Question 1
There is an axiom (an assumption) in economics about consumers and that is that we all operate under “full information.” Anyone that has ever been to Trader Joes (or HyVee for you Midwesterners or Publix for the southerners) and Walmart on the same day will find out that those red seedless grapes that you paid $2.99/lb at one store are $1.29/lb at the other (by the way, be prepared to learn a lot about my grape obsession). In that spirit, I want you to get fully informed on college majors. College is a beautiful investment in your “human capital,” which will net you millions of dollars in your lifetime. Even in our dark times. So bravo! Good choice on going to college! However, not all majors are made equal.
Are you sure you are in the right major? The right school? Should we all be Petroleum Engineers? Is economics a good major choice? (This may look familiar if you are in Macro course too. Respond here and there for the sake of discussion.)
http://www.npr.org/sections/money/2013/09/11/221417806/episode-485-whats-your-major
http://www.npr.org/sections/money/2013/09/10/219372252/the-most-and-least-lucrative-college-majors-in-1-graph
Question 2
The economics of textbook prices has always been interesting to me. I remember that in my undergrad years at the University of Utah in the early 2000s that I never paid above $100 per book (save an anatomy book that was almost an arm and a leg). I complained constantly at the semesterly outlay of $400-$500. Now, the books I require for my courses are double the prices! The books are prettier now with pictures (and a lot less math for some reason like little game theory compared to when I was young) but this still hardly justifies the price. We will get into inflation in this course but even economists in Latin America would blink at the inflation rate in textbooks.
I will give you my own confession to requiring certain texts over potentially cheaper ones: time. In my own production possibility frontier of time and quality, the indifference curve that meets tangency balances my grading time as well quality of course materials. Sadly, this point also comes at a higher textbook cost. I would love to come up with my own material for a course and never require a text. However, the breadth of my own teaching load creates “opportunity costs” for other things like eating or sleeping and my other job. Thus, a text with bells and whistles saves me time and allows me to teach other courses, eat, sleep, and pay my mortgage. However, even if I did have just one class to teach, I would still favor using an expensive text as it doesn’t make sense to “reinvent the wheel.” This again is opportunity costs and economics is all about incentives and logic and rationality.
Listen to the following podcast and give your opinion. Is it a racket? What would be the fix in a perfect world? I actually teach courses with my own materials (no pictures) that are hundreds of pages of government documents or cases. Would this be preferred?
http://www.npr.org/sections/money/2014/10/03/353300404/episode-573-why-textbook-prices-keep-climbing
Question 3
The “invisible hand” is part of the lore and lingo of economics. It is the metaphor from Adam Smith himself. It is about supply and demand and the market economy in general. Adam Smith would walk the streets of Edinburgh and notice the transactions. The payment of a price, which were variable for much of history, would settle at a level that reflected the given supply and demand of the good. If the price of Scottish grapes were $10/lb and I only make $10/day, then it’s easy to say that my price elasticity of demand for grapes will be elastic (more on this to come). Only Scottish lairds and ladies could afford to eat them. But say there is a bumper crop of grapes in the hills of Brigadoon, I will have power as a consumer over the merchant as grapes are spoilable. BOOM! Lo, the price drops to reflect the merchant’s supply and my demand. This is the “invisible hand” and the market economy in general.
Listen to the following podcast about a modern take on the ‘invisible hand’ and Paul Samuelson and Amartya Sen. They critique the “invisible hand.” Sen says that trust is necessary between Merchant and Consumer and Smith was wrong to assume that this trust. I disagree with him, as most economists do. Most economists assume that there is trust and we all work for an “efficiency price.” Tell me, intuitively, why the price we pay at the store is at a good price. What happens when we are gouged by merchants? Do people continue to frequent these stores?
https://www.npr.org/sections/money/2009/12/podcast_adam_smith_and_the_not.html
Question 4
As a business lawyer, I believe completely in the freedom of contract. I have read many economic and legal arguments to allow it (skim the attached article). The fallout is not hard to guess at. It would be the urban legend nightmare of people drugging and kidnapping young, pretty victims, cutting them open taking a kidney or an eye, leaving them in a bathtub full of ice to sell the organ on the black market. But(!), people in India and Pakistan do sell organs and even act as surrogate mothers for Europeans where birth surrogacy is illegal and society is still functioning.
Listen to the following podcast and tell me your opinion. Is this a slippery slope or can we do it reasonably?
http://freakonomics.com/2010/12/30/freakonomics-radio-you-say-repugnant-i-say-lets-do-it/
Question 5
The tragic fall of Afghanistan in August of 2021 has been heartbreaking to watch. The politics, military, and sociology have their own tragedies, but what about the economics?
The Taliban were in power from 1995 until 2003. They brought in as much as $11 billion a year in GDP when in power. They tax everything but there’s a lot that comes from international aid, lots of NGOs (non-governmental entities) invest in developing countries, and of course, kidnappings and the opium trade. China is expected to bankroll investment now that the U.S. is out of the picture.
What isn’t being talked about is the minerals. I live in West where mining is a very big industry. There’s a lot of potential for resources in Afghanistan for non-fuel minerals. This could power a boom if they chose to seize it.
Listen and watch some of the following links. What is your economic opinion on some of the following: Will Afghanistan be a favorable business environment for non-western countries? Will the Taliban bring in stability that will allow the necessary economic environment for growth? How about minerals?
https://www.marketplace.org/2021/08/16/from-taxes-to-the-drug-trade-how-the-taliban-paid-its-way/
Who is going to provide funding to Afghanistan under the Taliban?
Question 6
The benefit of a higher education is the possibility of rolling a better whip than you have now. There’s a lot economic costs in those old hoopties.
In my opinion, the policy of “Cash for Clunkers” thought up by Cass Sunstein was an amazing program. It set up a government rebate to trade-in hoopty gas guzzlers for new cars. In case you all don’t remember 2008, it was a time of meltdown, recession, and bankruptcy. I was living in Southern California at the time and gas hit $5.50 a gallon, which was an increase of $3.00 in a matter of months. Everyone was driving Hummers and Suburbans (or that enormous Ford Excursion!) in suburban LA. People couldn’t trade in their rides for Priuses fast enough.
Enter the Car Allowance Rebate System – CARS – where you could get up to $4500 on a new car if your present car was old enough. This helped the environment by getting old cars off the road, it stimulated the economy, and it helped Detroit (where I moved right after LA) to fund their retooling after the bankruptcies.
Listen to the following podcasts and go back to 2008. What is your opinion of this policy 10-years after? Did we learn our lesson? Will Tesla save the world? What happens when India and China’s population reach the middle class and their consumer demand changes?
https://www.npr.org/templates/story/story.php?storyId=111093618
https://www.npr.org/sections/money/2018/03/05/590971877/sticker-shock-the-state-of-the-american-car-industry
Grading Rubric:
Quality
this is key
Responses are on topic and contribute to the quality of the discussion, demonstrate a good understanding of the concept, make appropriate connections between the issue and the theory learned in the class, and support logic/ideas by making references.
Length
You have to meet the length requirement as instructed on the forum.
Responses
At least two or more quality responses to others posts (copy and paste from internet or other sources (i.e. plagiarism), abusive or inappropriate response/language will be harshly penalized. In some cases it may earn a class grade of ‘F’). Demonstrate interest in peers’ topics and offer some thoughts.
Deadline
Submit on or before the due date as instructed on the forum.
