Economics @ ITT

The Fake Skills Shortage

Posted in economics, employment by ittecon on November 27, 2012

I have been teaching this by example for years to my Econ students. There is no nursing shortage, teacher shortage, engineer shortage… I posted this about the so-called nursing shortage in 2008.

Whenever you see some business person quoted complaining about how he or she can’t find workers with the necessary skills, ask what wage they’re offering. Almost always, it turns out that what said business person really wants is highly (and expensively) educated workers at a manual-labor wage.

via The Fake Skills Shortage – NYTimes.com.

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The Cause of Riots and the Price of Food

Posted in economics, externalities by ittecon on September 12, 2012

If we dont reverse the current trend in food prices, weve got until August 2013 before social unrest sweeps the planet, say complexity theorists

via The Cause Of Riots And The Price of Food – Technology Review.

Bay Bridge may have been lost jobs opportunity

Posted in economics, employment, Policy Issues, Trade by ittecon on June 5, 2012

By now we should all be used to Made in China stickers, but the San Francisco Bay Bridge? We’ve gutted our manufacturing base, and we can’t even build a bridge—the same bridge we built 75 years ago. Is a good thing?

California officials contend the U.S. does not have the manufacturing capacity or the workforce to build such a project on its own.

via Bottom Line – SF Bay Bridge may have been lost jobs opportunity.

Hospitals Buy Back-Door Drugs Due to Shortages

Posted in economics, microeconomics by ittecon on August 26, 2011

Fifty-two percent of hospital purchasing agents and pharmacists reported they’d bought drugs from so-called “gray market” vendors during the previous two years, according to a just-released survey of 549 hospitals by the Institute for Safe Medication practices, an advocacy group.

Gray-market suppliers are those that operate outside official channels, often buying drugs from uncertain sources and reselling them at a steep profit. A report issued last week by a one hospital association found their average mark-up was 650 percent.

via Half of hospitals buy back-door drugs – Health – Health care – msnbc.com.

Price-Gougers Hike Drug Costs During Shortage

Posted in economics, microeconomics, Policy Issues, Regulation by ittecon on August 17, 2011

Amid growing shortages of life-saving drugs, some back-door suppliers are capitalizing on the problem, jacking up prices for medications for cancer, high blood pressure and other serious problems by as much as 4,500 percent, a new hospital survey shows.

via Price-gougers hike drug costs during shortage – Health – Health care – msnbc.com.

An era of cheap food may be drawing to a close

Posted in economics by ittecon on January 31, 2011

While grain prices remain below the historic highs of 2008, they could remain stronger for longer this year as intense competition among crops for land use and depleted grain bins make it an even greater challenge to restore equilibrium.

via An era of cheap food may be drawing to a close – Business – Retail – Food Inc. – msnbc.com.

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.

States hire foreign teachers to ease shortages

Posted in microeconomics by ittecon on September 15, 2008

I saw this article the other day on MSNBC about a shortage of teacher in the US. In a free market, a shortage cannot exist except in the short term.  When the corporate media uses the term shortage, it is usually coded-speak for firms don’t want to pay more money to bring the supply into equilibrium. The demand for teachers is higher than the supply of nurses.  What this means, hypothetically,  is that the market is offering $40,000 a year for teachers in an environment that teachers may be willing to work for $50,000, and there is a disconnect.  The solution is not to import teachers—although it is one solution. The solution is to pay them more. This would be an incentive to teachers to enter the profession.

This can be demonstrated by the classic graph of supply-demand:

Disequilibrium

Disequilibrium

Schools are offering a wage of P3. At P3, they are expecting Q3 teachers; however, at this wage (price) point, teachers are only willing to supply Q1. No surprises here. If schools really need Q3 teachers, they would have to pay wages of P1.   In any case, a market clearing equilibrium can be gained by paying P2.

Here are some other articles on the matter of shortages: