Structural Employment

One of the things that we have talked about so far in macroeconomics is the different types of unemployment.  In particular, structural unemployment is often cited as a common problem in the United States.  From the early 1900s to the late 90s, the United States was heavily involved in manufacturing.  However, with NAFTA and increased globalization, it is not news to anyone that many of these jobs have now gone overseas.

That is why I read this article with great interest.  It seems that manufacturing is trying to make a comeback.  It is a specialized form of manufacturing, not the large scale "make giant things" manufacturing of the past.  Machines are becoming increasingly complex, and require a more trained and complex workforce to operate them.  This seems perfectly suited for the United States, which should be able to blend its manufacturing heritage with the human capital needed for complex industrial production.

And yet, it appears that the outsourcing of American manufacturing has led to a dearth of people skilled in factory jobs.  Trade schools and technical skills are a thing of the past; just think of Baltimore County.  Once, Western TECH and Eastern TECH were trade skills where students learned what we would call "votech" jobs.  Now, they are magnet skills which cater to a college bound clientele.

Read the article and consider the questions below:

• Do you see manufacturing as a "job for tomorrow" in the United States?  Or will factory jobs remain a niche in the United States, with the bulk of manufacturing occurring overseas?
• As a student, what do you think of the decline of vocational technology in schools?  Do you think some students would be better served learning heating and air conditioning repair or masonry in high school?  Or is the "everyone goes to college" model (promulgated by your very county) a better approach for an increasingly complex economy?
• Should the United States even bother competing for manufacturing if other countries can do it for a much lower cost?  Consider China for example.  (FYI:  video has two parts where naughty words are bleeped out).

The first blog post will be due on Saturday, February 25th at midnight.  The second blog post will be due Sunday, March 4th at midnight.

Is GDP the Be-All-End-All?

Here at the beginning of macroeconomics, we've really been discussing the aggregation of data.  After all, macroeconomics is the examination of the economy as a whole, and in order to do that economists must slog through a tremendous amount of data to find out what is happening.

GDP is the most common measure of economic progress; indeed, the release of this number is a big deal in the media, and dominates the news headlines over several days.  Entire economic policy choices are made using this number...Presidencies have collapsed because of this number.

What if it's wrong?

All statistics are, to some degree, inaccurate (the old saying "lies, darn lies, and statistics"), but they are at least supposed to somewhat mirror reality.  However, the very way that GDP is calculated might make it an inaccurate and not very useful measure of economic prosperity.

Please read the following article on GDP and answer the following questions:

• How is GDP computed?
• What are some things which would improve GDP that do not necessarily benefit society?
• According to Nic Marks, why is GDP an obsolete measurement?
• What are some alternative ways of measuring GDP?  What arguments do the proponents make?
• What is your view of GDP?  Is it an okay measurement of a country's economic health, or is outdated?  Explain.  (Note:  for guidance, here is a list of countries ranked by GDP per capita.  Look at the countries near the top and bottom...is there a discrepancy between their GDP and the country's "livability"?)

Your first post will be due by Saturday, February 4th by midnight.  The second post will be due by midnight on Sunday, February 12th.

How Much Does a Whale Cost?

In the past two weeks we've been discussing the tragedy of the commons, and the idea that unless a shared resource is somehow incentivized to be saved, than people will deplete it to extinction.  We discussed this in the context of grass on the commons, auctioned air, and now you will examine it in one other area:  the whaling industry.

Some of you may be familiar with this topic through "Whale Wars", while others of you might have thought that the practice of killing whales ended with Captain Ahab.  But the issue is becoming relevant again, and lo and behold some economists have gotten together and proposed a solution to help the whaling industry clean up its act.  Why, people should buy and sell whales.

Please read the article linked here (a warning to animal lovers:  the picture at the top of the article might gross you out a little).  After reading the market, consider the following:

• What is the current state of the whale population?  How are whales currently protected?  Do these protections seem to have much effect?
• What is the proposed option to save the whales?
• How is this scenario similar to the cap and trade auction we did in class?
• One argument against whale markets is that whales are different than pollution because they are sentient beings.  One researcher even suggests that this could be "worse than slavery."  Do you agree with this assessment?  Explain.
• How would enforcement work?
• Do you agree with this proposal or not?  Explain.

The first post will be due Saturday, January 14th at midnight.  The second post will be due Sunday, January 22nd at midnight.  These will be the last two posts of the quarter/semester, so make them count!