Stephanie Parenteau - Critique of "Unemployed Veterans"

Approximately two weeks ago, the House passed a bill with the motive to help unemployed Veterans find work, and also to redefine the qualifications for who is eligible for federal help under new health care reforms. Essentially, the bill was passed to stimulate the business cycle and reduce the economy. Tien thoroughly explains the potentials of the bill, and why she agrees with the House that the bill will do more good than harm and will in fact stimulate our deteriorating economy. However, I disagree with a lot of what this bill has to offer.

  In my opinion, the economy’s two main detriments are its unemployment rate, and the amount of government debt. This bill provides jobs for unemployed veterans by providing employers with tax credits. When an employer receives a tax credit, it reduces the amount of taxes being paid to the government, causing a chain effect that eventually results in government debt increasing. While providing tax credit for employers, the bill also states that it will provide education for veterans in order for them to become more qualified for various positions. Who is ultimately going to pay for this education? The government will be spending more money providing education and job retraining programs, and again will increase government debt.

Currently, there is a very large amount of frustration throughout the United States regarding unemployed students whom have received college degrees and even secondary college degrees. These unemployed students are obviously already well-trained and qualify for many positions in our business cycle that are just not available right now. Not only will this bill proposition result in more government spending, but it will reach an even more unemployment rate for students. I respect veterans tremendously, and do agree that something needs to be done to help for a lesser unemployment rate, but this isn’t a good way to do this. I’m not exactly sure how the government could provide jobs for these vets without increasing their amount of debt, but they need to primarily worry about government spending over anything else.

As for the other half of the bill, which explains that the government will redefine eligibility for federal help under health care reforms, I do agree with Tien that this will help decrease the federal debt deficit, and will make a lot of tax payers happy. Health care is one of the many assets that cause for so much government debt, due to the amount of money the government supplies for these reforms. I think that this part of the Bill will inevitably help the economy and reduce the government debt, while reducing the amount of angry tax payers that have to pay taxes for all of this health care. When reducing eligibility, the government is able to use this money for something else that could quite possibly be more detrimental right now than people with health care.

I do strongly wish for the government to somehow reduce the number of unemployed vets, and provide health care for people who are not financially stable. However, I only agree with the second half of this bill. The United States has the largest amount of debt in the world, and anything that we do to worsen this debt is not going to help the economy. More government spending and less tax collecting might help the veterans and the economy temporarily. But in the long run, it’ll cause the same problems (maybe not as crucial) as when the government was providing financial support for banks when the housing market crashed in 2008. The economy and the government will benefit, however, from the regulation of eligibility for financial support from health care reforms.

http://money.cnn.com/2011/11/16/news/economy/unemployed_veterans/index.htm?iid=SF_E_Lead

Critigue - America's Jobless

Colin Picard

In the article "America's Jobless," large amounts of people looked to find a way to apply for the job of miner in Australia. Such a job is incredibly difficult, and challenged my view that many Americans forced to work manual jobs, because they saw them as menial. I believed this from firsthand experience from my brother, who has gone through long stretches of unemployment through the reasoning that since he has worked for so long as a waiter, server, cook, busboy, and barman, it is time he can find a position like manager. I did not doubt that marines and miners could handle the job, but investment bankers and people with art degrees seriously considering it surprised me.

The main thing to consider is obviously the pay; give enough money, and people will do near anything. This apparently includes living underground for weeks at a time mining. The article argues that taking up the mining profession in Australia, while high-paying, is unnecessary, as those same would-be miners could find the same job in Canada or the Dakotas. I agree with the statement that many jobs go unfilled because people are simply not aware of them. People have always been willing to travel great distances for employment; my grandfather is a three-generation New Yorker who went from putting down land lines on Long Island, to serving in the Army during the Korea War, to retiring in Pittsburgh after twenty years with Bell Telephone/AT&T. The article seemed to argue that people often will not move for a job unless given extreme amounts of money, but I disagree with that. While $200,000 a year would convince ME to travel to work in Australia, $50,000 a year would get me to across the entire country.

It is unarguable that employers are willing release skilled, experienced workers in exchange for unprepared ones; which is a major reason young people out of college struggle to find jobs. The article's point that that particular miner was so highly paid was because of his experience is correct though. Mr. Salisbury, no matter how good a cook he is, cannot arrive with the same skills and abilities of the $200,000 miner.

"Original - Herman Cain" Critique by Wyatt Reeder

Greg Long explains Herman Cain's "9-9-9" tax plan. Mr. Cain's proposed tax plan is aimed at "leveling out" the sales tax, income tax and personal tax on businesses. Some see this idea leading to the revival of the US economy. However, it does not quite make sense to me. While it is said in an animated film, used to generate support for his campaign, that "$2 trillion would be added to the GDP and 6 million jobs would be created", it fails to highlight that the tax on some households making below $20,000 would indeed increase "nearly 950 percent". While this would not seem like much of a burden to a millionaire or billionaire, someone trying to scrape by on welfare and provide for their family would be in even more trouble. This does not seem "fair" by any means to me.

While corporations do play an important part for our GDP, if we are going to be fair about things, why should they receive breaks just because they provide jobs? Companies such as BP Oil, which in 2006 spilled 4.9 million barrels of crude oil into the Gulf of Mexico, not only dodged much of the promised restitution and damages, but also under Herman Cain's running platform, would receive tax cuts and rake in more money. It is instances such as these that make Americans distrustful of big business. The fact that individuals want to not only forgive corporations and allow them essentially free-reign, but prostrate their control over our economy is appalling.

I have to disagree with Greg when he says that the simple answer to our national crisis is taxes. Although there has been an increased amount of spending on the part of the government, I would say that it needs to stay the same. This does not mean that change in ways it is spent can occur. There have been unwise decisions, but that can be expected. The people of the United States are not ready for a change as drastic as the "9-9-9" plan that could possibly destroy families that are already suffering, simply because they might have had bad luck. It is not right to say that while someone "rich", whether they make their money through hard work, playing a game or entertaining millions should not have to pay their dues. That is what America is, is it not? "The Land of Opportunity", where one can make their dreams come true? But who is to say that there are not those who are as talented, or those who do possess the same work ethic and determination and are simply less fortunate? Make a reasonable tax plan, if any, and make smarter decisions when spending.

Tamika Rickman – Critique on “A New Method to Save Our Economy”

William Reitan explains how the economic times are different and more promising today than the economy in 2008. During the recession in 2008 the government bailed out banks by giving banks large sums of money to compensate for the loss of money giving out to homeowners. Today the banks are lending money more carefully and analyzing their balance sheets and working with their reserves and available capital more closely. I would agree that the government bailing out the banks was a good idea because it helped banks to recover from a great loss due to the price of homes falling and homeowners were not able to pay off their loans. Also the government also helped to increase the money supply in the economy; therefore preventing inflations or deflations and a further decline in the economy. The government also prevented millions of people from losing their homes and becoming homeless and jobless. However, this action severely hurt the government by further increasing their debt and then having to increase taxes for taxpayers to bail out the government. The government’s actions went against the belief of capitalism, whereas, the markets control supply and demand, not the government. This may allow the government to gain too much control, increasing their power over capitalism. Businesses and banks have to work together to stimulate the economy and not depend on the government to help bail them out in order to reach some type of financial stability, otherwise the government will further sink into a large debt and will depend on the citizens to pay their way out which will just prolong the recession. I must admit that some government assistance is needed to help solve the economy but some structure is needed to help stabilize the cause, such as, the money is given to the banks as a bail out but a repayment must be paid within a certain length of time to avoid raising taxes and prolonging the government’s debt. Handing out large sums of money in a crisis without some type of structure and having tax payers pay the price is not the answer because it is truly hurting the economy. I also disagree with the idea of helping of other countries to pay off their debts, especially when other countries have no interest in helping us. Our interest in other countries is one reason why we have such a large debt of our own. We spend so much time being involved in other countries issues that we neglect our own. So many companies move overseas which hurts our economy because we are losing businesses and jobs bank in the states. The government needs to focus on encouraging companies to remain in the states and increase the exports of materials and decreasing the amount of imports. Other countries have to find solutions on their own to extinguish their debts while we focus on becoming the super power once again.

"Should the Fed buy bonds?" Critique by Colin Illar

In response to the blog post "Should the Fed buy bonds?", there are many things to look at. For one, the post was very well written. The author adequately organized the post to include background information of the article as well as plenty of analysis regarding economic concepts included in the article. My only critique as to the way the article was written would be a little more expansive of a summary of the initial article. The blog post had a much bigger focus directed to analyzing the economic concepts involved in the article such as quantitative easing and Federal Reserve policies. If a broader summary of the article was given in the post, it would be easier to compare and contrast the various policy options for the Federal Reserve.

As for the analysis of the article, I find myself agreeing with the poster on a few concepts and disagreeing on others. I do agree with the analysis that more quantitative easing may not be a good policy measure by the Federal Reserve. As the article and Cole's blog post point out, quantitative easing has been tried twice before with minimal to no effect on the economy. It has kept interest rates low, which was a success, but this has not led to the desired effect. I also agree with the poster's argument that the Federal Reserve cannot fix this problem on their own. Other factors have been strongly affecting consumers willingness to spend in the economy and on bonds that are available at such a cheap rate due to the low interest rates. The easiest explanation to this could be a severe lack of consumer confidence in the market. The confidence could be affected by many factors, including the gridlock regarding new legislation to create jobs, continuing stagnation in employment numbers and increasing bad news regarding the economy, such as news that American Airlines, one of the largest airline companies declaring bankruptcy following one of the biggest travel weekends of the year. All these factors can drown out news of low interest rates and expansionary policy measures by the Federal Reserve, so until consumer confidence is stabilized, the Fed's current options will continue to under perform.

Regardless of all the analysis I agree with, I still find fault with the last statement made by the poster, that time will fix the low consumer confidence. I think that rather than time leading to more consumer confidence, I believe that more time with this little improvement will create more of a downward spiral regarding confidence. As younger generations graduate college and look for jobs in an uncertain market, it is likely to me that the low confidence will spread to the new additions to the labor force. The fed and the government need to try everything they can regarding the economy to create a higher confidence in younger people who are more likely to spend with less things to pay for.

Charla Henley-Critique Blog Entry #2

In response to Madison Phillips--"Higher Education and the Economy: The next bubble to burst?"

In response to Madison’s “Higher Education and the Economy: The next bubble to burst?” I would like to first say that it is an extremely well written and well thought out piece. However, although it is strong and I truly enjoyed reading it, I think there’s some room for more economic connection. Many significant numbers are presented in her post in regards to debt. Here, Madison provides that “Grubb continues in saying that the 2008 reported average debt of graduating seniors was $23,200.” Economically speaking, if we have graduates fresh out of college in double-digit debt as presented here, that is going to decrease confidence in spending and probably increase uncertainty. In my opinion, graduates are going to be less likely to make long-term investments—such as buying a house or car or even putting significant amounts of money into savings or the stock market—because they are worried about their debts and unwilling to risk falling further into debt. Recent graduates may also hesitate to make purchases to furnish their houses or apartments, and may shop for cheaper groceries and other necessities for the same reason. Ultimately, I see graduate debt as a decrease to the product demand curve and I wonder if that will also raise prices and have a negative influence on product supplied.

Earlier in her post, Madison wrote that, “The New York Federal Reserve Bank places the total amount of debt due to higher education costs at $550 billion, and even suggests that this number could be underestimated. It has been said that the total amount of outstanding debt from higher education could surpass $1 trillion in the near future.” The values presented here frighten me because we are talking about billions of dollars in debt. However, it is important to remember that this number is a compilation of everyone’s debt due to higher education. After a quick search on Wikipedia, I was able to find that the United States had than 18,248,128 students seeking higher education in 2008, according to the US Department of education. If we divide the estimated $550 billion total for graduate debt by the estimated number of students seeking higher education in 2008, the number is $30,140, which is only slightly more than what Gibbs presented in the first point I mentioned. Moreover, Madison pointed out that, “’The 2008 census reported average earnings of those with advanced degrees, (a master’s professional or doctoral degree), totaled $83,144.’ Those with bachelor’s degrees made $58,613, while people with high school diplomas had average earnings at $31,283. These numbers show that education really does, or can, pay off in the long run.” Madison is right to say that in the long run, the pursuit of a higher degree does indeed pay off. Clearly people pursuing these professional degrees are, on average, better off than those who choose otherwise. The students who seek a professional degree, who may average about $25,000 in debt, are making the money to pay it off. Therefore the argument that says that the amount of debt is too high for the degree earned to matter is false.

When the New York Federal Reserve Bank or any department releases numbers like the one presented above (“$550 billion”), as a total, it makes matters seem so much worse than they are. As Madison also pointed out in her post, the media makes reference to many schools with higher tuitions when they report average debt. The reality of the matter is that many graduates have less debt then they report but their reports make the readers or viewers feel like education, and the pursuit of it, is not all it used to be. Economically speaking, it is not ideal that these reports are coming out and making education look too expensive because education is very important in ensuring economic growth and advances in technology. If the media keep making education look like it isn’t worth the investment, people are going to stop seeking higher degrees. While higher education is not the only way to ensure technological advancement, it would not be beneficial to our nation to have people pass up higher education just because it is an investment.

In response to Madison’s title “Higher Education and the Economy: The next bubble to burst?” I’d like to call attention to her statement that a bubble is something that is overpriced but has great support. I’m not so sure that education is really a bubble because I think it is priced where it needs to be to allow demand not to overhaul supply. If we made education cheap and everyone pursued a higher degree, there would be no distinction between the “higher” piece of higher education; because everyone would receive the “higher” education degree. The price of the schooling is supposed to help balance out the supply and demand of a higher education. That is why the prices keep rising. Not everyone can pursue the degree or they’ll be nothing “higher” about it.

Ultimately, I think the only concerns I have in regards to higher education and the economy are that graduates have low confidence and high uncertainty of where, how, and when to spend their money, so as not to plummet further into debt; and how the media portrays educational debts. I think higher education is priced where it needs to be to maintain its title of higher education, therefore I do not think it is a “bubble” waiting to burst. Finally, I think higher education is a necessity to promoting economic growth and technological advancement so I think it is important to keep up the number of students pursuing higher education. And great job Madison! I really enjoyed your original post!

http://en.wikipedia.org/wiki/Higher_education_in_the_United_States

Critique on Graduates Returning to the Nest- Kim Ceres

“As new graduates return to the nest, economy also feels the pain” is an article that explains the affects of graduates moving home on the economy. This article describes how recent graduates move back to the nest in order to save money. Which is beneficial for them but it has a dramatic affect on the economy. Recent graduates that do not move back home have the potential to have a large affect on the economy due to the fact there are a lot of goods that they would need. New graduates need items such as cars, refrigerators, silverware, etc. Before reading this article I never realized the effect that recent graduates have on the economy. In addition, I found it to be very interesting how much the current economy is affecting students. Especially to the extent in which, that students are opting to move home instead of paying for housing. I thought it was interesting how Anuk brought up the argument that companies do not want to hire students right out of college due to lack of experience. I disagree with the argument that companies are less likely to hire students right out of college because a lot of times companies would rather hire new workers. This is because they are cheaper and usually have stronger computer skills. Although, I feel that lack of experience could be an issue for some professions that require more experience in a particular field such as a head of a department or an upper level manager. I agree with the argument that since graduates are moving back home this has a strong affect on the economy. I agree with Anuk when she explained how the economy is “losing” out on the recent graduates’ consumption. Due to the fact, that since they are moving back home they will not be needing to purchase larger items such as refrigerators, microwaves, and other household appliances. This decreases the output in the economy since, graduates will be consuming much less than they would if they were not living at home. In addition, I agree with the argument that since aggregate demand is decreasing due to the lack of consumption, it results in a surplus in the economy. In turn, decreasing the level of production and increasing unemployment. If recent graduates had more faith in the economy it would help to increase consumption dramatically and raise GDP and hopefully help to decrease the unemployment rates.