July 30th, 2014 — Economics and Investing, Jobs
When I was in junior high school, our usual assembly program was a short film shown in a darkened auditorium.
One celluloid image I recall vividly was from a driver safety clip of an accident where the one of the pipes in a truck driver’s load had gone through his body.
A much less horrifying picture is of a Frankenstein movie where one of the peasants threw a giant boulder at the terrified fleeing monster and the huge “rock” bounced high up in the air over his head.
Then, one day there was a noticeable buzz of excitement in the school auditorium. A real live person had showed up to talk to us – a representative from the General Electric Company (GE). He was a young guy wearing a suit and tie and beaming like a little kid with a new toy on the brightly-lit spotlighted stage. Continue reading →
May 21st, 2014 — Economics and Investing
Google is the 52nd richest company in the world, exceeding even Facebook at 510th place. The word “google” has even become a verb. What’s not to like?
Well… Google often fails to serve people who search it or the people trying to get their sites noticed. All too often Google’s results completely miss the mark. Continue reading →
October 31st, 2013 — Economics and Investing
Government spending is what our two political parties are fighting over. At the heart of this dispute is something called a “multiplier effect”. Here’s an example from the October 2013 AARP Bulletin. The sidebar for “Social Security’s Impact,” claims:
- $2.00 is added to the U.S. economy for every dollar of Social Security benefit paid out
- 9 million jobs are supported by the combined spending of Social Security recipients and businesses.
- $1.5 trillion was added to the total economic output by Social Security in 2012.
These statistics in favor of Social Security are based on the multiplier effect.
What is a multiplier?
Here’s the simplest definition I could find:
An effect in economics in which an increase in spending produces an increase in national income and consumption greater than the initial amount spent. For example, if a corporation builds a factory, it will employ construction workers and their suppliers as well as those who work in the factory. Indirectly, the new factory will stimulate employment in laundries, restaurants, and service industries in the factory’s vicinity.
But note that this definition of the investment multiplier effect leaves out three other ways of launching a positive fiscal multiplier effect. The first is by government spending. Two other ways are through tax reductions and growth of exports.
Where did the idea of a multiplier effect come from?
Continue reading →