Economics @ ITT

Unemployment for those earning over $150,000 is only 3%; unemployment for the poor is 31%

Posted in economics, employment by ittecon on April 27, 2010

This blog entry points out that unemployment for those earning $150,000 per year or more is only 3%, whilst unemployment for the poor is 31%. A recent study by Northeastern University’s Center for Labor Market Studies also notes that those earning over $100,000 are only experiencing 4% unemployment. Not to incite a riot or instigate a class war, there is clearly a disparity here. I was fortunate enough to have studied labour economics  with Paul Harrington at Northeastern, and I have to admit that Labour Economics has always been an economic topic with of my highest interest besides general Behavioural Economics and Game Theory, especially as it concerns labour contracts; but I digress. It’s nice to see that some economists are keeping an eye on this.

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Chickens for Checkups

Posted in economics, Humour, Policy Issues by ittecon on April 26, 2010

Sue Lowden, Republican senatorial candidate from the state of Nevada suggests that the solution to the health care problem can be solved by barter. The DSCC has facilitated this by offering Ms Lowden’s services as a health care clearing house. If you are low on cash and wish to barter for health care services, visit this site.

Visualising $100,000,000 Budget Cuts

Posted in economics, macroeconomics, Policy Issues by ittecon on April 25, 2010

Learn about the Federal budget of the United States of America, and visualise what a $100,000,000 budget cut means in perspective.

Big Mac Index as a Proxy for Purchasing Price Parity

Posted in economics, International Economics, macroeconomics by ittecon on April 23, 2010

Purchasing Price Parity is an economic concept that allows us to compare across differently scaled economies. One way this is implemented is by a Big Mac Index, wherein parity is assessed by the price of a Big Mac in the countries being compared. One can even see how these countries change over time relative to each other.

A shorter video explanation can be found here. One can also see how long it takes to earn enough to buy a Big Mac in various countries to get a sense of local purchasing power.

How Does the Average Family in the US Get By?

Posted in economics, microeconomics by ittecon on April 15, 2010

On just over $50,000 per year, the average family unit (2 adults and 2 kids) is finding it ever so more difficult to get by. Graham Summers posts in Gains Pains & Capital where the income goes and what’s left over. One could quibble over some of his numbers, assumptions, and semantics, by all in all he presents a workable framework that we can all use to see how we fit into this.

Many of us do not even have this and are, in fact, below average. To this population, Joe Average Conservative has it pretty good. These  underlying assumptions are stated as a basis of this article. We assume that Joe Average Conservative

  1. Didn’t overpay for his house
  2. Made a 20% down-payment of $45K on his home purchase
  3. Has no debt aside from his mortgage (so no credit card debt, student loans, etc)
  4. Only has one car in the family and drives 15,000 miles per year
  5. Keeps his energy bill reasonable
  6. Does not eat out at restaurants ever/ keeps food expenses moderate
  7. Has no pets
  8. Pays for health insurance but has no monthly medical expenses (unlikely with two kids)
  9. Keeps his personal budget under control regarding cable TV, Internet, and the like
  10. Doesn’t spoil his kids with toys, gadgets, trips to the movies, etc.
  11. Doesn’t take vacations.

As you can see, some of these assumptions are unrealistic. And, given our consumerist society, Joe Average Notsoconservative does not faire so well because these assumptions are immediately and consistently violated. What’s a guy to do?

US Cars Worst-Made On The Road

Posted in economics, Policy Issues by ittecon on April 14, 2010

What happens when the market gets mixed signals? When governments artificially stimulate demand, producers have no incentive to provide value. Forbes magazine offers this story.

Big Banks Make Profits from Microcredit Loans to Poor

Posted in economics by ittecon on April 14, 2010

Is some access to credit better than no access? The New York Times has something to say about this.

Posted in economics, Moral Hazard, Policy Issues by ittecon on April 12, 2010

Most Americans seem to believe that we should tighten our belts and balance the budget. They are willing to make budget cuts, but not where it would make any significant difference. As this article, The Futility of Budget Cuts, points out, people are more than wiling to cut mass transit, housing, agriculture, environment and foreign aid. The problem is that all tolled, these programs barely amount to 3 percent of the budget. The programs large enough to make a difference are defense, health care programs, and social security. Of course, defense is a sacred cow in US politics, there is no political will to overhaul the health care systems in any meaningful way, and social security has a funding problem in general, so we are told we are left with the choice of taxes, taxes, or taxes. And so it  goes…

The blue bars represent what people suggest should be cut, and the red bars represent the percentage of the budget.

Senator Wants to Fight Airline Baggage Fee

Posted in economics, microeconomics, Policy Issues, Regulation by ittecon on April 12, 2010

MSNBC presents an Associated Press piece stating that Senator Shumer (D-NY) wants “the federal government to  prohibit airlines from charging a fee for carry-on baggage” because “[a]irline passengers have always had the right to bring a carry-on bag without having to worry about getting nickeled and dimed by an airline company.” He argues “that carry-on bags are a necessity for travel.” Ben Baldanza, CEO of Spirit Airlines, has defended that “having fewer carry-on bags will help empty the plane faster, and the fee is intended to get customers to pay for individual things they want, while keeping the base fare low.”

I have to agree with the airlines on this account. First, airline travel itself is not a necessity. There are substitute forms of transportation, and if some firms charge for carry-ons and others don’t, then let the market decide. Why should all customers have to pay for the ones who carry on luggage. Now, don’t get me wrong. For all sorts of reasons, when I travel, I tend to travel light and not check in any luggage. I would be upset at this fee, too. My first course of action would be to seek another airline. If all airlines charged this fee, I might see how much railways charge, or perhaps I’d drive instead of fly. As difficult as the government has made air travel this past decade in the name of Homeland Security, I am not much interested in flying anyway.

Goodbye Paper Money: Does It Mean More Ways for the Banks to Screw Us?

Posted in microeconomics by ittecon on April 10, 2010

Currency has come a long way in the past few thousand years of human existence. Ancient Turkey started using hybrid silver and gold coins around 640 B.C. and the Chinese started passing paper around 800 A.D. But it wasn’t until the middle of the 20th century that Diners Club finally invented credit cards…

Article here How would this affect seigniorage?