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.