Ask an Economist (Post #1005 and counting)

[JerichoHill]

So JH, what got you interested in economics? Do you like it now for the same reason you got interested in it? If not, what do you like most about it now? If you could start over from undergrad would you still become an economist?

I had a high school teacher who had a graduate degree in economics who taught our political and historical AP classes. He was also an avid chess player and stock market enthusiast. He basically taught so he'd have something to do, as I found out later he was quiet loaded by making good stock market picks in the 80s.

Anyways, that teacher became my inspiration for becoming an economist. I like solving puzzles. Of course, what I liked matured as I became more educated. Now I appreciate it more for giving me a job that aint boring, and that its framework of analysis helps me take care of my family's (okay, a wife and a dog) future well being

The only thing I'd change about my undergrad days is that I would have gone to a school with more girls. I didn't understand that economics could be applied to anything (including dating) when I started college. Oops.

 

[JerichoHill]

Could you give me a summary of what is Microeconomics and what is Macroeconomics?

Microeconomics basically covers the economies of businesses, and is situated for say, singular entities. Micro appeals to mathematicians. Macroeconomics is the study of economic decisions at a bird's eye view of a set of entities.

Micro cannot be equated to Macro, at least not right now. Its an ecological problem, or rather, a problem of information being lost in the aggregation of microeconomies into the macroeconomy.

That, and there's alot more BS in macroeconomics

 

[The Yankee]

Just the absolute insane amounts that professional athletes are being paid may be enough to skew the results greater than what you would expect a few thousand people would do. When the minimum wage in our big sports leagues often being more than $100,000 in a year, that would add significantly to that total whereas many athletes had off-season jobs to support themselves in decades past.

I'm sure there are more examples, but that was the one that came to mind when seeing JH's post on how much the top level may be skewed.

Maybe it'd be more useful to see more levels in such a graph, and see where such lines are drawn, rather than include everyone making over $100,000 from a person getting that $100,000 to someone raking in $5 million (which would equal 50 people making $100,000).

 

[Mowque]

Is outsourcing bad?

reason i ask is that one of my profs just made a huge rant against it, and i have noticed THIS particular prof is often wrong.......

 

[The Yankee]

Depends who you ask, is the short version.

It's bad for the person that used to be doing that here because that person has to go look for new work. Yet, doing something like that (such as outsourcing the help hotlines to India) will also keep costs down because it's just plain cheaper to employ those workers elsewhere and technology is so cheap and reliable enough for the connections to happen.

I've also heard the argument that while we ship off our call centers to India or where have you, we can also move on to bigger and better things.

I'm sure there are statistics that would show any net benefits and deficits that may occur due to outsourcing, though.

 

[Godwynn]

JerichoHill and Whomp were right, the mortgage mess just got worse.

E*Trade Financial lost half of its value overnight on worries of a $1 billion dollar writedown caused by mortgage backed securities.

It currently trades at $3.99 a share, back in June it was at $25.60.

Ouch!

 

[The Yankee]

HSBC is going to write off a substantial amount, also.

 

[JerichoHill]

Just the absolute insane amounts that professional athletes are being paid may be enough to skew the results greater than what you would expect a few thousand people would do. When the minimum wage in our big sports leagues often being more than $100,000 in a year, that would add significantly to that total whereas many athletes had off-season jobs to support themselves in decades past.

I'm sure there are more examples, but that was the one that came to mind when seeing JH's post on how much the top level may be skewed.

Maybe it'd be more useful to see more levels in such a graph, and see where such lines are drawn, rather than include everyone making over $100,000 from a person getting that $100,000 to someone raking in $5 million (which would equal 50 people making $100,000).

I agree that would be quite useful, because I'm in that 5%, but I don't live like A-Rod, that's for sure!

 

[JerichoHill]

Is outsourcing bad?

reason i ask is that one of my profs just made a huge rant against it, and i have noticed THIS particular prof is often wrong.......

In and of itself outsourcing is an economic transaction and therefore has no presence on a good vs. bad compass. By being a voluntary economic transaction, it carries with it an assumption that it is mutually beneficial to both parties.

Does outsourcing hurt individuals?

Outsourcing to me is a politically charged buzzword. Companies who were late to the outsourcing craze found out that not everything should be outsourced. Oops.

Outsourcing jobs can hurt small communities who were dependent on a single employer. However, since the US is becoming more city-oriented than rural ortiented(see the Census on that one), its a trend thats going to keep on happening. West Virginia is an example of state hit hard by outsourcing but which had programs in place that definitely helped alot of folks making a transition.

Your professor has drunk too much PerotAid

 

[JerichoHill]

JerichoHill and Whomp were right, the mortgage mess just got worse.

E*Trade Financial lost half of its value overnight on worries of a $1 billion dollar writedown caused by mortgage backed securities.

It currently trades at $3.99 a share, back in June it was at $25.60.

Ouch!

And this is not the bottom folks!

Yet, CEO's of these companies taking these massive losses are getting retirement packages valued in the millions. The incentive structure for executives is supremely messed up, and that has to get under control.

 

[JerichoHill]

Depends who you ask, is the short version.

It's bad for the person that used to be doing that here because that person has to go look for new work. Yet, doing something like that (such as outsourcing the help hotlines to India) will also keep costs down because it's just plain cheaper to employ those workers elsewhere and technology is so cheap and reliable enough for the connections to happen.

I've also heard the argument that while we ship off our call centers to India or where have you, we can also move on to bigger and better things.

I'm sure there are statistics that would show any net benefits and deficits that may occur due to outsourcing, though.

Everyone forgets about that call center worker in India that just got a job...

 

[The Yankee]

So which decade will it be when these Boards of Directors wisen up about such golden parachutes?

We've got a ways to go, yet. Wonder how the bears are doing in all this. A great time to be shorting a few of those banks.

 

[The Yankee]

Everyone forgets about that call center worker in India that just got a job...

That's true, but just looking at a US-centric view, it's one lost job versus lower costs.

Our problem is that we're not doing well enough adapting to this brave, new world.

 

[Godwynn]

It is also nice to remember that outsourcing cannot really affect service industry jobs. Which is by far the largest sector of our economy (~85%)?

 

[Mowque]

Thanks, and in addtion i just checked a book out called "The world is flat" seemed exatcly related........Should i trust the book? (from an economist's point of view)

 

[JerichoHill]

Thanks, and in addtion i just checked a book out called "The world is flat" seemed exatcly related........Should i trust the book? (from an economist's point of view)

Its always good to know all the viewpoints. Thomas Friedman is going to be very pro-globalization. Try Stiglitz's "Making Globalization Work" for a counter viewpoint.

 

[JerichoHill]

It is also nice to remember that outsourcing cannot really affect service industry jobs. Which is by far the largest sector of our economy (~85%)?

Id be more concerned with automation

 

[Mowque]

That book is out till the 15 so, Flat Earth it is......... thanks for the direct answers, good thread idea

 

[delsully]

When will the US economy tank and slide into its next depression? I know it's going to happen, but how long can we keep up with the smoke and mirrors?

 

[Integral]

When will the US economy tank and slide into its next depression? I know it's going to happen, but how long can we keep up with the smoke and mirrors?

The quick answer is that there's roughly a 50/50 shot of a recession in 2008.



Jericho, I'll ask again, since it got caught up in the last two pages: are the long-term benefits of a carbon or gasoline tax enough to outweigh the short-term costs? Would an increased Federal tax on gasoline be a good thing for the American economy in the long run?

If the question is worded badly, let me know and I'll try to rephrase it.