Sunday, August 30, 2015

Basic Economics of the Export-Import Bank of the United States

An excellent economic analysis on the Export-Import Bank done under the article titled, "Basic Economics of the Export-Import Bank of the United States | Mercatus"

Domestic firms seek to utilize a local Government Export-Import Bank to make international trade "fair", since, based on those domestic firms perception, the rules of the game are not titled in their favor. Yet, as it is with most things with Economics, the obvious answer is not always the ideal "solution".

Monday, August 24, 2015

Roland Fryer - Education in America (Must See)

Contra Wise-Job Market

The scholarly analysis of race has be done from scholars of all types. One of the most popular scholars of the analysis of Race is Tim Wise. Mr. Wise has dedicated a large portion of his research on "white privilege". "White Privilege" is the main reason why there is an inequality gap, as per Mr. Tim Wise, on the economic outcomes in the labor market between whites and blacks. Of course, in true scholarly fashion, he has empirical evidence to support his position.

In this brief article, I will focus on the statistical analysis and how it supports(or does not support) his premise. The article of focus is titled, Excuses, Excuses: How the Right Rationalizes Racial Inequality (Part I: Wages and the Job Market) 

Before I go forward in addressing Mr. Wise, there are a couple of points I would love to present to the reader:

1. Racism does exist. Yet, how it feels to the individual is subjective.

2. My analysis is limited to how Mr. Wise builds his argument, not proving or disprove that racism or "white privilege" exists. 

For starters, let's take this first quote from Mr. Wise:

"For example, the argument that racial wage gaps merely reflect different levels of experience and qualifications between whites and blacks are simply untenable, when one examines the data. Fact is, earnings gaps persist at all levels of education. According to Census data, whites with high school diplomas, college degrees or Master’s Degrees all earn approximately twenty percent more than their black counterparts. Even more striking, whites with professional degrees (such as medicine or law) earn, on average, thirty-one percent more than similar blacks and fifty-two percent more than similar Latinos (1). Even when levels of work experience are the same between blacks and whites, the racial wage gap remains between 10-20 percent (2)."

As per the census of 2011, only 6% of Blacks are in the STEM workforce. If only 11% of blacks are in the workforce, and represent 6% of the STEM workforce, it would only stand to reason that the income disparity would work against blacks. With regards to STEM wages after graduation, they earn $15k more than non stem majors. Couple that with the notion that there exist only 6% of Blacks in the STEM fields, this is one explanation of the income disparity.

Here is a question for Mr. Wise: How is this an example of "white privilege"? If Blacks are under represented in STEM, this is clearly a choice by youngsters on what type of college study in which to major. This is not a "zero sum" game as Wise attempts to infer.

Next, making the assumption that earnings for two individuals are supposed to equal is a un realistic position. Each individual has different skills, interests, educational levels and the like. If someone is a janitor, and the next person is a neurosurgeon, it is quite clear that their income will differ.

With this sort of analysis, Wise attempts to conflate the notion of qualitative analysis with quantitative analysis. How does he possibly conclude from this that there is "white privilege". What he is demonstrating is that the aggregate of choices between the races, with regards to college major and career choices, are demonstrating differences in outcome.

In short, the only real conclusion that Mr. Wise can draw from the analysis of this data is that both races, in the aggregate, have chosen different career paths. Based upon those choices, the incomes will differ based on market demand for those said professions in the labor market. Making a conclusion that this is "white privilege", based on these differences, is invalid.

St Louis Fed: QE was a Mistake?

This article here states that the St Louis Fed claims that the program of Quantitative Easing was a "mistake". Key excerpt here:

"Now, the very same St. Louis Fed (this time in the form of a white paper by the bank’s vice president Stephen D. Williamson), is out questioning the efficacy of QE when it comes to stoking inflation and boosting economic activity.

Williamson says the theory behind QE is “not well-developed”, and calls the evidence in support of Ben Bernanke’s views on the transmission mechanisms whereby asset purchases affect outcomes 'mixed at best.' "

Read the rest of the article here.

Pharmaceutical Prices, Patents and the FDA

This article from Mises Daily | Mises Institute, explores the economics of the issues surrounding bringing drugs from Research and development, approval from the FDA, and finally, to the marketplace. What are the economic impacts on the marketplace due to this process?

Sunday, August 16, 2015

Immigrants are sending billions home each year, and getting that money across borders has turned into a massive, entrenched industry

Key Excerpt from article titled, "Immigrants are sending billions home each year, and getting that money across borders..": 

"Globalization has made borders much more porous. Workers look abroad for better opportunities to earn money, which they can then send to their families back home.

But getting that money across borders isn't simple, which is why immigrants have been heavily dependent on remittance companies like Western Union, MoneyGram, and Ria.

The problem, though, is that the fees these companies charge are often very high, and substantially cut into workers' earnings. That's why digital-first companies are starting to seize on the opportunity in the remittance industry."

Adam Smith’s Criticism of Government: Knowledge

Here is an excellent analysis of Adam Smith's point about how Government's difficulty in attempting to "plan out" things in an economy.

Opening line of the article:

 "Adam Smith argued that politicians and bureaucrats lack both the information required to make good decisions and the incentives to become better informed."

Read the rest here.

Sunday, August 2, 2015

Farm Work is Dangerous in South Africa

These individuals that are murdering large amounts of farmers in South Africa are simply performing an act of economic destruction.

Key Excerpt from the article, Farm work is South Africa's 'most dangerous occupation':

"The number of farm murders rose to 67 in 2014 from 62 the previous year, Afriforum and the Transvaal Agricultural Union (TAU) said. There were 277 farm attacks in 2014, which the organisation believes is the highest figure since 1990.
The 132.2 murders on farms per 100,000 people is more than double the murder rate for policeman at 54.4 per 100,000 people, the unions added, and 32.2 per 100,000 for the country's population as a whole"