Category: Economics

You don’t want to cite Joseph and the years of abundance as an argument for central planning. It’s actually an example of coercive government power leading to slavery of the people.

An article in the Times of Israel, “The road to Egypt: job creators in the Ancient World”, has the subtitle Joseph’s rise to power is no blueprint for good government but rather a profoundly cautionary tale.

I’ve not studied the issues mentioned in the article, but want to put up a post as a marker for future reference.  I’ll try to come back to these ideas, but in case that doesn’t happen, or it is a long time until I do, the discussion will be here.

As a Christian, I don’t spend much time in the Torah. Okay, make that zero time.

Having spent a bit of study effort in the book of Genesis, I am familiar with the story of how Joseph used his God-provided experiences and abilities to care for his family.

Imagine my surprise to learn that during the famine years Joseph sold wheat in exchange for cattle and other livestock. When grain ran out a year later and people needed more food, they sold their land to Joseph, i.e. the government. When the famine ended, they had neither land to raise grain nor livestock to produce cash or food.  They were slaves. They knowingly went into slavery.

Continue reading “You don’t want to cite Joseph and the years of abundance as an argument for central planning. It’s actually an example of coercive government power leading to slavery of the people.”

Myths abound for the cause of the financial crisis

John Allison describes a number of the myths floating around in his article at Forbes. I read it in the 12-10-12 paper edition of Forbes, but can’t find it online. Was able to find it here:  The Financial Crisis and the Bank Deregulation Myth.

Here’s two old myths:

One is that the ‘robber barons’ took advantage of the common man to create their fortunes. In fact, great industrialists, like John D. Rockefeller, dramatically improved the quality of life for everyone. Another myth is that President Roosevelt’s New Deal ended the Great Depression, when in fact the Depression did not end until after WWII when his policies were abandoned.

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“Deck the Halls with Macro Follies” – Economists sing your favorite holiday carols

(cross-post from my other blog, Nonprofit Update.)

Remember the rapping economists we saw here and here?  They’re back!

Just in time for Christmas, EconStories imagines their fantasy Christmas album featuring the classic hits from Keynes, Hayek, and other renown singers you know and love.

Enjoy the greatest collection of economic hits ever aggregated.

[youtube=http://www.youtube.com/watch?feature=player_profilepage&v=7uKnd6IEiO0#t=41s]

Continue reading ““Deck the Halls with Macro Follies” – Economists sing your favorite holiday carols”

Under what economic model did the pilgrims almost starve? What different economic model allowed them to thrive?

Here’s the arrangement the Pilgrims used when they first landed:

“Although they planted household gardens almost from the start, they collectivized initial field and livestock operations. The settlers had some agricultural successes, but they were unable to grow corn in their common field. Within six months of reaching Plymouth, almost one-half of the population had perished from disease.

That’s a quote from Professor Robert Ellickson in Prof. Don Boudreaux’s article The Pilgrims’ economic progress.

A collectivized farming system didn’t work too well.  Starvation was the result.

So, they changed their plans: Continue reading “Under what economic model did the pilgrims almost starve? What different economic model allowed them to thrive?”

A year ago there was no way to get all that Bakken oil to market. Add creativity and ingenuity in a capitalist setting. Problem solved.

Pipelines take a long time to build. The rapid increase in oil coming out of the ground in North Dakota was leaving producers worried. How could they get all that oil to market? There was so much oil going through the existing pipeline to one location (Cushing) that there was a big discount on that oil.

People who wanted to make a buck stepped in. There’s now enough capacity to get all the oil to market and the discount for Bakken crude is gone.

That’s my summary of RBN Energy’s post, From a Famine of Pipeline to a Feast of Rail – Giving Thanks for Bakken Delivery.

Continue reading “A year ago there was no way to get all that Bakken oil to market. Add creativity and ingenuity in a capitalist setting. Problem solved.”

Millions of people spontaneously work together to make your pencil – “I, Pencil: The Movie”

Likewise for everything you ever use – millions of people working together created it not knowing what they were actually working on. Why?

“Voluntary spontaneous cooperation”

[youtube=http://www.youtube.com/watch?v=IYO3tOqDISE&feature=player_embedded]

From the waitress serving lunch for the lumberjacks cutting down a cedar tree, to the miners pulling ore out of the ground, to the engine room crew on a freighter bringing the ore to the U.S. to the engineer driving the train bringing the pencil to the regional distribution center to the forklift operator loading the truck that carries stuff to restock your neighborhood store, millions of people worked together to create the pencil you will hold in your hand during tomorrow’s staff meeting.

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Unintended consequences – reducing employee hours to avoid cost of health insurance coverage

Ignored in policy setting discussions is the likelihood that people will change their behavior in unexpected ways to go around a costly or burdensome or intrusive new policy. The latest of many examples is from yesterday’s Wall Street Journal – Health-Care Law Spurs a Shift to Part-Time Workers. 

I will work up an example to show why companies would consider this.

It seems that in order to avoid a major increase in costs, many employers are thinking about reducing their staff’s hours to less than the number of hours where health insurance coverage is required.

The article mentions several companies moving in this direction: Continue reading “Unintended consequences – reducing employee hours to avoid cost of health insurance coverage”

How to guarantee shortages – make the price signal illegal

New Jersey has apparently made supply and demand illegal. The power of the state will hammer anyone who charges more than the state feels is reasonable by their standards. See Price gouging complaints in New Jersey as merely one report on the topic.

Making it illegal to sell stuff at the market price guarantees the shortages will get worse. Why?

People will panic-buy things they don’t need, retailers may not be able to get replacement stock, and some retailers may have to close their doors when they run out of stuff. 

As a natural and logical result, other people who really need something will find only bare shelves.

But it sure feels good to rant against ‘price gouging’.  Makes for great sound bites on TV.

On the other hand, if you let prices rise, the price signal will allocate the scarce goods to people who really need them. Why?

Continue reading “How to guarantee shortages – make the price signal illegal”

Pricing mechanism did its job during California gas shortage – you could get gasoline if you wanted it

The recent gas shortage in California is a superb illustration of the idea that if you don’t meddle with prices and just leave them alone, they will communicate to everyone how scarce a resource is. The natural and expected result is that people who want the resource can get it.

Prices worked

The recent gas crunch shows what happens when you let the market work. Prices spiked because of a supply crunch. People who didn’t really, really need gasoline held off on topping their tank. People who really, really did need gas could get it.

Two things prove this to me.

Continue reading “Pricing mechanism did its job during California gas shortage – you could get gasoline if you wanted it”

“Free enterprise creates its own luck”

Here is a great comment from Mr. Greg Arnot on an article by Daniel Yergin:

Free enterprise seems to generate its own luck. Millions of free people stabbing out in seemingly random directions, each acting in his or her own self interest, seem to always find a way.

Free enterprise is able to focus chaos in order to meet our needs and exceed our expectations.

How’s that for a semester of economics compressed into 50 words?

Mr. Yergin’s article, The Real Stimulus: Low-Cost Natural Gas, discusses the boost to the economy of low-cost natural gas from shale.

Look at the dramatic change in just a few years:

Continue reading ““Free enterprise creates its own luck””

How to crush retirees –1970s vs 2010s, or, QE3 kicks off

In the ‘70s it was inflation that crushed retirees. Today it is near zero interest rates.

Inflation rates in the late ‘70s and early ‘80s were terrible. The 1974 rate of 11.0% was just a hint of things to come.

Continue reading “How to crush retirees –1970s vs 2010s, or, QE3 kicks off”

Prices have information – they drive buyers and sellers

I can’t explain all the economics lessons in the following joke, but can tell there are many.  Funny thing about prices is that they motivate buyers and sellers.  Prices contain a lot of information.  We need to interpret them well.  Here’s an insight on pricing and human behavior:

today’sFUNNY===========================

A woman walks into a butcher shop and asks the butcher how much a pound of tenderloin is.

“$12 per pound,” replies the butcher.

“Are you sure? That can’t be,” says the lady.

Continue reading “Prices have information – they drive buyers and sellers”

One possible reason your benefits package at work might be shrinking

In this economy, it is difficult for employers to keep providing great benefits.  Check out this email from Mikey’s Funnies. It just might explain why the benefits package from your employer isn’t really great and might even be shrinking.

today’sFUNNY===========================

A woman, searching for a job, inquired about the benefits. The Personnel Manager informed her they had group health and life insurance, but the costs were deducted from the employee’s pay.

She said, “My last employer had full health coverage, as well as five years salary for life insurance and a month’s sick leave AND they paid the full premiums.”

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Higher Ed revolution is well underway – Marginal Revolution University opens its electronic doors.

I’ve been wanting to start commenting on the big changes in on-line education. Wanted to introduce the ideas as a part of a big series of posts I have in mind, but change is running far faster than my limited time to write. So I’ll start commenting before having chance to introduce the overarching idea….

Two economists, Tyler Cowen and Alex Tabarrok, have started an on-line college. Marginal Revolution University will offer their first class on Development Economics starting October 1st.

The professors are structuring their curriculum for the online environment from scratch. Videos will be recorded uniquely for the course and will be structured in short, five-minute blocks.

Here is a short description of the course:

Continue reading “Higher Ed revolution is well underway – Marginal Revolution University opens its electronic doors.”