The ridiculous just became the absurd:
Noting that the demand-side gas out did not work on May 15, some retailers thought maybe they could 'help' motorists. At least one gas station manager shut off his pumps.
And, as if we needed more evidence that even business owners don't understand supply and demand, one said,
"So I just thought: What can I do to help the consumer?"
Yeah, that's it, I'm sure it had nothing to do with the free national publicity of his station and about how caring he is about the plight of consumers....
Obviously one, or a handful of gas owners doing this would have no overall effect. But even if many retail suppliers started doing this (which for the same reasons the original gas out didn't work, is impossible) --- DEMAND IS NOT SUPPLY --- all that would happen is the supply pipeline to consumers via the retail outlet would be temporarily cut off in many places, leading to INCREASED prices, NOT decreased prices.
So thanks for the help, but then again, no thanks!
Friday, May 25, 2007
Tuesday, May 22, 2007
Mankiw on China Trade
I haven't agreed with Dr. Mankiw in a while - but one of his latest posts on the 'problem' (or lack thereof) of China fixing its nominal exchange rate, is spot on!
Having said that...
mvpy said...
"This is right in theory, but not in practice. Real and nominal exchange rates track each other very closely, even over long periods - since prices are sticky. Slaughters argument is based on PPP holding - but PPP is a notoriously Pretty Poor Predictor. Whether PPP even holds over long periods is a hotly debated topic."
I suppose the overall point to be made is that, with trade, there are other things the US could be worried about rather than on China's exchange rate.
UPDATE:
Like our own lack of private Savings in the US......
Having said that...
mvpy said...
"This is right in theory, but not in practice. Real and nominal exchange rates track each other very closely, even over long periods - since prices are sticky. Slaughters argument is based on PPP holding - but PPP is a notoriously Pretty Poor Predictor. Whether PPP even holds over long periods is a hotly debated topic."
I suppose the overall point to be made is that, with trade, there are other things the US could be worried about rather than on China's exchange rate.
UPDATE:
Like our own lack of private Savings in the US......
Monday, May 21, 2007
Great Gas Out Just Farted
You may recall that there was this urban myth that went around that everyone should participate in a "gas out" whereby the 'masses' would not buy gas for a day / seriously cut back consumption in order to stick it to gas companies and drastically reduce prices.
That day was supposed to be May 15.
Did it work?
You be the judge....
Note the spike - upward - round abouts May 15 for Indiana. Also notice the beautiful, almost seemless line trending upward --- the national average.
MYTH BUSTED!!! (PS i love that show)
That day was supposed to be May 15.
Did it work?
You be the judge....
Note the spike - upward - round abouts May 15 for Indiana. Also notice the beautiful, almost seemless line trending upward --- the national average.
MYTH BUSTED!!! (PS i love that show)
Sunday, May 13, 2007
Sounds like the Pope could use a few Econ classes....
The Pope today denounced both Marxism and Capitalism......
?
“I do not mean that nonbelievers cannot live a lofty and exemplary morality; I am only saying that a society in which God is absent will not find the necessary consensus on moral values or the strength to live according to the model of these values.”
Ok, so in my view the Pope doesn't seem to be denouncing either, but rather stating that God should be more prevelant in today's economic and political systems. This to me is actually a much different controversial statement in which the Pope seems to be saying that separation of Church and State is not a good idea to say the least.
His statement strikes me as utopian - he seems to imply that society would be better off if everyone believed in God (presumably the Catholic One) and that then everyone would have the same morals and beliefs and things would run smoother.
That is simply naive.
I know Catholics who have a wide range of belief systems - yet they all believe in the basic idea of God. Some support abortion, some don't. Some support gay marriage, some don't.... So frankly I fail to see how a political economic system where God is at the forefront would change anything other than perhaps by turning our society into an indoctrinated group of individuals ruled by one extremely large special interest group.
I think both Marx and Adam Smith would be appalled at such an idea.
One note about this post: I'm not trying to pull a Sinead O'Conner here. But please keep in mind the Pope is just a man - weather you believe he is influenced by the hand of God or not, and his opinions should be subject to scrutiny just like the rest of us.
?
“I do not mean that nonbelievers cannot live a lofty and exemplary morality; I am only saying that a society in which God is absent will not find the necessary consensus on moral values or the strength to live according to the model of these values.”
Ok, so in my view the Pope doesn't seem to be denouncing either, but rather stating that God should be more prevelant in today's economic and political systems. This to me is actually a much different controversial statement in which the Pope seems to be saying that separation of Church and State is not a good idea to say the least.
His statement strikes me as utopian - he seems to imply that society would be better off if everyone believed in God (presumably the Catholic One) and that then everyone would have the same morals and beliefs and things would run smoother.
That is simply naive.
I know Catholics who have a wide range of belief systems - yet they all believe in the basic idea of God. Some support abortion, some don't. Some support gay marriage, some don't.... So frankly I fail to see how a political economic system where God is at the forefront would change anything other than perhaps by turning our society into an indoctrinated group of individuals ruled by one extremely large special interest group.
I think both Marx and Adam Smith would be appalled at such an idea.
One note about this post: I'm not trying to pull a Sinead O'Conner here. But please keep in mind the Pope is just a man - weather you believe he is influenced by the hand of God or not, and his opinions should be subject to scrutiny just like the rest of us.
Friday, May 11, 2007
Tuesday, May 8, 2007
Becker quote a little off-base
Mankiw cites Becker as saying:
"This brings us to our punch line. Should an increase in earnings inequality due primarily to higher rates of return on education and other skills be considered a favorable rather than an unfavorable development? We think so. Higher rates of return on capital are a sign of greater productivity in the economy, and that inference is fully applicable to human capital as well as to physical capital. The initial impact of higher returns to human capital is wider inequality in earnings (the same as the initial effect of higher returns on physical capital), but that impact becomes more muted and may be reversed over time as young men and women invest more in their human capital....For many, the solution to an increase in inequality is to make the tax structure more progressive—raise taxes on high-income households and reduce taxes on low-income households. While this may sound sensible, it is not. Would these same individuals advocate a tax on going to college and a subsidy for dropping out of high school in response to the increased importance of education? We think not. Yet shifting the tax structure has exactly this effect."
I agree generally with Becker's placing eduction on such a high pedastal. I don't think redistributing income, however, should be abandoned.
Interestingly, no one else points out the very obvious fact that while the return to education begets income gaps, the reverse is also true: the have-littles don't often have as good of a chance to get the quality education as those that are well off do, for various reasons and variables related to the income gap itself. In other words, a little redistribution may be necessary to provide certain low-bracket individuals the opportunity to receive an education that might otherwise might be outside their grasp.
The only reason I can think that Becker would avoid that simultaneity issue here is perhaps because he has been too far gone up the crickety steps of the Ivory Tower he might not notice those low-income people way down below....
Wanting to devote more resources so more kids pursue higher education is of course great. The thing is, progressive taxation does that at least to some degree. If we get rid of progressive taxation, (or make it much less so) as Becker implies, and supplant it with some education incentive, exactly what would that look like? I don't think specifics were offered, so until they are, I'm sticking with at least some progressive taxation....
Furthermore, if we did use education incentives there would still be a large number of people who can't or just don't want to get a higher education, for various reasons: mentally challenged, socially inept, love doing a specific low-skill job.... Should we eliminate government assistance for them in the form of progressive taxation? If so, does this pose an ethical issue?
"This brings us to our punch line. Should an increase in earnings inequality due primarily to higher rates of return on education and other skills be considered a favorable rather than an unfavorable development? We think so. Higher rates of return on capital are a sign of greater productivity in the economy, and that inference is fully applicable to human capital as well as to physical capital. The initial impact of higher returns to human capital is wider inequality in earnings (the same as the initial effect of higher returns on physical capital), but that impact becomes more muted and may be reversed over time as young men and women invest more in their human capital....For many, the solution to an increase in inequality is to make the tax structure more progressive—raise taxes on high-income households and reduce taxes on low-income households. While this may sound sensible, it is not. Would these same individuals advocate a tax on going to college and a subsidy for dropping out of high school in response to the increased importance of education? We think not. Yet shifting the tax structure has exactly this effect."
I agree generally with Becker's placing eduction on such a high pedastal. I don't think redistributing income, however, should be abandoned.
Interestingly, no one else points out the very obvious fact that while the return to education begets income gaps, the reverse is also true: the have-littles don't often have as good of a chance to get the quality education as those that are well off do, for various reasons and variables related to the income gap itself. In other words, a little redistribution may be necessary to provide certain low-bracket individuals the opportunity to receive an education that might otherwise might be outside their grasp.
The only reason I can think that Becker would avoid that simultaneity issue here is perhaps because he has been too far gone up the crickety steps of the Ivory Tower he might not notice those low-income people way down below....
Wanting to devote more resources so more kids pursue higher education is of course great. The thing is, progressive taxation does that at least to some degree. If we get rid of progressive taxation, (or make it much less so) as Becker implies, and supplant it with some education incentive, exactly what would that look like? I don't think specifics were offered, so until they are, I'm sticking with at least some progressive taxation....
Furthermore, if we did use education incentives there would still be a large number of people who can't or just don't want to get a higher education, for various reasons: mentally challenged, socially inept, love doing a specific low-skill job.... Should we eliminate government assistance for them in the form of progressive taxation? If so, does this pose an ethical issue?
Mankiw's Misleading Memo
Part of Mankiw's defense for a gas tax comes from an old CBO report from 2004 which compares the benefits and costs of CAFE to a gas tax. They confirm that a gas tax could cost less than CAFE. ... That conclusion came from the old CAFE model. The model has since been reformed.
I wish Mankiw would stop pushing that out-dated CBO report (from 2004). The entire CAFE model has been revised since then and is in the process (end) of a major overhaul. This overhaual makes that report useless and outdated. I'm waiting for a new CBO report.
Read more here: CLICK ME
Or, for a point by point about what reformed CAFE means for efficiency: CLICK HERE
I'm not saying I think CAFE is THE only way to go, but I am saying that Maniw's use of the old CBO report is misleading. In fact part of the reason for the push of the overhaul was due to this old report. Shame on Mankiw for presenting only partial facts.
I wish Mankiw would stop pushing that out-dated CBO report (from 2004). The entire CAFE model has been revised since then and is in the process (end) of a major overhaul. This overhaual makes that report useless and outdated. I'm waiting for a new CBO report.
Read more here: CLICK ME
Or, for a point by point about what reformed CAFE means for efficiency: CLICK HERE
I'm not saying I think CAFE is THE only way to go, but I am saying that Maniw's use of the old CBO report is misleading. In fact part of the reason for the push of the overhaul was due to this old report. Shame on Mankiw for presenting only partial facts.
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