Sacrificing Transportation Efficiency

In a Forbes article by Timothy B. Lee entitled, “The Case for Tearing Down Urban Freeways,” there is a discussion of the decision to replace Philadelphia’s “aging” I-95 freeway. The article cites examples in both San Francisco and New York in which the demolishing of an urban freeway has resulted in “higher property values, tourism and more housing for city residents.” Having emphasized the importance of the railroad in the development of the United State’s internal economy, I find it interesting that we have reached a point where transportation efficiency can be so easily sacrificed. The automobile and the network of freeways on which it depends has surpassed the efficiency of the railroad to such an extreme that it may be considered unnecessarily efficient, and therefore some transportation efficiency can be sacrificed for environmental quality.
http://www.forbes.com/sites/timothylee/2011/11/15/the-case-for-tearing-down-urban-freeways/

Self-fulfilling prophecies

It is rather interesting to see how expectations often play a part in establishing results, whether in bank stability or even market leadership. In Bernanke's lecture on "Money, Gold, and the Great Depression," we observe how the expectation of bank failures spark bank runs in 1929, and lead to thousands of actual bank failures in the 1930's. Similarly, investors' speculation on the stability of the gold standard also contributed to the difficulty for central banks to maintain the gold values of their currencies, creating an overall unstable and destabilizing effect on the economy. We can see this pattern of self-fulfillment come into play even in company business models, through "expectations management," where the public's perceived future market leader will become the market leader, as the company's brand naturally builds upon itself through a network effect.

Labor Force Participation Hits New Low

This article by Sara Murray, posted online from the August 5, 2011 Wall Street Journal, discusses data that indicates that the labor force participation ratio has dropped to a new low since the beginning of records in the early 1980s. The article does not just state the obvious, in that workers have become discouraged and have given up on finding work, but it goes further. It says that those workers who have been out of the job market for a long period often have a reduced life span and develop anxiety and depression. It is interesting to see this long run effect for those out of jobs. The article also states that as participation decreases the economy looses productivity. One can then use the concept of factor productivity discussed in class to make assumptions about how this is affecting those who are in the labor force. Assuming a decrease in the labor force participation rate means less workers. Holding output (Q) constant, the only way to keep total factor productivity (A) constant would be to increase the amount of hours worked by each of the existing workers or to increase capital investments. During the recession I assume it is difficult to find capital investments and therefore hypothesize that each work will have to work harder and longer. Therefore with the information given the decreasing labor force participation ratio would not only but a mental strain on those out of work, but also on existing worker. I found it extremely interesting to read an article and be able to formulate my own hypothesis based on what was taught in class.

If your interested in reading this brief article here is the web address: http://blogs.wsj.com/economics/2011/08/05/labor-force-participation-hits-new-low/

Even Nobel Prize Winners Can Tell

Since we've been talking about the Great Depression during class and comparing it to the economic situation of the world now, I saw an article about 2 economists who just won the Nobel Prize. They are experts in the subject that we are studying at the moment. They can see that we are in a huge economic downturn that could be comparable to the Great Depression and their focus is exactly what one of the articles we have to read for class also mentions: interest rates, inflation, and economic shocks: http://www.cnn.com/2011/10/10/business/nobel-economics/index.html?eref=rss_world&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fcnn_world+%28RSS%3A+World%29

Gap Widening

According to this news source, http://www.boston.com/bigpicture/2011/11/feeding_7_billion.html, the gap between the rich and the poor are still widening despite the more developed world we live in. One of the most important staples of the world is wheat and from the pictures, it looks like Canada is one of the main producers of wheat. This could be part of the reason why Canada was able to be one of the countries who experienced reversal of fortune because it was fortunate enough to have the land that is conducive to growing wheat and therefore allowing Canada to have a continuous source of food and also allowing Canada to have control over a main food source of the world.

US Farmers Reclaim Land From Developers

This article from the November 14, 2011 printed Wall Street Journal was one that caught my eye. This article indicates that thousands of acres across the land are now being used again for agriculture. This article uses a different, and more modern approach to explain an increase in Demand for farmland. In class we looked at the topics of transportation and social savings. We saw that as transportation costs decreased a national market was created in which the price of goods varied little across cities. We discussed the social savings associated with the railroad and the radius of cultivation. This article uses an interesting new approach and looks at the value of US cropland. It is interesting to see how land values have changed nearly a century after the second industrial revolution. The article notes that land values have fallen do to the housing slump and that all crops are doing well. The article notes that with the already established infrastructure, markets, and transportation there are “rising prices for everything from corn to cotton” which increase the demand for farmland. Yet is does not go onto explain why prices are high for crops? I find it fun to run though different scenarios, all of which come back to the fact that gas prices are high and unemployment are low. I’ll let you formulate your own thoughts that will most likely differ from mine, but what we will all agree on is that man things have changed!

The Elusive Progressive majority

The latest issue of the Economists points out that how elusive demographic changes can affect presidential elections. It says that by the year of 2050, the white is no longer the majority of U.S. population. The Latino share of population will double from 15% to 30%, African-American and Asian-Americans will grow from 19% to 24%. Due to the trend that minorities like to vote for Democrats, it is a bad news for the Republicans for sure. Immigrations not only affect the economic aspect of lives, surely political aspects too.

Poorest poor in US hits new record: 1 in 15 people

There are more people getter poorer nowadays, the new record in US was there are 1 poor in every 15 people. Living in today is very expensive, every thing in our life cost so high, for example the price of food, gas, rental, and electric was rising every year. The price was increase rapidly yet the wage was still the same or lower. Those costs was just enough for middle-class to survive, it was a very hard time for poor. That makes the poor even poorer when the prices of products are so high.

http://news.yahoo.com/poorest-poor-us-hits-record-1-15-people-040233161.html

European economy has all but stalled

Economic growth in European countries has slowed if not stalled which could imply they are heading to recession.  In class we discussed what the global market implies for savings and the demand for domestic and foreign assets particularly in the case of the Great Depression.  For example, an increase in interest rates in France would change the nominal interest rate in the U.S.  The cost of borrowing in some European countries has grown in addition to economic shrinkage in others which means there is a contraction in lending.  The article points out that this will definitely affect the U.S. economy in that it can change lending expectations and the expected return.  A changed interest rate in foreign lending markets will affect the interest rate in the U.S. economy which could mean an increased recession.  It is clear that economic activity abroad is affecting the U.S. economy even today.

http://hosted.ap.org/dynamic/stories/E/EU_EUROPE_ECONOMY?SITE=CAANR&SECTION=HOME&TEMPLATE=DEFAULT

Wage Violations

http://online.wsj.com/article/AP1a153b15fbd44922854b2aff6f272223.html?KEYWORDS=wage+penalties

This article from September, 2011 in the Wall Street Journal discusses the issue of classifying workers as independent contractors instead of full-time employees.  By classifying workers as independent contractors, employers do not have to meet the minimum wage standards set by governments, and do not have to pay workers compensation, insurance, or any federal taxes associated with having full time employees. Although this isn't the same as a Black wage penalty, it shows that there are still wage penalties apparent, but more from an institutional perspective, and not a race perspective.

A Gold Rush of Subsidies in Clean Energy Search

In class we examined the United State’s history of natural resource consumption and extraction. During this discussion we looked at two arguments in particular, the “favorite by fortune” and “favorite by design” argument. We tried to discern whether the US gained a lead in resource extraction, in comparison to the rest of the world, due to luck or institutional design. This article is a relevant modern example of “favorite by design” when it discusses how financial incentives in the form of subsides will shape the country’s future resource consumption. Today’s subsidies for clean energy are similar to the Federal Mining Law of 1872 in the sense that entrepreneurs now have more to gain and a lower market entrance cost thanks to changes in government regulation. Compare and contrast this to The Federal Mining Law of 1872, which also made market entrance easier by allowing free exploration and purchase, and improved miner returns by giving exclusive right of possession and enjoyment. Please view the New York Times article below for more details!

http://www.nytimes.com/2011/11/12/business/energy-environment/a-cornucopia-of-help-for-renewable-energy.html?_r=1&hp