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Hot Topics help you help your students apply economic reasoning to the news and public policy issues of the day. FTE will watch the news for you, and when we find a story that lends itself to economic analysis, we'll email you a Hot Topic discussion guide, hot off the virtual press.

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Most Recent Hot Topics

What’s Up With Gas Prices? (05/02/08)

On April 14th 2008, the national average price for a gallon of regular gasoline reached a new all-time, inflation-adjusted high of $3.37.  But people are driving less and oil supplies are increasing!  Decreasing demand and increasing supply should lower the price of gasoline; so why are gas prices rising?  Is it the election?  A conspiracy?   Price gouging oil companies?  Or might supply and demand still have something to do with this mystery?

 

The Economic Stimulus Package of 2008:  Will It Work? (04/07/08)


For months now, the American economy has shown signs of slowing down.  Stalling GDP, weak holiday retail sales, lower housing starts, rising interest rates, and higher unemployment are all indications that “something’s up” and the economy is down. Recently journalists and politicians have begun to use the dreaded “R word” – recession. Many fear that “recessionary psychology” is taking hold and that consumers will begin to react by spending less, initiating a downward spiral in which decreased spending (demand) reduces employment and income, which in turn further reduces spending. Such negative momentum could turn the fear of a recession into reality. Knowing that gloomy recession headlines trigger finger pointing that’s not good for political careers, politicians have a strong incentive to address recessionary psychology. Enter:  the economic stimulus act of 2008!

 

Increasing the Minimum Wage: Sounds Good – But Will It Work? (02/23/07)

Undoubtedly the most sensational result of the 2006 mid-term elections was captured this month in news pictures of Nancy Pelosi, a Democrat, calling the House of Representatives to order in the first session of the 110th Congress. However, as January wanes and Congress settles in, another, less-noted result of November polling is likely to get increasing attention:  Six states voted to join the 22 that have already raised the minimum wage above the federally mandated $5.15/hr., and Congress looks ready to raise the federal level for the first time since 1997.  While all of you who work minimum-wage jobs are saying, “YESSS! It’s about time!” you might want to hold the cheers for a minute.

Supplemental Article:

Missing Rungs, Veiled Threat (02/09/07)

Milton Friedman’s famous proclamation, that without economic freedom there could be no political freedom, now has a sequel.  From rioting in the banlieue of Paris to the swelling tide of anti-Muslim sentiment across Europe, recent events reveal this: economic integration must precede cultural assimilation.  This is the essence of what Europe does not get and what the U.S. must never lose.

Up, Down, and All Around: The Fast-Paced Price of Gas (11/08/06)

Noticed anything different at your local gas station lately? After a summer of sky-high gas prices, there’s been a dramatic and rapid decrease in the price at the pump. No complaints, right?  But you do have to wonder, “What gives?”

There are many people willing to offer answers to that question; speculation is rampant in the news media and in daily conversation. Unfortunately, not all of it is equally enlightening, but armed with the tools of economic reasoning, you can sort it out.  

"The Wal-Mart Bill" - Is It Helping Low Wage Workers? (03/20/06)

Recently, Maryland passed a law requiring Wal-Mart to spend at least 8% of its payroll on employee health care. And the city of Santa Fe, also concerned for the well-being of low-skilled workers, increased the minimum wage to $9.50/hr., the highest in the country. Will legislators' good intentions help workers? What are the "seen" and the "unseen" results of attempts to legislate improvements in workers' well-being?

More Lessons from Rosa Parks:
How Economic Self-Interest Trumped Racism (11/03/05)

The nation mourns the passing of Rosa Parks, whose dignity and quiet courage made her the image of the 20th century Civil Rights movement. She earned her place in history and in our regard by making a choice - to stay seated on a public bus in Montgomery, Alabama, when a white man demanded that she move.

Economics teaches us that people respond to incentives, that their choices can be explained in terms of the rewards and punishments they perceive to be associated with the alternatives they face. We also know that incentives are shaped by the rules of the game - the formal laws and informal norms of the societies in which we live.

How Hurricane Katrina Polished Wal-Mart's Image (10/18/05)

After Hurricane Katrina, ". . . if you mention the Red Cross or FEMA to people in Slidell, you hear rants about help that didn't arrive and phone lines that are always busy. If you mention state or national politicians, you hear obscenities. But if you visit the Wal-Mart and the Sam's Club stores here, you hear shoppers who have been without power for weeks marveling that there are still generators in stock . . ." People always complain about government, but we do depend on it, so the volume of the criticism aimed at federal, state, and local officials in the aftermath of Hurricane Katrina is a little surprising. What happened to make people happier with Sam Walton than with Uncle Sam? An easy answer would be that government officials either didn't get it or didn't care - and many have been quick to make those accusations. But really, it's not usually very satisfying to explain things in terms of other people being mean or stupid, is it? Economic analysis offers us insight: People act in their self-interest. Our task, in trying to explain the behavior of different groups and individuals in the aftermath of Hurricane Katrina, is figuring out what they perceived to be their self-interest.

Don't Buy Those New Clothes Just Yet! (2/25/05)

If you upgraded your wardrobe over the holidays, you aren't going to be happy about the latest news from the clothing industry: Most retailers expect clothing prices to fall 20-30% this year. And those aren't sale prices or special promotions; they're permanent reductions.

Tsunami - The Economics of Natural Disasters (1/7/05)

What can economics teach us about how best to address the needs of survivors of this, and future, natural disasters? Fortunately, a great deal. Economics is, after all, the study of how we deal with scarcity - scarcity made starkly real by events like the Indian Ocean tsunami. The concepts and principles we learn in relative comfort are no less true in times of distress. Economics teaches us that the quality of people's lives depends, ultimately, on the production and distribution of goods and services. And like it or not, the laws of supply and demand that govern this process are as binding in times of crisis as they are in times of plenty.

More Market Magic: Futures Markets Predict the Presidency (10/26/04)

The magic of futures markets can be applied not just to the prices of commodities, but to almost any event, result, or outcome. Suppose, for example, that I offer you the following contract:

If Ralph Nader wins the popular vote in our state this November,
I will pay you a dollar.

Will you buy the contract from me? What if I offer a contract for a Kerry win? A Bush win?

The idea of using markets to predict political outcomes is more than theory. There actually is a futures market for the U.S. presidency, the Iowa Electronic Market, where $1 futures contracts are traded for a variety of sporting, entertainment, and political events. The IEM uses real money, so while it's fun, it's also a serious research investigation into the predictive power of markets.

After the Hurricane: How Much is Too Much? (10/4/04)

In a natural disaster, its not just trees that go through the roof; so do the prices of necessities like water, plywood, ice, electric generators and, yes, tree removal services. Where's the good ol' magic of the market when you really need it?

Deficits 101 (6/11/04)

Just like clockwork, we can predict that every four years we’ll be bombarded by speeches, sound bites, and accusations about the federal government’s budget. The debate could be useful in setting our national priorities, but in the frenzied campaign atmosphere, it’s rare that opposing points of view are presented in a way that helps us formulate thoughtful opinions. And if you think the candidates’ positions are confusing, wait until the commentators weigh in! Confusing or not, the fact remains that the federal government’s budget – whether in deficit or surplus — affects our lives and it’s to our benefit to understand the debate. Starting with the basics gives us a foundation for sorting out the rhetoric, so let’s call this lesson “Deficits 101.”

The High Price of Oil (5/25/04)

Road Trip! The perfect graduation celebration, right? Wrong! Have you seen the price of gas lately? In dollar terms, the cost of filling a gas tank is at an historical high, and prices are rising daily. Definitely not good for summer travel plans. So, who's the villain in this sinister plot to make summer vacations more expensive?

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The Heartland FoundationThanks to FTE partner The Heartland Foundation for it's assistance in providing articles and columns used in compiling the Hot Topic student handouts.