Archive for May, 2007
A thought question: Chinese interest-rate subsidies
Wednesday, May 30th, 2007A different perspective from Greg Mankiw on Chinese economic policies:
Suppose the U.S. President were to propose the following policy: “My fellow Americans, I have just asked the Congress to increase taxes on all of us. After they pass my tax increase, I will instruct the Treasury to lend the additional tax revenue to the government of China.”
Most Americans would, I suspect, be opposed to this proposal. They would see it as beneficial to China but without much benefit to the United States. With America eager to lend, China would enjoy lower interest rates. Why should Americans pay higher taxes to finance Chinese borrowing and spending?
I agree that this would be a strange and not very sensible policy for the U.S. government to pursue. But isn’t it a bit odd that many Americans today are objecting to precisely the opposite of this policy. China is not borrowing from the U.S. government but is instead lending to the U.S. government by buying large quantities of Treasury bonds. The money used to buy these bonds could be returned to Chinese citizens in lower taxes. In other words, Chinese taxpayers are financing American spending and keeping our interest rates lower than they otherwise would be. And many Americans, including the President and Treasury Secretary, are complaining.
Interesting.
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Bad news for Lou Dobbs and John Edwards: The poor are getting richer
Wednesday, May 23rd, 2007From The Wall Street Journal:
What happened? CBO says the main causes of this low-income earnings surge have been a combination of welfare reform, expansion of the earned income tax credit and wage gains from a tight labor market, especially in the late stages of the 1990s expansion. Though cash welfare fell as a share of overall income (which includes government benefits), earnings from work climbed sharply as the 1996 welfare reform pushed at least one family breadwinner into the job market.
More pain at the pump
Monday, May 21st, 2007
My own analysis of the flawed economics of the policy
Thursday, May 17th, 2007In 2003 BYU announced that it would be implementing new boundaries for its BYU-approved housing (now called ‘contracted housing’), which finally went into effect last month. This so-called “2-mile radius†rule was introduced with vague explanations from BYU’s administration, and is drafted in such a way as to cause negative consequences for the same students for whom this policy was supposedly instituted, while significantly benefitting other parties. If it truly wants to keep its students’ best interests in mind, BYU should repeal this policy and give students back their options for housing.
Why was this policy implemented in the first place? After it was announced, BYU spokesperson Carrie Jenkins gave the following explanation, “It is important not only the academic environment, but the moral environment. [sic] Part of the BYU experience is to live in a strong moral environment. We have limited resources at BYU and we can not [sic] keep stretching those resources and provide the environment our students expect.†[Nielson-Stowell, A. BYU housing boundaries to change dramatically. (2003, December 8). Daily Universe] I think it’s interesting that students’ “moral environment†was cited as a reason for the change. At first this seems obvious, given BYU’s strict moral code of conduct, but upon further thought one sees that proximity to campus doesn’t have any causal relationship with adherence to the Honor Code. In other words, being closer to campus, by itself, does not affect one’s righteousness. To attend BYU all students must receive an ecclesiastical endorsement signed by his or her Bishop, Stake President, and, most importantly, the students themselves. Location does not change that. If a Bishop judges a person to be worthy, and that person signs the statement declaring that they live by the Honor Code, that would be sufficient recourse for a Saint to be admitted into the temple; therefore, that should also be sufficient recourse for a student to be admitted into the School. Should we only allow Saints who live within a 2-mile proximity to enter the temple? Personal accountability overrides proximity in matters of the temple; it should in matters at BYU as well. (more…)
BYU’s 2-mile radius rule: an opinion editorial
Tuesday, May 15th, 2007Economics and 2-mile rule
Starting after this month, approved housing for BYU will be limited to a two-mile radius. The intentions of this policy were to benefit the communities of Provo and Brigham Young University. According to the Provo city government Web site, the policy was made “to foster redevelopment of the built environment close to campus, providing affordable, quality housing opportunities to support the university and providing neighborhood-scale commercial services within a walkable community.”
However, apparent considerations were not taken to address possible rent increases. With an increase of students within a limited area, there is a consequential increase in demand for housing spaces. According to supply and demand, if demand is high and supply is limited the monetary value of the demanded good will increase. With the new policy in place, more students will be restricted to live in a limited amount of spaces. The demand, therefore, will increase followed by a jump in prices to rent these properties.
Our dependence on oil
Sunday, May 13th, 2007America needs to reduce its dependence on oil-based fuels to reduce dependence on politically-volatile nations, to reduce carbon emissions that have a detrimental environmental impact, and to ease the financial strain on low- and middle-class families. Lower-income families feel the impact of higher fuel prices in two ways: the direct impact of higher gas prices at the pump, and the higher indirect cost of the goods they buy (most, if not all, of which are transported by a means of conveyance that uses oil-based fuel). The true scope of the impact on the environment of the carbon dioxide emitted from cars is debatable, but the fact that cars running on oil-based gasoline produce harmful emissions is indisputable. Alternative energy solutions may go a long way in solving this problem, as fuels produced from renewable sources burn cleaner and have byproducts that are friendlier to the environment. A large portion of the oil we use as inputs into gasoline comes from countries that are politically unstable. Many governments of Middle Eastern countries are battling intense political disharmony that is largely anti-American, and as a result we often see this influence appear in decisions by the Organization of Petroleum Exporting Countries (OPEC) to manipulate oil prices. America can reduce its susceptibility to this manipulation by reducing its dependence on oil-based fuels.
A few of Lou Dobbs’ logical fallacies
Thursday, May 10th, 2007In reading Lou Dobbs’ commentary entitled “We’re on a ‘fast-track’ to bad trade policy (April 4, 2007) I noticed several of the strategies and fallacies of ethos, logos, and pathos. First of all, he is a journalist and a graduate in economics from Harvard University, and so he has a gift with forming cohesive arguments. His style of writing, along with the national exposure he enjoys from being an anchor on CNN lend to his credibility. He has authored several books on the economic war the middle class faces as the nation grows within a global economy, and so he has become somewhat of an expert on the topic. While he makes many good points, his logic regularly falls prey to logical fallacies.
Thirty-one years of consecutive trade deficits and the loss — in just the last six years — of millions of manufacturing and good-paying middle-class jobs to outsourcing have been the result of what I consider this unconstitutional ceding of power to the executive branch in the form of fast-track authority.