Britain, Back into the Storm?

As the world economy continues to crumble, countries and governments across the world face an uncertain and gloomy future. What’s more, prominent economists have continued to warn politicians that the worst is far from over when it comes to the growth slowdown that has afflicted global output for the past four years. England however, is in somewhat of a unique situation. Although its economy has been hit hard by the global downturn, many believe the country is on the path to recovery. Moreover, England’s economical and political distance from the troubled euro currency and the Eurozone debt crisis has kept investor confidence relatively high. It is in this context that some politicians have begun advocating fiscal tightening and a reduction of the national debt. While the British government does plan to increase the money supply to help the recovery, steep reductions in capital spending and other tight fiscal policies may hinder growth and hurl Britain into another recession. As we learned in class, monetary and fiscal policies are important in dealing with economic crisis, as was the case in the great depression. As Britain begins to stumble out of the Great Recession, it is important that politicians do everything in their power to ensure a steady and successful recovery

Ricardo Johnson

http://www.economist.com/node/21541021

Importance of Technology in the Workplace

Contrary to our discussion in class, this article argues that technology use as positively transformed the workplace by improving communication (removing spatial boundaries, allowing for global communication), revamping the recruiting process (can target candidates using digital marketing, electronically screen candidates to save time), encouraging efficiency (through electronic filing) and lastly, increasing mobility (decreasing travel costs, establish global presence). Though I agree with these points, my personal experience suggests that increased dependence on technology (computers, phones, email, social networking, etc) has caused me to become impatient, more forgetful, and easily agitated when idle. Technology is a double-eded sore with great positive effects and equally damaging negative outcomes. Discipline and good judgement are necessary to maximize the benefits of technology.

http://smallbusiness.chron.com/importance-technology-workplace-10607.html

- Mehul Jain

Value of College Degree is growing, study says

While learning about the impact of education on the supply of skilled workers, I was curious to explore the current rate of return on education. Similar to the high school movement discussed in class, a college education (under-graduate and/or graduate) results in higher wages. As this article states “the pay premium for those with bachelor’s degrees has grown substantially in recent years. Among those ages 25 to 34, women with college degrees earned 79 percent more than those with high school diplomas, and men, 74 percent more”. However, instead of a shrinking income equality gap, it is widening prompting the recent Occupy movement which aims to bring attention to this fact.

http://www.nytimes.com/2010/09/21/education/21college.html

- Mehul Jain

Postal service on the run

The U.S. Postal Service on Monday announced a $2.1 billion cost savings proposal that would result in the end of next-day service for regular mail and the loss of about 28,000 postal worker jobs. The financially troubled agency officially proposed the change to its regulator, changing its national standard for regular first-class mail -- mail that requires a 44-cent stamp for the first ounce -- to two to five days from the current one to three. The measure is tied to a plan to slash hundreds of mail processing facilities, which would mean that 28,000 postal workers could be out of a job by the end of next year. Officials say the move is necessary to preserve the future of the U.S. Postal Service, which is on the brink of insolvency. The Postal Service has racked up $5.1 billion in debt this year and faces a deadline to make another $5.5 billion payment to its health care retirement fund on Dec. 18.
The changes are being proposed to address an estimated 47% drop in regular mail expected over the next 10 years. If the Postal Service gets its way, regular mail would no longer be delivered the next day as early as April. And most of the 250 mail processing facilities on the list would be closed next year.
http://money.cnn.com/2011/12/05/news/economy/postal_service/index.htm?iid=HP_LN

World starts to worry as Chinese economy hiccups

As we discussed in class, the government can affect monetary policies through open market operations (buying and selling of bonds to affect money supply), reserve ratio (can increase or decrease money supply)and the discount rate (inter-bank lending interest rate) to help stimulate the economy. This article emphasizes this belief by stating that if the Chinese government can “control the downturn... and the domestic situation doesn't get out of control, it won't be so bad”. Furthermore, the weakening economy is discouraging investment as firms are imposing tighter credit conditions which is leading to a slowdown in manufacturing. This article is both a scream for help as well as a cautionary note to the world highlighting the dangers of an increasingly global and interdependent economy.

http://www.npr.org/2011/12/02/143048898/world-starts-to-worry-as-chinese-economy-hiccups

- Posted by Mehul Jain

Young workers see employment gains

Young workers are landing jobs again. Some 650,000 workers aged 16 to 24 found employment in the past three months, the biggest spike for that age group since the recession began, according to Labor Department statistics. Young Americans were hit harder than most other groups during the Great Recession; the percentage of 16- to 24-year-olds with jobs fell to as low as 44.6% of their age group, down from 52.2% at the start of the recession. Certainly, people of all ages suffered. But the share of those in their working prime, age 25 to 54, who had jobs fell only 5 percentage points to 74.7% at its worst, while the percentage of employed older folks held fairly steady. Since August, however, young people have been flooding the workforce. They account for nearly two-thirds of the rise in employment in the past three months, with older workers making up the rest. It's likely they are finding work at retailers, restaurants and other service-related employers. These industries have been boosting their payrolls lately and their workforce often skews younger. "This is a promising indication, but the question is whether it will continue," said Harry Holzer, a professor at the Georgetown Public Policy Institute. Also, experts worry about the quality of the jobs. It would be great if companies were bringing on young workers and training them so they can one day move up the employment ladder, said Paul Ashworth, the chief U.S. economist at Capital Economics. But it's more likely they are in lower-wage positions, such as clothing store clerks or waitresses.
http://money.cnn.com/2011/12/01/news/economy/young_workers_employment/index.htm?iid=SF_E_LN

The rich get richer and the poor get taxed

Newt Gingrich is now the national frontrunner for the Republican nomination, and is polling well in the early states of Iowa and South Carolina. Two factors in Gingrich's economic plan to help the economic are a sharp reduce in corporate tax rates, while reforming entitlement programs, the Food and Drug Administration and the Environmental Protection Agency, and balance the budget by instituting an optional flat tax on individuals.

Gingrich wants to reduce the corporate tax rate from 35% to 12.5% -- a move that would take the corporate tax rate from one of the highest in the industrialized world to one of the lowest. He argues that a drop of that magnitude would make the U.S. a much more attractive place to do business. But at the same time, the drastic reduction would leave an enormous hole in revenue collected by the government, making a balanced budget all the more difficult. Gingrich also wants to add to the current tax code by putting an optional 15% flat tax on income in place. Taxpayers would be able to choose whether to pay the flat tax, or file under the existing tax code. The new flat tax would boost growth, Gingrich says, while saving hundreds of billions in compliance costs.
http://money.cnn.com/2011/11/29/news/economy/newt_gingrich_plan/index.htm?iid=SF_E_River