You Have $75 Billion To Save The World---How would you spend it? See here how top economist would spend it.

Asked how they would spend $75 Billion dollars (by the Copenhagen  Consensus Center) to help people in the developing world, five of the worlds top developement economists responded by listing, in order of priority, what they would do. The list is below. Go HERE for a short analysis of this list.  Do you agree with these prescriptions?  Would you add something (or subtract)?

You Have $75 Billion To Save the World:  How would you spend it?

1     1.  Bundled interventions to reduce under-nutrition in preschoolers (to fight hunger and improve education)

2   2.  Expanding the subsidy for malaria combination treatment

3   3.  Expanded childhood immunization coverage

4   4.  Deworming of schoolchildren, to improve educational and health outcomes

         5.  Expanding tuberculosis treatment

6     6.  R&D to increase yield enhancements, to decrease hunger, fight biodiversity destruction, and lessen the effects of climate change

7   7.  Investing in effective early warning systems to protect populations against natural disaster

8    8.  Strengthening surgical capacity

      9.    Hepatitis B immunization

1   10.  Using low‐cost drugs in the case of acute heart attacks in poorer nations (these are already available in developed countries)

1   11.  Salt reduction campaign to reduce chronic disease

1    12.  Geo-engineering R&D into the feasibility of solar radiation management

1   13.  Conditional Cash Transfers for School Attendance

1   14.   Accelerated HIV Vaccine R&D

E  15.  Extended field trial of information campaigns on the benefits of schooling

1   15.  Borehole and public hand-pump intervention

 

1

Nice interactive---Where would YOU cut Defense spending to reduce government spending? See what I did HERE...

Think YOU can cut the military budget in order to reduce deficit spending?  Go to the interactive HERE and try for yourself.  Below this first picture of the interactive is the box on the left and the "cuts" I made--at total of $173 billion over 10 years.  Low hanging fruit and, for me, relatively easy cuts to make.  How did you do?? (HT: to website Chart for the link)

Substituting Capital for Labor down on the Farm---The US way and the Afghani way. I don't know what to say when I see the comparison here...

This video (From NPR) shows a farm tractor cultivating/planting a field without a driver. It is pre-programed to ride a grid and do what it does.  The farmer can now do something else with his time or he does not have to hire a worker. 

The farmer, or more likely, a corporate analyst/accountant, has determined that substituting capital for labor will be more profitable for the business.  Technology has become less expensive relative to labor on the farm. 

The photo below shows a farmer in Afghanistan (guessing he is not a corporate account) tilling his field the old fashion way---by old fashioned, I mean pre-1900's on back. 

In Afganistan, labor is cheap and capital is expensive so more labor is used to produce food.  Quite a difference in productivity outcomes, wouldn't you say? Hard to believe these two situations exist at the same time in today's world. 

Source: Here

Must see graphics on the relationship between education and employment. See how I sliced and diced this one! Literally, I sliced and diced it.

This graphic shows number the of jobs in a particular job/career sector by educational attainment.  The bigger the bubble the larger the number of jobs in that sector for those with that level of education.

For instance in the first line "management" the larger bubble is in the "6-Bachelor's Degree" level of education. The next largest bubble on the line, but much smaller is for "2-High School Diploma or Equivalent". This means to be in management, you don't have to have a degree BUT it helps--that is who most of the jobs go to. 

So, look at the rest of the employment categories keeping in mind what the bubbles mean.  Below this first chart, I made some notes on it and have an observation.  See you again below after looking at this first one...

Source: Bureau of Labor Statistics

Notice what I circled and what I put in the rectangular box.  The circle on the upper right contains the jobs for people with "More Education", specifically with a Bachelors degree or higher. The one on the lower left contains jobs for people with a high school diploma or less.  The RED horizontal line represents the point of significant transition from more educated to less educated in terms of job distribution.  It is not even a transition---it is a drop-off! Of note is the area I labeled "Dead Zone".  The relative number of jobs available for those in between low and high educational attainment are pretty thin. 

Can policy change this?

I see income inequality based on educational outcomes pursued by individuals. What do you see?

What do I have in common with John Coffey (The Green Mile)? We feel the same way about politics lately. I will let him speak for me here...

I think I am following economics and politics too much lately. I find myself feeling like John Coffey in The Green Mile...I will let him speak for me.  :)

A nice, easy to read graphic showing the changes in spending in the Federal Budget over the last 50 years..Pretty eye-opening!

A nice visual showing how the components of the Federal Budget (Discretionary and Non-Discretionary elements) have change over the past 50 years.  Here is how you read this---in 1962 Defense spending was 51.7% of the budget, in 1987 it was 29.7% and in 2011 is was 22.6%. Easy to see that Defense spending, while in total dollars spent has increased dramatically, has decreased by more than half relative to everything else in the Federal budget. 

If you look at the categories in 1962 then look at them in 1987 and 2011 you see a significant shuffling of the categories.  Public transfer payments (money moving from the govt to individuals) has increased dramatically---See Social Security, Medicare, Medicaid, Social Safety Net programs, etc.  Direct Federal government spending on "stuff"--transportation, roads, and "everything else" has decreased in proportion.


Source: NPR viaThe Big Picture

Interesting survey results from former college students as to what they might have done differently. Don't pass up at least a look at this chart

The first one is a tough one and very personal.   Think of the results of this survey as your "future self" traveling back in time to your "present self" and giving you some advice. Current and future college students should ponder this chart and consider it free advice.

Source: The Economix

Objective analysis of the primary reasons health care is expensive in the US. Worth a read if you are interested in something called "facts"...

Healthcare spending is an important political and economic topic today. Economist Tim Taylor has an excellent blog posting analyzing current research as to why the US has higher spending per person on healthcare compared to other major developed countries.

He discusses ALL the major reasons why there might be differences in spending outcomes, but narrows down the most expensive culprits in the conclusion below (I underlined them).  I encourage you to read the WHOLE analysis and become (more) educated on this issue.  These problems ARE solvable with a little political will and common sense on both sides of the political aisle!

"The question of why the U.S. spends more than 50% more per person on health care than the next highest countries (Switzerland and Netherlands), and more than double per person what many other countries spend, may never have a simple answer. Still, the main ingredients of an answer are becoming more clear. The U.S. spends vastly more on hospitalization and acute care, with a substantial share of that going to high-tech procedures like surgery and imaging. The U.S. does a poor job of managing chronic conditions, which then lead to episodes of costly hospitalization. The U.S. also seems to spend vastly more on administration and paperwork, with much of that related to credentialing, documenting, and billing--which is again a particular important issue in hospitals. Any honest effort to come to grips with high and rising U.S. health care costs will have to tackle these factors head-on"

Source: The Conversable Economist

Source: HERE

NICE inforgraphic on gasoline spending around the world. Who do you think is number 1? You might be surprised.

LOL! No, there is no surprise... Interesting statistics on gasoline usage around the world.  I would like to see a graph with the trends in these categories over the last 20 years.  We are a monster consumer of gas but I don't think as much so in recent history.

From: Business Insider

Source: Business Insider

Nice Chart showing showing poverty, income inequality and redistribution in developed countries...See how the US stacks up...

Income inequality and poverty is a hot political and economic topic today.  Below is a chart (from The Economist) that compares, within developed countries, levels of poverty and income inequality BEFORE and AFTER "taxes and cash transfers" (fancy way of saying "income redistribution"). 

The light and dark blue sections of the bar TOGETHER represent the percent of each countries population below the median income level for that country (median income--half of the people are above that level of income, half are below).

Just the light blue part of the bar represents the percentage of the population that is below the median income level AFTER people pay taxes and those taxes are redistributed to the relevant stakeholders-- people below the median.

As an example of how countries use policy to "level income" , I isolated the US ("A") and Sweden ("B"). I used these two because the percentage of the population living below the median is roughly the same--each bar (light and dark sections) settle at around 26%-27% and because they have a significantly different outcomes after redistribution.

After taxes and transfers ("C"), the US has roughly 17% of the population under the median income level and Sweden has 8% under the median.  The US reduced the percentage below the median by 37% and Sweden reduced it by 70%.  (If I did my math right!) 

So, while both countries started out with roughly the same percentage of people below the median, after taxes and transfers, Sweden (percentage-wise) did significantly better than the US in getting its population to/above their median income level.

Good thing, Bad thing, Neither? What do you think?  Keep comments kind, please...

Studying for the AP Economics Test? Try this App to improve your score. There IS still time!!

Here are links to "Apps" to help you study for the AP Economics tests next week.  They are from Mike Fladlein at Mikeroeconomics Blog.  These will help you for last minute cramming.  Lots of questions and instruction.  Download so you can Upload into your brain!!! GO FOR IT!!

Click HERE for i-Tunes
Click HERE for Android

Nice graph showing CEO-To-Worker Pay Ratio. Can you guess under which President it had the widest gap BY FAR? Better look before leaping.

Here is a graph charting CEO (Chief Executive Officer) pay and compensation relative to the wages paid to workers in the employ of those CEO's (for a summary of the methodology of this study go HERE to EPI). 

In 1965 the ratio is 20:1. The CEO was making 20 times the compensation (wages and benefits) that the average worker in his employ was making.  Read any point one the line in the same way. 

I was surprised to see that the ratio is now back to mid-1990 level!  It fell dramatically after 9/11 and the subsequent recession (or should say the one we were already headed into) and never recovered to its peak in the last year(s) of the Clinton administration Yes, the Clinton administration! 

Note: The source of this chart comes from the Liberal (Left-leaning) think tank Economic Policy Institute (EPI). PLEASE no rants of bias! :)

Source: EPI

Two possible explanations: (1) the rapid growth in CEO pay and leveling of wages in the US coincided with globalism---CEO's/Execs had world-wide operations responsibilities increase (hence more pay/compensation) and US workers rapidly had to "compete" (read that had jobs off-shored) with workers around the world (hence stagnating wages).  Or (2) the default--Corporate greed.  You choose.  I am not picky...

Nice graphic on the "Plastic Island" floating around the Pacific Ocean. We're gonna need a bigger recycling container...

This is a graphic that shows the floating island of debris in the Pacific Ocean.  It shows its evolution over time.  Below is what The Economist says about it.  Here is the link to the actual study. 

Source:  The Economist

""New data on the amount of plastic washing around the Pacific
MUCH of the plastic swirling around the sea ends up in the North Pacific Gyre, where four great ocean currents meet to create a swirl of water moving clockwise that is twice the size of the United States. Its less polite name is the North Pacific Garbage Patch. A new study led by Miriam Goldstein of the Scripps Institute of Oceanography and published in Biology Letters has quantified the increase in scraps of plastic there between 1972-87 and 1999-2010. The number of small particles of less than 5mm in diameter floating in the areas sampled increased about 100 times (from virtually nothing). This is bad news for almost everything apart from Halobates sericeus, a small insect that now has lots of nice little floating platforms on which to lay its eggs.""

Helpful hint to Election watchers---Ignore the Romney vs Obama National Polls you see...THIS is the map that matters...One candidate is in REAL trouble...

National polls on Presidential candidates are virtually useless.  Presidents are elected by the Electoral College process.  A candidate needs to rack up 270 electoral college votes to win.  

Notice the data in the lower left hand corner. Give or take a few votes, Pres Obama already has near enough to win.  If the election were held today, Mitt Romney would have to win ALL of the States considered "toss ups" to get exactly 270.  On the map those would be the States in the grayish color. 

Game over???

I pity the people in those toss up States in the Fall. They are going to get hammered with campaign advertisements and scrutiny.

Note: I added a second map I found HERE so as you can see that I did not cherry pick.



Source: 270toWin

Nice Graph showing the External Costs associated with Energy Production. A nice lesson on Negative Externalities...

When a firm produces a good the cost of producing it only includes the input costs associated with making the good.  These are called "internal costs" in economics.  The costs of producing are borne only by the producer and paid for by the consumer, the two most interested parties in any transaction.

What if the production and consumption of this good imposes ADDITIONAL costs on people or society ("third parties") that are not paid for either in the production or consumption of this good? These additional costs are called "external costs" in economics. 

Some goods create more external costs than others. Looking at the bar graph below, you can see electricity production is all over the map. 

On the far left, we have electricity produced by coal.  The black portion of the bar shows how much of the costs of producing electricity are internalized.  The other two bars show how much in external costs imposed on society per kilowatt of electricity produced.  Producing coal for electricity is cheap but it imposes significant other costs, mainly health and environmental, on society that the producers and consumers of coal generated electricity do not pay for up front. 

Source: The Conversable Economist

The other sources of energy  you see on the graph impose less external costs on society BUT cost more to produce and consume.

Energy policy and health/environmental policy converge. The stuff  Economists dream about...

Read the whole blog entry regarding this graph HERE. It is well worth the time.