Oil Prices dependent on succession issues in middle eastern countries

http://www.philstar.com/Article.aspx?articleId=741245&publicationSubCategoryId=66

Essentially with the death of the saudi Arabian king, and Gaddafi this past week, there are succession issues. This article brings up multiple issues in relation to who will succeed as ruler or governor of each country, and how that could affect oil prices in the US. It looks to be that oil prices may rise heavily in the future, as Libya and Saudi Arabia are two of the biggest oil suppliers to the US in the world. The question arises- how concerned should the US be about Middle Eastern Politics?

China's Domestic Consumption and Economic Growth

While efficiency and technological improvements in labor and capital contribute greatly to an economy, one very important factor that instigates economic development is high domestic consumption. The introduction of the railroad, as noted in class, was a significant event in our country's economic history. High domestic demand for goods allowed for producers to expand beyond their local markets, and transportation improvements such as the railroad helped satisfy consumer demands. These transportation improvements also led to other kinds of economic development and growth. As noted in this article, domestic demand for goods in China is relatively low compared to in countries such as the United States. While China does have comparable technology and resources as developed nations, it is not yet categorized as a "developed" country. This could be related to the country's low rate of domestic consumption, and how that kind of behavior effects economic growth.

More Jobs Predicted for Machines, Not People

In the New York Times article, "More Jobs Predicted for Machines, Not People," the argument is that jobs are being lost because of technological advances, which include “robotics, numerically controlled machines, computerized inventory control, voice recognition and online commerce”. It is interesting to notice the changing trend of the labor force. It first started off with the majority being slaves, then as time went by women were added more prominently to the labor force, and now everyone in the labor force seems to not be safe from technological advances. Both high-skilled and low-skilled workers are threatened by the potential of technology. Research done by renowned economists shows that corporate spending has increased on equipment and software while payrolls have been stagnant. It will be interesting to see in the long run the effects of technology and the gap between Third-World countries. They more advanced the technology gets, the more it will be necessary for the LDCs to have it as well to somewhat keep up with the world. This phenomenon may just continue instead of improve the trend of economic convergence between developed countries and economic divergence between the developed and developing world.

In accordance with the first article we read in class by Sokoloff and Engerman, there is an article featured on the site www.economist.com that talks heavily on the history and importance of sugar trade. Late 17th century Barbados, for example, received huge amounts of income from their cane plantations. From all the glorification of having mineral rich land, however, came some downfalls. As we saw in class, factor endowments and quality of natural resources were not sufficient or adequate explanations for the rise of the U.S. as a leading economic force throughout history. For those countries such as Barbados and Jamaica, they faced extreme climates that soon took tolls on the public. Mosquito-infested swamps, hurricanes, earthquakes, and diseases such as yellow fever all affected the growth of these societies. Also, the article takes into consideration that these countries consumed extreme amounts of rum because of it's easy access, resulting in large amounts of deaths. Perhaps the effects of factor endowments and natural resources/environment can be looked at in more detail than what was noted in Sokoloff and Engerman's article.

The entire article can be found here
http://www.economist.com/node/21525808

Unemployed Americans take over Immigrants' Jobs

This Associated Press video and corresponding article present information that with Alabama's recent changes to their immigration law, farmers are losing migrant workers and look towards hiring unemployed American citizens to step in. Politicians feel that it's too early to say that the law isn't working and that with the state's 9.9% unemployment rate, unemployed Americans will slowly fill the jobs. This reminded me of how in the past, farmers hired Black workers due to their inexpensive wage rate. Now in the 21st century, farmers are looking towards hiring American citizens to fill in the once regarded "low wage" jobs.

Early Childhood Education and it's Push to Fight Poverty

This American Progress report discusses how increasing the provision of early childhood education (ECE), through the revision of the Elementary and Secondary Education Act, could aid children living in poverty. According to the 2010 Census, 1 out of 5 U.S. children live in poverty conditions with over 50% of them being minority children. Hence, the report shows that ECE participants are "2.5 times more likely to continue on to higher education," and can earn higher median income rates. This is similar to what we learned in lecture about how school quality and years of schooling can lead to economic convergence.

China's Economy Converging to U.S.

The Wall St. Journal article discusses "cosmic convergence" between China's growth rate of 9.1% to U.S.'s September unemployment rate of 9.1%. This may be just a coincidence, however, there is no doubt that China is certainly inching their way up the economic development ladder. Just imagine that in 1870, China's GDP per capita was substantially behind U.S. but now is on its way up.

With immigration discussions overwhelming the U.S. airwaves, it becomes quite easy to disregard immigration issues in other parts of the world--namely in the U.K. Similar to what was seen in the 1920's with imposition of quotas due to the Immigration Act of 1924, many Britons exchange a similar sentiment that there should be "an annual cap on immigrants coming from outside the EU," according to the U.K. Press Association. This idea, among the others presented, would assist England in cutting down their net migration numbers from the current 242,000 down to "tens of thousands." It should be interesting to see how these ideas unfold and how they have an effect on Europe, and the world as a whole.

Disparities between the quality of education attained by students of different backgrounds have been quite evident throughout the past couple decades, and even in 2011 these inequalities are quite prevalent. The Los Angeles Unified School District (LAUSD), the second largest district in the country, is finally accepting the ramifications of the need to equalize the education provided to minority students. Although it will take quite some time for the changes to be put into action and for results to be attained, effort will be put into increasing the education quality of schools in neighboroods catering to minority populations.

On Youngs Creek in Washington state, a $29 million hydro dam has just been opened that expects to provide electricity for approximately 2,000 homes in the area. The steep costs of this project were considered prior to the start of the construction of this dam, and due to the fact that there was seemingly greater social benefit than social costs, the efforts were supported. This three year project took the environment into consideration as well, ensuring that the trout that live in the water around the dam would not be harmed by the man-made structure."Microdams are more economical than other environmentally friendly sources of energy such as solar or wind power," as reported by the senior engineer for water resources and generation for the Public Utility District of the county, so maybe we will start seeing more of them popping up as a means to energy production.

Technology and the Economy

As I was hanging out with my brother (who was playing on his iPhone), I wondered to myself- Do technological improvements, especially those that combine many technologies into one, actually hurt the economy? I’m not talking about the fear of robots taking over human jobs and creating unemployment. I’m talking about iPhones and other smart phones that are capable of acting as a CD player, radio, television, telephone, and computer all at the same time. While these smart phones may enhance our standard of living, they could have an adverse effect on the economy. Instead of buying a television, a radio, a CD player, and a telephone, a consumer only needs to buy a smart phone that can do all of these things. Therefore, many radios, televisions, and CD players don’t get bought and those companies go out of business. Also, consumer spending decreases and as a result GDP (GDP= C+ I+ G+ X) decreases. Of course my theory is based on speculation, but it would make for an interesting research project.

Current Economy and FDR's New Deal

Has anybody else noticed how much construction there is everywhere? It seems as though construction is being done on every road in Los Angeles. During the Great Depression, FDR launched his New Deal which contained items like the Works Projects Administration and the Public Works Administration that were put into place in order to create more jobs and uplift the economy out of the depression. I feel as though a similar policy is trying to be implemented today. I don’t know if it will be as successful as FDR’s plan, but I do know that it creates a lot more traffic in the already traffic-filled city of Los Angeles.

CA Dream Act- A modern twist on education rights

The passage of the CA Dream Act is a step towards remedying the age old problem of unequal education rights between immigrants and non-immigrants. By allowing the undocumented to increase their likelihood or levels of education, they can potentially escape the circle of poverty that the illiterate and uneducated in historical times. With increases in opportunities for schooling, slaves and immigrants both saw increases in wage relative to whites in earlier times in the US. Could this be the same for today?

Potential Modern Day Reversal of Fortune?

The article “A Game of Catch-up” which was published by The Economist on September 24^th discusses how countries in Asia such as China, India and Indonesia are quickly catching up to the “old rich” countries such as America and the UK.

This article discusses briefly the history of the development of different countries and is really reminiscent of the Sokoloff article as it talks about a potential future reversal of fortune and tries to explain it. It first explains how early industrialization allowed countries in Europe and America to develop the best technology and have the highest standard of living and discusses how there was a “great divergence” between them and the rest of the world for two centuries. This set up the hierarchy of the rich West and the poorer East.

It then goes on to remark that recently a “great convergence” in standards of living between the East and West is occurring as technology and innovations (which originated from the West and Japan) are being adopted. Of these emerging countries, China and India are growing the fastest.

If we were able to theoretically construct Cobb-Douglas production functions for both China and India, we could hypothesize that the improvement of technology and policies is increasing the total factor productivity of both countries, i.e. A is increasing, causing China and India to produce higher levels of output with the same inputs. The article also mentions how technology and new production methods(improvements to efficiency a.k.a. increases to A) are allowing even small countries the opportunity to become economic leaders.

If we view “standards of living” as an indicator of economic prosperity (like GDP per capita), the idea of this “convergence of standards of living” runs parallel to the ideas behind economic convergence. The article discusses how the US has been growing very slowly since the financial crisis while emerging countries in Asia are growing fast, stating “The IMF forecasts that emerging economies as a whole will grow by around four percentage points more than the rich world both this year and next. If the fund is proved right, by 2013 emerging markets (on the IMF’s definition) will produce more than half of global output, measured at purchasing-power parity (PPP).” The IMF predicts a reversal of fortune by around 2013.

Some of the factors experts attribute to this potential reversal of fortune include the uncertainty of “Rich” countries like America due to the amount of debt they have accumulated, which scares off investors and turns them towards rapidly growing emerging economies.

Another contributor towards the growth of Asian countries is their changing of economic policies to those more open to international business. Both China and India previously had very closed economies, and their transformation to more open door policies is discussed as well. “In 1978 Deng Xiaoping won approval for a set of economic reforms that opened China to foreign trade, technology and investment. India’s big liberalisation came a little later, in 1991. The GDP of China and India is many times bigger now than it was in the mid-1970s. In both economies annual growth of 8% or more is considered normal. Average living standards in China are still only a sixth and in India a fourteenth of those in America at PPP exchange rates, but the gap is already much smaller than it was and is closing fast.” This improvement to growth is not attributed to increased efficiency like the adoption of technologies, but due to the reform of policies that previously acted something like a negative favor by design.

The article also makes a very interesting comparison between the reversal of fortune between the UK and US to the impending one between the East and West. It states, “Economic catch-up is accelerating. Britain’s economy doubled in size in the 32 years from 1830 to 1862 as increased productivity spread from cotton to other industries. America’s GDP doubled in only 17 years as it overtook Britain in the 1870s. The economies of China and India have doubled within a decade.” If we choose to predict based on this information, India and China will definitely grow (and perhaps surpass the United States and UK) at an even greater pace than what has previously been seen by the current world leaders.

The author further supports his theory of a future reversal of fortune by also discussing the shrinking of the West and juxtaposing it next to the rapid growth of the East. The article states “If emerging markets keep on growing three percentage points a year faster than America (a conservative estimate), they will account for two-thirds of the world’s output by 2030, reckons Mr Subramanian. Today’s four most populous emerging markets—China, India, Indonesia and Brazil—will make up two-fifths of global GDP, measured at PPP. The combined weight in the world economy of America and the European Union will shrink from more than a third to less than a quarter.”

In conclusion, I found one line in the text which seems to summarize the authors findings concisely and simply, “No country, or group of countries, stays on top forever. History and economic theory suggest that sooner or later others will catch up.”

The article can be found here: http://www.economist.com/node/21528979

Immigration and the GOP race

 Rick Perry lost ground in GOP race after supporting TX policy allowing undocumented students to attend public colleges. Similar to early 20th century debates about requiring literacy test at the border. This time focused on highly-skilled immigrants (in college).