Big Picture Economics E-Book

Joel Naroff

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 431

Veröffentlichungsjahr: 2014

Beschreibung

Navigate the economy with this insightful new book The world is awash with economic information. Governments release reports. Pundits give their interpretation on television. And the stock market may go its own way, confusing everyone. How can you better understand what it means for you? Big Picture Economics, a new book by award-winning columnist and futurist Joel Naroff and veteran journalist Ron Scherer, says the thread that ties everything together is "context." The authors show how consumers, business, the Federal Reserve, and government take into account what's going on around them to make critical decisions like buying new products, building new factories, changing interest rates, or setting budget goals. The book provides a clear roadmap to understanding the whole story behind the global economy. Big Picture Economics helps readers understand how context impacts decisions and decision makers. - The Federal Reserve and Congress in formulating economic policy - Consumers in a shopper nation and what makes us buy or not buy - Corporations making decisions on whether to build new factories and buy other companies - The federal budget that must deal with complex issues, including the reduction of health care spending - A simple test for tax cuts or increases: will they help the economy grow? - Where to produce and where to sell in a global economy that is more like a Mobius strip than a flat world - International events that can ripple through the economy and ultimately affect workers in the Midwest - Technology, such as intelligent drones to wearable computers, are changing the future Experts laud the book for its perceptive insights: "It all sounds like common sense, but it is actually based on a close, expert reading of economic history and what that history implies for the future. Read this book to become a more educated judge of economic policy." --Robert Moffitt, Krieger-Eisenhower Professor of Economics at Johns Hopkins University "Naroff and Scherer show how seemingly unrelated things like an upgrade of the Panama Canal, a Tex-Mex restaurant's menu change, or how many Americans are overweight turn out to be intricately linked to our daily experiences. What brings the book to life is the authors' focus on these hidden interconnections." --Brendan Conway, blogger and columnist, Barron's

Leseprobe

Contents

Preface

Acknowledgments

Chapter 1: Introduction to the Economics of Context

Adapting to the Economy—View from the Cab of a Truck

The Service Sector—The Enchilada Stops Here

The Cash Register Stops Singing

Celebrate for 15 Minutes

What Does Economics Teach Us about Context?

Economic Theory and Fiscal and Monetary Policy

Notes

Chapter 2: The Federal Reserve, Congress, and the Use of Context in Economic Policy

Public Policy Spreads a Wide Ripple

The View from the Hill

Why the Economic Forecast Matters

Economic Assumptions Matter: The Rosy Scenario

Does One Policy Fit All?

A Bank Loaded with Economists

The Importance of the Beige Book

From Beige to Blue and Green

Fed Policy

From Bubbles to Fed Meetings

The Fed Goofs

Notes

Chapter 3: We Are All Economists and Don’t Know It

Context Tells Us What We Can Afford

Frugal in Arizona

The Economy Gets Worse

Public Officials as Economic Forecasters

A Mayor as Economist

Tampa’s Faulty Economic Model

Changing the Economic DNA

How an Educator Put on an Economist’s Hat

A Fiscal Grand Canyon

Crow Solutions

The Business Owner as Economist

Greg Parker: From Fast Food to Economics

Convenience Store Economics

Things Are Bad, So Expand

Notes

Chapter 4: How a Perfect World Would Work

How We Got Here

Building the U.S. Economy: A Journey through Time

Money Makes the World Go ’Round

Money Is Not Enough (Don’t We Know That!)

The Banking System Made Simple

Big Brother Is Watching Over Us

The World Is Our Oyster

Chapter 5: Shopper Nation: Why We Buy or Don’t Buy

What Causes the Itch to Spend?

Seniors Get the Jobs but the Pay Leaves Many Cold

“Charg-It”

Why Debt Is Good—or Bad

The Rich Worry, Too

Economic Theory of Wealth

Feeling Good? Buy a Car

Notes

Chapter 6: How Is a Can of Tuna Like a Smartphone? Yes, Context!

A Company Decides to Build Chips

Computer Chips: Five Factoids on Making Computer Chips at GLOBALFOUNDRIES

The Urge to Merge Depends on Context

The Corporate Tax Conundrum

Corporations Are People, Too, and They React Accordingly

To Regulate or Not Regulate, That Is the Question!

Notes

Chapter 7: When to Spend, When to Cut, and When to Scratch Your Head Over the Federal Budget

Impact of Health Care on the Budget

Doubts from a Doctor

What If Lower Health Care Spending Continues?

How the Budget Interacts with the Economy

It’s Not the Deficit but the Interest That Matters

Notes

Chapter 8: Tax Policy: Does Cutting Taxes Cure All Ills?

There Is No Such Thing as a Free Tax Cut

How Much Do Americans Make and What Are They Taxed?

While the Distribution of Income Is Good or Inevitable, It Still Matters When It Comes to Tax Policy

Is the Answer to Every Economy Ill to Cut Corporate Taxes?

Notes

Chapter 9: Monetary Policy: Money, or Maybe the Federal Reserve, Makes the World Go ’Round

How Monetary Policy Works

Problems Facing the Fed

Meltdown of the U.S. Financial System

The Correct Way to Evaluate the Policies

Notes

Chapter 10: The Panama Canal Widens and the Middle Class Grows in China—How Does That Affect Indiana?

Ports Get Ready for Change

The View from the West Coast

Trade beyond the Canal

History: The Moat around Fortress America Has Dried Up

Even Small Countries Can Crash the World Economy

Free Trade Is a Goal, but Fair Trade Is a Necessity

Currency Manipulation Has Negative Implications beyond the Obvious

Notes

Chapter 11: What Do We Do Now?

“The Future Ain’t What It Used to Be”

Flying Robots, 3D Printers, and the Future

Will the Consumer Continue to Reign? Maybe, Maybe Not

Fracking: Controversial but Changing the Future

Can We Squeeze More Out of the Ground?

The Economics of More Energy

The Aging of Boomers Will Change the Economy Once Again

Notes

About the Authors

Index

End User License Agreement

List of Tables

Table 5.1 Older Workers Get the Jobs

Table 7.1 Contributions of Various Factors to Annual Growth in Per-Beneficiary Spending for the Elderly in Parts A and B of Medicare (percentage points)

Table 7.2 Major Foreign Holders of Treasury Securities (in billions of dollars)

Table 8.1 Estimated Income and Taxes for 2014

a

Table 8.2 Shares of Tax Filers with Adjusted Gross Incomes of $100,000 or Higher in Tax Year 2011

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Guide

Cover

Table of Contents

Begin Reading

Big Picture Economics

How to Navigate the New Global Economy

Joel Naroff

Ron Scherer

Cover design: Michael J. Freeland

Cover image: © Photodisc / Jupiter Images

Copyright © 2014 by Joel Naroff and Ron Scherer. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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ISBN 978-0-470-64181-1 (Hardcover)

ISBN 978-1-118-41809-3 (ePDF)

ISBN 978-1-118-41531-3 (ePub)

For Cindy

—Joel

For Kathy

—Ron

Preface

At times, the economy may seem like a washing machine with economic news sloshing all over the place. Consumer spending is up; the stock market is down. The Federal Reserve is lowering interest rates; Congress is cutting spending. Sometimes it may seem hard to believe anything ties it all together.

In Big Picture Economics: How to Navigate the New Global Economy, we show that there is one thread that holds it all together: Context.

Every sector of the economy—the consumer, business, the Federal Reserve, and Congress—all need to look at what’s going on around them when they make critical decisions buying new products, building new factories, hiking or lowering interest rates, or setting budget goals.

To help us reach that conclusion, we talked to real people. A truck driver explains how he sees the economy firsthand as he barrels down the highway and how it affects his financial decisions. The manager of a Tex-Mex restaurant chain describes the economics of making tacos and enchiladas in the middle of a recession. An administrative assistant, who had been furloughed, shares her budget-cutting secrets as she watches her paycheck shrink. A former president of the Dallas Fed describes how the central bank makes decisions. And an ex-staffer of a key congressional committee talks about how our politicians make decisions that affect us all.

At the same time as we are talking to real people in Big Picture Economics, we are trying to give a deeper perspective on economics, sometimes known as the Dismal Science. We look at the factors that make up the business cycle, as well as discuss global issues and taxation. We discuss whether a balanced budget is good, bad, or irrelevant. We delve into monetary policy, examining why the Federal Reserve has kept interest rates low for a long time. And we try to give some historical perspective on how we got to where we are.

To illustrate that we are all economists, we talked to the mayor of Tampa, Florida, about how he copes with running a city during a time when tax revenues are falling. One of his economic indicators: Are young people out walking their dogs? Yes, he sees it as part of context—an indication more people are living downtown.

The president of Arizona State University considers himself an education architect, redesigning the learning landscape at one of the nation’s largest universities. But he also tells us how he had to don an economist’s hat once the state legislature made a major cut to his funding.

Indeed, many of the people we talked to opened up about how the Great Recession—the one that began in 2007—influenced them. Yes, there were a lot of belts being tightened, but we also found that tough times stimulate a fair amount of creativity. A restaurant manager decided that he would offer patrons specials they couldn’t refuse so people would get used to eating out even when the economy was tanking. A president of the university started online courses that quickly brought in $100 million. A mayor tried to figure out ways to attract the type of business that would keep his daughter from moving away in search of rewarding work.

To better understand context and the corporate mind-set, we explore the inner workings of a huge new semiconductor factory to find out what economic factors made the owner of the factory decide to invest billions of dollars in the middle of the recession. In the same chapter, we also talk to a merger master, who helps corporations decide whether it’s a good time to buy or sell assets.

At times, Congress may seem to ignore what is happening in the economy. To get a deeper understanding of how Congress does or does not use context, we talked to a former staffer who worked on a key budget committee. He explained the context around some curious political decisions. In Big Picture Economics, we also look more closely at one of the largest parts of the federal budget—health care. It may sound counterintuitive, but we find that the rate of growth of health care spending is slowing. But a doctor who treats overweight patients every day warns that the drop may be only temporary unless we start to control what we eat.

In the last chapter of the book, we try to look into the future. We opine that one thing is certain: the rate of change is accelerating. In that chapter is a short discussion about the possible future of flying robots. Perhaps they could be used by farmers to examine their crops more closely, said one of their creators. After the chapter was written in late 2013, Jeff Bezos, the chief executive of Amazon.com, told the CBS show 60 Minutes, that he could envision the online retailer making deliveries to customers using what Amazon calls octocopters. Yes, very similar to the flying robots at Hearst. Getting government approval to use them could be a few years away—if it ever comes. But who knows—books may get delivered to your doorstep by an octocopter in the future.

All of this came together for us in a relatively short period of time. One of us is an economist and the other a journalist. In November 2012, over lunch at a mall in suburban Pennsylvania, we started to fill a legal pad with ideas, which eventually became chapters. That set us off on the adventure of writing a book. We can’t promise exotic locales, but we found that places such as Saratoga Springs, New York, and Bayonne, New Jersey, offered plenty of surprises in the world of economics. We hope you take the trip with us to discover why context matters in Big Picture Economics.

Acknowledgments