Buy America

Here's the rough draft to a column that i'll post in my school paper. If you notice something economically wrong or if I failed to expand on something let me know.

Debunking Myths
Buying American: Good or bad?

Here’s the task: Bob, a middle aged man, experiences a mid life crisis and realizes in order to live life to the fullest he must buy a new car. Bob narrows his choices down to two cars; a Toyota Celica or a Ford Mustang. Both cares provide the oldie with a self-confidence boost; however, the Celica costs $35,000 while the Mustang costs $40,000.
If Bob values both cars equally, should Bob buy the American or Japanese hot rod? In other words, this leaves you with the predicament: do I support the local American Business or the international tycoon business? Generally, Americans would pick the good ole red, white, and blue over foreign competitors; but by doing so, Americans are shooting themselves in the foot (sorry Florida).
It is foolish to buy products based solely on where the product is made! The general misconception of buying international somehow involves money leaving our economy and floating over to foreign countries. This is not the case: if Sally bought a Toyota car, Toyota could not exchange the American dollars for the Japanese Yen.
Alas, this leaves Toyota with the predicament of how to spend the American dollars. A portion of the money is spent on American goods and services, while another portion is invested into the American bonds, the stock market, and other securities. In effect, Japan is trading a consumer good, the Toyota Celica, for American goods and investments.
Back to the example, Bob could have saved $5,000 if he bought the Celica instead of the Mustang. In economic lingo, this is called the opportunity cost. The opportunity cost was huge, meaning Bob sacrificed a lot of money to buy a car of equal value. The lost $5,000 could have been used to pay for Bob’s daughters college education or invested into his 401k retirement plan.
If opportunity cost is not convincing enough, take a closer look at the incentive structure behind buying American. If Ford realizes that consumers will only buy their products, the incentive to provide a cheaper and better car will diminish. If every American consumers buys Ford, the company’s profits will soar while its product quality will drop.
In conclusion, always pick the best product based on quality and price no matter where its made.

Goodbye lightbulbs

The last light bulb factory in the United States closed down today, meaning more jobs will be shipped overseas (to China presumably). I sympathize for the 200 people who lost their job, but I'm also glad China is making the lightbulbs while we're providing the better paying (and more educated) services. Thomas Edison may be ticked, but I don't mind really.

http://www.washingtonpost.com/wp-dyn/content/article/2010/09/07/AR2010090706933.html

Catholic Priests

I wrote this article for a microeconomics class.

Why do most branches of Christianity encourage their priests to marry while the Catholic Church enforces celibate priests?

The Catholic Church forbids all members of the clergy to marry except for deacons, while all other branches of Christianity grant the rite to marriage to all members of the clergy including priests. The sacrament of matrimony is seemingly available to all Christian men except Catholic priests. Generally, Catholics follow guidance from two sources- scripture and tradition. The celibate life of a priest was derived from tradition over several centuries, not from scripture such as the Bible. Scripture may be permanent, but tradition is flexible enough to grant priests the permission to marry. However, this has yet to happen.

Despite being a nonprofit organization, the Catholic Church does not publish its financial records but assume that each priest earns $40,000 a year. A priest can reasonably rent an apartment, own a decent car, and pay for all living expenses while earning this income. The Diocese of Arlington contains 251 priests. If each priest earns on average $40,000 yearly, the diocese has to allocate $10,040,000 of its yearly budget to salaries.

Most priests realize that celibacy not only allows for a stronger bond with God, but it also allows the Church to allocate resources to more needy people. Let’s say the Catholic Church disbanded its celibacy stance, allowing all clergy members to marry. If 75% of the 251 priests in the Diocese of Arlington married their true love, the Church would be forced to pay all priests a higher salary. The average cost of raising a baby per year is around $10,000[1]. If each priest raises two children on average, the yearly salary for a priest would elevate to $60,000.  The Diocese of Arlington now has to allocate an additional $5,020,000 of its budget to the salaries of priests. 

The Catholic Church strives to assist the poor and needy as a non-profit organization. By enforcing strict celibacy rules, the Church can allocate millions of dollars to the less fortunate. In economic lingo, a priest’s opportunity cost of remaining celibate is low. The opportunity cost is the net gain of the next best option. This means that priests are happier knowing that they sacrificed a potentially better life for themselves for a better life for the impoverished.

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[1] http://www.babycenter.com/cost-of-raising-child-calculator

How education affects employment

I found this article interesting because it analyzed the relationship between the current unemployment rate and the education system of the United States. The article states that the U.S. will see an increase in demand for college level jobs, but the number of college grads in the future will not match the demand (there will be shortage). Thus, the U.S. will see a slower recovery due to cyclical employment and the shipping of jobs overseas.

I see a separate problem arising: if the U.S. cannot expand its education system, more educated countries will lead the way in innovating ideas. Innovating ideas may not seem important, but where would the U.S. be without Bill Gates and Microsoft, Edison and the light bulb, and Bell and the telephone? The education system needs to be reformed; otherwise, expect to see the current recession to drag on.

Goal for the blog

I created this blog to share my thoughts and opinions on current economic issues and topics. I an Independent, meaning I do not support a political party, so I like to think I have an unbiased view of the world.