Economics @ ITT

Conspicuous Consumption: A(nother) Cautionary Tale

Posted in economics, environment by ittecon on January 27, 2014

Unfettered capitalism is a road to extinction, and, sadly, not just a metaphor.

At first the frenetic pace of the killing didn’t matter: there were so many seals.  On one island alone, Amasa Delano estimated, there were “two to three millions of them” when New Englanders first arrived to make “a business of killing seals.”“If many of them were killed in a night,” wrote one observer, “they would not be missed in the morning.”  It did indeed seem as if you could kill every one in sight one day, then start afresh the next.  Within just a few years, though, Amasa and his fellow sealers had taken so many seal skins to China that Canton’s warehouses couldn’t hold them.  They began to pile up on the docks, rotting in the rain, and their market price crashed.

To make up the margin, sealers further accelerated the pace of the killing — until there was nothing left to kill.  In this way, oversupply and extinction went hand in hand.  In the process, cooperation among sealers gave way to bloody battles over thinning rookeries.  Previously, it only took a few weeks and a handful of men to fill a ship’s hold with skins.  As those rookeries began to disappear, however, more and more men were needed to find and kill the required number of seals and they were often left on desolate islands for two- or three-year stretches, living alone in miserable huts in dreary weather, wondering if their ships were ever going to return for them.

“On island after island, coast after coast,” one historian wrote, “the seals had been destroyed to the last available pup, on the supposition that if sealer Tom did not kill every seal in sight, sealer Dick or sealer Harry would not be so squeamish.”  By 1804, on the very island where Amasa estimated that there had been millions of seals, there were more sailors than prey.  Two years later, there were no seals at all.

via Noam Chomsky is right: It’s the so-called serious who devastate the planet and cause the wars –

Youth Unemployment Is Costing the World Billions

Posted in economics by ittecon on January 23, 2014

In the U.S., the crisis is costing American taxpayers $25 billion annually in the form of lost tax revenue and government benefit payouts, according to a recent report by Young Invincibles, an advocacy organization for young people.

Youth Unemployment Is Costing The World Billions.

Time for a New Theory of the Firm

Posted in economics, microeconomics by ittecon on January 20, 2014

In first year economics when the supply curve was shown as upward sloping, the annoying undergraduate in me asked: why? When we get on to exactly why the supply curve is upward sloping, lo and behold, it is simply a representative firm’s marginal cost curve. Amazing!

But wait. If that’s true then firms operate at a point where there are diseconomies of scale. Yet didn’t most goods come down in price as output increased? What happened to the whole idea of economies of scale?

via Fresh economic thinking: Time for a new theory of the firm.

How Verizon and AT&T Stack the Deck

Posted in economics by ittecon on January 10, 2014

Does Oligopoly sound familiar? Remind you of another game you used to play called Monopoly? You’ve got it. Oligopoly is its first cousin.

via Ripoff nation: How Verizon and AT&T stacked the deck against cellphone users –

Economics Education Has it All Wrong

Posted in economics by ittecon on January 10, 2014

It’s long overdue to bring the outside world into the classroom at the beginning of the economics syllabus, not at the end, and to teach students how to use the tools we give them to make sense of the problems that excite them.

Economics Education Has it All Wrong gives some interesting perspective on this topic.

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Consistent Pricing Models

Posted in economics by ittecon on January 8, 2014

A few years ago, I used to eat a McDonald’s Egg McMuffin without meat (AKA, Canadian bacon or ham) most mornings, and then I learnt that I could order the ingredients separately for less money—almost a dollar less in some markets. Ordering an Egg McMuffin without meat afforded me no price break despite not depleting McDonald’s of their meat.

A supervisor explained that I could get the same sandwich at a discount by ordering an “English muffin, add round egg and cheese.” I discovered that the prices changed from location to location, but I stopped buying Egg McMuffins when I found a place that sold omelets at a good price.

I have recently changed employers, and I am still looking for a decent breakfast at a reasonable price. This morning I ordered an English muffin, add round egg and cheese, but to my surprise and chagrin, the price was higher than the Egg McMuffin.

I don’t think it is too much to ask for different restaurants within a brand to utilise a consistent pricing model—even if they have some nuance in the underlying constituent pieces. In my case, it would make more sense to discount a customer for not consuming a certain component.

Bitcoin explained for 5-Year Olds

Posted in economics by ittecon on January 8, 2014

Here is an explanation of Bitcoin suitable for a 5-year old:

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