Saturday, August 30, 2014

Discrimination is alive and well against fruits and veggies in the EU.

The European Union (EU) has strict standards (see HERE) when it comes to the sale of certain fruits and vegatables.

In order to be sold in markets they must meet not only quality specificaitons but "appearance" standards as well.  This results in LOTS of food waste becasue the "Ugly Fruit and Veggies" never make it to the selves.

This article is about a woman in Portugal who is taking on the problem of "Lookism" in produce section.

Portuguese Food Co-op Fights Back Against EU-Mandated Waste

Baylen Linnekin speaks with Maria Canelhas from Fruta Feia, which has saved literally tons of great food from the garbage.

Seems like this is a way to keep prices high as well.  There is plenty of ugly produce that is perfectly edible and meets all the standards for consumption.

Ugly Produce is a suitable substitute for "Beautiful Produce".  A face palm to the concept of Substituion Bias.

Guess this guy below would not be welcome at a super marche' in Paris.  Looks like he could whoop up on the other veggies in the bins.

I have had this for awhile. I lost track of the source

Wednesday, August 27, 2014

Fuel for Food in the Upper Mid-West. Caught in the Opportunity Cost trap.

The allocation of scarce railroad track from the transport of food to fuel has created a costly consequence for agricultural interests. The simultaneous boom in energy and food production necessitates choices.  It appears the fossil fuel (oil and gas) interests are winning out.  There is no escaping Opportunity Costs!

Millions in Agriculture Lost as Rails Neglect Grain Surplus (HT Morning Ag Cllips)

Farmers in North Dakota are experiencing millions of dollars in losses as their grain shipments — held up by rails’ prioritization of the transport of oil — have no way of getting to the companies that need them, like cereal producer General Mills. Production at such companies has slowed, and the grain, with nowhere to go, “is simply going to ground and rot,” farmer Bill Hejl told The New York Times. 
What’s more, farmers expect that the upcoming harvest will yield a record crop of wheat and soybeans, meaning that this problem is only expected to get worse. 
Farmers have long relied on railroads, “the backbone of North Dakota’s transportation system,” to help them move their crops across the country, and abroad. 
But lately, the region’s railroads are occupied by shipments of oil, which, along with gas, have become biggest contributor to North Dakota’s gross domestic product. As of August 22, reports indicate that the Burlington Northern Santa Fe Railway (the state’s largest railroad) had a backlog of 1,336 rail cars waiting to ship grain, while Canadian Pacific railroad had a backlog of 1,000 cars.

Burger King and King Sugar. One wants to pay less taxes and the other wants to receive more tax dollars. One is way worse than the other.

Ah, the arrogance of royalty.

The freak-out continues over Burger King moving to Canada because of the purchase of a MUCH larger company (Tim Horton's).  

Last year BK paid about $88 million in taxes to the US Federal government.  The US Treasury will "lose" this money (maybe more, maybe less depending on future profits) in tax revenues.

BK is labeled unpatriotic and subject to boycott.

Below is an excerpt from Bloomberg.  
"...Because of a plunge in U.S. sugar prices amid a hefty crop of sugar beets and cane, the Agriculture Department estimates that it may have to buy 400,000 tons of sugar from processors who might default on $862 million in government loans. Sugar producers have the option of repaying the loans either with cash or with their harvests if prices fall below a certain level. 
This is all part of a confection of federal price supports and subsidies for the industry. Last year, sugar processors took out loans when U.S. prices were about 25.5 cents a pound. Prices have since declined to 21 cents, just a hair above the trigger price that lets them repay their loans with raw sugar. 
The sugar, by law, would be sold to ethanol refiners, who would pay 10 cents a pound less than the government paid -- an inducement needed to get the ethanol industry to use the sugar. Aside from the ridiculousness of piling one ill-advised subsidy atop another, this would produce a loss of $80 million for the U.S. Treasury. Some industry analysts estimate the government may have to buy as much as 800,000 tons of sugar to restore balance to U.S. stockpiles, potentially doubling the loss..."---Bloomberg (Opinion piece)

Twisted, ain't it?

An equal (or greater) number of tax dollars are LOST to support raw sugar producers, who are a small in number but a politically potent group...And who cares?  I hear crickets.

Concentrated benefits, dispersed costs.  Crony-Capitalism.  Multiply this example 10's or 100's of times. Don't believe me? Read the Farm Bill.  Makes Burger Kings lost tax revenue look like the Dollar Menu.

And people call Burger King's move a "Whooper" of a mistake.

Tuesday, August 26, 2014

Comparing Apples to Burgers when it comes to taxes. One is a Whopper and one has a small worm hole--don't assume which is which...

It is possible to be a corporate "traitor" without leaving the country.

Last year Burger King paid a total of $88 million dollars in taxes (Yahoo Finance).

Apple AVOIDS paying roughly $17 million dollars PER DAY in taxes (Business Insider).

It took Apple less than a week to avoid paying what Burger King actually paid in taxes for a year.

We love Apple, but hate Burger King.

Not sure if I am comparing Apples to Apples here (forgive the pun), but American apples and Canadians apples pretty much look and taste the same, don't they?

Confession: I own an i-phone, i-pad AND I like Burger King.  Guess I am complicit in corporate traitorism.

Does it help my cause that I am a former Marine (me, the taller one)?

Is US agriculture hurt by the sanctions Vlad imposed on US food exports to Russia? It really is a game of chicken.

Here is an estimate of how much in lost food exports various countries will suffer as a result of the counter- Russian trades sanctions against the US and the EU.

According to this source, the US will lose about $688 million in sales.  Of this amount, about 44% is in the form of chicken(s):
For the United States, the loss of the Russian food export market is less important. Last year, the United States exported 267,000 metric tons of chicken to Russia, worth $303 million, according to the U.S. National Chicken Council and USA Poultry & Egg Export Council. According to Gwen Sparks, a spokeswoman at the U.S. Department of Agriculture, exports of agricultural products to Russia in 2013 were valued at $1.3 billion, less than 1 percent of total U.S. agricultural exports.--Washington Post
Less than 1% of total exports. Sanctions, Smank-tions.  Is that all you got, Vlad?
Infographic: The Countries Hardest Hit By Russia's Trade Ban | Statista
You will find more statistics at Statista

Friday, August 22, 2014

The rise of the robots! In the movies the heroes usually win that battle. How will the Labor Markets fair?

A nice graphic from MIT Technology Review on the rise in the use of robotics in manufacturing versus the change in manufacturing employment.  It certainly is a mixed bag in terms of the relationship (as they note in the graphic).

There is no question that the two will be co-joined in the short and long(er) term as the workplace changes and labor adapts to new technology, and vice versa.

Thursday, August 21, 2014

Primer on how the Unemployment Rate is Calculated..

If you are a student or teacher of economics here is a terrific primer on how the Dept of Labor's Bureau of Labor Statistics collects information and calculates the Unemployment/Employment rate.

A great resource for your class.

HT: The Conversable Economist.

Economic vs Accounting Profit: Corn or Soybean? That is the question--answered here.

Using data from the US Dept of Agriculture Economic Research Service (USDA-ERS) I made the following two charts (I am in the infant stages of learning Excel, excuse the poor formatting!).

They show the "Accounting Profit"(RED) and "Economic Profit" (BLUE) for Corn and Soybeans in 2013. The distinction between the two is important in AP Microeconomics.

When tallying costs, accountants only care about explicit money costs paid for resources.  When calculating economic costs, economists include implicit Opportunity Costs in addition to money costs.

Economic costs are ALWAYS going to be more than accounting costs, hence economic profits are ALWAYS going to be less than accounting profits. Repeat that until it clicks!

As a recent transplant to the mid-West (Illinois, now Ohio) I have quickly learned that Corn and Soybean require very similar resources to grow---the Opportunity Cost of switching from one to the other is apparently quite low.

Simple observation:  Growing Corn in the "Northern Great Plains" does not seem like a good idea. Soybean returns a higher accounting and economic profit.  Growing Soybean in the "Heartland" seems like a GREAT idea--accounting AND economic profits are high.

Note this data are for 2013.  I drive around Central Ohio quite a bit.  I notice many more fields that had corn last year are now teeming with soybean. Why?

Economic theory (and apparently practice if I can believe my lying eyes!) suggests in a "perfectly competitive" market, the presence of economic profit(s) induces producers to enter that market.

Use these graphs as you wish.  Hope it helps with the concept.

Here are the agricultural regions (SOURCE USDA-ERS):

Wednesday, August 20, 2014

One Million Deaths caused by these 3 things we take for granted everyday.

Saw this link by way of Hans Rosling and this passage made me pause:

Burden of disease from inadequate water, sanitation and hygiene in low- and middle-income settings: a retrospective analysis of data from 145 countries

In 2012, 502 000 diarrhoea deaths were estimated to be caused by inadequate drinking water and 280 000 deaths by inadequate sanitation. The most likely estimate of disease burden from inadequate hand hygiene amounts to 297 000 deaths. In total, 842 000 diarrhoea deaths are estimated to be caused by this cluster of risk factors, which amounts to 1.5% of the total disease burden and 58% of diarrhoeal diseases. In children under 5 years old, 361 000 deaths could be prevented, representing 5.5% of deaths in that age group.
Those of us who live in developed countries do not give these things a second thought when we use them--except when they do not work on immediate demand.

Clean water, functioning indoor toilets and proper hand hygiene. Ordinary for us, extraordinary for many others.

Drink some water, flush your toilet and wash your hands---next time stop and celebrate it.  Pass it on! :)

Monday, August 18, 2014

Here is the BEST answer to every job interview question---Economist-style.

What happens when you ask someone with an excellent grasp of economics to be honest in a job interview (SMBC).  

Made me laugh.  Thought of something like this a couple of weeks ago in a job interview when asked "Why do you want to work for _____School District?"....Ummm, you have an opening and I need a job.  :)


Teaching (or learning) Interest Group Politics? You need this App!

Ran into this site, SpendConsciously ,while trolling the Internet.  If you are teaching (or learning) about interest group politics this site has a REALLY fun and interesting App. It is called "BuyPartisan".  I downloaded on my Smartphone for "free".

Using your phone you can scan the bar code on a product, and if they have the company in their database, it will return to you the proportion of dollars this company donates to the major political parties (and "others").

Spent some time doing this to items in my pantry.

I think it might slow down my shopping trips as I use this in stores. Knowledge is power, or so I have heard.

Saturday, August 16, 2014

Back to the Future: Russia threatens price controls in the face of Economic Sanctions. We know how this will work out.

Predictable consequences are playing out in the economic sanctions world---with more to come:.

Russians already hurt by Western food import ban

Russians are already paying a price — literally — for the ban on food imports from Europe and the United States that Russia imposed last week to retaliate for American and European economic sanctions.
Suppliers and consumers are facing shortages and price hikes on staples such as fish and fruit, as well as gourmet items such as Italian Parmesan and French Brie cheese.
Suppliers have raised prices for some fish by 20-36%, one of Russia's biggest retailers, X5 Retail Group, complained to Russia's government, the Kommersantbusiness daily reported on Wednesday. Suppliers reported shortages and higher prices for fruit, retailers braced for milk prices to go up, and some meat suppliers were engaging in price speculation, Kommersant reported.
Russia's Central Bank warned last week that the sanctions are likely to increase an already rising inflation rate. Even so, Russia's government has pledged that prices will not go up as a result of the import ban, promising that the Federal Anti-Monopoly Service will check reports of suppliers raising prices.
In the worst case, the government could resort to price controls, Kommersantreported.
Should Russia enforce price controls one unintended BUT predictable consequence would be the rise of Black Market activity.  Russians are used to this--they just need to brush off the rust from the old Communist days.

Below I explain the economic theory/rationale behind the rise of Black Market activity in face of Government policy to control prices.  Let me know what you think. Thanks.

Friday, August 15, 2014

George Soros is "short selling" the US market. A quick Lesson on "Short Selling"

There is an article in Business Insider today on Billionaire George Soros and how he is "short selling" a collection of stocks in the US market.

Most people buy stock in a company with the expectation the price will increase, or appreciate, in value. This is called "going long" on a stock.  Buy Low, Sell High.

However, there is a stock trading technique call "going SHORT" on a stock. Also known as "Short Selling". This means you anticipate the price of the stock will go DOWN.  Buy High, Sell Low. The defintion of "Buy" in short selling is misleading at best.  But it is a way of making money when the price of a stock goes down.

Go here for a more technical explanation of Short Selling.  Below I give a most elementary, non-technical explanation of how this works.  If you are not familar with the trading technique it might help you when you start looking into the complexities of short selling.  Gotta walk before you can run!

Short Selling a stock:
I borrow 100 shares of stock you own in "XYZ Inc". Right now those shares are worth $10.00 each.  Let's say I pay you $50.00 up front as a fee to do so AND I PROMISE to return those shares to you whenever you want them back. 
I take those shares and immediately turn around and sell them. I now have $1,000 in my bank account. 
Let's say the stock price goes down to $5.00. You freak out and want your shares back so you can sell them and take your losses. You come to me and demand your 100 shares back. 
Well, I do not have them anymore!  So, I have to go out and buy 100 shares at $5.00 per share. I am sure there will be plenty of sellers as the stock price decreases.  I need $500.00 to do so. Remember, I have $1,000 in my account for the original sale at $10.00 per share. 
I write a check out of this account for $500.00 to buy 100 shares. I still have $500.00 remaining in my account.  MAGIC!!! (minus the $50 I paid you up front I "clear" $450.00 in the end and adding the $50 fee I paid you, you lose a total of $450.00).
Not bad, eh?

You might be wondering: "What if the price did not go down but went up instead?"

Then I am in a bit of trouble.  My prediction that the price would decrease did not pan out.

If the price went up to $15.00 per share then the total value of the 100 shares is $1,500. You want your 100 shares back so you can take the profit!

I now MUST go out and purchase those 100 shares for $15.00 each.  I only have $1,000 in my account from the original transaction so I have to deposit another $500.00 in order for my check to you to clear.

I lose $500.00  (plus the $50 fee) and you gain $500.00 (plus the $50 dollar fee) on the investment.

Crazy system, right?

Tuesday, August 12, 2014

Shark Week and the Market for Shark Tacos. Let's go to the graphs.

Shark Week on T.V. has appartently increased the demand for Shark Meat in a variety of forms.

NPR has a story on this:
Discovery Channel set viewership records in 2013 as millions of people tuned in to watch sharks feed, sharks attack, extinct giant sharks and researchers catch and tag sharks. Discovery's "Shark Week" returned on Sunday, and this year, to the dismay of conservationists, restaurants and markets nationwide are feeding the frenzy with a slew of shark meat promotions.
This gives me an opportuntity to "go to the graphs" and analyze this development from a basic supply and demand perspective as to what SHOULD happen using the "Market for Shark (Meat) Tacos".

I think I have this right, but let me know where I might have gone wrong. If you can use this in your class(es) feel free to do so. There is no tragedy in this common(s).  :)

It is time for lunch where I am but I am pretty sure a Shark Taco is not on the menu for me. Yuck!

Saturday, August 2, 2014

Population Pyramids for Israel and Palestine. Whoa to the policy-maker who ignores this!

Demographics is seldom talked about when it comes to geopolitical issues but it is an important explicit and implicit variable that underlies many conflicts.

Here is what Israel and Palestine look like projected to 2015.

All is not equal in terms the age group 19 and under, especially.

Source: HERE