Quotulatiousness

April 19, 2015

Does the Equilibrium Model Work

Filed under: Economics — Tags: — Nicholas @ 02:00

Published on 2 Jan 2015

Does the equilibrium model work? Nobel Prize winner Vernon Smith conducted experiments testing this model and found that time and time again, the model did indeed work. This video takes a look at Smith’s evidence and analyzes other instances where market conditions shift either the demand or supply curve, and the equilibrium model comes into play.

April 16, 2015

Exploring Equilibrium

Filed under: Economics — Tags: — Nicholas @ 04:00

Published on 2 Jan 2015

In this video, we’ll review equilibrium in the adjustment process, showing that the equilibrium price is the only stable price. Then we’ll take a look at equilibrium quantity, where quantity demanded is equal to quantity supplied, and how this plays out in a free market economy that seeks to maximize gains from trade.

Measuring productivity in the modern economy

Filed under: Economics — Tags: , , , — Nicholas @ 03:00

Tim Worstall on how our traditional economic measurements are less and less accurate for the modern economic picture:

… in the developed countries there’s a problem which seems to me obvious (and Brad Delong has even said that I’m right here which is nice). Which is that we’re just not measuring the output of the digital economy correctly. For much of that output is not in fact priced: what Delong has called Andreessenian goods (and Marc Andreessen himself calls Mokyrian). For example, we take Google’s addition to the economy to be the value of advertising that Google sells, not the value in use of the Google search engine. Similarly, Facebook is valued at its advertising sales, not whatever value people gain from being part of a social network of 1.3 billion people. In the traditional economy that consumer surplus can be roughly taken to be twice the sales value of the goods. For these Andreessenian goods the consumer surplus could be 20 times (Delong) or even 100 times (my own, very controversial and back of envelope calculations) that sales value.

We are therefore, in my view, grossly underestimating output. And since we measure productivity as the residual of output and resources used to create it we’re therefore also grossly underestimating productivity growth. We’re in error by using measurements of the older, physical, economy as our metric for the newer, digital, one.

In short, I simply don’t agree that growth is as slow as we are measuring it to be. Thus any predictions that rely upon taking our current “low” rate of growth as being a starting point must, logically, be wrong. And that also means that all the policy prescriptions that flow from such an analysis, that we must spend more on infrastructure, education, government support for innovation, must also be wrong.

April 14, 2015

The Supply Curve Shifts

Filed under: Economics — Tags: — Nicholas @ 05:00

Published on 2 Jan 2015

This video explores factors that shift the supply curve. How do technological innovations, input prices, taxes and subsidies, and other factors affect a firm’s costs and the price at which the firm is willing to sell a good? By answering these questions we have a better idea of how the supply curve will shift. This video walks you through examples and scenarios that illustrate this concept.

April 13, 2015

A Deeper Look at the Demand Curve

Filed under: Economics — Tags: — Nicholas @ 02:00

Published on 2 Jan 2015

This video looks at both the horizontal and vertical methods for reading the demand curve, how demand curves shift, and consumer surplus.

April 10, 2015

A Deeper Look at the Supply Curve

Filed under: Economics — Tags: — Nicholas @ 05:00

Published on 2 Jan 2015

What does the supply curve show us? This video takes a look at what we can tell from the supply curve about the behavior of sellers and quantities supplied at different prices. We’ll talk about producer surplus as well as factors that lead to an increase in supply and a decrease in supply — and we’ll provide a list of these important supply shifters.

QotD: Zoning hurts the poor

Filed under: Economics,Government,Quotations,USA — Tags: , , , — Nicholas @ 01:00

One kind of regulation that was actually intended to harm the poor, and especially poor minorities, was zoning. The ostensible reason for zoning was to address unhealthy conditions in cities by functionally separating land uses, which is called “exclusionary zoning.” But prior to passage of the Civil Rights Act of 1968, some municipalities had race-based exclusionary land-use regulations. Early in the 20th century, several California cities masked their racist intent by specifically excluding laundry businesses, predominantly Chinese owned, from certain areas of the cities.

Today, of course, explicitly race-based, exclusionary zoning policies are illegal. But some zoning regulations nevertheless price certain demographics out of particular neighborhoods by forbidding multifamily dwellings, which are more affordable to low- or middle-income individuals. When the government artificially separates land uses and forbids building certain kinds of residences in entire districts, it restricts the supply of housing and increases the cost of the land, and the price of housing reflects those restrictions.

Moreover, when cities implement zoning rules that make it difficult to secure permits to build new housing, land that is already developed becomes more valuable because you no longer need a permit. The demand for such developed land is therefore artificially higher, and that again raises its price.

Sandy Ikeda, “Shut Out: How Land-Use Regulations Hurt the Poor”, The Freeman, 2015-02-05.

April 9, 2015

The Demand Curve Shifts

Filed under: Economics — Tags: — Nicholas @ 02:00

Published on 2 Jan 2015

How do increases or decreases in demand affect the demand curve? An increase in demand means an increase in the quantity demanded at every price. Similarly, a decrease in demand means a decrease in the quantity demanded at every price.

This video takes a look at some important factors that shift the demand curve, such as changes in population, changes in income, prices of substitutes, and changes in taste. We’ll look at real-world scenarios that cause a change in demand — like how the demand for batteries increases when a hurricane is expected, how our demand for inferior goods decreases when our income increases, and how the demand for hot dogs increases when the price of the complement, hot dog buns, decreases.

April 8, 2015

Venezuela’s economic plight

Filed under: Americas,Economics,Politics — Tags: , , , — Nicholas @ 05:00

J.R. Ireland sums up the Venezuelan situation:

The current fate of Venezuela is one of the most wretched and tragic foregone conclusions in modern history — an economic system that was doomed, from the first optimistic days of its implementation, to fail miserably and to beggar the poor, beleaguered Venezuelan people as it did so. There was no other way it could conceivably end. This sort of command economy has been tried continuously throughout the 20th century and humanity’s failure to learn from socialism’s shortcomings is the primary reason the next century is unlikely to greatly improve upon the last, at least from a human rights perspective.

So anyone who had paid attention to the decay, stagnation, and eventual collapse of every command economy of the 20th century knew immediately that Chavista socialism would be no more successful than Castro’s socialism, Mao’s socialism, Lenin’s socialism, or Pol Pot’s socialism and would end, eventually, in the same great grey void of hopelessness, impotence, shortages, inequity and despair. Therefore, those of us who actually know anything about the failings of such command economies cannot be particularly surprised by the fact that condoms currently cost $755 for a 36 pack of trojans, that authorities have begun making it illegal to shop more than twice a week in a desperate attempt to alleviate shortages, or that women must now wait in long lines to get something so simple as tampons. This was guaranteed to occur all along and the foreordained Day of Judgment was only ever so slightly delayed by a period of high oil prices which allowed the Venezuelan government to paper over systemic failings with a vast influx of petrodollars.

What I now have to ask is this: When can we expect an apology from the various ‘enlightened’ and ‘caring’ progressives who applauded Chavez during his rise to power, who claimed that every one of Chavez’ failings was the fault of bigoted American imperialists undercutting the Savior of South American, and who declared Chavez to be some sort of righteous admixture between Jesus Christ, Gandhi, Albert Einstein, and George Washington?

This is probably why so many people think businesses should pay more tax

Filed under: Business,Economics,Government — Tags: , , — Nicholas @ 04:00

At Forbes, Tim Worstall reports on a staggering misconception among Americans about what corporate profits amount to:

A wonderful little find by Mark Perry. Something that helps to explain quite why so many completely ridiculous economic ideas and public policies manage to gain traction. The problem is that the average person just doesn’t understand the economy at all. No, I don’t mean economics, or the abstruse arguments about whether we should use monetary or fiscal policy. But just the basic raw numbers of what’s actually going on out there. As Perry goes on to point out this, well, let’s not beat about the bush here, let’s call it what it is, this ignorance of the universe they’re inhabiting by the average person out there is what keeps the economic demagogues in business.

Here’s what Perry found:

    When a random sample of American adults were asked the question “Just a rough guess, what percent profit on each dollar of sales do you think the average company makes after taxes?” for the Reason-Rupe poll in May 2013, the average response was 36%! That response was very close to historical results from the polling organization ORC’s polls for a slightly different, but related question: What percent profit on each dollar of sales do you think the average manufacturer makes after taxes? Responses to that question in 9 different polls between 1971 and 1987 ranged from 28% to 37% and averaged 31.6%.

That’s simply a ridiculous belief. Plain howling at the Moon crazy. The capital share of the economy isn’t that high and the capital share is made up of a great deal more than just profits (depreciation, rent, interest and so on as well as profits). There’s just no way that this is anywhere near true. As Perry goes on to point out:

    According to this Yahoo!Finance database for 212 different industries, the average profit margin for the most recent quarter was 7.5% and the median profit margin was 6.5%.

The Equilibrium Price

Filed under: Economics — Tags: , — Nicholas @ 02:00

Published on 2 Jan 2015

In this lesson, we investigate how prices reach equilibrium and how the market works like an invisible hand coordinating economic activity. At equilibrium, the price is stable and gains from trade are maximized. When the price is not at equilibrium, a shortage or a surplus occurs. The equilibrium price is the result of competition amongst buyers and sellers.

QotD: Top 10 reasons not to be a leftist

Filed under: Economics,Politics,Quotations,USA — Tags: , , , , , — Nicholas @ 01:00
  1. Gun control. Liberals are completely wrong about this. A fair number of them know better, too, but they sponsor lies about it as a form of class warfare against conservative-leaning gun owners.
  2. Nuclear power. They’re wrong about this, too, and the cost in both dollars and human deaths by pollution and other fossil-fuel side-effects has been enormous.
  3. Affirmative action. These programs couldn’t be a more diabolical or effective plan for plan for entrenching racial prejudice if the Aryan Nations had designed them.
  4. Abortion: The liberals’ looney-toon feminist need to believe that a fetus one second before birth is a parasitic lump of tissue with no rights, but a fetus one second afterwards is a full human, has done half the job of making a reasoned debate on abortion nigh-impossible.
  5. Communism. I haven’t forgiven the Left for sucking up to the monstrous evil that was the Soviet Union. And I never will.
  6. Socialism. Liberals have never met a tax, a government intervention, or a forcible redistribution of wealth they didn’t like. Their economic program is Communism without the guts to admit it.
  7. Junk science. No medical study is too bogus and no environmental scare too fraudalent for liberals. If it rationalizes bashing capitalism or slathering on another layer of regulatory bureaucracy, they’ll take it.
  8. Defining deviancy down. Liberals are in such a desperate rush to embrace the `victimized by society’ and speak the language of compassion that they’ve forgotten how to condemn harmful, self-destructive and other-destructive behavior.
  9. William Jefferson Clinton. Sociopathic liar, perjurer, sexual predator. There was nothing but a sucking narcissistic vacuum where his principles should have been. Liberals worship him.
  10. Liberals, by and large, are fools.

Eric S. Raymond, “Top Ten Reasons I’m Neither a Liberal Nor a Conservative”, Armed and Dangerous, 2004-09-19.

April 7, 2015

The Supply Curve

Filed under: Economics — Tags: , — Nicholas @ 04:00

Published on 2 Jan 2015

In this video, we explore the relationship between price and quantity supplied. Why does the supply curve slope upward? The supply curve shows how much of a good suppliers are willing to supply at different prices. For instance, oil suppliers in Alaska and Saudi Arabia face different costs of extraction, affecting the price at which they are willing to supply oil.

April 6, 2015

The Demand Curve

Filed under: Economics — Tags: , — Nicholas @ 04:00

Published on 2 Jan 2015

Why does the demand curve slope downward? The demand curve demonstrates how much of a good people are willing to buy at different prices. In this video, we shed light on why people go crazy on Black Friday and, using the demand curve for oil, show how people respond to changes in price.

April 3, 2015

Updating the old saying “where there’s muck, there’s money”

Filed under: Economics,Science,Technology — Tags: , , , — Nicholas @ 04:00

According to this story in the Guardian, a typical city of one million people poops out $13 million in (potentially recoverable) precious metals every year:

Sewage sludge contains traces of gold, silver and platinum at levels that would be seen as commercially viable by traditional prospectors. “The gold we found was at the level of a minimal mineral deposit,” said Kathleen Smith, of the US Geological Survey.

Smith and her colleagues argue that extracting metals from waste could also help limit the release of harmful metals, such as lead, into the environment in fertilisers and reduce the amount of toxic sewage that has to be buried or burnt.

“If you can get rid of some of the nuisance metals that currently limit how much of these biosolids we can use on fields and forests, and at the same time recover valuable metals and other elements, that’s a win-win,” she said.

A previous study, by Arizona State University, estimated that a city of 1 million inhabitants flushed about $13m (£8.7m) worth of precious metals down toilets and sewer drains each year.

The task of sifting sewage for microscopic quantities of gold may sound grim, but it could have a variety of unexpected benefits over traditional gold mining. The use of powerful chemicals, called leachates, used by the industry to pull metals out of rock is controversial, because these chemicals can be devastating to ecosystems when they leak into the environment. In the controlled setting of a sewage plant, the chemicals could be used liberally without the ecological risks.

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