Should the United States government bailout the Auto Industry? Or, should the Big 3 be forced to seek Chapter 11 Bankruptcy Protection and therefore allowed to fail? What are the implications for either outcome on the US economy?
Tuesday, November 18, 2008
Question of the Day:Auto Industry Bailout
Should the United States government bailout the Auto Industry? Or, should the Big 3 be forced to seek Chapter 11 Bankruptcy Protection and therefore allowed to fail? What are the implications for either outcome on the US economy?
Sunday, October 19, 2008
A Flat World?
For those of you that have read The World Is Flat by Thomas Friedman, Edward Leamer has written a very witty and intelligent critique to this book. Ed Leamer is a accomplished Economist and is currently a Professor of Economics and Statistics at UCLA. He has four published books and has also written many articles.
While I have not read the full critique yet, I would recommend at least skimming through it. The World is Flat has been heralded in the press and among many professionals as a landmark book. The book attempts to explain the future of globalization and the reasons for it. But with any book that gets famous there are going to be opposing views, and it is important to get both sides. So if you have read the book and thought that it had some interesting insights I would definitely recommend the paper. Also, if you have not read it I would also recommend reading it, for the paper gives a excellent summary of Friedman's proposal as well Leamers view.
It is pretty hilarious too. This is not something you get in most economics papers.
Link to A Flat World, A Level Playing Field, a Small World After All,
or None of the Above? by Edward E. Leamer
http://www.uclaforecast.com/reviews/Leamer_FlatWorld_060221.pdf
While I have not read the full critique yet, I would recommend at least skimming through it. The World is Flat has been heralded in the press and among many professionals as a landmark book. The book attempts to explain the future of globalization and the reasons for it. But with any book that gets famous there are going to be opposing views, and it is important to get both sides. So if you have read the book and thought that it had some interesting insights I would definitely recommend the paper. Also, if you have not read it I would also recommend reading it, for the paper gives a excellent summary of Friedman's proposal as well Leamers view.
It is pretty hilarious too. This is not something you get in most economics papers.
Link to A Flat World, A Level Playing Field, a Small World After All,
or None of the Above? by Edward E. Leamer
http://www.uclaforecast.com/reviews/Leamer_FlatWorld_060221.pdf
Freedom to Facism
I have found this documentary that gives an interesting argument about the Income Tax and the Federal Reserve. Needless to say his argument is way out there, and some of his claims are questionable, but I think it deserves a watch. The link to the movie is provided below, and if you can find the time to watch it post a comment on your view of the movie.
http://video.google.com/videoplay?docid=-1656880303867390173
http://video.google.com/videoplay?docid=-1656880303867390173
Thursday, October 16, 2008
Environmental Economics
Hey guys,
For those of you who didn't make the lunch today, the econ club actually had a great talk with Dr. Vossler and Dr. Evans about environmental economics, which is their field of research. Environmental economics is a branch that uses different methodologies to put prices on things that don't necessarily have a market price, such as air quality, water quality, and mortality risks. Currently, Dr. Vossler and Dr. Evans are working on a project involving the EPA and helping them come up with a better audit system for companies who cheat on their voluntary regulation report on their pollution and emissions of harmful chemicals. It is some really interesting research.
Some of the other things that we discussed are the different methodologies used in environmental economics such as state of preference treatments, which are used to measure how much someone values a environmental policy. Also, we talked about who really suffers when there is an oil spill off the coast of Alaska like the one from the recent past involving Exxon? How do you know how much damages a company should pay? Dr. Vossler explained it is not just based on loss of tourism revenue or the time people put in to clean the spill or the loss of revenue to fisherman; but it is also based on the people who see the little oil covered duck or bird being cleaned or the people who just hear about it even who suffer a welfare loss, meaning that they are worse off then before the incident occured.
Another topic we discussed was if there is a trend to maybe some global regulating body towards pollution. Apparently given that the standards differ on so many levels from country to country, it really isn't feasible without some global initiative. They did mention a UN sponsored agreement that was voluntary to sign up for countries and binding but if your country didn't commit to this pollution agreement there really wasn't a penalty.
Overall, it was a really interesting talk. I highly recommend that everyone attend our next luncheon with faculty.
For those of you who didn't make the lunch today, the econ club actually had a great talk with Dr. Vossler and Dr. Evans about environmental economics, which is their field of research. Environmental economics is a branch that uses different methodologies to put prices on things that don't necessarily have a market price, such as air quality, water quality, and mortality risks. Currently, Dr. Vossler and Dr. Evans are working on a project involving the EPA and helping them come up with a better audit system for companies who cheat on their voluntary regulation report on their pollution and emissions of harmful chemicals. It is some really interesting research.
Some of the other things that we discussed are the different methodologies used in environmental economics such as state of preference treatments, which are used to measure how much someone values a environmental policy. Also, we talked about who really suffers when there is an oil spill off the coast of Alaska like the one from the recent past involving Exxon? How do you know how much damages a company should pay? Dr. Vossler explained it is not just based on loss of tourism revenue or the time people put in to clean the spill or the loss of revenue to fisherman; but it is also based on the people who see the little oil covered duck or bird being cleaned or the people who just hear about it even who suffer a welfare loss, meaning that they are worse off then before the incident occured.
Another topic we discussed was if there is a trend to maybe some global regulating body towards pollution. Apparently given that the standards differ on so many levels from country to country, it really isn't feasible without some global initiative. They did mention a UN sponsored agreement that was voluntary to sign up for countries and binding but if your country didn't commit to this pollution agreement there really wasn't a penalty.
Overall, it was a really interesting talk. I highly recommend that everyone attend our next luncheon with faculty.
University of Chicago Economist Steven Levitt
New York Times Article:
Everything You Need to Know About the Financial Crisis: A Guest Post by Diamond and Kashyap
Everything You Need to Know About the Financial Crisis: A Guest Post by Diamond and Kashyap
by: Steven Levitt
Sunday, October 12, 2008
What if we gave the bailout to the people?
So first of all this website looks amazing Paul! Great Job!
Second, I was reading an article recently that proposed an interesting idea that the $700 billion bailout could be given to the American people instead of to the failed credit institutions. The author assumed that the population was 300 million and that within that 200 million people were between the ages of 18 to 65. The proposal was that if the government took the $700 billion dollars and distributed it as a dividend to the 200 million people, being taxed accordingly, would give each person roughly $175,00. The author then gave possible spending purposes of this money. A family could pay off their home mortgage and reduce the number of foreclosures thus helping the housing crisis. People could pay back their student and business loans thus increasing the strength of a weakened credit market. The author gave about ten examples in all.
There is a crucial flaw in this simple proposal. It trusts in the ability of the population to overcome its propensity to save as it does with every tax incentive issued by the government. Therefore without a solution or mechanism to ensure a larger percentage of people spending this incentive if it was implemented, the proposal would fail to increase consumer confidence or strengthen the credit markets just as Bush's latest tax incentive failed.
Second, I was reading an article recently that proposed an interesting idea that the $700 billion bailout could be given to the American people instead of to the failed credit institutions. The author assumed that the population was 300 million and that within that 200 million people were between the ages of 18 to 65. The proposal was that if the government took the $700 billion dollars and distributed it as a dividend to the 200 million people, being taxed accordingly, would give each person roughly $175,00. The author then gave possible spending purposes of this money. A family could pay off their home mortgage and reduce the number of foreclosures thus helping the housing crisis. People could pay back their student and business loans thus increasing the strength of a weakened credit market. The author gave about ten examples in all.
There is a crucial flaw in this simple proposal. It trusts in the ability of the population to overcome its propensity to save as it does with every tax incentive issued by the government. Therefore without a solution or mechanism to ensure a larger percentage of people spending this incentive if it was implemented, the proposal would fail to increase consumer confidence or strengthen the credit markets just as Bush's latest tax incentive failed.
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