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.

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.

Classics

From time to time, an ambitious student will ask me where she can find one or another classic of economic literature that I may have referenced during a lecture. Of course, not wanting to dampen her fledgling curiosity, I recommend FREE sources of such information, like the following:

site 1 / site 2

Private Anti-Terrorism

After the terrorist attacks in 2001, the federal government moved to increase spending on aviation security and take control of passenger and baggage screening at U.S. airports. But after more than a decade of experience, it is clear that the creation of TSA and the federal takeover of airport screening was a mistake.

In a new paper, a scholar argues that Congress should abolish TSA and argues that passenger and baggage screening should be moved to the control of airports and competitive private bidding.

Fed's Centenary

This year marks the 100th anniversary of the Federal Reserve. And in this month’s Cato Unbound Cato scholar Gerald O’Driscoll calls the Fed’s record “unenviable,” and economist Lawrence H. White agrees. Scott Sumner suggests that while central banks may have their problems, inflation isn’t one of them. Further, he recommends a flexible monetary policy that continues to use central banking to stabilize the economy in times of crisis.

The 47%, or 43%, or...

Recall Mr. Romney's silly utterance regarding taxes? Well, if not, you'll find a nice little video primer below that summarizes his folly fairly succinctly.

Income Redistribution

This paper considers how Social Security’s many benefit and tax features have redistributed income across groups over time.

Using Current Population Survey data from 1970 through 1994 and micro-simulation projections from the Urban Institute’s DYNASIM3 model, research found that for many decades, Social Security redistributed from African-Americans, Hispanics, and other people of color, to whites.

And these transfers will likely to continue in future decades, as findings suggest that future reforms that place the burden of Social Security reform solely on younger, more diverse generations may have undesired distributional consequences if the aim of the program is to provide greater relative protections to more vulnerable groups.

End Extreme Poverty Now!

The number of people worldwide living in extreme poverty—defined as living on $1.25 a day or less—was cut in half between 1990 and 2010. Yet more than one billion people still subsist at this level, and about three billion live at under $2.50 a day.

Laurence Chandy, a fellow at the Brookings Institution, discusses the possibility that by 2030 the world might eradicate the most extreme poverty. He explains how we measure the problem, what the private sector and aid agencies can do about it, whether or not current targeting approaches are effective, and talks about the poverty problem in the United States.

U.S., Oil Exporter

While federal law bars overseas shipments of most U.S.-produced oil, refiners can export petroleum products created from that crude, including gasoline, diesel and jet fuel.

In July, U.S. refiners shipped a record 3.8 million barrels of products a day to places as far flung as Africa and the Middle East, according to the monthly data from the Energy Information Administration. That volume is nearly 65% above the 2010 export level, when the U.S. oil boom was still in its infancy.

White House Burning

In White House Burning, Simon Johnson and James Kwak—authors of the national best seller 13 Bankers and cofounders of The Baseline Scenario, a widely cited blog on economics and public policy—demystify the national debt, explaining whence it came and, even more important, what it means to you and to future generations.

Foreign Aid is Bad

In his new book, “The Great Escape: Health, Wealth, and the Origins of Inequality”, Angus Deaton, an expert’s expert on global poverty and foreign aid, puts his considerable reputation on the line and declares that foreign aid does more harm than good.

He argues that it corrupts governments and rarely reaches the poor. It is high time for the paternalistic West to step away and allow the developing world to solve its own problems.

World's Going to Hell

In 1798, Thomas Malthus posited that the world's food supply grew arithmetically while it's population grew geometrically, leading to the dour conclusion that certain natural correctives like starvation, war and pestilence would be inevitable.

Since that time, any thesis that sets forth a similar conclusion via whatever mechanism is designated "Malthusian".

None of these has proven to be correct thus far, but is it just a matter of time? You can judge for yourself...read the original Essay on the Principle of Population by Thomas Malthus.

Another Bubble?

Robert J. Shiller, a Yale economist and one of this year’s winners of the Nobel Prize in Economic Science, is known for indexes he created and has used to predict stock market and housing bubbles in the economy.

More recently, he has expressed some fear at the ballooning stock market indices.

Funky 100$ Bills

The new $100 bill, which just made its debut, has updated security measures to cut down on counterfeiting.

The changes include a blue, 3-D security ribbon that makes bills easier to verify but harder to copy, which will not make North Korea very happy.

And there is also color-shifting ink on the bill that changes from copper to green when it’s tilted. So, if you pick up a 100 dollar bill with a portrait of Ben Franklin on acid, chances are it's legitimate and not a fake.

Gates Profile

I understand that it may interfere with your prejudices, but if you have an open mind, watch the profile below to find that one of the richest men in the world is also one of the most generous.

High Heel Recession

Yet another silly correlation has been uncovered, and this time by none other than IBM.

IBM conducted a study of social media posts and is predicting that women’s heel heights, which are currently in nosebleed territory, are poised to come back down to Earth. Why? Because there has been a strong negative correlation between the height of heels and the economy over time. The higher the heel, the lower the economy.

Of course, this bears mentioning the old saw that "correlation does not necessarily imply causation".

U.S. Birthrates Plunge

The overall U.S. birth rate, which is the annual number of births per 1,000 women in the prime childbearing ages of 15 to 44, declined 8% from 2007 to 2010.

The birth rate for U.S.-born women decreased 6% during these years, but the birth rate for foreign-born women plunged 14%, more than it had declined over the entire 1990-2007 period. The birth rate for Mexican immigrant women fell even more, by 23%.

Wages, Productivity and Marx

In the classical terminology of Marx, a large reserve army of labor reduces both the individual and the collective bargaining power of workers, enabling capital to take a bigger piece of the economic pie.

The Economic Policy Institute estimates that between 2007 and 2012, wages fell for the lowest 70 percent of all wage earners, despite productivity growth of 7.7 percent.

A Rich Recovery

During the Great Recession, as things like capital gains temporarily dried up, top income earners took a hit. But the rich have come roaring back, to such an extent that 95 percent of the gains from economic recovery since 2009 have gone to the famous 1 percent. In fact, more than 60 percent of the gains went to the top 0.1 percent, people with annual incomes of more than $1.9 million.

Japan is Growing Old

The International Monetary Fund estimates that Japan’s working-age population will fall by almost 40 percent by 2050. The share of citizens older than 65 is expected to jump from 24 percent in 2012 to 38 percent in 2050, when the ratio of the working population to the elderly population will be 1 to 1.

Japan is growing older faster than anywhere else. Unless the nation can shore up its work force, it faces a long-term drag on economic growth at a time of soaring obligations for old-age entitlements.