Monday, August 30, 2010

Costs, Benefits And Environmentally Friendly Energy

In my first lecture, I usually define what we mean by "rational" in economics. It means "no one intentionally makes themself worse off." Or, a rational act is one where "the benefit is greater than the cost." Of course, the benefit is in the eye of the beholder. If you go to a Radiohead concert, it might bring you alot more benefit than it would bring me. And costs and benefits are not always known. But this is more or less what rational means.

So we should be rational in our energy use. That is where the article Green Energy: Why We're Still Not Using It comes in. Here is an exerpt:

"The total cost to research, build and operate new green energy plants combined with storage and transmission expenses is significantly higher than traditional coal burning plants. According to the U.S. Energy Information Administration, the average cost of solar power is almost four times as much as traditional coal burning electric generation. The costs are difficult to compare due to the widely disparate nature of individual technologies but the net result is that startup costs are steep."

[wind power]" still 50% more expensive than coal-powered electrical plants. Offshore turbines are almost twice as expensive."
There could be some environmental benefits that would change the accounting. Those were not esitmated in the article. But those would have to be very high to tilt the balance toward some of these alternative fuels.

Saturday, August 28, 2010

Cuba Allows Some Market Reforms

See Cuba eases property laws, could open door to golf. In my classes this week, I went over some basics of economics, like the different economic systems, tradition, command and market. I said that there were not very many examples left of countries that used the command economy. North Korea and Cuba are two possibilities.

But now Cuba's government is loosening its grip on economic behavior. Here are the changes:
"Cuba has begun allowing foreign investors to lease government land for up to 99 years, a step toward a future that could be filled with golf courses ringed by luxury villas, beachfront timeshares and vacation homes for well-heeled tourists."
"A measure appearing the following day expanded self-employment, letting Cubans grow and sell small amounts of farm products out of their homes or special kiosks."
These are only small steps, of course. But they are in the right direction.

The article also mentions:
"The law marks the first major expansion of self-employment since Castro said in an address to parliament Aug. 1 that his government would reduce state controls on small businesses and private enterprise — a big deal in a country where about 95 percent of people work for the state.

Cubans already sell fruit, pork, cheese and other items on the sides of highways across the country, fleeing whenever the police happen past. The new measure legalizes such practices by letting Cubans grow whatever they wish and sell it, while bolstering state coffers with new taxes on their earnings."
Update 8-29: Cuba is also no longer going to subsize cigarettes. See No Smoking: Cuba drops cigarettes from ration book. It says:
"A program that provided state-subsidized smokes to Cuban seniors is headed for the ash heap.

The communist government announced Wednesday it is cutting cigarettes from its monthly ration books effective Sept. 1, the latest in a series of small steps toward fully eliminating subsidies for food and other basic items that impoverished islanders depend on.

Cubans 55 and older had been eligible to receive three packs of "strong" cigarettes and a pack of milds -- 80 cigarettes altogether per month -- for 6.50 pesos, or the equivalent of about 30 cents, using their ration books at state-run distribution centers.

The island's lowest-quality cigarettes, the only kinds subsidized, normally cost 7 pesos, or about 33 cents, per pack, while imported or topflight domestic brands can go for $3 or more apiece.

Until the 1990s, all Cubans 18 and older received a monthly allotment of cigarettes, but the loss of billions of dollars in annual subsidies from the collapsed Soviet Union forced officials to scale back subsidized smoking. Now even older smokers are out of luck."

Wednesday, August 25, 2010

Frugal Is The New Sexy

Well, okay, maybe it isn't. But how do you make being careful and responsible with your money into an exciting, if not sexy, personality trait? The article How to Be Frugal and Still Be Asked on Dates discusses the issue. The article opens with:
"Saving may be making a comeback, but it still hasn’t gotten its sexy back, particularly if you’re a man.

Earlier this month, the Commerce Department reported that the personal savings rate in June was a much-improved 6.4 percent and that the number had risen as high as 8.2 percent in the depths of the stock market doldrums in the spring of 2009.

Those who are single may not have been rewarded for their parsimony, though. Now comes some survey data from ING Direct, the people who would like you to save more money in their online savings accounts. In June, the company asked 1,000 people which words would come to mind if someone was fixing them up on a blind date with someone described as frugal.

Just 3.7 percent answered “sexy,” while 15 percent picked “boring” and 27 percent chose “stingy.”"
So the cheapskates among us have their work cut out. But the most interesting thing to me was what went into newspaper personal ads way back in 1860. Here is what one ad says:
"“A young lady, rather good looking, and of good address, desires the acquaintance of a gentleman of wealth (none other need apply), with a view to matrimony.”"
Here is an ad from a man in 1860:
"“The advertiser, a successful young business man of good education, polite manners and agreeable address, having recently amassed a fortune and safely invested the same, wishes to meet with a young lady or widow.""
Do men still need to be wealthy today to meet that special woman? Does more money help? If you are not willing to spend alot on your girl friend hurt a guy?

There is actually a blog about how to save money shopping called Frugal Is The New Sexy!

Then there was this funny cartoon from the Wall Street Journal. It was originally at Pepper...and Salt.