Will Protectionism Be Our Downfall?

Mr. Obama talks about not rewarding companies who ship jobs overseas... 

I suggest he look up comparative advantage. 

I know that I have sufficiently argued my point against protectionism, why self-sufficiency undoubtedly hinders more than it helps, and why comparative advantage truly helps the entirety of our populace in the long run.

Here's my extremely simple example to really get my point across... Imagine there are two people working on the same project and allowed to work together, but are getting two separate grades. Let's say the project has two components, one being mathematical, the other being writing-based. Person A is exceptional at math, but only has average writing skills, while Person B has outstanding verbal prowess, yet lacks such a status at math. Each person can make the best project if Person A does their own math, and greatly helps Person B with their math, while Person B would do the writing portion by themself, concurrently substantially aiding Person A with their writing portion. 

By each person doing what each is most adroit at, both parties get the best grade, and both parties win.

Now, the people are countries, math and writing are two different goods, and the project is GDP. 

It speaks for itself... Protectionism will only kill us. 

The End of Incentives

It looks as if the upper class will have their incentive to work decreased... Exactly what we need when GDP is already under it's potential. This article talks about Obama's healthcare plan, proposed tax cuts to the middle and lower classes, and the tax increase for the richest Americans. 

While some of Obama's reforms include the government actually saving money, it seems as if the new taxes are a start to lowering our Gini coefficient, and increasing income "equality" in the United States, while increasing healthcare coverage provided by Washington. 

While this isn't necessarily socialism, it sure is a page out of Europe's book...

And the World Watches Washington

In Thomas Friedman's op-ed, he talks about how the world watches Washington, and how many are scrambling to the dollar, with the overall prominence of the U.S. in the global economic arena. 

He's unquestionably, right. I mean, it seems as if every new development in Washington is so closely examined, not only by the US media, but by all. 

I'd also like to say that his book on globalization, The World is Flat. If you question the value of globalization to America, or would like to reinforce your belief in its merits, it's undoubtedly a must-read either way. 

Greg Mankiw's Favorite Children's Books

Here

More than a Harvard Economist...

Best Purchase...

Yesterday I made two great purchases.... At least as economics goes...

1. Principles of Economics by N. Gregory Mankiw. The man is a genius, and I could use a more in depth textbook for learning the basics. I also plan on using it as a nice reference material.

2. Capitalism and Freedom by Milton Friedman. Invented Monetarism... I don't need to say more.

Obama's Dream Come true

While it was a prolonged struggle to pass a stimulus bill which included provisions for investment in "green" energy, it looks as if ex-gang members are being trained to install solar panels. Check it out.

Maybe some more of that stimulus should go to Homeboy Industries, the non-profit supporting this effort...

EXTREMELY NERDY! ECON JUNKIES ONLY!

Now that you've all been forewarned of the exceedingly nerdy nature of this post... I will not accept any asinines on the basis that this post was too nerdy... On the Freakanomics blog, I found this recent post about how at the University of Michigan, the band has started to play over inappropriate chants that are shouted by students when an opposing team's player gets a penalty... Naturally, it's examined in an economic light of what the students should do to attain a desired equilibrium. 

For Those VERY Obsessed with Economics... Like I

This website, run by MIT, has free courses, that have the lecture notes, problem sets, exams, and quizzes for economics courses, among those of other subjects. I know I'm going to be using that website... check it out. 

Poor Indian Farmers Buying Cell Phones

As the entire Indian Economy, and that of the world, nosedives, cell phone sales to poor farmers, despite the current economic condition, and their 1,000 dollar a year incomes. As the article states, they are able to be much more efficient by getting the best prices by calling.... read it

Obama "inexcusable and irresponsible"

Obama declared yesterday that the delay of the incoming stimulus package is "inexcusable and irresponsible." 

I couldn't agree more. The last thing we need are wavering politicians who won't just go for our best chance, currently, of getting out of the current recession. We don't want more unfavorable events occurring, further disheartening the public's faith in an economic comeback. A stimulus should not only help out consumption expenditures, and increase jobs, but also show the people that we can get through this, and give them the necessary faith to help bring our economy back to its full employment output. 

And for Libertarians this article, written by a Harvard prof, takes the Libertarian view as to how the stimulus should be. 

Some good thoughts, even in my opinion. I definitely agree with some things (certain tax cuts, fewer government expenditures than originally planned, cut benefits) but some others not so much. 

The Incoming Stimulus... Just Do It

Again, I want to voice my thoughts on the stimulus again since it seems that Republicans are still not satisfied with the current package... some have wanted more money and others less...

I'm with Obama and Geithner... pass the damn bill. 

I believe that the worst action in this case is inaction, and that is our current course of action. The clock still ticks yet our elected officials won't just pass the bill, and make a full-fledged effort to alleviate the current recession. 

Zimbabwean Hyperinflation

This link is to a CNN article announcing Zimbabwe's latest move to combat hyperinflation, which is to slash zeros off of it's currency's value, 12 to be exact. 

I liked this article very much, because it reminded me of how my own econ professor explained the situation to us, by showing an unusually large rightward shift in the money supply on a supply/demand graph for money. His ensuing explanation, "Mugabe does this every Thursday" along with his tone made me crackle, seeing as such a move is utterly absurd, and reduces interest rates to levels that will undoubtedly cause such absurd amounts of inflation. 

I pulled this off of Gregory Mankiw's Blog, a Harvard Economist, whose blog I read religiously, and I recommend you all do as well, in addition to your daily dosage of B.S. Free Economics. 

Geithner: A Speedy Recovery is Needed

As I was reading the WSJ, I saw an article on what incoming Treasury Secretary Timothy Geithner plans on doing. The title of the article itself pointed to his belief that a speedy recovery is necessary in order to recover from the current recession. 

If you look at my previous post, I pointed to this as well... 

Will *insert expletive" Congress Finally Pass The Stimulus?!?!

As a true believer in Keynesian Economics, I find it quite perplexing that this stimulus package has yet to be passed into law. It seems quite clear to me that such a package that is the precise medicine needed to treat the ailment at hand in the American Economy. Infrastructure overhauls, and tax breaks are exactly what the country needs in order to shift Aggregate Demand to the right in order to get experience economic growth, at least in the short term. Hell, any AP Macroeconomics student knows that, yet it seems that our exceedingly asinine and pygmy-minded bureaucrats can't seem to understand, therefore they believe that such a stimulus package is wasteful, a description that doesn't have any truth to it. 

Conversely, I do fully comprehend that Keynesian theories don't always work, but at this point I'm more or less willing to see our government try something as opposed to nothing. Specifically, I remember quite well reading an article about the many failed stimulus packages utilized in Japan during the 90's as their attempt to pull themselves out of a recession, yet didn't do much more than create a large national debt, and make extremely nice roads. Clearly our monetary policy isn't doing enough to encourage more domestic investment, to the chagrin of monetarists, thus we aren't making any progress in terms of trying to achieve economic growth. 

In conclusion, while we already have an exceptionally large national debt, we must practice deficit spending until our country can recover from the current economic crisis. 

The Bailout Game

I found out about this game courtesy of my economics professor...

Alright I'm For Real this Time

Due to much protest, and a tad of regret for ending my blogging, I have decided to commence my blog posts again. I hope those of you who have been reading my blog are elated by such news, and that you will read my posts as I churn them out.

Thank you.