Wednesday, October 31, 2012

Before You Criticize Free Trade, You Should Read Douglas Irwin's Book Free Trade Under Fire

Here is the the Amazon link:

Free Trade Under Fire: Third Edition

I think it does a good job of debunking and refuting many of the mis-conceptions about trade. Irwin is an economics professor at Darmouth Univiersity who has published many book. Here is the Aamzon description:

"Growing international trade has helped lift living standards around the world, and yet free trade is always under attack. Critics complain that trade forces painful economic adjustments, such as plant closings and layoffs of workers, and charge that the World Trade Organization serves the interests of corporations, undercuts domestic environmental regulations, and erodes America's sovereignty. Why has global trade become so controversial? Does free trade deserve its bad reputation?
In Free Trade under Fire, Douglas Irwin sweeps aside the misconceptions that litter the debate over trade and gives the reader a clear understanding of the issues involved. This third edition has been thoroughly updated to include the latest developments in world trade--including the practice of off-shoring services, the impact of trade on wages, and the implications of trade with China-based on the latest research."
My own review is below after a letter to the editor that I had published in the Wall Street Journal about NAFTA.

A student in my class said something like "free trade works in theory, but not in practice." I think it actually works pretty well in practice, as Irwin shows in his book. The Nobel prize winning economist Paul Krugman wrote a great article explaining how you need theory to understand what happens in practice. See The Accidental Theorist.

Now my letter and review. My letter is about how wages went up and unemployment went down in the years immediately after NAFTA was went into effect.

This was published for the most part as a letter to the editor to The Wall Street Journal on Wed., May 4, 2005, page A19. Links to all of the data sources from the Department of Labor are listed at the end of the article.

In the Sunday April 10 edition of the San Antonio Express-News, both Carlos Guerra and Stefanie Collins warned of the dangers of the Dominican Republic-Central American Free Trade Agreement (DR-CAFTA). Any trade agreement is likely to be complex, with many clauses and stipulations worked out over the negotiating table. Perhaps there are dangers to workers and the environment that should be discussed. But I don’t want to defend DR-CAFTA here, since Henry Cisneros had already explained its good points the previous Sunday.

I want to address the job loss issue that both Mr. Guerra and Ms. Collins mentioned in their critiques of DR-CAFTA. They both mentioned large job losses, especially in manufacturing, that resulted from NAFTA, which went into effect in 1994. Mr. Guerra wrote, “more than 2 million manufacturing jobs vanished, most moving to Mexico…” Ms. Collins was more specific (although she mentioned a smaller figure): “Since NAFTA was signed in 1993, the U.S. trade deficit with Canada and Mexico has risen and led to the loss of 879,280 jobs through 2002. Most were high-paying manufacturing jobs.”

Was this the case? Did NAFTA cause the U.S. to lose so many jobs, especially high-paying manufacturing jobs? Probably not. I say probably, since causality, in any social science (economics included), is difficult to prove since so many factors change so quickly in the real world. But if many high-paying manufacturing jobs were lost, it took many years until after NAFTA went into effect before they were.

Let’s start with jobs in general. The U.S. unemployment rate was 6.9% in 1993, the year NAFTA was agreed to. It was 6.1% in 1994. The rate fell steadily until reaching 4.0% in the year 2000. Even in 2002, the year after we had a recession, the rate was 5.8%, lower than the year NAFTA went into effect.

But what about manufacturing jobs? We had just about 17 million in 1994. It actually rose to 17.56 million in 1998 and was at 17.26 in 2000 (still higher than in 1994 the year NAFTA went into effect). Then we had a recession in 2001 and since then the number of manufacturing jobs has fallen quite a bit, down to 14.3 million. So that is a loss of nearly 3 million since 2000, which might be due to the recession. If it were due to NAFTA, then why did it take so long for the loss to happen?

But what about wages? Ms. Collins mentioned that we had lost many high-paying jobs. But real hourly wages have risen since 1994 for all workers. For all workers, hourly wages rose 38.4% while the Consumer Price Index (CPI) just rose 27.1%, hence the real gain. For manufacturing jobs, hourly wages also rose more than prices, with a 34.1% gain. But a pre-NAFTA comparison is in order. From 1984-1994, hourly wages for all workers rose 33.5%, while the CPI rose 42.2%, indicating a fall in real wages. The same happened for manufacturing jobs with hourly wages rising only 33%, well under the rise in prices. So it looks like workers did better in the years after NAFTA went into effect than before.

Economists generally like trade since it allows each nation to specialize in the goods it can produce most efficiently. The increased output can be traded to other nations for their increased output. In that case, jobs move from one industry to another. For example, although we lost manufacturing jobs, we gained about 2 million construction jobs from 1994-2004, which paid well. In 2004, the average hourly wage for construction workers was $19.23. Construction wages also showed real gains from 1994-2004 while showing losses in the 1984-94 pre-NAFTA period.

So my educated guess is that NAFTA caused no significant job loss or wage loss. We probably should not be against DR-CAFTA based on the job impact of NAFTA. I used data from various U. S. Department of Labor websites. Feel free to email me about these sources.

Book Review

Free Trade Under Fire: Second Edition
By Douglas A. Irwin
Princeton University Press, $19.95

“No nation was ever ruined by trade,” said Ben Franklin. Simply put, but in addition to Franklin, the case for free trade has an impressive intellectual lineage that includes supporters such as Montesquieu, Adam Smith, David Ricardo and John Stuart Mill. Many of their theories and observations about trade have been verified by modern statistical and economic analysis. This is all covered Irwin’s book.

Irwin, who shows that many popular beliefs about trade are wrong, is an economics professor at Dartmouth University. He has published a large number of articles on trade in peer-reviewed journals, including several in the American Economic Review. But he also taps the research of many other noted economists like Paul Krugman and Jagdish Bhagwati.

What is good about trade? It increases specialization in each nation which leads to greater efficiency and productivity which in turn leads to greater incomes. Consumers can buy a greater variety of goods, not just more goods. Nations that opened up to trade have generally taken advantage of these forces.

When nations close themselves to trade, as the U. S. did in 1807, the economy suffers (the embargo was lifted after about a year since everyone knew it was causing serious economic damage in terms of higher prices and lower incomes).

What popular beliefs about trade are wrong? Trade does not necessarily hurt the environment. Pollution often results from non-trade reasons. Sometimes blocking trade hurts the environment, since doing so depresses incomes and in the long run, higher incomes mean more resources to clean the environment.

In some countries that block agricultural imports, farming expands into ecologically sensitive areas while increasing the use of pesticides and fertilizers (which happens less in nations that are better suited to farming).

Developing countries that embraced free trade (like China and India) have generally done better than those who have not. Workers in third world countries are often helped by foreign investment by multi-national companies.

Imports and rising trade deficits don’t necessarily hurt wages (which are greatly affected by productivity growth) or raise unemployment in the United States (and if we try to protect domestic jobs with higher tariffs, foreign countries earn fewer dollars so they buy fewer U.S. goods, which reduces jobs here). Irwin points out, as does Paul Krugman, that if unemployment rates really do rise due to trade agreements, the U.S. government can use the appropriate macroeconomic policies to increase aggregate demand, thus raising employment.

But jobs are not usually lost, since exports and imports generally increase and decrease together (and when the import to export ratio rises it is usually because oil prices have risen, not because we are being flooded with cheap imports). In fact, protectionism is rarely beneficial. Protecting jobs can be expensive. It costs consumers $140,000 a year to preserve each domestic textile job since tariffs raise prices.

The book contains many interesting tidbits. Many fewer American workers are exposed to international competition now than in 1960. The United States runs surpluses in the trade of services, even computer services. The opening of McDonald’s restaurants in Hong Kong in the 1970s forced other restaurants to keep their bathrooms clean (which were filthy before).

Dirty industries don’t migrate to third world countries. Tariffs on textiles and apparel are like a regressive tax, hurting low-income groups the most through higher prices. Most of what the United States imports are intermediate goods that are used to produce other goods (if we raise tariffs we would directly hurt American companies that need these resources).
A very small percentage (like 2-3%) of jobs lost each year are lost due to imports or outsourcing. The share of the GDP made up by manufacturing has changed little since 1970, so that sector is not in decline. Organizations like Oxfam are beginning to see the benefits of trade. Dumping of low price imports into the United States causes little damage.

In some cases he perhaps goes into too much detail. A few theoretical aspects of trade could have been better explained. But there is so much good material in this book reading only part of it is valuable. He also gives a fair presentation of the arguments against free trade.

Irwin’s knowledge and understanding of the legal, political and historical aspects of trade and trade agreements is as impressive as his economic knowledge. But, as he notes, “free trade is not a magic bullet” for prosperity. What is needed is “Stable macroeconomic policies, the rule of law, and the protection of property rights that enable the market mechanism to function properly [which] are preconditions for reaping the full benefits of international trade.” With issues like Dominican Republic-Central America Free Trade Agreement (DR-CAFTA) on the horizon, this book is timely and important.

Sunday, October 28, 2012

You Can Make How Much Just For Passing A Drug Test?

See Regulator says pipeline fight raises issues for lawmakers. Excerpt:
"[Barry] Smitherman, whose agency regulates the oil and gas industry in Texas, spoke at a daylong energy conference hosted by the Greater Houston Partnership, offering an unabashed defense of fossil fuels and the shale oil and gas renaissance.

"I've always heard that solar panels are only two years away from parity with fossil fuels," he said. "The problem is, fossil fuels don't stand still either."

Smitherman, a former Harris County prosecutor and former chairman of the Texas Public Utility Commission, said he had never been to Midland before he was appointed to the Railroad Commission in 2011.

Now, he said, it is once again the epicenter of the state's oil boom, with 20 percent of the nation's oil and gas produced in the Permian Basin.

"If you can pass a drug test, you can drive a truck and make $80,000 a year in Midland," he said.

But the Eagle Ford Shale in South Texas is "the hottest play in America," he said, with some experts predicting its reserves may hold more crude oil than any find in U.S. history."

Friday, October 26, 2012

Wow, The World Series Sure Is Expensive-It Costs $140 . . . Just To Park!

See Better bring a lot when parking at World Series. Excerpt:
"The San Francisco Giants have been among the industry leaders in "dynamic pricing" of tickets, basing certain games' ticket values on market forces. Across the street from AT&T Park, a valet parking stand has certainly taken that concept to a higher level for the World Series. At MoMo's, a restaurant at 2nd and King streets near the ballpark's entrance, valet prices reached what season-ticket holders said was a new high -- $90 for a compact car, $100 for a standard size and $130 for a large truck or SUV. "It is gouging," said John Byun of Los Angeles, moments after forking over $140 (a hidden $10 fee not included on the sign) to park his Lexus SUV. "But it's the World Series. Whatever the price is, you have to pay."
A World Series game will probably have the greatest demand of any games a team plays in a year. But if the number of parking spots is fixed, the price will naturally rise alot. Now maybe people could open up their driveways for fans to park in, but I don't know the neighborhood and there may not be any driveways available. And city zoning ordinances could prohihit that kind of thing. So it could be impossible for the quantity supplied of parking slots to increase.

If the city outlawed higher prices than normal for such events, then they would go to whomever shows up first. People would show up several hours ahead of time and then have to find something to do. Maybe the ball park might not even be opened yet. Some people might have to leave work even earlier than they planned. So it could result in some inefficiencies.

Wednesday, October 24, 2012

A Good Spanish Blog On Economics By Noé Hernández Cortez

Noé Hernández Cortez is a professor at Universidad del Valle de México, Campus Coyoacá. Here is the link to his blog: Noehernandezcortez's Blog.

Sunday, October 21, 2012

Philosophy Professor Says We Should Let People Sell Their Vote

No, kidding, really. See The argument for vote buying by James Stacey Taylor, an associate professor of philosophy at the College of New Jersey. I hate it when philosophers work my side of the street. Oh, well, Adam Smith was a philosopher. At least Taylor uses economics jargon like externalities. Excerpts:
"Of course, there are objections to this vote-buying plan — you’re probably thinking of some right now.

One common argument is that, if vote-buying were allowed, elections would always be won by the wealthiest candidate, rather than the person with the best policies.

Another objection is that vote-buying would lead to the disenfranchisement of the poor, because they would be most likely to sell their votes and thus would lose their political voice.

And another objection is that allowing vote-buying would lead to what economists call negative externalities — bad effects that will occur for people who don’t participate in the vote-trading.
They’re all reasonable arguments — but none shows that a market in votes should be outlawed.

For starters, allowing vote-buying would not result in public offices going to the highest bidder. Some people would still refuse to sell their vote, giving it away just as they do now — and not necessarily to the wealthiest candidate who offers them the best deal.

There’s evidence all around us: Consider low-income Republicans who vote for candidates who will shrink entitlement programs; or consider wealthy Democrats who votes for candidates who will raise their taxes.

Political ideologies transcend straight cost-benefit calculations, which is why we can be sure that people with the freedom to sell their votes would not necessarily offer them to the highest bidder.

Allowing a market in votes also would not disenfranchise the poor: Candidates would compete for their votes, just as they do now. Currently, they can legally offer to enrich the poor via government policies.

But why compete only on policies? Since poor voters decide which “bundle” of policies they prefer, why shouldn’t they be allowed to choose from different bundles of policies and prices in a market for votes — especially since this will give them the immediate benefit of the price of their vote with money that hasn’t been plundered from taxpayers?

The last objection — that a politician could buy his way into office and favor some over others — has merit. But it also happens already."

Friday, October 19, 2012

Is College Still A Good Investment?

See Regardless of the Cost, College Still Matters by Michael Greenstone and Adam Looney of the Brookings Institution. Excerpts:
"In most respects, a college degree has never been more valuable. As highlighted in a recent Hamilton Project piece, recent college graduates earn more money and have an easier time finding employment than their peers who only have a high school diploma. What may be less intuitive is that these gaps have been growing in recent years. ..., a young college graduate earned about $4,000 more per year in the 1980s, adjusting for inflation, than someone of the same age who did not attend college (averaged across the entire population, not just those in the workforce). Over the last three decades, that figure has climbed to $12,000 per year.
Differences in employment rates between college graduates and non-graduates have not demonstrated as clear of a trend over this period, with one key exception. In recent years—particularly in the aftermath of the Great Recession—college has become an increasingly important determinant of one’s employment status. Today, a college graduate is almost 20 percentage points more likely to be employed than someone with only a high school diploma. This “employment gap” between college and high school graduates is the largest in our nation’s history."
"While the evidence is clear about the lifelong value of more education, skeptics are increasingly pointing to rising tuition costs to claim that college is not as sound of an investment as it once was. And it is true that tuition has increased significantly over the past few decades. In 1980, it cost an average of about $56,000 (adjusting for inflation) to attend a university for four years. This figure includes tuition, fees, and the “opportunity cost,” or income one foregoes to attend school instead of holding a job. (This figure excludes room and board: one must eat and sleep whether she is in college or not.) In 2010, four years of college cost more than $82,000, a nearly 50 percent increase over that 30-year period.
This increase in tuition is based on calculations from the National Center for Education Statistics but it may overstate the rise in the costs of college. First, this rise in tuition does not account for recent increases in financial aid. Thus, while the sticker price of college may have gone up, it is unclear to what extent the cost to students and their families has increased. Indeed, according to the College Board, the actual cost of a four-year degree has remained relatively constant over the last 15 years.

Regardless of the magnitude of the exact increase in tuition, a sole focus on the cost of college is misleading because it only tells half of the story. Specifically, the monetary benefits of a college degree have increased dramatically over the last few decades. An individual who entered college in 1980 could expect to earn about $260,000 more over the course of her life compared to someone who received only a high school diploma. In contrast, for someone starting college in 2010, the expected lifetime increase in earnings relative to a high school graduate was more than $450,000. These estimates are adjusted both for inflation and the fact that most of this additional income will come much later in a graduate’s life, and the calculations are described in more detail here.

Even if we assume that all students actually pay tuition at the published rates, the bottom line is this: while college may be 50 percent more expensive now than it was 30 years ago, the increase to lifetime earnings that a college degree brings is 75 percent higher. In short, the cost of college is growing, but the benefits of college—and, by extension, the cost of not going to college—are growing even faster."

Wednesday, October 17, 2012

Is Storytelling Important For The Economy?

"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, you’ve done most of the heavy lifting required to build a successful brand.

The question, though, is why--why do stories have such “primal power” when it comes to influencing an audience?

It turns out there’s a perfectly good scientific explanation: Stories affect us on both on an incredibly deep intellectual and emotional level that we are just beginning to understand.

That quest began when scientists discovered that fictional stories affected the same region of the brain that reacts when we ourselves are engaged in real-life drama. Stories create a bonding empathy which causes us to strongly identify with the made-up protagonist, as if we were, in fact, that person. In other words, stories have such impact because our brains actually get a little mixed up as to what’s real and what’s not."
There is also a great book out there called The Storytelling Animal: How Stories Make Us Human by Jonathan Gottschall. Here is the review I wrote at Amazon:

"If you liked "The Moral Molecule" by Paul Zak, "The Righteous Mind" by Jonathan Haidt or "The Power of Myth" by Joseph Campbell, you will probably like this book, too. It would be worthwhile if only for the anecdotes. The explanation about how a scientist proved that cats dream. Or that going to an opera greatly influenced Hitler. You want to keep reading. You never grow tired of it. How stories are a deeply inherent part of our nature is entertainingly explored. Stories affect business and economics because CEOs and brands need to tell a story. The role that evolution played in making stories important is explained. His theories and conclusions are supported by science. But it is still enjoyable. Gottschall himself is a good story teller. I love the line about stories being the flight simulators for life. The moral and socials role of stories are also explored. But stories are personal, too. We each have a story we tell ourselves. As Jung said, we should all try to discover what myth we are living by. Books like this should help us out on that quest."
A related post is Economists Love Fables And Parables (Or, What Is The Essence Of Economic Analysis?)

Sunday, October 14, 2012

Where are the most affluent counties in the nation?

"Seven of the 10 most affluent counties in the nation are near Washington, D.C." That is according to a NY Times article by George Mason University economist Tyler Cowen called That Blurry Line Between Makers and Takers. Here is an excerpt:
"The problem is that taking, rather than making wealth, appears to be growing in relative influence.  
Most of us are actually both makers and takers. Consider farmers who produce food and favor agricultural subsidies. The question is whether the role of wealth maker has more influence over our politics, at any given time, than does the taker role. Is public policy being adjudicated on grounds of ethics and efficiency, or is the real story about lobbying and the relative power of different interest groups?  
It isn’t easy to measure whether politics is less public-spirited these days, and we should resist the tendency to idealize the past. Still, job creation, median income and other measures of economic well-being have done poorly since the late 1990s. That suggests that America isn’t paying enough attention to creating wealth and increasing general prosperity. 
FOLLOW THE MONEY Seven of the 10 most affluent counties in the nation are near Washington, D.C. That means a growing number of educated people are making a very good living advising, lobbying and otherwise influencing the federal government. This is a talent drain. It’s far from obvious that we are getting better policy as a result, and true wealth creation has not kept pace."

Friday, October 12, 2012

Great Moments In Causation Vs. Correlation: Eat more chocolate, win more Nobels?

In chapter 1 of the macro textbook I use there is a discussion of association (correlation) vs. causation. Like if an NFC team wins the Super Bowl, the stock market goes up afterwards. But there was a great example of this in the news the other day called Eat more chocolate, win more Nobels? Here is the article:
"Take this with a grain of salt, or perhaps some almonds or hazelnuts: A study ties chocolate consumption to the number of Nobel Prize winners a country has and suggests it's a sign that the sweet treat can boost brain power.  
No, this does not appear in the satirical Onion newspaper. It's in the prestigious New England Journal of Medicine, which published it online Wednesday as a "note" rather than a rigorous, peer-reviewed study. The author — Dr. Franz Messerli, of St. Luke's-Roosevelt Hospital and Columbia University in New York — writes that there is evidence that flavanols in green tea, red wine and chocolate can help "in slowing down or even reversing" age-related mental decline — a contention some medical experts may dispute. Nevertheless, he examined whether a country's per-capita chocolate consumption was related to the number of Nobels it had won — a possible sign of a nation's "cognitive function."  
Using data from some major chocolate producers on sales in 23 countries, he found "a surprisingly powerful correlation." Switzerland led in chocolate consumption and Nobels, when looked at according to population. The United States is in the middle of the pack with the Netherlands, Ireland, France, Belgium and Germany. At the bottom were China, Japan and Brazil. The study only includes Nobels through last year — not the ones being announced this week.  
Curiously, Sweden should have produced only 14 winners according to its appetite for chocolate, yet it had 32. Messerli speculates that the Nobel panel, based in Sweden, may have "patriotic bias" toward fellow countrymen — or that Swedes are very sensitive to the effects of chocolate so that "even minuscule amounts greatly enhance their cognition."  
It is possible, he admits, that chocolate isn't making people smart, but that smart people who are more likely to win Nobels are aware of chocolate's benefits and therefore more likely to consume it. Sven Lidin, the chairman of the Nobel chemistry prize committee, had not seen the study but was giggling so much when told of it that he could barely comment.  
"I don't think there is any direct cause and effect," Lidin said. "The first thing I'd want to know is how chocolate consumption correlates to gross domestic product." Messerli also calculated the "dose" of chocolate needed to produce an additional Nobel winner — about 14 ounces per person per year, or about nine Hershey bars. He discloses that he is doing his part — he eats chocolate daily, mostly Lindt dark."
Maybe rich countries (with higher GDP) produce more prize winners since they can afford to spend more money on education and research. Those countries would also be able to afford to eat more chocolate. But, just to be on the safe side, eat more chocolate since the USA is only in the middle of the pack. It is your partriotic duty. And neither Obama nor Romney says what they will do about our chocolate deficit.

Wednesday, October 10, 2012

International Inflation Rates

OECD country inflation data. You will have to look for the pull down menu that says "Measure." Then pick the one that says "Percentage change from the previous period." That will get the annual inflation rates for different countries.

CIA World Factbook. Belarus had the highest with 52%. Ethiopia had 33.2% and Venezuela had 26.1. Four more countries had 20% or higher. Then another 24 countries had 10% or higher.

Supposedly Keynes said that in the German hyper-inflation of the 1920s, people would order 2 or more pitchers of beer at a time because the price would rise if they waited. But that meant the cost was drinking warm, stale beer later. Prices rose a trillion times in one year.

Sunday, October 07, 2012

U.S. Fertility Rate Hits Lowest Level on Record

Click here to read the WSJ article by Conor Dougherty. The reason is the weak economy. Excerpt:
"The overall fertility rate for women in the U.S. — defined as the number of newborns per 1,000 women aged 15 to 44 — was 63.2 last year, down from 64.1 in 2010 and the lowest rate since the government started collecting these statistics in 1920.  
Ken Johnson, senior demographer at the Carsey Institute at the University of New Hampshire, notes that similar fertility drops occurred during the Great Depression — and never recovered. “The young women never made up for the births that they didn’t have,” he said.
Much of the delay in child-bearing has occurred among younger women, probably because they have more leeway in delaying their families than women who are closing in on the end of their fertility window. The most startling example: Hispanic women between 20 and 24 saw their fertility rate drop to 115 last year from 165 in 2007. White women between 20 and 24 saw their rate fall to 72 from 85 over the same period."

This has been going on for the past few years. See my earlier posts:

Did The Recession Help Lower The Birth Rate?

The Economy Affects The Birth Rate

Friday, October 05, 2012

Unemployment rate drops to 7.8% in September

Click here to read the LA Times story. The rate went down because of strong enough job growth, not because people dropped out of the labor force. The labor force participation rate rose from 63.5% to 63.6%. The percent of the adult population that has a job rose from 58.3% to 58.7%. The table below shows this latter number over time.

Click here and here to see the BLS data.

The government does two different surveys that don't always give the same result. See Why Jobs Surveys Don't Always Tell the Same Story by BEN CASSELMAN of the WSJ. Excerpt:
"The monthly payroll number—how many jobs are gained or added in a month—is based on a survey of about 141,000 businesses and government agencies. The unemployment rate and related statistics are based on an separate survey of about 60,000 individual households.
The business survey is larger and generally more stable. Since the start of 2011, payrolls have grown by an average of 169,000 jobs a month. The growth, though slow, has been relatively consistent. Payrolls have risen by more than 250,000 only three times since the start of 2011, and by less than 50,000 only once.
The household survey is more volatile. The unemployment rate has fallen to 7.8% from 9% over the past year, but rather than a smooth downward trend, the rate has moved in fits and starts, and has even risen on occasion. The survey's tally of people with jobs—based on counting the number of people who say they are working, rather than the business survey's count of employees—has been even choppier."

Wednesday, October 03, 2012

Economist Has Plan To Save The Spiders

See Spiders and sense. It was a letter to the editor of The San Antonio Express-News:
"Re: “Rare spider has created a web of complications,” Front Page, Sept. 16:

The article pointed out how the finding of a rare cave spider has halted construction on the interchange between Texas 151 and Loop 1604. I would like to propose a simple, common-sense way to make the correct social choice and either proceed with the interchange or construct an alternative interchange at no added cost to the taxpayer.

I would propose that the cave containing the spider be sold at auction on eBay along with any genetic rights unique to spiders from that particular cave. Place as the reservation price, meaning the minimum bid that would be accepted, the extra cost arising from constructing an interchange without disrupting the habitat. I am sure the Texas Department of Transportation could estimate that cost.

That is all that needs doing. If the spider sells on eBay, that means the value of that spider and its habitat in the competitive market is greater than the cost of redirecting the interchange. The money raised from the sale would cover the cost of redoing the interchange. If the spider does not sell, that means preserving the spider and its habitat is simply not worth as much as the interchange would be. Either way, the result would be efficient. If only our regulators would allow it!"

Robert Collinge, retired economist and professor of economics, UTSA