Speaker: Dr. Tyrus W. Cobb - The Yucca Mountain Proposal and a Nevada Energy Park

Dr. Tyrus W. Cobb, former Special Assistant to President Ronald Reagan, will be speaking to the UNR Economics Club this Wednesday, April 18th, at 5:30pm in AB 106!

For more information about Dr. Cobb, you can read his profile at the National Security Forum website: http://nationalsecurityforum.org/tyruswcobb/.

He will be making an argument for the creation of a Nevada Energy Park provision in the Yucca Mountain Energy Proposal, which he argues could bring funding, jobs, and new technology to our state. Please come join the discussion on Wednesday night!

- Ariel Castro, University of Nevada, Reno Economics Club

The 7th Annual Econ Day at Reed High School!

ECON DAY was put on yesterday (Wednesday 3/14) by the UNR Econ Club and Department of Economics.  This event was sponsored by One Nevada Credit Union and hosted by Reed High School. It had great attendance, with about 150 high school students, mostly seniors. 

UNR professors Mark Pingle and Jeanne Wendel presented 30 minutes sessions on the Economic Way of Thinking and the Economics of Driving.  Guest professor Pat Rishe presented a 30 minutes session on the Economics of Sports.  This provided those in high school with some sense of what economics is about.

UNR Sophomore and Econ Club member Ziad Rashdan spoke about his experiences as a UNR undergrad, his experience as an economics major, and his plans for the future.  Grad students Grace Morris, Nate Wiseman, and Dimitri Papadovasalaki talked about their plans as they are pursuing graduate degrees.  This provided the high school students with ideas about career paths associated with economics.

Finally, paid for by One Nevada Credit Union, Pub N Sub provided an awesome spread of pizza, wings, and sandwiches for a mixer at end of the event, where the high schoolers could hang out and talk with the econ professors and UNR econ students to get their questions answered. 

All in all, a very good event!

Thank you to the UNR teachers, students, and our sponsors for their willingness to give of themselves to benefit the lives of young people. And of course, a big thank you to Reed High School for welcoming us to come chat, and to the students for their willingness to listen and learn.


- Ariel Castro, University of Nevada, Reno Economics Club 

SIFE club info & 3/7 Econ Club Speaker!

Here's another great opportunity for students to get involved at UNR: the Students in Free Enterprise Club. This club does community service in the fields of economics and free enterprise, and helps students acquire the knowledge and resources to create successful business ventures. The UNR SIFE club competes nationally and is attempting to qualify for international competitions. The club is sponsored by the Koch Foundation, and in the last two years has received $15,000 dollars from that organization alone to help them fund their operations and travel to the national competitions in Los Angeles. If you've got the entrepreneurial spirit, join the SIFE club! For more information, look them up on Facebook or check out the following article in the Nevada Sagebrush: http://nevadasagebrush.com/blog/2011/02/21/sife-club-comes-to-unr/. UNR SIFE meets every Tuesday night at 7pm in Ansari Business 210.

Next week, (Wednesday, March 7th), the UNR Economics Club is hosting John Farahi. Mr. Farahi is the president of Monarch Resort & Casino, the parent company of the Atlantis Casino. He is an entrepreneur and businessman, and was voted Entrepreneur of the Year for a large business by the Reno Gazette Journal. You can visit his Forbes.com profile for more information (or inspiration).

Mr. Farahi will be speaking in Ansari Business 106 on Wednesday, March 7th at 5:30pm, we hope to see you there!

- Ariel Castro, University of Nevada, Reno Economics Club

Speaker Event: Koch Foundation - Dr. John Hardin and Rodney Vessels

On Wednesday, February 29th we were visited by two speakers representing the Charles Koch Foundation. The Koch Foundation and its various groups are non-profit charitable institutions that work to increase knowledge of economic freedom in the United States.

The first to speak was John Hardin. John holds a PhD in History from University of Maryland College Park. The topic of his lecture was "Prosperity and Economic Freedom". Originally from South Carolina, John spoke in an enthusiastic southern accent and with a sense of urgency.

He began by noting a very recent spike in prosperity: in the 1800s, he cited, 85% of the world's population lived in absolute poverty. 200 years later - present day - the absolute poverty rate had dropped to 17%. To give an example, he noted that in the 1800s, a person would have had to work 2.5 hours to buy a 3lb. chicken, but now, the average worker can afford that in only 14 minutes of work. In addition, the infant mortality rate has been cut in half since the 1960s. The quality of life of the average person has increased significantly - but why?


Dr. Hardin argues that there is a strong relationship between economically free countries and income per capita, life expectancy, overall happiness, civil rights, and other benefits. Even within the United States and Canada, Hardin argues that states with more economic freedom enjoy more prosperity. He uses a five point rubric to examine the economic freedom (or lack thereof) of a specific locality:

1. Size of the government relative to the economy
2. Regulation
3. Sound Money: Low inflation; the government's responsibility to keep prices stable despite incentive to print money and spend.
4. Free Trade: Lowering barriers to trade (taxes, tariffs, quotas, etc). 
5. Rule of Law: Simple and certain definition of property rights, enforcement of contracts, etc. 

 The United States has been struggling in some of these categories, however, and there has been a noticeable decrease in certain measures of our prosperity. The rate of youth unemployment (defined as involuntary unemployment for people between the ages of 18-29) has increased by 20% from 2000 to 2009. There has been a 600% increase in the size of government in the last 50 years relative to the size of the economy. Dr. Hardin also pointed out that there was no appreciable difference in the size of government between Republican and Democrat leadership, making the issue far larger than partisan politics. In very recent memory, during the Bush Jr. years from 2000 to 2009, the size of government rose by 4% - more than the 3.4% average since 1946.

The U.S. government is facing an unprecedented increase in unfunded liabilities, and according to Hardin, there is no working plan for the control of these debts. Programs like Social Security, Medicare, and Medicaid represent 45% of our spending. While he maintains the programs have honorable ends, the means for their payment could be disastrous. The interest we owe (and must pay) on these massive debts is projected to increase to 20% of our budget in the next 15 years.

With the ballooning of government programs comes the inevitable increase in the regulation that must monitor it. George Washington University's Regulatory Studies Institute reports that the cost of establishing and enforcing laws is at a historic high. Compliance costs for businesses represent an annual loss of 1,752 billion dollars. Big businesses often fight for regulation, because their size offers a competitive advantage in legal work, lobbying, and other political means which can afford them profitable pseudo-monopolies. In one case, General Electric fought against the companies that produced incandescent lights so they couldn't cut into the market share. This is a popular tactic in agricultural and manufacturing industries as well. Our regulatory freedom ranking has dropped from 2nd in the world in the year 2000, to 27th in 2009 according to GWU's Regulatory Studies Institute.

We know our prosperity is positively correlated with our economic freedom, and evidence by many measures shows our economic freedom is decreasing. Dr. Hardin left us with an ominous rhetorical question: if we know these things to be true, when will we start to really feel a decrease in our quality of life?

After Dr. Hardin's talk, Rodney Vessels spoke about various opportunities with the Koch Foundation and other organizations. If you are interested in an internship program with the Koch Foundation, you can visit http://www.charleskochinstitue.org. There are also job opportunities available at http://www.kochassociateprogram.org, and at http://www.libertyatwork.org. For more information about economic freedom, you can visit http://www.economicfreedom.org, or visit their Facebook page by looking up "Economic Freedom".

- Ariel Castro, University of Nevada, Reno Economics Club

Speaker: Ron Knecht

This Wednesday we were given a talk by Ron Knecht about the budgetary outlook in the United States. Mr. Knecht is an economist and policy analyst with a very impressive résumé. He received M.S., J.D., and P.E. (Engineering) graduate degrees and is currently serving on the Board of Regents for the Nevada System of Higher Education. He has recently served for two years on the Business & Finance Committee, and for one year as its Vice-Chairman. For more information about Mr. Ron Knecht, you can visit his personal website at http://www.ronknecht.com/, or his profile on the NSHE website: http://system.nevada.edu/Nshe/index.cfm/administration/board-of-regents/current-regents/ron-knecht/.

Knecht began by discussing the impact of the recent budgetary issues on students at UNR and NSHE institutions. The large endowment funds, operating funds, and pension plans for employees are all reliant on the rate of return on state and federal treasury bonds. A crisis at the state and/or federal level can have huge effects on the University's budget, even if the school manages its funds well.

Knecht continued to discuss the recession in 2008. He argued that despite the frenzy of finger-pointing, deregulation was not likely to be the cause of the recession, because there had been no meaningful deregulation initiatives during that period. His data showed that proposals for new financial regulation increased from 56 under Bill Clinton, to 62 under George W. Bush, to 149 under Barack Obama. He described the "policy-driven credit mania", spurred by federal incentives to invest with approved interest rates, and a regulatory system that protects financial gamblers; the culture of "too big to fail" that creates incentive for risky lending and borrowing. He also discussed in great detail what he considers to be the great folly of Fannie Mae and Freddie Mac: Fannie Mae, he said, degraded their lending standards to increase their market share in sub-prime loans while hiding the risk from investors. These companies provided taxpayer-backed liquidity and kept interest rates low with federal guarantees.

The mismanagement of mortgage-backed securities under Fannie & Freddie and supported by the SEC is far from the only issue facing the U.S. economy. As the economy receded, the velocity of money (V) decreased and the Federal Reserve system compensated by increasing the money supply (M1). The debt-to-GDP ratio increased substantially during this period. Mr. Knecht mentioned an ongoing friendly debate he has with UNR's Dr. Elliot Parker regarding the optimal debt-to-GDP ratio - Knecht says the optimal ratio is approximately 22%, but Parker argues the ratio should be 25-30%. The current ratio is ~36%, a number both can agree is too high and an obstruction to the growth of the economy.

Other issues haunt the U.S. economy and stall growth. There is a serious problem with unemployment and underemployment -- inflation is "the new normal". The labor force is on the decline, with men exiting the labor pool and retiring early. The entry of women into the workforce has been slowing down, despite their increased presence in colleges and rates of graduation. The increase in unemployment benefits from 62 to 99 weeks, while protecting the jobless, also has the behavioral effect of discouraging their re-entry into the labor force. Mr. Knecht points to a deficit of 10.5 million jobs.

 There is also a demographic issue facing most developed countries - "hyperaging", as Knecht describes it, happens when a country's population ages quickly and the ratio of people who are economic producers to dependents decreases substantially. The "baby boomer" generation, now entering retirement and drawing Social Security, according to Knecht, has left current young people in the United States with a poor legacy. The bankrupt healthcare system and social benefits program will have to be substantially down-sized soon, making current young people work well past the current retirement age and literally pay for the indiscretions of their parents' generation.

In the past, struggling economies have been saved by technological increases, business innovations, and growing trade. Mr. Knecht points to spending on education as being positively correlated with economic growth. In the face of an economic cataclysm, the United States will have to carefully examine its priorities and spend accordingly.

- Ariel Castro, University of Nevada, Reno Economics Club

Speaker: Gerald O'Driscoll, Jr.

Today the UNR Economics Club had the great honor and privilege of receiving a talk from Gerald P. O'Driscoll, Jr. about Greece, the European Union, and the future of the eurozone economy.


Gerald O'Driscoll is currently a Senior Fellow at the Cato Institute, and has served as the director of the Center for International Trade and Economics at the Heritage Foundation. He has also served as vice president and director of policy analysis at Citigroup, and vice president and economic advisor at the Federal Reserve Bank of Dallas. If you'd like to find out more about Gerald O'Driscoll, please visit http://www.cato.org/people/gerald-odriscoll.

Mr. O'Driscoll's talk today was mainly about Greece and its recent debt crisis, as well as the historical economic context of the crisis and what can be learned from Greece's difficult times. Greece, he mentioned, is currently in its 4th year of recession, with a rising 19% unemployment rate, a GDP receding by a yearly 12%, and youth unemployment at a staggering 47%. Greece's job loss has been almost entirely in the private sector, and the youth have been leaving the country in great numbers to avoid unemployment.

The Greek debt crisis, at its core, is the result of government spending exceeding tax revenue and the Greek private sector under-producing. However, according to O'Driscoll, there are a variety of other elements at play; for one, Greece gets loans for its sovereign debt at interest rate only slightly higher than that of Germany, despite a much weaker economy. Also, studies have shown that Greece's most recent governments -- both Center-Right and Leftist -- have consistently "fudged the numbers" and understated their debt.

"So what can be done?", asked some of our students. Mr. O'Driscoll laid out a series of steps that he believed could help get Greece get back on its feet. For starters, he encourages a heavy liberalization of the Greek economy, and the removal of barriers to entry that make it difficult for working-class Greeks to get to work, for example, licenses necessary to become a barber or taxi driver. The rigid economic system is stifling Greek growth. In addition, Greece's parliament must stick to the austerity and book-keeping measures put in place as conditions of the most recent loans they've received from the European Union and the International Monetary Fund, to insure the stability of their present and future debt.

Mr. O'Driscoll also fielded questions and offered insight into the economies of the United States, Japan, Italy, Portugal, Peru, and Chile. All told, it was a very insightful lecture and we are all grateful for Mr. O'Driscoll's visit.

- Ariel Castro, University of Nevada, Reno Economics Club

Introduction

Hello,

The purpose of this blog is to informally discuss the events, lectures, and meetings held by the University of Nevada: Reno's Economics Club. There will also be notices about upcoming events and pictures, if we're feeling saucy. The writings hereafter are the views of their respective authors, and do not represent the University of Nevada: Reno.

- Ariel Castro, University of Nevada, Reno Economics Club