Lawsuit Abuse is Holding Back Our Economy


This article discusses some of the effects of frivolous lawsuits and some of the remedies that can be made to curb the massive amounts of these suits that are filed.

One thing it fails to mention that I feel is very important is that part of the reason the filing of suits has gotten so out-of-hand is what is called a "nuisance value." Basically, a nuisance value is a small amount of money (often $10,000) that an insurance company (or other large corporation) will pay out to rid themselves of the "nuisance." This amount of money is miniscule in relation to the amount of money it will cost in litigation. However, the err in this way of thinking is that now, every Joe Blow with a desire for a quick buck is filing suit, knowing they will probably get at least a "nuisance" award. If companies would simply pay out the larger sums of money now to litigate, it would discourage lawyers from filing the frivolous suits in the first place. Remember, most plaintiff lawyers will not see a dime if their clients don't win. It is very costly in the short-run, but I believe more economically sound in the long-run.

Case in point, (the short version) the firm I used to work for dealt with one lawsuit in which the Plaintiff was claiming a large sum in damages, we offered about $14,000 (nuisance), which was declined. This case was taken all the way to trial in which the Plaintiff was awarded nothing, not one, single dime. The Plaintiff's lawyer went broke and had to close shop.

Home Schooling

Don Boudreaux comments on a study done by John Wenders and Andrea Clements. The study shows that taxpayers are saved “big money” when children are home schooled. The article suggests that by children being home schooled benefit the school districts in the long-run by relieving total costs of educating them. An annual potential cost of savings to Nevada, where the study was done, taxpayers can be any where from $24.3 million to $34.6 million attributable to home schooled students. The money saved on those taught at home can be used to enhance the educational opportunities of those who attend public schools.
Business should encourage home schooling because more money will be used to enhance the education of those that attend public schools. Because workers will be more prepared, marginal productivity will increase and business profits will go up. I could be totally off on this one but I’m sure Tufte will let me know, and give me full credit.

Greenspan: Social Security in trouble

According to this article, http://money.cnn.com/2005/02/17/news/economy/greenspan_socialsecurity.reut/index.htm Greenspan won't use the word "crisis" in reference to Social Security as President Bush has because he feels that "crisis" is imminent and that the problems with S.S. are not imminent. Even though it is not going to happen in the next few years, wouldn't it still be considered imminent when considering how long government takes to implement any new law or system?

As the babyboomers retire, social security will be faced with tremendous problems, and action should be taken now to prevent it. However, the cure for the problem will not occur because politicians make decisions based on whether or not it'll get them re-elected, and S.S. remedies won't procure votes.

Then again, perhaps finding ways to fix S.S. is not the answer, but better equipping individuals with the skills to invest and plan to take care of themselves in their retirement years would be better. Less government always appeals to me ... and S.S. was never intended to be the sole source of income for people in retirement.

Small Dairy Farmer Finds Niche Market

Five year ago, dairy farmer Robert Shatto found himself at a crossroads. He had been operating at a loss for two decades and the situation was only getting worse. He didn’t want to give up the business so he came up with another plan. He returned to his roots -- playing up his milk's fresh, hormone-free advantage, and used retro glass bottles that no other store was using. The newly popular Shatto brand milk also had residual effects – farm tours that draw as many as 1,000 visitors a week and an expanded product line including orange and root-beer flavored milk.

Even though 5 dairy farms close a day, there are the few who are taking control of the marketplace. They’re producing a wholesome product and marketing a lifestyle. It’s a huge opportunity to reverse the trend of the disappearing family farm.

The high-end branding moves have afforded small dairies a way to insulate themselves -- with built-in margins -- from the fickle market forces that have wreaked havoc on milk prices. Farmers who sell their milk to the cooperatives at a set price, which for years has typically meant lower than the cost of production, can now demand their own price, anywhere from $35 to $45 per 100 pounds of milk to retailers directly, in contrast to $10 to $16 to the cooperatives.

These small farmers can barely keep up with the demand they have created, but by them coming up with niche markets that needed to be filled, they have been able to stay in business and preserve the small family farms.

Downloading Music. Good or bad?

One controversial issue I have a hard time finding a standpoint on is downloading music illegaly. I have yet to illegaly download music via internet myself, but being a music lover and a poor college student, I have been tempted. According to an MSNBC article, internet piracy costs the music industry about $2.4 billion a year. I do not wish to encourage illegal acts, but is $2.4 billion really all that much in comparison to what the industry takes in? Could there possibly be bigger problems? I personally think the money shouldn't be the focus. Can internet piracy really have a big enough effect on the economy to cause concern? Even if songs are downloadable illegaly, for free, I still want tangible items such as the disc, artwork, and the rest of the package that comes with it. The legal downloadable music, the music I pay for, has been more of a comlimentary good than a substitute, encouraging me to go out and buy the album at a store or order it online. So would any music I downloaded illegaly. Downloadable music hasn't decreased my demand for compact discs. Most music lovers I know still love going into music stores. To me it's about the "clicks" complimenting the "bricks."

To Meet or Not to Meet is the Question

In the blog “Inflation Targeting” Taggert discusses the February meeting of the Federal Reserve Board. The main point of the blog is about the Committee formulating a numerical definition of the price-stability objective of monetary policy. Costs and benefits of introducing such a definition were weighed. It was unanimous that price stability provides the situation for maximizing sustainable economic expansion in the long-run, but views differed on the need to specify a numerical definition for the Reserve’s price-stability objective. Some felt that it would be useful as an anchor for long-term inflation expectations. Several felt the definition would be inconsistent with the Committee’s twofold mandate of promoting maximum employment as and price stability. When all was said and done no conclusion was reached and the Committee decided to postpone any final decision.
Apparently the utility of the meeting exceeded the utility of other important business they were faced with, this even though they could come to no decision whatsoever. If they would have done a cost-benefit-analysis they would have realized the meeting was useless.

Demand for Exorcists Hits the Roof!

In the article Wages of Exorcists to Rise WIlliam Butterfield explains that despite the influx in the number of exorcists, there are still not enough to meet demand. In the past few decades the Catholic practice of exorcism has reemerged. Exorcism is the use of prayer to rid a person or place of the devil or demonic spirits. Butterfield says that the push by the Catholic Church to prepare more exorcists seems to be a competetive reply.

Butterfield says The Catholic Church has limited the supply of individual prayer to its priests. Since people demand prayer, they have started attending other churches which will supply the opportunity to pray. Evangelicals have been outpacing the Catholic Church in congregational recruitment.

Basically the Catholic Church is being beaten by the competition. In an effort to offer the consumer/ parishioners what they demand, the Church is increasing the supply of individual prayers, in the form of exorcisms. Who would have though that a ceremony used to cast out the devil had anything to do with Man Ec?

All concentrations of power are bad

I love this ... http://angry-economist.russnelson.com/concentrations-of-power.html ... I am so tired of so many people trying to give more and more power to the federal government. I am tired of listening to liberals (I mean not to offend) screaming that the government has a responsibility to take care of us (are we really that unable?) and asking for more federal programs, federal funding and federal regulation.

The main result of liberal desires is, in my opinion, a more socialist type government and we know, we have many examples, that socialism doesn't work well.

If the author of this blog I'm referencing is correct that George Bush is attempting to reduce the power of the Federal Government and restoring it to its original purpose then ... GO BUSH!!

A New Kind of Drug War

I never in a million years pictured myself saying that we should legalize drugs in the United States, this article http://www.msnbc.msn.com/id/7045183/ by Christopher Farrell changed my mind. He talks of how some $33 billion have been spent on the prosecution of drug offenders in recent years. The article discusses legalizing drugs and regulating them like we do cigarettes and alcohol, by restricting sale to minors and imposing steep taxes.

Most people are frightened by this concept. It is scary to think you could walk into a local liquor store and by narcotics but obviously prohibition and prosecution are not working. There is a big enough demand and plenty of drug lords to supply the demand that those who want it know how to get it. I say lets legalize drugs, and place a stiff tax on the purchase of those drugs, which in turn will lower the cost of finding and fighting the law breakers. I do believe the tax should be stiff enough to deter just anyone from buying it, and low enough to kill the underground drug traffic. Like the author says, "You can't ignore that price matters even in this market."

Sara Lee to Remove Clothes

In the article Sara Lee to Remove Clothes, it is talking about how Sara Lee Company is going to enter into a new market of clothing. Which personally I think is different because when I here the name Sara Lee I automatically relate it to food products, coffee, and cleaners. The company plans that the clothing market is a big industry and they should enter it. I wonder if it will affect how there brand image, and if it will hurt there other products. It also brings up another question are they trying to target too many markets at once will they end up dropping one of the others. Some believe that if any are to go it will be there household cleaning products because there are some big companies to compete against like Proctor and Gamble, and Unilever.

Freedom Faces a Price

In Econ 3010, Dr. Tufte has explained optimal input combinations and what is needed for minimizing costs and maximizing output, (profit). Companies can track their profit maximization for each employee by employing each individual until the marginal revenue of a particular employee equals the resource cost of hiring the individual. In other words, if a city has too many police officers to do police work, marginal revenue, (productivity) will be lower than what it could be by having the right amount of police officers to do the same job; marginal revenue equals resource cost.

Imagine being over in Iraq today. Just last week in Iraq, Insurgents attacked another oil pipeline by setting fire to it. Acts like this is preventing Iraq to export oil and generate income. More importantly suicide bombers are still threatening our US troops, and other Iraq government officials, etc… I don’t know how many troops are over at Iraq today, but I do know that more are headed there soon. Maybe instead of more labor, (troops) we should send more capitol, (equipment). Perhaps marginal revenue will then equal resource cost.

The Underdog Is Growing

In the article The Sweet Smell Of Orange, it shows the idea of returns to scale and how small companies generally have more to gain. Patriarch Max Appel and his wife, Elaine co-founded Orange Glo almost 20 years ago. Orange Glo started off as a small operation in the Appel's garage. They would test the product on their own kitchen cabinets before introducing it in the home and gardens trade show in 1986. It started to become a big hit so the Appels decided to bring some of their family members in on the product. After bringing some of their kids, who have obtained MBAs, they have decided that it was better for them to outsource the manufacturing. This would allow them to focus more on marketing the product. The family is still seeing an increase in returns to scale. It is tapering off as they start to become larger and producing a number of different products. I believe that in the next ten years the Appel family will have grown as much as possible and have a constant return to scale. There is also that threat of other substitutes that could cause Orange Glo to develop a decreasing return to scale.

MacDonald's Produce

The MacDonald's franchise has had a major effect on the beef-raising and the potato-growing industries for quite some time. One might not think so from one view point because it only consumes about 4.1 % of the beef and 2.2% of the potatoes grown. It's because of their picky specifications and standards as to exactly what kind of beef and what kind of potatoes that have such a huge effect on the market. With the new health kick especially around the U.S., MacDonald's has taken a big step into the fresh produce market and plans on buying hundreds of millions of pounds in this area. The company plans on buying 135 million apples during this year alone (making it the #1 apple buyer in the world). As far as lettuce goes, the plan is 116 million pounds along with 50 million pounds of grape tomatoes http://www.oligopolywatch.com/. The prediction is that small farmers will still be overlooked being as that MacDonald's is likely to reduce the suppliers to only a few and will certainly demand for more standardization. Will the rest of the fast food market follow? Will America become more healthy with all of these food alternatives? Certainly demand is going up.

Is inflation a problem?

The week of February 28, 2005 will feature some key reports on the economy and give investors a glimpse into the most recent trends that will be happening in the economy and ideally assuage the fears about inflation that made for a volatile February on Wall Street. According to the article, A good read on the economy could help stocks hold on to Gains, it states that strengths in the manufacturing and service sectors could mean consumers and businesses alike are willing to spend more. That, along with stronger job growth, will make the Federal Reserve’s policy of raising interest rates easier for corporate America to manage.

These reports will help determine whether the stock market can once again surpass December’s highs and hold on to the gains, or whether inflation fears will continue to keep stocks from making meaningful gains in the short term. So what do you think? Will the economy keep growing or will inflation become a problem?

What is going to happen to MCI?

In an article, MCI spurns Qwest again, stated that Qwest has put in a bid for MCI for 8 billion dollars. MCI, however, has been keeping close ties with Verizon and has thought about settling with the company for 6.7 billion dollars. A lot of short-term investors are upset about the idea to settle for less, but MCI has done its homework. Qwest has 17 billion dollars in debt and 7.5 billion in annual revenue. The company hasn’t shown any financial strength. Verizon on the other hand is one of the largest telecommunications companies. I can’t even believe that MCI is going out. Over the years they haven’t been doing well, but this is a company that has been around ever since I was born. It will be interesting to see what will happen to whatever company purchases MCI. Verizon is huge but they also have competitors like Cingular who merged with AT&T. One of MCI old competitors.

Vioxx Back on the Market?

Government advisors are considering allowing Vioxx to remain on the market, reports the Associated Press in the article Panel Backs Keeping Pain Drugs on the Market. Vioxx is an effective pain killer and anti-inflammatory despite its side-effects. These advisors suggest that prescription drugs should carry warnings like cigarettes. Cigarettes have horrible side-effects yet they're still on the market and people still use them.

Although the FDA doesn't have to follow the recommendations of its advisors, it usually does. If Vioxx were to return to the market certain patient restrictions would apply.
Dr. Steven Nissen, medical director of the Cleveland Clinic's heart center, said, "What we really want is to make sure it's available for patients that need it and is unavailable to patients for whom it's inappropriate."

All pain killers carry risks. Ibuprofen taken in consistantly large doses over the long run will most likely cause ulcers. People who are having Vioxx related problems have been taking large doses for many years. The government can't continue to eliminate all risks involved with taking prescription drugs. A young relative of mine takes several prescribed pain killers for severe back problems and nerve damage. He already has stomach problems and a weaker immune system as a result of large doses. These costs are small compared to how severely his life-style would be restricted without pain killers.

With enough information consumers should be allowed to choose which risks they take. Too much government regulation can have adverse outcomes. As Steven Landsburg says in Fair Play, " education about risks is one thing; telling kids that there's a single "right" response to those risks is something different and more sinister."

Half-full or Half-empty, where is employment going?

Worker satisfaction has declined in the past few years. The article Half-full Half-empty, stated that the income and age group the most dissatisfied with their jobs were income ranging from 25,000-35,000 a year and age 35-44. The age group that was the most satisfied with their jobs was ages 65 and older. It stated that the reason for the long-term decline was because of technology and the increased demand for productivity, and the short-term were issues like bonuses and compensation packages. It also stated that the baby boom generation will be leaving the work force soon and that the new generation of young workers will be just as unsatisfied but will be able to put up with technology changes. I really think that the new young generation will have a lot to pick up. The job market is going to expand so big, and younger generations are going to have to pick up the excess demand of production that will exist when a large working force leaves. I think that the younger generations are going to demand more bonus packages and higher pay, but companies aren’t going to afford it. It will be interesting to see how it will all pan out.

Reinventing the Family Farm

The American family farm is an art and science that is slowly dieing. Farmers have faced bleak farm prices since the 1950s. That’s the case with production focused farms growing such commodities like wheat, corn, soybeans, and pretty much most types of vegetable crops. Today’s production farms that grow these types of crops are large corporate run agribusinesses, and have the means to compete in a very difficult market. The focus for the smaller family farmer seems to be one of finding a niche market and then focusing on becoming the very best in that niche. The story relates a young financial planner and his story of buying an old vineyard in Temecula California. This family not only grows the grapes on their farm, but they harvest, produce, package, and sell the wine that comes from their grapes. This seems to be a way the farmers are finding a competitive edge in the difficult world of farming. By selling packaged goods instead of large bulk commodities, the man in this story has reinvented the family farm.

California Is Not Business-friendly

The top ten most business-friendly states this year in regards to tax policies were South Dakota, Florida, Alaska, Texas, New Hampshire, Nevada, Wyoming, Colorado, Washington, and Oregon. Several of these states happen to be California's neighbors. California ranked a low 38th in this list, putting that state at a huge disadvantage with just about every state in the western United States. The main reason for this is California's gigantic 8.8 percent corporate income tax which is the highest in the western region of the country. Short-term tax lures are a good ploy for political figures to attempt to "create" jobs. But what really needs to be done is California's tax codes must be changed to be permanently business-friendly to both existing and new-coming employers. Can you really blame California companies for taking their businesses elsewhere? Why stay in a tax crazy state when you could save twice the amount on taxes in the neighboring state? Maybe somebody should recommend to the terminator that he create a more neutral tax code before every business flees the unfriendly state.

The Economist vs. The Environmentalist

Most people would agree that economic growth and the environment are opposite forces that have been at war with each other for decades now. Economists have often felt that environmentalist restraints on economic growth were a threat to human progress. Environmentalists realize that our natural resources are limited and believe that conservation is key. Perhaps the answer to resolving this ongoing conflict of interests is compromise. Since no one is going to ever be able to convince the people of the world to give up there vehicles, than why don't we work with technology as best as possible to improve and help save our environment. Use technology to discover and develop man-made resources that can replace the use of our natural resources. It was through the technology of deep water drilling that we were able to discover more oil reserves. Human beings are selfish by nature and we will do whatever we can to give ourselves a better standard of living. Since this is inevitable, why don't we just try and do our best at using technology for the good of the environment. Lets do our best to make growth and technology an ally and not a threat to the environment.


The article “Asset stripping is good” recaps a small portion of the movie “Pretty Women” from an economic standpoint. It talks about a character in the movie that buys large companies and then turns around and sells them for pieces. The sum of money received from selling the pieces was greater than the whole. This is smart business but not always the best way to make friends. The article also draws an interesting correlation between the asset stripping business and prostitution, which you can read for yourself.

“When economic resources are tied up in activities with an insufficient economic future to justify their use in this way, it makes perfect sense for someone to un-bundle them and release them into the wild, separately.”
Basically, asset stripping involves the whole idea in economics that we are working with scarce resources. If you take resources that were otherwise locked up in something like a large business with a lower overall worth, it’s sometimes good to strip it down for a higher net benefit to society.

Workloads: Do We have This Down?

In an article entitled "Overworked and underplayed?", (U.S. News and World report; Oct 2003) the author, Ulrich Boser, wonders why people are under the impression that America's youth are overworked in elementary/secondary education. A study revealed that most kids spend less than an hour a day studying; almost 40 percent of high schoolers surveyed had done no homework the night before; and most college freshman report that they spent just an hour a day - an all-time low - on homework during their last year of high school. Boser feels the reason people have such a misconception is partial due to the fact that they can't remember working at all as kids, and mostly because of a study done in 2000 that was misinterpreted. It was widely reported that homework more than doubled from 1981 to 1997 for children ages 6 to 8. But the increase included some students who went from no homework to a little bit, thus inflating the average. On the flip side, Boser says that it is easy to find individual cases of students up to their red-rimmed eyeballs in schoolwork, but states that "This is not your average student". So 'on the whole' are elementary/highschool students too burdened with school work? Are elementary schools preparing students for secondary education, or better yet, are high schools preparing students for college? Could this be some of the reason that nearly half of those who start college never finish with a four year degree?

U.S. on borrowed time, borrowed money, borrowed energy

If anyone has traveled to another country lately realizes that the U.S. dollar doesn’t buy what it used to. Americans had the luxury of purchasing more goods in foreign countries at a lower price than in America. What is the reason? The value of the dollar was worth more compared to the euro and the yen a few years ago, and has been declining since. Foreign investors are now looking to the U.S. to invest and buy products just like we were looking in other countries just a few years back. The price of oil is now costing more with the rise in prices and the declining dollar. What can we do to stop the dollar from falling? If the government raised taxes and cut spending on oil then we could slow the dollars fall and help the deficit. In the article U.S. on borrowed time, borrowed money, borrowed energy , the Bush administration says they are not going to raise taxes, cut spending or reduce oil consumption in ways that could really shrink our budget and trade deficits and reverse the dollar's slide. If we don’t do something, who knows what will happen.

Drug Legalization-A New Kind of Drug War

According to the article A New Kind of Drug War, http://www.businessweek.com/bwdaily/dnflash/feb2005/nf20050228_1996_db013.htm,
our current approach at handling the illegalization of drugs has a very dismal return on profit. Federal, state, and local governments have put some $33 billion in resources toward prosecuting the war on drugs in recent years, but what has been the return on that $33 billion-not very much at all. A big majority of crime and corruption come from the illegal drug trade flourish. U.S. prisons are crowded with drug-law offenders -- more than 54% of federal prisoners sentenced in 2004 were sent away for breaking drug laws. So, that leaves us with the question of whether legalizing drugs and very heavily taxing them would benefit us in the long run?
Just for a comparison, the heavier taxing of alcohol and cigarettes has had a decrease in the usage of them. Would this be the same for drugs? I don't have a strong stand either way on this matter because I can see it from both sides. First, to legalize certain drugs, the number of users may increase and it would be that much easier to get ones hands on. But, as far as receiving any benefit from drugs, the legalization would provide a huge amount of tax money. It's hard to say though because those who already do drugs probably will continue to do so and they may be able to get it other places without having to pay the taxes. So by legalizing it, we may create more users and receive some benefit from it.
So you tell me, do the benefits of legalizing drugs outway the costs of doing so? Are the risks worth taking?

America's retirement, not as bad as other countries

America has one of the most diversified retirement systems. It entails; social security, company pensions, 401 (k) savings plans that are largely invested in stocks, and private insurance policies. The rest of the world is not as diversified as us and is in greater trouble with their retirement systems. The world has the same problem as we do with the baby-boom generation, but they do not have workers coming in from other countries everday. America, because of all the immigration, will genrate more workers to help pay for social security and other retirement systems. We have Mexico which helps in this process. My question is why is so much empasis put on social security when we have more retiremnet systems than the rest of the world? Also, if the social security fall happens, will it lower the standard of living?

The Business of Space Travel

Finding a market niche is hard to do with so many people pushing different products. One niche that has yet to be fully exploited is now being developed by a Chinese American company. They plan on selling space flights and space station visits. Their cheapest product includes a short sub-orbital flight taking you to the edge of the atmosphere. The exact price of the sub-orbital flight was not stated in the article “Space maybe the final frontier for Chinese Tourists” but it did mention a lofty 120,000 dollar down payment!!! Most people will never have that kind of cash but as the market increases and the demand stays constant prices will fall and consumer's reality may include the stars.

Technology Prevails

Here’s an example of a company dropping a part of its product line with grace! Kodak has decided to cease production of its slide projector because of declining demand caused by the increased demand for technology.

“During its heyday from the 1960s to the 1980s, it was the principal means for amateurs to share their astrophotos and give lectures at club meetings, conventions, public star parties, and planetarium shows.” So for all of you projector fans out there, it’s time to move on to PowerPoint. It’s reported that over 15 million of these projectors are floating around in American basements, school storage units, and local dumps.

While many other companies would go crying to the government for subsidies and grants to save their dying product, Kodak silently drops its beloved projector and moves on to bigger and better things.

For the full story, read "Amateur Astronomers Lose an Old Friend."

Rising cost of Education

I recently read an article about the rising costs of tuition at four year colleges and universities, in this article it said that on the average that tuition increased by 10% from last year to this year. It also said that tuition has increased 51% over the last decade. I for one am having a hard time with the high prices of tuition and books, I went to school many years ago and have recently returned, and the first time I went to school I was able to cover the cost of tuition and books with a pell grant, but now a grant barely covers the cost of tuition. I have been forced to borrow more and more money to cover the rising costs of getting an education so I am hoping that it is really worth it in the long run.


Who knew that Dr. Tufte with his kick-back demeanor and smooth hairstyle was on the way to being rich? “How Much Can College Economics Professors Make?”

“According to the Bureau of Labor Statistics, salaries for economics teachers…averaged nearly $140,000 a year -- based on a 52-week year -- in 2003” 52 weeks! That’s an overstatement…the majority of teachers only teach 9 months out of the year which equals about 40-42 weeks.

The demand for economists has definitely made for a good yearly pay for some economists. Some senior economics faculty make “$150,000 to $250,000 for nine months' work.” While some make their fortunes at high paying schools, others stay around at lower paying colleges to for the simple enjoyment of the profession.

“The sheer growth of the field also is playing a role as schools rush to expand their programs. Among the most ambitious is New York's Columbia University, which is enlarging its department from 28 to the equivalent of 41 full-time professors, plus an additional five visiting professors each year. Such growth has helped create a hiring rush at all levels.” This is why some schools are willing to pay the big bucks for economists like Dr. Tufte.

To check out more about his topic, read “The Market for Academic Economists”.

Bush renews push to alter Social Security

When bush returned from Europe he said “Now that I'm back home, I'm eager to move ahead with one of my top domestic priorities: strengthening and saving Social Security," I believe he is making such a big deal about social security because it is a much easer thing to fix than Medicare. Bush made a much bigger problem when he created the prescription drug plan for the elderly. The deficits he created will be far larger and are much more of a concern than social security. I find it very disappointing and concerning when the president will not address a problem he created. When will President Bush take responsibility for his policy and inform the American people how he plans to pay for the prescription drug plan for the elderly?


Is your campus bookstore ripping you off? I don’t know about you but I’m tired off feeling ripped off by the school bookstore. I’ve decided to do some research to find out why I feel they’re ripping me off.

As I searched around the internet, I found that it’s most likely not the school bookstore ripping us students off. The blame needs to be placed at least partially on the publishers of the books. Most publishers sell the books to the bookstore at a reported cost of 75% of retail. The publishers give the bookstore a suggested retail price and most bookstores seem to stick with it. This means that the bookstore is only making a 25% profit off of he books we buy. So is the bookstore ripping us off or are the publishers?

Besides buying our books exclusively off of the internet at 25% retail cost, what other ideas might we as students propose be done to ease our book buying pains?


The EU has recently passed a law making airline companies compensate customers for delayed or cancelled flights as stated in the article "EU Strengthens Passenger Rights". There are fixed rates, ranging from £173 for short flights, £276 for medium-haul and £415 for long-haul flights. (Reported dollar amounts vary.) If the flight is cancelled, the airlines must provide “refreshments and overnight accommodation.” These compensation penalties exclude delays and cancellations that are out of the airlines’ control. Many of the short flights that carry steep penalties are only £10 a flight. This means if you book about ten flights at £10 a piece, assuming the EU flights are as reliable as the U.S. flights, you’re bound to get penalty money for at least one. So, you spend £100 a day and get £173 a day in return for your efforts. This is a 73% increase on your investment daily. This is only the numbers for the short flights…let’s not forget there are bigger penalties for the longer flights! Oh, to think like a capitalist!

While I agree with the idea that some compensation is due for a flight being late, I think that a major perverse incentive has been created here. By doing this, airline companies are simply going to raise their rates passing the cost on to the customer’s; narrow minded people are going to abuse the system, and overall the customers will lose out.

$2.50 a Gallon?

The demand for gasoline is ever-growing but supply capacity is peaked. In the article, Analysts: Crude Could Hit $60 a Barrel, it states that we should be expecting $2.50 a gallon somewhere in spring. After spring, I believe gas prices will get even higher. I do not see the demand for gas diminishing any time soon. This made me think of substitute goods, as the price for gas increases, the benefit of a substitute increases. I believe the trend for hydrogen and alcohol fueled cars will rise. There are a few motor companies that are investing in these substitute goods; I feel these companies will be a good investment in the long run.


United Europe

In the blog “Do we want a 'one voice' Europe?” Alex Singleton discusses Bush’s travels around Europe this past week. Alex refers to an article by Timothy Garton Ash that was published in Today’s Guardian. Ash believes that Europe needs to become unified and have one voice. Singleton disagrees with the idea as do I.
It is good for each European Country to have its own voice. It allows each of them to have a say in what is going to happen. If there is disagreement between the 25 countries that make up the EU shouldn’t they all be heard?
Europe is not the United States of America. It isn’t one country. Each country has its own ideas, values and norms. Thinking that all of Europe should be one voice is like saying all of North America should have one voice. Do you think that would fly with the Canadians and Mexicans?
The competition between European Countries allows the U.S. and other countries to obtain lower prices on European goods. It also helps the EU economy because it gives them more bargaining power. Lower material prices will increase production and GDP will rise.

Why are durable goods declining?

In the article, U.S. Jan durable goods orders drop on cars, planes, it talks about how the demand for long lasting American goods which is goods lasting for three or more years are declining. This decline in durable goods comes as a bite of surprise because “Wall Street economists had expected durable goods order to rise 0.1 percent.” A 9.8 percent decline happened in the defense capital goods which was also a shock because there was a 56.9 percent advance in military aircraft orders. The demand for computers, vehicles, and aircraft was also down. Yet, the demand for metals and machinery where up. What could be causing this trend? Will it hurt growth in the coming year?

Air Pollution, Fact or Fiction?

During a class taught a Southern Utah University, a professor was going over air pollution and the so called “green house affect”, when surprisingly to me the professor began to explain from an article he read that ninety-five percent of global warming was do to water vapors in the atmosphere. This was very new to me after being taught for a long time that air pollution is a bad thing. Even in my college studies it’s been taught that air pollution is a negative externality on society. Air pollution comes at a cost that is greater than the benefits when measured on an overall scale. In a recent article from BusinessWeek,"The Smog Trade" it tells of European companies buying and selling “carbon credits”. These “carbon credits” are traded among European companies for pollution rights. Even in America air pollution is in the political lime light for the “harm” it does on society. With this professor explaining the low level of threat air pollution is on society, should there be more research on the subject or should the idea be discounted?

Increasing Unemployment

In the article Jobless claims up more than expected it talks about how the number of claims for unemployment are up in last couple of weeks. The labor department says that there are no events that would have caused this rapid increase in unemployment. Is this just the way the market works or is this just a fluke that happened?


Do "Good" Companies Perform Better?

In an article found in Forbes titled "Who are our best corporate citizens?", http://moneycentral.msn.com/content/invest/forbes/P101993.asp, the idea that companies who are concerned with more than just the bottom line perform better in the long run is discussed. We are talking about this issue in my government and business class currently, and according to our discussions studies show no definate advantage to companies who are socially responsible. I personally think that if a company is socially responsible they will have a good reputation and therefore people will want to buy their products and invest in the company. Making that a company a good success in the long-run. I also think companies need to balance the amount of money given for the social good and the amount of money given to shareholder. I was wondering what others thought.

The cost of an Oscar

A recent article I read by Forbes magazine discussed the cost of films that have won the Oscar for Best Picture. The average cost to produce a film is $41.7 million. The average cost of films which have won the Oscar for Best Picture is only slightly more at $47.2 million. It goes to show that a film doesn't have to have a huge budget in order for it to be the best movie of the year. There are a few exceptions when a film with an enormous budget wins the award, such as Lord of the Rings: Return of the King at $97.2 million , Gladiator at $130 million, and Titanic at $280 million. Films like this generally win the award based on advancements made in the show which redefine filmmaking. (Personally, I think the only reason Titanic won any awards is because they wasted.. I mean spent so much money.)


Bird Flu is for the Birds

In recent news the deadly H5N1 virus, or Bird Flu has been slowly killing small numbers of people in Southeast Asia. As many as 45 people have died in the past year, and doctors say if the virus were to mutate into a more communicable strain like that of the common cold flu a serious pandemic could break out on a global scale. The solution is to minimize the the risks of infection from poutry to humans. Many of you may think how does this relate to managerial economics. I'll try to mention just a few of the possible devastating effects this could have on not only the U.S. economy, but the entire global economy. If a pandemic outbreak of Bird Flu were to really happen, which it could possibly, global markets could entirely fall apart. Think about what we have learned in history class about the Bubonic Plague "Black Death" more than half of the entire population of Western, and Eastern Europe were completly wiped out in just a matter of a few years. I don't know all the facts concerning the potency of the Bird Flu, but I do know that it is deadly, and could potentially be as deadly as the Plague. It scares me to think that just a single virus too small to see with the naked eye could wipe out an entire society or perhaps its economic viability because of the number of deaths associated with it. What do you think, is it possible for Bird Flu if gone unchecked to do such damage? What happens if the precautionary steps that will or have been taken to protect our planet fail. I think there is more to come on this scary virus. And it will have a great economic impact on our future.

Environmental Trade-Offs

In the article The Truth About the Environment, Bjorn Lomborg expresses his views on environmental beliefs such as the depletion of natural resources and the burgeoning population. Society is exposed to one-sided issues. What the world knows about the environment is what they are told by environmentalists. Facts are ignored. Rationalism is disregarded. Energy supplies have always been large enough to supply the world’s needs, contradicting environmentalists’ statements that we will soon run out. Advancing technology has made possible continual discovery of new energy sources. Extraction is constrained by capital. Therefore, price increases are not due to scarcity.

America will not be overflowing with refuse within the next 10 years. “…even if the American population doubles by 2100, all the rubbish America produces through the entire 21st century will take up (an 18 mile square), " writes Lomborg. Try to discuss this with the vast majority of people who have never bothered to research the facts. Land in the U.S. is plentiful yet many people are under the impression that without recycling we would be inundated by garbage.

Recycling is not cost effective. My roommate pays $15 a month for a recycling service. As part of this service we are required to clean each recyclable. Do you know how long it takes to scrub a peanut butter jar or wash a lotion container? Recycling is a misuse of my time and more importantly to me, a misuse of water. Steven Landsburg addresses this issue of trade-offs in Fair Play by asking, "with exactly which valuable resources are we obligated to be exceptionally frugal?" I feel that because I live in the desert more of my energy should be used to conserve water.

Bjor Lomborg poses an interesting question, “the question is whether the cure will actually be more costly than the ailment.” A better use of money according to Lomborg would be to “provide universal access to clean drinking water and sanitation”. (Lomborg, 2001, Always look on the dark side of life, para.8) This would prevent two million deaths annually. The environment needs to be managed with regards to opportunity costs. Bjorn Lomborg once held left-wing environmental views before he found data to support the opposite argument.

Toyota vs GM

Toyota announced last Tuesday that they plan to build at least two more auto plants in North America. Toyota expanded U.S. sales by 10 percent in 2004, by selling over 2 million vehicles here for the first time, and giving it a 12.2 percent share of the world’s richest car market. Toyota is not only meeting their sales projection they are beating them. With this kind of growth, Toyotas market share is sure to compete with the world's largest auto maker GM. GM has had slipping auto sales in recent years, and with no "ace up their sleeves" on the horizon will probably soon fall victim to Toyotas marching advance on the U.S. market. Toyota already has five finshing plants in North America, with a sixth currently under construction in Texas. The site of its seventh factory has yet to be unvailed, and the site of the eight will follow soon after. Toyota wants to be the biggest, and soon they will be if everything goes as planned. This obviously creates plenty of new jobs for the people located near these large manufacturing plants, but the economic benefits are so much bigger than that. With more production capability Toyota can become even more competitive. Hopefully they will offer lower prices, and better customer service on its vehicles, and in the future you may see more Americans driving Toyotas. Economic growth could not be more clear than when it comes to Toyota, they are a strong production company and are stategically planning to become stronger. Watch out GM.

Are There Benefits From Blogging?

According to an article titled, "Blogging's Cure for the Expat Blues," there are. Blogging has been around for about 8 years, and according to the Pew Research Center there are current estimates that the U.S. now has 8 million bloggers, or 7% of the 120 million Internet users. Worldwide, that number is higher still, although other countries aren't seen as being as blog-happy as the U.S. Many of these bloggers are people who have just moved to a new place or country and have no connection to home except by blogging. They find solemnity in blogging. It is their way to cope with the new culture, and by blogging they are also able to make new friends around the world who find themselves in the same situation.
Blogging costs are relatively low (more to start your own blog site). You just need a computer and an internet connection, and the benefits are proving to be great for many. However, the article does mention that although blogging has great benefits for some, they shouldn't let it replace real life. The opportunity costs given up to blog might be greater than they know if they don't get out and experience the new culture.

Greenpeace Fools or Friends

Recently in London oil trading was disrupted by a group of greenpeace activists. The group burst into the International Petroleum Exchange with around 35 demostrators. They were successful in suspending trade of the worlds second largest oil energy futures market for nearly an hour. Can greenpeace really expect to disrupt the energy futures market enough to have a positive influence on the environment? In my opinion their efforts were futile at best. All they did was create a distraction for a few minutes that suspended the trading process for about an hour before everything returned to normal. I think greenpeace needs to rethink their strategy about how they plan to persuade the world to become less oil dependent. Did the suspension of trade for about an hour have an economic impact on the world economy? That is the question. I think it could have. There are many people all over the world trading with those people at the International Petroleum Exchange. If they could not get what IPE was offering because trading was suspended those folks business went elsewhere. The marginal costs of such a trade blip frankly in my opinion seem immeasurable. The next time greenpeace decides to have a demonstration maybe they should think twice about what it will do to them economically. After all even greenpeace demonstrators have to get around with some form of carbon dioxide emitting transportation.

Online banking saves people time!

Online banking saving people time and money. Personally online banking saves me tons of time everyday. I pay bills, manage a credit card, and check my account balance in a matter of minutes! I can’t see how people lived so long without online banking. In the article “Click! online banking usage soars!” it says that 53 million Americans use online banking or about 44% of total internet users. In total can you believe how much time online banking saves America? This is just another classic example of our economy going forward by making things easier! God bless technology!

Chewing gum tax proposed in Britain

Last night on the Dennis Miller show, he was making fun of Britain's new proposal to add an extra tax on chewing gum to fund "gum clean up" in the cities and I thought it was pretty funny. So I checked out some articles on it and found that while it seems trivial on the surface, it turns out this is a major problem in London and Edinburgh especially. It costs Britain £150 million (US$250 million) a year to clean gum off their sidewalks. It costs around 3 pence to manufacture a stick of gum but roughly 10 pence to remove it from the street. The new proposal, which is likely to be passed, would levy a 1 pence tax on each pack of chewing gum, which is forecast to provide £9m a year and would go directly to local councils and public authorities.

The police are unable to effectively enforce littering fines on all the millions of people who spit out their gum as they walk down the streets. This problem is so widespread and unavoidable, it seems like a greater solution would be to dish the total cost of clean up onto the gum chewers and charge a 15-17 pence tax per pack. This also potentially discourages people from buying the gum in the first place. This raises the question, who is responsible for this problem? Is it the gum chewers, the gum manufacturers or the government?


For Best Results, Increase the Trade Deficit

The trade deficit is at an all time high of near $60 Billion. This needs to be increased to help stimulate the U.S. economy. According to Daniel Griswold, of the Cato Institute, increasing imports leads to an increase in the level of domestic manufacturing output. In the article A Package Deal: U.S. Manufacturing Imports and Output Rise and Fall Together Griswold explains the economic reasons for this phenomenon. Economic statistical data since 1989 shows that as the percentage of manufacturing imports increases so does the percentage in domestic manufacturing output.

One reason is that the main demand for real imports comes from domestic producers. Another reason is, "that in a flexible, market-driven domestic economy, resources can quickly shift from one sector to another". American companies thus focus their capital and labor in areas where they can be more competetive. In this way, imports do not lead to fewer jobs, but to a "shift in resources, production, and employment to sectors where Americans are more productive".

Therefore, while common sense may lead domestic managers to call for protection from imports in order to increase manufacturing output, historical trends do not support such logic. "The protectionist dream is really a nightmare for U.S. manufacturers." Historically, slower growth of imports means slower growth of manufacturing output. So, according to history, if the desire is to increase the GDP, we should increase the trade deficit, not decrease it.

Will there Ever be a Demand for This???

Artificial Life Inc. of Hong Kong has created a virtual girlfriend named Vivienne who goes wherever you go. They say she likes to be taken to movies and bars, enjoys getting flowers and chocolates, and you can even marry her in a virtual ceremony and get a virtual mother-in-law. She may sound like a mixed blessing, but nonetheless, she is a concept that cellphone system operators and handset manufacturers are starting to embrace.

Vivienne is at the leading edge of a wave of services that companies are developing to take advantage of the much faster data transmission rates made possible by 3G technology. These include the ability to download everything from high-resolution television news broadcasts to music videos to trailers of the latest movie releases.

Artificial Life’s company’s creative content editor, Mary Anna Donaldson, says she hopes they think of Vivienne as a companion and will see her as a practice round before the real one. They also say that in order to prevent anyone from becoming addicted to Vivienne’s charms, the program will limit users to an hour of play time a day. Artificial Life is also looking at creating a virtual boyfriend for women, virtual boyfriend for gay men, and a virtual girlfriend for lesbians. Do you think singles will start demanding these services or will it be a flop?


Who wants it more?

MCI will soon be faced with another challenge. Qwest Communications is currently preparing a new bid in hopes that the improved offer will grasp the attention of the MCI board. Although the board has supposedly accepted a lower bid from Verizon, Qwest desires to persuade them with a higher incentive. A merger with Verizon could lead to a more steady growth rate, but the competition's bid just might be too much to refuse. As for Qwest, the merger would be a significant help for the struggling company. This situation illustrates very plainly the power of a competitive market. The market, as well as MCI stockholders, should claim victory.

Mad Cow

Japan imposed a ban on the beef imported from the United States when the first case of mad cow disease came around in December 2003. Japan and the United States have been discussing business to renegotiate the international trade between the two countries. Before the mad cow disease case, Japan was the most lucrative overseas market for the United States in beef producers. It amounted to be about $1.7 billion in beef. Just lately the Japanese agreed to do more business with the United States by importing U.S. grade A40 beef. This classification of beef falls into the category of cattle aged 12 to 17 months. Before mad cow disease, the age of the cattle had not been an issue. The United States are more than willing to cooperated with these new guidelines in order to revive the business with the Japanese.

Boeing Losing Some Weight

Boeing sold two its commercial aircraft plants in Wichita, Kansas and another facility in Oklahoma today. This move was made in order to focus its energy on design and final assembly. That is a huge step for America's largest aircraft producer. This breaks down to very simple economics- managing scarce resources. Boeing must believe that their managerial talent and time is scarce and would be more beneficial if it were focused on fewer objectives. Are there other economic reasons that Boeing would make such a huge business change?

We will never run out of oil

According to the article We Will Never Run out of Oil, it is talking about the oil supply and how it is not suppose to last more than a few decades. According to Mike Moffatt he thinks that is a false statement. The reason for this is because there is plenty of oil in the grounds. Even if it comes down to completely running out of oil he makes a good statement, that people will find other means of transportation, if it is ridding a bike, carpooling, finding more economic cars, or cars that run on alternative fuel. It is the basic principle of economics which is supply and demand. If the supply is short and the price goes up then the demand will go down. I would have to agree with I really don’t think that we will run out of oil, but if we do then there will be alternative choices because we live in a world with smart people that something will be invented to take the place of oil for our cars to run. What do you think about the oil situation?


Social Security

In the article Chairman Greenspan in the lion's den by Tom Curry it tells about how Alan Greenspan supported private investing as part of the social security program. I myself think this is a great idea. I want to be able to invest my money any way that I want for when I retire. We all know that one day we will have to retire and that we should start investing now in our youth so that we can have a good sized retirement fund. I think that Greenspan support of this is great, he is a great economic mind and this will probably put the nation at ease.

E-commerce Filling Niche Markets

According to chapter 3 in our textbook, Managerial Economics in a Global Economy, the Internet has given rise to electronic commerce and it is revolutionizing business relationships. E-commerce offers tremendous advantages to buyers and sellers and represents a fundamental change in the way buyers and sellers interact in the market place. This is exactly what is taking place in the article I found entitled At Restaurant Sites, Food Is Just a Start. This article talks about how small restaurateurs are increasingly using the Internet to sell goods that go far beyond the usual array of branded T-shirts and hats, in hopes of not just building the bottom line, but also cultivating possible new markets for expansion. Through e-commerce these small companies are fulfilling a niche market and making extra profit off of it. According to Hudson Riehle, senior VP for the National Restaurant Association, “selling retail merchandise allows these companies to generate additional sales without having to invest much in infrastructure.” That is one of the biggest advantages in e-commerce for the supplier. Some other advantages for the supplier include that the store is always open, rent is cheap, and it can reduce their cost of executing sales and procuring inputs. Advantages for consumers include having around the clock access to the virtual store and they can engage in comparative shopping at minimal cost and effort. As e-commerce continues to grow, more and more companies will be looking to use it and fill niche markets that have not been filled.


Need, Money, Urgency

This article talks about salesman, and that their prospected customers must have three characteristics which are money, need, and urgency. If a salesperson has a good relationship with a buyer and he can find anything to sell to his client then it is best to refer him to someone else that will benefit the customer’s needs. The salesman can collect a referral fee for doing this, and he should because the customer is not his qualified customer.

Another case is if a customer feels that he needs a certain product but does not have any money or access to the money needed to purchase the product, then he is also an unqualified customer for that particular salesman. The last case scenario is if a customer really understands that he can benefit from the product and has the money however, he does not follow through with the purchase then he falls into the “should” be customer classification.

Decrease in Jobless Benefits

Economists have projected an increase in the economy by 3 percent for the year of 2005. It is down from last year’s 4.4 percent; however the growth rate is still respectable. In this the jobless benefits claims have reached an all time low in four years. The Federal Reserve Chairman Alan Greenspan believes that the “economic fundamentals have steadied with inflation and inflation expectations well anchored.” The decline of jobless claims has come to surprise economists, because they had projected an increase of 12,000.


China's "Great Leap Forward"

China has really blossomed economically in the past decade and are continuing to up the ante for every other competing economy in the world. This article from Slate, http://www.slate.com/id/2113345/, crunches some interesting numbers on how China is growing, such as receiving more foreign investment capital ($53 Billion) than any other country. Also, discussed is China's manufacturing strategy of being able to undercut competitors labor costs significantly, which has given many companies' no choice, but to send their manufacturing to China. It is expected that these costs will continue to stay low with so many unemployed farmers and state workers sitting on the backburner.

Could hockey burse the economy?

During this years season the National Hockey League (NHL) has had a major lockout. Now it appears the entire season maybe called off. Not only has this been a bad year to attend a hockey game, but it turns out that manufactures and retailers of hockey apparel and equipment are being hit hard as well. Hockey fans are not purchasing clothing, hats, or skates this season. They are having a hard time purchasing and wearing such items when there are no games to attend.

As the players are trying to get higher salaries they are hurting the economy. By staying off of the ice they are crippling a billion dollar a year industry. Since September sales of related paraphernalia have dropped by 50 to 60 percent depending on reign.

Should these hockey players expect their fans to return in droves when and if the season resumes. After all, it is just a game, right? People are getting paid, and paid well, to do what they love. Now because of their selfishness they are putting the hurt to the economy.


Discrimination in the workplace

The Equal Employment Opportunity Commission(EEOC) collected a record $420 million for employees last year. Last year the commission resolved 85,259 discrimination cases to total the $420 million, but the number of cases were down from the year before. This means that the workers filing the complaints and winning are receiving more money in court. They collected more than $251 million by settling cases before trial, and $168 million through EEOC lawsuits filed in federal courts. It seems to me that by filing a complaint you have a good chance at getting a settlement. The article doesn't' show how many complaints were dismissed, which could alter my opinion. I believe that there is too much unnecessary litigation in the workplace that could be avoided if people could just be more mature. We live in such a diverse country and we need to learn how to work together. What are these people going to do when their job sends them to a different country? Also, what about the employees filing complaints just because they have a good chance at receiving a settlement? We all need to get along with each other and not expect handouts if someone seems to treat us badly. How are we going to compete globally if we can't even get along with our own co-workers?

Discrimination in the workplace

The Equal Employment Opportunity Commission(EEOC) collected a record $420 million for employees last year. Last year the commission resolved 85,259 discrimination cases to total the $420 million, but the number of cases were down from the year before. This means that the workers filing the complaints and winning are receiving more money in court. They collected more than $251 million by settling cases before trial, and $168 million through EEOC lawsuits filed in federal courts. It seems to me that by filing a complaint you have a good chance at getting a settlement. The article doesn't' show how many complaints were dismissed, which could alter my opinion. I believe that there is too much unnecessary litigation in the workplace that could be avoided if people could just be more mature. We live in such a diverse country and we need to learn how to work together. What are these people going to do when their job sends them to a different country? Also, what about the employees filing complaints just because they have a good chance at receiving a settlement? We all need to get along with each other and not expect handouts if someone seems to treat us badly. How are we going to compete globally if we can't even get along with our own co-workers?

Discrimination in the workplace

The Equal Employment Opportunity Commission(EEOC) collected a record $420 million for employees last year. Last year the commission resolved 85,259 discrimination cases to total the $420 million, but the number of cases were down from the year before. This means that the workers filing the complaints and winning are receiving more money in court. They collected more than $251 million by settling cases before trial, and $168 million through EEOC lawsuits filed in federal courts. It seems to me that by filing a complaint you have a good chance at getting a settlement. The article doesn't' show how many complaints were dismissed, which could alter my opinion. I believe that there is too much unnecessary litigation in the workplace that could be avoided if people could just be more mature. We live in such a diverse country and we need to learn how to work together. What are these people going to do when their job sends them to a different country? Also, what about the employees filing complaints just because they have a good chance at receiving a settlement? We all need to get along with each other and not expect handouts if someone seems to treat us badly. How are we going to compete globally if we can't even get along with our own co-workers?

Women-A More Powerful Market Force

Who would have thought that Women would be a driving force in the market? Well, according to the article in Business Week titled “I am Woman, Hear Me Shop” women have emerged as a potent force in the market. The article states that although women make less money than their counterparts--78 cents for every dollar a man gets, they have a much higher influence because they make 80% of all buying decisions in the home. This is causing marketers to change the way they market their products to women. Many are switching from TV ads to women's magazines and spots on TV shows like Oprah and Extreme Makeover: Home Edition. And companies like Home Depot are now beginning to target women by offering classes that teach them how to do home repairs.

I think it is a smart move for companies to gear their advertising more toward women, especially since women are becoming key-players in the professional world today. (Although it will probably take more effort on behalf of companies to try to figure out what women want!)

Is Bigger Better?

In the article Boeing Launches Long-Haul Passenger Jet, Boeing introduced its new plane. The 777-200LR "Worldliner" was produced to compete with the new British-made “Airbus” (The world’s largest commercial jet). Even though the 777 is capable of flying 9,420 nautical miles in one trip, and carry 101 metric tons, it takes a lot of gas to fuel these behemoths. I view these airplanes like the gas hungry SUV’s, starving an already gas dependent world.
Boeing stated the seat-mile costs of the 777 to be 15% to 18% lower than other models, but this is the optimal number of seat to gas per mile ratio. This sounds well and good, but just like the SUV’s, the plane will not always be full. For sometime the airlines have been in trouble, running empty flights and companies filing chapter 11. This is like a mom driving a Hummer; she hauls the kids once in a while, but the full use of the vehicle is rarely at maximum optimization. http://story.news.yahoo.com/newstmpl=story&cid=580&e=2&u=/nm/20050216/bs_nm/transport_boeing_dc

Retail Sales Take Dip In January

Not since last August have retail sales dipped so much. The 0.3 percent decrease in January came from many different factors. Slipping auto sales, electronics, and home appliances all contributed to the dip. On the positive side of things retail clothing and clothing accesory stores experienced a 0.6 percent increase for the month. That was almost twice what analysts were predicting. So what does all of this mean to you and me. Well we are consumers. We pay for these things, we demand these things. But what do the numbers mean. I believe they are some arbitrary means to compare progress. So how does a dip in retail sales really affect me? I think the whole idea here is to measure where we stand as an economy. If we know that retail sales fell last month then we can take the appropriate measures to not let it happen next month. My point that I'm trying to get at here is we need to study economics by participating in economics. So go out to eat tonight. You'll be glad you did because then you'll know that at least you helped to contribute to restaurant sales in the month of Febuary. Please help me out here. Why are these insignificantly small numbers so important? [0.3%, 0.6%] Does it really make any difference how much retail sales fell. It seems so immaterial to me.

Bankruptcy is Not an Option for GM

During the 1970s GM had something that excited people, cars. Really cool cars and trucks too, but more than anything they had fast great looking automobiles that the American public sought after. Those were the good old days. When GM was king and profits were solid, with steady growth year after year. When imports like Toyota, Nissan, and Honda came to town, profit margins began to slip and GM found itself scrambling to regain market share that they once owned. It seemed they were regaining some of that market share a couple of years ago when it recorded strong gains back to back with its Cadillac and Hummer sales. Once again though, they are losing ground with shrinking profit margins, and less than excited customers.
The biggest culprit is not poor sales, although that is one part of GMs financial problems, but it is GMs retiree health-care costs that are eating up profits. This year they are expected to spike $1 billion to a total of $5.3 billion. The problem seems to be that GM doesn’t know the reason they are in business. They are more of a huge medical and pension provider rather than a manufacturer of automobiles. So why are Japanese automakers stealing away market share? They have retired employees as well, but because Japan has a national pension system they are able to have much lower fixed costs in their home markets. For example, each car that GM sold last year made them only $213 compared to Toyota that made nearly $1,500 per vehicle sold. There is no question why GM cannot compete they just aren’t making as much money on their sales as they were before. This is due to the cost of their retiree, and pension plans that are putting a bigger dent in their bottom line than they ever have.
“Anyone who thinks bankruptcy is an answer is nuts.” (Welch, Byrnes) GM is still a good distance from this worst-case scenario. They would have to lose a lot of cash before they claim bankruptcy. Chief Executive for GM G. Richard Wagoner Jr. said, “GM is in the black, is cash-positive, and has $23.5 billion in its coffers.” (Welch, Byrnes) Despite the fact that GM does have a positive cash flow the important thing will be for it to keep up with its debt obligations [pensions and health care], and patch the hole in the bucket. By controlling the cost of their health, and pension plans GM can put itself in a position to compete again. Ultimately the success of GM will be determined by its ability to realize what their product is, cut their overall fixed costs, and make smart investments with the precious funds they have remaining to design and build sleek, attractive vehicles that outperform their foreign counterparts.

New Car Market Emerging

In the article New-car buyers flocking to the Internet, it states that America’s new love affair isn’t with the SUV or even the arrival of hybrid gas-electric vehicles, but it’s with the Internet. The Internet is now crossing the last frontier in the new car buying process – online negation and purchase. Jupiter Research reported last month that Internet generated sales leads and requests for price quotes will account for 22 percent of new car sales this year, up from 15 percent in 2002. So what is fueling this trend? In part, it’s a result of our busy lives. On the Internet, shoppers can cover several, even dozens of dealerships in just minutes, compared to spending days driving form one lot to another. So do you think as this new market emerges and more computer-literate consumers reach the age of buying cars, that it will put the concrete dealerships out of business?

compensation packages

In Microeconomics we learned about social loss because of taxes. My brother in law just started a healthcare program for his employees because it saved him money paid out in taxes. In manegerial Economics we are learning about making decisions for a business. My question is what are the pros and cons of employee benefit packages from a managers point of view and also what does the gov't do to still get a cut from benefits offered to employees by businesses. I know that this has limmited aplication to economics but I was just wondering if anyone knows.

Economists raise 2005 GDP forecast

Analysts have raised their forecasts for economic growth to 3.6 percent this year. It is good news that America’s GDP is growing. I get the impression that many Americans are worried that too many jobs are being moved over seas. The reality is that America is producing more than it ever has. Do you agree that many Americans believe that America is producing less? Why?

What To Do About The Increase Of Illegal Immigrants

What shall we do about the increase of undocumented immigrants? According to the article migrants no more there has been an increase of 300,000 undocumented immigrants in the past decade (http://search.epnet.com.proxy.li.suu.edu:2048/login.aspx?direct=true&db=aph&an=14940443.) The article says that this increase has been partially influenced by the increase of the Border Patrol. Because of the heightened securtiy, immigrants that do make it across are less likely to return home to visit. Thus we have, in a sense, locked these undocumented immigrants in. So I propose that we keep the Border Patrol where it is at, while at the same time finding those who employee undocumented immigrants and fine them. I know there are those out there that say it gets the product to the consumer cheaper, but if you can produce a cheap product while giving a better lifestyle to your employees isn't that even better? How do you accomplish these two goals? I suggest that the companies build a plant in mexico, or in this case buy farm land. This would allow those immigrant workers to stay in mexico,and obtain a farily decent paying job. By doing this they can purchase the things they need at a cheaper price and do not have to worry about the poverty line, or being seperated from their families. If we can make Mexico, their homeland, more desirable by relocating some jobs there it would make everyone better off.

You have all seen them.

You have all seen them. The little telephones placed in the back of airline seats. But how many of us have used them? Not me, I always wondered how much it would cost but never ever picked one up. Soon the European airplane manufacture Airbus will do away with such out of date technology by allowing private cell phone use on all its European flights! In an article titled "Cell phone use coming for Airbus fliers" http://www.msnbc.msn.com/id/6975242/ I read how Airbus is going to save people the scare resource of time!
Those long flights with nothing to do can be filled with useful conversion and constructive web time! This is a classic example of technology moving forward helping people to become more productive by filling in a small economic niche. I hope it is only a matter of time before U.S. regulations permit such a technological advance because there is a domestic demand.

Who's the Client? The Plaintiff or the Lawyer?

One thing that really annoys me are "ambulance chasers. " Something that annoys me more are lawyers who are ambulance chasers and/or engage in similar activities. Lawyers are intelligent enough to realize the perverse consequences of such practices but continue because of greed. These "ambulance chasing" lawyers ignore people who truly need the help of a legal expert so they can devote their time to some person who allegedly had been "wronged" by a drug company. That's a discussion for another day. The economics behind my griping is that the lawyer industry has created its own demand and supply curve. The demand curve being those lawyers who are looking for people who have supposedly been taken advantage of and want to stick their hands in some kind of lucrative compensation that a drug company is issueing. The supply curve would be the people who have taken the drug. I used the example of drugs and drug companies, but there are other examples as well. For a more thorough analysis on the economic effects of this issue, please refer to my hyperlink above.


Is an MBA enough?

As I picked up an old U.S. News & World Report (Oct. 2003) the other day at a friends apartment, I stumbled across a commentary entitled "In today's job market is an MBA Enough?". It stated there is currently more than 100,000 men and women studying for an MBA degree. Many hiring managers have questions about the real-world value of the MBA in today's business world. These same managers often feel that the traditional graduate business degree provides enough theoretical knowledge, but perhaps, not enough applied or hands-on training. Hence, I ask your opinion. Is the traditional way of teaching for an MBA effective? Are MBA program curriculum's in need of change? Should business programs emulate the medical programs, in that actual work experience is need before graduation?

Start-up Companies Hire Overseas

"Nearly 40% of start-ups in a new USA TODAY study employ engineers, marketers, analysts and others in jobs created in India and other nations", according to the article To start up here, companies hire over there. Drawn overseas by cheap labor many U.S. companies bypass the U.S.A's labor market. Intel plans to increase international hiring. Technology facilitates international transactions. Tech jobs fell in the U.S. from 5% in 2001 to 4.4% last year.

Support for anit-offshoring legislation has increased amid weaker than expected job growth. Canadian labor is 30% below U.S. wage rates. Americans need to accept lower rates to be a global competitor. Globalization provides opportunities to increase market share and decrease costs thereby increasing revenue. Laws should not protect the American worker and discriminate against the Canadian worker as Steven Landsburg points out in his book Fair Play. International companies prosperity and competitiveness will in the long run benefit the U.S. by returning jobs here. Higher paying administrative positions are kept in the U.S. The U.S. is already benefiting from the wealth created by these CEO and senior software developer positions. Consumers benefit from lower prices. Foreign nations benefit from increased employment.

When Will It Be All Wireless?

In a recent article from MSNBC it wrote of a merger that coupled Verizon Wireless and MCI in an article named "Verizon to buy MCI for 6.7 billion" . With this acquisition of Verizon it brought to mind how rapid the growth of the information age has been. The growth of wireless phones and wireless internet has provoked the question, where is it going from here? With this increasingly growing industry what should we as economic conscience people expect. In economics technology changes markets completely let alone not to mention the shift of the supply curve. With information present all around us what will happen to the competitive aspect of it all? Sure, we know that with more information at hand it makes everything that much more competitive, but will it ever end? When wireless companies such as Verizon are taking the reigns as a major telecommunications giant will we see more cell phones and less land lines? If so, what will the affects be? When more information is more readily available will it complex every industry or make it run much more efficient creating an overall good for society?

Woman Power

According to an article in BusinessWeek Online, women purchase at least half of all consumer electronics sold. As described in the article, many companies are shifting their focuses of their advertising campaigns towards women. Many executives and managers are making this change after realizing the revenue potential of women buyers. This phenomenon sounds as though the companies are trying to expand their demand for their products by reaching a new clientele. It will be very interesting to see if this marketing goal will produce the desired fruits of the electronic corporations.

What is happening to employment?

In an article by CNN news called Job Growth…is this it? really got me thinking about where America is headed. I really find a lot of what the article had to present to be an eye opener. The article stated, “The economy created nearly 2.2 million jobs last year, an improvement from the 2002-2003 period, when there was a net loss of jobs. But that's still well below the average of any recovery that's lasted this long since World War II.” I think, that the reason why America is having problems creating the jobs needed is because of the constraints on employment. For example, the article also stated, “…factors hurting job growth in the current expansion: companies facing stiff competition from overseas, especially from China and Latin America; productivity growing at better than double the historical average; jobs moving overseas in services and not just in manufacturing; the growing use of temp workers; and the nation's shrinking manufacturing base…” These constraints make it hard to create job productivity in the United States. The United States cost of living is greater, so if employers lower the wages available for workers in the United States the living conditions in the United States will be lower. I know that these constraints on employment are going to really change the economy in the United States. This country can’t maintain employment with competition as fierce as it is.http://money.cnn.com/2005/02/14/news/economy/jobs_outlook/index.htm

International production

Why are the Chinese companies moving their production to Germany? It seems strange that the Chinese would do this because of their strong reputation of being a super low cost producer. It comes to the point that the Chinese want to speed up the delivery time for their higher end products shipped to Europe. It takes about four weeks to ship product from China to Europe. This time lag is perfectly fine for low quality products, but when customers want quick service for the high quality product then needs have to be met.

China focused in on Germany for manufacturing high quality in order to acquiring German patents and engineering experience. It takes many years to know how to produce large equipment like the Germans do. China considers the higher worker wages of $2000 to $26000 per month, versus $400 to $500 well worth the money.

The production contract between China and Germany is a win, win situation. Not only will the German infrastructure and quality of life be improved, but as will China by increasing exports by 34 %. The past two years has been strengthening the relationship between the two countries when China moved to be the number 2 buyer of German machinery. That has been a big impact on the German economy.

This article is found at The Chinese are coming....To Germany

Does spending really matter?

Is the deficit as big as we think it is? Are the politicians in Washington blowing it out of proportion? Today, in America we have a President who loves to spend. In fact he has not vetoed a bill since he has gotten in the White House. My question is, doesn't America have enough fixed assets and capital that will cover the deficit? For example, all of our natural resources or the national parks. Since we have these fixed assets does the deficit really matter? Has it changed our lives? I don't think so, I have not changed one thing about my life because we have a deficit. Why do reporters like Brendan Murray keep reporting the negative and not the positive aspects of the deficit? Maybe because it is all political.


Who would have known that Gov't subsidies actually repress African Cows? In the article “Brown urges end to ‘scandalous’ trade barriers”, I was informed that “more was spent on an average European cow every day than on a poor African.” This all has come about from subsidies and trade barriers put up but rich countries to hold back the poor countries. It costs poorer countries millions of dollars extra to trade and sell their cows because of the trade barriers.

Gordon Brown is the British Finance Minister. He went out on a limb Jan. 16th to boldly declare that unequal trade is being created by Gov’t subsidies and artificial trade barriers.

The idea in Brown’s speech is that we are holding poorer countries down while instituting our barriers and subsidies. By having a trade barrier, we’re making the competitive playing field uneven in our advantage. In effect, this will hurt us in the long rung. As we learn in economics, competitive companies benefit society in that prices are driven down and efficiency is driven up. At this point, barriers have done nothing but stunt this efficiency growth by keeping new foreign companies from entering into the market.

It's time to break the barriers and let the cows out!

Consumers vs. Customers

What is the difference between a consumer and a customer? Consumers just make purchases where as a customer is an active participant in helping design and sell a companies products. For example the company that produces Legos. The Lego has been around since almost the entire plastic age. They are good quality toys that have for the most part remained unchanged from when our parents were kids. Their standard sized Lego bricks will merge and connect with our kids' Lego bricks.

The Lego company soon discovered a group called the AFOL (Adult Fans of Lego) community. Before finding this community they thought that they were mostly selling to children, and only a few crazy adults who refused to let go of their childhood. They came to find out that about half their sales of Legos were to adults involved in this AFOL community. Now the Lego company has involved their consumers by adding a fan-created Lego kit to their product line-up. By doing this and getting their consumer's feedback they have turned their consumers into customers. By doing this Lego has eliminated a major risk in business. This risk is that the consumer might not want to buy your company's product, and then you have to cover all your costs of this product within. By doing what Lego did and turning your consumer into a customer, you can eliminate this risk almost completely. I think this is a brilliant concept that alot of businesses may overlook. This goes to prove that studying your consumer carefully and completely can contribute significantly to the success of your company


Japan's on a Roll

Japan’s on a Roll.

Who would have thought that because oil prices are down we would purchase more high priced ticket items? Well we do. With the decline in oil prices Japan had an increase in sales of flat screen TV’s and digital cameras. Not only are we buying more of their goods, but they benefiting from our recent interest hike. When the Fed raised interest rates a quarter of a percent, it increased Japanese investment income.

I guess that it makes people feel richer when gas prices are down so they may purchase different items than they would if gas prices didn’t change.

Bush Aims to Boost US Tsunami Aid

Bush Aims to Boost US Tsunami Aid

Does it make economic sense to rebuild countries after a major disaster? This may not be politically correct, but should we send 950 million dollars to aid tsunami relief? I am looking at this in a totally economic way. Will helping these countries help the U.S. economy? The U.S. trade deficit reached over 617.7 billion dollars last year and is projected to keep getting bigger. Couldn’t we use this money here at home? With the hubbub about social security, don’t you think the 950 million would help keep it a float for awhile? Like I said, I know this is in bad taste, but why do we always have to be the saviors of the world? Maybe it’s time to be selfish and get our own ducks in a row.

Cosmetic Surgery for Animals

The mayor of West Hollywood has proposed a law that makes "tail-docking" and "ear-cropping" of dogs illegal. This liberal city is the one that made the declawing of cats, one of the most painful cosmedic procedures of them all, illegal two years ago. This topic struck interesting because whether or not the way a company turns a profit is ethical is often a topic for debate. Is the sale of magnetic yellow ribbons for people's cars when the profit isn't donated to the mourning families eithical? Is doesn't seem right to turn a profit off of someone elses pain. The question is then why cut off parts of the dogs we breed in order to make them conform to some human-authored breed standards? Most of us probably did not even realize how ridiculous this sounds because it is such an accepted part of our society. Why make our animals go through these painful and unneccesary procedures? Veterinary science is a profitable industry (as most of us know from having to take our pets to the costly veterinarian) but cosmedic surgery for our cats and dogs may be crossing the line.

The Budget

The Bush administration is now facing the results to their overspending of government money. The national deficit is higher then ever before, and President Bush is working on plans to improve deficit spending and to make the tax payer dollar go as far as possible. The major issues on the table are the war in Iraq, social security, and the AMT.

The President says that he will he provide the resources to his vision of the Iraqi war while the White House does not have a plan for funding. The cost of America’s programs is too much to handle with the current budget. President Bush plans to present the budget of $2.5 trillion to congress, but will try to avoid the costs that are associated with the war. The war with Iraq is not included into the budget and it requests $80 billion.

President Bush’s top domestic priority of social security is also requesting more funding from $1 trillion to $2 trillion over the next 10 years. Along with social security is the AMT which is a tax system which imposes higher tax to 3 million middle class families. This problem increases when inflation occurs and family income rises and 30 million could be paying the AMT by 2010. The plan to fix this problem will cost about $500 billion during a 10 year span.

President Bush has good plans for improvement, however the plans may turn out to do more harm than good to America. If the costs of Iraq, social security, AMT relief, and permanent tax cuts continue to rise, then the projected deficit will be closer to $400 billion than the planned $250 billion by year 2009. These big ticket items could add a resulting $3 trillion more to the national debt. http://www.businessweek.com/bwdaily/dnflash/feb2005/nf2005023_2151_db045.htm


Now here’s a “niche” in the market I’ve never thought of. For all of you cell phone using daters, here’s a good buy for you!

Virgin Mobile is now offering a “Call you back” service to all their customers (Only in Australia at this point). Here’s the idea…You’re on a date. The conversation stinks, McDonald’s really isn’t your favorite hotspot for a comfortable dining experience, and “Desperate House Wives” comes on in 15 minutes. What to do…What to do…You discreetly dial three numbers on your phone, hit the send button, and hang up. One minute later, “Ring-Ring”. You answer the phone and it’s a concerned roommate telling you to get home immediately, “Something’s happened.” Your concerned date promptly packs up the Happy Meals and takes you home.

What your date doesn’t know is that the person on the other end of the concerned phone call was actually a Virgin Mobile phone operator making up a story so that you can get out of your terrible date.

This is all part of a new service offered by Virgin Mobile. It’s funny to think of an actual demand for such a commodity but it’s real and Virgin Mobile has the supply. “A survey of 402 people by Virgin Mobile found that 53 percent arrange in advance to have a friend call them mid-date to check they are all right or if they need an excuse to get out. The results showed women were twice as likely as men to use the tactic.”

Click here for the story: Ubiquitous Markets (Valentine's Day Edition)