Economics @ ITT

Real-World Simpson-Bowles Pre-Emptive Analogies

Posted in economics, Policy Issues by ittecon on February 27, 2013
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Simpson-Bowles analogies

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Why we don’t eat horse meat: It’s economics

Posted in economics by ittecon on February 26, 2013

A three-ounce serving of roast horse has 149 calories, 24 grams of protein, and five grams of fat. The same amount of beef tenderloin has 179 calories, 24 grams of protein, and nine grams of fat. Horse milk, which some Central Asians drink in fermented form, has one-third the fat of cow’s milk.

via Why we don’t eat horse meat: It’s economics – Business on NBCNews.com.

China Losing Edge as World’s Factory Floor

Posted in economics by ittecon on February 25, 2013

Race to the bottom or … shite rolls down hill?

China is losing its competitive edge as a low-cost manufacturing base, new data suggest, with makers of everything from handbags to shirts to basic electronic components relocating to cheaper locales like Southeast Asia.

via Business without Borders | China losing edge as world’s factory floor.

The birth of a new global currency?

Posted in economics, macroeconomics, Trade by ittecon on February 22, 2013

The internationalization of the RMB, as engineered by the Chinese government, is happening at warp speed. At the start of 2012, the RMB ranked 20th among international currencies, according to SWIFT (Society for Worldwide Interbank Financial Telecommunication). It leaped six spots in nine months.

via Business without Borders | The birth of a global currency.

Why Should Taxpayers Give Big Banks $83 Billion a Year?

Posted in economics, Income Redistribution, macroeconomics, Moral Hazard, Policy Issues, Regulation by ittecon on February 22, 2013

On television, in interviews and inmeetings with investors, executives of the biggest U.S. banks—notably JPMorgan Chase & Co. Chief Executive Jamie Dimon—makethe case that size is a competitive advantage. It helps them lower costs and vie for customers on an international scale. Limiting it, they warn, would impair profitability and weaken the country’s position in global finance.

So what if we told you that, by our calculations, the largest U.S. banks aren’t really profitable at all? What if the billions of dollars they allegedly earn for their shareholders were almost entirely a gift from U.S. taxpayers?

via Why Should Taxpayers Give Big Banks $83 Billion a Year? – Bloomberg.

‘Privacy tax’ creator makes his case, warns ‘software is eating the world’

Posted in economics, Taxation by ittecon on February 15, 2013

Colin, a tax inspector for the Ministry of the Economy and Finance in France, believes that corporations have turned the Digital Age into a massive tax haven which dwarfs anything high-priced accountants have ever pulled off in places like the Cayman Islands. His beef: Corporations don’t pay a penny in taxes on all that free labor.  In other words, not only are you are the product, but you’re also paying for all the roads, fiber-optic lines and airports that digitally dependent corporations need to get rich.

via ‘Privacy tax’ creator makes his case, warns ‘software is eating the world’ – Red Tape.

Have You Ever Tried to Sell a Diamond? A History of Exploitation

Posted in economics, microeconomics by ittecon on February 15, 2013

An old but wonderfully insightful article about the scam of diamonds.

The diamond invention—the creation of the idea that diamonds are rare and valuable, and are essential signs of esteem—is a relatively recent development in the history of the diamond trade. Until the late nineteenth century, diamonds were found only in a few riverbeds in India and in the jungles of Brazil, and the entire world production of gem diamonds amounted to a few pounds a year. In 1870, however, huge diamond mines were discovered near the Orange River, in South Africa, where diamonds were soon being scooped out by the ton. Suddenly, the market was deluged with diamonds. The British financiers who had organized the South African mines quickly realized that their investment was endangered; diamonds had little intrinsic value—and their price depended almost entirely on their scarcity. The financiers feared that when new mines were developed in South Africa, diamonds would become at best only semiprecious gems.

via Have You Ever Tried to Sell a Diamond? – Edward Jay Epstein – The Atlantic.

If Drug Companies Could Charge Higher Prices, Why Arent They?

Posted in economics, microeconomics by ittecon on February 15, 2013

What the hell is economist Douglas Holtz-Eakin smoking when he implies that pharmaceutical companies are not maximising profits?

Economists usually believe that companies try to make as much money as possible. This is why readers of an NYT article on plans to reduce Medicare payments for drugs might have been surprised…

via If Drug Companies Could Charge Higher Prices, Why Arent They? | Beat the Press.

Fox News Attacks Proposed Minimum Wage Increase

Posted in economics by ittecon on February 13, 2013

Fox News figures responded to President Obama’s proposal to increase the minimum wage by resurrecting the myth that such an increase will negatively affect employment. In reality, there is no evidence that raising the minimum wage results in higher unemployment. 

via Fox News Seizes On Obama Proposal To Attack Minimum Wage Increase | Blog | Media Matters for America.

The Productivity Dividend: Raising Pay While Working Less

Posted in economics, employment by ittecon on February 13, 2013

Given increases in productivity and stagnating wages in the US since 1973, it appears that a proper solution would be to decrease the work week, increase wages, and employ previously unemployed people. This seems to be a win-win-win proposition.

When economic gains are shared broadly, there is no reason prosperity cannot include significant reductions in work hours as well as material improvements.

via The Productivity Dividend for Dummies: Raising Pay While Working Less | CEPR Blog.