Un-Brain Drain

Earlier this year, 50,000 additional H-1B visas were made available to U.S. companies for skilled workers under the proposed Immigration Innovation Act, which was introduced into the U.S. Senate in January.

The limit had been 65,000, which high-tech companies claimed was too few, thus hurting American business and innovation.

Woe is Medicaid

Medicaid’s open-ended matching grants to the states have led to huge cost growth, but not better health care. Congress should give each state a fixed amount of funding and free them to experiment with better ways of providing care for the needy. Limiting annual growth in the block grant to five percent would save $760 billion.

Secure Social Security

Social Security has huge unfunded obligations, and it causes ongoing damage by reducing personal savings and harming labor markets. Meanwhile, spending on federal disability programs has soared as the number of recipients has multiplied.

America should move to a system of personal accounts for retirement and disability, but meanwhile we would save $640 billion by indexing initial benefits to prices, modestly raising the retirement age, and trimming the disability rolls by one quarter.

Monopolies Aren't All Bad

Profs. Kevin Murphy, Edward Snyder and Robert Topel of the University of Chicago have written about some of the results of bargaining between big businesses and their customers. Big businesses often offer volume discounts, quote nonlinear prices and give loyalty incentives to customers, all mof which can encourage customers to purchase more, perhaps in a quantity similar to what they would buy in a more competitive market with lower prices.

If this bargaining view of monopolies is correct, then the standard view of big business has exaggerated the degree to which dominant sellers harm the economy.

Monopoly - Here We Come

Sprint is considering an acquisition of T-Mobile US that would reduce the U.S. mobile industry to three large carriers if approved by regulators.

The country's third-largest mobile operator, which itself was acquired by Japan's SoftBank only months ago, is studying regulatory concerns and might make a bid in the first half of next year, according to a WSJ report.

Crooks and Bitcoin

The FBI estimates that 600,000 bitcoins are owned by Ross Ulbricht, the alleged mastermind of online drug marketplace the Silk Road.

The bitcoins are encrypted and cannot be easily accessed. Currently, they are worth around $60 million and represent approximately 5 percent of the entire market.

Amazon dot Drone

Amazon.com plans to deliver packages to customers using unmanned aerial vehicles.

Amazon's Prime Air Service, powered by drones, will be ready technologically to enter commercial operations as soon as the necessary regulations are in place as delineated for civilian unmanned aircraft by the U.S. Federal Aviation Administration.

Estimated date of actual operation - 2015!

Stop Corporate Welfare

Farm aid distorts agriculture, harms the environment, and nearly all goes to well-off businesses.

Energy subsidies have been disastrous — from a $500 million loss on Solyndra to $700 million wasted on a clean coal project in Mississippi.

Phasing out farm and energy subsidies would save $160 billion.

Save the Earth, Save Some Bucks

The Earth Institute of New York’s Columbia University conducted a survey and published their results on how clueless consumers are in regards to saving energy. The study noted that switching to more efficient technologies was more effective than behavior change, something few consumers realized.

In other words, switching the lights off will save very little energy. Making the right buying decisions when purchasing new appliances is far more cost-effective in the long run. Households could reduce energy consumption by up to 30 percent by choosing energy efficient appliances.

X-mas Spending

Data predict a 1.7% to 2.4% increase in holiday retail spending this year. So why have retailers considered this a bad thing?

Well, the population has increased, so even if individual Americans spend less in 2013 than they spent in 2012, the number of people spending money will be greater, thus somewhat offsetting this year's decline in per-capita spending.

In fact, population growth is a key reason holiday retail spending almost always rises. According to National Retail Federation, the average increase in holiday retail spending over the past decade has been about 3%. In a good year, sales will rise by 4% or better, and in a not-so-good year, by 2% or less. By that reckoning, this is not a banner year.

Walmart Buys American

Walmart, which centers its business on inexpensive items, started a program this year to increase its purchasing of American-made goods by $50 billion over the next 10 years. The company says that more than 150 projects are under way, with products ranging from socks to flat-screen TVs.

Of course, Walmart has an advantage that few other retailers can match: Because of its scale, it can pressure suppliers on cost.

Christmas Sucks!

Most economists agree that if Christmas ceased to exist, consumers would spend more on themselves or spread their gift purchases more evenly across other events such as birthdays, putting more goods into the hands of people who truly value them.

In other words, with regard to the economy and its robust health, an overdependence on one silly holiday in which individuals buy gifts for others that those others probably did not want in the first-place, Christmas sucks!

Military Bloat

At the current pace, unrestrained compensation costs will edge out funds for training, readiness and weapons of America's Military.

A recent Congressional Budget Office study said that between 2001 and 2012, when private-sector wages were effectively flat, basic military pay rose by 28 percent in inflation-adjusted dollars. The study also said that cash compensation for enlisted personnel, including food and housing allowances, is greater than the wages and salaries of 90 percent of their civilian counterparts.

Cut Military Spending

The Constitution envisioned a military to “provide for the common defense” of the United States, not one that serves as the world’s policeman. Congress should reduce overseas military commitments, avoid foreign wars, and create a leaner force structure. Making reforms to meet the budget caps for 2014 and beyond could save at least $200 billion.

Medical Waste

In a fine recent volume entitled “Best Care at Lower Cost”, the Institute of Medicine of the National Academy of Sciences deconstructed medical waste in America. The chart below, adapted from the report, enumerates the sources of estimated waste.

Of course, these numbers are merely the study panel’s best estimates and clinical judgments. One can imagine a lively debate over some of the estimates, especially the estimated $210 billion spent on “unnecessary services” or the estimated $105 billion attributed to “excessively high prices". And yet, it is almost certain that American costs are significantly higher than those in other developed nations, such as Canada.

Christmas Coercion

Christmas gifts can be viewed as just another economic transaction. The warm feeling that comes from giving could hide a mundane investment in social relationships. A gift entails a hidden obligation to treat you nicely, creating a special bond between the giver and the recipient.

And research indicates that small gifts may be more effective than large ones. As economists estimate that big gifts, being too blatant, tend to raise the receiver’s suspicion. They generate suspicion that the benefactor has a hidden agenda, and trigger an impulse to restrain reciprocal behavior.

On the other hand, not giving at all isn’t just neutral on potential recipients: it generates negative behavior in return. This demonstrates that in gift-giving, like so many other social exchanges, too much is bad, but nothing is worse.

Bitcoin Bubble?

How did a currency with scarce global acceptance move from $10 to over $1000 in under a year?’

That answer is quite simple: growing media interest has created a surge in demand. The more the price has moved, the more press coverage it has received and, consequently, the more people have been introduced to – and demanded – the digital currency.

But the system is now straining at the seams. Its computational underpinnings have collectively reached 100 times the performance of the world’s top 500 supercomputers combined: more than 50,000 petaflops. And it is not as secure and anonymous as it seems.

Will Bitcoin’s self-correcting mechanisms, and the enlightened self-interest of its users, be able to address these weaknesses and keep Bitcoin on the rails? Only time will tell.

Keynes, Back on Top

Although Keynes’s ideas went somewhat out of favor in the 1980s and 1990s, they came back into fashion as the financial crisis of 2007-09 unfolded. The use of fiscal stimulus to fight recessions in America, Britain and Asia led Keynes’s most prominent biographer, Robert Skidelsky, to declare the “return of the master”.

Keynes's notoriety among the public rose so much that a hip-hop video of him arguing the merits of fiscal stimulus with his rival, F. A. Hayek, went viral on YouTube back in 2010.

Elasticities and Energy

A recent study has established that employment is affected by oil prices in a very particular way.  

Elasticities of Employment w/r to Oil Prices

Total U.S. Employment	-0.02
Coal Mining	0.24
Oil and Gas Extraction	0.40
Oil Field Machinery	0.29
Refining	-0.03
Petrochemicals	0.36

In other words, though a doubling in the price of oil would decrease employment in America by 2%, it would increase employment within most sectors of our oil production matrix by leaps and bounds. If accurate, this might shed light on some perverse political incentives.

Big Bank Protectionism

Since the 2007–08 financial crisis, global regulators have engaged in a lengthy struggle to reshape the international financial system to make it more resilient under stress.

Two recent proposals: the "Foreign Banking Organization" proposal of the U.S. Board of Governors of the Federal Reserve System and the United Kingdom’s "ring-fencing" plan are purportedly a part of this effort. The proposals are intended to protect national financial systems from the risks posed by a failure of one or more global, interconnected banking organizations operating within national borders.

As such, the proposals may merely amount to national regulators adopting a parochial, protectionist, or "home country first" approach to regulation, which may insulate banks without reforming them, and could slow world economic growth.