This is Jack Boyce's Typepad Profile.
Join Typepad and start following Jack Boyce's activity
Join Now!
Already a member? Sign In
Jack Boyce
Recent Activity
The concept of a balanced budget for federal government is one that seems to draw support from the American public, yet many do not understand the true ramifications of a balanced budget amendment. Leading economists warned against this amendment as an amendment of this form would cause major issue within the economy. Due to the nature of balancing the national budget and how costly it would be to do so, the economy would be constantly on the verge of or in a recession. According to the article, a balanced budget amendment would cause an increase in the national debt and lead to decreases in tax revenue and cause a rise in unemployment. These issues alone would limit the national government’s ability to function and lead the country out of troubled times. It would lead to funding problems, especially in regards to education and infrastructure, two major keys to the backbone of the US economy. These economists point the 90s as an example of the government’s fiscal policies leading to a national surplus, and how it was achieved without a balanced budget amendment. Additionally, a nation’s economy cannot be run as if it is a corporation or private firm. Privates firms are at liberty to do as they chose in order to cut spending or increase their budget. A nation cannot be run the same way. The nation’s economy is critical to the livelihoods of all citizens in that country, whether they understand that or not. If a country starts running its economy like a company, many people would feel hardship, especially in a country like the US. If a balanced budget were to be implement in today’s society, the economy would most likely be doomed to fail.
In his article “Confronting the Fiscal Boogeyman”, Barry Eichengreen discusses the world economy and how it is slowly fading in to an abyss of failure and approaching ways to find a solution. According to the article, fiscal policy is all that is left as the last line of defense and central banks are the key to getting out of the decline. While this is may be the case, these banks have lowered interest rates are at all-time lows and foreign banks have negative rates, yet the economy is still not expanding the way it was supposed to. These negative rates, which were supposed to implement growth in the economy, have begun to negatively affect the banking industry, as they can no longer make a profit or pass off their debts with the prolonged negative interest rates. Eichengreen believe that the answer to the problem is straightforward and involved an increase in governmental spending on the public sector, and invest in research, education, and infrastructure. This would lead to the private sector’s willingness to invest, as they would be making a profit and could take on additional projects, as Eichengreen describes. He follows this idea with opinion of how it is disturbing that world governments are unwilling to attempt this and refers to the interesting concept of “ordoliberalism” as a reason why. A concept used by the Germans and Russians after World War II that limited governmental influence on the economy to enforce contracts and keeping a competitive market, “ordoliberalism” was used to stop excesses, like those of Hitler and Stalin. This concept led to major costs and hyperinflation, which is why it is not logical to follow this concept in society today. The world economy is in peril and with the slowed economies in the United States and Europe and economic failures in Asia, the world needs to find a solutions to its issues, and these solutions may be found in fiscal policy and pubic spending.
In the article “Restaurant Industry Unharmed by Modest Minimum Wage Hikes”, the effects of an increase in minimum wage are related to society and the practical implications. A major concern for the restaurant industry is the ability to pay workers at a rate that is affordable and does not influence consumer happiness. Throughout the past, a rise in minimum was seen by the industry to be nuclear disaster as it would lead to fewer workers being hired, and consumer unhappiness as service would be slower. Restaurants have risen their prices to offset the wage increases, but how effective will this be in the long run. The possibility of another rise is possible, and this would cause an increase in prices. There will be a certain point where the consumer will no longer be willing to pay the prices that restaurant owners must charge to cover their losses and make a profit. Increases in the minimum wage may be positive for the time being, but moderation in regards to the overall increase over time, as it may lead to negative consequences.
In class, we discussed the three main types of unemployment and what type of unemployment there was during and following the Great Recession of 2008 and its doubled unemployment rate. Krugman discusses this in his article “Structural Humbug Revisited”. Krugman talks about the type of unemployment that occurred during that timeframe and how it was not truly debated by people and just accepted as structural, although many economists disagreed. He relates it to the Great Depression and how there was a similar view to it being structural, but the economic advancement caused by the financial stimulus that was World War II. Krugman views the Great Recession as a cyclical version of unemployment. There is a main difference between the two, as structural results in more people searching for jobs than there are available, while cyclical refers to the deviation between the actual and natural unemployment rates. Since there was no wage changes for skilled vs non-skilled workers and the fact that there was an overall fall in employment, the unemployment of the Great Depression could not be structural, but must be cyclical. It was also interesting to see Krugman’s opinions of those who called the unemployment structural, as he refers to them as “elite”.
In the Harvard Gazette’s article “The costs of inequality: When a fair shake isn’t”, it discusses the economic cost of inequality in society. It shows the historical lead up to the era, and how income inequality began to be reinvigorated after the Great Depression. This article seems to blame these tendencies on the power and influence level a person has, as the top 20% of people have over 80% of the national wealth. I understand the concepts this article is trying to prove, but I do not necessarily believe what it is saying. Political and social power may influence certain aspects of the economy, but people come from all different types of background and the resources are available for the people in the lower 40% to rise up in society. Warren Buffett, one of the world’s wealthiest people, created his own path to success from the time he was a child, selling soda and newspaper and investing his money wisely. Mark Cuban, the owner of the Dallas Mavericks, created his own path to success as his parents were not wealthy and he went from being a bartender to starting his own company, selling it, and making wise investments and diversifying his wealth. I understand that there is inequality in society, as it has be ingrained in my mind through my Catholic school education, but government handouts and free passes do not encourage progression in society, but acceptance of the free help and the lack of desire to advance. I agree with Powell that inequality is a problem in society and society needs to take action, but in order to fix it, people need to get an education, work, and earn their money and not receive checks in the mail from the government.
In Robert Rubin’s article “How ignoring climate change could sink the U.S. economy”, Rubin discusses the effects of the climate change and its causes are detrimental to the economy. Rubin writes about the public opinion of climate change, how 60% of people feel it is caused by human action, the effects of greenhouse gases on the environment and how that relates back to the economy. According to Rubin, there is a trade-off between the environment and its protection and business capabilities, as he states that reducing the use of fossil fuels would “impede” on production and hurt the U.S. economy. In my opinion, the climate change the world is going through is a part of the Earth’s natural cycle, but it is being sped up by the pollution people emit during their daily lives. The change to cleaner technology and reusable resources and energy source would be a benefit for society, but with the amount of pollution across the world, especially in China and India, the world may still be in trouble. Rubin has many valid points regarding the ramifications if this issue is left for a later time. The change in climate is going to affect the U.S. economy and people, especially producers and factory owners need to understand this and change their methods before it is too late.
Toggle Commented Feb 5, 2016 on ECON 102 at Jolly Green General
I never had a true understanding of what negative interest rates were until reading this article and doing some additional research. This article discusses Japan’s implementation of negative interest rates to try and promote growth in their faltering economy. With the current state of Japan’s economy and its lack of economic growth over the last twenty five years, it is not surprising that they have implemented the negative interest rates. It is a last resort that may be necessary as the country has fallen behind economically and is still trying to recover from the tsunami of a few years ago. In addition to this, the article itself mentions the recent failures in China, the extremely low oil prices, and slow international trade. All of these issues are contributing to the numerous issues of the Japanese economy and the prime minister has decided to attempt to “break the country’s cycle of decline”. It will be interesting to see how this pays off over time as while Prime Minister Abe has a track record of making to decisions to improve the Japanese economy. It will also be interesting to see how Japan will hold up with the many foreign influences over their economy and the failures in the current global economy.
Toggle Commented Jan 30, 2016 on ECON 102 at Jolly Green General
Jack Boyce is now following Caseyj
Jan 28, 2016
Jack Boyce is now following The Typepad Team
Jan 26, 2016