The Fish Market 9.16.2013

Aidan Stuckert

Competition is one of the most powerful forces in the world of economics. On the other hand, a monopoly is one of the most destructive forces. Competition leads to lowered prices and better products. However, when businesses are fighting for money they need to evaluate opportunity costs. In most cases, ethics are sacrificed.

            Let’s take a deeper look at what the need for money has done to our environment. If farmers in the Amazon are faced with the choice to clear a couple hundred acres of forest or have reduced revenue, the answer is simple for all businesses, deforestation. Rather than even selling the lumber, the majority of it is just burned down. This contributes to global warning on a massive scale, as well as fueling the 35 to 50 extinctions that happen daily (there are also reports of 200+ daily extinctions).

            The profitability of putting greed before the environment is only temporary. Why don’t businesses work their employees 16 hours a day? Because continuously raping your resources isn’t sustainable. You would be able to get a lot of work done at first, but eventually the workers would rebel or make mistakes from restlessness. The environment works the same way. Businesses need three things: Resources, Money, and Time. Businesses cannot operate if one of those three necessities is missing.

            A problem with the invisible hand theory is it implies businesses don’t care about the consumers or other businesses. When one company decides to dam a river, they don’t care that it will kill any salmon that try to reproduce in it. Competition has lead to the irreversible destruction of the world largest food source. The Ocean. Once we figured out fishing could be created into a business, we created an entire industry on it. Boats got bigger and tools became more efficient. Can we continue to use competition if it will inevitably point to the demise of all aquatic life?  Usually, there are tradeoffs in businesses. There aren’t any consequences to polluting so there aren’t any necessary tradeoffs.

            Ocean acidification is one of the least known but worst aspects of businesses not taking care of their workers (the environment in this metaphor). Pollutants from the air are absorbed by the ocean and the acid levels increase. A raise of just 0.1 in pH can kill entire ecosystems. Every fish we hunt has had a massive population reduction. In this case, having a mixed economy is beneficial. The government can impose regulations to keep the economy form exterminating the economy (because without land and resources nothing can operate). Entire states can be based on fishing.

As fishing increases, the fish population decreases. Trolling the bottom of the ocean with fish nets is like a farmer cutting his crops 20 times a year. There wouldn’t be any time for the crops to grow back before you cut them again. Supply and demand is a main component of almost all economies. Also, it is part of the Invisible Hand Theory. If someone needs something, someone else will see that and sell the need to make money. Just because there is a demand for fish doesn’t mean there is a supply of them. When (not if) we reach the ‘end of the line’ the markets that run on the fishing industry.

Fish play a quintessential role in the world; they have been a part of our culture ever since we discovered them. Fish are considered holy in some regions. The fishing industry is a micro economy in itself. If the fish were to leave, the truckers that transport fish would be affected, the stores that sell fish would be affected, and many restaurants would be affected.

If something is not done fast to save the fish and the environment we will have to worry about things far worse than crashing economies…global starvation.

Million Dollar Slaves

Million Dollar Slaves

By: Joshua Byrd

I recently discovered that ninety percent of all U.S. citizens are and will always be modern day slaves. Unless you are a part of the ten percent of the population who are wealthy millionaires, you will never be excluded from the slave category.  Most of us reading this blog are in category one.. But, after researching and looking into modern slaves I found out that even the most upheld and notable sport icons are in the same boat as most Americans, and I call them Million dollar Slaves. The most recent display of million dollar slaves was in 2011 when the National Basketball Association (NBA) had their fourth league lockout under commissioner David Stern. Another example of this was also in 2011 when the National Football League (NFL) went on their fifth league lockout. Among these two programs the players in it are arguably the most idoled, famous, and wealthy people in the U.S., but couldn’t play football or basketball when they wanted to. Their bosses (the owners of the sports teams) had a different plan in the year 2011. The owners wanted more money, the players wanted to keep their money, so who controlled whom?

In the year 2011 the NBA had one of the biggest lockouts in league history; the two sides just couldn’t come to an agreement. Before the lockout, the players were getting 57% of the revenues and the owners were getting 43%. Ownership asked for a 50/50 split which they were not given, and had no choice but to lockout the NBA. This meant that the arenas were closed, practice facilities closed, workout facilities closed, and even the players weren’t granted access to see the team doctors. The President of the NBPA (National Basketball Players Association) Derrick Fischer of the Los Angeles Lakers, Matt Bonner of the Spurs, and Maurice Evans of the Wizards represented the players. David Stern and deputy commissioner Adam Silver represented the owners. After meeting a couple times the two sides failed over and over again to come to a resolution. For some reason after meeting with each other they couldn’t tackle and find a solution on the four major issues as to why the NBA went into a lockout. The biggest reason was the NBA had been losing money over the past two years, and only the big markets like the L.A. Lakers, Miami Heat, Chicago Bulls, and the New York Knicks had been making money. But, smaller markets like the Minnesota Timberwolves couldn’t compete with other programs and were losing money rapidly. Another huge reason to why they had a lockout is because players that had huge contracts for 5-6 years weren’t living up to their potential and the value of their contract. When a team makes a deal with a good player for $80+ million for 6 years, and that player gets injured or become a liability for the team, the team may lose money. A contract is a contract and they have to respect it no matter what happens. So where do they go on from this and solve these problems? After fifteen hours of bargaining, 149 days of lockout, 16 regular season games missed, and pre-season games missed, they finally came to a conclusion. They concluded that the players will have a $300 million annually reduction in salaries, which would make owners about $3 billion over the 10-year deal. But, the new agreement called for a 50/50 split of all basketball revenues instead of the 57/43. With the loss of the 16 games they had to cut the NBA season short to 66 games, which was a loss in $400 million. “For myself, it’s great to be a part of this particular moment, in terms of giving our fans what it is that they so badly wanted and want to see,” said Derek Fisher, the president of the players union. Ladies and gentlemen we have basketball, until the 10-year contract runs out then what will they do?

Similar to the NBA lockout the Nation Football League (NFL) had a lockout soon after the 2010-11 season was over. Who would have thought these millionaires and billionaires would fight over money. Well, once again the multi-billion dollar industry of a major sports market is at a standstill. Greed fills them all when money is the motive, and the owners (billionaires) wanted to “take back” the league, and the players (millionaires) wanted a bigger piece of the sweet apple pie the owners were eating. The profit-pie that both sides wanted so eagerly is about 9 billion dollars annually. Now out of that, the owners get to take $1 billion off top, and any extra money they need which would go towards miscellaneous operating expenses.  After the owners finish with all of their needs the players get 59.6% of the remaining pie, the money comes in the form of a salary cap which every team has. Now, the whole feud is that the owners want the players to get the same percentage but out of a smaller pie. They want $2.4 billion dollars off the top with the extra money they would need for miscellaneous reasons, and the players would get the same 59.6% of the remaining money. This would represent about 18% decrease in pay. But, players still have contracts that the owners have to abide by, so this decrease in pay would affect rookies and free-agents the most, at first. Eventually a player’s contract would run out and they would lose about 18% of their normal income. How can both sides with very strong voices come to a conclusion? After the 130-day long lockout the NFL went through both sides finally reached a decision, which would benefit both sides. It was a win/win for both sides. Ownership received 52% of the revenue instead of 47% in previous years, and they also raised the salary cap to $120 million with an additional $20 million for benefits. In the end, the owners and players split over $9 billion, and they didn’t lose any league games which was the number one thing they wanted. So, no one really lost in the 2011 NFL Lockout.

Everything about this entire process makes me sick to my stomach. Not because I'm against capitalism or because the thought of someone making that much money and wanting more makes them a villain in my eyes; it doesn't. No, what makes me sick is the idea that these two sides seem willing to stick to their guns even to the point of hurting the third party in all of this. Have they stopped to consider the parking attendant, the beer guy, the concessions staff, security, ticketing, and practice players? Or what about the fans who spend thousands of dollars every year to see their heroes play their favorite game? Once those checks stop coming, well that’s a story most Americans know all too well. The longer they hold out and stand their ground, the longer thousands of people will not have jobs from just one industry. Come on, players and ownership let’s get it together and vow to have no more lockouts. Honestly what would we do without football or basketball? 

Apple Does it Again

By Jennifer Gohlke 

With all the new technology emerging around the world, the population is constantly left wondering what the newest advancement will be when it comes to cell phones, tv’s or computers. One of the leading brands in this search for improvements is Apple. This company is always on the top, creating the latest, most innovative devices. Their ridiculously popular iPhone is Apple’s largest source of revenue, accounting for 53% of their earnings according to The Economist. Although sometimes consumers believe their “needs” form plans for the innovative devices, the way Apple continuously produces phones each year creates a sense of need for the consumers, in a way where once one iPhone is bought, the next invention must be purchased instinctively as a replacement.

The first iPhone was released in 2007, and since that time, Apple has gained $150 billion in revenue from their phone line alone. The way they create a newer version of the iPhone each year builds a sense of need within the consumers. This supply and demand is what brings Apple the big bucks; they create the supply, and as they watch the frenzy of customers line up for their new technology, they dream up the latest and most innovative ideas for the new iPhone, that will be released in the next year. The excitement of leaks and sneak peeks into whatever iPhone is developing at the time only reinforce the demand among consumers. This creates an even bigger supply, which is why the iPhone has been the “world’s bestselling smartphone for five consecutive years” according to The Economist.

Apple has discovered a technique to keep the customers involved and interested; the limited, yet exciting new options make decisions regarding iPhones simple and effortless. For many users, buying the most recent iPhone is instinct and simply just an upgrade to the next best thing. According to Time.com, customers say that they like having choices, but when it comes to technology, only one option makes the purchasing process much easier. People naturally want the best of anything that they can get their hands on, and this deluxe phone is not any exception.

The company represents the social aspects of our country as well as our mixed economy. Recently, according to Business Insider, it’s been said that the government will gain some control over parts of the Apple company, mostly regarding security. A patent from Apple would allow our government to have the power to cause black outs around certain areas, in the situation of a protest, concert, or other time when information should not be spread. However, the United States also has characteristics of a free market, in the way that Apple and individual companies can produce any kind of product. They benefit from this because they can create and almost manipulate the thoughts of consumers, drawing them in to a never ending “need” for the newest technology.

Apple is only one of the many companies that has mastered the ways of the economy. Their creation of need among consumers has helped them become the most successful electronic company in the world.

                                      

Bibliography

"Apple may need an iPhone 6 sooner rather than later | Apple - CNET News." Technology News - CNET News. N.p., n.d. Web. 18 Sept. 2013. <http://news.cnet.com/8301-13579_3-57523913-37/apple-may-need-an-iphone-6-sooner-rather-than-later/>.

"Apple Patent Allows Government To Control Phones - Business Insider." Business Insider. N.p., n.d. Web. 18 Sept. 2013. <http://www.businessinsider.com/apple-patent-government-control-phones-2012-10>.

"Daily chart: Mega phone | The Economist." The Economist - World News, Politics, Economics, Business & Finance. N.p., n.d. Web. 18 Sept. 2013. <http://www.economist.com/blogs/graphicdetail/2012/09/daily-chart-6>.

"6 Unfair Market Advantages You Should Steal from Apple | Copyblogger." Content Marketing Tools and Training | Copyblogger. N.p., n.d. Web. 18 Sept. 2013. <http://www.copyblogger.com/apple-market-advantages/>. 

Is a Centrally Planned Economy Better for America?

Is a Centrally Planned Economy Better for America?

By: Zoe Kanavas

As a nation dependent on self-incentive, our common thinking is that our economy is the most efficient, logical method. But our capitalist country is currently running a 7.3% unemployment rate, leaving 22995000 Americans out of work. Compare that to China’s 4.1% unemployment rate, even with a significantly bigger population the country manages to keep the rate low. The centrally planned economy has a major impact on this low number. Thus, there is a possibility that a government controlled economy would benefit a country rather than defeat it.        

            Because a CPE is in constant regulation of the entire economy, there is also a regulation on the goods and services given out to the people. Ideally, this is a solution to inequality because the government’s goal is to provide services such as: free healthcare, free education, and guaranteed jobs. When contrasting the healthcare systems between the U.S. and China, there are 44 million Americans without health insurance, while China’s healthcare is provided to 95% of the population. Clearly, the healthcare in this CPE styled country is benefitting more of its population than our mixed free economy is. Even though both countries offer free education the amount of vigor in Chinese classrooms is much higher than American schools. This results in a more beneficial schooling experience, pushing Chinese scholars to the top in the world. Lastly, by simply comparing America’s unemployment rate of 7.1% and China’s 4.1% it can be seen that the job guarantee is present in CPE China. Therefore, the regulation of these goods and services can be a solution to inequality, healthcare, education, and job issues.

            Although China is a wonderful example of a centrally planned economy gone right, it is not the same case in every setting. In a different CPE country, Iran, the unemployment rate is 11.2, and in a different country, Libya, it’s as high as 19.8. Corrupted governments with extremely powerful leaders can cause the economy to spiral downward, fast. Even in every case of CPE, there is a very limited amount of freedom for the people. There is no possibility for the consumers to choose what they want to purchase, and the lack of entrepreneurship may lead to lack of motivation to get work done. In addition, the almost guarantee of jobs can allow a person to not feel the need to work their hardest if their job will always be there. Also, because the government needs to control the whole system, much money and time is lost in the constant communicating the government must make in order to keep all the firms on track.

            While the lack of profit and freedom for the people may be discouraging in a CPE, countries like Cuba, Turkmenistan, Myanmar, Belarus, and Laos with this method of economy all have unemployment rates under 4%, one even being .5%, in Belarus. That poses the tradeoff of freedom of economy for a possible higher standard of living regulated by the government. Would the gain be worth the loose for our economy? Or would it result in a worse scenario than we are already in?

Bibliography:

"Unemployment Rate - Countries - List." TRADING ECONOMICS | 300.000 INDICATORS FROM 196 COUNTRIES. N.p., n.d. Web. 16 Sept. 2013. <http://www.tradingeconomics.com/country-list/unemployment-rate>.

"'Ticking Time Bombs': China's Health Care System Faces Issues of Access, Quality and Cost - Knowledge@Wharton." Knowledge@Wharton. N.p., n.d. Web. 16 Sept. 2013. <http://knowledge.wharton.upenn.edu/article.cfm?articleid=3296>.

"Comparing U.S. and Chinese Public School Systems." University of Michigan. N.p., n.d. Web. 16 Sept. 2013. <sitemaker.umich.edu/vanschaack.356/strenghts_and_weaknesses_of_both_systems>.

"Monroe-Woodbury Economics / Centrally Planned Economy." Monroe-Woodbury Economics / FrontPage. N.p., n.d. Web. 16 Sept. 2013. 

<http://mweconomics.pbworks.com/w/page/8370236/Centrally%20Planned%20Economy#Pros>.

"PBS- Healthcare Crisis: The Uninsured." PBS: Public Broadcasting Service. N.p., n.d. Web. 16 Sept. 2013. <http://www.pbs.org/healthcarecrisis/uninsured.html>.

"Planned economy | features, advantages and disadvantages." IGCSE, A Level, IB Business studies, Economics, Accounting and ICT. N.p., n.d. Web. 16 Sept. 2013. <http://www.dineshbakshi.com/as-a-level-economics/basic-economic-ideas/117-revision-notes/1349-planned-economies>.

Labor Force Shrinking

According to a report from CNN, the United States' labor force has shrunk to a level of 63.2%, the lowest it has been in 35 years. The labor force is calculated by tabulating all American citizens 16 years or older who are either working or looking for a job. The labor force reached it's peak in 2000, when 67.3% of eligible Americans had jobs, but has been declining ever since.

The reasons for this could be several. One of them just happens to be demographic, as the baby boomer generation has now reached the age of retirement and is no longer working. Workers over the age of 65 make up 38% of the labor force, and those folks are now retiring in large numbers. What is partially alarming though, is the apparent lack of good full-time jobs. Too many Americans are finding themselves with low-paying jobs containing no benefits. Further, there seems to be  a trend as some companies move to cut full-time positions in favor of part-time work.

The lack of good full-time positions is something that young people are having to grapple with, as many of them are finding themselves working in jobs that they do not consider to be career-path oriented. Even after graduating from high school and college, many young Americans find themselves living at home, working jobs that do not necessarily correspond with what they studied.

One significant problem posed by the declining labor force is that with a fewer percentage of people working, there are fewer people paying for various guaranteed entitlement programs. As more people retire, and the percentage of Americans working decreases, the government will have to decide what to do with the scarce resources, whether it is to increase the tax rate or to cut some of the benefits.

What possible implications does this have for you?

Stock Market

Written by Rajiv Geffert

 There is something that is trending in the American public and that means good for our whole economy. The stock market has reached an all time high but what does this mean for Americans and America in general some may ask. Some economists say that this is great for the the economy and that the only place we can go is up. They say that “the rally is just getting started”. There however are some people who say that the only place to go is down and that we should be preparing for an economic blow. In the article it states that “Both the Dow Jones Industrial Average and S&P 500 ended at historic highs with the S&P finally surging above 1576, the previous record set in October 2007.” There is no telling what will happen to the stock market until it happens. This however doesn’t mean that it is going to plummet down into a spiraling recession like before. It also doesn’t mean that it’s going to go up by an astronomical percent. In the stock market game, there are two kinds of players, there’s not really an in between. There are bulls and bears. Both of them have very different viewpoints on the stock market and the economy as a whole. Bulls are when people are buying stocks and the market is going up. A bear market is when people are selling and holding on to stocks and the market is going down or staying at a steady rate, not increasing or decreasing. You can look at this as a realistic standpoint that bears are pessimists and bulls are confident in their game and that the stock market is just going to keep going up. As an individual you can take this record breaking stock market and invest or hold off, whatever you really feel comfortable with.

Some people may also ask why and how the stock market keeps going up. There are some obvious and not so obvious answers and some predictions too. Some people think that the FED has rigged the stock market and that they keep giving out money to people so that they can keep buying stocks thus increasing the US economy as a whole. People say that the FED isn’t losing anything either, they say that they are just creating new money so in essence that is causing inflation. It is estimated that the FED creates about 4 billion dollars a day and some of that goes to stocks and some of it goes to equity which helps keep the stocks high and promotes people to buy stocks. There is not a clear answer to why this is thought to be but it is said by an expert at Forbes which is an economic genius when it comes to just about anything. So in conclusion the stock market is rising and it can be observed that it is a good or a bad thing who knows. It’s really up to you whether you’re a bull or a bear, you choose.

Fiscal Policies to Reduce Deficit

Fiscal Policies to Reduce Deficit

By: Kayla Vitalbo

            Congress has been going back and forth since 2008 to find ways to reduce the deficit and stimulate the economy again. Economists believe that reducing the deficit is a priority, and doing so would stimulate the economy. Economists report to the New York Times that “Tax increases and especially spending cuts take money from an economy that still needs some stimulus now, and is getting it only through the expansionary monetary policy of the Federal Reserve.” There are still not means of compromise between the two houses, mostly because the Democrats strongly believe that spending cuts and tax increases on targeted classes (such as the wealthy) are the key to fixing the economy, whereas the Republicans believe that spending cuts alone and a classical economic policy of the economy fixing itself rather than the government intervening, is the key to success.

            Boehner and Obama are still trying to compromise between the two houses, but are taking their own measures to get their point across. Obama is travelling to different states to talk to college students about the necessity of research and educational spending, while the House Republicans are trying to force an answer or a compromise out of the Democrats. They are doing so by threatening to allow the Treasury to prioritize debt payments if Congress cannot agree to increase the nation’s debt ceiling, so we can keep borrowing money to pay the creditors. Boehner and Obama need to come to an agreement to put a fiscal policy in place, because only have a monetary policy is not doing enough to stimulate the economy.

            Gregg Daco, an economic advisor, is told by clients that fiscal policy doesn’t really matter and they brush off any ideas about a fiscal policy. Daco tries to get through to his clients to tell them that “it does matter, and it is important in terms of growth. It’s also important in terms of confidence.” Having a stable economy boosts the economies confidence, and we are then able to take more investment risks to further stimulate economic growth. Implementing a fiscal policy in addition to a monetary policy just ensures that we have more options to grow our economy.

            Both parties believe that reducing the deficit is a priority, but both parties want to go about reducing it in different ways which is what they need to compromise on. Our national debt is currently at $16.8 trillion, and is only going to grow if we don’t do anything else to prevent it. The graph below shows the nation’s debt every five years since 1965, and our debt has increased significantly from 65% of our nation’s GDP in 2008, to an astounding 102% in 2013. The recession in 2008 caused a lot of problems, especially with the people not spending as much money which decreased economic growth, and now the people still aren’t as willing to spend, so the government needs to take action and implement some sort of policy. Not only is it important for the Federal Reserve’s monetary policy to be in place, but it is also necessary to implement a fiscal policy that both parties can agree on in order to stimulate and grow our economy.

Works Cited

Calmes, Jackie. "Deficit Reduction Is Seen by Economists as Impeding Recovery - NYTimes.com." The New York Times - Breaking News, World News & Multimedia. N.p., n.d. Web. 9 May 2013. <http://www.nytimes.com/2013/05/09/us/deficit-reduction-is-seen-by-economists-as-impeding-recovery.html?hpw&_r=0>.

"The inconvenient truth about the US national debt | AEIdeas." AEIdeas. N.p., n.d. Web. 9 May 2013. <http://www.aei-ideas.org/2013/01/the-inconvenient-truth-about-the-us-national-debt/>.

"US Total National Debt | The Concord Coalition." The Concord Coalition. N.p., n.d. Web. 9 May 2013. <http://www.concordcoalition.org/us-total-national-debt?gclid=CLOSydfAibcCFZBcMgodZncAnQ>.