Ben’s Blog

It’s very hard to get unbiased information on how we’re doing in Iraq. The Republicans and Democrats aren’t going to be honest about the situation, and most of the media are just as bad.

I was glad to see this post on the Freakonomics blog today. Levitt summarizes a logical analysis of “the surge” by an MIT economist. To summarize it even further, the surge is making a difference in some areas, but it doesn’t seem to be making a long term difference.

The author’s main evidence on that front is the price of Iraqi government-issued bonds. If the government collapses the bonds won’t get paid. At the moment, the financial markets aren’t giving the government much of a chance based on the price of the bonds. Of course, financial markets do occasionally get things wrong, but they’re right more often than not.

Levitt also makes some interesting observations about academia at the end of the post.

Today was the worst single day for US stock markets since 9/17/2001, the first day the markets were open after 9/11. The S&P 500 was down 3.47% at the end of the day. The Dow was down 3.29%. The mutual funds I have money in dropped 3.21% on average. The Chinese markets dropped 9% today after setting an all-time high yesterday. Investors got worried that the value of both Chinese and US stocks were inflated. They probably were, though I could have done with a less violent correction. The biggest gainer today was Radio Shack of all companies. Their stock went up 11.94% after they announced profits were up 65% in the last quarter.

In much better news, Mississippi landed a Toyota plant today. They were also considering Arkansas and Tennessee. The jobs the plant will create, both directly and indirectly, are greatly needed. Manufacturing jobs have been leaving Mississippi in droves over the past decade or so. The plant should employ around 2,000 people, and another 2,000 jobs will be created in related industries. It will be built in Blue Springs, which is about 10 miles up highway 78 from Tupelo. It should become operational in 2009.

I assumed the Toyota plant coming to Mississippi was mostly a regional news item, but Google News currently lists 486 articles from all over the world. Impressive.

Today I ran up on this interesting article on the US budget. His main point is that we can’t do much to fix the budget unless we first fix the “welfare state.” The federal government spent nearly $2.7 trillion last fiscal year. That’s $248 billion more than they took in. The deficit made up about 9.2% of the budget. Around 60%, or $1.6 trillion, of the budget was “payment to individuals” which includes Social Security ($544 billion), Medicare ($374 billion), Medicaid ($181 billion), and other types of welfare.

According to the US National Debt Clock, the national debt currently stands at over $8.7 trillion. That’s $29,000 per person. Recently the debt has been climbing at a rate of $1.57 billion per day, or slightly over $1 million every minute of every day.

Most economists agree that the national debt itself is not that big of a problem. Last fiscal year the government spent 8.5% of the budget ($230 billion) paying the interest on the national debt. That’s substantial, but it’s not hurting us too bad. The problem is that the government continues to add to the debt, and every year they spend more of our tax dollars paying the interest.

This site shows that Reagan, Bush, and George W. Bush are the only presidents that have increased the national debt as a percentage of our GDP since the end of World War II.

I’ve been interested in economics for a few years now. I’m no expert by any means, but I imagine I know more than the average person. (I’d know way more if I’d read those economics books that have been sitting on my bookshelves for a couple of years now.) If I were to get another degree one of these days, I’d be tempted to get it in economics. I don’t think I’d want a career in it, but it would improve my critical thinking and problem solving skills. Economists impress me with their ability to make sound scientific statements on a wide range of topics.

I’m probably going to start posting more economics-related material on the blog. I’ll do my best not to bore you. Most of it will be from one of these blogs:

• Freakonomics Blog - the authors of the bestselling book
• Free exchange - The Economist’s blog
• The Beckner-Posner Blog - an economist and a federal judge
• Marginal Revolution - two economists at George Mason University
• Greg Mankiw’s Blog - a Harvard economist

Slate has an interesting article on the movie theater business. Theaters are really in three different businesses: showing movies, selling overpriced food, and selling advertisements.

Some interesting tidbits from the article:

• Theaters keep about half of the ticket price. The other half goes to the movie studios. (Better than I expected.)
• Theaters have about 50 cents in a $5 bucket of popcorn.
• Some advertisers will pay theaters up to $50,000 per screen per year to show their ads. That’s pure profit for the theaters.
• Theaters prefer shorter movies. They offer more chances to sell popcorn and show advertising. I’m guessing they don’t like Peter Jackson. :)

Now, I’m off to see King Kong.