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Economy

As part of legislation, Congress made it illegal for banks to charge a certain percentage to merchants when a debit card was swiped.  As a result, the merchant was able to retain more of the purchase price, but the bank lost a segment of its revenue; profits were threatened.

Because banks don’t enjoy profit margins significantly above the average, they have to work to retain whatever margin they DO have.  This means that the lost revenue from debit card swipes paid via the merchant would have to be made up elsewhere.

Banks began to end free checking.  They even began to add $5.00 fees for using a debit card for purchases.  The banks changed the way and manner in which they billed individuals based on indiscriminate legislation.

Now consider Verizon.  The telecommunications giant introduced a $2.00 fee for electronic billing to certain customers.  There was o regulation that forced this move, no change in laws.  Verizon simply felt that they need to move revenue in a specific segment.

Customers were enraged.  And Verizon changed course and ended the charge:

Verizon Wireless bowed to a torrent of criticism on Friday and reversed a day-old plan to impose a $2 bill-paying fee that would have applied to only some customers.

The consumer vitriol, which cascaded across Twitter and onto blogs and petitions all around the Web, struck a chord with a company that was clearly not expecting it.

“The company made the decision in response to customer feedback about the plan, which was designed to improve the efficiency of those transactions,” Verizon Wireless said in a statement referring to the reversal.

Companies risk capital in an effort to produce a product or service that the consumer wants.  In return for this risk, investors desire a return on capital.  If they fail to obtain this return, they move their capital somewhere else.  Therefore, it is incumbent for a company to look to improve revenues in any way they can.  And if those methods fail in the market place, shrewd companies will adapt.  Inefficient companies will fail.

And all of this is achieved through the free market.  Not one of government control.

Every year the Associated Press interviews top economists and asks them for their thoughts on the coming year.  This year we have good news:

The three dozen private, corporate and academic economists expect the economy to grow 2.4 percent next year. In 2011, it likely grew less than 2 percent.

The year is ending on an upswing. The economy has generated at least 100,000 new jobs for five months in a row — the longest such streak since 2006.

The number of people applying for unemployment benefits has dropped to the lowest level since April 2008. The trend suggests that layoffs have all but stopped and hiring could pick up.

While a 2.4% growth rate isn’t as large as we would like to see, it does represent a better than 20% increase over last year’s numbers.  As long as we continue to grow, every little bit helps.  However, the employment picture doesn’t seem to look ay brighter for next year that for this year:

Unemployment will barely fall from the current 8.6 percent rate, though, by the time President Barack Obama runs for re-election in November, the economists say.

Not only has this economic crisis been deep but it’s been wide.  We’re gonna be looking at elevated unemployment for years to come.

Disclaimer:

This is a topic that earns conservatives a bad name.  Or rather, this is a topic that liberals are easily able to use in order to give conservatives a bad name.  This is an unfortunate reality, for IN reality, it is the conservative that gives more to charity than the liberal:

The fact is that self-described “conservatives” in America are more likely to give—and give more money—than self-described “liberals.” In the year 2000, households headed by a conservative gave, on average, 30 percent more dollars to charity than households headed by a liberal. And this discrepancy in monetary donations is not simply an artifact of income differences. On the contrary, liberal families in these data earned an average of 6 percent more per year than conservative families.

So, with that said, let me make it clear that what I describe as policy in no way or manner represents my individual and specific view of the actual person, their plight, human spirit and personal tragedy.

Okay, now, onward.

I caught a Reuters article recently.  Specifically detailing the impact of the recession on our children; our homeless children:

In a report issued earlier this month, the National Center on Family Homelessness, based in Needham, Massachusetts, said 1.6 million children were living on the streets of the United States last year or in shelters, motels and doubled-up with other families.

That marked a 38 percent jump in child homelessness since 2007 and Ellen Bassuk, the center’s president, attributes the increase to fallout from the U.S. recession and a surge in the number of extremely poor households headed by women.

To be sure, we have work to do.  The problems surrounding kids who don’t have hoes is bad.  And getting worse.  I don’t think there’s a soul alive who who disagree that something, anything, has to be done.  But it’s important to acknowledge that the thing, the “anything, is going to come in two forms:

  1. Direct assistance to the displaced families right now.
  2. Actions that will prevent the homeless condition from occurring in the first place.

While noble, I am less interested in the first, as a matter of policy, than I am in the second.  Consider this:

As her mother sat in a homeless shelter in downtown Miami, talking about her economic struggles and loss of faith in the U.S. political system, 3-year-old Aeisha Touray blurted out what sounded like a new slogan for the Occupy Wall Street protest movement.

“How dare you!” the girl said abruptly as she nudged a toy car across a conference room table at the Chapman Partnership shelter in Miami’s tough and predominantly black Overtown neighborhood.

There was no telling what Aeisha was thinking as her 32-year-old mother, Nairkahe Touray, spoke of how she burned through her savings and wound up living in a car with five of her eight children earlier this year.

Think of that.  This woman is trying to care for a family of 9 on her own.  Ms. Touray is 32 years old and has 8 children.  In comparison, I had yet to be married at 32.  And now, as a professional married to another professional I have two children.  Without making any judgements as to decisions or life circumstances, as a 32 year old professional, I’m certain that I would have struggled caring for 8 kids.  Even making it to work would be difficult if not impossible.

Again, my interest in the conditions of the poor and homeless in America are more focused on preventing single 32 year-old women from having 8 children.  To put this in perspective, if you were to take ALL families in 2011, the percent of them that have 7 or more members is 2.6%.  When you look at only female householder, the percentage of families with 6 members is 2.8%.  In a perverse fact of life, the problem gets worse as women find themselves raising the family alone.

Certainly I can’t know the journey that Ms. Touray has taken to get to where she is.  Her life could be one of immeasurable bad luck and unbelievable twists of fate that have led her to where she is.  However, I suggest that another theme exists.  One that we can change.

That is, there is a significant portion of our population that makes misinformed and bad decisions that ted to put them in cohort groupings that lead to poor outcomes.  Is it perfectly allowable that a single woman would want to make it on her own and raise a family of 8 children?  Sure, without a doubt.  However, if a trusted friend or sister were to seek your advice on her decision to embark on this path, what might your counsel look like?  Would you caution her?  Might you recommend that she obtain an education?  Perhaps secure income?

Something.

What would you counsel your own daughter to do?

And if THAT answer is different than, “I’d do nothing.  However, I would continue to lavish untold amounts of mine and my neighbor’s money in order to support her.”, then I ask you:

Why aren’t we making YOUR answer policy?  Why aren’t we telling our Ms. Tourays of the world that it’s generally not accepted wisdom to create a condition where you are single with 8 kids?  In fact, why is it so “insulting and disparaging” even to merely suggest such advice?

Got a bunch of baseball cards in the attic?  Beanie Babies maybe?  How about some old CD’s?

Now, say ya wanna sell ’em.  Everyone knows that if you start the bidding to high you won’t get any takers.  Bring the price down and you can sell almost anything.

Simple:  More expensive, fewer people buy.  Less expensive, more people buy.

Which makes this so mind boggling:

Eight states will ring in the New Year with a higher minimum wage, under state laws that require wage floors to keep apace with inflation. San Francisco, one of the few cities that sets its own minimum wage above the federal level, is also raising wages for the lowest-paid workers in the new year. It will become the first big city in the country to require companies to pay their workers more than $10 an hour.

The minimum wage increases in Arizona, Colorado, Florida, Montana, Ohio, Oregon, Vermont and Washington will be 28 cents to 37 cents an hour, according to the National Employment Law Project. That is an extra $582 to $770 a year for a full-time minimum wage worker, and resets these states’ minimum wages to $7.64 to $9.04 an hour.

At that higher end is Washington State, which will become the first state in the nation to set its minimum wage above $9 an hour. For reference, the federal wage floor for most workers is $7.25 an hour.

I get it, I do.  No one’s time should be worth so little.  However, by forcing businesses to pay more for labor than they otherwise should, they will buy less labor.  And lastly, should an individual be free to bargain for the value of his time?

 

Christmas is more expensive this year.  3.5% more expensive:

Giving the holiday presents of a French hen, a milking maid, a leaping lord or even a partridge in a pear tree is rather unlikely in this day and age. But the gifts from the favorite holiday carol “The 12 Days of Christmas” are lighthearted clues to how the economy is faring.

Over all, prices are fairly stable and not rising precipitously for even the quirkier gifts, according to the Christmas Price Index released for the 28th year by PNC Wealth Management, part of the PNC Financial Services Group. On the down side, the price tag for the eye-popping 364 items and services in each of the song’s verses breaks $100,000 for the first time this year.

Gold, for example — as in the five golden rings — has fallen in price. Those rings (fairly lightweight ones, one would think) come to $645, down from $649.95 last year. Even though gold commodities, an investor haven, have been hovering at record highs recently, the demand for gold at retail has been weakening.

Unsurprisingly, labor costs remained fairly flat. The nine ladies dancing, for example, remained static, at $6,294, the same as last year, according to figures from Philadanco, a dance company in Philadelphia. The 11 pipers piping, at a price of $2,427.60, and 12 drummers drumming, for $2,629.90, were up modestly, about 3 percent. The only unskilled laborers in the verses are the eight maids-a-milking, who are calculated as earning the $7.25 minimum hourly wage. That wage did not rise in 2011 for the second straight year, so their cost stayed the same.

The price tag for one round of gifts is $24,263.18 this year, up $823.80 from last year. Repeating the gifts totaled slightly more than $101,000, a gain of 4.4 percent, also close to the federal price index.

It would be fun to “gift” the 12 days of Christmas one year.

 

So, I get the hinge.  The Democrats in the Senate won a vote to extend the payroll tax cut for 2 months.  The House GOP doesn’t like that bill and wants to vote on one of their own.  They want the tax cut to be longer than 2 months, more like a year:

The fourth-ranking House Republican argued Tuesday that a two-month extension of the payroll tax cut “would do more harm than good.”

Now, in so far as we can reduce the tax burden for a s long as we can, I resonate with the good Mr. Hensarling, Rep from Texas.  What I don’t understand however, is why even such a relatively short extension of a year is thought to be THAT much better.  If you’re gonna end the tax, end the tax.  A temporary reduction is just as random and unpredictable if it’s 2 months or 12.

I’m a little disappointed in both parties over this one.

The market isn’t perfect.  It’s a system kinda predicated on failures.  As capital in the hands of the incompetent isn’t used to it’s potential, that capital will flow to it’s best use.

However, some of the failures are mind boggling.

ANDERSLOV, Sweden — Several blond residents of a southern Swedish town were left with green hair after an unusual reaction between the water supply and the shower system of a number of new homes.

Authorities began investigating when a number of inhabitants of Anderslov complained that their hair suddenly turned green, Swedish newspaper Skanskan reported.

They tested the water supply in several homes to see if there was a high level of copper — known to turn hair green — but recorded only normal levels of the metal.

However, when hot water was left in the houses’ water systems overnight, the amount of copper in it was found to increase to five or 10 times the normal amount.

Investigators concluded that the hot water must have peeled copper from the pipes and water heaters. The copper then was absorbed into the water, causing the shock hair color change when residents showered.

The problem was found to be worst in new homes, where pipes lacked coatings.

Now, we can get into the benefits of state mandated housing regulations or private managed regulating agencies.  Either way, the solution to the copper in the water problem can’t be this:

Residents were told wash their hair in cold water or live in an older house to avoid the problem.