Recently in Economics Category

Normally, I would have just left this as a comment (here).
As setup, the discussion was about illegal immigration, but something touching on education (Laura had mentioned teaching and pay; I don't know if she knew I am a teacher, but I felt a couple of things about teaching were worth mentioning.)
Joe thought it worthy of posting as an entry and asked I do so. Here it is:


Laura,

I do apply that same rubric to all labor. What is really difficult is when companies can outsource the labor to a different country (for example, software) which allows lower wages to be used, it is very difficult for those in that industry to compete. Doing the same with other industries would also mean that meaningful wages would have to be paid, but not as long as illegal immigrants are filling the positions.
Now something that will probably take you back a little. I think illegal immigration should be fought at every level of government, but as I teacher, I sometimes know when a student is in the class as a child of a legal immigrant, and when they are in the class as a child of an illegal immigrant -- and I am bound not to reveal that information by privacy in education laws. I've also worked in a district that was nearly pure naturalized citizens -- people that have lived in the country, who's parents lived here, and grandparents lived here (sometimes for many generations). Guess which district has more respectful children: Loudoun -- by far. People that are immigrants (legal or otherwise) have seen first hand how good the education is here for their children, and they demand respect of those that teach. Go somewhere that the parents have always seen good education, and there isn't necessarily the same level of respect.
That said, I still believe the laws should be enforced.

As difficult as this may be to believe, it is apparently so, judging by Steven Pearlstein's article of Sunday, September 23, 2007; Page F03:


Tobacco Road, Redux

The Wall Street Journal last week had a wonderful article about the revival of tobacco farming in the United States in the three years since the government stopped subsidizing it.

The lead of the story was about an Illinois farmer, Martin Ray Barbre, who was doing better than ever with this year's corn crop, netting a record $250 an acre. But what Barbre is really proud of is his 150-acre tobacco crop. Each acre nets $1,800.

How could this be? It turns out that the subsidy program generated so much supply that it drove prices down below the cost of production, making it appear the subsidies were essential for the farmer's survival. Once the subsidies ended, however, so many subsidy-addicted farmers got out of the business that supply fell below what the cigarette companies needed, creating the $1,800-an-acre windfall. But don't worry: Before long, the market will do what markets do well, which is bring supply and demand back in balance at a price that allows a reasonable profit.

So tell me this: Why is Congress -- a Democratic Congress, no less -- about to renew a farm program that wastes $15 billion a year on market-distorting subsidies?


The Sunday Washington Post was just full of interesting articles. You have the Dems playing the "word" game where there are no more "earmarks" on their bills. They change the name to something else and say that "....it is perfectly legal". Anybody that shows me a work-around and tells me that it is perfectly legal is skirting the rules. Earmark is earmark. The word carries a bad tone associated with "pork", "special interest" and the like. What that means is spending YOUR money wastefully. What the Dems do with proficiency (as well as some out-of-step Republicans). Let's just say that those people associated with the left are at it again!

The GOP is wanting to pander to the Hispanics and can't understand why no Republican candidates other than John McCain are willing to show up with the Democratic candidates for a forum tonight in Miami on Hispanic issues. I wonder if they are talking about foreign policy? Otherwise, why would a candidate single out an ethnic group? Special favors? I thought the object was to tell Americans (U.S.) what their positions were to help all? Does this smack of "special interest" also?

Al Gore is going to support one of the Dem candidates...any except the Clintons. Do you think that Hilly is better off because of this? I certainly have my own opinion.

And Mark (I'm the best Governor of Virginia in your lifetime) Warner is in a quandary as to which position to run for. If he chooses U.S. senator, he will be assessed with the other Democratic candidates (and he doesn't stomach that well). Does this say something? He wants to be governor of Virginia again and thinks that his record will landslide him right in. The governor who took a deficet and turned it into a surplus....with a tax increase! Heck, anybody can do that. The Dems are NOTORIOUS for that mindset. Kaine't wanted to save that surplus for a rainy day and increase taxes (and has) more. What is that surplus of our money for? I sure could use it. I forgot. The government under liberal thinking needs ALL your money so that it can manage your life since you are too inept to be able to do that yourself. Government for all. Viva Lenin!

I need more coffee so I can work the crossword.

As everyone here probably knows, the Census Bureau just released it's annual report on poverty. Well, a philosopher(?) from George Washington University, Charles Karelis, thinks he knows why: "[After] doing lots of reading and giving it extensive thought, Karelis concluded that the reason some people are perpetually poor is that they don't have enough money." (Washington Post, Wednesday, August 29, 2007; Page D01)

The point is not to be self-obvious, but to look at the culture of poverty, in that, when one is poor, he thinks that what little he could save could not lift him out of poverty. So he does not bother to save at all.

Of course, the tales of poor people who have struck it rich in the lottery or in sports . Sure, they're anecdotes. This article has many sources on studies of lottery winners. According to one article listed there, about one-third of lottery winners go bankrupt. (I assume, of course, they're talking about the honkin' big lotteries, not the Pick Three.)

Well, I can't say I think much of Prof. Karelis' theory, but I'm willing to be one of the test subjects!

To tell the truth, the real reason we never get the poverty rate down is that we keep changing the definition! Here's an article from the National Review (thank you for the link, Leader Levin) that discusses the new poverty report. These are a few of the salient points of the article:

1) 80 percent of poor households have air conditioning. By contrast, in 1970, only 36 percent of the entire U.S. population enjoyed air conditioning.

2) 46 percent of all poor households actually own their own homes. The average home owned by persons classified as poor by the Census Bureau is a three-bedroom house with one-and-a-half baths, a garage, and a porch or patio.

3) The typical poor American has more living space than the average individual living in Paris, London, Vienna, Athens, and other cities throughout Europe.

4) 89 percent own microwave ovens, more than half have a stereo, and a more than a third have an automatic dishwasher.

This is poor?

A former co-worker of mine (a legal immigrant, I might add) was most insistent that we do not have poverty in America. He has a point, too. He's from Sri Lanka. 41.6% of the people there live on less than $2 per day. 25% live below the national poverty line. He knows poverty.

Jesus was right, the poor will always be with us, because no matter how rich they get, we just keep raising the bar and calling them "poor."

Aside from Ford's obvious problem of the United Auto Workers' driving labor costs above their natural level, the company is also shooting itself in the foot fighting against foreign replacement parts manufacturers (Washington Post, Tuesday, August 21, 2007; Page D01).

Now, at first glance, one would think that protecting one's patents would be a good thing. It is, up to a point. That point is that Ford wants to be the sole supplier of replacement parts. The problem is that other, foreign manufacturers can make identical parts cheaper than Ford can. By attempting to drive such manufacturers out of the market, Ford will only drive up the cost of those parts. The result is that the cost of ownership goes up. When the cost of ownership goes up, fewer people buy Fords.

Ford should consider licensing such manufacturers, with the licensing fee's going directly to pay for quality inspections of the parts. Although this would increase the cost of such replacement parts, the manufacturers could advertise that the parts are licenced and inspected by Ford, and the competition would keep the prices down.

Madness...

via Drudge

UPDATE: And the Chinese back away from their own threat.

I was reading Tom Rust's website trying to find out why this man (the ex-mayor of Herndondo whose watch allowed the significant increase of illegals in the town) would initiate such ridiculous and prejudice fines on the drivers of Virginia. On his site was most recently asked questions as to why only Virginians? The response was...constitutionality...working on ways....unfortunately...

Yes, I believe that it is unfortunate that the thinking is that stiffer fines on Virginia drivers will help fill the transportation coffiers of our area. This under the guise of "reducing drunk and reckless driving". In reality, it is a sham for non-enforcement of all driving code laws. Much of this comes from the areas police forces and lack of monies for additional officers or the courts being overworked and understaffed. I have heard this arguement for years.

This was originally going to be a response to The Stay Puft Marshmallow Man (hereafter "puffy" or "puffalump"), but I thought the topic deserved it's own post. The first post is here.

Puffalump remarked that:

it's like this: Western economies have pretty much outgrown manufacturing. Once upon a time %70 of the population was in agriculture, now it's %2. We used to have big textile factories in the 1800s, then we moved into production of more tech-driven machinery like cars. Now we produce ideas, other countries build the stuff (for example: http://www.microsoft.com/surface/

this is a typical progression of a capitalist economy. Europe, Japan also moved from ag. to text. to manufac. to tech.

as more countries move up the ladder, others move in to fill the gap they leave and along the way, and the world becomes more integrated.

You want a revolution? this is a revolution! China is racing down the trail we helped blaze. What are we going to do about it; step up and move boldly into the uncharted waters of the future, or freak out and try to reverse the flow of history?

He meant that the manufacturing jobs are declining -- our actual manufacturing output is increasing. The problem is that our productivity is outpacing our production, so jobs are lost.


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