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	<title>Kyle Berg &#187; Economics</title>
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<link>http://kyleberg.com</link>
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<title>Kyle Berg</title>
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		<title>Economic Perception</title>
		<link>http://kyleberg.com/2008/05/08/economic-perception/</link>
		<comments>http://kyleberg.com/2008/05/08/economic-perception/#comments</comments>
		<pubDate>Fri, 09 May 2008 04:40:09 +0000</pubDate>
		<dc:creator>Kyle</dc:creator>
				<category><![CDATA[Economics]]></category>

		<guid isPermaLink="false">http://kyleberg.com/?p=506</guid>
		<description><![CDATA[Maybe I shouldn&#8217;t be amazed, but I am. Perhaps disgustedly dumbfounded would be more proper phrasing. Since I&#8217;ve gotten back to the United States, I marvel at how desperately the media tries to paint our economic situation as dire. One would guess we spent our days wringing our hands, looking for soup lines, and wandering [...]]]></description>
			<content:encoded><![CDATA[<p>Maybe I shouldn&#8217;t be amazed, but I am. Perhaps disgustedly dumbfounded would be more proper phrasing. Since I&#8217;ve gotten back to the United States, I marvel at how desperately the media tries to paint our economic situation as dire. One would guess we spent our days wringing our hands, looking for soup lines, and wandering the streets in search of employment. My guess is that most people of the world would kill to live through whatever economic &#8220;hardship&#8221; we&#8217;re experiencing. I again find myself wishing to God we demanded more economic education in our schools.</p>
<p>Sure, food prices are rising rapidly. But this is happening all over the world and has a lot to do with asinine ethanol policies and barriers to free trade. Sure, gas is expensive and I think more about whether or not I really need to run out to the mall or if I should save the gallon of gas. But again, this is happening all over the world as other countries grow, produce, and use more energy. For perspective, adjust the dollar for inflation and compare prices to the gas lines of the late 1970s, and we&#8217;re still paying roughly the same, but without the lines. Again, some of the suffering could be alleviated by better energy policy and allowing ourselves to increase our production capacity. We&#8217;re finding a way to adapt and the lack of change in our behavior indicates it. My friend from Switzerland said he couldn&#8217;t afford the <em>luxury</em> of a car and paying over $6/gal over there. Until I see no more solo drivers, streets full of bicycles, and we carpool to church and restaurants rather than just meeting there, you won&#8217;t convince me it&#8217;s as bad as the media says. And then there&#8217;s the &#8220;mortgage crisis.&#8221; You would think no one owned a home and that people were being tossed to the streets by the millions. In reality, it is a market correction that needed to take place and affected something like 2-4% of home owners. Finally we have the big R-word, recession. Economists forecast something like a 20-30% chance we will hit a recession <em>later</em>. That means there&#8217;s a better chance we won&#8217;t. Yet if you were to go down the street and ask people if we are <em>in a recession right now</em>, I&#8217;d bet the majority would say yes.</p>
<p>There is no reason for doom and gloom. We live in the United States of America, the country many people dream of one day entering. We wake up every day with opportunity and freedom. I cannot even begin to imagine some of my Argentine friends&#8217; reactions if they were able to live like us for a few days. If they then heard us complaining and fretting about the future, they would think us the most ungrateful group of people they had ever seen. Many of our troubles are self-inflicted, and this ought to inspire us to correct our mistakes and, for God&#8217;s sake, lower taxes, not despair. I for one, will not let the media dictate my life and steal my happiness and optimism.</p>
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		<title>Thinking about &#8220;Free&#8221;</title>
		<link>http://kyleberg.com/2007/10/28/thinking-about-free/</link>
		<comments>http://kyleberg.com/2007/10/28/thinking-about-free/#comments</comments>
		<pubDate>Sun, 28 Oct 2007 05:43:11 +0000</pubDate>
		<dc:creator>Kyle</dc:creator>
				<category><![CDATA[Economics]]></category>

		<guid isPermaLink="false">http://kyleberg.com/2007/10/28/thinking-about-free/</guid>
		<description><![CDATA[About 2 1/2 weeks ago, some of the other volunteers I met in Barracas were nice enough to offer me a ride most of the way home. As we drove down Avenida Libertador, the law school of the University of Buenos Aires came up on our right. The girl driving gestured emphatically and bragged about [...]]]></description>
			<content:encoded><![CDATA[<p>About 2 1/2 weeks ago, some of the other volunteers I met in Barracas were nice enough to offer me a ride most of the way home. As we drove down Avenida Libertador, the law school of the University of Buenos Aires came up on our right. The girl driving gestured emphatically and bragged about the school. &#8220;Where else in the world can you go to law school without paying?&#8221; she asked. &#8220;At least not paying right now,&#8221; I said half-heartedly, not wanting to make a discussion out of it, yet feeling compelled to make an economics quip for some silly reason. Fortunately, it went right over everyone&#8217;s head and nothing became of it.</p>
<p>As I waited an exorbitant amount of time at the Juramento train station, my mind kept going back to that brief, seemingly insignificant moment. It was one of those where living in a foreign culture allowed me to see the locals and yet examine myself in a different light. <em>Why did it bother me that someone was bragging about a &#8220;free&#8221; education? Sure it&#8217;s not really free. Someone is paying for it, just not the student. But who cares? The same thing happens in the U.S. with countless issues. Why think about this now?</em> What struck me was the pride and emotional attachment she had formed with &#8220;giving&#8221; an education to anyone who wanted it. Even though she worked in human resources and wasn&#8217;t interested in law school, the idea that any Argentine could study to be a lawyer made her feel something special.</p>
<p>No matter how much we discussed the matter, more than likely, she would cling to the pride she felt with the country&#8217;s &#8220;free&#8221; education. I could talk about the poor condition of the University and how I&#8217;ve heard its own students make jokes regarding its lack of materials or modern facilities. Then I could continue with the idea that the education really isn&#8217;t free because the teacher salaries, buildings, and electricity are funded by taxpayer pesos. Finally, we could debate the idea of funding by taking from a certain population segment versus only requiring the customers to pay. But again, the emotional attachment would not only remain in tact, it would become more fervent.</p>
<p>It may not seem like much, and I cannot explain this subjective moment. But it was an instant where an idea cemented itself as a firm conviction. I became aware of the fundamental reason I could never condone the seizure of one&#8217;s belongings in order to give them to others (a.k.a. socialism). No matter how subtle, and in spite of every heart wrenching appeal, it is based on envy. As a Christian, how can I support a mindset that promulgates covetousness while simultaneously discouraging personal responsibility?</p>
<p>First, I put myself on the hypothetical receiving end. A few examples came to mind and each was was rooted in envy.</p>
<p><em><strong>As a college student:</strong></em> I don&#8217;t have the money to pay for school and my parents didn&#8217;t save like other families. (It&#8217;s the obligation of others to fund public universities so I can attend free of charge or at least received subsidized tuition and loans. Envy).</p>
<p><em><strong>As a farmer:</strong></em> My product isn&#8217;t fetching the price I would like. (Others ought to spend more of their paychecks by paying government regulated prices so I can stay in business. Envy).</p>
<p><em><strong>Sports team owner:</strong></em> So many other cities are paying for stadiums with public funds. (My team needs one too. Envy).</p>
<p>Next, I considered the matter as if I were a lawmaker and thus responsible for taxation. Still, no matter the desired outcome, I could not justify taking from others. I could not find biblical justification to force others to comply with my projects that went beyond the basic functions of government.  Everything was based on a comparison to others and a use of emotion rather than on a foundational principle or conviction.</p>
<p>It can be disheartening to realize how much public thinking is based on envy. After being told how bad our lives are or what we don&#8217;t have what someone else has, we demand action. We forget any economic or historical context and don&#8217;t think about how our actions affect our fellow citizens&#8211;no matter how indirectly.</p>
<p>Were economic arguments made without emotional pleas, they would be dismissed out of hand. For instance, if I walked down the streets of Fargo and robbed $100 from every house in my neighborhood that was better off than mine, I would be without justification. Yet I do the same thing when I demand that those same homeowners pay higher taxes to cover my schooling, farm subsidy, stadium, small business, or any other entity. Only under the stealth method of obligatory withholding does it come across differently and make people like me seem like heartless monsters. But it is a process to which we acclimate and it makes me yearn for the day when we can call envy by its name and enough people say &#8220;Where does it stop?&#8221;</p>
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		<title>Venezuelan Price Controls</title>
		<link>http://kyleberg.com/2007/09/15/venezuelan-price-controls/</link>
		<comments>http://kyleberg.com/2007/09/15/venezuelan-price-controls/#comments</comments>
		<pubDate>Sat, 15 Sep 2007 07:05:21 +0000</pubDate>
		<dc:creator>Kyle</dc:creator>
				<category><![CDATA[Economics]]></category>

		<guid isPermaLink="false">http://kyleberg.com/2007/09/15/venezuelan-price-controls/</guid>
		<description><![CDATA[The economic brilliance of Venezuelan president Hugo Chávez continues to amaze the world. Rather than performing training drills or studying in the classroom, some of his reserve soldiers are being sent out to enforce government price controls.  As Chávez spreads his systematic, maniacal socialism throughout Venezuela, the weakened economy is deteriorating faster than a [...]]]></description>
			<content:encoded><![CDATA[<p><a href="http://kyleberg.com/wp-content/uploads/2007/09/716151.jpg" title="716151.jpg"><img src="http://kyleberg.com/wp-content/uploads/2007/09/716151.thumbnail.jpg" title="Venezuelan soldiers checking price controls" alt="Venezuelan soldiers checking price controls" align="left" /></a>The economic brilliance of Venezuelan president Hugo Chávez continues to amaze the world. Rather than performing training drills or studying in the classroom, some of his <a href="http://www.lanacion.com.ar/942882">reserve soldiers are being sent out</a> to enforce government price controls.  As Chávez spreads his systematic, maniacal socialism throughout Venezuela, the weakened economy is deteriorating faster than a Hollywood marriage. As always, centrally planned prices are leading to shortages as businesses fail or are shut down for defying regulations. Many choose not to sell anything as the mandated selling price would result in a net loss. The inefficiencies of such regulated economies are obvious and well documented. Unfortunately for the Venezuelans, as Chávez seizes more private businesses and converts them to state entities, they enjoy less and less freedom.</p>
<p>While the United States is far from this state of affairs, Venezuela serves as an important reminder. Without <em>both</em> the documents given to us by the Founding Fathers and a capitalistic economy, the United States would never have achieved such greatness. As the late <a href="http://en.wikipedia.org/wiki/Milton_Friedman">Milton Friedman</a> best explained, there is a direct relationship between <a href="http://www.amazon.com/Capitalism-Freedom-Anniversary-Milton-Friedman/dp/0226264211/ref=pd_bbs_sr_1/105-5450345-9112463?ie=UTF8&amp;s=books&amp;qid=1189837128&amp;sr=8-1">capitalism and freedom</a>. The more capitalistic a nation, the more liberty its people enjoy.  Conversely, the more socialistic a nation, the more the heavy hand of government must step in to maintain its control.</p>
<p>On its face, the correlation appears so simple. Yet I fear many Americans do not connect the dots when it comes to economics. The assault on capitalism and corporations is so strong that it even slips into the subconscious of conservatives. There is such a fear of being stigmatized as unrealistic, cruel, or condescending, that many people I know that would otherwise be conservative, acquiesce. They talk themselves into supporting programs or accepting mandatory deductions from their paycheck because we &#8220;have a responsibility&#8221; to &#8220;help others&#8221; or &#8220;it&#8217;s only right.&#8221; Or, they support tobacco or local sales taxes in order to &#8220;generate more revenue&#8221; rather than demanding spending cuts or looking for an answer through private enterprise. &#8220;It&#8217;s just the reality of the situation&#8221; is often the refrain. But when does that justification stop being valid? Never. And therein lies the danger. Usually, we trade away our freedoms in a piecemeal fashion, but they are traded away nonetheless. Once another 1/2 cent of every dollar is taxed, regulation put in place, or agricultural price floor mandated, the chances they will ever go away are slim to none. On the other hand, it&#8217;s almost certain the government will need to grow in order to maintain the trade off we made.</p>
<p>We might be a long way from Venezuela, but as we slowly acclimate to socialism, we stray further from the capitalism that has made our nation great. No nation has ever taxed or regulated its way to greatness and I doubt any ever will. The excellence of America thrives because its people are allowed to live free and to innovate. It&#8217;s a shame capitalism, which has done more to improve the lives of people across the world than any program FDR or Bono could have envisioned, is so maligned. And more perverse still is the glorification of a socialism that has taken the lives of tens of millions of people and left nations destitute. If we believe socialism is the answer to the world&#8217;s evils, then lets go after it with gusto and follow the lead of Chávez. But if it is as devastating and controlling as history shows, why do we want anything to do with it, no matter how small?</p>
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		<title>Poverty is Relative</title>
		<link>http://kyleberg.com/2007/09/07/poverty-is-relative/</link>
		<comments>http://kyleberg.com/2007/09/07/poverty-is-relative/#comments</comments>
		<pubDate>Fri, 07 Sep 2007 03:55:15 +0000</pubDate>
		<dc:creator>Kyle</dc:creator>
				<category><![CDATA[Economics]]></category>

		<guid isPermaLink="false">http://kyleberg.com/2007/09/07/poverty-is-relative/</guid>
		<description><![CDATA[The United States is so prosperous that the majority of its citizens have no perspective on how much of the rest of the world lives. Those labeled as poor or &#8220;disadvantaged&#8221; today lead better lives than even royalty of the past could have imagined. The &#8220;poverty&#8221; in our nation is often more a figment of [...]]]></description>
			<content:encoded><![CDATA[<p><img src="http://kyleberg.com/wp-content/uploads/2007/09/children2.thumbnail.jpg" title="Hungry children" alt="Hungry children" align="left" border="0" hspace="4" vspace="4" />The United States is so prosperous that the majority of its citizens have no perspective on how much of the rest of the world lives. Those labeled as poor or &#8220;disadvantaged&#8221; today lead better lives than even royalty of the past could have imagined. The &#8220;poverty&#8221; in our nation is often more a figment of our imagination and a product of emotionally manipulative reporting and political pandering. Consider these statistics from Robert Rector (affectionately referred to as Eeyore around the office for his lack of emotion) of the <a href="http://www.heritage.org">Heritage Foundation</a>:</p>
<blockquote><p>The following are facts about persons defined as &#8220;poor&#8221; by the Census Bureau, taken from various gov­ernment reports:</p>
<ul>
<li>Forty-three percent of all poor households actu­ally own their own homes. The average home owned by persons classified as poor by the Census Bureau is a three-bedroom house with one-and-a-half baths, a garage, and a porch or patio.</li>
</ul>
<ul>
<li> Eighty percent of poor households have air conditioning. By contrast, in 1970, only 36 percent of the entire U.S. population enjoyed air conditioning.</li>
</ul>
<ul>
<li> Only 6 percent of poor households are over­crowded. More than two-thirds have more than two rooms per person.</li>
</ul>
<ul>
<li> The average poor American has more living space than the average individual living in Paris, London, Vienna, Athens, and other cities throughout Europe. (These comparisons are to the average citizens in foreign countries, not to those classified as poor.)</li>
</ul>
<ul>
<li> Nearly three-quarters of poor households own a car; 31 percent own two or more cars.</li>
</ul>
<ul>
<li> Ninety-seven percent of poor households have a color television; over half own two or more color televisions.</li>
</ul>
<ul>
<li> Seventy-eight percent have a VCR or DVD player; 62 percent have cable or satellite TV reception.</li>
</ul>
<ul>
<li> Eighty-nine percent own microwave ovens, more than half have a stereo, and more than a third have an automatic dishwasher.</li>
</ul>
</blockquote>
<p>The entire article can be found <a href="http://www.heritage.org/Research/Welfare/bg2064.cfm">here</a>.</p>
<p>I could go on and on about people I know in Argentina who do not own a home, have never learned to drive, enjoy air conditioning only at the mall, and may have never even seen a dishwasher. However, they are content and view themselves as well-off, fortunate, and among the middle class. The notion of being classified as &#8220;poor&#8221; or &#8220;downtrodden&#8221; would never enter their mind. Whether Americans compare their living conditions to other countries or the rest of human history, the result is the same. There is absolutely nothing to complain about.  Whereas true poverty in other parts of the world is a state of reality and almost inescapable for many, in our country, it is, almost without fail, the consequence of our actions.</p>
<p>What is unfortunate is the number of people consumed with envy and pessimism because they have been told someone owes them or did them wrong. Come to Argentina, which is better off then many South American countries, and try the same talking points concerning poverty and you will be laughed out the door. It really is fascinating how much of our perception is based on what we are told rather than what is true.</p>
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		<title>The Economist Cites Latin American Economic Growth</title>
		<link>http://kyleberg.com/2007/08/24/the-economist-cites-latin-american-economic-growth/</link>
		<comments>http://kyleberg.com/2007/08/24/the-economist-cites-latin-american-economic-growth/#comments</comments>
		<pubDate>Sat, 25 Aug 2007 02:31:37 +0000</pubDate>
		<dc:creator>Kyle</dc:creator>
				<category><![CDATA[Economics]]></category>

		<guid isPermaLink="false">http://kyleberg.com/2007/08/24/the-economist-cites-latin-american-economic-growth/</guid>
		<description><![CDATA[The August 18th issue of The Economist has an article on the economic progress being made in Latin America. It makes a special note of people rising from poverty in Mexico and Brazil. Argentina seems to be a mix of good and bad economic news. On the positive side, tourism continues to boom as people [...]]]></description>
			<content:encoded><![CDATA[<p>The <a href="http://www.economist.com/opinion/displaystory.cfm?story_id=9653053">August 18th issue of The Economist</a> has an article on the economic progress being made in Latin America. It makes a special note of people rising from poverty in Mexico and Brazil. Argentina seems to be a mix of good and bad economic news. On the positive side, tourism continues to boom as people flock to take advantage of the peso conversion rate. Additionally, the country remains incredibly wealthy in natural resources. The flipside is corruption and poor economic policies abound and the citizenry steadfastly clings to a socialistic ideal. While better than years gone by, it continually startles me to observe the inflation on a month to month basis. This remains one of my chief concerns when looking at the future of the country. The Economist overview of Argentina can be found <a href="http://www.economist.com/countries/Argentina/">here</a>.</p>
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		<title>Sick Employees</title>
		<link>http://kyleberg.com/2007/05/31/sick-employees/</link>
		<comments>http://kyleberg.com/2007/05/31/sick-employees/#comments</comments>
		<pubDate>Fri, 01 Jun 2007 02:56:00 +0000</pubDate>
		<dc:creator>Kyle</dc:creator>
				<category><![CDATA[Economics]]></category>

		<guid isPermaLink="false">http://kyleberg.com/2007/05/31/sick-employees/</guid>
		<description><![CDATA[In my Spanish class yesterday, Maria was telling me about all the government mandated paid vacation time employers must give to employees. There&#8217;s a minimum of 2 weeks right off the bat after hiring. If you&#8217;re a student, you&#8217;re granted 12 days per year to be used at your discretion to take exams or study. [...]]]></description>
			<content:encoded><![CDATA[<p><a href="http://kyleberg.com/wp-content/uploads/blogger/_U5D9yAgx4X8/Rl-peECCtfI/AAAAAAAAAS0/CF33lZaX2FU/s1600-h/doctor.jpg" onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}"><img src="http://kyleberg.com/wp-content/uploads/blogger/_U5D9yAgx4X8/Rl-peECCtfI/AAAAAAAAAS0/CF33lZaX2FU/s200/doctor.jpg" style="margin: 0pt 0pt 10px 10px; float: right; cursor: pointer" id="BLOGGER_PHOTO_ID_5070958039385945586" border="0" /></a>In my Spanish class yesterday, Maria was telling me about all the government mandated <span style="font-style: italic">paid</span> vacation time employers must give to employees. There&#8217;s a minimum of 2 weeks right off the bat after hiring. If you&#8217;re a student, you&#8217;re granted 12 days per year to be used at your discretion to take exams or study. When you get married, you&#8217;re granted 12 days for the wedding, honeymoon, etc. Sick time must be paid and I believe it&#8217;s 12 days as well. If a woman has a child, she receives 45 days vacation on both sides of the pregnancy and the government gives her a small payment as well. There are more. And trust me, every worker in Argentina is well aware of their vacation &#8220;rights&#8221;.</p>
<p>I realize these are Argentine laws, but it got me thinking because the socialism I see here is a glimpse of the United States in the future. Honestly, sometimes I wonder how businesses do it. How they put up with lawsuits, harassment claims, government regulation, investigations, over taxation, accusations of gouging, etc. is beyond me at times. They are put down in the press as greedy while the worker is upheld as moral and a victim of &#8220;The Man&#8221;. Business provides us with jobs not only to feed our families, but a chance to save for the future and create a better life than anyone else has ever enjoyed in the history of this planet. This work is a gift and an opportunity, yet so many view it as an entitlement.</p>
<p>It used to be that business was about making money. Unfortunately, it seems more like a health care provider, daycare center, government tax fund-raiser, or whatever other &#8220;give-me because I want it&#8221; attitude we can come up with. Emotions, not reason rule much of our business policy. Contrary to popular opinion, businesses do not have an unlimited amount of money to meet the wishes of every employee. They cannot arbitrarily decide to set prices in order to be more &#8220;fair&#8221; to the buying public or better compensate their employees. Everything has a cost and employee benefits are no different. They are part of the package offered to attract the best and brightest employees away from competition. They are not a right. Business is about earning a profit and jobs are a byproduct of that pursuit. But when business stops being about making money, we&#8217;re sunk. The more money they make, the better off we are. And the less they make, the worse off we are. Everything has a cost. What we are getting are disguised entitlement programs. Rather than raising taxes to pay for these things, they&#8217;re being sluffed off to employers and ultimately to employees in the form of lower wages.</p>
<p>It might not be emotional or sexy, but economics is consistent and when examined outside of our emotional prejudices, not that complicated. I urge you to read this <a href="http://www.heritage.org/Research/Labor/wm1457.cfm">article</a> from The Heritage Foundation regarding mandatory sick pay and this <a href="http://www.heritage.org/Research/Labor/wm1450.cfm">article</a> about abuses that take place in a mandatory system. They reason through better alternatives while also examining the consequences of government imposed sick pay.</p>
<p>What scares me more than anything about seeing socialism on parade here or in the U.S. is the absolute ignorance in regards to economics. Those with market-based solutions are viewed as cold and uncaring while proponents of government mandates are seen as caring and compassionate. But this &#8220;caring&#8221; costs the government nothing, slows down the economy, and always costs somebody else something. There&#8217;s a phrase that goes something like &#8220;A gift that costs you nothing is no gift at all.&#8221; Yet many see government as the bestower of gifts when it passes regulations. How someone can be seen as compassionate for giving away what is not theirs is beyond me. And what&#8217;s worse, those who make the rest of our lives better by giving us jobs and providing us with cheaper goods and services are seen as villains (i.e. Wal-Mart, Exxon Mobil, Pfizer, others).</p>
<p>Reason is what makes me a conservative. I read and look at what happens in a free market. Then I read and look at what happens in a socialistic system. After that, I take a quick glimpse at history to examine what has succeeded and what has failed. Finally, I compare the two and draw a conclusion. Sure free markets have their problems. But so do socialist ones. Free markets have greed, but they also allow unparalleled liberty, lift people up, and allow them to follow a dream. Socialist systems have greed in leadership and envy and poverty among the citizenry. They are either totalitarian and rule with an iron fist or they lack the rule of law in some or many parts of society (as I see here). Argentina is not as bad off as many other countries. But trust me, our free market is a gift.</p>
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