Mess Up

H&R Block (a company that helps people prepare their taxes) made an embarrassing confession that they goofed up on their own taxes. They owe $32 Million in back taxes and lost 250,000 clients. Apparently there was a software issue that made it impossible for some H&R Block offices to process taxes.

Graduates vs. oligarchs

I read an interesting article by Paul Krugman, he talks about the discrepancy of the often preached idea that the higher the education you receive the higher the income. The 80-20 fallacy is mentioned that 20 percent of the people control 80 percent of the wealth, and he argues this is not the case. He says that it has become less than a percent of the people that are controlling the wealth "income at the 99th percentile rose 87 percent; income at the 99.9th percentile rose 181 percent; and income at the 99.99th percentile rose 497 percent. No, that's not a misprint." Many of our goals as MBA’s is to be the best and work hard to be in the top percent, are the odds on our side? I believe they can be.

Returns in the future?

I read an interesting post today. It covered the issue of our country's huge deficit, and posed the question of whether or not our children would end up benefitting from money being spent today at the expense of our ever rising deficit. The post claimed that we are taking out debt that will ultimately provide long term investment. I personally disagree. I don't believe that every dollar being siphoned from Saudi Arabia or Japan, etc. to finance our debt is being spent in the altruistic pursuit of long term investment. Billions alone are being used to finance war, which I don't consider to be any type of investment. This post made me seriously question our federal government's spending, and made me realize that my children won't necessarilly yield any benefit up the road from our country's current state of massive debt.

Brazil Senators Propose Weakening Currency

When I hear about a weakening currency, at first it sounds like a bad thing. Brazil's senators are proposing a bill that would weaken the real. Brazil's real has experienced 47% inflation since 2004, which is hurting their economy. The proposal will let exporters keep money earned internationally in foreign currency. This will help exporters keep profits that would eventually be lost by the strengthening of the real. This allows them to pay off debts, imports, and investments, saving money in transfer costs. A more balanced currency will help stabilize Brazils economy.

Price Ceiling

In this post about the recent transportation crisis in New York, an ineffective price ceiling was discovered. The article states that during the transportation crisis, the city authorized cab drivers to increase their rates up to $5 per ride, from the standard price of $2. Cab companies chose not to change their prices however, in fear that it would offend their regular customers. This is an example of a price ceiling being set higher than the equilibrium price, making it ineffective.

A Nuclear India?

With over a billion people, India represents the world's largest democracy. Now, President Bush is on his way to make a nuclear deal with this growing power. India's rapid growth has been feared by many Americans while supported by others. India's upper and middle classes have seen the benefits of last year's 30% growth in U.S. imports. The nuclear agreement will help to reduce India's dependence on oil while supplying the additional energy needs necessary for economic growth. Although India has agreed to separate nuclear energy work from nuclear weapons programs, some are still skeptical of the deal. With a predominantly Muslim population, concerned Americans want to make sure that nuclear weapons don't get into the hands of terrorists.

To Mardi Gras or Not to Mardi Gras?

In the wake of Hurricane Katrina many residents are apprehensive regarding this year's Mardi Gras celebration. Six months after this city was hit by the worst natural disaster in US history, New Orleans looks more like an urban wasteland than a party ground. Now many wonder whether this year's Mardi Gras will be able to breathe new life into the city. An estimated 700,000 party goers are expected to come for the celebration, however many local residents are understandably concerned. "We don't need Mardi Gras, we need to rebuild the city," said resident MacArthur Samuels. "Don't put up lights for Mardi Gras if there is no lights in my neighborhood." On the flip side, city officials are hoping that Mardi Gras will generate 500 million dollars to help reconstruction efforts. Regardless, the tone of this year's Mardi Gras will be far different from that of previous years.

Definite Market for Kindness

Upon reading this economist's site, I found an entry that really stood out to me regarding the increased demand to adopt children with Down Syndrome. While I would have never thought of such a "market" if you will, I was amazed to read stories of various families' willingness to raise, and nurture children with Down Syndrome. In fact one family, the Steele's, who had adopted a daughter with the disability, found the experience so enriching, that they now work to match up willing families with children who need a family, and happen to have Down Syndrome. The article highlighted the fact that such longings from families has evolved from a time when many many disabled children posessed a strong negative social stigma. In fact, things have evolved such that the Steele's said they have families on waiting lists for the opportunity to adopt children with Down Syndrome. Aside from the fact that this trend represents a more tolerant, informed, and caring society, it clearly shows that families wanting to adopt children with disabilities are making up more than a grain of sand in society, but rather comprise of a growing demographic with the need for quality information, and services regarding their choice to adopt a disabled child.

Reducing the Risks of Alcoholism

The article, Law of Demand, mentions some research that is trying to prove that “as the availability of addiction treatment options grows, individuals will consume more of an addictive good." It makes a lot of sense to me. As the risks of addiction decrease, the law of demand says that usage of addictive substances should go up. In a sense, health insurance coverage and treatment availability increases the number of addicts in the country. I thought this was a good example of how something other than price changes can increase the demand for a good.

Government & Happiness

Are people happier when they are ruled by a smaller government? The blog, Big Government and Happiness, mentions that countries such as Japan, Spain, South Korea, Norway, and Finland have the lowest government spending, and gives reference to research that attempts to measure the correlation between this statistic and happiness. Firstly, I don’t know if scientific or accounting methods are capable of measuring a person’s happiness. Sure we can give point values to certain amenities and physical items, but is it possible to say that these things make people happy? Second, does government spending really contribute that much to a person’s outlook on life? If you take into consideration government religious policies, restricted freedoms, etc., along with government spending, I think that the argument can hold its ground. However, correlating happiness with spending alone does not hold much water in my opinion.

Great Scholar, Great Teacher

As I read an article about the enthusiastic and bright, David Colander, I gained an appreciation for his contributions. If I'm not mistaken, he was the author of my macroeconomic text book, spurring my interest in the article. While Colander is extremely bright, and could have any opportunity to write, research, or consult, etc, he seems to be most enthused about teaching his undergraduate students economics. You can tell that he wants his students to understand the material, allowing them to relate economic principles, to life situations. In reading about his passion, I thought of one of my former economic teachers who uprooted from his home country to teach economics at a small, rural college because he loved doing it, not because he had to. He used his knowledge in an attempt to help his students understand economics, and was able to explain concepts at a beginner's level, enabling us the opportunity to excel in the class if we wanted to. As I read about Colander, and thought about my former teacher, I thought about company leaders. CEOs and high up managers have the capacity to foster an environment in which their employees can feel empowered and significant, yet so many times managers are so engrained in their own success and potential for advancement and increased compensation that they fail to act in the best interest of their employees, and ultimately their company. I'm sure that Colander, and my former econ teacher are living fulfilling lives as they strive to enrich the lives of their students, and the same could be true for managers trying to empower their employees. Couldn't it ultimately end up in a manager's favor if their employees felt a better sense of moral, were able to improve productivity, and yielded a higher return for their company? I believe so!

GM stepping up to the plate?

In a GM article I read today, I was honestly surprised to see that in addition to some other measures, GM was attempting to save costs by reducing dividends, and lowering their top execs' salaries. I am pleased to see that the BOD recognizes how crucial it is that they take some action. I found this topic to be interesting because the same issue came up in one of my classes the other day, and it struck me as odd that GM had not done more to try to salvage their company. Also, while shrinking top level salary is generally not at the top of managers' priority lists, it shows that the BOD are acting in the best interest of the GM company and its shareholders at large, rather than acting in the best interest of a minority group of top managers. While it remains to be seen whether these actions will make a dent in GM's financial woes, it does set a high profile example of what companies should do when they must nurse their bottom line back to health.

The War on Drugs

I came across an interesting article pertaining to the war on drugs titled, "A New Kind of Drug War". From President Nixon's declaration of the "War on Drugs" to present day the U.S. government has devoted enormous resources to fighting narcotics. The article states that approximately $33 billion in resources have been thrown into the fight in recent years. So, how has this investment paid off??? It seems obvious that it has done little to stop the flow and supply of narcotics as the "War" was intended to do. Prohibition of alcohol was a disaster and increased illegal activity. The end of prohibition quickly cleaned up the alcohol industry. Could the legalization of narcotics have the same effect???

The article presents a compelling argument for the legalization of narcotics. Legalizing narcotics would cause the price of drugs to fall substantially, but a steep excise tax on these drugs could easily push the legal price higher than current narcotics prices. These taxes could then be used to fight the hopefully smaller amount of producers who choose to go underground. The tax revenue could also be used to help fund prevention and treatment programs. The legalization would also free up numerous resources for the war on terror and reduce the overcrowding of prisons. A major principal in economics and to this proposal is that a price increase will decrease the consumption of a good, but whether or not the good is inelastic or elastic will have a major effect on how much the price increase decreases consumption. Are narcotics inelastic or elastic??? Would the benefits of legalized narcotics outweigh the costs, and would narcotics consumption fall or rise???

It is a scary concept that a person of legal age could go to the nearest liquor store and purchase a bag of heroin or cocaine, but it seems obvious that the current way of combating narcotics isn't working.