Barry Ritholz tells us the obvious which alas is ignored. We treat inflation as one number which somehow could be controlled and managed by a central bank. However, inflation is made up of prices of several products and services. These prices in turn depend on the nature of industry of the product. If it is a monopoly, prices will remain sticky/unchanged and if more competitive, prices will change more often.
Inflation isn’t dead; it just might not be where you think it is.
To find significant price increases, you need only look in the right places. There are many goods and services with rising prices, as well as those without. Together, they tell a fascinating tale about the modern global economy. Understanding the forces driving prices higher — or not — is crucial to investors and policy makers alike.
Given that the Federal Reserve has been trying to generate inflation for much…
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I have always been proud of my alma mater, The University of Chicago, and the education that I received in Hyde Park. However, that pride has been magnified this week with a letter sent to the class of 2020. As we have been discussing, various schools have eradicated free speech protections on campus in a national trend toward speech regulation. UChicago has decided to stand its ground and reaffirm its commitment to free speech on campus. The letter warns students that they will not shielded from views that upset them or given “safe spaces” on campus. In doing so, UChicago has recommitted itself to the very touchstone of education: the free and robust exchange of ideas.
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In The Closing of the Liberal Mind: How Groupthink and Intolerance Define the Left, Kim Holmes addresses the “paranoid style of American politics” as described by political scientist Richard Hofstadter in the 1960s.
Liberal populists, … are big believers in conspiracy theories. Hillary Clinton once spoke of a “vast right-wing conspiracy” against her and her husband, and she is not alone in her paranoia. Senator Elizabeth Warren of Massachusetts (whose financial disclosure reports showed her to be worth about $8 million in early 2015) believes businessmen, bankers, and the rich are irredeemably selfish and make decisions solely for their own benefit which hurts the poor. To many progressive liberals, opponents of same-sex marriage are not honest people guided by conscience, but malicious bigots out to do harm. American history is not a complex unfolding of events but a cynical conspiracy driven by rich white people whose only interest is…
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A short time ago, a press release from the Productivity Commission dropped into my in-box, announcing the release this morning of the Commission’s draft report on better urban planning. The Government asked the Commission to take a first principles, or “blue skies” approach to the issue.
I’ve been increasingly skeptical of the work of the Productivity Commission. They often provide some interesting background analysis and research, and yet they increasingly seem to be well described by the old line “when your only tool is a hammer, it is tempting to see every problem as a nail”. The Productivity Commission is mostly made-up of, and run by, (able) long-term public servants. Public servants design and help implement the instrument of state – government attempts to remedy problems, typically with government-based tools. There is a self-selection bias problem – people who are inclined believe in the importance/viability of government solutions are more…
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Poor consumers spend relatively more on sectors that are more traded, while high-income individuals consume relatively more services, which are among the least traded sectors.
Here is another infographic from one of my favorite illustrators, Richard Johnson (photo, right). If you search on his name on my blog site, you will see several different examples of his work I have highlighted before.
While economists are famous for their disagreements (and their incompetent forecasts), there is universal consensus in the profession that demand curves slope downward. That may be meaningless jargon to non-economists, but it simply means that people buy less of something when it becomes more expensive.
And this is why it makes no sense to impose minimum wage requirements, or to increase mandated wages where such laws already exist.
If you don’t understand this, just do a thought experiment and imagine what would happen if the minimum wage was $100 per hour. The answer is terrible unemployment, of course, which means it’s a very bad idea.
So why, then, is it okay to throw a “modest” number of people into the unemployment line with a “small” increase in the minimum wage?
Yet some politicians can’t resist pushing such policies because it makes them seem like Santa Claus to low-information voters…
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