Opec's Greedy Strategy

Opec has lead the market in "black gold" for quite some time and is quite persistent to keep the momentum going in the area. Opec, since the 1970s has continually pushed all of its customers by trying to maximize revenue while trying to maximize price. Of course, this is something that any good business would strive for but has Opec taken it too far? Fear, Greed & A Barrel Of Crude informs us that gas prices per barrel rose and closed in New York today above $48 a barrel. Before we know it, I bet the price will reach above $50 a barrel and that means well on the road to $60. If this happens I feel quite confident that people will look for other means of transportation or at least development enginneers and others will look to create and perfect other means of giving a vehicle power.

Many countries are already rationing their investments in the area and planning for the future. Opec can clearly see that it walks a fine line to keeping everyone pleased. One Russian observer remarked, "We can assume that the oil prices will not go down in the near future because there are no indications of the coming seasonal drop in the demand for oil, in particular, due to a rather cold winter in the United States." We constantly hear complaints, or perhaps we complain ourselves, about the price for a gallon of gas. Well, things don't seem to be looking too bright in the future for this area. Opec has the strategy figured out: it tells traders one thing and sends false signals while surprising the market on the other hand. Will Opec go on with its greedy ways? Will the world market tolerate it? These are the questions that come to my mind.

A Valid Point on Outsourcing

I am open minded enough to see the benefits of outsourcing. Yes, jobs are being deleted and people are losing their job as a result, but in the long run won't they find another or create a job, possibly something where they can contribute to society in a more efficient manner? Not to sound cold hearted, but my concern is not for the welfare of the the working U.S. citizen. Well, I guess it is, but not as direct as everyone elses'. My concern is for the individual business, that despite outsourcing of some positions, still employ U.S. citizens. Lou Dobbs of CNN, who does not favor outsourcing, brings up the point that not only are we losing jobs here in the U.S., but the quality of service is being forfeited as a result. Here lies my concern. I've experienced a decline in quality service with a company that serves me. It discourages me from wanting to use the service because I can't understand the person that is trying to help me, in part due to their strong accent. In addition, the representative I am speaking with sometimes has no experience with the product I'm using. If quality of service declines, customers will go somewhere else, and revenue will drop for a business, possibly causing more job losses. I think outsourcing may have a more indirect effect than the majority of the public are focusing on. What will happen to the economy if the customer service of businesses have poor quality?

Public School or Public Choice?

Although the elections are past, one issue that really struck home with me was the issue of private school vouchers. I have a child that will be entering the public school system soon, and I have grave concerns about the system.

You may have noted that our gubernatorial candidates this past election season didn't mention too much about the specifics of the voucher program. Both candidates basically said that they supported "Utah's children," and yet, they had very different opinions regarding the voucher program.

Following is a link to a site that addresses some criticisms and concerns over the voucher program, www.schoolchoices.org/roo/myths.htm.

Of particular interest when discussing voucher programs is that most people complain that public schools are underfunded. However, the United States spends more on education than most, if not all, other countries in the world, and yet our quality of education continues to decline. Interest groups lobby for more and more money while our schools get worse and worse.

By no means am I saying that the voucher program is a cure all, or that it doesn't come with its own problems (after all, government still has a hand in it), but I do believe it's a great step in the right direction. It would help market forces to begin to work and thus, improve the quality of education our children receive.

Opec's greedy strategy

Opec has lead the market in "black gold" for quite some time and is quite persistent to keep the momentum going in the area. Opec, since the 1970s has continually pushed all of its customers by trying to maximize revenue while trying to maximize price. Of course, this is something that any good business would strive for but has Opec taken it too far? Fear, Greed & A Barrel Of Crude informs us that gas prices per barrel rose and closed in New York today above $48 a barrel. Before we know it, I bet the price will reach above $50 a barrel and that means well on the road to $60. If this happens I feel quite confident that people will look for other means of transportation or at least development enginneers and others will look to create and perfect other means of giving a vehicle power.

Many countries are already rationing their investments in the area and planning for the future. Opec can clearly see that it walks a fine line to keeping everyone pleased. One Russian observer remarked, "We can assume that the oil prices will not go down in the near future because there are no indications of the coming seasonal drop in the demand for oil, in particular, due to a rather cold winter in the United States." We constantly hear complaints, or perhaps we complain ourselves, about the price for a gallon of gas. Well, things don't seem to be looking too bright in the future for this area. Opec has the strategy figured out: it tells traders one thing and sends false signals while surprising the market on the other hand. Will Opec go on with its greedy ways? Will the world market tolerate it? These are the questions that come to my mind.

Existing-home sales hit all-time high in ’04

This article is a great example of how monetary policy can make a huge effect on the economy. The article states that home buyers continue to benefit from low mortgage rates; home sales have increased 9.4 percent last year. It also stated that sales prices for an existing homes increased 8.3 percent that marked the biggest one-year jump in home prices since 1980. Do you think that these low interest rates have created an inflated price of homes? Is it possible that when rates go back up the price of homes will fall? Would this economic factor be an important consideration to someone who is trying to choose between leasing vs. buying?

Does Corporate Social Responsibility Mean Superior Performance?

Is it true that social and environmental resposiblity goes hand in hand with superior financial performance? According to an article titled "Holy Grail Found", the anwers is an emphatic yes. The article states that two "meta-studies" (studies of studies) were performed and have concluded that a "statistically significant association between corporate social performance and financial performance exists, which varies 'from highly positive to modestly positive.'"

So what does this mean? If a company wants to be superior does it have to focus on being socially and environmentally responsible? Maybe superior financial performance is enhanced because of other factors such as good management, product differentiation, or low cost. Perhaps companies that do well financially just have more resources to invest into being socially responsible. Whatever the case, what is a company that wants to out-perform competitors supposed to do? Focus more on the environment, and use its resources in that manner? Maybe resources could be better distributed to society by other means. What do you think?

Dog behavior explains the Margin

Dogs seem to genetically understand the economic principle of the margin. In the article Dogs at the Margin, Don Boudreaux expalins how dogs seem to instictively understand this economic principle. He discribes his findings after his family purchased a second dog. When the old dog tries to eat from the same dish as the new dog, a barking, biting brawl breaks out, but when the old dog drinks from the same water bowl everything is alright. According to Boudreaux, it is related to the anscestor of the dog, the wolf. Wolves knew that there was plenty of water to drink, but that food was much more scarce. As a result, the next meal became much more valuable to the animal than the next drink. This happened despite the fact that an animal can live much longer without food than it can without water. This attribute seems to have been passed down to the modern day dog; they seem to know that food is more scarce than water and therefore more valuable.

This example of the dogs marginal meal applies directly to economics. The principle of the margin is how much value will be placed on the next unit of a product to be consumed. If a good is scarce, it becomes much more valuable than a good which is plentiful. This happens because the scarcity creates more value in the eyes of consumers. Consumers are willing to pay more simply because the good is rare. As goods become more scarce, their marginal value will increase. As in the Diamond verses Water paradox, the water is less valuable because it is so plentiful, eventhough it is more essential to survival.

The Effects of Daylight Saving Time

The Concept of Daylight Savings has been around for a long time. In the article “Saving Time, Saving Energy”, it states that there are three economical reasons for the time switch. The first is that it saves energy. By observing it in the months of March and April we save energy that is equivalent of 10,000 barrels of oil each day. The second is that it prevents traffic injuries. Daylight savings allows people who work and have to school to travel home in the daylight which is safer then traveling in the dark. The third is that it prevents crime. Since people get more done in the daylight it leaves them less exposed to various crimes, which are more likely to happen at night then in the light of day.
The tie to economics here is the demand for daylight. The more daylight, the more energy saved for something else. You might even say that energy is an inferior good to daylight. The more daylight, the less energy demanded. The demand for electricity for lighting our homes is directly linked to when we hit the hay and when we rise in the morning. By adding an extra hour of daylight the demand for energy to light our homes goes down and the desired effects of the government to conserve energy reached.

Student Aid

While reading in the book fair play, an interesting issue came up. The Author talked about how taxes are wrong because takeing something away from someone and giveing it to someone else is wrong. Reading this makes sense but I have never met a student that would not accept a grant or a gov't subsidized loan. Do you think that Fair Play is correct and people loose there sense of right and wrong as they get older and more educated? or Do you think that the theory of helping the economy by increasing education possibilities is a more sound theory behind Grants and Subidized loans?

Procter & Gamble Buys Gillette.

In the article "Procter & Gamble buys Gillette" Procter & Gamble has made a huge move in wanting to buy The Gillette Company. The stock deal is valued at $54 million dollars. There are those people out there like the Wall Street analyst’s that think it is not a good idea or that it is overpriced. The reasons that they feel this way is because their will be some overlap in a few brands such as deodorants, teeth whiteners, and toothbrushes. Another reason is the advertising and being able to distinguish between the different products. However, I think that it is one smart move by Procter & Gamble. Because with all of the resources that the two companies already have they will be able to combine efforts and resources, and this will create great strength for them that will be hard to compete with.

Learn more about price elasticity

If you are like me some things take a while to sink in, so that I fully understand them. Economics is one of those things that takes a while. As I searched the internet about topics that I could write a post on I came across the website http://economics.about.com. This site is a great tool for me and others like me who sometimes have a hard time learning.

The site has articles about recent economic news as well as instructions and examples about some of the formulas that we have been using in class. The link I looked into was the one about price elasticity of demand which address is http://economics.about.com/cs/micfrohelp/a/priceelasticity.htm.

If you need a little extra help or would just like to learn a little bit more check this out and see if it helps you.


Here’s a prime example of socialistic laws gone bad as illustrated in the article “We'd Be No Worse Off Than the Europeans”. In Germany, any person who is out of work is given a form of ‘unemployment’ to survive until he or she can find a job. Sounds great doesn’t it? Well, the downside is that after one year a person on welfare is given a work assignment by a local ‘Job Center’ which is operated by the government. If the person turns down the work assignment, the person is no longer able to receive government help.

I am a strong believer that government aid should be worked for and not so freely handed out but…in Germany, prostitution is legal. The government can call up any woman after one year of being unemployed and force her to work at brothels or as a phone sex operator. “At one job center in the city of Gotha, a 23-year-old woman was told that she had to attend an interview as a "nude model", and should report back on the meeting. Employers in the sex industry can also advertise in job centers, a move that came into force this month. A job center that refuses to accept the advertisement can be sued.”

This is what happens in a socialistic style economy, one which other countries readily embrace and one which America mimmicks in so many ways. Too many handouts are given and now to make up the finacial difference, women are being forced into outrageous professions if they wish to survive. In a more capitalistic economy healthcare is better for some and worse for others; but at least in a capitalistic economy people have the freedom to choose their own professions.

Is the media telling us the truth?

In a recent article "Iraq election helps the dollar" the media tells us how the dollar gained strength compared to the yen going from ¥103.37 to ¥103.43 early Monday. They assume such a jump is due the recent elections in Iraq. My question is the dollar really “firmer today”?

So I went to another website x-rates.com to inquire about this sudden strengthening of the U.S. dollar. From January 28 to January 31 three out of five major currencies actually gained against the dollar including the European Euro, Canadian dollar, and Austrian dollar. Another currency the British pound stayed the same. According to x-rates.com only one out of five major currencies the Japanese yen gained favor to the U.S. dollar.

So my mind is left with questions like? Is the media out for consumers’ best interests? Do they feed us information that might be tampered with? And how much does our economy depend on the media?

You can't cheat on health

In an aritical from USA today reported a new study of frying foods in phytosterol, and additive that reduces LDL cholesterol, or bad cholesterol. I find it fascinating that technology has enabled humankind to make donuts that will reduce your cholesterol. I think even Homer Simpson might be impressed by this new discovery. However, though the overall wellbeing of human kind has improved, and the resources available to generate long prosperous lives are more attainable, I find that, especially in America, the human populous has been trying to cheat themselves of true good health. In addition, I think that foods processed with cholesterol reducing additives may have high selling rates at first, but eventually decline in the market. A few years ago companies made all kinds of chips fried in Olean. Olean made chips fat-free without too much loss in flavor. The rave was huge, until people started having symptoms of stomach craps and diariah. Consumers were confused with the idea that bad food is bad, even if it is fat-free. Bob Goldin stated, “Consumers will have a big problem linking fried foods or snacks with ‘better for you.’ I think there’s so much skepticism” I disagree, America is increasingly becoming obese for a reason, and that isn’t because people who eat high cholesterol foods are worried about how much cholesterol it has. Foods with cholesterol reducing additives give additional value to eat more of that product, which I feel, will create a high short-term demand. I think the idea will be, this food was in my diet before, and now it is “healthier for me and will reduce my cholesterol,” I should eat more of it. The idea of finding a way to cut corners to better health overtime will decline in the overall value it intended.

Mexico Tests Elasticity in Telecommunications.

In the article, by Anthony Harrup, the Mexican government has lost income because people are using more “mobile to mobile” phone calls. The government has implemented a plan to increase revenue by lowering the rate for “fixed to mobile” phone calls. Over the coming years, this plan will increase the elasticity for the “fixed” good. Since mobiles and fixed phones are substitute goods, this new act will give the public more of a reason to make “fixed to mobile” calls. Is lowering the price of an inferior good going to increase revenue? I believe by increasing elasticity, the volume of calls will go up, and the government will eventually see a profit. http://www.smartmoney.com/news/ON/index.cfm?story=ON-20050106-001086-1800.

Lessons from the playground

In Steven Landsburg book Fair Play, he approaches the issue of taxing the rich to feed the poor. Landsburg likens this tax to his daughter on the playground. He said "...I have never, ever, heard a parent say to a child that it was okay to forcibly take toys away from other children who have more toys than you do" (landsburg 8). He goes on to say that he has never heard of children developing a government so that they could take toys from those that had many to give to those that had little (landsburg 8).

Being one of those that do not fit in the rich category I am grateful for the taxes on the rich. However, when I graduate and become one of the rich, I don't think that I will enjoy the tax as much as I do now.

I believe that if there were some benefit for the rich to give their money to the poorer class (such as myself) that there would be more of it. I also think that there are people who are comfortable just living off of the government and the rich citizens income tax. This creates a lazy, idle society. If we were to do away with the tax the rich heavily and give the poor freely method, and go with a flat tax rate method, it would create an incentive to be more productive, be involved with government procedures and expenditures, and overall create a more productive society

Plan B Beats Abortion

The Food and Drug Administration is still deliberating whether to make Plan B available over the counter. The morning-after pill prevents an agg from being fertilized if taken within 72 hours after intercourse. It does not cause abortion. If available without prescription 1.3 million abortions and 1.5 million unintended pregnancies could be prevented, according to the USA Today article, 'Plan B' beats abortion. Critics and the FDA are concerned that unprotected intercourse among teens will increase with easier access to the pill. Barr Pharmaceuticals, creators of Plan B proposed a new plan to require those under 15 to have a prescription. Without more data about how teens will use the pill the FDA feels it cannot make an informed decision.

In order for young girls to safely use the pill some physicians say they must have control over its distribution. Wendy Wright, senior policy director for Concerned Women of America said, " the morning-after pill is a pedophile's best friend. Morning-after pill proponents treat women like sex machines." Although this may be true, easier access to the pill could reduce the number of children born into abusive situations. " The FDA's job, by law, is to judge the safety and efficacy of drugs, not the morality of people who use them."http://www.usatoday.com/news/opinion/2005-01-20-plan-b-our_x.htm

Tufte's Economics Classes Blog

Tufte's Economics Classes Blog


If I owned a business the principal-agent situation ( http://en.wikipedia.org/wiki/Principal-agent_problem) would be one of my biggest concerns. As I have bounced around from job to job it definitely can be recognized who understands this phenomenon and who doesn't. My first job out of high school I was a salesclerk in a sunglass store. I was paid hourly with no bonus or compensation for selling. Hustling on the job didn’t get me very far and I had no motivation to learn the product or to push sales. On the other hand at my current job success is nicely rewarded; not only with bonus cash, but promotions within the organization. With every promotion the rewards grow increasingly better. Money motivates like nothing else. That is the first step in handling the issue.

When Wal-Mart Comes to Town

In an article called "When Wal-Mart Comes to Town" it gives some interesting figures to what happens when Wal-Mart comes to town. It said that stores within a 20 mile radius of 14 Wal-Mart's studied saw sales decrease by 25.4% after five years from when Wal-Mart moved in. Even in our little town of Cedar City you can see where all the business is, and its not downtown. Almost all could relate to the zoo-like atmosphere that Wal-Mart has on a Saturday or Sunday afternoon. It's amazing to see all the people that flock to Wal-Mart to do business. We've all heard about the town meetings that have been held to fight Wal-Mart from coming to towns, and also all the heart breaking stories of mom and pop stores with great history going broke in a matter of months because of Wal-Mart. It's tiring to hear how bad Wal-Mart is. This is nothing more than the growing pains of economic progression. We are not forced to do business with Wal-Mart; we go there willingly because we get more "bang for the buck". It won't be long until we see another "Wal-Mart like" corporation come up the ranks to provide something better to the consumer. It's just economic progression! We're all better off in the end because of it!

Women Beware: Gold Diggers Afoot!

I could see it coming like another Patriots super bowl victory. Times are changing and the days of chivalry are all but gone. Women are dominating every facet of life. Professions, positions, and programs that were once only had by men, are now being occupied by women. There is now a majority of women in graduate school and professional jobs. Some say that the tides are changing. But with this recent shift in gender power, women now are seeing the whole scope of worries that come with this increased economical benefit, Gold Diggers! It use to be a worry that a only successful men would have. Now women have to ask themselves, 'Is he just after me for my money?'. Studies show an all time high of stay-at-home fathers. Women are out bring home the bread, as men stay at home and take care of the homestead and children. I hate to steal a line from Spiderman, but does the phrase 'where much is given, much is expected' even relate? Should women, or anybody for that matter, have to be concerned about 'Gold Diggers'? Are women ready for all that comes with being successful, eventhough it may be unfair in either case?


DayLight Savings Time

In the article "Spring Forward, Fall Back: Its all about Economics" the athor talks about the economics of DayLight Savings time, and how there is a 10% decrease in energy consumption during that time of year. So I suggest that we stay on daylight savings time year round, I dont know that if the energy savings would remain the same throughout the year, but I know that I for one am sick of the time changes. I say we pick one and stick with it, personally I prefer DayLight Savings Time.
It seems to me that during the winter that it gets dark way to early, and that forces my son to come in from playing and he just bounces off the walls. I think it would be better to have an hour more daylight in the evening than in the morning.

Big Willie's New Gig

Country Music singer Willie Nelson has a new gig and its all about selling to the big rigs, and hopefully the rest of the country. Nelson’s new business venture is about biodiesel. His interest in the newly emerging fuel mixture was piqued when his wife bought a vehicle that ran on biodiesel. When Nelson looked into the new fuel he thought this could be the future. He started the whole project by joining forces with three other businessmen. They started marketing this new fuel to truck stops. It is essentially a mixture of soybean oil and normal diesel fuel. The great thing is that it can be burned in any diesel engine with absolutely no modifications. Willie hopes to get the fuel out to the public as a better alternative to regular diesel, since biodiesel burns much cleaner.
The economic benefit that this could have in the future is amazing in my opinion. Biodiesel opens up vast opportunities of new markets for farmers in soybean country. This is just the tip of the iceberg. Future research could even further refine biodiesels’ capabilities, and someday may even prove to be a much preferred alternative to gasoline. The crucial phase of this new fuel is in its infancy, and that is the task of bringing it to the attention of the public. Even better would be to get the support of large oil carries to refine and distribute biodiesel. Anyway you look at it Willie is on the road again, only this time he is burning biodiesel instead of gas.

Why be on time?

In the article “Punctuality is inefficient, Q.E.D.” by Andrew Chamberlain, it brings out the point of how people set a time and place to meet and invariably one or both parties are late in accordance to the time set pervious. Why does showing up late happen so much in society these days? As was pointed out in the article it’s because no one wants to wait and it’s costly if you look at it in economical terms.
The more time you spend waiting on someone the more costly it is too you which is a negative externality. If someone shows up early and the other person is late then it’s even more costly for the early person. Arrival times can be thought of as economical cost factor and the price changes with the arrival time. People hate their time being wasted so the end solution is to show up late and it will not be their time and money being waited.
If one has a time deadline that has to be meet then a good idea would be tell everyone an earlier time therefore, when they are late they really will be one time. An example of this would be you having a dinner at 7:00 p.m. and telling everyone it’s at 6:30 p.m. This way when everyone shows up late, the dinner still will start on time.


Is Our Food Storage's Hiking Up Food Prices?

For longer than I have been alive, there has been an issuing for people to get some sort of food storage in case of an emergency. I am not saying that it is not a good idea to have food storage; it’s just that some people that store food might not ever be able to use it in some cases of disaster. Let’s look at a perfect example, St. George, Utah. Flood victims lost more than just personal items; some lost their food storage.

Buying goods is a normal action people interact with day-by-day. The demand of a good becomes sensitive when people buy a lot of that particular good. So, if people only bought what they needed instead of buying more, would the elastic price of a popular item become less sensitive from lack of demand?

In my personal opinion, the buying power people have today will only become better. In other words just because people may buy a lot of one particular good, does not mean stores will increase the price to make a higher profit. When I say that our buying power will only become better, I mean that through technology we [the world] will find new ways to produce goods at a faster rate and less expensive for the consumer. The more we as consumers buy, the more the world will produce, and the more we will help the economy as a whole.

Growth in Saint George, UT

It has been projected that Saint George will continue to grow at a rate of 3.9% each year. According to an article by the Spectrum, at this rate the population will reach 607,000 by the year 2050. The population is currently about 120,000. This projection seems way too high for me. Saint George is growing, it's true, but its a retirement community. There are currently over 1200 practicing real estate agents eager to help retirees settle down in this relatively quite, little community. There are five golf courses and dozens of retirement communities. The problem lies in the business infrastructure. The organization which employees the most people in Washington County is the school district. The city is building a new offramp and preparing to build an airport in an attempt to attract larger businesses to the area. Do you think this is going to help, or will Saint George always be for the non-working class?

Is the U.S. the greatest threat to the world economy?

In this article, by Adam Davidson, the United Nations warn that the greatest threat to the world economy comes from the United States. Even though the global economy grew by 4 percent in 2004, the largest increase in years, the U.S. economy could cause an abrupt and globally damaging correction.

There are many reasons for the U.S. to be in this position, namely the huge tax deficit, which exceeded 600 billion dollars in 2004, the largest in history. Next, is the increasing Government debt that also reached record highs last year. Finally, we have the ever weakening U.S. dollar. This was the meat of the article. It stated the U.S. dollar is the primary reserve currency for most foreign countries. This is a concern because when the dollar is weak; all countries that rely on it will have less money to spend. The article goes on to state the treasury will ask for help from European and Japanese leaders to strengthen the dollar.

I agree with the European bankers when they remarked that the U.S. Government should help itself by encouraging savings and reducing the nation’s debt.


The Aging Population

All around the world a big percentage of the workers is reaching retirement age, and there are less people to fill the jobs as they become open. A few of the articles that I read suggest that because of the decline in the number of workers, the world's economy is going to decline. In an article titled "Productivity Can Make Up the Gap" http://yahoo.businessweek.com/magazine/content/05_05/b3918035.htm
the authors suggest that just because there is a declining number of workers, the world's economy can still grow. According to the acticle the average productivity in Japan, per worker, has increased 2% each year since 1980. If the trend continues productivity will rise 169% by 2050, raising Japan's GDP by 72%. I would tend to agree with the latter article, if countries can increase productivity then the world's economy will continue to grow steadily, even with fewer workers. For productivity to increase countries needs to provide education and encourage innovation.

Is the Dividend Tax Cut really worth it?

In the article, "The Dividend Tax Cut and Interest Rates", by Mike Moffatt, an interesting point of view is brought to light.(http://economics.about.com/cs/interestrates/l/aa012303a.htm The article talks about President Bush's proposed dividend tax cut which will allow us, as taxpayers, a brake or cut in our amount of taxes that we have to pay in dividends. Normally, dividends are treated the same as income we normally earn, but with Bush's proposed plan those dividends would become tax exempt-we wouldn't have to pay on them anymore. But, do we really understand the effect this will have on other aspects, namely bonds and interest rates? As stated in the article, one of the unintended consequences with the dividend tax cut will be a rise in interest rates in the future. Now I don't know about you, but if you are planning on buying a home or car in the future, that isn't real good news. A lot of hardcore studies haven't been done on just how much this will effect the interest rates, but rest assured that they will be affected. It's hard to say which would be better-no dividend tax, or higher interest rates? I guess it all depends on what boat you're riding in.

Why should the rich get tax breaks?

In this election year you heard one side blaming the other side about giving tax breaks to the rich and not caring about the middle class. Why would you give tax breaks to the rich? First the top 50 percent of wage earners are paying 96.03 percent of all taxes. The top five percent of wage earners pay 53.25 percent of all taxes. If the lower 50 percent of wage earners aren't paying taxes, how can you give them tax breaks? Maybe this was an election ploy by one side to get votes. Another reason is that the top 50 percent are your entrepreneurs and businessmen who create wealth to the economy when they get some extra cash. That is the biggest reason why we give tax breaks to the rich. The rich do something productive when extra money comes their way, they don't blow it.


In this article, by Mike Moffatt, he gives a scenario on baseball and opportunity cost. He believes that baseball fans do not know the concept and just play off of their emotions when a team doesn't sign a certain player. Moffatt gives a scenario that the Totonto Blue Jays had to make in the 2002 season. I think Moffatt doesn't understand opportunity cost. The Blue Jays choice was to pick between Jose Cruz Jr. and five minor league players or sign six average baseball players. Moffatt chose the six average players. The Blue Jays also went with the six players. I think they should of signed Jose Cruz Jr. an emerging young player at the time. That would have given the Blue Jays the opportunity to develop their thriving farm system. Farm system is the minor leagues, by the way. The cost of losing a star player at the time is a bigger cost than not being able to sign six average players and be an average team due to that. Tell me what you think.


Is the Cost of Getting a Degree Killing You?

If you are like me, the cost of your college degree is probably mounting up. College loans and credit card debt are quickly making Americas young adults the most indebted generation ever. We have all heard our parents and grandparents say “get a good education and you will get a good job” Once you get that well paying career off the ground your problems are all over right? Wrong! Your problems are just starting. Payment of student loans starts, credit card interest haunts you daily, and now you need a car to get to work since you can’t walk to the school anymore. During the 1990s, college costs soared by an average of 38%. To make matters worse the costs of rent and housing prices have increased faster than inflation over the past decade. Does this mean we must enslave ourselves to massive amounts of debt, to get a beginning salary that barely pays all of the bills? The sad but all too real story for some students comes in the way of a trade off. Some students decide to quite while they are ahead by dropping out of school before they finish, getting an early start on the debt they have already amassed. Others choose not to attend a college or university altogether to avoid the pain and suffering. And then there is the die hard student who tries to work 60 hours a week, while going to school full time to avoid debt altogether, and in the process becomes a social recluse. Any way you look at the challenge of getting a good education, there are definite economic trade-offs that we must all consider. So what do you think? Should we amass debt to get a good education a hope that we can pay for it when we finally get a job? Or should we try another more effective alternative? Help me out here.



(This is a post by Dale that I had to cut and paste here due to technical difficulties.)

Is deflation knocking at the door? The Federal Reserve's now have major decisions to make about the deflation threat. Deflation means a general decline of prices. This has not happened since the Great Depression. Before deflation was just a topic of from history, but now it is becoming something to worry about.

Deflation is an issue concerning supply and demand. By having too much supply and too little demand is where lies the problem prices decline at a fast rate. Compaines will struggle trying to out price competition. In such a battle consumers will react at a much slower pace, waiting for the lowest price possible. Meanwhile, consumers are not stimulated to buy, which will cause a major disaster in the economy.

Despite the positive outlook for the economy, deflation poses great dangers of destroying corporate profits, hurting the stock makret, and pressuring companies to fire workers. Interest rates could be lowered overnight, making it harder for the Ederal Reserve's to stimulate the economy. Farmers and compnaies, more than likely, will default on loans which are fixed while the prices they receive fall.

This article found at www.washingtonpost.com concludes that deflation may require bigger deficits and lower interest rates. Just when America is already full of deficits, this could become a bigger problem.

Yellow Ribbons Everywhere

In the article “Bumper to Bumper” by Giddings, he comments on the wide use of ribbons on vehicles. Giddings refers to another article “Consumed” by Rob Walker; Walker believes that the ribbons make a declaration about what kind of person has a ribbon on their car. So who cares if your yellow ribbon says that you support our troops. Could it be that those who ride around with their magnetic bows on their cars are saying “I have a husband, wife, son, daughter or a family member who is out there protecting yours and my freedom.
The real economics behind this “yellow ribbon magnet” affair is that someone came up with the idea that a yellow ribbon symbolizes our support for the troops and created a demand for it. This demand is making money for several companies. These five dollar “hot” items have made both consumers and business people alike happy. Isn’t that how our economy should be? It’s not a matter of a particular statement a person it trying to make. It’s about capitalizing off of something the public wants.


The Stock Market Is Falling Again

"The Dow Jones industrial average fell 68.50 to 10,47147" stated the Seattle Time's Michael J. Martinez. This is something that no investor wants to here. The Stock Market has been falling for the past several months. In the article Nervous investors push stocks lower http://seattletimes.nwsource.com/html/businesstechnology/2002156407_stox21.html, Martinez tells of how there are many companies that have not meet their projected earnings for the fourth quarter and are now lowering there projected earnings for this next quarter.

Martinez quotes Rod Smyth, from Wachovia Securities the chief investment strategist saying, "We're in a correction right now from the rise we saw since mid-October. It's perfectly natural for markets to behave this way." But what I want to know is this really normal? Could the online traders have an effect on the way the market fluctuates with extreme ups and down? I think the ups and downs come from the ability of anyone to buy and sell so easily.


Does Wall Street Care About Economics?

It is a common occurrence that when a publicly traded company announces plans to acquire another publicly traded company the “value” of the acquiring company decreases, while the value of the company to be acquired increases. For example, when Oracle Corporation announced its proposed acquisition/hostile takeover of PeopleSoft, the value of Oracle’s stock steadily declined for the nearly 18 month battle while PeopleSoft stock rose $5.1 billion! This seems to occur in spite of whether investors and analysts believe the acquisition will be profitable to the expanded company or not. It is understandable why the public would invest in the company to be acquired- they will usually be paid a premium for their shares. What I question is why the public would believe the acquiring company is so much more worthless because it is venturing to expand. It seems that Wall Street must believe that the economies of scale have reached a saturation point. Of course, there are inherent risks when a large purchase is made. The integration may not be smooth, but in the long run why would the public believe that expansion is devaluing?


Is There a Light at the End of the Tunnel for Tsunami Hit Economies?

As the tsunami death toll rises past 162,000 and over 800,000 people being displaced from their homes (ABC News) economists say the tsunami may have a relatively marginal economic impact. In the economies of Sri Lanka, Indonesia, India, Thailand, and the other affected countries, tourism and fishing make up only a small percentage of the overall economy. Even as it has destroyed the livelihoods of millions of families in South Asia, the tsunami will shave only a few points off the region’s economic growth this year. Depending on the importance of tourism in each country, the decrease is expected to range from less than one percent for Thailand, to two percent for Sri Lanka, and four percent for the Maldives, according to estimates by Standard Chartered Bank.

These countries economies are based on other factors such as agriculture, clothing factories, gas production, and many others economic factors besides fishing and tourism. In Aceh Indonesia, the tsunami apparently did not damage the region’s most lucrative properties of oil and gas production facilities. Most of Aceh’s population depends on agriculture for their livelihoods such as rice, peanuts, soybeans, maize, cassava, and potatoes. It is unclear how much agricultural land was flooded by the tsunami, but it wasn’t hit as hard as the fishing and tourism industry. Sri Lanka’s economy, which is still heavily agricultural, with tea, rubber, and coconuts, was not hit by the tsunami. Sri Lanka also has many garment factories that supply stores like Victoria’s Secret which employ, directly and indirectly, close to one million people. None of these companies have been affected by the tsunami. Also, many economists are predicting that there will be a surge in the construction industry and the production of raw materials such as cement and steel, because of the rebuilding that will take place.

Yes, the tsunami may be one of the world’s largest human disasters ever, but it may be just a small wave to the economies in the South Asian countries.


Gov’t Grants Business Immortality

Why is the government handing out money through subsidies and regulations to preserve dying industries? The living and progressing industries are forced constantly to pay taxes, which keep dying industries alive. As Hayek, in the book “Economics in One Lesson" illustrates, do we keep the ‘horse and buggy’ industry alive because it is dying or do we support the growth of motorized vehicles? Perhaps many of the loans and help granted to such dying industries are because of special interests and the “good ol’ boy” attitude towards friends in high places.

Not only does the practice of subsidizing and regulating some industries promote “keeping the dead alive” but it prevents competition which can and will hurt consumers in the long run. The article "The Price of Deregulation: Subsidies" explains what happens in the long run when subsidies and regulations are taken away. “Just between 1976 and 1990 the estimated savings from deregulation were $5 billion to $10 billion per year (in the airlines industry). Taking the low estimate, that’s $70 billion in savings over just 14 years—and that’s just lower ticket prices. Add in better routes, safety, customer service, innovation, and 14 more years of low prices to the present, and that total’s much larger.”

It’s time to start deregulating and let the ‘horse and buggy’ industries die away. Sure, it will hurt in the short run but it will benefit us all greatly in the long run.