Saturday, August 18, 2012

Another chart showing the growth in energy consumption in the developed vs developing world from 2000 to 2011. Wow!

I just this one after the one I just previously posted.

The change in energy use JUST since 2000 is quite amazing.  The BRIC countries, Brazil, Russia, India and ESPECIALLY China have all increased their consumption of energy (from a variety of sources, mostly carbon based) and developed countries for the most part consume a smaller share.

This can be good, bad, or ugly---depends on which side of the economic development scale you reside in. 

Source: BusinessInsider

Nice infographic showing the growth in carbon emissions in China. We can congratulate ourselves on our efforts to reduce emissions, but does it matter?

If you are interested in the topic of carbon emissions, this graphic is for you. It shows the changes in carbon emissions primarily in China and secondarily in other parts of the developing world.

I have seen a recent graph that shows carbon emissions in the US have dropped dramatically in the last few years. Some due to efficiencies, some due to the wider use of natural gas,  BUT I would venture to guess MOST of the decrease is due to the recession and high(er) gas prices.

Do we have global carbon emission reductions (lead by the US) or has it just shifted to other places?

Friday, August 17, 2012

Nice graph breaking down voting by age group over time. I guess it is easier to get to the polls using a walker as opposed to a skateboard. Go figure...

Hard to see the colors, but the line in the middle (58.2% on the right) is the"Total Voting Age Population" trend line.  The top line (68.1%) represents "65 years and over". The other age groups are above or below the Total Voting Age Population line.

If you follow the 65 years and over line from right to left, you will see it is pretty steady over time. 
While there is a decline in every other age group along the way, they show back up in the golden years.

If you were running for national office, which group would you target for votes and which group would you pay lip service to?   Yeah, me too. 
Source: Conversable Economist

Thursday, August 16, 2012

There is a scourge 3 times larger than the drought affecting food prices. See it here in one easy chart...

The drought of the summer of 2012 is expected to result in the loss of 13% of the corn corp. This is widely reported as a disaster in need of immediate compensation. 

Forty percent (40%) of the corn crop will lost due to the Federal Ethanol Mandate (3 times as much as the drought).  This is narrowly reported as a problem and is ignored by politicians and policy-makers.

Why is this mandate still around, or at least modified? Just askin'...

Source: Coyote Blog

Supply and Demand Extravaganza---Having fun with Lobster...

Nice blog entry from Business Insider on the price of Lobster in Maine. 

There are LOTS of microeconomics concepts embedded in this short discussion, i.e. basics of supply and demand, perfect competition (lobster men are "price takers", restaurants in competitive markets), monopolistic competition (restaurants in tourist areas), and there is even a little "opportunity cost" thrown in for good measure.

Excellent resource for students to dissect, draw graphs, and discuss. Good times...

The Price Of Lobster Has Dropped To A 40-Year Low

Nice graph showing Total Government jobs now exceed Total Private Sector Goods producing jobs. Is this the new normal? I think so...

Nice graph showing where jobs have been concentrated since 1940. 

On the vertical axis are the jobs in "thousands", which means you add 3 zeroes to the end of the number you see and read it as "10 million or 20 million" as you move up the axis.

Jobs can be divided up into 3 major categories--Private sector service-providing, Private sector good-producing, and Government sector jobs (Federal, State, and Local).

Source: The Big Picture Blog
Our march towards a service-type economy has been a long time coming. The service sector line and the goods producing sector started to diverge in the 1950's and increased at an increasing rate thereafter. 

It is also interesting to note the private goods producing line relative to the government jobs line. They converge for the first time in 2002 and as of 2008 there are more government sector jobs than there are goods producing jobs.

It is a fact that, in real terms, we are producing more manufactured goods than ever--even TODAY, factoring in the recession!! Why is this?
""The falling cost of automation, globalization, relative wages, productivity increases, consumer/worker preferences, the rise of the internet, and political forces, are just a few of the many causes of the shift to service jobs, which now make up almost 70 percent of nonfarm payrolls.""---Source HERE
Increases in productivity in manufacturing occur external to what is happening with population.  It is much more difficult to get the same productivity from government with increases in population.  I am not saying you can't get better productivity in government, but you can't expect the same gains relative to private manufacturing.  OR CAN YOU? 

What do you think??

A pretty shocking graph of the distribution of health care spending in the US. Gives new meaning to the term "1%-ers"--A must see to understand our situation.

Nice illustration of the distribution of health care dollars in the US.  This gives new meaning to the term "1%-ers". 

In 2009 the total spent on "personal" health care in the US was $1.259 Trillion dollars. If you look in the middle of the horizontal axis you will see that 50% of the US "non-institutionalized" population (excludes military, those in prison, schools, etc) account for just $36 Billion in spending and the other 50% account for $1,223 Billion (read that $1.223"trillion")

As you move from left to right on the graph line, you see that an ever smaller percentage of the population consume a larger part of the spending.  The Top 5% account for $623Billion of the $1.223Trillion (51% of the total) and just 1% account for $275B (23% of the total).

 A little over 50% of health care dollars in the US are spent on just 5% of the non-institutionalized population, which is roughly 235 million people in 2009, the year of the data in the graph. 

Sobering. What do you think?
Source: The Big Picture Blog

Wednesday, August 15, 2012

A proposed Soda Tax--- Is it a "Lump-Sum Tax" or a "Per Unit Tax" and how does it affect the market graph in Microeconomics...Nice real-life example here

Two cities in California are deciding whether or not to tax soft drinks of a particular sort. What will be interesting to teachers and students of Microeconomics is the type of tax and how it will affect a firms cost curves (full article is pasted below the fold). 

The operative paragraph is highlighted below.  It suggests that the tax will be a "lump-sum tax" and not a "per-unit tax".
""...The Richmond and El Monte levies are structured as business license fees imposed on merchants—not as taxes on each drink purchasemeaning it would be up to the sellers to decide how to pass along the added costs...."--WSJ

The question for students---how does this affect a firms Fixed Costs (FC), Average Fixed Costs (AFC), Variable Costs (VC), Average Variable Cost (AVC), Total Costs (TC), Average Total Cost (ATC), Marginal Costs (MC)?

MOST IMPORTANTLY: What will happen to the ATC Curve (if anything)? The MC curve (if anything)? The profit-maximizing level of output (if anything)?

This is a very important concept in AP Microeconomics and is almost always tested on the AP Microeconomics test in May.  Hope it helps.

Tuesday, August 14, 2012

In this post I explain in 7 easy steps the "Obamacare" side of how those $700 Billion in Medicare savings are attained. No old person dies, I promise (OR do they??).

This is a complicated issue and I have tried to boil it down to its bare bones so you can have some idea of what the debate over the dueling proposals for Medicare are.

First I will explain what the Affordable Care Act  ("Obama-Care") plan does for/to Medicare and then after studying up a little more on the Romney/Ryan plans I will try to break them down too.

I am just presenting the facts as I know them and I know there are a jillion interpretations and opinions.  KINDLY let me know where I am going wrong on the BASIC facts.  Don't stray too far into the weeds and argue the minutiae, please.

1.  Medicare is a Federal entitlement program that pays for the healthcare of its recipients---old people.  It is (mostly) financed by a 1.45% payroll tax on your earned income.

2.  Because of changing demographics, the US has and is about to get a whole heaping new batch of old people in the coming decades.

3.  Spending on these folks is expected to grow at a somewhat predictable and projectable (my made up word) amount for the next decade or two.  Lets call that amount "X".  Most people consider this amount unsustainable relative to the amount of money brought in through the above mentioned payroll tax.

4.  The Affordable Care Act ("Obamacare) has a provision for controlling that projected cost ("X") to the tune of approx $700 Billion dollars (the figure cited in the media at the moment). In other words over the next 10 years the ACTUAL amount spent relative to the projected amount  ("X") will be $700 Billion LESS--A "savings" of $700 Billion.  Got that?

5. How does this $700 B in savings from "X" occur? This is important, pay attention:  Reducing the amount paid/reimbursed to individual doctors and hospitals for the care they provide patients is the biggest part of the "savings". In other words, if a doctor was getting, say $100 to treat a patient today, under the new law that would be, say, $75.  I DO NOT KNOW the percentage change, BUT I have seen somewhere in the neighborhood of an average of  27% reduction in payments to doctors, so don't hold me to that number, please.  The rest comes from reducing payments to insurers.  This serves as an incentive for insurers to crack down on waste, fraud, abuse, over payments, etc---get  paid less, have to watch out for every dollar.  If you remember, insurance companies supported this because in return they would potentially get lots of new customers paying premiums as a result of the "Individual Mandate". 

6.  KEY POINT.  NO defined benefit to the "Olds" has been decreased by the ACA accounting. Please repeat that.  It is important to understanding this side of the argument.

7.  The ACA proposes to use that $700B in savings to (1) enhance benefits to Medicare recipients and (2) finance a large portion of the many provisions for expanded healthcare in the ACA.

Clear as mud??

I think Point 5 is the MOST important one to understand and the one I don't hear/see talked about much in the media---in regards to the ACA and Medicare.

Point 5 leads to a discussion as to whether it affects Point 6.  ACA says no.  I believe the Ryan plan says yes---I will try to explain that one next.

Some say the savings in Step 7 are an illusion.  Don' ask me---I dunno...

Let me know if this is helpful.  I tried to make it as easy to digest as possible.  :)


Monday, August 13, 2012

Nice infographic on education spending in the US. I think we spend too much (over-all). How about you??

Well, at least relative to other countries.  Here are some facts and figures about Education Spending in the US and some comparisons with other countries.  We spend more on education than other industrialized economy's, but seemingly get worse outcomes.

Human Capital is how economies are going to develop from now on.  Advancements in technology and improved processes are a given.  How people adapt and take advantage of these changes will dictate the quality of life in the future.

Education, or "skill acquisition", will become more important than it is today.

Below the inforgraphic are 10 bullet points with brief explanations of each. If you click on the link it will take you to source articles and/or research papers with more details. This is a great resource if you are doing a paper for school!!

Infrographic Source: Online Colleges
  1. The U.S. spends more than any other nation on education.

Each year, the United States shells out billions of dollars on education. In 2010, the total annual spending on education was more than $809 billion dollars. That’s more than any other industrialized nation, and more than the spending of France, Germany, Japan, Brazil, the U. K., Canada, and Australia combined. The difference is substantial when you look at annual spending per child as well. In the U.S., the average student costs the government about $7,743. The next highest nation is the United Kingdom, with $5,834 per student, a difference of almost $2,000 a year per student. So what do top performing nations like Finland and South Korea spend? Just $5,653 and $3,759 per student, respectively.

2. Yet, math and science scores for U.S. students are substantially lower than many other nations.

When it comes to getting students to learn more and perform better in school, it isn’t purely an issue of collective education spending. While the U.S. spends more than any other nation on education, its test scores don’t reflect the average spending per student. On math tests, American students score an average of 474 on a 600 point scale, doing slightly better on science with an average score of 489. By comparison, Canadian students scored an average of 527 and 534 on the same tests, and Finnish students dominated the pack scoring 548 and 563. Of course, these are just averages. Students in affluent suburban districts score much higher than their poorer, urban counterparts, which leads us to our next point

3. Educational spending is often inconsistent.

Educational dollars in the U.S. aren’t always fairly allocated. Students coming from the most high-need, desperate situations often don’t have access to good-quality schools, resources, and experienced teachers. Part of that has to do with inconsistent allocation of educational funds. Recent studies have found that school districts commonly distribute different amounts of funding to individual schools within the district, even those serving the same types of students. Many schools get less money for funding teacher salaries, which means they can’t afford to hire experienced teachers, a problem that’s further compounded by receiving lower amounts of unrestricted spending, leaving schools without a way to make up the difference. A study of Houston-area schools found that schools just miles apart had vast differences in funding, with some receiving $18,027 per student and others just $4,800. While some schools with high funding were successful, others were failing, demonstrating that money doesn’t always determine educational outcomes (though it usually doesn’t hurt).

4.More money isn’t always the solution, but better allocation of it can be.

Simply giving more funding to schools that are struggling or failing hasn’t proven to be a reliable solution to America’s educational problems. What does matter, however, is how that education funding is spent. A review of California schools in 2007 found no relationship between spending and student outcomes stating that more funding wouldn’t make a difference until “extensive and systematic reforms” were made. What does that mean? It means that many of the major problems with education in the state, and possibly nationwide, stem from the illogical and wasteful ways school funding is spent than from lack of money. In fact, the study suggested that even in under performing inner city schools, students would see a much greater benefit from reforms than from simply increasing spending.

5. Education spending can have far-reaching economic effects.

Attending a high-quality, well-funded school can be one of the best gifts a young person can receive in life. Why? Because a solid elementary and secondary education has some far-reaching effects that can resonate throughout life. Those who attend quality schools are more likely to choose additional education throughout their lives and in turn are likely to make more than their peers who attended lower quality schools. Of course, education spending itself isn’t what separates a high-quality school from a low-quality one, but it does allow schools greater freedom to provide resources, extracurriculars, technology, experienced teachers, and arts and science education to students, the impact of which isn’t insignificant.

6.Teacher pay does matter.
Over the past few years, teachers have been hit hard by accusations that they’re overpaid and that they put an undue strain on state finances. Yet studies show that teacher pay does make a difference in improving educational outcomes for students and for improving the quality of education in America as a whole. In fact, teacher pay is uncompetitive with that offered by other professions, and the economic penalty teachers pay for their chosen profession increases the longer they stay on the job. As a result, many of the best teachers leave the teaching profession or never enter it in the first place. Consider these stats: every year 20% of teachers in urban districts quit, 46% of teachers quit before their fifth year, and the turnover costs associated with this costs the U.S. $7.34 billion every year. Lower pay means fewer top performing individuals are attracted to the profession and that more high-quality, experienced teachers leave, which has had a marked effect on education quality, especially in poor, urban schools.

7. The more money people have, the more they spend on education.

Education spending isn’t just an issue for the state and federal government; it affects individuals, too. As you might have guessed, those who come from the upper income brackets spend more on education than those in lower income brackets, probably largely because they have the resources to be able to do so. This can have a significant impact on the long-term academic and professional success of students, as parents who can afford to invest in tutoring, extra classes, and high-quality colleges generally have students who perform better than their peers. This can create an enormous gap between well-off students and their less well-off peers, before state and federal school spending is even taken into account.

8. Charter schools aren’t cure-alls for education woes.

Many cities struggling to deal with failing schools are investing millions of state dollars into funding charter schools. While some of these schools have seen success, they’re not necessarily the perfect solution to America’s bigger educational problems. Charter schools can kick out students that don’t measure up, don’t allow teachers to join unions which keeps their pay low, and as studies are finding, spending less money on students and more money on education than their public school counterparts. A study by the National Center for the Study of Privatization in Education found that charter schools spend less on instruction, even when controlling for other factors, finding a $1,140 discrepancy in spending on average. (It is important to note, however, that these results were not found at all charters schools, and some spent considerably more than their public counterparts.) The major problem with sending public money to the private charters, suggests the study, is the lack of transparency among some charter management organizations, making it hard to tell where funding is going.

9. The biggest return on investment in education spending comes from spending more on the lowest achieving students.

While high-performing and average students certainly should receive their fair share of educational funding and resources, studies suggest that education spending has the biggest impact when it’s focused on students who are below the status quo. Why? Because helping these students excel in school and beyond can have a big economic impact further down the road. Elite colleges and universities receive millions in funding every year, but those are schools that some students can’t even dream of attending and with little financial assistance or motivation, they often end up in dead end jobs, on welfare, or even in jail. Happily, the funding tide seems to be slowly changing, with Obama pledging billions in funding to community colleges and technical schools, providing greater economic opportunities for all, not just the top performers.

10.The earlier money is spent on education, the better the investment.

While there is much debate and confusion about the best way to reform education, one thing numerous studies point to and that most experts can agree on is that the earlier students receive high quality education, the better. A study at the German Institute for Economic Research found that immigrant children who attended public kindergarten were 25% more likely to go on to a pre-university track of study. A study at the University of Chicago found that preschool programs for disadvantaged kids generate a 16% annual rate of return on an initial $10,000 investment. Why such a big gain? These students are more likely to get good grades, stay in school, go to college, and enjoy higher lifetime earnings. They’re also less likely to go to jail and go on welfare, which means both society and the individual students reap the economic benefits of smart, early educational spending.

Sunday, August 12, 2012

Why did Romney choose Virginia to announce his running mate? Neither one are from there. See the politics of it in this important electoral college map...

This graphic shows the likelihood of a particular State to be the deciding one in the upcoming Presidential election.

Remember, it IS electoral college votes that matter! Ohio and Virginia are going to be important players in the next few months.  Stay tuned.

Source: Five Thirty Eight
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