Archives: Reg Murphy Pubs

Georgia agriculture rocks, check it out

Written by Don Mathews on . Posted in Don Mathews, Reg Murphy.

Drive west across south Georgia to the Alabama line and, depending on which route you take, you’ll pass through towns such as Homerville, Willacoochee, Hahira, Pavo, Ty Ty, Eldorendo.

If you don’t pay attention, you’re likely to think those little towns are nestled in the middle of nowhere.

If you pay attention, you’ll recognize that those little towns are nestled in stuff that is better than gold.

Those little towns are surrounded by acres and acres and acres of cash crops. Peanuts. Cotton. Blueberries. Pecans. Watermelon.

The quantities we’re talking about here blow the mind.

First, there’s the acreage. The U.S. Department of Agriculture estimates that Georgia farmers have planted 1.45 million acres in cotton this year. They’ve planted 700,000 acres in peanuts. That’s down from last year’s record high of 835,000 acres.

Georgia farmers have also planted 360,000 acres of corn, 180,000 acres of winter wheat and 170,000 acres of soybeans.

No wonder farm towns are small. With all those acres planted in crops, where’s room for a town?

Then there’s the quantities of the harvested crops. This year’s peanut crop is expected to be 3.1 billion pounds. Yes — billion, with a b. And, yes, that’s Georgia’s peanut crop, not the nation’s or the world’s.

The forecast for Georgia’s 2018 cotton crop is 2.9 million bales or about 1.45 billion pounds. For corn, 52.8 million bushels. Soybeans, 7.2 million bushels.

In 2017, Georgia farmers produced 700 million pounds of watermelon, 385 million pounds of onions, 193 million pounds of cabbage, 166 million pounds of cucumbers and 107 million pounds of pecans.

Poring over Georgia agriculture data is enlightening and fun. But it doesn’t compare to actually seeing those acres and acres and acres of planted fields on a long drive on two-lane roads through south Georgia farm country.

One suspects that Georgia farmers are obsessive-compulsive. The planted acres are as neat and tidy as can be. The rows of plants are perfectly spaced. The plants themselves are lush and green and full — pretty, too.

I’m partial to all these Georgia crops, but my favorite is blueberries. Blueberries, as the agriculturally cultured know, grow on bushes. The bushes have rich, green leaves and multi-colored branches and canes that twist in whimsical ways.

Blueberry production has really taken off in Georgia over the past generation. As the markets for tobacco and timber have sagged, many farmers have shifted to blueberries.

Georgia is called the peach state. But in 2005, the market value of Georgia’s blueberry crop exceeded the market value of its peach crop, and has every year since. In 2017, the value of Georgia’s blueberry crop exceeded the value of its peach crop by a factor of four.

It’s easy to romanticize about being a farmer — the quiet, the beautiful fields, the closeness to the earth.

The thought of sitting on a shaded porch with a cold beer watching blueberry bushes as far as the eye can see sway in a summer breeze had me checking how much my wife and I have saved for retirement and if there were any small houses for sale in the middle of a blueberry field.

But farming can be a rough go. So many factors are out of a farmer’s control — the weather, for instance.

In 2017, a warm winter followed by several days of freezing temperatures hammered Georgia’s blueberry and peach crops. The blueberry harvest fell by 53 percent from the previous year; the peach harvest fell by 76 percent.

At any rate, Georgia agriculture rocks. Take a drive and check it out.

  • Don Mathews
  • Reg Murphy Center

Good (right) and bad (wrong) economics

Written by Skip Mounts on . Posted in Reg Murphy, Skip Mounts.

Tariffs continue to be in the news. Not only are they being used as leverage to create new trade relationships, they are also being used as an instrument of foreign policy. How they are being used has never been addressed in this space. Our focus has only been that they are just bad economics.

While standing in line at Southern Soul, a fellow barbeque lover and reader of From the Murphy Center raised a philosophical question with me — how do we know if a policy is based on bad economics? We had a good lengthy discussion — the line was long and moved slowly — that needed to become public. So here it goes.

The most fundamental model in economics is supply and demand. Close your eyes for a moment and imagine a graphing space with price per unit on the vertical axis and quantity demanded and supplied on the horizontal axis. In that space, demand is a line that is downward sloping to the right, while supply is a line that is upward sloping to the right. Where the lines cross is called equilibrium.

Supply and demand contain the fundamentals of all human behavior. Buyers, in all that they do, willingly substitute. This is probably the contribution of economics to mankind; just the simple idea that consumers willingly move between alternative goods as they make choices. Sellers, on the other hand, face the engineering technological constraint that the marginal cost of making additional units of a product rise as more are made. This is a certain as gravity.

These two forces cannot be avoided. They are certain. They are indisputable. They cannot be ignored. It is what it is.

The supply and demand graph is only a simple way to depict human behavior. Trying to control the market does not alter the behavior that is contained in it. The forces do not go away. Again, it is what it is. Just accept it and move on. Attempts to ignore or rationalize away these fundamentals make everyone worse off.

This is how I judge various economic policies. Can I find supply and demand in them and what does the policy maker do with it? Does he/she accept and embrace the forces or do they ignore them or, worse, think they can control them? Anything that does the latter is bad (wrong) economics. This is what is so troubling about the rise of socialism among younger people. The tenants of socialism are built round behaviors that people simply don’t exhibit. They just don’t. Therefore socialist policies are bad (wrong) economics. Just Google Venezuela and read about their economy — if they still have one by now.

What I really worry about is that we economists, who love supply and demand, are not doing our job by showing others our love for this model and our acceptance and respect for simple and basic human behavior that is contained in it. At times it seems like we embrace the mathematics and statistics and the art of empirical estimation. Dr. Jonathan Gruber, the MIT economist who was a lead designer of the Affordable Care Act, had a nice mathematical model and pretty flow charts. The problem was that the behavior contained in supply and demand was ignored. It is emotional love, respect and commitment to the principles that we must show our students. Failing to do this will take us down the road for more bad economics and away from what is right and good.

  • Reg Murphy Center
  • Skip Mounts

Economic nationalism puts the swamp, administrative state first

Written by Don Mathews on . Posted in Don Mathews, Reg Murphy.

“Drain the swamp” and “deconstruct the administrative state” are two stated goals of the rising populist wing of American conservatism.

The swamp refers to the lobbyists and entrenched interests who curry favor with politicians to gain legislative goodies (that come at the expense of everyone else) and the politicians who are happy to dole out the goodies in return for political support.

The administrative state refers to the mass of federal agencies and bureaus that impose regulations on people and businesses with no accountability to them, and apparently little, if any, accountability to Congress.

Another tenet of populist conservatism is “economic nationalism,” often expressed as the slogan “America First.”

Economic nationalism is an ideology that claims that a strong nation is an economically self-sufficient nation. To achieve economic self-sufficiency, the government takes it upon itself to direct economic activity through steep tariffs, subsidies to “critical” industries, strict regulations on cross-border capital flows and substantial investment in public infrastructure.

Therein lies a fundamental and irreconcilable contradiction of populist conservatism.

Administering tariffs, subsidies and all the rest of economic nationalism requires a huge and powerful administrative state. It requires legions of federal bureaucrats to rule on an enormous array of questions. Such as:

Which industries are to be protected by tariffs? How big should the tariffs be? Which industries are to be subsidized? How big should the subsidies be?

What infrastructure projects should the government undertake? Where? How much?

And in deciding which domestic industries to help with tariffs, subsidies and regulation, politicians and bureaucrats simultaneously decide which industries to hurt.

Tariffs on steel? Good for domestic steel producers, not good for domestic producers of goods made out of steel.

Further, government economic planning, which is what economic nationalism is, invariably has unintended consequences. For example, by restricting imports, tariffs also restrict exports.

Tariffs cause Americans to buy less foreign goods. That means fewer dollars supplied to the foreign exchange market. That causes the foreign exchange value of the dollar to appreciate, which makes U.S. goods more expensive for foreigners, which causes them to buy less.

So, domestic exporters, when the economic nationalists raise tariffs, you’re going to suffer. Welcome to government economic planning of the populist variety, where a few politicians and the administrative state decide which industries win and which industries lose.

Under economic nationalism, bureaucrats thrive. So do the lobbyists and entrenched interests who inhabit the swamp.

A government that doles out hundreds of billions of dollars in goodies — and harm — attracts lobbyists and special interests like doling out barrels of chum attracts sharks.

Entrenched interests lobby hard to get the goodies. Lesser interests lobby hard to temper the harm. The lobbyists get rich.

This is not academic speculation. It’s happening now.

Thousands of domestic businesses that stand to lose big from steel and aluminum tariffs have spent days and dollars applying for exemptions from the tariffs. Not receiving an exemption could spell the end of some firms. Who decides the fates of the applications? Department of Commerce bureaucrats.

Earnings of Washington’s prominent K street lobbying firms, already fat, are up 20 percent over last year.

And unintended consequences? How about the $12 billion to pacify farmers clobbered by the trade war? That’s $12 billion on top of the $20 billion in subsidies they’ll receive this year.

Some conservatives understand that economic nationalism enriches, first and most, the swamp and the administrative state. Populists don’t.

  • Don Mathews
  • Reg Murphy Center

College diplomas signal willingness to think, problem solve

Written by Melissa Trussell on . Posted in Melissa Trussell, Reg Murphy.

Professors are often confronted with skepticism of students and find ourselves answering some version of the question, “What’s the point?”

I have just completed a summer term that has been a refreshing reminder of my answer to that question.

I started the summer apprehensive, as I was teaching a new course — the Economics of Religion — and in a style I had never before attempted: completely discussion-based with no formal lectures or exams. Classroom time for this course was to be much less structured than in my typical classes, and while the idea of this type of learning environment excited me, the uncertainty of it made me nervous. Would students read and be willing to discuss? Would they be serious enough about the topics to learn from discussion with peers? And, the one that is probably least important but frightened me most — would we have enough to say to fill the allotted time?

Not only did my students prove my anxiety unfounded, but they also renewed my faith in their generation’s ability to think critically and discuss rationally and respectfully. For around two hours each week, I had 20 students of varying religious backgrounds engaged in thoughtful, polite and lively discussion of how economic principles apply to individual and corporate religious behavior.

My favorite moment of the entire term came during our first class meeting, when we began to talk about the introductory chapters of our text. I opened the floor with the question, “What do you think?”

One student responded, “I have never thought about my religion in this way.”

Variants of this sentence were repeated by many students throughout the term and in their final assignment, which required them to apply what we had read to their own personal religious experience, or lack thereof.

In all of what we do as faculty and staff at a college, this sentence — “I’ve never thought … in this way” — is the point.

Labor economists have two theories on the value of a potential employee’s college diploma to an employer. One theory says the diploma simply serves as a signal to the employer that the applicant is a good worker. The second theory says the diploma represents years of accumulated knowledge and skills beyond high school.

My mission as an educator is the intersection of those two theories. It is irrational to believe a student will remember all or even most of the material covered in the college courses he or she takes. But, a college diploma should serve as a signal to potential employers that a graduate has gained and honed both a willingness and the ability to think about problems in new and challenging ways.

Above all others, this skill is most likely to translate into a productive worker who is receptive to on-the-job training and is capable of working well with others.

An educator’s job is to create “I’ve never thought … in this way” moments.

If you are interested in learning more about the subject of religion and economics, I recommend the book “Marketplace of the gods: How economics explains religion” by Larry Witham.

  • Melissa Trussell
  • Reg Murphy Center

Transaction costs go beyond the courts

Written by Skip Mounts on . Posted in Reg Murphy, Skip Mounts.

With the nomination of Judge Brett Kavanaugh to replace Justice Anthony Kennedy on the Supreme Court of the United States has come a renewed discussion of the importance of the Supreme Court and the role of its justices in our everyday lives. Should Supreme Court justices be strict constitutional constructionists or should justices interpret the Constitution taking into account changes in our culture and values? Alternatively, should Supreme Court justices simply interpret the law or should they, through their interpretation, make new law?

I must confess I enjoy hearing experts argue the various sides to these heady issues. I really enjoy a good explanation. After all, I have made a living simply explaining things.

Today, the question before us is should judges in general have a good understanding of economics, especially when making rulings on civil wrongs called torts? To this end I want to introduce you to Ronald Coase (1910-2013). Coase, best known for having been on the faculty of the University of Chicago School of Law, won the Nobel Prize in economics in 1991 for his work in the area economists call “transactions costs.” Using Adam Smith as an anchor, economists are very good at explaining how people, as they pursue their own self-interest, are guided by an invisible hand to promote the welfare of others. Furthermore, in a perfect world, this pursuit of private interest results in an allocation of economic resources that maximizes social welfare. This is the nature and benefit from competition.

The key phrase in the previous sentence is “perfect world.” The perfect world has many attributes, two of which are perfect knowledge and no transactions costs. This is to say, everyone in a market knows what everyone else knows and it is costless to get together and trade.

This is where Coase comes in. In his article entitled The Problem of Social Cost, he argued that in a lawsuit involving two people who are free to engage in trade, the resulting allocation of resources does not matter on what the judge rules. Here, judges don’t need to know economics. They just need to assign property rights — assign guilt.

An example may help. Assume that I live next to a noisy neighbor with a very loud stereo. I, however, like quiet. I go over and ask my neighbor nicely to turn it down and they tell me no. I ask again and all they do is turn it up louder. So, I call up my attorney friend, complain to the police, and then finally sue for quiet.

Let’s assume I win. By the judges ruling (giving me the property right of silence), I can have perfect quiet all the time. However, in the perfect world my neighbor might come over, offer me a little money, and ask is there a time I will be gone so they can make noise. Well, I will be gone some days and they did, after all, offer some money. So, yes, here are the dates. Give me the cash. In the end, I get some quiet and my neighbor gets some noise. This is the final allocation of resources that maximizes social welfare.

What happens if my neighbor wins and can have noise all the time? Again, in the perfect world, I may offer my neighbor some money to turn the stereo down on some days at some times, especially the days they are gone making noise somewhere else. They may very well agree. Here, like above, I get some quiet and they get some noise.

The ‘Coase theorem’ says that regardless of who wins — determined by the judge — we end up with the same amount of noise and the same amount of quiet. The key to this outcome is that my neighbor and I trade property rights after the judge rules.

However, what happens if there are transactions costs — we are unable to trade. In this case, the ruling of the judge matters. Here, the judge needs to understand the economic consequences of their ruling. Where is social welfare maximized? When I win or when my neighbor wins? How much quiet and how much noise?

The world is full of transaction costs. The beneficial impact of free trade and competition can be limited. We need to understand these limits. This is not to say we need to prevent competition and trade from occurring. The world is never quite perfect. Maybe we can get there with a judiciary that understands a bit of supply and demand. The economists at the Murphy Center are always glad to help.

  • Reg Murphy Center
  • Skip Mounts

Finally, labor markets are tight again

Written by Don Mathews on . Posted in Don Mathews, Reg Murphy.

Labor markets are always slow to recover from recessions, especially nasty recessions. And the last recession, the 2007-2009 recession, was nasty.

At long last, labor markets have largely recovered from that nasty recession. The national unemployment rate is down to 4 percent. Nine states – Colorado, Hawaii, Idaho, Iowa, Maine, Nebraska, North Dakota, Vermont and Wisconsin – have unemployment rates less than 3 percent. Only two states – Alaska and West Virginia – have unemployment rates greater than 5 percent.

Georgia’s unemployment rate is down to 4.2 percent. Nine Georgia counties have unemployment rates below 3 percent, while 81 – including Glynn at 3.3 percent, McIntosh at 3.7 percent and Camden at 3.8 percent – have unemployment rates between 3 and 3.9 percent. Only two Georgia counties have unemployment rates above 6 percent.

That’s how labor markets ought to be. Tight.

The labor market recovery has been remarkable, albeit protracted. Though the national recession ended in mid-2009, the national unemployment rate in 2011 was still 9 percent. By the end of 2015, it had fallen to 5 percent.

The labor market recovery in Georgia has been even more remarkable.

In 2011, Georgia’s unemployment was still 10.2 percent. Not a single Georgia county had an unemployment rate below 7 percent. Fully 118 of our 159 counties had unemployment rates in excess of 10 percent.

By the end of 2015, Georgia’s unemployment rate had fallen to 5.6 percent. Only one Georgia county had an unemployment rate greater than 10 percent.

The labor market recovery on the South Georgia coast has been more remarkable still.

We hardly need reminding that the recession hit harder and lasted longer in our neck of the woods than in most other necks of the woods. In 2011, Glynn’s unemployment rate was 10.4 percent, McIntosh’s was 10.6 percent, Wayne’s was 12.1 percent and Brantley’s was 13.2 percent.

By mid-2014, local unemployment rates were still alarmingly high: 8.1 percent in Glynn, 8.5 in McIntosh, 9.6 in Wayne and 10 percent in Brantley.

Brantley’s current unemployment rate of 4 percent is the lowest it has been since 2004. Wayne’s current unemployment rate of 4.2 percent is the lowest it has been this century.

Now there’s just one piece of the local labor market recovery left to complete.

During recessions, the labor force often shrinks. During the last recession, the nation’s labor force decreased by 2.4 percent, while Georgia’s fell by 6.5 percent.

Local labor forces shrunk much more. During the last recession, McIntosh’s labor force decreased by 11 percent, Wayne’s by 12 percent, Glynn’s by 13 percent and Brantley’s by 15 percent.

Recoveries draw people back into the labor force. The labor forces of both the U.S. and Georgia are now 3 percent larger than their previous peaks.

Unfortunately, the same cannot be said for local labor forces. Local labor forces are growing again but remain below their previous peaks. The labor forces of Glynn and McIntosh are 3 percent below their previous peaks, while Brantley’s and Wayne’s are off by 7 and 11 percent from their previous peaks.

We’re getting there, though, and the low unemployment rates are truly welcome.

  • Don Mathews
  • Reg Murphy Center

Trying harder to find a job not always possible

Written by Melissa Trussell on . Posted in Melissa Trussell, Reg Murphy.

I recently attended a conference where Chi Man Yip, a doctoral student at University of Calgary, presented a paper called Search Relativity, which he has coauthored with Ying Tung Chan of Southwestern University of Finance and Economics. The paper is not yet published and is still in progress, but I found its premise and conclusions quite interesting.

The aim of the paper is to try to understand relative unemployment rates of more educated individuals to less educated. Historical data show that the unemployment rate among society’s most educated always hovers around one half the overall unemployment rate. Paradoxically, the overall unemployment rate is not correlated with the fraction of society who are highly educated. The paper takes a theoretical approach to solving this paradox.

Among their interesting results is the one from which the paper derives its name: Search Relativity. The authors present a simplified model showing that the primary characteristic that improves one’s chances of finding a job is search intensity relative to others in the labor market. In other words, if you look harder than anyone else, you will find a job faster than anyone else.

Their theory suggests that education, experience, etc., do not, in themselves, increase one’s speed of finding a job. More educated individuals have lower unemployment rates simply because they devote more time and energy to looking for work.

This is potentially a really important finding for policymakers and social workers. That advice our parents gave us is now supported by economic theory — if you are having trouble finding a job, look harder!

So, for those of us who are lucky enough to be employed, our suspicions are confirmed. It’s not luck at all. We have jobs because we worked hard to find them, and others do not have jobs because they just didn’t work as hard as we did. Right? That’s what this new theory from Yip and Chan says.

But, wait. Not so fast.

After Chi Man had presented, while most in the room chatted excitedly about this result, one young woman raised an important objection to that line of thinking. She pointed out that even if Yip and Chan’s theory is correct and search intensity is the only important factor in successful job hunting, the solution to unemployment is not as simple as just telling the jobless to look harder. One’s ability to search intensely for work is often affected by things beyond the individual’s control.

I am not too far removed from my own job search to remember the resources it required: access to a computer for building my resume and for submitting it to online job listings, transportation to job interviews, nice clothes for interviews and the ability to pick up and move to a new city for the job I eventually got. It does not make sense to tell someone without access to these things to look harder for a job. And it does not make sense to expect someone without a job to be able to gain access to these things.

This is the issue faced by many of our unemployed. They face constraints making it impossible to look harder.

So, yes, Yip and Chan’s theory does have important implications for policymakers and social workers, but their answer is not simply in telling folks to try harder. The policy implication is that in order to alleviate joblessness, we need to help provide the tools necessary to try harder. Only then can we assume individual motivation is a primary determinant of who gets the jobs.

  • Melissa Trussell
  • Reg Murphy Center

Orchard Street, immigration and the Statue of Liberty

Written by Skip Mounts on . Posted in Reg Murphy, Skip Mounts.

I’m from Orchard Street. Are you? I have been told that over one in three Americans are from Orchard Street. Curious? Are you sure you are not from Orchard Street? If not, where is your Orchard Street?

For me, one of the most emotionally moving places in New York City is the Tenement Museum located at 103 — you guessed it — Orchard Street. This is the lower eastside of Manhattan and is probably a place where the Hop-On Hop-Off buses that fill the city with tourists don’t stop too often. (Schiller’s Liquor Bar is near. Sunday brunch is wonderful.)

The goal of the museum is to capture the stories of immigrants who started their lives in America on New York City’s lower eastside. The stories you hear begin in the 19th century. They are told while you tour tenement buildings that are across the street from the museum shop. You begin by walking up to the top story — usually four or five floors above street level — where your guide begins telling you about the first recorded family to live and work in the tenement. As you walk up you are going back in time. The rooms you visit are not restored but roughly/crudely returned to the way they were at the tenement building’s beginning. As you descend to another floor you move forward in time and learn the story of another family.

When you reach street level you see pictures of the current day descendants of the tenement’s residents. There you meet their descendants of today, the legacies of immigrants who found a place to work and live on Orchard Street. From what I remember, my maternal great grandmother, Margarette Emmel, knew Orchard Street before walking across the Manhattan Bridge to find Brooklyn Heights. Unless you are a Native American, you are a descendant of an immigrant. Where are you from?

The Statue of Liberty is iconic with the celebration of our freedom on the Fourth of July and any other day of the year for that matter. For me it is part of America’s holy ground. Beginning in 1883 it was probably the first amazing thing the future Orchard Street immigrants saw as they entered New York harbor. So, in some very real sense, as we celebrate our freedom with Lady Liberty, we should also celebrate being a nation of immigrants and the freedom of those who came to Orchard Street.

Emma Lazarus is the author of The New Colossus, the poem that is on the Statue of Liberty. These lines are well known beginning with “Give me your tired, your poor, Your huddled masses yearning to breathe free…” As a poet, she knew the right words to use. Lady Liberty calls to people who want to ‘breathe’ free. Emma did not say “be” free. I wonder if she deliberately chose the word “breathe” to say that freedom is not where we are (be); freedom is who we are (breathe). Like the air we breathe, freedom is part of our physical being and spiritual souls.

For those of you who know where I am going, I believe that criminals, murderers, drug dealers, pedophiles, etc. should be in jail regardless if they are immigrants or citizens. However, anyone who yearns to “breathe” free should be welcomed here. One of the problems with our current immigration system is that it is too difficult to enter legally. It is so difficult people need to enter illegally — they need to sneak in. People enter on one-week tourist visas knowing that they are planning to stay much longer, but there is no legal document that validates a longer stay. We need easier legal ways for people to get in. I suspect that if it is easier to get in, it will then become easier for people to return to their native lands knowing that they can come back.

Everywhere I go, I hear about labor shortages. Also, data clearly show that there are not enough workers paying into Social Security to support the future demands of retiring baby boomers. We have a growing economic constraint on our stand of living. It is a people problem. We need immigrants, seasonal workers, etc.

So, let us breathe our freedom today and let’s use our imagination to find ways to let anyone who wants to breathe with us come in and take a breath. Let us never forget the sweet smell of Orchard Street and the legacies created there — “I lift my lamp beside the golden door!”

  • Reg Murphy Center
  • Skip Mounts

Tariffs and Trade: In theory and in reality

Written by Skip Mounts on . Posted in Reg Murphy, Skip Mounts.

One of the many unanticipated benefits of writing under “From the Murphy Center” has been the enhanced connection with our community. Often someone will tell me that they read a column and liked it. One time someone said, “Don’t give up the day job — whatever that is.” Even a few of the men who sit in front of Parker’s on St. Simons Island early in the morning solving the world’s problems have offered friendly critiques. Keep it up Golden Isles. Melissa, Don and I think it is great.

A few weeks ago I wrote a piece that argued that knowing business is not the same thing as knowing economics. I said it is important that policymakers have a clear understanding of tariffs, the balance of trade, the capital account and trade deficits. Even under the best of circumstances, international trade theory is hard to understand. It is helpful when reality gets in the way and gives us a case upon which to hang our hat.

In theory, when a tariff is created, the importer of the tariffed item pays a tax when it is brought into the country. One might anticipate that this tax, say 25 percent, is passed along to buyers. Buyers, seeing the increase in price due to the tariff, switch to domestically produced substitutes, now appearing relatively less expensive. Therefore, in theory, tariffs help domestic industries.

Now, tariffs in reality. I was in middle Georgia over the weekend and talked with a businessman who uses various types of steel in his production process. He only, and I repeat, only uses domestically produced steel. As he says, “I’m a vet and I only buy American.” He will never buy foreign steel.

Well, he recently placed an order with his domestic supplier. The tariff should not affect him, right? He was told that his price was now 25 percent higher when compared to his last order. The supplier said, “We need to get our 25 percent while we can.” President Trump’s proposed tariffs are to take effect in July. Already we can see how domestic firms will react to a tariff on foreign steel.

This is not a one-off case study. The economics literature on tariffs is filled with instances like this. I doubt if this is what the President’s policymakers had in mind.

When there is a balance of trade deficit with China for example — imports from China exceed exports to China — Chinese citizens end up holding lots of dollars. This is to say, our balance of trade deficit is matched by a capital account surplus.

What do they do with these dollars? We were in New York City with friends a few weeks ago and I commented, while sitting in traffic (a New York City sport) on how much construction is going on. Our friend, who has been in the financial services industry forever, said that Chinese investors are one of the largest, if not the largest, player in this construction. He also said that this is across the United States in every major city. Our balance of trade deficit can be seen in the very changing of our domestic skylines. This is what they are doing with their surplus of dollars — investing in the United States! Do we want this construction to go away with a smaller trade deficit?

As we celebrate our freedom this Fourth of July, let us also celebrate the ability to trade freely. Let freedom and not government determine economic outcomes. Happy Fourth to each of you. Let freedom ring!

  • Reg Murphy Center
  • Skip Mounts

Form Formal to Casual: Is the change in office fashion good or bad?

Written by Don Mathews on . Posted in Don Mathews, Reg Murphy.

Work fashion has changed much over the years, especially office work fashion — fashion for what used to be called “white collar” jobs.

Not so long ago, the dress code for office jobs was simple: suits and ties for men, below the knee length dresses or jackets and below the knee length skirts for women. Aside from color coordination failures and other random lapses in taste, people looked sharp.

Sometime in the 1990s, formal began to give way to casual. Now, suits and ties make the backs of closets rather than people look sharp, as formal dress has been replaced by business casual, or what I call post-modern, office hodgepodge.

I’m torn on whether the change in office fashion has been for the good or for the bad.

I’m big on aesthetics. That’s a point for suits and ties.

I’ve also found that when adults dress like adults, they’re more likely to act like adults, though there are no guarantees. Score another point for suits and ties.

The big problem with a suit and tie, though, is the tie. A men’s necktie is nothing but a decorative hangman’s noose.

I like to be productive at work. I’m more productive when I’m not choking.

And ties are expensive. A nice tie runs $50 easy. So a tie is double strangulation. A tie will choke you when you pay for it as well as when you wear it.

Some guys who didn’t like spending their work hours choking would wear their ties with shirts that were an inch too big around the neck. You could always spot those guys. They looked like bobble-head dolls.

A better technique is to ditch the tie altogether. That’s pretty much what we’ve done.

From a practical perspective, though, the shift from suits and ties and dress clothes to post-modern, office-hodgepodge business casual has made life more complicated. Before, the line separating appropriate office attire from inappropriate office attire was clear. Now, it’s not.

The initial descent into office fashion decadence happened when some offices introduced “casual Fridays.” “Casual Fridays” was a ploy concocted by human resources people to boost office morale. “Hey, you’ve worked hard all week. As a reward, we’re going to let you dress down on Fridays. So, chillax! Go casual!”

A hasty move. To some people — many people, it turned out — casual and slob are synonyms.

In short order, people showed up for work in clothes one might wear to compete in a pie eating contest. Some people showed up looking like they had just competed in a pie eating contest.

So “casual Fridays” quickly became “business casual Fridays” — business casual meaning clothes less formal than suits and ties but more formal than pie eating contest clothes.

Well, thanks for the clarification.

And we all know what road “business casual Fridays” led down. Why just Fridays? What’s wrong with the other days?

Now every work day is a post-modern, office-hodgepodge business casual day.

Maybe suits and ties was a better rule. Except it’s nice not to choke while working. And I’ll eat pecan pie any time. Cherry pie is good, too. And apple.

  • Don Mathews
  • Reg Murphy Center