Tuesday, March 9, 2010

The Effect of Unemployment Insurance on Unemployment

starEconLog: Library of Economics and Liberty
March 9, 2010 4:52 PM
by David Henderson

The Effect of Unemployment Insurance on Unemployment

(March 9, 2010 01:52 PM, by David Henderson) Does standard microeconomics fail when there's a recession? Last week, I addressed the issue of how much of the current unemployment is due to the many extensions of unemployment benefits. In some states you can now receive benefits for as...
Labor Market


Tom S.

Saturday, February 20, 2010

My Twitter Updates

On the side of the screen I have "Twitter Updates". This is what I am doing to feed links to news stories of interest. The links are shortened using a link shortner (usually bit.ly) to make sure they fit in Twitter's 140 character limit. The links I have there point to legitimate sites. I hate spam as much as the next guy...

Enjoy the news.

Monday, February 1, 2010

Cost of one red cent...or a plug nickel

The Infectious Greed blog has dug through the proposed 2010 budget to find that it costs the U.S. Mint 1.8 cents to make a penny, and 9 cents to make a nickel.

So that penny for your thoughts costs more than you thought...

A Common Misconception

Based on some comments from my students, I had to hit this again..
The government has very little to do with the amount of imports coming into the country. Businesses in the U.S. decide to import products rather than buy local. They do this because imported products are usually cheaper, and cheaper is what their customers (you & me) look for. They wouldn't import it if we didn't buy it. Importing is how WalMart gives us the "everyday low prices" which are quite important to us.
But we "need the low prices because we can't find good-paying jobs, because there aren't many jobs to choose from." It is a chicken & egg thing - fewer jobs mean lower wages, so we buy cheap imports, which leads to fewer jobs & lower wages, which leads to more imports, which leads to fewer jobs & lower wages...
The government influences imports primarily in 2 ways: 1. product-quality regulations, and 2. Trade taxes & rules. The product quality is self-explanatory - if a product doesn't meet U.S. product safety standards, it isn't allowed in. The taxes are penalties importers must pay - these penalties get passed on to us by higher prices. So the government has reduced & eliminated most trade taxes (tariffs) - that is what NAFTA & the WTO is about.
American consumers & workers should take a fair part of the blame because we are constantly demanding higher wages & lower prices. You can't have them both at the same time (or companies would go broke quickly, then no one has jobs). At this point the lower prices part is winning. Our wages still are among the highest in the world, but as we import more & lose more jobs, global wages will catch up to ours. As global wages catch up, prices of imports will go up, so imports will look less attractive (when added to increased transportation costs, we might see a return to locally made products in another 30 years or so).
Corporate greed is part of the problem, too. Local laws & regulations (such as increasing minimum wages, & social programs like Social Security & welfare) is part of the problem. Rising health care costs are another part. The list goes on, but let's not put it all on the government's shoulders. They do enough to get frustrated about, lets not get mad over something that isn't their fault.

Oil demand has peaked in developed world: IEA

I don't know if I believe it, but here is a thought - oil demand
peaked in 2007.

http://link.reuters.com/cut86h

Sunday, January 31, 2010

Tuesday, January 26, 2010

2010 Federal Budget Deficit to be $1.35Trillion?!?

The 2010 Federal Budget Deficit is expected to be $1.35 trillion, according to wsj.com. This is in part from increased spending for the stimulus, and decreased tax revenues as businesses & workers bring in less money.
When combined with the debt the federal government already owes, the total deficit by year's end could be well over $7 trillion.
With the government doing all this borrowing, the pool of available funds for consumers & business to borrow from will be smaller - which will lead to higher interest rates. The higher rates makes corporate growth harder, which will make future job growth slower - slowing down our long-term recovery.
Needless to say, this will be a political hot potato, just as it was in the 80' and 90's. What is is going to take to get the deficit to go away is anybody's guess. It took free trade & the birth of World Wide Web to clean up the last one.