By Dean Baker
There's not anything unsuitable with economics, Dean Baker contends, yet economists often forget about their very own rules by way of monetary coverage. What may coverage appear like if we took uncomplicated ideas of mainstream economics heavily and utilized them always? within the debate over legislation, for instance, Baker--one of the few economists who estimated the meltdown of fall 2008--points out that ideological blinders have obscured the actual fact there isn't any “free market” to guard. sleek markets are hugely regulated, even if intrusive rules equivalent to copyright and patents are hardly ever considered as regulatory units. If we admit the level to which the economic system is and may be regulated, we have now many extra techniques in designing coverage and identifying who merits from it. On wellbeing and fitness care reform, Baker complains that economists forget about one other easy concept: marginal fee pricing. in contrast to all different industries, clinical providers are priced terribly excessive, a long way above the price of construction, but that discrepancy isn't addressed within the debate approximately overall healthiness care reform. What if we utilized marginal expense pricing--making doctors’ wages aggressive and charging much less for pharmaceuticals and checks equivalent to MRIs? Taking Economics heavily deals an alternate Econ one zero one. It introduces fiscal ideas and thinks via what we'd achieve if we unfastened ourselves from ideological blinders and come back to fundamentals within the so much components of our economic system.
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Extra info for Taking Economics Seriously
The Washington Post, for example, reported last year that the schizophrenia drug Seroquel may be less effective than claimed. Studies revealing the potentially harmful effects of the arthritis drug Vioxx were famously suppressed. Given the enormous profits at stake, the withholding of relevant evidence from drug research is entirely predictable. While few economists would dispute that patent monopolies in pharmaceuticals and medical technology provide incentives for 32 taking economics seriously wasteful activities, they defend patents as the price we must pay for financing drug research and development.
The same graphs would show large losses when government patent protections drive drug and medical-equipment prices above marginal costs—on the order of 1,000 percent, 10,000 percent, and in some cases 100,000 percent. Some cancer drugs, such as Avastin and Erbitux, are particularly overpriced. Even in Econ 101, though, the direct inefficiency associated with setting prices above marginal cost is only part of the story. When government interference sets the price of any 26 taking economics seriously product above its marginal cost, it also creates the opportunity for monopoly rents—extra profits due to artificial scarcity.
S. -made clothing. The benefits to consumers are clear in both cases. Drafting international training and licensing standards would be the next step. -certified testers in their home countries to determine whether 40 taking economics seriously they meet the standards. S. citizen. A kid growing up in Mexico City or Beijing would have as much opportunity to work as a neurosurgeon in the United States as a kid growing up on Long Island. Compensation in the most highly paid medical specialties averages far above $250,000 a year, even after physicians have paid for their malpractice insurance.
Taking Economics Seriously by Dean Baker