Thank you for visiting my blog. I post things I think will be of interest to high school students and teachers of economics. Please leave a comment if what you find here has been useful to you. THANK YOU!
I have lived in Northern Illinois for a year now. I have visited downtown Chicago many times. I ALWAYS feel safe. Those of you who are familiar with the area, I often walk from Union Station to different points along Lake Shore Drive and in between.
I circled that area on the map above. It is considered the Downtown area of Chicago. It is a bit of an oasis relative to what you see around it. The little finger-like area jutting out into Lake Michigan on the rigtht is the famous Navy Pier.
I only post this to tell you that, from my experience, visiting Downtown Chicago is safe and I NEVER get hassled by anyone. People politely ask for money, but do not pressure you. Again, that is MY experience.
This graph shows inflation, as measured by the Consumer Price Index (CPI), from 1776 to Present. Don't ask me how they got data from that far back.
The creation of the Federal Reserve is widely cited as the downfall of the value of the dollar. Guess I see some inflation post 1913, especially after WW II.
However, even a high school economics teacher can see that in 1970 when the dollar went off the "Gold Standard" did we see an acceleration of inflation (or was it the 69' Mets?). Co-incidence? Someone smarter than me (everyone out there) please tell me.
Health care costs have contributed to stagnant wages for most workers. I don't THINK this is controversial.
Below is a chart showing the increase in annual premiums paid for coverage, 2002-2012. The cost in dollars terms you see below are BOTH the employee and employer contributions to the total price paid for health insurance. The employee pays part of the cost out of their wages and the employer pays part of the cost on behalf of the employee---this is known as "non-wage" compensation.
In 2002 a family policy cost $8,003 dollars. Using the BLS inflation calculator, in today's dollars that would be equivalent to $10,242. Yet, the policy today actually costs $15,745---$5,503 or 54% more than the if the policy increased at the general rate of inflation as calculated by the Consumer Price Index.
Here is another chart showing the percentage changes in various measures of wages and health care premiums paid by workers. Green line is the percentage change in wages. The blue and red lines are what employees and employers contribute in premiums. The gray line is the general level of inflation as measured by the Consumer Price Index (CPI).
Green line is relatively flat. Red and Blue lines increasing at steady rate. Red and Blue lines are the ones contributing to the flat green line. Health care premiums holding down wages. Can you see it?
You will have to click HERE to see a larger image.
On first look, I was aghast at the amount of "leakage" or loss of product along the supply chain from field to table.
But then I thought about it.
With all the latest advancements in technology, processing and packaging, how aweful HISTORICALLY the waste and loss must have been compared to today, in real terms.
In nominal terms, there is going to be a lot of waste because we produce more food than ever.
If you look at the percentages they use for "developed" vs "developing" countries, I would venture to say that 50 years ago you could apply today's developing countries percentages to the developed worlds.
In other words, if developled countries are doing twice as well as 50 years ago in reducing waste/leakage but it STILL seems like a lot of spoiled/damaged/lost food.
Or...it could be the developed world consumers are so picky that even slightly damaged produce does not get put on the shelves and is thrown out, whereas, the our fore-mothers/fathers would not have been so finicky about a bruise or two.
Below are the prices for admission to the Disney World Parks in Orlando, Florida. Just got back from there for vacation!
A one day ticket today for a person 10 and older is $89.00 and under 10 is $83.00.
In 2010, I did a blog entry on elasticity of demand using a price increase they imposed at the time (go HERE for that entry). At that time the price increased to $82 for 10+ and to $74 for under 10.
For the 10+ ticket that is an 8.54% increase and a 12.16% increase for the under 10 ticket.
If we were to factor IN inflation (using the BLS calculator) that $82 dollar 10+ ticket in 2010 should be $86.57 in today's dollars. It is actually $89.00)
The under 10 ticket ( $74 in 2010) would be $78.13 in today's dollars. It is actually $83.00.
Quite amazing that the Disney was able to increase their ticket prices FASTER than the general rate of inflation DURING a prolonged economic downturn. That shows some significant pricing power within this market.
Hold your Fast Pass, there Goofy!!
Let's look at what is probably (I have no idea for sure, though) a more common ticket purchase---a 3 Day ticket.
A 3 Day 10+ ticket cost $232.00 in 2010. In 2012 dollars that is $244.94. The ticket price today is $242. Increased slightly less than the rate of inflation.
A 3 Day under 10 ticket cost $214.00 in 2010. In 2012 dollars that is $225.95. The ticket price today is $226.00. Increased slightly less than the rate of inflation as well.
So, this result shows Disney may not have the pricing power I initially thought they had.
I suppose I could do the math to figure out the rest of the days, but I am still tired from the trip.
When you ban something, or severely restrict its free trade, that most people want (not just insiders, but the public at large), a predictable domino effect will take place.
Found (HERE) the following 16 predictable things that follow the ban/outlawing of a good and/or service that usually happen on cue.
When a law bans exchanges wanted by everyone directly involved a number of things happen:
1) The exchanges continue; 2) Prices of the banned items rise and wars to control turf begin; 3) New criminals are created, including many people who are ordinary good people (like colored margarine seekers); 4) New enforcement agencies and staff are created; 5) New jails are built and new jailers are trained; 6) Laws, lawyers and lawsuits proliferate; 7) A new branch of law and its practitioners prosper and support further extension and complexification of regulations; 8) A portion of the entire apparatus of enforcement and punishment is progressively corrupted; 9) New agencies and staff are created to discover, eliminate or suppress the corruption; 10) Many begin to support ever more drastic suppression and punishment; 11) A profitable subliminal partnership emerges unifying the interests of violators and enforcers as the profits from the illegal trade are negotiated and distributed among them; 12) The business engages all of the following: bad people buying and selling, good people buying and selling, police, judges, academics, enforcement trainers and suppliers, prison builders and suppliers, staff to support all of this, journalists to cover it, media organizations to sell the coverage; 13) Completely uninvolved people are caught in crossfires, including taxpayers; 14) The costs of controlling the new flourishing evil continue to grow seemingly without limit; 15) The vast network of beneficiaries of the law applaud and lobby for its continuation, vilifying all opposition; 16) Everyone gets more and more discouraged and inclined to hate all humanity. This list is probably too short.