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Cyril Morong: Dangerous Economist

Cyril Morong, who teaches economics at San Antonio College, is the Dangerous Economist. Cyril picks up on some very interesting articles in the news with his own comments. This blog is very easy to read and great for people wanting to see how economic principles appear in everyday news.

Over 40 years, 70% of the population made it into the top 20% of earners for at least one year

See Earnings in the U.S.: A Game of Chutes and Ladders by Jo Craven McGinty of The WSJ. Excerpts: "Over roughly 40 years, 70% of the population made it into the top 20% of earners for at least one year, according to researchers at Cornell University and Washington University in St. Louis. But only about 21% remained there for 10 consecutive years, and even fewer clung to the top rung for a solid decade.“A small group of people persist at the high and low levels,” said Thomas A. Hirschl,...

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Are Farmers Markets An Example Of Perfect Competition?

Perfect competition is one of the four market structures (the others being monopoly, oligopoly and monopolistic competition). It has free entry, meaning nothing stops new firms from coming in, there are many competitors and all selling an identical product. This report from Jodi Helmer of NPR seems to show this.See Why Are So Many Farmers Markets Failing? Because The Market Is Saturated. Excerpt: "When the Nipomo Certified Farmers' Market started in 2005, shoppers were eager to purchase...

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Joseph Schumpeter, Capitalism and Intellectuals

See Socialists, Knowledge of History and Agency. These are letters to the editor of The WSJ in response to an article about socialism by Joseph Epstein. The one below reminded me of a 1992 article by Robert Samuelson in Newsweek. "Joseph Epstein’s “Socialists Don’t Know History” (op-ed, May 30) on the abysmal historical knowledge of young people brings to mind the prophesy of the keenest of economists, Joseph Schumpeter, in 1942 when he said that capitalism would destroy itself by...

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Is there really a shortage of construction workers?

See Behind Deadline: Home Projects In Colorado Suffer From Worker Shortage by KAREN SCHWARTZ of the Associated Press.A shortage means that the price is below the intersection of supply and demand and that the quantity demanded is greater than than the quantity supplied. It does not mean we simply have less of something than we used to. If price were too low, we would expect to see it rise until quantity demanded equals quantity supplied again.This article talks about a shortage of...

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U.S. Job Openings Outnumber Unemployed by Widest Gap Ever

By Sarah Chaney of The WSJ. I've done alot of posts on the relationship between inflation and unemployment. So this article shows the job market is doing well and inflation is low. The inflation rate in 2018 was 1.9%. Over the last 12 months it is 2.0%. See Consumer Price Index Data from 1913 to 2019.Excerpts from the article: "The number of job openings exceeded the number of unemployed Americans by the largest margin on record in April, signaling difficulty for employers to find workers...

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Social media, insurance and asymmetric information

Can a Facebook Post Make Your Insurance Cost More? With insurers likely to add social media to the data they review before issuing policies, it might be wise to post pictures from the gym—but not happy hour by Ellen Byron and Leslie Scism of The WSJ.This reminds me of what economists call "asymmetric information." This is a situation in which the seller knows more about a product than the buyer (sometimes the buyer knows more about something important like how healthy or risky they are as...

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Are business cylcles imbedded in longer cycles called financial cycles?

See Investors, Buy the Dips: The Economic Cycle Isn’t What It Used to Be by Jon Sindreu of The WSJ. Excerpts: "Business cycles have historically happened at intervals of between five and eight years, so the current expansion is indeed an abnormally long one.""these business cycles are themselves contained within longer ones, which economists call “financial cycles.”""Economists have long struggled to separate the two types of cycles. Back in 2003, University of Chicago professor Robert...

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Is the U.S. student loan system broken?

See The Long Road to the Student Debt Crisis: A series of well-intentioned government decisions since the 1960s has left us with today’s out-of-control higher education market by Josh Mitchell of The WSJ.The program was set up in the 1960s and 1970s to get more people into college, with the aim of increasing productivity and incomes. At first, the federal government guaranteed the loans before eventually lending the money.Excerpts: "four in 10 recent college graduates are in jobs that don’t...

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What Chocolate Shortage? Cocoa Prices Steady as Record Output Projected

Supply concerns made cocoa the best-performing commodity of 2018 By Kirk Maltais of The WSJ. This is what we predict in economics, that if sellers anticipate higher prices in the future, they will begin taking steps to increase supply when the higher prices are supposed to arrive. If this is a competitive market, supply will keep increasing until price falls enough so that we move back to an average rate of profit. The article indicates that this happened.Excerpts: "The world appears to...

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Companies and governments are paying people to get healthy, and it works

By Marc Mitchell. He is an Assistant Professor at Western University. Excerpt:  "In the past, the prevailing opinion was that health rewards, like paying people to lose weight, simply do not work. They may stimulate health behaviours in the short term but once removed, people will go back to doing what they were doing before, or worse.By introducing extrinsic rewards you can actually damage (or shift focus from) the important intrinsic motivators that drive long-term change — for...

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