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Monthly Archives: February 2010

This article–In Secret, Nations Work Toward Crackdown on Piracy–tells the story of contemporary copyright infringement without noticeable favoritism to either side. It is also made quite clear that there are strong feelings in support of copyright enforcement, and a huge number of people who think it is not necessary.

The cheap and selfish side of me loves pirated music and movies, and I am happy to live in a place where that is accepted. The economist side of me understands the justifications for copyright protection, to reward the innovation and creativity of writers, actors, movie directors, and musicians.

The real problem now is that the true beneficiaries of copyright laws are not the artists at all. Rather, they are the millionaire producers and owners of the book, movie, and music industries. They can argue day and night that quality movies and music depend on copyright enforcement and the great profits that result, but it is truly becoming a poorly disguised ruse to rationalize higher prices.

The real cost to society comes with the decreased expenditures for other goods and services. It decreases consumer surplus and indirectly decreases profits in other industries.

Because we need to encourage people to sing and write and create?


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As a teacher of economics, editorials on education interest me on two levels. One, the debate about learning strategies and how that dictates teachers’ approach in the classroom. Two, education is obviously important as an investment both in social welfare and potential production.

Cynthia Tucker’s article, Improving education begins with better teachers, is an unfortunately shallow critique of the direction education policies are taking.

Educating all of our children, including those from poor and dysfunctional homes, is clearly in the national interest. In a globally competitive market, and with nations like China and India emphasizing high-quality education, we simply cannot afford not to educate everybody.

And it does no good to point fingers at parents — some of them busy trying to make ends meet, some of them functionally illiterate, some of them simply irresponsible. No child chooses to be born into a home without the obvious advantages.

I’ve heard from too many public schoolteachers who blame their students’ poor performance on their parents’ failures. That suggests to me those teachers don’t have much faith in their students’ ability to learn or in their own ability to teach them.

My own experience is not only from US schools, but would suggest that teachers’ attitudes are often a reflection of management and administration. Teachers often–very often–find themselves in a work environment where the ideals they embraced in their education studies are ignored in favor of high scores and keeping parents happy.

Despite the strides made in learning science, and the obvious advantages of active learning and critical discussion, classrooms are often still a reminder of old ideals, rote learning and unquestioned acceptance of the facts.

Why does it happen? Yes, sometimes because a teacher does not really accept the research and they revert to the methods of their own teachers. Just as often, it happens because administration demands obedience and results at the cost of an interactive environment.

What to be done? For one, quit appointing MBA’s to manage schools. Yes, schools are in many ways a business, but–to borrow the metaphor–management should be schooled in the proper methods of production, and learning production is complex enough to require great devotion of study on its own.

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Some of this story about the Chinese bullet trains is really impressive.

The Chinese bullet train, which has the world’s fastest average speed, connects Guangzhou, the southern coastal manufacturing center, to Wuhan, deep in the interior. In a little more than three hours, it travels 664 miles, comparable to the distance from Boston to southern Virginia. That is less time than Amtrak’s fastest train, the Acela, takes to go from Boston just to New York.

Even more impressive, the Guangzhou to Wuhan train is just one of 42 high-speed lines recently opened or set to open by 2012 in China. By comparison, the United States hopes to build its first high-speed rail line by 2014, an 84-mile route linking Tampa and Orlando, Fla.

OK, bragging rights over the US are one thing, but the really impressive part is the economic stimulus this investment provides for both short term and long.

Of course jobs are being created now with the construction of the trains and tracks, but the new, fast transport will also improve the mobility of labor and other resources needed in an expanding economy.

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Two articles caught my eye this morning, one on plans for the Federal Reserve to tighten money growth as recovery allows, another on the growth of the US trade deficit.

I was surprised that the trade deficit had grown lately, thinking that lower exchange rates had already boosted US exports. In fact, that has happened, but the growth in oil imports has overwhelmed the export growth in heavy machinery and commercial airplanes. It is predicted that deficits may continue to grow as American incomes grow and import demand increases.

But how will the Fed’s plans affect that?

Bernanke said the Fed will likely start to tighten credit by boosting the interest rate it pays banks on money they leave at the central bank. Doing so would raise rates tied to commercial banks’ prime rate and affect many consumer loans. Companies and ordinary Americans would pay more to borrow.

Initial response is that borrowing will decrease and import demand–for better or worse–will probably decrease as well. But what happens to the interest income? Just a thought, but if the interest elasticity is inelastic (< 1), the actual quantity of debt will increase with higher rates.

The point of the rate hike is said to be controlling inflation, but what if the rate hike brings more money into circulation?

There is likely a mistake in my thinking here. Please point out my mistakes.

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