Why the Music Industry is one of the most important industries

 Why the Music Industry is one of the most important industries

Written by: Jack Davis 

Everyone is aware that the music industry is quite a large industry. Through research, I discovered that it is actually quite larger and impactful than I had originally thought. Contributing a staggering 170 Billion USD to the annual GDP, as well as employing 2.5 million people nationwide, the Music Industry is one of the most important industries in the US. 

Starting off, the music industry contributes around 170 Billion USD to annual GDP every year. This is a massive amount of money, and it has been increasing due to streaming becoming more accessible and easier to come across. According to IFPI, there were 341 million paid music subscriptions by the end of 2019, which is slightly less than 11% of all smartphone users. These are massive numbers, with large amounts of money circulating due to streaming alone, not to mention concerts and the creative process. Spotify alone has 182 million Spotify Premium users worldwide, according to statista.com.

As you can see, Spotify's monthly active users has only increased since 2017, and has shown no sign of slowing down. This is how streaming plays into the massive GDP boost that the music industry delivers. This is one reason why I think the music industry is one of the most important industries in the US.

Aside from raking in the sheer amount of money that it does, the music industry also employs 2.5 million Americans, according to riaa.com, a well reputed company in the music industry. According to statista, there are 157.54 million people employed in the US. This means that 1.59% of all employed Americans are employed in the music industry. The vast majority of these employees come from live performances, distribution, travel, recording, and streaming. This just helps create an idea of how large the industry truly is, and why it is one of the most important industries in the US.

Works Cited

Götting, Marie Charlotte. “• Spotify users - subscribers in 2022.” Statista, https://www.statista.com/statistics/244995/number-of-paying-spotify-subscribers/. Accessed 30 May 2022.

Lewis, Jaron. “Uncommon Ways The Music Industry Affects The Economy.” Omari MC, https://www.omarimc.com/uncommon-ways-the-music-industry-affects-the-economy/. Accessed 30 May 2022.

“New Report: How Music Powers the American Economy.” RIAA, 9 February 2021, https://www.riaa.com/new-report-how-music-powers-the-american-economy/. Accessed 30 May 2022.

Stone, Jimmy. “The State of the Music Industry in 2020.” Toptal, https://www.toptal.com/finance/market-research-analysts/state-of-music-industry. Accessed 30 May 2022.

Reshoring Initiatives Impact US Economy

 Reshoring Initiatives Impact US Economy

 Written by: Logan Schill 

“Reshoring involves the return of the production and manufacturing of goods to the company’s original country. It is the opposite of offshoring, which is the process of making good overseas to try to reduce the cost of labor and manufacturing,” cited by Freight Waves.

American offshoring started in the 1970’s by prominent public US companies. In the early 2000’s, US manufacturing companies created another boom to the world economy with their offshoring initiative and efforts to save money by bringing in products manufactured in Asian-Pacific countries such as China, Taiwan, Sri Lanka, Malaysia, Indonesia, India and Vietnam to mention a few because they are low-labor cost countries. Building a stronger world-wide economy provided cost savings to US manufacturing companies for both consumer and industrial market goods. However, events such as worldwide Covid-19 pandemic and the Russian-Ukraine War, have created supply chain issues in the United States.

Companies did not have a balanced manufacturing plan for a massive world-wide pandemic that has created supply chain disruptions for raw materials to US manufacturing companies and finished goods for consumers. The complexity of the Russian-Ukraine war has magnified supply chain issues. With severe supply chain issues and significantly increased freight costs, several US companies are now looking toward a reshoring initiative. Products will be manufactured in the US creating jobs and an upswing to the US economy.

Reshoring efforts can add up to $443 billion dollars to the US economy according to Thomas Net.  In its 2021 State of North American Manufacturing Annual Report, Thomas found several shifts in domestics sourcing trends and supply chain demands in the post-pandemic world.  The survey found that 83% of North American manufacturers are likely to reshore products, up 54% in March 2020.  According to the findings, if manufacturers bring on just one single-contract domestic supplier, $443 billion could be added to the US economic value.

One key factor for reshoring are the increased costs of freight. Chart on the right indicates rising cost of containers from China starting in July ’21 to beginning of 2022. Costs were around $2,500 per container in August to a high of $20,000 per container in September ’21. Average cost from July ‘21 to start of 2022 was $14,487.09 per container.

One specific product in high-demand has been nitrile gloves. Post-pandemic the US government and distributors are sourcing domestically. Production for nitrile gloves is increasing with two manufactures in the states. Nitrile gloves are an important personal protective equipment (PPE) item used by workers in many industries including medical, laboratory, automotive, food processing and several other industries. More than 95% of nitrile gloves are manufactured in Asia and less than 1% have been manufactured in the US.

SHOWA Group and US Medical Glove Company (USMGC) are both domestic manufacturers of nitrile gloves. SHOWA Group is expanding operations in Alabama, and USMGC has leased a one million square foot facility in Illinois to ramp up production.

SHOWA Group is installing two new production lines to double their production to 800 million gloves per year. SHOWA plans to add two more production lines in the near future to increase their output to 1.2 billion gloves per year. Increase in production will add nearly 100 new jobs to the SHOWA Group team. 

Reducing carbon dioxide emissions is an environmental impact reshoring products back to the US as indicated by the artboard on the right from SHOWA Groups website.

According to Richard Hepell, President and COO of SHOWA stated in a CNN interview, “We are trying to make sure the US Government knows we have a facility here. We’re bringing in the latest high-speed monorail production lines that will product three times more gloves per hour. This will help bridge the gaps between costs differences in Asia and US. The key to this is making sure to continue to invest in new technology, keep an eye on what’s happening in Asia, and then try to stay ahead of the curve in the US to keep us competitive.

USMGC will house up to 80 American-made nitrile glove machines capable of producing up to 8.1 billion gloves per year. The vision to create four major manufacturing hubs will create more than 3,000 direct jobs and 10,000 indirect jobs created in the US. “American customer service, reliability and quality control can only be delivered by eliminating dependence on foreign made machines, not just foreign made gloves,” said US Medical Glove CEO, Dylan Ratigan.

According to Nick Mallinger, President of Tanis Incorporated, “We are seeing our business increase as companies continue the reshoring initiative. We do business with both SHOWA Group and US Medical Glove Company. We are also working with Peleton, who recently purchased Precor in North Carolina. Peleton was having freight and logistics issues getting their equipment made overseas, so they purchased Precor to have control of their products and logistics domestically manufactured in North Carolina.”

Offshoring will continue to be part of the US economy. However, reshoring initiatives will be an ongoing effort as US manufacturers continue to battle raw material delays or shortages, freight costs and logistic issues. Reshoring is necessary to rebalance costs and the supply chain, especially in the United States. Reliable, dependable, and quality manufacturing companies have an opportunity to thrive with the current reshoring initiatives. Manufacturers will have more control of their products and costs as well as having the ability to hire more labor.

Works Cited

“Artboard 1.” SHOWA Gloves, https://www.showagroup.com/wp-content/uploads/2021/02/Made-in-USA-glove-reduces-impact-on-environement.pdf. Accessed 30 May 2022.

“Made in America.” SHOWA Gloves, https://www.showagroup.com/us-en/showa-made-in-america. Accessed 30 May 2022.

Mahoney, Noi. “Can US cash in on reshoring manufacturing opportunities?” FreightWaves, 6 January 2022, https://www.freightwaves.com/news/us-cash-in-on-reshoring-manufacturing-opportunities. Accessed 30 May 2022.

“NEW REPORT: Reshoring Could Drive $443 Billion in U.S. Economic Value Over Next 12 Months.” Business Wire, 2 June 2021, https://www.businesswire.com/news/home/20210602005529/en/NEW-REPORT-Reshoring-Could-Drive-443-Billion-in-U.S.-Economic-Value-Over-Next-12-Months. Accessed 30 May 2022.

“US Medical Glove Leases Almost 1 Million Sq. Feet for Nitrile Glove Factory.” PR Newswire, 26 August 2021, https://www.prnewswire.com/news-releases/us-medical-glove-leases-almost-1-million-sq-feet-for-nitrile-glove-factory-301363781.html. Accessed 30 May 2022.

The Biggest Issue for Businesses Right Now: The Supply Chain Crisis

 The Biggest Issue for Businesses Right Now: The Supply Chain Crisis

Written by: Johnny Maasch 

Lately, we have been going to stores or gas stations sighing at the unbelievably high prices. We are paying so much more now compared to a year ago. And quite possibly, we could be paying even more another year from now. This is a big issue for us, but for businesses, an even bigger issue. Some may believe that higher prices should not be worse for businesses because they will make more money, right? Wrong! The prices are rising because there is a supply chain crisis, meaning that the steps it takes to obtain and sell a product are much more expensive. This leads to consumers being less willing to consume those products, hurting businesses. The supply chain crisis is the biggest issue for businesses right now because the pandemic led to slower transportation of goods, transportation has increased in price, and shipping containers are becoming extremely expensive.

Before diving into the reasons why the supply chain crisis is the biggest issue for businesses right now, it is important to provide context on what the supply chain is and how this crisis began. The biggest factor that began supply chain issues was the pandemic. The pandemic proceeded to cause layoffs, a decrease in productivity, and reduction in shipping. At the same time, China was sending shipping containers to any country, even if they did little trade with them, such as countries in West Africa. This led to empty shipping containers to pile up all around the world, resulting in a shortage.  Because there are now less workers and fewer containers to ship with, a supply chain crisis began.

First, multiple national lockdowns slowed down the transportation of raw materials and finished products. Because of this, the manufacturing process was largely disturbed. In addition, workers were getting quarantined left and right and some governments were closing factories, causing the number of producers to dramatically decrease. Recently, Shanghai has been in a total lockdown where “25 million people have been ordered to stay home.” (Brant). Many suppliers in Shanghai are being shut down because of this, meaning that many products are laying in factories instead of being distributed. All of this leads to a lack of workers, supplies for businesses, and sales. Many companies were not prepared for these tremendous effects. 

In fact, Ernst & Young LLP (company known for business consulting) conducted a survey on 200 senior supply chain executives in 2020. The survey looks at the pandemic’s impact on those companies. As shown in the picture below, most of the responders claimed that this had negative effects on their company. 

https://www.ey.com/en_us/supply-chain/how-covid-19-impacted-supply-chains-and-what-comes-next 

Second, transportation costs are insanely high, leading to the cost of products to increase. And if the cost of products is higher, less people will purchase them, and businesses will make less equity. From April of 2020 to April of 2022, a gallon of gasoline in the Chicago area has increased by about 42.5%. These costs have been increasing in the United States for several reasons, one being that we have discontinued the domestic production of oil. To add, a more recent reason would be since we have discontinued our imports of oil from Russia due to Russia’s actions against Ukraine.

https://fred.stlouisfed.org/series/APUS23A7471A 

Lastly, shipping containers are getting incredibly expensive while being in the wrong places. To dive deeper than explained before, in early 2020, China started to create half of the protective masks. Because there was such a high demand for masks during this time, China needed to meet that new sense of demand by sending more shipping containers to deliver these masks everywhere. Because some of these places were not too involved with China in trade, these shipping containers got stuck in the places they were sent. This ultimately led to a shortage of shipping containers for China, which is not great news because China needs shipping containers more than any other country. This hurts businesses because many countries get raw materials from China, and if there are no raw materials, there are no products to sell. And with shipping becoming more expensive and slow, companies will have to spend more, wait longer to receive products, increase prices, and less consumers will purchase.

Overall, there are many reasons why the supply chain crisis came to be. And, this is also the biggest problem for businesses because they need to wait longer, spend more, and increase prices while consumers will not consume as much. This will likely continue to be an ongoing issue for quite a long time, and some businesses may ultimately shut the doors if it gets too severe. So, do you believe the supply chain crisis is the largest problem for businesses right now?

Works Cited

“Average Price: Gasoline, All Types (Cost per Gallon/3.785 Liters) in Chicago-Naperville-Elgin, IL-in-Wi (CBSA).” FRED, 11 May 2022, https://fred.stlouisfed.org/series/APUS23A7471A. 

Gamio, Lazaro, and Peter S. Goodman. “How the Supply Chain Crisis Unfolded.” The New York Times, The New York Times, 6 Dec. 2021, https://www.nytimes.com/interactive/2021/12/05/business/economy/supply-chain.html?action=click&pgtype=Article&state=default&module=styln-supply-chain&variant=show®ion=MAIN_CONTENT_1&block=storyline_top_links_recirc. 

Harapko, Sean. “How Covid-19 Impacted Supply Chains and What Comes Next.” EY, EY, 18 Feb. 2021, https://www.ey.com/en_us/supply-chain/how-covid-19-impacted-supply-chains-and-what-comes-next. 

Baby Formula Bust: Shortages in Baby Formula Across America

 Baby Formula Bust: Shortages in Baby Formula Across America

Written by: Abby Rokus 

Over the past few weeks, baby formula has disappeared from shelves. This may initially seem like a COVID supply chain issue--and in part, it is. The center of the issue, however, surpasses typical shipping issues and ingredient shortages. Instead, it lies in America’s oligopoly over the baby formula market and refusal to trade with other countries.

Since the 1990s, baby formula producers have been the target of criticism. They faced lawsuits for creating barriers, such as fixing prices, to enter the market. The three largest manufacturers produced 90% of the formula consumed in the U.S., and their share has only increased as now 98% of formula consumed in the U.S. is produced domestically. As a result, consumers are overly reliant on producers and do not have many alternative options.

The problem is only exacerbated by government programs. For example, the WIC, or the Special Supplemental Nutrition Program for Women, Infants, and Children, provides grants that ensure access to food. According to the New York Times, this program “purchases more than half of all infant formula supply in the United States, with about 1.2 million infants receiving formula through WIC.” Not only are they the primary consumer of formula in the U.S., but state WIC agencies are also required to bid for contracts and WIC recipients are only able to buy formula from the single manufacturer the contract agrees upon. The producer then discounts the formula used by the agency. This results in a spillover effect to the general public as doctors and supermarkets are more likely to recommend and stock the WIC selected formula. WIC recipients should be allowed to choose from a variety of manufacturers in order to help diversify the market. This would break up the oligopoly and allow for more competition, ultimately benefiting families using the service.

Currently, only three brands are suppliers for the WIC. They include Abbot, Mead Johnson, and Gerber, which provide 47%, 40%, and 12% of formula for the WIC, respectively. Due to the WIC contracts, smaller companies do not have the financial incentives to enter the market. This has been a problem for decades, but we are currently seeing the effects due to one of Abbott’s plants closing on account of cases of bacterial infections. The closure resulted in recalls and stopped production of formula. They made the right choice as continuing manufacturing could have resulted in the deaths of more infants. On the other hand, when recalling the product, Abbott and the FDA should have planned for a substitute to be provided because families had no other options. This lack of foresight resulted in shortages as Abbott is one of the few formula manufactures in the U.S. and is the sole provider of formula for the WIC in nearly two-thirds of the country. Additionally, they are the main producer of specialized formula for young children who cannot consume regular products due to health conditions. Without Abbott, babies are currently being hospitalized due to not having access to the correct formula.

The government has also contributed to formula shortages by limiting trade with international companies. There are strict regulations on the labeling of formula and tariffs as high as 17.5%. This discourages trade amid the shortage despite European products being seen as equal to, or better than, American products. Canadian formula is also prevented from entering the U.S. due to low trade quotas, yet it would likely meet many of the FDA standards with minimal alterations. Thus, the U.S. should lower tariffs and remove quotas in order to prevent future shortages.

Due to few sellers and minimal trade, formula went out of stock in many stores. The out of stock rate for baby formula, according to CNN, was between 2% and 8% in early 2021. By April 2022, it reached 31%. Now, it lies at 40%, as seen in the first graph below. Some states are more affected by the shortages than others. For example, more than half of all formula was sold out in Missouri, Texas, the Dakotas, Iowa, and Tennessee at the end of April. The second image shows a map of which states have been the most affected by the shortages.

https://www.axios.com/2022/05/06/baby-formula-shortage-abbott-recall 

https://www.nbcnews.com/data-graphics/chart-baby-formula-supply-dwindling-months-rcna29475 

In response to the shortage, the FDA has allowed Abbott to start producing formula again. Although this is a beneficial step, it will still take the formula 6 to 8 weeks to reach shelves, and more needs to be done immediately. Waivers have also been granted to WIC recipients, allowing them to choose from multiple brands rather than just one. This lessens the problem of shortages, yet does not contribute to short term supply chain issues. The main strategy the U.S. is using to target this is reducing restrictions on international companies. A shipment from Germany last week included 35 tons of formula that would feed 9,000 babies and 18,000 toddlers for one week. While a significant amount, this was hypoallergenic formula for children who cannot tolerate regular formula. It was given to hospitals rather than supermarkets in order to assist a high risk population, so it will not be very helpful to the majority. There will, however, soon be a second shipment of regular formula that can be bought in grocery stores by all consumers.

Between families attempting to make their own formula and rationing the minimal amounts they have been able to buy in store, it is evident that the industry must change to avoid future shortages. Increasing competition, reducing barriers for imports, and preventing market consolidation are steps that must be taken to combat current issues. Hopefully with these changes, we will not see any sections of the supermarket barren in the future.

Works Cited

“Baby formula shortage turns 'terrifying': Out of stocks worsening.” Axios, 6 May 2022, https://www.axios.com/2022/05/06/baby-formula-shortage-abbott-recall. Accessed 24 May 2022.

Horsley, Scott. “Formula for trouble: How the US got into an infant formula mess.” NPR, 19 May 2022, https://www.npr.org/2022/05/19/1099748064/baby-infant-formula-shortages. Accessed 24 May 2022.

Kavilanz, Parija, and Ramishah Maruf. “The baby formula shortage is getting worse.” CNN, 11 May 2022, https://www.cnn.com/2022/05/08/business/baby-formula-shortage/index.html. Accessed 24 May 2022.

Ngo, Madeleine. “Baby Formula Shortage Has an Aggravating Factor: Few Producers.” The New York Times, 20 May 2022, https://www.nytimes.com/2022/05/20/business/economy/baby-formula-shortage-market.html. Accessed 24 May 2022.

Sandoval, Polo, and Samantha Beech. “Baby formula arrives in Indianapolis from Germany on US military aircraft to address critical need.” CNN, 22 May 2022, https://www.cnn.com/2022/05/22/politics/baby-formula-us-military-aircraft/index.html. Accessed 24 May 2022.

Wu, Jiachuan. “The Data Point: Baby formula supply has been dwindling for months.” NBC News, 19 May 2022, https://www.nbcnews.com/data-graphics/chart-baby-formula-supply-dwindling-months-rcna29475. Accessed 24 May 2022.

Used Car Prices Continue to Increase; why?, and when will they Return to Normal?

 Used Car Prices Continue to Increase; why?, and when will they Return to Normal?

Written by: Jake Sandlass 

Currently, the used car market in the U.S is breaking records… and not in a good way. As of November 2021, the average price for a used car was $29,011; a 21.4% increase in cost from the same time in 2020. Consumers looking for vehicles are paying drastically overpriced amounts or simply deterred from purchasing a car. The average price of used cars increased every month from February to November of 2021 and shows no signs of stopping anytime soon; but what's causing this?, when can we expect prices to return to normal, and what impacts is this having on the standard of living for a lot of Americans? 

For one, this is adding a ton of cars to the road that are dangerous, have outdated safety features, worn out parts, and in need of an upgrade as consumers choose to limp their car along until the market recovers. Personally, I have heard from several mechanics that my car is unsuitable to be driving on public roads and has several safety concerns… However, since the repairs are more than the vehicle is worth and I would need to pay upwards of $15,000 for a decent car I’m choosing to limp it along until it either quits on me, or the used car market returns to normal. Also, America is not very catering to people without motor-vehicles. Lack of public transportation can make it very difficult, even impossible to get to and from work, school, etc. Thus, people in sticky financial situations who may have had a vehicle quit on them can struggle to make an income and have a drastic decline in quality of life. 

But why is this happening? Well, the skyrocketing price of cars can be tokened to a few different root causes. For one, the worldwide shortage of microchips has pushed up prices for new cars thus increasing the demand in the used-car market. Early pandemic, microchip producers shut down to protect the health of workers, however consumer demand for electronics increased causing huge back-ups that microchip producers are still working to recover from. This then caused car manufactures to be unable to finish vehicles creating an 8 million car shortfall in 2021. Car manufacturers are also significantly underemployed, Kelly Blue Book said car manufacturers had more than 584,000 jobs in October 2021 they were unable to fill. With fewer new cars being produced, there are less people trading in their used ones causing prices to increase. Dealerships who previously had hundreds of new cars in their lots now have fewer than 10, according to KPMG. 

The question that consumers awaiting a drop in cost ask is when will the car market return to normal? While it's hard to say forsure, experts aren’t expecting much of a change until 2023. It is all dependent on the supply chain; when microchip production can catch up to demand and car manufacturers can reach full employment. Patrick Gelsinger, CEO of Intel, told investors in July 2021, that it will take another one to two years for the microchip industry to catch up to demand and we will continue seeing increasing prices in the used-car market through 2022. However, he is hopeful that we will begin seeing significant change early 2023. 

How has the Film Industry affected the economy and how has COVID-19 played a role in it?

How has the Film Industry affected the economy and how has COVID-19 played a role in it?

Written by: Gavin Long 

Many of you or I'm sure all of you have been to a movie theater or seen a movie inside of a theater at some point in your life. When you go to the movie theater it’s quite an experience. You go up to the counter, buy your tickets from the employee, get your snacks from the food service people And go and sit down and enjoy your movie. However in 2020 and 2021 this experience was taken away from us due to COVID-19. And like we studied in class, this was considered a recession. Prior to the COVID-19 pandemic, movie theaters and Hollywood contributed $504 billion to the U.S. GDP or 3.2% of the goods and services portion of GDP. This overall is a major reason why the Film Industry has affected the economy and the Film Industry has contributed a decent amount to total GDP

Here is a visual image of the Film Industry before COVID-19 and what happened during the pandemic recession. 

However something important to note is that when other countries produce a film that it does not count towards the U.S. GDP. A film can only count towards GDP if it is American produced. 

Furthermore, another reason why the Film Industry has affected the economy is because of positive externalities. Movies are filmed in many different locations of the world. For example, Harry Potter, a very popular film franchise, was filmed in the United Kingdom and Ireland. The positive externality of filming in those locations is that both of those locations have increased tourism by 50%. Also, some towns inside of the UK and Ireland have increased tourism as much as 200%. This is a positive externality because now those towns have more people going there and they have currency to spend. If they were to spend then that would contribute to the GDP. 

Overall these are just a couple of ways the Film Industry can impact the U.S. Economy. Through contributing to GDP and increasing tourism which is a positive externality, the Film Industry has a lot to offer for the economy even though it lost some revenue due to COVID-19. Do you think that the Film Industry has contributed a lot to the economy?

Works Cited 

 Name. “Popular Movies Can Increase Tourism to the Film's Location between 25%-300%.” Champion Traveler, https://championtraveler.com/news/popular-movies-can-increase-tourism-to-the-films-location-between-25-300/. 

Norah, Laurence. “The Top Harry Potter Filming Locations in the UK.” Finding the Universe, 8 Dec. 2021, https://www.findingtheuniverse.com/harry-potter-filming-locations-uk/. 

Rosal, Mel-Leo. “U.S. Film Industry Statistics [2022]: Facts about the U.S. Film Industry.” Zippia, Zippia, 11 May 2022, https://www.zippia.com/advice/us-film-industry-statistics/. 

The Financial and Economic Effects of Elon Musk Buying Twitter

 The Financial and Economic Effects of Elon Musk Buying Twitter

Written by: Evan Murphy 

On April 4th, 2022, Elon Musk announced he had purchased 9.1% of twitter. This news sent the stock prices soaring, and had people speculating. He was also offered a board seat by twitter’s board of directors, a move that would have restricted Elon to only owning a maximum of 15% of the company. Initially, Elon agreed, but later backed out. It was then on April 25th, 2022, that Twitter’s board of directors accepted Elon Musk's offer of $44 billion dollars for total control of the company, or $54.20 per share. Upon this completed transaction, twitter will likely also become a private company. Elon decided he wanted to purchase and control the entire company, and it looks like he is now doing so. But what financial effects does this major purchase have on not only the economy, but also on everyday consumers?

Although there has been an agreement for Musk to purchase Twitter, Twitter shareholders must approve the deal at the next annual meeting before it is finally official. So there is some chance that the deal could fall through, but the obstacles are seen as relatively insignificant, and Twitter expects the deal to close sometime later in 2022. But once the deal goes through, all stakeholders will be affected greatly financially. Twitter shareholders will receive $54.20 for each share of twitter stock they hold, as this is the price of shares after Elon purchased the company. This means a major cash influx for all stakeholders, especially those holding a significant number of shares. 

But Twitter’s switch to becoming a private company has other effects as well. With complete control over Twitter’s platform, Musk could make changes to put pressure on other tech companies, such as Meta Platforms Inc, the company behind the Facebook network, or other tech giants like Apple. Twitter could alter its approach to letting other companies on its platform, which could put pressure on other companies to take a similar path to Twitter.

Likewise, as a private company, Twitter would not be required to report on its financial performance in the same way that it does as a publicly traded firm. This means Twitter can be less transparent to investors in the social media and tech industries.

Elon Musk's purchase of Twitter, assuming it gets finalized, will have fairly substantial financial and economic effects. Whether more positive or negative, we’ll have to find out. But what we do know is that Twitter’s potential transition into becoming a private firm can have many effects on investors, as well as other firms. Musk will also be in full control of decision making, meaning he can easily implement new changes to twitter, revolving features, policies, etc. But to find out if these changes will have a more positive or negative impact, I suppose we’ll have to find out. 

Works Cited

Hawkins, Andrew J. “Elon Musk Buys Twitter: All the News You Need on One of the Biggest Tech Deals of All Time.” The Verge, The Verge, 16 Apr. 2022, https://www.theverge.com/23026874/elon-musk-twitter-buyout-news-updates.

jenn_elias. “Elon Musk's Deal to Buy Twitter Leaves Many Key Questions Unanswered.” CNBC, CNBC, 25 Apr. 2022, https://www.cnbc.com/2022/04/25/elon-musks-deal-to-buy-twitter-leaves-many-key-questions-unanswered.html.

Reiff, Nathan. “What Investors Should Know about Elon Musk Buying Twitter (TWTR).” Investopedia, Investopedia, 27 Apr. 2022, https://www.investopedia.com/what-investors-should-know-about-elon-musk-buying-twitter-5268075. 

Interest Rates Cause and Effect

 Interest Rates Cause and Effect

Written by: Tejas Babel 

Due to the recent inflation, the Fed has increased the interest rate, and has announced that it will continue to do so until the inflation problem is solved. What does this mean for the average American? How much does the rising interest rates affect people’s lives? And what does rising interest rates mean for the Economy? The Fed increases its interest rates by increasing the federal funds rate. If the Fed increases its federal funds rate it’s more expensive for banks to get loans; hence, banks increase their interest rates on the average person. 

The federal funds rate also directs the greater economy, or changes its course.  This transition is often in multiple stages; for example, in 2020 Fed decreased its interest rate to 0%, and within a week the effect could be seen on the stock market. A month later the larger gap between GDP and stock market was created. It took GDP another 6 months to bounce back, and it took even longer for businesses to get back into profits. Hence, some sectors of economy are affected immediately while others take longer to respond. Common Americans are usually the last to benefit, but first to be hurt from these.  

In 2020 the interest rates were decreased, but recently the Fed has been increasing them to slow down the economy and reduce inflation to 2%. according to investopedia, the markets will react inversely from 2020. To avoid this sudden change in the direction of the economy, the Fed is gradually increasing interest rates at 0.25% intervals (quantity easing). According to CNBC, The Fed is gradually increasing interest rates so they can spread out the effect of the economy slowing down, and get a gauge of how effective these monetary policies are. It’s possible for there to be another recession because of this change in interest rates, but Fox news said “ The changes are too subtle for the employers to do a 180 degree turn from hiring to laying off people.” Hence, it would be reasonable to accept the economy would slow down to a point where there would be jobs for everyone but fewer openings, and the prices will stabilize. 

The state of the US economy overall is in an interesting position because the overall demand for goods has increased and the price level for supplies has also increased. Normally an increase in price level of supply would result in stagflation, but the high demand for goods counter it, but also led to more inflation. With the increase of interest rates the Fed is trying to reduce demand, and hoping that supply shortages will end. Furthermore, the ban of Russian oil has led to another supply crisis and has halted the rising of interest rates. 

Contrary to March 2020 the economy will see decline but it will not be as sharp, and the economy will plateau for the next couple of years. According to Forbes, the upcoming years are looking prosperous for the US economy in regards to increase in real GDP. While GDP will see a 4% increase. The job market is also predicted to sustain its current level of wage. Although the jobs aren’t at risk, Americans' financial state is at risk, many people bought houses at the low interest rates after covid, many of those homeowners will struggle to pay mortgage and home loans at the higher interest rate. 

Interest rate

Inflation 

Historical interest rates have been around 5% -6% but since 2008 the interest rate has been close to 0%. They were rising until covid hit, hence the Fed will likely restore the interest rate to pre-covid rates and see how the economy reacts before taking further measures. So for the common person it means that the interest on their credit cards and home will increase to pre-covid levels. 

All in all, rising interest rates will not lead to a recession, but slow the inflation and negatively affect wages for low income, unskilled workers and job availability will decrease. The Fed also predicts that many private big infrastructure investments will be delayed. Although some people argue that the 2020 response will lead to excess inflation; hence, the 2022 counter response will lead to some recession. But according to investopedia, in march of 2020 the Fed had to take immediate radical action to get the economy out of a recession, but now the Fed has more time and this shift in monetary policy will be smooth and the average American will be affected to a minimum. Although the Fed has to be very careful and focus on the fridual supply side of the economy because the economy can very quickly move towards stagflation. 

Everything is More Expensive

Everything is More Expensive

Written by: Jensen Wallace

By now all of us have read about or experienced the large increase in gas prices throughout the US. There are three main reasons that gas prices are being affected this way. First of all, there is a large increase in demand for gas post-pandemic. Vaccines were distributed and people became more comfortable leaving their homes. This increase in demand made an increase in prices, about a 45% increase from the pandemic low according to economist Aimee Picchi. Another reason for the increase in gas prices is the cuts to oil production. During the pandemic, most oil producing nations cut their production by 10%. Now, the process of catching up to the demand is taking longer than most would’ve hoped. OPEC representative De Haan said, “the production is still far behind the curve.” The final important reason that gas prices are rising is the unfortunate situation in Russia. Russia is one of the largest oil producers and one that exports often to the US. Amid the conflict with Ukraine, President Biden has cut off oil and gas imports from Russia, thus lowering the supply and raising the price

While gas prices increasing is an obvious issue for a teenager from South Eastern Wisconsin, it is also an even larger issue for everything else. This discussion started at the dinner table between me and my dad. I was complaining about having to spend fifty dollars to fill up every once in a while. He then proceeded to explain to me that there was more to this gas issue than just that. He gave me a prime example of this which is what made me really dig deeper into this issue. My dad owns a septic tank business for which they need several septic trucks. He decided to buy a new truck which in any normal time would take about a month and a half to get. However, due to the gas issue it is going to take upwards of a year. This is because in order to make the truck you need fuel to make the parts. Fuel to deliver the parts. Fuel to deliver the truck across the sea from China. Fuel to run the truck. Now there is less supply of the septic service and the price for that goes up as well. There is fuel and gasoline throughout this whole process which really made me realize how much of an economic setback this gasoline issue is. 

https://journalistsresource.org/environment/gas-prices-effects-health-driving-economics/

https://www.ers.usda.gov/data-products/chart-gallery/gallery/chart-detail/?chartId=1005

Another great example of this problem affecting other things can be seen by comparing these two graphs. The graph on top shows the retail price of gasoline over the years of 2008-2015. The graph below shows the retail price of food goods over the years of 2001-2021. Due to the fact that the span of years of this data is different it makes it slightly more difficult to find similarities. However, when looking closer and comparing the years we can see the correlations. In 2008-2009 there was a spike downward in both graphs. They also correlate in 2014-2015. By comparing these graphs we see how the price of gasoline can also affect the price of foods as it affects the price of everything. 

Conclusively, in the future there should be more focus on avoiding relying on gasoline as much as we do. There are a lot of different ways to do this, but the most realistic and efficient solution would be putting a focus on green energy and converting our source of energy. There are various ways of doing this. For example, there are simple green energy sources like solar panels and wind turbines. These have become more popular, but to fill the need for gasoline there must be something more advanced. Recently there have been advancements in Carbon Dioxide Storage technology. This the idea of burning fossil fuels and taking the CO2 that would be released into the atmosphere and storing it miles below ground. This is just another green, efficient energy alternative. By turning our focus away from gasoline we will not have to worry about the issue of everything being expensive in the future.

Works Cited

“3 Reasons Why Gas Prices Are so High - and When They Might Come Down.” CBS News, CBS Interactive, https://www.cbsnews.com/news/gas-prices-high-expensive-come-down-cbs-news-explains/. 

Bhattarai, Abha. “Beyond the Pump: Record Gas Prices Are Pushing up Everyday Costs, Dampening Economic Recovery.” The Washington Post, WP Company, 16 Mar. 2022, https://www.washingtonpost.com/business/2022/03/12/gas-prices-economy-inflation/. 

Wihbey, John, and About The Author John Wihbey. “Gas Prices and Their Societal Effects: Health, Driving, Economics and Policy.” The Journalist's Resource, 17 Dec. 2020, https://journalistsresource.org/environment/gas-prices-effects-health-driving-economics-policy/. 

Free Trade?

Written by: Ashton Janowski 

A commonly debated topic in the US, and around the world today is whether or not Free Trade is a good or bad thing for an economy. Many economists go back and forth on the issue as there are definitely two sides to the argument, however after further research, it is clear which side's evidence outweighs the other.  Free Trade can be defined as a trade policy that does not restrict imports or exports. In simpler terms, this has a similar concept as a Free Market, just in trade terms. The US currently has 14 Free Trade Agreements (FTA’s) with 20 different countries. In 2018, the US imported $2.3 trillion worth of goods which was the highest on record for a single year. The goods that are imported include things such as manufactured goods, minerals, fuel, oil, machinery and other goods that our country doesn’t produce in excess here in the mainland. As a result, we set up trade agreements or Free Trade with other countries in order to import and export goods. It seems like a great thing for all involved, however there are people who disagree with the idea of Free Trade and think it is bad for the economy for a number of reasons such as putting workers in bad working conditions and causing job loss. Although their reasoning can be argued, that evidence does not outweigh the facts presented through research which makes it clear that Free Trade does indeed help the economy since it promotes efficiency and innovation as well promotes growth within the economy. 

Free Trade by definition allows countries to trade with one another without any limitations on imports or exports. This means that more products get shipped in and more products get shipped out for a lower price which helps both sides involved in a particular transaction. Since products in excess of 2 trillion dollars are being shipped into the US each year through Free Trade, this causes there to be a demand for companies to be efficient and innovative with the imports they are given from countries like China. According to mercatus.org, “Over time, free trade works with other market processes to shift workers and resources to more productive uses, allowing more efficient industries to thrive.” With this increase in efficiency among industries, these companies are able to become more innovative and produce more in less time. This leads to an increase in wages, being able to invest in things like infrastructure,and ultimately leads to a more dynamic economy that can take what they are given from other countries and turn it into something that the American people will continue to buy and put money towards. Along those same lines, Free Trade allows for new resources to be brought into the country which introduces new items that businesses in our economy can take advantage of and innovate into new products which can turn into money for them, and more importantly, our economy. 

A second argument that proves why Free Trade is a good thing for the US economy is that it promotes growth within the economy itself. According to corn.org, “Opening markets fuels export growth. Even growing imports can promote jobs here at home. Half of all imports are not finished consumer goods, but intermediate inputs used by U.S.-based producers.” What this means is that most of the imports coming to the US are raw materials that are turned into final products by companies here in the US. The companies need people to turn those raw materials into finished products so they hire people to do that which creates jobs, and as mentioned in the quote above, growing imports here in the US produce jobs for US citizens. Job creation is a big deal in promoting economic growth and Free Trade does just that for people no matter what field of work they’re in. Finally, in reference to the image below which is also from corn.org, you can see it’s a graph showing the economic growth from FTA partners across the world. The yellow section of the graph represents growth of other countries during the same time period in which a certain country  was part of an FTA. The green represents that individual countries growth during the same time. As you can see from the graph, the green exceeds the yellow in every country and by staggering numbers in some cases. This graph statistically proves that Free Trade promotes economic growth, and ultimately, almost every country involved in FTA’s economically grows during the time period in which they are in an FTA.

All in all, Free Trade has many positives, but there are also drawbacks to this style of trade such as deplorable work conditions and job loss when a particular trade is no longer traded between countries. Even with all of that taken into account, it is still clear to see that the positives that come with Free Trade such as promoting efficiency and innovation, as well as causing economic growth within a country outweigh the negatives by far. For that reason, it would be in the US’ best interest, and any country’s best interest, to continue their Free Trade Agreements in order to ensure their economy can continue to grow. 

Works Cited

“The Benefits of Free Trade: Addressing Key Myths.” Mercatus Center, 15 Sept. 2019, www.mercatus.org/publications/trade-and-immigration/benefits-free-trade-addressing-key-myths.

Kafele, Baruti Libre. “Free Trade Is the Key to Economic Growth: Baruti Libre Kafele.” FEE Freeman Article, Foundation for Economic Education, 9 Oct. 2016, fee.org/articles/free-trade-is-the-key-to-economic-growth/.

Pettinger, Tejvan. “Benefits of Free Trade.” Economics Help, 28 Mar. 2020, www.economicshelp.org/trade2/benefits_free_trade/.

Tim. “International Markets and Free Trade.” Corn Refiners Association, 4 May 2018, corn.org/policies/trade/international-markets-free-trade/. 

Supply Chain Issues and Failure to Recover

Supply Chain Issues and Failure to Recover

Written by: Lauren Mistele

Over the course of the last few months, it has been presented to the economy that supply chain issues are still very prevalent in our everyday lives and still fail to recover from when they began to struggle. As import rates continue to rise due to online purchases increasing, shipping continues to become more and more backed up without enough labor to fix the issue. After the Covid-19 pandemic started, supply chain issues began to rise at extremely high rates and we still fail to recover from this issue due to multiple factors. Supply chain still struggles due to the unemployment rates, lag in technology improvement, and resulting in longer delivery times as the main impact daily consumers notice/undergo.

First off, the labor shortage is greatly affecting the supply chain and halting the steps towards progressing back to where the economy used to be performing at. After the pandemic began, cyclical unemployment grew at an exponential rate due to the quickening failure of the state the economy was unfortunately in. As the economy slowly began to recover from the pandemic, many of the workers that were originally let go during this time have still failed to return to work, and now fit into the category of discouraged workers. With this gap presented for the labor force, the supply chain is greatly affected in the sense that there are not enough employed people to load and unload the exports/imports from the shipping containers. Along with unloading the goods, there are not enough drivers to transport these goods before they can even be unloaded. This labor shortage poses a very prevalent problem that our economy has to deal with in order to improve supply chain efficiency to boost the productivity of shipping as it was before the pandemic. 

In addition to the labor shortage being an issue for the supply chain, the lag in technology improvement leads to the lack of shipping being improved and delivery times becoming faster than they ever have been before. Connecting back to shipping issues, improvements are not able to be made within technology and certain goods as the parts to improve these goods are taking longer to be received or not received at all. The shortage in computer chip shipments has halted much of the technology improvement that is being attempted to occur. Also, with a decrease in the people in the labor force, there are more jobs available than people to fill the positions which occurs in a halt in productivity within areas of improvement. Overall, supply chain is not able to be boosted due to the halt in technology improvements which leads to the longer and constant delivery rates consumers are experiencing. 

As you can see in this graph, it is clear that delivery times are at the highest rates they have been since 2010 due to supply chain turmoil and the failure to recover from the issues presented from the pandemic

Although many economists and consumers believe that supply chains will be fixed as time goes on and as improvements are made, more action needs to be taken than just waiting for this issue to be solved based upon time. An increase in the labor force must occur to fill the positions that need to be accounted for in order to allow shipping to keep up with the high demand it is receiving and give the economy what it needs to make life better for all individuals pre-pandemic once again. 

Works Cited

“2022 Supply Chain Issues: Our Predictions on What to Expect.” AdRoll, 1 Apr. 2022, https://www.adroll.com/blog/2022-supply-chain-issues-our-predictions-on-what-to-expect. 

Goodman, Peter S. “A Normal Supply Chain? It's 'Unlikely' in 2022.” The New York Times, The New York Times, 1 Feb. 2022, https://www.nytimes.com/2022/02/01/business/supply-chain-disruption.html#:~:text=Normal%20Supply%20Chain%3F-,It's%20'Unlikely'%20in%202022.,year%2C%20and%20perhaps%20even%20longer. 

“How the Labor Shortage Is Impacting the Supply Chain: Would Immigration Reform Help?” The National Law Review, https://www.natlawreview.com/article/how-labor-shortage-impacting-supply-chain-would-immigration-reform-help. 

The Everlasting Economic Benefits of the Milwaukee Bucks

The Everlasting Economic Benefits of the Milwaukee Bucks

Written by: Avery Mueller

As many of us know, the Milwaukee Bucks season has recently ended in a devastating defeat to the Boston Celtics in the sixth game of the 2nd round of playoffs. This came to a shock to many Wisconsinites, after the Bucks last season ended in a championship -- bringing a sense of pride to all of those who watched back in the summer of 2021. Although this year’s season did not finish in the way many fans anticipated or wanted, we can look back on all of the economic advantages that the exceptional team has brought to Milwaukee in the past two years. 

The long term economic shutdowns due to Covid-19 had awful effects on urban economies, especially Milwaukee . According to City.Milwaukee.Gov, “Approximately 47% of Milwaukee workers with unemployment claims, or roughly 46,800 workers, filed at least three months of weekly claims during the COVID-19 pandemic. Over 26,000 workers filed at least six months of weekly unemployment claims from March 2020 through January 2021.” Many businesses were also shut down, as the lockdown continued (seen in the empty streets pictured).  Housing rates became inevitably more expensive than many could afford. Shortages were found in many stores city-wide. These profound impacts left many in Milwaukee hopeless, while struggling to provide for themselves and their families. 

It was almost a miracle that the Bucks 2020-21 season ended the way it did. The Milwaukee Convention and Visitors Bureau announced that the playoff game streak gathered a total of $57.6 million in direct and indirect spending (with 28 million gained during 6 game finals series in July alone). UrbanMilwaukee stated, “Direct spending, approximately $32 million, occurred in lodging ($8.4 million), recreation ($6.6 million), retail ($5.8 million), food and beverage ($5.2 million), transportation ($4.3 million), business services ($1.2 million) and space rental ($38,521).” These profits really pushed the economy in Milwaukee forward, and provided hope for many citizens and businesses -- hope that many hadn't felt for months.

Overall, there is no doubt in mind that the $250 million dollar Fiserv Form was a great usage of public financing, as they brought in almost $58 million dollars in just one season. Furthermore, the creation of the Deer District (an outside viewing option where fans gather together to watch the game) was genius, as it gathered 65,000 people in the final game. Of course, Deer District has a long way to go in terms of safety of its occupants, but the benefits are substantial considering its entry is free: thousands of dollars in parking fees generated, food and drinks being bought, merchandise being basically ripped off the shelves, hotel rooms being sold for the nights of the games, and so much more. The new spaces and updates to the Bucks arena and property was a great investment, especially during a time when Milwaukee needed it most. "I think it's been phenomenal for the city, it really has," Milwaukee Bucks co-owner Marc Lasry said. "That's the one thing you want. It feels like it brought the city together."

65,000 fans pack Deer District for Bucks Game 6 | FOX6 News Milwaukee (Link to FOX6 news report from game 7/20/21)

Though the Milwaukee Bucks 2021-2022 season didn’t end in the same championship fans had seen the previous year, it would be ignorant to say that all of the team’s hard work was for nothing; millions of more dollars were brought to the city, as tickets to Fiserv Form were sold out, and as the deer district started up again. This money contributes significantly to rebounds that some businesses hoped for, and the citizens of Milwaukee who still need to get back onto their feet, more than two years since the pandemic originally started. 

As many fans await the 2022-23 NBA basketball season to start, it will be thrilling to watch to see how the teams and players perform in comparison to previous years, and what economic influence that the Bucks will have on their city once again. 

Works Cited

“65000 fans pack Deer District for Bucks Game 6 | FOX6 News Milwaukee.” YouTube, 21 July 2021, https://www.youtube.com/watch?v=AIAVcoaSCpk&feature=youtu.be. Accessed 23 May 2022.

“Aerial views of nearly empty Milwaukee streets during the coronavirus pandemic.” Milwaukee Journal Sentinel, 2 April 2020, https://www.jsonline.com/videos/news/2020/04/02/drone-view-nearly-empty-milwaukee-streets-during-coronavirus-pandemic/5113163002/. Accessed 23 May 2022.

“Bucks Announce Adjustments To Deer District For Game 6.” NBA.com, 19 July 2021, https://www.nba.com/bucks/news/bucks-announce-adjustments-deer-district-game-6. Accessed 23 May 2022.

“The COVID-19 pandemic: Impacts on cities and major lessons for urban planning, design, and management.” NCBI, 18 September 2020, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7499053/. Accessed 23 May 2022.

“Economic Impact Data for Milwaukee Bucks Championship.” Visit Milwaukee, 27 September 2021, https://www.visitmilwaukee.org/media/press-releases/economic-impact-data-for-milwaukee-bucks-champions/. Accessed 23 May 2022.

Jannene, Jeramey. “Eyes on Milwaukee: Bucks Championship Had $58 Million Economic Impact.” Urban Milwaukee, 27 September 2021, https://urbanmilwaukee.com/2021/09/27/eyes-on-milwaukee-bucks-championship-had-58-million-economic-impact/. Accessed 23 May 2022.

Types of Inflation

Written by: Connor Bruwer 

I’m sure we’ve all noticed the presence of inflation. It’s all over the news. It’s hard to say that not all of us have been affected, even in the tiniest form. I know for many of us, refilling our tanks has been a hassle, with the drastic increase in the price of gas. 

Types of inflation

Inflation occurs when there’s increased pressure on demand. Value of money decreases, while the value of goods and services increases. Sometimes, inflation is classified in three ways: Demand-Pull inflation, Cost-Push inflation and Built-In inflation 

Often considered as the most common form of inflation, demand-pull inflation occurs when aggregate demand overpowers aggregate supply. Because consumers are willing and able to purchase a certain good with higher demand, the price of that good increases. This then takes away the purchasing power of consumers. Oftentimes, demand-pull inflation is a sign of great economic performances, with rising employment rates. However, when consumer spending rises, it becomes difficult for firms to maintain quality performance as the demand of their product rises. Wage inflation also exists within demand-pull. As firms produce more of their product, they face an increase in demand for workers, which puts a pressure on increased wages. 

On the other hand, cost-push inflation is mainly driven by producers, which affects consumers. This type of inflation can be either expected, or unexpected. An increase in wages and cost of production, including the price of materials and resources are primary expected causes. Unexpected causes include, natural disasters, which may damage a production facility and impact the performance of production, causing a rise in production costs. At the end of the day, consumers have to pay the price of higher costs for the company’s product/service.

Finally, built-in inflation seems like the type of inflation that only gets worse. This occurs when individuals demand for higher wages in order to maintain their cost of living. This is known as a “wage-price spiral”. However, this only makes matters worse, with company’s / businesses raising the prices of their products / services. This causes a loop that forces workers to continuously demand for higher wages. 

The chart above shows the increase in annual inflation rates. As all three types of inflation play a role in the rise, the U.S. has experienced it’s highest rate of inflation throughout the past 40 years. 

As we dive deeper into the presence of inflation, it’s important to consider the different types that play a significant role in the rise of prices. It’s hard to not acknowledge the effects of inflation, as we all may be experiencing. It’s interesting to see the many, and complex routes taken in order to reduce the presence of inflation. 

Works Cited

Belda, Annemarie. “Inflation Defined (What Is the Inflation Rate?) | Mint.” Mint, 24 August 2020, https://mint.intuit.com/blog/planning/inflation/. Accessed 2 May 2022.

“Current US Inflation Rates: 2000-2022 | US Inflation Calculator.” Inflation Calculator, https://www.usinflationcalculator.com/inflation/current-inflation-rates/. Accessed 2 May 2022.

“Inflation 40 year high: CPI March 2022 hits 8.5% annually.” USA Today, 12 April 2022, https://www.usatoday.com/story/money/2022/04/12/inflation-rate-cpi-highest-40-years-prices/7284054001/. Accessed 2 May 2022.

“Inflation Definition - Economy.” Investopedia, https://www.investopedia.com/terms/i/inflation.asp. Accessed 2 May 2022.

Kelly, Robert. “Cost-Push Inflation Definition.” Investopedia, https://www.investopedia.com/terms/c/costpushinflation.asp. Accessed 2 May 2022.

Kelly, Robert. “Demand-Pull Inflation Definition - Economics.” Investopedia, https://www.investopedia.com/terms/d/demandpullinflation.asp. Accessed 2 May 2022.

“Current US Inflation Rates: 2000-2022 | US Inflation Calculator.” Inflation Calculator, https://www.usinflationcalculator.com/inflation/current-inflation-rates/. Accessed 2 May 2022.

Eorzean Economics: How Virtual Economies Manage Inflation

 Eorzean Economics: How Virtual Economies Manage Inflation

Quinn Gordon

Final Fantasy XIV has a robust in-game economy, yet one with a strange problem: every single person is effectively printing money all the time. Every monster slain, every quest completed, every piece of loot sold means more gil in your pocket. This poses a major threat to the economy, the same one we face in everyday life. That's right, it's that dreaded I-word: inflation. Since Final Fantasy XIV's launch in 2013, more and more players have been accumulating gil, the currency of Eorzea. Considering there's more than 36 million players all earning gil, how has the economy not succumbed to hyperinflation? There's a few reasons why, but it largely comes down to one thing: money sinks.

There's a few rules of Final Fantasy XIV's in-game market that control inflation. For one, players can buy items on other servers but can only sell on their home server, creating slightly different economies that still have trade between them. Players on the free trial can't sell items, so people can't create bot accounts that automatically obtain and sell items to inflate the economy. Most importantly, every single transaction has a 5% tax paid by the seller. It's not like there's a government that's funded with in-game money, so what's the point of this tax? It serves as a money sink, something that directly removes money from the economy to control the amount in circulation. 

Money sinks are essential to controlling inflation in an MMORPG. Since sources of money are often endless, there has to be a method of directly removing money from the economy. Buying consumables like potions and food, the market tax, non-refundable costs to buy a house, repairing gear--money sinks are everywhere. At the same time, if you have too many money sinks, players might feel like the game's more about paying fees than having fun. Market tax is a smart way to institute a money sink: it's a consistent percentage that applies to every sale, so players are used to it as just a fact of life. It's similar to a progressive tax, because the higher price of the item, the more tax you pay. Someone who never sells items won't pay any tax, though players would have a hard time making any gil without selling anything.

A similarly structured money sink is the cost to teleport between cities throughout the world. This fee increases with distance; you'll only pay 300 gil to go between two cities, but going to another continent or even another world could cost up to 1000 gil. Players unlock farther-off destinations as they progress through the story, so this fee actually takes more money from more established players who likely have more gil than a newer player (though the fee is still a small percentage of the player's wealth). In this way, it's similar to the real-world ability-to-pay principle. 

In addition to money sinks, the developers monitor the economy to ensure money is flowing as it's supposed to. In an interview, game director Naoki Yoshida explains that they keep tabs on how much money is flowing into and out of the economy per day, using this data to adjust how severe money sinks are. They also monitor individual items; Yoshida says "a remarkably high sales value for certain items would indicate to us that those items are not being made available enough." If an item is selling for much more than it was intended to, they increase the supply of it by raising the drop chance or lowering the amount of materials needed to craft it. Setting a sort of price ceiling like this keeps goods affordable, especially if they're sought-after like stat-raising food or gear for taking on high-level raids. 

In an MMO, economic management is incredibly important. Free-market purists may cry foul, but were it not for these systems, in-game economies may grow unfeasible altogether. Sometimes a game will fall victim to deflation, where there isn't enough money in the economy; in the case of the game New World, players started bartering instead of paying gold (why pay to repair your sword when you can buy a new one from another player?). To the contrary, Diablo 2 players used magic rings called Stones of Jordan as currency after gold became wildly inflated. It's all about balance: keeping inflation under control while still introducing money to the economy, intervening to keep the economy healthy but still allowing trade to flow freely. While game economies are much lower-stakes than real life--in the end, all that's at stake is fun--they are perfect demonstrations of economic principles and studies on how an economy should be run. 

Works Cited

Colbert, Isaiah. “New World’s Economy Is So Busted, Players Are Bartering For Items.” Kotaku, https://kotaku.com/new-worlds-economy-is-so-busted-players-are-bartering-1847904272. Accessed 17 May 2022.

MMO Economies - Hyperinflation, Reserve Currencies & You! - Extra Credits. www.youtube.com, https://www.youtube.com/watch?v=sumZLwFXJqE. Accessed 17 May 2022.

“Why Did Stones of Jordan (‘SoJ’s’) Become the ‘Currency’ at One Point in Diablo 2?” Arqade, https://gaming.stackexchange.com/questions/22688/why-did-stones-of-jordan-sojs-become-the-currency-at-one-point-in-diablo. Accessed 17 May 2022.

Wray, Chris. “Q&A with Naoki Yoshida on Final Fantasy, MMO Markets and Economies.” Wccftech, 7 Nov. 2020, https://wccftech.com/naoki-yoshida-on-mmo-markets-and-economies/.

Why are people not able to buy the Playstation 5?

 Why are people not able to buy the Playstation 5?

By Alex Coralline-Jones

Sony’s newest iteration in the Playstation line of consoles is the single most popular console on the market right now. The Playstation 5 is currently the most powerful console for sale, but this beast is being tamed by a few things, as of right now. It’s in incredibly limited supply, and the non-retail supply that’s out there is really expensive, especially compared to its market price. This has been brought on by several factors, almost all of which are entirely out of Sony’s control. The main two factors of the shortage are side effects of COVID-19, and from malicious intent from people focused only on profit.

First and foremost, the accessibility of the Playstation 5 is being hindered by the global chip shortage brought on by the COVID-19 pandemic. These chips, also known as semiconductors, are responsible for a very large amount of things, such as digital displays, and more complex things like assisted parking. They also happen to be used in the Playstation 5. Because of this shortage, anything requiring these chips are in incredibly low stock. The console, which is affected by this shortage quite heavily (since it’s not a necessity like vehicles), is in immensely low stock, and has been for the majority of its lifetime. This clearly clashes with the incredibly high demand of the console, meaning that most people who want the console are not able to buy it.

Another massive reason for the Playstation 5 shortage is the subset of people who don’t actually care about playing on the console, and just buy an insane amount of the available stock, with their only goal being to sell the console at a gigantic markup. These people, known as scalpers, do not care about the feelings of the consumers. They’ve already bought a ton of the available consoles, definitely disappointing potential customers who will actually play it, so if they sell it at such a high price, even if they make people angry, they don’t care. Scalpers have made the average price of PS5s rise drastically, further reducing the amount of people who will ever get the console.

Works Cited

Carcasole, David. “PS5 Scalpers Continue their Reign of Terror.” PlayStation Universe, 16 February 2021, https://www.psu.com/news/ps5-scalpers-continue-their-reign-of-terror/. Accessed 16 May 2022.

Starr, Jake. “Global Chip Shortage Causes More Problems With Sony's PS5 Supply.” GearHungry, 11 February 2022, https://www.gearhungry.com/sony-ps5-chip-shortages/. Accessed 16 May 2022.

Understanding Economic Racism and How History Brought us There

 Understanding Economic Racism and How History Brought us There

Easton Majeskie

Economic discrimination refers to any form of wage, workplace, and/or job availability disparities in minority communities. It wouldn’t seem that the “Land of the Free, Home of the Brave” would actively uphold these reprehensible practices- but we have our shortcomings, and it’s necessary to learn how and why whole demographics of Americans are being disenfranchised under the rug. 

Racism can be physical, it can be emotional, and it can be more so societally ingrained, but it is always debilitating, disadvantageous, and destructive in more ways than imaginable. To fully grasp this concept, we have to start at a vile, pivotal moment of American history- The Jim Crow era. Jim Crow legislation, which enforced segregation for all Black individuals, is still actively impacting generations and generations of Black success, affluence, and opportunity- even in 2022. Oftentimes, more desirable jobs were reserved exclusively for White people, while lower-paying, unsupported jobs were given to Black people, this oppressive ideology is observed in current workplaces as employers are 50% more likely to follow-up on candidates with “White-sounding” names- this also goes for college applications. Furthermore, Black hairstyles including locks, braids, afros, and cornrows are often stigmatized and drowned in harmful stereotypes that perpetuate workplace racism. The “Crown Act” which was passed in California, prohibits discrimination based on intrinsic Black hairstyles- only 8 states have followed the same law. Prejudice against Black hair is undoubtedly observable everywhere you turn, but it’s clear businesses uphold Jim Crow era stereotypes that patronize and dehumanize Black culture. 

There was never a time in the U.S. where wages were equal among all races. According to the Pew Research Center, “in 2015, average hourly wages for Black and Hispanic men were $15 and $14, respectively, compared with $21 for White men.” The income gaps have always been disparitally skewed White, with Black households earning (on average) $43,300 and White households earning $71,300. There are a plethora of reasons as to why the gap is so large, but most of it traces to Jim Crow laws and their impact on how future generations of Black Americans attain education, stable housing, and well-paying careers. For example, as these laws pushed Black people into metropolitan areas without necessary government funding, White people were able to thrive in suburban neighborhoods with stable, lucrative jobs provided by the government. 

Hourly Wages Based on Race via Pew Research Center

The impact that Jim Crow Laws and economic racism has on Black Americans and the acknowledgement of this history should be highly regarded and scrutinized. It’s a chapter of a long book of atrocities towards minorities, and it should be our job to understand why many are structurally disadvantaged. 

Works Cited

Gross, Terry. “A “Forgotten History” of How the U.S. Government Segregated America.” NPR.org, npr, 3 May 2017, www.npr.org/2017/05/03/526655831/a-forgotten-history-of-how-the-u-s-government-segregated-america.

“Jim Crow: Now & Then.” Github.io, 2013, cibonayrae.github.io/jimcrow/economic.html.

Patten, Eileen. “Racial, Gender Wage Gaps Persist in U.S. Despite Some Progress.” Pew Research Center, Pew Research Center, 1 July 2016, www.pewresearch.org/fact-tank/2016/07/01/racial-gender-wage-gaps-persist-in-u-s-despite-some-progress/.

Yamiche Alcindor,Rachel Wellford,Bria Lloyd,Candice Norwood. “How Hair Discrimination Impacts Black Americans in Their Personal Lives and the Workplace.” PBS, 2 Apr. 2021, www.pbs.org/newshour/show/how-hair-discrimination-impacts-black-americans-in-their-personal-lives-and-the-workplace.

Why is Inflation so high? What are the effects?

Why is Inflation so high? What are the effects?

Written by Megan Murphy 

Recently, Inflation has reached its highest peak since 1981. I’m sure you have personally experienced these rising prices with either your gas prices or food prices. As of April 2022, the inflation rate is 8.3% which is almost 7% more than the inflation rate in 2020. Not only that but core inflation rose 5.5% in the fast year which is the quickest jump since 1991. Core inflation is inflation which excludes food prices and energy prices. Gus Faucher, a chief economist at PNG financial, stated, ““Prices are increasing broadly throughout the economy, and the Federal Reserve has been caught off-guard by the extent of inflation,″ which shows why inflation is getting so out of control. 

Some examples of inflation would be how bacon prices rose 19% from a year ago, men’s coats and suits rose 11% from a year ago, and dining room furniture is over 17% from last year. Also renting a car will cost you 36% more than it did a year ago. 

You may be wondering why inflation has been so bad recently. This is for a couple big reasons. The first reason is that consumers are on a spending spree now that most people are fully vaccinated and are out shopping more. Also, there have been stimulus checks due to the effects of covid which does go to stimulate the economy but the higher demand leads to higher prices. Not only is the demand for a lot of goods higher, there have been significant supply chain issues, some of which are tied to Covid-19. When there are supply chain issues, the cost of production tends to increase which then leads to higher prices. 

In times like these the Fed steps up to limit inflation. The Fed increased interest rates in order to limit inflation. However, it takes time for these tools to actually work. 

This table shows how high inflation is compared to all the years since 2012 

Works Cited 

ABC News, ABC News Network, https://abcnews.go.com/Business/government-stop-slow-inflation/story?id=84031525. 

“Current US Inflation Rates: 2000-2022: US Inflation Calculator.” US Inflation Calculator |, 11 May 2022, https://www.usinflationcalculator.com/inflation/current-inflation-rates/.

Wiseman, Paul. “Explainer: Why Us Inflation Is so High, and When It May Ease.” AP NEWS, Associated Press, 12 Jan. 2022, https://apnews.com/article/why-is-inflation-so-high-5f69bed77f98221f9936ae99f96fd361. 

What to Know about Emergency Funds

 What to Know About Emergency Funds

By: Emma Williams 

An emergency fund is something that everyone should have because you never know what might come your way in life. This is a fund that you build overtime, so that you can use it in case of an emergency down the road. An emergency fund can protect you from falling into a bad place financially when you encounter life events that you had not planned for in your budget. When starting an emergency fund, there are key things that you need to know. The first thing to know is some reasons as to why you may need an emergency fund such as an unexpected medical bill. Another thing you need to know about emergency funds is how to actually build this fund. Most people do not know how to start, so they end up putting it off until the time comes when they actually need it. Lastly, you need to know when to actually use this fund. Many people may end up using it incorrectly, which can lead to more financial stress down the road. 

The first topic that needs to be considered is why it is actually important to have an emergency fund. A major reason to have an emergency fund is if you only have one source of income. According to The Balance, if you only have one source of income, you need to have this fund in case of a job loss or if you get an illness that prevents you from working. Another great reason to have an emergency fund is if you are young and just starting to budget your money. When you first start budgeting, you are likely to leave some of your expenses unaccounted for, so your emergency fund could help you in those situations for the first year while you are establishing your budget. According to Bankrate.com, 1 in 4 Americans indicated that they have no emergency fund savings at all, which can be detrimental to them because if they suddenly lose their job, they have no cash flow, and nowhere to turn if they are short on money since they never established an emergency fund.

The next important thing to know about emergency funds is how to actually build this fund. If you are struggling financially, then it may seem impossible to start, so knowing a couple ways to build up this fund may make it seem less difficult. According to ConsumerFinance, the best thing to do to start building your emergency fund is to set a goal for how much money you want to put aside every month or pay period. By creating this goal, you will stay motivated to actually attain that goal, and your emergency fund will thank you for it. If you aren't sure how much you want to have in your emergency fund, experts recommend having 3-6 months worth of living expenses such as food and housing. Another tip for creating your emergency fund is to have a system for making consistent contributions to this fund. This can be by having automatic transfers, or by setting aside a certain amount of cash. You want your contributions to be the same amount every time, but if you can afford to put a little extra towards this fund, then you will watch it grow faster. 

The last important thing that you need to know about an emergency fund is when to actually use this fund. If this fund is used incorrectly, then you may not have enough money when it comes time to pay for a true emergency. Some examples of using this fund incorrectly are to upgrade your phone, upgrade your wardrobe, vacations, or to lend money to someone else. These are incorrect ways to use this fund because these are not needs, they are wants. You don't need a new phone, so it's not a wise idea to spend an emergency fund on that purchase. You have taken time to create this fund, so you owe it to yourself to spend it when absolutely necessary. A perfect example of when to spend this fund is to cover living expenses after losing a job until you can get a new one. This is why experts recommend having three to six months worth of living expenses in your emergency fund because after a job loss, it can take anywhere from three to six months to find a job again. Another good way to spend an emergency fund is on car repairs after an accident. This is something you would want to use your emergency fund for because it is an unexpected purchase that was not planned for in your budget, and a necessary purchase so that you have a way to and from places such as your job. 

Works Cited

Caldwell, Miriam. “8 Reasons You Need an Emergency Fund Now.” The Balance, The Balance, 20 Oct. 2021, https://www.thebalance.com/reasons-you-need-an-emergency-fund-2385536/.

“An Essential Guide to Building an Emergency Fund.” Consumer Financial Protection Bureau, https://www.consumerfinance.gov/start-small-save-up/start-saving/an-essential-guide-to-building-an-emergency-fund/.

Foster, Sarah. “Survey: More than Half of Americans Couldn't Cover Three Months of Expenses with Emergency Savings.” Bankrate, https://www.bankrate.com/banking/savings/emergency-savings-survey-july-2021/#:~:text=More%20than%20half%20of%20Americans%20(or%2051%20percent)%20have%20less,from%2021%20percent%20in%202020.

Irby, LaToya. “A Quick Guide to Using Your Emergency Fund.” The Balance, The Balance, 17 Jan. 2022, https://www.thebalance.com/when-should-you-use-your-emergency-fund-453900. 

How Venezuela's Currency Became Almost Worthless

 How Venezuela’s Currency Became Almost Worthless

Gavin Goold

As the war in Ukraine rages on, people talk about all of the economic problems with Russia and how their currency, the ruble, is becoming worth less and less. But this hyperinflation still doesn’t match that of Venezuela's currency and its economic impacts. The Bolivar, Venezuela’s currency was first produced in 1879 and because of its initial reliance on gold and silver for its value standards it was a very stable currency. But in 1983 that all changed as the government put it as a floating exchange rate (which means it is not tied to anything) leading it to be more volatile. This coupled with the fact that Venezuela's whole economy is based on oil and in 1986 a major collapse in oil prices led the Bolivar’s value to downturn, having annual double digit inflation rates for the coming years. 

Then in 1999 Hugo Chavez was elected president of Venezuela and set out to make the country more fair and equal for all as there was much disparity between rich and poor with there being all of the oil companies. This was attempted through the bolivarian missions which were effective at the time at lowering poverty and unemployment rates but the dark side of these government run reforms were that they simply couldn’t afford them. According to CNBC in 2012 the GDP of Venezuela was over 50% of just public spending. And to implement this plan Venezuela had to borrow a lot of money leading to it being in 2013 over 100 billion dollars in debt. 

This major loss of money also led to Venezuela not being financially ready for economic downturn or recession and sadly for them the economic downturn was about to hit as in 2014 the price of oil plummeted from once being worth around 100$ a barrel to in 2016 being worth 29.32$ at its lowest. This was obviously a huge blow to Venezuela’s economy as they almost solely relied on oil for profit. In turn, as now the president Nicolás Maduro at the time had almost no way to pay back the countries they had borrowed billions from, the only way in his mind was to just print more money. This is where the major problems really began as now inflation was rising at a rapid and unrelenting rate with no signs of stopping as Maduro always blamed other countries like the U.S. and adversaries like Juan Guidado for his country's problems instead of trying to solve them himself. And since 2019 Maduro’s legitimacy as president has been in major dispute as Juan Guiado has risen up and said that he is the legitimate president after what looked like to be rigging of the election to keep Maduro in power. 

That coupled with the open revolution against Maduro has thrown Venezuela into free fall. And in a 4 year span Venezuela’s GDP dropped 35%, a sharper decline than that seen in America’s Great Depression. This obviously led to a major decrease in standard of living for the Venezulan people as riots broke out and Venezuelas murder rate spiked leading it be one of the highest in the world at the time in 2017. This unrelenting plunge of the Bolivars value has led the country to basically stop trying to even track the inflation of it as it is estimated to have inflated over 2,000,000% by some. And basic goods like food and medicine became almost impossible to afford by the average citizen. Reverting back to the way Venezuela was in the 90’s but a whole lot worse for the average citizen as now any money they had made was worthless and crime was on the rise to gain basic supplies.

So what has been done to fix this issue? Well many Venezuelans have adopted and started just using U.S. Money as it is much more stable and actually valuable. Another attempt at stabilizing inflation is the Petro Venezuela’s crypto currency based on oil although that also has allegations of government misuse and corruption. But for the Bolivar, Maduro decided to take off six zeros from the end of it and call it a day as now 700,000 bolivars is now worth 7 for example an attempt that many economist say won’t just magically fix inflation but it seems to be the only thing Maduro is willing to do.

Inflation Percentage via BBC

Work Cited

  (www.dw.com), Deutsche Welle. “Venezuelans Try to Beat Hyperinflation with Cryptocurrency 

Revolution: DW: 16.04.2021.” DW.COM, www.dw.com/en/venezuelans-try-to-beat-hyperinflation-with-cryptocurrency-revolution/a-57219083.

Bloomberg.com, Bloomberg, 

www.bloomberg.com/news/articles/2022-01-14/venezuela-breaks-one-of-world-s-longest-hyperinflation-bouts#:~:text=On%20an%20annual%20basis%2C%20Venezuela,2021%20with%20inflation%20at%20686.4%25.

MCaruso_Cabrera. “Why Venezuela Is so Desperate, in 5 Easy Charts.” CNBC, CNBC, 

19 Oct. 2014, www.cnbc.com/2014/10/17/venezuela-economic-mess-why-venezuela-is-so-desperate-in-5-easy-charts.html.

“Venezuela Crisis: How the Political Situation Escalated.” BBC News, BBC, 12 Aug. 2021, 

www.bbc.com/news/world-latin-america-36319877.