Money

Here is a chart of money: 

Approximately all of it (at the time, and in dollars) and examples of what it can be used for. As the chart states: "All this money flows in and out of, and between, households, corporations, and governments. This process is complicated". Basically, there is a circular flow to all of this money, so there is double counting. But it is a great snapshot to look at whenever one is bored.

So…That Immigration Bill

If anyone reads this regularly, they know I’ve done a few posts about the economics of migration (here, here, and here). That’s because freer migration is the single best thing for the world economy. Since that statement isn’t at all controversial, and Latinos voted against Republicans in droves in the last election, it was natural that a bipartisan immigration bill passed the senate. The bill, while still flawed, was progress in the right direction. However, it died in the House, where Republicans refused to let it come up for a vote. 

So what would the immigration bill have done for the economy? It would have been a net benefit. The CBO found that, over the next 20 years, passage of the immigration bill would increase GDP by 5.4%, and reduce federal debt by $300 billion. Average wages would be 0.5% higher[1]; the rate of return on capital investment would be higher. Immigrants added to the population would “participate in the labor force at a higher rate”, or because they would be both less skilled and work at lower wages, on average (the bill would also allow for more skilled immigrants), they would be employed at a higher rate[2]. Overall, the bill would increase the productivity of capital and labor, meaning it would be profitable to employ more of both. Illegal immigrants who would obtain legal status would see a wage increase of 12%, and increased productivity. It would lead to a higher return on savings, which, combined with increased wages would lead to a higher savings rate.

Economist Quotes

"What are you? Blind? In which case maybe. I mostly support projects working to restore sight and prevent eye disease. Or 'expanding the market' as you might call it."

- Banksy

July Jobs Report

162,000 jobs were added in July. It's neither relatively good nor bad. The previous two months were revised down by 26,000 jobs total.

It's a mixed signal, and there have been a lot of mixed signals in the economy lately. The good part is that the innovative Fed policy we currently have automatically adjusts to economic conditions. If the economy slows down it means monetary stimulus will last longer. And the mixed signals in the economy have already triggered some subtle but telling word changes in Fed policy statements, which point to the need for continued stimulus.

The Walmart Living Wage Bill is a Bad Idea

The bill that recently passed the D.C. City Council  yet to be signed by the mayor, requiring Walmart to pay a “living wage” of $12.50 an hour is a bad idea[1]. At worst it will harm the poor and unskilled, at best it is a very inefficient way to benefit a small number of them.

Suburban Poverty

"...it is true that poverty rates tend to be higher in cities and the countryside. But the suburbs are where you will find America’s biggest and fastest-growing poor population."

June Jobs Report

195,000 jobs were added in June. A relatively good number given the recent past. The labor force participation rate stayed about the same. Furthermore, both April and May were revised upward to nearly 200,000 jobs added.

Current job numbers represent a break with the previous post-recession trend of relatively strong winters and weak summers. 2013 is on track to be the  strongest year of the recovery. All this despite fiscal austerity, and weaker growth in Europe and developing countries. Monetary policy, however, has been at its most expansionary of the recovery.

Abortion

The state of Texas is currently trying to pass a bill that would limit access to abortions, which, according to the Supreme Court, is at least against the spirit of the Constitution. Anyway, a Democratic State Senator, Wendy Davis, successfully filibustered the bill in a special legislative session. However, the governor just declared a new special session, so its passage is very likely.  

Due to these current events, now seemed like a good time to share a couple graphs I've come across in The Economist. First, a graph of teenage pregnancy, birth, and abortion rates. 

All rates have been decreasing, despite the legality of abortions. Surely the large decrease in teenage pregnancy has contributed, so it would seem that if Texas wants to reduce abortions it should reduce its higher than average teen pregnancy rate. But Texas has abstinence-only education.

The second graph shows the rates of safe and unsafe abortions in the world:

According to the data, Latin America and Africa have the highest rates of abortions, despite having some of the strictest laws limiting the procedure, or making it illegal. At the same time, they have the highest rates of unsafe abortions. The least that can be said is that laws limiting or making abortion illegal are negatively correlated with the rate of abortions. The United States and Canada, where abortion laws are generally more liberal, have lower rates of abortions and nearly no unsafe abortions. And those rates are decreasing.

No one wants there to be more abortions. But it seems that "legal, safe, and rare" is a more successful policy than the alternative, which, according to these graphs, could be described as "illegal, unsafe, and more common".

May Jobs Report

The Economy added 175,000 jobs in May. A very average number. The unemployment rate went up 0.1% to 7.6% due to more people entering the labor force. 

Not much more to say / gonna be lazy on this one. Sorry I'm not sorry.

Pakistan

A pretty newsworthy event has occurred in Pakistan: after winning an election, the new Prime Minister was sworn in. But this is no ordinary political event; it is in fact the first time since independence that an elected civilian government has finished its full term, and been replaced by another elected government. The new Prime Minister, Nawaz Sharif, also set a record by being elected to the post for a third time.

Additionally, there is a new opposition party, led by Imran Khan. His party had never won a seat previously, but now is the third largest in the parliament. The vote, while beset by some violence, was largely free and fair. Turnout increased to 60%. It only takes one time to set a precedent. Here's to a better more democratic future.

Mr. Sharif called for the end to drone strikes in Pakistan after being sworn in. Imran Khan has done so repeatedly as well. A new data visualization tells the story of drone strikes in Pakistan. Less than 2% of those killed have been "high-level" targets, 22% were confirmed civilians, and the remainder are "alleged combatants", whom the authors treat as "other" or those who can't be proven non-combatants.

The drone program got off to a pretty slow, yet horrible start, generally killing more children than anyone else, to say nothing of adult civilians. Over time, civilian deaths continued to increase, but alleged combatant deaths increased faster. Presently, around 76% of those killed are alleged combatants. Better targeting I guess, but it bears repeating: less than 2% have been high profile targets.

Economics of Emigration and the American South

A while ago I posted about the immense benefits of freer migration for migrants, the places they leave, and the places they go. Most research focuses on immigration, and partly as a result there is concern that emigration makes a sending country worse off by reducing its productive capacity. As I outlined in my original post, emigration is a net benefit, and increases growth.

Since then, I came across a paper on emigration and growth in the Southern United States. At the beginning of the 20th century the South was proportionally poorer than the North. Starting in the 1940s, the South grew faster than the North and closed the gap significantly. At the same time, there was large black emigration out of the South.

To get at the causation, Richard Hornbeck and Suresh Naidu of Harvard and Columbia University respectively, look at The Great Mississippi Flood of 1927. 

Fair Trade

Is better to buy based on than organic/local. This has been a micro-blog.

My Ideology

If there’s one thing I could’ve[1] said to my Sociology of Inequality class, it’s that markets are natural forces. They cannot be defied indefinitely. Just as ideology is more powerful than coercion in the survival of societies, markets are more powerful than our resistance to them. If you don’t do things efficiently it doesn’t matter your goal, you wasted resources. Our optimal progress depends on working with natural forces; it’s just like sailing. 

Progress that more widely benefits humanity is certainly possible. Every dictator who falls, or monopoly that can’t adapt fast enough will benefit that progress. When markets are not manipulated to serve governments, businesses, countries, regions, or groups in particular, but the people of all of them in general, we’ll have reached our potential. That is what we should be striving to do, because nothing else will work.

April Jobs Report

165,000 jobs were added in April. A number that is neither good nor bad. The unemployment rate went down to 7.5% and not because people were leaving the labor force this time. In better news, March's terrible number has been revised up to a less bad 138,000 jobs added. February's numbers were revised up to 332,000 jobs added, the highest number since May of 2010.

Front Page Billing for Maryland

This is the most front page Maryland I've seen on a non-Maryland news source site or paper. When gay marriage was upheld in referendum we had to share the glory with some other states. But now here we are:

As the Governor, Martin O'Malley, put it, "Evidence shows that the death penalty is not a deterrent, it cannot be administered without racial bias, and it costs three times as much as life in prison without parole." Not to mention, as was communicated by the presence of an exonerated death row inmate at the signing, it can't be administered without killing innocent people. So woo.

Actually far more important is the 260,000 people dying in the East African famine during 2010-12. For some reference the UN estimates around 70,000 people have died in Syria's civil war in the past two years. The UN has many early warning famine indicators, and they did see the famine coming. But rich countries didn't want to help out any until it was a popular story in the news.

Also apparently the ECB has realized monetary policy is too tight and has made it a quarter percent less too tight.