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Friday, October 1, 2021

Econ 101: Not your white guy's economics column - Sonoma County Gazette

In high school, I took an economics class. There were graphs and equations. My eyes crossed and my brain shut off. For reasons that are still a little fuzzy, I found myself in my first microeconomics class at the JC. There were about 45-50 people on the first day. The professor advised us that only about 10 of us would show up to the final. He was correct. Only about 10 people made it all the way through the class. On that final day, I was one of three women who completed the course. I eventually found myself clumsily muddling my way through an Economics degree. I didn’t do it well or with grace. I’m no great economist. I’m not even a good economist. I am however someone who loves subject. Economics is a topic that encompasses everything from what we eat for breakfast to the vast political and social rifts that plague our lives. It is so important, but so inaccessible to most people. Many people write about economics. Those people typically are herringbone blazer wearing, graph wielding, mathematical formula crafting, PhD. holding men. While what they teach us is valuable, it is still very foreign and inaccessible to most of us.

I promise I will never put up a graph or write an equation. Economics really is the study of everything and as such can easily be explored intuitively and creatively through discussion and thought exercises.

To begin, what is “the economy?” The Oxford Dictionary defines the economy as “the wealth and resources of a country or region, especially in terms of the production and consumption of goods and services.” What does this actually mean? “This,” I say waving at everything around me. The economy is the aggregation of everything. Now, I understand that when we discuss the economy, we talk about things like GDP, employment, and the stock market. Those things are all pieces of what is happening with the economy, but it’s not the whole story.

Let’s break it down

First, let’s talk about “wealth and resources” part. Everything is wealth or a resource. Everything. The air we breathe, the food we eat, the time we spend, the energy and focus we give things are all wealth and resources. So right off the bat, economics just got that much more interesting.

Next part: “Of a country or region.” That’s us, you guys! We’re the country. You are the economy. I’m economy. All 300 million of us are the economy. That’s pretty exciting. What seemed mere minutes ago to be an abstract and distant subject matter has just now become all about you.

Ok, so now for the part that we all associate with economics, “production and consumption of goods and services.” This is the working, buying, selling, and investing that we all think of when we reference “the economy.” A lot of this involves money, but it’s also how we spend our time. It’s how we make decisions about which bottle of wine to purchase. This again is everything, only in a slightly more herringbone way of approaching the matter. So, there you have it. The economy is everything.

As we head into autumn, which for us is also grape harvest season and fire season, we become acutely aware of the impacts of our decision making. We are literally reaping what we’ve sown agriculturally speaking, but, we are also reeling from the effects of climate change, income inequality, and resource scarcity that have been many decades in the making. How do we sow the seeds of a healthier, safer, more sustainable future? Well, the answer is economics. It’s more important now than ever to have these discussions in a way that doesn’t involve graphs but empowers us to go about the business of making everyday decisions collaboratively and with hope.

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Econ 101: Not your white guy's economics column - Sonoma County Gazette
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'Economics should not be a barrier': Community colleges use federal funds to attract, retain students - The Boston Globe

When Lawrence resident Iseline Mendoza needed help meeting her housing costs this summer, she turned to what might seem an unlikely place for help: her school, Northern Essex Community College.

Mendoza, who had been living with her mother during the pandemic, was able to move with her 2-year-old son to her own apartment with the help of funds provided by the college to cover the initial rental costs.

Like the other 14 community colleges in Massachusetts, Northern Essex does not offer campus housing for students.

“That really helped me to be able to focus on my studies,” she said, adding that having her own apartment has also enabled her to better fulfill her duties as the college’s new Student Council president. “It really encouraged me even more to want to be at Northern Essex.”

In part to stem a long-term enrollment decline exacerbated by the COVID-19 pandemic, community colleges across the state are providing expanded financial and other support to help attract and retain students.

The added assistance was enabled by an infusion of federal emergency funds the colleges have received during the pandemic to help students with their educational costs, and to meet their own operating expenses.

Those funds — along with the partial return of in-person classes — are raising hopes among some officials and students that life is starting to return to normal at the community colleges.

Students make their way on the Brockton campus of Massasoit Community College.Jonathan Wiggs/Globe Staff

“We’ve been really excited to have some increased activity on campus after 20 months of COVID-19,” said Phil Sisson, president of Middlesex Community College, which has campuses in Bedford and Lowell.

“Things are going pretty smoothly. I think the college is really staying focused on reaching out to students, making sure all their needs are met,” said Amara Bangura, a student at Massasoit Community College, which has locations in Brockton, Canton, and Middleborough.

Alieza Inam, another student at Massasoit, is also happy she is getting at least some on-campus experience this semester. The Sharon resident, who is pursuing an associate’s degree in biology, goes to Massasoit’s Brockton campus once a week for a lab session.

”I’m excited to be there in person,” said Inam, who enrolled at Massasoit in late 2020 and until now had no in-person classes. “I’m enjoying being actually able to meet people. Being online, it’s hard to make friends. And it feels like I am actually getting to know the college.”

Alieza Inam is a biology student at the Brockton campus of Massasoit Community College. Jonathan Wiggs/Globe Staff

Like other higher educational institutions in New England, community colleges have seen their student numbers drop in recent years due in part to stagnant population numbers, according to Nate Mackinnon, executive director of the Massachusetts Association of Community Colleges. That decline grew steeper last year when colleges had to shift to nearly all-virtual instruction.

“This fall we are in a better situation because we are able to offer a number of classes in person,” said Mackinnon, who estimated that among the 15 community colleges in the state, the proportion of courses meeting on campus ranges from 20 percent to 50 percent.

He added that the expanded assistance colleges are offering students is also having an impact. “Without the federal resources, enrollments would be much worse than they are right now.”

As one other step to promote a return to normalcy on campuses, the presidents of the community colleges recently announced that students, faculty, and staff at all the colleges must be fully vaccinated by January.

“It’s paramount to maintaining a safe and healthy learning environment at our colleges,” Mackinnon said.

The Brockton campus of Massasoit Community College. Jonathan Wiggs/Globe Staff

Community colleges offer a range of options, from two-year associates’ degrees that some students stretch over a longer period of time to certificate programs lasting a year or less to noncredit workforce training.

Ray DiPasquale, president of Massasoit Community College, said community colleges have long been a vital part of the higher education system, due in part to their affordability. Tuition and mandatory fees at community colleges last year averaged $6,778, compared with $11,149 at state universities, and $15,699 for University of Massachusetts schools.

But they are now playing “just as important a role in helping students in any way we can to continue their education despite the challenges of the pandemic,” he said.

Mendoza said Northern Essex also paid for an exam she took that earned her needed credits to complete her degree at the end of this semester — saving her money — and provided her free tutoring and counseling,

“They’ve really given me a lot of opportunities,” said the former amateur boxer, whose career goal is to work for an organization that helps people released from prison to reenter society.

“Historically, community colleges have always been prepared to answer the call for our communities whenever there is a need,” said Jennifer V. Mezquita, vice president of student affairs at Northern Essex, which has campuses in Haverhill and Lawrence.

She said the colleges did that again during the pandemic by pivoting to online learning without sacrificing the close interactions with faculty members students have long enjoyed. She said the enhanced assistance to students is also part of that response.

Students at Northern Essex Community College can get work down outside in several outdoor plazas on campus in Haverhill.Nathan Klima for The Boston Globe/The Boston Globe

Mezquita said Northern Essex is providing students money to meet costs — from housing to transportation and child care — that might otherwise prevent them from attending college, drawing from federal funds it received for that purpose.

She said the college also allotted part of the federal money it received for its own operating expenses to erase debt some of its students owed for tuition and fees. Other help has included assisting students in purchasing laptops and subsidizing costs of taking exams to earn credits.

Northern Essex also accelerated the adoption of a “case management” system to provide prospective and enrolled students the personal attention they need, Mezquita said, noting that the pandemic has “made salient” the value of that one-on-one assistance.

Mezquita credits the enhanced student support with a small uptick in Northern Essex’s enrollment this year — from 4,700 students to about 4,800.

Middlesex Community College this summer also used federal money to wipe out student debt to the institution, an initiative that saved about 2,800 students on average $1,500 in outstanding tuition and fees incurred from the start of the pandemic.

“We wanted to make sure we were doing as much as possible to keep students on the path to getting an education,” Sisson said.

He said the college also has provided students emergency funds for housing and other costs, and offered them “robust” virtual academic advising, counseling, and other services. Expanded in-person activity is also important to many students, he said.

Sisson said Middlesex Community College still projects a slight decline in enrollment but that the debt relief initiative, in particular, will help prevent it from being even steeper. “A number of students have expressed to us that they are extremely grateful to not have that debt hanging over their heads.”

Daniella Dankwa, a Lowell resident and Ghana native who is pursuing an associate’s degree in nursing at Middlesex, said she has benefited from being able to pick up free food from a college pantry, and from funds she has received to help with her expenses.

Daniella Dankwa is a student at Middlesex Community College. Daniella Dankwa

“They provide a lot of support services for students. It’s very helpful,” said Dankwa, formerly Middlesex’s student trustee. “They reach out to make sure you are on the right track, and provide tutoring help.”

Massasoit Community College provided tuition and fee debt relief to about 1,500 returning students this fall, loaned laptops to 292 students, and offered funding for other expenses. Staff also has stepped up efforts to help students with their academic needs and assist prospective students with the admissions process.

“We’ve tried to become a valuable resource to students in every way possible,” DiPasquale said.

Massasoit’s enrollment is projected to fall by about 7 percent this year, continuing the downward trend of recent years, according to DiPasquale. But with the supportive efforts the college is mounting, he is hopeful enrollment will start to recover.

Bangura, who is majoring in media communications, received funding from the college that he primarily used to access online textbooks, along with virtual tutoring support that helped him complete a course.

“I’m extremely happy with the way the college meets the needs of students,” said the Sierra Leone native, who as a “presidential student ambassador” is himself, an informational resource about Massasoit for current and prospective students.

“Our message to students is that we are open for business,” DePasquale said, “and that economics should not be a barrier. Our goal is to help you achieve your education, to achieve your dreams.”

John Laidler can be reached at laidler@globe.com.

Amara Dangura on the Brockton campus of Massasoit Community College.Jonathan Wiggs/Globe Staff

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'Economics should not be a barrier': Community colleges use federal funds to attract, retain students - The Boston Globe
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CMU Library: Economics Of Streaming Inquiry Timeline - Complete Music Update

Euro-Area Inflation Numbers to Stoke Economics Debate - Bloomberg

Welcome to the Brussels Edition, Bloomberg’s daily briefing on what matters most in the heart of the European Union.

Inflation numbers for the euro area due at 11 a.m. today will provide more fodder for one of the  hottest debates in economics: whether the current spike in prices is merely a temporary phenomenon or whether the tide has turned. So far, most officials have stuck to the view that the pressure will fade soon. ECB President Christine Lagarde reiterated this week that the central bank expects inflation to slow once pandemic-driven effects pass. But there are growing concerns among her colleagues that prices will remain elevated for longer, partly driven by persistent problems in the global supply chain. In Germany, the highest inflation reading in almost three decades is sharpening focus on wage negotiations, seen as the key test for how durable rising prices will be.

— Lyubov Pronina and Alexander Weber

What’s Happening

Energy Debate | Soaring energy prices in the EU are boosting concerns about public support for the bloc’s climate reform and reshaping agendas for key political meetings. Environment ministers will discuss the issue on Oct. 6 following Poland’s call to carefully consider its impact on the design of a planned green economic overhaul.

Google Fight | Google urged the EU’s General Court to cut or cancel a “staggering” 4.3 billion-euro antitrust fine on the grounds that it never intended to harm rivals. Commission lawyer Anthony Dawes scoffed at the search giant’s plea, saying the fine was a mere 4.5% of its revenue in 2017, well below a 10% cap.

Air Fare | Sixteen major airlines have committed to providing better information and timely reimbursement of passengers in case of flight cancellations, according to the Commission. Remaining reimbursement backlogs have been cleared in the vast majority of cases and passengers will be refunded within seven days as required under EU law.

Skills Shortfall | After the dearth of lorry drivers, lobbyists in post-Brexit Britain are warning of a  looming shortage in bankers. International hires, mostly from the EU, make up about a fifth of the 1.1 million people working in U.K. financial services, but Brexit is making it harder and more costly to lure foreign staff.

Dutch Deadlock | Seven months and numerous political reckonings, scandals and resignations later, the Dutch are back where they started.
D66 leader Sigrid Kaag removed her “political blockade” and agreed to start negotiations to form a new government with the same four parties in the previous one. It may pull Dutch politics out of the deadlock it has been in since the March election that consolidated caretaker Prime Minister Mark Rutte's liberal VVD as biggest party.

In Case You Missed It 

Chinese Reliance | The EU is pushing for the continent to establish its own supply of rare earths to reduce an uneasy reliance on China for the elements crucial to electric cars, wind turbines and mobile phones. A plan released Thursday calls for governments and manufacturers to support mining and processing through a mix of subsidies and sales quotas.

Corona Support | The Commission wants to phase out state support to companies next year that’s seen governments pledge or distribute some 3 trillion euros to keep businesses going during the pandemic. EU members can comment on the proposals and demand tweaks before they’re final.

Orban Challenge | Klara Dobrev, who has vowed to annul Hungary’s controversial constitution, was on track to score an upset victory in the first round of an opposition primary to decide who will challenge Viktor Orban in the election. A vice president of the European Parliament and the only woman running, Dobrev, 49, had 35% of the votes and was leading four challengers with 90% of the ballots counted.

Excess Capital | Top European banks plan to reward shareholders with at least 22.5 billion euros of excess capital built up after their regulator restricted dividends and share buybacks in the pandemic. The ECB’s controversial cap ended on Thursday and Andrea Enria, who leads its oversight arm, said he will only intervene if payments are imprudent.

Chart of the Day

European stocks have been rising for 6 consecutive quarters, but momentum is fading

European stocks eked out a sixth quarter of gains in the three-months to September, but momentum is fading. September was the worst month for the continent's equities in almost a year, as concern over rising bond yields and inflation counters optimism about the recovery.

Today’s Agenda

  • 11 a.m. Eurostat publishes preliminary euro-area September inflation data
  • 11 a.m. Germany’s Greens and FDP hold more exploratory talks on joining a coalition government as junior partners
  • EU foreign-policy chief Borrell visits Gulf states
  • EU climate chief Timmermans hosts a meeting with ministers of the High-Ambition Coalition, ahead of the pre-COP summit
  • Commission Vice President Vestager meets UN’s Guterres
  • EU energy chief Simson and Norwegian Energy Minister Bru speak at EU-Norway Energy conference in Brussels

Like the Brussels Edition?

Don’t keep it to yourself. Colleagues and friends can sign up here.

For even more: Subscribe to Bloomberg.com for unlimited access to trusted, data-driven journalism and gain expert analysis from exclusive subscriber-only newsletters.

How are we doing? We want to hear what you think about this newsletter. Let our Brussels bureau chief know.

Before it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. Learn more.

— With assistance by Diederik Baazil, Aoife White, Ewa Krukowska, and Nikos Chrysoloras

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    Euro-Area Inflation Numbers to Stoke Economics Debate - Bloomberg
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    How Does the Economy Work? A New Fed Paper Suggests Nobody Really Knows - The New York Times

    Many experts are rethinking longstanding core ideas, including the importance of inflation expectations.

    It has long been a central tenet of mainstream economic theory that public fears of inflation tend to be self-fulfilling.

    Now though, a cheeky and even gleeful takedown of this idea has emerged from an unlikely source, a senior adviser at the Federal Reserve named Jeremy B. Rudd. His 27-page paper, published as part of the Fed’s Finance and Economics Discussion Series, has become what passes for a viral sensation among economists.

    The paper disputes the idea that people’s expectations for future inflation matter much for the level of inflation experienced today. That is especially important right now, in trying to figure out whether the current inflation surge is temporary or not.

    But the Rudd paper is part of something bigger still. It reflects a broader rethinking of core ideas about how the economy works and how policymakers, especially at central banks, try to manage things. This shift has also included debates about the relationship between unemployment and inflation, how deficit spending affects the economy, and much more.

    In effect, many of the key ideas underlying economic policy during the Great Moderation — the period of relatively steady growth and low inflation from the mid-1980s to 2007 that also seems to be a high-water mark for economists’ overconfidence — increasingly look to be at best incomplete, and at worst wrong.

    It is vivid evidence that macroeconomics, despite the thousands of highly intelligent people over centuries who have tried to figure it out, remains, to an uncomfortable degree, a black box. The ways that millions of people bounce off one another — buying and selling, lending and borrowing, intersecting with governments and central banks and businesses and everything else around us — amount to a system so complex that no human fully comprehends it.

    “Macroeconomics behaves like we’re doing physics after the quantum revolution, that we really understand at a fundamental level the forces around us,” said Adam Posen, president of the Peterson Institute for International Economics, in an interview. “We’re really at the level of Galileo and Copernicus,” just figuring out the basics of how the universe works.

    “It requires more humility and acceptance that not everything fits into one model yet,” he said.

    Or put less politely, as Mr. Rudd writes in the first sentence of his paper, “Mainstream economics is replete with ideas that ‘everyone knows’ to be true, but that are actually arrant nonsense.”

    One reason for this, he posits: “The economy is a complicated system that is inherently difficult to understand, so propositions like these” — the arrant nonsense in question — “are all that saves us from intellectual nihilism.”

    And from that starting point, a staff economist at the world’s most powerful central bank went on to say, in effect, that his own employer has been focused on the wrong things for the last few decades.

    Bettmann/Getty Images

    Mainstream policymakers, very much including Mr. Rudd’s bosses at the Fed, believe that inflation is, in large part, self-fulfilling — that what people expect future inflation to look like has an ability to shape how much prices rise in the near term.

    In the common telling, the Great Inflation of the 1970s got going because people came to believe inflation would keep spiraling. The surge in gasoline prices wasn’t simply a frustrating development, but a harbinger of things to come, so people needed to demand higher raises, and businesses could feel confident charging higher prices for most everything.

    In this story, the great achievement of the Fed in the early 1980s was to break this cycle by re-establishing credibility that it would not allow sustained high inflation (though at the cost of a severe recession).

    That is why today’s discussions over the inflation outlook often spend a lot of time focusing on things like what bond prices suggest inflation will be five or 10 years from now, or how people answer survey questions about what they expect.

    Mr. Rudd argues that there is no solid evidence that the conventional story of the 1970s describes the real mechanism through which inflation takes place. He says there’s a simpler explanation consistent with the data: that businesses and workers arrive at prices and wages based on the conditions they’ve experienced in the recent past, not some abstract future forecast.

    For example, when inflation has been low in the recent past, workers might not demand raises as they would in a world where inflation was high; after all, their existing paychecks go pretty much as far as they used to. You don’t need some theory involving inflation expectations to get there.

    Some economists who are sympathetic to the idea that central bankers have overly fetishized precise measurements of inflation expectations aren’t ready to fully dismiss the idea.

    For example, Mr. Posen, a former Bank of England policymaker, says there remains a simple and hard-to-dispute idea about inflation expectations supported by lots of history: that if people distrust a country’s monetary system, inflation shocks can spiral upward. Economic policy credibility matters. But that isn’t the same as assuming that some survey or bond market measure of what will happen to inflation in the distant future is particularly meaningful for forecasting the near future.

    “It has been a noble lie that has become a critical part of the catechism of global monetary policy, that long-term inflation expectations are not just interesting but are a decisive determinant of real-time inflation,” said Paul McCulley, a former Pimco chief economist, commenting on Mr. Rudd’s paper.

    This isn’t the only way in which basic precepts underlying economic policy are shifting beneath economists’ feet.

    Particularly prominently, for years central bankers believed there was a tight relationship between the unemployment rate and inflation, known as the Phillips Curve. Over the course of the 2000s, though, that relationship appeared to weaken and become a less reliable guideline for how to set policy.

    Similarly, interest rates and inflation fell worldwide, for reasons that scholars are still trying to understand fully. That implied a lower “neutral interest rate,” or the rate that neither stimulates nor slows the economy, than was widely believed to be the case as recently as the mid-2010s.

    In many ways, the Fed’s policies just before the pandemic were aimed at incorporating those lessons and embracing sustained lower interest rates — and the possibility of lower unemployment — than many in the mainstream thought reasonable a few years earlier.

    In the realm of fiscal policy, some conventional wisdom has also been upended in the last few years. It was thought that large government debt issuance would risk causing a spike in interest rates and crowd out private sector investment. But in that period, huge budget deficits have been paired with low interest rates and abundant credit for businesses.

    All of this makes it a challenging time for central bankers and other shapers of policy. “If you’re a policymaker and you don’t have robust confidence in the parameters of the game you are managing, it makes your job a whole lot more difficult,” Mr. McCulley said.

    But if you are in charge of making economic policy that affects the lives of millions, you can’t simply shrug your shoulders and say, “We don’t know how the world works, so what are we supposed to do?” You look at the evidence available, and make the best judgment you can.

    And then, if you think it turns out you were wrong about something, publish a sassy paper to try to get it right.

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    How Does the Economy Work? A New Fed Paper Suggests Nobody Really Knows - The New York Times
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    Atlanta Fed chief to head chamber in 2022, sees diversity as economic fuel - The Atlanta Journal Constitution

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