9/29/2007

Universal health care or alternatives

This seems to be a big topic right now, especially in the political ring. The Salt Lake Tribune recently ran an article about an idea along these lines. The article says that the insurance would actually be purchased from the private market but at affordable prices. The idea is to create a "stock exchange" where individuals would use pretax money and employer premiums to purchase their coverage. The exchange would not be a government entity but a non profit entity. The plans would also follow the individual and not change with job changes. The backers of this idea claim that it would increase competition between insurance companies which would drive the cost down. The article goes on to discuss more details and how the plan would be funded.

This was a new idea that I thought was interesting and I am curious to learn more about it. I think that the traditional idea of universal health care in theory is a good idea, but the execution is tough because it decreases the incentive for the actual health care providers. I had a friend who lived in Canada for a few years who had some pretty negative experiences with their health care system. His roommate had his scrotum bitten by a dog (this is a true story) and they had to visit 3 hospitals and wait almost 5 hours for treatment because none of the doctors knew what they were doing.

Our health care system definitely has problems and needs to be fixed. How to fix it is the real question.

9/28/2007

Inelasticity of Potatoes

After I reviewed the research conducted by the United States Potato Board, I was surprised by the results. However, after review of the research, I agree with the Board that potatoes can be fairly inelastic. The consumption of potatoes in the United States is very high and substitutes for potatoes may be easy to find, but substitutes like instant potatoes are not good.

Since many consumers of potatoes think they pay more for potatoes than they actually pay, the increase in price of potatoes would not significantly decrease the demand for potatoes to a certain point. According to the research, prices could increase by a significant amount with little decline in demand. Yet, I am not sure if I agree with the article on significant changes in price. Although potatoes may be fairly inelastic with small increases in potato prices, I also believe that if the price is increased significantly that demand will become very elastic. I can also see how significant price changes in potatoes would not decrease demand since most consumers are willing to pay more for potatoes without a decrease in demand. Are potatoes really as inelastic as the article claims? I think that the article is very convincing, but I am not completely convinced.

9/26/2007

A recent CNN article discussed the market for pork in China. Declining numbers of pig farmers, higher costs of feed, and a disease that killed thousands of pigs dramatically decreased the supply of pigs in China. The price of pork has risen significantly and is being blamed in a large part for the rising inflation rate. The government has decided to release pigs from its reserves to help combat these high prices and the rapidly increasing inflation.
With these abnormally high prices for pork, you would think that there would be plenty of incentives to being raising pork or importing it from elsewhere. The problem is that the government has frozen prices and is trying to enforce those price ceilings. Essentially they are hurting the market by not allowing it to adjust itself. If they were to allow the price to rise high enough, either demand for pork would decrease because no one would want to pay that high of a price, or the supply will increase as new and existing suppliers raise more pigs to sell as the rewards will be great with the current prices.
The government needs to quit intervening and allow the supply and demand to adjust and fix themselves.

9/23/2007

Ticket Scalping Law in Missouri

The state of Missouri is trying to get a bill passed to legalize the scalping of sporting event tickets. Ticket scalping is a type of free market where suppliers, ticket scalpers, that have extra supply, tickets, are trying to sell to buyers who have a demand for the tickets that these suppliers have. The buyer and seller negotiate on the price of each ticket purchased. This results in each transaction that takes place maximizing the amount of buyer and supplier surplus that occurs. Therefore, all that Missouri is really trying to do is to allow the free market to rein without regulation.

There’s No Such Thing as a Free Pretzel

Airlines have recently started to charge for the amenities that they use to offer their passengers for free. These amenities include snacks, drinks, pillows, etc. The company has found that the typical airline traveler would rather have a less expensive ticket price than a twenty cent bag of crackers. There are some airlines though, Continental, that have not followed this industry trend. Therefore, many people think that with flying with a company like Continental that they are getting not only cheap air travel but also a free snack. Is that snack really free though? Most of the airlines that are still offering these complimentary snacks are not making as direct of flights as the companies that are eliminating the snacks. Thus, an airline traveler spends a great deal more time traveling for that twenty cent bag of crackers. Even though people are not paying for the crackers with their ticket prices, they are paying for them with their time. For me, I say keep your crackers, just get me to my destination faster.

On Now We’re just Making Shit Up

Terrorism is a serious threat to the United States and its citizens. In the area of airport security against terrorism though, when is America going to say that enough is enough? Our country has gone from taking necessary precautions, to making airport security check points a circus. The country should start looking at all of the additional costs that we are incurring to have all of this ridiculous security and see if it is really worth the minimal benefits that are derived from this plan. This article also points out that one is more likely to die from crossing the street than from being killed in a terrorist attack. If that is the seriousness of crossing the street, maybe we should start making people take off their shoes before doing that too.

Organs Anyone? The Case for Legalized Organ Sales

Recently, the concept of legalizing the purchase and sale of human organs has been a hot topic issue. I think this practice should be allowed to take place. People are rational thinkers and will naturally make decisions that result in more benefits than costs. Therefore, if people looking to purchase organs are able to pay the reservation prices of those that are looking to sell their organs, I say let the trading begin.

9/19/2007

Powerset to Take on Google

There is a new search engine company that is discussed here that is planning to take on Google. They claim that they have a competitive advantage in user interaction for search because it is more user friendly. Their angle is to allow users to type actual sentences about what they are looking for instead of using keywords and boolean operators (like you do now in Google).

I am all for competition in the market, and hope Powerset does well, however, I do not think that they will be able to beat out Google in the search engine market. Google is too big, too powerful, has too many resources, and is too far entrenched in the market to be truly be booted out of the market (as Powerset is claiming they will do).

What is keeping Google from offering the same feature of allowing you to type "How old is Steve Jobs?" instead of "steve jobs age" in the Google search term entry field? With their vast resources, it is entirely possible that if Google felt threatened by this ability that their competitors have, they will offer it themselves.

In order for Powerset or any other potential competitor in this market to overthrow Google, they must have a tremendous branding strategy, marketing campaign, and broad range of phenomenal free services like Google currently does. Otherwise, there will not be a noticeable shift in the market toward Powerset and away from Google because there is not enough marginal benefit for the substitute.

9/13/2007

The Price of Low Prices

I like reading about this argument that globalization is bad. It makes me laugh. I personally love reaping the benefits of shopping at Walmart. The jobs being outsourced by factories in China are for unskilled labor. Writers of this argument never talk about foreign companies coming to us for consulting work, which pays big money. Our country, and economy, is advancing past our industrial revolution. Technology is our strength now and outsourcing factory jobs to countries entering their industrial revolutions is part of globalization. Some just need to open their eyes to this reality.

9/12/2007

Mattel CEO Pledges to Improve Toy Safety

To be totally honest, I don't ever read the labels on the toys that I buy for my kids, but whenever I hear or read about a toy recall, I find myself going thru my kids toys to see if I've been the victim of a Chinese lead painted toy manufacturing malfunction. However, I wonder if companies like Mattel that voluntarily recall more than 21 million toys over concerns of a danger such as paint with too much lead actually see an increased demand in the long run for their toys? Obviously in the short run, the demand will decrease for toys made in China and sold by Mattel when consumers run out to purchase substitutes to Mattel's toys for the upcoming holiday season. But do you think that the demand for their toys will eventually increase to a point that is higher than the pre-recall levels because consumers will see Mattel as a responsible retailer who is first concerned with the well being of their customers? I think it potentially could unless Mattel is found to have really drug their feet in recalling the toys as if having a hard time making that kind of decision over what costs may be associated with a recall. Consider the Tylenol example of when cyanide was discovered in several locations around the States after it had killed several people. Tylenol made a tough and costly decision to pull all bottles of Tylenol off the shelves at that time. History has proved that to be a good decision and so with Mattel. Of course, only time will tell if parents are willing to put their money where their children's mouth is, literally, when it comes to buying toys made in China and sold by Mattel.

9/11/2007

The Way to Prevent the Looming Recession

Recently, the Fed has been in a crises with the current market situation. The Fed is expected to do something about the possible recession as a result of factors such as the housing market. In this article, Robert Reich claims that tax cuts are the answer to the preventing the recession and not the Fed cutting the the federal rate. With major concerns in the economy right now and many homeowners trying to sell their homes without much success, the nation is experiencing rapid loss in jobs in the mortgage, contractor, and many other related industries. Foreclosures are also at an all-time high.

I agree with the article, in that the Fed is not going to be able to turn around the market; however, I don't agree that tax cuts for the middle and lower classes is the answer to avoiding a recession. Doesn't there have to be more than just tax cuts to turn around the economy in a major crises? What else could be done to prevent a recession? With middle-class and lower-class Americans struggling to survive, I don't believe tax cuts will be sufficient because many people in these classes are too high in debt and will not spend the extra money from the tax cuts on other goods to prevent a recession. Also, I believe the article contradicts itself in saying that the middle-class will spend more with a tax cut because it also says that Americans are "so far in debt." With mortgage debt a huge part of the possible recession, payroll tax cuts wouldn't put much of a dent into the outstanding mortgage debt of Americans. Plain and simply put, many Americans purchased homes and expected to be able to get instant equity out of the home and turn it for a profit quickly. As a result, many Americans paid top-dollar for homes and are now stuck with the debt, which they can't afford. Is a recession inevitable?

9/10/2007

The Rising Tide of Corn

This article was published in the Washington Post.

The rising cost of oil has increased the cost of gasoline. With that rising cost, consumers have pushed for alternative forms of fuel. Scientists have finally produced a substitute for gasoline known as ethanol, but the unintended consequence has been that the price of food products are rising dramatically. Ethanol is a green, or clean burning, fuel made from corn. With the increase in demand for corn, farmers are having to pay more for the feed used to raise their animals. In turn, the costs of milk, eggs, meat, and cereal are all increasing as a direct result.

This article is a great way to see a very direct and obvious shift in the demand curve. In the beginning corn was seen as a viable option to create a green fuel, since it was a renewable resource. Only after the fact was it made evident that an unusally high demand would be placed on corn and the effects it would have on prices in the food industry. Now we are seeing the dramatic effects.

One other thing I wanted to point out is that the market had a shortage of corn, which increased the prices dramatically. To take advantage of this, farmers have planted millions of acres more to keep up with the demand. The market will reach an equilibrium, and the rising cost of corn will eventually level out.

9/08/2007

Baby Boomer Versus Generation X

When I read this article I soon realized that the facts are right, but I am having a hard time deciding if these facts are good or bad. The article points out the main differences between the "Traditional" workplace and the "New Generation" workplace. For instance, in the traditional workplace an employee's promotion is based off of longevity with the company. Whereas, the new generation expects promotion based on performance. I find myself caught in the middle feeling that both are extremely important. You want your employees to perform their best, but you also want them to stick around to avoid high turnover and unnecessary training costs. Is it possible to promote both, and if so, should you? Next, a traditional employee waits to be told what to do and then obeys. Whereas, the new generation has initiative to move forward on their own, but will challenge authority when questioned. Which is worse? That may depend on what type of manager you are. Finally, respect of a traditional employee is based on position/title. Whereas, the new generation does not give respect unless they feel it has been earned. Is one method right or wrong? Maybe as an employee you should work hard to earn respect while at the same time respecting everyone else, especially those who are in positions higher than your own.