-Christmas Shopping?-

Article: As wealthy cinch the purse, holiday spending slides

Author:  Steve Liesman

Date of article: Friday, 13 Dec 2013

News Source: CNBC

            This article discusses the importance of Christmas spending to the well being of the economy. As we all know, most of us tend to spend much more money during the holidays than any other time of year and this occasional, annual burst in spending is great for the current and upcoming fiscal year. But the article takes a quick spin, saying “The CNBC All-America Economic Survey paints a contradictory portrait of consumers and of their finances, and willingness to spend ahead of the critical Christmas shopping season.”

            Even though spending is down, the survey also showed that people are quite optimistic about stocks, inflation and wages. This is nice to see after the slum that our economy had been for some time. Yet “On the other hand, the survey of 800 people nationwide predicts a sharp, 9.4 percent drop in holiday spending this year compared with actual outlays a year ago as measured by the National Retail Federation. Americans plan to spend just $681 this holiday season, about on par with 2009, when the nation was clawing its way out of a deep financial crisis.”

            Further reading concludes that this drop in Christmas spending is due to a sharp decline in spending by the wealthy.” Those with incomes above $100,000 plan to lay out $300 less than they did last year, undoing two years of strong gains. But more broadly, overall sentiment about the economy remains muted and incomes severely challenged. There's even evidence that the imbroglios in Washington had a depressing effect on holiday spending.” Essentially, because the rich are spending less, the poor are spending much less in fear of another recession.

            Just 15 percent of the public rate the economy as excellent or good, a substantial gain from 4 percent during the recession that began in 2008 but still well below the 26 percent who thought the economy was in good shape in 2007.Meanwhile, 83 percent rate the economy fair or poor. A quarter of those who will spend less this year say it's because their income is lower; 22 percent report that it's because the economy is in bad shape.

“But overall optimism on the economy remains subdued. Just 26 percent say the economy will get better next year. A year ago, attitudes were more buoyant, with 37 percent thinking the economy would improve.” Although, people are more optimistic about the economy’s bounce back than they were before, the recession really lost some its followers and it’s unclear if people will ever have the confidence they once had with their money.

-The Economics of Marijuana-

Article: States Push to Get Most Out of Marijuana Taxes

Author: Dan Frosch

Date of article: April 24, 2013

Website: New York Times

Marijuana has been used for thousands of years, and hemp itself was for centuries of great importance to the United States economy. But in the early to mid-20th century, many states began to ban the drug, and soon marijuana consumption became illegal under federal law.

One important facet of California's proposition was an excise tax that proponents claimed would bring billions of tax dollars to a state in economic turmoil. From an economic perspective, it seems pretty rational -- imposing a tax on a multi-billion dollar market and cuttting spending on law enforcement will yield more money.Let's think in terms of real dollars: a 2003 study by the Office of National Drug Control Policy estimated domestic spending on cannabis prosecution to be a whopping $29 billion each year. Furthermore, a study commissioned by the United Nations in 2006 estimated the North American cannabis market to be worth upwards of $60 billion per year, more than the combined value of corn and wheat. It seems obvious that the economic benefits would be outstanding, but there are other contributing factors.


First and foremost, it is a basic rule of economics that the easier it is to obtain a product, the less the product will cost. Taking marijuana off the black market and into a legitimate marketplace will make it easier to buy and consequently cause a considerable drop in price. In fact, a study by the international think tank Research and Development Corporation concluded that Proposition 19 could potentially lead to a decrease in the price of marijuana by as much as 80%. If prices were to fall so drastically, it is unknown whether the economic tax benefits would outweigh the social costs.Secondly, the law of supply and demand tells us that as the price of a product decreases, consumption will increase. This is something that legalization opponents are quick to point out, and it is difficult to predict exactly how marijuana usage in the United States would change. 

Nevertheless, the Prohibition Era was notorious for multi-million dollar crime rings involved in the underground trade of alcohol, and the same exists today for the marijuana industry.
The American marijuana trade is a large part of the ongoing drug war with and within Mexico, Canada and other countries. Pro-legalization activists argue that by legalizing marijuana, criminal activity would literally decrease and take the "shady" aspects out of the drug trade.

We may never know exactly what America would be like should marijuana be legalized, but the debate over doing so will surely never die until it happens.