Tuesday 8 April 2014

April News Letter

Link To Online PDF

This month's issue feature an article from UW alumni and Former Economics Society Executive Eric Chung as well as the highlights from the eConference: What's Next.

Thursday 20 March 2014

Canada is not engaged in this new world

I found this editorial in the Globe and Mail and thought it was an interesting summary of the current state of world affairs highlighting the lack of preparedness and lack of involvement of Canada. Though not strictly related to economics, the world has changed drastically in a short period of time. Political apathy amount young voters in Canada and a lack of real action in foreign policy are economically relevant especially to our generation.




http://www.theglobeandmail.com/globe-debate/canada-is-not-engaged-in-this-new-world/article17551097/#dashboard/follows/

Terror attacks, secessionist movements, domestic wars, sabre-rattling maritime disputes, ethnic clashes, the spread of nuclear weapons and the return of great-power rivalries. Today’s world is a very uncertain place, with more points of conflict, real or possible, than would have been thought likely not long ago.
Russia will envelop Crimea, thereby establishing an ominous precedent that through manipulation and force, it can wrest territory from another country. Having succeeded in Crimea, will Russia now try the same tactic in eastern Ukraine, with its large Russian-speaking population? Or in the Caucasus, or the “-stans” of Central Asia where centralized Soviet control once prevailed?
What Russia displays today is great-power muscle, with scant regard for international law or human rights. As President Vladimir Putin’s Foreign Ministry argued last year in a major policy paper, Russia laments “the risk of destructive and unlawful use of human rights concepts to exert political pressure on sovereign states.” What counts instead is “civilizational identity,” the paper asserted.
Whereas people in the West might have considered Russia part of Western civilization, especially once freed from the shackles of communism, Mr. Putin does not. Instead, Russia and its adjoining sphere equate to another civilization, quite different in history, culture, political institutions and worldview than the West. Murkier still are the currents that swirl in the intellectual depths of the Kremlin about the Russian soul and Russia’s special mission to bring civilization to the world.
This Russian chauvinism, for which the West has a very inadequate response, mirrors China’s desire to reassert its domination over a sphere of influence in its near Pacific. The maritime and air-defence disputes China has provoked have put it at odds with Japan, Vietnam, the Philippines, Brunei and Malaysia, the most serious conflict being with arch-rival and old enemy Japan.
Add to this the unpredictability of North Korea, with its nuclear program and systematic oppression of its own people, and you have a region rife with uncertainty. To which might be added poor relations between Japan and South Korea.
By acting as great powers, the Russians and Chinese produce two counter-reactions. First, states around them fear their pressure and invite others (read: the United States) to help them resist. Second, by asserting their civilization’s mission, they alarm internal minorities, as with Chechens in Russia and Uyghurs in China, both of which have produced terrorist organizations.
Although terrorism no longer threatens the West’s fundamental security (as was once thought possible), it is nonetheless a far-flung menace, from the Saharan region to northern Nigeria, parts of the Middle East (Afghanistan, Iraq, Pakistan), southern Thailand, China, Russia and India.
Civil strife rips countries apart, as in Syria and Iraq. In Libya, where North Atlantic Treaty Organization bombs helped remove Moammar Gadhafi from power, what remains are warring clans and chieftains with only a shadow of central authority. In Lebanon, the shakiest of civil peace prevails. Massive but peaceful demonstrations have shaken Turkey, Venezuela, Egypt and Thailand, among others. In three countries stitched together a long time ago, secessionists in Scotland, Catalonia and Quebec wish to make independence for their nations.
Where does Canada fit into this world picture, nicely traced in a recent “strategic outlook” paper for the Conference of Defence Associations? Very far from a deep strategic engagement – geographically, mentally and in terms of preparedness.
The foreign aid budget is going down. Foreign Affairs is losing staff. The last round of defence budget cuts melted 12 per cent of departmental resources. Procurement delays for new equipment are endemic. We ask the military to do too much with too little. We have too many military bases, but the politics of closing them remains difficult.
Canada no longer tries, however feebly, to help resolve or mediate international disputes. Rather, Ottawa chooses sides and then offers little beyond rhetoric and finger-pointing.
The government’s own most recent foreign policy paper was exclusively about marketing Canadian products abroad in selected markets – a perfectly valid part of any international engagement, but given the challenges of the world, hardly a complete one.

Thursday 13 March 2014

eCon: What's Next



Tickets on sale now: tinyurl.com/qhtwdnw
Early bird price:
$7 for a single day pass
$15 for a three day pass


Regular ticket price:
$9 for a single day pass
$20 for a three day pass


March 18: Policy & Econometrics
March 19: Banking & Finance
March 20: Entrepreneurship & Marketing

Have you ever wondered how you can use your undergraduate degree when you search for a job? While doing an Econometric assignment, do you wonder if you will ever use that knowledge evenafter the course is over?
Your questions can be answered at eCon 2014: What's Next
UW Economics Society is hosting a conference for UW students regardless of your faculty or major. Come out to hear from the current professionals about how they used their undergraduate degree to land with their current career. The details like what their daily tasks are, how they make use of the knowledge and skills from their undergraduate studies, and the first-hand experience of the transition from the academic world to the career world
Our UW Economics professors will show you how the courses are directly related to these careers.
Each industry (Econometrics, Policy, Finance, Banking, Entrepreneurship, Marketing) will be represented by 2 to 3 speakers in the combination of the professionals and the professors.
The conference starts on March 18th and ends on March 20th. Each evening will start at 5:30 p.m for the registration. Please arrive no later than 5:50 p.m to start the conference on time. Each industry will be discussed over 1 hour (to 1 hour and 30 minutes). On the closing day (March 20th), Professor Larry Smith will join us.
A meal will be provided to every attendee along with UW Economics Society clipboard, pen, and handouts from our speakers. These are included in your ticket price!
For a detailed schedule, please refer to our Facebook page (facebook.com/uweconsoc).
Tentative schedule is as followed:
5:30 - 6:00 Registration
6:00 - 7:30 Industry 1
7:30 - 8:00 Break
8:00 - 9:30 Industry 2
9:30 - 10:00 Networking Session
There are limited amount of tickets available at Early Bird price. Please purchase the ticket early!
We are proudly supported by AEF and Economis Department.

Friday 7 March 2014

Weekly Article)Food for Economic Thought: Comparison of Empirical Evidence from Various Food Policies in Developing Countries

As food have skyrocketed lately and populations constantly on the rise, governments of third world countries are becoming exceeding burdened by the costs of keeping their people fed and nourished. Up until now one of the most common forms of aid for this issue was for government to provide food subsidies; however, these policies are becoming unsustainable very quickly. 

Over 3 years in Egypt, from 2009 to 2012 the cost of food subsidies have nearly doubled. Further, it has been noted that much of this aid money gets into the wrong hands. In Burkin Faso, Egypt and the Philippeans, less than 20% reaches the very poor households. In the Middle East and North Africa only 35% of the aid reaches the poorest 40% of the population. These results are from studies conducted by the IMF. 
The great desire to cut costs are motivating many countries to seek more efficient and targeted forms of aid. Just recently, Iran began issuing free food handouts while Malaysia and Indonesia are offering extra cash benefits to poor households. These countries are outspokenly against food stamps or vouchers because they are seen as too “American” or “un-Asian”.

However, the International Food Policy Research Institute suggests that this attitude towards food vouchers might be a mistake. The IFPRI has analyzed results of a World Food Program experiment in Ecuador 2011, which compared  results from food handouts, cash benefits and vouchers all conditional on the recipients attending nutritional classes. The empirical evidence from these studies found direct food handouts to be the least effective.  

The cost of handing out food stuffs is 3 times as much as food vouchers in order to boost caloric intake by 15%. Also, it is 4 times as costly to increase dietary diversity and quality. Additionally, extra costs such as distribution are very high and the experiment showed evidence of wastage; meaning only 63% of the food handed out was actually eaten. 
Compare this to the results of cash benefits, where 83% of cash were spent on food, or for food vouchers, where 99% of them were redeemed for nutritional goods.  

The IFPRI found that the results were akin to similar experiments conducted in Yemen, Uganda and Niger. 
For example, Egypt, who’s policy still revolves around food subsidies, mostly subsidizes starchy grains and bread. As a result 70% of adults are overweight and 29% of under fives have experienced stunted growth. Foods like dairy or vegetables are unsubsidized and unaffordable for many people, greatly decreasing the quality of diet for many Egyptians. 

The conclusion drawn by the IFPRI is that food vouchers are more effective at encouraging people to buy healthful goods, and that they are about 25% cheaper for governments to boost the quality of the diet of populations compared to cash benefits or food handouts. 
It seems that the switch from universal subsidies to vouchers could be the most efficient way to increase quality of health and eliminate poverty in many struggling third world countries. 

Source: *M. Hidrobo, J. Hoddinott, A. Peterman, A. Margolies and V. Moreira, “Cash, food, or vouchers? Evidence from a randomized experiment in northern Ecuador”.

Written by Barbara Jung, Marketing Director of UW Economics Society

Tuesday 25 February 2014

Loretta Napoleoni: The intricate economics of terrorism

Interesting TED talk if you are interested in the underground economy or the economics of crime.

Loretta Napoleoni details her rare opportunity to talk to the secretive Italian Red Brigades -- an experience that sparked a lifelong interest in terrorism. She gives a behind-the-scenes look at its complex economics, revealing a surprising connection between money laundering and the US Patriot Act.
http://www.ted.com/talks/loretta_napoleoni_the_intricate_economics_of_terrorism.html

Monday 24 February 2014

Weekly Article) Short Term Pain for Long term Gain: Environmental Policies for Economic Success

In the opinions of many, policies put in place to enforce the reduction in carbon emissions and pollution stifle economic productivity. “Dirty” industries incur higher costs and have to lay off workers or close down entirely, resulting in unemployment and loss of income for the people living in areas that depend on these industries for work. 

However, three economists from the National bureau of economic research, Maya Rossin-Slater, Adam Isen and W. Reed Walker conducted a study to disprove this common belief.  They compared labour market statistics on people who were born in areas where air pollution was decreased as a result of the Clean Air Act of 1970 to those who were born in areas where pollution did not fall. Those born in areas with cleaner air and reduced pollution earned on average about $4,300 extra over a lifetime than those born and raised in more polluted areas. 

The argument of the study was to show that the long term benefits of environmental policies actually improve economic success in individuals. Cleaner air and environment leads to better childhood health, development and therefore a higher likelihood to achieve success in other aspects of life such as job performance and salary. 

The “fetal origins hypothesis” is a belief that being born during a famine or an economic depression can reduce adult life expectancy and increases chances of diabetes and heart disease in old age. Supporters of this hypotheses firmly believe that exposure to pollution at a young age may affect individuals for the rest of their lives. 

This study begs the question: do the positive long term affects outweigh the negatives? There are many factors that the study didn’t talk about. How many jobs were lost when these industries conducted huge layoffs or closed down? Did people who lost these jobs find work again easily? How long were they unemployed for? Did they miss out on good benefits like health insurance which could have been detrimental to their health as much as higher levels of pollution could have been? Is an extra $4300 over a lifetime per person a significant enough amount to justify all the losses incurred when big businesses take a hit? There are many external factors to examine before the real net benefits or costs can be claimed. Perhaps this might be a great case study for your next public policy paper?  

Study Source: "A. Isen, M. Rossin-Slater and R. Walker, "Every breath you take—every dollar you'll make: the long-term consequences of the Clean Air Act of 1970", NBER working paper 19858, January 2014.

Written by Barbara Jung, Marketing Director of UW Economics Society