New Deficit Figures

The deficit is shrinking.

Unfortunately the reason is the growth of revenues is outpacing the growth of spending.

September 2007 Unemployment 4.7%

from the Skeptical Optimist

$75,000 Playoff Tickets

But back at on the Northside of Chicago at the friendly, but pricey confines of Wrigley Field, a larger fan base and more limited supply of tickets had driven the average resale price up to $334, with some tickets selling for as much as $2,177, and standing room tickets going for $100...

A pair of seats five rows behind the first base dugout at Wrigley for one World Series game have already sold for $6,000 each, already topping the highest price for a ticket sold on StubHub to last year's World Series-- $5,883 each for four seats in row B behind home plate for Game 3 in St. Louis.

And if the Cubs rally and somehow make it to the World Series, we are likely to see even higher prices. One seller is already listing a pair of tickets for $75,000 each...

The laws were among the most worthless on the books. If anything, they drove ticket prices higher by limiting supply as the laws made some potential sellers reluctant to put tickets up for sale. Numerous studies have shown ticket resale prices drop once anti-scalping laws disappear.

So even though few can afford to shell out $75,000 to root, root, root for their home (or road) team in the playoffs, having an open secondary market for ticket sales makes it less likely that anybody will ever have to pay such a high price in the first place.

read the full article

Porterhouse: 3.62 Pounds

Step 1: Get a huge steak (2.5 inches thick)
Step 2: Set out about 1 hour prior to grilling
Step 3: Season to perfection
Step 4: Slather in bacon grease and bake in oven at 275 for 7 minutes per side
(probably on this one about 12 minutes would have been better)
Step 5: Toss on a screaming hot cast iron gill
Step 6: Cook 2 minutes per side
Step 7: Remove from grill, tent with foil, allow it to rest about 10 minutes
Step 8: Devour

Yes, it was raw in the middle 2+ inches.

Dow Jones and Free Trade

As world trade increases, so does prosperity
As world trade declines, so does prosperity

read the entire report: The Fruits of Trade

Free Trade: Good or Bad

What Free Trade Really Means

Jeffrey Herbener

The Role of Government

All that government need do to foster wealth creation is protect private property and contract. By enforcing a legal code requiring restitution by criminals to property owners for theft, fraud, and other violations, government is using its power to foster trade.

When using its power to violate property and contract, however, government is managing trade. Domestically, such a policy is called regulation; internationally, it is called mercantilism. Or it was, until recently, when apologists have taken to calling it “free trade.” Both NAFTA and the Uruguay round of GATT were widely but mistakenly called free-trade agreements.

Similarly, the ink was barely dry on the Constitution when the Hamiltonians began to embody their view that centralizing, i.e., monopolizing, power over money and both interstate and international trade in the national government should be the fountainhead of a system of domestic regulation and international mercantilism.

Instead of adopting either a gold or a silver standard as a free market would, Congress opted for the Hamilton-Jefferson bimetallic standard, an unworkable hybrid that vacillates between gold and silver. Worse yet, the legality of banking with fractional reserve notes and the imposition of the Hamiltonian central bank were accepted.

Later, as Civil War emergency measures, the national government issued fiat paper money, forced its acceptance with legal tender laws, and established a federal regulatory system for banks in the National Banking System. This halfway-house to total national government control over money and banking was completed with the Federal Reserve System, which has given us the chronic inflation and business cycles of the twentieth century.

A False Dilemma

Whether or not the full exercise of national power over money in the Fed has been better than the devolution of that power in the states is an open question. But the dilemma the Founders saw is false. The way of escaping the detrimental consequences of power centralized in the national government or decentralized in the states is to choose the free market. To argue that such power cannot be denied to government is to surrender to despotism. The concept of limited government necessarily implies that valuable powers can be denied to government.

In monetary affairs this means government protection of, and absence of intervention into, private property and contract in money production. Entrepreneurs left to their own devices, within a system of private property protection, will best satisfy consumers with a pure gold standard—money as gold coin and notes and deposits 100 percent backed by gold. Such a system provides the benefits of uniform money without the drawbacks of arbitrary inflation…

... The free market, based on protection of private property, will secure the blessings of liberty without government regulation of any kind, from any source.

The lessons from American history for deciding current foreign economic policy are clear. American prosperity depends on enacting a policy of free trade at home and abroad…

If Americans choose a political solution to the current international economic problems, they will face a disastrous dilemma. Maintaining the status quo forces America into the same role as one of the original 13 states in the late eighteenth century. We will continue to suffer the ills of managed trade: trade wars, balance of payments deficits, currency devaluations, and stagnating standards of living. Accepting the logic of centralizing political power, as with the GATT-created World Trade Organization, will lead to international regulation. Supranational institutions will come to command the economies of different countries in the way that the national government came to command the economies of the various states.

We must heed the lesson that so many Americans have paid so dearly in liberty and prosperity for us to learn. America must reject the false dilemma of managed versus regulated trade and choose free trade. That means that government at all levels must step aside and allow markets to work.

read the entire article

Recommended Reading: Walter Williams essay

The Intellectual Defense of Liberty

By Walter E. Williams

All too often defenders of free-market capitalism base their defense on the demonstration that free markets allocate resources more efficiently and hence lead to greater wealth than socialism and other forms of statism. While that is true, as Professor Milton Friedman frequently pointed out, economic efficiency and greater wealth should be seen and praised as simply a side benefit of free markets. The intellectual defense should focus on its moral superiority. Even if free markets were not more efficient and not engines for growth, they are morally superior to other forms of human organization because they are rooted in voluntary peaceable relationships rather than force and coercion. They respect the sanctity of the individual…

Therefore, acts such as murder, rape, and theft, whether done privately or collectively, are unjust because they violate private property. There is broad consensus that collective or government-sponsored murder and rape are unjust; however, government-sponsored theft is another matter. Theft, being defined as forcibly taking the rightful property of one for the benefit of another, has wide support in many societies that make the pretense of valuing personal liberty. That theft, euphemistically called income redistribution or transfers, is often defended by lofty phrases such as: assisting the poor, the elderly, distressed business, college students, and other deserving segments of society. But as F. A. Hayek often admonished, “[F]reedom can be preserved only if it is treated as a supreme principle which must not be sacrificed for any particular advantage. . . .”…

…In other words, the rise of capitalism enabled the gradual extension of civilization to greater and greater numbers of people. More of them had more time available to read and become educated in the liberal arts and gain more knowledge about the world around them. The greater wealth allowed them the opportunity to attend to the arts, afford recreation, contemplate more fulfilling and interesting activities, and engage in other cultural enrichment that was formerly within the purview of only the wealthy…

For individual freedom to be viable, it must be a part of the shared values of a society and there must be an institutional framework to preserve it against encroachments by majoritarian or government will...

…As is often the case, political liberty is used to stifle economic liberty, which in turn reduces political liberty.

read the entire essay

Incentives Matter

Boost your grade before midterm.

What is the most useful/important idea or concept you have learned thus far in economics?

I need you name and period/block along with an answer to get the bonus points.


We have our first commenter. Good job, Michelle. I'm going to wait until Wednesday to post the comments so people will not parrot other people's comments.

Woo hoo. 4 people!!! Yeah!!!

Supply and Demand: Gas Prices

Why Do Gasoline Prices React to Things That Have Not Happened?

Although no one likes to pay more for gas, market-determined gasoline prices operate to prevent shortages and maximize economic efficiency.

read the entire essay

Markets in Everything: Cricket Fighting

Cricket fighting video from National Geographic

How Different Investments Did Last Week

Unemployment Rate for September 4.7%

This is considered full employment by most economists. The key idea is that education makes you more employable.

Students: Questions, Comments, and Suggestions

Why is sitting down and paying attention so hard?

MAKE UP YOUR MISSING TESTS ASAP. YOU WILL GET A ZERO UNTIL THE MISSING TESTS ARE MADE UP. THIS WILL DROP MOST PEOPLE A LETTER GRADE ON THEIR REPORT CARD.

Parents: Questions, Comments, and Suggestions

Another week down.

Recycling Myths

MYTH 5: WE SQUANDER IRREPLACEABLE RESOURCES WHEN WE DON'T RECYCLE.

In fact, available stocks of most natural resources are growing rather than shrinking, but the reason is not recycling (Foster and Rosenzweig 2003).
Market prices are the best measure of natural resource scarcity. Rising prices imply that a resource is getting more scarce. Falling prices imply that it is becoming more plentiful. Applying this measure to oil, we find that over the past 125 years, oil has become no more scarce, despite our growing use of it. Reserves of other fossil fuels as well as other natural resources are also growing.

Thanks to innovation, we now produce about twice as much output per unit of energy as we did 50 years ago and five times as much as we did 200 years ago. Optical fiber carries 625 times more calls than the copper wire of 20 years ago, bridges are built with less steel, and automobile and truck engines consume less fuel per unit of work performed. The list goes on and on. Human innovation continues to increase the amount of resources at our command.

MYTH 6: RECYCLING ALWAYS PROTECTS THE ENVIRONMENT.
Recycling is a manufacturing process with environmental impacts. Viewed across a wide spectrum of goods, recycling sometimes cuts pollution, but not always. The EPA has examined both virgin paper processing and recycled paper processing for toxic substances and found that toxins often are more prevalent in the recycling processes…

MYTH 7: RECYCLING SAVES RESOURCES.
It is widely claimed that recycling "saves resources." Proponents usually focus on savings of a specific resource, or they single out particularly successful examples such as the recycling of aluminum cans.

But using less of one resource generally means using more of other resources. Franklin Associates, a firm that consults on behalf of the EPA, has compared the costs per ton of handling rubbish through three methods: disposal into landfills (but with a voluntary drop-off or buy-back recycling program), a baseline curbside recycling program, and an extensive curbside recycling program.

On average, extensive recycling is 35 percent more costly than conventional disposal, and basic curbside recycling is 55 percent more costly than conventional disposal. That is, curbside recycling uses far more resources. As one expert puts it, adding curbside recycling is "like moving from once-a-week garbage collection to twice a week" (Bailey 1995, A8).

read the entire article

Guns and Butter

In fact, the U.S. is spending relatively little on defense by historic wartime standards, and that's including the $192 billion in 2007 to fund the efforts in Iraq and Afghanistan. It's true that overall defense spending, in dollars adjusted for inflation, is higher than it was during the 1990s. And thank heaven for that. Defense spending as a share of the economy in the Clinton years dipped to its lowest level since 1940, as we lived under the illusion of a "peace dividend" while al Qaeda was gaining strength.

read the entire WSJ article

There basic argument is that a war surtax is not needed.

Gas Mileage

Top Ten Newspaper Websites

Weak Dollar, More Exports

read the WSJ article

Housing Bubble: The Worst is Far From Over

See here and here.