Don't Quit Your Day Job…

You know what’s depressing? A graph of spending versus revenue, which is updated through 2009. The Heritage Foundation recently uploaded one of these graphs, and I’m happy to share it with you today.

Fresh off of Secretary of State Hillary Clinton’s classic quote to the Brookings Institute, “The rich are not paying their fair share”, it’s nice to see a few publications with proof that thought may be a little wacky. The Congressional Budget Office released a timely report they named “Average Federal Taxes by Income Group”. What does that report show? Strangely, that the share of the burden of taxation for the rich in this country has actually been increasing. Shocking, I know, with all of the quotes you can find to the contrary. Let’s take a look…

…enter grade inflation. This site has recently touched twice on the topic of the spiraling cost of advanced education. Recently the New York Times covered something that the schools are giving back for the increased attendance cost – higher grades. Yes, grade inflation is increasing at a pretty decent clip right along with college costs.

That treasure trove of data the Bureau of Labor Statistics has a fascinating report that it calls the “Employer Costs for Employee Compensation” report. Last Wednesday it released its report on the compensation costs at various employer types (and locales) for March 2010. One of the interesting things it does, as picked up on Mark Perry’s (great) blog, is to spin out the government’s estimate of overall hourly wages – for private industry, and for state and local government workers. The government workers win in a first round knockout…

As I mentioned in my last article, education is one of the categories where spending has increased the most over the last decades. However, it’s unclear if the product students are receiving is even worth the cost they have been paying. At issue: this article from the New York Times, heavily digested all over the internet. Setting aside the fact that our protagonist majored in Religious and Women’s studies, what is the value (in expected weekly salary) of a graduate or an undergraduate degree?

What’s grown faster than inflation the last 40 years? No, not medical expenses. What’s grown faster than that? You guessed it (from the title of this post) – education costs increased almost 1000% from 1978 to 2008, compared to about 300% in the generally price level as measured by consumer inflation. Yes, inflation is one of the categories of spending which is increasing at an off-the-chart-rate.

Thanks to the Committee for a Responsible Public Budget, you too can play Dictator/a for a day! It’s no surprise that the United States has a high national debt. The United States has around $13 trillion in public debts. The United States is also the largest economic engine in the world, with a GDP of $14.2 trillion in 2009. How would you balance the expenditures of the government?

I haven’t recently taken a look at what the Treasury market is telling us about inflation… but that’s now changed, and I’m here to share with you. The market predicts continued smooth sailing on the currency front. My method is the very crude subtract real treasury yields from the yield curve. Currency stability is probably here to stay in the meantime, what with the only reasonable alternative in flux and everything… and the market reflects that truth.

In Economics, there is a concept of ‘leading’ and ‘lagging’ indicators. ‘Leading’ indicators predict economic activity in the future- they are statistics which give a decent idea how things will be soon. ‘Lagging’ indicators are the opposite; they signal performance in the recent past. Is it possible that there is a leading indicator of the economy that we all experience? According to an article in the Wall Street Journal, our spam email messages have become more bullish over the past few months.

Substitution and Income Effect: These two terms are very familiar to anybody who has taken an intermediate course in macroeconomics. With the recent articles regarding volunteerism and labor statistics, I thought that it was very timely to write on these two very important concepts.

Let’s start with a thought experiment: if you were to receive a 10% increase in your hourly wage, would you increase, decrease, or maintain your hours worked? Believe it or not, any answer is correct, despite many assumptions regarding the positive slope of labor supply curves. The reason that any answer is correct lies in an understanding of substitution and income effects.