Saturday Mail: A Thing of the Past

By Tom Blau 

Saturday Mail: A Thing of the Past

                In an effort to cut costs, and reduce their ever-expanding deficit, the USPS has announced that an end to mail service on Saturday’s will be coming, specifically starting August 5^th. The plans are to stop collecting and delivering first-class mail and letters, but large packages would still be delivered. To summarize, people will have to agonize and suffer for that one special birthday card to come or for loads of junk mail to arrive for one more day.

                As many of you probably don’t know, the USPS has been a little bit of a bind the past half a decade or so. Make that a big bind. Since 2006, the agency has defaulted twice on payments totaling just $11 billion. That’s right, $11 billion! It has also exhausted a $15 billion line of credit from the U.S. Treasury. Last time we saw a business in this much trouble, Obama was bailing out GM! Because of their shortcomings, the USPS has been borrowing billions of dollars from taxpayers to make up the differences. From the chart below, we can see that the USPS is bleeding, make that hemorrhaging funds, and that they have been on a steep and steady decline for the past decade.

The new plan is expected to save them about two billion dollars per year, which may seem like a lot, but is only a drop in the gigantic $16 billion bucket of losses they reported in 2012. Coupled with technological advances making more and more mail go by the wayside, the USPS is in need of big help. According to estimates, some 22,500 employees around the nation will face the end of their careers when this new initiative is implemented in just under six months.

                The end of Saturday service will put a stop to a tradition that has been going strong, with only a few hiccups, since 1863. In a Gallup poll conducted by CNN News, 69% of people surveyed said that this either wouldn’t affect them, or that they wouldn’t mind the change. Even considering statistical anomalies and under coverage due to biased reporting, this still well over half of the population. Personally, as a business-minded man, I welcome any changes like this that will put the agency back on track to cut its budget problems.

                But Marketers do not have the same opinion on the hot button issue. Considering that direct mail marketing is the most powerful form of advertising, they will have to switch their schedules of mailings around so that their target market receives advertisements before the weekend. While this may not seem like a big deal to the majority us, many of these big companies are not happy with the decision.

                Talking about people that will be affected by this, what about those 22,000 employees that will be out of work coming this August? Many postal workers are now in severe suspense of their job security and what will become of it in half a year. One of the benefits of the job about a dozen years ago was that these men and women had total job security. Nothing could touch them, because no matter what, they had mail to deliver, yet now, there is a serious threat that the USPS could be going back on their word.

                What do you guys think? Will Saturday service be missed, and why or why not?

 

North Korea: The New Capitalists!

 By: Eunice Chang

Hello AP Econ!
Eunice here, again. I was lucky enough to have two blog entries back to back, considering my last name is at the beginning of the alphabet.  Anyways, let’s get to it.

Like my last post, I will be giving a brief summary. In the very recent article “North Korea: The new capitalists”, from the Economist talks about how North Korea’s new leader, Kim Jong Un, is starting to stray away from traditional North Korean values. Obviously this will be a long enduring process, however, North Korea is becoming more modern by the second. Since North Korea is a Communist country, to see any type of “freedom” in their economy is unheard of. In recent times, a lot of “under grown” capitalist exchanges have been made. This may be confusing, so I will explain. In the 1990’s, North Korea suffered with a famine. This opened opportunity for a new sort of North Korean trading. Obviously many of these people are smallholders, mainly women who were trying to sell vegetables from what their families had. Although there is little information about this, individuals are able to strive and operate by exporting raw materials to China, with the return of various consumer goods. An informal “money-exchanging” system is used to shift funds in and out of the country. Although government officials have tried different regimes to suppress this “farmers’ market” and catch smugglers, cash can bribe their ways out of trouble. This is now becoming an indispensable part of their whole economy.  It is crazy how North Korea is starting to hit somewhat of a “revolution” today.

  

Current President, Kim Jong Un, waving international money in the air. This also shows that there is economic revolution present in North Korea.

North Korea has always been in the back of my mind, probably because I happen to be Korean. Although my family is from South Korea, changes in North Korea not only affect them, but the whole world. Since North Korea is an extremely dangerous place for “outsiders”, we are constantly on the “lookout” for anything that may be fishy or threatening. To see any budge, even little like this, is just one step closer to revolution. Although that may be a very scary thing for some, it is kind of fascinating to see it in our lifetime. I’m not saying that they’re going to be a free market Capital economy like America tomorrow, but there are some tints of color in their economy now. It may take centuries and many lifetimes for North Korea to become truly “free”, but they’re certainly making progression (even if it’s the way they want it to be).  

Signs of Liberation in North Korea (in the economy and not in the economy):

- Kim Jong Un

·         He is the most modernized president North Korea has ever seen.

·         Speaks in Public (this was very rare for past North Korean presidents)

·         He is not polygamous. He has one wife.

-          Relationship with China

·         Although there are no “official” economic partnerships, there have been many “underground” economic deals, trades going on.

-          Missionary Work

·         Many “outsiders” are seeking jobs (like teaching English) in North Korea so that they can spread awareness and do missions work throughout North Korea

Although there are extremely small fluctuations in North Korea’s economy, this can lead to greater things. It is tragic to see the poverty in which some of the North Koreans live in. This is AP Econ, and we are talking about the economy, but it is cool to see that the changes in the economy of a certain country can completely change the lives of some individuals. Economics is doing things, people. It’s changing lives.

If you want to help bring liberty in North Korea, please visit: http://libertyinnorthkorea.org/

 

Apple in China

By Terry Richard

Although Apple appears to have complete dominance throughout the world, their stock value is steadily decreasing. Apple’s sales are still increasing, yet their value is decreasing. How could this be? Essentially, this is because of the smartphone explosion overtaking our society today. People are finding it necessary to purchase a smartphone, and more people are choosing smartphones over iPhones. In addition, people are becoming less willing to pay for yearly updates when previous models appear to suffice. Unless a new and popular product comes out, this will likely continue. In conclusion, Apple is becoming a less dominant force; however they maintain overall superiority in the market.

Despite the appearance that Apple is declining, this is only relative to other markets. At the end of the fiscal year in this past September, total sales added up to over $22.5 billion. This is more than double the sales during the previous year.

This graph illustrates the overall stock value in China and the rest of the world. Apple Inc. has been declining since approximately October. However, the value of Apple in China has been increasing since October. These trends are expected to continue in the future.

Despite Apple’s relative decline, Apple is growing throughout China. This is because Apple has made special efforts to gain popularity in the world’s most populous country. The trend of Apple building in China is expected to continue. In the past year in China (including Hong Kong and Taiwan), sales have grown 67%. Apple has plenty to be excited about in expanding markets, but the growth is slowing and stalling in developed markets. This is why Apple is making an effort to expand sales in China and other more populous countries. For example, in Brazil and India, rich citizens find it necessary to purchase an iPhone, according to author Sean Geary. These observations indicate the positive correlation between Gross Domestic Product (GDP) and iPhone purchases. GDP measures gross domestic product, and measures the total value of the goods and services produced by a country in one year.

Despite the short term loss in popularity, Apple is only expected to decline in the short run. The short run refers to the conceptual time period where all factors are fixed for the business. The decline is mostly because Apple’s new products are quite similar to their old products. Consumers are accepting the iPhone 4, causing the popularity to decrease in the iPhone 5. This is the main source of revenue for Apple, thus this is a huge blow for the company. Fortunately, Apple is expected to see better opportunities in the long run, where all factors are variable. Apple is powerful enough where they can easily survive through short run losses, while being able to gain potential profits in the long run. These incentives to succeed in developing countries are motivating Apple and other competing companies to attempt to sell in China and other developing countries. Emerging markets will drive Apple 
to succeed, and inevitably profits can relatively increase if Apple attacks the market properly.