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This is my last Econoblog for the year. I hope I have shed some light on the most important issue of our day. Contrary to what the media pundits are saying, the financial crisis is far from being over. In fact, I expect it to get much worse. But the one thing I have failed to do through this series is to provide the solution.
So to finish off this series I'll do just that.
As I have said before, the greatest fighter of economic depressions was Warren Harding. Even though inaction won't get you reelected, it is the best strategy. But inaction is only the solution when the market is free. As it stands right now, we are far from having a free market. This is largely due to the Federal Reserve, our biggest problem.
The Federal Reserve creates this massive credit expansion that leads to the artificially low interest rates and massive borrowing. This economic expansion creates these booms which we love so much. But eventually, the boom will come to an end. This is what's happening now.
The market needs to reset completely. Jobs need to be lost, businesses need to fail, and a recession needs to take place. This is the inaction that is required for the best economic recovery.
There is action that needs to be taken. The Federal Reserve should not continue to engage in this credit expansion. The policy needs to be drastically changed in order to avoid these economic meltdowns.
I'm not saying there would never be downturns in the economy without a central bank. I'm just saying there would never be the systematic failure of the largest economy in the world.
And when these downturns do occur in the market, it is best to sit back and let the market adjust. Fortunately, without the Federal Reserve's credit expansion we would never have as bad of a crisis as we have now. The downturns would be minimal.
So this is my proposed solution: Stop the credit expansion of the Federal Reserve, let all banks and businesses fail, don't give government employment, don't increase taxes, and massively cut the size of government.
That's it for this series; I hope everyone has enjoyed my opinions of this crisis. I can always be reached at
matthew.hickok@gmail.com if you have any questions or comments.
As for an ending note, I would like to leave you with a quote from my favorite economist, Murray Rothbard:
"This means, also, that the government must never try to prop up unsound business situations; it must never bail out or lend money to business firms in trouble. Doing this will simply prolong the agony and convert a sharp and quick depression phase into a lingering and chronic disease. The government must never try to prop up wage rates or prices of producers' goods; doing so will prolong and delay indefinitely the completion of the depression-adjustment process; it will cause indefinite and prolonged depression and mass unemployment in the vital capital goods industries. The government must not try to inflate again, in order to get out of the depression. For even if this reinflation succeeds, it will only sow greater trouble later on. The government must do nothing to encourage consumption, and it must not increase its own expenditures, for this will further increase the social consumption/investment ratio."
By Matt Hickok
Monday, May 11, 2009
Paul Krugman thinks he has one solution for the economic crisis.
If you are not aware of Krugman, he is a New York Times columnist and Nobel Prize winner. He is known for his work in trade theory, and has an odd obsession with Japan. He's loved by nearly everyone, and even has a song written just for him.
I've never been a fan of Krugman. I consider it a disgrace for him to win the same award that was given to such economists as Friedrich von Hayek and Miltion Friedman.
Someone who commits the broken window fallacy in every column should not be in the same league with these economists. Also, his political beliefs have always held priority over his economic beliefs.
In a recent New York Times column, Krugman supported government regulation on emissions in order to increase investment in alternative energy. With regard to cap-and-trade policy, Krugman states "And committing ourselves to such a policy might actually help us in our current economic predicament."
He then goes on to say that free marketeers should be alright with such policies.
Why? Because they believe so strongly in the magic of the market. So basically, he is saying that it might hurt the economy, but it's okay because the market can adjust.
But one has to ask: Why force the adjustment in the first place?
There is a reason that investments in alternative energy sources are low; It's too expensive. Right now, fossil fuels are worth the price. The investment in alternatives will not increase until the substitute good becomes a less appealing option. Fossil fuels are much more practical at this point in time.
Forcing us away from the practical and best economic choice will not encourage economic recovery, but rather hamper it. Climate change regulations will hurt the economy.
More money will be spent on enforcing regulations and government researchers.
Also, regulations always slow down business operations and add to the costs, resulting in higher prices for consumers.
Krugman even admits that consumers would be made poorer by these policies. "But how much poorer? Not much, say careful researchers, like those at the Environmental Protection Agency or the Emissions Prediction and Policy Analysis Group at the Massachusetts Institute of Technology."
Basically, we will be worse off, but not by much. Therefore, it will lead to recovery. Brilliant.
So why does an economist support a policy that will be economically harmful?
After examining him more closely, it's easy to see that many other beliefs take priority over his economics. He is a strong supporter of the welfare state. Economically, this is an absurd position to take, but he holds this position because of his moral beliefs.
I believe this applies here as well. He is much more concerned with fighting global warming than fighting a depression.
Perhaps he should change professions.
By Matt Hickok
If you are not aware of Krugman, he is a New York Times columnist and Nobel Prize winner. He is known for his work in trade theory, and has an odd obsession with Japan. He's loved by nearly everyone, and even has a song written just for him.
I've never been a fan of Krugman. I consider it a disgrace for him to win the same award that was given to such economists as Friedrich von Hayek and Miltion Friedman.
Someone who commits the broken window fallacy in every column should not be in the same league with these economists. Also, his political beliefs have always held priority over his economic beliefs.
In a recent New York Times column, Krugman supported government regulation on emissions in order to increase investment in alternative energy. With regard to cap-and-trade policy, Krugman states "And committing ourselves to such a policy might actually help us in our current economic predicament."
He then goes on to say that free marketeers should be alright with such policies.
Why? Because they believe so strongly in the magic of the market. So basically, he is saying that it might hurt the economy, but it's okay because the market can adjust.
But one has to ask: Why force the adjustment in the first place?
There is a reason that investments in alternative energy sources are low; It's too expensive. Right now, fossil fuels are worth the price. The investment in alternatives will not increase until the substitute good becomes a less appealing option. Fossil fuels are much more practical at this point in time.
Forcing us away from the practical and best economic choice will not encourage economic recovery, but rather hamper it. Climate change regulations will hurt the economy.
More money will be spent on enforcing regulations and government researchers.
Also, regulations always slow down business operations and add to the costs, resulting in higher prices for consumers.
Krugman even admits that consumers would be made poorer by these policies. "But how much poorer? Not much, say careful researchers, like those at the Environmental Protection Agency or the Emissions Prediction and Policy Analysis Group at the Massachusetts Institute of Technology."
Basically, we will be worse off, but not by much. Therefore, it will lead to recovery. Brilliant.
So why does an economist support a policy that will be economically harmful?
After examining him more closely, it's easy to see that many other beliefs take priority over his economics. He is a strong supporter of the welfare state. Economically, this is an absurd position to take, but he holds this position because of his moral beliefs.
I believe this applies here as well. He is much more concerned with fighting global warming than fighting a depression.
Perhaps he should change professions.
By Matt Hickok
In This Economy, Students Led to the Thrift Shop
Everyone knows that the economy isn't that great right now, and because of it students have had to cut back on spending money.
One thing that many college students enjoy doing is shopping.
Here in Richland Center the main thrift store is Goodwill, and surprisingly you can find a lot of good things there; cute clothes, cheaper household appliances, and other little knick knacks that you might find useful.
When it comes to shopping, think about stopping at Goodwill or another thrift store to see what can be found.
What do students think about shopping at thrift stores?
"I sometimes find good things there, like Super Nintendos," said John Strait, a sophomore here at UW-Richland. When asked if he shops there because of the economy being so bad Strait answered, "I just shop there because stuff is so cheap."
Josh Oates, another sophomore here at UW-Richland, was asked if he has ever found something at a thrift store. He replied, "Yes, I found some cool stuff for paint ball."
Another store to consider when looking to save money is TJ Maxx.
It has low prices but still has nice clothes and other items.
Just because a place is considered a thrift store doesn't mean it is any less of a regular store.
You are still able to find name brand clothes, just only for a lot cheaper. That's the good part about it.
By Tasha Walters
One thing that many college students enjoy doing is shopping.
Here in Richland Center the main thrift store is Goodwill, and surprisingly you can find a lot of good things there; cute clothes, cheaper household appliances, and other little knick knacks that you might find useful.
When it comes to shopping, think about stopping at Goodwill or another thrift store to see what can be found.
What do students think about shopping at thrift stores?
"I sometimes find good things there, like Super Nintendos," said John Strait, a sophomore here at UW-Richland. When asked if he shops there because of the economy being so bad Strait answered, "I just shop there because stuff is so cheap."
Josh Oates, another sophomore here at UW-Richland, was asked if he has ever found something at a thrift store. He replied, "Yes, I found some cool stuff for paint ball."
Another store to consider when looking to save money is TJ Maxx.
It has low prices but still has nice clothes and other items.
Just because a place is considered a thrift store doesn't mean it is any less of a regular store.
You are still able to find name brand clothes, just only for a lot cheaper. That's the good part about it.
By Tasha Walters
Monday, April 27, 2009
Do Rising Costs Impact Student Transfers?
Jean-Claude Bedard, otherwise known as JC, said when deciding what college you are going to transfer, "Cost is definitely a factor."
All schooling costs are going up and it's not just tuition. Housing and transportation are going up as well, and the government does not require employers to raise the amount an employee is paid.
So how does the government expect students to pay for their tuition?
Bedard also stated that his parents are not helping him with the cost of school. Like many other students he has to work and get financial aid. This causes many students to juggle a full-time job and school schedule while still ending up with thousands of dollars in loans.
Caleb Hendrickson said that he will be transferring to UW-Stevens Point and that cost was not a deciding factor.
"It's the place to go for natural resources. I need to go there either way so either I need to pay up or I don't get to go."
"Cost was a minor thing, it was on the list but there were other things a head of it," said Julia Schneider.
"Location and convenience was my main deciding factor. Everything I do is in Madison."
Schneider said she has family and a job nearby. Her regular activities are all near or in Madison, so the obvious choice was to decide on Madison.
The United States military is paying for Seth Winchel's schooling "…and what they don't, I am fortunate (enough) to have really good parents". He said, "Just for going to school I'm making around $1,200 bucks." He checked into other schools, but Milwaukee and Oshkosh were the only ones that had Religious studies and ROTC -Reserve officer Training Course. He decided that Oshkosh was the best choice.
The only requirements the military has for paying your full tuition is that you are a full-time student and you have passing grades.
By: Elizabeth Sobek and Indaca Brown
The Future of Our Economy
In the last few weeks, there hasn't been very much discussion on the economy. Maybe that's because the media has been busy talking about pirates, handshakes, and flu outbreaks. Or maybe it's because it makes people uncomfortable.
Uncomfortable news sells, but not when it's boring. But in case you haven't been following the condition of the economy, it does not look good.
Lawrence Summers, director of the White House National Economic Council, said to expect worsening conditions.
In 2009, the economy is expected to shrink by 2.8 percent. By 2010, unemployment is supposed to reach over 10 percent and the economy is not expected to grow at all.
While this is obviously undesirable, it is necessary. This is the correction the market needs, and it's not good for those who have to suffer through it.
It's too bad that people are begging for help from the people who started this mess. The government is going to introduce policies which will further weaken our economy.
These polices have already started. The government is trying to prop prices up, weakening the dollar, and digging us deeper into debt every day.
In order to keep prices from falling, wages will be kept high by minimum wage laws, unionization will be encouraged, and inflation will continue to rise. With this inflation, more people will be eager to ditch the dollar as its value plummets, and this debt has to be repaid at some time.
Since this money comes from the private sector, expect the productive area of the economy to drastically decrease.
These are all steps in the wrong direction.
In 1920, America had its most severe depression it has ever seen. Banks and businesses failed at an astonishing rate and aggregate production dropped by 20 percent within only months. I bet you never learned about this in history class. That's because it only lasted one year.
Our greatest depression fighter ever was Warren Harding, the most underrated president in our history. As the last president refused to adopt Keynesian economics, he did the exact opposite of what we are doing now. He did absolutely nothing.
Harding let banks and businesses fail. All of them. No bailouts, no worker programs, and no inflation. He did nothing, and the depression was over within one year.
You can learn a lot from history, especially when it comes to economics. What we need is a Warren Harding, not Franklin Roosevelt who let a depression last for a decade by his reckless Keynesian policies. Unfortunately, we are stuck with politicians who are following in Roosevelt's footsteps.
Expect things to continue getting worse. Until we have real change, this downward spiral will continue. My guess is that this depression (yes, I said depression) will continue for years. So sit back, and watch our wonderful leaders fail time after time again while searching for the policy.
And by right policy, I mean whatever gets them reelected.
Uncomfortable news sells, but not when it's boring. But in case you haven't been following the condition of the economy, it does not look good.
Lawrence Summers, director of the White House National Economic Council, said to expect worsening conditions.
In 2009, the economy is expected to shrink by 2.8 percent. By 2010, unemployment is supposed to reach over 10 percent and the economy is not expected to grow at all.
While this is obviously undesirable, it is necessary. This is the correction the market needs, and it's not good for those who have to suffer through it.
It's too bad that people are begging for help from the people who started this mess. The government is going to introduce policies which will further weaken our economy.
These polices have already started. The government is trying to prop prices up, weakening the dollar, and digging us deeper into debt every day.
In order to keep prices from falling, wages will be kept high by minimum wage laws, unionization will be encouraged, and inflation will continue to rise. With this inflation, more people will be eager to ditch the dollar as its value plummets, and this debt has to be repaid at some time.
Since this money comes from the private sector, expect the productive area of the economy to drastically decrease.
These are all steps in the wrong direction.
In 1920, America had its most severe depression it has ever seen. Banks and businesses failed at an astonishing rate and aggregate production dropped by 20 percent within only months. I bet you never learned about this in history class. That's because it only lasted one year.
Our greatest depression fighter ever was Warren Harding, the most underrated president in our history. As the last president refused to adopt Keynesian economics, he did the exact opposite of what we are doing now. He did absolutely nothing.
Harding let banks and businesses fail. All of them. No bailouts, no worker programs, and no inflation. He did nothing, and the depression was over within one year.
You can learn a lot from history, especially when it comes to economics. What we need is a Warren Harding, not Franklin Roosevelt who let a depression last for a decade by his reckless Keynesian policies. Unfortunately, we are stuck with politicians who are following in Roosevelt's footsteps.
Expect things to continue getting worse. Until we have real change, this downward spiral will continue. My guess is that this depression (yes, I said depression) will continue for years. So sit back, and watch our wonderful leaders fail time after time again while searching for the policy.
And by right policy, I mean whatever gets them reelected.
Sunday, April 26, 2009
Inflation
A key issue in today's economic climate is inflation. Inflation is the rate of change that the CPI (Consumer Price Index) increases at. So basically, inflation is the increase in overall prices in the economy.
Most people just assume that inflation is a naturally occurring phenomenon. This is far from true. Inflation is a policy which the government chooses.
Media pundits usually describe inflation as the government printing money and injecting it into the economy. Unfortunately, it isn't that simple. It would be too easy to be critical of that policy, so the process of inflation is much more complicated. If people can't understand it, it's harder to be critical of it.
There are different ways for the government to cause inflation, and I'll discuss two of them. These techniques are performed by the Federal Reserve.
The first thing to understand is the reserve requirement set by the Federal Reserve.
This is the percentage, or ratio of deposits, which the government can loan out. Right now, the reserve requirement is set at 10%. That means for every $100 deposited into the bank, it can loan out $90. The lower the requirement, the more money is created resulting in a higher inflation rate.
The second tool used, is open market operations.
The Federal Reserve buys or sells government securities. By doing this, it increases or decreases the reserves of commercial banks. The money is not literally printed. Instead, it is all done electronically.
By increasing the reserve of banks, they have more money to lend. This is how the rates are set. The more funds in a bank's reserves, the lower the interest rates. The lower the interest rates, the more loans are taken out.
This is how inflation occurs. The money supply is expanded by the Federal Reserve.
There are many consequences of inflation. The most obvious is the increase in prices.
The greater the money supply, the higher the prices.
This becomes a big problem when your income is fixed, but the prices are rising dramatically. The older population is hurt the worst by inflation.
When prices increase, the value of the currency decreases. If a piece of candy cost $1, a dollar was worth a piece of candy. If it costs $2, then a dollar is worth half a piece of candy. It loses its purchasing power.
Lastly, inflationary bubbles are created. As I mentioned before, inflation means lower interest rates. These low interest rates are responsible for bubbles in the economy, and ultimately responsible for the business cycle.
Inflation is devastating to all people.
Unlike many economic issues, this is completely controlled. But as long as the government can create money out of thin air, it will take advantage of it.
Who wouldn't want a legal monopoly on counterfeiting?
Most people just assume that inflation is a naturally occurring phenomenon. This is far from true. Inflation is a policy which the government chooses.
Media pundits usually describe inflation as the government printing money and injecting it into the economy. Unfortunately, it isn't that simple. It would be too easy to be critical of that policy, so the process of inflation is much more complicated. If people can't understand it, it's harder to be critical of it.
There are different ways for the government to cause inflation, and I'll discuss two of them. These techniques are performed by the Federal Reserve.
The first thing to understand is the reserve requirement set by the Federal Reserve.
This is the percentage, or ratio of deposits, which the government can loan out. Right now, the reserve requirement is set at 10%. That means for every $100 deposited into the bank, it can loan out $90. The lower the requirement, the more money is created resulting in a higher inflation rate.
The second tool used, is open market operations.
The Federal Reserve buys or sells government securities. By doing this, it increases or decreases the reserves of commercial banks. The money is not literally printed. Instead, it is all done electronically.
By increasing the reserve of banks, they have more money to lend. This is how the rates are set. The more funds in a bank's reserves, the lower the interest rates. The lower the interest rates, the more loans are taken out.
This is how inflation occurs. The money supply is expanded by the Federal Reserve.
There are many consequences of inflation. The most obvious is the increase in prices.
The greater the money supply, the higher the prices.
This becomes a big problem when your income is fixed, but the prices are rising dramatically. The older population is hurt the worst by inflation.
When prices increase, the value of the currency decreases. If a piece of candy cost $1, a dollar was worth a piece of candy. If it costs $2, then a dollar is worth half a piece of candy. It loses its purchasing power.
Lastly, inflationary bubbles are created. As I mentioned before, inflation means lower interest rates. These low interest rates are responsible for bubbles in the economy, and ultimately responsible for the business cycle.
Inflation is devastating to all people.
Unlike many economic issues, this is completely controlled. But as long as the government can create money out of thin air, it will take advantage of it.
Who wouldn't want a legal monopoly on counterfeiting?
Monday, April 13, 2009
Who's to Blame?
Who is responsible for this mess?
When we discover the cause for the irrational consumer behavior, we'll have the answer.
There are dozens of theories which try to explain the rapid shift in consumer demand, but I felt that only one theory has been successful.
It all starts with the Federal Reserve's manipulation of the interest rates.
In a free market, the interest rates are set by the amount of savings deposited in the bank. The law of marginal utility requires a lower price when the supply is higher. When people deposit money into a bank, it is loaned out to other people. The more money that people save, the more loanable funds available. This means the interest rates drop, and loans become more appealing.
So investments that were not profitable before become much more appealing at lower interest rates.
From the business standpoint, there is yet another dimension. When interest rates are low, it means lots of people are saving their money. This is a signal that people don't want to consume today, but consume in the future instead. Conversely, when interest rates are high, it shows that people are not saving, but consuming in the present.
So the interest rates are a signal for businesses. Investors choose how to allocate funds based on these interest rates. As I have said, if the interest rates are low, it looks like people are saving rather than consuming. So to investors, this is the best time to invest in future projects.
This is the problem.
Countless investments were made because loans were cheap.
Think of a steel plant who buys one more expensive piece of machinery. The piece of machinery wasn't affordable, and it wasn't required, but it was bought anyway due to the ease of getting a loan. Imagine this on the national level. Risky investments were made by the thousands because it's cheap, not because it's needed or even profitable.
Then comes the problems of time preference.
What happens when investments are made based on fake interest rates? When the rates are low because of the Federal Reserve and not the amount of savings, everything gets distorted. Businesses invest based on how much people are saving or consuming. Since the interest rates are low, it looked like people were saving at that time, and going to spend in the future.
Businesses changed plans accordingly. Since people were going to increase spending in the future, investments were made for future production. New factories were built, technologies were researched, and the economy was greatly invested in for future consumption.
The problem is that people never did increase savings. The interest rates were low because of the Federal Reserve, not because of high savings. So when all of these new projects were started, they couldn't be sustained. The savings didn't exist which were supposed to fund these projects.
These projects have to be discontinued. Factories need to shut down, people have to be laid off, and the economy must slow down.
This is when the slowdown occurs. Businesses realize they have invested too much for the amount of savings that exists, and they have also realized that they have made foolish investments because it was easy to get loans.
This is just the beginning of the problem.
Next week I'll expand on it by talking about inflation, reserve requirements, and the purchasing of bonds through open market operations.
When we discover the cause for the irrational consumer behavior, we'll have the answer.
There are dozens of theories which try to explain the rapid shift in consumer demand, but I felt that only one theory has been successful.
It all starts with the Federal Reserve's manipulation of the interest rates.
In a free market, the interest rates are set by the amount of savings deposited in the bank. The law of marginal utility requires a lower price when the supply is higher. When people deposit money into a bank, it is loaned out to other people. The more money that people save, the more loanable funds available. This means the interest rates drop, and loans become more appealing.
So investments that were not profitable before become much more appealing at lower interest rates.
From the business standpoint, there is yet another dimension. When interest rates are low, it means lots of people are saving their money. This is a signal that people don't want to consume today, but consume in the future instead. Conversely, when interest rates are high, it shows that people are not saving, but consuming in the present.
So the interest rates are a signal for businesses. Investors choose how to allocate funds based on these interest rates. As I have said, if the interest rates are low, it looks like people are saving rather than consuming. So to investors, this is the best time to invest in future projects.
This is the problem.
Countless investments were made because loans were cheap.
Think of a steel plant who buys one more expensive piece of machinery. The piece of machinery wasn't affordable, and it wasn't required, but it was bought anyway due to the ease of getting a loan. Imagine this on the national level. Risky investments were made by the thousands because it's cheap, not because it's needed or even profitable.
Then comes the problems of time preference.
What happens when investments are made based on fake interest rates? When the rates are low because of the Federal Reserve and not the amount of savings, everything gets distorted. Businesses invest based on how much people are saving or consuming. Since the interest rates are low, it looked like people were saving at that time, and going to spend in the future.
Businesses changed plans accordingly. Since people were going to increase spending in the future, investments were made for future production. New factories were built, technologies were researched, and the economy was greatly invested in for future consumption.
The problem is that people never did increase savings. The interest rates were low because of the Federal Reserve, not because of high savings. So when all of these new projects were started, they couldn't be sustained. The savings didn't exist which were supposed to fund these projects.
These projects have to be discontinued. Factories need to shut down, people have to be laid off, and the economy must slow down.
This is when the slowdown occurs. Businesses realize they have invested too much for the amount of savings that exists, and they have also realized that they have made foolish investments because it was easy to get loans.
This is just the beginning of the problem.
Next week I'll expand on it by talking about inflation, reserve requirements, and the purchasing of bonds through open market operations.
Monday, April 6, 2009
Unemployment Hits 8.5%
The unemployment numbers in March were not pretty. In the private sector alone, 633,000 jobs were cut. The unemployment rate is now at 8.5%, making it the highest in 25 years. Many people thought the worst was over, but now it looks like the worst is yet to come.
Businesses all over the country have announced plans to cut more jobs in the future. Even the U.S. Postal service is planning on cutting jobs in up and coming months, showing that jobs in the private sector are not the only jobs at risk.
Since December of 2007, 5.1 million American jobs have been lost. Of those lost jobs, 3.3 million have been in just the last 5 months. The automobile industry, manufacturing, and construction industries are responsible for the bulk of the cuts.
So what should be done?
Before making any sudden decisions, the reasons for this systematic failure have to be discovered. The most immediate and obvious piece of evidence, is that demand for these goods has dropped dramatically.
Demand for a product can decrease at any time for a number of reasons. But how can the aggregate demand for all goods drop so dramatically and simultaneously? This sudden drop of spending has sent the economy spiraling into chaos.
This switch in consumer behavior has baffled our government officials and economists alike, which has caused them to panic. People have demanded instant action, resulting in rushed policies.
However, these rushed policies were thought up out of panic and instinct, not economic reasoning.
One solution has been to create government jobs and "invest" in the nation's infrastructure. But as I have explained in previous articles, this increase in government expenditures requires a decrease in private sector spending. Government jobs and production increases, but decrease in the private sector.
The other solution has been more expansionary monetary policy.
The Federal Reserve has been actively manipulating interest rates in an attempt to expand the credit available.
This expansion of credit is the reason for this crisis in the first place, and continuing this reckless policy will create more bubbles and delay recovery. This will be my topic next week.
I'll explain the cause of decreased spending, high unemployment, and who is responsible. Also, I will explain why the actions taken by our government are wrong, and how it will delay recovery.
Make sure not to miss out on next week's article!
Businesses all over the country have announced plans to cut more jobs in the future. Even the U.S. Postal service is planning on cutting jobs in up and coming months, showing that jobs in the private sector are not the only jobs at risk.
Since December of 2007, 5.1 million American jobs have been lost. Of those lost jobs, 3.3 million have been in just the last 5 months. The automobile industry, manufacturing, and construction industries are responsible for the bulk of the cuts.
So what should be done?
Before making any sudden decisions, the reasons for this systematic failure have to be discovered. The most immediate and obvious piece of evidence, is that demand for these goods has dropped dramatically.
Demand for a product can decrease at any time for a number of reasons. But how can the aggregate demand for all goods drop so dramatically and simultaneously? This sudden drop of spending has sent the economy spiraling into chaos.
This switch in consumer behavior has baffled our government officials and economists alike, which has caused them to panic. People have demanded instant action, resulting in rushed policies.
However, these rushed policies were thought up out of panic and instinct, not economic reasoning.
One solution has been to create government jobs and "invest" in the nation's infrastructure. But as I have explained in previous articles, this increase in government expenditures requires a decrease in private sector spending. Government jobs and production increases, but decrease in the private sector.
The other solution has been more expansionary monetary policy.
The Federal Reserve has been actively manipulating interest rates in an attempt to expand the credit available.
This expansion of credit is the reason for this crisis in the first place, and continuing this reckless policy will create more bubbles and delay recovery. This will be my topic next week.
I'll explain the cause of decreased spending, high unemployment, and who is responsible. Also, I will explain why the actions taken by our government are wrong, and how it will delay recovery.
Make sure not to miss out on next week's article!
Donations for the Needy?
Non-traditional student Lori Brinkley donates anything to various charities whenever possible in order to help people who don't have much to survive on.
That was before she lost her job because of the current state of the economy. Now, it's all she can do to pay the bills and is forced to shop at the very places she used to donate to.
"I no longer have the ability to give to others," said Brinkley, "All the money I have has to go to my own family, and we now shop at Goodwill."
Today's economy has changed the lives of many UW-Richland students.
With money as tight as it is for so many, some students are left wondering what happens to the people who need help from charities just to get by.
Although the economy has affected everyone in some way, there are still students who want to donate to charities even if they don't have much themselves.
"We don't have a lot of stuff, but if we have something we don't need we can always give it away to someone who needs it more," said sophomore Julie Opalinski.
The bad economy has had little impact on charity donations given by a few students.
"It hasn't affected me not giving," said sophomore Laural Olson, "If I don't have a need for old clothes or if it's food I don't like, I want to give it to someone that will use it."
Many students believe that the economy has limited the amount that people can donate to charities.
"Yes, a lot less because people have to pay for their own things, they have to make ends meet," replied freshman Desiree Hofmeister when asked if she thought the economy has affected charity donations.
The economy has noticeably affected the Goodwill store in downtown Richland Center as well.
"We've been very busy; people are refusing to pay full price at regular department stores since they just can't afford it," said Goodwill Acting Supervisor, Doris Turner. "We've always had regulars, but there are a lot more out-of-towners coming in and a lot more higher-class people than normal too."
The economy has hit some students harder than others. Some students find that there just isn't enough money to donate anything to charity, even if they want to.
Has the economy affected your ability to donate?
By: Michelle Holman
Tuesday, March 31, 2009
Politicizing Economics
I actually hesitated to show this video, because I thought it gives too much credit to the Treasury Department's decision making process. I would prefer a chicken with its head cut off to corrupt politicians with the same decision making capabilities. At least the headless chicken wouldn't conscientiously run our country into the dirt.
Why is our government so good and making things worse?
One possibility is that politicians don't know any better. They think they can successfully run the entire economy by using centralized power.
In college, Keynesian economics is the major school of thought. So even though the stagflation in the 1970s should have put an end to Keynesian thought, it didn't happen.
Even though the theory required that the government must step on the gas and slam on the brakes simultaneously, it was nearly untouched.
This makes no sense from an economic perspective, but from a political perspective, it makes perfect sense.
Keynesianism focuses on short run policies only. If there is a recession, create immediate jobs by increasing government spending. For example, Franklin Roosevelt created the Civilian Conservation Corps in a desperate attempt to create jobs.
A competent economist would look at this situation, and immediately notice a problem. Where did the money come from to create these jobs? It comes from higher taxes or printing money. Neither of these effects are seen immediately, but in time, the economy will suffer from the decreased funding available in the private sector.
Fortunately for the politician, this problem will just be passed onto someone else. Long term consequences are irrelevant to politician's interests. If you are concerned with getting reelected, why do you care about the economic situation in 10 years?
If there is an economic crisis, the correct action might be doing nothing. While this may be the right action economically, it is suicide politically.
This is why Keynesianism is so popular in the political realm.
An odd example is that of Herbert Hoover. I say it's odd because of the misconception of Hoover's time in office. He was known to be the awful president who sat back and watched The Great Depression take place.
While this may have been the correct action at the time, it would kill his political career. Roosevelt was praised for doing the very opposite. He was a man of action. The actions themselves were irrelevant, people just wanted action.
The reason this is a misconception is because Hoover was a man of action as well. As a matter of fact, he laid the foundation for the New Deal. If he really was the free market ideologue he is known for, he wouldn't have created the Smoot-Hawley Tariff Act, the Revenue Act of 1932, the Emergency Relief and Construction Act, or the Reconstruction Finance Corporation. These are hardly free market policies.
Political gain is just one reason our wonderful politicians choose their policies. Later, I'll explain some other possibilities.
For now, all we can do is expect more of the same in the coming months. Expect messages of hope and prosperity, but get ready for inflation and unemployment. Be sure to thank your leaders in Washington.
Monday, March 30, 2009
Is there anyone who really knows what is going on in the economy? Of course there is. But the only people who have the answers are literally laughed out of debates. This is obvious at 3:40 in the video when Peter Schiff is rudely interrupted by the other people on the show.
Peter Schiff has always put the emphasis on savings rather than consumption. Ever since Keynes, a British economist, attempted to show how saving money is a sin, Schiff's stance has been an unpopular one.
Schiff explained our current crisis in 2006 when people were still saying the economy has never been better. Notice at 0:43 that Schiff says that we are consuming too much and not saving enough. The media has been consistent in saying that the problem lies in lack of consumption.
So when there are two opposing views, who do we listen to?
My vote goes to the person who has been right all along.
But for most people, listening to Schiff is not convenient. He always preaches absurd ideas. He advocates saving rather than borrowing. He does not believe in artificially lowering the interest rates.
Most importantly, he thinks we should live within our means, not run an economy based on debt.
These views are not welcome.
At 2:08-2:20, Schiff says exactly what has just happened in the last few months. This was almost 3 years ago when he said it, and he is stunningly accurate. He was right about the stock market collapsing, the housing bubble, the price of gold reaching $1,000 per ounce, and all of the debt that would remain after the crash.
My favorite part of the whole video is at 3:30 when one of the people opposing Schiff says, "What artificial lending standards are you talking about?" That is absolutely priceless. To make it better, he says it while laughing at Schiff.
I wonder if Art Laffer ever paid Schiff that penny.
By: Matt Hickok
Money Mayhem: Economy vs. Students: Who Will Fall?
Today's economy is tough on everyone, especially UW-Richland returning adult student Dennis Drake.
"It has been tough," Drake said of being a student this semester. "I have seen friends that are students who are struggling making ends meet. Every day I see them make choices to forgo eating lunch because they can't afford it."
Drake's family members are also feeling the effects of this current state of the economy.
"My family members have suffered the most," he said. "My son and daughter-in-law both have been laid-off, forcing them to have to move back home in order to make ends meet."
All of us have to make tough choices now more than ever: Eating out versus paying the gas bill; buying that new laptop; pumping gas into our cars.
And now, students are joining in on this current fight, and not just non-traditional students, but students overall are going to have even more tough times ahead due to the current state of our economy.
"I think times are only going to get worse before we see things turn around," Drake said. "We are all in the same boat and the boat has a hole in it; we all have to bail water if we want to stay afloat."
More than ever money for school is hard to come by, especially as prices increase.
"For the current academic year, the average list price of tuition and fees at four-year public universities rose $394, or 6.4 percent, to $6,585," according to the annual Trends in College Pricing report from the College Board. "At private colleges, prices rose $1,399, or 5.9 percent, to $25,143."
But the good news for UW-R students is that this school's tuition is the lowest in all of the UW-Colleges.
Tell us: Can you afford to go to college?
By: Alejandro Batts
"It has been tough," Drake said of being a student this semester. "I have seen friends that are students who are struggling making ends meet. Every day I see them make choices to forgo eating lunch because they can't afford it."
Drake's family members are also feeling the effects of this current state of the economy.
"My family members have suffered the most," he said. "My son and daughter-in-law both have been laid-off, forcing them to have to move back home in order to make ends meet."
All of us have to make tough choices now more than ever: Eating out versus paying the gas bill; buying that new laptop; pumping gas into our cars.
And now, students are joining in on this current fight, and not just non-traditional students, but students overall are going to have even more tough times ahead due to the current state of our economy.
"I think times are only going to get worse before we see things turn around," Drake said. "We are all in the same boat and the boat has a hole in it; we all have to bail water if we want to stay afloat."
More than ever money for school is hard to come by, especially as prices increase.
"For the current academic year, the average list price of tuition and fees at four-year public universities rose $394, or 6.4 percent, to $6,585," according to the annual Trends in College Pricing report from the College Board. "At private colleges, prices rose $1,399, or 5.9 percent, to $25,143."
But the good news for UW-R students is that this school's tuition is the lowest in all of the UW-Colleges.
Tell us: Can you afford to go to college?
By: Alejandro Batts
Sunday, March 15, 2009
Stimulate this!
How can the government stimulate the economy?
It doesn't make money by running a successful business. Instead, the government gets its wealth from taxation and its very own printing press. Unlike a business, how well the government performs is irrelevant to the amount of money it can spend.
The current stimulus package is going to pump billions into the economy. However, since the government has no money available, due to massive debt, they need to come up with the money some other way.
Borrowing the money is an option, but since the debt has to eventually be paid back, the money has to come from either taxation or through printing the money.
In order to pay for this stimulus through taxation, the government has to take money from the private sector and redistribute the wealth as it sees fit. The private sector operates on a profit and loss system unlike the government.
In order to survive as a business, you rely on creating things that are in demand, making them valuable. To stay in business, they must compete with other businesses to meet the needs of customers. Whoever can meet these needs the best will be the most successful.
So businesses are forced to be efficient and create goods in demand. The government on the other hand, is completely different. It doesn't require efficiency or meeting the needs of customers.
Instead, it just uses taxation. If there's a new public works project to build in a bridge, the money must come from the private sector. Whether the project is in demand or not is irrelevant.
The project can be completely worthless, but since the money doesn't come from successful business decisions, the project can still be completed.
So these government projects may give us jobs, but it takes away wealth from the private sector to do so.
The second way for the government to fund this stimulus is to print the money.
In order to understand why this is such a bad idea, people need to understand what money is.
Money is a medium of exchange, it is not wealth. Rather than bartering with each other, we use a medium of exchange so that transactions are much simpler.
Our money is paper, nothing more.
So how exactly would printing more of our medium of exchange fix our economic crisis? It wouldn't.
Nothing of value is created. The only result is the increase of prices and the devaluation of all of the money we have earned in the past.
Government stimulus does not exist. It is an attempt for politicians to make certain people happy in a Keynesian fashion. It is political suicide for a politician to do nothing in an economic crisis. Whether the policies are helpful or harmful is irrelevant. People want action.
Tell us: Does this make sense? What do you think should happen to the economy?
It doesn't make money by running a successful business. Instead, the government gets its wealth from taxation and its very own printing press. Unlike a business, how well the government performs is irrelevant to the amount of money it can spend.
The current stimulus package is going to pump billions into the economy. However, since the government has no money available, due to massive debt, they need to come up with the money some other way.
Borrowing the money is an option, but since the debt has to eventually be paid back, the money has to come from either taxation or through printing the money.
In order to pay for this stimulus through taxation, the government has to take money from the private sector and redistribute the wealth as it sees fit. The private sector operates on a profit and loss system unlike the government.
In order to survive as a business, you rely on creating things that are in demand, making them valuable. To stay in business, they must compete with other businesses to meet the needs of customers. Whoever can meet these needs the best will be the most successful.
So businesses are forced to be efficient and create goods in demand. The government on the other hand, is completely different. It doesn't require efficiency or meeting the needs of customers.
Instead, it just uses taxation. If there's a new public works project to build in a bridge, the money must come from the private sector. Whether the project is in demand or not is irrelevant.
The project can be completely worthless, but since the money doesn't come from successful business decisions, the project can still be completed.
So these government projects may give us jobs, but it takes away wealth from the private sector to do so.
The second way for the government to fund this stimulus is to print the money.
In order to understand why this is such a bad idea, people need to understand what money is.
Money is a medium of exchange, it is not wealth. Rather than bartering with each other, we use a medium of exchange so that transactions are much simpler.
Our money is paper, nothing more.
So how exactly would printing more of our medium of exchange fix our economic crisis? It wouldn't.
Nothing of value is created. The only result is the increase of prices and the devaluation of all of the money we have earned in the past.
Government stimulus does not exist. It is an attempt for politicians to make certain people happy in a Keynesian fashion. It is political suicide for a politician to do nothing in an economic crisis. Whether the policies are helpful or harmful is irrelevant. People want action.
Tell us: Does this make sense? What do you think should happen to the economy?
How's your major?
Antonio Thomas Jr. wrote about the economy and majors earlier this semester:
http://www.theonlineexpress.com/home/index.cfm?event=displayArticle&ustory_id=51110457-6370-436a-b4fc-dba34ceb7b4b
By: Antonio Thomas Jr.
"No, it belongs to us!"
Apparently, three and four year old children understand property rights better than most educated Americans.
I found a video on YouTube of a father trying to tell his kids that the government is going to be spending $800 billion for a stimulus, and they will have to pay for it.
The video has been deleted, most likely due to one of the children crying. Fortunately, I had the chance to watch it a few times first.
The conversation starts out with the father telling his daughter that she will have to pay billions of dollars for this stimulus package.
How does she react? "No, it belongs to us." She then follows with "That's not fair."
Of course it's not fair. The concept of someone else spending her own money is beyond her comprehension. If it's the kid's money, then why would someone else be spending it?
This stimulus bill that passed will have to be paid by us, these kids, and people who don't even exist right now. Whether the stimulus will work or not is irrelevant to the moral hazard this poses.
How can we possibly justify stealing the property of people who have not even been born? Did my future child consent to this burden he will have to bear?
The father of these kids went too far, which is when the boy starts to cry.
Near the end of the video, the child brilliantly says the one thing that everyone is thinking: "But we don't have any money!" He doesn't understand how his money can be spent, when he doesn't have any.
Politicians love to talk about this stimulus, but refuse to say where this money is coming from. It is not coming from a budget surplus, which is obvious because of our multi-trillion dollar deficit.
If more people had the common sense of these two kids, we would be much better off right now.
By: Matt Hickok
I found a video on YouTube of a father trying to tell his kids that the government is going to be spending $800 billion for a stimulus, and they will have to pay for it.
The video has been deleted, most likely due to one of the children crying. Fortunately, I had the chance to watch it a few times first.
The conversation starts out with the father telling his daughter that she will have to pay billions of dollars for this stimulus package.
How does she react? "No, it belongs to us." She then follows with "That's not fair."
Of course it's not fair. The concept of someone else spending her own money is beyond her comprehension. If it's the kid's money, then why would someone else be spending it?
This stimulus bill that passed will have to be paid by us, these kids, and people who don't even exist right now. Whether the stimulus will work or not is irrelevant to the moral hazard this poses.
How can we possibly justify stealing the property of people who have not even been born? Did my future child consent to this burden he will have to bear?
The father of these kids went too far, which is when the boy starts to cry.
Near the end of the video, the child brilliantly says the one thing that everyone is thinking: "But we don't have any money!" He doesn't understand how his money can be spent, when he doesn't have any.
Politicians love to talk about this stimulus, but refuse to say where this money is coming from. It is not coming from a budget surplus, which is obvious because of our multi-trillion dollar deficit.
If more people had the common sense of these two kids, we would be much better off right now.
By: Matt Hickok
Got a job?
With the economy in shambles and unemployment on a rise, some students at UW-Richland stay confident while others do not see the future so brightly.
And just as concerning for many students is whether they can find - or can keep - a job today.
"It's tough in the job market right now," said Chris Gander, a freshman who recently found work at Culver's. "The jobs are out there, but you just have to look for them. You just have to stay persistent and make sure you follow up on your applications."
Despite the recession, students who currently have jobs believe their jobs are in fact more secure now then they were before the economy went south.
Although many places in Richland Center are still hiring, every prospective candidate for a job must bring everything they can to the table and even settle on a job they may not want while looking for their "dream job."
Enter the old adage: Get the job you can get until you get the job you want.
"My employer would rather keep me on for the time I can work rather than pay the money to train someone else to do the same job," said sophomore Logan Mathews, who is a member of UW-Richland's Student Senate. "As long as I do my job they will continue to want me back every summer."
And there are things you can do today to stay marketable and keep some of the power over keeping your job.
"Increase your flexibility and make yourself more attractive to potential employers when you are out searching for a job," said Gander.
Simply being in college in Richland Center can help someone find work.
UW-Richland enrolls nearly 500 students (472 this fall), and local businesses look to the school to provide many of their employees every year.
Yet, some students continue to find themselves extremely worried about the current job market in Richland Center with unemployment reaching levels it has not been at in years.
"I don't think the job opportunities in Richland Center, or the surrounding Southwest Wisconsin region look promising," said Robert Johnson, a junior Senator on the Student Senate and a Resident Assistant at Campus View. "Factories are closing or moving left and right. I am not sure there are very many places beyond Wal-Mart that are presently hiring. And, while it is a job, people are stumbling backwards on the pay scale when leaving production jobs for Wal-Mart."
Tell us: What is your job? Do you think you will be able to keep it?
By: Paul Kornacker
Is it really "our" money?
Out of curiosity, I decided to check out the new Web site dedicated to the latest government scam. As soon as the page opens up, you are greeted with the offensive and frustrating banner, which reads: "Your money at work."
If the money that is being spent on this stimulus is ours, can we please have it back?
Of course we can't, because it's not really our money.
Just like everything else, it belongs to the state, and we get the privilege of conditionally holding property.
For example, say that you buy a house from someone. Do you buy it or do you rent it from the state?
Since you are forced to pay a tax every year on it after you supposedly own it, it seems like the house is rented rather than owned.
If you own a business where you pay your employees to lie outside in the front lawn just to make the place look nice, this "labor" might be worth $4 per hour, but the state forces you to pay them $7 per hour. On top of that, you have to pay a payroll tax, charge a sales tax, and comply with loads of regulations.
So do you really own that business too?
Even though the government tells you that you own things, don't be fooled.
So where is "our" money going?
To make the stimulus seem more attractive, it says that $288 billion is going for tax relief.
Doesn't that sound great? The government takes a bunch of our money, and now they are going to give it right back.
Too bad they don't actually have any money to do so. They either have to print the money, devaluing all of our currently held cash, or borrow the money, so that we have to pay it back later.
But there is another problem.
Right next to the phrase "Tax Relief" on the new Web site, there is one of these "*." What the hell does that mean?
I followed it down to the bottom of the page and read the following:
"* Tax Relief - includes $15 B for Infrastructure and Science, $61 B for Protecting the Vulnerable, $25 B for Education and Training and $22 B for Energy, so total funds are $126 B for Infrastructure and Science, $142 B for Protecting the Vulnerable, $78 B for Education and Training, and $65 B for Energy."
So apparently "Tax Relief" is the new phrase for massive government spending. Just like "Investment" is now used rather than "Spending" when it comes to all of this new government spending.
Semantics does wonders for popular opinion, though.
Not only does the government have the nerve to call this "our" money, but they also have the nerve to use semantics to get their way.
This isn't tax relief.
It isn't investment.
It isn't our money, and it is not recovery.
It is the government trying to fix its own mistakes, by repeating its actions.
It is about politicians and interest groups getting what they want by using us.
So what now? Tell us: Do you agree with the stimulus?
By: Matt Hickok
If the money that is being spent on this stimulus is ours, can we please have it back?
Of course we can't, because it's not really our money.
Just like everything else, it belongs to the state, and we get the privilege of conditionally holding property.
For example, say that you buy a house from someone. Do you buy it or do you rent it from the state?
Since you are forced to pay a tax every year on it after you supposedly own it, it seems like the house is rented rather than owned.
If you own a business where you pay your employees to lie outside in the front lawn just to make the place look nice, this "labor" might be worth $4 per hour, but the state forces you to pay them $7 per hour. On top of that, you have to pay a payroll tax, charge a sales tax, and comply with loads of regulations.
So do you really own that business too?
Even though the government tells you that you own things, don't be fooled.
So where is "our" money going?
To make the stimulus seem more attractive, it says that $288 billion is going for tax relief.
Doesn't that sound great? The government takes a bunch of our money, and now they are going to give it right back.
Too bad they don't actually have any money to do so. They either have to print the money, devaluing all of our currently held cash, or borrow the money, so that we have to pay it back later.
But there is another problem.
Right next to the phrase "Tax Relief" on the new Web site, there is one of these "*." What the hell does that mean?
I followed it down to the bottom of the page and read the following:
"* Tax Relief - includes $15 B for Infrastructure and Science, $61 B for Protecting the Vulnerable, $25 B for Education and Training and $22 B for Energy, so total funds are $126 B for Infrastructure and Science, $142 B for Protecting the Vulnerable, $78 B for Education and Training, and $65 B for Energy."
So apparently "Tax Relief" is the new phrase for massive government spending. Just like "Investment" is now used rather than "Spending" when it comes to all of this new government spending.
Semantics does wonders for popular opinion, though.
Not only does the government have the nerve to call this "our" money, but they also have the nerve to use semantics to get their way.
This isn't tax relief.
It isn't investment.
It isn't our money, and it is not recovery.
It is the government trying to fix its own mistakes, by repeating its actions.
It is about politicians and interest groups getting what they want by using us.
So what now? Tell us: Do you agree with the stimulus?
By: Matt Hickok
Majors that will work
Freshmen Chelsey Carley imagines herself as a pediatrician, helping families and children.
"I love to be around children," she says.
And in this economy where some students might be concerned about their majors and if they will be able to find a job in a few years, Carley is not worried about majoring
in Pre-Med.
"I do believe that it will be easy to find a job in my profession because there is always a demand for doctors," Chelsey says. "After med-school I would like to maybe travel to third world countries and provide some free medical care for the children in those countries."
Many college students enter college not knowing which major to choose, and it is even more challenging with the trouble the economy is having. Now they commonly ask, is their major a good one?
Those majoring in English, History and some other majors might have a hard time finding supple job options in the near future. But nursing, business and also veterinary skills are among the hot demands now - and likely will be when the economy rebounds.
So what's a good major?
"It's tough to say what is a good or bad major," said George Henze, a student services coordinator at UW-Richland who specializes in career counseling.
Though Henze suggests, "You want to go with what's hot right now!"
Ahmad Haleem, a sophomore at UW-Richland who is also planning to study medicine, will be following in the footsteps of his uncle. There is no doubt in his mind that he has made the right decision, despite Wall Street woes.
"Pre-Med is a very competitive and challenging field," Haleem said, "But I don't know. With the economy now, it doesn't look like not only doctors, but other jobs that are 'higher up there' are easy to find. People are finding it harder and harder, even when you have a degree in that field."
That may be, said UW-Richland's Henze, but there are ways to make your majors work for you.
"It all depends on how you promote yourself," he said.
What major do you have? Will you have a job when you graduate? Tell us below.
By: Antonio Thomas Jr.
"I love to be around children," she says.
And in this economy where some students might be concerned about their majors and if they will be able to find a job in a few years, Carley is not worried about majoring
in Pre-Med.
"I do believe that it will be easy to find a job in my profession because there is always a demand for doctors," Chelsey says. "After med-school I would like to maybe travel to third world countries and provide some free medical care for the children in those countries."
Many college students enter college not knowing which major to choose, and it is even more challenging with the trouble the economy is having. Now they commonly ask, is their major a good one?
Those majoring in English, History and some other majors might have a hard time finding supple job options in the near future. But nursing, business and also veterinary skills are among the hot demands now - and likely will be when the economy rebounds.
So what's a good major?
"It's tough to say what is a good or bad major," said George Henze, a student services coordinator at UW-Richland who specializes in career counseling.
Though Henze suggests, "You want to go with what's hot right now!"
Ahmad Haleem, a sophomore at UW-Richland who is also planning to study medicine, will be following in the footsteps of his uncle. There is no doubt in his mind that he has made the right decision, despite Wall Street woes.
"Pre-Med is a very competitive and challenging field," Haleem said, "But I don't know. With the economy now, it doesn't look like not only doctors, but other jobs that are 'higher up there' are easy to find. People are finding it harder and harder, even when you have a degree in that field."
That may be, said UW-Richland's Henze, but there are ways to make your majors work for you.
"It all depends on how you promote yourself," he said.
What major do you have? Will you have a job when you graduate? Tell us below.
By: Antonio Thomas Jr.
Our obsession with employment
America currently has an obsession with employment.
People are losing jobs in every area of the market, and politicians are doing the best they can to try and remedy the situation. So should the government try to create jobs?
To answer this question, we need to find out whether employment is intrinsically good or whether it is dependent on something.
If unemployment is high, is it a good idea for the government to hire people to dig holes, and then fill them back in? A lot of economists would say that this benefits the economy. The logic behind this view, is that employment should be a goal, not the result of production.
While politically convenient, this obsession with employment is dangerous to the economy. Only things which are in demand have value. In order to have economic growth, we have to make sure the production is geared towards things with this value.
The result of this production isn't just jobs, but valuable jobs. This is something which the government cannot possibly do. The only way to tell which jobs are profitable or not, is in the marketplace where businesses operate in a profit and loss system. If the production is profitable, the business is successful. If the production is unprofitable, the business fails. This requires the workers to find different jobs in the market. The only sustainable jobs are those which are profitable.
However, when the government creates jobs, it's an entirely different ball game. Government jobs do not require the jobs to be successful. Those jobs depend on taxation. Wealth is taken from the private sector and redistributed into these government jobs, many of which are unprofitable.
Someone may feel that building a parking ramp in the middle of a cornfield is a good thing because it creates jobs. It's easy to fall into this trap. People feel this way because they can see jobs being created. They see the construction workers building the parking ramp.
The problem is what they don't see. Many people fail to realize that the money used to employ these people was taken from profitable production. And since these government workers are employed by taxation rather than through the market, it is impossible to know whether the public works being built are in demand or not. They may very well be worthless.
This is an example of the broken window fallacy. It is the most common error made by economists.
The most famous example is of the shopkeeper. Pretend there is a man who owns a small shop in Richland Center. Some vandal decides to throw a rock through his window. Now the shopkeeper has to spend money to hire someone to fix his window. So is the vandal a hero?
What people don't know, is that this man was planning to buy a suit from the local tailor, but instead the shopkeeper had to use that money to hire a man to fix his window. So while it's true that he had to hire someone to fix his window, the tailor is now out of a job.
Regardless of the window breaking, the amount of jobs given are the same. The difference is who it goes to. If the window had not broken, the shopkeeper would have had both a window, and a new suit. However, since the window did break, the shopkeeper only has a window. That means there was no economic growth when there could have been.
This is the danger of the government creating jobs. Employment should always be the result of profitable production, never a goal. However, since creating jobs will get you elected, don't expect the right choices to be made.
By: Matt Hickok
People are losing jobs in every area of the market, and politicians are doing the best they can to try and remedy the situation. So should the government try to create jobs?
To answer this question, we need to find out whether employment is intrinsically good or whether it is dependent on something.
If unemployment is high, is it a good idea for the government to hire people to dig holes, and then fill them back in? A lot of economists would say that this benefits the economy. The logic behind this view, is that employment should be a goal, not the result of production.
While politically convenient, this obsession with employment is dangerous to the economy. Only things which are in demand have value. In order to have economic growth, we have to make sure the production is geared towards things with this value.
The result of this production isn't just jobs, but valuable jobs. This is something which the government cannot possibly do. The only way to tell which jobs are profitable or not, is in the marketplace where businesses operate in a profit and loss system. If the production is profitable, the business is successful. If the production is unprofitable, the business fails. This requires the workers to find different jobs in the market. The only sustainable jobs are those which are profitable.
However, when the government creates jobs, it's an entirely different ball game. Government jobs do not require the jobs to be successful. Those jobs depend on taxation. Wealth is taken from the private sector and redistributed into these government jobs, many of which are unprofitable.
Someone may feel that building a parking ramp in the middle of a cornfield is a good thing because it creates jobs. It's easy to fall into this trap. People feel this way because they can see jobs being created. They see the construction workers building the parking ramp.
The problem is what they don't see. Many people fail to realize that the money used to employ these people was taken from profitable production. And since these government workers are employed by taxation rather than through the market, it is impossible to know whether the public works being built are in demand or not. They may very well be worthless.
This is an example of the broken window fallacy. It is the most common error made by economists.
The most famous example is of the shopkeeper. Pretend there is a man who owns a small shop in Richland Center. Some vandal decides to throw a rock through his window. Now the shopkeeper has to spend money to hire someone to fix his window. So is the vandal a hero?
What people don't know, is that this man was planning to buy a suit from the local tailor, but instead the shopkeeper had to use that money to hire a man to fix his window. So while it's true that he had to hire someone to fix his window, the tailor is now out of a job.
Regardless of the window breaking, the amount of jobs given are the same. The difference is who it goes to. If the window had not broken, the shopkeeper would have had both a window, and a new suit. However, since the window did break, the shopkeeper only has a window. That means there was no economic growth when there could have been.
This is the danger of the government creating jobs. Employment should always be the result of profitable production, never a goal. However, since creating jobs will get you elected, don't expect the right choices to be made.
By: Matt Hickok
Will my major get me a job?
The crappy economy has hit home for Treavor Russell.
A Freshman at UW-Richland, Russell, wanted to major in oceanic and atmospheric sciences. But now, he thinks that's too obscure to land him a job after college.
So, now, he has switched to chemistry, a major he feels might garner him many more job prospects.
"The ocean major was something I was interested in, but I decided to drop it not only because of the bad economy right now, but because the advancement in that field is just not strong enough to guarantee me a job," Russell said. "The nice thing about the chemistry major is that it gives me a buffer for my future, whereas oceanic and atmospheric sciences, well… there's just not a lot of call for it," said Russell.
With the national - and world - economy in a recession, getting into the right career path has never been more critical. And since students at UW-Richland are all here to further their chances at a dream job, the question is: Is there such a thing as a bad major?
The short answer is no. But that doesn't mean students shouldn't be worried. Now, more than ever, they just need to be more creative.
"If you're in a major like philosophy, get creative how to sell the skills you have and to apply them to the job you're interested in," said George Henze, a student services coordinator at UW-R. Learn who specializes in career counseling. "Think of non-traditional uses. For English or education, those skills can always be applied towards employers such as proofreading companies."
What are some of the careers that are struggling? Well, they may be the ones that always have had a stigma. Traditionally, English, history, and philosophy majors have always been thought to be more unemployable than other majors that sound more like a job description: nursing, social work, etc.
But today there isn't just one job that's worse than another, despite mass layoffs in economic sectors across the board, Henze said. "I wouldn't know of any major that I wouldn't recommend going into because of the economy right now," he said.
And there are still people pursuing jobs in those harder-to-attain career fields.
Bob Johnson, a sophomore at UW-R, is pursuing a major in just such an area: history.
"History is a pretty hard major to get a job in, kind of like philosophy, so it's important to have a career goal and to know about its potentials and prospects," he said. "What I'm worried about, in regard to the economy, is whether I would have to drop out of college before I finish with a Bachelor's degree if I couldn't afford it anymore."
Johnson's not alone in his worries.
Corey Bobb, a freshman at UW-R, is working towards a major in music education after switching from a social work major.
"It will all depend on the state of the economy and the job opportunities that present themselves in the next few years," Bobb said. "But all in all, I'm not overly concerned about finding a job because the education field, as it pertains to a musical standpoint, is very wide."
Nevertheless, being smart and savvy in terms of a chosen major during the economic recession can only help.
"If it's possible, try to delay your graduation until the economy gets better," said Hanafiah Harvey, the Economics professor at UW-R. "Get an internship in the meantime in order to make yourself more compatible for the career you want. It opens doors."
Other students have more ideas on how to be more marketable: double-majoring.
"It's easier to get a job if you're double majoring," said Aiden Rohwer-Nutter, a sophomore at UW-R who is pursuing majors in both legal studies and psychology because she's convinced that double majoring will provide her with a better chance at getting a job.
"With a psychology major, there are no jobs straight out of school, but with the legal major, there's at least some low paying jobs that will get me through grad school," she said.
Regardless of the current economy, some school is better than no school, said UW-Richland's Henze.
"The bottom line is: a four-year degree is good to have," he said.
By: Susie Lepro
A Freshman at UW-Richland, Russell, wanted to major in oceanic and atmospheric sciences. But now, he thinks that's too obscure to land him a job after college.
So, now, he has switched to chemistry, a major he feels might garner him many more job prospects.
"The ocean major was something I was interested in, but I decided to drop it not only because of the bad economy right now, but because the advancement in that field is just not strong enough to guarantee me a job," Russell said. "The nice thing about the chemistry major is that it gives me a buffer for my future, whereas oceanic and atmospheric sciences, well… there's just not a lot of call for it," said Russell.
With the national - and world - economy in a recession, getting into the right career path has never been more critical. And since students at UW-Richland are all here to further their chances at a dream job, the question is: Is there such a thing as a bad major?
The short answer is no. But that doesn't mean students shouldn't be worried. Now, more than ever, they just need to be more creative.
"If you're in a major like philosophy, get creative how to sell the skills you have and to apply them to the job you're interested in," said George Henze, a student services coordinator at UW-R. Learn who specializes in career counseling. "Think of non-traditional uses. For English or education, those skills can always be applied towards employers such as proofreading companies."
What are some of the careers that are struggling? Well, they may be the ones that always have had a stigma. Traditionally, English, history, and philosophy majors have always been thought to be more unemployable than other majors that sound more like a job description: nursing, social work, etc.
But today there isn't just one job that's worse than another, despite mass layoffs in economic sectors across the board, Henze said. "I wouldn't know of any major that I wouldn't recommend going into because of the economy right now," he said.
And there are still people pursuing jobs in those harder-to-attain career fields.
Bob Johnson, a sophomore at UW-R, is pursuing a major in just such an area: history.
"History is a pretty hard major to get a job in, kind of like philosophy, so it's important to have a career goal and to know about its potentials and prospects," he said. "What I'm worried about, in regard to the economy, is whether I would have to drop out of college before I finish with a Bachelor's degree if I couldn't afford it anymore."
Johnson's not alone in his worries.
Corey Bobb, a freshman at UW-R, is working towards a major in music education after switching from a social work major.
"It will all depend on the state of the economy and the job opportunities that present themselves in the next few years," Bobb said. "But all in all, I'm not overly concerned about finding a job because the education field, as it pertains to a musical standpoint, is very wide."
Nevertheless, being smart and savvy in terms of a chosen major during the economic recession can only help.
"If it's possible, try to delay your graduation until the economy gets better," said Hanafiah Harvey, the Economics professor at UW-R. "Get an internship in the meantime in order to make yourself more compatible for the career you want. It opens doors."
Other students have more ideas on how to be more marketable: double-majoring.
"It's easier to get a job if you're double majoring," said Aiden Rohwer-Nutter, a sophomore at UW-R who is pursuing majors in both legal studies and psychology because she's convinced that double majoring will provide her with a better chance at getting a job.
"With a psychology major, there are no jobs straight out of school, but with the legal major, there's at least some low paying jobs that will get me through grad school," she said.
Regardless of the current economy, some school is better than no school, said UW-Richland's Henze.
"The bottom line is: a four-year degree is good to have," he said.
By: Susie Lepro
How did we get here?
What continues to amaze me is how the most important issue of this economic crisis is also the last issue talked about. How did we get in this mess in the first place?
Turn to any media source, and it becomes apparent that our wonderful politicians are running around like chickens with their heads cut off. They have no idea what's going on.
What they do know is if they don't act quickly they will be out of office next election. So predictably, they are all putting their energy into finding a quick fix to all our economic woes.
After all, as John Maynard Keynes, a 20th Century economist, once said, "In the long run, we're all dead." If that means putting a band aid on a bullet hole, then so be it.
But through all the chaos, one must wonder how we got here in the first place.
When the media or politicians rarely do talk about the cause of the crisis, we are given simplistic and shallow reasoning.
The most common of course, is greed.
The evil and tyrannical corporations are all out to get us, and we are just helpless civilians oppressed by some flaw in the personality of these entrepreneurs. Other reasons can range from under-consumption, lack of confidence, or some people just think the business cycle is an inherent flaw to the market economy.
So can our crisis really be attributed to any of this? Let's assume it can.
Take greed for example. Greed can drive business owners to make poor choices in order to achieve some short-run gain. Perhaps Ford decides to cut 50% of their employees, and increase the workload on the remaining employees. The immediate result, would be lower operating costs and higher profits, in the short-run.
The economy as a whole would suffer from the sudden burst of unemployment, but not to the extent that we would consider it a depression or even a recession for that matter. People would complain and possibly boycott Ford for their actions, but nothing more.
Businesses do this from time to time. They change their strategy, they hire lots of people, they fire lots of people, and sometimes they even go out of business.
Whether greed is the reasoning behind bad business decisions is hard to know. But for the purpose of this example, let's assume that the unemployment caused by Ford was because of greed. A few thousand jobs were lost, that much is certain, but with an economy the size of the United States, it would be just a bump in the road rather than driving off a cliff.
But when we are in a crisis such as this, it isn't a couple hundred jobs lost here and there, it's a systematic failure of our economy.
Unemployment rapidly increased by tens of thousands recently, and not by the fault of one business, but thousands.
Entrepreneurs who were recently apt when it comes to making good business decisions, have suddenly lost all ability to manage. As far as greed goes, apparently there was a nationwide epidemic of greed which suddenly infected all our nation's businesses.
Theses previously benevolent CEOs, have and inexplicably and simultaneously become greedy tyrants incapable of running a business. Not in just one or two areas of the economy, but every area.
So whatever causes the media and politicians give for our economic crisis, whether it be bad business decisions, greed, under-consumption, or even random chance, they must also give an explanation for it all happening at once.
Why the sudden immorality of our business owners? Why the sudden loss of ability to make good business decisions?
When the market system has a built-in natural selection mechanism, existing businesses should exist because of efficiency and the ability to predict the future. How is it possible for the entire economy to fail at once, when they have been so profitable in the past?
These are questions, which need to be asked in order to start understanding this mess. Understanding this crisis should be the top priority rather than making rash decisions based on political gains.
Do you agree?
Turn to any media source, and it becomes apparent that our wonderful politicians are running around like chickens with their heads cut off. They have no idea what's going on.
What they do know is if they don't act quickly they will be out of office next election. So predictably, they are all putting their energy into finding a quick fix to all our economic woes.
After all, as John Maynard Keynes, a 20th Century economist, once said, "In the long run, we're all dead." If that means putting a band aid on a bullet hole, then so be it.
But through all the chaos, one must wonder how we got here in the first place.
When the media or politicians rarely do talk about the cause of the crisis, we are given simplistic and shallow reasoning.
The most common of course, is greed.
The evil and tyrannical corporations are all out to get us, and we are just helpless civilians oppressed by some flaw in the personality of these entrepreneurs. Other reasons can range from under-consumption, lack of confidence, or some people just think the business cycle is an inherent flaw to the market economy.
So can our crisis really be attributed to any of this? Let's assume it can.
Take greed for example. Greed can drive business owners to make poor choices in order to achieve some short-run gain. Perhaps Ford decides to cut 50% of their employees, and increase the workload on the remaining employees. The immediate result, would be lower operating costs and higher profits, in the short-run.
The economy as a whole would suffer from the sudden burst of unemployment, but not to the extent that we would consider it a depression or even a recession for that matter. People would complain and possibly boycott Ford for their actions, but nothing more.
Businesses do this from time to time. They change their strategy, they hire lots of people, they fire lots of people, and sometimes they even go out of business.
Whether greed is the reasoning behind bad business decisions is hard to know. But for the purpose of this example, let's assume that the unemployment caused by Ford was because of greed. A few thousand jobs were lost, that much is certain, but with an economy the size of the United States, it would be just a bump in the road rather than driving off a cliff.
But when we are in a crisis such as this, it isn't a couple hundred jobs lost here and there, it's a systematic failure of our economy.
Unemployment rapidly increased by tens of thousands recently, and not by the fault of one business, but thousands.
Entrepreneurs who were recently apt when it comes to making good business decisions, have suddenly lost all ability to manage. As far as greed goes, apparently there was a nationwide epidemic of greed which suddenly infected all our nation's businesses.
Theses previously benevolent CEOs, have and inexplicably and simultaneously become greedy tyrants incapable of running a business. Not in just one or two areas of the economy, but every area.
So whatever causes the media and politicians give for our economic crisis, whether it be bad business decisions, greed, under-consumption, or even random chance, they must also give an explanation for it all happening at once.
Why the sudden immorality of our business owners? Why the sudden loss of ability to make good business decisions?
When the market system has a built-in natural selection mechanism, existing businesses should exist because of efficiency and the ability to predict the future. How is it possible for the entire economy to fail at once, when they have been so profitable in the past?
These are questions, which need to be asked in order to start understanding this mess. Understanding this crisis should be the top priority rather than making rash decisions based on political gains.
Do you agree?
Econoblog!
Foreclosures, stock market crash, stimulus packages, skyrocketing unemployment are the common topics of nearly all media outlets. But can anyone really make sense out of all this? Of course they can. Nearly every economics crisis which has occurred has been predicted. And what is predictable is always explainable.
So that will be the purpose through this blog. Rather than blame political parties or greed, I'll show the real issues here. I'll cover many economic topics throughout the semester, mostly dealing with the nature of these economic catastrophes. Some of the topics I'll touch on are economic booms and busts, the nature of an economic crisis, the unstable fractional reserve banking system, inflation, employment, deflation, the purpose of money, government investment, and much more.
I'll start with the most basic principles first, and eventually tie everything together so that the current crisis will finally make sense. So I hope this series on the economy will both entertain and educate. I welcome all feedback, both negative and positive. Feedback can either be public through comments, or if there is any specific question you want to ask me personally, you can reach me at:
matthew.hickok@gmail.com
So that will be the purpose through this blog. Rather than blame political parties or greed, I'll show the real issues here. I'll cover many economic topics throughout the semester, mostly dealing with the nature of these economic catastrophes. Some of the topics I'll touch on are economic booms and busts, the nature of an economic crisis, the unstable fractional reserve banking system, inflation, employment, deflation, the purpose of money, government investment, and much more.
I'll start with the most basic principles first, and eventually tie everything together so that the current crisis will finally make sense. So I hope this series on the economy will both entertain and educate. I welcome all feedback, both negative and positive. Feedback can either be public through comments, or if there is any specific question you want to ask me personally, you can reach me at:
matthew.hickok@gmail.com
Money Mayhem: Will there be any jobs when we graduate?
In one day last week, 65,000 people lost their jobs. All in one day. American companies are slicing budgets and positions in all sectors of industry. Thousands of more jobs have been shed and it's likely to get much worse.
So what does this mean for college students? Where will the jobs be? How is what is happening out there in the world influence UW-Richland students and their dreams and career prospects? Will you even have a job when you graduate? Are you in the wrong major? Will you even be able to pay for college to graduate?
This semester, the Express will ask these questions in a series on the economy that starts today. Each Monday, along with all of the other usual photos, stories - and soon, videos - of UW-Richland news and views, our reporters and editors will present these stories.
To start today, our in-house economist and Webmaster, Matt Hickok, will give us an update on what exactly is happening in our economy and how it impacts us. We invite you to comment along with Matt throughout this series with your concerns and thoughts on what you think is happening. More importantly, we want you to share your stories. Are you worried about the future? You will be able to post these comments on the blog.
If you want to share your stories outside of the blog, or you have comments about this series, contact the Express Editor, Thomas Johnson, at Thomas.johnsonjohn@gmail.com.
So what does this mean for college students? Where will the jobs be? How is what is happening out there in the world influence UW-Richland students and their dreams and career prospects? Will you even have a job when you graduate? Are you in the wrong major? Will you even be able to pay for college to graduate?
This semester, the Express will ask these questions in a series on the economy that starts today. Each Monday, along with all of the other usual photos, stories - and soon, videos - of UW-Richland news and views, our reporters and editors will present these stories.
To start today, our in-house economist and Webmaster, Matt Hickok, will give us an update on what exactly is happening in our economy and how it impacts us. We invite you to comment along with Matt throughout this series with your concerns and thoughts on what you think is happening. More importantly, we want you to share your stories. Are you worried about the future? You will be able to post these comments on the blog.
If you want to share your stories outside of the blog, or you have comments about this series, contact the Express Editor, Thomas Johnson, at Thomas.johnsonjohn@gmail.com.
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