Do you ACTUALLY make phone calls with your cell phone? If you do, you are in the minority...

We do not have a landline phone (you know, one that plugs into the wall) in our home anymore.  We have cellphones as our primary home and mobile telephony devices.  How about you?  This article in the NYTIMES make the point that we have passed the point where we now collectively use our phones MORE for other uses than simply making a phone call:

""Instead of talking on their cellphones, people are making use of all the extras that iPhones, BlackBerrys and other smartphones were also designed to do — browse the Web, listen to music, watch television, play games and send e-mail and text messages. The number of text messages sent per user increased by nearly 50 percent nationwide last year, according to the CTIA, the wireless industry association. And for the first time in the United States, the amount of data in text, e-mail messages, streaming video, music and other services on mobile devices in 2009 surpassed the amount of voice data in cellphone calls, industry executives and analysts say.""

Professor Mark Perry at Carpe Diem makes an ironic point about this process of "creative destruction" but in reverse(??)...

""Isn't it interesting that historically the telephone replaced the telegraph, and talking on the phone replaced sending telegrams as the preferred method of communication. Now with the popularity of using phones for text messages and emails, it's almost like going back to sending telegrams by phone instead of talking on the phone.""

World's First Gold Dispensing Machine---Watch your fingers!!!

"""This Wednesday saw the official opening of the world’s first permanent gold-dispensing vending machine. Created by German company TG Gold-Super-Markt, the GOLD To Go ATM is located (unsurprisingly) in the lavish Emirates Palace Hotel, in Abu Dhabi. Gold has strengthened 13 percent in 2010 following nine straight annual gains, so now when hotel guests want to exchange their cash for something a little more economically-stable, they won’t have to bother with gold store clerks or business hours.
A computer inside the ATM keeps track of gold prices in real time, and prices its gold accordingly. Because it has less overhead costs than a store, TG Gold-Super-Markt claims the machine is able to offer “very competitive prices.” Besides dispensing 24-carat gold bars in 1, 5 and 10 gram sizes, the ATM also offers gift boxes of gold coins bearing symbols such as the Krugerrand, a maple leaf, or a kangaroo - perhaps market research showed that South Africans, Canadians and Australians like gold? Interestingly, there’s no American eagle."""

A Penny for your thoughts...unless that Penny costs 1.62 cents to make...

Nice example of interest group politics getting in the way of "good" economics...I support the President on this one....

""Those pennies and nickels in your pocket cost more to manufacture than they are worth. That's why the Obama administration wants to use cheaper materials -- possibly an aluminum alloy -- to make the coins.
"Making coins from more cost-effective materials could save more than $100 million a year, which isn't just pocket change," said Dan Tangherlini, the Treasury Department's chief financial officer.
But some businesses, particularly vending machine owners and laundromat owners, are preparing to fight the administration plan to downgrade nickels. They're worried that any change in weight and metal content would require expensive overhauling or even replacement of their machines, The Los Angeles Times reported.
"We're all taxpayers, and we're all in favor of being able to mint coins at a more reasonable cost," Brian Wallace, president of the Coin Laundry Association, told the Times. "But we want to make sure there aren't unintended consequences that could deeply impact the small business owner during a recession."
Last year a penny cost 1.62 cents to manufacture. The nickel (which contains more copper than actual nickel) costs 5.79 cents.""

Donate a shirt or shoes and destroy a business in Africa...STOP this madness please!!!

No good deed goes unpunished...OR is it a good deed?  There seems to be a consensus in the international aid business that, no matter the good intentions, people who collect a variety of goods to send to poor countries are really hurting more than helping...Click HERE for original story from TIME Magazine "Bad Charity? "All I Got Was This Lousy T-Shirt!)"

In the history of foreign aid, it looked pretty harmless: a young Florida businessman decided to collect a million shirts and send them to poor people in Africa. Jason Sadler just wanted to help. He thought he'd start with all the leftover T-shirts from his advertising company, I Wear Your Shirt. But judging by the response Sadler got from a group of foreign aid bloggers, you'd think he wanted to toss squirrels into wood chippers or steal lunch boxes from fourth-graders.

Little did Sadler know he had stumbled into a debate that is raging in the aid world about the best and worst ways to deliver charity, or whether to give at all. He crashed up against a rather simple theory that returned to prominence after aid failures following the 2004 Asian tsunami and 2010 Haiti earthquake: wanting to do something to help is no excuse for not knowing the consequences of what you're doing.

 Dumping "free" goods that are readily available in these countries (yes, there are LOTS of viable industries/businesses in ALL parts of Africa) have negative consequences on the local economies...

But why gang up on a guy who just wants to help clothe people in Africa? First, because it's not that hard to get shirts in Africa. Flooding the market with free goods could bankrupt the people who already sell them. Donating clothing is a sensitive topic in Africa because many countries' textile industries collapsed under the weight of secondhand-clothing imports that were introduced in the 1970s and '80s. "First you have destroyed these villages' ability to be industrious and produce cotton products, and then you're saying, 'Can I give you a T-shirt?' and celebrating about it?" says James Shikwati, director of the Nairobi-based Inter Region Economic Network, a think tank. "It's really like offering poison coated with sugar."

Mr. Sadler has relented and is not going to send the shirts to Africa. He is going to raise money with them or donated them to local charities...

Sadler has proven flexible: he says he is listening to his critics and no longer plans to send the shirts to Africa. He says he will find another way to use the T-shirts he collects, possibly for disaster relief, giving them to homeless shelters or using them to create other goods. He says any profits would then "go back to the company's goal of helping foster sustainability." And judging by the response on the Web, he's getting a lot of donations. "I've since listened to a lot of these people," he says. "I want to change this thing into something that's better, that's more helpful and that listens to the people that have the experience that I don't have."

This story is just representative of the whole "problem" of foreign aid, BUT I believe the model is changing for the better.  Aid is necessary for immediate relief to save lives---NO question about that. However, when it extends beyond that scope you risk the unintended consequences of imposing harm on local  industries and entrepreneurship, and that is the only real hope for life beyond subsistance level in developing countries.

DONATE CASH--NOT YOUR TRASH!!!

Economics Majors rank #2 in pay!!! Get you some!!!

Just a plug for Economics as a major...Number 2 on the payscale!!!  A very flexible degree and can take you in many different directions. It trains you to think about resources in non-traditional ways...

2. Economics. A pretty ubiquitous myth is that economics is all statistics and math. The fact is, while economics majors do a lot of statistics and math, they also study a wide range of topics, including social science, psychology, political science and history. Alan Metzer, even said: "economics is a social science." There are plenty of humanitarian efforts you can make in this line of work, as economists are needed to create public policy -- domestically and internationally.


Average first year salary: $50,200. Average mid-career salary: $101,000. 

Go HERE to see number 1...

Mr Huston's family is now legal and can eat Thanksgiving dinner in peace...

Mr. Huston's family will no longer have to break the law for Thanksgiving dinner  (if they happen to be in Georgia)....

According to the National Highway Traffic Safety Administration, Georgia is one of the top 10 states in the country in deer-related auto accidents. Now, drivers can get some just desserts – or dinner. The Senate gave final passage to SB 474, which allows drivers to keep any bear or deer that they might run over. The so-called Road Kill Bill, carried by Sen. Don Thomas of Dalton, passed 47-0. “This is hot of the grill,” Thomas said, tongue planted firmly in cheek. “And I urge you to support it.” According to the bill, “Any person may take possession of native wildlife which has been killed by a motor vehicle.”---Source: Division of Labour

Would you buy a $9 Million dollar house that will be soon underwater? Did not think so, but someone did...

If you thought that because of climate change the oceans will rise and consume a good portion of the coastlines, would you buy a $9 million dollar house/property on the coastline?  Seems like a bad investment OR you dont really believe that the coastlines are going to become part of the ocean anytime soon OR you believe you have solved the problem.  I am not questioning the validity of climate change, but do question the motives of self-appointed gurus of any sort...I am guessing that leaders of the environmental movement do not approve of this either, so I dont believe I am being partisan on this issue....Cant people ACTUALLY lead by example?? Just askin'...

""It is reported that former Vice President Al Gore just purchased a villa in Montecito, California for $8.875 million. The exact address is not revealed, but Montecito is a relatively narrow strip bordering the Pacific Ocean. So its minimum elevation above sea level is 0 feet, while its overall elevation is variously reported at 50ft and 180ft.At the same time, Mr. Gore prominently sponsors a campaign and award-winning movie that warns that, due to Global Warming, we can expect to see nearby ocean-front locations, such as San Francisco, largely under water. The elevation of San Francisco is variously reported at 52ft up to high of 925ft. There being very little reason to suppose that the Pacific Ocean would (or could) rise much less in Montecito than in San Francisco, it follows that Mr. Gore just paid nearly $9 million for property, which according to his professed beliefs, will likely soon be literally under water and hence worthless both as a residence and for resale""....(Click HERE for rest of the story)

Video animation of the Oil Rig "Malfunction"...Only 1 minute long

I can't vouch for the technical aspects of this video, but it gives an animated view of what happened with the oil platform...

Nice Graphic on the Costs of BP Oil Spill...

Cost & Effects of The BP Oil Spill

Mr Gore must have read my blog post---Can't be out-done by Gisele---Buys an even BETTER HOUSE!!

Sorry, I just can't resist this one...(previous post about Gisele HERE)

From LA TIMES:  Al Gore, Tipper Gore snap up Montecito-area villa

""Former Vice President Al Gore and his wife, Tipper, have added a Montecito-area property to their real estate holdings, reports the Montecito Journal.  The couple spent $8,875,000 on an ocean-view villa on 1.5 acres with a swimming pool, spa and fountains, a real estate source familiar with the deal confirms. The Italian-style house has six fireplaces, five bedrooms and nine bathrooms.""

Want a raise at work? Then "Be a Complement and not a Substitute"...

Well worth a read if you are wondering how you can develop additional leverage at work to get a raise or to get ahead---Excellent advice from an Excellent AP Economics teacher!!

How To Use Economics To Get A Raise---By Mike Fladlien

"Be a Complement Not a Substitute"
Complementary goods are like a right shoe and a left shoe. One shoe simply isn’t sufficient. You need both shoes. If the job you’re doing can be done by a machine or done by cheaper labor, then you need to find a way to become part of the process. For example, if an answering machine can replace a receptionist, then when the machine becomes cheaper, it’ll be used in place. The receptionist has to build client relationships and answer the phone. In other words the receptionist has to be able to do the work that a machine cannot. A receptionist can also build value for the attorney, by rescheduling clients who miss appointments so that the boss doesn’t have an empty space on his/her calendar. The receptionist might call ahead to confirm appoints. This is work that a machine cannot easily do. 

Differentiate
A worker must differentiate herself from other workers. It’s not enough to be able to do the job. A worker  musst add something extra. Perhaps Juanita has specialized knowledge of accounts receivable software that can’t be duplicated or outsourced. Perhaps she has knowledge of contract law that can’t be easily learned.
When Juanita works with clients perhaps they comment about the personal attention that makes them feel special.""

A short yet excellent explanation of a Carbon Tax to reduce carbon emissions. A policy alternative to Cap and Trade

A short yet excellent explanation of a Carbon Tax to reduce carbon emissions. A policy alternative to Cap and Trade...From EconomicsBlog:

"""The production of carbon dioxide is widely held to contribute to social / environmental problems such as global warming. This carbon pollution is a negative externality. It is a cost imposed on the whole of society and not just the individual who consumes a certain product. e.g. if you drive a car, the external costs are felt by everyone else.
Because certain carbon intensive industries create negative externalities, the social cost of production is greater than the private cost.
In a free market, these negative externalities are not included in the price leading to overconsumption and social inefficiency. We can say there is a missing market, because the external cost of carbon emission is ignored.

Diagram to show Welfare loss of Negative Externality

The Purpose of A Carbon tax

The purpose of a carbon tax is to internalise the externality. What this means is that the final price of the good should include the external cost and not just the private cost.
In theory, the tax should equal the external cost. Therefore, the price consumers pay will be the social cost.
Demand will fall and the new equilibrium will be socially efficient because at this output, the marginal social cost equals the marginal social benefit.

Diagram to Show Carbon Tax

Revenue Neutral

In theory a carbon tax should be revenue neutral. This means the tax raised from taxing carbon emissions can be used to reduce other taxes. There should be no overall increase in the tax burden.


Problems of Carbon Tax
•Production may shift to countries with no or lower carbon taxes.
•Cost of administrating the tax.
•Difficult to know the level of external cost and how much the tax should be.
•Possibility of tax evasion. Higher taxes may encourage firms to hide carbon emissions.
•If demand is price inelastic, the tax may have to be very high to reduce demand significantly.
•Consumers dislike new taxes and often don’t believe that they will be ‘revenue neutral’. This is not an economic argument, but it is a political reality and explains why it is often difficult to implement."""

Bee rustlers---How do they get the lasso around their necks???

From BBC: 'Bee rustlers' sting Japanese apiarists

""Japanese bee-keepers have been warned to be on their guard, following a spate of hive thefts.
The price of honeybees has doubled in recent years after a ban on imports. Police suspect a gang of specialist thieves is stealing honeybees to order. In central Shizuoka prefecture, eight hives of 60,000 bees were taken in a single night from five separate farms. The area is well known for strawberry growing and farmers need honeybees to propagate their crops. The insects have been in short supply in Japan after imports were banned for several years to try to prevent the spread of parasites. The price of a swarm has doubled to more than $400 (£260). The Japan Beekeepers and Honey Association says more than two million of the insects were stolen in 2009, and thefts are becoming more frequent. The organisation has urged its members to be alert, but has admitted it is difficult to protect hives around the clock on remote farms. ""

How do you like your wine capped? Cork or plastic?

From WSJ: Show Stopper: How Plastic Popped the Cork Monopoly

A terrific example of "creative destruction" at work, in the wine cork business, of all places.  Creative destruction is a necessary component for innovation and the continued development of new products.  We must be willing to let go of goods that have been rendered less useful (NOT necessarily useless) though technological advancement and/or changes in consumer preferences. Seems as though there is a challenge to a centuries old "tradition"...

""The story of how Nomacorc and other stopper upstarts broke the centuries-old cork monopoly is a lesson in how innovation, timing and hustle combined to exploit an opening in a once airtight market. It shows that any dominant industry can be vulnerable to competition, especially if it grows complacent about its position.""

 It is a market-oriented cleansing process that is not without costs, however, such as the workers in the out-innovated businesses who lose their jobs. Creative destruction also serves to keep the attention of the dominant industry.  They cannot become complacent or a competitor/upstart will chip away at their market dominance. 

""Unknown to most American wine drinkers, the plant's owner, Nomacorc LLC, has quietly revolutionized the 400-year-old wine-cork industry. Since the 1600s, wine has been bottled almost exclusively with natural cork, a porous material that literally grows on trees in Portugal, Spain and other Mediterranean lands. But over the past 10 years, an estimated 20% of the bottle stopper market has been replaced by a new technology—plastic corks that cost between 2 and 20 cents apiece. More than one in 10 full-sized wine bottles sold worldwide now come with a Nomacorc plug, while another 9% or so come from other plastic cork makers. Screw caps took another 11% of the market.  "We infuriated the cork industry," says Marc Noel, Nomacorc's chairman.""

I don't drink wine (or any other alcoholic beverage) so I don't really have an opinion, but I am sure the debate rages among oenophiles (is that the right word?)...But I do love Creative Destruction---gives me warm fuzzies. Such as I would imagine wine would... :)


Related story on the world-wide wine glut..

Business Spending Propels Recovery---Nice Graphic showing C + I + G + N(x)...

A MOST excellent interactive graphic from the WSJ  (click HERE for original story) on the latest Gross Domestic Product report...Just put the cursor over a particular bar and you will see that sectors contribution (or detraction) from GDP...Conveniently set up to show C + I  + G + N(x)!!  An economics teachers dream!!