Assumptions

Assumptions make economic analysis easy. Economics makes several assumptions when building models. This is no different than believing that animals can talk when you read a fairy tale or mystery. You take certain things as a given.

One day in microeconomics, the professor was writing up the typical "underlying assumptions" in preparation to explain a new model. I turned to my friend and asked, "What would Economics be without assumptions?" He thought for a moment, then replied, "Accounting."

Economists take a kick in the pants from other disciplines because economists assume that everything else is held constant. Assumptions makes the analysis relevant and efficient. The following joke is attributed to Paul Samuelson whose pioneering work in economics layed the foundation for all modern day analysis.

A physicist, a chemist and an economist are stranded on an island, with nothing to eat. A can of soup washes ashore. The physicist says, "Let's smash the can open with a rock." The chemist says, "Let's build a fire and heat the can first." The economist says, "Let's assume that we have a can-opener..."

You Might be a Blonde Economist

You might be a blond economist if you think

the Lorenz Curve has to do with natural childbirth.

production possibilities has to do with the Kama Sutra.

Pareto efficiency is a parade with no clean up.

a compensated demand curve is paid to relate price to quantity.

consumer's surplus is an outlet store on the interstate.

the CPI is forensics investigation into prices.

the short-run is the time it takes to get a beer from the fridge.

that "incremental" analysis is crazy.

a barrier to entry is when your wife deflects your advances.

a dead-weight loss is when your husband moves out.

adverse selection is choosing a Miller Lite when you could have had a V-8.

a labor economist delivers babies.

utility theory has to do with power and water.

the GDP gap is a trendy place to buy clothes.

property rights are the opposite of property lefts.

the economics pie can be bought at a bakery.

Economics Anagram

Economics is often described as the dismal science. Most notable was the doom and gloom economist Thomas Malthus who predicted exponential population growth would outpace arithmetic food growth resulting in famine. It's economics like Malthus who give economics a pessimistic name. These economists who proclaim that the glass is half-empty have been scamming the public. Economics is really funny.

An anagram of economics results in "Cosmic One." It's easy to see that the economic gods intended economics to be funny. Just remove the "s" from cosmic. Anyone can learn economics. Let's take the "con" out of economics.

Basic Economic Concepts

Say you're in a line at a buffet and the man in front of you can't make up his mind. You observe that the man moves slowly. Something about the man's nonverbal language tells you that those who like to take their time don't mind being passed in line. So you leapfrog past the man so you can eat and hurry back to work. This is an example of thinking economically. You are weighing the costs and benefits of waiting another minute so you are thinking at the margin. You are also trying to maximize the use of your time by pursuing a Pareto efficient equilibrium.

See if you can find the Pareto efficient statement in the following joke taken from http://netec.wustl.edu/JokEc.html.

Three guys decide to play a round of golf: a priest, a psychologist, and an economist. They get behind a VERY slow two-some, who, despite a caddy, are taking all day to line up their shots and four-putting every green, and so on. By the 8th hole, the three guys are complaining loudly about the slow play ahead and swearing a blue streak, and so on. The priest says, "Holy Mary, I pray that they should take some lessons before they play again." The psychologist says, "I swear there are people that like to play golf slowly." The economist says, "I really didn't expect to spend this much time playing a round of golf."By the 9th hole, they have had it with slow play, so the psychologist goes to the caddy and demands that they be allowed to play through. The caddy says O.K., but then explains that the two golfers are blind, that both are retired firemen who lost their eyesight saving people in a fire, and that explains their slow play, and would they please not swear and complain so loud.The priest is mortified; he says, "Here I am a man of the cloth and I've been swearing at the slow play of two blind men." The psychologist is also mortified; he says, "Here I am a man trained to help others with their problems and I've been complaining about the slow play of two blind men."The economist ponders the situation--finally he goes back to the caddy and says, "Listen, the next time could they play at night."

What Are Economists Worth?

An excerpt from Cafe Hayek, "The report of the World Bank Growth Commission, led by Nobel laureate Michael Spence, was published last week. After two years of work by the commission of 21 world leaders and experts, an 11- member working group, 300 academic experts, 12 workshops, 13 consultations, and a budget of $4m, the experts’ answer to the question of how to attain high growth was roughly: we do not know, but trust experts to figure it out.
"This conclusion is fleshed out with statements such as: 'It is hard to know how the economy will respond to a policy, and the right answer in the present moment may not apply in the future.' Growth should be directed by markets, except when it should be directed by governments."

Macroeconomics is a social science that is still in its infancy. Sometimes economists don't have the answers especially to growth. The Solow Growth Model was awarded a Nobel Prize, but application of the theoretical model to real economies is difficult. Economists have much to learn. Consider the following joke.

Man walking along a road in the countryside comes across a shepherd and a huge flock of sheep. Tells the shepherd, "I will bet you $100 against one of your sheep that I can tell you the exact number in this flock." The shepherd thinks it over; it's a big flock so he takes the bet. "973," says the man. The shepherd is astonished, because that is exactly right. Says "OK, I'm a man of my word, take an animal." Man picks one up and begins to walk away.
"Wait," cries the shepherd, "Let me have a chance to get even. Double or nothing that I can guess your exact occupation." Man says sure. "You are an economist for a government think tank," says the shepherd. "Amazing!" responds the man, "You are exactly right! But tell me, how did you deduce that?"
"Well," says the shepherd, "put down my dog and I will tell you."

The Constant Assumption

Economists make predictions by holding everything else constant. For example, an economist might say, a consumer will buy more of good x when the price is lower assuming everything else is held constant. This assumption is based on the partial derivative (See Chapter 1 "Ceterius Paribus).

Q: How many economists does it take to change a lightbulb?

A: Eight. One to screw it in and seven to hold everything else constant.

Popcorn and Movie Price

USA Today, Moviegoers' eyes could pop at the price of corn reports that concession prices can account for 80% of theater profit. Admission prices, based on survey data, usually accounts for 55%.

I asked the assistant manager at the only theater in Muscatine about the USA Today data. The manager, a former student, said that their theater makes nothing off the $5 admission fee, but popcorn is marked up 300%. Concessions amount to 100% of theater income. The corporate office spends $35 to make 1,000 containers of popcorn. This theater makes 3,000 containers a week.

Unemployment

Macroeconomists divide unemployment by type. Frictional Unemployment occurs when an individual is between jobs. Structural unemployment happens when a job becomes obsolete. The natural rate of unemployment is frictional + structural employment. Cyclical unemployment happens when the economy is in a recession. This is a higher unemployment rate than is natural. If hens were cyclically unemployed, would they be "layed off"?

Gas Prices

Suppose you own a gas station on a busy corner. Across the street is a competing gas station. Both stations sell the same, homogeneous product, gasoline. Now, if my competitor raises her prices and I don't, I will steal her market share. If I raise my prices and she doesn't then I will lose market share. We must both keep our prices the same. We are caught in a prisoner's dilemma. How can anyone say that as the owner of the business, I have control over my gasoline prices? If you assume that light, sweet crude oil will continue to increase, then if my competitor raises her prices and I don't, then when I replenish my stock of gas, I'll have to pay more and my temporary market advantage from lower prices will be erased. Gasoline is sold in a perfectly competitive market. Period.

A prisoner's dilemma always make me laugh because the dilemma assumes that competitors have perfect information and behave cooperatively. I offer the following joke to show what I mean.

Two policemen are considering the problem of catching the bandit. One of them starts to calculate the optimal mixed strategy for the chase. The other policeman protests.

"While we're doodling," he points out, "he is making his getaway."

"Relax," says the game-theorist policeman. He's got to figure it out too, don't he?"

What Do You Do?

What do you throw a drowning history teacher? Nothing, because as they like to say when they leave, "I'm history."

What do you throw a drowning lawyer? You throw the book at him.

What do you throw a drowning classical economist? Nothing. An invisable hand will save him.

R. Kelly Videotape

A judge has to weigh the evidence to see if the evidence has probative value before allowing admittance. In the case of R. Kelly a video was shown on a six-foot television and on a monitor for the jury. The defense showed several birthmarks and scars that were not evident from the video. In addition, the chain of evidence has been contaminated. The tape has a dubious route to the the court including a year when the tape could not be accounted. Now, the defense is asking the judge to allow the reporter who originally found the tape to testify against his constitutional rights. It seems to me, that the video seems to exonerate Mr. Kelly. This trial has already committed several mistakes including an artist's sketch of the jury. Look for this case to go to appeal. The case is already six years old. It will be eight years old before a decision is reached.

For law students, excellent discovery and cross-examination is here.

High Popcorn Prices

Indiana Jones and the Crystal Skull opened on Wednesday. Whoever possesses the skull will be cursed to kill the one they love. Crystal Skull movie goers might find that that the price of complementary good, popcorn, has risen in price. Will the higher price of popcorn kill the movie experience?

The usual explaination of popcorn pricing is that a two-tier system of pricing is in place to capture the consumers surplus remaining after paying the admission price. If a movie goer would be willing to pay $20 to see the movie, if the theater charges $15 admission, then the concession stand could charge $5 for popcorn. Disney has the same pricing decision with rides and admission.

This time the pricing decision for popcorn is left to market forces. USA Today reports that cost-push inflation is pushing popcorn prices higher. The pricing decision isn't a hard one for theaters. Econ 101 predicts that if the price of a complementary good increases, then the demand for its complement will decrease. The movie theater will have to decide if people are coming to watch Indy or eat popcorn.

What's the Difference Between Micro and Macroeconomics?

Microeconomics deals with a single firm and how individuals make decisions. Because decision making is made on the microscopic level, I misspell microeconomics as "mikeroeconomics". Macroeconomics deals with the whole economic system. Since McDonalds sells its popular burger around the world, I refer to macroeconomics as the "Big Mac." Macroeconomics is a relatively new social science and thus is evolving.

In microeconomics the questions keep changing, but the answer is always is answered where marginal revenue equals marginal cost. In macroeconomics, the questions stay the same but the answers keep changing. An example of macroeconomics is inflation--a rise in the general level of prices.

A tourist group was standing at the Potomic River. The guide said to the group, "When George Washington was president, he could throw a dollar coin across the river." A tourist on hearing this says, "No way!! The river is a half-mile wide." The guide pauses and says, "You must remember that a dollar went farther in those days."

Hayek and Myrdal

Economics is the only field in which two people can share a Nobel Prize for saying opposing things. Friedrich Hayek and Karl Gunnar Myrdal shared the prize in 1974 for having opposing ideological viewpoints about market intervention. I can imagine a debate between the two punctuated with "Whether you want to believe my premise or not...." I'm sure that both Nobel laurates when home under the weather after their arguments.

Price Elasticities

Wayne McCaffery calculates the price elasticity of demand for electricity as inelastic. Wayne writes on the AP Macroeconomics listserve, "But this week's Economist has a story on energy usage. Page 78, May 10th 2008 . The elusive negawatt. In the article it says, that for every cent over the national average price for electricity per kilowatt-hour consumption falls by 7%. Now I don't know the national average price of a kilowatt hour but I paid 10 cents last month. It seems in sates where the are paying 11 cents, they use 7% less. Hmmm. does that mean that a 10% increase in the price of electricity leads to a 7% reduction in the quantity demanded of electricity? That gives a price elasticity of demand for electricity at .7, less than one, but not so far from one, but still inelastic."

The New York Times has more on food including a video here.

Economics is the study of how to use limited resources to satisfy unlimited wants. Economics involves making choices. The more I look around the world, the more I question the consumption choices I make.

Chapter One

How to do pronounce "Economics"? The proper way to say it rhymes with "etCH". A proper pronouncian can be found at the encarta dictionary here. I tell my students that I pronounce it "EEK" onmics because economics is like a mouse that surprises you. But economics like the mouse isn't really anything to be scared of. Economics is just the study of how to satisfy your unlimited wants with your limited resources. Economists like to say that economics is about choices, opportunity cost, and marginal thinking. In other words, economics is about how to do it, what your give up when you do it, and how many times do you do it.

Economists do it with models. Economists do it in an Edgeworth box. Economists do it with Slutsky equations. In my case, I Mt. Dew it.

Gen X and Saving

Gen Xer's usually have great jobs like a mortgage broker or a merger and acquistions lawyer. But, in the process of acquiring their degrees, racked up so much debt that they saved nothing for retirement. USA Today has an excellent article. Generation X is proof that you can't spend yourself rich.

A study was done by Pew Charitable Trusts, challenged the notion that each generation would be better off than the previous. The study, 'Economic Mobility: Is the American Dream Alive and Well?" focuses on the income of males 30-39 in 2004 (those born April, 1964 – March, 1974) and is based on Census/BLS CPS March supplement data.
The study, which made national headline news on May 25, 2007, emphasizes that in real dollars, that cohort made less (by 12%) than their fathers at the same age in 1974, thus reversing a historic trend. The study also suggests that per year increases in father/son family household income has slowed (from 0.9% to 0.3% average), barely keeping pace with inflation, though progressively higher each year due to more women entering the workplace contributing to family household income.

Graduation always leads me to several parties where enthusiastic grads talk about the careers they will pursue. Very few want to start at the bottom and work their way to the top. A career path in which one begins at an entry-level position will not burden the worker with debt and provide hundreds of opportunities to save while assessing the career choice. Why earn a masters degree before beginning your career when the expected benefit will be less than the cost?

MSN has a list of occupations and earnings here.

Are Market Forces a Good Thing?

The rabbi addressed the congregation. "Leobwitz has just lost his wallet with $800 dollars in it. If anyone finds it, Leobwitz is offering a $50 reward." After a pause, Liebermann says, "I'll give $75."

Education vs. Prison Spending

In Iowa, spending on incarceration outweighs spending on education. Here are some facts:


Increase in incarceration rate 31
Growth in prison spending per capita 21
Growth in higher education spending per capita 8
These facts from http://www.motherjones.com/ show that more money is spent on social order than spent on education. Also, a disproportionate amount of blacks are imprisoned. Blacks make up 3% of the general population but 67% of prison population. This is a state that Obama won easily in the primary. ISEA reports "an Iowa teacher earns the average teacher salary of $40,877 at age 42 after teaching for 15 years. (Iowa Department of Education, Iowa Basic Education Data Survey). Additionally, The average Iowa teaching salary is about $20,000 below the average salary for other Iowa professionals with similar education requirements and job skills." I'm not for throwing more money at education since I believe teachers are paid their marginal product. What I am favoring are incentives that help our state make good choices to avoid incarceration.

To Think About

Does the public need a bad guy to blame economic woes on? See Thomas Sowell.
Is speculation in commodities driving higher food prices? Townhall has a video.
Here's another viewpoint on commodities and speculation.

Economic Rent

Berta's Fundamental Law of Economic Rents.. "The only thing more dangerous than an amateur economist is a professional economist." Economists have predicted 8 of the last 12 recessions. Economists are paid too much.

Forensics Evidence on Trial

Marginal Revolution is a superior blog. Law students are advised to check out CSI on Trial for a comprehensive discussion of forensic evidence. I teach my students that the burden of proof is nearly impossible for the prosecution in criminal cases.

Irresponsible

I often teach students new vocabulary by letting them Divine the word through a series of hints. I call this the Scooby-Doo approach. It's like letting the students solve the mystery. I believe this involves students in an active learning process. Today, while teaching "Fiscal Policy" to my enriched class, I offered this clue. "Hillary says that her husband, Bill was ________ responsible and that's why he ran budget surpluses during his terms." From the back of the room I heard, "Irresponsible."

The answer I was looking for was "fiscally." As the graph shows, Mr. Clinton indeed ran a surplus. I like the student's answer better.

A Double Entendre

Two economists were walking down the street when they noticed two women yelling across the street at each other from their apartment windows.
"Of course they will never come to agreement," stated the first economist.
"And why is that?" inquired his companion,
"Why, of course, because they are arguing from different premises."
Economics applies mathematics to philosophy. The new buzzword in teaching is "rigor." Do you think that teachers can bring so much rigor to economics that we also bring "mortis"? I guess it depends on where you stand.

Learning Economics Through Jokes

Economists like to explain firm behavior in the short-run and long-run by pointing to the existence of fixed costs. In the short-run, there are fixed costs and in the long-run there are not. In the absence of fixed costs, a firm can choose what output it wants to produce since all inputs are variable. It's like the fixed costs just disappear like a magician can make a scarf or a card disappear with a flick of the wrist. How can costs just disappear?

A blond wakes up one day and she's cold. She figures out that the chill she's feeling is from her poorly insulated windows and has new windows installed. The windows were indeed the reason why she was cold. A year later she gets a nasty phone call from the window installers. "When are you going to pay for your windows we installed." The blond gets her ire up. "Wait a minute, Buddy. When you installed the windows, you said that the windows would pay for themselves."

As the great Abba Lerner once said, "In the long-run, there's just another short-run."

Junior Advisory Group

A group of MHS students learned about banking from Jamie leza over the school year at First National Bank. Kudos for their initiative.

Las Vegas Mortgages

My sister says that homeowners who bought homes in Las Vegas who were classified as "subprime" are now sueing the real estate broker who sold them the house.

Clayton Act

Do you use coupons? If so, then you are paying a different price than those who don't. Do you fly first class or coach? Do you go to the matinee or the late show? Do you use a senior citizen's discount? All of these allow a business to charge a different price for the same good. Under the Clayton Act (1914) this might be illegal.

When business practices substantially lessen competition or tend to create a monopoly, then antitrust laws regulate the operation of the business. I doubt if any of the business practices I began this blog with less competition substantially, but it made good discussion in econ class. In 1967 Utah Pie won a case against three Los Angelos competitors using the Clayton Act. I think the real regulatory effect of the Clayton Act was to make dumping illegal.

Closed Book

Borders Bookstore is the delight of my Sunday visits home. A rich selection of music and an offering of 127,000 book titles with tables and chairs for reading give the cafe an ivy league feel. I put a spending ceiling of $50 on my visits. With lines that form out the door, you'd think that Borders would be a heavy buy for stock market speculators.

Borders Group Incorporated closed at $6.01 per share on Friday's NYSE. This company has lost 75% of its value in the last year. Ticket symbol MI, Borders has 60M shares outstanding with a forward P/E of -60. There's not a lot investor confidence in this stock. A Value Line would be interesting to read. My take is that Borders positions itself away from malls in which readers can shop for other wants whereas Barnes and Noble differentiates itself by aligning with mall shoppers. BN has over 800 stores and the financial strength to lower prices and capture market share. Both are selling a homogeneous good and playing a noncooperative game. BN has the strength to play longer.

I wonder if the duopoloy is engaged in a price war similar to a Counot model of oligopoly behavior. Amazon is a nice substitute. How many times have I priced a book at Borders than bought off Amazon is incalculable.

If economics is a guide, Borders will survive, but with changes. My stock advice is to sell and buy on technicals if you must own this stock.

Law and Legal

Hulk Hogan's son pleads on DUI charge.

R. Kelly uses judicial procedure advantageously.

Rapper, DMX, suppresses evidence illegally obtained.

In legal cases, the side with the best lawyer, most preparation, and the most money ususally wins. I can't think of a case where this has not been true. As a test to my legal theory, follow the Roger Clemens/Mindy McCready case.

Birthday Cake

Katie Gunderson snapped this picture of me eating cake during Enriched Economics. Katie was awarded one of the prestigious Excellence in Education awards and will receive it May 18, 2008. Katie wants to be a teacher. I pity the student who tries to lie to her as she has developed her cross-examination skills that would be the envy of Jerome Facher.

Biology Teacher Unjustly Dismissed

Biology teacher, Tiffany Sheppard, claims she was fired from her teaching job at Port St. Lucie, Florida, because of her part-time job. Ms. Sheppard took a part-time job as a ship's mate that required her to wear a bikini. MSN has a video interview here. Tiffany's job reminds me of a Hooter's waitress which requires her to look good and flirt. Several legal and constitutional questions are raised. The main question revolves around the employment contract.
Does Florida have an employment-at-will doctrine? If so, then Tiffany has no remedy or recourse in the law. Was a grievance procedure followed? It appears from news accounts (Hearsay) that Tiffany's due process rights were violated.
Many colleagues have asked me about the contractual requirements outside of the school day. In this case, I think Tiffany's job undermines her ability to teach and she should have been given a chance to quit her job on the fishing boat. Public sentiment is often the motivation for hiring decisions whether right or wrong.

New Zealand

HT to MV=PQ for this video and WSJ explaination of ag products.
Ethanol is supported by three government incentives: a mandate that requires refiners to use an increasing amount of ethanol each year; a 51-cent-per-gallon tax credit for refiners tht add ethanol to gasoline; and a 54-cent-per-gallon tariff on imported ethanol.

Meet Flad's Mom and Girlfriend

One day at the museum, eagle photographer, Don Retherford, snapped this picture of my girlfriend and my mom. Don's pictures populate the Figge museum.

Parking and Opportunity Cost

Ten minutes before the start of the HNI Shareholders meeting everyone started to arrived and the second floor of the Holiday Inn was packed. I believe that these high-level executives and shareholders had a high opportunity cost of time to arrive much earlier.

HNI Annual Shareholder's Meeting

A tradition for my economics classes is to attend the HNI Annual Shareholder's meeting. CEO, Stan Askren, is a powerful speaker and a classy man who took the time to talk to my class before speaking for the 44,000,000+ shareholders on the statement of financial condition. Last May, the stock stood at $43.31 per share and today closed at $22.56 for a drop of 48%. My students wondered how to explain the drop in the world's second largest office furniture manufacturer and largest hearth producer.

The office furniture market is dominated by three manufacturers, HNI, Steelcase, and Herman-Miller with market shares approximately 13%, 14-15%, and 10% respectively. The market structure is oligopoly with all firms making a homogeneous product. I believe the market has valued the companies in line with the products they produce by equating the stock prices. Today, Steelcase closed at $12.03 and Herman-Miller at $23.99. The market has simply given the producers a value that reflects the output.

The meeting is replayed here. If you listen to the introductions, you'll hear my name humbly mentioned. HNI is all class.

Outstanding Graph on CPI

Tim Schilling pointed out an outstanding graphic on the CPI and its component spending. In the Business Section of the New York Times, "All of Inflation's Little Pieces" is a graph that your mouse can roll over and see the percentage change in food, gas, and medical prices. Tim's blog discusses real income and is recommended.

Assorted Reading

Crunch, Jared Bernstein. Crunchpoint. Reminds me of Lou Dobbs.
Cop in the Hood, by Peter Moskos. Tough cop recounts one year on the job.
Rigged, by Ben Mezrich. Brilliant tale of the Dubai Mercantile Exchange.
Beat Your Ticket, Nolo Press. Really works.
International Economics, by Robert C. Feenstra and Alan M. Taylor. So thorough that I am adopting it for class.

Exchange Rates

A very good introduction to relative exchange rates can be found here. The teacher goes by the name of Dark Wraith. He uses jokes and visuals to make his point.

Pennies from Heaven

If the penny was eliminated from circulation, would charities suffer? I usually donate my pennies to whatever cause is at the cash register. I suspect that charities would suffer if the cent was eliminated.

I also believe that a true equilibrium would not equate since all of the possible mutually beneficial transactions would not have transacted.

The penny has a transaction cost that sometimes make transactions irrational. I believe that the US needs the one cent coin.

Does a Weak Dollar Stop Immigration?

Juan lives in Mexico and works in a perfectly competitive market. Whether Juan works in Iowa or Mexico he can produce the same marginal product. If the wages are the same in both places, will it be rational for Juan to work in Iowa if the dollar is depreciating?

I think Juan would be best to stay in Mexico if Juan is sending money home to support his family. If the USD is depreciating, then the USD is buying less goods in Mexico. Juan would be better off staying in Mexico where his marginal product equals his wage. Otherwise, Juan will be working longer to buy the same amount.

If the dollar continues to depreciate, then border patrols will not be necessary. Only those immigrants who want to live in the US will obtain the necessary paperwork since they want to live here for reasons other than pecuniary.

Switch Grass

Econ student, Jordan Turner, did some due diligence on switch grass in response to my lecture on Ethanol and world hunger. He found that switch grass grows faster and is suited for various climates. The grass does not need to replanted every year and the potential to produce 1000 gallons of ethanol per acre, compared to 665 gallons for sugarcane and 400 gallons for corn. Brittney Brown argues that switch grass isn't a cash crop and won't be planted by a profit maximizing producer.
Changing grass, corn, or sugar into gas reminds me of alchemy, the practice of changing metals into gold. Jarad Michael Kraft argues that artificial diamonds show that naturally occuring chemical compounds can be synthetically manufactured.

As wheat supplies dwindle and more acres of land are diverted from eatible corn to biofuels, alternate fuel sources have to be explored. Meanwhile, I continue to act like economics predicts and save--furthering the deeping recession and distorting market signals.

Eminent Domain

"You have the right to remain silent," is one of the Miranda warnings that an officer reads when arresting someone. The right not to incriminate yourself is given in the Fifth Amendment to the US Constitution. Did you know that the same amendment also gives the government the right to take property for public use?

Eminent Domain allows the government to take property to use in the best interests of society. In Muscatine, several hundreds of acres of farm land were siezed so a two-lane highway could be build south of town. Recently, in Kelo v. City of New London, the court ruled that property could be taken from one private citizen and given to a subcontractor for development. This controversial decision sparked a reply by the NAACP. The government takes the land that has the lowest marginal cost--land that is usually disproportionately owned by black property owners.

The Supreme Court Decison in Kelo was 5-4 with Clarence Thomas dissenting. The English language allows for liberal construction of any sentence. Furthermore, American citizens are taught to vote so that the majority rules. Law is a political tool that can be contorted to suit the needs of those with influence. Does the law really do what brings the greastest good to the greatest number of people?

The Bill of Rights

Mr Wu, who is 40, was found guilty in August of extorting money from an environmental-equipment manufacturer by threatening to inform the authorities that products supplied to a steel company were substandard. The court also ruled that he had cheated the company by claiming to represent the equipment-maker and seeking payment for the sale. The amount involved was 45,000 yuan ($5,940). Mr Wu denied the charges and told the court that his confession had been extracted by torture. Ms Xu says journalists were barred from the proceedings and no witnesses were produced for cross-examination.

The above taken from The Economist shows the disparity in the legal systems. In the US, we have the right to freedom of speech, the right to have an attorney present during questioning, the right to face the accusers, and the right to free from cruel and unusual punishment. Besides environmental issues, the lack of a just legal system is holding China back from being a world power.

Food Shortages

USAToday has a nice article here. In the comments, bloggers make points for planting a garden to offset rising food prices, making different consumption choices, and controlling population. General Motors forms a partnership with an Ethanol plant here. In this article, mention is made that fuel can be made with switch grass and waste by-products. It makes sense for GM to vertically integrate to lower costs. In a related article, Exxon disappoints investors with earnings of $10.8 billion. As I look out my apartment window, I can see the flooding of the Mississippi reaching closer and closer. The muddy water now covers Riverside park and Mississippi Drive. The waters reflect the pregnant and turbulant rain clouds above. The alley behind the closed Ace Hardward store is now the mainstreet for diverted drivers taking the detour around the closed streets. The river is a metaphor for me. Nature is now going to take back some of what she gave working through the food, fuel, and financial markets.