The decline of music piracy holds lessons for other industries

Check out this article on the decline of music piracy. When napster first came out it was all the rage. Now there seem to be other legal alternatives to illegal file sharing of music. In your opinion are more people turning to legal means, or is illegal downloading of music still commonplace?

Fed Chairman Game

Check out this game created by the Federal Reserve. It deals with exactly what we are studying right now, monetary policy. The game puts you in the position of the Fed Chairman, and you must manipulate interest rates in order to balance unemployment and inflation. Click on the learn more button before playing. Investigate the Fed Toolkit and the other items in the help section. After this play the game. Give me a short summary of your strategy and how it went.

Who Won the Recession? McDonalds.

Check out this interesting article about how McDonald's sales actually increased during the recession. How can this be? Aren't we all about eating healthy? Didn't we all watch "Supersize Me"? Feel free to share your own McDonald's experiences. Are you a closet "Big Mac junkie"?Can you think of any other businesses that did well as consumers stopped spending?

Allocating H1N1 Vaccines

Greg Mankiw is one of the most highly respected Economists in the U.S. He is currently a professor of Introductory Economics at Harvard. Check out this discussion question that he plans to use in his classes. Feel free to go beyond his two alternatives and be creative with your ideas.

The Government Spending Multiplier

Here is an article dealing with exactly what we are studying this week, fiscal policy and the Keynesian Multiplier. Read the article and respond to the four discussion questions at the end of it.

World Clock

This is a repeat of an older post, but I still love this site. Check out the world clock. Do you see any trends? Any of the numbers surprise you? Check out some of the other features on the site.

Economics: The 180 Degree Science

Read Steve Latter's article about how studying Economics just may cause you to re-examine some long held beliefs about the world. In your comments be sure to answer two of the four discussion questions found at the end of the article. Enjoy your Labor Day Holiday. Three cheers for the American worker, the most productive being the world has ever know.

The National Debt

Follow this link to view the 30 minute film entitled "I.O.U.S.A." The filmmaker is obviously not a big fan of George W. Bush. However, with that he mind, he still does an excellent job of educating us about the size and problems of the national debt. Leave your thoughts after watching the video in the comments section of this blog. Each comment must be a minimum of fifty words, make sure to leave your name and class period at the end of the comment. What are the lasting impressions that this video left on you?

Assignment #1

Follow link to Reffonomics.com, click on Macroeconomics Textbook. Click on "Basic Concepts" in the left hand column. Read all parts of first section "What is Economics?" Take online "What is Economics" multiple choice Quiz. Print off score sheet after quiz and turn in at the beginning of class Thursday August 27.

Welcome!

Welcome Class of 2010. The wonderful world of Economics is waiting for you.

Monkey Business

For this our final blog of 2008-09, I've decided to resurrect an oldie but a goodie.
As you all know, I am no big fan of monkeys. However, this is a pretty interesting article on the research being done by a Yale economist testing the economic behavior of a group of Capuchin monkeys.
What do you think of his research?

A Sin Tax on Video Games

OK, one of you recently told me that all of my current events and news stories were negative and that I was depressing all of you every day in class. Here is a lighter side story. A sin tax is a tax on negative behavior such as taxes on cigarettes or alcohol. A Louisiana lawmaker has decided that all of this video gaming and TV watching has got to stop. It's not just Louisiana either, lawmakers in New Mexico, Texas, and Wisconsin have tried to get similar legislation passed. What are your thoughts on this? Are the youth of America spending too much time in front of their Xboxes and Wiis? Will this legislation alter their behavior?

Making Sense of the Banking Crisis

This is, perhaps, the most engaging and accessible explanation of the current "Great Recession" I have come across. In this 59-minute podcast, Ira Glass and his cohorts at Chicago Public Radio and NPR create an ultra-simplified world of just one eager dollhouse buyer, a would-be banker with $10 in his pocket, and a young man with $90 he wants to put into a savings account to explain the financial mess we find ourselves in. This recording explains why TARP is called TARP, what insolvency is all about, what the term toxic assets means, and why America's biggest banks are afraid to "mark it to market" or re-value those toxic assets.

After listening I have a better appreciation for the state of all things financial but I am left wondering, what's the best way out of this morass?

Discussion Questions

1. Can you point to an underlying cause that precipitated this crisis?

2. Does the government nationalize the banks for a time, robbing banks' shareholders of their investments but allowing banks to start over with a clean slate? Does it help the banks get back on their feet by purchasing toxic assets with taxpayer money at artificially high prices? What are the short and long term effects of these different strategies?

3. Do you think the United States has "learned its lesson"? Will people (and businesses and governments) change their behavior? Or are we doomed to repeat this process?

4. Are there safeguards the government can introduce that will keep this from happening in the future?

Buy American

It seems obvious that the idea of "buying American" is a good thing. Shouldn't we try to buy American made goods, especially during this period of recession and economic downturn? It could almost be seen as our patriotic duty to purchase American made goods. We would be saving American jobs, wouldn't we? Well what seems obvious is not always the economic truth. Read this blog post by Steve Latter. He makes some very good points about free trade, and the evils of protectionism.

Should the Government Bail Out the Auto Industry?

by Victoria Miu

America's Big Three—General Motors, Chrysler, and Ford—are in big trouble. Sales from the not-so-fuel-efficient fleet of American-made vehicles had already suffered considerably because of high gas prices even before the financial crisis began to get serious in September of 2008. Faced with undesirable terms in private credit markets, the Big Three are now turning to the government for financial assistance. The House passed a bill to rescue the Big Three car companies with $15 billion in emergency loans on Wednesday, December 10, but the Senate abandoned the plan the day after. Should the government bail out the auto industry?

Those in favor of the bill argued that the rescue plan can prevent the loss of 500,000 jobs in the auto industry. Job losses in the auto sector would most likely have spillover effects in other sectors. As auto workers lose their jobs, they would consume fewer goods and services, negatively affecting industries in retail, health care, and financial services. With unemployment already rising, supporters of the bailout argued that keeping auto workers in their jobs is much easier than creating new jobs for them.

Opponents of the bill compared the bailout to the inefficiencies generated by government subsidies and tariffs. Many companies face financial problems—why should the government save the Big Three and not the others? Poor performance is typically a good signal that a company should change how and what it produces. A partial government takeover of American auto companies will not ensure that the firms will start producing vehicles that people want to buy. A bailout, according to critics, will simply prolong the inevitable: the consolidation of the American auto industry, the large number of layoffs that come with it, and the migration of workers from autos to more profitable industries.

Discussion Questions

1. What is the role of labor unions in contributing to the financial problems facing the Big Three? In particular, how well do the wages reflect the productivity of the workers in the Big Three? Click here to read more.

2. Do you think the problems faced by the Big Three stem primarily from the recent financial crisis or from longer-term decisions about what types of vehicles to produce and how to produce them?

3. Some suggest that another reason leading to the failure of the Big Three is that American consumers prefer cars made by foreign companies, such as Toyota and Honda, to cars made by American-owned companies. How does the market of foreign-made cars affect the demand for American cars?

The Snuggie

Follow the link in the title to a USA Today article on the Snuggie. The Snuggie is the latest product to make the jump to pop culture icon. Why has this product become so popular. There are a host of other blankets-with-sleeves (a.k.a. “robes”) on the market, from the “original” Freedom Blanket to the socially conscious but awkwardly named Slanket. One upscale version, the Nuddle, even includes a pocket in front for your hands and another at the bottom for your feet (the Nuddle is so upscale that it doesn’t have sleeves, it has slats).

Niche-marketed blankets didn’t catch on last winter, when home heating costs skyrocketed with rising fuel prices.

So why now?

According to their ads, 4 million Snuggies have been sold in the past 3 months. Could the downturn in the economy have anything to do with the increase in infomercials and sales of these products?

Have you ever fallen victim to one of these must have products? Think "Shamwow", "Chia Pet", "Loud and Clear", etc.

Are Newspapers a Thing of the Past?

Precious News
by Kevin Zhang

News of Barack Obama's historic election on November 4 dramatically increased demand for newspapers on November 5. Tall, bold headlines announcing the nation's new president transformed copies of the daily paper into collector's items. Though many publishers printed thousands of extra copies in anticipation of higher demand for their post-election issue, at newsstand prices, supply simply couldn't keep up with the surge in demand. On Wednesday morning, many looking to own a piece of history found only empty news boxes and long lines in front of newsstands.

Not surprisingly, copies of major newspapers' November 5, 2008 issue began selling for as much as $200 on eBay and Craigslist.

This is a classic example of how a market responds to an increase in demand. The market equilibrium on a normal day for newspapers is at point A with price P1 and quantity Q1. As the demand curve for newspapers shifts rightward from D1 to D2 (people want more newspapers at any given price level), both equilibrium quantity and equilibrium price of newspapers increase as a result—from P1 to P2, and Q1 to Q2. On November 5, the quantity of newspapers supplied increased in part because publishers anticipated higher demand and in part because they scrambled to reprint when demand was even higher than expected. In the end, more newspapers appeared in the market, and at higher prices. The new market equilibrium for newspapers on November 5 is now at point B.

Though the consequences of the sudden shock in demand for November 5 newspapers are pretty much as expected, the reasons behind this shock are not so clear.

Though newspapers received renewed attention after the election, newspaper circulation has fallen steadily across the country for years. The ease of instant access to up-to-date information and the accessibility of free content have turned many readers to the Internet for news. The spike in demand for newspapers after the election raises interesting questions about the value of the daily newspaper in a digital world.

With the prominence of the Internet, why do you think people still wanted physical copies of newspapers with news they probably already knew? What factors do you think drove up the value of newspapers after the election? What do paper newspapers have that websites do not?

Are Women About to Become a Majority of the U.S. Work force?

Check out this NY Times article about a truly historic economic event. Women are about to make up the majority of the U.S. labor force. Read the article and see what you think. Is it time for a little role reversal. Is it time to redefine our beliefs about gender responsibilities?

Which Jobs are Recession Proof?

Recession-proof
by Kevin Zhang


Doomsayers are coming out of the woodwork en masse as 2008 ended during a dismal economic downturn. With consumer confidence at an all-time low, the financial industry shell-shocked as grand, monolithic companies crumbled all around, and nearly 2 million jobs lost in the past year, the end looks nigh indeed.

But before you don your sandwich boards and raise high your signs, things may not be as bad everywhere as they seem.

The economy rises and falls in what's called a business cycle. Some years are relatively prosperous with rapid economic growth and expansion while other years see the economy contract or stagnate. These fluctuations last over periods of years and their timing is largely unpredictable.

Some firms stick with the general trend of the market, their business conditions weakening when the market weakens, strengthening when the market recovers. These are procyclical firms. Others, countercyclical firms, do the reverse; their business conditions weaken when the times are good, and strengthen when times are bad. There are still other industries that don't depend on how the economy is doing at all.

So, while the bankruptcies and bailouts get the boldest headlines these days, here's a brief list of industries that are doing just fine.

The funeral services industry depends more on long-term trends such as aging populations and baby booms rather than on the twitching of the stock ticker. And of course, it also helps that their services are always in demand.

The entertainment industry is another good example. Revenue from concerts and movies have stayed strong during this economic downturn. Faced with gloom and doom, many find the few hours of escapism well worth the price of admission.

Discount stores, most notably Wal-Mart, are attracting cash-strapped customers looking to get the most out of their money.

As jobs get scarcer, going back to school makes a lot of sense for those looking to weather the fierce competition in the job market and to improve their skills and credentials. According to the Labor Department, the education industry has added 9,800 jobs in November.

Can you think of any other industries that are counter-cyclical? Has the recent recession caused you to rethink your career plans?

The World Clock

This is a repeat of an older post, but I still love this site. Check out the world clock. Do you see any trends? Any of the numbers surprise you? Check out some of the other features on the site.

We are moving back to this site

We will resume our blogging project on this site. You may still use the wetpaint.com site to get class notes and to reference the other resources on that page, but our blogs and responses will now be posted on this site.
Mr. Pye