Tuesday, February 17, 2015

Oppose Net Neutrality

Putting on my economist hat! (and declaring I am not an economist on anyone's payroll except the University of Akron)

Economic Reality versus Wishful Thinking again!

Please learn about Net Neutrality and write the FCC to oppose it. (Comment here http://www.fcc.gov/comments on proposal 14-26)

Too many people on all sides of the political and social spectrum seem to favor it. The Internet is not a telecommunications utility. It should scare you that all the large companies are in favor of it. Regulations are often packed with the nicest sounding words, but this is not in our (read the consumer's) benefit. It is in the benefit of the huge corporations. Regulation often protects the status quo which is the large businesses. This passes and the future possibilities of starting a business on the internet or starting your own blog may be so encumbered that the new business or media won't take place.  You may have to give you permission or a license to start your business or media site. This will protect the existing cable and internet providers.

Right now you don't need to fill out forms and pay taxes to start up a business on the internet, but after the FCC rules on net neutrality you may have to, in fact I think you will definitely have to. This will return the sales tax on the internet -- imagine how you will have to know the tax rates in all jurisdictions in the country, collect the tax and disperse it. That alone will discourage new and little business. Big companies, no problem they can afford a department of accountants and programmers and they will pass that cost on to you.

I have decried the appalling lack of economic literacy for my 35 years of teaching. I have tried to do my part to get people to understand economic reality versus wishful thinking. Net Neutrality being able to improve things for you is wishful thinking. Contact the FCC now and complain - do not support the new rules. You must get your comments by Feb 26. Make your voice heard or you will be sorry. Netflix will cost you more (I know they say it will be less, but they want this) and a competitor to Netflix will not be able to get started without satisfying the regulators.

Check out this video to see my point made.

Regulation is helpful when the market is not competitive if the goal is to deal with the competitive elements by causing them to lower price and increase service.  This is the classic text book use of regulation moving the market to increased efficiency. If the government goal was to lower Netflix's price and forcing them to increase service then perhaps.... but Netflix would not be the major company in favor then would it?

Write the FCC now or your use of the internet will forever change for the worse. The FCC commissioner has commented that the media on the internet needs to be controlled so you have a more truthful source. That should scare you to death. The bad parts on the internet and the quacks that write nonsense is the price of freedom. I do not want all my news pre-approved which could happen.

Economic reality is far more important than wishful thinking.

Monday, February 25, 2013

What if your wages were sequestered?

An employee who makes $50,000 per year goes in for a meeting with his boss.  The boss looks glum and tells the employee he must cut his pay by $13,238 as he has no choice, he is being forced to do it by the Board.  The employee begins to sweat trying to figure out how to pay his bills on only $36,763 and panics, shouting at his employer how bad this is.  “I can’t lose $13,000….”

The employer takes pity on the employee and says … “Let me explain.  You do not understand the new (Washington) math.  The cut in your pay is indeed over $13,237 but that is over 10 years.  Also, it is out of planned spending not on actual spending.  You see I have planned to give you a 10.3% increase each year and I now find that is impossible so I have to cut somewhere.” The employee notices a tear forming in the employer’s eye. “The Board is making me cut a total of 2.4% of my planned spending and that means I can only increase your current salary by $3,829 and not the $5,152 I had intended.  Over 10 years that is a $13, 236 cut in your pay.  You do know it’s the evil Board, not me don’t you?“ 

The employee now really confused says, “You mean you are only cutting $1,324 next year and you are not cutting it from my $50,000 pay, but from my $5,152 increase you had planned to give me and which I have not even yet received?”

“Yes,” the employer replies with much remorse, feeling so bad he has to hurt his employee by cutting his pay.  The tears are flowing now.

And the employee says, “So actually, you are not cutting my pay of $50,000 and you are INCREASING my pay by $3,829 next year?”

“Yes” says the employer, “I am so sorry to hurt you so much.  I know you will have to stop doing so much, maybe not be able to pay your mortgage, make your car payments, and send your kids to school.”  At which the employer bursts out in tears sobbing uncontrollably and wailing about the impending disaster to come.

The employee looks at the pathetic employer and states, “So this year I make $50,000 and next year you are going to pay me $53,829, a nice raise, but you think I am being cut $13,236 over 10 years because you can’t raise my pay as much as you want?”

“Yes” sobs the employer now on his phone begging the Board to avoid the cuts at all costs.  I am trying to tell them how much it will hurt you and all my other employees.
The employee rises and leaves the bosses office smiling and imagining the good an increase of over $3,800 is going to do.  

Now you understand sequester.  $3.6 trillion today is planned to be $6 trillion in 10 years, but $2.4 percent cut must be taken from the planned increase meaning that government spending will still increase.  The problem is that over 60% of the economy is entitlements and cannot be touched by the sequester and that means the cuts fall most heavily on federal expenditures that are discretionary.  Passing smarter cuts and entitlement reform could go a long way, but as long as our “employer” wails and doesn’t act, we are stuck.  But wait, aren’t we the employers of them?

Tuesday, February 12, 2013

Economic Writing Contest

2013 Creative Writing Contest http://www.clevelandfed.org/Learning_Center/For_Teachers/contests_for_students/writing/2013/index.cfm

Monday, February 11, 2013

Tips for leaders of online programs

Tips for college leaders to make online programs work http://www.insidehighered.com/views/2013/02/11/tips-college-leaders-make-online-programs-work