• 16750_SupremeCourt.11.16_000002592980XSmall

    Supreme Court Laughter

    Mar 30 • Economic Debates, Economic Humor, Economic Thinkers, Government, Thinking Economically, Uncategorized • 533 Views

    Using transcripts that say (Laughter) when some levity enters the proceedings, one legal scholar has concluded that the Supreme Court averaged 1.027 laughs per oral argument. The funniest justice is Anton Scalia who holds the record with a total of 77 “laughter episodes” during one year.

    On Wednesday, he added to this year’s total. When one attorney suggested that the Court could decide which sections of the Affordable Care Act would survive if the individual mandate were eliminated, Justice Scalia responded, “…what happened to the Eighth Amendment? You really want us to go through these 2700 pages? (Laughter)…Or do expect us to give this function to our law clerks?…” (the Eighth Amendment prohibits cruel and unusual punishment.)

    Another example of Scalia humor:

    Soon after a light bulb went out with a loud pop during a 2005 oral argument, Justice Scalia said, “We’re even more in the dark now than before.”

    Behind Scalia, Justice Breyer has been a close second and Justice Roberts is #3. Meanwhile, Alito and Ginsburg are far behind and, rarely speaking, Justice Thomas is 0 on the humor scale. Here are graphs of the “number of laughing episodes” per justice and “laughing episodes per argument.”

    Recent appointees Kagan and Sotomayor have not yet been judged but Kagan is said to have considerable potential. As Solicitor General, Kagan mistakenly referred to Justice Scalia as Mr. Chief but within seconds corrected herself with, “excuse me, Justice Scalia–I didn’t mean to promote you so quickly.”

    The Economic Lesson

    Analysis that sums up Supreme Court sentiment on the serious side emphasizes the split between the liberal and conservative justices. Perhaps Nicholas Wapshott’s “The Clash That Defined Modern Economics” conveys not only the conflict between the ideas of John Maynard Keynes and Friedrich Hayek” but also the conflict within the Supreme Court. Each supporting the survival of modern capitalism, Keynes believed that state intervention was necessary for the market’s health while Hayek said government constrained the market’s ability to create wealth.

    Summarizing each man’s outlook, this rap video introduces Keynes and Hayek.

    An Economic Question:  Does Keynes or Hayek represent your idealogical tendency?

    No Comments on Supreme Court Laughter

    Read More
  • Money..16624_4.26_000006278830XSmall

    Laundering Zimbabwean money

    Mar 29 • Demand, Supply, and Markets, Developing Economies, Economic History, Government, International Trade and Finance, Money and Monetary Policy, Thinking Economically, Uncategorized • 820 Views

    In Zimbabwe, people are laundering money. Literally.

    When their U.S. dollars look too gray and faded, Zimbabweans wash and dry them. In this Wall Street Journal photo, dollar bills, shirts and sheets are suspended with clothes pins along a line. Why?

    First some history

    During September 2008, Zimbabwe’s inflation rate was 489 billion percent. One loaf of bread sold for what 12 cars had cost a decade earlier.  People were paying their rent with groceries because no one wanted currency. The price of a morning bus ride to work? Only for that trip because soon the fare would rise.  Forget saving. What you had today was worthless tomorrow. Freeze prices? Supply evaporated. And yes, everyone was a billionaire.

    The solution was the U.S. dollar. Using the dollar as the basis of a multi-currency system in which the Zimbabwe dollar was banned, they attacked their hyperinflation. And that takes us to the laundry.

    In the U.S., we have currency, checks, credit, the Fed to oversee the money supply and the U.S. mint to replace worn out bills. Not Zimbabwe. Zimbabweans have U.S. cash (or 4 other foreign currencies) and avoid their banks. As a result, they keep their cash and wash it when necessary.

    The Economic Lesson

    To be called money, a commodity needs 3 characteristics:

    • It should be a medium of exchange. (People willingly use the commodity for exchange.)
    • It should be a store of value. (In the future, it still will have relatively comparable purchasing power.)
    • It should be a measure of value. (When someone says one dollar, you know what that means.)

    Today, in the U.S., the basic money supply includes cash, currency, travelers checks and demand deposits (checks).

    When, during 2008, Zimbabwe’s inflation rate was one of the highest among the 30 countries experiencing hyperinflation since 1790, its currency could not be called money.

    An Economic Question: Specifically explain why the Zimbabwean dollar cannot be called money.

    No Comments on Laundering Zimbabwean money

    Read More
  • neighbors

    Not so Nosy Neighbors

    Mar 28 • Behavioral Economics, Households, Thinking Economically • 633 Views

    By Mira Korber, guest blogger.

    You are like your neighbors, but not for the reasons you might think.

    Here are some general assumptions about neighborhoods (all quoted from this Atlantic article):

    “(1) Neighborhoods are important centers of American life. (2) The residents of American neighborhoods talk to each other. (3) Politics is an important topic of their discussions.”

    Two researchers, Samuel J. Abrams and Morris P. Fiorina, have refuted the aforementioned assumptions; they interpreted a 2005 Georgetown University survey of 1,001 people, showing that only 1.8% of the participants “usually” discuss politics with their neighbors. Therefore, according to Abrams and Fiorina:

    “Americans today do not know their neighbors very well…and they do not see themselves as swimming in a sea of like-minded people…even if geographic political sorting were ongoing, its effects would be limited by the preceding facts about contemporary neighborhood life.”

    The researchers argued that neighborhoods house similar people because of shared interest in what the location itself has to offer. For example, people who value education, high-paying jobs, or a sophisticated social scene tend to congregate not because they know each other, but because they seek those community traits.

    Your neighbor might want the same education for his daughter as you want for yours, but it doesn’t mean you know each other. Therefore, community “sorting” occurs, and income inequality gaps increase due to educational disparities among communities rather than social herding.

    The Economic Lesson

    Read the following Huffington Post charts, which show the steadily increasing income inequality gap in the US. A few notable figures include the child poverty rate (21.9%), which is second only to Mexico (24.8%), the average American CEO’s pay (1039 times greater than the average worker), and homelessness rate (1 in 5 people). Additionally, this Economist article explains who makes up America’s wealthiest “1%.”

    An Economic Question: In what ways have you noticed an income gap between the rich and the poor?

    No Comments on Not so Nosy Neighbors

    Read More
  • tacos

    Tacos Meet Helicopters

    Mar 27 • Behavioral Economics, Businesses, Demand, Supply, and Markets, Innovation, Labor, Regulation • 567 Views

    By Mira Korber, guest blogger.

    Hunger strikes. You desperately scan Main Street for any sign of your favorite food: tacos. There’s nothing in sight and your handy UrbanSpoon iPhone app has failed miserably in finding restaurants that serve food from anywhere south of Texas.

    So you call in the Tacocopter.

    OK, maybe it hasn’t really come into our lives yet, but one day your tacos may possibly fly right to your feet with this taco-toting-helicopter.  The basic idea of Tacocopter is simple and clever: you order tacos online through your smartphone, and have them delivered directly to you by an unmanned helicopter, which then flies back to a restaurant to fill more orders.

    However, progress launching the Tacocopter has stalled (no pun intended) for a number of reasons. The US government is wary of pilot-less flying objects (officially dubbed “Unmanned Aerial Vehicles) hurling through the air for commercial pursuits. Also the potential risks of crashing with birds, injuring innocent bystanders, delivering to the right person, and spontaneous combustion all must be taken into account.

    Speaking of advancing transportation technology, self-driving cars are in the works as well. And for a funny glimpse into the “future” of technology and food, take a look here.

    The Economic Lesson

    With technological advancement and innovation comes Joseph Schumpeter’s theory of creative destruction. As Marginal Revolution points out, the Tacocopter model could present a phenomenal variety of uses, including delivery of medications to the elderly and disabled.

    Therefore, what would the Tacocopter mean for delivery services as a whole? What would happen to delivery people bringing food to your doorstep? Waiters and waitresses?

    Look here for an interesting graph and article showing how technologies have increased exponentially since the 1400s.

    An Economic Question: What other uses do you see for the Tacocopter model?

    No Comments on Tacos Meet Helicopters

    Read More
  • 16750_SupremeCourt.11.16_000002592980XSmall

    The Affordable Care Act, the Supreme Court and Line-Standers

    Mar 26 • Demand, Supply, and Markets, Government, Thinking Economically, Uncategorized • 480 Views

    If you don’t have 3 days to spare and want to watch the oral arguments for the Affordable Care Act, you can hire a professional line-stander. Charging close to $36 an hour to wait outside the Supreme Court, they started the line last Friday.

    There are approximately 400 seats in the courtroom. With each of the Justices allowed 9 people, and the Court staff, certain Congressional leaders, members of the Supreme Court Bar and the media attending, the room fills up quickly. In addition, 60 seats have been allotted to the public for each day’s arguments and another 34 for a 3 to 5 minute peek at the proceedings. With tomorrow (3/27) considered prime because of the individual mandate oral arguments, people might say no for their Monday seat and stay in line for another day.

    If you cannot get in, and no radio, no TV, no commercial photos or video, how to be a part of history? Each day, the audio should be available here by 2:00 and you can see the schedule here for the case, formally called Department of Health and Human Services et al. v. State of Florida et al.

    You can look at the issues at econlife.

    The Economic Lesson

    The alternative you sacrifice–your time if you stand in line or your money if you pay a line-stander–is the opportunity cost of the decision. Whatever the Supreme Court decides for Department of Health and Human Services et al. v. State of Florida et al, the opportunity cost will be considerable.

    An Economic Question: What is the opportunity cost of a decision you recently made? (Remember that choosing is refusing.)

    No Comments on The Affordable Care Act, the Supreme Court and Line-Standers

    Read More