Category: Economics

The Medicare Disadvantage

DANA GOLDMAN, director of USC’s Schaeffer Center, ADAM LEIVE, graduate student at University of Pennsylvania and DANIEL MCFADDEN, senior fellow, Schaeffer Center.

This op-ed originally appeared at the New York Times.

One question at the center of the Medicare debate is whether private insurance companies have a future role to play in the huge federal program. Paul Ryan’s 2012 budget proposal gives private health plans a starring role in the form of a voucher program. But some economists would give them the hook, citing the failure of Medicare Advantage to control costs. Some perspective is in order.

Medicare Advantage has historically cost 7 to 12 percent more than traditional Medicare, according to the Medicare Payment Advisory Commission. But to conclude that this cost difference proves that private health plans have no place in Medicare misreads the Medicare Advantage experience in an important way: It ignores the decisive role that government has played in driving up the program’s costs. Medicare Advantage is only partly about reducing costs. It is also designed to increase choice for beneficiaries. And the incentives that government gives private health plans to expand choice end up undercutting efforts to save money.

Privatizing the Public University

WILLIAM TIERNEY, director of the Pullias Center for Higher Education, USC’s Rossier School of Education.

This op-ed originally appeared in the Chronicle of Higher Education.

Recently a committee of the University of California’s Academic Senate effectively threw cold water on the plans of UCLA’s Anderson School of Management to take its M.B.A. program private.

The plan was for the program to give up state funds and, in return, for the state to give the school more leeway in issues such as setting tuition. The school’s faculty and the UCLA Senate had approved the plans, but it ran into unanimous opposition from a committee of the Academic Senate. It was troubled that donors might have too much influence, that faculty priorities might shift, and that costs would rise without sufficient financial aid for poorer students.

China Needs a Wall Street

HASHEM PESARAN, professor of economics, USC Dornsife.

This op-ed originally appeared in The Sunday Times.

The British economy is experiencing a double-dip recession, the leading eurozone economies and Japan are stagnant and the American economy is slowing down. At the same time, emerging economies such as China and India continue to show impressive growth.

This divide in the fortunes of the industrialised and emerging economies is not new. Over the past two decades China’s importance has increased dramatically. While world trade has grown by about 40% from the mid-1990s, China’s trade has more than doubled during the same period.

New China Syndrome: Richer, Unhappy

RICHARD A. EASTERLIN, professor of economics, USC Dornsife.

This op-ed originally appeared in the New York Times.

China’s new leaders, who will be anointed next month at the Communist Party’s 18th National Congress in Beijing, might want to rethink the Faustian bargain their predecessors embraced some 20 years ago: namely, that social stability could be bought by rapid economic growth.

As the recent riots at a Foxconn factory in northern China demonstrate, growth alone, even at sustained, spectacular rates, has not produced the kind of life satisfaction crucial to a stable society — an experience that shows how critically important good jobs and a strong social safety net are to people’s happiness.

A Housing Recovery That Leaves the Middle Class on the Sidelines

ROBERT BRIDGES, assistant professor clinical finance, business economics, USC’s Marshall School of Business.

This op-ed originally appeared at Forbes.

It would seem that a government seeking to display a true populist streak by helping its citizens buy houses would do so in a way to ensure prices as low as possible. For those who are not yet homeowners, how is it populism when recovery makes houses more expensive rather than more affordable?

For some time now, demand for houses has been artificially boosted by federal and state tax policies, rising governmental involvement in residential-debt financing, and persistently low interest rates orchestrated by the Federal Reserve. This intensified demand has not been relieved by sufficient new supply of houses, resulting in intractable upward pricing pressure that has put home-ownership beyond the reach of growing numbers of moderate-income buyers. Future housing markets are likely to be increasingly vulnerable to destructive price swings if credit-fueled demand and no-growth sentiment continue to flourish.

California Needs a Politics Rooted in 2012, Not 1978

DOWELL MYERS, demographer and planning professor, Price School of Public Policy.

This op-ed originally appeared in the Los Angeles Times.

At the root of California’s dysfunctional politics lie some old ideas about who we are as a state. Demographics have been more volatile here than in other states, and many Californians older than 55, who make up roughly 46% of state voters, don’t want to pay for changes they never welcomed. The tragedy is that they are battling problems that have largely dissipated. The outlook for California going forward from 2012 is very different from what it was two decades ago.

Take population growth. The 1980s brought an unprecedented growth spurt for the state, with population increasing by some 6.1 million people. This far exceeded the population growth of 3.7 million people in the 1970s and 4.3 million in the 1960s.

How to Save the Euro: A Little More Inflation in Germany, Please

ARIS PROTOPAPADAKIS, professor of business and finance, USC Marshall School of Business.

This op-ed originally appeared at the Huffington Post.

Euro zone leaders’ latest plan to rescue the euro, agreed to late last month, focuses on two crises: the continent’s ailing banks and the sovereign-debt woes of Europe’s southern peripheral economies. Unfortunately, their blueprint neglects a third crisis that continues to grow and could bring down the euro zone: Greece, Ireland, Italy, Portugal and Spain are becoming increasingly uncompetitive economically relative to Germany.

Most economists agree that renewed economic growth is essential for saving the euro. The problem is that the effects of measures such as creating a banking union, the centerpiece of the recent summit’s rescue plan, may save the banking system but will do nothing to reverse the loss of competitiveness among the region’s economies. The euro zone can’t wait much longer, as the steadily rising borrowing costs of Spain and Italy demonstrate. It needs to start growing now, and the fastest and surest way to stimulate growth without increasing deficits is for Germany to accept a much looser monetary policy and the consequent higher inflation to help restore the competitiveness of Europe’s peripheral economies.

Has Proposition 13 Lost Its Relevance?

DOWELL MYERS, demographer and professor of planning, USC’s Price School of Public Policy.

This op-ed originally appeared in the Sacramento Bee.

Proposition 13 is widely regarded as the third rail in state politics: Touch it and you’re politically dead. It has earned that sacrosanct status because it solved some urgent problems for California homeowners. But that was a generation ago, a different time with different problems. As we face the challenge of reviving the state’s housing market and finding a reliable revenue source for freeways, schools and other public services, we should consider how Proposition 13 should serve us in the future.

Don’t Expect Fireworks With New Mexican President

PAMELA K. STARR, associate professor of international relations, USC Dornsife.

This op-ed originally appeared in the Los Angeles Times.

Enrique Peña Nieto, the fresh-faced politician Mexicans elected this week to be their president, represents the Institutional Revolutionary Party, or PRI, which completely dominated Mexican politics for 71 years until 2000. Many Mexicans are concerned that the PRI’s return will lead to a restoration of autocratic rule, an officially sanctioned detente with organized crime or a marked deterioration in bilateral cooperation. But these things are unlikely.

Silicon Valley Needs a Foreign Policy

ERNEST J. WILSON III, dean of USC’s Annenberg School for Communication and Journalism.

This op-ed originally appeared at Foreign Affairs.

As California’s high-tech firms grew to become economic powerhouses in the American economy, they punched below their weight politically. For the most part, they are not very savvy about the ways of Washington — they came late to the lobbying game — and their political strategies were naïve compared with those of old industrial sectors like oil and automobiles.

That seems to be changing. In January, a group of high-tech heavyweights, including Google and Wikipedia, along with less prominent combatants (155,000 Web sites in all) and nonprofits such as Fight for the Future, joined in a massive online blackout to protest the Stop Online Piracy Act (SOPA). Since the bill’s introduction in May 2011, a wide mix of representatives from the film, television, music, and publishing industries had been championing SOPA and its sibling, the PROTECT IP Act (PIPA), two pieces of legislation designed to address international theft of copyrighted U.S. intellectual property.