So this question probably says something about myself or my friends, but the other day we were arguing over the effect of a Zombie Apocalypse on AS/AD.
We agreed that as humans are infected and become zombies SRAS will shift left as the labor force diminishes. Costs of production would also rise as transportation costs rise having to avoid areas of zombie infestation. You get the idea.
Since at this point there is no cure for the virus that is at the heart of any zombie outbreak these changes in supply are likely permanent, shifting LRAS left as well.
The real argument came with the debate over whether AD shifts left, right or is indeterminate. Some argued that as humans become zombies AD would obviously shift left since zombies don't demand anything. There would also likely be quite a dent in international trade resulting from quarantines to restrict the spread of the disease. Investment would likely fall as inventories drop with looting and the unstable business environment made planning future investments problematic.
On the other hand, government expenditures might rise sharply with additional defense expenditures, rescue operations and medical research and development. In addition, those of us left would certainly demand more weaponry, canned food, kerosene, etc. - survivalist type stuff. Given this, wouldn't AD shift to the right? Or would the resulting positive changes in aggregate demand simply cancel out the negative changes in AD resulting in no real change or AD is indeterminate?
I need your help. They some don't like my answer - that SRAS and LRAS shift left and AD is indeterminate. Does AD shift? Which way? If so which happens first, the shift in AD or SRAS?
Friday, January 28, 2011
Actual vs Potential GDP Graph---We need to consume us some GDP---FAST!
Actual vs Potential GDP Graph---We need to consume us some GDP---FAST!
A close up view of the difference between the US's ACTUAL GDP and its POTENTIAL to produce GDP. The line below the Potential GDP would represent the dollar figure for a point inside the Production Possibilities Frontier, such as Point "A". The PPF just shows the raw production numbers of Capital and Consumer Goods. We have a lot of ground to make up!
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| Source: Econbrowser |
The Presidents State of the Union Address and how it relates to the Production Possibilities Frontier---I told you I could do it!!
The Presidents State of the Union Address and how it relates to the Production Possibilities Frontier---I told you I could do it!!
Here is how some of Pres. Obama's statements relate to the Production Possibilities Frontier. I highlighted the key "buzzwords" I looked out for. All suggest an Allocative Efficiency decision to allocate more resources towards "Capital Formation"--moving to the production/development of more Capital/Infrastructure to create the conditions for true economic growth. On the graph below, we first have to move from Point "A" to Point "B" on the PPF (There is no such thing as a free lunch--Opportunity Costs!), before we can experience economic growth, illustrated by a shift to the right of the PPF. Economic growth is an increase in our potential to produce more goods (and services), both Capital and Consumer Goods. Currently we are operating BELOW our potential, at a point inside our PPF. It is important to remember the distinction between GDP growth, which is what we need to just get back to the PPF, and Economic growth, which I just described above as a shift to the right, or an increase, in our productive capacity.
""Meanwhile, nations like China and India realized that with some changes of their own, they could compete in this new world. And so they started educating their children earlier and longer, with greater emphasis on math and science. They’re investing in research and new technologies. Just recently, China became home to the world’s largest private solar research facility, and the world’s fastest computer.""
We know what it takes to compete for the jobs and industries of our time. We need to out-innovate, out-educate, and out-build the rest of the world.
But after investing in better research and education, we didn’t just surpass the Soviets; we unleashed a wave of innovation that created new industries and millions of new jobs.
We’ll invest in biomedical research, information technology, and especially clean energy technology – an investment that will strengthen our security, protect our planet, and create countless new jobs for our people.
Maintaining our leadership in research and technology is crucial to America’s success. But if we want to win the future – if we want innovation to produce jobs in America and not overseas – then we also have to win the race to educate our kids.
Our infrastructure used to be the best – but our lead has slipped. South Korean homes now have greater internet access than we do. Countries in Europe and Russia invest more in their roads and railways than we do. China is building faster trains and newer airports. Meanwhile, when our own engineers graded our nation’s infrastructure, they gave us a “D.”
We have to do better. America is the nation that built the transcontinental railroad, brought electricity to rural communities, and constructed the interstate highway system. The jobs created by these projects didn’t just come from laying down tracks or pavement. They came from businesses that opened near a town’s new train station or the new off-ramp.
Over the last two years, we have begun rebuilding for the 21st century, a project that has meant thousands of good jobs for the hard-hit construction industry. Tonight, I’m proposing that we redouble these efforts.
We will put more Americans to work repairing crumbling roads and bridges. We will make sure this is fully paid for, attract private investment, and pick projects based on what’s best for the economy, not politicians.
Within 25 years, our goal is to give 80% of Americans access to high-speed rail, which could allow you go places in half the time it takes to travel by car. For some trips, it will be faster than flying – without the pat-down. As we speak, routes in California and the Midwest are already underway.
All these investments – in innovation, education, and infrastructure – will make America a better place to do business and create jobs. But to help our companies compete, we also have to knock down barriers that stand in the way of their success.
To reduce barriers to growth and investment, I’ve ordered a review of government regulations. When we find rules that put an unnecessary burden on businesses, we will fix them.
""Meanwhile, nations like China and India realized that with some changes of their own, they could compete in this new world. And so they started educating their children earlier and longer, with greater emphasis on math and science. They’re investing in research and new technologies. Just recently, China became home to the world’s largest private solar research facility, and the world’s fastest computer.""
We know what it takes to compete for the jobs and industries of our time. We need to out-innovate, out-educate, and out-build the rest of the world.
But after investing in better research and education, we didn’t just surpass the Soviets; we unleashed a wave of innovation that created new industries and millions of new jobs.
We’ll invest in biomedical research, information technology, and especially clean energy technology – an investment that will strengthen our security, protect our planet, and create countless new jobs for our people.
Maintaining our leadership in research and technology is crucial to America’s success. But if we want to win the future – if we want innovation to produce jobs in America and not overseas – then we also have to win the race to educate our kids.
Our infrastructure used to be the best – but our lead has slipped. South Korean homes now have greater internet access than we do. Countries in Europe and Russia invest more in their roads and railways than we do. China is building faster trains and newer airports. Meanwhile, when our own engineers graded our nation’s infrastructure, they gave us a “D.”
We have to do better. America is the nation that built the transcontinental railroad, brought electricity to rural communities, and constructed the interstate highway system. The jobs created by these projects didn’t just come from laying down tracks or pavement. They came from businesses that opened near a town’s new train station or the new off-ramp.
Over the last two years, we have begun rebuilding for the 21st century, a project that has meant thousands of good jobs for the hard-hit construction industry. Tonight, I’m proposing that we redouble these efforts.
We will put more Americans to work repairing crumbling roads and bridges. We will make sure this is fully paid for, attract private investment, and pick projects based on what’s best for the economy, not politicians.
Within 25 years, our goal is to give 80% of Americans access to high-speed rail, which could allow you go places in half the time it takes to travel by car. For some trips, it will be faster than flying – without the pat-down. As we speak, routes in California and the Midwest are already underway.
All these investments – in innovation, education, and infrastructure – will make America a better place to do business and create jobs. But to help our companies compete, we also have to knock down barriers that stand in the way of their success.
To reduce barriers to growth and investment, I’ve ordered a review of government regulations. When we find rules that put an unnecessary burden on businesses, we will fix them.
Ho Hum...Budget deficit for the year reaches $1.5 Trillion...Hmmm...What does that look like?
Ho Hum...Budget deficit for the year reaches $1.5 Trillion...Hmmm...What does that look like?
CBO projects U.S. budget deficit to reach $1.5 trillion in 2011, highest ever
This graphic shows what One Trillion Dollars looks like. To put the budget deficit for ONE YEAR in perspective, below you are looking at standard pallets stacked with $10,000 packs of $100 bills. Notice the average size man in the lower left-hand corner. The pallets are double stacked and the whole thing is about the size of a Walmart Store. Of course you have to add on half again to get $1.5 Trillion...Have a nice day...
This graphic shows what One Trillion Dollars looks like. To put the budget deficit for ONE YEAR in perspective, below you are looking at standard pallets stacked with $10,000 packs of $100 bills. Notice the average size man in the lower left-hand corner. The pallets are double stacked and the whole thing is about the size of a Walmart Store. Of course you have to add on half again to get $1.5 Trillion...Have a nice day...
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Wednesday, January 26, 2011
Is Atlas a Hero or an Enabler?
Was out this weekend and saw a statue of Atlas. Always makes me think of Ayn Rand's book Atlas Shrugged. Here is how John Galt sees Atlas: (btw, Atlas = taxpayer, taxpayer = YOU!)
VERY COOL population pyramid graphic from 1950 to today---Watch it change before your eyes!
VERY COOL population pyramid graphic from 1950 to today---Watch it change before your eyes!
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Who was the richest man in the history of the US? A nice interactive graphic here....
Who was the richest man in the history of the US? A nice interactive graphic here....
GO HERE to see who the richest people in American history were. You will find a very nice interactive graph there....(HT: The New Arturian Economics)
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Salaries of Top College Majors by starting and career mid-point pay...Economics is near the top...just sayin'...
Salaries of Top College Majors by starting and career mid-point pay...Economics is near the top...just sayin'...
Nice graphic containing unusual taxes people pay on things in the US...
Nice graphic containing unusual taxes people pay on things in the US...
Free Tax Filing, Efile Taxes, Income Tax Returns – TurboTax.com
Graph of Corn used for Ethanol as a percentage of US corn production---posted with no comment...none needed...
Graph of Corn used for Ethanol as a percentage of US corn production---posted with no comment...none needed...
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| WSJ using US Dept of Agriculture Data |
The US loses more ground in a measure of Economic Freedom--From Free to Mostly Free...I don't like the sound of that..
The US loses more ground in a measure of Economic Freedom--From Free to Mostly Free...I don't like the sound of that..
A highly regarded survey of economic freedom shows the US losing ground in economic freedom, by their metrics. We have moved from "Free" to "Mostly Free". Not a good turn of events...Look at the whole survey to get a better perspective.
The 2011 Index of Economic Freedom
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| The Heritage Foundation |
The 2011 Index of Economic Freedom
"The U.S., which fell from the ranks of “free” economies to the “mostly free” category in 2010, continued to lose ground. Its score slipped by 0.2 points to 77.8, dropping its world ranking to 9th place, one slot behind an improving Denmark.
The U.S. lost ground in four of the 10 economic freedoms measured by the Index, with the greatest decline resulting from the explosive growth of government spending. Monetary freedom also declined. “Government interventions in housing, automotive, health and financial markets have substantially increased price distortions,” the authors note. “Drastic legislative changes in health care and financial regulations have retarded job creation and injected substantial uncertainty into business investment planning.”""
The Chinese are invading the US...The weapon of choice is small appliances. Prepare your bunker (with small appliances from China of course)...
The Chinese are invading the US...The weapon of choice is small appliances. Prepare your bunker (with small appliances from China of course)...
The bright side to Imports---They help us Export! Huh? Answer within...
The bright side to Imports---They help us Export! Huh? Answer within...
I was quite surprised by this graph. A little over half of the dollar value of imports into the US are in the form of inputs---goods used as a component in a finished good (Industrial Supplies) or are used to make other goods (Capital Goods). Ultimately both contribute to the manufacture of a finished product MADE IN THE USA, to be either sold domestically or exported. I am just a high school econ teacher, but I think that means jobs for Americans. I pose the question: Why is our trade deficit such a problem? (HT: CafeHayek)
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| Carpe Diem |
Map of the World at Night and of the Korean Penisula.
Map of the World at Night and of the Korean Peninsula...Quite dramatic.
The World at Night. One of my favorite visuals of all time. There are many things to observe on this map that says alot about geography, culture, economics, politics, etc in a country and region. What do you see when you view the first map? The second map shows the Korean Peninsula in two different time periods, 1992 and 2008. The South has changed considerably and in the North it is pretty much status quo---quite sad. (Source Aidwatchers)
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Sunday, January 2, 2011
What South Korean students are doing on Christmas Break vs. What American students are doing....
"What did you learn over Christmas Break?"
South Korean student answer: "How to dominate the world!"
American student answer: "Break was too short! It is not fair!"
South Korean student answer: "How to dominate the world!"
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| South Korean elementary and middle school students rub their bodies with the snow during a winter military camp for kids at the Cheongryong Self-denial Training Camp on Daebu Island in Ansan. Some 50 students took part in the three-day camp as a way to mentally and physically strengthen themselves.Baltimore Sun. |
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| American students practicing for a "really cool" Flash Mob to be performed at the mall, or re-enacting the last episode of "Glee" or Some-Such... |
If you shovel snow from a public parking space, can you "save" that space for yourself? Show your work for full credit...
Interesting how circumstances can change the way people think about public property. Just because someone shoveled a space they feel entitled to it. Perhaps these residents are using this passage from John Locke "Two Treatises on Government" to justify their attempt at co-opting of public property:
""The labour of his body, and the work of his hands, we may say, are properly his. Whatsoever then he removes out of the state that nature hath provided, and left it in, he hath mixed his labour with, and joined to it something that is his own, and thereby makes it his property. It being by him removed from the common state nature hath placed it in, it hath by this labour something annexed to it, that excludes the common right of other men: for this labour being the unquestionable property of the labourer, no man but he can have a right to what that is once joined to, at least where there is enough, and as good, left in common for others.""However, I don't believe Locke would not approve of using his words in this case with land legally appropriated for use "in the common"--it is no longer "in the state of nature"--or is it? If government fails in its duty to preserve the property in common (not plowing the road for the safety/convenience of its citizens),should/could it not be considered plunged back into the state of nature? It would be an interesting episode of COPS to see a resident use Locke to justify his place-holding of a public parking spot...I am guessing that would end with a tasing.
My wish for the New Year....YES, it is related to economics...Don't judge me...
Food for thought as we pass into the New Year...
""On Jan. 1, 2011, the oldest Baby Boomers will turn 65. Every day for the next 19 years, about 10,000 more will cross that threshold. By 2030, when all Baby Boomers will have turned 65, fully 18% of the nation's population will be at least that age, according to Pew Research Center population projections. Today, just 13% of Americans are ages 65 and older.""Pew Research CenterNew Year, same problem with long-run Social Security and Medicare sustainability...Is THIS the year these programs will be addressed with the seriousness they merit? That is my wish for the New Year---or to lose 25 pounds, whichever comes first. They both face insurmoutable odds...
Tips for communicating with your collge professors by e-mail...Only one chance to make a first impression...
Here are some tips for e-mailing your Professors in college. Most center around "growing up". Numbers 1, 8 and 9 would be my personal pet peeves ..(Source: Chris Blattman)
1. Kick the email address from high school. It’s time for “hot_muffin92@hotmail.com” and “mikey_g@gmail.com” to rest in peace.
2. Greet. Politely. Launching straight into the message is bad, but “Hi!” is poor form and “Hey Prof!” is an unmitigated disaster. “Dear” and “Hi” are fine, so long as you follow both by a name or title: “Hi Professor” or “Hi Mr. ____”.
3. On second thought, be careful with the Mr. and Ms. I could care less if strangers address me as Mr., Dr. or Prof. Blattman. Few of my colleagues seem to feel the same way. Sadly your approach must conform to the average (or even lowest common) ego. If you’re not sure if the person is a Dr. or not, three seconds on Google should tell you.
4. Capitalize and punctuate. otherwise we will lol at yr sad attempts
5. But not all punctuation. Of the exclamation point, Elmore Leonard said “You are allowed no more than two or three per 100,000 words of prose.” That’s roughly one exclamation point for every 500 messages you send. Use them wisely, for their overuse is the first sign of an immature mind. (Related, from Terry Pratchett: “Five exclamation marks, the sure sign of an insane mind.”)
6. Death to the emoticon. Keep them for your friends. And recall that, for centuries of the printed word, writers managed to convey sarcastic and funny without the semicolon and parenthesis. If you think your comment needs an emoticon, this is a sign you need to rewrite (or delete) the remark.
7. Avoid fancy typefaces or “stationery”. One word: cheeseball.
8. Be clear and concise. Write short messages, make clear requests, get to your point rapidly, and offer to provide more information rather than launch into your life story.
9. Don’t ask for information before you’ve looked on Google. “Can you send me paper X?” is annoying. But the best I’ve received: a request to explain the Cold War.
10. Don’t sound presumptuous. Many people are busy and important (and everybody thinks they are). If you are asking for anything requiring time or energy, it is courteous to be demure.
11. No quotes from famous people in your signature. See “cheeseball” above.
12. With your juniors, do the above as fastidiously as with your seniors. Allow me, momentarily, to break rule #11: ”Modesty is not only an ornament, but also a guard to virtue” – Joseph Addison
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