Archive for April, 2007

Apr 25 2007

America’s Immigration Problem – the human cost

Immigration: The Human Cost | The Onion – America’s Finest News Source

Free trade, labor mobility, globalization: scary words! Watch this harrowing story of the insufferable losses imposed on American workers due to immigration, then post your comments. What impact does immigration have on American jobs? Should the US take greater steps to protect Americans like Mr. Boyle from the threat of cheap labor from poor countries? Who is truly harmed by labor mobility and who benefits?

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Apr 25 2007

What’s got the dollar so weak in the knees?

US dollar plummets against euro as ECB rate hike becomes likely — Shanghai Daily | 上海日报 — English Window to China News

“THE US dollar has dropped to a 27-month low against the euro… The United States currency also tumbled to its weakest level against the British pound in 26 years”

What’s happening to the US dollar? The article claims that “interest rate differentials” are causing the weakening of the dollar relative to the Euro and the Pound. How can this be explained? First of all, why is the US Fed predicted to cut rates in the near future?

“The dollar’s losses last week accelerated after a US government report showed that consumer prices excluding energy and food moderated last month. That contrasted with reports from the United Kingdom and New Zealand indicating accelerating price pressure.”

What’s the connection between slowing inflation in the US, accelerating inflation in Europe, falling and rising interest rates, and the exchange rate? At this point in the AP course, you should be able to explain all of these connections.

How can we explain how the following economic trends lead to a weakening of the dollar and a strengthening of European currencies?

“The yield advantage of 10-year Treasury notes over similar-maturity German bunds dropped to 0.47 percentage point last week, the lowest since November 2004. A narrowing yield gap dims the allure of dollar-denominated assets.”

“The economy in the euro zone will grow 2.3 percent this year, beating the 2.2 percent estimate for the US…”

“ECB council member Axel Weber told Handelsblatt newspaper that an ‘extremely positive’ economic outlook meant the bank can’t signal it’s finished raising rates.”

If you can read, understand and explain this article right now, they you probably understand most what what you need to understand from Chapter 38. Let’s hear your comments, folks!

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Apr 22 2007

Globalization’s winners and losers, and losers, and losers…

Globalization for Whom? (July-August 2002)

Thanks to Katie Daily for posting the above article to the new Wikinomics page “AP Econ in the News”. Several very interesting articles were linked to this page over the weekend, but this one just jumped out at me as particularly interesting.

This piece looks at the question of whether globalization reduces poverty. Many critics of globalization (you know, those union members and see turtle costumed folks who protest at WTO and IMF meetings, and millions like them in the develop and developing worlds), claim that the record of the 1990s shows that a more integrated global economy does not necessarily mean less poverty in poor countries. The author here claims that while global poverty may not have been eliminated during this decade of global integration, this is only because some of the poorest countries have not yet become “globalizers”, rather have remained “non-globalizers”

“…countries that have the best shot at lifting themselves out of poverty are those that open themselves up to the world economy.”

The author points to several figures supporting the positive impact globalization has had on countries that have chosen to participate in the integration of global markets, such as China and India.

“By selling its products on world markets, China has been able to purchase the capital equipment and inputs needed for its modernization. And the surge in foreign investment has brought much-needed managerial and technical expertise. The regions of China that have grown fastest are those that took the greatest advantage of foreign trade and investment.”

Read: SHANGHAI folks. This article points perfectly to the phenomenal growth we’ve observed here in our own home. China’s decision in 1978 with Deng’s “Reform and Opening” to participate in, rather than isolate itself from the global marketplace has resulted in a doubling of life expectancy, a near doubling in literacy rates, rapid development of the country’s infrastructure and the emergence of China as a dominant and undeniable force in the economic and political landscape.

The author explores the idea that China’s (as well as its East Asian neighbors’) economic emergence may have been achieved by shunning free market principles and turning instead to protectionist methods such as quotas, tariffs on imports, subsidies to domestic producers, etc…

Perhaps China has unlocked a secret of successful integration in the global economy. Despite the West’s desire to liberalize and open the economies of all poor nations and their claim that this is the best means to eradicate poverty rapidly, China’s experience shows that a healthy dose of government control and protectionist policy may actually result in the greatest economic gains for the world’s poorest countries. I’m interested to know what students think about China in the world today. Does the high level of government control over the economy stifle further growth and prevent the total eradication of poverty? Or should the government continue to meddle in the market, protecting domestic industries and hope that its interference does not limit the country’s growth, thus halting continued improvements in standard of living experienced by the majority of Chinese over the last 40 years? This may be a good topic to bring up over dinner with your families this week! Share your thoughts here!

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Apr 18 2007

Are your parents’ jobs in jeopordy?

Well, probably not at this moment, but a changing global economy may mean China turns to the US less and less as Europe, Africa and other regions become more important to the Chinese export market.

China Leans Less on U.S. Trade – New York Times

So here’s the perfect article for our last unit in AP Macro! After reading chapter 37, this article should make pretty good sense. The Chinese economy, unsurprisingly, is very dependent on the US as a source for its exports. But as the dollar weakens against the yuan, and Americans erect new barriers to trade, China is turning to other parts of the world to export its output to.

While the European Union has restricted certain imports, particularly shoes, American trade barriers have drawn more attention.

“The U.S. government is still trying to protect its own markets,
unlike Europe, which is very free,” argued Huang Yasong,
international sales manager for the Hubao Group

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Apr 17 2007

IB – Unemployment at 4.4% Is this below the NRU?

Jobs much stronger than expected – Apr. 6, 2007

This article has some very up to date stats on the employment situation in the US. Overall it seems the job situation is as strong as it’s been in years. Unemployment has dipped to 4.4%, the net job growth is positive, even though certain sectors have lost jobs in the last few months. Read this article, connect it to what you know about full-employment, unemployment, and other topics from Ch. 8.

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