July 18, 2014
An interesting post in the Wall Street Journal about Obama’s proposed raise in the minimum wage led to a post on the American Enterprise Institute blog. In general, the argument is that, even if other potential economic issues are taken out of the equation, an increase in the minimum wage tends to help low-wage workers in high-income families much more than low income families.
What in the world does that mean?
There is not a correlation between low-income families and low-wage workers. This can be a really difficult concept for students to understand; many low wage workers are actually second job workers in a high income family, and in many cases, poor families have NO workers.
So the general idea in the WSJ is that there are fewer people living in poverty in the US than in the past, and a full 1/3 of low-wage workers were actually in high-wage families. Running analysis and calculations, they estimate that if the minimum wage rose to $10.10 as proposed, only 18% of the benefits of these higher wages would go to low-income families.
To make a blanket statement that raising minimum wage would raise people out of poverty is false. So…in this era of enormous student loans discouraging people from continuing post-high school training and fear of taxes as outlined in Piketty’s Capital book, what is an economically realistic answer to the issue of income inequality?
This ties extremely well to the UFR curriculum and policy priorities. Lesson 1.4 looks at taxation and asks the essential question “Is there a fair and efficient way to fund and maintain the public services we want?”. If decreasing the income/wealth gap is a priority, what policies need to be investigated? If this is not a priority, why does it keep coming up in the news?
July 15, 2014
The political cartoons included in this blog are selected as tools to teach about public policy issues. Their inclusion does not in any way constitute an endorsement by Teachers College, Columbia University, of their point of view.
Political cartoons can be a powerful way to teach and talk about public policy issues in the classroom. They engaging, often funny, and they teach very complex ideas in a quick and intuitive way. We are so convinced of the value of political cartoons that, in addition to including them in many of our blogs, we feature posts that are all cartoons.
Using cartoons presents an opportunity to teach students media literacy, including the ability to detect point of view or bias. As a sequence, we strongly encourage students to study the cartoon carefully, analyze the specific context of the cartoon, and determine the cartoonist’s point of view. See the blog post of October 8, 2013 for a guide to using the political cartoons we have selected. The Library of Congress also has a a very useful Cartoon Analysis Guide.
David Fitzsimmons, Arizona Star, 2014
David Fitzsimmons, Arizona Star, 2014
Steve Breen, San Diego Union Tribune, 2014
Gary Varvel, Indianapolis Star, 2014
Kevin Siers, Charlotte Observer, 2014
July 11, 2014
I found the most fascinating blog post with slides from a presentation from the Federal Reserve of St. Louis. The presentation looks at Generation X and the Millenials facing life after the Great Recession, but also how they compare economically to the Greatest Generation, the Silent Generation, and the Baby Boomers.
Now, perhaps BEING a Gen-X’er makes me a little more interested, but I stayed quite awhile on slide 45 (sorry, I can’t seem to post a link to just one slide!). Not only did the overall wealth of Gen-X families decline since 2008, they are recovering much more slowly than the older generations. Slide 46 showing homeowner rates is even more astounding, showing that young homeowners (under the age of 40) are not only in decline, but in the words of the Fed, “plunging”.
Perhaps one of the most disturbing sets of data and projections, though, is on slide 48. Starting somewhere between those born in 1963 and those born in 1973 (the shift from Boomers to Gen-X’ers), over the course of a lifetime, people pay out more in taxes than they receive in federal benefits. That fear we’ve been seeing in the distance for years – of Social Security reform, or worse, of Social Security collapse – is very real for Gen-Xers and Millenials.
Although this post is initially more personal than K-12 education oriented, this could easily be turned into information for students to determine research questions, research, and answers. After all, this will affect them more than other generations! When I was a high school teacher, my Economics classes would talk about the national debt and things like Social Security. If students have information such as what is found on slide 48 as a starting place, it can lead to all kinds of rich and valuable discussions and research revolving around fiscal policy and policy choices. What is the answer for Social Security? How much should the government get involved in household finances, such as guaranteed mortgages or secured student loans?
July 8, 2014
The political cartoons included in this blog are selected as tools to teach about public policy issues. Their inclusion does not in any way constitute an endorsement by Teachers College, Columbia University, of their point of view.
Political cartoons can be a powerful way to teach and talk about public policy issues in the classroom. They engaging, often funny, and they teach very complex ideas in a quick and intuitive way. We are so convinced of the value of political cartoons that, in addition to including them in many of our blogs, we feature posts that are all cartoons.
Using cartoons presents an opportunity to teach students media literacy, including the ability to detect point of view or bias. As a sequence, we strongly encourage students to study the cartoon carefully, analyze the specific context of the cartoon, and determine the cartoonist’s point of view. See the blog post of October 8, 2013 for a guide to using the political cartoons we have selected. The Library of Congress also has a a very useful Cartoon Analysis Guide.
Pat Bagley, Salt Lake City Tribune, 2014
Gary Varvel, The Indianapolis Star, 2014
Chip Bok, 2014
Joe Heller, Green Bay Press-Gazette, 2014
July 6, 2014
The Affordable Care Act requires employers to offer health coverage, including birth control, at no extra cost to employees. The First Amendment to the Constitution says that freedom of religion trumps federal law. The Supreme Court found earlier this week (Burwell vs. Hobby Lobby Stores, Inc.) that closely-held corporations have the protection of freedom of religion and may not be required to offer something such as birth control that may offend their religious beliefs.
The Economist is calling it a “battering” of the Affordable Care Act. Fox News reports that the decision has “revived” the backlash against the ACA. The Huffington Post says that half of the women able to receive private insurance have access to birth control under the ACA. Mixed reviews and reactions across the country have set discussions about the ACA and freedom of religion into play. I’ve seen intense “discussions” around Facebook and Twitter, and have seen local people stage boycotts at the local Hobby Lobby.
I thought this post from the Wall Street Journal was extremely interesting, and went beyond the hype of religion versus privacy fears. in it, blogger Al Lewis asks a very important question: Where does this end? The Supreme Court has now found that corporations have freedom of speech (Citizens United case) and freedom of religion. What else do they have basic Bill of Rights freedoms?
I bring it up only because of what future connotations this could hold at the level of the federal government. If a corporation is a human person (as the Court has now found, twice), what limits are in place for federal and state election contributions, or even running for Congress? Okay, that may be silly, but having students research the question of the Hobby Lobby case could be a very interesting dive into giving them the chance to form their own political opinions with facts. If the Supreme Court is correct in this ruling, what evidence can they find to support it? If the Supreme Court is incorrect, what evidence do students produce?
July 6, 2014
The Economist has a great Daily Chart this week about small businesses in the United States. Overall, it looks at which states are most friendly towards entrepreneurs. They come to the overall conclusion that taxes and bureaucracy are halting entrepreneurial activity across the country. In the accompanying article, The Economist states that small business owners are more frustrated with the bureaucratic end of licenses and requirements than taxes.
With so many states trying to attract small, new businesses to their region (I saw a commercial on TV the other day for New York state, encouraging people to move there because of their friendly business practices; also, I live and work in a state where the governor has promised thousands of new jobs before the end of his term), when we look at the actual data, it seems that many states are actually NOT all that friendly to the entrepreneur. What does all of this mean?
The interesting part that I’m bringing to the blog is this quote from The Economist:
Changes to regulations have little effect on economic growth in the short run—cyclical influences such as the state of the housing market or the fortunes of a particular industry (high-tech in California, oil in Texas) matter more. But in the long run, business-friendliness makes a difference: one study found that states that rank better on indices of taxes, costs and regulations enjoy stronger job growth, after filtering out the influence of industry composition and the weather.
This offers a terrific opportunity to bring to students a concrete example of long-run versus short-run affects of economic policies. In the long run, business-friendliness makes a difference, even more than state taxes on entrepreneurs. What does this mean for their individual state on the interactive map? Their region? The country as a whole? It’s a great chance for students to dig in and do some research. It could even be paralleled to the national movement towards raising the federal minimum wage.
June 30, 2014
You have to love the acronyms in economics (MC, DWL, AS, TC) – they’re almost as much fun as the acronyms in the education world…but I digress. A very interesting blog from Harvard Economist Greg Mankiw states very clearly that (although the math may be off somewhat) the Affordable Care Act will cause a decrease in long-run gross domestic product (GDP). If you’re interested in the calculations, head on over to his blog, but I’m more interested in the concept of deadweight loss (DWL) and how that transfers to a loss of potential GDP. It’s a GREAT real-life lesson for your AP Micro students struggling with the concept of taxes and DWL.
DWL is basically an inefficiency that occurs when equilibrium does not fall where the market says it should. This means there is something in there – government intervention in this case – that causes potential loss. I’ve found that my students in the past struggled with the concept immensely, because they wanted to know where something could disappear to: if it was there in the past, why isn’t it there now, and where did it go? The abstract concept of potential gain and potential loss can be very difficult to understand.
I think Forbes has a terrific outline of Mankiw’s issue, which basically states that all taxes have a potential DWL. In general, a tax adds inefficiencies into a market, no matter how great people/politicians may think that tax may be worth it. Great examples are property taxes, which funds our public school systems, or state taxes that fund our roads. They’re needed, and many people think they’re worthy taxes, but the fact is, it still creates an inefficiency.
I bring Mankiw’s blog up because, as Forbes points out, it’s a great example of basic economic theory. We have choices, and we make decisions based on the marginal impact of those choices. More importantly, there are trade-offs for whatever we do in life. We make the choice as a country to pass the ACA, and it will, by economic definition of a tax, decrease long-run productivity.
June 30, 2014
The political cartoons included in this blog are selected as tools to teach about public policy issues. Their inclusion does not in any way constitute an endorsement by Teachers College, Columbia University, of their point of view.
Political cartoons can be a powerful way to teach and talk about public policy issues in the classroom. They engaging, often funny, and they teach very complex ideas in a quick and intuitive way. We are so convinced of the value of political cartoons that, in addition to including them in many of our blogs, we feature posts that are all cartoons.
Using cartoons presents an opportunity to teach students media literacy, including the ability to detect point of view or bias. As a sequence, we strongly encourage students to study the cartoon carefully, analyze the specific context of the cartoon, and determine the cartoonist’s point of view. See the blog post of October 8, 2013 for a guide to using the political cartoons we have selected. The Library of Congress also has a a very useful Cartoon Analysis Guide.
Jimmy Margulies, 2014
Jeff Darcy, 2014
John Darkow, 2014
Steve Sack, 2014
John Cole, 2014
June 30, 2014
The last few weeks, there have been more recalls from General Motors Corporation – this time of over 7 million vehicles. As someone who was affected by the last recall, this has been something on my radar…just keeping an eye on events.
Last week, GM told dealers across the nation to pull Chevy Cruze cars off the lot due to a faulty airbag issue, although no recall has yet been made. Forbes has the story of the new recall, though, outlining over 7 million vehicles affected in the US for these new recalls. When you add in GM vehicles worldwide, it rises to over 8.4 million. This means that over 28 million GM auto owners have been affected by recalls just this year (compared to 22 million recalls from all automakers combined in 2013). At the same time, GM has announced that it will not cap the amounts for families of victims to claim with the faulty ignition switch recall, and these compensations will start at $1 million.
If you recall, GM was one of the giants in the federal bailout of companies when the economy crashed in 2007-o8. A CNN poll just a few weeks ago announced that 6 out of 10 Americans thought the auto company bailouts were wrong. According to Time Magazine, the federal government lost over $11 billion in the GM bailout alone. Toronto-based GM dealers are suing the parent company for funds not received from the federal bailout.
With all of this bad news in the press lately, you’d think GM would be worried its image is tarnished and all of these recalls might scare away buyers. But, at the same time, an interesting set of data has been released showing that GM had terrific growth in sales in May 2014 of over 12%, and multiple plants are running at full capacity. In fact, although May 2014 sales seem to be a fluke (numbers are projected much lower for June 2014), it seems that auto sales in general have finally bounced back to pre-Great Recession numbers.
Holy cow, what do all these seemingly unrelated facts mean? Why am I bringing all this data into the equation?
In poking around, I found that last December, The Center for Automotive Research released an analysis of the auto bailout. They analyzed two separate possible scenarios, and in general found that if the federal government had not stepped in with the bailout money, the results could have been catastrophic for the US economy. They estimate that over 4 million jobs would have been lost over the first two years, which would have equated to over $105 BILLION in transfer payments such as unemployment compensation, Social Security benefits, and the like.
I thought this was a great opportunity to have kids look at the pros and cons. A majority of people in the US still think the bailout was unnecessary – yet it saved over $100 billion according to this research. Who are these people at the Center for Automotive Research? What bias may they have? Where did the money come from for the bailouts, and as they were repaid, where did that money go? How is all of this connected to all of these recalls – what will happen if the recalls continue and eventually affect GM sales over a long period of time?
Hi folks – sorry for the lack of posts lately – my “other life” took over for two weeks and I was out of state at a workshop for awhile. I’ll make up for it today!
