This is one of the great questions of our time. Since coming out of the recession five year ago we’ve been wondering what exactly government is supposed to do. Few argue a role in keeping us out of a depression, even if the “how” is a major source of pain. But the job of government in a more stable economic environment is more difficult to nail down.
While to debate is more of a spectrum than polarized viewpoints, there are roughly two sides. One side wants the government to stay out of the economy. Keep the rules and taxes simple, and don’t mettle. Just let things play out. The other side prefers more regulation and more involvement to either help push us forward or keep things stable. The first camp would opine that when government gets involved they usually aren’t helpful. There are plenty of examples both sides can cite to support their case.
How this plays out can be well illustrated in an LA Times article about hydrogen fuel cell powered cars. Hydrogen fuel cells were supposed to be the next big thing. They run on hydrogen and the only emission is water. It’s pretty impressive stuff. But while the fuel cells were getting off the ground hybrids and full electric cars came to town. And so the hydrogen fuel cell business has stalled for years.
Unlike electric cars, fuel cells and refuel as quickly as gasoline cars, making long trips easier. But there aren’t many hydrogen fueling stations in the US. Entrepreneurs are reluctant to build more stations until more of these cars are on the road, of which there are very few. But automakers won’t make more until there are more fueling stations available. Two supply problems result in very low customer demand.
Now what does this have to do with government and economics? Assume for a minute that we all support more hydrogen fuel cell cars but still face this supply issue of cars and stations. The market may struggle to sort this out on its own. But the government could help. By subsidizing fueling stations, fuel cell vehicles, or both, government can create a market that might not otherwise have existed.
Government can create markets and manipulate them. Creating a market for fuel cell vehicles might help with our fossil fuel problem. A tax on carbon emissions could too. The risk is always in the implementation. Who will this manipulation hurt? Who will it help? Can we execute this policy fairly and achieve the desired result? These are often unknowns with policy. Few will argue that well-meaning, and well-executed policy is a good thing. Your faith in government’s ability to do so probably shows how you feel about the role of government in economics.
Image: Mercedes Benz F-Cell
Less than 10 months ago he was the most powerful banker in the world. He could move markets with a single sigh or a misplaced comma. Now, Ben Bernanke can’t even refinance his mortgage:The former Federal Reserve chairman, speaking at a conference in Chicago yesterday, told moderator Mark Zandi of Moody’s Analytics Inc. — “just between the two of us” — that “I recently tried to refinance my mortgage and I was unsuccessful in doing so.” When the audience laughed, Bernanke said, “I’m not making that up.” “I think it’s entirely possible” that lenders “may have gone a little bit too far on mortgage credit conditions,” he said.
Confusing the matter is the fact that as the former head of the Federal Reserve, he can actually make much more money now than ever before. The trouble may be with the volatility of those earnings. Either that, or he’s late making payments on that Jos. A Bank card.
Michigan Stadium, known better as “The Big House” is the largest stadium in the US with the capacity to host around 110,000 people. It’s the residence of the University of Michigan football team. Michigan is truly one of the greatest universities in the country. Amazing academics, great college town, and fantastic sports make for a perfect combination. But there is trouble in Ann Arbor.
Michigan football has been a bit disappointing lately. And when you have 100k seats to fill that can be a challenge. The blame is being passed around from too much commercialism to the overall poor performance of the football program. These both make sense. Michigan has more wins than any football team in history. But that’s a bit of a funky statistic since the team has existed since 1879. Just by sheer length of history they have these wins. Most of them haven’t come lately. And with such a well recognized brand and massive alumni network, over-commercialization is always a risk. Striking that balance between performance and capitalizing on it is a challenge for any school with a major sports program.
The discussion of what’s wrong at Michigan is best summarized in this article on Deadspin. But there are a couple of other factors at play that aren’t really being discussed.
Michigan football is partially a victim of the struggles of Michigan’s economy. Despite being a premier academic institution, the state of Michigan has been trying to find a 21st century identity after manufacturing’s decline. This can likely mean that alums and fans of Michigan may not be staying within driving distance of the school for a game. You can see that in the population growth (or shrinkage) of the state compared to the US overall. It’s hard to keep butts in the seats of the fans are spread all over the country.
Likewise, there are demographics working against Michigan. College sports fans are both old and white. While these are dominate demographics they aren’t exactly on the rise. All sports are interested in touching new audiences (just look at what the NFL has done with women), and college sports will not look so great moving forward with the old white demo. It’s no surprise then that attendance at college games is down this year, with only a few exceptions.
So Michigan has some issues unique to them and others facing the college game as a whole. It’s true that a winning team can solve most problems, but the headwinds are getting stronger.
Amazon, Yelp, movies, video games, even the App Store. Everything has reviews. And the five star system is one of the most well recognized out there. We love reviews of things we want to purchase because it makes us feel more informed and confident about our decisions. Whether this translates into greater satisfaction would be the subject of a good study.
But this system is deceptive. We tend to think of something greater than 3 stars as pretty good. 4 stars is about all I would need to say this thing is good. But is 4 stars really that good?
Think back to your schooling days. 4/5 stars is the same thing as saying 80%. Depending on your school that was at best a B- and before college that would have been a C for me. Do you really want to purchase a B- product? On the same scale 3 stars is a D- or F. That’s hardly a good score.
That’s how the stars are misleading. First of all, they’re stars, which we love. The only thing better would be hearts. But even stars take us back to our schooling days.
4/5 stars? You could do better.
There’s no shortage of studies and data out there showing that gender differences in the workplace exist. This is most commonly reflected in a pay gap between men and women working the same job. The reasons for this gap vary, and are debatable, but the truth is that men and women are different. And it’s likely that our differences will always result in some variation. Of course if discrimination is to blame, that must be corrected.
But what do studies of men and women say about how they treat each other in economic situations? The NY Times Upshot blog has a collective view of the research as compiled in a couple of books. Here are some highlights:
- There’s an economic game where participants are given $10 and must offer some of it to another person. If the other person accepts the offer they both get the money, so you feel compelled to offer something. Both men and women offered less money when the partner was a women. Even worse, women offered less to women than men did to women. Women also offered more than half of the $10 to men.
- In another game that measured competitiveness, women were more willing to compete with other women. But they peddled back on the competitive spirit against men.
- Women negotiate harder for others, and less so when pushing their own interests.
What is driving this behavior? Do women act differently than men by nature, or are societal norms at play? That’s difficult to break apart. But there are ways. The challenge with economic experiments that a true experiment would require messing with people. To see the nature vs nurture element we’d need to segment hundreds of baby girls and raise them in a society without the gender norms we have to see how they would react in these situations. That’s impossible, and immoral. So economists are limited in what they can measure.
Read: Why the Economic Gender Gap Will Eventually Close (NY Times Upshot)
Who knows where it got started, but we love to watch other people buy houses on TV. Perhaps the most well known show is House Hunters, but there are many others. One favorite of mine is called Beachfront Bargain Hunt. The premise is the same as always, an individual or family is looking to buy a house. In this case the focus is on finding inexpensive homes on the coast, usually in the southern US. What really drew my interest in this show was their use of aerial shots. Shots that allow you to see the entire property from a bird’s eye perspective. Sometimes this is just 20 feet off the ground, other times more like 100 feet. You can get a good feel for these shots in this video.
Without knowing too much about TV and cameras, the old way to get shots like this is very expensive. You need someone that can fly. Aerial shots usually require a helicopter set up something like this or this. That’s just not worth the effort and you may not even get the shot you want with such a big machine. If you’re lucky perhaps a cherry picker might get the job done. But again, too much effort. But this is the 21st century, and we need a 21st century solution. Enter the drone. Now one person with a device that costs just a few thousand bucks can get you the exact shot you need. And this is exactly what Beachfront Bargain Hunt using companies like this one. The types of shots they’re able to get are incredible.
Imagine using a shot like that to help sell your house. Just awesome.
Now imagine someone using a drone to look at your kids playing in the backyard. Or look in your second floor window. Or watch a football game. Or a competing business spy on your operation. Commercial drones can cost thousands of dollars. But consumer versions are only in the hundreds. And “toys” are in the double digits. Some even come with cameras already attached.
Drones are creating a whole new world of potential violations of law and privacy that previously weren’t considered or policed. Things we just didn’t have to think about. Like, who owns the air 200 feet above your house? New technology is almost always great, but laws and regulations are slow to keep up.
We’ve all been on the highway and a big rig truck comes up on you and seemingly runs you off the road. More than likely it was your fault as truckers are some of the best drivers in the world. But their trucks are big and intimidating. Trucks are an incredibly important part of our economy as they ship 70% of everything. Nothing else even comes close. So today let’s look at what’s going on in the industry.
It looks like business is good. The closest competitor to trucks is rail, and it hardly compares in market share. Business is good too, as total tonnage shipped by trucking continues to climb. But all is not well in the land of trucks. They’re facing changing tides on many fronts that bring new challenges to the industry.
- Fuel costs: When the cost of diesel goes up we don’t notice it as much as the cost of gas. But consumers do feel some of the pinch. The challenge in trucking is to pass along rising fuel costs without disrupting demand for the items being shipped.
- Regulation: Whether on environmental or safety grounds, the government is more involved with trucking than they’ve ever been. New regulations are already shaping passenger vehicles. Commercial trucking has been largely protected but not for much longer. The American Trucking Associations (ATA) is an organization representing trucking and they’re already in Washington trying to influence policy. Yes, everyone has an advocate or a lobbyist.
- Trucker shortage: The ATA estimates that by 2022 there will be a shortage of ~240k truckers. The challenges above coupled with an aging trucker population has led to fewer new truckers entering the market. This will drive wages up, if it hasn’t already.
As it turns out, people from my generation aren’t so interested in becoming truckers. I for one can’t blame them. We hear about getting STEM jobs, and we want to work from home. Trucking just isn’t sexy. Will the increase in wages draw enough people to trucking? Economics would say so. A supply and demand gap can be closed with a change in prices. But will that price increase be too much to pass on to consumers? That’s the pickle. We’ll see if trucking is still so significant in a few decades.
Image: Don O’Brien
How The Mighty Have FallenLess than 10 months ago he was the most powerful banker in the world. He could move markets with a single sigh or a misplaced ...read more
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