Thursday, 31 March 2011
Tuesday, 22 March 2011
For those who don’t know, the Progressive Economics Forum is undoubtedly the largest blog dedicated to providing a progressive economic analysis of social issues Canadians hold dear, like social equality, fighting poverty, union rights, and education. The Progressive Economics Forum is also the network of 125 economists (some of whom run the Forum’s blog) from across Canada who provide research that counterbalances the conservatively anchored perspective many policy advising economists share. It’s quite nice to be on their link list.
And there have also been some inroads in the Winnipeg blogosphere, as Gauche Manitoba has also been kind enough include this blog on its blogroll.
Oh, and more will be coming on the Hugh Grant study and the RAG Machine's reaction to it!
Wednesday, 9 March 2011
A lot of the really cutting edge work in economics right now is being done by theorists who assume imperfect information or information asymmetries (some people knowing more than others). Joseph Stiglitz is one such person and has provided an example of how a firm could raise prices to a very high level even in a very competitive market:
In some cases it has been shown that even though there are many firms, prices might be raised to the monopoly level even when search costs are very small. To see why, consider a case where all firms charged the same price. If any firm were to raise its price just a little—by an amount less than the cost to customers of switching to another firm—that firm would lose no customers. Thus, so long as the price is below the monopoly price, it pays that firm to raise its price by a little. But it pays each firm to do so: all raise their prices—and the process continues until the monopoly price is reached.So, a landlord could raise the rent $5 above the "best price" realizing that searching for a cheaper apartment would cost a tenant $5.45. Several other landlords could do likewise. All these landlords could do this again, realizing that searching for another rental unit would cost a person $5.45 (in spent energy and time). These landlords could continuously do this until rents were at obscenely high rates per month.
The costliness of finding a new home would hurt poorer people in particular, given their more limited resources and (in quite a few cases) smaller social networks means it'd be more difficult for them to find new apartments. Furthermore, since few if any property developers build rental units for the "low income rental market", there would already be less competition in that sector.
Sunday, 6 March 2011
PERFECTLY COMPETITIVE MARKETS
DEMAND, SUPPLY, AND WHERE THEY MEET
|Figure 3: Number of rental units supplied at each price of rent. The higher the rate of rent, the more landlords are willing to supply. Numbers are not based on empirical studies, for demonstrative purposes only.|
Image Source: Created by The Analyst
|Figure 4: In a perfectly competitive market, charging less than the equilibrium price causes shortages, as not as many landlords will supply as many units as there are tenants demanding.|
The model employed was simple. Housing units cost the same but differ in idiosyncratic characteristics; similarly, households are identical except for idiosyncratic differences in tastes. As a consequence, a household will like some units more than others, and the longer and the more effectively it searches the more likely it is to find a unit that suits its tastes well. ..However, they urged caution and pleaded that people look at local conditions (as Hugh Grant did) before applying any given model.
Because search is costly and housing match quality is idiosyncratic, landlords have market power which they exploit by pricing above cost. The vacancy rate adjusts so that zero (expected) profits are made in long-run equilibrium. The uncontrolled equilibrium vacancy rate is inefficiently high. Thus, a reduction in rent below its uncontrolled equilibrium level is welfare-improving; mild rent control is beneficial...
Wednesday, 2 March 2011
Gosh, perhaps even Business schools will get on the Right's "academic enemies list".
Tuesday, 1 March 2011
But much of my horror is at realizing how much worse things could get. As someone with an interest in American politics I have watched with amazement as "issues" like whether the President looks into a teleprompter have taken centre stage while self-conscious charlatans like Glenn Beck are paraded around as prophets by the far-Right. This horrible state of affairs came to The States through one vehicle - a massive, rightwing corporate media machine that distills 24 hour manufactroversies. To my horror, I see a similar vehicle developing in Winnipeg in particular and Canada in general.
In Winnipeg one has only to listen to Charles Adler rattle on about some triviality on CJOB, pick up a copy of the Winnipeg Sun, or read the latest press release from a hard Right "independent" Think Tank like the Frontier Centre for Public Policy to get a taste of this. Rightwing media outlets and corporate funded propaganda mills like the Cato Institute have misinformed Americans for decades and the model has been transplanted to Canada.
Sun Media's national editor, Mark Bonokoski, even said "[Bill] O’Reilly represents the fearless tone Sun News Network should emulate"*. Conrad Black created a media empire that was firmly to the Right, Izzy Asper created an ultra-blue Liberal media, and David Asper has turned the inheritance of his father's empire into a blue Conservative media machine. 17 out of Canada's 18 national dailies endorsed the Conservative Party of Canada, a political party that currently only has just over a third of the Canadian electorate on its side.
With the excessively centrist NDP provincial government expiring shortly (the PCs will almost certainly win the 2011 Provincial election), there is no time more urgent to combat the swaths of Rightwing disinformation in this city.
With all these stakes in mind, I decided to make a place where Rightwing, Absolute Garbage (RAG) articles and statements get thoroughly trashed. Hope you enjoy the fun.
*In wake of accusations that the commentator should "tone it down" after the Arizona shootings.