High Price of a Gallon of Gas

The national average is $3.20 per gallon. It will only go higher. At what point do we start making changes in our lifestyles? Will you continue to drive as much as ever, and just cut back elsewhere? Is the demand for gas totally inelastic? Surely, at some point we will start driving less. What are your thoughts?

How Government Makes Things Worse

I know we just had an article on the law of unintended consequences, but I couldn't pass this one up. Ethanol and Sub-prime have more in common than what we would think.

Price of gold soars

The price of gold has reached historic highs. As young economists, can you predict some of the consequences of this? Go beyond the obvious of just more expensive jewelery.

The Scarlet Letter for Drunk Drivers

What do you think of this plan being proposed in the state of Washington? Get convicted of drunk driving and your car is affixed with a bright yellow license plate for a year. Will this serve as a deterrent? The bill's author seems to think it will prevent repeat offenses, and warn the rest of us to give these cars a wide berth. What do you think?

Free Cell Phones for Achievement in School

Obviously, doing well in school should be its own reward. However, in todays society that doesn't seem to be the case. What do you think of this program being tried out in a few Brooklyn middle schools? Free cell phones and minutes for good grades.

Thoughts from a respected Economist

Check out this article from renowned economist, Greg Mankiw. It is a very insightful commentary about the economic problems this country will face in the near future. Dr. Mankiw is an economics professor at Harvard, and he served as head of the Council of Economic Advisors under President Bush. He has also written numerous textbooks on Economics.

The Baby Name Wizard

This is a fun little site. It tracks the popularity of thousands of different baby names. Check out the historical trends. Check out your name and see where it falls on the timeline.

The Death of the CD

This is a short article about downloaded music sales surpassing CD sales by the year 2012. Will CDs go the same route as LPs, 8-tracks, and cassetes?

The Secret to Raising Smart Kids

This article raises the point, it's all about effort and not about talent and ability. What are your thoughts?

The Law of Unintended Consequences Strikes Again

"What do a deaf woman in Los Angeles, a first-century Jewish sandal maker and a red-cockaded woodpecker have in common?"
Politicians would do well to remember a basic principle of Economics, "the law of unintended consequences."

Is it time to say goodbye to the Penny?

Has the venerable $.01 piece outlived its usefulness? Check out the website for some of the arguments in favor of eliminating the penny. What do you think?

Pigou would say, Hooray for the Irish!

A Pigovian tax, named for British economist Arthur Pigou, is a tax aimed at diminishing an activity seen as harmful to society. An example would be a pollution tax on companies guilty of polluting the air or water.
The Irish have taken this step to rid their society of plastic bags. Could we do the same here? Should we? Can you think of other activities that could be taxed?

World Clock

Check out this facinating website. Did any of the numbers surprise or even frighten you?

Bail Bonds; A Purely American Tradition

I did not realize that the use of bailbondsmen was unique to the American Justice system. Read this article and comment; What are your thoughts on allowing people to pay a percentage of their bails to bondsmen in order to get out of jail while awaiting trial? Is it free enterprise at its best? or Is it a practice that needs to be done away with?

Tax Rebates by May

Tax rebates of up to $600 per person could be in our hands by early May. Is this a good idea? Can you think of any drawbacks? Could it just be an election year ploy?

Cash for Grades

The New York school system is considering a plan for rewarding student performance with cash. Do you think this is a good idea?

What does Economics mean to you?

As we embark on this new semester of Economic study, I am curious to know what Economics means to you and what role it plays in your life. Leave your comments.
Mr. Pye

Week 1 Assignment

Go to Reffonomics website. Click on Lesson Plans link. Under basic concepts lessons, click on "Introduction to Economics." Review lessons 1 and 2. "What is Economics?" and "Opportunity Cost vs. Tradeoffs." Click on Multiple Choice quiz link and take 10 question MC quiz. Print off your score. Bring to class on Friday January 25, 2008.

Holiday Wishes

Have a Merry Christmas, and a Happy New Year. See you in 2008.

A Quick Quiz

Demand, Supply Hip Hop Style

All right you hip hop wannabes, check out this rap. It actually makes some good points about the principles of economics. It is the last song on the index.

Push Presents; Are you kidding me?

Apparently this is a new phenomenon, giving new mothers gifts of jewelery particularly diamonds just after they give birth. Is this an example of materialism run amok? Or does it show that men are more compassionate these days after seeing their spouses go through the pain of pregnancy and childbirth. Perhaps its a creation of the jewelry industry in order to sell more products. What do you think?

Death of the U.S. sock industry

Check out this story from NPR about the Invisible Hand at work. You can also listen to the story if you prefer. It is an excellent article about the pros and cons of globalization in the once thriving U.S. sock industry.

Goalies, Stop Jumping.

Staying with our sports theme this week, check out this bit of economic research on goalies and penalty shots. It might surprise you. Isn't it funny how economics can be used to explain almost anything?

Should College Athletes Share in the Revenues

Check out this local story from the Chronicle. It is an old argument, that college athletes (especially football players) are bringing millions of dollars into their schools, and that they should be getting some of that money. Would that be the end of college fooball as we know it, if we started paying players? What about the free education these players are getting? What do you think?

Debunking some myths regarding healthcare

Many of the current presidential candidates are railing about the failure of the U.S. healthcare system and calling for major reform. In this editorial, economist Greg Mankiw looks deeper at some of the claims being made.

Thinking about your future

Still trying to decide what to major in in college, how about oil. Read this article about the looming shortage of petroleum engineers, geologists, and oil industry workers in general.

Devices Enforce Cellular Silence, Sweet but Illegal

I want one of these. Check out this NY Times article on cell phone jammers. May we never have to listen to someone's personal details in an elevator, checkout line, or waiting room again.

Maybe its not as bad as we think

Today is Jobs Day. Here’s what you need to know about the October employment report:
+166,000 net new jobs were added in October. This is almost twice what the markets expected.

The unemployment rate is unchanged at 4.7%.

The US economy has created 1.68 M net new jobs over the past year, and 8.3 M since the labor market turnaround in August 2003.
We’ve had 50 months (4 years and 2 months) of continuous employment growth, a new record.

Wages are up 1.2% over the past year, adjusting for inflation.
In other economic news, on Wednesday we got GDP data:

GDP grew 3.9% in the 3rd quarter, well above market expectations of about 3%. This is the strongest quarterly GDP growth in 1½ years. Extra happy.

We can see the effects of a strong labor market in the consumption numbers – people are working and their real incomes are climbing, so they’re buying more stuff. Since consumption is about 70% of the economy, strong consumption growth is critical to continued GDP growth.

Housing is still a drag – it knocked 1.1% off the third quarter growth number. This is bad but unsurprising. The silver lining is that there’s no evidence the housing decline is spilling over into consumption.

Business investment was solid. Investment in “equipment and software” grew at a 6% rate, the best in 1½ years.

Exports continue to be strong, and they now make up 1 in 8 dollars of our GDP (12%). The rest of the world is growing, and they’re buying our stuff.

This last point is a useful reminder – world economic growth is not a zero sum game. When other countries’ economies grow, they buy more US goods. That’s good for us.

It’s no fun unless you have a picture. The yellow bar shows the total of 3.9% GDP growth. The other bars show where the growth is coming from.

This is my favorite way to show what’s actually going on – you can see that most of our growth is coming from consumption, that business investment and exports are important, and that housing is still a big drag.

We also had some happy news that productivity grew 2.6% in the 2nd quarter of this year. Higher productivity means each worker makes more stuff. Over time, productivity growth leads to wage growth.

Wednesday the Federal Open Market Committee cut the fed funds rate by a quarter point, to 4.5%. They also cut the discount rate by the same amount, to 5%. The FOMC also put out a statement. Since we don’t comment on the Fed’s monetary policy actions, I’ll leave it at that.

There are, however, some clouds going forward.

It’s probably going to take a while to work out of the housing downturn. We expect housing will continue to be a drag on GDP growth.
Oil prices are nearing an all-time inflation-adjusted high (depending on how you measure inflation).

The credit markets are still working through problems that first appeared in August.
One of our favorite words when talking about the US economy is “flexible” – we have extremely flexible labor and capital markets. When bad things happen (e.g., a factory closing, wildfires, housing and credit market troubles), a flexible economy can adjust and recover quickly and with the smallest amount of pain. We’re seeing the benefits of a flexible economy now.

Halloween Spending

Check out this slide show about the money that Americans spend on Halloween. It is very interesting and eye opening. Remember consumer spending is the key to keeping the economy going. Maybe we should create a few more holidays in order to fend off recession.

Womenomics; The New Defining Force in the Economy

"It found that over the past decade or so increased female participation in the paid labour force has contributed more to the growth of the world economy than either booming China or new technology"
Let the battle begin.

Cupcake Ban

Say it ain't so. A ban on cupcakes, could anything be more un-American? What are the economic implications?

Public school or Private; Does it really matter?

According to this report, its not the type of school you went to, but those chats around the dinner table that really make the difference.

Is this a case of Capitalism run amok?

Read this interesting but somewhat frightening article about the global market for human organs.
". . . If you lose your job, you can sell your home. If you lose your home, you can sell your possessions. If you lose your possessions, you can prostitute yourself. And if you lose everything else, you can sell one more thing: your organs."
What is your reaction?

Global Perspectives Survey

Check out this interesting article about attitudes on a variety of topics from countries around the world. Of particular interest are the attitudes about trade.

Protectionism in sports

What a timely article. Since we are currently studying protectionism, what are your thoughts on this article. The head of the European Soccer Association wants to limit the number of foreign players on European teams. What will be the consequences of such actions?

Consumers fight back against scalpers

Ever try to buy tickets to a concert only to find out that they are already sold out. Read about what consumers in Australia are doing to fight back against scalpers.

Myths about the rich

The 2007 edition of the Forbes 400 wealthiest Americans was released last week. As in years past, it's one of the more useful economic annuals when it comes to laying bare the folly of antitrust, worries over the wealth gap, and perhaps silliest of all, the assumption that the rich became that way for exploiting the non-rich

A lesson in supply and demand

The ethanol boom of recent years — which spurred a frenzy of distillery construction, record corn prices, rising food prices and hopes of a new future for rural America — may be fading.

Only last year, farmers here spoke of a biofuel gold rush, and they rejoiced as prices for ethanol and the corn used to produce it set records.

But companies and farm cooperatives have built so many distilleries so quickly that the ethanol market is suddenly plagued by a glut, in part because the means to distribute it have not kept pace. The average national ethanol price on the spot market has plunged 30 percent since May, with the decline escalating sharply in the last few weeks.

Shift your demand curve to the right and watch equilibrium price and quantity rise. Then, push your supply curve to the right far enough so that price falls (by 30%).

Outsourcing; Is it really a problem?

When the politicians begin complaining about outsourcing in the American economy, have them read this article.

Every Breath You Take

Columbia Business School's Dean Glenn Hubbard sings about wanting Alan Greenspan's job that went instead to New Fed Chair Ben Bernanke. Parody created by Columbia Business School students.

Is a new tax the answer to Global warming?

Check out Greg Mankiw's article about the use of a carbon tax to limit pollution and the spread of global warming. Does this idea make sense to you?

U.S. Farmers Rediscover The Allure of Tobacco

In economics its called the law of unintended consequences. The government tries to pass a law that is beneficial and the law has the totally opposite effect. The U.S. Government ended subsidies to U.S. tobacco farmers hoping that they would start growing some other crop. Now they are growing more tobacco than ever. What do you think other nations are saying about U.S. tobacco growers exporting the evil weed to their countries?

Determinants of Supply and the Market for Pork in China

Thanks to Jason Welker for this timely article and idea. Since we just studied Supply Determinants, remember:
S - Subsidies and Taxes
T - Technology
O - Other goods
N - Number of sellers
E - Expectations
R - Resources, raw materials
Using your knowledge of the determinants of supply, analyze what is happening to the market for pork in China. Several of these determinants are at work here. Which way is the supply curve for pork shifting, and why? Also since the price of pork is going up, what effect will it have on the demand for other items? Remember substitutes and complements.

Is the U.S. ready for Universal Healthcare?

Read this article from the NY Times, then do your own research and decide, "Is the average American voter ready for a government run system of Universal Health Coverage?"

Cash for Grades

New York City is considering giving its students money for good grades. What do you think?

U.S. Food Aid for Africa: Helping or Hurting

Read this article about how U.S. aid for Africa may actually be hurting local African farmers . . .

First the Oil companies and now Baby names, What will Venezuela and President Chavez regulate next

The prolifically inventive world of Venezuelan baby names may be coming to an end. A bill introduced last week in Venezuela would limit parents of newborns to a list of 100 names established by the government.

Week 2 assignment

Go to Reffonomics website. Read through powerpoints over Unit 2 (Production Possibilities Curve/Frontier). Take multiple choice quiz. Print out score and bring to class on Friday Sep 7.

American Productivity

In honor of Labor Day, let's hear it for the American worker. Fox News reports:

"The average U.S. worker produces $63,885 of wealth per year, more than their counterparts in all other countries, the International Labor Organization said in its report. Ireland comes in second at $55,986, followed by Luxembourg at $55,641, Belgium at $55,235 and France at $54,609."

Something to ponder, What is it about our society and culture that makes us want to work so hard?

Will trips to the mall become a thing of the past?

Check out this story as online clothing sales have surpassed the online sales of computers and software for the first time in history. What are the implications for so called "brick and mortar" stores like Dillards, J.C. Penneys, etc. . .

Best High School Commencement speech ever

Check out Conan O'brien's speech to the graduating seniors from Stuyvesant High School in New York.

Predictions

Check out these predicting tools from Ian Ayres, a professor at Yale Law School who also has a Phd in Economics. As Economists one of the things we do is try to anticipate and predict future events.

World Clock

Check out this fascinating website. This world clock is keeping up with numerous events. Can you see the trends? Did any of these trends surprise you? Check out the numbers for the year, month, week, current day, or just how fast they go up from the moment you start the clock.