April 25th, 2005



A co-worker is quitting to travel the world. Not the person who made millions and retiring to do it. Least I don't think she made millions. If she did, dammit, I wanna know how.

Very cool.

Also, notice the Creative Commons license! Also sweet.


Eco 200: stolen food aid

(group) The deputy chairman of the Russian Red Cross complained in the 1990s that food aid sent to the country by Western nations was being stolen. "Russian swindlers are the most experienced in the world," he said. The deputy director of the Russian aid commission expressed the need for a centralized system to ensure proper distribution. Which do you think is likely to get into the mouths of hungry people faster and with less loss of spoilage: food that is distributed through government agencies and charity organizations or food that has been stolen? Why?

I would expect the stolen food would get into the hands of the hungry more efficiently. There is significant opportunity cost for thieves if they hold onto the stolen food. Spoiled food is worthless to them. They have incentive to sell it, even at lower prices. They will also want to recoup the expenses they incurred in stealing the aid. Since charities have no monetary incentive to distribute food, they have less incentive to distribute. Their incentive is their altruism and costs to get rid of spoiled food. They cannot (I assume) make money by selling the food.


Eco 200: money is materialistic

(group) If the desire for more money is an indication of a selfish and materialistic attitude, as many people seem to think, why do churches and charitable organizations work so hard to acquire more of it?

Non-profits acquire more money because it can be traded for the things that are important to them.


Eco 200: drought

(group) The summer of 1988 saw a record-breaking drought in the agricultural heartland of the United States. The following year saw the largest jump in U.S. crop acreage since World War II. What prompted farmers to undertake such a public-spirited response to the situation created by the drought?

They could make more money. If the drought went on for a second year, the farmers who do have goods to sell will see higher demand. Even if it did not, there might still be higher demand based on the previous year's scarcity.


Eco 200: rent control in New York City

(group) Do price controls keep the wealthy from obtaining more than the poor? One reason that local governments sometimes impose rent controls is precisely to prevent money prices from rationing scarce residential space. Do the controls succeed in doing this? How has it happened, do you suppose, that most of New York City's rent-controlled apartments are occupied by relatively wealthy people?

According to the 2002 New York City Housing and Vacancy survey (http://www.census.gov/hhes/www/housing/nychvs/2002/s7at90.html), the median income in rent-controlled apartments is $15,000/year and the average is $27,285. In rent-stabilized apartments, the median is $20,000/year and the mean is $30,832. These are not relatively wealthy people.

I haven't peeked at the answer guide yet, but I suspect this is not the answer for which they are looking.


eco 200: rent control part 2

(group) The rent control ordinances that cities sometimes enact usually try to restrict rent increases to the amount of the owners' cost increases. Use the analysis of this chapter in thinking about the following questions:

  1. What is the cost to a landlord of renting an apartment to you for $500 if someone else is willing to pay $600? What is the benefit of renting to you?

    The cost is $100. The benefit of renting to you is not having to pay costs associated with setting up new leases, cleaning, upgrading, etc.

  2. What effect will a rent-control ordinance have on the cost to landlords of letting an apartment unit stand idle, or of using it themselves, or of allowing relatives to live in it rent-free?

    It lowers the opportunity cost of those situations. The opportunity is fixed.

  3. What concept of cost do you think supporters of rent controls have in mind when they speak of basing maximum rents on landlord's costs?

    They are considering operating costs, not opportunity costs.

  4. Mortgage payments reflect the cost of purchasing a building and hence can usually be included as legitimate costs when landlords operating under a rent control law request rent increases. What determines the cost to a potential landlord of purchasing an apartment building?

    The demand for apartments along with the supply of equivalent housing. If other apartments are available at rent-controlled prices, the prospective owner won't be able to charge more than those apartments.

  5. The costs of purchasing fuel for heating purposes can always be included as legitimate costs when landlords request rent increases. What determines fuel prices?

    The demand for fuel is determined by the supply of heating alternatives. Assuming the cost to change to new alternatives like electric is high, the demand for fuel will be inelastic, and the supply of heating fuel will govern prices to a point.

  6. Suppose a landlord rents space in a nearby parking lot and makes it available to his tenants. If the demand for parking space in the area rises, he will probably have to pay more to rent parking spaces. Why would a rent control commission be more likely to grant the landlord's request for a rent increase based on the increased demand for parking than for one based on the increased demand for rental housing itself?

    Because driving and parking isn't perceived as a necessity as much as shelter is.


Eco 200: discrimination

(group) Discrimination

Words are important: see lecture materials. Words are important: read the following short article by Thomas Sowell: http://seattlecentral.org/faculty/jhubert/sowellwords.html

In what ways do you "discriminate?"

1 a : to make a distinction <discriminate among historical sources> b : to use good judgment

2 : to make a difference in treatment or favor on a basis other than individual merit <discriminate in favor of your friends> <discriminate against a certain nationality>

So in other words, discriminating is making a choice, based either on good judgment (1) or on something other than individual merit (2). I have discriminating taste in food. I choose things that taste good. I also tend to think people from North Idaho are prejudiced after having lived there 12 years. However, many are not but I assume they are until I know better.


Eco 200: market analysis

(group) Market analysis

Review the market analysis section in the lecture. What would we expect the market to look like if some group, say analysts, were underpaid? Explain.

The supply of market analysts would go down. Assuming that those who are good market analysts are also good at other things, they will find other opportunities that pay more. So the supply will also be of lower quality. Analyst pay would also go up as demanders sought to keep them. At least as long as the analyst work product was still valuable.