So a Greek, a Spaniard, and an Italian walk into a bar...

Who picks up the tab? The German. Since we’ve started talking about currencies and the forex market, I feel it would be apt to start off with a joke and then mention the Euro dilemma. More specifically, the problem with regards to Greece dumping the Euro in order to return to the Drachma. The issue here is how would this affect Europe as a whole? This Cnnmoney article states how if Greece dropped the Euro, virtual chaos would ensue including: the printing of currency at a rapid rate, the decrease in bank savings, the issue with translating foreign loans into alternate currencies, and most importantly the resulting domino-effect of other nations leaving the Euro (like Germany and France), thus radically damaging the currency. On the other hand, this NPR article mentions how Greece should leave, resulting in a immense hit economically, but a faster recovery would ensue than if it stayed within the Eurozone and maintained its current austerity measures. The million-dollar question is what should they do? And how would the consequences of that action reverberate worldwide?

Voter Turnout In the US- What it Might Mean for Next Year's Election

This coming year marks the impending doom that is the Presidential Election, and thus asks for introspection on what we can expect from the voters in this fine country. Interestingly enough, despite the frequency with which we hear about opportunities to vote, people are not turning out to vote as often as we think. While we are on the incline as far as voter turnout rates now, the highest voter turnout occurred in the mid 1800's, a time with not nearly as much voting rights or opportunities as now. Women, slaves, and freed slaves did not have voting rights at this time, so voting was solely on free (white) males who owned property. This relates to our discussions in the Sokoloff and Engerman article about voting rights and the development of a country. If we are to suggest that voting rights leading to higher voter turnout and a country's development, then what can we infer about the lower voting turnout today? Especially in light of increased voting rights and opportunities? Instead, I think it's important to remember that there are other factors involved in interpreting voting rights, such as political disaffection, political partisanship, and overall political awareness. This could prove an alternative hypothesis to Sokoloff and Engerman's hypothesis.

http://en.wikipedia.org/wiki/Voter_turnout_in_the_United_States_presidential_elections

Positive Selection Puzzle

In class, we discussed the positive selection "puzzle" on immigration. Today, many of the immigrants coming into the U.S. are of higher skill. In my opinion, this could be due to the fact that immigrants, upon arrival, typically earn less than natives and eventually catch up over time. Transportation costs (i.e. train, plane, car, and some other indirect costs) may have increased from the initial decrease in the 19th century, making it difficult for lower skilled workers to come especially if these costs need to be paid upfront. The fact that high skill immigrants are coming into the U.S. will allow these new workers to compete in the job market. Because immigrants can be hired at a lower wage than natives, high skill immigrants in the U.S. can pose a threat to high skill natives in the job market because of the fact that firms can hire high skill immigrants at a lower wage than their native counterpart. This phenomenon of positive selection does remain a puzzle but can be explained in many different ways. Perhaps low skilled workers in other countries receive a higher minimum wage than here in the U.S. which is why we don't see any negative selection. There is also the possibility that the U.S. offers one of the highest returns to an education when compared to other countries. Overall this issue does require additional extensive research and an answer revealed.

CEO compensation, oh joy!

In the midst of all the OccupyWallStreet and other protests and demonstrations worldwide, we still see that the heads of corporations doing what they do best - fattening their wallets. Now I understand these CEO’s may deserve bonuses for running successful corporations, but the extent of their extravagance regarding these’s increases are ludicrous. It’s come to the point where the employee is giving the proverbial 110% effort (working extra, overtime, etc.), but only getting peanuts in return; meanwhile their bosses yearly earnings magically shoot-up dramatically. As we saw in lecture, the data in one of the graphs showed how the post-1980’s CEO compensation had grown at a faster rate than ever before. But the question is why has this happened? Aren’t there regulators or a board of directors to instill some sanity and fairness into the equation? The members of these boards, let’s just say, “look out for each other” more than the average Joe employee. Oh, and here's a list of the 20 CEO’s with the most outrageous pay raises who "earned" the most in the past year.

World Population Growth

Not only was October 31, 2011 a day when we ate exorbitant amounts of candy and wore silly costumes, but it was also a day when the world population reached a whopping 7 billion people. While a "Gross World Product" is not something we currently measure, I wonder what effects the world's ever-growing population could have on worldwide production. We mentioned that in the Cobb-Douglas model, the growth rate of output could be increased by either changes in efficiencies or changes in capital and labor. But in today's world, not every person who is eligible to be in the work force contributes to the production of goods. It could be the case that large working-age populations have negative effects on an economy. Contrary to what the Cobb-Douglas production function might suggest, the growth rate of labor might have a negative relationship with the growth rate of output. A high labor growth rate might not be so good for the world economy after all.

Daylight Savings

There is much argument about whether daylight savings saves money or wastes it. Some say that it saves money because we use less light when we spring forward. Some say it wastes money because it throws farmers out of rhythm and messes with our agriculture. I believe that daylight savings should theoretically have no effect whatsoever. If we were to make an economic model, we’d see that the same number of hours of sunlight would be offered in a world with daylight savings and in a world without it. So, really the amount of light usage and energy usage should not be different in these two worlds. Thus, there should be no economic advantage or disadvantage to daylight savings.

What do you think?

Here is an article about the subject:

http://blogs.wsj.com/economics/2011/03/14/saving-daylight-wasting-electricity/

China converges with 9.5% annual growth rate

http://news.yahoo.com/world-economy-needs-china-slow-growth-gradually-040907334.html

This article discusses China's rapidly growing economy, and how it compares to the rest of the world. It explains the issues other developed countries are having, with the threat of China's 9.5% annual growth. Compared to the U.S. - with a 2.5% growth rate last quarter - China seems to be slowly converging on the developed countries. There is a high potential for it to overtake the most productive nations of today, known as a "reversal of fortune". China's flourishing markets will be carefully watched especially by the developed world, hoping for a more gradual growth rate for the sake of the world economy.