Chapter 4

Chapter 4 told the flip side of the governments role in our lives. Economics tell us that we all act in our own self interests, and so we need a source of public goods. I would like to address something that the author pointed out in the latter part of the chapter. He addresses tax cuts as a way to increase the revenue of everyone. Wheelan says that this gives false impression, and it is true. With tax cuts means more revenue sure, but then we have less tax money to pay for new stop signs (public goods). The less we pay our government the more economic growth but then we don't have the resources to fight wars. There would negative effects on education to. We wouldn't be able to pay for public education and then we lose the investment that is education. Taxes are necessary but not fun, much like eating vegetables.

"Education has clearly played a role in moving the nation's economy forward and lifting millions of citizens out of poverty" (93). As seniors, we are in the process of choosing which college to attend next fall. We are taking a lot of factors into consideration, especially the economics part of it. This passage directly relates to my life because it made me think of how my dad is making me have a "meeting" with him about paying for college. I know I am responsible for paying at least 1/3 of the total expenses, and so this factor is weighing on my decision on choosing a college. Should I go to my top choice? (the most expensive one) Or should I go to the less expensive one and have almost an equally good college experience? To pay for these expenses, I am looking into getting a job and this chapter made me think of how what role taxes play.

Chapter 4

After reading the chapter, I still don't really understand how taxes work. The most interesting part of the chapter was the section about the DMV. They have no incentive to provide good customer service, but if licenses were in the private market, terrible drivers would be cruising the streets. It seems like there's really no good way to fix the problem. It's all at the expense of tax payers.

Chapter 4

 Touching on a point that many people were making, it is interesting to think about my different experiences with costumer service from government led corporations and private corporations. Joelle and Ben talked about how DMV workers for instance don't need to be polite or overly helpful because they have no competition. Wouldn't it be cool if instead government workers had an attitude of pride in working for our country? What if DMV workers were super helpful because they know you can't find their necessary services elsewhere. I know that's sort of a "dream big:" idea but I think it's an attitude that would rally more support behind government involvement in the economy. It was interesting to me how divided the issue of government involvement is, even for Wheelan. Society makes this issue seem like a "lose-lose" situation. Like Wheelan said, I think that if the government involvement is solely focused on helping the American economy while keeping all social classes financially safe, than it should be encouraged. However, that is no easy task. This issue becomes frustrating because it seems as if someone is always at the short end of the stick. There will always be people who are upset with what the government funds via tax dollars, and there will always be people complaining that the government has not stepped in to provide financial assistance to those who need it. I would like to see what a healthy balance could look like, maybe the U.S. has been at that place before or maybe we are getting closer to reaching it.

Ch. 4

Ben, that struck me as interesting as well. I'm probably the only Senior in the building that doesn't have a drivers license but I've heared from a large, large some of my family that the people there aren't easy to work with at all. I always thought they were just crabby people but I now know that's not necessarily the case. The department's attitudes reflect human nature, sinful nature if you will. If there's nothing in it for them, they do what they want rather than thinking in stead of putting the customer first.
The Fidelity rep has a reason to be overly polite to a customer because they will lose service and money if they don't treat their customers that way. It adds a whole new element that the government doesn't care to possess. Although the reasons for it are understandable, same amount of money no matter what, their response is disheartening. This makes me understand more the attitude of central government countries and their lack of good customer service. Everybody gets the same amount of everything and the government has no motivation to promote the idea of human relations coming into the equation.

Chapter 4

6.
The DMV is a place that most likely everyone is going to have to go to. The DMV is a government run place and they have ZERO competition. They do not have to be better than anyone because the government won't allow private companies to give out the things the DMV gives out. This is probably a good thing because then bad drivers could get on the road and this could lead to all sorts of problems. However, the DMV does not need to have great customer service, they can leave the place messy, and they can make you sit there for however long they want. Because there is no competition there is no real desire to try and please the people you are serving. Thankfully people aren't to heartless so going to the DMV isn't too painful, but it does stink to go there. If the government could figure out a good system so that there could be private companies you could go to things would be much easier. This is not the case so we will have to continue to go to the DMV and wait around for an unusually long time.

The portion of the text that I found most interesting was the topic discussing taxes and how they can be a "deadweight loss". If the tax on somebody is 50% then the incentive for the individual to make an income or profit decreases significantly because if they are losing half of the income they make, what is the purpose of working at all?  So lets say that person does decide to opt out and quit working all together, does there absense from work affect the government and the overall income recieved from taxes each year? Not necessarily, but does it effect the individual and their families?  Most definitely.  He used the anaogy of the photo album and the burgler, the burgler will just throw it away and it is really no benefit to him but it is a huge loss to the family.  Something about this does not seem right.

Ch 4

In European history we are studying Russia during the period between World War One and Two. Specifically  we are focusing on the political and social activities of the Soviet Union. Chapter 4 provided an excerpt or the economic structure of Russia and how it evolved, giving me more insight in this period of time. Further this portion clarified questions I have asked Myself about the benefits and destructive qualities of their government involvement. This provided me with a clear example of a failed attempt at government regulation. The allocation of recourses was inefficient causing a distressed population. (For many other reasons as well). Although extreme, the example provided by Wheelan highlights the misguided theory of total government involvement.

Chapter 4

Wheelan states that instead of creating the Margarita Space Pak, these engineers could be working on something like "searching for cheaper, cleaner source of energy or a better way to deliver nutrients to malnourished children in Africa" (85). This was a small point in the beginning of the chapter but it grabbed my attention the most. I've been to Africa. I've seen malnourished in the flesh. I sang songs and ran through fields with little kids who are in so much need of nutrition it makes you want to cry. Now I understand that we can't help/save everybody, but isn't it a better use of a brilliant mind to use its skill to better the world, than to give the baseball fans more options for beverages? The economy boggles me the more and more I read this book. It seems as if we keep learning more problems that are easily solvable, but no one is willing to sacrifice anything to solve them. "Does the world need the Margarita Space Pak? No. Could the engineering minds that created it have been put to some more socially useful purpose? Yes" (85).

Chapter Four

Reading about the idea that Milton Friedman had about letting more people take the bar, thus allowing more people to be lawyers was very interesting to me. Initially my thought would be that we would want only the smartest, most eager people to be lawyers but Friedman's analogy about cars makes it clear that we don't. Saying that not everyone should have to drive a Cadillac shows how not all lawyers have to be "the sharpest knives in the drawer." The not as "talented" lawyers could be the ones who do things like wills and real estate closings which would lower the price of the legal services. Since the "easy" things don't require an amazing lawyer, the price of all legal services, including the more difficult cases would be less expensive.

4

This chapter was very frustrating  for me to read because it really luminated how the government really just puts a damper on the public. In many cases governments may have more then enough money to put into essential needs but instead but into things that seem that they will bring a return back quicker. For example the Soviet Union putting money into steel rather then birth control putting the soviet people in the position of having abortions being the only option for planned parenthood. The government chose the wrong way to channel their resources into because they were to concerned about getting a faster return rather then doing what was best for their country in the long run. It also occurred to me to when Wheelan was talking about how governments have so many regulations that involve them receiving the publics money. In developing countries like Bolivia where the economy is struggling more, it takes an entrepreneur twenty steps to be able to register and license their business which takes a large amount of time and money, where in a developed country like Canada it's only two steps. This should be a perfect example to developing countries to show how to turn your economy around. In a developing country having citizens make a strong attempt to create a successful business should be encouraged by making it easy to get your registration and license just like in Canada, not by making it a difficult amount of steps just so that the government can take of your money before you can actually do anything with it. Very frustrating to me at how selfish government is.

Chapter 4

Where does our money go? Probably not on the forefront of my mind or that of my peers, while some of us may work, we ear considerably less than our parents, most of whom really don't know what their money goes to. From what I understand, it is removed from our paychecks before we even get them to various government public services. Some of these are greatly advantageous to us, such as military protection and Social Security. Some that the government controls, is not. Why do we have to send our money to the Post Office that is very inefficient when a private company could do it better? This may seem harsh and I am in no way trying to belittle or say that these people should not have a job, but think about surgeons that work hard saving peoples lives, for an average of maybe 60 hours a week, send a decent percentage of their income to provide wages for a postal worker who has no motivation to do their job efficiently. Why do we have to provide for them what a private business could have taken over years ago, providing the workers wages through the companies income? However, imagine if the USPS had been transferred into a private setting. With the increase of internet use in our country and the decrease in demand for a postal service could have caused there to be no mail service if they could not stay afloat. The government can almost always provide some sort of income through various taxations to the American public, in which this as a private setting could not.
Taxes, government vs. privately owned advantages are very complicated and intertwined.

Chapter 4

     I am a seventeen year old who has a job and I still don't understand taxes. Taxes are very important in how our country runs but seem stupid because it feels like they are just taking our money. I thought the part about if the family should buy the new TV or invest made a lot of sense to me. Wheelan says that this famliy has 1,000 dollars and can choose to spend it on a new TV or they could invest it in the bank and keep it for a later day. When I started off I thought oh for sure buy the TV thats the "cool" thing to do. Then Wheelan says "These investments are the macro equivalents of a college education; they make us more productive in the long run and therefor richer" (95). You cant just think about what will make you happy right now you have to think about what is best for you later in life. "it makes us happy today but does nothing to make us richer tomorrow" (95). If the family was to buy the TV they would be very happy for about a week but then what happens when the new TV brakes and doesn't work anymore? They will have nothing left because it wont work. The money that you invested can't "break" like the TV. Therefor you will be happier in the long run.

Chapter 4: Government and the Economy II

6.

The issue of Malaria has plagued our minds for many years and we, as humans, have tried to face it from many different angles; one of which is DDT (or Dichlorodiphenyl trichloroethane). By killing the Mosquitos who carry the disease with the synthetic contact nerve poison, Malaria was eradicated from Europe and Northern America. Unfortunately many poor countries, such as parts of Africa and Southeast Asia, still suffer from the disease. Wheelan gives an example quoted from Tanzanian reasearcher Wen Kilama, "If seven Boeing 747s, mostly filled with children, crashed in Mt. Kilimanjaro every day, then the world would take notice"(89). The example Wen Kilama gives can be applied to many different problems of disease, infections, ways of life - the list runs on and on. I personally found his point interesting because it can be taken in a couple different ways. On one side of the spectrum, you have people who care for children raising Cain about the children who are killed on impact with the mountain or devoured by the hungry flames of the wreckage and want to solve the issue for that facet of the occurance. On the complete opposite side, you have environmental activists raging about how the daily crashes are ruining Mt. Kilomanjaro's environment with the post-crash fires and fuel leakage (not to mention the bodies of children polluting the natural environment). Did I mention the tourists? Who wants a bunch of bodies scattered along the trail? Kind of ruins the hike, doesn't it? So Wheelan does bring up a point: people would take notice and get the issue solved quickly -even if they don't care about the children - they care about something, and that something gets them motivated to do something about it.

Chapter 3

"Externalities are at the root of all kinds of policy issues, from the mundane to those that literally threaten the planet" (56). This line made me wonder if externalities and market failure are at all avoidable. From reading, it seems to me that if government stayed out of a lot of economic processes and just let the market work itself out, then failure would happen less often. But there can also be a social cost if a third party, government, doesn't step in. But when is the point when government exceeds its responsibility?

Chapter 3

7)
After reading this chapter I have learned to think about the consequences that would affect others, before making a decision. Wheelan used several examples of negative externalities and how their effects on others outweigh their price most of the time. Wheelan also made me realize that little things (such as starting my car) can affect others. When I start my car at 7 in the morning I am more worried about being on time to zero hour rather than thinking about how this action may affect others. (Wheelan uses this exact example). When we buy something new we so often think about how it is going to change our lives (usually for the better), and not how it could change someone else's (usually for the worse).

Chapter 3

There was one statement that Wheelan said towards the end of the chapter that stuck out to me. He said that liberals (in the American sense) often overlook the fact that a growing "economic pie" does in fact make even the small pieces, bigger. This was in contradiction to the idea that everyone having equal wealth would create less divisions but a smaller "pie" as a whole. What confuses me about this is that, if our country became wealthier as a whole, and people with less money now have a bit more, doesn't that just shift everything? Wealthy people would just become more wealthy. The economic gap doesn't become more narrow it just shifts upward. So is that a good thing? Does this play into externalities because taxing certain behaviors or taxing anything that would affect the lower class ultimately stimulates the economy, helping poorer people? I'm confused about how the two relate. On a totally different note, another idea I thought was interesting was how(according to Wheelan) people are misinformed about government involvement in the markets. I have often heard that if the government was uninvolved in markets than everything would sort itself out in a way. However, Wheelan showed how GOOD government involvement is what keeps the economy flourishing, comparable to how no one likes the umpire, but you cant play the game without him.

Ch 3

The concept of an externality being both positive and negative intrigued me, and brought about the question that is: if an externality is both positive and negative is it still a market failure? An equilibrium seems to appear in the long run, so to me in a strictly economic sense it seems to not be a market failure. The example Wheelan gave was smoking cigarettes which gives people second hand smoke but also makes social security costs lessen. Though I don't approve of smoking, or appreciating other people's deaths for personal gain this theory seemed to make sense in this case. This also begs the question to me as to how far externalities can be defined. Ethically speaking I do not like using positive and lung cancer in the same phrase, so what do economists truly think as positive externalities and where does it end?

Chapter Three

The passage that stuck out to me in this section touched on the reasons why vaccinations and medications aren't given out for free in places like Africa where people who really need it wouldn't be able to pay for it. Wheelan explained that the reasoning behind having expensive medication isn't simply to make a profit, because in these types of countries the people have no choice, they simply can't afford it. He also explains that the medication and shots themselves aren't even extremely expensive once they are made. The real expense is the investing in the research that takes place before the medication is developed. I had never thought about the fact that people don't just create medication for free, it all takes money.

What I found particularily interesting about this chapter was the passage talking about the governments distribution to wealth.  The taking a dollar from Steve Jobs analogy put it in perfect perspective.  We see that it would make more sense to take money from the wealthier because they have a lot more to offer, but that is just it, they have more to offer not only dollar wise.  They have a lot more to offer in recources as well, so what Steve Jobs could have done with that dollar essentially could have been more beneficial in the long run verses what the  poor person recieving that dollar could have gained.  Yes it sounds obserd to tax every single person in the United States the same way, and it is in fact obserd and potentially impossible but what I have never understood is why this came to be.  Why does more have to be taken from the upper class then the lower class?  Yes they have more wealth but they have also worked for that wealth in most cases, it has not just been handed to them.  So my question is, why can it just be handed to others?  When my dad went into the NFL, all of his siblings still back in Sunnyside,Texas quit their jobs because they knew that my dad would provide for them when they needed help.  And I understand that some people truly cannot get jobs, they have tried but things just are not working out in their favor, but there are also those people, like my Aunt's and Uncle's who can, but don't because they know they will be recieving at least something.

Chapter three

In chapter three Wheelan demonstrates how externalities can appear simple at first but get more complicated the more you look into them. The government is useful to the economy in that it offers a structure for settling externalities through laws and court systems. Wheelan uses the example of whether he should pay his neighbor for silence or should his neighbor pay him for the right to play the bongos. The government also provides services such as parks and polices forces which would not likely exist in the same way under private ownership because a private owner would not derive significant utility from offering public services. A government may facilitate solving externalities, offer public services, and redistribute wealth, but there is the question of at what point is the government too involved. Wheelan describes the questions concerning wage distribution as needing "philisophical or ideological answers" rather than economic ones, meaning there is an even wider range of opinions on the matter. The key to success seems to be finding a balance of government involvement and ideals where most parties are satisfied and the economy is provided with structure without being stifled.

Chapter 3

Chapter 3

Externalities seem to be very complicated to solve and pinpoint when making a decision for you/your family. It appears that almost everything that you do has the ability to make someone worse off than they were before. We always talk about how driving cars that get horrible gas mileage put more strain on our resources and harm our environment. I'm quite sure by now that everyone knows that. But we still buy big SUVs. My mom has, for as long as I can remember, had a big car. We've had a minivan, a Ford Expedition (even bigger than Wheelan's Explorer) and currently a Buick Enclave that seats seven. Now, we had our reasons for purchasing a big car. There is five of us in our family, we take at least one major (twenty-five hour) road trip a year with around five smaller ones as well. We take our two dogs on this trip and are gone for two - three weeks, creating a substantial amount of luggage as any family with four girls would. My dad argued against this recent purchase because he believed that the costs (gas, insurance, etc.) that would go along with this bigger car were not worth the benefit for the three weeks every year where this car would truly be an asset. He is probably right, because in the long run my mom makes more stops at the gas station and is worse for the environment. It is affecting more than just my sisters and I being unable to sit in too close proximity for twenty five hours but we bought the car anyway. I was hesitant to Charles Wheelan's proposal on raising the gas tax or the tax on cars because how can you really tell what is the correct amount to add? I think that this is something, however, that could possibly be further expanded and researched in years to come and something that would prove to be extremely beneficial to our world, at the right and fair price.

Ch. 3

Maybe it's the mother and me as I read this, but the economist suggesting that "children are just like cigarettes or mobile phones, [and] clearly impose a negative externality on people who are near them," is absurd. I understand what he's saying about how thinking about their people's needs, wants, and how it could affect the community is important but this example could very well be too far. People need to embrace the saying "live and let live." We are so up tight in this country and I think that the idea of externalities is often abused to over protect and heighten regulations, to provide loop holes for law suites perhaps. The idea of externalities is great, defining them is important and can benefit the community and a wonderful way. But they've got to be monitored. Each of us was a child at one point, children are our future, we can put up with them for a plane ride.

I find it really sad that the government has to put so many regulations in play. There should not have to be taxes put on certain foods in order to take down obesity rates, or smoking habits, etc. Its the person's choice, not the governments problem. I'm not a libertarian, may sound like one right now, but I honestly think that people in general should take more control of these things that they can deal with on their own and not have the government have to come in and do it for them.

3

Something that I was able to relate from my life in this chapter is when Wheelan was talking about how governments put regulations on things like what things homeowners can do to their own houses. A couple years ago my family was putting on an addition to the top floor of our house and we had to change our original plans to only go out of the back of the house, to go out to the front side now too because of this monster house legislation. Minnapolis had passed this monster house legislation that limits you to the type of additions and construction that you can do. My parents wanted to put a dormer across the whole length of the back side of the house but the legislation limited us to do that because the goal of the legislation was to make sure neighbors would not have anything taken away from their house from our house getting bigger, to make sure there was no negative effect.

Another thing I found fascinating was how many African countries are rich with oil and diamonds but their governments failed to develop and sustain what is needed so support a market economy. How Angola had the money (900 million) to spend to help their children live beyond the age of five but instead spent it all on weapons. I have always wondered how Africa had found its self In such a whole but now I understand that a lot of it is simply from a failed market economy.

Ch. 3

6.
Making new medicines is a difficult task and it is also very expensive. Once people have put in all that money and effort to create this new medicine they put it on the market. People begin to buy it, but not everyone can afford it. Someone who needs this new medicine to go on living is unable to buy it. Because the company who made it has a patent on it this is the only place you can get the medicine and it is set at one price. This is where the government will step in and pay the company that made the medicine. Then the patent will no longer be in effect and the medicine can be made by other companies. This will make the price go down and people will be able to afford this new medicine. The difficult and somewhat disturbing question is what medicine will the government buy? There is no way to tell which illness is the worst. We cannot prioritize certain medicines over others. It is sad that someone may have to go on suffering because the government cannot purchase the medicine from a company to lower the price. There should be a better system in place when it comes to medicine. Obviously there is no perfect answer, but I believe everyone should get the medicine they deserve even if that person has made bad choices that lead to them needing the medicine.

Chapter 3

     Right away in chapter three Wheenlan talks about buying a SUV. He states "My decision to buy an SUV effects everyone on the roads, yet none of those people has a say in my decision" (54). This made me think back to what we have been talking about in class. When we talked about negative externalities. What we do has a negative or positive externality on everyone. If he buys the SUV he could be taking up more space on the highways and roads than if he were to buy a smaller car, which would impact other cars on the road.
     "The reality is that nobody ever likes the umpire, but you cant play the World Series without one" (66). In the economy the government is like the umpire they call all the shots. You cant sell anything, move anywhere, or pretty much do anything without the government. That is just how the world runs now and we have it this way for a very important reason. If we all controlled our own things in life no on would ever get along. If we were to sell our own houses on whatever we wanted and the government had no say no one would ever buy a house. No one would get along without the government there to help. "Government does not just fix the rough edges of capitalism; it makes markets possible in the first place" (65).

Chapter 3: Government and the Economy

7. 

Wheelan states, "One crucial role for government in a market economy is dealing with externalities - those cases in which individuals or films engage in private behavior that has broader social consequences"(56). My view of the government was slightly altered. Evil, overpowered, ignorant: these are the words that come to mind when I hear the word "government" mentioned. Now, I have a minor change in how I view the system that rules we the people. Yes, they (the infamous they) meddle considerably in our lives ad nauseum and micro manage our lives, but they are responsible for the laws which keep us safe, advancements in social status among the world, and make decisions regarding the economical market that we cannot do as regular citizens (even if they aren't the best decisions). Concerning the root of issues, Charles Wheelan writes, "Externalities are at the root of all kinds of policy issues, from the mundane to those that literally threaten the planet"(56). The government must address these mundane or potentially world threatening issues in one way or another, and I am certainly glad I do not have to. 

Chapter 2: Incentives Matter

3.

So what are the implications of the future? With such a seemingly corrupt group of people in high command of the general public's interest, how can we solve issues at hand? Wheelan brings up the black rhinoceros. Their horns fetch a high price. On the black market, a rhino horn is wor more than gold. One kilogram of rhino horn goes for $60,000 to $100,000, whereas one kilogram of gold goes for $40,600. One ounce of black rhinoceros horn is worth approcximatly $1610. That means that a full horn goes for about $300,000. Let that sink in for a minute. Today, there are only about 3,610 black rhinos left in the wild. For those of you who like money, that's 1.08 billion dollars. The gradually lowering quantity of rhinos increases the cost of their horns causing more and more poachers to want to sell them on the black market leading to the extinction of the black rhino - something future generations will never be able to view except from photographs. Incentives equals motivation.

Ch. 2

Predictability is crucial. The analogy with the NASA rocket and improving homeless statistics and conditions. It really made me understand the complexity of the situation. The fact that we can know exactly where the moon is and calculate the distance to send a rocket but we have absolutely no way of knowing how people will react to their circumstances. A lot of times we blame the government or another entity for our "poverty" or socioeconomical issues but we don't realize the difficulty of this task. It is something we often overlook.

Chapter Two

What stuck out to me was the section where Wheelan talked about employees at Burger King and how the managers protect the company by giving the customer the incentive. The employee at Burger King is going to continue getting paid minimum wage even if the company loses profit, so why not pocket the money from a couple of burgers here and there? The individual store however would lose many of what could be productive hours of work by the manager if they had to watch every transaction to ensure that the employees were doing what they were supposed to do. By putting the little sign on the register, telling customers that their meal is free and to see a manager if they don't receive a receipt, benefits the store even more than the customer (despite what the customer with the free meal may think). Finding the highest benefit depending on where the incentive lies gives companies the ability to better themselves.

Chapter 2

The first thing that jumped out at me is how teachers get paid, how it all depends on how long you've taught and your years of schooling. Personally, this explains to me a lot in all of my years of schooling. Especially with math, because I've always been a student who constantly struggles with all math and most teachers I've had just try to push me through it, and if I do bad on the test then they just push me through the retake or whatever it takes to make sure I get it done. Not if I actually end up understanding it, which has always been so frustrating to me that I've never actually had a teacher who will really do that. Because I mean why does it really matter to them when there not paid on performance, I'm sure it would all be different if they got paid on their students test scores. In which case I would be bringing down my teachers pay because of my scores with the hope that they would be able to help me understand which will help me in the long run and help them get a higher pay. Now that I think about it you never really seem to find incredibly smart kids want to be teachers, I mean why would they when they know they won't make much and they can out their talents somewhere with higher incentives. Not to say that there aren't smart teachers out there but they are limited. It just makes you wonder how better our education system could be if we changed how we paid teachers and gave them a challenge, especially those incredibly smart people who can pass on their knowledge through their talent while making more and more money from how their students progress.

Chapter 2

3. There are always going to be issues that need to be solved in our world. There is no perfect answer, but there are right answers. The right answers are only temporary though. A new problem will come up and you will then have to solve that. Animals are a great resource. Fishing is a huge market. The only problem is that there are too many fish being caught. Everyone wants to catch them because they can make a profit. Fishermen cannot pass up on fish otherwise the next guy will catch it. In a few years what will the fishing market look like? All the time we are fixing up things to protect the future. We cannot look at the short term in these situations. I plan to be here for a while so I would hope that people would try and make sure there a plans to protect our resources. Otherwise they will get used up and when I'm 50 years old what am I going to do? I hope there is enough left that I can go out and fish when I retire.

Chapter 2

This chapter is all about incentive.  What I found interesting is that humanity only operarates at its best when there is something in it for them.   The knowledge of bettering someones life or making a difference isnt good enough.  His quotation about Bill Gates not dropping out of Harvard to join the Peace Corps but instead to create a computer program that would make him one of the richest men in the world stands true.  It's all about money and benefits.  If there is a higher reward, there is a better chance that we will do a better job.  The issue brought up about the teachers pay was most intriguing.  The teachers are all paid on a calculated formula that has nothing to do with their performance.  They are not paid on how well there students are doing, but on how long they have been at the school.  Unfortunately every student has experienced a careless teacher in there academic carreer.  Though the student is seriously hindered, the teacher doesnt get docked a cent.  He mentioned that people who have the higher test scores, the ones that are very talented and qualified are also talented in other areas, and because they are not paid based on their ability to teach but instead there ability to hold onto a job, they are more likely to take another job somehwere else where their talent will be properly evaluated and rewarded.  This doesn't just go for teachers though, but in many professions.  "We perform better when we are paid on commission."  Our best work isn't done when the next guy is recieving the same amount as we are for doing a mediocre job, our best work is done when we have to do the best to recieve the most.

Chapter 2

     Is the world that we live in really that selfish? In chapter 2 Wheelan talks about self interest in the scenario of two men who are accused of murder. If one says that the other is at fault while the one saying that didn't really do anything that man could send his partner to jail for life and he would only have three years. That doesn't seem right to me at all. Are we all just selfish and only want whats best for ourselves? Does the government just want money and doesn't really care about what it takes to get that money?
     I really was interested when Wheelan talks about how we can send a man to the moon but we cant get homeless people off the streets. It made me think back to the first chapter and the baseball player. We give so much money to somethings but don't have money for the poor people. We have science to get a man to the moon and we can figure it out mathematically. "We don't have a formula for persuading a sixteen-year old not to drop out of school" (53). Things in life aren't that easy to understand like math and science.

Chapter 7

Chapter 7
This chapter was very engaging and interesting. For starters, Wheelan offers in the chapter us something that we all can understand, The financial crisis in 2008. The borrowing of money and the buying and selling of stocks all combined into one chapter. I couldn't believe how much information was fit into one chapter. The interesting topic I want to discuss is the credit system, the fact that Americans are sponging money that isn't theirs. A crazy notion that people would put themselves into such a place as debt. It is all investment though. That is why The United States is in debt. It is to invest into the US's ability to produce more, and therefore in the long run be better off. Wheelan encourages us to do the same, To make good investment decisions and take risks. Investments are at the heart of economic thinking, it is thinking in the long run.

Chapter 7

I agree with Taylor about this chapter. The material was difficult, but once it clicks in your mind it becomes a lot easier. I found it really interesting that people sometimes think so illogically and irrationally about money. All the "get rich quick" schemes still attract plenty of intelligent people. When Wheelan was explaining how investments work, it made me think about how it's easy to get caught up in the short-term financial consequences and ignore the long-term financial benefits.

Chapter 7

This chapter was very interesting, and a lot of complicated material. I thoroughly enjoyed learning more about the 2008 Financial Crisis because it is something that we all lived through quite recently, but we weren't equipped with the knowledge to fully understand it. The AIG meltdown, which I hear referenced pretty often in regards to the tumultuous time, actually had to do with guaranteeing debt that could not be really accounted for. They speculated and left a lot of  room for risk by underselling their product.This speculation also plays into the stock exchange and Wall Street. One comparison that Wheelan pointed out that really stuck out to me was the Chicago Brownstone and stocks. If you find a  Brownstone on the market that is underpriced, it should make you suspicious. Even if it meets all of your expectations, has a great neighborhood, and passes all of the inspections, it should still alarm you that someone is selling it for way under what it is worth. This is really what should be running through your head when stock brokers are trying to sell you stocks.  They need to sell it, and it looks like a good entrance for you so you buy it, yet they were trying to get rid of it. While Wheelan points out that it could be for a multitude of reasons, but that our lack of patience for a good return drives this. The market also sets a fair price based on what the seller thinks it's worth, which relates to why Brownstones sell for $500,000 instead of $250,000.  I also thought that what was really interesting about this is that unlike health care, like we discussed in Chapter 5, everyone buying stocks has the same information available to them. Yet there is still huge drawbacks and risks to knowing all of the information. You don't get to know what is going to happen to this investment in the future, while with healthcare, you know that you did all that you could to prevent something worse from happening by going to the doctor. With an investment you could lose all of your money or reputation based on trends that are not predictable.

Chapter 7

6.
The part in this chapter that I found interesting were two things. The first was that giving such a small amount of money to someone in a 3rd world country can lead to so much success. Because 3rd world countries don't have a lot there are so many things that you can set up. The options are unlimited and you will most likely not have any competition. Since, it is so easy for these people to set up a small shop I don't see why more money isn't awarded to these countries. I think more people should be involved in programs that give out small loans. It is also reliable because the return rate is 96%. The second thing that I thought was interesting was how if you leave your money in the stock market for 25 years you will have made a lot of money. If someone bought Google stock at the start of the 2008 recession they would have a ton of money right now. I understand that the stock market is more complex, but this makes me feel like people would be tempted to keep their stocks in for as long as possible. I am not sure if this is good for the market or not. It seems like an easy way to get rich even though it would take a while. This seems too good to be true.

Chapter 7

Chapter 7 is relevant to our youthful spontaneous generation because of the analogies Wheelan proposes. He says that buying a house is like buying stocks. Just as no well conditioned house is going to magically appear inexpensive, there is no quick way to get rich in stocks. It highlighted the thinking process of economists when it comes to these types of situations. A second analogy he uses is waiting in line. We are quick to try to find the quickest way to become wealthy just as we try to find the fastest line. Economists then say it all averages out in the end so stick to one line. This seems like a reasonable ascertainment though I'm not quite sure why. My doubtful thought most likely stems from the fact that I am an atypical American looking for a shortcut to the front of the line.

Ch. 7

Credit is, I'm my opinion, the problem of many of our modern day problems. It is why the country is so far in debt and why we, like Wheelan mentioned, are so materialistic. Now, don't get me wrong, it's a wonderful concept, it's enabled phenomenal things to happen to human and urban development and it is how I'm paying for my college education but, I believe that it has taken over our mindset as a country. We are using too much of the money that we think we have when we really don't have enough to pay it back.
--Pirates were a surprise!
I agree with Clare that stocks have always confused me but the realestate analogy was extremely helpful. The fact that whoever is selling, wants to get rid of whatever it is they are selling. The idea of maximizing your utility is fascinating to me, learning to what extent people will go to get the best value.

Chapter 7

Question 4 asks what solution Wheelan proposes to the problem presented in this chapter. I would say that one problem is people's desire to "get rich quick."  Americans are notorious for coming up with new ways to solve our problems, and do it faster than ever before, yet most of the time what ends up working the best is the fundamental and basic methods. Towards the end of the chapter Wheelan proposes some economical advice: Save. Invest. Repeat, Take risk, earn reward, Diversify and Invest for the long run. These things are what we already know can pay off. We've been told our whole lives to save our money, set up a savings account (a Wells Fargo lady scolded me about this not to long ago...) and never put all our eggs in one basket, but I was caught off guard on Wheelan's second piece of advice, "Take risk, earn reward." This is something that confused me a bit. It seemed like Wheelan is saying to take risks, yet I felt like throughout the chapter he supported the "safer" economic choice. I'm sure there is a fine line between taking risks and being profligate with your money. On the other hand, what good does it do to keep certain capital locked up? Anyway, his main idea seems to be that there really is no "get rich quick" plan that will make you a millionare over night, and you'll rarely choose the shortest line at the grocery store.

Chapter Seven

Health insurance is brought up again in this chapter and shows how the reasoning behind what you pay is much deeper then what meets my teenaged naive eye. Knowing exactly why we pay what we do is an important thing to know by the time we are adults getting health insurance for ourselves. With insurance, there are really two parties trying to benefit themselves as much as possible. The average citizen, and the insurance company. The insurance company sets you up to pay more then most people need, with the possibility that something much worse may happen. A quote that stuck out to me was "You are not worried about average outcomes; you are worried about the worst things that could possibly happen to you" (153). The risks that humans face just living their lives everyday are enough to make most people see the need for this possibly over expensive health insurance.

7

While reading this chapter I suddenly felt very dumb. In business class were playing the stock market game and while I had been doing research for my game at the "top 10 hottest stocks of 2014" I thought I was ahead of everyone else because I was really researching the stocks. After reading this I realize that wow everyone else really does have the same amount of access to research, I really don't know what could happen to any of these stocks, for all I know these financial advisors on "msn finance" could be just writing about stocks just because they're going to get a pay check anyways, I could do the same amount of research and write the same things they do. Most likely it wouldn't make a difference because with stocks we really don't know. I could be spending much of my time researching and feeling better about myself and my stocks that I'm investing in, but in the long run I could easily end up making way less then just investing in a "regular stock" but spending less of my time doing it. Talk about a marginal benefit-marginal cost situation. It's just like the grocery store line analogy. I could think I did my research on which stock or which line to go into but the odds are the same whether I hit a great stock or a fast lane as is hitting a bad stock or a slow lane. I just got to hope that my investment goes according to my or (msnfinance.com) plan.

Chapter 7

     Chapter 7 was really confusing for me. I do not understand stocks and why people would put a lot of their money on something they have no control of. They could end up with more or nothing at all. I understand why you would help your loser brother in law that needs to go to anger management classes because he is your family and needs help.  But why would people give money to something they have no idea what it even is? Is it just because you might get money back? what happens when you don't get any money back you only loose money?
     One thing that I did understand and found interesting was the Serve. Invest. Repeat portion of this chapter. Don't go out and spend your money just because you have money. Saving your money will be better in the long run. "The cost of living better in the present is living less well in the future" (169). You cant have it all, all the time you need to be wise about your spending. Wheelan says it himself its not that hard "save early, save often, and pay off the credit cardS" (169).

Chapter 7 - Financial Markets: What economics can tell us about getting rich quick (land losing weight too!)

3. 

Eating grapefruit and ice cream for a weight-loss program. Will it work? The answer is no. Wheelan points out that the promised diet goes against all health care and dietary information we hold to be true, so why would we agree to something so absurd? Because it gives us hope of a better us and a better future. Stocks, bonds, and the general financial market are compared to the idea of getting rich quickly or getting thin faster. Stocks do not make a person rich overnight - just like doing a 5 minute ab workout will not give you a 6-pack the next morning. People are enthralled with the idea of a "quick fix" and not having to take the pain or the frustration in the short run. Using the ab workout in comparison to the financial market: in order to get to the "perfect 10" body, you have to endure the many, many weeks of the pain of muscle building that comes from hard work. Similarly, stocks work best if you have money you're not using at the moment and are able to invest it and wait it out - even if it takes ten to fifteen years. What benefits you in the short term generally does not benefit you in the long run. As Wheelan said, "it [investing successfully] requires discipline and short-term sacrifice. The payoff is a slow, steady accumulation of wealth rather than a quick windfall"(149). Don't be fooled by "get rich quick" scams. Do the research.

Chapter 5

I agree with Becky, that what struck me the most was the "sad truth" aspect of racial discrimination. I felt like this chapter was justifying racial discrimination in a way, which i didn't know how to react to. Wheelan spoke of many true points where when race is the only thing we can know, its the most valuable information to you at that time. He even told of his own experience being racially profiled and the claim ended up being true (he was in fact on the way to a Bulls game) I'd like to know what steps can be taken to eliminate racial profiling as a source of information. It almost seems impossible at times but I'm sure in the future we can get to that point. Referring to the gender discrimination he mentioned towards the beginning of the chapter, I thought the idea about a maternity leave package was great. Basically companies will pay for your time off during maternity leave, if you come back. If you decide to quit after your leave, you do not receive the money. I thought this was an equitable and fair way for companies to not be burned by giving hefty maternity leaves, which results in a discrimination towards women in the future.

Chapter 5

Question 6)
The chapters introduction was truly intriguing. The Hope Scholarships were a in theory a great idea, but basic self-interest ran the program into the ground. It was then only supported by government subsidies. This all happened because students calculated their projected income over the next 15 years of their lives and figured if they would pay less with or without the this loaning program. It led to the students not opting in if they would make a lot and lower earning students opting in to a program that in the fifteen years they would work, would cost them less. 1.5% of fifteen years is a lot for a some and little for others. People picked what worked best for them, what would save them the most money, what was in their own self-interest. I would give Bill Clinton an A for effort, but he didn't take into account that people will weigh their options and act in their own self-interest.

Chapter Five

"What you don't know can hurt you." In chapter five Wheelan describes how integral information and information distribution is to the economic field. Information distribution affects many aspects of life from profiling to health insurance to McDonalds. Before the reading I was unaware of the complex relationship between patients, doctors, and insurance companies when it comes to information and treatment. I am now aware of how important it is to figure out which outrageously expensive medical technologies are worth the cost and how to strike a balance where patients are receiving quality care without unnecessary costs and "false positives." Healthcare in the context of economics cannot be viewed in the same way as purchasing a television or a car. The medical field, dealing with the well being of humans, demands a more complex solution than maximizing income and minimizing costs.

Chapter 5

Something that stuck out to me was that everyone but the insurance company wants to do as much as they can to feel good after the day is done. By that I mean a patient with prostate cancer isn't going to feel any better psychologically by just sitting and waiting it out like the watchful waiting process is but their going to want to do everything that they can so that at the end of the day they can feel like they've done the most they can for themselves. So in this case most want to take the technology route, because that gives them the feeling that they're doing everything they can rather then waiting and watching, no matter how expensive or neuter results it may give, the patient wants to feel that they're doing something to help themselves. The only thing blocking that in most cases, healthcare. The same thing with doctors, they're not going to feel comfortable until they do and offer every method they can to maximize the patients health, the only thing blocking their way most of the time is the health care of the patient. Technology is giving the doctors better and better chances to save and heal patients but the problem unfortunately is how expensive it is, too "expensive" for health care to cover. The reoccurring factor here being health care not covering barely anything. Sure the insurance company needs to make a profit but in every section (patient,doctor,tech) the insurance company isn't helping any of it in anyway just causing more patients to result to doing nothing because the company won't cover it, along with the doctor who is trying to help as best they can but is held back by the patients insurance company. Nothing will change the mediocre results that America's patients are receiving unless health care changes. The bottom line is that like Wheelan said "soaring costs and mediocre results" is what is killing this countries health care, if you can even call it that.

Chapter 5

At the beginning of the course we discussed that it is crucial for average humans to study economics to know when people are lying to you. In this chapter this concept is expanded on by introducing the importance of information. The example the book provided was insurance companies not only charging more for particular peoples insurance, but not offering insurance to those they discriminate against. This dishonesty is important to notice, because naturally many companies will follow similarly. The book emphasized obtaining information, and being reluctant to provide it. It was interesting yet frightening to read about the effect one hair follicle could have.

Chapter 5

2. 

The health care system impacts my life right now, but not as much as it will in the future. In the future I will most likely get health care. It is good to know now that so many things can impact if I get health care or not. It may also impact the cost. Insurance companies can do what they please when it comes to deciding who gets their health care. If someone does not meet the requirements the company can deny them. It is cruel to think that the people that need the insurance the most will not be getting it. Having a national health care also provides its own implications. Everyone will have a set price even if they are healthy. Unhealthy people will profit from this, but the healthy people will not profit as much from this. Deciding these types of problems will be important in my future. Economists will debate which option is the best, but I do not see a good solution to this specific problem. It is interesting seeing how economists are involved in the worlds biggest problems. 

Chapter 5

The most profound idea that I gathered from this chapter was the discrimination factor.  Interestingly enough, I didnt think that the discrimination itself was sad, but the fact that we have it for a reason and certain events in the past have proven the "need" for it.  For example, he used the idea of an African American man and that if there are no criminal record backround checks they are actually less likely to be hired.  If you hear that initially that may sound obserd and messed up, people shouldnt be discriminated on based on the color of their skin, right?  But the sad truth is, there is a reason that this notion is upheld.  A black man is 24% more likely to have served proison time over a white man.  They arent discriminating against Indians or Asians because there is no reason to in this situation.  We have to realize that the discrimination doesnt come from out of the blue but there is a reason behind it.

Another issue that I found sad was that I as a woman would have a harder time getting chosen for the job over a man because of the fact that I will most likely require maternity leave, and me coming back to work after my time away is not guarenteed, thus causing a hastle for the company I'd work for. But the key phrase is "most likey".  The interviewers dont know that I will even want to have children or are even interested in the fact, all they know is that I am a woman and the situation could happen.  But the issue is that it has happened, therefore giving them a reason to hold this belief.

Chapter 5

2/5) The title chapter, McDonald's didn't create a better hamburger so accurately assesses world thought and the unspoken rule of branding in everyday life, that I didn't even realize how much of an impact generalizations have on such a broader spectrum of thought until the end of the chapter. Assuming that anything you see spotlighted in New York Fashion Week is fashionable, Apple makes the best products and that Nike shoes are always the best shoe to run in has nothing to do with rather or not you have researched what you are about to buy, compared it to another product or have any concrete document saying it is way better to buy this brand than that, because honestly iPhones may have more glitches than other phones available. But the fact that we do this on a much deeper level is what sort of shocked me. Women do not lose jobs because as some claim that it is because they are thought of as an inferior sex, but that companies had figured that they were extremely less likely to leave to take care of their family. A Harvard education may guarantee a smarter and better "packaged" employee in some circumstances, but so is the equally as smart applicant who just so happened to go to a nice and yet unheard of liberal arts school. This is just truly a very deeply rooted human inclination to chose the seemingly more safe choice because it takes all of the extra work out it. Employers not given all of the information just won't be able to make an unbiased opinion but then again as Wheelan points out, will giving the employers all the information give you even more opportunity to discriminate?

Chapter 5

        Kathryn said exactly what I wanted to talk about. I read the part about discrimination and immediately wanted to talk about it. It is wrong that we make judgements about someone because of their skin color. Its wrong that we want to hire men over woman because we think that they will need to leave to take care of a baby. I think what Kathryn said is spot on, how do we know that woman wants a child? Men and woman should be treated 100% equal in everything we do. Along with blacks and whites. I love when Wheelan says, "This chapter is not about discrimination. It is about information, which lies at the heart of many discrimination-related problems" (108). I believe that statement is very true about a lot of things in life. If you simply don't know something you shouldn't talk about it.
        Another part in this chapter I found interesting was when Wheelan talks about health and how if the doctor suggest something we should do just that. Some people don't want to pay for medical help or they think that doctors just suggest things to make money. That is not the case. Doctors should do everything they can to help the patient. Doctors don't want to not do something and then later have the patient have something worse because they didn't do anything about it. That would cause more problems for either the doctor or the patient.

Chapter Five

(Q6)
This chapter was particularly interesting to me because it mostly dealt with the people side of economics. How and why racial profiling happens as well as gender discrimination, are something's that I have never thought much about. The author talked about how the laws set in place to protect some people actually hurts others. When applying for a job a person doesn't need to disclose all of their personal information. However, this hurts the majority of people in the long run. Although racial profiling is unethical and racist the author points out the reason why it is still something that happens.  If an employer is hiring an adult male and there are two people (one black, one white) trying to get the job statistics say that the black male is more likely to have a criminal record then the white male. (23% vs. 8%). The employer has to go with the information that they do have, opposed to going with information that they don't have access to. This is also the case with women. If a young man and young woman are equally qualified for a job position employers are more likely to hire the man because women take time off for maternity leave and may not return afterward. This is all true information, but the woman may never be intend to have children whereas the man may want to be a stay-at-home dad. Since employers can't ask these types of questions while interviewing a potential employee they have to stick to what they have access too. This is frustrating because the consequences cause problems even for people who have done everything right, but repealing the laws may cause more problems.

Ch. 5 Q. 6

I realize what I wrote may sound offensive, please note that I did not mean it to be taken so in any way.

I think the topic of student loans is relevant to all of us in this class at this moment. The idea of people paying their loans back in a technically unfair fashion is ridiculous if Bill Clinton thought that people would actually go for that. I can see why the idea would sound good without the proper information, but once the idea it is fully explained, the flaws are obvious. If someone chooses an extremely expensive line of study, they should have a plan of action to pay it back, period. Fair and square, so to speak.

The importance of the degree of problem solving that went into the maternity leave package was necessary and well done. I think everyone can appreciate how economics is doing its job well to modernize itself along with the social issues of today. However when it comes to discrimination, "rational discrimination," personally I think people are way too uptight. As a society we have to let go of previous mistakes in history that caused these discriminations. But realizing the possibility of this happening is not probable, people should make more of an effort to take down the social differences. One way of doing this would be young people going to a job interview looking as presentable as possible. If a teenager expects to get a well paying job by showing up to the interview in ripped jeans, a tongue ring, an eyebrow piercing and heavy makeup, discrimination will probably not in her favor. Image is everything, especially for a first impression.

Chapter 5 - Economics of Information: McDonalds didn't create a better hamburger

5.

The main point of this chapter was not one of discrimination or stereotypes, but rather one which is lack of information. Information is derived in several ways: past experiences, research, word of mouth, stereotypes, etc. Unfortunately, as Wheelan says, "information... lies at the heart of many discrimination-related problems" (108). Misinformation is carried in the ways of the world: stereotypes, gossip, rumors, assumptions, the list runs on. The issue of discrimination has been a major topic for we as Americans in the last handful of decades. The controversy led to Schloarships for minorities, financial aid, and Social Security benefits to name a few in favor of minority groups. Today, there are many taboo subjects when it comes to race. You can't just go around and walk up to an African-American person and say "Hey, did you spend too much time in the sun? Your skin is awfully tan". Or ask an Asian person, "Do you need some sunglasses? You're kind of squinting". You will not get nice looks or kind comments. 

There is a solid mix of people from all denominations and ethnic backgrounds on both sides of the issue, but I personally believe that before stereotypes are made, people should be well-informed and create their own biased opinions. Everyone has a bias, so why take someone else's?