@###%#%%*&#^^^#%^^+# BLASTED ETHANOL!!!!!!!!

More fall-out from Ethanol Mandates..URGGGHHH!!!

What If Buying Food was JUST LIKE The Way We Buy HealthCare in the US...See Video!!!

As a student you are probably dont know how we actually purchase Healthcare in the US. It is a system violates one of the basic tenets of Economics---Lack of CLEAR PRICES!!  Click HERE for a 45 second video that pretty well sums up how we price health insurance here...

Ummmm...Happy Thanksgiving???

Children Age 12 Have To Use A Booster Seat While in a Car....

Well, sort of...Part of a chapter in the new book by Levitt and Dubner "SuperFreakonomics" is about child seats and how the data show that if a child is over 2 years of age their is no significant safety advantages of a car seat versus just wearing a regular seat belt (for Levitt's research, click HERE)...This is a link they provided to a BBC article reporting that in 2006 the British government passed a law requiring children up to 12 (yes, 12!!) years old, or UNDER  4' 5" to be in a booster seat...Can you imagine telling your 12 year old son/daughter/brother/sister to get into the booster seat?  Also, why the height requirement?  Why, if they are concerned about safety, does this not apply to adults who happen to be shorter than 4' 5"??  Seems excessive to me...What do you think?

US Share of GDP Constant Over Last 40 Years---MUST Be A Bad Thing...RIGHT???

 No, not necessarily...I analyzed the graph wrong (yes, I can make a mistake)...I looked at it as GDP growth as opposed to SHARE of World GDP...A fellow AP Economics teacher Jason Welker, set me straight.  His explanation below clarifies what this graph REALLY says....

"I'm not sure we should be so troubled by the flat trend lines for Latin America and Africa. Keep in mind, this is not GDP, this is share of world's GDP. Unlike total output, which is NOT a zero sum concept, share of total output IS a zero-sum concept. A gain made by one part of the world is only possible by a loss made in another part of the world. The decline of the EU 15's share of world GDP does not mean that the EU 15 experienced a decline in output. In fact, the EU 15 have grown steadily over the last 40 years. Their downward sloping curve indicates that they have grown more slowly than the rest of the world, that's all. So the flat lines for Africa and Latin America in fact indicate that those two regions have grown more rapidly than Europe. Although it doesn't look like it on this graph, the "poor south" is actually catching up with the "rich north" as average growth in Europe lags behind that in the south.
It's a bit misleading to interpret the graph in this way, but the gains in Asia have in a way come at the expense of gains in Europe, but only in that they now have a larger share of a MUCH larger pie! All regions have grown, and Latin America and Africa have grown AS quickly as the US, and MORE quickly than Europe. Good news!"

Bar Graph of Pres. Adiministrations and Cabinet Member experience in the Private Sector...

Is having private sector experience important for Cabinet Members to have?  Many times Members who do are too close to the industry they perhaps have to regulate/make rules, creating potential moral hazzards.  On the flip-side, if one is going to regulate/make rules for an industry, should they have some experience with the industry itself??

The Natural Rate of Unemployment---Europe vs. US

Here is Labour peer and happiness economist Lord Layard on the cause of long-term unemployment in Europe:

"Europe has a notorious unemployment problem. But if you break down unemployment into short-term (under a year) and long-term, you find that short-term unemployment is almost the same in Europe as in the U.S. – around 4% of the workforce. But in Europe there are another 4% who have been out of work for over a year, compared with almost none in the United States. The most obvious explanation for this is that in the U.S. unemployment benefits run out after 6 months, while in most of Europe they continue for many years or indefinitely."

Hat tip to the Tim Worstall at the Adam Smith Institute.

Seeing is Believing (in the free market)

"Everywhere we look it seems that health care is more expensive: prescription drug prices are increasing, costs to visit the doctor are up, the price of health insurance is rising. But look closer, even closer, closer still. Don’t see it yet? Perhaps you should have your eyes corrected at a Lasik vision center.
Laser eye surgery has the highest patient satisfaction ratings of any surgery, it has been performed more than 3 million times in the past decade, it is new, it is high-tech, it has gotten better over time and… laser eye surgery has fallen in price. In 1998 the average price of laser eye surgery was about $2200 per eye. Today the average price is $1350, that’s a decline of 38 percent in nominal terms and slightly more than that after taking into account inflation.
Why the price decline in this market and not others? Could it have something to do with the fact that laser eye surgery is not covered by insurance, not covered by Medicaid or Medicare, and not heavily regulated? Laser eye surgery is one of the few health procedures sold in a free market with price advertising, competition and consumer driven purchases. I’m seeing things more clearly already."

From HERE

Tire inflation: tariffs, demand push up prices

UPDATE: As a result of tariffs imposed on tires imported from China the following has resulted:

1. The domestic price of tires (mainly low to mid-range price) has INCREASED because of the tariff (cash off the top going to the Federal coffers)
2. The domestic supply of tires has DECREASE because of fewer tires are imported to the US from China which INCREASES the price of tires
3. Chinese manufacturers of tires are quickly moving production of tires to other countries to avoid the tariffs imposed on them.
4. Domestic (US) manufacturers of tires are NOT ramping up production because, (1) they are a minor player in the US market for inexpensive tires, and (2) if they are in the market they know that the supply will INCREASE in the near future when the production from countries other than China makes it ways to our shores. They will simply take advantage of the higher prices and not expand production in a meaningful way and will NOT add employees in a meaningful way either.
5. NO permanent jobs will be created by this tariff, however jobs will be lost (perhaps only temporarily) by (1)people who work in at the disembarkation point of the tires,(2) truckers who move the tires around the country, (3) employees at tire retailers (epecially ones who specialize in the inexpensive tire business) because the higher prices will reduce demand for the tires.
6. People who can least afford the tires will be disproportionally hurt---the tariff along with seasonal increase in demand puts upward pressure on the price of tires.

My question (because I have been SO negative): Who WINS in this situation?? Please post your answer...I know some of the winners but believe I can learn from you!! :)

If you want to read an excellent book on trade and tariffs that is written in the form of a fictional narrative, please check out "THE CHOICE"...

Brain Teaser---See if you can figure it out!!! :)

Brainteaser...Try to work it out then go HERE for the solution... Be honest and post in the comment section if you got it rght or not....:)

Jack is looking at Anne, but Anne is looking at George. Jack is married, but George is not. Is a married person looking at an unmarried person?

(a) Yes
(b) No
(c) Can not be determined

SuperFreakonomics---Uncomfortable to Read and discuss in mixed company...

I am reading SuperFreakonomics right now...There are sections of the book that are uncomfortable to talk about in mixed company or with students. andI will not be discussing several of the premises with students (you will have to read it to find out).  Many "Professional" Economists are panning this book for a variety of reasons.  They consider it to be "economics lite".  I am enjoying most of it, though.   It raises many questions about generally accepted "facts" or circumstances and just asks people to look at problems through a different lense.  This is what I find attractive about studying economics---it truely is a discipline that asks you to question everything. 

Something I did not know before reading SuperFreakonomics:

 "Today, when you admire old New York brownstones and their elegant stoops, rising from street level to the second-story parlor, keep in mind this was a design necessity, allowing a homeowner to rise above the sea of horse manure"

Small, I know, but it is something I always wonder about when I watch Law and Order and othe shows/movies filmed in New York City.

The Values Question...What Choice Would You Make???

A most excellent opinion piece today in the New York Times by David Brooks.  It makes no judgements about the merits or demerits of healthcare reform but it's inevitable impact on the future of the US economy/society.  I especially like his use of a basic economic concept we learn in class the first day---Trade-offs that result in opportunity costs.  This paragraph strikes me as illustrative of this important concept:

"Reform would make us a more decent society, but also a less vibrant one. It would ease the anxiety of millions at the cost of future growth. It would heal a wound in the social fabric while piling another expensive and untouchable promise on top of the many such promises we’ve already made. America would be a less youthful, ragged and unforgiving nation, and a more middle-aged, civilized and sedate one.We all have to decide what we want at this moment in history, vitality or security..."

What choice would you make?

Watch Unemployment Increase Before Your Eyes...

Thanks to Mario Garza for this link...Nice Adobe Flash graphic that shows couty by county the change in the Unemployment Rate in the US.  It only goes to September when the rate was "only 8.5%.  SCARRY but worth a look...

Advice From Grandma

Excellent article by Thomas Friedman.  I dont always agree with him and I am uncomfortable with his apparent fascination with authoritarian power as a tool to get major policies implemented.  Perhaps I am misreading him in that respect.  Regardless, this column hits on many of the things I think and include in my lectures.  The final paragraph sums it up for me:

"The standard answer is that we need better leaders. The real answer is that we need better citizens. We need citizens who will convey to their leaders that they are ready to sacrifice, even pay, yes, higher taxes, and will not punish politicians who ask them to do the hard things. Otherwise, folks, we’re in trouble. A great power that can only produce suboptimal responses to its biggest challenges will, in time, fade from being a great power — no matter how much imagination it generates."

I would not be adverse to paying more in taxes IF I thought for a minute that 30% to 50% (I am not alone) of it would not be wasted as I believe it is right now.  I want a politician that will show ME some restraint BEFORE they ask me to pay more taxes.  Is that asking too much?

"Man Bites Dog" Front Page Story in New York Times...FINALLY!!

An EXCELLENT front page article in todays New York Times on the National Debt and the potential financial ticking time bomb it is.  If you have taken AP Macroeconomics or are taking it now, the MOST of the discussion will be familar to you.  This issue is not, in my opinion, taken seriously enough by the public.  Both political parties are party to this problem so there is enough blame to go around.  We will not be able to grow our way out of the debt, at least not in the next 5 to 10 years. I believe we will have tepid economic growth because we have reached the end of your last significant Aggregate Supply shock (1990's to early 2000's).  This is the last time we had a increase in our productive capacity due to the leaps in technology, communication, transportation, fiber optic cable,, etc that vastly increased our productivity.  We seem to have milked that for all it is worth.  We will have marginal increases in productive capacity but not enough to sustain the increase in population and the need to create 150,000 plus jobs a month to keep up with new entrants into the job market.  WHERE IS THAT NEW POSITIVE AGGREGATE SUPPLY SHOCK GOING TO COME FROM?  Opinions???

The Lexus and the Olive Tree...

A picture is worth a thousand words!  A woman taking a break from very labor intensive work to talk on her cell phone.  Who is she talking to?  Friends, family, checking the latest world market price for the good they are harvesting, or all of these?  It reminds me of Thomas Friedman's book "The Lexus and the Olive Tree" and the emergence of technology and how it clashes (or complements(?) ) with traditional economies as they exist today.   Is this good for developing countries or does it theaten the "ways" of traditional societies that sociologists/anthropoligists decry? Would substituting Capital for Labor improve their lives/culture/way of life or make it worse?  Are we qualified to even ponder the question because we look at it through the prism of our "Western-orientated" lense? 

Economic explaination of the Tuition "Crisis" in California---Complete with Supply and Demand Graph Illustration---Life is GOOD!!!

Click on the Title above to go to article...

The National Debt is NOT a big issue and should have no influence on Stimulus Debate...

Paul Krugman suggests that the US National Debt is not excessive (not desirable, but not excessive) relative to other countries and should not be the over-riding consideration in considering a NEW fiscal stimulus bill...Perhaps he is correct considering the experience of other countries who have a MUCH higher Debt-to-GDP ratio...

Which Industries Spend More as a Percentage of Sales on Reseach and Development?

The healthcare industry, as a whole, puts a larger percentage (in terms of total sales) of capital back into research and development than just about every other major industry.  This is an area where the U.S. still maintains a Comparative Advantage (and HERE) relative to the rest of the world.  Are we (politicians/policy-makers/industry) doing enough to make sure it stays this way?... 

From the Department of Odd Marketing...

This restaurant just opened in Keller, Tx.  It is only blocks away from our administration building where we go for most of our staff development.  I am guessing this will be our default place to go to lunch.  It will complement our general sense of feeling for the training we recieve....:)