Steven Levitt: A Modern Day Economist

     When we thinks of economists, most of us think of people like Adam Smith or Thomas Malthus. Instead we should be thinking about the economists of today like Steven Levitt. Steven Levitt is the world renowned author of many studies that have impacted everything from car seats to sumo wrestling, but he is best known for his work on the bestselling book Freakonomics.

Steven Levitt

    Levitt graduated from Harvard in 1989 and then obtained his Ph.D in economics from MIT in 1994. He now teaches at the University of Chicago as the William B. Ogden Distinguished Service Professor. In 2004 he won the John Bates Clark Medal for being by the American Economic Association for being the most promising economist under 40. Levitt's work on various economic topics include crime, politics and sports. The most prolific of his research topics is the impact of legalized abortion on the United States crime rate.  Levitt has said,

"The numbers we're talking about, in terms of crime, are absolutely trivial when you compare it to the broader debate on abortion. From a pro-life view of the world: If abortion is murder then we have a million murders a year through abortion. And the few thousand homicides that will be prevented according to our analysis are just nothing—they are a pebble in the ocean relative to the tragedy that is abortion. So, my own view, when we [did] the study and it hasn't changed is that: our study shouldn't change anybody's opinion about whether abortion should be legal and easily available or not. It's really a study about crime, not abortion."

Steven Levitt Teaching at the University of Chicago

    It is studies like this that take economics to a different place in society. Levitt has brought the study of economics to a new place and has shown the value of finding correlations within data is a better way to make choices. We shouldn't let our bias get in the way, we need to simply look at the facts. That is something that Levitt offers up in every study he authors, and that is something I admire and respect.

Unemployment: A Male Dominated Area?

     A new Census report finds that for the first time, more women in the workforce have bachelor’s degrees than men (37 percent vs. 35).  This is a vital sign for growth among women in the workforce. With more women going to school it means that there is a larger population of them entering the workforce with an expanded skill set. We also see the discrepancy between men and women attaining high school diplomas over men: 88 percent in women to 86 percent in men.

Women in the Workforce poster from WWII

     What this correlates to is that men and women no longer have unemployment rates that are almost even. Back in 2007 both male and female unemployment was hovering around 5 percent. However as of the census data from 2009, we see male unemployment jump to 10 percent and female unemployment only rise to 8 percent. That discrepancy is the largest since World War Two.

Growth of Women acheiving higher education

     This opens up a lot of questions about how to keep men in school and how this will effect our employment landscape in the years to come. The rise in women in the workforce will drive a cultural shift that might see traditional gender roles reversed. These changes are something our society will have to deal with in the coming years. As of today though, we must focus on not only continuing to encourage women to seek higher education, but also find new ways to entice the male populous to stay in the educational system. If we do not find ways to combat this rapidly growing discrepancy we could the current economic growth start to backslide.

Competition in the Tablet Market

     The tablet market is by far the fastest expanding market in the realm of technology. With people seeing the advantages for ultra portable devices, the tablet is taking off faster than most people expected. But one company who knew this would be a major game changer was Apple. With the release of the iPad, Apple has forever changed the computing landscape. But they also created a new market. Up to that point the tablet had been a very niche product. However as soon as Apple decided to put some research and development into how to make the tablet more suitable for main stream usage, people started to notice how fantastic these pieces of technology can be.

The Apple iPad

     It was not just consumers who took notice though. Other technology companies started to notice as well. Companies like Samsung, Dell, Motorola and Research in Motion have all released a tablet that they hope will cut into Apple's huge market share and bring some of the very lucrative expanding market into their hands. But the problem for these companies is that Apple has had such a huge head start that it has made competition essentially nonexistent. The fact is that now Apple has become synonymous with the phrase "tablet", and that makes it very hard for other companies to gain any sort of market share. Apple does a very good job of making their products the first thing you think about in mobile computing.

Apple Store Location

      From their iPod's to the iPhone and now the iPad, Apple has been able to keep their products in the forefront of each market, and they do so early on in the life cycle of innovation. It started with the iPod. Before people even knew they wanted to have their entire music collection in their pocket, Apple had created the iPod. And now with the iPad, they have done the same thing, making it very hard for competitors to break into the market. Being the first to market is everything, and Apple has capitalized on that competitive advantage over and over again and it looks like they will continue to do so for a long time.

Demand For iPad 2 Off The Charts

     Apple was forced earlier this week to delay orders for those who have been put on a waiting list for the iPad 2. The entire stock of iPad 2's is said to be sold out, at not only independent retailers but Apple Stores as well. "Demand for the next generation iPad 2 has been amazing," Apple said in a statement to the press this week. "We are working hard to get iPad 2 into the hands of every customer who wants one as quickly as possible."

Launch of the iPad 2

                                          

Tuesday's need to push back estimated shipping times is the latest in a string of delays since the iPad 2 first went on sale in the U.S. last Friday. Initial orders were scheduled to ship in a matter of days, but the wait was quickly pushed back to between two and three weeks.

On Saturday, Apple was forced to extend estimates to three to four weeks. Now, customers who hesitated to buy could be waiting over a month to receive their iPad 2.

iPad 2

Wall Street analysts generally expect that Apple sold at least a half million of the iPad 2 in its first weekend of availability. More bullish estimates have forecast Apple to have sold as many as a million at launch.

This just shows us what a hold Apple has on the tablet market. With the one of the closest competitors, the Samsung Galaxy tab only selling 2 million units in the fourth quarter and the iPad 2 selling around a million units in just its first weekend on the market we see how unfair a fight this truly is. Apple is so far ahead that they have been able to make a new model of their very successful iPad (which sold around 15 million units in one year) before the competitors have had a chance to get a first generation tablet out. 

Apple is doing the same thing to the tablet that they did to the Mp3 player, making it impossible for anyone to catch up until the competition eventually gives up.

The evolution of the iPod

Governmental Opportunity Cost In Rebuilding North Africa

     With North African countries like Egypt, Tunisia, and Libya at a cross roads governmentally speaking, the people left in charge of the mess left behind in this wake of civil unrest will have an important decision to make. Which style of government will they choose?

          Protesters against Libyan president Muammar Muhammad al-Gaddafi

     The reality is that it comes down to two styles of government. With economic policy being the biggest problem in North Africa, the countries with the two strongest economies; the United States and China have two very different governments. The United States is the proponent for Democracy around the world, and would love to see North Africa fall into a Democratic system. China on the other hand uses a Communist system of government. This is where the opportunity cost evaluation come in. These countries have a choice ahead of them that will effect their countries for years to come.

     The people of these countries need to do an opportunity cost analysis of the two governmental systems and decide what they feel is best for them. I will offer you an example of some the opportunity costs that are associated with the choices ahead of these countries.

In the case of choosing democracy the countries of North Africa can expect some things for certain:

1. Capitalism under the Democratic banner of government does not always mean assured economic growth. The people of North Africa need to make sure that they do certain things with in the government in order to be able to reach a future where economic stability is attainable. This means that steps like bulking up infrastructure and increasing education need to be taken in order for capitalism to flourish (or any economic policy for that matter).

2. With Democracy and Capitalism, some people will still be impoverished. Unfortunately, the capitalistic economy does not allow for every single person to attain a standard of living that a lot of the North African countries are fighting for.

3. Democracy is a very fragile thing. With corruption running rampant in these countries, we can not assume that these potentially new democratic states will be governed properly and fairly.

If the North African countries choose a communist system like that of China they can expect a few things:

1. Communism is not entirely fair. A true Marxist state has never been attained. People in power still exploit those that are not, even though everyone is said to be equals.

2. Human rights are not truly a priority. Sure the communist Chinese government may be able to promise economic growth but often, as is the case in China, human rights get tossed to the wayside. For example the Chinese government executes the most people in the world annually, and have a track record of poor human rights (e.g. Tibet)

3. Often Communism is not far from Despotism. If we hearken back to both the USSR under Stalin and the Peoples Republic of China under Mao, we see that communism often means tyrannical rule under a self motivated ruler. Even though communist states are run by a party, that party often is just represented by one single figure. The people of these countries have been under despots for as long as they can remember, and the thought of that happening again might be enough to scare them away.

                                      The Egyptian revolution

     The reality of this situation is that economic policy should and probably will play a large role in deciding what government these countries will choose. At this point democracy might not work because these countries lack the strong middle class that holds government responsible. We as Westerners tend to see our system of democracy to be the best form of government, and in most respects that is true. But the fact of the matter is that the communist party of China has been able to lift a substantial amount of people out of poverty while the Democracy demonstrated by the United States has been faltering a bit in the same category.

     This is a perfect example of how opportunity cost should be weighed. These countries have the scarcity of not only time but the peoples willingness to listen to ideas, they have the choices of either Communism or Democracy, and they must weigh the value of both systems. Opportunity cost at its finest.