NFL Ticket Prices on the Rise

According to the article, NFL Ticket Prices on the Rise, even though sales are down average ticket prices have still increased. This seems a little backwards, but prices have actually risen on average 4.5 percent this year. Most the average price increase comes at the expense of the New York football fans, however. In reality, only nine of the NFL's teams have prices above the league average. David Carter, executive director of USC's Sports Business Institute, said "The tough economy is certainly playing a role in pricing decisions made by management, and that some teams soften the blow of a price increase by including price breaks on concessions or parking." Lowering the price for items may help, but not everyone buys from the concession stands or pays for parking to begin with. With the weak demand for tickets, most teams will want to decrease ticket prices to fill the seats.

If we can’t stop immigration why make it illegal.

The bar is set too high for immigrants to comply with the law of becoming legal, so they come here anyway. Some believe, although impossible, if we stopped illegal immigration, that the laws of supply and demand would increase wages to become more desirable for Americans. This might be true but the prices for the products from those jobs would not be so desirable.

If illegal immigrants are interrupting the laws of supply and demand as the article “The Dark Side of Illegal Immigration” would suggest why make them illegal. We should put them on the same playing field as Americans. Instead of tax free below minimum wage workers, why not manage the immigration problem by making it easier for foreign workers to obtain work visas? This would quickly increase taxes from workers who would now be complying with the law. It would also greatly decrease illegal immigration by those who want to comply with the law but have no other recourse if they want to work here (this still does not make it right but its reality).

Is the Recession Over?

The longest recession since the 1930's officially ended in June 2009. Lasting 18 months, this "great recession," as it has been called, has caused the loss of an estimated 8 million jobs. Although technically over, many are asking whether the effects of the recession are really over, or if this is just a temporary state for the economy. According to the LA Times, "Mark Zandi, chief economist at Moody's Analytics, said it was noteworthy that the panel settled on June, as it was during that month that the spending from the Recovery Act stimulus was at its maximum."
In order for the recovery to continue, it seems as though an additional stimulus package will need to be passed by the government.
And, while Warren Buffet is stating that there will not be a double dip recession, more economists are stating that the risk of a double dip recession is increasing.
In my opinion, this recovery is fragile at best. I believe there are more dips ahead for the economy. If allowed to recover at a natural pace, the cycle of the economy will eventually recover to a bullish economy (as Warren Buffet states). This current recession occurred due to economic and political policies which staved off the inevitable and natural downturn in the economy. In order for future "great recessions" to be avoided, reasonable policies need to be in place to allow the natural, smaller recessions to occur.

- Ralphie

I-15 CORE project grows economy

In a small press release from ksl.com, we read the story that the Utah government is creating more jobs with its investment in an I-15 CORE project. According to the article, this new project is creating more jobs than a typical project of this size usually creates as the government is being strategic in utilizing local businesses to purchase the building materials needed for the job.

I appreciate this endeavor as it appears that the Utah government is doing something similar to what the National government did during with time of the “Great Depression” with their Civilian Conservation Corps program.

I believe that this project will shift the “job supply” curve to the right while the “jobs demanded” curve will remain in the same location. As a result, the price of labor may fall some (making it harder for those already employed to make better wages); however, more people will have the opportunity to be employed and thus the overall market will improve with more employed workers.

Matt Ridley's "The Rational Optimist" Is Free (Hurry)

The Rational Optimist, a pretty good seller about economics that came out in June, is priced at $0.00 if you download it to your Kindle.

This price was set by the publisher, and I have no idea how long it will last.

Small Business Bill

The Senate is likely to soon approve a bill to aid small business by providing easier access to loans and some tax breaks. This bill is intended to lower unemployment by stimulating hiring by small businesses and remove a potential barrier to new business start up. The question is will the bill accomplish its intended purpose and what might be the unintended consequences of such a bill. One such example might be an increase in supply in competitive industries with low barriers to entry. In such an industry the accessibility of cheap funding with govt backing might cause a number of new entrants to the market that shouldn't have been admitted. This could drive down prices and hurt all participants in that market until the market naturally returns to equilibrium and these companies will leave the market. In this example the intended purpose would also not occur as hiring might increase for a time but layoffs would follow in due course. The real question that should be considered by the Senate in determining to pass this bill is: is there a supply shortage caused by lack of available funds (likely as a result of recession paranoia) or is the market in equilibrium?

Complementing Tablets

Dodocase is extracting consumer surplus as a complement product to Apple’s iPad. This innovative idea of making a “book-style” case has been extremely successful and has greatly impacted the manufacturers struggling business—not as many books being bound in the US these days. In fact, all these new products have been quite successful with the release of the iPad, and many are being modified to complement the Kindle as Amazon reports an increase in demand.

An Amazing Managerial Economics Video

You have probably seen this.

It is the comedian Louis K C on the old Conan O'Brian show discussing technological advances.

This is copyright protected, so whenever it shows up on the internet it gets taken down very quickly. I won't be updating this link.

The relevance of this is for the perception of people sometimes that they have been ripped off. The relevant bit is just after the 2:00 mark (referring to internet access on planes).

I posted this because of a response I left to Brett's comment on this post by iPoser about Apple, Amazon and MacMillan Publishing.

Many people recognize that the consumer may have lost something after the producer changes something about the business relationship. But this often obscures the fact that the consumer's situation often had to change as well. When both change, it isn't clear that the consumer's have lost anything at all.

This is the sense of this video. How much has anyone lost if a business provides something for you, and then has problems providing it? The answers is ... sometimes ... not much at all.

New laws designed to protect U.S. jobs may be pushing them overseas

In February of this year, the article New farm labor rules comming, announced the Department of Labor's amendment of the H-2A program which now requires "employers who seek work visas for foreign workers [to]...document that they [also] sought qualified U.S. workers" for the same jobs. This new law was supposedly designed to protect jobs for U.S. Citizens as it encourages employers to use Citizens rather than foreign workers.

However, I believe that the exact opposite outcome will occur. Instead of protecting jobs, litigation like this will shift the job supply curve to the left as red tape and other road blocks like this will tempt employers to move their businesses overseas where they will have more freedom to act as they please.

Tom Nassif, President of Western Growers, commented on this new law and shared his feelings in regards to how the very job the law is supposed to protect only makes them more scarce when the said, "We know our produce is going to be harvested by foreign workers, the question is, will it be here in the U.S. or will it be abroad?"

Clearly, laws like this have good intentions but their ramifications only make doing business harder and less desirable in the U.S. I believe the solution to this problem is to deregulate business and to allow the "invisible hand" of markets to dictate terms and not the Government.

Apple, The Puppet Master

Earlier this year Macmillan Publishers and Amazon had a public dispute over Macmillan’s requirement to charge between $12.99 to $14.99 for e-book versions of its bestsellers and some hardcover releases. Amazon retaliated by refusing to sell Macmillan’s books…but it only lasted about a week. Amazon gave in because, well, Macmillan has monopolistic power over its titles, and there’s not much they can do about it since they likely have a load of inventory they’d prefer to cycle through.

It’s important to realize there is another party in this dispute. Because market power is so short-lived (especially right now in the tablet market), Apple is being very strategic in its actions to maintain its market-leader position with the iPad. By persuading MacMillan to follow an agency model with Amazon, Apple has basically regulated Amazon’s Kindle by constraining any advantages the Kindle can gain in the sale of e-books.

Modest Gains

There seems to be a stigma going around that the result are to good to last. While listening to a couple of economist talk ( sorry for not being able to find the names) on "the squak box". They continued to refure to how well we thought we were doing in late 1997 before evey thing dropped out for the 2nd time. It may be my naivety to this type of thing, but it seems like if they think that even Grease is not going to default on their loans that we may have turned the cornner.

Bandaids

Another federal program seems to be on its way to failure. The New York Times reported that nearly 3,000 home mortgages that had been modified by the Federal Loan Modification Program have ended since the program started last fall. The vast majority of the modified loans that ended early were because of foreclosure, with only a handful ending because home owners paid off the mortgage, likely because they sold their houses. The problem with the program (and other similar programs) is that they just put a bandaid on the problem. What they should do is get to the root. Taxpayer dollars are wasted on extending the problem, rather than eliminating the source.

Gas prices and recessions, it takes two to tango.

I found this great post by James Hamilton of Econbrowser which discusses the correlation between gas prices and recessions. Mr. Hamilton provides data which shows that a sharp rise in gas prices precedes recessions. The article notes that the recent rise in oil prices probably isn't enough to cause a double dip on its own, however the recent recession was exacerbated by the steep rise in prices immediately before the crash. Hamilton concludes that the high oil prices are a drag on the economy but are not bad enough to cause another dip on there own.

Promoting Mediocrity

An interesting article in the New York Times featuring a ‘Republican’, Florida governor Charlie Crist, who is currently vying for a Republican seat in the senate, just vetoed a bill that would have essentially based teachers’ pay on results, primarily students’ test scores. It would have also eliminated the general, long-term tenure granted to teachers. It is simply another example of people wanting to be paid, regardless of their performance. If teachers were paid according to their students’ success, we would see a significant increase in their preparation, care, and time spent with students. It would also eliminate those teachers who create a suck on state budgets, as well as an overall improvement in education. Since the public education system has decreasing returns to scale and down-sizing is what they need, this would provide a channel to get rid of poor educators.

http://www.nytimes.com/reuters/2010/04/15/us/politics-us-usa-politics-florida.html?_r=1&hp

(Dr. Tufte, for some reason blogger isn't letting me hyper-link the article, so it's here instead).

Corruption

We have talked a lot in class about trust of strangers being an integral part of economic growth. I found the following chart very interesting. It is a survey on curruption in different countries around the world. Many of the countries at the very bottom of the list are also the poorest countries in the world. Haiti only scored 1.6 out of 10. With that much corruption how can their economy progress? How can people feel safe investing their money? We cant expect anything diferent from them if all we do is send more money through a long chain of corrupt officials.

The Newest Advancement in Eminent Domain

Senator Dodd's Financial Regulatory Reform bill will establish a new government entity under FDIC called the Financial Stability Oversight Council. This new organization will have the power to take over any company with $50 billion in assets or more that it deams too risky. This was explained (but buried) in the article GOP Takes Aim at Plans To Curb Finance Industry in today's New York Times.

"The Democrats’ bill, sponsored by Senator Christopher J. Dodd of Connecticut, would give the Federal Reserve oversight of the largest financial institutions, those with at least $50 billion in assets. And it would let the Treasury secretary — with support from regulators and the approval of a special panel of three bankruptcy judges — take over any giant company that posed systemic risk to financial stability, and essentially force it out of business."

Granting the Government an unchecked ability to take over the large private companies that appear to pose a "systematic risk" may well decrease the risk that financial institutions are willing to assume in lending to individuals and businesses. This would decrease liquidity and increase the likely hood of a new recession.

Dissent on Recessions end

After reading this article in the New York Times Mr. Robert J. Gordon is saying the recession ended in the second quarter of 2009. Is this correct? His colleagues have came out stating that the recession that started in 2007 is not yet over. These gentleman our on the National Bureau of Economic Research Business Cycle Dating Committee which determines the start and end dates of recessions. Why has Mr. Robert J. Gordon came out and made this statement when he’s colleagues our saying that the recession is not over? Here is some of the data Mr. Robert J. Gordon is going off real GDP has recovered strongly from a trough in the second quarter of 2009 to current quarter which is close to the peak it was at in 2007. Mr. Robert J. Gordon is going off of a private organizations data that has been pretty accurate over the past estimating real GDP changes a quarter or two in advance. Should we believe this information?
Article

Translating Bernanke

In an interesting article in the Wall Street Journal, Jon Hilsenrath translates Ben Bernanke's congressional testimony. The article states that monetary policy will most likely not be tightened any time in the near future because "there is no reason".

The article also points out that the Federal Reserve thinks the recovery is real, but there will be some problems down the road given the condition of many state and local governments.

I can only hope that the Fed leaving interest rates and monetary policy alone in the coming months will help improve the economy further and we won't go back into a recession.

A Zero-sum Mindset

Zero-sum mindset is bad for the world. Anti-capitalist terrorists have this mindset: We are poor because you are rich. This logic is so irrational. We can all agree that terrorism has a negative outcome in any aspect and is only destroying capital in most situations with has an adverse economical outcome.

Federal Funds Rate & Summer predictions of growth graphic

I found a graphic that gives a prediction for real GDP growth percentages in summer 2010 with a direct comparison to the federal funds rate in recent history. The article explains that the changes in federal funds interest rates provide one of the eleven factors used to create predictions. However, changes in interest rates come with a delay of about fifteen months before any changes in the economy are noticed. Unfortunatly growth over the summer is predicted to slow from that of the early months of 2010.