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Mitchell Brister
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I really enjoyed these articles as they put a large emphasis on solutions and viable options for the future. Something that I was thinking about when reading the Harvard magazine article is that humans are extremely reactive and rarely ever proactive. I began to think about this in terms of the nuclear reactor explosion in Chernobyl. Obviously the negative effects of Chernobyl are absolutely horrifying. My family actually would host a girl every summer from Belarus so that she could be clear of the radiation from Chernobyl if only for a small amount of time. But to get back on topic, my thought was that If an event like Chernobyl has completely turned off a generation from the numerous benefits from Nuclear energy, what an event would do for fossil fuels. My thought, as terrible as it is, was that if we had some sort of Chernobyl for fossil fuels, something that could represent the long term damage that our current fossil fuels are causing, outside of an oil spill, that the shift away from our current fuel sources would be tremendous. I know this isn't a great thought, but it just hit me that it almost always takes some sort of disaster to happen for people to change. I pray that climate change will be the exception.
Toggle Commented Mar 14, 2016 on ECON 255 for next Thursday at Jolly Green General
At this point in the course, I am really not surprised at the findings of this paper. Coal use has costs to society that the current price doesn't even begin to capture. Coal use is bad for the environment. Does it matter exactly how bad? No, not really. Its bad and therefore we should be trying to phase out of coal. The exact amount of damage is only important if we were going to include the total cost into the price of coal which will most likely never happen. Its nice to think about a clean grid and everyone being responsible, but without incentives on a large scale, that scenario might as well exist in Narnia. Until there is some sort of disincentive for firms to find an alternative source of fuel, and the social cost is included into the price of coal, or any fossil fuel for that matter, then nothing will change. These papers will continue to be published and there will continue to be debates, but I fear it will be too little to late before those who choose to be blind to the environment are slapped in the face by an emergency scenario. I swear I had a good day today.
Toggle Commented Mar 9, 2016 on ECON 255 for Thursday at Jolly Green General
One of the main issues facing biodiversity is the fact that agriculture covers so much land and is constantly expanding as the population increases and consumption continues to increase. As with most environmental policy the key is to get the big players, being the US and China, to comply and lead the charge. And as we know with regulation and lobbyists in the US, it is really hard to impose a lot of restrictions on US farmers. On top of this food consumption is something that is seen as a basic human right that everyone consumes, so raising the price of food to truly reflect the social cost is a very difficult proposal to get everyone on board with. On thing that came to my mind when reading this article was the development of indoor farming methods that are used in Japan. These facilities can be built on multiple stories which may help with the expansive farming issue that is threatening biodiversity.
Toggle Commented Mar 3, 2016 on ECON 255 for Thursday at Jolly Green General
The paper does a great job of quantifying and showing the economic value of biodiversity in Barbados. Through non-market valuation techniques, we can see the value of the coral reefs. We can also use reasoning from the paper to think about the importance of all kinds of different environmental areas. An issue that continues to bother me when thinking about this paper and others like it is the bottle neck that is big company’s influence in politics. Like Professor Casey said in class, I forget the country, but that in many other countries scientific research is read and digested and acted on. In the US it feels like the money of big company’s is all that is acted on. Much like in the situation with the Cuban coral reefs, I have a bad feeling that if a cruise ship business or oil drilling company finds the area that is to be protected important and valuable, that politicians will be more inclined to side with them. Especially when the company’s are able to promise thousands of jobs, and any sort of policy to protect the environment is labeled as some sort of left granola policy. Even when the economics of the situation account for the efficient amount of environmental resource. I really hope that there is some sort of chance in politics so that people can see that a conservation of the environment doesn’t always have to come at the direct expense of growth like is perceived by many.
Toggle Commented Feb 3, 2016 on ECON 255 for next Thursday at Jolly Green General
The Tragedy of the Commons brought forth the issue of breeding and the finite capacity of the earth. This issue isn’t something that most people like to address or really ever do when thinking about the environment. I have to say that I disagree with some points made in the paper. The first point that I disagree with is the assumption that the population is what is really ruining the environment. I believe that before we talk about controlling population and taking away the right to breed, we can make huge strides in the consumption and production of pollution around the world. Pollution is the real issue when looking at the future of mankind. And if the U.S., China, and India could cut down their pollution levels, they can make a drastic change for the earth. I really don’t see an issue with greater population on earth. I believe that there is plenty of room for more people around the world and food production is only becoming more efficient. Water is another issue, but I really do believe that technology will advance to help us with desalination of ocean water. The real issue I see is the consumption and production of pollution. Before we start talking about taking away a human right, we should do everything else we can. On top of this education and increase access to healthcare will decrease birth rates, helping to lower the rate of population growth.
Toggle Commented Jan 22, 2016 on ECON 255 for Friday at Jolly Green General
This paper discusses the causes for capital flows into developing nations by looking at the effect of US treasury yields. One side of the argument is that the flow of capital is largely determined by internal policy and economic conditions. The other argument is that the flow of capital is determined by the external economic conditions and more specifically to this paper the yields on the US treasury bonds. Traditionally research has only used regressions between the yields on Treasury bonds and the cash flows into developing countries without taking into account volume and composition of the treasury bonds. This paper tries to correct this mistake. They found that the international bond rates do have an effect on the the market for developing countries. This paper has really made me think back to Professor Reiter’s Globalization and Economic Development class in which we discussed international cash flows and Foreign Direct Investment. While often looked at as a positive way for developing countries to access capital and grow, there is a downside. Local markets and producers in the markets can often be crushed by large international firms coming into a country. On top of this, in the same way that FDI can flood into a country, it can flow out. When a situation like this happens the local economy is crushed. These are just two things that came to mind when reading this paper, and two subjects that I hope to discuss in class.
Toggle Commented Nov 17, 2015 on ECON 280 for Thursday at Jolly Green General
Rodrik’s paper does a great job at looking at examples of growth to derive truths about universal growth strategies and policies. One example that I found interesting was China. Rodrik juxtaposes the widely accepted Washington Consensus to the growth strategies and policies that China used in the 1970’s and 80’s to make an important point. The policies that China used were both non-conventional, and extremely successful. The polices varied greatly from the traditional Washington Consensus and shows that most policies need to be highly individualized and in many instances unorthodox to be effective. The overarching rules of economics can’t be broadly put on economies and be expected to work. The truth about the broad growth strategies that this paper sought to find is that there are no successful universal growth strategies. To apply a single strategy or policy to every economy is irresponsible and ignorant but is the way that most people think.
I believe Banerjee and Duflo have done a very good job of laying out the spending and consumption habits to illustrate the lives of the poor and extremely poor. The paper was very insightful and brought to mind a lot of questions as to the economic solution for the poor. One of the main issues brought up in the paper was the lack of incentive for the poor to save any amount of money or to reinvest in their company. The example of fertilizer was very interesting as poor farmers usually do not use fertilizer even though it has been shown to be a great investment for farmers, and can be bought in small quantities at low cost. The Kenyan program that offered farmers a voucher with a subsidy to buy fertilizer later had great success. Programs like this may be a good idea in developing nations so that the poor will be encouraged to save. Another interesting point of the paper is the fact that they poor don’t eat as many calories as they should even though they could be spending more on food. The paper suggests that a reason for this may be that the poor fear sickness that will drop their weight either way, making the extra money they spend on food useless. Being underweight leads to sickness, and being sick leads to being underweight. This cycle is much like other cycles seen in this paper. With no capital, the poor can’t bring their businesses to scale, and thus can’t make much money. What does it take to break the poor out of these cycles? Is a big push needed?
The Krugman paper draws a clear line in describing the history of Development Economics between the High Development Theory, a time of simpler models and a more loose form of economics, and the more mathematical and empirical period that came after. Both, as the paper describes, have their pros and cons. The powerful takeaway from this piece that can apply to almost any aspect of life, is that one way doesn’t have to be right over another. That instead of a black and white mindset, the positives of each should be taken into account when addressing an economic problem. The aggregate supply and demand curves are an extremely rudimentary and simple model used to explain an extremely complicated economy, yet the general gist and trends seen in the model are extremely effective in understanding the economy. Mathematical models are always going to be better when they can be implemented, but just because a model isn’t as empirical and precise as another doesn’t mean it should be discounted. This paper did a great job of using an example from development economics to prove this point.
The second point that the article raises is that inflation may not be a bad thing, at least for the short run. As we talked about in class, higher inflation is a great thing for exports as it is cheaper for people in other countries as it is cheaper to buy US. Also as we talked about inflation is a great thing for those in debt. As a country in debt, we may want to look at this option maybe with a higher target inflation rate.
This article raises two very good points in my mind. The first, a fact, is that the banks are sitting on too much money. We need businesses to borrow. A possible solution is making an upper limit on bank reserves. The problem with this is that many businesses are sitting on mountains of cash as well. The problem here is that the FED and the government can't make people buy more goods and this is where the fundamental problem lays.
This article was extremely interesting. It shows how limited the effectiveness of GDP is in determining how well and economy is doing. This gap between how the economy is doing and the GDP number is only getting larger with increasing free technology. This reminds me of the derivatives market which continues to blow my mind. In the same way as free technology, derivatives don't go into the GDP, but to a huge extent. I think that it is only a matter of time before an economist comes up with some new measure of evaluating the economy that will better incorporate these two things. Sounds like a Nobel prize idea to me.
Toggle Commented Nov 22, 2013 on Link from Twitter at Jolly Green General
This article was very interesting for me. We have talked a lot about the traditional mathod of raising and lower interest rates by the Fed to control inflation. The only question I have from the article is that I don't see how this method of quantitative easing can be that effective. The banks already have all the money in the world just sitting in their reserves.They already have the money they need to purchase assets. The inflation expectations and downward pressure on exchange rates seem like good results of quantitative easing but if these are the main effects, I doesn't seem very effective to me.
This article reiterates what Professor Casey has been telling us in class. It also helps clarify a point that I was struggling with. Debt isn't a good thing, but it isn't as bad as people would like to believe. This is especially true when investment spending usually contributes to the deficit because the gains to the economy haven't been recognized due to our accounting policies. Investment spending is one of the biggest keys to growing our long run aggregate spending and increasing our economy and GDP. But under current policy there are incentives for politicians to cut spending in investment. This is a huge problem for America. Much of this pressure is simply for ignorance. For the majority of America they have no idea what government spending and more specifically government investment does for GDP.
The effect of monetary policy is fairly straight forward in its positive effects on the economy. It backs up the fact that lower income families spend more money of the money they would receive than a higher income family. Obviously monetary policy and stimulus should be directed toward these lower income families. This also proves that when putting in policies and laws it is always best to be as specific as possible. Instead of simply averaging the entire economy's MPC, it was best to target the lowest 10%.
In the same way the models are extremely important but at the same time not the final answer, I believe the FED's past policies explained in this argument are important. Obviously what this article has proven is that there is definitely a place for monetary policy. It has shown that the two times in our past where we have failed, is when there was a pesimistic view on monetary policy. Obviously as the article says there is monetary policy in place now but it is hard to tell the thoughts behind the FED's actions because it is so soon. There have been good arguments agains monetary policy which can be considered, but having no to little monetary policy would be foolish. We would have learned nothing from history. The banks currently hold all the money and they key is to somehow get the firms to borrow. Although there is no magic answer to the problem, I believe this article has shown us that no monetary policy isn't it.
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Oct 24, 2013