Economics Week in Review 10/10 - 10/13

Definitions:

Price Floor: Price floor is much more common than a price ceiling. If there is a price floor, there is also always a surplus in the market. A price floor is caused by government regulation, subsidies, or minimum wage. An example of a price floor is the market for fast food labor. With a price floor, the equilibrium of the market will always be below the price floor.

Price Ceiling: A price ceiling is less common than a price floor. With this, the equilibrium of the market will always be above the price ceiling. A cause of a price ceiling could be price controls. An example of a market that could have a price ceiling is the market for apartments. A price ceiling will create a shortage in the market.


Universal Basic Income (UBI): A basic income, sometimes known as a citizen's income, is a form of social security where in all citizens receive regular, unconditional sums of money from the government. This amount is given to all without any means-test or work requirement.

Market Failure:  Any situation that causes the quantity supplied does not equal the quantity demanded in a market (a surplus or shortage).

Super Pacs: The result of Citizen United v. Federal Election Commission. A super pac is a political committee that can accept unlimited contributions from corporations, labor unions, and individuals to use for political campaigns.

Rate of Growth: The rate of growth is the GDP (national economic growth rate) of a country. GDP is the total value of goods/services produced in a country in a year.

Low Growth Period: A time of a low rate of economic growth that often leads to income inequality and increased unemployment.

Capitol: Defined by Piketty (on page 28 of Capital in the Twenty-First Century), capitol is defined as the sum total of nonhuman assets that can be owned and exchanged on some market. Capital includes all forms of real property (including residential real estate) as well as financial and professional capital (plants, infrastructure, machinery, patents, and so on) used by firms and government agencies.


Current Events:

http://www.nytimes.com/roomfordebate/2016/10/04/easing-the-pain-of-automation/a-universal-basic-income-would-insure-against-job-loss

This link is to an article discussing the benefits of a UBI. To make the claim that a UBI would be beneficial, the author uses the argument that it would insure against future job lose due to new technologies. 47% of jobs in the U.S. are at risk and automated cars alone would take away the most common job in 29 states. If a basic income was instated, those who could possibly lose their jobs in these cases would be insured to still have a safety net and not fall into poverty as easily. However, there are consequences of a UBI which we discussed and debated during class, such as the increase in taxes to fund the basic income.


http://www.nytimes.com/2015/10/19/insider/how-do-the-leading-presidential-campaigns-spend-money-differently.html?_r=1

In this article, the strategies of campaign budget managing is discussed. It is possible to learn more about a candidate by looking at how they spend/raise money. For example, Hillary Clinton uses most of her budget on organization and pay roll, while Donald Trump spends more on places for rallies and travel. With this article, we started a discussion in class over whether or not a politician has to be wealthy in order to be successful and what is the best way to run a budget for a political campaign.


Takeaways:

For someone who is not extremely involved in the current presidential campaign, or the economics of politics in general, I found the class on the economics of running a presidential campaign to be very interesting and I enjoyed learning something new. The question of if a politician has to be wealthy in order to be successful was intriguing. While it is important to understand that the spectrum of what is considered "wealthy" is very different for politicians than non-politicians, I agree with our class discussion; a politician does not need to be personally wealthy, but needs to be able to raise funds for their campaign and have a large budget to spend wisely.

I also found the class on the Universal Basic Income to be very interesting. For me personally, it is tough to say if a UBI would be truly beneficial or not. I see that there are many setback of the concept, such as higher taxes and opportunity costs, but personally, I do not agree with the argument that a UBI would reduce incentive to work or drive down productivity. It would be beneficial, increasing the spending power of everyone and improve the quality of life for many citizens. Though I am not completely sold on the idea, I think that it wouldn't hurt to carry out more case studies with a Universal Basic Income.