Ask an Economist (Post #1005 and counting)

[Godwynn]

Do you see rising post-secondary education costs and slow growth or even stagnating uneducated labor wages as a big looming problem?

Afterall, a majority of college students are fresh out of high school earning minimum wage or slightly above.

Also, do you think that the Federal Government should increase funding to public universities?

 

[LightFang]

Good points, all! Yet however must we view the world in strictly economic terms? I understand that price floors do introduce a disequlibrium price. However: it's just too fun being the devil's advocate and in any case it's important to view all sides of the thing. I was just trying to point out one justification for the price floor. But avoid worshipping the market. I know this is an economics thread; I was just trying to point out a justification for a price floor, is all. There has to be a reason why the whole world did not turn uber-privatized free market-worshipping people if it were so simple as that.

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See wage, minimum.

Well, that would mean that the price floor is above equilibrium since their time is worth less then you would value it, yet you have to pay the employees a set amount because the price cannot sink below the floor. If your price floor is below the equilibrium price, then it won't do anything because the price will stay at equilibrium. It has no reason to move unless something (like say a price ceiling set at a price lower than equilibrium) introduces intervention and causes a disequilibrium situation to occur.

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Moving on with the economics!

What's your view on flat taxes and/or the negative income tax? I don't know if this question has been answered before since I've only recently started viewing this thread.

 

[JerichoHill]

@@Godwynn

Do you see rising post-secondary education costs and slow growth or even stagnating uneducated labor wages as a big looming problem?
As long as demand continues to rise for a college education, I do not see prices falling. However, the quality difference between say, the best state school, and the local college is shrinking. So there are ways to substitute. Private schools have become something of a "club". That has societal implications. Fact: Harvard could pay for each of its students for all 4 years and still make money because their endowment is so large.

Afterall, a majority of college students are fresh out of high school earning minimum wage or slightly above.
I dont consider that to be an issue. Minimum wage jobs are highly substitutable and draw from a large labor pool

Also, do you think that the Federal Government should increase funding to public universities?
Which ones? I worked on initiatives in Georgia for the smaller state schools. The larger ones seem to be doing okay.

@@LightFang

Good points, all! Yet however must we view the world in strictly economic terms? I understand that price floors do introduce a disequlibrium price.
If they're effective, yes.
However: it's just too fun being the devil's advocate and in any case it's important to view all sides of the thing. I was just trying to point out one justification for the price floor. But avoid worshipping the market.
I don't worship the market. But I am going to answer things in this thread as neutral as possible.

If your price floor is below the equilibrium price, then it won't do anything because the price will stay at equilibrium. It has no reason to move unless something (like say a price ceiling set at a price lower than equilibrium) introduces intervention and causes a disequilibrium situation to occur.
And that's the minimum wage!

What's your view on flat taxes and/or the negative income tax? I don't know if this question has been answered before since I've only recently started viewing this thread.
Reducing the complications of the tax code would be nice, wouldn't it. A whole industry sprang up because it got so convoluted (money that would be better spent elswhere if we didnt have the red tape).
As for a negative income tax, do you mean something like the EITC?

 

[LightFang]

Reducing the complications of the tax code would be nice, wouldn't it. A whole industry sprang up because it got so convoluted (money that would be better spent elswhere if we didnt have the red tape).
As for a negative income tax, do you mean something like the EITC?

Yes, something like that.

 

[WillJ]

Jericho,

I'm very interested in development economics, and I'm also interested in experimental economics. As far as I know, these two fields don't really overlap. Am I wrong about that? Is there research involving laboratory experiments that has implications in development economics? (I realize a lot of development econ involves field experiments, but I'm talking about laboratory experiments done in the United States.) I can hardly imagine how there can be a connection between the two fields, but then again until recently no one thought that ab experiments could connect with any kind of econ, so anything's possible, and it'd be really cool if it's the case!

 

[JerichoHill]

@@WillJ

I'm very interested in development economics, and I'm also interested in experimental economics.
No, they don't really. Experimental deals with agent modeling. I know a bit about since Vernon Smith taught at GMU while I was there, so I got to learn it from the guy who won a Nobel for it.

As far as I know, these two fields don't really overlap. Am I wrong about that? Is there research involving laboratory experiments that has implications in development economics?
I'm not aware of any currently, aside from the ongoing agent modeling simulations.

 

[downtown]

Will you, or your office, need any intern slave labor around say, March?

 

[philippe]

In what do you see the most benefit? Capitalisation or repatrition in pensions?

 

[JerichoHill]

Will you, or your office, need any intern slave labor around say, March?

We have interns year-round. Typically there's a fall internship (Sept - Dec), spring interns (Jan - May), and summer. I personally would think that you may not enjoy it as it seems to be grunt work, but sometimes the interns get to work on big time cases. Sometimes we even hire em.

 

[JerichoHill]

In what do you see the most benefit? Capitalisation or repatrition in pensions?

What's the specific issue at question? Is this US specific or another country?

 

[philippe]

What's the specific issue at question? Is this US specific or another country?

In mostly western-european countries but an explanation for the US would be a nice add-on .

 

[downtown]

We have interns year-round. Typically there's a fall internship (Sept - Dec), spring interns (Jan - May), and summer. I personally would think that you may not enjoy it as it seems to be grunt work, but sometimes the interns get to work on big time cases. Sometimes we even hire em.

Ah, grunt work isn't a problem for me. I've been doing intern grunt work (and now I'm getting paid for it! Horray!) for about 2 years now for various government agencies. Being a data jockey isn't that bad...we all got to pay our dues. I work in a justice-related department now, and I *thought* advancing that to the federal level, towards a cause I'm actually interested in, would be cool.

I got a special OSU fellowship to study in DC for a quarter, where they pay for housing and food, and give credit..but we kind of have to find an internship ourselves (Its March-June). Looks like my time-frame won't work out. Oh well.

 

[JerichoHill]

In mostly western-european countries but an explanation for the US would be a nice add-on .

This is an issue in France right now no? With the US stock market woes and such? If a country is going to fund its pension system, it should fund it with a balanced portfolio, and that would include international assets.

But how much I guess is the question. Its a good one. Give me a day or two and Ill have an answer

 

[Godwynn]

What are the economic effects of a stagnant population?

Will economic growth slow? Will inflation slow?

Thanks ahead of time.

 

[Mr_Fusty]

I have wondered...

What would be the ultimate effects on the US Economy if the $ lost it's position as the leading reserve currency and internationally accepted means of payment? I am assuming here that another currency assumes the $'s position.

 

[JerichoHill]

@@Godwynn
What are the economic effects of a stagnant population?
--Could be good or bad, really. No labor growth, but potentially more wealth per person. If we're talking absolute stagnant pop (not just native citizen pop) then sure growth would probably slow. Population growth mattered more when we were in the industrial and mechanical age.


Inflation isn't related at all to this. That is a money phenomena.

I have wondered...

What would be the ultimate effects on the US Economy if the $ lost it's position as the leading reserve currency and internationally accepted means of payment? I am assuming here that another currency assumes the $'s position.

Like now? Not as bad as its being hyped up to be. I'd just as soon as the experience would be similiar to Great Britian.

 

[JerichoHill]

But how much I guess is the question. Its a good one. Give me a day or two and Ill have an answer

Phillippe,

After consideration of your question, it would seem best to that a country not entirely divest itself of investment neither foreign nor domestic. However, one is likely to favor domestic vs. foreign because of incentives to the growth of the home country's economy
.

 

[JerichoHill]

@ Godwynn

One reason for the rise in college costs has been a rise in demand for a college education. One part of this rise in demand has been because employers now require college degrees for consideration for low level management postions, like a shift manager at Ruby Tuesday's. However, they can do this because the value of a degree has been diluted somewhat by our declining primary education system and the glut of BA's (rather than BS's) . Somewhere along the way we began to send more people to college than the economy needed.

 

[Mulholland]

Looks like the markets have already priced in a fed rate cut. If you were Ben Bernanke what would you do at the next meeting?

 

[JerichoHill]

Not cut rates. A .75 cut in two meets is awfully fast for cuts.

Despite the Fed looking at core inflation rates, that's a bunch of hooey since it doesn't include food and energy, which have inflated greatly. The dollar's lost a good bit of value, and a sizeable chunk of that loss is directly attributable to the fed's previous rate cuts.

I think its much more likely that the Fed's going to stand pat. CitiGroup got bailed out, the market responded, the holiday season looks good, and with inflation woes around, the best move the Fed could do is see how its previous actions start to shake out.

I am hopeful that the Fed will not act to push back a potential recession's start date until Jan 21st, 2009, but Bernanake's previous actions make me wonder how much he's responding to political, rather than economic, pressure.