The World We’re Actually Living In

Let’s look at the world we’re actually living in. (link)

Do you agree? Thoughts?

The ‘Illegal’ Trap

A vigorous discussion is taking place online about the word “illegal” as an adjective for certain immigrants. An immigrant activist named Jose Antonio Vargas, a former reporter, is urging news organizations like The New York Times to stop using it. He says the word is inaccurate, improper and demeaning. (link)

 The way “illegal” in “illegal immigrant” defines an entire person, not merely  an unlawful act. It taints everything that person does, and suggests an irreparable offense.   How do you legalize an illegal person?

Thoughts?

Talent, labor, and essential services

 So......would you be a non-unionized police officer in Camden?   Would you trust one to treat you fairly?  (see both these links  here too)

Talent, labor, and capital.  If a job can be done by anyone, then wages are held down.  If it takes talent, then wages tend to be high.  How do you police a city like Camden?  By labor or talent?  

Tradeoffs and externalities in the world of biofuel

It’s billed as a champion energy crop that yields three times as much ethanol per acre as corn, a fast-growing field grass that’s ideal for making clean auto fuel without displacing scarce crop land. The N.C. Biofuels Center has been pushing for more than a year to grow the Arundo plant on a mass scale, touting it as a new cash crop and the prime energy source for a proposed $170 million biofuel refinery in eastern North Carolina.But the bamboo-like grass has a dark side. Some scientists have called Arundo “the plant from hell” and rank it among the world’s 100 worst invasive plants.....The lore about the Arundo is that it can grow up to 10 inches a day, resprout from roots buried 9 feet deep, and burrow under roadways to infest neighboring fields. It’s nearly impossible to get rid of once established in some states. California has spent more than $70 million on eradication programs over the past two decades.

Read more here: http://www.newsobserver.com/2012/09/24/2367318/energy-wonder-crop-arundo-raises.html#storylink=cpy

  (see link here)

So....North Carolina regulators are being asked to allow mass production of the Arundo so that a biofuel plant can be set up.  Should the crop be grown?

Read more here: http://www.newsobserver.com/2012/09/24/2367318/energy-wonder-crop-arundo-raises.html#storylink=cpy

United States Economy Still Weak, but More Feel Secure

Both economists and the Romney campaign are puzzling over the same paradox: The recovery has flagged and yet the country’s mood appears to be improving (link).

The numbers are not in our favor, yet people are feeling better about the future of the economy in the country. Does anyone else feel this way? Do you consider this to be a "half-full, half-empty" perception? If so, do you think these thoughts has/will help the economy improve? 

Is there such a thng as verifiable truth?

An article and a blog rant caught my eye this morning.  The article is a bit tongue in cheek but is a fascinanting look at postmodernism.  (see link here) Postmodernism is described in the article (Postmodernism is dead).
 
In the beginning artists, philosophers, linguists, writers and musicians were bound up in a movement of great force that sought to break with the past, and which did so with great energy. A new and radical permissiveness was the result. Postmodernism was a high-energy revolt, an attack, a strategy for destruction. It was a set of critical and rhetorical practices that sought to destabilise the modernist touchstones of identity, historical progress and epistemic certainty.  
Above all, it was a way of thinking and making that sought to strip privilege from any one ethos and to deny the consensus of taste. Like all the big ideas, it was an artistic tendency that grew to take on social and political significance. As Ihab Hassan, the Egyptian-American philosopher, has said, there moved through this (our) period “a vast will to un-making, affecting the body politic, the body cognitive, the erotic body, the individual psyche, the entire realm of discourse in the west.”

In such a world, truth is no longer absolute but relative.  The blog writer calls modern day politics "fact-free" and asserts that

In a postmodern world in which all all discourses are equally valid regardless of their truth-value, the claims of the ruling class are not exposed for the lies and imbecilities they are. Postmodernism as it actually exists - that is, with a supine media - thus helps to serve a reactionary function. (see link here)


Believe what you will and who you will.  And don't worry overmuch about truth or validity.  Which leaves us economists back at the impossibility theorem.  If we can't have a democratic social welfare function, and truth does not exist, then how does a nation choose its position on a production possibility frontier?

Romney hammers Obama over GDP numbers

On Thursday, Romney blames President Obama for "revised GDP numbers that revealed the economy grew more slowly in the second quarter than originally thought." This article posted on CNN, talks about how Romney believes that Obama is to blame for the slowing growth of GDP. (link)

Romney claims that Obama has been using the same policies for the past 4 years, and its causing the health of the economy to decline.

He also commented on Obama's ideas for military, and that "The idea of cutting our military commitment by a trillion dollars over this decade is unthinkable and devastating."

Any thoughts? Is Obama to blame?

Spanish Scare Roils Europe Markets

On Tuesday, the Prime Minster from Spain, Mariano Rajoy informed that the Spanish government will restrict programs that allow people to take early retirement as part of overhauls to rein in the country's debt and shore up its shrinking economy. He said the government wouldn't eliminate the option of early retirement but would limit the capacity of individuals to stop working at around 60, as many do now. link

He also stated that Spain would not be requesting a rescue package from the euro-zone bailout fund until Spain's borrowing costs remain "too high for too long." 

But Spain's borrowing costs rose and its stock market fell sharply on the eve of Madrid's announcement of new austerity measures, putting the shaky economy again at the center of Europe's race to preserve its currency union. link

What should Rajoy do? Do you think Spain should continue to hold back on the request or would it be wise to ask for it now?

Big protests/riots in Spain and Greece

On Tuesday, Brandon and Alex asked the class whether a smaller government (lower taxes and spending) would be a good thing.  Overall, I think it is where we are headed.  Timing is everything.  It is easier to make these kinds of changes when the economy is improving.  We see that austerity in Europe is having terrible consequences because it is a contractionary fiscal policy at work.  These photos were taken of yesterday's riots in Greece and Spain.  (see here)

Unemployment, particularly youth unemployment,  in both countries is at Great Depression levels.  GDP is in freefall. 

Romney Urges Attaching Certain Strings to Foreign Aid

This past Tuesday both presidential candidates spoke at the Clinton Global Initiative in New York (link). Mitt Romney laid out the broad outlines of his plan to foster work opportunities and free enterprise in developing nations. Thoughts? Should Romney have a plan to help other nations while his own is having employment problems?

Local transit issues: the actors are more important than the issue

So....the city and county need to design a cost effective and integrated county-wide transit system.  Demographic changes in the county (more urban; less rural) and federal, state, and local tax revenue declines have changed the financial viability of the system, regardless of whether it is owned and operated by the county or the city.  There was an article in last night's mlive version of the local paper that described a county transit board meeting:  it gives a flavor of the positions that various actors are taking in the restructuring of the service.  (see here)

Tongue in cheek look at different schools of thought in Economics

There are lots of blogs out there that are written by economists or those interested in economics.  I read a lot of them (not all the time but every now and again).  I think the different schools of thought are very important today because macroeconomic realities have changed since the Great Recession began.  Eventually, we will see a new kind of "mainstream" theory and policy.  Check out the blog entry here.

Consumers Step Up Spending

After a few sluggish years in our economy, it appears as though things are finally turning around. But is it too little too late? A mere bubble perhaps? How do these minuscule improvements stand in the face of the economic downturn we are just finishing (slowly) as a nation? How do these numbers look for our potential presidential (re)electees? (link)

President Obama & Foreign Policy

Today President Obama will be giving his speech on foreign policy to the United Nations General Assembly. Having good relations with countries abroad is extremely important in the globalizing world we living in today.  During the presidential campaign, I have been seeing articles and news sources commenting on President Obama’s need to increase his foreign policy efforts in order to gain more support.  The video attached below provided by the Wall Street Journal, shows reported Neil King discussing the importance of today’s speech and Obama’s objectives for it.  This speech will be Obama’s last foreign policy address until the elections.  For you, where does the importance of foreign policy stand in this presidential election?

http://live.wsj.com/video/presidential-race-turns-to-foreign-policy/B1CBC60D-8845-4CB2-B1B8-623D3048A98A.html#!B1CBC60D-8845-4CB2-B1B8-623D3048A98A

German Business Confidence Falls

Declining for the fifth straight month, once you 'sees the magic trick once'...one wonders if the bond-support plan had any real impact on European economic recovery. Especially considering how much Germany has given economic support to Spain and Italy. Will this help raise European markets on the whole, or could Germany be dragged down with them? (Link)

Super PAC Influence Falls Short

Given our recent class discussion about Super PACs, how (if at all) does this recent news affect your opinions of their functionality? Since April, more than $250 million dollars have been poured into various national political contests. How equitable and/or democratic is this? Given that some nations have caps and limits on campaign spending, is this an idea the US should consider? (Link)

Obama Work Requirements & Daily Show Interview With Herman Cain

I know this post might be pushing the blogging guideline limits, but it is right on topic and who doesn't enjoying watching comedy central?  The popular commercial against the Obama campaign talks about Obama “gutting” welfare reforms by dropping the work requirement.  For those of you who are not familiar with the commercial, please watch the following link before viewing the interview.

http://www.youtube.com/watch?v=0F4LtTlktm0

In an interview with Herman Cain, former presidential candidate for the Republican Party, John Steward discusses with Cain issues involving the Obama administration’s leniency on citizens receiving food stapes and welfare.  They go into talking about the commercial and Steward questions Cain about the specific language used in the commercial. 

I want to know first what you think about the commercial and the secondly your thoughts on Cain’s response.   In your comments think about where the work requirement is today and what affect it has on the upcoming presidential election.

http://www.thedailyshow.com/watch/wed-august-29-2012/exclusive---herman-cain-extended-interview-pt--3

The entire interview with Herman Cain can be found on the August 29^th timeline page through this link http://www.thedailyshow.com/videos

Enjoy!

In Spain, Austerity and Hunger - Slide Show - NYTimes.com

Macroeconomic policy choices can make a real difference:

In Spain, Austerity and Hunger - Slide Show - NYTimes.com

Free markets and government subsidies

A fascinating article on how various government subsidies helped the energy sector develop fracking technology can be found here. 

"The free market has worked its magic," the Barnett Shale Energy Education Council, an industry group, claimed over the summer. The boom happened "away from the greedy grasp of Washington," the American Enterprise Institute, a think tank, wrote in an essay this year."

But the government was involved:

the natural gas and petroleum industries altogether accounted for about $2.8 billion in federal energy subsidies in the 2010 fiscal year and about $14.7 billion went to renewable energies, the Department of Energy found. The figures include both direct expenditures and tax credits.  Congress passed a huge tax break in 1980 specifically to encourage unconventional natural gas drilling, noted Alex Trembath, a researcher at the Breakthrough Institute, a California nonprofit that supports new ways of thinking about energy and the environment. Trembath said that the Department of Energy invested about $137 million in gas research over three decades, and that the federal tax credit for drillers amounted to $10 billion between 1980 and 2002.  The work wasn't all industry or all government, but both.

 I think it is fair to say that most Americans dislike subsidies (at least those that benefit someone else.)  We fail to recognize how many benefits we get from government expenditures.

US Census Bureau Provides Comprehensive Data on Taxation

If you go to the link provided below and choose a year, a very well organized and easy to follow summary will come up. The summary breaks up every type of tax the government implements with a clear definition of that type of tax.  The summary also provides information on which states are the highest contributors to that tax and the government’s tax revenue in general.  Since the Census Bureau provides summaries for years 1992-2011, it may be interest to compare two summaries and see what types of taxes increased or decreased in certain states over the years. 

http://www.census.gov/govs/statetax/historical_data.html

I tried to attach actual examples of summaries, but the data would not upload correctly. 

How did political polarization happen?

Perhaps the least-controversial issue in American politics is the idea that we should hand out more work permits to high-skilled foreigners, particularly people with STEM degrees. Not everyone thinks this is a good idea, but the consensus around it is pretty widespread. So why doesn't it happen?Well, roughly because there's no political percentage in writing a bill that passes. Increased immigration of foreign technical experts isn't just widely popular among policy analysts and opinion leaders, it's a key priority for high-tech companies. So legislators have the goal not so much of doing what the tech companies want, as trying to structure the situation so as to align the tech companies with their partisan interests.
 (see link here)

Basically, both parties block work permits for high-skilled immigrants because the blockage feeds into partisan agendas.  Read the blog entry and try to be proud of our American political process. 

The retirement crisis

Baby boomers have not saved enough for retirement.  Last year, ABC news reported that " 9 percent of the 77 million people born between 1946 and 1964 are not strongly convinced they will be able to live in comfort in their later years. Just today, 11,000 more boomers turned 60 years old.Further underscoring the financial squeeze, 44 percent of boomers express little or no faith they will have saved enough money by retirement. One in four said they do not think they will be able to retire – ever" (link)  Data shows that 40% of boomers are not financially prepared for retirement.  About half of those could save more and work longer and thus create their own financial resources for later years.  (see link)

A bill in California would create a private investment fund for workers that would provide annuity income.  The plan is as follows: "Eligible employees would have 3 percent of pay deducted from their paychecks, unless they opted out. The employee contributions would be pooled and conservatively managed by professional investment managers chosen by the state through a bid process. That could include private firms and the California Public Employees’ Retirement System, the big public pension manager. The program would be overseen by a board of public and private sector leaders, appointed by the governor and the Legislature. One of the advantages of the plan is that pooled contributions and professional management would reduce administrative costs and investing mistakes, which would boost returns beyond what most 401(k) investors achieve on their own."  (see link) 

What about Social Security?  These private pensions would augment social security pension benefits.  What is meant by retirement will change in the next couple of decades.  Notice that the Social Security system is not in trouble today.  Unlike the federal government, the fund has a surplus which has been built over the past 3 decades, largely through increased taxes,  to help fund baby boomer retirements.  The surplus isn't big enough to fully fund retirements. (see link). 

As with most public policy questions, there are no easy answers.  Should California lead the way to the creation of yet one more pension plan?  Trillions of retirement-oriented investment dollars have been "lost" since the financial crash of 2008.  Who should make up this loss?  What should happen to the baby boomers?

Pension Crisis Looms Despite Cuts

Across the country, states are cutting the benefit programs of their own public-employees. What does this say about how our larger economic policy is changing? Almost every state bureaucracy agrees that some trimming of benefits or contributory measures is necessary. But why?  (link)

CNBC Debates Fiscal Policy

The video attached below provided by CNBC debates the need to increase taxes.  This video brings up issues we have been discussing in class such as: where taxation matters, how fiscal policy creates growth, how to reduce the deficit, and how to raise revenue.  The debaters are constantly relating the current tax situation to what happened during President Clinton’s time in office.  Things have obviously changed since then, but do you think a similar fiscal policy model can be used today?  Also, since this video was made three months ago, what changes have we seen in fiscal policy since July?

http://www.youtube.com/watch?v=jEg1fJ-TAlE

Ability American Have to Work Out of Inequality

American has always been seen as the land of opportunity.   As American we have been told that if you work hard, you have the ability to succeed. Isn’t this at the core of the American dream?  The paper provide below, published by the Brookings Institution, is challenging this idea.  In comparison to other developed nations, is U.S.'s success system really all that merit based?  In the fight against inequality in America, do those who have been born into poverty really have the ability to change their socioeconomic statues just by working hard?  For those of you who studied abroad, it may be interesting to compare the United States with the place you studied in regards to ability people have to work out of their socioeconomic class.

http://www.brookings.edu/research/papers/2012/09/20-pathways-middle-class-sawhill-winship