This is what the President should be doing…

darkow

This cartoon is here to tell the viewers that Bush is sleeping while the economy is going down. It basically says Bush should do something about it. I disagree the best thing he could do is nothing.

This is just the market’s correcting from bad Federal Reserve management.

Published in: on March 31, 2008 at 4:11 pm  Comments (1)  

Gore’s New Campaign

The biggest mistake Time magazine ever made was naming Putin as 2007’s “Man of the Year”. It should have been Al Gore. The “used to be next President of the United States” is initiating a 3-year, $300 million campaign to “alert” Americans about the significance of global warming. Gore’s aim is to convince the American voter/taxpayer that climate change is not only a problem, but federal and state action must be pursued immediately.

Al Gore has always interested me with his political fervor about climate change, and his hippie-like suggestions as to what to do. When Gore first began discussing global warming back in the early nineties, I don’t think he knew much about economics. Now its probably more like he doesn’t care so much.

From a scientific standpoint, Gore is almost entirely correct about what he claims will happen to the world’s climate (he’s also not a physicist). The problem is, the former Vice-President wants the federal government to put gigantic restrictions on all greenhouse-emitting products, in virtually every market. Gore also wants to restrict greenhouse gas emissions through a sketchy tax system.

Here’s where the Gore Theory breaks down:

If the US is not using as much greenhouse-producing resources any more, than China and the rest of the world are. The only difference is, our economy will do worse while their’s grows. Not so good in the short run. If greenhouse emissions are a problem, than entrepreneurs will have to spend on innovation anyway. Not so good in the long run either. Capping American consumption of greenhouse resources will only make the situation worse for Americans.

Consider this discussion, and see what your thoughts are. Can you find anything else wrong with Gore’s ideas? Do you have a solution/answer of your own? (check out this article) After some time, I will return with some of my own…

Published in: on March 31, 2008 at 4:47 am  Leave a Comment  

Is the Hummer more efficent than a Prius?

Every environmentalist in the world has made the Hummer their main enemy. There examples of the world going to hell in a hand basket often consist of “These people that drive Hummers…” and some hope that we all go to Prius-like cars.

A recent Slate Magazine article talked about the recent craze that the Hummer is actually more efficient than the Prius. The idea got started through emails like all good rumors. As most rumors some are true and some are untrue. This article takes out all the bias and see what is the science that they are using to come to this conclusion.

“The skeptics’ basic argument is that the Prius‘ battery is irredeemably
un-green, mostly because of its high nickel content and complex manufacturing
process. As a result, “Dust to Dust” contends that a Prius will consume $3.25
worth of energy per mile over its cradle-to-grave lifetime. A Hummer H2, by
contrast, will use $3.03 per mile and the Hummer H3 just $1.95.”

This is very interesting because for the first time people have looked at efficiency at being more than just gas consumption. No one ever says that the Prius is more efficient to make than the Hummer.

Toyota does admit that the energy to create a hybrid is a lot but they believe it makes up for it with the less gas that is consumed later on the road.

My opinion is I seriously doubt this to be true and it is still a long term investment towards using less gas because the production costs may stay relatively fixed. If the costs, which I have no clue what exactly it would be, raises for making hybrids then you would see people starting to notice.

The rest of the article can be found here.
Published in: on March 30, 2008 at 10:19 pm  Leave a Comment  

Cellphones are Killers?

A new study in the use of cellphones links their use to a certain type of brain cancer. According to an award-winning neurologist, Dr. Vini Khurana, claims that the use of mobile phones is linked to a particular brain tumor that is deadly.

Dr. Khurana is already demanding the communications industry and government regulation make changes to adapt to these new findings. The researcher claims that the long-term use of cellphones at least doubles the likely hood of developing terminal brain cancer. Citing these figures, Khurana claims that cellphones are more deadly to the general population than smoking and asbestos.

Naturally, the Mobile Operators Association have refuted Dr. Khurana’s work as being generally “wrong” for a number of unlikely reasons. I find this particularly interesting. We have a reputable scientist claiming that an incredibly popular western product is a major health risk, while the industry denying any problems exist.

While I’m not entirely convinced cellphones are “dangerous”, I would definitely like to see what further research by the scientific community yields. I also wonder how much money communications industry lobbyists will spend trying to crush this movement.

Published in: on March 30, 2008 at 12:28 am  Leave a Comment  

The Power Hungry Fed

Treasury Secretary Henry Paulson is back in the news again. This time, it’s for introducing a new and controversial idea concerning the role of the federal reserve.

After reviewing recent economic interaction, Paulson believes the Fed needs a greater role in the general markets, and has made a progressive proposal concerning the responsibilities of the department. The Secretary would like the reserve to monitor all of the financial industry. In addition, Paulson has offered the following elements as well:

-Merge the Securities and Exchange Commission with the Commodity Futures Trading Commission

-Give stock exchanges more room for self-regulation

-Consolidate bank supervision into one regulator

The idea behind this new proposal, is that the federal reserve becomes more efficient, but also a sort of “first line of defense” for financial crisis. Streamlining the fed is certainly a good idea; this will make them more productive while also lowering the cost to the American taxpayer. However, giving the reserve more to care for is increasing government-economic regulation, not shrinking it. I am a big opponent of federal regulation in almost every case, and this area is one of them.

I say this because for all the good regulation is said to do, we see at least as much bad. In this case, I feel that having the fed support all of the financial industry would be creating a giant crutch, paid for in taxes and bonds. Another words, if the reserve does monitor and support the financial industry, I will expect less-intelligent decisions and more leaning on the government.

Published in: on March 29, 2008 at 1:25 pm  Comments (2)  

Spyplanes for Cops

The Miami-Dade Police department is always looking for new ways to combat crime. After great success in the modern battlefields of Iraq and Afghanistan, aerial reconnaissance vehicles are next.

The MDPD is currently awaiting the approval of the Federal Aviation Administration to begin the purchase and use of a particular model produced by Honeywell International. The drone model is small, but capable of servicing a huge area of urban Miami with far less resource consumption than a conventional aircraft. The MDPD is also only one of many law-enforcement bodies currently in the market for aerial reconnaissance. The list of potential consumers include the FBI, the Justice Dept. and many others.

I love to hear cases of technology advancing do far in one direction, that it actually creates entirely new markets in others. In this case, we have a weapon critical to modern American military operations that now has a demand in the civilian sector of law enforcement. This case is great because not only will both police and the defense-industry benefit, but the corresponding law enforcement will improve as well.

Published in: on March 29, 2008 at 2:10 am  Leave a Comment  

The Economics of Selling Sex – Part Two

This is a continuation of a discussion of "Freakonomics" author Steven Levitt’s findings of selling sex in Chicago.

We have so far seen that the market for selling sex has been effective at not getting caught, paying its workers high incomes, and successfully being able to price discriminate.

Just to add to the price discrimination idea, a funny idea I had was is that people usually don’t like to be price discriminated against. They sometimes get the government to intervene and because prostitution is illegal the market is protected from that type of intervention.

On to the other findings:

The found that there are demand shocks in the prostitution market just like in real life. If we were all of a sudden to have a lot more gas our economy would boom. The same goes for prostitution.

When people came to Washington Park, which was one of the areas in Chicago, for the fourth of July celebration the business grew by 60% and prices rose 30%. I think this is amazing. The reason why prices did jump up more is because he believes there is a flexible labor supply. I am unsure about this. I would have a hard time imagining women who were regular workers and a large amount that were part-time.

One of the most important and against the illegalization people in prostitution is the finding that the workers made more money with pimps. They were also less likely to be arrested. I am not sure how but that is definitely an important finding because many people against it worry about the trafficking of prostitutes and being used by pimps. I have even heard people in the middle say "I support prostitution, but not pimps."

The other interesting side is the ideas that Taggert Brooks brought up, which is what kind of people go to strip clubs. These people are usually looking for near-sex experiences and realize prostitution is just around the corner. He found that they were college educated who have had an STI. This is kind of the burn sydrom.

For example: my female friend asked me when will the guy say ‘I Love You,’ which we all know is an important stage in the relationship. I told her right after you if he got burned before. These two examples are a lot alike.

The next time you are having a discussion about prostitutes you are now well armed with facts and interesting discussion topics.

Published in: on March 28, 2008 at 3:02 pm  Comments (2)  

Quote, Poll Results, and New Poll

This is to all the people who believe taxing the rich is a good thing…

"The idea that a man making $100,000 a year should be forced to contribute 90% of his income to the cost of government, while the man who makes $10,000 is made to pay 20% is repugnant to my notions of justice. I do not believe in punishing success." ~ Barry Goldwater

Poll Results

If you had to pick one to be President who would you pick…

  1. Barrack Obama – 72%
  2. Hillary Clinton – 27%

New Poll

Is it the governments job to decide whether companies merge or not?

  • Yes
  • No
  • Undecided

Also, I am running out of ideas for polls so if you have any ideas then email me or comment here.

Published in: on March 28, 2008 at 2:15 am  Leave a Comment  

The Economics of Selling Sex – Part One

Steven Levitt from the University of Chicago is best know to putting modern Economics in the hands of the normal person in his book "Freakonomics."

In a American Economic Association meeting, he discussed the Economics of Prostitution in Chicago and what has been found.

He found things like that half of the cities arrest take place in just 0.3% of the street corners. This is because the search costs are very high for clients and workers to find each other.

The other part I found interesting was that the incomes were high for the prostitutes. This proves why they are in this industry and no in others. The average rate was $25-30 bucks an hour.

He also found that the chance of getting assaulted was once a month and that the police hardly ever caught them. The chance was higher for them to have sex with a police officer than to be caught.

My favorite part, as an economist, is that they were able to price discriminate. The prostitutes perceive white men to be richer than black men. White men then get charged more and the workers ask them to name a price first. They give a price to black men first.

This is obviously not good for the poor white man and very good for the rich black man. I guess stereotypes do work out for some people.

A surprising fact is that prostitutes who were more attractive did not get higher rates.

Published in: on March 27, 2008 at 2:42 am  Leave a Comment  

Sirus-XM Merger Approved

This from BreitBart.com:

"The Justice Department approved Sirius Satellite Radio’s $5 billion buyout of rival XM Satellite Radio on Monday, saying the deal was unlikely to hurt competition or consumers.

The deal was approved despite opposition from consumer groups and an intense lobbying campaign by the land-based radio industry."

This is so stupid that we need the government to approve mergers. It really shows how scared of monopolies we really are.

My favorite part is the Public Choice part of this is that land-based radio industries lobbied against this merger. Lets think why would a land-based radio not want them to merge? It could be for two reasons:

  • They want the consumers to not be exploited by a monopoly
  • They wanted to keep the cost of doing business high for satellite radio so that they will not take more of their customers away.

I believe it is the second one. One the Justice Department saw this they should have accepted the deal right away. If monopolies did what "they" are afraid of, they would raise prices and lower output. This would actually benefit land-based radios because more people would substitute that in.

Of course the Justice Department, did say they allowed the merger because they don’t just compete with each other. For once, the Justice Department made a smart move.

For the long term, we should urge Congress and the President to remove restrictions on mergers. The government being in control of it only raises the cost of doing so, which raises the costs to the consumers.

Published in: on March 26, 2008 at 6:45 pm  Comments (2)