Random Things to Read
Terry J. Fitzgerald in the Minneapolis Fed Review:
Fringe benefits have become an increasingly important part of employee compensation over the past 30 years. The BLS estimates that benefits currently account for about 30 percent of employer costs for employee compensation. While the BLS does not provide similar estimates for 1975, other sources suggest that the benefit share of total compensation has risen substantially. For example, the Economic Benefits Research Institute estimates that health care as a share of total compensation rose from 3.3 percent in 1975 to 8.5 percent in 2005.
…Rather than falling by 4 percent over the past 30 years, average hourly earnings have actually risen by 16 percent.
Doesn’t that last sentence single-handedly refute Paul Krugman’s latest book? Thanks to Tyler Cowen for the pointer.
Ecologist Ken Caldeira:
If we could pour a five-gallon bucket’s worth of sulfate particles per second into the stratosphere, it might be enough to keep the earth from warming for 50 years. Tossing twice as much up there could protect us into the next century.
Thanks to Greg Mankiw for the pointer. What I would like to know is whether geo-engineering represents a just-in-case technology. That is, if we can execute an Operation Sunscreen that quickly stops temperatures from rising, that would make for a really strong case against sacrificing a lot of GDP through a carbon tax. Because we do not yet know how bad global warming is going to be, the longer we can wait before doing anything about it, the better–but only if we know that we can wait and still do something about it!
Recall that 78 percent of the buyers in this market [college education] choose the public sector. Tuition is going up because it can, to paraphrase the old saw about the dog (or is it the monkey?). But too big a sticker shock across one year would irritate voters, who might then insist on tighter regulations on public sector higher education. Think about the equilibrium. Many state schools could earn more money by forgoing state aid and raising tuition to profit-maximizing levels, or some approximation thereof. Step-by-step, we are moving toward some version of this outcome.
Why do low-tuition goodies for middle class parents no longer figure so prominently in the political calculus? Could it be the aging of the population? Or simply that some schools tried raising tuition and found that it did not backfire?
It strikes me that we use the same formula to raise prices in both health care and education. (a) Subsidize demand; (b) Restrict supply using accreditation rules.
Tyler’s question is why prices rise gradually rather than simply reach a high level and stay there. I think what goes on is a gradual cycle whereby the demand subsidy goes up, then the price goes up, which leads politicians to increase the demand subsidy, etc. The process plays out over time, not all at once.