Crowding Out?

This may be taken as evidence of crowding-out. Remember that the crowding-out is when the government deficit begins to increase interest rates eventually decreasing investment.

This accompanying piece gives some interesting looks at the debt. (Keep in mind the White House projections may be politically biased... unless prepared by the CBO)

Delaware River

Interested in an environmental topic for your final position paper? This is a nice topic involving the local economy: Should the Delaware River be dredged or not. This article pins environmentalists vs. commerce. I have a feeling it all comes down to commerce. Follow the opposition and you may find it comes down to which state stands to gain from it.

Economic Prosperity

Why do some nations find economic prosperity while others fall short? That is the heart of a very good book titled “A Farwell to Alms”. The first chapter goes a long way in describing this problem and can be found here.

Looking for a graph that tracks these nations? Look here (click on the link below the map to get the bigger version of the map).

HT: Mankiw

EA Sports as a Monopoly

Anti-trust laws are designed to prevent monopolization. The technical terms are restraint of trade. By cutting back quantity a monopolist has an opportunity to increase prices (and therefore profits). If you saw "The Informant" that is what the justice department was investigating.

One of the most obvious cases of restraint of trade comes from the NFL's video game practices. They allow only one company (EA sports) to make a game with the NFL's likeness (and therefore the only game to have real NFL players in the games). EA must pay the NFL a lot of money for this right, and EA must make a lot of money making their version of the game (which is Madden). Now it is being challenged in court.

I am interested to see how the NFL will fight this one. Will they rely on their limited Anti-trust exemption (which they have... and this is what allows them to sign exclusive deals with DirecTV for broadcast rights). This is probably their best legal case, but I give this lawsuit a chance to change everything. With more competition comes choices and decreased prices.

(HT: Deadspin of all places)

Recent Unemployment Rate

So we finally hit the double digit unemployment rate. The unemployment rate is what economists call a lagging indicator. This means that as we climb out of a recession (which we technically have done) there are certain things that happen at different times. For example, worker productivity increases relatively quickly. Once employers recognize that workers are bringing in more revenue they begin hiring temporary workers, then full time workers. The end result is a ‘lag’ between production increases and job increases.

Aside from the discouraged worker effect altering these number, another interesting paragraph in the article that centers on our classroom discussion of underemployment is quoted:

Counting those who have settled for part-time jobs or stopped looking for
work, the unemployment rate would be 17.5 percent, the highest on records dating
from 1994.

Auctions and Politics

Marginal Revolution has this great link to a classroom discussion on auctions and politics. This also relates to sunk costs.

Super Freakonomics

The book ‘Super Freakonomics’ just came out. Just like the first one, the second has been controversial. The biggest controversy is the chapter on Global Warming. Steven Levitt (the author that is an economist) went on the daily show recently. This discussion summarizes this controversy.

New Business Model Needed for Newspapers

Newspapers are a dying industry. The latest from the link: "Average daily circulation at 379 U.S. newspapers plunged 10.6 percent in the April-September period from the same six-month stretch last year..." Competition from the internet has created an incentive to put articles online, and anyone who charges does so alone thus driving down viewership. Someone has to come up with a business model that will work. So how about this idea:

Allow the newspaper industries to collude. Basically grant them an Anti-trust exemption like the one sport leagues have. Instead of the Phillies and Yankees acting together to figure out ticket prices, advertising, etc... we can allow the Inquirer and NY Post to act collectively on advertising, and most importantly a collective requirement for payment for its online content. Just as the Phillies and Yankees compete on the field the papers can compete with its content. Otherwise there is a classic prisoner's dilemma (like our OPEC studies in class). Any thoughts?

Unions and Politics... an Unholy Alliance?

At one point California had to give out IOU’s instead of money. Pennsylvania just completed our state budget despite new sources of revenue by renting out land for natural resource drilling and new casino tax revenue. One of the smallest states in the nation (New Jersey) has an awful mess dealing with their insane property taxes despite annual enormous revenue from Atlantic City casino taxes. Ever wonder how the trail to state insolvency is ploughed? This article from today’s ‘Currents’ section in the Inquirer written by Fred Siegel and Dan DiSalvo has many of the answers. Their argument is that powerful state unions are draining funds from the states, and it is the politicians who give out those contracts that should be to blame. Is this article fair to unions? Some money quotes:

The governmor of a state is supposed to keep the spending in check. What does Gov. Corzine do it 2006?

"...when [Corzine] shouted at a Trenton
rally of about 10,000 public workers: "We will fight for a fair contract."
Corzine was, of course, management in that situation, not labor."

The situation in NY looks dismal… maybe this has something to do with it.

"Nearly 800 Gotham "rubber room" teachers who have problems on the job are
being paid not to work. Salary increases have been running at better than twice
the rate of inflation."

When did this begin?

A significant boost was President John F. Kennedy's decision to mobilize public-sector workers as a new source of political support.

Some additional stats:

"In New York City, where public-sector union benefits have grown twice as
fast since 2000 as those in the private sector, firefighters may retire after 20
years at half pay. Pension benefits for a new retiree averaged just under
$73,000 (all exempt from state and local taxes). To top it off, retirees receive
a health insurance policy that is worth about $10,000 annually."

The punch line:

"In the absence of tough-minded
leaders who will take on the public-sector unions, the fiscal future of states
and localities is bleak."

Politics and the Media

Politicians often feed off of people not understanding the difference between deficit and debt (and the media seems unwilling to take on the task). This article outlines how we reached a record deficit in 2009. The print inquirer article puts it best (I don’t understand why the article changed once it hit online).

This deficit represents “… more than $4,700 for every man, woman, and child in the United States.”

It is as if everyone in America just increased the balance on their credit card by 5k (including my two year old daughter!). The scary thing is that next year will probably be just as bad. Another quote:

“President Barack Obama has pledged to reduce the deficit once the Great Recession ends and the unemployment rate starts falling. But economists worry the government lacks the will to make the hard political choices to cut spending and raise taxes to get control of the imbalances.”

This completely ignores the fact that the powers that be must cut the DEBT, not the deficit. Even if Obama cuts the deficit in half every year for the next seven years the debt will continue to grow (and it will be your generation that will pick up the tab). Politicians get votes by ignoring this issue (so at least I can understand why they do it) but I can not figure out what the media gets

Drop in Minimum Wage

An historic drop in Nominal Minimum Wage. Very interesting.

California and Pot

Talk about a quick way to increase GDP. Take the underground economy involved in pot and make it legal. Now all of that production is calculated in GDP. That may be the quickest fix to get us out of this recession.

Are we in a recovery?

If you hold a conversation with someone very ill you probably pick up on the fact that they are sick. Medical doctors specialize in telling us why they are sick. Similarly anyone living in America over the past year knows the economy is sick. Macroeconomists try to tell us why this is the case.

This leads to the latest batch of economic numbers. Looks like the unemployment rate went up to 9.8%. To the casual observer this is not much of a jump, but it is actually worst than it appears. Lets dive deeper into the numbers: Many economists and politicians are sold on the fact that we are in a recovery. They cite a small uptick in housing prices and a small decline in 2009 second quarter GDP (with the implication that we are now in the upswing). To quote the article: “The latest data "sets the stage for an improved economic outlook for the rest of 2009 and throughout 2010," said Aaron Smith at Moody's Economy.com.” (Sounds optimistic… right... like any news coming after that date will be positive). Now this info: We lost a net total of 263,000 jobs last month (more than expected). In addition this takes into consideration that previously unemployed workers have begun part time work to make ends meet. They are counted as employed. Take this into account and the number of 9.8% unemployed actually underestimates the problem. In addition to this, these numbers do not take into consideration the discouraged workers effect. We will discuss these things in greater detail in the class soon (oh joy!).

The NFL's Los Angeles Packers?

For those that follow the National Football League you may be aware that the league has an interesting way to dealing with the salary of their players. The story is that the two pronged attack of heavy revenue sharing and capping your costs (in the form of a hard salary cap) distributes talent to every team equally (in theory at least).

Economists are skeptical of the motives of the owners of the leagues. The correlation between payroll and winning is not quite as strong as many would expect with the exception of the extremes. So we hypothesize that it may be the owners attempt to keep costs down that is driving the cap issue. But leaving that issue alone right now the current news of salary being uncapped in 2010 is a subtle, yet very important potential structural change inside the NFL. The implications could be very interesting for the future of the NFL.

What appears to be happening is that the large market teams (Dallas, Washington, etc…) do not want to be a part of a heavy revenue sharing/hard salary cap system any longer (if you were always making more money would you want to always share it?). They appear to be getting in the way of an agreement between the owners that would result in the uncapped season. What follows is anyone’s guess, but keep in mind that the salary cap was a concession given up by the union in the collective bargaining agreement (CBA). So the question remains, if the owners give up something they fought so hard to attain in the first place, will the union be so kind as to give it back again? One possible outcome: The richer teams get the uncapped seasons followed by reduced revenue sharing that would allow the NFL to look more like Major League Baseball. A few large market teams would arise (I would put Eagles in that class) while a few smaller market teams would disappear, or move (perhaps teams like Green Bay moving to places with large populations and no teams like Los Angeles in order to collect more revenue). For football fans it is an issue worth monitoring.

Deficits and Debt into Historical Perspective

If I told you someone tallied up $10,000 in credit card debt and asked how bad that was you would probably tell me you do not have enough information to answer that question. One vital piece of info would be how affluent that person was. For example, if that person were a college student your answer may be different then if it were Bill Gates.

With this general idea in mind we explore the complex world of public finance. If I tell you that a government deficit was $100 billion, you should similarly ask which government, and how affluent they are. The gauge of affluence is measured by economists as Gross Domestic Product (GDP). Thus to put our current spending into perspective we examine how much the government outspend tax revenue this year (the deficit) as a percentage of GDP, and how much money we owe out as a result of past deficits (debt) as a percentage of GDP:

In case you are wondering, the debt was very large in the early 1900’s due to the World Wars.

(Charts were generated by usgovernmentspending.com)

Obama and the Tire Industry

One thing that economist stress is the fact that trade is good. Most economists would agree with the assertion that protectionist policies deepened the Great Depression. This is in part excusable as politicians catered to the initial drop in industry by ‘protecting’ them with tariffs. We fast forward to today and assume that our politicians take the important lessons we learned from the Great Depression and abandon ‘protectionist’ policy for short political gains. It does not always work out that way.

The latest example of this is in the tire industry. Obama decides to place tariffs on tires imported from China. Political opinions are that he is paying back some union support during the election (not to pick on Obama, as I recall an extremely similar action by Bush when he got into the office by placing tariffs on steal). The next step will be China’s retaliatory tariffs. The end result: reduced trade… which to an economists is a sad event.

What is the Auto End Game?

As previous postings indicate, many economists were (and still are) skeptical of the auto bailouts. Further evidence that it was a bad idea via the link. The punch line: That the tax payers will not recover their money. I have two questions: Why did the US government ‘bail out’ the auto industry if they (and everyone else) knew bankruptcy was inevitable (which it was according to intrade). Question number two: What did they get ‘bailed’ out of?

Technology Today

Two very interesting videos via 'Division of Labour'. Two main points here, the obvious one is that technology increases at an increasing rate. Slightly more subtle is the fact that technology does not exhibit diminishing returns (double the amount of technology we more than double our output).

Ghostwriting

Does this practice fall under the category of "immoral and legal" or "immoral and SHOULD be illegal"? The act is known as 'ghostwriting', defined in the article as:

... when a drug company conjures up the concept for an article that will counteract criticism of a drug or embellish its benefits, hires a professional writing company to draft a manuscript conveying the company's message, retains a physician to sign off as the author, and finds a publisher to unwittingly publish the work.

As a researcher this type of thing amazes me.

Update: A new article with some added detail. To give you an idea of the scope:

In 1997, for example, DesignWrite, a medical communications company in Princeton, N.J., proposed to Wyeth a two-year plan that would include the preparation of about 30 articles for publication in medical journals.

In the Beginning

Confused about the bank ‘bailout’ and terms like ‘TARP’. What exactly did happen in the financial industry last September just as the mess began? This piece pulls much of it together very nicely.

Be sure to go to 'Watch the full program online'

Welcome to Fall 2009

Feel free to comment as you see fit. Be sure to include your names.

Why are Costs so High?

An excellent post by Mankiw on Healthcare costs and the salaries of doctors.

More on ‘Buy America’

The ‘Buy America’ provision is another form of protectionism. This argument is advanced by Temple economist Dr. Dunkelberg in the following link.

Biased Healthcare Debate

Want more on the current health care debate? Here it is from the left.

Here it is from the right.

Let the mud slinging begin. BTW, the intrade contract for the deal to be made by the end of the year is the chart. Losing popularity?

Update: A link to Friedman's take (HT Mankiw)

Healthcare Debate Simplified

Do you want an unbiased explanation to the current healthcare debate? Try it here, or here, under the left column headed ‘Healthcare for Dummies 6-18-09’ (each are podcasts).

Buy American

The ‘Buy American’ provision is a type of protectionist policy that economists warn about. The theory is that the stimulus money should be spent on American products… which seems good at first. But one of the major problems with such policy (aside from subsidizing inefficient production) is that they often are followed by retaliatory trade barriers. Such is the case in the following links. The first discusses the ‘Buy American’ provisions, and the second discusses retaliation.

The bottom line is that trade is NOT a zero sum game. Everyone wins by trading, and in this instance it appears as if everyone will lose.

GM and Bankruptcy II

Here is another excellent opinion piece by David Brooks from the New York Times. The punch line:

The end result is that G.M. will not become more like successful car companies.
It will become less like them. The federal merger will not accelerate the
company’s viability. It will impede it. We’ve seen this before, albeit in
different context: An overconfident government throws itself into a
dysfunctional culture it doesn’t really understand. The result is quagmire. The
costs escalate. There is no exit strategy.

GM and Bankruptcy

The ‘Old GM’ is being reborn into the ‘New GM’, and it’s looking quite different. Some interesting details from the link:

“The plan is for the federal government to take a 60 percent ownership stake in the new GM. The Canadian government would take 12.5 percent, with the United Auto Workers getting a 17.5 percent share and unsecured bondholders receiving 10 percent. Existing GM shareholders are expected to be wiped out.”

Talk about controlling the means of production… (Would Marx be proud?).

A couple of points:
First, why did the government decide to bail out GM in the first place if they knew (and it appears as if it was inevitable, at least according to intrade) that they would end up in bankruptcy court. In essence the original 20 billion was lost in the ‘Old GM’ inefficient waste.

Secondly, the talk is that the government does not want to control the company. Thus the talking points are that they want to get ASAP. I am skeptical of the Government relinquishing control of anything let alone something that gets so much press.

Ultimately this brings to mind a quote by Ronald Reagan:

"The nine most terrifying words in the English language are: 'I'm from the government and I'm here to help.'"

Legalizing Marijuana

Would you like a brief summary of the issues surrounding the legalization of Marijuana? This is an excellent place to start (focus on the economic issues).

Print News on Life Support

Print news is in trouble. There are many reasons for this that I will not bother getting into (just think of the costs associated with providing papers to residence). The question is what, if anything should be done about it.

The idea of a ‘newspaper bailout’ has been brought up, but quite frankly this makes even less sense then the automakers bailout (and look how that turned out). In many people’s opinion the greatest loss to a society without traditional newspapers would be the loss of investigative journalism (if there were no newspapers, there would be no Watergate uncover). And any financing by the government may cause a conflict of interest (from the organization that should be investigated the most).

Here is a good piece that follows up with this other previous posting.

Taxing the Rich

One important lesson we learn in economics is that the government’s projected tax revenue differs from actual tax revenue received. To summarize (begin by picturing a Supply and Demand curve in your heads):

1. Any projected tax revenue takes into account the quantity before the tax is placed.
2. Placing the tax on any product will shift the supply curve to the left.
3. Identify the new equilibrium quantity and you will find it has decreased.
4. Find the new tax revenue (quantity times the tax) and it will be smaller than the pre tax revenue.

Here is some evidence of taxing high end labor. Is this a viable and desirable alternative?

Update: For a different perspective regarding taxing the wealthy here is an interesting article by a well known economist.

Nationalizing Health Care I

The first of what I suspect many hints dropped that the government is seriously considering nationalizing health care. What I find interesting is the timing... right after admitting we are out of money Obama implies we will make changes to health care.

In addition to the health care hint there is a word on our deficit and debt.

Is Economics Right for You?

Thinking of majoring in Economics? Here are some pros and cons.

Cons: You will have to put up with some apparent ugly professors.
Pros: Your patience will be rewarded with a relatively higher salary (all things being equal).

The bottom line: Forgo eye candy now for more money latter.

Prices for Baseball Games

The demand for baseball games can be a complex issue. A lot of previous literature exists regarding variables that affect the demand for baseball games. These variables include: weather, day of the week, time of the day, division opponents, and likelihood of a close game (with the home team winning).

So what is the next step? Recognizing that when the demand changes, so does the equilibrium price. Charging more money for games that have a higher demand is the profit maximizing strategy. Baseball has not adopted this strategy… but maybe this is the wave of the future.

Major quote from the article:

Many teams have various ticket prices for the same seats, altering the dollar amount based on the opponent, the day of the week and the time of the year, but those variations are set before the season and not altered. The Giants, by being more fluid, are taking the concept a step further.

Advanta and Alter

Talk about bad times hitting close to home (and how quickly times have changed). Here is a story discussing Alter (as in the building attached to our classroom). Keep in mind they just opened the building inside one month! The bottom line: “Too many [people] have not been paying their bills during the recession.” This is not a good recipe for a credit card company. Hopefully they can pull out of this.

Summer I

Welcome to the American Economy class blog. Please check here regularly for new postings.

Google Unemployment

Google and economic data working hand in hand. Pretty cool.

(HT: Marginal Revolution)

Deflation in Spain

What to learn a bit about deflation? This article gives you an idea. (The picture is found in the article)

Shifting Jobs in America

How (and where) are the jobs shifting in America? This will give you an idea. (Be sure you push play)

Interesting Graph

One of the most though provoking graphs I have every encountered. Courtesy of ‘A Farewell to Alms’ by Gregory Clark.

Update: The conversation that accompanies this graph is a discussion regarding the correlation (positive, negative, or the lack thereof) between income and child births. This link may indicate where the US stands. Very interesting.

The Market for File Sharing

Very homogeneous product + zero marginal cost + copyright laws + easy access = controversy

Side note: Take away the ‘easy access’, and replace ‘copyright laws’ with ‘patent laws’ and I may be talking about prescription drugs.

Print Media on Life Support?

When I was younger I recall my grandfather telling me stories about how they would get TWO papers every day… one morning and one evening edition. I was astonished. Maybe someday we will tell stories to our grandchildren about what it was like to get a paper at your house every SINGLE day.

More evidence that supports the hypothesis that print media is dying.

Who is Picking up the Tab?

Healthcare is a complicated issue to tackle. One timeless post by Mankiw explores what happens if one Obama plan is passed. The plan sounds innocent enough. Tax the employer to pay for healthcare. But knowing that who pays for a tax and who pays the burden of a tax is an important distinction to make.

Game Theory

A couple of Game Theory flicks for you (to remind us of our OPEC curve example). The first is from ‘A Beautiful Mind’, the second comes courtesy of Mankiw. Enjoy.

Update: The movie 'The Informant' was inspired by a real antitrust case that broke up a cartel that fixed the price of Lysine. The secretly filmed video can be found here. (HT: video via Marginal Revolution)

How to Fight Drugs in the US?

Imagine the President of the US comes to you with a set amount of money to combat illegal drugs in the US. It is up to you to allocate this money as you see fit. Keep in mind that the demand for illegal drugs is probably inelastic. Your options are as follows:

1) Attack the supply of drugs: This option was taken by past administrations (at lease since the ‘war on drugs’ campaign in the 80’s). What is the result? Decrease supply, increase price (by a lot) and decrease quantity (by a little).

2) Attack the demand for drugs: This option has been suggested by many economist since we believe there is a reasonable chance that the result would be a decrease in demand, a decrease in price (which decreases revenue for the sellers), and decreases quality by a larger magnitude.

Now there is some evidence that Obama may consider the latter option with his latest pick for the number two drug czar (a local guy). Money quote:

He “…will be charged with reducing demand for drugs, a part of the foreign-supply-and-domestic-demand equation…”

The Invisible Hand

I spoke to my grandfather the other day (who just turned 97!) and I asked him what he thought of Obama. His response: “What happened to the American dream when you work harder to keep more?”

Since I am an economist the first thing that pops into my mind is Adam Smith and his 'Invisible Hand'. I was reminded of this conversation when I came across this article. If I were allowed to post on the article (I am not a member) I would point out to the first commenter that what they write about are what laws are for.

On the flip side Keynes was criticized in his day for expanding the size of the government and was considered by many as anti-capitalist. His response was that he was trying to save capitalism, not destroy it. Then again this argument probably carries greater weight in the days of the Bolshevik revolution (which lead to the communist USSR)… maybe less weight today?

Employment (or the lack thereof)

Gloomy chart for you all to ponder (I feel for my seniors). The shaded areas are the periods of recessions. When will the discouraged workers effect kick in?

(H/T: Bureau of Labor Statistics)

Cigarette Taxes

The smoker tax in the news again. Tax revenue is a function of (in part) the Elasticity of Demand. Who is paying the burden of this tax?

Job Loss Report

This is bad news. The economy is a mess, and monthly economic reports that do not meet economist expectations imply the worse is yet to come.

BTW: Following some Intrade prices will show how the market reacts to this information

Sports Stadium Financing 101

When a sports team wants to get a new stadium they claim this will help the local economy. This gives those teams an economic justification for public subsidies. The Florida Marlins just convinced Miami of that (will they be called the Miami Marlins one day?). Major League Baseball is currently trying to help the Oakland A’s get their hands on some public money (while the A’s are insulting Oakland!). Locally Chester helped finance a soccer stadium. Here is a major problem: Public funds for stadium spending do not create positive economic conditions.

Plenty of economic research points to the fact that stadium spending hurts the local economies. Lots of ways to think of this one… but here are two main ones:

1) The Marginal Propensity to Consume for sports owners are lower than that of the alternative recipient of the funds. This creates a smaller multiplier for stadium financing relative to other public programs. (think opportunity cost)
2) The “it will help stimulate local businesses” argument disappears when you consider the research that shows local businesses are actually a substitute (not a complement) to sporting events. Think of it: you have one day per week to allocate toward leisure. You can either go to the theater or to the game. Not both. Furthermore, local businesses deal with negative externalities such as increased congestion and decreases parking.

The problem (and the power that team’s have over cities) are that they can pick up and move. Maybe cities are stuck in a Prisoner’s Dilemma? If so the solution may be pass a federal law prohibiting such finances (or to threaten to pull the leagues antitrust exemption… which is an entirely different rant). So how do they get the funds? This may help explain things.

More Evidence of Crowding-Out?

Crowding out: Government deficit runs very large, interest rates increase and the market ‘crowds out’ the private investors.

This article talks about how the UK tried to issue bonds, and apparently no one wanted it. Perhaps a surplus in the bonds market? Maybe the UK should increase the interest rates.

How to Turn Toxic Assets into Liquid Assets

For the first time I can remember there are some details disclosing how the government is going to handle the ‘toxic assets’ that are floating around out there.

As a refresher: Housing bubble leads to decreased housing prices. Decreased housing prices leads to increased foreclosures. Increased foreclosures lead to tightening up of the credit industry. Tightening up of the credit industry leads to decrease demand for houses (can’t get the loans). Decreased demand for houses leads to decreased housing prices.

This was the scenario six months ago that sparked this financial mess. Many people believe a ‘bail out’ of the financial industry is different than other industries if only for the fact that the above cycle needs to be stopped (plus there are negative externalities as some people are effected other then the home buyer and seller… think student loans). The original ‘bail out’ (TARP as it is now called) was originally 700 Billion dollars to combat this problem. One annoyance was that there was never any transparency to the program (no one knew what was going on).

Fed and the money supply

An article about the Fed pumping money into the American economy.

The Gold Standard and OZ

An interesting BBC article talking about the gold standard, and The Wizzard of OZ. (via Mankiw)

OPEC and the Prisoner’s Dilemma

OPEC has never been concerned with the “world economic woes” (as this article implies). Many of the nations are however concerned with financing their governments. All things being equal there is a direct correlation between government revenue and the price of oil for these nations. Do they make up the lost revenue by ‘cheating’ on their cartel partners when they need money?

The bottom line: It is not benevolence that drives OPEC, but the incentive to make money.

Academics and Politics

Ever wonder how the political affiliation between academic departments stacks up? Economics is left leaning, but relative to other subjects it leans right.

Deficit and Debt

Wonder how the government can spend more than the tax revenue it brings in? They do it by issuing bonds, which increases the national debt.

As they do this more often (which is the case lately) economists look for any potential ‘crowding out’ that may occur. Some may see this article as evidence to crowding out.

Economic impact of subsidizing sports

Anyone interested in the economic impact on local economies of government expenditures on sports (Olympics, stadiums, Super Bowl, etc…) should take a look at this article.

Crime in Philly

Economics is about maximizing unlimited wants with limited resources. When it comes to fighting crime we want to minimize crime subject to the police cost constraints.

With this in mind Michael Smerconish writes in the inquirer an article that cites this study. A quote from Smerconish:

They determined that certain factors can help forecast whether an individual is
more likely to commit a homicide (or attempted homicide) while they're under
parole supervision.

These factors are interesting (and maybe controversial).

Philly Print Hurting

More evidence that the newspaper industry needs to find a new way to generate revenue (probably involving the internet). Any ideas?

How does the stimulus package alter Temple’s finances?

A first glance of how the stimulus package will affect higher education.

What do economists agree on?

Excellent post from Mankiw’s blog found here. We will touch on many of these topics during this class.

A few quick thoughts:
Are numbers 4 and 11 in direct conflict with each other (maybe if we assume the government will never aim for a surplus)? This leads to the question of the probability of number 8 occurring.
For number 10, think food stamps.
Why specify “young and unskilled workers” in number 12?
Number 7 looks like a classic prisoner’s dilemma.

Sunk Costs in Sports

Imagine you are running a business. You make a poor decision in investment on a piece of capital that does not yield any positive returns. Economists consider this a ‘sunk cost’ and suggest your next decision should not be a function of these past expenses. They are in the past, and you should only think in terms of marginal cost and marginal benefit.

In the sports world there are two recent examples of such logic. The LA Dodgers signed Andrew Jones to a multi year contract. Year 1 passes and he proves an enormous disappointment. What should happen next… if the Dodgers are rational they will cut Jones and eat his salary (which they did). Here is a similar example of this principle in play in the case of Matt Bush, who some say is one of the biggest baseball busts of all time.

Scarry

Government Spending put into perspective

Recent Job Losses II

Playing around with the data: does this chart tell a different story?

Economics job market

Economists see markets in everything. But how would they examine the market for themselves? This link could also give you insight into how they higher education professions work (for those who are interested).

Recent Job Losses

Excellent summary of spectrum of Economists’ views on Fiscal Policy

The great fiscal economic debate: To stimulate or not to stimulate, summed up in the Sunday’s Inquirer here. Two good opposing sides: the left leaning stance here, and the right leaning stance here.

Protectionist policy in the stimulus package II

An update here: Obama appears to be backing down.

Interesting advertisement by the Cato Institute

Cato is known to be relatively conservative. Here is an ad against the Fiscal stimulus package.

The Federal Open Market Committee interest rates put in perspective

What are the Federal Reserve's principal tool for implementing monetary policy? Click here to see the intended federal funds rate change from 1990 to present time.

What Country has the Highest Total Tax Revenue as a % of GDP?

Dowload the Economic and Financial Indicator to view which countries are collecting nearly half their GDP as taxes.

Are Colleges Now Baring the Burden of the Economic Downfall?

Colleges around the county are experiencing the effects of the economic crisis. Download here to see the steep decline of endowments and their strategies to survive.

Pharmaceuticals, Ranging from Monoply to Perfect Competition

Is the Pharmaceutical Industry slowly becoming a Perfection Competition Market? Click here to see the silver lining behind "Big Pharma".

Is Taxing the Uninsured Justifiable?

Greg Mankiw's blog, Taxing the Uninsured, provides insight regarding Obama's new health plan. Click here to see the economist perspective.

Will there be protectionist provisions in the stimulus package?

Most economists are probably keeping a close eye on this issue.

Which states get our Federal Taxes?

Interested in seeing how federal taxes are distributed per state: You can download the document from here (it’s not very large):

Interested in Freakonomics?

You may want to download the student guide to see if you are interested, or if you want some more intro to econ information.