Welcome. I started this blog for my economics students, but any other fans of economics (and science or history) are welcome. My goal for this blog is to provide background on current events. Hopefully, the links to interesting newspaper articles, videos, data, books, web sites, and research will convince you that economics is fascinating and relevant to your life.
Tuesday, February 21, 2012
The long-term unemployed and high school dropouts
This 60 Minutes episode focused on the "carnage" caused by long-term unemployment. It highlights one program, Platform to Employment, that has successfully helped the long-term unemployed reenter the workforce. This program starts by revamping its unemployed clients' confidence, and then finding internships for these mid-career professionals. It also helps them navigate discrimination against the long-term unemployed.
Monday, February 20, 2012
Productivity and U.S. Competitiveness
The link between competitiveness, productivity and regulation gets special focus in this issue of the Economist. For those of you who are new to the reading the Economist, Schumpeter is a weekly column about markets. It is named after an economist, Joseph Schumpeter, who championed the "creative destruction" of markets.
Economist (2-18-2012) United States' economy Over-regulated America
Economist (2-18-2012) Schumpeter: This times it's serious
http://video.cnbc.com/gallery/?video=3000067504
In this interview (6 minutes), the Chief Economist for the Conference Board, Bart van Ark, explains how productivity is measured ( = real GDP/hours) and worrisome signs for the future. With real GDP growing slowly and hours finally increasing as more workers are hired, productivity growth is slowing. Productivity is pro-cyclical - it grows when real GDP grows.
Productivity in developed nations is still 4 times higher than in emerging nations. While productivity is growing faster in developing nation as they borrow technology, they still have along way to go to catch up.
Economist (2-18-2012) United States' economy Over-regulated America
Economist (2-18-2012) Schumpeter: This times it's serious
http://video.cnbc.com/gallery/?video=3000067504
In this interview (6 minutes), the Chief Economist for the Conference Board, Bart van Ark, explains how productivity is measured ( = real GDP/hours) and worrisome signs for the future. With real GDP growing slowly and hours finally increasing as more workers are hired, productivity growth is slowing. Productivity is pro-cyclical - it grows when real GDP grows.
Productivity in developed nations is still 4 times higher than in emerging nations. While productivity is growing faster in developing nation as they borrow technology, they still have along way to go to catch up.
Saturday, February 18, 2012
Reagan and Thatcher
To gain insight on the partnership of these world leaders, watch this fascinating 5 minute segment of interviews with each. Interestingly, Reagan saw her as a potential Prime Minister early in her career.
http://youtu.be/GHfH5TUbhi4
An opinion piece in this Friday's WSJ called for a new European revival of Reagan and Thatcher's free market approach.
WSJ (2-17-2012) "Europe's Supply-Side Revolution" by By DONALD L. LUSKIN AND LORCAN ROCHE KELLY
Luskin and Kelly suggest European governments should focus more on growing out of the crisis, i.e. focus on the supply side of the economy.
"In the 1970s, conventional wisdom held that the U.S. couldn't compete against Japan and, yes, Europe. But fear clarified our minds, and the supply-side revolution we dared to undertake in the 1980s restored America's growth and competitiveness. Conventional wisdom today holds that Europe is doomed. To the contrary. It is, bravely, starting its own supply-side revolution."
http://youtu.be/GHfH5TUbhi4
An opinion piece in this Friday's WSJ called for a new European revival of Reagan and Thatcher's free market approach.
WSJ (2-17-2012) "Europe's Supply-Side Revolution" by By DONALD L. LUSKIN AND LORCAN ROCHE KELLY
Luskin and Kelly suggest European governments should focus more on growing out of the crisis, i.e. focus on the supply side of the economy.
"In the 1970s, conventional wisdom held that the U.S. couldn't compete against Japan and, yes, Europe. But fear clarified our minds, and the supply-side revolution we dared to undertake in the 1980s restored America's growth and competitiveness. Conventional wisdom today holds that Europe is doomed. To the contrary. It is, bravely, starting its own supply-side revolution."
Wednesday, February 15, 2012
How much of a role should the government play in the national economy?
This special report in the Economist magazine addresses state capitalism, with a focus on China, Russia, and Brazil.
Economist (1-21-2012) "The Visible Hand"
http://youtu.be/4Fn33n4Csi0
Class:
List and discuss three pros and cons of state capitalism, a system in which the government plays a very large and direct role in the economy. State capitalism is on the rise in many countries, and some countries, such as China, claim it explains their recent success.
Is this a flash in the pan? What hazards are lurking in the future for this approach?
Monday, February 6, 2012
NYT (2-7-2012) "Data show Greece's debt ratio growing as economy-shrinks" by DAVID JOLLY
By treaty, countries in the euro zone are supposed to keep their debt/GDP ratio under 60%. Greece has never met that target since it joined the euro zone. In 2001, it had a debt/GDP ratio of around 100% (debt = GDP). Due to raising debt and shrinking GDP, its debt/GDP ratio now is close to 160% (debt > GDP). According to the CIA World Factbook, Greece's GDP shrunk 2% in 2009, 4% in 2010, and 5% in 2011.
To get its debt ratio back down to 60%, Greece will need to
1. decrease debt (default)
and/or
2. increase GDP
Cutting current government spending to stop adding new debt ("austerity") has not helped much, because it has also negatively affected GDP. If the EU really wanted to stave off default, it could promote (and fund) new policies that increase Greece's GDP. Labor market reforms would be a promising area to start.
Really good news clip about Greece's debt to GDP numbers
"As recently as Jan. 23, creditors wanted an average coupon of about 4.25 percent, two people familiar with the talks said then. That offer equated to a loss of about 69 percent on the net present value of Greek debt." from Bloomsberg (1-30-2012) "EU stumbles over Greek aid package as Merkel signals debt agreement delay" by By James G. Neuger and Jurjen van de Pol
By treaty, countries in the euro zone are supposed to keep their debt/GDP ratio under 60%. Greece has never met that target since it joined the euro zone. In 2001, it had a debt/GDP ratio of around 100% (debt = GDP). Due to raising debt and shrinking GDP, its debt/GDP ratio now is close to 160% (debt > GDP). According to the CIA World Factbook, Greece's GDP shrunk 2% in 2009, 4% in 2010, and 5% in 2011.
To get its debt ratio back down to 60%, Greece will need to
1. decrease debt (default)
and/or
2. increase GDP
Cutting current government spending to stop adding new debt ("austerity") has not helped much, because it has also negatively affected GDP. If the EU really wanted to stave off default, it could promote (and fund) new policies that increase Greece's GDP. Labor market reforms would be a promising area to start.
Really good news clip about Greece's debt to GDP numbers
"As recently as Jan. 23, creditors wanted an average coupon of about 4.25 percent, two people familiar with the talks said then. That offer equated to a loss of about 69 percent on the net present value of Greek debt." from Bloomsberg (1-30-2012) "EU stumbles over Greek aid package as Merkel signals debt agreement delay" by By James G. Neuger and Jurjen van de Pol
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