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We’re on Facebook ..................2
Economics & Model UN .........3
Found on the Internet ............5
Tentative Spring Schedule .....6
Tentative Future Classes ........6https://scholarworks.lib.csusb.edu/coyote-economist/1011/thumbnail.jp

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California State University, San BernardinoCSUSB ScholarWorksCoyote Economist CSUSB ArchivesSpring 2013CE Winter 2013Coyote EconomistFollow this and additional works at: http://scholarworks.lib.csusb.edu/coyote-economistPart of the Economics CommonsThis Book is brought to you for free and open access by the CSUSB Archives at CSUSB ScholarWorks. It has been accepted for inclusion in CoyoteEconomist by an authorized administrator of CSUSB ScholarWorks. For more information, please contact scholarworks@csusb.edu.Recommended CitationCoyote Economist, "CE Winter 2013" (2013). Coyote Economist. Book 2.http://scholarworks.lib.csusb.edu/coyote-economist/21Coyote EconomistCli!s, Ceilings, and the Federal Budget: Scary...or Not?Inside this Issue:We’re on Facebook ..................2Economics & Model UN .........3Found on the Internet ............5Tentative Spring Schedule .....6Tentative Future Classes ........6News from the Department of Economics, CSUSBVolume 19, Issue 2  Winter 2013Department of EconomicsCSUSB 909-537-5511http://economics.csusb.eduFacebook: CSUSB Department of Economicscontinued on page 2Stories of !scal cli"s, debt ceilings, and the presumed need to deal with the nation’s public debt have saturated the mass media in recent months. Much of this discussion has had more to do with political posturing than with any serious e"ort to deal with the nation’s economic problems. But, even when carried out with the most serious of intentions, these debates are o#en premised on economic illiteracy. $e !rst problem confronting this national debate is the idea that !scal responsibility requires bringing the federal government’s debt under control, rather than stimulating the economy. Given that the economy is still very weak, with the unemployment rate still near 8%, cutting the federal de!cit at this time is actually the height of irresponsibility. $e economy has yet to achieves rates of growth required to absorb all the workers who have been looking for jobs since the start of the Great Econ Students Push Back on Proposed CSU Fee IncreasesLast November Natalie Dorado and Morgan Lim joined other students at the CSU Board of Trustees Meeting to protest a series of proposed fee increases. $e CSU had proposed a new set of fee increases (Graduation Incentive Fee, $ird-Tier Tuition Fee, and Course Repeat Fee) intended to raise revenues for the CSU while “encouraging” students to graduate at a faster rate. $e proposed Graduation Incentive Fee will be a supplemental fee to be imposed on “super seniors,” students who had taken more than 240 quarter units but had yet to graduate. $e proposed $ird-Tier Tuition fee will be an extra fee imposed on students taking more than 18 units per quarter. And, the proposed Course Repeat fee was supposed to be an extra continued on page 3Morgan Lim, Natalie Dorado and Yesenia Ramirez a#er November 2012 CSU Board of Trustee meeting2Continued from page 1fee imposed on students repeating a course. All three proposed fees were to be assessed on a per-unit basis and no student was to be assessed more than one of the three new fees in any given quarter. $e CSU argues these new fees would provide students an incentive to graduate sooner. $ese new fees would be added on top of  all the other fee increases that the CSU had imposed on students over the previous ten years. Undergraduate full-time tuition fees per academic year increased at the CSU from $1,428 to $5,472 between 2001-2002 and the Fall Quarter of 2011. All these fees, the ones already imposed and the new set of fees the CSU is considering, are being pushed by two forces: !rst, the steady privatization of the CSU (with a growing proportion of the CSU’s funding coming from private donations and grants) and; second, the budget shortfalls occasioned by the Great Recession.  As a response to the new (and larger) fees imposed on students, a group of CSU students formed Students for Quality Education (SQE) during the 2007-08 academic year. $e goal of SQE is to educate both fellow students and the surrounding community about CSU budget cuts and fee increases. $e website for SQE (http://csusqe.org) says,“Our movement for educational justice in the CSU is not new. Students in the 1960s fought to open up the University for working families and immigrant students. $ey demanded high quality and relevant education, and badly needed student services such as the Educational Opportunity Program (EOP). From this movement the CSU grew to become the People’s University, open to all who met the basic requirements for entrance.”$eir website notes they, and others who share their goals, have had success:“However, in 2002-2003, a recent wave of budget cuts from the state government began, which resulted in students organizing to oppose budget cuts and massive student fee hikes. Students around the CSU organized marches, rallies, lobbied their legislators and Governor to stop these attacks on students. $eir e"orts resulted in helping to save EOP from elimination by Governor Schwarzenegger in 2004-5.”Currently, SQE is !ghting CSU fee increases, program cuts, and class reductions.To accomplish these goals, SQE has held protests, rallies, sit-ins, teach-ins, and walk-outs. Chapters of this organization are found on most CSU campusesAlong with the California Faculty Association, the SQE has been actively Pushing Back... SQE has held protests, rallies, sit-ins, teach-ins, and walk-outs...pushing back against political forces seeking to privatize the CSU. SQE is committed to keeping the CSU system true to its original purpose: a publicly funded “people’s university” system.Natalie Dorado is active in the SQE and participated in the CSU hunger strike of May 2012 (protesting the budget cuts and fee increases). Last fall, Natalie, Morgan Lim, and other members of the CSU chapter of SQE, collected student responses to the proposed fee increases and went to Long Beach to voice their strong opposition to these measures at the Board of Trustees meeting. At that November meeting the CSU Board of Trustees decided to table the proposed fee increases. We like to think this decision was partly prompted by the work of Natalie, Morgan, and other student members of SQE.If you are interested in joining with SQE in their e"orts to protect the “People’s University,” send an e-mail to: csusb.sqe@gmail.com. Alternatively, you can speak with Natalie or Morgan if you see them in or out of class.We’re on Facebook !!Don’t forget to check us out on Facebook and tell us that you like us! Just look for $e CSUSB Department of Economics Facebook page.  Joining us on Facebook is an important way of keeping up with Departmental news and Department events as well as getting information on political economy. Look for us on Facebook...we’re easy to !nd!...... the CSU Board of Trustees decided to table the proposed fee increases......•     •     •3continued on page 4Continued from page 1Scary Budget?Recessions. $ese workers include both those who lost their jobs in the recession and new workers who have entered the labor force since then, including college students who have graduated the last couple of years.Given the level of su"ering among the working classes, the responsible thing to do is stimulate the economy even further and move the economy to full employment. As all principles of macroeconomics students know, this requires expansionary monetary and !scal policy. Since the Fed has been actively engaged in expansionary monetary policy, that leaves the Federal government to pursue expansionary !scal policy, that is increase—rather than decrease—the federal de!cit and the debt. “Austerity policies” at this point in time (i.e., cutting back on the de!cit and the debt) will make things worse, not better. Indeed, if the “austerity hawks” had their way and were able to cut the de!cit by a signi!cant amount, the e"ect would be to reduce the rate of economic growth and increase unemployment. Economics majors are part of CSUSB’s Model United Nations team, which will be participating in the National Model United Nations Conference in New York City in March of 2013. $is will be the 37th year that CSUSB will be participating in the National Model United Nations Conference. At this Conference, one group of CSUSB students will be representing Turkey while another group will be representing Palestine. In addition, the CSUSB Model Arab League will be participating in both the Southern California and Northern California Model Arab League Conferences to be held in April of 2013. $is will be the 21st year of participating for the CSUSB Model Arab League. In both Model Arab League conferences, the CSUSB students will be representing Saudi Arabia. Listed below are the Economics students who will be participating in the Model United Nations, the Model Arab League, or both:Permanent Mission of Turkey to the United Nations, Committee Assignments:Kevin Gema (Political Science & Economics): General Assembly First Committee Catherine Ou (Economics): General Assembly Second CommitteeJosh O’Handley (Political Science & Economics): General Assembly Fourth CommitteeMatthew Becker (Economics & Administration - Real Estate Concentration): United Nations Conference on Trade and Development (UNCTAD)Permanent Observer Mission of the State of Palestine to the United Nations, Committee Assignments: Blanca Ortega (Social Science - Economics): General Assembly $ird CommitteeChi Truang (Economics): Council of Social A"airs MinistersEconomists Participating in CSUSB Model United Nations$is, in turn, would reduce even further the tax revenues &owing to the federal government and increase—rather than reduce—the de!cit and debt. In contrast, expanding the federal government’s de!cit through expansionary !scal policy would stimulate the economy, reduce the level of unemployment, increase the &ow of tax revenues and, over time, reduce the size of the de!cit and debt as a share of GDP. It is also common to hear ill-informed politicians and pundits suggest that the federal government should live within its means, just like a household. $is household analogy is false, however: the federal government is not like a household. Unlike a household, the federal government can alter its budget (&ow of tax revenues) by altering its spending. If the federal government were to increase its spending, it would stimulate the economy, cause unemployment to decrease and tax revenues to rise, improving the federal government budget. Obviously, this is not something individual households can do. In any case, the facts of the de!cit are far less scary than many proclaim. $e best way to measure the “size” of the de!cit is to calculate the ratio of the de!cit to the size of the economy, measured by GDP. Any given dollar size of de!cit has a smaller impact on the economy the larger the economy happens to be.$e table on the next page presents this ratio for years 2000 until 2011. It also includes estimates of this ratio for 2012 through 2017. $is data came from the President’s Budget (see http://www.whitehouse.gov/omb/budget.)As can be seen, the de!cit did rise ... “Austerity Policies” will make things worse, not better...4dramatically in 2009 as tax collections fell and government spending increased (partly due to stimulus spending programs). In 2009 this ratio reached -10.1%: that is, the de!cit was a bit more than 10% of the size of the economy.  Negative numbers represent de!cits while positive numbers represent surpluses. A de!cit equal to 10.1% of the economy is, of course, a huge de!cit.  Yet, in the last couple of years this size of this de!cit has fallen. And estimates of the future size of the de!cit have it falling back to “normal” levels by 2017. Even if the size of the de!cit is currently a concern, it seems that the normal workings of the federal budget process has it returning to  levels that are not a major concern. Drastic remedies to “solve” the problem of the de!cit do not seem necessary.Further, as is implied above, a major cause for the large de!cit in recent years is simply the economy, and not some out-of-control  Congress spending like crazy. $e de!cit typical grows during bad economic times, in part because bad economic times lead to lower tax collections (as people’s income has fallen) and greater federal spending as automatic stabilizers kick in. $at the de!cit rises in bad economic times is not a surprise.Indeed, the !gure to the right shows the relationship between the unemployment rate (which rises in bad economic times) and the size of the deficit (as a percent of GDP). As can be seen, higher unemployment tends to make the de!cit larger: as the unemployment rate grows this is associated with a more negative (de!cit) budget stance. Of interest is the de!cit-unemployment rate combinations circled. $e points circled in red represent the Great Recession. $e point circled in blue represent the bad recession of the early  1980s. $e red circled points seem quite consistent with Continued from page 3-12.0-10.0-8.0-6.0-4.0-2.00.02.04.02.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0Deficit as % GDPUnemployment RateHigh Unemployment --> High DeficitEarly 80s recessionGreat Recessionthe relationship seen in the rest of the graph. $e points associated with the relationship in the early 1980s, however, seem somewhat di"erent. $e reason the de!cit didn’t rise so much in the early 1980s recessions is partly explained by the cause of the recession; this recession was partly caused by policy-makers, in particular the Federal Reserve. Indeed, recession of the early 1980s (partly caused by the  Fed) was desired by policy-makers in order to get the high in&ation of that time period under control. $e Congress was not particularly interested in passing stimulus programs to reduce the severity of the recession and, many thought, the Fed had some control to undo the recession by returning to expansionary monetary policy.$e Great Recession was di"erent: policy makers didn’t anticipate or desired the huge recession starting in the late ‘00s. In fact, policy makers were very concerned, if not scared, that the Great Recession might come to equal the Great Depression of the early 1930s. As a result, the Congress passed stimulus programs to !ght the recession. As a result the federal de!cit expanded greatly.$e graph below shouldn’t be misinterpreted. It is certainly true that the level of employment shapes the de!cit (and surplus) and, in turn, the existence of a de!cit (or surplus) shapes the unemployment rate. Yet the pattern seen in the graph below mostly reveals the impact that a poor economy (and higher unemployment) has on the de!cit. $e graph does not indicate that a reduction in the de!cit will reduce ... a major cause for the large de!cit is simply the economy......"e Great Recession was di#erent...continued on page 5Scary Budget? Federal Budget Surplus or De!citFiscal Year Surplus or De!cit as Percent of GDP2000 2.42001 1.32002 -1.52003 -3.42004 -3.52005 -2.62006 -1.92007 -1.22008 -3.22009 -10.12010 -9.02011 -8.72012 estimate -8.52013 estimate -5.52014 estimate -3.92015 estimate -3.42016 estimate -3.42017 estimate -3.05Found on the Internet:0.02.04.06.08.010.012.0Unemloyment RateYearUnemployment in the USunemployment. Indeed, economic theory says the opposite: a reduction in the de!cit, during bad economic times, will tend to increase unemployment.A further mistaken idea is that the current federal budget problems are related, in some way, to “entitlement spending.” Entitlement programs includes Social Security, Medicare, and Medicaid. $ese programs have been created by Congress so that if someone meets the eligibility requirements for the bene!ts these programs provide, the person gets, is entitled to, the bene!ts.  One implication of these entitlement programs is that the spending on them (in any given year) is determined by the number of people who are eligible for the programs (and not by a decision by Congress to spend a certain amount on these programs in that year).One can discuss whether it is good idea, or not, to have program spending determined by an entitlement progress or by explicit Congressional decisions. What is not open for discussion is the (false) claim that entitlement spending is a cause of current budget de!cits. It is not. For instance, the Social Security program actually helps fund other federal programs as it earns more (in OASDI taxes) than it pays in bene!ts. Medicare and Medicaid are on less solid !nancial footing, but these two programs are not the cause of any (real or imagined) federal government budget problems. Indeed, the causes of federal de!cits in recent years are: stimulus spending, reduced revenue due to the Great Recession, spending for various wars, and reduced tax collections due to tax cuts passed by Congress during the Bush II years. Entitlement spending has little to do with any recent federal budget de!cits.But no matter what caused the current large federal debt, a large federal debt is a smaller problem than the near 8% unemployment rate. $e high unemployment rate is Continued from page 4Scary Budget?•     •     •causing su"ering now; the de!cit and debt are not causing real problems now and no sign exists that the current de!cit and debt will cause signi!cant problems in the future.  6Tentative Fall 2013 ClassesFall  Winter Spring Econ 200 Econ 200 Econ 104Econ 202 Econ 202 Econ 200Econ 302 Econ 300 Econ 202Econ 311 Econ 311 Econ 333Econ 335 Econ 322 Econ 335Econ 410 Econ 360 Econ 357Econ 480 Econ 430 Econ 372Econ 530 Econ 443 Econ 410SSCI 320 Econ 460 Econ 445  Econ 475 Econ 450  Econ 540 Econ 490       Econ 630Tentative 2013-2014 Course O"erings#  SEC TITLE    DAYS HOURS AM/PM INSTRUCTOR200 01 PRIN MICROECON  MWF 1040-1150 AM  STAFF200 02 PRIN MICROECON  MWF 0120-0230 PM  STAFF200 03 PRIN MICROECON  MW 0600-0750 PM  STAFF200 04 PRIN MICROECON  TR 1000-1150 AM  ALDANA200 05 PRIN MICROECON  TR 0200-0350 PM  STAFF202 01 PRIN MACROECON  MWF 0920-1030 AM  STAFF202 02 PRIN MACROECON  MWF 0120-0230 PM  STAFF202 03 PRIN MACROECON  TR 1000-1150 AM  STAFF202 04 PRIN MACROECON  TR 0200-0350 PM  NILSSON202 05 PRIN MACROECON  TR 0600-0750 PM  KONYAR302 01 INTER MICROECONOMICS MW 0400-0550 PM  TORUNO335 01 TOOLS OF ECON ANALYSIS MW 0400-0550 PM  STAFF410 01 MONEY & BANKING  TR 1200-0150 PM  PIERCE480 01 QUANTITATIVE METHODS TR 0200-0350 PM  KONYAR530 01 THE GOOD ECONOMY TR 1000-1150 AM  NILSSON600 01 PROSEMINAR IN ECON M 0600-0950 PM  TORUNOSSCI320 UNDERSTANDING CAP’ISM TR 0800-0950 AM  PIERCEStaying Informed about Department Events and NewsIf you’re receiving the Coyote Economist, then you’re on our mailing list and everything is as it should be. But, if you know of an Economics Major, or an Econ Fellow Traveler, who is not receiving the Coyote Economist through e-mail, then please have him/her inform our Administrative Support Coordinator or the Chair of the Economics Department, Professor Mayo Toruño. Our phone number is 909-537-5511.  You can stay informed by consulting: Our Website - http://economics.csusb.edu/ Our Facebook Page- http://www.facebook.com/pages/CSUSB-Department-of-Economics/109500729082841 Chair of the Economics Department – mtoruno@csusb.edu

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