Class Summary 12/9

Profits Losses & Entrepreneurs

Bill Gates we don't celebrate the accumulation of wealth we celebrate when we give all of the money away BUT... what is doing more good? Microsoft or charity? These are important aspects of life to think about. 

Do we care about the poor as much as we think we do? No, Mayor of Boston won't allow Wal-Mart, which would provide healthy food for the poor, and he also won't allow CVS Minute Clinics, which would provide healthcare for the poor. 

While health insurers, providers, and doctors DO make money off of our sickness we have to think about HOW they make money. (i.e. Healthcare makes money not by keeping us sick but by making us better, same with clothing, food grocers, even Hallmark).  

When you really want something we show it by how much we're willing to pay for it. 

EWOT #12

I found this article and connected it directly to what Rizzo has been talking about in class recently. The article talks about Obama's plan to reform tax payments and to tax the rich more. The tax system we have now seems completely unfair, however how easy will it be to change? The answer: it won't be. This article highlights all of the specific taxes that we discussed in class (e.g. payroll tax) and the unfairness that Rizzo hinted at. It will be interesting to see how and if the tax system will be reformed. 

"The Sumptuary Manifesto"

After reading this excerpt it made me think about all the taxes that we had been discussing in class. If we really did tax everything that a person ate to stop obesity, and to tax each extra yard of clothing, in a society with so many rules and taxes no one would ever flourish. There would be no choice, no preference, and if people did develop preferences and choice those would be taxed as well. We have learned that taxes do nothing except change the behavior of buyers, which we see clearly in this article. In the society described with all of the imposed and proposed taxes the buyers wouldn't even have a "behavior" and if they did it would be very limited because their choice and preferences are limited. There would be no true economic system with fluctuating supply and demand. Living in a society with choice, preferences, and yes, still taxes, it is almost impossible to imagine a society as described in "The Sumptuary Manifesto". 

Class Summary 12/7

We started talking about Taxes and the Economic Incidence of Supply & Demand and how that changes an application....

First, an excise tax means that sellers are legally responsible to give tax to the government. This means that to make the profit that the seller needs to they must charge a price that helps them both benefit and pay the excise tax. The main problem with taxes is that it east away at potential trade/exchange of a transaction. It is dead weight loss, taxes prevent mutually beneficial trade. 

When looking at sales tax we try to make the buyers pay the tax again. Taxes are really transfers neither good or bad, but taxes change people's behavior.

With payroll tax, which is a tax that is paid by everyone who works, goes to medicaid, medicare, and social security. This is the tax that "screws" everyone. 

There is clearly inefficiency with how we collect taxes. We ultimately want to tax things where behavior will not change very much for buyers; since demanders are insensitive to price change they often bear the cost of the tax. 

So we wonder... why doesn't the real incidence matter? And what DOES matter?

Class Summary 12/5

We began looking at the illegal sale of drugs and how the legality effects both Supply & Demand... 

We saw that the supply curve rotates up and becomes less elastic; whether selling drugs is legal or illegal marginally the trade-off is the same to the drug dealer. When drugs become illegal there is less sold but there is still a desire for the product. We tend to see more dangerous drugs produced when drugs are illegal. What the government and what we need to think about is opportunity cost, for example, instead of improving technology for everyone we are spending money putting people in jail for drug-related charges. (U.S. spends $33 billion on attempting to stop "drug wars")

EWOT #11

This is a picture of the Occupy Protests in Portland, as I've been studying economics and following the OWS movement, I wonder what they're truly protesting and if it is all worth it. I am also in an anthropology course which has shown me other sides to the economic issues which we discuss in Rizzo's class. However, after doing more of my own research I'm not sure if I agree with anyone. I know the data that Rizzo has shown us proves a lot of the common beliefs throughout America wrong, however since the beliefs are incorrect how did our economy get like this? And what are people actually protesting? This image and other images from "The 45 Most Powerful Images of 2011" made me think not only economically about the culture that we live in today, but also about how I want things to change and what information I want others to be aware of. 

"Bethpage Gray (Market)"

"Perhaps the equilibrium isn't as balanced as estimated. It's impossible to know for sure. There are more than 70,000 members in the Bethpage State Park reservation system. The course can accommodate 35,000 rounds per year. The phone system books up completely by 7:03 p.m. every night. People want to play golf. Until there is a greater supply of affordable, quality options, NY Golf Shuttle will continue to play the market. And if you want to get on Bethpage, remember this outfit is the cause of, and solution to, your problem."

The above quote from the article from Golf Digest says it all, the equilibrium isn't balanced. There is more demand than there is supply and if there continues to be scalpers, and other agencies like NY Golf Shuttle will continue to exist. People don't care what means they go by to receive their ends, they just in this case want to play golf. Whether this is morally right or wrong is beside the point, economically this is what's happening because there isn't an equilibrium being reached at any price. This article relates exactly what we've been talking about and can be related to the concept of price ceilings, which we discussed earlier this week in class.