EWOT Goggles #14

The dining halls on campus, also known as the bane of my food consumption existence, have an interesting policy that I was recently made aware of. Apparently, as part of our dining bill for the semester, all students pay some sort of a dish and cutlery taken/breakage fee around $80. Since this is paid at the beginning of the semester, it is a sunk cost. We know that consideration of sunk costs lead to bad economic decisions, but this fee disincentivizes being careful about breaking plates and incentivizes sneaking a cup or ten to your dorm room. One of my friends, who will remain unnamed, was ecstatic about the return of the deep soup mugs because he had been waiting to take one up to this room for awhile. Can we also just focus on the ridiculousness of the fee we're charged? It's not my fault that someone purchased breakable ceramic dishware for Danforth in the University's strive for feigned elegance. Putting delicate plates and bowls in the hands of sleep-deprived college students wasn't exactly the bright idea of the century. Regardless, out of all the meals I've eaten at Danforth, I've only heard two dishes break. The number of dishes broken and/or stolen from the dining hall hardly add up to $80 per student. This fact coupled with the astronomical lines might cause someone to take a few forks out of spite. The fee promotes a certain level of carelessness and dishonesty, even though it's just a precautionary measure.

EWOT Goggles #13

Images taken from gonorthwest.com

In regards to yesterday's lesson on rent controls, I immediately thought of the Fremont neighborhood in my hometown of Seattle. Washington State doesn't have price ceiling rules for rental properties, though it does have renter unions. This allows for more or less of a free market for apartments and condos throughout the state. Fremont used to be a hippy, bohemian neighborhood with living spaces that were pretty far from luxurious. It was filled with hole-in-the-wall restaurants and second-hand clothing stores. About fifteen years ago, a collection of more highly paid demanders decided that the area was "chic". Not only did the quantity demanded of spaces for rent increase, but so did the demand for higher quality apartments and condos. As a result, the hippy artist renters were driven out of the Fremont housing market because of the new higher earning, higher bidding demanders. The businesses in and around the Fremont living spaces assimilated with the new crowd of renters. Chain and upscale restaurants replaced the diners, and the second-hand stores were traded for chic boutiques. The market behaved in the way it normally should because rent controls weren't present. If they were, Fremont might not have evolved in the way it did. The quality of the apartments would have suffered because of a fixed rent landlords could charge, and Fremont would not have been as trendy as it is today.

EWOT Goggles #12

Random economic anecdotes from my Thanksgiving travels:


I never truly notice the 2000+ mile difference between my home in Seattle and Rochester until I sit on my ass for more than seven hours. This aside, airports proved to be a very apt locale to observe economic concepts in action. One of the first things I noticed when I was checking in was the plethora of computerized check-in stations. Some might argue that the introduction of this technology eliminated ticket agent jobs. There was actually, however, an abundance of agents directing people where to go and stepping in when the computers couldn't complete requests. This was especially helpful when, on account of the Continental/United merger, I couldn't use the computer to check in. The check-in technology likely created more jobs upon it's implementation when the computer service jobs are factored in with the front desk agent positions.

Unfortunately, there isn't a direct flight between Rochester and Seattle, so I had the pleasure of connecting in Chicago. The Midwest isn't the most lovely of places, but I would rather fly through O'Hare than a large number of other places. The Midwest region isn't particularly health-conscious, so searching for consumables other than McDonalds-like health level took a bit of looking. When I finally stumbled upon a vendor that sold something with actual vegetables, the line was decently long. The wait signaled the degree of salad scarcity. Regarding allocation of these scarce goods, the price system was of extraordinary assistance because other distribution methods would have probably caused me to miss my flight.

My last economic point on airline travel centers around the "everything's great and no one's happy" concept. Griping was commonplace during the day-before-Thanksgiving travel rush. People were upset about not having open overhead bins above their row, making a fuss about needing to consolidate their carry-ons to meet regulation requirements, and visibly perturbed that United Airlines would suggest that Pepsi was a substitute good for Coke. The fantastic idea that we were able to make a cross-country journey in the span of seven hours was totally lost on all of these travelers. Instead of bitching about the little things wrong with their flight, these people should marvel at the fact that they reached their Thanksgiving destination in a matter of mere hours.

EWOT Goggles #11

http://www.time.com/time/world/article/0,8599,2099200-1,00.html

Child labor is a hotly debated topic in the world today. This article highlights the key issues that consistently arise. For Victor,  a Bolivian 15-year-old who has been working for five years already, must work in order to provide income for his family. He vehemently asserts that he has a right to work. On a moral level, no one would prefer that children be a part of the workforce. In the practical world, however, it is necessary for them to work so that their families can eat. Citizens of the poorer nations in the world, such as Bolivia, don't really have much of a choice. This being said, fair treatment of child laborers should be of the utmost priority since abolishing child labor isn't feasible. According to the rule of law, these children should be treated the same as unionized adult workers. Children are improving the economy by increasing the supply of products to meet the people's demands, and should have equal rights because of their contributions to the market. This is currently not the case because employers believe they can do whatever they want since the children have less of a voice. The working conditions are often appalling, but instead of attempting to improve them, the organizations of the world are fixated on ridding the world of what they call 'child slavery'.

The level of intensity of the issues surrounding child labor is on par with those enveloping the universal healthcare debates. Both concepts deal with the equality of people. All humans deserve the right to work as well as access to adequate healthcare, but the current policies aren't conducive to helping people. The attempts to centrally control child labor and universal healthcare will actually hinder people rather than help them. Rizzo mentioned in class this week that the more important a good or service is, the more important it is that the allocation of it is left to the market. If child labor laws improved the working conditions for children, their employment could fluctuate with the market demand for it. The same idea applies to healthcare. Medical treatment would be more accessible if there wasn't a central planner involved. The Times article about child labor urged that instead of dealing with child labor, policy makers should concentrate on the poverty that causes it. Protectionism in regards to child labor will only exacerbate the poverty in countries like Bolivia. If people focused more on economic ideals, working children in these nations would be much better off.

EWOT Goggles #10

There are some times that I'm in the mood for a good infomercial. I'm always fascinated by the fact that the developers of such products featured in infomercials are able to create a desire for a product seemingly out of thin air. The root cause is that they solve the information problem of transaction costs. "A blanket with sleeves? Thats a ridiculous idea!" some might say. If they take a moment to think about it, however, they will likely remark, "I do really hate that my arms get cold when I'm reading a book..." Thus the value for Snuggies is born! This is a perfect example of supply creating its own demand. Informercials tend to point out issues that we didn't know we had. It is this strategy that allows the demand for products as "pointless" as the Snuggie to exist. The infamous $19.99 price tag of infomercial goods is usually low enough for the quantity demanded of these products to increase. Most people decide that solving the problem of cold arms due to the construction of the average blanket is worth about twenty dollars. The majority of people are willing and able to pay this price. Consequently, Snuggies are now a best-selling product.

EWOT Goggles #9

Genetically modified foods are a topic of massive debate in our modern agricultural society. There a several  aspects of the process that worry people (i.e. "playing God", health risks, etc.), but the fact of the matter is that GM crops have a comparative advantage over regular crops. The World Health Organization estimates that there are around 5,000 pesticide-related deaths each year. Genetically altered crops usually have a pest-resistent gene, thus eliminating the need for pesticide use. This dramatically reduces the number of cases related to pesticide poisoning among GM crops.

GM produce also fosters specialization. Due to strides in fertilizer development, crop rotation is becoming more and more outdated. Corn, for example, can essentially be grown year round on particular fields. Farmers can specialize in certain seeds so all growers don't need to raise everything. Your average grocery store has fruit, vegetables, and grains that originated in all points in the country, and often the world. Because the genes that cause products to spoil have been isolated and removed as fully from crops as possible, produce can be stored for obscene amounts of time without spoiling. GM crops have overcome the physical transaction cost of distance because their long shelf life allows for long transportation times.

As with almost every job field besides health care and higher education, strides in agricultural technology have replaced many manuel workers indefinitely. Machines can plant, water, fertilize, and finally harvest the crops. Genetically modified plants cut down on the amount of machine work as well because little or no pesticides or herbicides are used. It's difficult to say whether GM plants are "better" because they still belong to a world with a ton of unknowns, but they definitely have comparative advantages in most all growth and cultivation processes over regular crops.

EWOT Goggles #8

http://dontevenreply.com/

Linked above is probably one of the funniest websites on the internet. The man behind the whole scheme replies to Craigslist ads in the most awful, rude, and inconsiderate ways possible. (I highly recommend the read.) Most of the time he doesn't even accurately address the desire of the Craigslist post-ee. All jokes aside, Emails from an Asshole perfectly illustrates the impossibility of altruism and/or the Golden Rule in market systems. Trade becomes a zero-sum situation whenever altruism is present in an exchange. Selflessness is a necessary component of altruism. Self-sacrifice cannot be present in trade because then it's no longer a fair exchange, but rather borderline thievery by the gaining party. If one person "wins" and one "loses" then it's no longer a trade.

Rizzo suggested that a comparable moral code does indeed exist in markets, creatively coined the Silver Rule. Under this principle, one must deal with others how they would want to be dealt with in market transactions. The creator of Emails from an Asshole clearly doesn't abide by this policy, and neither do a myriad of Craigslist, Ebay, and other users of similar websites. People are constantly getting ripped off on online trading websites because interaction are impersonal. It's much easier to deceive someone you can't or will never see than it is to purposefully trick someone you're looking in the eye. Ebay removes the humanity from trade even more so than Craigslist. Online bartering sites are a breeding ground for dishonesty. What does this say about morality within the market? Even further, what does this suggest about the moral compasses of the participants of said market?

EWOT Goggles #7

Although the legal drinking age is technically determined at the state level, the federal government managed to establish a 21-year-old minimum throughout the country with what was one of the best uses of incentives of all time. Washington told each of the fifty states that they had autonomy over the age requirement for drinking, but that they would use federal highway funding if the drinking age wasn't 21 in their state. This was absolutely brilliant. Of course all the states quickly fell in line to institute the suggested drinking age. The cost of losing highway funding was just too great.

As with most plans, even the great ones, there were several unintended consequences. Because teenagers have to wait longer to legally drink, they often put themselves in dangerous situations in order to consume alcohol. Alcohol accounts for almost 1/3 of all driving deaths among teenagers (http://www.sadd.org/stats.htm). While the highways might be better maintained, the amount of teenagers dying on them  has increased substantially.

Perhaps a more relatable situation is the one involving the all-too-common overprotective parents. Teens who's parents tended to be on the stricter side about alcohol consumption (likely because the death rate among teenagers is high due to the age limit) have a much harder time adjusting to the freedoms of college. If a few of my former classmates are any indication, a night of binge drinking gone wrong is a massive unintended consequence of restrictive parenting. Overprotective parents are also an unintended consequence of the higher drinking age. Every decision comes with negative and/or positive repercussions and implications.

EWOT Goggles #5

As a freshman in college, I pretty much meet a new person every day. Among the usual introductory conversation topics is an inquiry about what the other person's intended major is. Among the more "practical" answers like Business or Economics are majors such as  Art History or Gender Studies. The salaries related to the latter degrees aren't likely to even repay the total cost of college. What would possess people to decide so early on in their lives that a large salary wasn't in the cards? Doesn't everyone crave a luxurious lifestyle?

The answers to the questions posed above lie in the idea that values are subjective. Clearly the people who choose a Humanities degree value the subjects that they're studying. Perhaps the opportunity cost of not making a high salary is worth pursuing careers in those fields. Money doesn't incentivize the person who settles on a Gender Studies degree, but rather the joy that the subject matter provides for them. We haven't been introduced to the concept of utils yet, but they definitely apply to this scenario. The relative satisfaction of the subject content this person would receive from majoring in Art History is higher than that of someone who would prefer to major in Economics.

It's also a tad ridiculous to focus on the monetary cost of college versus how much a Humanities major will make in their lifetime because college tuition is a sunk cost. A refund is impossible, so they continue to study what they love because that has infinite utils of utility for them. Therefore, these people are "getting their money's worth" from college, and subsequently, their career.

EWOT Goggles #4

http://buzzpunching.blogspot.com/2011/07.html

The problems surrounding corn subsidies in America are strikingly similar to the grain price issues that plagued England around the late 18th and early 19th centuries. As a result of the price of British grain quadrupling, foreign grain was brought into England because it was far less expensive. The government attempted to rectify the situation by imposing "corn laws" to protect English land owners. America is currently facing the same issue, except now many would argue that corn prices are too low. 

American corn farmers can no longer eat what they grow. This is quite the agricultural phenomena. Ignoring the whole other can of worms containing GMO debates, today's corn is a raw product that is basically inconsumable in its unprocessed state. The government has caused a series of unintended consequences by subsidizing corn to the extent at which it has. For one, things containing high fructose corn syrup are usually wildly unhealthy. Because corn is so heavily subsidized, these products are much cheaper than nutritious alternatives like raw fruits and vegetables. The low prices incentivize people to purchase these unwholesome items. Nutritional value in soda and candy is basically non-existentent, and people who regularly consume such products gain significant amounts of weight. Therefore, one could make the assertion that the corn subsidies in the United States are a driving force behind obesity in Americans. If you further extended this idea, you could probably prove that corn subsidies also contribute to a lot of the healthcare budget issues as well. Sometimes the interconnectedness of such processes are staggering.

Along with contributing to obesity, the corn subsidies also dis-incentivize farmers from growing other crops. Corn is "safe" because they know it will bring in a steady paycheck since the fluctuation of the price doesn't directly affect them. Crop rotation has been completely taken out of the equation because of technological developments that allow corn to be effectively grown on the same land year after year. This has actually caused such an influx in corn that there is so much that we have to find more and more uses for it. Cows, chicken, and even fish are being fed corn. None of the aforementioned animals are biologically compatible with corn consumption, but the product is cheap and plentiful. The bottom line is that as long as there is so much corn floating around, people will find ways to utilize it because they are incentivized by its cheapness.

EWOT Goggles #3

Haitian Divers Hope to Aid Ailing Reef 

I read the New York Times article linked above about three weeks ago, and it addresses environmental economics very poignantly. Because natural resources are "free", people often overlook their value. Nature provides many services that even the best man-made machines couldn't compete with. For example, it would cost us about fourteen trillion dollars per year to recreate all of the air-cleaning and water-purifying functions that rainforests offer at significantly less productivity levels. By this statistic alone the environment is invaluable, and yet the destruction of our planet continues.

Natural devastation is especially prevalent in poverty-ridden, economically unstable areas. Haiti certainly falls under this description. The coral reefs that surround the island are in awful shape because of overfishing, a direct result of terribly impoverished people trying to make an honest living. These people represent a portion of the 70% of people that are poorer than the bottom 5% of Americans. Their living standards are absolutely on par with those of people living in the early 1800s. To them, the environment has monetary value, but not in the sense of protecting it. They see it as a form of livelihood, as opposed to the functions it provides for society as a whole. In order to help people to see the economic worth of the environment it is necessary to equalize the living standards of people around the world.

EWOT Goggles #2

                                   http://waznmentobe.com/uncategorized/really-sad-pictures.html

Along with a large portion of the world's population, I'm anxiously awaiting the release of the iPhone 5. Our society is enamored with cell phones in general, but Apple took the devotion to handheld life devices to a whole 'nother level. If you live in a Westernized portion of the world and the iPhone concept is foreign to you, you clearly live under a rock. Imagine, however, how strange it would have appeared to people in Elizabethan times, for example. Attempting to work through such a conversation in one's head is evidence enough of the immense growth the world has experienced. What's especially amazing about the iPhone is that it's available to people from all socioeconomic backgrounds. Even if you can't afford one, it's likely that you've touched one. This was absolutely not true for luxuries in the past. A peasant would never know what a silk robe of a royal felt like. It's incredible that something as fascinating and complex as an iPhone is available to such a breadth of people.

The iPhone also hammers home the point of intensive growth. People are becoming richer because it's feasible for them to do so. As their individual wealth grows, so does their attachment to material items. This is clear because the market for complicated devices is worth millions if not billions of dollars. We truly only need the call function on a cell phone, but instead our societal and economic growth has allowed for the ability to hurl virtual birds at virtual pigs with the touch of a finger. Even the smartest scientist in the past couldn't have conceived such an idea, and would probably find our reality laughably impossible.

EWOT Goggles #1

I have a question for whomever decided that the above picture was a good marketing tool for a Back to School sale. Why, dear advertiser who makes copious amounts of money, would you write a '2' in place of the word you so awfully represented with a number? A large majority of kids butcher the proper English language when they text and/or write on the internet. I don't have to go to school to do either of those things. In fact, some preteens and adolescents would strongly argue that they would much rather give themselves premature carpal tunnel of the wrist with a myriad of electronic devices than go to classes. You are encouraging this.

In an economic sense, why on Earth would I spend money on school, much less school supplies, when the advertiser behind this sign probably makes more than my college tuition in the span of a few contracts? He is, for the purpose of my argument, a successful businessman. Perhaps more impressively, he was able to become wealthy without proper English. Essentially what this sign is telling me is that I never have to go to a single Language Arts class in my life if I want to be affluent. So no, store with poor choice of advertisement, I will not go to your 'Back 2 School' sale. I'll be on Facebook instead.