Here are some excerpts from an article published yesterday for Bloomberg by Kevin Hassett, a scholar at the American Enterprise Institute for Public Policy Research:

The National Confectioners Association estimates that 2005 Halloween sales were $2.1 billion, easily making Halloween the biggest candy season. This year, sales will certainly be higher.

What percentage of those sales end up providing candy that individuals don’t really like? If my own careful scientific study of Halloween bags is any guide, perhaps about 75 percent.

It’s not the dead that concern me about Halloween. And it is not the impact of all that sugar on the weight of our kids. No, it’s the dead-weight loss, or pointless lost utility of the entire enterprise. That likely has a dollar value that exceeds $1.5 billion annually. American citizens squander more than a billion and a half dollars a year on an economically inefficient holiday.

So let’s do something to reform Halloween. The first step would be for Halloween donors to give kids money instead of candy. Kids could then go to the supermarket the next day and binge on the candies they really like. That solution would get an A-plus in economics.

So, his argument is that the first law of economics would be that lump-sum transfers are more economically efficient than in-kind transfers. If you are going to give a gift to somebody, you should just give them the money. They will be a better judge of the best way to spend it. I guess the same theory applies for birthdays and religious holidays as well, but money is just so … impersonal.

He continues:

Many schools prohibit children from taking Halloween candy onto the premises. That is exactly the wrong policy. Schools should encourage all children to bring their entire haul to school, and allow them a lengthy period to trade candies among themselves. That way, the Take 5s and the 100 Grand bars will find their way to individuals who cherish them.

Of course, nobody will take the Charleston Chews, so we should also consider a federal block grant to local school districts to support environmentally friendly disposal of the candy.

And Halloween used to be such a simple holiday!

In my nerdy student-of-Economics way, I’m very excited about today’s appointment of Ben Bernanke, Ph.D., as Fed Chairman Alan Greenspan’s replacement. Beyond his impressive C.V., Bernanke has a solid understanding of the pressures facing U.S. monetary policy, such as the need to be more transparent about setting inflation targets, and the balance between solid GDP growth and tight interest rate policies.

“Economics is a very difficult subject,” Bernanke once said. “I’ve compared it to trying to learn how to repair a car when the engine is running.” He is not alone in that school of thought, as I have had several Economics professors make similar statements to me. As our danger factors like the current account deficit and our core CPI and PPI figures continue to grow disparate of each other, and external pressures like oil prices and off-shore labor movements weigh on our ability to grow nominally as an economy, the need for someone who can add more clarity to our monetary policy is abundantly evident. I really hope Congress approves the appointment.

Italians like their coffee strong and their currencies weak. That, at least, is the conclusion one can draw from their latest round of grumbles about Europe’s single currency. But are the Italians right to moan? Is the euro overvalued?

The Economist’s Big Mac index (see table below) suggests they have a case: the euro is overvalued by 17% against the dollar. How come? The euro is worth about $1.22 on the foreign-exchange markets. A Big Mac costs €2.92, on average, in the euro zone and $3.06 in the United States. The rate needed to equalise the burger’s price in the two regions is just $1.05. To patrons of McDonald’s, at least, the single currency is overpriced.

The Big Mac index, which The Economist has compiled since 1986, is based on the notion that a currency’s price should reflect its purchasing power. According to the late, great economist Rudiger Dornbusch, this idea can be traced back to the Salamanca school in 16th-century Spain. Since then, he wrote, the doctrine of purchasing-power parity (PPP) has been variously seen as a “truism, an empirical regularity or a grossly misleading simplification.”

Source: The Economist

A brief story came across the AP newswire this afternoon detailing the differences in the ongoing U.S. budget discussions/debates currently happening in Washington. Essentially, there are three schools of thought as to who owns the purse strings - the President, the House, or the Senate. All three are in fairly close agreement with how to spend nearly $2.6 trillion this year alone, but, for the third year in a row, all three neglect addressing the incredible deficits that are being created in the process.

The Congressional Budget Office (CBO) projects that if current laws and policies remained the same, the federal government would run budget deficits of $368 billion in 2005 and $295 billion in 2006. However, because of the statutory rules that govern such baseline projections, those estimates omit a significant amount of spending that will occur this year–and conceivably for some time in the future–for U.S. military operations in Iraq and Afghanistan and for other efforts in the war on terrorism. And, those estimates are on top of the record $412 billion deficit set for 2004.

The following chart from the CBO shows the total revenues and outlays as a percentage of GDP from 1962 to 2015. Notice the pattern within the past three years, and how the budget gap doesn’t appear to be narrowing. When will the elected powers-that-be attend a simple finance course?