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	<title>Real World Economics</title>
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	<link>http://www.edlotterman.com</link>
	<description>By Ed Lotterman</description>
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		<title>What some call &#8220;pink slime,&#8221; others call being thrifty</title>
		<link>http://www.edlotterman.com/2012/04/05/what-some-call-pink-slime-others-call-being-thrifty/</link>
		<comments>http://www.edlotterman.com/2012/04/05/what-some-call-pink-slime-others-call-being-thrifty/#comments</comments>
		<pubDate>Thu, 05 Apr 2012 11:26:11 +0000</pubDate>
		<dc:creator>Ed Lotterman</dc:creator>
				<category><![CDATA[Other]]></category>

		<guid isPermaLink="false">http://www.edlotterman.com/?p=3449</guid>
		<description><![CDATA[My own conflicted reactions to discussions of &#8220;pink slime&#8221; &#8211; the processed beef product that is at the center of considerable controversy &#8211; illustrate the complicated economics of modern food and its processing. I can&#8217;t help it; the &#8220;yuk factor&#8221; is familiar for me. I am a farm kid, but I always have hated to watch the evisceration or bleeding of any animal, even fish or fowl, much less do it myself. And two of the most difficult experiences I ever had while working in international development projects involved having to eat repugnant foods. Once, when I already was nauseous from altitude sickness at 14,400 feet in the Peruvian Andes, I had to choke down cau cau &#8211; a mixture of potatoes and sheep tripe &#8211; to avoid offending the Indian woman who was our hostess. Another time, in a fancy restaurant in Sofia, Bulgaria, I had to express pleasure in the breaded calf brains that a local counterpart loved. At the same, it pains me to waste food to an extent that probably rises to the obsessive-compulsive disorder scale. So I instinctively support making use of a food product that is nutritious and safe. Moreover, a cousin who works [...]]]></description>
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		<slash:comments>1</slash:comments>
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		<title>In shipping, cattle and some careers, cycles play out</title>
		<link>http://www.edlotterman.com/2012/04/01/in-shipping-cattle-and-some-careers-cycles-play-out/</link>
		<comments>http://www.edlotterman.com/2012/04/01/in-shipping-cattle-and-some-careers-cycles-play-out/#comments</comments>
		<pubDate>Sun, 01 Apr 2012 11:25:27 +0000</pubDate>
		<dc:creator>Ed Lotterman</dc:creator>
				<category><![CDATA[Other]]></category>

		<guid isPermaLink="false">http://www.edlotterman.com/?p=3447</guid>
		<description><![CDATA[The bottom has fallen out on shipping rates, putting the world&#8217;s ship owners and ocean shipping companies in dire financial straits. For the dry bulk carriers that haul grain, iron ore, coal and similar commodities, charter rates as of February 2012 are down over 94 percent from May 2008. Rates for container ships have not fallen as drastically, but are down 55 percent from two years ago. Only oil tankers have seen little change. Why such drastic changes? The explanation would be familiar to Minnesota hog and beef producers and to aeronautical engineers as well. All of these are &#8220;goods&#8221; in which production cannot be changed instantaneously and for which both supply and demand are &#8220;inelastic.&#8221; Simply put, even if prices change dramatically, the quantities producers are willing and able to sell and that buyers are willing to buy don&#8217;t change very much. The result is a repetitive cycle over time that oscillates from gluts and low prices to dearths and high prices. Consider beef production, familiar to many Minnesotans. Start with prices at some given level. Then there is some change in demand, say in exports sales to Asia. One of the features of such products with inelastic supply [...]]]></description>
		<wfw:commentRss>http://www.edlotterman.com/2012/04/01/in-shipping-cattle-and-some-careers-cycles-play-out/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
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		<title>Health insurance would not be first mandate from government</title>
		<link>http://www.edlotterman.com/2012/03/29/health-insurance-would-not-be-first-mandate-from-government/</link>
		<comments>http://www.edlotterman.com/2012/03/29/health-insurance-would-not-be-first-mandate-from-government/#comments</comments>
		<pubDate>Thu, 29 Mar 2012 11:23:58 +0000</pubDate>
		<dc:creator>Ed Lotterman</dc:creator>
				<category><![CDATA[Other]]></category>

		<guid isPermaLink="false">http://www.edlotterman.com/?p=3445</guid>
		<description><![CDATA[Economists aren&#8217;t lawyers and should not speculate about any Supreme Court ruling on the constitutionality of imposing penalties on people who don&#8217;t buy health insurance. However, they do have insights for considering the issue more broadly. Start by recognizing that the extent to which individuals should be coerced to contribute resources for the well-being of a larger group is an economic question dating to pre-history. Prosperous societies have always implemented some element of such compulsion. All societies recognize the right of government to tax and, in many, to compel individuals to military service. Libertarians may long for government that impinges only minimally on individual autonomy, but history and anthropology show that compelling individuals to help defend the group and to perform tasks like producing food for common consumption has been ubiquitous. Individualists argue that there is a vast gulf between the social pressures within traditional tribes or villages and government mandates per se, but for those who study such societies, the distinction is not clear. In U.S. history, George Washington&#8217;s administration secured legislation requiring all adult males to own guns. How much such laws were enforced is unclear, but the constitutionality of the requirement, with a clear public purpose of [...]]]></description>
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		<slash:comments>16</slash:comments>
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		<title>Right-to-work debate full of economic tradeoffs</title>
		<link>http://www.edlotterman.com/2012/03/25/right-to-work-debate-full-of-economic-tradeoffs/</link>
		<comments>http://www.edlotterman.com/2012/03/25/right-to-work-debate-full-of-economic-tradeoffs/#comments</comments>
		<pubDate>Sun, 25 Mar 2012 11:23:07 +0000</pubDate>
		<dc:creator>Ed Lotterman</dc:creator>
				<category><![CDATA[Other]]></category>

		<guid isPermaLink="false">http://www.edlotterman.com/?p=3443</guid>
		<description><![CDATA[Regardless of what position you take on whether the Minnesota constitution should be amended to make it a &#8220;right-to-work&#8221; state, you probably can find an economist to support it. Unlike, international trade, which economists across the political spectrum generally find beneficial, or environmental economics, in which nearly all economists agree that emissions taxes or cap-and-trade plans are the most efficient ways to deal with pollution, there is little consensus on many areas of labor economics. Moreover, disagreements in labor econ tend to follow political party sympathies more closely than in nearly any other subfield of the discipline. Republican economists tend to criticize minimum-wage laws; Democratic ones see them as useful. Republicans tend to see laws banning gender, race and other forms of discrimination as taking a high cost in terms of economic efficiency; Democrats don&#8217;t. Republicans similarly tend to view unions as reducing economic efficiency while Democrats tend to think they correct failures of unregulated market economies. So it is no surprise that politically conservative economists tend to see any degree of compulsion in labor union membership as doing more harm than good, while liberal ones see important benefits from unionization. They also think that successful collective bargaining is nigh [...]]]></description>
		<wfw:commentRss>http://www.edlotterman.com/2012/03/25/right-to-work-debate-full-of-economic-tradeoffs/feed/</wfw:commentRss>
		<slash:comments>9</slash:comments>
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		<title>Rising farm values changing mix of property taxes</title>
		<link>http://www.edlotterman.com/2012/03/22/rising-farm-values-changing-mix-of-property-taxes/</link>
		<comments>http://www.edlotterman.com/2012/03/22/rising-farm-values-changing-mix-of-property-taxes/#comments</comments>
		<pubDate>Thu, 22 Mar 2012 11:22:04 +0000</pubDate>
		<dc:creator>Ed Lotterman</dc:creator>
				<category><![CDATA[Other]]></category>

		<guid isPermaLink="false">http://www.edlotterman.com/?p=3441</guid>
		<description><![CDATA[Farmland prices are surging just as residential property values continue to slide. These opposing trends in real estate prices may cause significant shifts in the burden of the property tax that supports local units of government such as cities, counties and school districts. This is not yet a public policy issue in Minnesota the way it is in Iowa and some other states, but don&#8217;t count on it lying dormant forever. Let&#8217;s start with the basics of real estate taxes. Local units of government draft budgets and determine the amount of money that must come from the property tax. Then that sum is allocated to specific properties. If all property was taxed exactly alike, that process would be simple &#8211; just divide the amount of money to be raised by the total value of property in the jurisdiction. That would give a percentage to apply to the value of each tract of property to calculate the dollars owed. In real life, we don&#8217;t tax all property the same. Owner-occupied houses pay a lower rate than those rented out. Business buildings have paid higher rates than residences, and so on. Agricultural land gets preferential treatment. Moreover, the mix of residential, commercial [...]]]></description>
		<wfw:commentRss>http://www.edlotterman.com/2012/03/22/rising-farm-values-changing-mix-of-property-taxes/feed/</wfw:commentRss>
		<slash:comments>2</slash:comments>
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		<title>High gas prices have been around before</title>
		<link>http://www.edlotterman.com/2012/03/18/high-gas-prices-have-been-around-before/</link>
		<comments>http://www.edlotterman.com/2012/03/18/high-gas-prices-have-been-around-before/#comments</comments>
		<pubDate>Sun, 18 Mar 2012 11:07:11 +0000</pubDate>
		<dc:creator>Ed Lotterman</dc:creator>
				<category><![CDATA[Other]]></category>

		<guid isPermaLink="false">http://www.edlotterman.com/?p=3431</guid>
		<description><![CDATA[Oil price spikes are not good for the economy, especially in the short term. But neither are they fatal. The U.S. economy, like other market economies, is more resilient than many people give it credit for. It can adjust to higher energy prices, just as it repeatedly has in the past. And, if history and economic theory are guides, sharp increases in the price of any resource usually are followed by long periods in which prices rise by less than average inflation. Start by considering how gas prices have evolved in the past century. Ignoring inflation, a slow increase occurred from 1919 to 1973. Since then, an upward trend took hold that saw sharp spikes whenever there was trouble in the Mideast, usually followed by declines as tensions eased. The first such spike came after the 1973 Arab-Israeli War when Arab-dominated OPEC first flexed its muscles and U.S. gas prices rose from 39 cents a gallon in 1973 to 57 cents a gallon in 1975. There were subsequent spikes as the regime of the Shah of Iran began to crumble in 1979, and from 2002 to 2008 with the Iraq War. Prices fell from 2008 into 2009 but have since [...]]]></description>
		<wfw:commentRss>http://www.edlotterman.com/2012/03/18/high-gas-prices-have-been-around-before/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
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		<title>Gambling highlights conflicted attitudes</title>
		<link>http://www.edlotterman.com/2012/03/15/gambling-highlights-conflicted-attitudes/</link>
		<comments>http://www.edlotterman.com/2012/03/15/gambling-highlights-conflicted-attitudes/#comments</comments>
		<pubDate>Thu, 15 Mar 2012 11:19:14 +0000</pubDate>
		<dc:creator>Ed Lotterman</dc:creator>
				<category><![CDATA[Other]]></category>

		<guid isPermaLink="false">http://www.edlotterman.com/?p=3438</guid>
		<description><![CDATA[Since the genie was let out of the bottle 30 years ago, expanding gambling has been a popular way to increase government spending without raising taxes. Now we may use it to finance a new football stadium. Economics cannot say if this is good public policy. But some insights from economics may help frame the debate. First, money in general is fungible and so are government revenues. If new revenues from gambling are a socially beneficial way of paying for a stadium, they would be an equally good way of paying for existing programs and thus reducing existing taxes. And, if we would not consider expanding gambling to fund current programs or reduce current taxes, why would this be a great option for a new publicly funded stadium? If one believes that governments should not do what the private sector can do more efficiently, then there is no reason government itself should sell gambling to the public. In Minnesota, most consumer spending on gambling takes place in Indian casinos, at a horse track or in connection with charitable formats like pull-tabs. But we do have the Minnesota State Lottery and we participate in multi-state enterprises like PowerBall. Instead of expanding [...]]]></description>
		<wfw:commentRss>http://www.edlotterman.com/2012/03/15/gambling-highlights-conflicted-attitudes/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
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		<title>Pain of higher gas prices outweighs economic benefits</title>
		<link>http://www.edlotterman.com/2012/03/11/pain-of-higher-gas-prices-outweighs-economic-benefits/</link>
		<comments>http://www.edlotterman.com/2012/03/11/pain-of-higher-gas-prices-outweighs-economic-benefits/#comments</comments>
		<pubDate>Sun, 11 Mar 2012 11:11:14 +0000</pubDate>
		<dc:creator>Ed Lotterman</dc:creator>
				<category><![CDATA[Other]]></category>

		<guid isPermaLink="false">http://www.edlotterman.com/?p=3434</guid>
		<description><![CDATA[Do oil price spikes really slow economic growth and harm people&#8217;s disposable incomes? Or is this just &#8220;nonsense,&#8221; to use the words of Caroline Baum, a Bloomberg columnist, in a recent op-ed pooh-poohing the idea that oil price increases harm the economy. That op-ed prompted several emails from readers seeking a second opinion on her views. The answer is that Baum makes at least one good point, but that higher oil prices really do have harmful effects on the overall U.S. economy. Start with the good point. As she notes, some economic sectors do benefit from higher prices. Rising prices make oil production more profitable and motivate greater drilling and resumed pumping from existing wells that are not worth pumping when prices are lower. Greater drilling and production increase employment in the oil sector itself, and in secondary ones that supply inputs like tools, machinery, pipe, diesel fuel and the myriad other items needed for increased production. The input supply firms themselves have higher profits and may invest in new plant and equipment. So there are further effects that spread through the economy like concentric circles after a stone is dropped in a pond. Moreover, the higher profits that result [...]]]></description>
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		<slash:comments>0</slash:comments>
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		<title>Instead of a stadium, why not just pay off the owners?</title>
		<link>http://www.edlotterman.com/2012/03/08/instead-of-a-stadium-why-not-just-pay-off-the-owners/</link>
		<comments>http://www.edlotterman.com/2012/03/08/instead-of-a-stadium-why-not-just-pay-off-the-owners/#comments</comments>
		<pubDate>Thu, 08 Mar 2012 12:05:44 +0000</pubDate>
		<dc:creator>Ed Lotterman</dc:creator>
				<category><![CDATA[Other]]></category>

		<guid isPermaLink="false">http://www.edlotterman.com/?p=3429</guid>
		<description><![CDATA[Despite much evidence that most Minnesotans don&#8217;t want tax money to go for a new Minnesota Vikings stadium, the odds seem to be in favor of a deal that would involve more than half a billion dollars of public money. If a new stadium can&#8217;t be rejected, for once and for all, there is a second-best alternative suggested by the work of Willard Cochrane, a great University of Minnesota ag economist who died Monday. Just buy off the team&#8217;s owners! Like other owners, Zygi Wilf and his partners want a publicly funded stadium in order to increase their own net profits. This would transfer wealth from the public to a small group that has already seen the value of their asset, the Vikings, appreciate by 40 percent in their first five years Minnesota Governor Mark Dayton, along with Vikings&#8217; owner Zygi Wilf, speaks during a press conference about a deal reached among legislative leaders for a new Vikings stadium on Thursday, March 1, 2012, at the state Capitol. (Pioneer Press: Ben Garvin) (Pioneer Press: Ben Garvin)of ownership, at least according to Forbes magazine. The cartel-like status of the NFL lets them threaten to move the team elsewhere. Naturally, many Minnesotans [...]]]></description>
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		<slash:comments>0</slash:comments>
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		<title>Not even money market funds are risk-free</title>
		<link>http://www.edlotterman.com/2012/03/04/not-even-money-market-funds-are-risk-free/</link>
		<comments>http://www.edlotterman.com/2012/03/04/not-even-money-market-funds-are-risk-free/#comments</comments>
		<pubDate>Sun, 04 Mar 2012 12:04:17 +0000</pubDate>
		<dc:creator>Ed Lotterman</dc:creator>
				<category><![CDATA[Other]]></category>

		<guid isPermaLink="false">http://www.edlotterman.com/?p=3427</guid>
		<description><![CDATA[It&#8217;s midnight. Do you know where your money market mutual fund is? Just as with a teenager, your money may well be out somewhere you don&#8217;t like and doing something that would horrify you. Many people, especially in the upper half of the income distribution, have savings in money market funds either directly owned or via 401(k) accounts. But many really don&#8217;t understand what such funds are or the risks that can go with them. Why should anyone be concerned? Go back to mid-September 2008, as Lehman Brothers went under and panic pervaded world financial markets. The Reserve Primary Fund, the oldest and one of the best regarded funds, announced it was suspending payment because it no longer had enough good assets to cover its liabilities. In other words, it didn&#8217;t have enough money to repay everyone if they chose to withdraw their money. It was like the classic movie examples of a bank run when worries about the safety of a bank become a self-fulfilling prophecy. Minneapolis-based Ameriprise Financial, which had $3.2 billion of its clients&#8217; money invested in the fund, didn&#8217;t get word of the shortfall until it was too late. Ameriprise sued Reserve, accusing the fund of [...]]]></description>
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