Some side thoughts.

Professor Brad DeLong asks why universities still have large lectures. My contribution: professors don't feel textbooks do an adequate enough job of explaining material. This is partly due to limited space in textbooks, which are a function of production costs. Authors have to find a balance between precision and clarity in the span of 800 pages. However, online textbooks don't have this restriction. An online textbook could be written to be very clear, with hyperlinks to rigorous mathematical proofs, or somesuch. Paradigms change slowly, though.

Bianaoh points me to the Dataverse Network, which seeks to make data and its analysis more accessible, while preserving credit. It strikes me as a great idea, and I hope to be able to use such tools in the future.

Cartoonist Scott Adams tells people what economists are good for. Convincing the public of anything unpopular is an uphill battle, Scott.

Lastly, something more related to the current economy. Current numbers with an historical perspective. The message: things have been worse, and we're still around. Cheer up, people.

Cities, broadband, and globalization

This should surprise no one. As cities grow more dense and traffic gets worse, people turn to closer-to-home solutions for shopping. Sprawling cities get shopping centers, close to home, that support the majority of local shoppers' needs. It, of course, makes perfect sense. Some places even have everything self-contained in single, massive buildings--living space, work, and shopping all in one.

Have you ever been worried that municipal politicians are wasting your money? It happens at every level of government. How's that for dead weight loss?

Google talks about municipal broadband. As I said in my other blog, Houston's working on it! Apparently, other cities aren't having success, though.

PBS has a neat web page on globalization, though the economist in me always wants more data.

National and International Governments

According to a Reuters article:

McCain's top economic advisers said Obama's proposals would hurt small businesses and not foster job growth. Martin Feldstein, a Harvard professor of economics, said Obama's approach would backfire.

"Obama's plan will slow the economy, will depress the economy by raising taxes -- raising taxes on business investment, raising taxes on individuals. And that tax increase isn't going to happen immediately, but the fact that he promises that he will make that happen in 2010 or 2011 is enough to continue to depress the economy now," he said.

Now, Martin Feldstein is a smart guy, but I don't agree with him here. Given the fiscal lag, the relative lack of power a president has over the economy, and the fact that congress will alter any bill proposed, it'll be a long time before anything similar anyone's currently proposed economic plan will have an effect on the economy. Moreover, the Federal Reserve Board governors are betting on upside risks being greater than downside risks--so we may actually want a slow down of the economy when any kind of plan does eventually hit, in order to stave off inflationary pressures. Moreover, the results of the Obama plan may be mixed, as middle class consumers will supposedly be getting help (and thusly be buying more things, helping all companies).

This is a great idea that should've been done a long time ago. I saw it linked on some other site, but I don't remember which.

http://www.showusabetterway.com/

In UK, you can get money if you come up with a way to improve the lives of UKers with online applications or providing easy access to data. They "want to hear your ideas on how to reuse, represent, mashup or combine the information the government holds to make it useful."

Yet another store closure.

Every Bennigan's and Stake & Ale in the country suddenly closed today. That's pretty drastic, and without warning. It's probably a bad way to run a company, to not warn even your employees about possible closures, or to close everything at once, but when you know you're going bankrupt you may not care.

News that doesn't get out as much, I think.

BW Senior Economist Michael Mandel reports that real college grad wages are down a whopping 5.5% Ouch! That's a figure we generally don't want falling, because we want to give incentive for people to pursue college degrees. I think we should expect that figure to rebound over the next few years.

And, while new home sales are down (IHT), it's actually higher than expected (Bloomberg). Bloomberg also reports that durable goods orders are up, consumer confidence is up, and moderate growth is expected.

Factory Output and Unemployment

Bloomberg reports that factory output rose in June. What does this tell us?

Well, nothing we didn't already know, I think. Take a look at Capacity Utilization. Looks like it's been falling, until a recent jump up. We don't know if there'll be a change in trend back upward, but I find it interesting how different indeces are tied together.

Look at capacity utilization over the past three years (you'll have to click on 'Charts' then '3-year'), and you'll see the rise in capacity utilization, before its downward descent. It shouldn't surprise you to hear that there's probably a negative relationship between capacity utilization and the unemployment rate (or, perhaps, a positive relationship between capacity utilization and the employment rate).

Capacity utilization measures the percentage of factories in use, but it takes people to work those factories. With constant technology (or, in the short term), a decrease in physical capital will likely lead to a decrease in human capital. For a given technology level, there's a particular ratio of physical-to-human capital, so a decrease in one form of capital will mean a decrease in the other form of capital, in order to keep the ratio constant. A rise in utilized physical capital--as the Bloomberg article reports--might portend a drop in the unemployment rate, or at least provides downward pressure on the unemployment rate.

"Downward pressure" just means that there will either be a drop in unemployment or less of a jump in unemployment, all other things equal.

On the other hand, the report may not be indicative of a trend. Capacity utilization has been dropping this year, and unemployment has been rising. Unemployment continued to rise in June, which suggests that capacity utilization will continue to drop.

Bottom line is this: if the report is actually the start of a trend, we'll see the unemployment rate start to drop. If no, the unemployment rate will continue to rise.

Side note: interesting 2002 article on the savings rate.

Educational issues

Apparently some people in the educational system want to do away with summer school. I wish he'd expound on his reasons a bit more, as summer school has been shown to help even low-income students.

An interesting topic raised in one of my old classes was Good Cause employment, we called it. In parts of Europe, I think by law, someone cannot be fired without a very good reason--and poor performance isn't good enough. In the United States, someone can be fired, essentially, at will or with no cause. In Europe, therefore, hirings and firings are less frequent, it is more costly to employ people (you have to be extra careful who you hire), and salaries are relatively lower. The discussion went on to conclude that in the United States, since hirings and firings and contracts are determined by the market forces, Americans prefer the extra pay to job security.

That's a long set up for one link, I think, but according to an online poll, some educators don't feel this same way. Those teachers prefer their job security over their high salaries. Also, according to that site, most teachers have functional or better parent-teacher relationships at their school, so I think that those polls don't represent a very representative sample of educators.