Thursday, August 30, 2012

Here is what the Pres ACTUALLY said in reference to the "You did not build that" quote. See how I re-phrase it and ask why ANOTHER sentence in what he said is not talked about at all..

Below are some of the before and after sentences from the now famous off-teleprompter comments from President Obama that resulted in the "You did not build that" mantra.
If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you've got a business — you didn't build that. Somebody else made that happen. The Internet didn't get invented on its own. Government research created the Internet so that all the companies could make money off the Internet. The point is, is that when we succeed, we succeed because of our individual initiative, but also because we do things together.
The fuss is what he actually meant.  I don't really know, to tell the truth.  If you take the highlighted sentence as a stand alone sentence and then it is confusing--and you have to put that at the feet of the President.  Awkward phrasing at the minimum.

Supporters of the President suggest that he was referring back to the previous sentence--"Somebody invested in roads and bridges" and the "you did not build that" refers to the fact that businesses did not actually physically build the roads and bridges.

Did he mean to say (my revisions and emphasis):  "Somebody invested in roads and bridges. If you've got a business---you did not build THOSE roads and bridges.  Somebody else made those roads and bridges happen".

This is STILL very inelegant to me! I don't really know what "somebody" refers to exactly---Government transportation workers? Wall Street Bond dealers who sell municipal construction bonds for construction projects?  Private contractors who actually invest in the equipment to build roads and bridges? Voters who approve bond elections and PAY TAXES to fund the roads?

I think ANOTHER line in the Presidents statement is curious and not sure why it has not attracted more attention:
"Government research created the Internet so that all the companies could make money off the Internet."
Does it help to have the line preceding it for reference?  Did the government researchers 50 years ago develop the internet with the expressed goal of creating a market for it in which companies will get fabulously rich? Emphatic no! Yes, you could say "You KNOW what he meant!!". True, but that is not what he said.  This sentence is just as awkward as the other.  I get hung up on the "so that" connector.  If I was grading this as a test, I would put a question mark over/on it.

The only line with positive effect, in my opinion, is the last sentence.  I can buy that---to an extent. 

Federal Budget spending in stacks of $10,000 bills sitting on pallets. See the three towers of political gridlock right here. Here's your sign...

The 3 pillars of the Federal Budget illustrated here--Social Security, Health Care (primarily Medicare and Medicaid) and National Defense. The rest is commentary, in my opinion.

The stacks are composed of individual pallets with packets of $10,000 bills. Each pallet holds $100,000,000 (100 Million dollars).

The fastest growing of these is Health care.  This is the reason this should be THE topic of discussion in the Presidential election, for better or worse.

More great visulazations like the HERE.

Source: DemocracyInfo

Wednesday, August 29, 2012

Nice graph showing global Arms Sales. Instability has been very, very good for US companies that make things that go BOOM!

Here is one way to quickly meet President Obama's goal to double US exports before his first term is up.

This graph show military arms sales to various countries, primarily in the Middle East..  Notice the surge in 2010 (latest data). Yikes!

This is due to the various dust-ups in the region, lead by the real or perceived threat that is Iran.

You can see, the US is the leader in sales relative to other countries with well developed capabilities to make stuff for war/defense. 

Instability is GOOD for making things that go BOOM!! :)

Source: Mother Jones

Nice Infographic showing the decrease in the size of packaging for some of your favorite products. Inflation without an increase in price. I feel ripped-off.

This infographic illustrates "hidden" inflation that may not adequately captured in the governments compilation of the Consumer Price Index (CPI)---what the Federal govt. uses to measure general changes in prices from one time period to another, resulting in a measure of inflation or deflation.

If from one CPI measuring period to another the contents of a good you purchase is sold in a smaller quantity (on a per ounce or per piece basis) BUT the price of the good remains the same, is isn't that an increase in the price of the good without, well, an increase in the price of the good? 

I buy less quantity at the same price as before the "shrinkage"---My purchasing power has decreased.

The increase in the price of one good, or even a whole category of goods, is not considered inflation ("A general rise in prices").   BUT I do FEEL poorer after looking at the chart below and see how I am getting less for more. 

How about you??

Source: Good Morning Inforgraphics

Nice infographic showing Income by Religious Belief. .

Income distribution by religious belief.  Click on image to make larger or go HERE to the site and see the original image.

Source: Pew Research via Chart Porn

Monday, August 27, 2012

With hurricane Issac looming there are the inevitable cries of "Price Gouging!" with gasoline. Please read this to get some perspective before getting angry.

With hurricane Issac hitting Florida and the Gulf Coast, the inevitable rise in the price of gasoline and other commodities will make headlines and cries of "Price Gouging!" will arise.  Justified or not, at least consider the issue from an economic and business perspective.

Most businesses, on a daily basis, do not stock more inventory than they can sell. This is especially true if the good is perishable or expensive to keep in stock. In other words, they try to not have any unnecessary excess inventory if they can avoid it. 

If I am selling a good, say gasoline, that is both perishable and expensive to stock, I would like to time it so that the quantity of gasoline I supply in a 24 hour period (before the trucks come to re-supply me) equals the quantity of gasoline demanded by my customers. I have no or little excess gasoline in my tanks for the day.  This is just good business practice, agreed??

Let's say I have studied my inventory spreadsheets and determine on average I need 1,000 gallons of gas in my tanks (my quantity supplied) to meet my daily average quantity of gasoline demanded by my customers.

For me, quantity supplied (1,000 gal) = quantity demanded (1,000 gal) at, say, $3.00 per gallon. I am at a relatively steady equilibrium on a daily basis. So far so good.

Now there is a hurricane or some other natural disaster looming.  I notice not only are my customers for that day coming for gas, but so are some of the others who I know filled up the day before yesterday are coming in to "top off the tank". In addition, I also notice they have a gas can or two (or 5) with them.

Halfway through the day I check my gas inventory and see I am selling 20% more gas at that time relative to a normal day.  I project I would need 1,200 gallons at $3.00 a gallon to meet the needs of my customers.  At this rate my 1,000 gallon tank is going to be empty by late afternoon and my other, regular daily customers will not be able to buy ANY gas. I will be out!!  The anger will be palpable.

How do I avoid this?  My supplier can't get another truck to me in a timely manner because ALL the other gas stations in the area are experiencing the same thing I am (this more to this part of the story (the suppliers side) but I will leave it out for now).

Economic theory suggests if I raise the price for each gallon of gas then "at the margin" buyers will decrease their quantity demanded.  But the question becomes, how much do I have to raise the price of each gallon to make sure I have enough gasoline to sell to anyone who wants some for the rest of my business day?

My goal is to get each customer to purchase a little less gasoline than they otherwise would, even in the face of the natural disaster.  Maybe forgo filling one or two extra gas cans.  As each person purchases less then the cumulative effect will be such that I will have gas for everyone (or most everyone) who comes in to get some throughout the day.  That is admirable on my part, don't you think?

What increase in price would be enough to accomplish this? $.10 cents a gallon? $.20? $1.00?  More?

People are getting out of town. Gotta have gas!  Seems like it will take a significant increase in the price to incentivize them to think about each additional gallon of gas they are buying.  Again, if I can stop them through aggressive pricing from buying "too much" then there will be some for the next person--so on and so forth.

Here is my dilemma:  If I increase the price enough to sufficiently reduce quantity demanded to meet more needs/wants, people will yell "PRICE GOUGER!!" (But they are at least driving down the road).  On the other hand, if I run out of gas my customers are going to be mad AND not have any gasoline to get down the road. 

What am I to do? 

Note: Here is an article written by a REAL economist on this topic. Much more academic in nature than my analysis. Worth a read. 

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