happy with their care than Americans are with american medical care. I keep reading here, that medical care is so awful in Canada. It is not true. I am giving foloowing references for those who are interested in knowing others opinions. Sorry for the long message. REFERENCES Physician Survey: 1. Hayes G J, et al.: Physicians Who Have Practices in Both the United States and Canada Compare the Systems, Am J of Public Health Nov 1993; 83(11):1544-8. The authors surveyed 147 physicians who had practiced in both countries. They had practiced on an average of 10 years in one country before moving to the second country. They were asked three basic questions: first about their overall satisfaction with both systems, second about the financial compensation, and third about their ability to practice quality medicine. Primary care physicians were equally satisfied with their financial compensation in both countries. Specialists were more satisfied with the US. Both primary care physicians and specialists ranked Canada equal to the US when it came to the quality of medical care delivered. In overall satisfaction there was slight margin in favor of Canada. Patient Surveys: 2. Sullivan P: Canadian M.D.s and Non physicians Rate Health Care System Highly, US Survey Reveals, Can Med Assoc J Oct 1992;147(8): 1219-20. This was a detailed survey of 1500 physicians and 1500 patients in Canada. Among physicians, 80% said they were satisfied or very satisfied with the quality of medical care they are able to provide. Among patients, 93% rated the quality of care they received as very high. Furthermore, 85% of the patients said they or their families never had to wait an uncomfortable length of time for specialist care. 3. Blendon R J et al.: Satisfaction with Health Systems in Ten Nations, Health Aff 1990;9(2):185-192. This was a Harris poll taken in ten developed nations (USA, Canada, England, Germany, Japan, Italy, Sweden, France, Australia and Netherlands). A scientifically selected sample of over 1000 people from each country (500 in Sweden) were interviewed. People were asked identical questions concerning the availability and quality of health care in their countries. Canada had the highest satisfaction rating of all the ten countries surveyed. The US shared the bottom place with Italy. This survey was in agreement with the earlier surveys done in 1988 by Los Angeles Times and in 1989 by NBC. Summary Article: 4. Barkin M: The Canadian Health Care System, Ann Emerg Med Oct 1992; 21:1245-49. This review article summarizes the differences in the health care system of the two countries. There are important similarities in the delivery of health care in both countries. The physicians and hospitals are private. The medical education system is virtually identical. The primary care physician s income is only slightly lower in Canada. The differences lie in the funding mechanism, patient satisfaction rates, and clinical outcomes in term of life expectancy, infant mortality, etc. Compiled by Steve Gupta, M.D.
[PEN-L:3959] Re: the CPI
At 10:57 AM 4/24/96, [EMAIL PROTECTED] wrote: I'm not convinced at all that the "substitution bias" is a bad thing. Assuming I'm a red-blooded Amurrican steak-and-potatoes man, if the price of steak rises relative to chicken and I'm forced to abandon my meat-eating ways and swallow fowl, doesn't that hurt my utility? (I'd get less "consumer surplus, right?) This problem would be missed by the Consumer Expenditure Deflator and captured by the Consumer Price Index. I don't think this is right, Jim. It assumes that utility is god- (or otherwise a priori) given, not constituted by practice. Comparing utility only works for marginal changes, but eating fowl instead of beef is in this context not a marginal change and then incommensurable. Note that the same argument you make above can be and is often used to argue that people will lose utility if the current auto-based transportation system is replaced by public/mass transit. Blair
[PEN-L:3961] CPI (from Dean Baker)
Being attacked on PEN-L, it feels like the old days. Anyhow, I would have been delighted to have a piece exclusively discussing the technical issues concerning the CPI in the Washington Post. If anyone knows how to get the Post to print such a piece from someone on the left, I'd be very interested in hearing about it. Getting to the point, I believe I have read most of the literature presenting evidence of high side bias in the CPI. There clearly are some sources of high side bias. However, much of the claims are grossly exaggerated, so that very small biases get blown up into large ones. There are also source of low side bias which no one has seriously examined. The treatment of health insurance is the most obvious example here, but there are others. I wrote a piece on the CPI for the American Prospect (Winter 1996). I would encourage people to look at if they want a view that differs from that of the Boskin Commission. This can be found on our WEB cite (www.epn.org). I should also mention that I have just finished a paper that examined the changes in the CPI over the post-war period. One of the things I did in this paper was project backward the size of the bias in the CPI based on current estimates. Whatever bias is there at present, it certainly was far greater in previous years. One result of this projection, is that if the Boskin Commission's estimate of the size of the current bias as 1% is correct, then the median family was living near the 1994 poverty level in 1960. It was at about 90% of the 1994 poverty level in 1953. Maybe people want to believe this, but it's a very different picture of the recent past than what I remember. I am attaching a copy of the executive summary of the paper to this note. The whole mess was sent to the Boskin Commission in the hope that it would give them something to think about before they issue their final report. Dean Baker Getting Prices Right: A Methodologically Consistent Consumer Price Index, 1953-1994 Executive Summary Dean Baker Economic Policy Institute April 12, 1996 This paper constructs a methodologically consistent consumer price index that covers most of the post-war period. This consistent index is meant to serve two purposes. First, there have been significant changes in population coverage, survey methodology, and conceptual treatment of categories of consumption over this period. A measure of overall and relative price changes that applies a consistent approach should allow for a more accurate understanding of movements in prices and output. A second reason why a consistent index should be valuable is that it can provide a better basis for assessing the size of current biases in the CPI. This paper uses the existing research on the size of various biases in the CPI to produce a range for the size of these biases over the whole period. It then projects backward two CPI series that have been adjusted in accordance with the high and low end of the range of historical bias estimates. These series are then used to evaluate the growth in real wages and family income over the post-war period. The following are some of the main points established in the paper: * The CPI is explicitly not designed as a cost-of-living index (CLI). The fact that it does not pick up consumer substitution in response to changes in relative prices is probably the least important distinction between the two types of indexes. A true CLI would have to measure all the ways in which changes in the physical and social infrastructure affected individual welfare. This would include determining the extent to which changing consumption patterns within society might change the utility derived from a particular product, or the need for that product. For example, a telephone becomes a necessity when it comes to be used as a standard means of communication. Households without a telephone become unambiguously worse off as a result of this development. A true CLI would also have to assess the extent to which changes in society, such as the increased fear of crime or a perceived deterioration in the quality of public schools, have affected people's well being. It would also have to assess the impact of relatively amorphous factors, such as a general decline of trust among the population. These are extremely difficult issues to quantify. They also raise questions in areas where economists have no particular expertise. For these reasons, the BLS has wisely chosen to restrict itself to the area where it does have expertise, the construction of a price index for a basket of consumer goods and services. * Most of the changes in population coverage, methodology, and the treatment of conceptual issues have led to clear improvements in the quality of the index. A notable exception is the treatment of health insurance. The current treatment creates an asymmetric situation from a policy and accounting standpoint. If the less
[PEN-L:3960] Re: the CPI
At 1:53 PM 4/25/96, Blair Sandler wrote: At 10:57 AM 4/24/96, [EMAIL PROTECTED] wrote: I'm not convinced at all that the "substitution bias" is a bad thing. Assuming I'm a red-blooded Amurrican steak-and-potatoes man, if the price of steak rises relative to chicken and I'm forced to abandon my meat-eating ways and swallow fowl, doesn't that hurt my utility? (I'd get less "consumer surplus, right?) This problem would be missed by the Consumer Expenditure Deflator and captured by the Consumer Price Index. I don't think this is right, Jim. It assumes that utility is god- (or otherwise a priori) given, not constituted by practice. Comparing utility only works for marginal changes, but eating fowl instead of beef is in this context not a marginal change and then incommensurable. Note that the same argument you make above can be and is often used to argue that people will lose utility if the current auto-based transportation system is replaced by public/mass transit. Oops. Now this last paragraph seems wrong to me: the argument above concerns the idea that utility is constituted by practice, but I think the last paragraph is about bounded rationality and/or the possibility of mass transit far superior to what currently exists. Blair
[PEN-L:3962] RE: the CPI
Eric's example is instructive. But the bias, I contend, is quite a bit worse than this. In Eric's example (and in the CPI calculations themselves) we assume, implicitly, that INCOMES are rising as fast as prices. It's odd that an income deflator is calculated based on this presumption, but true nonetheless -- and perhaps unavoidable. But what if incomes do not rise to maintain a given level of purchases? Then rising prices of necessary goods (I refer again to housing, health care and higher education) for which there are no substitutes will, of necessity result in lower purchases of other, non-essential goods. How is the CPI affected? In using fixed weights, the CPI continues to overstate the weight of non-essential goods whose price is rising slowly, while understating the (increasing) weight of goods whose prices are rising rapidly. People perceive that their living standards have fallen and an important reason is the rising proportion of income devoted to shelter, health care and children's educations. The CPI does not, as far as I know, account for this. It's a serious failing. Especially when these supposed substitution biases are being used to claim that real incomes have not fallen!! Ellen Frank
[PEN-L:3963] Military Keynesianism
someone on pen-l asked awhile back about who used the phrase "Military Keynesianism" first. I don't know. But the concept is older than the phrase. In Orwell's 1984, there's a book within the book "The Theory Practice of Oligarchial Collectivism" which posits a military-Keynesian political economy. The problem is that capitalist society has the capacity to produce too much, encouraging economic stagnation. The efforts to raise wages, etc., threaten hierarchy. The military effort -- the continuous and shifting wars between Oceana (that's us, folks), Eurasia, and Eastasia -- wastes the economic surplus. Going further back, didn't Luxemburg see military spending as a solution to capitalism's underconsumption problems? Malthus saw a similar role for the land-owners' luxurious life-styles; this might be extended easily to the military. in pen-l solidarity, Jim Devine [EMAIL PROTECTED] Econ. Dept., Loyola Marymount Univ. 7900 Loyola Blvd., Los Angeles, CA 90045-8410 USA 310/338-2948 (daytime, during workweek); FAX: 310/338-1950 "It takes a busload of faith to get by." -- Lou Reed.
