Wednesday , September 22 2021
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Articles by [email protected] (Cyril Morong)

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

5 days ago

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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U.S. Population Growth, an Economic Driver, Grinds to a Halt

12 days ago

Covid-19 pandemic compounds years of birth-rate decline, puts America’s demographic health at riskBy Janet Adamy and Anthony DeBarros of the WSJ. Excerpts:"America’s weak population growth, already held back by a decadelong
fertility slump, is dropping closer to zero because of the Covid-19
pandemic. In half of all states last year, more people died than
were born, up from five states in 2019. Early estimates show the total
U.S. population grew 0.35% for the year ended July 1, 2020, the lowest
ever documented, and growth is expected to remain near flat this year.""What concerns demographers is that in the past, when a weak economy
drove down births, it was often a temporary phenomenon that reversed
once the economy bounced back.""Yet after births peaked in 2007, they never

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Another Semester Has Started

27 days ago

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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Is Storytelling Important For The Economy?

August 18, 2021

"It’s the economy, stupid"-James Carville, strategist for Bill Clinton in the 1992 presidential campaign"The human mind is a story processor, not a logic processor."-from the book The Righteous Mind: Why Good People Are Divided by Politics and Religion by social psychologist Jonathan Haidt.Wouldn’t it be great if there was a blog that looked at the intersection
of the economy and storytelling or mythology? Well, there is! See Dollars and Dragons.Here is one example of how storytelling and economics come together. See Giving Your Brand Primal Power Through Storytelling by Nick Nanton & JW Dicks. Excerpt:
"At our agency,
we make what we call “story-selling” an essential component of our
branding efforts with our clients. We’ve seen firsthand that, when you
create the proper story,

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The ariline industry looks competitive

August 16, 2021

See Air Travel Prices Have Barely Budged in 25 Years. (It’s True.) by Scott McCartney of The WSJ. Excerpts: "In the first quarter of 1996, the average domestic airline ticket
cost $284, according to the Transportation Department’s Bureau of
Transportation Statistics. Twenty-five years later—the first quarter of
this year—the average domestic ticket cost? $260.

Adjusted for inflation, air travel in the U.S. has gotten much
cheaper. That 1996 ticket in today’s dollars would be $482""But history suggests that inflation in airline tickets ends quicker than
your last vacation. Over time, prices have fallen, even after the
industry consolidated to four giant airlines commanding a large share of
the marketplace.Competition is a constant in the airline business. If prices in

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When Money Is No Object

August 15, 2021

Sure, using a credit card is easy, but paying with invisible money makes saving harder and spending easier. People behaved differently when they saved—and spent—cold, hard cash. By Jason Zweig of The WSJ. Excerpt:"Nowadays, zooming through with digital toll technology like E-ZPass,
you may have no idea how much you just paid. Once money is
dematerialized, using it doesn’t feel like spending.

“As we move away from paying with those gross motor movements,”
says Kathleen Vohs, a marketing professor at the University of
Minnesota, “we lose that sense of its being an exchange, the gravity of
using money.”

Dozens of studies have shown that consumers using credit cards rather than cash are less likely to remember how much they spent, take less time deciding what to

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Does drinking after work work? (that is, does it lead to higher salaries)

August 13, 2021

By Paul J. Zak. Excerpt:"Employees
who drink after work have higher salaries.  Drinkers make 20% more than
abstainers–an huge effect.  This effect is thought to come from the
social connections one makes by socializing with work colleagues.  The
original research was based on a survey of U.S. adults. 
But, is it really true that hanging out with your work buds will get you a salary bump?"Dr. Zak did a controlled study but concluded there is no causation. Other posts about economist Paul Zak:Adam Smith vs. Bart Simpson. Great New Book On Neuroscience By Economist Paul Zak What Do Wall Street Traders Need Just The Right Amount Of? Can The Way You Tell A Story Affect How Willing People Will Be To Donate Money To Charity? Adam Smith, Marriage Counselor

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U.S. Population Growth, an Economic Driver, Grinds to a Halt

August 12, 2021

Covid-19 pandemic compounds years of birth-rate decline, puts America’s demographic health at riskBy Janet Adamy and Anthony DeBarros of the WSJ. Excerpts:"America’s weak population growth, already held back by a decadelong
fertility slump, is dropping closer to zero because of the Covid-19
pandemic. In half of all states last year, more people died than
were born, up from five states in 2019. Early estimates show the total
U.S. population grew 0.35% for the year ended July 1, 2020, the lowest
ever documented, and growth is expected to remain near flat this year.""What concerns demographers is that in the past, when a weak economy
drove down births, it was often a temporary phenomenon that reversed
once the economy bounced back.""Yet after births peaked in 2007, they never

Read More »

COVID-19’s Economic Impact around the World

August 11, 2021

By Juan M. Sánchez. He is an economist and assistant vice president at the Federal Reserve Bank of St. Louis. He presents a good overview with informative charts. Excerpt:"KEY TAKEAWAYS

Although the COVID-19 pandemic affected all parts of the world
in 2020, low-, middle- and high-income nations were hit in different
ways.In low-income countries, average excess mortality reached 34%,
followed by 14% in middle-income countries and 10% in high-income ones.However, middle-income nations experienced the largest hit to
their gross domestic product (GDP) growth, followed by high-income
nations."

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Does the U.S. have a firefighter shortage?

August 10, 2021

There are several fires that have been in the news lately. The Forest service has more than 100 openings for firefighters that it does not seem to be able to fill.Normally, in a shortage, the price (in this case wages) would get pushed up until there are no more openings. But the government does not work by market forces. Someone has to make a policy decision to raise wages. If that does not happen, the shortage will persist.The article also mentions how potential firefighters can get better pay and benefits elsewhere. That is something I talk about when I cover labor markets. How many people offer their services in one market depends partly on how much they can get paid somewhere else.See As the Dixie Fire and Others Burn, the U.S. Struggles to Find Enough Firefighters: Low pay and a

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Strong U.S. Recovery Aids Growth in Canada, Mexico

August 5, 2021

Americans are spending more on imports and travel, giving neighboring countries a boost By Kim Mackrael and Anthony Harrup of The WSJ. Excerpts:"The U.S. economy is so strong that its neighbors, too, are getting a boost. Businesses and consumers are buying more products from Canada and Mexico, and Americans flush with savings are going back to traveling
and sending more money across the southern border, helping to bolster
two countries whose economies were hit hard by Covid-19 infections and
lockdowns.Central bank officials have raised their forecasts for economic growth this year to 6% for Mexico and 6.5% in Canada, in part because of the strong U.S. rebound. The $1.9 trillion U.S. stimulus plan
enacted in March is expected to increase each country’s output by
between half a

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Target to pay 100% of college tuition and textbooks in bid to attract workers

August 5, 2021

By Melissa Repko of CNBC. Excerpt:"Target said it plans to invest $200 million in the education program
over the next four years. It developed the program with Guild Education,
a company that manages corporate education assistance programs."That sounds like education brokers that came up in a post from 2019, which I put below. Of course, with competition for workers and some workers still looking for jobs due to Covid and getting unemployment insurance, firms have to find new ways to get and keep them. But this is not totally new and there may be some interesting economics behind this.Here is the post from 2019 "Some Companies Offer To Pay All College Expenses For Their Workers."See Now Hiring, With Attractive New Perk: Free College Degree: Companies say benefits of a happy,

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San Antonio pipes in water from 150 miles away. Does anyone else pay for it?

August 3, 2021

See San Antonio built a pipeline to rural Central Texas to increase its water supply. Now local landowners say their wells are running dry. by Erin Douglas of The Texas Tribune. It’s called the Vista Ridge pipeline. It pumps water to San Antonio from other aquifers. It seems that it lowers those water levels, making it harder for residents in those areas to pump water. They have to lower their pumps or dig deeper wells, which is costly. In some cases they are compensated. In others they are not. Excerpts:"The pipeline helped conserve the sensitive Edwards Aquifer, upon which San Antonio has historically depended for water.But
less than a year after the pipeline began to suck water from a
different aquifer in Central Texas for delivery to 1.8 million people,
some residents in that rural

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Do states with income taxes put their sports teams at a disadvantage?

August 2, 2021

Some research suggests that. See Another Terrible Thing About Taxes by Erik Hembre. He is an assistant professor of economics at the University of Illinois at Chicago.Suppose Minnesota has a 10% income tax while Texas has no income tax ("Minnesota has one of the highest top marginal income tax rates for any state at 9.85 percent"). If a Texas team offers a player a salary of $1,000,000, how much would a Minnesota team have to offer to match that?$1,111,111. Why? Because the player will have to pay 10% of his income in taxes. What is 10% of $1,111,111? $111,111.Then $1,111,111 – $111,111 =  $1,000,000.That is what the player would make if played for the Texas team. So the Minnesota team has to actually pay more to get the same talent. Professor Hembre shows that teams in states with income

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After $250k in political support from Apache Corp., Texas Supreme Court does a rare double take

August 2, 2021

By Eric Dexheimer of The Houston Chronicle. Excerpts:"Last fall, it seemed that Apache Corp., the giant Houston oil company, had hit a dead end in a long-running legal battle.

A paralegal named Cathryn Davis claimed the company fired
her in 2013 for complaining about age and gender discrimination. A jury
agreed, awarding $900,000 to her and her attorneys; an appeals court
upheld the judgment. The company asked the Texas Supreme Court to review
the case; but on Oct. 2, it declined.

Litigants can ask the state’s highest civil court to reconsider such decisions, but it’s a long shot; nearly 98 percent of the time,
it refuses, according to research by the Texas Bar. Nevertheless,
Apache notified the Supreme Court it intended to ask for a

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Dilbert explains comparative advantage

July 31, 2021

After the comic, I explain a bit about comparative advantage (a post from 2018).I think it means the not smart ones have a lower opportunity cost of their time, which gives them a comparative advantage.Now the post from 2018:  Yesterday I posted a link to the new PBS series "First Civilizations"
which had an interesting episode on trade. Last year was the 200th
anniversary of David Ricardo’s important idea called "comparative
advantage." It explains how two nations can benefit from trade even if
one country seems to be better at making all products than the other.The Washington Post even had an article about it last year. It’s the 200th anniversary of the most counterintuitive idea in the social sciences by Daniel W. Drezner, a professor of international politics at the Fletcher

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Do looks matter for an academic career in economics?

July 30, 2021

From Marginal Revolution.
"It seems they do:
We document appearance effects in the economics
profession. Using unique data on PhD graduates from ten of the top
economics departments in the United States we test whether more
attractive individuals are more likely to succeed. We find robust
evidence that appearance has predictive power for job outcomes and
research productivity. Attractive individuals are more likely to study
at higher ranked PhD institutions and are more likely to be placed at
higher-ranking academic institutions not only for their first job, but
also for jobs as many as 15 years after their graduation, even when we
control for the ranking of PhD institution and first job. Appearance
also predicts the success of research output: while it does not predict
the

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The vaccine lottery is a worthwhile investment

July 29, 2021

From Marginal Revolution.
"Conditional cash lotteries (CCLs) provide people with
opportunities to win monetary prizes only if they make specific
behavioral changes. We conduct a case study of Ohio’s Vax-A-Million
initiative, the first CCL targeting COVID-19 vaccinations. Forming a
synthetic control from other states, we find that Ohio’s incentive
scheme increases the vaccinated share of state population by 1.5 percent
(0.7 pp), costing sixty-eight dollars per person persuaded to
vaccinate. We show this causes significant reductions in COVID-19,
preventing at least one infection for every six vaccinations that the
lottery had successfully encouraged. These findings are promising for
similar CCL public health initiatives.
That is from a new paper by Andrew Barber and Jeremy

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Each sex tended to report more demanding preferences for attractiveness and resources where the opposite sex was abundant, compared to where the opposite sex was scarce

July 28, 2021

See Sex differences in human mate preferences vary across sex ratios from The Proceedings of The Royal Society."AbstractA
wide range of literature connects sex ratio and mating behaviours in
non-human animals. However, research examining sex ratio and human
mating is limited in scope. Prior work has examined the relationship
between sex ratio and desire for short-term, uncommitted mating as well
as outcomes such as marriage and divorce rates. Less empirical attention
has been directed towards the relationship between sex ratio and mate
preferences, despite the importance of mate preferences in the human
mating literature. To address this gap, we examined sex ratio’s
relationship to the variation in preferences for attractiveness,
resources, kindness, intelligence and health in a

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Texas power companies seek to shift storm prep costs onto consumers

July 27, 2021

By Eric Dexheimer of The Houston Chronicle. Excerpts:"Thanks to skyrocketing energy costs during the February freeze that
paralyzed the state and killed hundreds of people, Texans will be paying billions of dollars in higher gas and electric bills for decades.

Now, energy companies are asking to pass on to ratepayers millions, even billions in additional storm-related costs.

Last month, Gov. Greg Abbott signed into law new rules
intended to strengthen an energy grid that failed Texans during a week
of subfreezing temperatures. “Bottom line is that everything that needed
to be done was done to fix the power grid in Texas,” he said at the time.

A major component of Senate Bill 3 was a requirement that
electric companies

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Many Jobs Lost During the Coronavirus Pandemic Just Aren’t Coming Back

July 26, 2021

Companies see automation and other labor-saving steps as a way to emerge from the health crisis with a permanently smaller workforce  By Lauren Weber of The WSJ. There are different types of unemployment (seasonal, frictional, structural and cyclical). Structural-unemployment
caused by a mismatch between the skills of job seekers and the requirements of
available jobs.

One example of this is when you are replaced by a machine.
Another
example is when there is a fall in demand for your product, so you get laid
off, like with typewriters since people now use computers. A third example is
geographical, when the jobs are not in your region of the country. Excerpts from the WSJ article:"Job openings are at a record high,
leaving the impression that employers are hiring like never before.

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How to Motivate Your Teen to Be a Safer Driver

July 26, 2021

Showing teenage drivers how to avoid being distracted behind the wheel works better than nagging them to put their phones away, research finds By Julie Jargon of The WSJ. Excerpts:"Through apps from insurers and other providers, parents can track their teens on the road and see how well they’re driving.""An age-old parenting quandary is whether and when to use positive
reinforcement or punishment with children. When it comes to teen
driving, the stakes for choosing the right approach are high. Do you
take away teens’ driving privileges if the tracking apps show them to be
speeding or using their phones too much while driving, or do you focus
on what they’re doing right?""Summer is the most dangerous time of year for auto accidents, and new
teen drivers are three times as likely as

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This Summer, Jobs Come With a Hefty Signing Bonus

July 24, 2021

As companies grow more desperate to fill open roles, some dangle incentives worth $1,000 or more By Patrick Thomas of The WSJ. Excerpts:"Signing bonuses are usually reserved for professional athletes and a privileged few white-collar professionals. Not this summer.

As U.S. employers’ search for hires increases in
urgency—especially in the manufacturing, logistics, healthcare and
food-service industries—truck drivers, hotel cleaners and warehouse
workers are being offered signing bonuses of hundreds and even thousands
of dollars.

Nearly 20% of all jobs posted on job search site

ZipRecruiter

in June offer a signing bonus, up from 2% of jobs advertised on
the job search site in March. The states with the highest shares of job

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Economic benefits from mega-events like the Olympics are often overstated

July 23, 2021

See Are the Olympics ever worth it for the host city? by Tim Hyde of the American Economic Association. Excerpts:
"A study appearing in the Spring issue of the Journal of Economic Perspectives breaks
down the costs and benefits of hosting the Olympic Games and explains
why some of the perceived economic blessings of the Olympics are mostly
wishful thinking. 
In Going for the Gold: The Economics of the Olympics (PDF), authors Robert Baade and Victor Matheson
consult estimates from academic, public, and media sources on the costs
and benefits of hosting the Games. As with any mega-event, costs and
benefits can be hard to estimate, but the general story is clear: for
most modern Olympics, the costs have far outstripped the benefits.The direct costs of hosting the Games
are probably

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Montana Boomtown Jumps to No. 1 on WSJ/Realtor.com Housing Market Index

July 22, 2021

Rankings show how the housing boom has ignited homebuying in smaller to midsize cities around the U.S By Nicole Friedman of The WSJ. This is a follow up to yesterday’s post about the indifference principle. This shows that people will move to what they think is a better city (which could make costs higher there, and it ends up not being any better). People are moving to Billings, Montana and housing prices are rising much faster there than across the country. It probably won’t be long until people will be indifferent to moving there or staying put since it is getting more expensive and that will eat up any extra benefits it might have. Excerpts:"Billings, Mont., is the new No. 1 on The Wall Street Journal/Realtor.com Emerging Housing Markets Index, boosted by its affordability and appeal

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The Indifference Principle Comes To San Antonio

July 21, 2021

The economist Steven Landsburg gave this definition for the "Indifference Principle." "Except when people have unusual tastes or unusual talents, all activities must be equally desirable"  (from his book "The Armchair Economist").Two recent articles touch on this:12 San Antonio companies that have been named best places to work each of the last 5 years: The San Antonio Business Journal has crowned these local employers multiple times from KSAT. San Antonio dramatically drops on U.S. News & World Report’s best places to live by Sarah Martinez of mysanantonio.com. (We fell to No. 75, a 34-point drop from 2020 when San Antonio ranked No. 41)For the first one on best places to work, the article says:"Here are a few characteristics that come across multiple times across many of the repeat best

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The Covid recession lasted two months

July 20, 2021

See Business Cycle Dating Committee Announcement July 19, 2021 from NBER. Excerpts:"The Business Cycle Dating Committee of the National Bureau of
Economic Research maintains a chronology of the peaks and troughs of
US business cycles. The committee has determined that a trough in
monthly economic activity occurred in the US economy in April 2020. The
previous peak in economic activity occurred in February 2020. The
recession lasted two months, which makes it the shortest US recession on
record.

The NBER chronology does not identify the precise moment that the
economy entered a recession or expansion. In the NBER’s convention for
measuring the duration of a recession, the first month of the recession
is the month following the peak and the last month is the month of the
trough.

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When the U.S. Gave Up Gold

July 19, 2021

Fifty years ago, President Nixon turned the dollar into a fiat currency, overturning the basic monetary arrangements of the postwar era By Jeffrey E. Garten. Mr. Garten is dean emeritus of the Yale School of Management. He has written a book called “Three Days at Camp David: How a Secret Meeting in 1971 Transformed the Global Economy.” Excerpts:"Fifty years ago next month, at a secret weekend meeting at Camp David,
President Richard

Nixon

and his top economic advisors decided to take the U.S. off the
gold standard. The dramatic move, announced by the president upon his
return to the White House on August 15, 1971, suspended the most
fundamental rules of the international monetary system, affecting the
prices of all products, commodities and services in

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Inflation Threat May Be Boosted by Changes in Globalization, Demographics and E-Commerce

July 19, 2021

Economists see shifts in these long-term trends putting upward pressure on prices By Gwynn Guilford of The WSJ. Excerpts:"Global trade more than doubled from 27% of world gross domestic product
in 1970 to 60% in 2008, buoyed by falling barriers to trade and
investment. In the U.S., it soared from 11% of GDP in 1970 to 31% in
2011. Global competition compelled companies to build elaborate
international supply chains, sourcing materials and products in the
cheapest possible place. They were aided by access to cheap labor, as
the fall of the Berlin Wall and China’s shift toward a market economy in
the 1980s and 1990s more than doubled the workforce integrated with the
global economy.""U.S. “core” goods prices, which strip out volatile energy and food
prices, rose just 18% between

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‘Too big to fail’: San Antonio’s fledgling job training program under scrutiny

July 17, 2021

By Joshua Fechter of The San Antonio Express News. Excerpts:"As San Antonio’s job training program lags and officials try to suss
out the details of its next phase, a key backer worries the initiative
is in trouble.

COPS/Metro, a grassroots advocacy group, aggressively
lobbied city leaders to create an emergency program to help some of the
thousands of people thrown out of work amid the pandemic get the skills
they needed to land higher-paying jobs.

The group’s leaders later threw their weight behind Mayor
Ron Nirenberg when he asked voters in November to use sales tax dollars
to create an expanded program.But months after the idea proved victorious at the polls, members of
COPS/Metro have grown increasingly disillusioned with how the city’s

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