The End... But not really

The year’s come to a close and it’s time to reflect on our progress. At the start of this year, I hoped to advance my understanding of basic economics, but over the past 64 posts I have learned so much more. I don’t think any one or two posts exemplify my journey because my style truly has evolved over this year and so has my content. For one, I have become far better at utilizing the blog as a media outlet for quick, unrevised entries that expresses the purest thoughts in perhaps their least polished literary form. More importantly, I have gained a greater grasp of economics, been introduced to the voices of fiscal policy and integrated myself into an ongoing conversation. Best of all, along the way I’ve been able to pause and talk about YouTube, Harry Potter, music and other stuff that has mattered to me. I hope to continue to share my thoughts, discuss economics with you into the future and further pursue this growing interest.

20 Is Better Than 8! For Now At Least

            NPR’s Planet Money had an interesting brief post a few days ago titled “The G8 Still Exists!” The title portrays the situation fairly accurately; don’t forget the still powerful G8. To those who don’t know, the G8 is comprised of the United States, United Kingdom, Russia, Japan, Germany, France, Canada and Italy, and was the go-to group for any large scale decision not too long ago. Off late, China alone has amassed an economy larger than that of nine of the G20 nations, and other countries such as Brazil and India have stepped to the fore front of international policy. Though the G8 continue to control major global institutions, the broadening spheres of influences have given rise to the more comprehensive G20 which includes Argentina, Australia, Brazil, China, the EU, India, Indonesia, Mexico, Saudi Arabia, South Africa, South Korea, Turkey and the current G8. This group represents major players from across the globe, each wielding power unto their own, who in collaboration are in near total control of world affairs. Though some believe the G20 simply represents a transition group to a new G8 encompassing tomorrows superpowers, for now power rests in this large group.

I'm A Senior Now! (Pt.1)

            This last week has been very stressful. I have attempted to carefully balance hanging out with friends and going to grad parties with finishing our homework and studying for the upcoming SAT subject tests. This year I am taking the US history and Chemistry subject tests as I recently took those AP Exams. Nonetheless, I am still at least 350 pages away from being ready if not more. Homework appeared to be done as of this morning as our language portfolios and US projects were turned in last week and I put the finishing touches on our AP Psychology project yesterday night. But surely enough, as I walk into the computer lab for AP Lang, I find out that I accidentally missed a week of blogging. Don’t get me wrong, I do enjoy keeping up to date and discussing economics but at this point I was kind of hoping for some extra time free of school to study and relax. But enough bickering! I wanted to briefly talk about this term as a whole.

            Third term has definitely been far easier than second term which was seriously hindered by swim season. Though I do play tennis in the spring it is far less time consuming and generally stressing than swim season. Tennis is best described as my fun sport; that sport that you do because you have nothing better to do, it’s fun and your friends do it. I would like to be better at tennis but that’s probably not going to happen soon. In the mean time, I shall content myself with playing with friends over the weekends and slowly bettering myself. Otherwise, classes with the exception of French have come to a close as focus has shifted towards the AP exams. The AP exams took place in the first week of March and are in part the reason why I took such a long break in blogging. To broadly evaluate this year’s exams, I’d say United States history was a solid 3/4, Language and Composition was a bit uncertain at 3/4/5, AP Calculus was good at a 4/5, Psychology was generally easy and should be a 4/5 and Chemistry was… well it was chemistry and I’ll give it a 2/3/4 hopefully. If all turns out well, I’ll get a few fives and fours but no guarantees. The one benefit of all these AP exams shows up around finals; we don’t have finals. This week all I really have to study for is my French final. Otherwise, in US I get to watch people present projects (I’m done with mine which was about Rain Man. It was a great movie that you should watch if you haven’t already), LA I get to do this blog and a final one, Psych I present a movie and Chem we go to donut-land! Calculus has been the best of all; most of the class is comprised of seniors who have now graduated and as a result, I don’t even have to go to class and have a free third hour.

I'm A Senior Now! (Pt.2)

            Departed seniors bring up the topic of graduation. I am one of the few juniors who for some reason or another decided to go to graduation which was a lot better than I thought it would be. Though two speeches that I won’t identify were particularly boring, the remainder were exceptional. Sure they fit the mold of typical freedom in life and push your barriers themes but each had its own unique twist or conveyance that really moved the audience. The performing arts also did a great job and I really enjoyed hearing the band, orchestra and choir fuse into one. After the ceremony, everyone said their farewells and exchanged tears and hugs.

            With graduation, I am now officially a senior! One more year and then… I’m not really sure to be honest. Some college and then the rest will happen as it comes. Anyways, back to more current news. Summer swimming starts up Monday and I can’t say I’m too excited. I do want to get back in the pool and back in shape but I’m not a big fan of being waking up at 6:30 or of swimming 3 hours a day. I’m also hoping to start up running a bit to get a steady number of miles every day; hopefully this will help me stay in shape during the swimming off seasons and be somewhat fun at the same time. Speaking of fitness, Alli Koch’s Powered by the Heart (linked to the right) started just yesterday. After biking through over 70 miles of what I’ve heard was pretty crummy weather, she’s been at it again today for another 120+ miles. We all support her great cause, are very proud of her, and wish her luck on her long journey. If you would like to know more about what she’s doing or want to donate (which you should!), once again the link is to the right.

            Well that about does it for my random updates for the end of the year. I apologize for how unorganized this entry was but it should cover a lot of what’s been on my mind lately. Hopefully I didn’t bore you too much with all this random non-economic stuff.

Can Obama Pull a Jackson?

It was the eight of January, 1835 when officials from across the country gathered in Washington DC for a meeting presided by President Andrew Jackson when it was officially announced the United States had paid all debts to other nations for the first time in history. Not only was the country out of the hole but for the time being, we were running a national surplus.

Right from the start debt was a choice for the United States. Following the Revolutionary War, as we were founded we had the simple option to default and forget about wartime loans. All the bonds and grants to the government would be forgotten but at the cost our credit, economic stability and credibility as a state.

So the US decided to take on its debt which for the same reasons as today, wasn’t very easy to finance. The debt wasn’t expanding at quite the rate it does today but neither was it shrinking. Then along came Andrew Jackson who as a land speculator in the West had gone in the red after a deal gone bad. His experience led to a campaign oriented around economic stability and would go on to enter office despising banks and considering debt a moral failure of sorts.

And so he went to work almost immediately, and shut down the National Bank. He then began selling US assets primarily in through federally held land in the West. Further, he ruthlessly blocked spending bills, vetoing expenditure of nearly any form. Though some questioned the integrity of his practices, there no doubt that it worked. Money poured into our coffers as spending simultaneously shrunk and the miraculous result was the erasure of our remaining $58 million debt within 6 years.

 And so it was on the eight of January, 1835 when Jackson realized he had the wonderful new dilemma of what to do with his extra reserves now. There was no National Bank anymore so he decided to divide the money and grant it to states by population. And sure enough that’s when the good times ended. The states weren’t quite as cautious as Mister Jackson and began a land purchasing bubble not hugely unlike our housing bubble, which soon grew out of control. Jackson noticed this and stepped in but immediately realized he was too late. By requiring land to be purchased in gold or silver, we saw a crash causing a recession that would drag on for six years. And just like that, with the pop of a bubble we said goodbye to a year long debt-free US.

Even when accounting for inflation, the debt Jackson tackled pales in comparison to the burden we carry today. Last Wednesday, President Obama proposed a combination of long-term spending cuts particularly in national defense, tax hikes and changes to welfare programs. Personally, with my limited economic knowledge, I believe each of these is exactly what we may need. Spending as our dear old President Jackson demonstrated is the obvious and possibly most important point. Tax increases (audacious considering elections are approaching) may very well be a fact that we are just going to have to learn to live with if we ever plan on lowering our deficit. Lastly, welfare programs at the moment have already been identified as facing huge sustainability issues particularly in the case of Social Security so reform is necessary in any case.

                 If these measures were to take effect and be as successful as planned, the national debt would be reduced by $4 trillion in the next 12 years. This goal is ambitious to say the least especially considering years past, but offers the kind of hope and worthy cause America needs at the moment to handle a task as daunting as this. So though for now the debt clock continues ticking, the beginning of our journey to the end just may be in sight.

Drugs: Are We Better off Legalizing Them? (Part 1)

The fundamental point behind making drugs illegal is that in addition to law abiding citizens, those who wish to abuse anyways face high production and sale costs which in theory should decrease demand. But illegal drugs are a special case in that their price is fairly inelastic because they’re addictive. The result is that unlike most other commodities, people are always going to be willing to pay any affordable amount to get high. So making drugs illegal simply limits the number of dealers to those who can overcome legal barriers, and in the process makes them richer and spikes crime rates.

So to test this beyond the theoretical economic mind, NPR’s Planet Money talked to Freeway Ricky Ross who after became a large scale crack dealer in Los Angeles was sentenced to life in ’96 only to be released on parole 13 years later.

So the first part: making drug sales illegal drives the price up. To judge take a look at Ross’ numbers. Ross went through up to $3,000,000 a day out of which he made between 200 and 400k off each million. Of this profit he estimates that the forbidden nature of his products is responsible is responsible for approximately a thousand fold spike in their price.

                Now onto part two, that part of this money funnels into higher crime rates. Rick worked with 30-40 guys each of whom at any given moment was required to be armed. This thug and armed environment had obvious effects.

Drugs: Are We Better off Legalizing Them? (Part 2)

Money was further distributed to uphold ties between groups that bought you a free pass in the otherwise fatal streets of LA. And these guys weren’t necessarily drug dealers but included an assortment of criminals be they robbers, “jackers” etc. Other major costs ranged from reserves to pay bonds to financing lawyers to hiring the so-called small timers involved in the intricacies of running a drug operation.  To these individuals, seeing such profitable business is a huge enticement to enter this world.

But the thing that economists don’t necessarily take into consideration that Rick can point out is pretty simple if you think about it. Drug dealing is different from any other job you could ever have. High risk jobs normally demand high compensation but to starting dealers, life in gangs is a slow transition from life at home so any compensation can be seen as a lot. Furthermore, the life involved and processes becomes a culture unto its own that can be more engaging than it is dangerous. The result, even if you weren’t paid as much as Rick, even if you were broke and hunted, it was a life that some just wanted to live.

The simple solution is to legalize these substances but that would spike addiction. So the choice really is would we rather have higher crime or more people addicted to drugs? But there is a third option and that is to destroy the motivation to use or sell drugs in the first place. And that’s what Ross addresses now by talking to youth and others about the life after prison or lack thereof if you’re killed. It’s not an easy task but it may be the only option in a business that’s otherwise economically and socially irresistible.