Mikeroeconomics

Teen's Cellphone Invention

2013-05-21T10:51:00.001-07:00

This from Yahoo!

A California teen’s invention could potentially knock down cellphone-charging time to a superfast 20 seconds.
So far, the energy-storage device has powered only an LED light, but it has the potential to do much more.
The future certainly looks bright for 18-year-old Eesha Khare, who pocketed a $50,000 prize for the Young Scientist award from the Intel International Science and Engineering Fair in Phoenix, Ariz., for her tiny and possibly revolutionary device.
Khare sees the device as potentially powering car batteries, cellphones or any electronics that could use a rechargeable battery.

I have several thoughts, some of them not so smart.

1. Batteries charge fast now. Why would she need batteries to charge faster when she could concentrate her efforts on curing a social ill?
2. the $50,000 cash was a huge incentive and added credibility to her resume.
3. I think this shows how the economy naturally works toward efficiency.
4. There should be a shift in Marginal Social Benefit curve to the right.
5. In emergency situations such as a tornado, people displaced by the storm will have greater ability to reach loved ones faster.
6. Is this invention like the car that go farther on a gallon of gasoline? In other words, will people demand more devices that use batteries thus increasing the need for faster battery chargers?
7. This invention shows what I've said all along. Each generation is smarter than the one before it.

Calvin and Hobbs on Free Market Economics

2013-05-19T03:17:00.000-07:00

Isn't this the infant industry argument? Competition fosters innovation and a "race to the bottom" in which prices equate at their marginal cost and profits are zero. In a market where there's easy entrance such as this, one would expect no profits to be made in the long run.

Let Them Eat Cake

2013-05-18T09:15:00.000-07:00

Income allows those advantages that those lacking income can't take advantage. In this cartoon, investors with disposable income can invest and make returns that those who need every dime to live cannot. Income builds income and disparity widens.

Economics involves choices. For those who are unemployed, what choices were made that put them on the dole. For example, did they work on weekends to build skills or did they spend $400 going to a baseball game? At work did they find a way to make them more valuable to the company or did they find a way of doing as little as possible? There are many valuable, hard working men and women who are unemployed and I'm not one to make hasty generalizations. My comments simply include how income leads to disparity.

Some Brands That Produce in Bangladesh

2013-05-14T02:39:00.000-07:00

The Yahoo! Finance article is here.

REUTERS/Andrew Biraj
As the death toll in the Bangladesh factory collapse climbs past 1,000 , major retailers that do business in the country are facing calls for accountability.
Deadly factory accidents are relatively common in Bangladesh, where government safety standards are rarely enforced.

Foreign companies met earlier this month to discuss improving worker safety, despite having refused to fund safety improvements for factories just months ago.

Bangladesh has said it will discuss raising the minimum wage from $38-a-month, currently the world's lowest.

The garment industry in Bangladesh accounts for about $20 billion in exports. Of those exports, about 59 percent go to the European Union, 26 percent go to the U.S. and 5 percent go to Canada.

I don't know much about the country off the coast of India, but I will bet that $38 a month is higher than any other wage that the workers could find and be legally employed. Life has never been easy for most of the residents of this country. In the 1970s I remember George Harrison's Concert for Bangladesh. By the way, I once offered a programmer from this country $500 to write an app for me that would take about a week. This is about 12 times more than the weekly salary in a factory. I am pro labor and I have been a MEA member for 33 years. I would support legislation that raised the minimum wage rate in this country although I know it will cost jobs. I want better working conditions that are safe. But social forces being what they are, if it becomes more expensive to produce in this country, producers will move someplace else. Many more will be hurt then.

My deepest sympathies are extended to the workers in this country. I hope for relief for those whose family was injured.

Sir Ken Robinson on Education

2013-05-12T04:34:00.001-07:00

There's been a lot of talk about flipping the classroom in education. This means that the students do the reading of the content for the next day, then come to class and do the "homework". This sounds good and I'm sure it works with some of the students, but I don't believe it would work on a large scale. One reason is that students discount the future so heavily that I don't believe that students will choose to read a textbook instead of going to work or an extracurricular activity. I think students would choose to enjoy the immediate benefits when the costs come later. I believe that Gary Becker believes that students will discount the future up to 50% which is pretty steep. This is one reason why I don't believe flipping the classroom will work. Public education is always being attached for various reasons such as failing to prepare students for the real world. I hate this statement because it shifts all of the burden from the learner to the teacher. When I go the the library, all I see is people using a computer to play a game of post on social media. I seldom see anyone engaged in serious study. Flipping the classroom will not work and neither will individualizing instruction. What has to change is the learner. Like the Japanese saying goes, "When the student is ready, the teacher will appear."

Television Ad

2013-05-09T07:30:00.002-07:00

Excellence in Education

2013-05-06T06:17:00.000-07:00

Click here for the Muscatine Journal article. Three of the winners are mock trial participants.

HaywardEcon Blog---"I am not an Economist. I just play one in a public high school": How much does Prom cost and who pays? A nice graph...

2013-05-06T02:36:00.001-07:00

HaywardEcon Blog---"I am not an Economist. I just play one in a public high school": How much does Prom cost and who pays? A nice graph...: Here is a short summation of the findings from a VISA survey where this graphic came from (found HERE). Spending on the a...

Kal Cartoon

2013-05-03T02:46:00.002-07:00

The question violates a Federal Rule of Evidence. That is a question cannot ask for speculation and demands an answer for which the "eye witness" lack s personal knowledge. The question should not be allowed.

Youth Unemployment

2013-05-02T02:51:00.003-07:00

Click here to see the article.

Unemployment Comic

2013-04-30T02:47:00.001-07:00

HT to Jodi Beggs, of Economists Do It With Models a href="http://www.smbc-comics.com/index.php?db=comics&id=2950">

M1

2013-04-28T16:37:00.000-07:00

This is my Alzheimer's problem of the day. If the central bank increases the money supply, the MS curve will move to the right and interest rates will fall. Initially, supply will exceed demand so investors will buy bonds driving up their price. As the price of bonds increase, the interest rate falls.

Leading Question

2013-04-25T02:51:00.001-07:00

I had this idea but featuring Playboy cartoonist, Dean Yeagle's Mandy. I wanted to see how many others had the same idea. Many artists had had the same idea and done it better than me which "leads" me to beg the question. When a firm chooses a price, is there a price that just seems right and I choose it? Or do I blatantly copy the market price like I copied this picture?

Buying and Selling Bonds

2013-04-21T11:27:00.002-07:00

Buying and selling bonds from Mike Fladlien

Real Exchange Rates

2013-04-21T04:52:00.004-07:00

Real exchange rate from Mike Fladlien

Assorted Links

2013-04-21T03:55:00.000-07:00

1. Excel spreadsheet errors and austerity.

2. Men and women think about money differently. (I believe this is why micro finance works.)

Aggregate Demand and Interest Rate Effect

2013-04-20T11:39:00.000-07:00

The Aggregate Demand curve assumes that consumers buy a fixed market basket. Assume that in the base year the CPI is 1 and the basket costs $100. If the CPI drops to .5 in the next year, only $50 is needed to buy the fixed market basket. Consumers will save $50 and the supply of savings will increase and the interest rates will decrease. Likewise, if the price level increases in 2, people can't buy the fixed market basket and they will withdraw savings. This will decrease the supply of savings and the interest rate will rise. This illustrates that the AD curve is downward sloping assuming that $Y is fixed.

Real Money Demand Explained

2013-04-20T11:31:00.000-07:00

This is a troublesome concept for me. This is how I explain it. Suppose that I always drink four cups of coffee every day. So I must carry enough money every day to buy four cups of coffee. This is my real money demand since I will carry enough money to buy four cups of coffee. When prices increase, my demand for money will increase proportionally. In this video, I carry $2.40 in my pocket to buy 4 cups of coffee that cost 60 cents each. If the cost of coffee increases to 80 cents, then I will carry $3.20 to buy four cups of coffee. You can see that I will demand enough money to buy four cups of coffee which is my real money demand. You can see that the proportion of the change in prices is equal to the proportional increase in the demand for money. Thus, $.80/$.60 = $3.20/$2.40. This is what gives me a problem since some textbooks use the nominal money demand curve and some use real money demand. It's my opinion that every one is okay to use.

So in the graph to the left, I have shown how money divided the price level is the real money demand. In this graph the interest rate represents the opportunity cost of holding money. At higher interest rates, people will hold less money than at lower rates. The market will clear at 3%.

Tax Toon

2013-04-16T02:57:00.001-07:00

Fox News reported that the IRS collected almost 3 trillion in taxes this year. I don't know how much of the tax revenue goes to entitlements but this cartoon isn't far off. I know my real income is down. AmosWeb.com reports that both real earnings and real income are down which means our wages buy less food and clothing. I know how I will react. I will work less, spend less, and save more. If my actions are like millions, look for aggregate demand to shift back and the recession continue for a very long time. My prediction might not align with the Economist who reported that unemployment is 7.6 for March, down from 7.7. As classical economists note, in the long run wages and prices will adjust to full employment output. I believe we are a long ways away from that long run.

What Makes Us Work at Work

2013-04-13T03:16:00.002-07:00

I have been studying behavior economics. Dan Ariely is one of the best. His books are outstanding. In this blog post he is interviewed about what motivates people to work. This is from the introduction.

When you look carefully at the way people work, he says, you find out there’s a lot more at play—and a lot more at stake—than money. In his talk, Ariely provides evidence that we are also driven by meaningful work, by others’ acknowledgement and by the amount of effort we’ve put in: the harder the task is, the prouder we are.

During the Industrial Revolution, Ariely points out, Adam Smith’s efficiency-oriented, assembly-line approach made sense. But it doesn’t work as well in today’s knowledge economy. Instead, Ariely upholds Karl Marx’s concept that we care much more about a product if we’ve participated from start to finish rather than producing a single part over and over. In other words, in the knowledge economy, efficiency is no longer more important than meaning.

Aggregate Demand and Interest Rate Effect

2013-04-12T13:59:00.000-07:00

These videos explain the interest rate effect and the slope of the aggregate demand curve. These are intended for students taking the AP in May.

Worst Recession Ever

2013-04-08T02:59:00.000-07:00

The Motley Fool has the entire article here. (click on graph to enlarge.)

A jobless recovery is one in which GDP grows even when the unemployment rate is above the natural rate. The Bureau of Labor Statistics cites unemployment at 7.7% which is down from the last reporting period. Productivity is increasing and so is income. (AmosWeb) This means worker skills are obsolete as the economy replaces workers with capital.

Latest Jobs

2013-04-06T03:24:00.002-07:00

The labor participation rate is now the lowest since the mid 80s. This is from the latest BLS.gov report:

The civilian labor force declined by 496,000 over the month, and the labor force participation rate decreased by 0.2 percentage point to 63.3 percent. The employment- population ratio, at 58.5 percent, changed little. (See table A-1.)

The LFPR equals the labor force divided by the civilian non-institutional population. The labor force is made up of those employed and unemployed. When workers drop out of the labor force completely, the unemployment rate could go down. I think this is the case with the latest numbers.

Job Satisfaction

2013-03-31T05:05:00.000-07:00

I have often thought that some people have a preference to repetition and like working in "boring" jobs. A person's intellect is not a major factor in the preference of liking repetition. It is this preference that I believe make ten's of thousands run marathons or habitually wash their cars. Does this preference lead to job selection?

In a rigorous article, the Heteconomist lays out his thoughts on the matter.

Tyler Cowen, begins his post with:

The first key point is that if you learn more on the job on a regular basis (i.e., your job is interesting), you become harder to replace from the point of view of your boss. Over time you win more of the bargaining surplus. That means we end up with jobs with an inefficiently low level of learning and jobs are too boring relative to an optimum.

I love labor market articles. I would have built the learning curve differently, but I'm not on the same level as these economists.

When MR is Greater Than MC

2013-03-29T07:56:00.001-07:00

Will a firm produce at the point where marginal cost is the least or where marginal revenue equals marginal cost? A firm that wants to maximize profits will produce at the MR = MC point because it captures all of the revenue possible with a given price.

As the graphs shows profit is maximized at 2.3 units. When marginal cost is low, profits are lower than when MR=MC. I conclude that profit max occurs where MR=MC.

This blog is intended to be part of my answer key for a writing assignment I contract for. My suggested answer is too long for the space allotment in my key.

I used the following formulas in my graph:

Total Cost = 2 + .25X^3
MC = .75X^2
AVC = .25X^2
ATC = 2/X + .25X
TR = 4X

I used the functions above so that students can see that the theory fits the reality.