When Foreign Currencies are Tied Together

All that talk in class the other day about how currencies that were linked by the Gold Standard and what problems that created made me think about our currencies today. This story from NPR's planet Money is really interesting because it talks about the problems of dismantling some of the ties that bind countries that use the Euro. Here's the link: http://www.npr.org/templates/rundowns/rundown.php?prgId=2&prgDate=11-10-2011

(It's the second story!)

Hunting the rich

This article was showing that there are good and bad ways for the wealthy to pay more tax. By taxing more on the rich seems fair as it was pretty much the same as paying the same tax percentage according to income. It seems reasonable as Warren Buffet point out that he should not pay a lower average tax than his secretary. The benefit of taxing more would allow the poor to save more incomes and spend more, which would help the economic. However, would rise the tax on the rich is the sole solution to the America debt problem and would it improve the economy in long run? It might only help if the increase tax will equal to spending cuts.

http://www.economist.com/node/21530104

Income Inequality

In class when we talked about years of schooling among Whites and Blacks, we were making the assumption that one extra year of schooling corresponded with about a 7% increase in wages. There was convergence of incomes of Whites and Blacks. Lately, there's been a lot of talk with the Occupy Wall Street movement where most of the wealth is in the hands of the richest 1%. Greg Mankiw's blog mentions Paul Krugman's claim that the income inequality is not due to educational differences because even with about a 10% in income with an additional year of education, the average person can't catch up to the 1%. The reasoning for that was because with an additional year of schooling, more opportunities open up. For more information,

http://gregmankiw.blogspot.com/2011/11/educating-oligarchs.html

Growing Economies, Stagnant Wages

The Economix Blog reports the findings from the Resolution Foundation of the ratios of average annual median wage to average annual growth in GDP per capita from the years 2000-2007. A higher ratio shows that median pay was close to the pace of output per capita. From the results, countries such as the United States and Canada had lower ratios relative to countries like Finland and Japan. With much talk over the growing inequality in this country, reports like this only prove such a basis.

http://economix.blogs.nytimes.com/2011/11/03/growing-economies-stagnant-wages/

The Jobless Economy

Martin Ford from Project Syndicate writes how structural unemployment is increasing and is inevitable from automation and new technologies. He mentions the fact that technology is increasingly improving, and how it will "exceed the capability of human workers in many routine job categories." One such example is agriculture. In the 19th century, about two-thirds of the work force participated in the agriculture industry; now it's around 2-3%.

Ford goes on, however, that the structural unemployment will eventually reach a "tipping point". Automation will drive prices down, increase demand of goods and services from consumers, which will give the money to businesses to boost employment. New and current industries will become more efficient in the long run and thus lower the structural unemployment rate.

http://www.project-syndicate.org/commentary/mford1/English