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Articles by [email protected] (Cyril Morong)

Life is full of tradeoffs, the case of federal renters assistance

15 hours ago

Getting this aid to people is slow since it takes time to verify who is in need (to prevent fraud). So you can have more assistance or less fraud. We might not be able to get both. There has been fraud with unemployment. See Scott Peterson, thousands of California inmates carried out ‘staggering’ Covid fraud, officials say by Tim Stelloh of CBS News. See also How scammers siphoned $36B in fraudulent unemployment payments from US by Nick Penzenstadler of USA TODAY. For the rental issue, see Logjams Are Keeping Much of $47 Billion in Federal Aid From Renters: Strict rules for eligibility and overburdened local officials prevent financial assistance from getting to struggling tenants by Will Parker of The WSJ. Excerpts:"Some local programs report being overwhelmed with applications that

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The Unlikely Demise of Texas’ Biggest Corporate Tax Break

2 days ago

After 20 years, the state’s most lucrative corporate welfare program comes to an end. By Justin Miller of The Texas Observer. He gives a good overview of this history of this program. I did a post on this a few days ago (link at the end). Excerpts:"In 2001, state lawmakers and business leaders warned that the state’s
high property tax rates were discouraging corporations from locating big
projects in Texas. At the time, Site Selection
magazine—a trade publication about economic development—showed Texas’
national ranking on new manufacturing plants had plummeted to 37th in
the nation, and without a state income tax, the Lone Star State had no
choice but to lean on sales and local property tax revenue to fund basic
services like public education. 
In order to attract large

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Some provisions of the new law regulating the Texas power grid

3 days ago

See ‘Everything that needed to be done’: Gov. Abbott signs bill to strengthen Texas’ electric grid by Jeremy Blackman of The San Antonio Express-News. Excerpts: "Gov. Greg Abbott on Tuesday signed sweeping legislation intended to
strengthen the Texas electric market in response to this year’s deadly
outage crisis.

The measures, including winter preparation at power plants and some natural gas facilities,
the creation of a statewide alert system, and a regulatory overhaul,
amount to the most significant changes to the market since deregulation
two decades ago.""The new weatherization mandates take effect after this coming winter,
and will be enforced with flexible fines that escalate over time. They
also leave oversight of the gas system, which fuels most of the

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Will higher commodity prices lead to more inflation?

4 days ago

See Commodity Price Surges Add to Inflation Fears: Higher prices for commodities are flowing through to more companies and consumers, making it harder for central bankers to ignore them by Tom Fairless, Alistair MacDonald and Jesse Newman of The WSJ. Excerpts: "Commodities generally make up a relatively small part of consumer
prices. They are mainly used for producing goods as opposed to services,
which are a bigger part of developed-world economies. Goods make up
about 20% of the weighting of the U.S. consumer-price index.

Academic work also suggests that the impact of commodity-price
shocks on inflation has fallen in recent decades, as elements such as
branding have become important in final costs.

Kevin Kliesen,

a business economist at

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Texas’ shameful Chapter 313 program is the sort of corporate welfare we don’t need

5 days ago

By Michael Taylor of The San Antonio Express-News. This program is costly for all tax payers in Texas and seems to only benefit a few corporations. So why does it persist? Why can’t we get rid of it?It reminds me of something from the sub-field of economics called "Public Choice" which uses economic theories and concepts to study politics. One of its tenets is "concentrated benefits, dispersed costs."This program in Texas concentrates the benefits of the program in a few people who will lobby very hard to  get it (including campaign contributions). So the politicians listen to them while the costs are dispersed among all the citizens. Since each citizen pays just a small amount for the program it does not pay for any of us to try to get our state senators and representatives to change

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Warehouses Look to Robots to Fill Labor Gaps, Speed Deliveries

5 days ago

Logistics automation companies say demand has grown during the pandemic as companies cope with big swings in volume and a tight hiring market By Jennifer Smith of The WSJ. It is not clear that this is an  example of structural unemployment, when workers are replaced by machines because it says that companies are having a hard time finding workers. Excerpts:"The robots are coming to labor-strapped North American warehouses.

Growing numbers of self-driving machines are shuttling clothing
and sports equipment down warehouse aisles, pulling bins of groceries,
cosmetics and industrial parts from high stacks and handing off goods to
human workers to help deliver orders faster. Some logistics operators
are testing forklifts that can be operated from remote locations,
allowing

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The Economic Recovery Is Here. It’s Unlike Anything You’ve Seen.

7 days ago

Households saved cash and banks amassed capital, but supply shortages are popping up and some employers can’t find workers By Gwynn Guilford and Sarah Chaney Cambon of The WSJ. Some good points about what causes recessions and what usually happens during them (passages in red). Excerpts:"Past recessions typically resulted from a rise in interest rates or a
decline in asset values that hurt output, income and employment,
sometimes for more than a year, said

Gail Fosler,

an economist and president of The GailFosler Group LLC. The
damage to household finances and financial institutions after the 2007
housing crash led to lost demand that weighed on the economy for years.""In downturns, consumers fearful of losing their jobs or incomes often
cut back on

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In Mexico, US energy firms face a ‘slow rolling expropriation’

17 days ago

By James Osborne. This article appeared in the San Antonio Express-News in Dec. 2020. I use the book The Economics of Macro Issues. Chapter 1 is called "Rich Nation, Poor Nation."
The chapter discussed how nations with common law systems, where
property rights are better protected than in nations with civil law
systems, have higher growth rates. Private firms are more willing to make long term investments in common law systems (compared to what they call civil law systems). But if Mexico, an example of a civil law system, starts taking over or trying to control the assets of foreign energy companies, it may hurt investment in the long run.This will slow down economic growth. I pointed out to my classes that even
a small difference in growth rates ends up causing a very big
difference

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The hidden costs of corporate social responsibility

18 days ago

By economists Guglielmo Briscese, Nick Feltovich and Robert Slonim. "Companies often engage in activities of corporate social responsibility
such as donating a share of profits to charity. Previous research
suggests these initiatives can help attract and motivate workers, even
at the cost of giving up part of their compensation. This column
presents experimental evidence that shows, however, that when workers
can choose who they want to work for, they prefer firms that offer a
higher wage, and are attracted by a firm’s corporate social
responsibility only when they consider their wage offer as ‘fair’.
Further, if companies compensate donations to charity by reducing
workers’ wages, this could ultimately harm workers’ wellbeing, depending
on the worker’s views on the

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Unprosecuted shoplifting causes Walgreens to close stores in San Francisco

19 days ago

See San Francisco’s Shoplifting Surge by Thomas Fuller of The NY Times. In my macro courses we read a chapter in the book The Economics of Macro Issues.
The chapter discussed how nations with common law systems, where
property rights are better protected than in nations with civil law
systems, have higher growth rates.Excerpts from the article:"At a board of supervisors hearing last week, representatives from
Walgreens said that thefts at its stores in San Francisco were four
times the chain’s national average, and that it had closed 17 stores,
largely because the scale of thefts had made business untenable.Brendan Dugan, the director of the retail crime division at CVS Health,
called San Francisco “one of the epicenters of organized retail crime”
and said employees were

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Chicken Shortage Sends Prices Soaring, and Restaurants Can’t Keep Up

19 days ago

Spicy sandwiches, hot wings and a labor crunch push poultry prices to recordsBy Heather Haddon and Jacob Bunge of The WSJ. Looks like a classic case of increased demand and decreased supply causing a higher price. Excerpts:"Chicken wings are flying off the shelves.

After a year promoting takeout wings and crispy chicken sandwiches, restaurants including KFC,

Wingstop Inc.

and Buffalo Wild Wings Inc. say they are paying steep prices for
scarce poultry. Some are running out of or limiting sales of tenders,
filets and wings, cutting into some of their most reliable sales.

Independent eateries and bars have gone
weeks without wings, owners say. Chicken breast prices have more than
doubled since the beginning of the year, and wing

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Economic Growth Is Set to Surge. Hiring Might Not Keep Up.

21 days ago

U.S. economy could face bottlenecks, wage and price pressures as labor demand outpaces supply By Sarah Chaney Cambo of The WSJ. Excerpts:"U.S. employers might have trouble hiring workers fast enough in
coming months to keep up with the projected burst of economic growth.

Consumer spending at restaurants, hotels and salons is already starting to take off as the grip of the Covid-19 pandemic eases and more people get vaccinated and draw on their stimulus checks and savings.

But many economists expect economic
activity to pick up faster than payrolls, at least initially, for
several reasons, causing bottlenecks and wage pressures.

This happened last year for many manufacturers that experienced
labor shortages as Americans working from home ordered

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Does Economics Make You Selfish?

24 days ago

From UMass Amherst.
"Working Paper Number
2021-07

Publication Date
2021

Abstract
It is widely held that studying economics makes you more selfish and
politically conservative. We use a difference-in-differences strategy to
disentangle the causal impact of economics education from selection
effects. We estimate the effect of four different intermediate
microeconomics courses on students’ experimentally elicited social
preferences and beliefs about others, and policy opinions. We find no
discernible effect of studying economics (whatever the course content)
on self-interest or beliefs about others’ self-interest. Results on
policy preferences also point to little effect, except that economics
may make students somewhat less opposed to highly restrictive
immigration

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Mythology brings Jordan Peterson and Joseph Schumpeter together

25 days ago

See The Man They Couldn’t Cancel by Barton Swaim of The WSJ. Excerpts:"He brings together a dizzying array of texts and traditions—Jungian
psychoanalysis, the Hebrew Bible and New Testament,

Frederick Nietzsche,

Søren Kierkegaard

and much else—to formulate basic lessons, or “rules,” about how
humans might overcome their natural tendency to lassitude and savagery.""The mention of environmentalism brings to mind the cultish side of
modern progressivism. Is this desire to flog and destroy, as he puts it,
a sign of some twisted spiritual longing? “I think so,” Mr. Peterson
says. “The people who caricature Western society as a patriarchy, and
then describe it as evil, they’re possessed by a religious idea.” He
thinks the problem with

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Joseph Schumpeter And Me

May 7, 2021

Jeffery S. McMullen of Indiana University published an article in the academic journal "Business Horizons." It is titled"Are we confounding heroism and individualism? Entrepreneurs may not be lone rangers, but they are heroic nonetheless."At the end of the post is a link to this article.McMullen cites a paper I wrote in the 1990s and mentions my name in the
same sentence as Joseph Schumpeter, an important economist from the 20th
century.Click here to read a short bio of him
A few years ago I wrote a post called "My Favorite Economist Is Joseph Schumpeter."  Here it is
""Why is this blog called The Dangerous Economist? Back in the early
1990s, I wrote a paper called "The Creative-Destroyers: Are
Entrepreneurs Mythological Heroes?" It compares the entrepreneur in capitalism to the hero

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How Much Is The Average MLB salary?

April 23, 2021

See Average MLB salary at $4.17 million, down 4.8% from 2019.The article mentions that there were 902 players on Opening Day rosters. It also shows payroll for all teams.So I added all that up ($3,825,147,026) and divided by 902 and got $4.24 million. I don’t know why there is a difference.The article also mentions "the average likely was lowered slightly by the expansion of active
rosters to 26, which probably caused teams to add 30 players making near
the $570,500 minimum."I multiplied 30 times $570,500 and got $17,115,000. Then I subtracted that from the total payroll of $3,825,147,026. That left $3,808,032,026. That is total payroll without the one extra player (at a low salary) on each team.Taking those guys out leaves 872 players. Then $3,808,032,026/872 gives us an average

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Is There Economic And Political Meaning In “The Wizard of Oz?”

April 16, 2021

To get a handle on this, you can read Money and Politics in the Land of Oz
By Quentin P. Taylor.  Below is an excerpt from the Taylor paper:
"Dorothy, the protagonist of the story, represents an individualized
ideal of the American people. She is each of us at our best-kind but
self-respecting, guileless but levelheaded, wholesome but plucky. She is
akin to Everyman, or, in modern parlance, “the girl next door.” Dorothy
lives in Kansas, where virtually everything-the treeless prairie, the
sun-beaten grass, the paint-stripped house, even Aunt Em and Uncle
Henry-is a dull, drab, lifeless gray. This grim depiction reflects the
forlorn condition of Kansas in the late 1880s and early 1890s, when a
combination of scorching droughts, severe winters, and an invasion of
grasshoppers

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How Odysseus Started The Industrial Revolution

April 9, 2021

Factory work may have been a commitment device to get everyone to work
hard. Odysseus tying himself to the mast was also a commitment device.
Dean Karlan, Yale economics professor explains how commitment devices
work:
"This idea of forcing one’s own future behavior dates back in our culture at least to Odysseus, who had his crew tie him to the ship’s mast so he wouldn’t be tempted by the sirens; and Cortes, who burned his ships to show his army that there would be no going back.Economists call this method of pushing your future self into some
behavior a “commitment device.” [Related: a Freakonomics podcast on the
topic is called "Save Me From Myself."] From my WSJ op-ed:
Most of us don’t have crews and soldiers at our disposal,
but many people still find ways to influence their

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These are the highest paying jobs in San Antonio

March 26, 2021

By Jessica Miller of mysanantonio.com.I made a table out of the numbers they have.
Rank

Occupation

Annual mean wage

1

PSYCHIATRISTS

$244,440

2

FAMILY
DOCTORS

$237,670

3

CHIEF
EXECUTIVES

$231,850

4

SURGEONS

$212,680

5

DENTISTS

$163,660

6

MARKETING
MANAGERS

$154,160

7

ARCHITECTURAL
AND ENGINEERING MANAGERS

$144,930

8

COMPUTER
AND INFORMATION SYSTEMS MANAGERS

$142,940

9

FINANCIAL
MANAGERS

$142,340

10

NATURAL
SCIENCES MANAGERS

$140,200

11

SALES
MANAGERS

$137,440

12

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March Madness Is a Moneymaker. Most Schools Still Operate in Red.

March 21, 2021

College athletic departments run an average deficit of around $16 million, according to one sports economist  By Jo Craven McGinty of The Wall Street Journal. Excerpts:"fewer than 10% of Division I athletic departments . . . generated enough revenue to cover the expenses of their
sports programs.""in 2019, just 68 of 351 Division I men’s basketball programs generated more revenue than expenses. And in 2016 . . . 73 of 252 Division I teams earned more than they spent.""In 2019, athletic departments across all three NCAA divisions generated
$10.6 billion in revenue from all sports and spent more than $18.9
billion. The two biggest costs were financial aid for athletes ($3.6
billion) and coaches’ compensation ($3.7 billion).""only 25 of the 351 Division I athletic departments that

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Company has to pay $108 million dollar fine

March 5, 2021

See Pilgrim’s Pride Is First to Plead Guilty to Chicken Price-Fixing by Michael Hirtzer of Bloomberg News. I will be covering anti-trust laws pretty soon in some of my classes and colluding on prices violates those laws."Pilgrim’s Pride Corp., one of the top U.S. chicken producers, has
become the first company sentenced to pay a criminal fine as part of an
ongoing antitrust investigation into the industry by the Justice
Department.The JBS SA-owned firm pleaded guilty to conspiring
with rivals to illegally prop up prices between 2012 and 2017, and will
pay $108 million, the Justice Department said Tuesday. That adds to
hundreds of millions of dollars in civil settlements that the chicken
industry has already made.The fines and payments are likely not
over, a sign that the extreme

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The CPI increased 1.4% in 2020

February 26, 2021

The 1.4% means that the CPI in December 2020 (260.474) was 1.4% higher than what it was in December 2019 (258.811).The 260.474 means that what cost $100 in 1982 cost $260.47 in December 2020.Now
the CPI can go up and down during the course of the year and the Bureau
of Labor Statistics calculates it for every month. So if it increased
every month but then fell quite a bit in December, it might not look
like there was much inflation.They also calculate an average CPI
over the twelve months and then compare that to the one for the previous
year. That inflation rate for 2020 was 1.2%. Those two figures are
usually pretty close to each other, but not always.  In 2008,
the Dec.-Dec. method gives a 0.1% inflation rate while the monthly
averaging method was 3.8%. In 2009, those numbers

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Monkeys seem to be selfish and rational

February 21, 2021

From Marginal Revolution.
"At the Uluwatu temple in Bali,
monkeys mean business. The long-tailed macaques who roam the ancient
site are infamous for brazenly robbing unsuspecting tourists and
clinging on to their possessions until food is offered as ransom
payment.
Researchers have found they are also skilled at judging which items
their victims value the most and using this information to maximise
their profit.
Shrewd macaques prefer to target items that humans are most likely to
exchange for food, such as electronics, rather than objects that
tourists care less about, such as hairpins or empty camera bags, said Dr
Jean-Baptiste Leca, an associate professor in the psychology department
at the University of Lethbridge in Canada and lead author of the study.
Mobile phones,

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A Special Valentine’s Message On Romantic Love

February 13, 2021

But first some links to related news stories: The first one is Researchers at AAAS Annual Meeting Explore the Science of Kissing.
The following quote gives you an idea of what it is all about:
"Kissing, it turns out, unleashes chemicals that ease stress hormones in
both sexes and encourage bonding in men, though not so much in women." I
guess economists call this "interdependent utility functions." Meaning
that what brings one person pleasure brings brings the other person
pleasure, and vice-versa.The other is Cocoa Prices Create Chocolate Dilemma. (that is from 2009)
The article opens with "Soaring cocoa prices are creating a Valentine’s
Day dilemma for chocolate makers. They don’t want to raise retail
prices when recession-weary consumers are trying to limit their
spending."

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The curious task of economics and the President’s Council of Economic Advisers

February 5, 2021

The Wall Street Journal had an article last week about Princeton professor Cecilia Rouse being nominated to be the chair of Council of Economic Advisers (CEA).  See Cecilia Rouse, Tapped to Be Biden’s Top Economist, Brings Labor-Market Focus: The Princeton dean would be the first Black chair of the Council of Economic Advisers by Paul Kiernan.A passage in that article reminded me of what Nobel prize winning economist F.A. Hayek called "curious task of economics."Here is the passage:"The primary role of the CEA chair is to provide objective economic
analysis to the president. Its staff of Ph.D. economists brief the
president on economic data, write an annual Economic Report of the
President, and participate in policy discussions alongside other
agencies—often seeking to stop ideas

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Zombies might return and fighting them is art as well as science

January 29, 2021

See Zombies Could Stunt the Bank Recovery: Europe’s
lockdown-support programs risk creating the kind of festering bad-debt
problems that damaged its economy after the financial crisis by Rochelle Toplensky of The WSJ. Excerpts:"The region’s generous lockdown-support programs and patchwork of
insolvency laws could create so-called zombie firms—inefficient
companies kept alive by cheap debt. Last month, the European Central
Bank said this remains a risk.""Following both the global financial crisis and the eurozone crisis,
nonviable companies in Europe were kept alive by politicians worried
about job losses and lenders hesitant to acknowledge bad debts. The
zombies lowered markups, net investment and productivity in their
markets as well as inflation in the wider economy, according

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Another Semester Has Started

January 22, 2021

Welcome to any new students. The entries usually have something to do
with a basic economic principle that is related to a recent news story.Here is something I wrote for The Ranger (the school paper of San Antonio College where I used to teach) back in 2011 titled "Why is college so hard?"Students might wonder why college, and SAC in particular, is hard. This
might sound trite, but I think the faculty at SAC want students to
achieve success in life and that means that classes have to be hard if
you are going to learn and understand the concepts which provide a
foundation for that success.I think my own experience as a
community college student over 30 years ago helps me understand this. My
teachers took their subjects seriously and maintained high academic
standards. They got me

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Financial Rewards for College Students Could Help Curb the Pandemic

January 19, 2021

A new study suggests ways of structuring payments to persuade even impulsive students to behave more cautiously
By Seema Jayachandran She is an economics professor at Northwestern University. Excerpts:"There are several ways such programs might work:A
university might announce that each week that students test negative,
they will be paid $50. Once they tested positive, they would no longer
be eligible for rewards.The
rewards could be structured as a one-time payment of $700 at the end of
a 14-week semester if students test negative every week.In
a blend of these two options, students could receive $350 if they
stayed negative for the first half of the term, then another $350 for
staying negative for the second half.Higher
or lower sums might be preferred. The important thing is

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Zombies might return and fighting them is art as well as science

January 18, 2021

See Zombies Could Stunt the Bank Recovery: Europe’s lockdown-support programs risk creating the kind of festering bad-debt problems that damaged its economy after the financial crisis by Rochelle Toplensky of The WSJ. Excerpts:"The region’s generous lockdown-support programs and patchwork of
insolvency laws could create so-called zombie firms—inefficient
companies kept alive by cheap debt. Last month, the European Central
Bank said this remains a risk.""Following both the global financial crisis and the eurozone crisis,
nonviable companies in Europe were kept alive by politicians worried
about job losses and lenders hesitant to acknowledge bad debts. The
zombies lowered markups, net investment and productivity in their
markets as well as inflation in the wider economy, according

Read More »

The CPI increased 1.4% in 2020

January 17, 2021

The 1.4% means that the CPI in December 2020 (260.474) was 1.4% higher than what it was in December 2019 (258.811).The 260.474 means that what cost $100 in 1982 cost $260.47 in December 2020.Now the CPI can go up and down during the course of the year and the Bureau of Labor Statistics calculates it for every month. So if it increased every month but then fell quite a bit in December, it might not look like there was much inflation.They also calculate an average CPI over the twelve months and then compare that to the one for the previous year. That inflation rate for 2020 was 1.2%. Those two figures are usually pretty close to each other, but not always.  In 2008, the Dec.-Dec. method gives a 0.1% inflation rate while the monthly averaging method was 3.8%. In 2009, those numbers were 2.7%

Read More »