• everyday economics and entitlements

    The Values That Make Us Spend More

    Aug 13 • Behavioral Economics, Economic Debates, Economic History, fiscal policy, Government, Health Care, Households, Labor, Lifestyle, Macroeconomic Measurement, Regulation, Thinking Economically • 127 Views

    Asked about the role of the state in taking care of us, a majority of Americans said to Pew Research in 2012 that they prefer self-reliance.

    healthcare spending and American values

    Where are we going? To whether our values correlate with our national healthcare policies.

    Reflected Values

    In a 2013 paper, economists Mark Stabile and Sarah Thompson considered the role of government in healthcare financing. Because their conclusions display how national values correlate with policy, I thought we should take a look at coverage and financing. All tables/graphs are from “The Changing Role of Government in Financing Health Care: An International Perspective.”

    Coverage

    If we assume that coverage indicates equity, then the facts below demonstrate that health care policy in England and France are our best examples of countries that implement Pew’s “nobody in need” philosophy. And yes, we do have the U.S. at the other end of the spectrum.

    “Breadth Population (% covered in 2011)”

    healthcare coverage

    “Scope: Benefits”

    healthcare coverage

    “Depth: User Fees”

    healthcare coverage

     

    Financing

    Because a general tax has the greatest revenue potential, the following financing graph places England at the top of the equity list.

    revenue for healthcare spending

    Our Bottom Line: Healthcare Spending

    National decisions about healthcare spending and revenue are perfect examples of fiscal policy tradeoffs between “nobody in need” and the “freedom to pursue one’s goals.”  When government takes care of us, it makes decisions about land, labor and capital instead of individuals and businesses who are pursuing their own goals.

     

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  • everyday economics and property rights

    How to Deal With Skyscraper Shadows

    Aug 12 • Economic Debates, Economic Growth, Economic History, Environment, Government, Lifestyle, Regulation, Thinking Economically • 107 Views

    Led by Jacqueline Kennedy Onassis and other celebrities, more than 800 demonstrators simultaneously opened their black umbrellas in New York’s Central Park on October 18, 1987 at 1:30. You can see below that the umbrellas created a shadow–the same shadow that two new office towers, if built, would have cast on the park.

    Property rights and sunlight

    From: Curbed

    Successfully proclaiming our right to sunlight, Ms. Onassis and her friends got a scaled down Time Warner Center.

    Where are we going? To the tug-of-war between property rights and sunlight.

    Pencil Buildings

    Michael Kwartler is a shadow expert,  As the go-to man for NYC agencies, for developers, for anyone concerned with the shadow a structure could cast, he would tell you that 90 minutes before sunset on December 21, the shadow of a NYC building can extend 4.2 times its height in a northeasterly direction. Mr. Kwartler would also tell you that pencil buildings are the newest concern for shadow worriers. Tall and slender, these buildings have magnificent views and perhaps one apartment on a floor. Discussing the shadows of such slender skyscrapers, architectural writer Paul Goldberger predicts that the southern tip of Central Park will be striped.

    These are some new pencil buildings:

    Property rights and shadows from pencil skyscrapers

    From: Vanity Fair (May, 2014)

     

    “Ancient Lights”

    The shadow fight takes us back to the English common law and the right of a property owner to protect her sunlight. In the U.S. though, the courts favored development over sunlight and rejected a broad property rights interpretation.

    Is the shadow (below) cast by One57 (described above) an ancient lights violation?

    Shadow over Central Park from a NYC building

    From: gothamist

    Our Bottom Line: Property Rights

    Illustrating that property rights extend beyond the building itself, a developer reputedly paid $54.9 million dollars for the air rights above Manhattan’s Art Students League building.

    Like Ms. Onassis and her Central Park friends, we can ask whether our property rights will be violated by the shadow from the structure.

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  • everyday economics and food trends

    Food Issues: Why Economists Say Kale is Like Fried Calamari

    Aug 11 • Behavioral Economics, Businesses, Demand, Supply, and Markets, Economic History, Economic Humor, Economic Thinkers, Entertainment, Innovation, Labor, Lifestyle, Media, Thinking Economically • 195 Views

    By Adrienne Wolff, guest blogger, Kent Place School alumna and Brown University freshman.

    There was a time, not so long ago, when kale was an under-appreciated leafy green. Quickly, kale rose to stardom among vegetables and even ended up in the snack food aisle. No longer exclusive to just the raw vegetable section, kale can now be found in smoothies, in juice, in ice-pops, in salads, in deep fryers, in noodles and even, believe it or not, in pancakes. Kale, a food trend celebrity, started out with humble beginnings, but soon became a household name.

    Where are we going? To the economics of food trends.

    Food Trend Cycles

    Fried calamari shares a trend trajectory similar to kale. Over the course of 16 years, calamari went from an item only on the menus in high-end restaurants to being found in the most unassuming cafes. The New York Times uses a Fried Calamari Index to track the amount of time it takes for a food to reach popularity after it has been introduced. Popularity is determined by the number of articles in which that the food is mentioned in the New York Times. Once popularity is reached, the food item has become part of the mainstream food scene. In recent years, the pace of food trends has accelerated; pesto for instance reached popularity over a 35-year period (1974-2009) whereas it took kale just 11 years (2002-2013).

    Creative Destruction from Food Trends

    From: NY Times

     

    Social media could be responsible for the increased rate of food trend cycles because we are able to hear about new foods faster and in much more depth than ever before.

    For instance, faster then any of the foods listed below, the cronut took off almost over night after sweeping across social media platforms.

    Creative Destruction from food trends

    From: NY Times

    In Bon Appetite, David Sax, author of The Tastemaker: Why We’re Crazy for Cupcakes but Fed up with Fondue, said that scalability and economics are the two reasons that cause a food to catch on and become mainstream. If a food is too obscure and expensive, the trend will never enter into the mainstream market. However, if a food is accessible in both price and taste (and has the added bonus of sounding expensive, such as quinoa), it will successfully enter “trend status.”

    This brings us to the economics of food trends.

    Our Bottom Line: Creative Destruction

    Creative destruction can help us understand food trends. Coined by economist Joseph Schumpeter, creative destruction describes the constant cycle of old products or goods being replaced by newer, higher quality versions. Think of it as “out with the old, in with the new.”

    Kale may be the King, but soon its crown will be usurped by yet another unassuming treat.

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  • everyday economics and embargoes

    How Cheese and Salmon Tell the Russian Embargo Story

    Aug 10 • Businesses, Demand, Supply, and Markets, Developing Economies, Economic History, Financial Markets, Government, International Trade and Finance, Labor, Regulation, Thinking Economically • 128 Views

    With the Russian embargo ending its first year, cheese and salmon tell a lot of the story.

    Where are we going? To the losers and winners that Russian sanctions created.

    The Impact of the Sanctions

    Responding to Russia’s policy in Ukraine, trade and investment restrictions were imposed last August by the U.S., EU, Australia, Canada and other nations. Days after they were implemented, Russia retaliated with its own new trade rules. On both sides we wound up with a long list of goods and services that could not travel to or from Russia.

    Below, you can see some of the products that were affected by the new trade barriers.

    Trade barriers from Russia

    Because trade barriers create new incentives that redirect the flow of exports, we have losers and winners.

    Cheese

    On the losing side, the word to remember is “fromagicide.” Used to describe the Russian destruction of thousands of tons of illicit cheese that made it through the embargo, it also applies to the European businesses that no longer enjoy lucrative exports to Russia. (One headline said the cheese smugglers were “Up to No Gouda.” [Sorry])

    The winners have been the Russian cheese makers. One executive at a high-end Russian supermarket chain said “Eighty percent of our cheese lineup has changed this year.” Up by almost 30 percent between January and April this year when compared to the same period during 2014, the cheese production increase shows that Russia is achieving one of its sanctions’ goals–to boost Russian agricultural production.

    Salmon

    For salmon, the Faeroes are the winners. Located between Iceland and Scotland, the 18 little rocky islands that compose the Faeroes are enjoying skyrocketing salmon demand and higher prices from Russia. One reason their Russian sales are soaring was an expedited note from the Faeroese prime minister ( a former fish salesman) to the Russians saying, “We are not part of EU—we are totally outside.”

    Trade barriers benefit Faeroe Islands

    You can see below how the salmon trade changed.

    Trade barriers benefit Faeroe Islands.

     

    Our Bottom Line: Trade Barriers

    With sanctions the extreme form of trade barriers, we still have a predictable impact on supply and demand. For cheese, that meant EU producers lost their Russian customers while their Russian counterparts benefited. Similarly, EU salmon exporters suffered and those in the Faeroes partied.

    But as you know, our story is about much more than cheese and salmon. With new trading incentives, each embargoed product has losers and winners.

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  • everyday economics and song copyrights and Grumpy Cat

    Why Birthday Cat Is Grumpy

    Aug 9 • Businesses, Economic Debates, Economic History, Economic Humor, Economic Thinkers, Education, Entertainment, Government, Innovation, Regulation • 158 Views

    If you had to name one song that belongs to no singer or writer, it could the Happy Birthday song.

    Not necessarily.

    Where are we going? To the intellectual property we own.

    Happy Birthday History

    First called “Good Morning to All,” the Happy Birthday song we all know was composed by two sisters in 1893.

    But here is where the story gets complicated.

    A firm buys the rights and agrees to give the sisters 10 percent of the song’s retail sales. From there, the lyrics morph into the Happy Birthday song and are published.

    You can see the “special permission” note under the title in a 1927 songbook. For a current copyright lawsuit, those two words are crucial.

    Happy Birthday song as intellectual property

    From: Boing Boing

     

    The 1927 songbook with the “Good Morning and Birthday Song” has become a key piece of evidence about whether Happy Birthday has copyright protection that dates backs many decades or is in the public domain. Saying she does not owe $1500 to a subsidiary of Warner Brothers for using the song, a film maker took them to court. With $2 million in annual licensing fees at stake, Warner/Chappell disagrees.

    Our Bottom Line: Intellectual Property

    Former Secretary of the Treasury Lawrence Summers once said something like, “No one in the history of the world ever washed a rental car.” You know what he meant. Whatever we own, we take care of, we improve, we can sell.

    On the other hand, legal scholar Richard Posner reminded us that items in the public domain can be equally inspirational. Explaining his position, he presented…

    “…the hypothetical example of a mural that is first sketched and only later completed by being carefully painted. If the sketch is allowed to enter the public domain, there to be improved by creative copiers, the mural artist will have a diminished incentive to perfect his mural. True; but other artists will have a greater incentive to improve it, or to create other works inspired by it, because they won’t have to pay a license fee to do so provided that the copyright on the original work has expired.”

    Do broad or narrow physical and intellectual property rights inspire more creativity? With the Happy Birthday song, the debate continues.

     

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