PPE Reading Group – September 19th, 2017

The PPE group engages in weekly conversations with diverse points of view in an effort to deepen our understanding of the intersection between politics, philosophy, and economics

This week in the Philosophy, Politics, and Economics reading group, we read and discussed The Welfare State as a Fiscal Commons: Problems of Incentives Versus Problems of Cognition by Keith Jakee and Stephen Turner. The article discussed the similarities between the tragedy of the commons and federal entitlement programs. We also read and discussed “Governing the Budgetary Commons” What Can We Learn from Elinor Ostrom? On the discussion board, the conversation center around two main topics: the role of analogy in solving real life problems and the applicability of a commons framework when thinking about the federal budget.

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PPE Reading Group – September 12th, 2017

The PPE group engages in weekly conversations with diverse points of view in an effort to deepen our understanding of the intersection between politics, philosophy, and economics

This week in the Philosophy, Politics, and Economics reading group, we read and discussed Elinor Ostrom’s Collective Action and the Evolution of Social Norms. Ostrom reviewed findings on what makes groups cooperate to achieve a better outcome than if each individual worked alone. We also read and discussed Barry R. Weingast’s The Economic Role of Political Institutions: Market-Preserving Federalism and Economic Development. Weingast discussed the role of limited political institutions in developing economic growth, focusing on case studies in the United States, England, Russia, and China. On the discussion board, the conversation centered on the nature of social norms and whether or not the things that make collective action possible are lost as groups scale up. Next week, the group will be reading and discussing The Welfare State as a Fiscal Commons: Problems of Inventive Verses Problems of Cognition by Keith Jakee and Stephan Turner and “Governing the Budgetary Commons” What Can We Learn from Elinor Ostrom? by Ringa Raudla.

Click “continue reading” for a selection of our conversation.
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IEI Insight: The Effects of Economic Announcements on Equity Markets

This IEI Insight is provided by Ryan Coughlin, a Gail Werner-Robertson Fellow and author of a paper on intraday equity market reactions to macroeconomic announcements.

Markets respond to large macroeconomic announcements. How markets respond and in which direction has been the study of research for decades. When macroeconomic reports on GDP, CPI, and unemployment are released, we expect big movements. While past research has examined macroeconomic announcement effects, my recent work supervised by Dr. Ernie Goss specifically examines intraday announcement effects, especially in light of recent Federal Reserve actions.
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PPE Reading Group – September 5th, 2017

The PPE group engages in weekly conversations with diverse points of view in an effort to deepen our understanding of the intersection between politics, philosophy, and economics

This week in the Philosophy, Politics, and Economics reading group, we read and discussed the first couple chapters of Richard Wagners, Deficits, Debts, and Democracy: Tangling with Tragedy of the Fiscal Commons. Wagner discussed causes as to why the United States has been continually running deficits since the 1960’s. On the discussion board, the conversation center around two main topics: Short term over long-term thinking and the prisoner’s dilemma of budget making. Next week, the group will be reading and discussing “Collective Action and the Evolution of Social Norms” by Elinor Ostrom and “The Economic Role of Political Institutions: Market-Preserving Federalism and Economic Development” by Barry R. Weingast.

Click “continue reading” for a selection of our conversation:
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Thomson: Fairacres Designation as a Historical Place

The following was written by Kevin Thomson:

The Fairacres neighborhood, located in a wealthy section of Omaha, NE near UNO and Memorial Park, is now on the National Register of Historic Places. The wealthy neighborhood was granted the honor by the National Park Service on July 24, 2017. At first, the designation may seem harmless. The neighborhoods listing on the National Register is a boon for Fairacres homeowners, but the benefits for the average Omaha citizen are less clear. Too many designations can cause problems for the city planners and limit the growth of affordable housing.
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Mercantilism: Not in My Backyard

Everything old is new again, argues Emily Hamilton in a paper comparing the Mercantilists of the past to the NIMBY’s (Not In My Backyard) of today. Both Mercantilism and NIBYism rely on the same incentive structure – private benefit to the collective detriment. These tactics can block development, restrict competition, and stifle growth in the most productive cities. The benefits are concentrated among a few while the costs are spread out among the many.

Mercantilism was the leading economic model for countries between the 16th and 18th centuries. It arose out of a zero sum – I win, you lose – view of the economy. The combative view of economic trade led the economy to favor particular industries by highly regulating imports and exports to keep prices high and escape competition. Ms. Hamilton’s point is that that NIMBYism works in a very similar way.
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IEI Insight: Less regulation of dentists can mean better oral health

This IEI Insight is provided by Maddi McConnaughhay, a Gail Werner-Robertson Fellow and author of a forthcoming paper on the impact of occupational licensing on dental health.

Occupational licensing impacts more than just the legal side of different practices in the United States. It has a significant impact on access to these services, along with control of the labor markets. This can have devastating impacts of the lives of the people in the United States as a side effect of the control of quality in care.

Occupational licensing is put in place to ensure the quality and safety of dental practices, but in the long-term it shrinks the labor market for dentists. Due to the decrease in the supply of labor, patients see an increase in the price paid for dental work. These economic effects have a significant negative impact on the dental health of the nation. States with more rigorous licensing regulations suffer from worse healthcare because it is not as easily attainable.

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Going Cashless: Benefits for the Poor?

I recently returned from a conference of the ABA Business Law society in Montreal, where I was joined by several pals (Erin Fonte, Jillian Friedman, and Denis Rice) to present on the topic of The Emerging Cashless Society. Movement away from paper money (or coins) to electronic payments is a global phenomenon. While other countries may be leading the United States in moving away from cash, the United States is not far behind.

This phenomenon is primarily a product of private ordering. People choose to transact business with credit cards, mobile payments, or other technologies such Pay-Pal or Dwolla rather than using currency. ( I like to use my Android Pay feature when I am at Whole Foods or Trader Joe’s. In fact, when the fellow ahead of me uses cash, I cannot help wondering if the young clerk is really thinking, “what are these green papers and why do they convey value”?) We like the convenience, as well as some of the additional services like fraud protection, dispute resolution, and airline miles that we get with other payment media, which cash cannot deliver. Continue reading Going Cashless: Benefits for the Poor?

IEI Insight: Common measure of income inequality seriously flawed

This IEI Insight is provided by Madelyn McGlynn, a Gail Werner-Robertson Fellow and author of a forthcoming paper on income inequality and the Gini Index.

Income inequality in America is growing quickly. Between the Occupy Wall Street phenomenon and presidential candidates debating solutions, this fact has started to creep into the popular consciousness and has sparked much concern. Income inequality is growing and this can be demonstrated mathematically. But what does that analysis really tell us?

According to Federal Reserve Chairman Janet Yellen, since 1973 the top ten percent of American incomes increased by about 30 percent. The bottom 50 percent of workers’ real income only rose by about five percent. This difference is significant, changes the dynamics of the American economy, and this inequality is not getting any better. Many studies have attempted to determine why this is happening. Researchers tend to conclude that income inequality is exacerbated by gaps in education, an aging labor force, and the presence of concentrated populations.

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IEI Insight: The (regulated) flow of alcohol in Nebraska

This IEI Insight is provided by Luke Buffington, a Gail Werner-Robertson Fellow and author of forthcoming papers on Nebraska liquor regulations and public choice challenges in education policy.

Following the end of prohibition in 1933 every state instituted some form of what has come to be known as the three-tier system for alcohol distribution. The system requires that all alcohol must go through a state-licensed, independent, third party distributor between the producer and the retail location. This has been combined with franchise laws, which give distributors in many states — including Nebraska — exclusive local contracts with producers that are very difficult to terminate. This legal regime certainly has some benefits, but it also has economic costs.

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