Newspaper Update

SUU's newspaper published an article on the bottom fold about the business school's accreditation. It was a couple of weeks late but...better late than never! Good for the Journal for actually writing something that matters.

Boo on Southern Utah's local newspaper

For those of you who don’t know, SUU school of business has recently achieved AACSB accreditation. According to Dr. Tufte, out of 3,000 universities only 300 have this level of accreditation. That means that SUU’s school of business is considered in the top 10% of all business schools in the US! This also means that our credits will transfer to virtually any school and it reflects a high level of education.

This seems like this would be news worthy. However, not a peep of this news was in Southern Utah’s local newspaper The Spectrum. Even our own school newspaper The Journal didn't mention anything other than a small article with a picture of Dean Templin eating cake somewhere buried in the back. Dean Templin flew all the way to Paris to get that award and cake in addition to all of the hard work of the business school's faculty. It’s not even a story worthy of The Journal’s website!

I have noticed a significant bias in our newspapers against SUU, the business school in particular. For example, just the other day The Spectrum ran an article about one of Dixie State’s students getting an internship with Senator Hatch. Somewhere buried within that article was the news that SUU was in the Princeton Review’s top schools. To me news of a small school like SUU getting this kind of prestige is very news worthy. It’s great that Dixie State has a student interning with Sen. Hatch. But do they have to bury other good news of SUU in the middle? By the way, SUU has sent two students as interns under Sen. Bennett. That wasn’t in the newspaper either.

So what does this have to do with economics? Everything. If you are a business owner in an area like Southern Utah and you get on the bad side of the local newspaper because you kissed the editor’s girlfriend in high school, you’re screwed. Capitalism doesn’t get to work for you. Even though you may provide better service, prices, etc. than your competitors you will have an uphill battle because of little or bad press.

Now is there a bias? Absolutely. If The Spectrum is this biased against a school in it’s own small community, think of how biased the "big" media could be against anything! It’s unfortunate the media only gives us the information it wants us to have.

Boo on The Spectrum.

Boo on Southern Utah's local newspaper

For those of you who don’t know, SUU school of business has recently achieved AACSB accreditation. According to Dr. Tufte, out of 3,000 universities only 300 have this level of accreditation. That means that SUU’s school of business is considered in the top 10% of all business schools in the US! This also means that our credits will transfer to virtually any school and it reflects a high level of education.

This seems like this would be news worthy. However, not a peep of this news was in Southern Utah’s local newspaper The Spectrum. Even our own school newspaper The Journal didn't mention anything other than a small article with a picture of Dean Templin eating cake somewhere buried in the back. Dean Templin flew all the way to Paris to get that award and cake in addition to all of the hard work of the business school's faculty. It’s not even a story worthy of The Journal’s website!

I have noticed a significant bias in our newspapers against SUU, the business school in particular. For example, just the other day The Spectrum ran an article about one of Dixie State’s students getting an internship with Senator Hatch. Somewhere buried within that article was the news that SUU was in the Princeton Review’s top schools. To me news of a small school like SUU getting this kind of prestige is very news worthy. It’s great that Dixie State has a student interning with Sen. Hatch. But do they have to bury other good news of SUU in the middle? By the way, SUU has sent two students as interns under Sen. Bennett. That wasn’t in the newspaper either.

So what does this have to do with economics? Everything. If you are a business owner in an area like Southern Utah and you get on the bad side of the local newspaper because you kissed the editor’s girlfriend in high school, you’re screwed. Capitalism doesn’t get to work for you. Even though you may provide better service, prices, etc. than your competitors you will have an uphill battle because of little or bad press.

Now is there a bias? Absolutely. If The Spectrum is this biased against a school in it’s own small community, think of how biased the "big" media could be against anything! It’s unfortunate the media only gives us the information it wants us to have.

Boo on The Spectrum.

Derivatives adding risk

Do derivatives add risk because of the secondary markets' lack of liquidity? This question is inspected on the New Economist web site in the article Derivatives: adding risk, or reducing it?. In recent years, investment firms have done very well by trading in credit risk derivatives. This article brings up the question of inefficiencies in the market, from poor book keeping to liquidity issues in secondary markets. Also, questions of SEC regulation inefficiencies have been of concern for years, and I suspect that when the SEC gets around to regulating the derivatives markets that hedge funds will have lower returns.

Effects of inflation from globalization

In advanced economies, inflation has dropped by as much as 1/2 a percent in non-oil import prices, as stated in the article How has globalization effected inflation on the New Economist web site. The article refers to global excess capacity leading to lower prices, in turn resulting in possible deflation. The article also refers to monetary policy of industrial countries making the effects of globalization only temporary, because of single digit inflation targets by economic leaders. As in most cases globalization benefits market competition and stabilizes price fluctuation.

Don't Blame the Consumer

Ford is going through some difficult times right now. They are shutting down plants and laying off thousands of workers. Ford management and workers seem to want to blame American consumers for their economic troubles. They seem to think we are somehow "Un-American" because we prefer foreign-made cars over American-made cars. The truth is that they mostly have themselves to blame, but politicians and unions have played a part in this too. The auto makers are mostly to blame because they have allowed themselves to get further and further behind foreign car manufacturers in quality. The government has sheltered them from competition with tariffs on foreign cars. The jobs bank that was agreed upon by union and Ford negotiators ultimately hurt both Ford and its workers.

Americans, just like anyone else in the world, want to get the most out of their money. All other things being equal, I think most Americans would choose an American-made car, but all other things are definitely not equal. Foreign car companies make much higher quality cars.

On the Border with Economic Incentives

I read a post on Andrew Samwick's blog about improving border control using economic incentives. We could do a much better job of controlling who enters our country via the southern border with Mexico if Mexico would put more effort into securing their side of the border. Currently Mexico has an incentive to allow illegal immigrants into the U.S. because illegal workers send a lot of money back to Mexico. In the post it says that we could create an incentive for Mexico to reduce illegal immigration by creating a guest worker program where we would reduce the number of guest workers allowed into the U.S. by two for every illegal worker. With such a program, Mexico would benefit more by helping to prevent illegal immigration than by allowing it. I think this is a good idea, the problem I see is trying to figure out how many illegal workers we have here in the U.S. The current estimate of illegal workers today is between 11 and 20 million. So, we know how many illegal workers we have here now .... give or take about 5 million.

From MySpace to Safer Place

MySpace is a growing hit among young adults and teens. They now have over 70 million users, up from 10 million just over a year ago. With the rise in popularity, so comes the rise in the number of sexual predators on the site. This article states that MySpace has been developing new ways of operation to lessen the number of sexual predators using the site. The more they regulate the site, the less appealing it will become to the young audience that uses it. With other similar sites popping up, it needs to maintain its "hip" image to sustain its popularity.

High Times for Luxury Watch Makers

Luxury watch makers are starting to see a boom in the industry. Watch exports from Switzerland rose 11% last year, while some individual companies saw increases of 50% or more. The reason that the article states is the cause of the boom is the increase in personal wealth. Last year, the United States had 10% more millionaires in 2005 compared to 2004. Asia also reported an 8% increase in millionaires as well. Watch makers say that these people view watches similar to wine. They like to collect them, and enjoy different style watches from all over the world. What does this mean for the industry? According to the article we will see more mergers and acquisitions, along with a larger selection of watches and higher prices.

Blackberry vs. Redberry

RIM has announced that it is on track to deliver its new blackberry to China the middle of next year. Recently following their announcement, China Unicom announced the introduction of their new Redberry. The Redberry is designed similar to the Blackberry, and has many of the same features. RIM will look into filing a lawsuit in China, but the litigation process is long and difficult. They seemed to be able to enter the market in China, but Chinese competitors seem to have the advantage.

Asymmetric information

I found this blog on the Marginal Revolution that goes along quite well with our in-class discussion of asymmetric information. The idea is that because of asymmetric information you can’t sell a good used car for what it’s really worth. As a result, people with good used cars tend to hold on to them and the percentage of bad used cars on the market goes up. This blog points out one way to get around asymmetric information and why the used car industry doesn’t fail. In the blogger’s own words, “buyers and sellers use testing and certification to remove the most important information asymmetries.” In recent years I have seen lots of used car dealers advertise that they sell certified used car. Like in the experiment last week, the certification is a way of signaling that a car is not a lemon and worth a high price.

America’s Top 10 Private Companies

In class, we started to talk about how big Virgin is. We started to talk about large private companies, and I found this page. It is pretty amazing how the biggest privately held company in America, Cargill, is not well-known by the public.

Why are these particular companies showing up as the largest privately held firms in America? I think it is because the grocery stores and farms are mainly family-owned businesses and the accounting firms are huge partnerships. The business models of these corporations are integral in keeping the firms private.

Womenomics

I read an article in the New Economist called A Guide to Womenomics. It is about how women are better in school and perform better at work. The article says that countries that have a large number of women at work also have better fertility rates than other countries that don’t have lots of women at work.

I’ve been verbally smacked for my opinions a few times here, so I’m going to go ahead and say it – the more women that go to work, the more little boys will grow up and go to jail. Before you get upset – I think that women are smarter than men. I think that women are more capable of tackling multiple tasks at once and looking at things from the “macro” perspective than men.

When women go into the workforce, they do really well. The problems arise when the women want to have a family, and the company doesn’t want to let them go. When moms go to work, little boys make trouble. I should know because my mom and dad worked my whole life, and my little brothers and I got into a lot of trouble. I think that enticing moms to keep working after they have kids is going to end up taxing society in the long-run. I think that we will all pay for it in the long-run.

Too Many Products?

Recently in the news an article explained that Mars the candy maker of a variety of candy bars decided to purchase a dog treat producer Greenie. Is this attempt to achieve economies of scope out of hand? I must admit that by selling more products to achieve more profits is one thing but to be associated with dog food from a candy producer stand point is something else. Can companies go too far in providing different products to consumers?

Bush vs. Gasoline vs. American Deaths

I just read a post about President Bush’s approval rating vs. the number of American deaths in Iraq vs. the price of gasoline. The blogger mentioned that most people would like to say that President Bush’s approval rating is inversely related to American deaths in Iraq, but the data show that is not true. Mr. President’s approval rating is more affected by the price of gasoline than by the number of American deaths in Iraq.

Should that concern us? It seems pretty intuitive to me. I think that people respond more to what is affecting their lives on a daily basis than on something that they read in the paper, but never really encounter. The average American does not know anyone who has died serving our country in Iraq. The average American does, however, feel very strongly that gasoline prices are too high. When we are managers in the future, we should be sensitive to this phenomenon. We need to understand that people respond more emotionally to the things that affect their day-to-day lives. If we are going to make changes to compensation, structure, vendors, or benefits, we can expect the people at the office to FLIP OUT. Very few people will immediately and quietly accept changes to their daily routines.

Outsourcing

I recently read a blog posted by Gregory Mankiw, a Harvard professor, and author of Economic textbooks. Professor Mankiw referred to a comment he made in one of his textbooks which caused a bit of an uproar regarding outsourcing. In regards to outsourcing, Mankiw states, “more things are tradable than were in the past, and that’s a good thing.” The article goes on to mention the importance of facing the challenges which outsourcing will bring. I agree that outsourcing or offshoring is a means of seeking greater efficiency through the market, but I realize it means lots of temporary job loss for countries like the USA.

Global Warming, The Result of Cleaner Air?

A recent European science meeting presented new research stating that clean air may be causing global warming. Two trends are thought to be pushing temperatures higher than originally believed, which are that cleaner air is letting more solar energy through to the Earth's surface, and increased water vapor in the atmosphere is reinforcing the impact of man-made greenhouse gas emissions. This is yet another indication that global warming is indeed a threat that needs to be addressed before it's too late.

Who Says A Name Is Just A Name?

A blog titled What's in a Good Name? on Daniel Gross's blog caught my interest. The entertainment company CKX has recently purchased, for $50 million, an 80 percent stake in Muhammad Ali's name. The company already rakes in millions for controlling the rights to such names as Elvis Presley, "American Idol" and David Beckham. In the five years prior to purchasing the rights to Elvis Presley, Elvis Presley Enterprises had brought in revenues of $40 million per year. So next time someone asks you what's really in a name, the answer could be millions.

Hugo Chavez, Venezuelan President

I read an interesting article titled, The Man Who Controls Venezuela. Hugo Chavez, when campaigning to be the Venezuelan president in November of 1998, had an interesting way of running for presidency. He stood in front of the television cameras and cracked a whip in a fury. "This is what I am going to do to my opponents!" Now a well-known figure in politics, one unique program known as Chavez's Barrio Adento program, has aided his economy by bringing in thousands of Cuban doctors to Venezuela in exchange for oil. The goal of bringing healthcare to the needy is not confined to his government alone. Although, maybe a little eccentric in his ways, he seems to be producing positive results for the Venezuelan economy.

Federal deficit, a record for March

The federal deficit reached a record for March at $85.47 billion which was the highest in history for any March. The article blames the fact that some payments usually not made until April were made in March. Does that mean April's deficit is going to be drastically lower? Probably not. The deficity just seems to keep growing with no plan to reverse it. This last February we reached a record spending for one month of $119.20 billion. At least we didn't reach that record two months in a row.

Living Wage vs. Minimum Wage

I read an article in USA Today called Living-wage movement takes root across nation. It is not an economic commentary, I know, but it talks about the price floor called a minimum wage and the price floor called a living wage. I am one person who does not believe that there should be a floor to wages. Maybe it is because I have never been paid minimum wage, but I don’t think so. I think that I am a person who believes strongly that there are market values for everything. I think that you can buy anything in this world with money. I think that the minimum wage creates an artificially inflated value for a sub-standard product. I think that the market should determine the value of one’s labor. I think that the price floor on labor is creating a social tax. I think that it creates a surplus of supply and a shortage of demand.

Armani...More Than Just A Name

A post entitled "The Business of Armani's Fashion House" from the Knowledge Problem blog explained how Georgio Armani has branched out into much more than wearable fashions, such as cosmetics, furniture, and even candy. While he was interviewed by the Wall Street Journal and was basically asked if he felt diversifying in so many product lines would take away from the prestige of his brand, he seemed quite confident in his abilities to cater to various markets with special attention, without losing his vision in any one of them. I think it's great that he has started to get involved with various projects, outside of clothing design. In business, if you have a talent for something, such as Armani's creativity and detail, why not capitalize on that in any way possible? It seems quite feasible that someone who has been highly successful creating timeless fashions would have great potential doing the same thing in other markets, such as furniture or cosmetics. I say, if you've got it, flaunt it!

Penny Pincher

The Daniel Gross blog had a post called "A Penny Saved. . . ." that was of particular interest to me. The post went on to comment about the recent high returns in the metals market, especially copper. I can attest to this because in my investments class, my group invested in a copper company, and recently just cashed in, earning ourselves a hefty 23% profit in less than a quarter! We were thrilled to say the least. The author of the post brought up the interesting idea that pennies may actually be worth more than a penny if the prices of copper keep booming. If that were to be true, I might actually have something going for me financially, but I'm not about to hold my breath over the possibility.

Hooray For Wal-Mart Banking!

As I read The Case for Smal Government blog, a Wal-Mart Banking post really appealed to me. The author had a great point. He basically said that if Wal-Mart could offer banking what it has offered the world of retail, than it would be a great thing. I completely agree! Finance is my field, and I don't feel threatened by Wal-Mart's possible emergence in the banking world. Perhaps they could bring something to the table lthat traditional banks have not. It remains to be seen what will ultimately come to pass from Wal-Mart in terms of its blending of banking and retail, but the future looks bright.

Lobbying To The Limit

As I read the Capital Freedom blog, I came across an interesting post concerning lobbying. The author talked about some recent proposed changes that would restrict some of the lobbying activity taking place, although the article linked within the post ultimately went on to say that major lobbying activities such as funding politicians' trips, etc. are still allowed. Basically the senate has recently tried to tighten up on its' lobbying policies, by attempting to outlaw politicians' acceptance of meals, as well as trying to increase the amount of information that lobbyists would have to disclose concerning their activity with politicians. Overall, I was quite dissapointed with the outcomes. In my opinion, not many laws were passed, and lobbying procedures still seem to remain pretty unregulated. I think that lobbyists and politicians working together represent a huge conflict of interest. One group receives gifts and resources (politicians), while the other usually gains huge incentives and legislation passed in favor of their businesses (lobbyists). It's about time, senate really stepped up and took a stand against lobbying. Lobbying is bribery, and shouldn't be a part of our governmental policy!

Airline tickets increase with increased fuel charges

The recent increase in fuel is effecting everyone whether you travel by air, bus, train or car. Even the cost of groceries has increased due to the cost of fuel. American Airlines has announced an increase in international tickets of $20 round trip. There is no end in sight of the continued cost increase. American Airlines has announced the increase for international flights but domestic flights will probably follow soon. I believe even the cost of fast food will be increased shortly.

Real estate slowing down

As I read this article I was slightly disappointed. I am probably in a similar situtation to most graduating students who are planning on selling their homes and moving in the next year. This article states that 2006 will be a slower year for real estate and the trend will continue. One of the reasons for this is that mortgage rates are expected to climb. Another fact I am not too happy about. I guess these are trends I and other students will have to live with.

Kinder Capitalism

Capitalism has always been about making the most bang for your buck. But recently there has been a few new companies arising trying to sell their products for only around a 33 percent markup. This is unheard of in our capitalistic economy. These companies buy their products from different poor countries and turn it around for a little profit. They believe in fair-trade, giving the consumer and wholesales more money in their pocket.
If this was my company I wouldn’t have the same business attitude. Maybe it is because I’m a college student waiting to make the return on my investment of school, on the other hand, I might have the same views in the long run.

Lack Of Financial Knowledge Highlights True Problem

After reading the contents of a post called “USATODAY.com - U.S. teenagers lack financial literacy” from the FinanceProfessor blog, I was not surprised at all. The article linked within the post goes on to show the grim statistics of high school students’ lack of financial knowledge. After reading this article, my first thought was that their lack of knowledge signals a major lack of competent teaching. Based on my own high school experience, I feel there is a real disconnect between many high school classes, and relevant real life instruction, including basic financial techniques such as budgeting, and investing, etc. The only class I recall teaching much in the way of financial information were my adult roles I and II classes. I think it’s time to stop reporting on this information, and start being proactive about it. I liked the blog author’s suggestion to start volunteering at high schools to teach students valuable financial information. I’m sure the positive externalities associated with such service would prove invaluable!

Unions and Violence

An April 10, 2006 post called "Surrender Monkeys Again" from the Let's Fly Under the Bridge blog, commented on the recent events surrounding French Union protests. According to the post, union members ultimately won their battle against the possibility of an Employment Contract, with their country's president opting not to mandate it. While unions members are obviously happy with the decision, many worry that such a decision could be detrimental to France's economic competitiveness. While I am usually in favor of unions, I have been dissapointed by some of the violent behavior that has been displayed by different union members in France. Peaceably protesting is fine, but violenting demonstrating is another, and in this case, I think that the decision to bow down to union members' wishes almost reinforces such behavior. It will be interesting to see how France's social and economic state ultimately hold up as a result.

Defense spending remains the leading source of revenue

Defense spending remains the leading source of revenue for the US industry. The defense budget continually increases the revenue. Leading areospae companies have stopped focusing on commercial business and instead focus on defense outputs because greater profit is made here. Fighting terrorism has casued increased cost in the field of areospae due to new regulations but it has also boosted profits for companies with defense contracts.

biotechnology, a lucrative business

The biotechnology industry is booming and so are the wages. Many states are now trying to get in on the action. In addition to states wanting to get biotechnology business to come to their state they are also spending billions to support the necessary research. Those in favor of biotechnology do not want government to step in and regulate business. Biotechnology will lead to innovations in the future.

Cracking Down on CEOs Compensation

Due to the rules and regulations the CEO’s and other high executive’s salaries and bonuses are a hard number to figure out. On the books, CEOs and other executives usually make less than a million dollars because of the tax write-off the government gives. But the problem is executives make much more money than that through bonuses and other compensation plans. The SEC is trying to crack down and make the rules clearer to see the whole price of the compensation. I believe that companies can give their executives any amount of money they want but it should be easier for the investor to see the number.

Tanning Industry

The needs and wants of people today are getting more and more into their physical look. One industry in particular is the tanning industry. People spend more than $5 billion a year on tanning. It is also an industry that isn’t dominated by any one company. The single largest company has only 5% of the market. This is identical to the video rental stores in the 80s before the Blockbuster stores came out. Entrepreneurs are seeing this trend and trying to jump at the opportunity. This is a real possibility that most people have overlooked.

College Grads Move to Big Cities

There are many different reasons why college graduates move to larger cities and the main reason is for money. These graduates are looking for high paying jobs and are driving up the housing costs in these cities. It is also creating a problem for cities that don’t attract these educated people. The article refers to, “the largest predictor of economic well-being in cities is the percent of college graduates.” Graduates bring in and spend money to further help the city. The problem starts with cities not offering the higher paying jobs for the educated; therefore, driving graduates away.

Healthy Economy vs. Healthy You

Wow! I read an article that illustrates perfectly why 2 factors that appear together are not always correlated. The Conspiracy to Keep You Poor and Stupid highlights a study that concludes that during healthy economies, there are more heart attacks and higher death rates. An economics professor in the article claims that when people are working more, they are not exercising, they are eating out more, and probably smoking more. However, the study does not give any concrete evidence as to the actual correlation between low unemployment and higher deaths. Is there any evidence that someone will join a gym and work out more if they are out of work? It seems a bit suspicious to me.

New Economics in France?

I recently read a good article on a French Economics teacher. The teacher had attended an internship that allows teachers to rotate through several departments of a company to see how the business is run. She has now been including capitalism, or "the market economy" as she puts it, in her high school classes. She was surprised that people enjoy working for companies and she is now encouraging students to study more than just the shortcomings of capitalism. France's economy is changing, as is illustrated with new employment laws. However, it is evident that many French citizens do not have a firm understanding of basic economic concepts. For instance, in a government survey, only 23% of respondents knew what GDP was. Hopefully this teacher's class will be a good start to a more thorough economics education.

Some Intervention Doesn't Make Sense

As I read The Case for Small Government blog post called "Externalities", I realized that just about everything we do affects someone, whether directly, or indirectly, for good or bad. Such a reality makes governments' dilemma of tyring to determine which issues are worthy of their intervention very complicated. The author of the post talks about the negatives that can be associated with alcohol, and his view that drugs should not be prohibited. While I see the harm that alcohol and drugs can cause individuals, and others around them, I still don't feel they should be illegal. Such consumption would not stop with a ban, but would likely spur people to resort to desperate, and often dangerous methods to attain them. That being said however, I wish people would not consume such products. Judgement is impaired, and thus true self-control. It is when that judgement is self-control is distorted that people make stupid decisions that harm others. Rather than banning these products, I think government, and private entities should make educating others' on alcohol and drugs' dangerous affects a priority. While it won't eliminate consumption altogether, I feel it is the best option because the often grim alternatives that could be associated with illegalizing alcohol and drugs altogether could be much more severe, as the author of this mentioned post emphasizes.

Health, Not War

As I read a post entitled “Large Government Budgets Result from Monopolization, Not Tax Revenue” from the Productivity Shock blog, I realized that it seems conservatives don’t always practice what they preach. How can you claim that implementing less governmental organizations is the key to lowering gov’t spending, and then pass literally every proposal requiring the deficit to bulge? You can speak to the masses about ideals that you really don’t have, but sooner to later, society is smart enough to realize that you are a hypocrite. So many conservatives get heartburn over the very thought of a nationalized health care system, but don’t even bat an eyelash at the fact that we’re spending billions of dollars every month in Iraq!!! At least implementing universal health care would promote health, not violence, something that is priceless in today’s ever unstable world.

Arbitrage, Or Just Business Savvy?

As I read the Division of Labour Blog, and read the Starbuck’s post from April 7th, I actually agreed with the comments. But then after thinking about it for a minute, I realized they charge ridiculous prices for their coffee because swarms of people come everyday, willing to do so! Why would Starbuck’s offer their coffees, etc. for anything less, when they have such a large, and continually growing clientele willing to shell out big bucks? While I would never personally fork out that kind of money for a beverage, apparently Starbuck’s has found a way to capitalize on people with deep pockets, or cravings. No one can deny Starbuck’s has found a way to make good on the simple idea of a cup of coffee turned espresso.

Mitt Romney's Health Care Reform

I've been watching the news recently and there seems to be quite a bit of talk over the new healthcare bill in Massachusetts. Governor Romney is taking advice from both the right and the left by creating a bill that requires purchase of insurance by all individuals for whom it is affordable. "A Healthy Blog" states that the governor is getting loads of feedback from both sides, some good and some bad. However, from what I understand, this reform seems like it actually may work. It is a mix of private businesses and government funding that will supposedly make healthcare affordable for just about everyone. We'll see!

CEO's Salaries Tied to Profits

There has been much talk in the business world about CEO's salaries being too high even when profits are down. Is this ethical? Personally it doesn’t matter how much a CEO makes but when the profits are down, the CEO’s salary should also be down. The president of Ford, Bill Ford, is taking a 40 percent hit on his salary due to the fact that of losses. He says he will not regain his normal salary until the company makes a profit.

Fed's Next Move

With the new chairman of the Fed, the question is will they keep on raising the rates and continue Greenspan's legacy? For the past 20 months the Fed has raise the rates a quarter percent at a time and businesses are wondering if the Fed will cease the raising. The article refers to Bernanke as being the tough guy trying to show who is boss but despite the media thinking that there will be another rate increase, professionals thinks otherwise. There are many assumptions about the May 10 meeting. The chief U.S. economist at Goldman Sachs believes it is not so easy to understand what the Fed will do because of the large hit the economy took with the last increase. The Fed will also take into account the unemployment rate. If the Fed keeps on raising the rate it will have a negative effect on the micro issues due to the fact that businesses and individuals will have a harder time with paying the higher interest rate.

Could This Help With Illegal Immigration?

As you know, illegal immigration is a big issue in this country. Several posts on this blog have mentioned President Bush's plan to deal with it. Most of us have agreed there is a need for action, but admittedly, few of us have a solution. I think this post from Vox Baby brings up a viable idea. At the heart of this issue is the fact that there are no real incentives for Mexico to help police the borders. The country receives a lot of remittances from those working illegally in the U.S. So, it is in their best interest to favor and condone the illegal immigration activities. How do we solve this? The author sums things up by saying, "If you want Mexico's help on the border, find a way to tax Mexico for violations of the border." The suggestion is to expand Bush's guest worker program. The key is to allow a number of guest workers, but decrease that number of guest workers whenever a worker comes over illegally. The specifics would have to be worked out, but I kind of like the idea. What do you think?

What a Difference a Stadium Can Make

This is an interesting post about professional sports teams and the effects of a new stadium. There is an economic impact called the "honeymoon effect" when a team builds a new stadium. This means that the attendance numbers increase because fans want to view the game in the new stadium. This can affect ticket and concessions pricing. The author gives an example of the Arizona Cardinals and describes them as one of the worst teams in the NFL. I must say, I agree. When Arizona was up for an expansion team, they chose to have the Cardinals come over from St. Louis instead. I still don't understand that decision. Anyway, the point is that the Cardinals are building a new stadium in Glendale, Arizona. Now that this is the case, they are no longer offering deals like the four-game ticket package. It is either one game or season tickets. Will they ask higher ticket prices while they are at it? It is interesting that this "honeymoon effect" has an impact on prices, but the team will likely not improve.

Failure to Launch

The new movie Failure to Launch depicts a thirty-something year old man living with his parents. I have come to learn that this scenario is becoming more likely. Over the thirty years, according to the Census Bureau, the real median income for young men (ages 25-34) has decreased about twelve percent. In addition to lower real income, housing costs are increasing at a greater rate than inflation. The result, more of these young men are living with their parents. I am pleased to find out that I am the subject of a major movie.

Free Pretzels?

I recently read an article that discussed the disappearance of “free” concessions and meals on flights. Instead of offering a free snack, airlines have been charging for such extras as has long been done with alcohol. This has been particularly apparent on domestic flights. Some passengers have been upset by this change; however, many airlines have continued with these changes. This is likely a result of the fact that consumers are more concerned with the price of the ticket and not the extras the airline offers. Why do you fly with a certain airline?

Is Amway Here To Stay?

I read a post called "Is Something Rotten In Utah? from the voluntaryXchange blog and must say I couldn't agree more with the comments contained in it!! While I think Utah is a wonderful place, with amazing people, it does seem like multi-level marketing tactics are very prevalent here. Perhaps the promise of getting rich quick is appealing to those who are trying to support large families, but ironically, such "promises" usually just suck people in, ultimately wasting their time and money, two highly valued commodities. Perhaps leaders of such companies see Utahns as trusting and friendly individuals, and pounce on them as their prey, but ultimately, people need to recognize that such marketing tactics are scams!!! Getting involved with such shady projects can also prove to be offensive. Just because one thinks they are going to be the next millionaire over night doesn't mean that everyone else shares in their passion. In fact, one of my mother's friends whom she had known for a long time invited my mom over for a "visit" and "lunch". This masked invitation turned out to be a 3 hour scheme to have my mother get involved with Amway. When my mother politely refused, she felt very awkward and uncomfortable. Sadly, that friend has failed to contact my mother since, and this happened many years ago. To which I say, what a loss! There are plenty of honest ways to make a good living, that don't require you to use your friends, and damage long term relationships. Those ways are called good ol' fashioned hard work! Sorry to say, you can't get something for nothing, and the sooner people start accepting that, the better off we'll all be. Trust me, if I never saw another pesticide selling or security system selling recruiter in the halls of the Sharwan Smith Center, IT WOULD BE TOO SOON!!!

Don't be "Bugged"

The Division of Labour post entitled: "Counterfactual analysis" commented on an article that claimed that bugs save the U.S.' economy billions of dollars every year. Despite these amazing savings, the author had to rain on my parade by talking about all the negative aspects of insects, even minimizing the multi-billion dollar savings the U.S. enjoys by saying, "That's all"? While I'm not a huge fan of misquitos or tics, I still can appreciate the point the article within the post was trying to get across. It is important that we recognize how all life forms contribute to our world, especially financially. All life, including insects, can help carry out crucial tasks for our ecosystem, and it's important to recognize those roles because they ultimately have a great affect on humanity's quality of life.

Cheating on your TAXES!!!

The recent New York Times article titled "Filling in the Tax Gap", is an excellent article that goes against the traditional grain of hating the IRS . It says that if you are an honest tax payer you should want the IRS to perform more audits. Most people are deadly afraid of the IRS and the word, "Audit." This should not be the case. The article details a 3 year IRS study. In the study the IRS randomly selected 46,000 tax returns for intensive review. Using this sample the IRS projected that the difference between the amount of taxes paid and the amount that should have been paid was a whopping $346 million. As an honest tax payer this disgusts me. Why should I be paying my fair share of taxes while there are others who are cheating on their returns? The article did convince me, an honest tax payer, that the IRS should do more to catch cheaters, but I am still deeply afraid of anything to do with an audit.

Does Training Improve Ethical Behavior?

Those of us in the MBA program have had several classes now where ethics have been discussed and taught. A post from the Finance Professor Blog poses this question, "Do training and new regulations lead to more ethical behavior?" In the same sentence, the author gives his answer, "Maybe, Maybe not." I guess this a safe enough answer, but it seems to hit the nail on the head. I think most people agree that ethics are important. By the same token, it seems that encouraging improved ethics through training or regulation would be a good thing. I believe ethics training is very useful and worthwhile. However, it is up to the individual to use what he/she has learned and apply it.

I often feel like the subject of ethics is discussed as a "situational analysis". To me though, situational analysis covers only one part of it. There seems to be two layers involved. That is, the situational layer and the core layer. The core layer consists of time-honored "laws" that just about everyone can agree on. This would include important principles like honesty and integrity. No amount of change or new thinking can change these principles or the effects of not following them. I doubt anyone serious about ethics would demean the value of honesty or integrity.

Let me clarify the distinction between core principles and situational analysis. Dr. Hamlin had a discussion recently on ethics in his Organizational Issues class. Many points of view were shared and many determined that defining ethics was a moving target. I agree that it can be difficult because there are many "gray areas". During the class he told us about some scam artist that tried to rip him off by using false money orders. No one in the class argued about the ethics of such behavior. It would have been silly to do so. This is an example of a core principle that everyone agreed on. It may have been that it was so much at the core, that people did not even think twice about it.

I usually do not enjoy discussing ethics in classes. I feel like the study of situational analysis detached from core principles does little good. It is hard to define and agree on what is right and wrong in each any every situation. However, we need to realize that core ethical principles can act as “pillars” to guide us even when there are “gray areas” or unclear solutions. I have seen the good side and the bad side of ethics training. I feel like SUU does a great job because professors teach moral behavior (core principles). I have attended other schools where moral behavior was formally taught, but unethical behavior was informally applauded.

Now, to answer this question, "Does training improve ethical behavior?" I have to agree with the author when he said, "Maybe, Maybe not". I think Dr. Christensen's explanation gives further clarity. He teaches that moral judgment can be taught, but moral courage is harder to teach. In essence, the teaching of ethics is good but the true test is whether you and I will have the courage to stand for what we know is right.

I Like Mike!

When I saw a post about Mike Leavitt on the voluntaryXchange blog I became very interested. While I didn't realize that Mike Leavitt had a strong chance of getting the already filled Chief of Staff job, I have no doubts as to why he would be a highly considered choice. Although the position was apparently filled by someone else, Andrew Card, I look forward to seeing what political and social positions Mike Leavitt will ultimately fill. I had the opportunity of meeting Mike Leavitt on March 25th, and I must say I was very impressed to say the least. I remember having met him at a Onions days parade in Payson, UT when I was very young, but this last meeting left a much deeper impression on me because of the place I am in my life today. It is also quite a special thing to me that one of Utah's governors was a gradate of the business school that I am currently attending. It is amazing to see where successful, goal oriented, and entrepreneurial minded individuals come from. People from all walks of life, and locations, large and small do incredible things, and it was very inspiring for me to meet one such person, Mike Leavitt, a graduate from my soon to be Alma Matter!

Trvial, Yet Relatable

Upon reading this March 31, 2006 post entitled "Fun fact of the week" from the Asymmetrical Information blog, I immediately could relate. She talked about something supposedly called the "Garcia effect", which is basically the complete avoidance of something because of a bad experience upon first encountering it. Incase you didn't refer to the link, the Garcia effect is in reference to edible things. To this day, I refuse to eat watermelon, and most melon type foods because of an instance when I ate watermelon and became sick immediately after. While I don't believe that the watermelon made me sick, I have always associated it with becoming sick, and have thus avoided it like the plague. While I realize this isn't entirely economics related, it really is food for thought. On another note, how many times do we avoid something great in life, because of one bad experience that could have happened as a complete fluke? My point, unless it's the opera, you may want to consider trying something again after a bad experience to see if it could actually be worthwile!

Free Trade Is The Right Choice!

An April 1, 2006 post called "Free trade pact?" on the FinanceProfessor.com blog was to the point, and accurate. The author provided a snippet from a BBC News source that explained South Africa, India, and Brazil's desire to establish free trade with one another. I think this would be great for them. Having the ability to trade with others makes markets more efficient because it allows others to produce items and make profits, while creating a larger market of consumers for producers. Less restrictions on trade offer more opportunities to engage in market related avticity, and therefore help to increase the quality of life for nations around the world. I hope that the nations listed above will be able to engage in free trade with one another and will be able to see the fruits of their labor in the process.

Bankruptcy is usually a Copout!

As I was reading a March 29, 2006 post from the Half Sigma blog entitled: "The moral justification for bankruptcy" I became annoyed. The author of this post made the act of taking out bankruptcy seem like a trivial event, however, it is not! His argument that people have been paying a type of "insurance" premium in the form of interest rates from creditors, and thus have the right to take out bankruptcy is completely bogus! People shouldn't file for bankruptcy because they have had to pay interest charges, but rather have had to pay higher interest charges because of the mass of careless individuals and corporations that have gone bankrupt. Many who file for bankruptcy never pay their creditors, and essentially force their creditors to raise rates for all of society in an attempt to recover their losses. While I realize that there are genuine situations where filing for bankruptcy is necessary, such as insurmountable medical bills, etc, bankruptcy shouldn't be a copout to get out of paying creditors. That is stealing. It's too bad if individuals decide that they no longer want to finance their outlandish homes, boats, cars, and other toys. They made a contract, and should be bound to it. I am not living within my means so that I can help subsidize the excessive spending of irresponsible and materialistic borrowers. However, the message that the author of this post conveys seems to prove otherwise.