US Steel responds to higher prices

US Steel is building  a new plant (WSJ, Sep 2021). The new plant represents a long-run increase in supply.

Are price controls constitutional?

 

DoorDash, Grubhub and Uber Eats say "No!" (WSJ, Sep 2021)

Evidence that low prices (and binding price ceilings) reduce the quantity supplied

"Low Medicaid payment rates—about half of what private insurers pay for primary-care services—discourage doctors from participating. A 2019 government report found that only 70% of providers accept new Medicaid patients, versus 90% for private coverage. The disparity is more pronounced for family-practice doctors and psychiatrists" (WSJ, Sep 2021).

Government subsidies for antisocial behavior stalled decades worth of black progress.

Jason Riley is critical of the Great Society and what Biden's proposed $3.5 trillion expansion of the social safety net might mean for Black progress. (WSJ, Sep 2021). Here are some money quotes.

"Entitlement programs were dramatically expanded in the 1960s in the service of a war on poverty, yet poverty fell at a slower rate after the Great Society initiatives were implemented, and overall dependency on the government for food, shelter and other basic necessities increased."

"Between 1940 and 1960 the percentage of black families living in poverty declined by 40 points as blacks increased their years of education and migrated from poorer rural areas to more prosperous urban environs in the South and North. No welfare program has ever come close to replicating that rate of black advancement, which predates affirmative action programs that often receive credit for creating the black middle class. Moreover, what we experienced in the wake of the Great Society interventions was slower progress or outright retrogression. Black labor-force participation rates fell, black unemployment rates rose, and the black nuclear family disintegrated. In 1960 fewer than 25% of black children were being raised by a single mother; within four decades, it was more than half."

“'The greatest twenty-five years of black progress after Emancipation itself came between the early postwar period and around 1973'”

“'Overall, African American incomes rose relative to white incomes for the first two-thirds of the century ... most scholars agree that income levels by race converged at
the greatest rate between 1940 and 1970.'”

Taught properly, economics provides a lens to understand the way the world works

 

"Taught properly, economics provides a lens to understand the way the world works. It is about how humans interact and make choices, and how an undirected market process unleashes the forces of invention, innovation, imagination, and improvement. The result is nothing short of miraculous.

"We ignite a spark in the minds of students when we show them how Adam Smith’s Invisible Hand motivates a self-interested individual to “promote an end which was no part of his intention” and thereby serve the needs of others. This seemingly simple concept explains why there was someone at your neighborhood coffee shop early this morning ready to serve you hot coffee, why a pilot spent years in training to fly you safely to Washington for this ceremony, and how something as simple as an ordinary lead pencil is the result of the peaceful cooperation of thousands upon thousands of individuals who will never meet" (From remarks by Fund for American Studies president Roger Ream, a recipient of the 2021 Bradley Prize, in Washington, Sept. 13).

Would price controls reduce R&D and future innovations in medicine?

 

This opinion says, "Yes" (WSJ, Sep 2021).

Lower the Bar for Legal Eagles Who Don’t Go to Law School

Is the purpose of requirements to practice law legally to ensure quality or to restrict entry (WSJ, Sep 2021).

Bad terminaology

The media frequently use economic terms incorrectly (Planet Money, Sep 2021) Rather than writing, "demand dwarfs supply", a writer using economic terminaology correctly would write, "At current prices, the quantity demanded exceeds the quantity supplied". The result, as predicted by supply and demand analysis, is increases in price.

What happens to the standard of living when the economy shuts down?

Median income fell in 2020 and the poverty rate increased (WSJ, Sep 2021).

I asked in class how forbidding people from working because of COVID would affect the production possibilities frontier. When the PPF shifts down and to the left, the economy cannot produce as much as before and incomes fall.

What happens in the market for lithium when the sales of EV increases?

Lithium Booms in the Battle for Electric-Vehicle Batteries (WSJ, Sep. 2021). The demand for inputs used to product a product increases when the demand for the product increases. Lithium is a key input for batteries.

What happens when a freeze kills sugar cane?

Sugar Prices Soar After Brazil Cold Snap (WSJ, Sep. 2021).

Amazon Go

Using AI, cameras, and sensors - Amazon is eliminating the human capital in stores and making checkout as smooth as swiping your phone and charging your account at the end. Imagine what Amazon can do when robots can fill orders and drones can deliver products to my doorstep. You could take a VR tour of a store and "buy" an item by blinking on it, the robot fills your cart, and the drone delivers the cart to your house. Your children's world will be different from mine.

Increases in the minimum wage are not going to slow the replacement of people with machines.

New York Trashes Landlords Again

This WSJ editorial raises questions about the security of landlord's property rights (WSJ, Sept. 2021). What exactly does the landlord purchase when the government can later forbid evictions or increases in rent? The restrictions decrease the income the landlord expected to earn. Does the inability to use the property as desired and decrease in income constitute "government seizure of private property for public use without just compensation"?

Do restrictions on evictions and increases in rent increase the incentive to become a landlord or decrease the incentive? How would the change affect the future availability of rental housing?