Iraq Affordable?

http://www.msnbc.msn.com/id/17665432/
This article "Is the Iraq war a relative bargain?" by the Associated Press is an interesting read. It points out some things that I didn't know about the war in Iraq before.

The first is that we have been paying for Iraq entirely with supplements to the budget. In the 4 years we have been at war, there has only been a section for the war in the actual budget for this coming year of 2008. This and the fact that the president hasn't really increased taxes since the start of the war means that we're paying for the whole thing on credit.

The second is that the U.S. economy has strengthened exponentially since the last time we were in a war that lasted a significant amount of time. That little tidbit means that even though we are still paying the same relative price to wage war that we have in the past, it is taking up much less of our economy's total output.

Because of this strengthened economy and odd methods of paying for the war, the associated press suggests that the war is actually very "affordable" for the country.

This is all well and good, but when the majority of the country doesn't believe we are over there for the right reasons or doesn't believe we should have been over there in the first place it becomes much more difficult to convince them that we can afford to be in Iraq. This attitude also makes it much, much more difficult to write off the large number of soldiers we have lost overseas already in this war. At the end of the article the AP cites what the cost would have been if we had kept doing what we were doing instead of starting a war with Iraq. It would have, in fact, cost a mere $50-$700billion. That may seem like a lot, but when just the medical care and disability costs payed to veterans of the war is already projected at $700billion, one has to question...why would you even think of calling this war affordable?

Mexico and Price Discrimination

so, last week thursday through tuesday I was in Mexico. during my stay there i happened to visit a flea market in Cancun. after walking away from the flea market i was reminded of how much i would have to catch up when i got home (since it was monday) and thought 'hey, i could use that market for econ' so here we go.

the flea market really amazed me as to how much of an excellent example it was of price discrimination. at this flea market, like many in mexico, it was expected that one would bargain for items. this means that every person who walks into the market has the chance to get a different price. although each vendor prices the item the same for everyone when they walk in it is up to the consumer as to how much they really pay.

for example, when i walked into a jewelry store with my new stepdad ron, he was interested in buying a pendant for my mom. the original price that the vendor said he would sell it for was $367 american. in less than half an hour ron had talked the vendor down to a mere $70, and he ended up throwing in a neclace chain to go with it for free.

this means one of two things, either the pendant really was worth very little to begin with, or the vendor knew ron would not budge, yet still wanted to get at least some money. this would indicate the mentality that a little money now is better than waiting and possibly not ever selling the merchandise. this is an interesting theory to me, being as vendors in the US have a set price, and a view that suggests that if one person doesn't want it at that price, someone else will. does anyone have any idea as to why there would be this fundamental difference in mind set?

tax cuts and the health care field

http://www.msnbc.msn.com/id/17075561/page/2/

Bush’s proposed health-care cuts spark debate

this article, by Christopher Lee and Lori Montgomery discusses the newly proposed cuts in health care by the bush administration. it suggests that his cuts could either sink or save medicare and medicaid. the authors also say that although the cuts could potentially work in helping balance the budget, they do nothing to address the real underlying problems that are making medicare and medicaid costs rise. they also show a concern for the future of the medical industry as far as people actually wanting to become doctors or surgeons or any other medical professional.

I think this article is excellent. i really entirely agree with what mr. lee and mrs. montgomery say in it. its true that tax cuts could, theorhetically, balance the budget, but for the most part in times of war it is considered good policy to increase taxes in order to raise funds for the war. in addition, i really don't think that simply making cuts in the budget can actually reduce debt, simply make the national rate of creating debt lower. we're still spending money, its just that we have slightly more to pull from, we aren't actually making money.

these cuts in the medicare and medicaid programs could also have extraordinary costs in the future. being as hospitals and by extension their employees are really not getting paid the full cost of doing many of the procedures they do, or it is at least very difficult, it could deterr people who are looking at a career in health care to reconsider. granted, people shouldn't look at a job just because of its salary, but many people do, and regardless of the reasoning behind getting into a field of medicine, we need doctors.

in addition to people being deterred from entering the medical field, bush's cuts propose to essentially stop paying for graduate education in teaching hospitals, yet another huge blow to the overall medical population.

so how will we balance the budget? if this passes, will medicare and medicaid survive, or will it become the next social security? what will happen to the medical field if it does?

sports economy

http://www.econlib.org/LIBRARY/Columns/y2004/Sandersonsports.html

so, this article , by Allen Sanderson, was about how large of a deal it is when athletes raise their pay, but how little it seems to matter when other entertainers (movie stars, etc.) raise their salaries, and questioned how we should view college athletes skipping years of school in order to begin their career in proffesional sports. it also compares college athletes to sweatshop workers, and pro athletes on steroids to entertainers who use cosmetic surgury.

Personally, i agree that we shouldn't make as big of a deal when pro sports players raise their pay because it really has little effect on the price of tickets, as Sanderson points out. the price of tickets is determined by the team's owners, who base it on the market as far as how much people are willing to pay in order to see the all star players, not how much the players charge for the service.

i do, however really have to disagree with Sanderson's point about college athletes being very similar to sweatshop workers. this is because although, yes, college athletes don't get paid for their performances on the field (besides maybe a t-shirt) they are building their talent so they can be paid an extraordinary amount of money in the long run because they are getting their names out there for pro coaches to see.

clarification

so i'm just clarifying what i said in class today about opportunity cost and figuring out which person should do what with comparative advantage (in case anyone was wondering)

when looking at amount of time one takes the value in the cell they are trying to find the comparative cost of and divide by the other value being compared and take the smaller of the values for the 2 different people as who should do that part of the work.

you can do the same thing when talking about quantities and get the same answer, except you have to find the opportunity cost of the specific item and then make it the inverse of what you found. for example: in question 4 when looking for the OC of hte united states making cars you can just take 12/4 and get 3, and then invert it so its still 1/3 and you still have to take the smaller number.

or, if you really want to get wild, you could probably just take the larger of the two numbers before inverting the fraction, because you will still end with the same answer, just not the same numbers.