Tuesday, January 20, 2015
Thursday, November 20, 2014
Despite Low Employment, Millennials Hold Key To Reviving South Texas
Despite Low Employment, Millennials Hold Key To Reviving South Texas
Welcome to boot camp for the young and unemployed in McAllen, Texas.
"We're going to go ahead and do this," says instructor Marco Lopez, leading a small classroom of millennials through do's and don'ts for job seekers inside a strip mall near McAllen.
In this area, only half of the people between 20 and 24 have a job, according to the Brookings Institution, a think tank based in Washington, D.C. In fact, among the 100 largest metro areas in the U.S., the McAllen area has the lowest employment rate for young millennials. The numbers aren't much better for older millennials between 25 and 34. Their employment rate is just 68 percent, placing the area 95th out of 100 by that measure.
The McAllen metro area of Texas has the lowest employment rate for
millennials ages 20-24 among the 100 largest metro areas in the country.
"I feel that extra pressure against me," says Trejo, a participant in this workshop for unemployed millennials with little or no work experience.
After a week of training at the Workforce Solutions Center in Edinburg, Texas, he spends a few months working for the local government. It's temporary, but it's also a rare chance, he says, to start building a legitimate career in his hometown.
"I've had a lot of opportunities to get affiliated with the gang here or get in with the cartels in Mexico," explains Trejo, who adds that it's easier to join a gang than to get a job.
Trejo says he wants to join law enforcement one day. He finally received his high school diploma this year after dropping out of high school at 17.
"I really want to be someone in life, because my mom never finished school. My dad never finished school. Most of my family, my uncles never finished school," he says.
'I Need To Get Out Of Here'
"Not many people get to graduate from high school. The few that do don't always find themselves fit for college, like they feel like they can't do it," says 20-year-old Misty Miller, a student at the University of Texas-Pan American, located just north of McAllen.
Miller, like the majority of residents in the area, is Mexican-American. She says family ties keep many millennials in the area even when job opportunities are scarce.
"Most Mexican kids don't leave home until they're married, if they have a good job or not," she says. "It's just being with your family."
Family drew 30-year-old Olmo Maldonado back to McAllen. His first big break in the tech industry came in California, where he worked as a software engineering intern at Google. At that time, he didn't see a future in the Rio Grande Valley.
"I was really skeptical and pessimistic about the Valley," he says. "My rule of thumb was I need to get out of here as quickly as possible."
That changed after Maldonado came home to help run his mother's marketing company for what was supposed to be a few months. Now, almost five years later, he's working to inspire other millennials, leading monthly "Tech Tuesdays" talks by local entrepreneurs, engineers and scientists.
He wants to add technology to sectors like healthcare, government and tourism that drive the economy here. As more local leaders in McAllen retire, he says he sees opportunities for a new generation.
"We can take part in boards. We can be part in legislation," he says. "We can be part in a lot of activities."
'I'll Be Needed Here'
"There is potential here, but not necessarily potential for college students graduating," says Leilani De Leon, 22, who is set to graduate from UTPA next year with a marketing degree.
Born and raised in McAllen, De Leon says she's ready to relocate for her career.
"I am open to going anywhere," she says. "If I got to leave, I got to leave."
For the area to prosper, millennials who do leave need to eventually come back, according to UTPA economics professor Salvador Contreras. He says McAllen's geography — 300 miles away from San Antonio, the nearest major U.S. city — puts the area at a disadvantage.
"The area as a whole is depressed. Millennials, along with Generation Xers and so on and so forth, everybody's in the same boat," he says.
Contreras says McAllen's population has grown faster than economic development here. That means, for now, there aren't enough good-paying jobs to go around. Highly-skilled millennials, he says, will be key to helping break this cycle of poverty in the future.
Miller, the UTPA student, believes she can play a role now. She plans to stay put after graduation and help the community overcome health issues like high obesity rates.
"I am studying nutrition," Miller explains. "So I think I'll be needed here."
And so will other millennials.
After reading the article what is your impression of what is going on in the Rio Grade Valley? What is your personal experience and what are your plans once you graduate from high school? What can the local government do to help students and locals who struggle to find employment and encourage college graduate to stay or return the Rio Grande Valley. What are advantages and disadvantages to remaining in the local region?
Tuesday, November 18, 2014
As Japan Falls Into Recession, Europe Looks to Avoid It
By LIZ ALDERMAN and JONATHAN SOBLE
NOVEMBER 17, 2014
PARIS — Japan looked like the model for economic revival. Growth was back on track. The stock market was surging. Inflation, which had eluded Japan for decades, was even returning.
But Japan’s grand economic experiment, a combination of fiscal discipline and monetary stimulus, is collapsing. On Monday, the country unexpectedly fell into recession, a downturn that has painful implications for the rest of the world.
Japan’s unorthodox strategy was supposed to offer a road map for other troubled economies, notably Europe. Fiscal belt-tightening and tax increases, while leaning on the central bank to pump money into the economy, was expected to help overcome a malaise.
The formula, though, has failed to ignite a meaningful recovery in Japan — and has even added to its woes. Europe must now decide whether to follow Japan’s lead by injecting more money into the economy, as the region’s central bank considers a similarly aggressive bond-buying campaign known as quantitative easing. And the United States, which just ended its own six-year stimulus effort, doesn’t offer much of a cushion should other economies stumble further.
“The United States is about the only growth beacon in the global economy right now, and that is not a very nice place to be,” said Jacob Funk Kirkegaard, an economist at the Peterson Institute for International Economics in Washington. “An American growth pickup is positive, but it looks like the rest of the world is again going to be relying on the U.S. as a consumer of last resort.”
Japan’s prime minister, Shinzo Abe, won power two years ago on a promise to pull the economy out of nearly two decades of corrosive wage and price declines. The initial response of both Japanese consumers and global investors was ebullient: The economy surged during the first few months of his administration in early 2013, and Japanese stock prices soared.
Mr. Abe’s program, called Abenomics, at first relied on a one-two punch of government spending and financial support from the Bank of Japan, the country’s central bank. The bank sharply increased its program of buying government bonds and other assets, similar to the stimulus effort recently ended by the United States Federal Reserve.
In some ways, Japan has been more aggressive than the United States. Its bond-buying program, which was expanded last month, is now bigger relative to the size of its economy than the Fed’s was at its peak.
Much of the enthusiasm for Abenomics has evaporated, however. Some economists blame a lack of action by Mr. Abe’s government in areas beyond pump-priming stimulus, such as deregulation and trade.
A turn toward tighter fiscal policy has taken the majority of the blame. Government data released on Monday showed that the country unexpectedly fell into recession in the third quarter, hampered by rising sales taxes that have discouraged consumers from spending. Mr. Abe is expected to shelve a second tax increase, lest the Japanese economy and consumer confidence erode further.
“What Japan shows is that if you have longstanding economic stagnation, having an aggressive monetary policy and even sizable fiscal reform is not going to work without deep-rooted structural reform,” Mr. Kirkegaard said. “The experience of Japan must be at the top of the minds of European leaders.”
High on the agenda is whether Europe should pursue large-scale purchases of government bonds, so-called quantitative easing.
The European Central Bank recently said it was prepared to take additional steps to revive the struggling economy, by lending more to banks and buying bonds backed by mortgages and other assets. Critics say the bank has not acted nearly aggressively enough to help revive growth, which has essentially stagnated.
The similarities between the two places is strong, which has prompted some economists to wonder whether Europe will turn into another Japan.
Europe and Japan have stuck with various versions of austerity, neither pushing ahead with deep-seated changes to their economy that analysts say are needed to revive long-term growth. Europe is also increasingly facing down the Japan-like specter of deflation as a recovery lags.
The political debate is also developing along the same lines.
A number of countries, led by France and Italy, recently balked at European Union requirements to doggedly adhere to fiscal targets and eschew stimulus spending that some economists say is critical. Some economists say that Japan’s situation only adds to the argument that fiscal belt-tightening, while sometimes needed to mend a country’s finances, hurts growth when an economy is in decline.
European politicians now widely blame austerity policies for delaying a return to growth, but Chancellor Angela Merkel of Germany is wary of loosening requirements for fiscal discipline after runaway debt levels and high deficits helped generate the eurozone debt crisis. The region’s leaders are scheduled to meet in early December to discuss further strategies for growth.
“The main implication is we are beginning to see what it might look like in Europe if we go down that road,” said Bart van Ark, chief economist for the Conference Board, referring to Japan’s recession.
“Europe has the potential to become a second Japan in terms of significantly slowing demographics, and weak per capita income growth,” he said. The Japanese experience shows that efforts to keep the economy afloat with more inflation and growth don’t help sustain higher growth in the long term. What’s needed, he said, is a “reform agenda, and that is a very difficult strategy” for politicians to pursue in any country.
The problems in Europe and Japan put additional pressure on the United States and China, which face their own headwinds.
The United States increased at a healthy 3.5 percent annualized pace in the third quarter, and unemployment has fallen below 6 percent. But troubling signs remain, including less-than-robust consumer spending and a lift from military spending that may be temporary.
China, too, is under pressure. Growth in China has cooled to 7.3 percent. While that is the envy of many countries, a slow clip by Chinese standards has raised questions about the nation’s economic health.
The disparate issues — a weak recovery in Europe, slowing growth in China and other emerging markets, as well as Japan’s failure to sustain any sort of a turnaround — have rung alarm bells in Washington.
Last week, Treasury Secretary Jack Lew said in a speech in Seattle that the United States was increasingly being relied upon to perform as locomotive for a global recovery.
“But the global economy cannot prosper broadly relying on the United States to be the importer of first and last resort, nor can it rely on the United States to grow fast enough to make up for weak growth in major world economies,” he said.
After reading the article, what events led to Japan's recession? How does the recession affect the U.S. economy and what actions can the U.S. Government enact so that we can avoid what Japan is going through?
Thursday, November 13, 2014
Ch. 6
https://docs.google.com/presentation/d/1wBVd1wivvxXs_fkUI0BOr5Pm0mJn0mATSj8cSVFYYIg/pub?start=true&loop=false&delayms=3000
Wednesday, November 12, 2014
Wednesday, November 5, 2014
Supply and Demand Scenarios
Supply & Demand Scenarios
A major step toward mastering the economic way of thinking is learning to reason in terms of supply and demand. On the questions below, your answers are less important than the reasoning with which you arrive at those answers. Use the economic reasoning skills you have acquired in this class to consider the following issues. Begin by considering the current situation as described in the problem. What effect will the change have on the price and the quantity demanded in the market?
Situation 1: Roses are red, violets are blue;
1. Using supply and demand analysis, explain why the price of roses always seems to rise just before Valentines Day.
2. Suppose a freeze killed one-half of the rose crop just before Valentines Day; how would this effect the price of roses? Why?
3.What would happen in the market for fine chocolates if one-half of the rose crop freezes?Why?
Situation 2: A story on the front page of The Wall Street Journal on October 22, 1996, told about troubles in the Bob Evans
Restaurants. The Bob Evans chain, which started as a truckers’ diner in the late 1940s, currently includes 380 restaurants with annual sales of more than $800 million. However, at the annual shareholders meeting disappointment and anger were the order of the day and the meeting focused on reported declines in the quality of food and service, and on the declining price of the company’s stock. In searching for an explanation for the plight of the Bob Evans chain, the Journal noted that, rising hog prices combined with Americans’ healthier eating habits have stalled sales of fried foods
and meat products, which account for almost 25% of the company’s revenue.
1. Use your understanding of supply and demand to analyze the impact of the conditions described in the statistic at the end of the article summary. Which issues effect demand? Which issues effect supply?
2. Has the quantity of food demanded by consumers declined over the last year? How will that affect the supply provided by the restaurant this year? Will these changes affect the menu prices?
Situation 3: Two years ago the city of Denver had an initiative on the general election ballot that asked voters to raise Denver’s minimum wage to 40% above the national minimum wage.
1. How would things in Denver have changed if it had passed? (What would be the same? What would be different?)
2. Predict the effect of this legislation on market(s) for labor in Denver, in the suburbs, and outside of the metropolitan area.
3.Where would you rather work (in Denver or the suburbs)? Where would you be most likely to get a job, in or out of the city?
4. Your uncle Charlie is thinking about opening a small restaurant in Denver or the surrounding suburbs. Where would you advise him to open his restaurant, in Denver or in one of the suburbs? Why?
Situation 4: Many local governments around the nation are concerned with the problem of teenage smoking. A wide variety of legislation has been passed with the intent of reducing sales of cigarettes to minors. Methods currently in use include: a.) Requiring a picture ID before purchase; b.) Banning cigarette machines in public access areas—moving cigarette
machines behind the counter in bars and restaurants; c.) Fining underage purchasers of cigarettes; d.) Fining those who sell cigarettes to minors.
1. Analyze the above options in terms of their cost of each protective measure. (What is the cost and who bears it?)
Predict the impact of each option on the demand, supply, and price in the market for cigarettes. 2.What is the difference in market impacts of fining the buyer vs. fining the seller of cigarettes?
Situation 5: The Dutch city of Amsterdam has had effective rent control since the Second World War. Despite its considerable charm, Amsterdam has many decaying and burned-out buildings. This is surprising, since everyone agrees that there is a severe housing shortage in Amsterdam. Tinje is a woman who lives in a rent-controlled apartment building facing a canal. A few years ago Tinje paid a plumber to install a shower in her apartment after years of futile requests to her landlord for a shower. If she leaves the apartment (which she is unlikely to do), she expects to charge the incoming tenant for the shower.
1.What is meant by a "shortage" of housing? Can you illustrate a shortage situation on the supply and demand graph below?
2. Using supply-demand analysis, can you give a plausible reason why Tinje’s landlord would be so unresponsive to her requests for a shower? Why didn’t Tinje just move rather than paying for the shower herself?
3. Can supply, demand, and price analysis help to explain why there are a number of decaying and burned-out buildings in Amsterdam? Why?
Situation 6: Suppose you run a lawn mowing business: you charge $15 per lawn and you can mow five lawns in an eight-hour day. You currently have more people asking you to mow their lawns than you can satisfy so you are considering hiring someone to help. Your other option is to buy or rent a riding lawn mower that will enable you to mow seven lawns each
day. You find that your friend Jim, a good worker, will work for $8 per hour or you can rent a riding mower for $100 per week plus $25 for gas and oil. You estimate that you can sign up an additional 25 customers.
1. Should you hire Jim or rent the mower and do the work yourself? Which would be more profitable?
2.What if the mower enabled you to mow eight lawns per day, would your decision be the same?
Friday, October 10, 2014
Creative Destruction
Creative
Destruction
1. In a free market, what happens
if a price is too high, a product doesn’t work, or service is lousy?
2. Why do you think Mr. Cheung
started making more things for the tourist trade?
3. What motivated telecom
companies to bring cell phones to developing countries? Did they know about the
difficulties faced by boat drivers, butchers, and egg farmers?
4. How does the rapid rollout of
cell phone technology illustrate Adam Smith’s principle of
the “invisible hand”?
5. Who benefits from new
technologies like cell phones? Who loses out?
6. Should government have banned
cell phones in order to protect the jobs of people who made and repaired
landline phones? Why?
7. “Many would say that this
[cell phone technology] revolution did more to give the average person power
and to reduce poverty than any government program.” Do you agree? Why/why not?
8. If goods and services can be
improved or made at lower cost, does it matter whether the cause is technology
or trade?
9. Rather than trying to preserve
obsolete jobs, what are some other ways we could help workers whose skills are
no longer in demand?
10. Why does competition lead to
inequality of outcome? Is that a bad thing?
11. What examples are given in
the video to show that the average person – not just the rich person – is
better off now than 25 years ago? Name 2 other examples?
12. What are some of the ways in
which poor households in the U.S. are better off now than the average household
was in the 1970s?
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