Archive forNovember, 2012

Free exchange: Game, set and match


This article discusses the work of the two men who are receiving the Nobel Prize in Economics this year. Both men worked on a “co-operative game theory” which they applied to organ donation, dating and even entrance to colleges and medical schools. Their theory works by accounting for personal preference while still using economic and game theory to predict what choices may be made, and how to create the best system for certain situations.

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Changing Social Behavior by Nudging


Sales at Nation’s Retailers Fall Short


This New York Times article discusses the underwhelming turnout on Black Friday. The major stores expected to perform (Macy’s, Nordstrom’s, Kohl’s, and Target), performed far below the projected numbers. Some might think this could be attributed to Hurricane Sandy, but it was the case all over the country, not just the hurricane-affected Northeast. Some smaller stores, like Gap, did well, but still not up to the expectations analysts had. No sure causes for this have been established, but it did seem like a common theme that shoppers were not impressed by the Sales, so they did not shop. Could stores be offering fewer or not as desirable sales because they are struggling? If this is the case, it is ironic that the poor economy is affecting not the people but the stores, causing the willing-shoppers to stay at home.

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In Drive to Unionize, Fast-Food Workers Walk Off The Job

This article discusses how employees at McDonald’s and other fast-food restaurants have started to strike. They are asking for the formation of a Union and higher wages; they have requested a raise from $7.25-$8.25 to around $15.oo. I found this to be very surprising. Since the fast-food industry offers low-skilled jobs, these employees have the potential to be replaced before a Union was created and acknowledged by these large international corporations. Also, unless the majority of McDonald’s/other fast-food restaurant employees went on strike, which doesn’t seem to be the case, I don’t foresee much progress being made. Similarly, as we discussed in class, higher wages would mean that the employers would hire fewer employees, so some of the individuals on strike would most likely lose their jobs in the long run anyway. Another challenge of creating a union and higher wages would be that these fast-food jobs are often temporary for many employees. As stated in the article, “These jobs have extremely high turnover, so by the time you get around to organizing folks, they’re not on the job anymore.” I will be interested to see if anything comes of this strike and whether the fast-food industry would consider paying their employees more.

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Battle of the Internet Giants

This article from the Economist discusses competition between internet giants and to what extent they should be monitored/controlled. The four companies Google, Apple, Facebook, and Amazon are listed as what the author calls “information monopolies.” I found this title to be very interesting, especially after the class discussion of the definition of public vs private goods. It goes on to discuss the potential effects of making these giants break up into smaller companies dealing with different aspects of their business. It is certainly a difficult area of business to change because all of these companies are changing so quickly as consumer preferences shift.


What Job Openings Tell Us

In What Job Openings Tell Us, the author, Casey Mulligan opens by saying, “A high ratio of unemployed to job openings means that the unemployed are competing a lot for jobs, many news reports say, when in fact it would indicate the opposite.” Mulligan continues to explain that when there is a higher tax on the employers, that employer will find a way to run his/her company with fewer employers and when this happens, these employers are reducing the amount of job openings that exist. This all creates a domino effect on the economy because the more people who are laid off leads to fewer jobs and more unemployed people vying for the same spots. The author offers his suggestion, “My conclusion is not new to labor economists, who have long understood that supply factors could increase the ratio of unemployed to job openings.” Milligan then continues to explain by using a chart showing “Unemployment, Job Openings and Marginal Tax Rates” to back up his theory.

As I continue to read more about more about our economy I am becoming increasingly negative about the situation and believe that we have dug quite the hole for ourselves and it seems nearly impossible that there will be a solution to this in the near or even relatively distant future. I think that the source of this particular problem is the taxing and the fact that it is possible for employers to run their company without as many employees yet, the employees that they had before were EMPLOYED! Imposing this tax scares employers away from creating new jobs.


Global Warming

Although this isn’t a standard article, it is nonetheless an amazing set of photos that show the effects of global warming within the past year. Changes in the environment are beginning to cause extreme problems for coastal cities, and it’s about time that government officials implement flood and natural disaster protection.

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O.E.C.D., Slashing Growth Outlook, Warns of Global Recession

The title to this article was what drew me in and when I continued to read, I almost wish I hadn’t! The article by Stephen Castle informs that on Tuesday, the Organization for Economic Cooperation and Development changed its positive view on the economy and said that there could be a global recession. The root of their concern lies in the failure to end the euro crisis and “avert a fiscal impasse in the United States.” Castle says that if the United States is unable to avoid the “fiscal impasse” that not only will our economy be in more trouble than it already is but there will be a global recession. The author also quotes the O.E.C.D.’s report, “’Over the recent past, signs of emergence from the crisis have more than once given way to a renewed slowdown or even a double-dip recession in some countries,’ the report said, adding that ‘the risk of a new major contraction cannot be ruled out.’” Castle urges that if nothing is done, our economy and the world’s economy could be in grave danger. As someone who has many more years left to live with this economy, this is a scary thing to hear. Wouldn’t it be nice if we could just press a refresh button and start all over?


Student Loan Debt Rising!

The link is a short blog post that I found in the New York Times’ Economix. It talks about the rising student loan debt delinquency that is now up to 11%. The numbers that the graph puts up, however, can be doubted according to the writer because the numbers do not consider those on the grace period.

I find it interesting to read this article because I encountered it right after I saw an article on the rise of the price of education. I can’t help but wonder if the reason behind all this debt is because of the perpetual rise of education costs. Of course, the recession should be taken into account, but I am not convinced that it would be the only reason.

What do you think are other reasons for this to happen?



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Tax Cuts, Tax Rates, and Tax Shares:

Bartlett points out that the latest information that the IRS put is a difficult pill to swallow—for both parties. On the Republican end, the data showed that the share of the total income taxes paid by the wealthier members of our society have increased. Yet, on the Democratic side, the information shows that the wealthier half of the country’s incomes increased which ultimately led to a decline in the average tax rate that they have. Bartlett categorizes these worldviews hoping to determine whether “the glass is half-empty or half-full.” Bartlett begins by examining the “1 percenters,” and lays out a chart that shows adjusted gross income share, share of taxes paid, and average tax rate from 2001-2010 and says, “Indeed, the percentage of all income taxes paid by the top 1 percent has risen to 37.4 percent form 33.2 percent in 2001. This necessarily means that the share of the bottom 99 percent has fallen.” He supports this statement by then showing a chart shows the bottom 99%, which does indeed affirm his statement. The article then continues to divulge his argument and I think this is crazy! The wealthy think that they are doing the right thing because they are paying more taxes than they were before. But, they are also making more than they were before. Granted, I am a college student who has no income and looking at this information is bound to give me a more democratic view but I still feel that the 1 percent needs to do their part because the economy won’t get better without work from both sides.


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