One reason it’s been so hard to shift this economy out of second gear–why we’re still stuck with large output and employment gaps–is that there’s actually a cost to dysfunctional federal politics. The Fed’s holding up their side of the bargain, but it takes both monetary and fiscal policy. Over at WaPo.
The recent dust-up over price gouging in the market for pharmaceuticals points to an obvious problem. Medicines have characteristics of public goods, and the current system is horribly distorted. Like I said, prices don’t go up 5,000% overnight in functioning markets. There are various ways to nibble around the edges–and I’m not against trying them. But my strongly held sense is that it will take price controls and putting patents in the public domain to solve this. Over at the NYT’s Room for Debate.