Thinking About Environmental Economics in Alaska

 April 25, 2018 Dinner/Discussion

For our last SWEET meeting, we have a very special guest - Camilla Kennedy. Camilla currently teaches Environmental Economics and Policy at the University of Alaska Anchorage and works as the Economist for the Alaska Department of Environmental Conservation. She received her BA in Economics from UAF and her Masters in Environmental Economics from the London
School of Economics. She is an alumni of Students Who Enjoy Economic Thinking (SWEET) from 2007-2011, however, she considers herself a lifelong student of economic thinking.

It was suggested last week that we discuss the merits of House Bill 199 which mirrors the Stand for Salmon ballot initiative. The bill has drawn the opposition of oil and gas, mining, logging and construction trade groups as well as most Alaska Native corporations for being a de-facto prohibition on new development, such as Pebble Mine, in Alaska. Pebble Mine is  a mineral exploration project investigating a very large copper, gold, and molybdenum mineral deposit in the Bristol Bay region of Southwest Alaska. Proponents argue that the mine will create jobs, provide tax revenue to the state of Alaska, and reduce American dependence on foreign sources of raw materials. Opponents argue that the mine would adversely affect the entire Bristol Bay watershed; and that the possible consequences to fish populations, when mining effluents escape planned containments, are simply too great of a risk.

Some questions to consider:

Are the potential environmental impacts real or exaggerated?

Do the benefits of the project exceed the costs in the short run and long run?

If the project is approved, will the development of the minerals in this region continue the "resource curse" in Alaska?

 HB 199 (Stand for Salmon Initiative)

Pebble Mine

Other topics we could discuss with Camilla:

Fairbanks North Star Borough being reclassified as a “serious” nonattainment area for fine particulate air pollution. 

The Alaska water and sewer challenge. Over 3,300 rural Alaska homes lack running water and a flush toilet. Most of these homes are located in 30 “unserved” villages.

The Grecian horse: does immigration lead to the deterioration of American institutions?

April 18, 2018
Dinner/Discussion
Kayak Conference Room

Dr. Alex Padilla will be speaking on immigration Friday, April 27, at 10:30 & 2:15 in the Schaible Auditorium. Here is a copy of his recently published paper: The Grecian horse: does immigration lead to the deterioration of American institutions?

Abstract:
Concerns about the institutional impact of immigration, particularly in the United States, are not new. We can trace them back to Benjamin Franklin, Thomas Jefferson, and Alexander Hamilton. More recently, in response to a literature that questions the desirability of current immigration restrictions, Borjas (J Econ Lit 53:961–974, 2015) speculates that immigrants coming from countries with poor institutions could reduce substantially the institutional quality in the United States to a point where it could negate all economic gains associated with immigration in terms of GDP and income. Using the Economic Freedom of North America index since 1980, we find no evidence to corroborate Borjas’s concerns. However, we find mixed evidence that immigration increases minimum wages and union density.

Here is a short video that frames some of the arguments against immigration: The 5 Best Arguments Against Immigration—and Why They're WRONG

Are there, however, other legitimate reasons to slow down immigration into the United States? Philip Cafaro argues that a serious commitment to environmentalism entails ending America’s population growth by implementing a more restrictive immigration policy. The Environmental Argument for Reducing Immigration to the United States

Was Alexander Hamilton right about immigration? Hamilton’s Actual Views on Immigration

What about Milton Friedman's argument that you can't have free immigration when you have a welfare state? Milton Friedman on immigration

What Can Uber Teach Us About the Gender Pay Gap?

April 11, 2018 SWEET Dinner/Discussion

4:30 to 6:00 p.m.

Kayak Conference Room (outside of library)

Thank you, William Czyzewski for this discussion topic.

Link to Podcast


The gender pay gap is a hot topic in many academic circles.  It is of interest for economists and activists alike.  Commonly, the U.S. unadjusted average female annual wage is 78% of male wages (http://money.cnn.com/2015/04/13/news/economy/equal-pay-day-2015/).  However, this number does not take into account factors like the jobs being performed and the years worked within those industries.  After making adjustments to account for additional factors, amongst college graduates, the gap shrinks to about 88-93% (https://www.aauw.org/aauw_check/pdf_download/show_pdf.php?file=The-Simple-Truth).  This gap has been an issue of debate for some time, and a series of new studies by John List, chairman of the University of Chicago economics department, Rebecca Diamond of Stanford Graduate School of Business, and Jonathan Hall, who leads the public policy and economics team at Uber, has studied the pay gap at Uber.

Some questions to think of while listening to the podcast:

1.  Why were the researchers confident that their data could avoid gender biases?

2.  What contributed to the pay gap found in the study?

"Free, Fair and SMART Trade"

 SWEET Meeting March 7, 2018. 4:30 to 6:00 Kayak Conference Room in Library

WHEN President Donald Trump tweeted “We want free, fair and SMART TRADE,” on March 1st, trade-watchers groaned. Later that day, after months of back-and-forth between the protectionists and the globalists in the White House, he appeared to deliver the tariffs he has long been promising. He announced tariffs of 25% on imports of steel and 10% on those of aluminum.

Mr. Trump is using the “national security argument,” also called the “national defense argument.” This argument suggests that it is necessary to protect certain industries with a tariff to assure continued domestic production in the event of a war. Do you think their is validity in the application of this argument to Trump's proposals or is it a guise to shield American steel and aluminum producers from competition.

Do you think that impacted countries will win in their suit in the Word Trade Organization? Do you think the judges will rule for or against America in these suits? If the body of judges rule in America's favor, do you think other countries will retaliate and enact their own tariffs using the national defense argument?  What type of retaliatory actions by other countries do you expect? Who are the winners from Trump's proposed tariffs? Who are the losers?

President Trump wants tariffs on steel and aluminum 

Don’t Worry About Trump’s Tariffs

Trump's steel tariffs are earning him cheers from Democrats and unions—but giving the GOP shivers 

Sam's Club Catastrophe

In January of this year, Walmart closed a total of 63 Sam's Club stores across the nation, including in Puerto Rico. According to an article by Daniel Keyes, 10 to 12 of the closed locations are to be turned into e-commerce distribution centers. However, this left 11,000 people without work (over 9,000 affected) in short notice.

NOTE: We will be having our first meeting of this semester next week on February 21st at our regular time and place. We will be taking student organization pictures, too. 

Questions:

1. Who benefits most from this shift? Who suffers? Explain.
2. Do you believe that the benefits of implementing e-commerce distribution centers outweigh the costs associated with implementing the change?
3. How will (or has) this impacted the Fairbanks community? UAF? Alaska businesses? Alaskan Villages?  Is there anybody else you can think of who would be impacted by this?
4. With this closure, there are/were 51-53 buildings vacant. What, in your opinion, is the best use of these vacant buildings?

Articles for Reading:
-Fairbanks
-Across the Nation
-Why did they do this?

Alaska Gasline Development Corporation (AGDC) Natural Gas Pipeline Agreement with China Sinopec.

The pipeline as envisioned would rival the famed trans-Alaska oil pipeline, a major project of a generation ago. This pipeline has been a dream for Alaskans for years, seen as a way to provide economic certainty as oil production from the North Slope declines.

• Alaskans have long awaited the construction of a natural gas pipeline which has not yet materialized. Do you think that this new agreement will be the impetus for it to actually happen? 
• Is China, with its links to North Korea, our friend or foe? 
• Would the new pipeline impede the diversification of Alaska's economy and keep its citizens dependent on natural resources?
• Would this new project solve Alaska's budget crisis
• Would this project benefit Alaskans through lower energy prices?
• What are the merits of the project? What are the weaknesses?

Alaska signs gas-pipeline project deal with China

 

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?

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.

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

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: 

        https://thetyee.ca/Opinion/2011/10/14/Canadian-Ethical-Challenges/  

http://ritholtz.com/2008/12/the-financial-crisis-and-the-collapse-of-ethical-behavior/

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3110222/

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

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

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?