What is Brazilian President Dilma Rousseff’s real crime?

Dilma Rousseff, Brazil’s first female president, is about to go on trial. She is temporarily suspended from office while Brazilian politicians debate whether she broke the country’s laws.

Her crime is she allegedly borrowed about US$11 billion from Brazil’s state banks – about one percent of GDP – to fund long-running social programs for small farmers and the poor while trying to get reelected, which concealed a budget deficit. Continue reading

Could gambling be the secret to saving when rates are so low?

Many interest rates in the U.S. are close to zero and even negative in some parts of the world, like Japan.

Not unexpectedly, U.S. savings rates are also quite low as individuals ask themselves: “Why save a lot of money at a bank if I get no return?”

This situation has many commentators wringing their hands because low savings rates are a problem for many reasons.

Individuals who don’t save face spending their golden years of retirement in poverty, instead of plenty. In addition, people with no savings face financial problems and potential ruin when unexpected large expenses occur and cannot help out their children with large bills like college or a down payment on a first home.

In the absence of a rapid increase in interest rates, which appears unlikely, is there anything we can do to change this problem and get people to save more?

As odd as it may sound, gambling could be part of the answer. Continue reading

Why is corruption so costly?

The news is currently filled with stories of corruption.  A global group of media outlets just broke the story of secret offshore bank accounts in Panama, which suggests widespread corruption in the Russian government and elsewhere. For months, stories of the Brazilian government’s bribery scandal have filled the news. Other headline-grabbing events include Malaysia’s prime minister allegedly siphoning almost a billion dollars from a state development fund. Continue reading

Are Blondes Really Dumb?

Blondes are often stereotyped as dumb. The dumb female blonde is a staple of Hollywood movies such as Reese Witherspoon in “Legally Blonde.” Amazon currently sells many joke books that poke fun at blondes’ lack of intelligence. While they are derided for their supposed stupidity, until now no one has actually investigated “Are blondes really dumb?” Continue reading

What Will Happen To Taxes If the GOP Wins?

As the old saying goes, there are only two things certain in life: death and taxes. While being taxed is a certainty, the rate and types of income being taxed is not.

Each of the five remaining GOP hopefuls – Donald Trump, Ted Cruz, Marco Rubio, John Kasich and Ben Carson (who appeared on the verge of dropping out as this article was written) – has released tax proposals on his official website. Examining these plans provides a rough idea of what will happen to the tax system if a GOP candidate wins the November presidential election. Continue reading

Is It Time to End Tipping?

Today’s Wall Street Journal (Feb. 29, 2016, page R7; online version is here) printed  an article I wrote.  They asked me to be part of a debate on “Should tipping be eliminated in restaurants?”  I took the “yes” side.  This is a follow on article from the piece I wrote a year earlier in February 2015 (see the original piece here) that advocated the same idea. Continue reading

How do we know the Zika virus will cost the world $3.5 billion?

The mosquito-borne Zika virus has been declared a “Public Health Emergency of International Concern” by the World Health Organization.  The virus not only appears to severely harm unborn children but is also hurting the economies of many Latin American and Caribbean countries. The World Bank estimates Zika will cost the world US$3.5 billion in 2016.

Three and a half billion dollars is a huge amount of money. How did the World Bank calculate this figure? How do we put a price tag on Zika and other health catastrophes like Ebola, dengue fever or even more common problems like the flu? Can we even trust these figures? Continue reading

How do we know if the world is in a global recession?

Since the start of this year, stock markets around the world have fallen as panicked investors have begun believing that the world is slipping into economic malaise.  This fear has also driven down prices of commodities like oil and copper and impelled some central banks, like Japan’s, to make dramatic efforts to boost growth. The concerns are being magnified by memories of the worldwide recession of 2008 and 2009, when many countries experienced widespread joblessness, business bankruptcies and homelessness.

While national and international leaders cannot prevent worldwide economic downturns, a coordinated response among them can mitigate some of the impact. But it’s hard to rally government resources to this cause without the ability to determine whether we are actually in a recession or not.

So how do we know when the world is in a recession and such a response is needed? Continue reading

Winner of $1.5 billion Powerball Faces Long Odds – But even longer odds of keeping it

The U.S. Powerball lottery is holding a drawing this week for a jackpot that’s already reached US$1.5 billion. That’s after the 18 drawings held since November failed to yield a winner, causing the grand prize to swell to this record sum.

This jackpot is drawing such attention that more people are buying tickets, and even the lottery’s own projections are changing rapidly. During the weekend the payout was an estimated $1.3 billion. Monday it was revised to $1.4 billion and on Tuesday it hit $1.5 billion. Continue reading

To Really Beat Box-Office Records, “Star Wars” Will Need To Top These Numbers

This weekend, the newest Star Wars movie will start playing in cinemas throughout the world. Pundits in places like Forbes and the International Business Times are already predicting it will be the “biggest movie of all time.”

The headlines and superlatives about this movie’s box office records will dominate entertainment news during the winter. However, it is important to understand that the hoopla surrounding box office records is nothing new: Hollywood uses special effects for both making movies and discussing how a movie does financially. Hollywood movies consistently break box office (ticket sales) records because the industry does not adjust sales for inflation. Continue reading

Fed interest rate hike may have less of an impact than you think

There is a very high chance the Federal Reserve will raise interest rates next week.  It would be the first time the Federal Open Monetary Committee (FOMC) – the Fed’s rate-setting team – has lifted its benchmark rate since 2006, beginning the so-called return to normal.  Economists, traders and policymakers have been pontificating, prognosticating and placing bets about this decision for a long time, because the impact is expected to be far-reaching.

So how will higher rates affect you? Continue reading

An Amazing Adventure: Bicycling In Rwanda

I recently completed an amazing journey; three days of mountain biking on Rwanda’s Congo-Nile Trail. The bike trip offered incredible scenery, a tremendous physical challenge and a chance to better understand one of the more intriguing countries in Africa.

Since I was short on both time and experience navigating around Rwanda, I booked the trip through Rwandan Adventures. They (especially Joanna) took care of providing bikes, a guide and bookings for accommodations, all at a very reasonable price and with amazing service. Continue reading

Explainer: why does the price for turkeys fall just before Thanksgiving?

Thanksgiving is a great US holiday during which people consume huge quantities of turkey, stuffing, cranberry sauce and pie.  One of the stranger things about this holiday, however, is that a few days before everyone starts cooking, whole turkeys are suddenly discounted by supermarkets and grocery stores (see examples here or here).

And this happens every holiday season: the price falls just before Thanksgiving and stays low until Christmas. For example, November 2014’s price per pound for turkey was almost 20% lower than the price the previous March.  Why does the price come down at the one time of the year when demand for the product spikes the most – before a holiday that’s literally dubbed “Turkey Day”? Continue reading

Are Turkeys Getting More Expensive Over Time?

It is almost time for Thanksgiving, the holiday when many people in the USA cook and eat turkey.  As I was walking up and down the aisles of the supermarket yesterday, buying food for the holiday, I was wondering what has happened to the price of turkeys over time.

Continue reading

Why Google’s plan to blanket wilderness with Wi-Fi is a bad idea

Facebook wants to blanket rural India in cheap Wi-Fi. Google is launching balloons to do the same around the globe. Soon, it seems, there won’t be a square inch of Earth or the heavens that isn’t connected.

These ambitious plans beg the question: should there be places in the world where cellphones, tablets and other high-tech pieces of modern communications are off-limits and their use curtailed to emergencies only? Continue reading

What Should I Take To Climb Mt. Kilimanjaro?

In October my wife and I climbed Mount Kilimanjaro in Tanzania. A friend is contemplating doing the same climb and asked me for some advice on the type of gear he should use while climbing the Mountain so I am writing this for both him and anyone else interested in the climb. I am a 50+ year old college professor, not a professional climber or guide. This means the below suggestions might not match the route or conditions that you will encounter. We did a six day-five night climb with the African Walking Company up the Rongai Route, which goes up the north side of the mountain. Continue reading

Plain cigarette packaging: healthier citizens, sicker state finances?

Over the last few years, a new idea for improving public health has been slowly spreading across the world: a ban on selling cigarettes in packages with custom brand designs. Instead of selling branded tobacco, all cigarettes are sold in either plain packages or packages with grotesque pictures showing the health consequences of smoking.

The obvious question is: is it effective at reducing smoking rates? The less obvious one: what are the economic consequences of a healthier population? Continue reading

The tale of Uber and a 19th-century French economist

The French government and French taxi drivers are furious with Uber, the US car-hailing company.  At the end of June, the government arrested two top executives of the French division of Uber and is planning to bring them to trial. That came a few days after taxi drivers staged violent protests in Paris, burning cars and attacking other drivers who they thought worked for Uber. Continue reading