Migrant Caravan Nears Southern Border

Migrant Caravan Nears Southern Border

As many people have seen on the news, a large caravan of South American migrants is encroaching on the southern border of the United States. In order to provide insights on this issue, I will offer information regarding potential courses of action from both economical and humanitarian perspectives. 

Firstly, the economic impact from the mass resettlement would be primarily felt in the area in which a majority of the migrants select to settle, for the total size of the caravan is only roughly 4,000 people. While it is assumed that they would not have a large national impact in either the U.S. or Mexico, they may have a larger impact on local economies: lower local wages, lower returns to capital, and a higher labor supply are all consequences that would become evident in the local populations that accepted the migrants. Meanwhile, the populations that previously hosted the emigrants would experience slightly higher wages, higher returns to capital, and a reduced labor supply (under the assumption that the emigrants came from concentrated communities). 

The humanitarian aspect of this crisis is important as well. The migrants come primarily from the less-developed areas of Honduras and Guatemala, and many of the emigrants do not have the training to find work in positions for highly skilled labor. The lack of applicable skills needed to find well-paying work will drive many back into the poverty that they have tried so tirelessly to escape. One of the most practical ways to help the emigrants find work is for the United Nations to invest in the industries in the migrants' home nations. By having the United Nations collect contributions from many member nations, the impact of decreasing wages and MPL's would be greatly diffused and therefore reduced to negligible levels from the donor nations, while still increasing the wages and MPL's  for workers in the receiving nations. In addition to aiding the receiving nations while not detrimenting the donor nations, aiding in investment instead of resettlement would reduce assimilation costs for the migrants and assist in keeping family groups intact.   

  

China’s record trade surplus with the US shows Trump’s strategy is “failing”

Trump recently started a trade war with China, putting large tariffs on Chinese goods in order to lower the trade deficit between the US and China. So far though, it does not seem to be working. The trade deficit is reaching record highs this year. The deficit reached 34.1 billion this September, which is 13% higher than in 2017. So it does not seem that Trump's strategy is working. In fact, China has fought Trump's tariffs by purposely exporting more into the US and importing less, making up for where the tariffs should have made a difference. Trump's tariffs are hurting Chinese economy though, the IMF predicts that the tariffs could cause a loss of growth of 2% for China in the coming years. Though China isn't the only one hurt by these tariffs. Ford reported that they lost upwards of $1 billion due to the tariffs, which will cause lay-offs. 

I think that President Trump may need to rethink his strategy. While, with time, we may see the tariffs work and the trade deficit decrease, this is not guaranteed, and so far there are no signs of it happening. In fact the trade deficit has just continued to grow. I think Trump should rethink negotiating with China in order to come to a better trade relationship so that China might export less to the US, as right now they are fighting the tariffs by exporting even more than they did to the US. Trump came out strong in this trade war, implementing very high tariffs. I think that he should have started with negotiating with china and if that did not work he may have implemented slightly lower tariffs than he has now, in order to show China he was serious, without overly angering them.

https://www.vox.com/2018/10/12/17967422/china-trade-war-us-trump-deficit

Global Business Leaders and Saudi Arabia

The disappearance of Saudi Arabian journalist, Jamal Khashoggi, has global leaders very skeptical of future dealings with the middle eastern country. So, skeptical that global leaders such as, British billionaire Richard Branson, Uber CEO Dara Khosrowshahi, and more are suspending their ties with Saudi Arabia until further investigation. Khashoggi was last seen entering the Saudi consulate in Istanbul with marriage paperwork; Khashoggi has since been missing for a week. Saudi Arabian Prince Muhammad Bin Salman has been a  tyranny to his country, with throwing protesters in jail and being suspected of having goons beat a native satirist, and now suspected of killing a native journalist. It is an unclear motive but what does this mean for Saudi Arabia's export partners? The U.S. being one of many with a 9.8% import of petroleum and petroleum products. What will happen to terms of trade and welfare of Saudi Arabia if more global leaders start to fear future dealings with middle eastern country, afraid they may disappear too? I think both terms of trade and welfare will decrease. If Saudi Arabia can't export as much then they can't afford to import as much also. In turn meaning that Saudi Arabia won't have as much consumer goods. And SA won't have as much production since SA imports machinery and equipment, textiles, chemicals, etc. at a cost of $136.8 billion dollars. Their production will decrease and so will their welfare. If the findings happen to be against SA what course of action should be taken? I don't believe global leaders will completely stop importing goods from SA but they should be held accountable. Putting tariffs and sanctions does not seem like a stiff enough punishment. Their government seems to be out of control and that's a good place to start cleaning things up.

https://abcnews.go.com/International/wireStory/richard-branson-freezes-business-ties-saudis-58454809
https://www.realclearpolitics.com/articles/2018/10/12/why_do_we_care_about_jamal_khashoggi_138334.html
https://www.economist.com/leaders/2018/10/13/what-it-means-if-saudi-arabia-murdered-a-journalist-in-turkey

NAFTA Problems with the U.S. and Canada

Summary of the Article

There was a meeting for NAFTA and it didn’t go as well as the Canadians thought it would. Trump called the relationship between him and Prime Minister Justin Trudeau “testy”. Also, NAFTA is now called U.S.M.C.A. Most of the Canadians are mad not about the name change but because of other things that Trump has said and proposed to Canada. Canada is one of the U. S’s biggest importer of their goods and biggest source of international travelers. The relationship started to take a turn when the U.S. took action stating that the tariffs on steel and aluminum would go to Canada as well. To American citizens, we don’t know how it affects the Canadian citizens but the Canadians were mad about this proposed tariff. Then in August, Trump announced a deal with Mexico on NAFTA and suggested that Canada wouldn’t be included. Trump also would hit Canada would with a 25% tariff on their car exports if they don’t “negotiate fairly”.

My Solution to the Problem

What Trump did to the Prime Minister Trudeau was wrong and shouldn't have done what he did. Instead of trying and imposing tariffs to get what Trump wants, he should be trying to come to an agreement that both Canada and the U.S. can come to terms with. Both countries right now are not going to be happy with their terms of trade and should try and work out some agreement. As of now, Trump “patched” the U.S.M.C.A but didn’t really give Canada a say in their defense and made Prime Minister Trudeau and his cabinet even more mad at President Trump. Another proposal that could be the Trudeau should have spoken about the possible export tariff and could have came to a lower export tariff (10-15%) but I don’t know if president Trump would have listened to the negotiation.

Japan Embraces Bilateral Trade Talks with U.S.

Japan Embraces Bilateral Trade Talks with U.S. 

On September 26, the Japanese Prime Minister, Shinzo Abe, agreed to enter bilateral trade talks with President Trump after over two years of rejecting any offers for trade negotiations. The dispute between American and Japanese trading enterprises began after President Trump withdrew from the Trans-Pacific Partnership, which set trading precedents through a multi-lateral trade agreement between roughly a dozen nations. Many Japanese politicians feel as though they have been "chased into a corner" by President Trump's demands in regards to the potential threat of a 20-percent tariff on vehicles exported by Japan. However, most analysts believe that the new trade arrangements will be less extensive than planned, with the main purpose being to increase the amounts of agricultural products and military hardware exported to Japan. 

My Analysis

I personally believe that reentering an agreement such as the Trans-Pacific Partnership or using bilateral trading agreements under adjusted terms would greatly benefit the United States by increasing our terms of trade. Making alterations to our trading agreements will also benefit the partner nations as well by maintaining or increasing the amount of American products within foreign markets and the world market. An increase in the amount of products available to consumers would allow both foreign and domestic markets to reach higher, more extensive indifference curves, thus increasing overall satisfaction. Lastly, rejoining or making new trading agreements would support the profitability and sustain the exports of our foreign trading partners, thus allowing them to remain constant on their production frontier, one such example is the Japanese auto industry, which would export 200,000 fewer automobiles and experience a 2.2 percent decline in profitability if the United States imposed the 20-percent tariff. Renegotiating and reentering trading partnerships would greatly benefit both the U.S. and foreign nations: increasing U.S. terms of trade, increasing American exports and the variety of products on world markets, and stabilizing foreign industries are several effects of the new U.S. trading policy that will allow partnering nations to prosper. 

Trade War Between China and US

Regarding the terms of trade that we were discussing in class, the United States and China are not on good terms. In the articles "Trump threatens new tariffs on $267 billion of Chinese goods" and "China 'will retaliate' if the US imposes new tariffs on $200 billion of goods" from TheGuradian.com, there are talks that the terms of trade will be going down. In the first article, Trump plans on putting a tariff on $200 billion worth of Chinese goods imported to the US but can impose it to be worth $267 billion with a further package. With China having a trade surplus of over $31 billion as of August, Trump says he wants Beijing to make changes in economic trade and and technology policy. With this in mind, the terms of trade aren't equal between the US and China. With China at a big surplus and the US at a large deficit, there needs to be a compromise. Trump trying to impose a tariff on the imports might work for a little while, but in the end, it will hurt their trade relations along with hurting the global economy. With the second article, China will respond with retaliatory tariffs as well. However, they do share information that the trade gap between imports and exports rose from $4 billion to over $50 billion in July and China also imported $129 billion in goods from the US while exporting nearly quadruple the amount they exported to the US which was $500 billion. 

Now with the information that's given, I feel that there needs to be a change between the US and China because China accepts the US's imports but not willing to accept more while the US is buying more of China's exports but China isn't purchasing more of the US's imports. I do agree that there should be a tariff on the goods however, the tariff should be within a reasonable margin for the US to make up for some of the trade gap. The US has been dealing with this for a long time and have lost money for over 10 years to China and I feel that they need to work something out. The number that was thrown out by Trump was 25% on $50 billion worth of goods imported to the exported to the US. To me, that seems a bit steep and should go down to about 10% to start and see where it goes from there.

Sources: https://www.theguardian.com/technology/2018/sep/08/donald-trump-threatens-267bn-more-tariffs-on-chinese-goods

https://www.theguardian.com/business/2018/sep/06/china-retaliate-us-trump-imposes-new-tariffs-200bn-goods

Over fishing

      Overfishing has been talked about and a concern to countries to an extent in the past but hasn't been a serious priority that countries have worried about. One of the biggest issues is that the regulation enforcement for fishing has been extremely lax which has to lead to overfishing, overcapacity and illegal, unreported and unregulated (IUU) fishing. Countries have been subsiding there fishermen in order to secure the market. Which has to lead them to overfish because they know economic loss from the fish they loss will be reimbursed in some sort of way. 

     WWF has now urged countries in the WTO to so stop subsidizing them to prevent further harm to the wildlife and the environment. Which in the past few years the fish population has diminished as well as the size of them. To further the issue the ecosystem life has diminished and has contributed to the negative effects of climate change. This problem isn't one to be easily solved because taking away the subsidies of the fishermen could harm the market. For some countries fish is their main food source as well as protein, so placing an international quota would harm smaller countries that depend on fish. There is no real solution that would fully benefit both sides of this issue.               

                                         

References and further information: 

http://www.military-technologies.net/2017/12/14/wwf-calls-on-wto-to-end-subsidized-overfishing-and-illegal-fishing/

https://www.worldwildlife.org/threats/overfishing

https://euobserver.com/environment/140270

WTO dilemma, future without U.S

     

        The World Trade Organization was designed to incentivize countries trade to move smoothly and freely with one another. With the new presidency, one of the biggest supporting countries of WTO has now become one of the biggest critics. This could be a problem for many reasons the U.S. has been trying to strengthen the WTO for years now in order to increase trade. However one of the biggest complaints about WTO is lack of enforcement of countries regulations. Which is what the current presidency is complaining about and is now retracting themselves from these regulations.

       

        The U.S being one of the biggest economies in the world makes them have a lot of influence in what other countries will be doing. So when the U.S wants to impose tariffs on other countries which is what the WTO opposes other countries would soon follow to do the same. What does that mean for the WTO? Well, one could hypothesize that once the U.S. leaves other nations will follow leaving WTO useless. Certain trade with countries would diminish. This may incentivize consumers to buy domestically which could be good, however, welfare could diminish as the market becomes less competitive and one could see prices inflate.   

References: 

https://www.nytimes.com/2017/12/10/business/wto-united-states-trade.html

https://www.wto.org/

 

Money Supply Guidelines and Exchange Rate Aspects

Throughout this paper the author went through the consequences of monetary policy on the exchange rate. The author did this by using a standard two country model that was based on the Obstfeld-Rogoff model. One of the main assumptions that were made was that central banks would change monetary policy if inflation strays from the target levels. Which basically means central banks are expected to react to changes in the inflation rate. When setting up the country size and market structure of the home and foreign countries, a utility function was used to illustrate the preferences. Another was used to represent the budget constraints for both countries. He then constructed a production function for the domestic firm and created a price setting equation. The paper then goes into the money supply shock versus a shock to the monetary rule. He found that there was an undershooting of the nominal exchange rate which would mean that there is a weaker disbursement in the short run. The author also took a look at sensitivity analysis and found that the changes in the parameter values or the estimated values does not have any qualitative changes on the model. Overall when using the Obstfeld-Rogoff model he found that monetary policy rules could possibly be a reason why exchange rates tend to be fairly low at times.

  For more information Click Here  

Trump's Taxes: A Macroeconomic Look at the New Tax Policy

          The highly discussed and viciously touted tax plan set forth by the Republicans has finally come to fruition in recent days. In order to understand the effects of this new tax policy, the Tax Policy Center, an independent think tank group, did the numbers to see what the effects of the new tax plan will likely be.

          Within their study, the researchers looked at the effects on aggregate demand as well as savings and investments, output, and the labor market. The decrease in the corporate tax rate was viewed as a positive, yet there were concerns it would have its own repercussions. The loss of revenue from the corporate tax rate reduction was seen as a likely cause to worry, as the deficit would grow at a faster rate. However, according to the projections made by the Tax Policy Center, it would actually slow the growth of the deficit by nearly 213 billion dollars over the next 20 years. This combats with previous arguments made about the increase in the size of the deficit due to the tax rate loss.

           Another point worth discussing is the increase in output seen within the GDP, with an expected growth of 0.7% the first year, and a decreasing rate every year until it reaches about 0.0% in 2027. This is much less than what the Republicans have stated it will do for the economy.

           Even without the benefits from the growth in the GDP, the study points out there are massive benefits from the new tax policy. The inversion of many U.S. companies has been a hot topic within the political atmosphere lately. This new policy will help to eliminate this continued inversion and avoidance of the United States taxes. Corporations may return to the United States, but it is not guaranteed, and current corporations will be less likely to leave as a result.

          This study expands the thoughts of the benefits of new tax policies in order to make the United States more competitive in attracting foreign direct investment as well as the potential for retaining corporations within the United States. While the study is quick in response to the new policy, and further studies will be published to show the effects further, this is a good first glimpse. It seems that this tax policy will be able to provide some positives for both the United States government as well as the maintaining of businesses within the United States.

Take a look at the study HERE

Donald Trump’s current approach

Donald Trump's actions is what is known is a Madman theory of diplomacy. Many people fear about Donald Trump's decision on the nuclear button. However, Ted Lieu assured the citizen that Trump will not be the one who first strike without the approval and discussion with the congress. However the madman theory is not a logical way to response to situation especially, form the world leader.

History has shown such behavior were never a success for example Muammar al-Qaddafi. The late Col. Qaddafi was one wacky guy, whose outrageous behavior, bizarre uniforms, incomprehensible ideology, and inexplicable conduct left almost everyone who dealt with him mystified and concerned. He was able to use Libya’s oil wealth to cause a certain amount of trouble — including a number of acts of state terrorism — but what was the end result of Qaddafi’s unpredictable behavior? He was isolated and friendless by the end of his rule, Libya was a basket case despite its oil riches, strict international sanctions had forced him to abandon his failed attempts to acquire weapons of mass destruction, and he eventually got murdered by a rebel mob. Mad, perhaps; a total failure, most definitely.

This is just one example. There are many more such as Mao Zedong, Idi Amin, Saddam Hussein and even Pol Pot. History justifies that all these leaders came to an end without any positive outcome. Trump policy either political or economical could create financially instability and constrain economic progress.

Trump withdrew from the Trans-Pacific Partnership. It would have been the world's largest free trade agreements. He threatened to withdraw from NAFTA, the world's largest existing agreement. He said he would negotiate better bilateral agreements.

Trump advocated trade protectionism. In his campaign, he promised to inflict a 35 percent tariff on imports from Mexico. He said he would label China as a currency manipulator. Trump claims that China artificially undervalues its currency, the yuan, by 15-40 percent. If it didn't reduce its trade surplus with the United States, he would impose duties on its exports. As president, he has reversed some of those claims.

Therefore due to various reason Donald Trump’s current approach to handle matters is not the right one. Serious consequences may occur.

For more information: 

http://foreignpolicy.com/2017/08/16/things-dont-end-well-for-madmen-trump-north-korea/

Cashews and Globlization

When the topic of globalization and offshoring is discussed, Americans have a hard time realizing that this is not only an American issue. India gets bad rep because a large amount of companies are utilizing India's cheaper labor. However, India has been the long reining cashew capital of the world; they are losing those jobs to their successor, Vietnam. This is just another example that trade economics are an ever-changing, fluid environment.
India's city of Kollam has been booming due to the 800 factories that process (shelling, roasting, packaging)  cashews which are then shipped to other countries for consumption since the 1930s. In 1935, India controlled almost all of the cashew exports in the world. Today, Kollam only has 100 factories still in use. Many believe that the downfall is due to India's reliance on their cheap labor. Almost all the process is still done by hand and has not been changed in decades.
This opened the window of opportunity for Vietnam. They started using technology to do all the process of cashews which made their systems cost less then in India. Over the years, India has lost more and more business to Vietnam. Vietnams use of technology was motivated by two reasons: it increased the productivity of their workers and they felt pressure to meet food safety measures of the developed countries (which meant less contact time between the cashews and the workers). Today, Vietnams factories process 50 tons of cashews per day with only 30 workers. Now Vietnam accounts for 70% of all the world cashew exports.

To read the entire article: https://www.wsj.com/articles/how-cashews-explain-globalization-1512142823

Deflation and Expansion?

For the last several quarters, Japan has been growing at a feverish pace economically. This trend is due, in no small part, to an increase in their exports, which has increased on average of about six percent over the last three quarters. Japanese consumers have decreased spending by about two percent and there has been modest expansion of business investment during this same period. This is all good news, right? Who wouldn’t be content with these economic results? There is a small catch, since the 1990s Japan has instituted and over the years has ratchet-up a program of deflation, carried out by its central bank. As the central bank injects liquidity into the economy, prices subsequently fall, but so does the value of their currency, the Japanese Yen. This has presented an attractive opportunity for foreign investors looking for cheap investments, and foreign consumers looking for cheap foreign goods. Naturally, this has had a positive effect on Japan’s GDP, which explains the six percent increase in GDP over the last year.

What are some of the lasting effects of this deflationary tactic?  One argument would be that this could inhibit growth; By keeping prices so low for so long, year over year this removes money and capital from businesses and this will continually lead to a decrease in investment domestically, which would could lead to economic stagnation. On the other hand, the Japanese government could keep instructing its central bank to pump money into the economy and count on consumers to make up the difference in economic activity, in other words, consumption. But would the latter pass economic muster? Especially since Japanese consumers and the domestic sphere has been saving over the last year, instead of spending to keep the economy growing. 


https://www.nytimes.com/2017/11/14/business/japan-economy-gdp.html?rref=collection%2Ftimestopic%2FInternational%20Trade%20and%20World%20Market&action=click&contentCollection=timestopics&region=stream&module=stream_unit&version=latest&contentPlacement=9&pgtype=collection&_r=0

NAFTA: State by State

            As the headlines around NAFTA and the negotiations thereof continue their steady drip into the mainstream media, a new study has suggested that many of the states that overwhelmingly voted for Donald Trump could actually have the most to lose if negotiations fail to come to a compromise. Case in point, Michigan, where trade is 38.9% of the gross state product. Looking at the diagram below, you can see that Michigan’s top import trade partner is Mexico and its top export trade partner is Canada. The terms of trade mostly derive from the automobile industry, where nine out of Michigan’s top ten exports and nine of its top ten imports were related to auto manufacturing. Simply put, Michigan buys a lot of auto parts from Mexico and sells a lot of cars to Canada.

            NAFTA has helped to facilitate free trade between the U.S., Canada and Mexico because conducting business with nations in close proximity has many advantages. For example, a typical good imported from Mexico to the U.S. is made from parts that are up to 40% American-made (compared to 5% American-made with Chinese imports). However, if the trade agreement were to sour, vehicles would then become more expensive to produce as the cross-border supply chains for finished products kinks. As we learned in class, the gains from offshoring would then diminish and that increased cost of production would be passed along to the consumer.

            That being said, should states like Michigan be in favor of Trump’s promise to get rid of this trade agreement?

References:

NAFTA Uncertainty Threatens International Trade

Trump-Heavy States at Biggest Risk of Trade, NAFTA Disruption

Every US State's Most Important International Trading Partners

Trump In China

It seems that Trump is being accused of making irrational decisions, again. Levy states that Trump wasn’t taking all matters into consideration when he made this deal, that this deal was too narrow sighted. Trump has made an attempt at reducing the US-China trade deficit by selling “$250bn of additional goods and services to China.” Yet, Levy raises the issue of world trade deficits rising; unfortunately, Trump’s deal only addresses part of the US trade deficit, it merely scratches the surface. Levy raises the point that the trade deficit is a multilateral issue being taken on bilaterally. Although, Trump isn’t necessarily fixing the problem as a whole, which is most likely impossible to do all at once, he is at least staying true to what he said he was going to do while he was running for president. Trump said he would lower the US deficit and at least he is not doing nothing.

Trump In China: Simple, Bilateral Policy In A Complicated, Multilateral World

Trump Talk: What the President is Saying About Trade

At a stop in Vietnam along Trump's tour of five Asian countries, he made further remarks about the state of trade with China. Trump stated that the free trade between China and other APEC nations has resulted in the loss of millions of jobs in the United States. 

However, we have learned in class that while the jobs may have been lost to offshoring, it has ultimately benefited the United States far more than the loss of jobs. The prospect of having to produce the goods made in China within the United States would lead to either a wage decrease or a price increase, which would negatively effect the real wages of the workers within the United States. By offshoring these jobs to places like China, where there is a labor abundance, the United States is able to reap the benefits of having higher wages and paying less for the goods produced in China. China's labor abundance is massive in comparison to other nations, meaning that labor can be utilized at an extremely cheap price. This works well in the production of goods that require more labor rather than capital. Since this is the case, bringing the jobs back from China would only hurt the United States more than it would benefit it. 

Trump also mentioned the trade imbalance between China and the United States. We have also discussed in class how this can be misrepresented. China is often the producer of the final good, but not the parts that go into the final good. However, export measurements only measure the value of the final good, not the value added. This means that the data can be misconstrued to show an enormous trade deficit for the United States. This seems to have a political motivation behind it, as economists who work for the government would have this data readily available to them. At any rate, it seems that Donald Trump is moving closer to imposing further tariffs on the importation of goods from APEC nations, which would ultimately only hurt the United States citizens, as it would decrease the terms of trade by raising the price of imports. This rise in import good prices would shift production back home, but at a higher price to consumers, decreasing the real wages of US citizens in the process.

For more on Trump's trip and comments on his way through Asia, please read this article:

Trump's Asia Tour

WSJ Article

Housing Markets Creating Issues for Consumers

The housing market has gone through a lot in the past ten years but more recently there has been another issue that was been coming up. This issue has to do with the fact that 48% of the nations’ top housing markets are considered “overvalued”. What overvalued means is that the prices are 10% or higher than the long-term sustainable level. Which essentially means that the housing market wouldn’t be able to stay on this track for very long because it isn’t maintainable. The reason for this overvalue could in part be due to the strengthening economy which increases consumer spending and creates a strong request for real estate. Austin Texas in particualr has one of the highest amounts of "overvalued" homes in the nation. This high demand for real estate has created a situation where there is very minimal availability which just continues to skyrocket the prices. Another main issue is that consumers are finding it very easy to sell their homes but then are have problems finding a home that fits their needs and that is reasonable priced. I believe this will all change, if in the next coming months the economy takes a turn for the worst. This would create the opposite effect on the housing market and favor buyers. All in all I believe that this “overvalued” housing market will not last very long and will shift in the upcoming months.  

US increase in jobs is below the forecast.

After 2008 financial crisis US has been engaged in increasing the rate of employment ever since. Reducing the unemployment rate is tough to achieve. However in October 2017 there was an increase in the employment level of 261,000 jobs in US. A solid gain that nevertheless fell short of expectation.  As per BBC the wage grow was slower however the number of people that were not in the labor force rose. Which lead to unemployment rate to 4.1% in 2017 October which is the lowest rate in the US since 2000. The US Department of labor claimed that the employment in the food and drink industries increased sharply. One of the economist said that older speed of hiring would be difficult to maintain, because the supply of unemployed worker fell. However US departments are confused because the wage growth did rise significantly despite the employers pay more to the recited workers. As per the department of labor US average hourly pay for private sector was $26.53. Earnings increased by only 2.4% year by year.  Though the results were less than the forecast Mr. Wilson claimed that the results will not change the expectation that the US FED will increase the interest rate in December.

Retrieved from:

http://www.bbc.com/news/business-41856443

Tax Reform, Boom or Bust?

On Capitol Hill over the last two weeks, there has been a feverish pitch to change the tax code. Among the proposed reforms are a reduction in the corporate tax rate, increased standard reductions and lower rates, and an elimination of the estate tax. For lower to middle class residents the child tax credit will go up to $1,600 from $1,000, there will be a $300 credit to non-child dependents, and mortgage deductions will be capped at $500,000. These are just some of the big bullet points of the tax reforms. The impetus for such tax policy is to spur economic growth and to make the U.S market more competitive in terms of the corporate tax rate, which would be reduced to 20% from the current stated rate of 35%. These changes are estimated at a cost of about a $1.4 trillion addition to the deficit, but congressional proponents of the new tax reforms believe that increased economic growth and GDP will more than compensate for the expenditure. Taking what we have learned in the various models, and focusing on the laborer, would a lower corporate tax rate lead to higher wages due to a trickle-down effect from corporate savings? https://www.cnbc.com/2017/11/01/the-us-economy-is-strong-and-its-about-to-get-even-stronger-atlanta-fed-model-shows.html

https://www.cbsnews.com/news/gop-tax-plan-5-ways-the-proposed-tax-cuts-could-impact-you/

To Truck,to barter, .... and to eat brains! : Pursuing Prosperity in a Post-Productive World.

Last week in Senior Seminar, Jim Bang mentioned a book that he called "humor for nerds". I ordered this book because I felt that it would be a fitting read for the holiday; Economics of the Undead. This book covers important issues like how to attract to perfect living dead boyfriend, how humans and zombies may co exist, and how to political economy would act to the introduction of supernatural beings. as you can tell there are the issues we need to be worried about!

Once article in particular deals with how humans will trade when the zombies take over. The authors explore this concept in the context of The Walking Dead. We are very accustomed using money which will have no value in the apocalypse. There will be tone of objects of value laying around when the population is dramatically decreased. You could loot all the houses in the North America however eventually goods will become scarce in a world that has no human production. The authors make sure to note that the ever present danger of a zombie attack will likely make all survivors nomadic.

Trading for resources will be both a benefit and a hardship for the traveling bands of humans. Without the safeguards of laws and property rights, distrust will make trading difficult. How can you trade the other tribe half your stash of weapons for food and not be worried that they will turn those weapons on you for the food back? Trade will be necessary as members of tribes specialize in certain things, find special items looting, and find themselves unable to find or make badly needed items.

Without the aid of money, trading will be a complex series of arrangements. You must hope that the person you are trading with wants what you have. If you don't have want they want, you have to find someone that does and also will trade whatever the other person wants with you. So what is the best items to have? Moonshine or the knowledge to make moonshine would probably be a good choice. When choosing items of value to you hope to trade keep three things in mind: inherent value, divisibility, uniform quality, and a relatively high value to weight ratio.

While this may seem like a silly book right now, when the zombie invasion comes someone looting my house will find this very helpful.