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Economics

I try not to get involved with economics because I hated the subject instinctively, mainly because what I was hearing in class wasn’t logical and couldn’t be applied in the real world.

Max of Maxspeak was one of the few economists who made a point of connecting what was going on with the real world and now he has announced: So Long, and Thanks for All the Fish. A new position precludes blogging.

Duncan is still with us and shows us that too many people in business don’t understand the concept of supply and demand. When a business owner says:

“I don’t know what the answer is,” Francis said. “There’s just nobody around that wants to work.”

because he can’t hire people to work in a McDonald’s for $10/hour, it doesn’t occur to the owner that people who can make $15/hour or more for unskilled labor in the oil fields would be stupid to take the pay cut.

Mr. Francis just can’t believe that people don’t want to work for him because he doesn’t pay the prevailing wage for unskilled labor in his area. This is just like the agribusiness owners who don’t believe that people don’t want to weed and pick crops for minimum wage. These are the people importing labor to keep their costs down, because they are too cheap to pay a living wage.

Natasha’s post, Foreclosed in America, brought up something that should have occurred to me – where are the people caught up in foreclosures going to live? We haven’t been building rental housing. Supply and demand means rents are going to go up and a lot of these people, who are employed, are going to be homeless. We are going to have empty houses and people living on the streets.

6 comments

1 Jim Bales { 08.27.07 at 11:46 pm }

Have you looked at Brad DeLong’s website? I suspect at least part of his appeal to an academic like me is his, well, academic viewpoint.

Do you find that his style works for you?

2 Bryan { 08.27.07 at 11:59 pm }

I’ll check him out, Jim. Max just made a lot of sense to me because he related to problems I had experienced.

My academic life wondered from Slavic literature and language to Computer Science, and then Criminal Justice, so I managed to avoid everything beyond the intro macro courses.

3 Badtux { 08.28.07 at 4:11 pm }

Regarding rental housing: The foreclosed homes are being bought by investors for pennies on the dollars. The investors are going to rent out these homes. Thus all that is happening is that former homeowners become home renters. Sorta the same scam as the Great Depression, which similarly transferred real tangible wealth from the have-nots to the have-mores.

– Badtux the Economics Penguin

4 Bryan { 08.28.07 at 5:05 pm }

That works if you have people around with cash, but down here everything is leveraged, and there are a lot of properties sitting around vacant with “for sale” signs. They are going to be that way for a while. If you try to rent out a condo short-term you have to turn on the utilities and arrange for clean up in the local market. A lot of the home owner’s covenants don’t allow rentals in the subdivisions.

The current property taxes are based on the inflated prices, and they are going to have to come down, because taxes, insurance, and utilities are all spiking while the value of homes is dropping like a rock.

5 hipparchia { 08.29.07 at 12:01 am }

i’m really going to miss maxspeak.

i’ll second the suggestion on brad delong. also, i don’t really know enough about economics to know if i’m getting good information or bad, but i like angry bear too.

6 Bryan { 08.29.07 at 12:11 am }

Max related to the effects on normal people, not the market players or banks.

I’ll check out other people, but I was familiar with Max and we are in the middle of a meltdown.