Archive forSection 04

Buffett: What the rich owe the rest

Warren Buffett supports a progressive tax system (similar to Frank) and in this interview he explains this and his reasons for supporting that type of tax system, which largely have to do with him believing that he never would have been as successful as he is had he not lived in the United States.

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Wall Street Job Reductions Seen Persisting After Citigroup Cuts

This article has been published in Bloomberg Businessweek by Michael J. Moore, Christine Harper and Ambereen Choudhury. I found the article interesting, because it evaluates the situation of the job market in Wall street. Basically, Wall street job reductions have been persistent during the last two years, erasing more than 300,000 financial industry jobs. I find it interesting to see how the stiffed economy in general reflects the labor demand and supply on Wall street. The article points out that the cuts and reductions have most probably been the result of  a “market slowdown, stiffer capital rules and weak economic growth” Unless the situation returns to normal and the markets pick up, there will be even more job reductions. It seems like Wall street, and everyone else in the financial industry sector is preparing for a transition, as the industry is likely to shrink as the analysts predict.

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An example of the “Small Business Fallacy” that Frank discusses

This shows two opposing sides to what Frank discusses as to whether a small business will hire employees or not. The news clip shows that more or less Frank is correct that business owner make decisions based not on tax rates but on if by hiring an additional person they cover the salary of the person or not.


Money Isn’t Everything

This article discusses different things that some employees would prefer instead of salary increases. This is similar to the reading from this weekend, and explains why sometimes workers will try to avoid salary increases because of income taxes.

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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.


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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Is Christmas Bad for the Economy?

I found this article to be interesting because it ties in the idea of deadweight loss with the act of giving gifts over the holidays. Christmas isn’t necessarily bad for the economy; however, the economy would be better off sometimes without it. That is because many people cram all of their spending into the two months of Novemeber and December right before Christmas, whereas without the holidays, the people would have more money to spend sporadically throught the entirety of the year. Either way, retail stores are making money.

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Renewable Energy Costs in Britain

There are a lot of parallels between the issues addressed in this article and the challenges that are currently being dealt with in the US. Even with Britain’s current dismal economy, the administration is continuing to push for clean energy through nuclear and wind power. Just like in the US, these cleaner forms of energy cost more than the current forms of energy (coal and natural gas), and require economic incentives in order to even be considered. Perhaps this can be an example that even in tough economic times, the beginnings of a transition to cleaner energy forms is possible.


Why some athletes make so much more than others

This article discusses why the top athletes around the world are paid so much. It’s primary example is Alex Rodriguez of the New York Yankees. The article explains that if the owners feel that the player will increase revenue by his salary plus a little extra, the owner will be willing to pay it no matter how high the salary is. This is similar to what we have been learning in class about marginal product of labor and marginal cost of labor.

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