Assignment 9

16 Nov

Chapter 7 of poor economics is about the issues of small businesses, specifically run by poor people in third world countries, getting loans for capital. Banks won’t give them out because they don’t trust that the poor are going to meet their deadlines to re pay. Plus they want you to have some sort of history or relationship with the bank before. Moneylenders generally charge a much higher rate of interest with an average payment of 4.69% per day. At this rate, a $5 loan, if it goes unpaid for a year, leaves a debt of nearly $100 million. These loans often result in violence if they are not paid making them undesirable. Microfinance was a way to give small loans to the poor small business owners. MFI’s receive small profits but are more of a benefit to society growing the economy by allowing small businesses to grow. Unfortunately a sector of MFIs, who in some ways appear to function as traditional MFIs, have come onto the market and seek a more exploitative role. Beginning around 2005, certain lenders looked for ways to increase profits, turning from non-profit, to for-profit institutions and abandoning the social impact ideologies of the more traditional MFIs. MFI’s have made a positive impact but outside factors are now starting to hurt the good they were creating.

This was an interesting read. I never really thought about why third world countries have such trouble getting out of poverty. I think this showed a big reason why. I’m curious however to ask why government has not stepped in to regulate some of these interest rates to help the poor, but then again maybe the government isn’t very strong and doesn’t have the manpower to control that.

assignment 8

1 Nov

The article i read is starting to make me think that my topic is too broad. That maybe I need to narrow it down or at least divide it into subcategories. My topic is the effect of unemployment rate on the crime rate. In my readings I have been finding that most people who have researched my topic analyze two different categories of crime. One is violent and the other is property. I am more interested in the property crime rates, but I think I’ll analyze the violent crimes as well. Initially I was going to pick a bunch of different crimes such as murder and burglary and analyze them individually. I still may do that, but it might be best to narrow it down to violent and property crimes as a whole.

I am also noticing that there are many outside factors effecting the crime rate that I will have to pay attention for. For example, what if crime rate is decreasing as the unemployment rate is increasing. Could this be because there are less opportunities for crime to  be done? This is something I’ll have to pay attention too.

The article brought some good variables I will need to control. I’ll have to look at age, ethnicity, and schooling. One of the things I want to see is what people are committing more crimes when the employment rate goes down. I would assume it is people in the age range from 18-30, but I want to know for sure.This article is going to be a big help. It has lots of sources from the bottom that I will definitely use for my paper.

http://www.bus.ucf.edu/faculty/rhofler/file.axd?file=2011%2F2%2FTrogdon+-+Unemployment+%26+Crime.pdf

Assignment 7

26 Oct

The paper I read analyzed the relationship between unemployment and crime. Using U.S. state data, it estimated the effect of unemployment on the rates of seven felony offenses. They used data from the 1990’s and found that the decline of property crime rates could be contributed to the decline in the unemployment rate. The evidence was not as strong for the violent crimes.

One thing that the research brought to light was that alcohol and drugs tend to be associated with criminal activity. Since a lower unemployment rate would mean less income for certain people this causes them to have less money to purchase products that may cause or aid them in their crimes. This made think other things like guns that you would need money to get a hold of.

http://www.econmsu.org/cmt2/lib/c/488/File/Identifying%20the%20Effect%20of%20Unemployment%20on%20Crime.pdf

Aside

Barbarians at the gate

12 Oct

I really enjoyed the movie Barbarians at the Gate. It was about two different parties trying to buy out the company Nabisco. One side was led by the CEO of the company F. Ross Johnson and the other was led by Senior Partner of KKR Henry Kravis. I thought it was interesting to see how vindictive the two sides were towards each other. It was initially Kravis’  idea to buy out Nabisco as partners with Johnson. However, Johnson later decided to buy out the company himself. Then out of spite, Kravis decided to make his own bid to buy out Nabisco. You can tell that these business men have a lot of pride and don’t like to be outdone by one another.

There was a lot of verbal  back and forth between the two sides. The whole process of a buyout seemed really stressful. One side makes a new bid and then the other side makes a higher bid. Then there is a ton of paperwork that has to be filled out while including all the number crunching and financing. You can see why this process is difficult and takes a long time. A factor that adds to the stress is that you can’t trust anybody. Many times in the movie someone would lie to hide there hand of what they really intend to do. It’s hard to have a strategy when you never know if someone is telling the truth or not. Business is sort of like a chess game in that way.

The movie really showed how greed and money always have the final say in business. Ross Johnson’s greed cost him his job as CEO. He wanted to buyout the company and in the end Kravis won the buyout. Had he just stayed put he would have probably remained CEO. On the opposite side, the board members lost Johnson, who was a good CEO, because they wanted more money. Greed and money are extremely powerful.

Finally, I thought the statistic at the end of the movie was interesting. I believe it said that businesses in the 1980’s were 1 trillion dollars in debt. I’m assuming that was because of similar buyouts like the one from the movie.  Bidders kept driving of the price against each other to the point where when they bought the company they were too far in debt to come out. I’m guessing that this happened to several other companies

Assignment 6

5 Oct

Outline

  1. Introduction
    1. What effect does the unemployment rate have on crime?
    2. Explain why it is important

i.     Does a lower unemployment rate reduce the amount of crime

ii.     Important because it could improve an areas well being and economic health

  1. What inspired my question?

i.     Interest in the correlation between crime and unemployment

  1. Conclusion of introduction

i.     Layout the rest of my paper

ii.     Mention the sections of the paper and what they are about

  1. Literature Review
  2. Modeling
  3. Data
  4. Evidence
  5. Literature Review
    1. Mention the important information related to the unemployment rate and crime

i.     Explain the methodology and data in the work

  1. Critique poor papers
  2. State what I plan to elaborate on that other papers did not
  3. Modeling
    1. Hypothesis

i.     If unemployment decreases the crime rate will decrease and if the unemployment rate increases the crime rate will increase

  1. Test Hypothesis

i.     Discuss statistical and economic tools

ii.     Explain why certain evidence supports and does not support argument

  1. Data
    1. Data used

i.     Unemployment rate

ii.     Different crime rate data

  1. Describe important data
  2. Evidence
    1. Describe findings
  3. Conclusion
    1. What did I find about my hypothesis
  4. References

Why do crack dealers still live with their moms?

21 Sep

The chapter starts off by talking about how being a gang leader is not as glamorous as the chains and jewelry on television make it seem. In fact its quite the opposite. Before the arrival of crack cocaine there was no way for gang members to make money. They couldn’t charge dues to lower gang members because they had no money, marijuana was too cheap, and they didn’t know any rich white people to buy cocaine from. So, when crack was invented around the 1980’s it gave gang leaders a way to make a lot more money.

Crack is a much cheaper form of cocaine. First, it takes very little cocaine to make a lot of crack. Second, you smoke crack rather than inhale cocaine which gives a much more efficient way of delivering a high. Finally, the high lasts only about 15 minutes and is very addicting which causes the crack user to immediately want to get high again. Therefore, crack became the perfect drug for gangs to sell. 

The chapter goes on to discuss how a gang works. The life of a gang member was not at all wealthy unless you were a high up gang leader. High ranking gang members were receiving anywhere from $100,000-$400,000 a year. However, the foot soldiers, the gang members selling the drugs on the street, were making about $3.50 per hour. Most foot soldiers were making so little money they had another job at mcdonald’s. This wasn’t even the worst part of the job. Soldiers were getting shot at by rival soldiers. In fact, the study that was done by Sudhir Venkatesh with a gang in Chicago found that the annual death rate was 7%. There was a better chance of dying in a gang then there was dying on death row which was 2% annually. So why would these soldiers take these jobs?

The kids in the inner city were tricked into thinking they would get rich by joining the gain. They believed that once the guys at the top of the gang got old they would leave and then they would move up to the top of the gang. Also, kids saw gang leaders with expensive cars and expensive jewelry, but the cars were leased and the jewelry was fake because the gang leaders couldn’t afford it. The gang was viewed as the only way of being a success, and unfortunately crack cocaine tore apart the inner cities worse than ever.

Statistics:

Foot soldiers earn $3.50 an hour. Head Gang leaders earn $400,000. Pg 100

Foot Soldier Death Rate in the gang 7%. Annual Death Rate on Death Row 2%. Pg 102

1980 there were 3 million homeless people. Pg 86

 Barely one in three adult men worked at all. Pg 102

These statistics really show how bad of a job being in a gang was and how many of them were in a gang. A seven percent death rate is ridiculous. That means if your in the gang for four years you have a 25% chance of dying. And that’s not even including arrests and injuries. Plus, this is all for a salary of $3.50 an hour. Not exactly worth the risk. Yet, with all the people out of work and many with no high school degree there aren’t many options. Crack cocaine might be the single most destructive invention to the inner city neighborhoods.In fact, in some extra research I found that African Americans were catching up to whites in standard of living until the crack epidemic hit. Based on the chapter its easy to see why so many inner city people strive to be crack leaders. In their neighborhoods they are viewed as the heroes, and the best way out.

Assignment 3

14 Sep

My paper topic is the effect of unemployment on crime. Obviously there is a correlation between the two but I want to see how large it is. First I would like to see what kind of crimes are committed more when the unemployment rate increases. I believe it will be crimes that have a monetary incentive such as thief and burglary, but I also want to see if crimes like murder and assault that do not have any monetary incentive will increase as well. Finally, I plan to research what level of education the people who are committing these crimes have. My motivation behind this is I believe that there is a correlation between unemployment and crime, and I feel strongly that crime needs to be reduced. When I would pick up the newspaper everyday at home it seemed like there was a murder every other day. Therefore I think this project will give me an understanding of why people revert to crime when the unemployment rate is bad. I currently have data from the bureau of labor statistics and from the united states census bureau. It consists of the united states unemployment rate and several different crime statistics such as the offense, geographic community, and age, gender, and race. I will definitely need to look up the unemployment rate in geographical areas, as well as in age, gender, and race.

http://data.bls.gov/timeseries/LNS14000000

http://www.census.gov/compendia/statab/cats/law_enforcement_courts_prisons/crimes_and_crime_rates.html