Monday, November 13, 2017

What Are the Secrets of the German Economy — and Should We Steal Them?

It appears that Germany's government policies, industrial relations, and high-end products have helped its manufacturing beat back the threats of globalization. There is much political-rhetoric about the demise of the manufacturing sector in the U.S.:
Bernie SANDERS: We have had, for the last 30+ years, disastrous trade policies.
President TRUMP: We’ve lost 60,000 factories since China joined the World Trade Organization in 2001.
Should the U.S. adopt more protectionist policies similar to the Germans to help maintain the manufacturing sector in the United States? How important were the 2003 Hartz reforms (decreased government assistance to the poor and unemployed;  easier for firms to fire employees; and encouragement of more part-time, low-wage, non-union jobs) in turning the Germany economy around?

At the end of the podcast, Jeromin Zettlemeyer states that the U.S. has had its own comparative advantage and this has had the unfortunate side effect of wounding its manufacturing sector:
ZETTELMEYER: A very important reason why traditional manufacturing has declined in the U.S. which is completely under-emphasized, particularly by the Trump administration is domestic competition; extremely dynamic growth in new sectors in the United States, particularly, of course, the computer industry and the software industry, the platforms, the I.T. giants. This growth sucks away labor and makes it harder for traditional companies to compete.
This has nothing to do with globalization. This has something to do with technical change, but it has a lot to do just with the general dynamism of the U.S. economy. One of the reasons why the manufacturing share is high in Germany is because the German industry lacks this dynamism. The U.S. has traditionally been a much more dynamic economy. The U.S. has a very good model and what the U.S. should focus on is to maintain and improve its model, not about copying the German one.

To what degree does Germany's focus on tradition impact innovation? Is it a reasonable tradeoff? Should the U.S. attempt to adopt institutions of the German economic model?

Tuesday, November 7, 2017

Estate Tax Repeal

Last week we talked about President Trump's tax reform plan. Our discussion mostly centered on exemptions, deductions, fewer tax brackets and corporate tax rates in the United States. The repeal of the estate or "death" tax was briefly brought up. Do you think the estate tax should be abolished? Would eliminating the estate tax reduce charitable giving? Is the estate tax unfair to the wealthy? Do you believe we should keep the estate tax to reduce inequality? Do you think inheriting large sums without tax undermines people's motives to work hard in the future and, thus, undercuts the principles of capitalism? Is the estate tax a form of forced income redistribution? (If our discussion begins to dwindle from the estate tax topic, what are your views on inequality in the U.S. and what should be done about it?)

Trump GOP Tax Reform Framework Calls For Estate Tax Repeal

The inheritance tax, or estate tax, is a tax which the United States levies on the total taxable value of the estate of a deceased person. The amount of tax is calculated regardless of the method in which the assets of the estate are transferred to the person's heirs: assets included in a will, transferred automatically because the person died intestate or as an insurance benefit or account payoff. Inheritance tax is paid by the executor of the estate or by the person in charge of its assets.
The United States has a consolidated policy on inheritance and gift tax so that a person cannot give away his or her estate to potential beneficiaries shortly before death in order to avoid taxation; beneficiaries would simply pay gift tax rather than inheritance tax in this case. The federal government makes a distinction between the "gross estate" (all assets) and the "taxable estate" (assets less a certain number of allowable deductions such as funeral expenses, some charitable contributions and various other deductions).

In most cases, if the estate is left to a charitable organization or a surviving spouse, no inheritance tax is due. There are also exclusions for a certain portion of the estate; however, these have been frequently changed by recent tax legislation, and usually, it is worth consulting a professional to determine what amount of the estate is not taxable under current federal law. In part because these complexities make it possible for some wealthy people to establish shelters that let them avoid estate tax; the estate tax debate has been going on for years.

Tuesday, October 31, 2017

Trump's Tax Reform Dissected

 Dear SWEET Scholars,

Along with Thai food, we will be discussing Trump's Tax Reforms tomorrow from 4:30 p.m. to 6:00 p.m. in the Kayak Conference Room. I'm looking forward to seeing all of you sweet people!

1) Who benefits from Trump's tax plan?
2) Do you think the U.S. can afford tax cuts?
3) Will tax cuts pay for themselves through higher growth?
4) Is the top federal corporate tax rate too high?
5) Do you think the tax cuts will pass?

Trump's Tax Reform Dissected

Sunday, April 9, 2017

Ethics: What role does ethics play in economic decision making and governance?

Last week during the SWEET meeting we were discussing the future of Economics at UAF. At some point during the discussion the role of ethics in economic decision making was mentioned which started a somewhat explosive tangent. This week, I would like to expand on the role of ethics in economic decision making and how sometimes ideology can lead policymakers astray. 
I think we all know that economics is not just a discipline used to boost the bottom line of businesses and corporations. Some in the SWEET discussion group who will go unnamed here (you know who you are) would argue that ethics is subjective and therefore should consulted based on the whim of the people making decisions. This of course means that key policy makers could just decide to completely disregard or at the very least reduce the ethical concerns and legitimate consequences of externalities to mere tertiary consideration. I would like to offer the position that this ideology of what I call ‘Free Market Fundamentalism’ is very dangerous for politicians and other government officials to have because it means that the government is corrupted to favor the interests of corporations and other big businesses over the people they are elected to represent. 

Here are a few articles that look at the ethics of past and present economic decisions rather than just the bottom line: 

Based off of that reading, consider the following questions: 

1. What role does ethics play in economics and governance if any

2. What is the role of government in terms of regulation and how does that relate to ethics? 

3. If we lived in an Anarchic society with no government, what kind of recourse could people expect? Would it really be as efficient or more efficient than our current legal system? 

4. To continue from question 3, what would recourse in this hypothetical society be predicated on? Wealth? Survival of the fittest (most heavily armed)? 

5. Is there any meaningful way to reform the government? Or are the incentives for corruption too strong to overcome for public officials? 


—Isaac Gage

Sunday, April 2, 2017

UAF Economics Program and SWEET

Hello all!



Sherri will not be able to attend this next couple of meetings, however, SWEET will still be in session. This week's discussion topic is..... the peril of our economics program at UAF. Below is an excerpt from the report I wrote a couple of weeks ago on Sherri's lecture.

Now, all subdivisions of the economics program, including minors, majors and organizations such as Students Who Enjoy Economic Thinking, are at risk for being cut for financial reasons. . .

. . . Enrollment in the economics major started its suspension in April. Wall criticized this decision, saying the board should consider the cost/benefit analysis of cutting the economics program before making a final decision around June.

The current decision-making process overlooks the benefits of keeping the program in the university, Wall said. The economics program is ranked 80 out of the 280 programs here at UAF. Despite being on the bottom of the School of Management curriculum, the program generates a copious amount of student credit hours for those in and out of the School of Management.

Cutting the economics program would cost more in lost opportunities than it would save in cash, according to Wall.

“The suspension of the program was cited for financial reasons… However, after just doing a brief cost-benefit analysis, the savings of eliminating the economics program would be very negligible,” Wall said. “It ignores things like return on investment, and where students go and how they are giving back and contributing to society. An economics degree is a very, very valuable degree.”


You can read the full article at https://www.uafsunstar.com/professor-criticizes-lack-of-economics-education/.

Other good articles to read and ponder (although a little outdated) include:
  • http://www.newsminer.com/opinion/community_perspectives/economics-wrong-target-for-uaf-budget-ax/article_0201f12c-167b-11e7-82fe-efb33d8e9477.html 
  •  http://www.newsminer.com/news/alaska_news/budget-cuts-threaten-uaf-economics-major/article_5310849a-8939-11e6-b55d-f7e55b74f2aa.html 

Questions:

  1. What does economics mean to you?
  2. How has economics impacted your life?
  3. What value do you see in keeping economics at UAF?
  4. As a non-economics major, what value do you see in keeping SWEET?

I look forward to seeing you all on Wednesday!

-Destiny

Friday, March 10, 2017

Private Prisons

Corecivic Inc. ($1.74 billion in yearly revenue) and Geo Group ($1.61 billion revenue in 2011) are large companies that make money by building and operating prisons.  More and more prisons are not being operated by the states they are in, rather being run by private companies.  This has resulted in a host of effects even for people not normally associated with corrections and the legal system.

Readings:
http://www.nola.com/crime/index.ssf/2012/05/louisiana_is_the_worlds_prison.html
https://www.bloomberg.com/view/articles/2016-08-26/america-s-rocky-relationship-with-for-profit-prisons
http://www.nytimes.com/2009/02/13/us/13judge.html
https://www.washingtonpost.com/news/volokh-conspiracy/wp/2016/08/19/dont-end-federal-private-prisons/?utm_term=.84ea8f3594f8

Questions:
1.  Why is this switch to private prisons happening?  What economic forces might be causing the movement to private prisons?
2.  Should the state have a monopoly on prisons?
3.  Who, if anyone, stands to benefit the most from this switch?
4.  Who, if anyone, is harmed the most by this switch?
5.  In what manner, if at all, should the public benefit from incarcerated individuals?
6.  Is the movement towards private prisons a good change or a bad change?  Why?

Tuesday, March 7, 2017

Here We Go with Infrastructure Again

While economists have mixed views about the value of infrastructure spending, Donald Trump said the following in his recent address to a joint session of Congress:

To launch our national rebuilding, I will be asking the Congress to approve legislation that produces a $1 trillion investment in the infrastructure of the United States—financed through both public and private capital—creating millions of new jobs. This effort will be guided by two core principles: Buy American, and hire American. We’ve already seen this in action with Trump’s executive action on the Dakota pipeline. It stated that the pipes have to be American-made.


  • Do you agree with the statement that whenever government overrides the wishes of the market, it is not producing; it is destroying?
  • Are we really supposed to believe that Trump knows better how to transport pipe than the actual people who transport pipe?
  • What do you think of Pres. Trump's "Buy American & Hire American" agenda?
  • Should infrastructure construction be left to the private sector?
  • To what extent will government spending on infrastructure "crowd-out" the private sector? (Crowding out is a situation where personal consumption of goods and services and investments by business are reduced because of increases in government spending and deficit financing sucking up available financial resources and raising interest rates.)
To help prepare you for this week's discussion, here are some articles:



Wednesday, March 1, 2017

The Sweatshop Debate

Professor Ben Powell will be giving two talks on Monday, March 6. At 10:30 he'll be talking about sweatshops, and at 2:15 immigration. He is the author of "Out of Poverty: Sweatshops in the Global Economy (Cambridge Studies in Economics, Choice, and Society)."

Here's a link to United Students Against Sweatshops, a national student labor organization.
http://usas.org

Here is a link to a short video featuring Ben Powell:

https://youtu.be/O2sW2wt3nLU

This link shows the conditions inside sweatshops in Bangladesh.

https://youtu.be/XU6pwiSTMso

And finally, John Stossel:

https://youtu.be/0VaHmgoB10E


1) As western consumers and businesses, are we valuing people as whole human beings or exploiting them in a quest for productivity, profits and low prices?

2) Should we boycott companies that use sweatshops on ethical/moral grounds?

3) Should we boycott companies that utilize sweatshops that use child labor since we know that they are working instead of obtaining an education that results positive externalities in their society?

4) Why do labor unions back anti-sweatshop campus organizations?

5) Why does United Students Against Sweatshops also advocate for a $15/hour minimum wage?




Sunday, February 19, 2017

The DOW has exceeded 20,000: Does this mean we are in for a period of economic expansion?

From this Forbes article:

http://www.forbes.com/sites/michaelkay/2017/01/31/the-dow-jones-hit-20000-now-what/#5f2d51a17ed3

"The Dow Jones Industrial Average hit 20,000. The aftermath was a barrage of media stories—some encouraging, others less optimistic. The positive stories prompted investors to buy more equities in expectation of more future gain; the cynics foretold the forthcoming correction with a warning: Get out of stocks. The one common theme all the articles share is that, yes, something is going to happen next. And this something will likely show gains and reverses, followed by more gains and more reverses."

1) Is the DOW an outdated and irrelevant formula?

http://www.Npr.Org/sections/money/2017/01/04/508261371/episode-443-dont-believe-the-hype

2) Are we headed towards a period of economic expansion?

3) Should investors care? Should anyone?

http://money.usnews.com/investing/articles/2016-12-19/5-things-everyone-should-know-about-dow-20-000


Sunday, February 12, 2017

Is it possible to align incentives to achieve desired outcomes?

As you read these two articles in preparation for Wednesday's (February 13, 4:30 to 6:00 p.m.) discussion, ask yourself:

  • Is it possible to avoid switching effects and rewarding or punishing wrong behaviors. 
  • Given the fact that people respond to incentives in unforeseen ways and the many margins of choice, will our incentive schemes always go awry?
  • Do charitable efforts do any good? 
  • Should we not act on our good intentions?

Incentives Matter

Slavery, Snakes, and Switching: The Role of Incentives in Creating Unintended Consequences 

As we discussed at last week's meeting, we would like you to blog a substantive comment AFTER the meeting before Sunday, February 19, at 11:59 p.m.

Wednesday, February 8, 2017

Trump's New EPA Administration and the Economic Possibilities inside National Parks

I must begin with an apology for entering this topic at such a late date, and will discuss this in greater detail at the SWEET meeting regarding blog discussion.

On January 30 of this year, a H.J. Res. 46 was entered into the House by Rep. Paul Gosar [R] of Arizona. The joint resolution goes as follows:

Providing for congressional disapproval under chapter 8 of title 5, United States Code, of the final rule of the National Park Service relating to “General Provisions and Non-Federal Oil and Gas Rights”.
Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That Congress disapproves the rule submitted by the National Park Service relating to “General Provisions and Non-Federal Oil and Gas Rights” (81 Fed. Reg. 77972 (November 4, 2016)), and such policy shall have no force or effect.

Voting has yet to take place.

If this bill passes, it will weaken the protection that National Parks currently in place, and allow for an increase of mineral/oil extraction. As of this writing, Porcupine Mountains Wilderness State Park in Michigan has already experienced exploratory drilling for minerals by a Canadian company.

Questions to Consider:
 
1) Do the economic prospects outweigh the environmental impact on our National Parks?
2) Will we see this increase in Alaska under Trump's administration?
3) Is this how Alaska pulls itself out from under our growing state deficit?
4) Will this ultimately be in Alaska's best interest?

Food for thought:



https://www.abqjournal.com/940598/arizona-congressman-wants-more-drilling-in-national-parks.html

Saturday, January 28, 2017

The effects of pipelines. Helpful or harmful?

Most of today's news is filled with information about protests against pipelines such as the Keystone XL pipeline of the Dakota access pipeline. Protesters claim that it is harmful to the environment and infringes on the historical significance the land has to certain groups. How much of this is true? What are the alternatives to pipelines? Can we stop this tide if progression?

http://www.eia.gov/petroleum/transportation/ -Amount of oil transported by train.
http://www.cnbc.com/2014/08/06/after-billions-spent-are-pipelines-safe.html
http://safetydata.fra.dot.gov/officeofsafety/publicsite/summary.aspx
https://www.sayanythingblog.com/entry/dakota-access-pipeline-follows-existing-gas-line-protest-area/

Please look at the links above and any additional resources you can find and come charged to this Tuesdays meeting.