Archive for January, 2012

Predicting the Nevada Republican caucus

Posted: January 31, 2012 by alephnaughty in Politics
Tags: ,

I could run a victory lap tonight, but I won’t. Instead, I’ll just issue my prediction for the Nevada caucus this Saturday:

1. Mitt Romney

2. Newt Gingrich

3. Ron Paul

4. Rick Santorum

And off to Nevada we go…

Advertisements

Food stamps, there’s a problem

Posted: January 31, 2012 by nullpointerexceptional in Economics, Important, Posts that shouldn't have been written
Tags:

One brisk Saturday evening you find yourself at your local gas station/convenience store combo. Nothing seems out of place. Yup there are your teenagers working the register. The tweens scoping out the candy isle. The old woman stealing sugar packets from the coffee island. Everything checks out. You grab your warm coffee, after all you have a long night of partying ahead of you. Eventually you mosey on up to the checkout line, only to find everyone in the county came to the store at the same time. Great, just great. Looking for something to do, you start to snoop on that person ahead of you in line – well the 10 cans of Red Bull surely caught your eye, quickly interrupted by the small child screaming that the top of their lungs that they want candy and lots of it.

Yup, nothing out of the ordinary…well until that person in front of you plops the 10 cans of Red Bull and various candy bars on the table. But that’s not what caught your eye. It’s the swipe of an EBT (food stamps) card and the transaction reading APPROVED across the cheap LED screen. That can’t be right, can it? Are you telling me that person just bought $30 worth of junk using food stamps? I know that about only 1 cent of that probably came from my contribution to society but the concept still boggles the mind.

You’re still trying to wrap you head around this idea when you notice the newspaper headline “Food stamps to be accepted at McDonalds.” You’re freaking kidding me right? This has to be the twilight zone where a $7 Big Mac meal with their large soda is being financed by the greater public. You pass out from the frustration, hitting your head on the ‘Slippery when wet sign’ (well no shit Sherlock) only to awake in a hospital bed hours later. What do you mean you only take Medicaid? Concussion from the fall? Kick me out on the street because my company has a good insurance company? Maybe this is the twilight zone…oh right, this is America.

What’s that you say? You just bought a 70” HDTV? Jeez, you must make a lot of money – I can see the 20″ rims on your ever-so-fuel-efficient SUV. Thank the government? What, why? Food stamps? What the hell. Oh right, your $500 a month in food stamps let’s you spend the $500 you would have normally spent on food on sneakers instead – don’t think the government thought of that one.

So much for only being used for necessities. Food stamps, the next American dream.

UPDATE

I’m gonna have to get on welfare so I can hit up the local strip club: http://money.cnn.com/2012/02/06/news/economy/strip_club_welfare/index.htm?hpt=hp_t3

Issue #1: Unemployment in America, Pt. II

Posted: January 30, 2012 by alephnaughty in Economics, Politics
Tags:

Suppose that you expect to have a certain amount of funds at your disposal (you’re expecting your next paycheck, for example). What may you plan to do with those funds? One option is to spend them today, consuming goods and services produced by the economy. Another option is to save them today, so that you may consume goods and services down the line. If you decide upon the latter, you have two more options to choose from. The first is to free up your savings so that someone else may make use of them, in exchange for a promise of repayment (with interest) when you’re ready to spend. The second is to keep your savings to yourself–that is, to hoard money–until you’re ready to spend.

Whether you decide to consume (spend your funds yourself) or to invest (let someone else spend your funds), you’re contributing to the aggregate demand for goods and services produced by the economy. It’s only if you engage in hoarding that you deprive the economy of aggregate demand. The job of financial markets is to match savers with borrowers. If interest rates are just right, savers want to save as much as borrowers want to borrow. Consequently, there is little hoarding, and aggregate demand is plentiful. If interest rates are too high, savers want to save more than borrowers want to borrow, causing hoarding, thereby reducing aggregate demand.

In my previous post, I contended that greater aggregate demand would reduce the unemployment rate, putting willing workers back to work. If the preceding discussion is correct, then, the recipe for stimulating aggregate demand is lower interest rates. What, then, my fellow Americans, is my diagnosis of our jobs crisis? The interest rate is too damn high!

In my final post on this subject, I’ll explain why lower interest rates may not be so easy for the government to engineer, under the unusual circumstances of the present.

[Earlier posts in this series:

Announcing my bid for the US presidency

Issue #1: Unemployment in America

]

Issue #1: Unemployment in America

Posted: January 30, 2012 by alephnaughty in Economics, Politics
Tags:

Suppose that you own and operate a single firm. For whatever reason, it seems that the demand for what your firm produces has declined. Recognizing this, what should you do? Well, if consumers do not want to buy as much of your output as they did before, you should not produce as much output as you did before. There’s no profit to be made in producing stuff nobody wants to buy.

Now that you have decided to scale back your output, it occurs to you that you no longer require as many inputs as you once did. Among your many inputs is labor. If you do not require as much labor as you did before, some of your workers must be laid off.

Responding to a fall in demand, therefore, you have in a very small way raised the unemployment rate. Your ex-workers do not have jobs, but continue to actively seek employment. But why has the demand for your firm’s output pulled back? Presumably, other firms in the economy have either begun producing the same goods and services more cheaply (due to technological progress, say), or begun producing different goods and services which consumers want more than the goods and services you produce (due to a shift in consumer preferences, say). Whichever is the case, just as the demand for what you produce is falling, the demand for what others produce is rising. Needing to produce more output to meet growing demand, these other firms must draw upon more inputs–in particular, more labor. This raises the demand for labor, offsetting the fall caused by your firm, thereby restoring full employment in relatively short order. The unemployment rate is elevated only slightly, and only briefly.

Suppose instead that the aggregate demand for goods and services produced by the US economy declines. Much like your firm, the economy “recognizes” that the demand for its output has fallen, causing it to scale back production. Just as your firm would do in the course of scaling back production, the economy disemploys many of its inputs–most visibly, labor. The unemployment rate rises as in the previous case.

In contrast to our earlier example, however, a fall in aggregate demand is not offset elsewhere in the economy. Remember that, in this instance, we’re talking about the economy as a whole–there is no elsewhere. Does this mean that the unemployment rate will be permanently elevated?

Ideally, no. The reason is that, usually, prices adjust to clear markets. In our first example, the way that the economy signals to the newly unemployed workers to shift out of your declining firm into other expanding firms is by pushing down the wages you offer, while pushing up the wages they offer. Similarly, if the aggregate demand for goods and services produced by the economy declines, this ought to lower wages in general, encouraging firms to hire more workers. And if wages fall far enough, quickly enough, the number of people looking for work but unable to find it will be as low as always. That is, the unemployment rate will quickly return to normal levels.

In reality, however, this does not happen. The reason, in the view of many macroeconomists, is that wages are ‘sticky’, or ‘rigid’. When there is a drop in aggregate demand, instead of wages falling instantaneously, many wages fall rather sluggishly, or in lots of cases not at all. No single theory as to why this is the case commands a consensus, but the evidence in favor of wage stickiness is quite solid. If wages do not fall immediately when aggregate demand falls, then laid off workers will continue to apply for increasingly scarce job opportunities, keeping the unemployment rate elevated in the short run. In the long run, wages will fall far enough to restore the economy to full employment, but as J. M. Keynes famously remarked, “in the long run, we are all dead.” A lot of unnecessary suffering is evitable if policymakers properly deploy the instruments at their disposal to stimulate aggregate demand, encouraging the economy to scale up production, which in turn encourages the re-employment of unemployed workers. In my next post, I will explain how best to do just that.

[Earlier posts in this series:

Announcing my bid for the US presidency

]

Announcing my bid for the US presidency

Posted: January 29, 2012 by alephnaughty in Politics
Tags:

I hereby declare my entry into the 2024 US presidential contest. It is time for a change, America. Promise me your vote, and I will promise you a more perfect union. In posts to come, I will spell out my plan for cultivating a freer, fairer, and filthy rich U. S. of A., issue by issue, so that by 2024, you will know exactly where I stand. If you don’t like what I have to offer, vote for the other guy. Just be warned that he touches many a kid, has illegitimate, dark-skinned children, and often feasts upon the broken dreams of discarded fetuses. Also, take note that God and me are like this (*crosses fingers tightly*). Seriously, love that guy.

First up: jobs, jobs, and more jobs…

There are two kinds of Americans. The first are autistic. The second are drunk, drugged up, and manically depressed. Why? Don’t ask me. But, here’s a theory: the economy hates the second group, just like you hate your drunk, drugged up, and manically depressed cousin (and yes, the Oxford comma is absolutely essential) who just eats all your food and complains about life being unfair.

Now, Mr. Scientist (you might say), what use is this theory? Just seems like you’re hating on people who already hate themselves. Well, I am doing just that. But, I’m also doing science. If my theory is right, here’s a prediction it makes: the second group has shitty economic fortunes compared with the first. Ta da…

From personality to neuropsychiatric disorders, individual differences in brain function are known to have a strong heritable component. Here we report that between close relatives, a variety of neuropsychiatric disorders covary strongly with intellectual interests. We surveyed an entire class of high-functioning young adults at an elite university for prospective major, familial incidence of neuropsychiatric disorders, and demographic and attitudinal questions. Students aspiring to technical majors (science/mathematics/engineering) were more likely than other students to report a sibling with an autism spectrum disorder (p = 0.037). Conversely, students interested in the humanities were more likely to report a family member with major depressive disorder (p = 8.8×10−4), bipolar disorder (p = 0.027), or substance abuse problems (p = 1.9×10−6). A combined PREdisposition for Subject MattEr (PRESUME) score based on these disorders was strongly predictive of subject matter interests (p = 9.6×10−8). Our results suggest that shared genetic (and perhaps environmental) factors may both predispose for heritable neuropsychiatric disorders and influence the development of intellectual interests.

You know whose economic fortunes are better than humanities majors? Science majors. Just look at those p-values. Hot damn. I didn’t pay much attention in AP statistics (I just remember gems like “power is desirable”, and “we want small Ps”), but this looks pretty sciency to me. And the authors are from Princeton!

OK, so, my theory sucks. Granted. But how about them p-values? And for the record, I belong to the first group, have shitty economic fortunes, and I spend my days eating other people’s food and complaining about the unfairness of life. I am the two Americas.

2012 Winter X Games

Posted: January 29, 2012 by pleonasty in Sports
Tags: , ,

The 2012 Winter X Games came to a close today, and, as predicted, no one even knew it was on. If you can believe it, the ‘X’ in X Games means the sports in which the athletes compete are extreme. To that end, both the Summer and Winter X Games feature a multitude of adrenaline pumping, motor revving, energy drink drinking activities that challenge competitors and viewers alike to stick it out. This year Shaun White (USA), Torah Bright (AUS) and Halldor Helgason (ISL) are among the many names that no one has ever heard of. With the Women’s Figure Skating National Championships and Novak Djokovic’s striptease to focus on, it’s no surprise that the interest in the X Games has been X-hausted. That’s right, folks, we’re doing extreme puns now.

On a serious note, this year a good deal more attention has been paid to this year’s Winter X Games due to the death of Canadian skier and X Games multi-gold medal winner, Sarah Burke. While training in Utah, Burke fell and hit her head and went into cardiac arrest on the slopes. She was airlifted to a hospital where, on January 19th, she was overcome by her injuries and passed away. Unfortunately, her life insurance policy did not cover this particular event. In order to cover the massive hospital bills accrued during her 9 day stay at the University of Utah Hospital, Burke’s family opened a website to accept donations from her fans and concerned onlookers. Burke was instrumental in the addition of the superpipe skiing event to the 2014 Winter Olympics roster. At the very least, her legacy will live on.