Saturday, February 27, 2010

Google Inforgraphic--Some interesting detail about them....

Google amazes me in so many ways...A concise infographic HERE with interesting details about them...
Google has perhaps more than any other company become “The Internet Company.” It’s grown hand in hand with the internet and its entire business model has from the start been totally focused on the internet as a delivery platform.  And let’s face it, Google is a pretty interesting company. In fact, we think it’s so interesting that we put together this infographic with a ton of facts and figures about Google. We’ve been digging through Google’s SEC filings, news articles and the trusty old Wikipedia to get plenty of interesting data to include. We hope you like it!

A pop quiz: What’s the largest U.S.-based international relief and development organization?

Did not see this coming...NYTIMES: Nicolas Kristof: Learning From the Sin of Sodom...A MUST READ!!

It’s not Save the Children, and it’s not CARE — both terrific secular organizations. Rather, it’s World Vision, a Seattle-based Christian organization (with strong evangelical roots) whose budget has roughly tripled over the last decade. World Vision now has 40,000 staff members in nearly 100 countries. That’s more staff members than CARE, Save the Children and the worldwide operations of the United States Agency for International Development — combined.

For most of the last century, save-the-worlders were primarily Democrats and liberals. In contrast, many Republicans and religious conservatives denounced government aid programs, with Senator Jesse Helms calling them “money down a rat hole.” Over the last decade, however, that divide has dissolved, in ways that many Americans haven’t noticed or appreciated. Evangelicals have become the new internationalists, pushing successfully for new American programs against AIDS and malaria, and doing superb work on issues from human trafficking in India to mass rape in Congo.
Finally, recognition for the 10's of thousands (maybe 100's??) of missionaries who do great works for the world's poor and dont seek fame and fortune...There certainly are exceptions where bad things have happened as the result of missionary actions, but they are so small/miniscule relative to the good that is done ON A DAILY BASIS...Too bad the media in general and many/most  "progressives" cannot bring  themselves to acknowledge it. World would be a better place for it...

The Demand for Cigarettes is MORE elastic than we thought! (Yes, it is IMPORTANT!!)

D.C. Cigarette Tax Hike Fail:  In AP Microeconomics, we learn that if a community wants to eliminate a "Negative Externality" it should levy a per unit tax on a good or service to discourage the purchase and use of the offending good/service through higher prices.  The most prominent example teachers use is cigarettes.  Cigarettes create third party injury with secondhand smoke and other direct and indirect health  related problems.  Another reason the example is appropos is demand for cigarettes is generally relatively INELASTIC. When a good has inelastic demand it means that a change in price of the good will bring about a relatively small change in quantity demanded of the good, whether the price is increased or decreased.  If the price, with tax, increase by, say, 25% and it results in only a 10% reduction in quantity demanded then demand is said to be "inelastice". (The elasticity formula is %change in Quantity Demanded divided by the %change in Price--if result is less than one, demand is inelastic)...There is also a Total Revenue Test for Elasticity too.  If demand is inelastic, like cigarettes, then if %change in price increases MORE than the %change in quantity demanded than Total Revenues will INCREASE! However, it did not work out this way in D.C.
The projections are now that this year's estimated cigarette tax revenues will fall below the pre-hike FY2009 levels ($37.6 million)---in other words, the tax hike got the city less revenue, not more...instead of $45.4 million in revenue, Gandhi says the District will only bank $30 million.
Some predictable variables show up in this instance:
Because the increase, to $2.50, catapulted the District's rate over Maryland's $2-per-pack rate, Gandhi explains, many Maryland smokers who'd bought their tobacco in the District switched back to buying in Maryland. Add that to all the D.C. smokers who started buying cheap-as-dirt Virginia smokes, and you get the picture---
It appears that close proximity of a "substitute" LOCATION to buy cigarettes has made the demand curve for cigarettes in the Maryland/DC area MORE elastic! (The demand for a good becomes  MORE elastic with the increase in available substitutes)....If politicians and policy makers took an economics class now and again, they may become more aware of the consequences of their actions...

News Flash! China is experiencing wage inflation---MONTHLY minimun wage---$114!!


"Just a year after laying off millions of factory workers, China is facing an increasingly acute labor shortage. As American workers struggle with near double-digit unemployment, unskilled factory workers here in China’s industrial heartland are being offered signing bonuses.  Factory wages have risen as much as 20 percent in recent months."


Welcome, China, to the Short Run Aggregate Supply Curve.  China is experiencing "normal" inflation due to increasing wages as a result of moving closer to what is called "Full-Employment" Real GDP.  Economists define Full-Employment Real GDP as the dollar value of an economy's "potential" production, regardless of the price level.  Notice on the graph full-employment Real GDP ("FE RGDP") is fixed. 


This fixed point of potential GDP comprises the Long Run Aggregate Supply (LRAS) and is vertical at FE RGDP.   Any RGDP to the LEFT of the LRAS represents "Actual RGDP" (Point "RGDP1"). It means the economy is producing a Real GDP that is less than its potential ability to do so. It is "under-employing resources" and the main resource we care about is people.  At FE RGDP the unemployment rate is relativel low, but NOT zero!  Economists consider 0% unemployment to be actually about 5%, or the "Natural Rate of Unemployment".  If an economy can get to 5% unemployment it should consider itself at  full-employment.  The lower the Actual RGDP is relative to FE GDP the higher the unemployment rate (we have the presence of "cyclical unemploymnet"). As an economy increases its actual RGDP it consumes more societal resouces, labor included.  As you move closer to FE GDP, more people are employed and fewer and fewer skilled and unskilled workers are available. If business are still expanding, then they will have to compete with each other for ever-more scarce workers.  They do this by increasing wages, to attract AND retain existing workers.  Labor is the resource, according to the article, that is becoming more scarce, hence increasing wage rates.  Increasing wage rates are EXPECTED as a normal course as production moves closer to Full-Employment Real GDP. The effect of rising wages start to take effect in the graph (below) as we pass Real GDP5. This will increase the cost of producing, hence the transition from the horizonal section of the Short Run Aggregate Supply (SRAS) curve to the upward-sloping intermediate section of SRAS, up to Real GDP8.


You can see that price level increases as production is increased.  Again, it is important to remember that this is EXPECTED inflation and is built into the existing SRAS curve.  The problems arise when inflation is UNEXPECTED (creates "Stagflation"--more on that another time) and SHIFTS the SRAS curve to the left....Bottom line: China is moving along its Short Run Aggregate Supply Curve and is a normal condition as it reaches full-employment GDP. Problems arise when they (1) experience UNEXPECTED inflation (resource price shock, for example) OR (2) move BEYOND there Full-Employment capacity and ACTUAL unemployment goes below the Natural Rate of Unemployment...



TV News Reporting Template---Who would have thought???

If you are a news junky like I am, but are HIGHLY annoyed by local TV newscasts and the "on the scene" reporting, this video takes a humorous look at the template that local reporters apparently use to film their segments. When I watch the local news I do notice a pattern...

Friday, February 26, 2010

I am objective! No, REALLY I am....

A VERY short political philosophy quiz to determine your leanings HERE (only take two minutes and the most)....The graph above is mine...I answered honestly...I am pretty much a Centrist with Libertarian leanings...Guess that means I am somewhat objective OR I can committ one way or the other...it is a fine line, I suppose..

Thursday, February 25, 2010

Moving to China? Keep Fluffy at Home, PLEASE!!

From The Economist: "Off the menu: The right to eat cats and dogs is under threat"...I sometimes wonder about the country of China and some of the cultural norms...
AT THE National People’s Congress (see main story), the Communist Party decides what laws to draft and when they get passed. But public pressure is beginning to count, too. An attempt to persuade the Congress to ban the eating of dog- and cat-meat has captivated the Chinese press and caused an uproar....This creates conflict with ancient eating habits. Dogs are a popular dish in many parts of China, not least among ethnic Koreans in the north-east. Dog restaurants are also common in Beijing. Many believe that eating dog helps keep the human body warm in winter. Cats are popular in southern China. The sweet-tasting meat has been served to your correspondent, diced into small cubes reassembled in feline form with fur-stripped paws sticking in the air. The wretchedness of its foreshortened life was left to the imagination.

A Depreciated Dollar is NOT Appreciated by Oil Producing Countries---Should We Care???

Oil producing countries do not like a depreciating US Dollar.  As with most commodities (oil, wheat, corn, sugar, soybeans, gold, silver, on and on...) that are traded in world markets, the currency of record is the US Dollar.  In other words to buy or sell oil, countries need dollars to do so.  Today a barrel of oil (42 gallons in a barrel) sold for $78.17.  Lets use Canada as an example.  Canada is our number one source for foreign oil (surprised?).  Assume today Canada sells that barrel of oil and gets the $78.17.  More than likely they will exchange those dollars for Canadian currency (they dont have to, but lets assume so).  At todays exchange rate of $1.00 =  1.05CN the Canadians would recieve ($78.17 X 1.05) 82.08CN.  NOW, assume the dollar depreciates relative to the CN, or vice versa, the CN Appreciates relative to the dollar and the exchange rate is $1.00 = 1.00CN ($1.00 buys fewer CN than it did before).  Now the Canadians would only get ($78.17 X 1.00CN) 78.17CN---LESS than before!! In order for the Canadians to get AT LEAST what the got before the depreciaton of the dollar, they would NOW have to "get" $82.08 US dollars for a barrel of oil.  Every other country that sells oil, ceteris parabas, is going to be in the same situation.  The international market price for oil tends to increase.  There is a consistent inverse relationship between the price of oil and the value of the dollar (see graph...keep in mind there are other varibles at work too).  This works in reverse as well---an appreciating dollar tends to decrease the price of oil and other internationally traded commodities...

The Hummer Brand is Dead...I say good riddance....

WSJ: GM to Shut Hummer After Sale Dies

General Motors Co.'s beefy Hummers will join its Pontiac and Saturn in the scrap yard of failed brands after a $150 million deal to sell the line to a Chinese equipment maker collapsed. Sichuan Tengzhong Heavy Industrial Machinery Wednesday failed to win approval from Chinese regulators for its bid. GM said it would wind down Hummer operations after concluding Tengzhong wouldn't be able to finalize the deal.
I have said in class that the Hummer brand WAS bought by a Chinese company already, but I was wrong....The brand is dead, it seems, officially...Because I am  market-orientated in my outlook, I would never tell someone what kind of vehicle to buy.  I say let market forces do the work.  Well, market forces have spoken in regards to the Hummer. In this case, I believe the correct message was sent.  The vehilce always seemed excessive to me, not only in proportion, but in resouce use.  In a time of war, it symbolized what is/was wrong with our consumer culture AT THE AFFLUENT MARGIN. I heard people defend their purchase/use of this vehicle on the grounds of "freedom"(or some semblence of that arguement)...Yes, you are free to buy one of these, but SHOULD you is the question.   I would hope through  widespread "enlightened" study of economics and philosophy by "the folks", markets can be more efficient and more understood...Could happen...:)

Tuesday, February 23, 2010

YES! We DO need Healtcare Reform AND we can learn something from the Europeans!!

Yes, we do need Healthcare reform...Perhaps we CAN learn something from European models...
THE private provision of health care comes in several forms across Europe. In Germany and the Netherlands it provides coverage for those not on government schemes; in Britain and Ireland it duplicates state-run systems; and in France it tops up cover from official programmes. But do private health schemes lead to better care overall? A study by the Boston Consulting Group concludes that countries relying mainly on insurance—such as France, Germany and the Netherlands—provide better care than those, like Britain, Italy and Spain, that are chiefly funded by taxes and which spend less on health care as a proportion of GDP. (The Economist)

Has Your House Been Weatherized Yet? I Did Not Think So...$5Billion and Counting...

Here is a clip from CNN from LAST April talking about the weatherization plan...IMPORTANT to watch to get a frame of reference for what is written below...

NYTIMES: "Hiring Freezes Hamper Weatherization Plan"---Article suggests that one of the marquee programs touted under the, now 1 year old, $787 Billion Fiscal Stimulus Plan, is falling far short of showing results:
President Obama’s plan to create jobs and rein in energy costs through a steep increase in money for weatherizing the homes of low-income Americans has so far borne little fruit, with many of the biggest states meeting less than 2 percent of their three-year goals to date, the Department of Energy’s inspector general said in a reportTuesday.The inspector general, Gregory H. Friedman, called the lack of progress “alarming.”
This program is "only" $5Bof the total $787B (or 0.63%) but it was one of the most publically touted programs to garner public support for passing the stimulus. It was sold as program that was going to put people to work immediately AND save energy:
Far into the nation’s winter heating season, the program for the most part has neither saved energy nor put people to work, Mr. Friedman wrote. “The job creation impact of what was considered to be one of the department’s most ‘shovel ready’ projects has not materialized,” the report said...
In defense of the performance officials blamed the recession and bureaucratic delays:
Yet the report said action was hobbled by bureaucratic delays and by the recession itself, as spending cuts resulting from the economic downturn forced states to trim personnel expenses.  Many states either furloughed the state employees who would administer such programs or instituted hiring freezes that prevented state offices from processing additional work — even though the federal government would have paid the additional salaries, the report found. Another stumbling block was a decision by Congress to require contractors on the weatherization jobs to pay prevailing wages, the report said. To determine what those salary levels were, the Labor Department undertook a survey. In the meantime, the Energy Department instructed states to go ahead and put people to work and to keep records so the federal government could make retroactive payments if necessary. But most states did not begin hiring until the wage question was resolved last fall, the report said.
It is apparent that the "creation" of these weatherizing jobs will not occur until sometime after the economy starts to recover. Can they still be classified as "recovery" jobs? Can this program be called successful? Should it be reconsidered and the money allocated to a more productive use?  Just askin'...

Did the Internet Kill TV???

The rumor of Televisions death have been greatly exaggerated...Article in NYTIMES "Water-Cooler Effect: Internet Can Be TV’s Friend" suggests what we may already know: TV watching has been enhanced by the internet rather been replaced by it...
Remember when the Internet was supposed to kill off television?...Many television executives are crediting the Internet, in part, for the revival.
Blogs and social Web sites like Facebook and Twitter enable an online water-cooler conversation, encouraging people to split their time between the computer screen and the big-screen TV. The Nielsen Company, which measures television viewership and Web traffic, noticed this month that one in seven people who were watching the Super Bowl and the Olympics opening ceremony were surfing the Web at the same time.
Right now, I am updating this blog, posting it on FB, surfing the internet looking for new ideas AND watching (passively) a History Channel biography on Ben Franklin.  I notice many FB statuses are changed during "LOST" or various award shows.  How about you? What are your habits in this regard?

Monday, February 22, 2010

The Negative Effects of Subsidies in India--How to create a famine in one easy lesson...

India's "Green Revolution", begun in the 1970's, allowed it to become food self-sufficient and even a net exporter is now a net importer of food and is experiencing food inflation. Why?....This article suggests it is the use of particular, heavily subsidize urea-based fertilizer that is rapidly depleting soil quality and rendering arable land nutrient deficient.  There are alternatives to this fertilizer but are not widely used.  Again, WHY?  It appears to be the result of a common problem---once a subsidy is granted it is almot impossible to rescind it because entrenched corporate interests are eager to maintain the subsidy.  Subsidies tend to be very profitable for the recipient...
"The government has subsidized other fertilizers besides urea. In budget crunches, subsidies on those fertilizers have been reduced or cut, but urea's subsidy has survived. That's because urea manufacturers form a powerful lobby, and farmers are most heavily reliant on this fertilizer, making it a political hot potato to raise the price."
Farmers have become "addicted" to the low cost fertilizer even though they themselves see the harm it does...
"Without the urea, my crop looks sick," he said, picking up a few stalks of the young wheat crop and twirling them in his fingers. "The soil is getting weaker and weaker over the last 10 to 15 years. We need more and more urea to get the same yield."..."One farmer sees another's field looking greener, so he adds more urea," he says. "A farmer will become bankrupt, but he will not stop using urea."
This story is an excellent example of economics mixing with government/politics.  Subsidies are not bad if it creates a postitive externality, or a benefit that extends to society at large (food self-sufficiency is positive).  Early in the Green Revolution this subsidy appears to have created many benefits for the people of India. However, when the positive started to reach a point of diminishing returns, the policy should have been objectively reconsidered to ensure that positive externalities were still present in the production of food.  Interest group politics in this case stymied that reconsideration. As you know from class, I am fond of saying, economics tells you what should be done, politics decides otherwise..:)
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