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May 17, 2010 - Image 5

Resource type:
Michigan Daily Summer Weekly, 2010-05-17

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Monday, May 17, 2010
The Michigan Daily - michigandaily.com


Positive incentives



L et's play a word associa-
tion game: I'll say a word
and you shout out whatever
comes to your
mind. Ready:
If you are like
many of my non-
economics major
friends, you prob-
ably responded
with words like ERIC
"money," "sup- STULBERG
ply and demand," STULBERG
"Wall Street," etc.
I can almost guarantee that you did
not respond with "spring term and
summer term."
Spring term and summer term
are surprisingly good examples of
how economics works. Economics
isn't only the study of money and
graphs. It is the study - actually
the complex science - of cause and
effect. In economics, we replace
the word "cause" with the fancy-
sounding terms like "incentive"
and "disincentive." So let's analyze
the "incentives" for and effects of
spring and summer term.
In order for spring and summer
term to exist, students must want to
take classes. In economics, that is
demand. There aremanyincentives
for students to take spring and sum-
mer classes. Ann Arbor has a great
vibe in spring and summer and
students want to stay here to enjoy
a more kicked-back atmosphere. A
student with a double-major may
need to fulfill requirements. Per-
haps a student wants to take one
hard class by itself.
Courses also need professors.
Professors and GSIs supply the
service demanded by students,
teaching us during the spring and
summer in order to boost their
income. The University pays pro-
fessors and GSIs to teach so it can
make money from students' tuition.
And students are willing to pay
tuition for all of the incentives men-
tioned earlier. It's one giant win-
win cycle of overlapping incentives.
Each of these incentives have
specific effects on the Ann Arbor
area. The academic community -
students, faculty and administra-
tors - remaining in Ann Arbor is
an added boon to the local hous-
ing market and business establish-
ments. Many spring and summer
students sublet housing from other
students. If year-round students
couldn't find subletters for the
spring and summer, they may not
have leased housing for the year.
If it weren't for students subletting
in the spring and summer, the off-
campus housing market would be

negatively affected.
Local restaurants and supermar-
kets continue to ring up sales and
benefit from traffic generated by
those staying in Ann Arbor. This
traffic is an important buffer to
business establishments that would
otherwise suffer from an exodus of
students and faculty.
Summer classes

9 d n
a ° t
Amo-7"CG ne tog o torehab

aid Ann Arbor
These students and faculty
pump up other local businesses
with their disposable money. For
example, in the past week I've
bought a used textbook from
Ulrich's and an extension cord
from Target and saw a movie at
the Michigan Theater. My contri-
butions to those businesses alone
don't have much of an effect. But
even if a quarter of all students
taking spring term and summer
term courses buy their textbooks
from Ulrich's, spend money at local
stores and occasionally indulge by
going to the movie theater, it is
easy to see how these students are
vital to the local economy.
And as much as I like spending
money, I like to earn it even more.
This is probably true for many stu-
dents. As a result, students support
the University and local businesses
by providingthe ideal type of labor:
educated, eager and cheap. One of
my friends is assisting a professor
with cancer research for a mere
eight dollars an hour. Only in a col-
lege town could a cancer researcher
find an educated, productive assis-
tant who is willingto work for bare-
ly above minimum wage.
However you slice or dice it,
spring and summer terms are a
win-win for local businesses, stu-
dents and the University. Students
gain knowledge, course credits and
jobs. The University gains tuition
money and its researchers gain a
labor pool of the best workers in the
state. Businesses, too, have access
to that same labor pool and ben-
efit from the money students infuse
into the local economy.
Let's play the word associa-
tion game one last time. Ready:
"Spring and summer term." I bet
that you either said "last week's
miserable, rainy weather" or,
hopefully, "economics."
- Eric Stulberg can be
reached at estul@umich.edu.

magine you're an alien look-
ing down at Earth. From space,
you see the usual marks of
human activity:
the Great Wall of-
China, the Egyp-
tian pyramids and r
"The Apprentice"j
contestant Rod w
Blagojevich's hair.
But then you
see something
else: an explo- NICHOLAS
sion in the ocean. CLIFT
You notice a huge
slick of oil fed by a
leak that is spilling 210,000 gallons
every day, according to the Associ-
ated Press. Like ants trying to stop a
flood, you see the natives in fishing
boats making futile attempts to keep
the spill from spreading. You notice
others trying to plug a leak almost a
mile under the water's surface, and
failing. And then, on shore, you see
billions of people consuming oil like
addicted teenagers consume alco-
hol, oblivious to the harm it's caus-
ing, yet unable to stop. You'd think
humans were idiots.
And you'd be right - we're clearly
being foolish. The whole oil spill
fiasco has been a catastrophic com-
bination of failures. There was the
mechanical failure that started the
whole thing and caused the deaths
of 11 workers. There's the continuing
failure of BP and the federal govern-
ment to shut the gushing well down.
But these technological failures are
really just symptoms of a more dire
problem: our addiction to oil.
We need to take a moment, as
a nation, to look at ourselves in
the mirror. We have a problem. In
so many ways, our oil habit looks
extraordinarily like a drug addic-
tion, and it's slowly robbing us of the

great person we used to be. We've
gained some weight. Our behavior's
been sporadic. Some of our friends
are avoiding us, and our eyes look
bloodshot. We go to parties, but
nobody wants to dance with us.
Well, maybe that lastbit's just me.
Carbon dioxide, a byproduct of
burning fossil fuels is slowly poison-
ing our climate beyond recognition.
Even with no major spills, hundreds
of millions of gallons of oil each
year, much of it runoff from roads
and spills from routine mainte-
nance, find their way to the oceans,
causing environmental damage. We
get much of our oil from countries
that are openly hostile toward us.
We're willing to drill tens of thou-
sands of feet into the rock beneath
an ocean to have our precious oil.
The lesson, for us and our gov-
ernment, is simple: the oil addiction
must end.
On Wednesday, Senators John
Kerry (D-Mass.) and Joe Lieberman
(I-Conn.) unveiled the energy and
climate bill they'd been negotiat-
ing and amending for the last eight
months. In it are plans to reduce
the national reliance on foreign oil
and cut greenhouse gas emissions
83 percent by 2050. For our country,
this is rehab. Still, many are say-
ing that the bill has little chance of
passing within the year.
While America is resisting rehab,
China, the kid America picked on in
middle school, is showing us up. A
photo essay in the May/June issue of
MIT Technology Review reported
that last year China's investment in
clean(ish) energy surpassed that of
America's for the first time ever, as
the country spent $34.6 billion to
clean up its air. China is also build-
ing 22 new nuclear reactors with a
combined power output of 23 giga-

watts, or the equivalent of the power
supplied by about 7,600 of the largest
wind turbines on a very windy day.
The country has just completed the
first offshore wind farm to be built
outside of Europe, and it's adding
considerably to its use of hydropow-
er. China boasts the world's largest
manufacturer of crystalline silicon
photovoltaic solar cells and it's kick-
ing our butt in developing a clean
energy economy. America is being
left inebriated in the corner as the
world advances around us.
Our nation needs
to put an end to its
oil addiction.
-But I don't want America to be
that kid who everyone thought
was gifted in middle school but
hung out with the wrong crowd
and blew everything on drugs. We
have great minds and resources, as
evidenced by our own University.
With a strong but wisely set cap
and trade policy, the government
can make the price of carbon more
accurately reflect the toll fossil fuels
exact from society. We can end our
addiction and take back our techno-
logical superiority. America can be
the funny, attractive, successful kid
it once was, but only if it's willing
to check itself into rehab and give
up its addiction. Otherwise, China
will very soon be stealing America's
class presidency, its lunch money
and probably its girlfriend.
- Nicholas Clift is the summer
assistant editorial page editor. He can
be reached at nclift@umich.edu.

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