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Amartya Sen provides a sobering account of the distributional consequences of the rise in food prices in an op-ed in today's New York Times, "The Rich Get Hungrier." He describes one of the underlying causes as unequal income growth:
It is a tale of two peoples. In one version of the story, a country with a lot of poor people suddenly experiences fast economic expansion, but only half of the people share in the new prosperity. The favored ones spend a lot of their new income on food, and unless supply expands very quickly, prices shoot up. The rest of the poor now face higher food prices but no greater income, and begin to starve. Tragedies like this happen repeatedly in the world.
Anne Applebaum describes the generation of students coming of age these days as "The Busiest Generation" in her op-ed in The Washington Post today. Since one of the best parts of my job is that I get to teach and mentor members of this generation at Dartmouth, I figured I would chime in with a few observations.
First, the op-ed makes note of how competitive it is to gain acceptance to top universities. But the set of institutions with extremely low admit rates is not particularly large. (See this post from Vox Baby last year.) There are plenty of opportunities to attend fine colleges and universities without forsaking the freedom of childhood. And many of our brightest leaders come from these institutions.
Second, I have nothing against a competitive process, but I do regret that the competition takes place in the form of "more is better." More activities, more time spent on those activities, more lines on a resume. I wish the competition took place along the dimension of "better is better." Students should spend their time finding their true intellectual passions, which necessarily involves trying many different activities. But it also involves prioritizing them, committing to just a few of them, and letting the rest go.
Friday, the Internal Revenue Service reported a new record, the most federal income tax returns ever to pay no income tax. In 2005, the most recent data available, 7,389 returns with Adjusted Gross Income of $200,000 or more paid no federal income tax. That was up from 2,833 returns the year before.
Why the big jump in non-taxable returns? The income tax law was changed in 2004 to allow the Alternative Minimum Tax Foreign Tax Credit to offset 100% of pre-credit AMT. Previously, it could only offset 90%. Another factor was the lifting of the 50% of AGI limit and the limit on itemized deductions for charitable contributions made between August 27, 2005 and January 1, 2006 for the relief of Hurricane Katrina victims.
The BTW and I did something unusual yesterday: Instead of going to the mall or somehow figuring out how to spend money we really didn't need to spend, we spent an absolutely delightful afternoon at home doing very little. Dinner was a very simple meal prepared on the grill --the red and cipolini onions brushed with olive oil and topped with Chardonnay salt (my inner chef was on duty) were TDF.
My one regret is that we didn't get to see the new Indiana Jones film. Any 65 year-old man who is still a bankable leading man in the movies like Harrison Ford absolutely deserves our support and Hollywood needs to know there's a market for that.
But we didn't drive, didn't burn any fuel, didn't buy something at a sale we didn't need, etc.
The U.S Treasury last Friday put out a press release that proudly proclaimed its latest success in getting stimulus checks out the door. The money quote:
"This week the Treasury Department sent out 6.211 million economic stimulus payments to American households totaling $4.927 billion. So far, Treasury has sent out 51.675 million total economic stimulus payments totaling $45.720 billion."
Question 1: Has anyone noticed any change in consumer behavior since the checks started coming?
Question 2: Isn't the better statistic the number of stimulus checks that have been deposited or cashed rather than just mailed out?
Question 3: Instead of saying "51.675 million" in the release, wouldn't it have been easier to understand if the Treasury said either 51.7 million or 51,675,000?
It's not anti-Bush sniping to ask where $15 b. of Iraq reconstruction money went. There is quite a double standard in Washington when it comes to Pentagon spending. I have a formerly homeless friend, who suffers from seizures and can't work. When he moved to a better apartment almost two years ago, his Food Stamps were cut off for a month, and he had to reapply. Two social workers checked him out before he was were reinstated. This is standard procedure for the Food Stamp program. However, if you dole out money and equipment for Uncle Sam in Baghdad's Green Zone, no one is checking out where it goes, even if it's munitions that may ultimately end up killing young Americans there.
Several of my friends have served in Baghdad trying to perform Treasury functions. They all came back discouraged by what they saw and over how Bush Administration policies prevented them from restoring order and operating effectively.
The proposal from American Airlines to charge $15 for the first checked piece of luggage is so bad that even The New York Times story was able to list the key problems. Among them:
It is also likely to make the fight for already-tight space on planes more fierce, as passengers try to stuff more carry-on luggage into overhead bins.
American officials said the company had not devised a way to collect a $15 fee at boarding from passengers whose bags are deemed too big to carry on and must be stowed.
I spent much of the past two days looking for a new car. By dinner time yesterday I told my Beautiful and Talented Wife (The BTW) that I was no longer in the market.
The reason? No matter what make of car I was looking at, each of the salespeople I spoke with were so demeaning and inept that I'd rather keep my current car rather than do business with them. So there will be no profits for the dealership, no finance charges paid to the financing arm, no commissions to the salesperson, and no sales tax collected by the Commonwealth of Virginia.
Discussions about the federal budget like the ones we often engage in here at CG&G, typically focus on "formulation," that is, on the process and politics of putting the budget together and getting it enacted. That's the part we all generally agree is broken, not working properly, overly politicized, and...well...you get the picture.
But this story from Friday's Washington Post, which talks about $15 billion in spending on Iraq that can't be accounted for properly, or in some cases at all, shows that the other stage of federal budgeting -- implementation -- is similarly broken, not working properly, and...well...you certainly get this picture as well.
In fact, it appears as if virtually every procedure and law designed to prevent just this type of malfeasance was circumvented.
This spending was done in the midst of a national emergency and some of the usual safeguards couldn't be followed in the interest of national security and getting the job done quickly, right?
Pete has an excellent post below on gasoline prices that has garnered a great deal of attention. Take a look, for example, at this from Real Time Economics, which is part of the Wall Street Journal online.
First, it's great to be in the company of bloggers-in-crime like Pete and Andrew.
But beyond the self congratulation is a question: Why should anyone be surprised that there may be...or are...speculators on the price of oil?
If U.S. consumers are willing to pay ever higher prices for gasoline -- and so far there's absolutely no indication that they're not -- why shouldn't energy companies continue to raise those prices. That's textbook economic theory. And if prices are going to continue to rise, or if some believe they will, isn't speculation likely?