Economics has been Hijacked by the Rich and Powerful

"Economics has been hijacked by the rich and the powerful"

I found a very interesting interview done by D. Murali and B. Baskar. They interviewed US-based economist and author Mr. Jared Bernstien about questions or concerns the common man/consumer should be aware of. To check out the entire article go to:
http://www.thehindubusinessline.com/mentor/2007/04/30/stories/2007043000731500.htm

"Politics and economics can get pretty silly sometimes. In American politics, if the economy improves, the President will take credit for it, much like the rooster who thinks his crowing made the sun rise. "

Mr. Bernstien stresses that the common man should know more than the basic supply and demand relationship. He feels that learning "political economics" is of more importance to us as U.S. citizens. For example: so the majority of people know that economics is about making the best choice, given a scarce amount of a certain resource...but who decides whats "best"? The government? politicians? The interview leans toward the direction that it is important to educate ourselves about the ENTIRE economy, so as to let the citizens decide what "best" implies, and not simply to leave this to the government.

"Presidents and Congress do have a great deal of impact on the course of the economy, through fiscal (tax and spending) policy, regulations, and social spending. That said, I've gotten used to politicians "connecting the dots" between their policies and economic outcomes in ways that are pretty suspicious.

Too me, I feel this may be to much to ask of the general public. Look at our voting statistics...I don't think the "common man" seems much concerned with who is in charge of our country, economy, and war...until of course it directly affects their pay cheque. The benefit of books, articles, and interviews like this is there though. If for every interview, article, and book published, ONE more person begins to understand that the power of the economy lies with us, the common man, than that is at least a start. Do you think the 'common man' needs a lesson in political economics??? Or do we let the politicians, presidents, and congress define whats 'best'?

$2.8M Katrina verdict against Allstate

This post is a combination of two articles I found which both revolve around Hurricane Katrina and insurance claims. I took a small excerpt from both (the essentials), and posted the URL so if you so choose you can read the article in its entirety online.

1. The first: $2.8M Katrina verdict against Allstate

http://news.yahoo.com/s/ap/20070416/ap_on_bi_ge/katrina_insurance




"NEW ORLEANS - Allstate Insurance Co. must pay a Louisiana man who lost his home to Hurricane Katrina more than $2.8 million in damages and penalties, a federal jury decided Monday in a case that hinged largely on whether it was wind or storm surge that wiped out his house."

2. The Second: In New Orleans, a lesson in business and hope

http://www.latimes.com/news/nationworld/nation/la-na-mba29mar29,1,4971841.story

"With the assistance of the Idea Village, a nonprofit that has provided scores of local businesses with technical support, contacts and capital, the students — 15 in all — have adopted several enterprises, among them the Community Book Center. Their mission is to show the businesses ways to grow and sustain in post-Katrina New Orleans.The storm destroyed or financially hurt more than 80% of the 12,695 small businesses that were in Orleans Parish before Katrina, local business officials said. The few that have reopened are struggling to stay afloat with fewer customers, reduced profits and higher labor costs.The Stanford students think they can use their college training to help the small-business owners maximize their potential in the face of post-storm challenges."Education is what you learn in the classroom," said Daryn Dodson, 27, who organized the student group. "It doesn't mean anything until you apply it practically."



New Orleans is still in an poor situation economically, although could we expect different? The first article I found, was the $2.8M verdict from Allstate. After reading the entire article i found that numerous other people are awaiting verdict from the courts on similar claims. Should the client have been awarded $2.8M, while numerous others are sleeping on the streets while Allstate battles it out with a single home owner??? That was just a little food for thought, now on to the economics of Hurricane Katrina. What the Standford students are doing is what New Orleans needs...more business. They need to be able to regrow as to support themselves as the city they are. The best way to help them rebuild is to show the businesses how to grow, to attract new people to New Orleans, and to support themselves economically. What better way to help the economy than through the use of human capitol (including the educated Standford Students).

Growth Slows in Services Sector

Growth Slows in Services Sector

ISM's nonmanufacturing index slid to 52.4 in March -- lower than economists forecast.
From Wire Reports Posted April 5, 2007
http://www.orlandosentinel.com/business/orl-econ0507apr05,0,6558117.story?coll=orl-business-headlines

Service industries grew at the slowest pace in almost four years in March, leaving the economy more exposed to slumps in manufacturing and housing.The Institute for Supply Management's index of nonmanufacturing businesses including banks, builders and retailers slid from 54.3 to 52.4, lower than economists anticipated.

Orders placed with American factories rose 1 percent in February, the Commerce Department said Wednesday in Washington, also less than analysts predicted.Services, which account for 90 percent of the economy and have propped up growth for the past year, are now being hurt by rising fuel costs and slowing sales.Even so, March was the 48th straight month of growth in the nonmanufacturing industries."We're in a very uncomfortable place right now," said Cary Leahey, senior economist at Decision Economics Inc. in New York. "Not only are things more uncertain, but the risks of slower growth have gone up."

Climbing costs also make it tough for the Federal Reserve to respond to weakness in the economy by cutting interest rates. Stocks had little reaction to the report, holding onto their gains of the previous session. The Dow Jones industrial average rose 19.75, or 0.16 percent, to 12,530.05. Broader stock indicators made modest gains, with the Standard & Poor's 500 index rising 0.11 percent to 1,439.37, and the Nasdaq composite index gaining 0.34 percent to 2,458.69.

Traders' attention will now shift to the Labor Department's monthly jobs report on Friday, which economists predict will show a pickup in employment.The ISM report found that new export orders, a sign of strength in previous reports, fell hard in March. The export orders index showed a contraction for the month, coming in at 48.5 and down from 59 in February.David Resler, chief economist at Nomura Securities, said that in addition to housing, slowing business investment in machinery and other goods has also weighed on the economy last month."Why it's slowed down is a bit of a puzzle," he said, since all the conditions for business investment are in place: corporate profits are high, interest rates are still relatively low, and companies are putting their current equipment to heavy use.



This article puzzled me, and I read it numerous times. Why would the service industries (retail most specficially) be decreasing as more people are becoming employed? It seems to me that more people employeed would cause an increase in spending. Are fuel costs that much of a concern? I can not find a plausible explanation to this problem, and the more i research it, the more it seems no one is sure of the reason this happening. Why aren't consumers spending their money? This is not good news for our economy, we need consumers to spend. Why is this happening and what can we do to change it?