Go to E-Learning Meets Entrepreneurship.
The subtitle says "Transform years of entrepreneurship experience into custom made learning experiences."
Some universities and colleges are using this. The site includes some testimonials from professors and students.
One of the tools is "Custom Entrepreneurship Simulations."
That is the title of a book written by economist Arthur Okun in 1975. There was a recent WSJ article about him.
See Fighting Inequality With a Minimum of ‘Leaks’: The Great Society economist Arthur Okun argued that government policies are ‘leaky buckets’ that can never be perfectly efficient, involving trade-offs between costs and benefit by Roger Lowenstein.
The end of the article hints at the difference between positive and normative economics which I discuss briefly. Excerpts:
"Policies intended to fix inequality often have costly side effects, minuses as well pluses."
"“Equality and Efficiency: The Big Tradeoff,” published in 1975. Written by a former presidential adviser named Arthur Okun, it remains a staple of economics seminars. Okun argued that efficiency and equality typically exist at opposite ends of a seesaw. Push one up and the other tends to suffer. There is a trade-off."
"Okun illustrated his thesis with a memorable metaphor. Social policies were like buckets—but they were leaky buckets. For every dollar expended, policies to aid the poor might deliver only 80 or 90 cents. Buckets with the biggest leaks could squander most of the benefits. The leak could result from poorly designed incentives or from inefficiency. Okun’s point was that policy makers should devise programs that get the best of this trade-off—those with the smallest leaks."
"He served on the Council of Economic Advisers under President Lyndon B. Johnson"
"Today, Okun’s framework remains a powerful analytical tool. Consider, for instance, the massive stimulus spending during the pandemic. Progressives insisted that serious inflation was not a risk, but they were wrong. Over the past 12 months, thanks to hefty government checks, among other causes, inflation consumed all of workers’ wage gains—and more. The policy was a very leaky bucket.
Student debt forbearance is another one. Not only are college and graduate students disproportionately well off, but the money has already been borrowed, so canceling loans would do nothing for incentives. It would be far more efficient to lend money to students in community colleges and condition aid upon graduation.
President Donald Trump’s tariffs were pitched as a job protection policy, but studies suggest that for each job saved in U.S. factories making washing machines or steel, American consumers were saddled with more than $800,000 in higher prices: an inefficient bucket. On balance, it’s not clear that tariffs help inequality at all."
"the debate over inequality suffers from a basic ambiguity: inequality between whom? Though trade hurts certain groups of American workers, trade liberalization has helped to lift two billion people in Asia out of poverty. Many critiques of inequality focus on the top 1%, but some say the rich are a distraction: What matters is elevating the poor."
"a policy to, say, tax the superrich will not necessarily create good jobs at the bottom.
In assessing economic progress, inequality alone is an incomplete measure. After all, inequality falls during recessions; it also fell during the pandemic. But pandemics and recessions are plainly bad for everyone. Growth also matters."
"economists across the political spectrum endorse policies that they deem less leaky: investments in education, worker retraining, child care and housing; inducements to work rather than subsidies for the out-of-work; ending job discrimination; attracting high-skilled immigrants."
"When life prospects are so unequal, one policy response is to invest more in common goods, such as infrastructure, public transport and healthcare. This is the approach in Europe, which is less unequal than the U.S. but has, on average, a lower standard of living. There is a trade-off.
Once you start looking at the world through the lens of trade-offs, policy debates become less about right and wrong and more matters of give and take. Covid lockdowns aren’t good or bad—they reduce the risk of illness but impose an economic and social cost. A gas tax holiday offers relief at the pump but encourages people to burn more oil.
At the very least, debates over trade-offs tend to be rooted in facts. Arguments over good and evil can resemble theological schisms."
The last sentence is what touches on the difference between positive and normative economics. A positive statement is just a statement of fact, like the unemployment rate is 5.1%. A normative statement makes a value judgement like "the unemployment rate is too high" of "the government needs to do something to lower the unemployment rate."
Related post:
Okun's Law (for every two percentage points the economy grows above its long-term trend annually, unemployment falls by a percentage point)
Jonathan Haidt wrote the book The Righteous Mind: Why Good People Are Divided by Politics and Religion.
It is about how polarized and nasty our politics have become, how
everyone loves to demonize and ridicule anyone from a different
political party. But these are things that Adam Smith talked about in
his book The Theory of Moral Sentiments. I will have an excerpt from that at the end of the post.
Haidt is also concerned about how politically biased higher education
has become, with the vast majority of professors being liberal,
especially in the social sciences and humanities. So he and some other
professors have founded the Heterodox Academy. Here is what they are about:
"We are a politically diverse group of social scientists, natural scientists, humanists, and other scholars who want to improve our academic disciplines and universities.The Chronicle of Higher Education ran an article in 2017 titled Can Jonathan Haidt Calm the Culture Wars? You might have to be a subscriber to read it. Excerpts:
We share a concern about a growing problem: the loss or lack of “viewpoint diversity.” When nearly everyone in a field shares the same political orientation, certain ideas become orthodoxy, dissent is discouraged, and errors can go unchallenged.
To reverse this process, we have come together to advocate for a more intellectually diverse and heterodox academy."
""The extremes, the far left and the far right, are being" — Haidt pauses a beat — "well, I’d say bizarre and crazy, but first, that would be a microaggression" — a roar of laughter from the audience — "and second, it would not be true. What’s happening isn’t crazy. It’s straight moral psychology.""Here is the passage from Adam Smith:
[Haidt] "explains what he calls "the new moral culture spreading on many college campuses." It is a culture, he says, that values victims, prioritizes emotional safety, silences dissent, and distorts scholarship. It is a culture that undermines the university’s traditional mission to pursue truth — "veritas" is right there on the seals of Harvard and Yale — in favor of a new mission: the pursuit of social justice. It is a culture that Haidt believes is fueled by three factors: political polarization, the rise of social media, and a lack of ideological diversity in the professoriate."
"Today, however, precious few conservatives are in psychology departments. "If you say something pleasing to the left about race, gender, immigration, or any other issue, it’s likely to get waved through to publication," says Haidt. "People won’t ask hard questions. They like it. They want to believe it." This represents "a real research-legitimacy problem in the social sciences.""
"His critics, of whom there are many, see his efforts to shift the conversation about diversity away from race and gender and toward politics as at best obtuse and at worst hostile. They say his absolutist stance on free speech is at odds with the need for a diverse and inclusive university. They say he lends a social-scientific sheen to old conservative arguments. They say his penchant for skewering the left, coupled with his willingness to engage the right, is suspect and creates confusion about where his sympathies actually lie. They say he’s either a closet conservative or a useful idiot for the right.
Haidt acknowledges that, especially in the wake of Donald Trump’s election, he risks sounding like a guy in Berlin in 1933 insisting that wisdom is to be found on both sides of the political spectrum. "The election has ramped up emotions so strongly that any effort to say, ‘You really need to have more conservatives in the university, and you need to listen to them’ strikes some people as immoral." On the other hand, he says, the election has forced a reckoning. More academics are saying, "Wow, we really are in a bubble. We must get out of this bubble.""
"On the left in the early 2000s, he grew frustrated by what he saw as the failure of Al Gore and John Kerry to speak to voters’ moral concerns. Haidt shifted his research focus to political psychology and immersed himself in conservative media, subscribing to National Review and watching Fox News. "My reaction was constantly like, ‘Oh, I never thought of that. Oh, that’s a good critique,’ " he says. "The scales were falling from my eyes." He’s since carefully positioned himself as a centrist, a neutral broker who speaks with all sides."
"Some liberal professors fear giving even inadvertent comfort to the right, especially with Trump in the White House and a Republican majority in Congress. Others, he argues, are intimidated by the bullying tactics of the far left.
That diagnosis rings true to David Bromwich, a professor of English at Yale. His 1992 book about the campus culture wars, Politics by Other Means (Yale University Press), is a withering assault on both traditionalists of the right and thought-policers of the left. (As John Silber wrote in a review, the book might have been called A Plague on Both Your Houses.) Asked how the current mood on elite campuses compares with that time, Bromwich says it’s at least as bad. "There is a horror of being associated with anything or anyone conservative," he says, calling it "a mark of the timidity of the academic personality in our time. It leads to a great deal of conformity, small acts of cowardice, and the voluntary self-suppression of ideas.""
"It’s human nature to make things sacred — people, places, books, ideas, Haidt says. "So what’s sacred at a university?" he asks. "Victims are sacred," he answers. And a victimhood culture offers only two ways to get prestige: Be a victim, or, if you can’t manage that, stand up for victims. How? "By punishing the hell out of anyone who in any way, shape, or form, even inadvertently, marginalizes a member of a victim class.""
""I’m very alarmed by the decline of our democracy." He grabs a stack of four books from beside his keyboard. The spines read like a map of his anxious mind: The Authoritarian Dynamic, The Federalist Papers, Rude Democracy, Why Nations Fail. He is especially worried about how social media deepen our political divisions. "We are all immersed in a river of outrage, drowning in videos of the other side at its worst," he says"
"The animosity of hostile factions, whether civil or ecclesiastical, is often still more furious than that of hostile nations; and their conduct towards one another is often still more atrocious. What may be called the laws of faction have often been laid down by grave authors with still less regard to the rules of justice than what are called the laws of nations. The most ferocious patriot never stated it as a serious question, Whether faith ought to be kept with public enemies?—Whether faith ought to be kept with rebels? Whether faith ought to be kept with heretics? are questions which have been often furiously agitated by celebrated doctors both civil and ecclesiastical. It is needless to observe, I presume, that both rebels and heretics are those unlucky persons, who, when things have come to a certain degree of violence, have the misfortune to be of the weaker party. In a nation distracted by faction, there are, no doubt, always a few, though commonly but a very few, who preserve their judgment untainted by the general contagion. They seldom amount to more than, here and there, a solitary individual, without any influence, excluded, by his own candour, from the confidence of either party, and who, though he may be one of the wisest, is necessarily, upon that very account, one of the most insignificant men in the society. All such people are held in contempt and derision, frequently in detestation, by the furious zealots of both parties. A true party-man hates and despises candour; and, in reality, there is no vice which could so effectually disqualify him for the trade of a party-man as that single virtue. The real, revered, and impartial spectator, therefore, is, upon no occasion, at a greater distance than amidst the violence and rage of contending parties. To them, it may be said, that such a spectator scarce exists any where in the universe. Even to the great Judge of the universe, they impute all their own prejudices, and often view that Divine Being as animated by all their own vindictive and implacable passions. Of all the corrupters of moral sentiments, therefore, faction and fanaticism have always been by far the greatest."
Here is the Amazon link: How the World Became Rich: The Historical Origins of Economic Growth by Mark Koyama and Jared Rubin. This is an excellent book
Here is the description:
Most humans are significantly richer than their ancestors. Humanity gained nearly all of its wealth in the last two centuries. How did this come to pass? How did the world become rich?
Mark Koyama and Jared Rubin dive into the many theories of why modern economic growth happened when and where it did. They discuss recently advanced theories rooted in geography, politics, culture, demography, and colonialism. Pieces of each of these theories help explain key events on the path to modern riches. Why did the Industrial Revolution begin in 18th-century Britain? Why did some European countries, the US, and Japan catch up in the 19th century? Why did it take until the late 20th and 21st centuries for other countries? Why have some still not caught up?
Koyama and Rubin show that the past can provide a guide for how countries can escape poverty. There are certain prerequisites that all successful economies seem to have. But there is also no panacea. A society’s past and its institutions and culture play a key role in shaping how it may – or may not – develop."
Here are links to their teaching materials:
REVIEW QUESTIONS AND CHAPTER SLIDES
Review Questions for How the World Became RichGAO report finds loans made over past 25 years could lose $197 billion because of policy changes, revised repayment projections
By Melissa Korn of The WSJ. Excerpts:
"The Education Department will likely lose $197 billion on loans it made over the past 25 years, a massive swing from its predicted $114 billion in income, according to a federal watchdog.
The Government Accountability Office said in a report Friday that because of policy changes and updated estimates on how much borrowers will actually repay, the Direct Loan program, which had $1.4 trillion in debt outstanding at the end of the last fiscal year, will fall far short of its original plan to make money for the federal government. Instead, they said, it will run deep in the red.
The biggest contributor to the new calculation was the pandemic relief package enacted by former President Donald Trump in early 2020, and which President Joe Biden last extended in April, to run at least through the end of August."
"Suspending payments, freezing interest rates at 0% and stopping collections on defaulted loans added $102 billion in costs to the loan program, the GAO report found."
"it lost money on loans issued in all but one year over the past quarter-century. Originally, the Education Department estimated the loans would generate $6 in income per $100 lent out. The GAO analysis found the loans wouldn’t make money, but actually cost the government $8.88 per $100 in loans."
"When income from student loans doesn’t match projections set in annual budgets, other government accounts fund the difference. The amount set aside for that purpose has risen sharply in recent years, especially during the pandemic."
Here are some earlier posts on related topics:
Many college dropouts are worse off economically than if they hadn’t started college (2019)
More employers offer workers help paying off student loans (2019)
The Diminishing Returns of a College Degree (2017)
The Diminishing Returns of a College Degree: In the mid-1970s, far less than 1% of taxi drivers were graduates. By 2010 more than 15% were (2017)
Who Is Most Likely To Default On Their Student Loans? (2016)
Student loan delinquency is higher than for other borrowing (2015)
For Some Grads, College Isn't Worth Debt (2014)
Is College Still A Good Investment? (2012)
Is It Getting Too Expensive To Go College? (2011)
Maybe That College Degree Is Not As Valuable As You Thought (2010)
As college costs rise, sticker shock eased by student aid (2010)
See US Appeals Court Denies Bid to Block Nevada Geothermal Plant: A federal appeals court has rejected a bid by environmentalists and a Nevada tribe to halt construction of a geothermal power plant that opponents say would harm an endangered toad and destroy sacred hot springs by SCOTT SONNER of the Associated Press. Excerpts:
"The 9th U.S. Circuit Court of Appeals refused on Monday to reinstate a preliminary injunction that temporarily suspended work on Ormat Nevada’s project 100 miles (161 kilometers) east of Reno that would generate carbon-free power by pumping hot water from beneath the earth.
A three-judge panel that heard oral arguments on the appeal last month concluded further delay of the project would make it “all but certain” Ormat would be unable to meet a contract deadline to complete construction by the end of this year.
Ormat said failure to meet the deadline would cost the company $30 million over 20 years and could jeopardize the entire project.
“Beyond the economic losses to Ormat,” the appellate court said, “the district court properly considered the public interest in a ‘source of carbon-free baseload electricity,’ royalty returns to the federal government, and state and local taxes which would be collected as a result of the project.”
The U.S. Fish and Wildlife Service declared the Dixie Valley toad endangered on a temporary emergency basis in April, warning the operation of the geothermal plant near the toad's habitat could lead to its extinction."
Related posts:
Tradeoffs and anti-trust policy (2019)
More Proof That Tradeoffs Are Everywhere: Blind People Don't Like The New, Quiet Hybrid Cars (2007)
The Recession Cleaned The Air, Another Example Of How Life Is Full Of Tradeoffs (2011)
Life is full of tradeoffs, the case of federal renters assistance (2021)
Tradeoffs: More Goods And Services Might Mean Less Clean Air (2013)
Life is full of tradeoffs, wind power vs. fishing edition (2022)
Life is full of tradeoffs, reducing animal cruelty vs. increasing worker safety (2022)
Life is full of tradeoffs: If we want more historic preservation we might have to give up some solar panels (2022)One weakness of the unemployment rate is that if people drop out of the
labor force they cannot be counted as an unemployed person and the
unemployment rate goes down. They are no longer actively seeking work
and it might be because they are discouraged workers. The lower
unemployment rate can be misleading in this case. People dropping out of
the labor force might indicate a weak labor market.
We could look at the employment to population ratio instead, since that
includes those not in the labor force. But that includes
everyone over 16 and that means that senior citizens are in the group
but many of them have retired. The more that retire, the lower this
ratio would be and that might be misleading. It would not necessarily
mean the labor market is weak.
But we have this ratio for people age 25-54 (which also eliminates many college age people who might not be looking for work).
The percentage of 25-54 year olds employed was 80.0% in July. It was 79.8% in June. But it was 80.0% in May, so we just got back to where we were.
It was 80.5% in Jan. 2020 and 69.6% in April 2020. Click here to see the BLS data. The unemployment rate was 3.5% in June. Click here to go to that data. The % of those 16 and older employed went from 59.9% up to 60.0%.
Here is a good graph from the St. Louis Fed. It shows that there are 127,121,000 people in the 25-54 year old group. So since we are 0.5 percentage point below the 80.5% of Jan. 2020 (the high point since the previous recession), that is still 635,605 fewer jobs (Hat tip: Vance Ginn of the Texas Public Policy Foundation).
Also, we are up 10.4 percentage points since April 2020 (80.0 - 69.6). That is 95.4% of what we lost from Jan. 2020 to April 2020 (10.9 percentage points or 80.5 - 69.6). Then 10.4/10.9 = 95.4%. So we have gotten about 95.4% of the jobs back. Good, but a significant amount of ground has still has to be made up.
Here is the timeline graph of the percentage of 25-54 year olds employed since 2012.
Now since 1948
See EV Startup VinFast Hits the U.S., Opens First Showrooms In California by Sean McLain of The WSJ. Excerpts:
"The EV company, established in 2017 in Vietnam, plans to sell two all-electric sport-utility vehicles in the U.S. to start: a midsize SUV, called the VF 8, that starts at $40,700, and a larger VF 9, starting at $55,500. U.S. buyers can place orders now with deliveries expected to start at the end of 2022.
Unlike other EV rivals in the U.S., VinFast has a unique business model in which buyers pay one price for the vehicle, but then lease the battery for a monthly fee. The company offers two battery-subscription plans, costing anywhere from $35 to $160 a month, depending on how much the owner wants to drive, the model purchased and the type of battery.
The fee includes maintenance of the battery and replacement when charging capacity drops below 70% of its original capacity.
VinFast has said the battery leasing model brings the upfront price of its vehicles down $15,000 to $20,000, roughly on par with what many gasoline-powered models sell for today. The company also said it eliminates risks for the consumer because the service covers all repairs, maintenance and replacement costs, including swapping out the battery for a newer one."
So it seems like if you plan to drive less, you pay less. You pay a lower monthly subscription fee. This sounds like insurance companies charging you a lower premium if you accept a high deductible (that is the amount of, say, medical costs you have to pay before the insurance pays anything). In that case, you are planning not to use the insurance very much because you think you are healthier than average. In both cases those who use it less will pay less.
Quite high, if underlying inflation and the ‘natural’ unemployment rate have risen, some economists say
One definition of the natural rate of unemployment is that it is the lowest rate of unemployment compatible with price stability (which the Fed defines as an annual inflation rate of 2% or less).
This graph shows that if we keep increasing AD (either by lowering interest rates, increasing the money supply or increasing government spending), Q (real GDP) will keep increasing which lowers the unemployment rate as firms need more workers.
But the price level (CPI) will keep increasing more and more, meaning higher and higher inflation rates.
The big question to me is how much AD there is right now (although that is not the only question). If it is pretty far to the right, and well past QF, then AD will need to be reduced. But this would reduce Q or real GDP which means firms layoff workers, raising the unemployment rate. The more Q falls, the more the unemployment rate goes up.
But also, if workers continue to expect high inflation they will demand higher wages which reduces SRAS. Then we get both unemployment and prices rising. It would take another big reduction in demand to lower prices and that could put us below the QF.
Excerpts from the article:
"How much pain will U.S. workers need to endure if inflation is to return to 2%?
Not much, say most economists. Unemployment is expected to plateau near 4.3% at the end of next year, up from 3.6% in June, according to The Wall Street Journal’s latest survey of economists.
A great deal, according to other economists, who say unemployment might need to rise as high as 10%, implying a deep recession and much higher interest rates from the Federal Reserve."
"To get it to 2% (the inflation rate), the Fed will need to cool the labor market and lower wage growth (see above where I mention worker expectations and the shift in SRAS), currently running around 5% to 7% a year, according to data from the Labor Department and the Federal Reserve Bank of Atlanta.
That effort starts by reducing the number of job vacancies, which are currently historically high relative to unemployed workers. As the economy cools, companies will have less new business and start to withdraw job postings.
As the number of job openings declines, unemployment tends to rise."
"In a paper published Friday, Fed governor Christopher Waller . . . argue[s] that unemployment might increase by only 1 percentage point or less, even with a large decline in the vacancy rate.
Vacancies are currently so high relative to available workers, the paper argued, that new job openings generate fewer and fewer hires. That means a given decline in vacancies will have a smaller effect on unemployment than in a normal labor market." (I think this is like saying we are not that far past QF in the graph and that Q is not that high because of the vacancies-jobs not getting filled so goods are not being produced)
"But other economists say that such a free lunch is unlikely.
Since the 1950s, every time the vacancy rate came down from a quarterly peak, it was accompanied by a significant rise in unemployment, according to a recent paper by former Treasury Secretary Lawrence Summers and former International Monetary Fund chief economist Olivier Blanchard.
For example, during the 2008 global financial crisis, the unemployment rate increased by as much as 3.8 percentage points. Since the 1950s, on average, the unemployment rate rose by 2.1 percentage points during the two years following a vacancy rate peak.
Moreover, the post-Covid economy may be less efficient at matching job seekers to job openings. That suggests a higher rate of unemployment might be needed, for a given number of vacancies, to stabilize wages and prices—a measure known as the natural rate of unemployment.
During the pandemic, jobs shifted geographically, especially out of city centers, putting them out of reach of some workers. Certain skills became more important, such as computer programming, while others were less in demand. The Fed can’t do anything to fix such mismatches between workers and jobs." (I think this means that SRAS has or will shift to the left since, if workers can't get hired, then we get rising prices and rising unemployment).
"If today’s high inflation rates have become deeply ingrained in the thinking of households and businesses, as they did during the 1970s, it will take much higher unemployment, and a punishing recession, to wring it out." (Again, see my comment on expectations above-also, from 1975-83 unemployment and inflation both averaged 7.7% and this is sometimes called stagflation)
Related posts:
Fed Focuses on Inflation Sentiment (Dec. 2021)
The Fed chairman says the relationship between inflation and unemployment is gone (2019)
Unemployment Isn’t What It Used to Be: The low rate doesn’t take account of low labor-force participation. Wages are a better indication of slack (2019)
The Phillips curve is alive and well (unless it's dead) (2019)
Fed officials disagree on how much inflation the current low unemployment rate might cause (2018)
Fed Looks for Goldilocks Path as Jobless Rate Drops
(2018)
Is the Phillips curve affected by prices that are acyclical? (2019)
What is Full Employment? (2020)
