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
This blog contains posts and comments written by students in Dr. Tufte's economics classes at Southern Utah University.
2/14/2005
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.
http://www.bloomberg.com/news/economy/usgovernment.html
http://www.bloomberg.com/news/economy/usgovernment.html
OPPRESSED AFRICAN COWS
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!
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
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
2/13/2005
Japan's on a Roll
Japan’s on a Roll.
http://www.bloomberg.com/news/economy/economies.html
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.
http://www.bloomberg.com/news/economy/economies.html
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
http://news.bbc.co.uk/2/hi/americas/4252171.stm
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.
http://news.bbc.co.uk/2/hi/americas/4252171.stm
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
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
DATE DITCHING
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)
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)
GAS PRICES FALL
Here’s a great article about the cost of gas. This is something I researched a little in microeconomics and decided to write on. The press wants us ‘Average Joes’ to think we’re in a major crisis with gas prices. I think otherwise. Read the article “Sky-high gas prices? Not really.”
The numbers given in the media don’t take into account inflation. Maybe they should cause a big stink about the rising cost of candy. Back in the day, you could get a handful of candy for a penny. Good luck getting that deal today.
As stated in the article, money is relative to the time period. “Sure, the $2.03 being charged at the pump today seems high. But in actual financial terms, it's a lot less onerous than the $1.25 a gallon motorists were paying in 1980 -- a whopping $2.80 when translated into 2004 dollars. (Adjusted the other way, today's $2.03 pump price is equal to 89 cents in 1980 dollars.)”
We're getting one heck of a deal! We're paying about 39% less than twenty years ago! Seems the whole gas price crisis is nothing but a media fallacy.
The numbers given in the media don’t take into account inflation. Maybe they should cause a big stink about the rising cost of candy. Back in the day, you could get a handful of candy for a penny. Good luck getting that deal today.
As stated in the article, money is relative to the time period. “Sure, the $2.03 being charged at the pump today seems high. But in actual financial terms, it's a lot less onerous than the $1.25 a gallon motorists were paying in 1980 -- a whopping $2.80 when translated into 2004 dollars. (Adjusted the other way, today's $2.03 pump price is equal to 89 cents in 1980 dollars.)”
We're getting one heck of a deal! We're paying about 39% less than twenty years ago! Seems the whole gas price crisis is nothing but a media fallacy.
2/12/2005
Are there Class?
In the article, Class warfare without class, by Donald Luskin it talks about how there is not truly class in America because “class implies a rigid structure, with little to no mobility, and easily defined borders.” The thought of placing a group of people into levels depending on what they make is harder than one thinks. Where are the lines? How much or how little does one have to make to put them in the rich or poor category? Can this clearly be defined? Think of someone making $50,000 a year, but has $20,000 in school loans and a family with two kids. The lines are not clear as to how much freedom there is in an income.
The article then goes on to discuss if there are institutional barriers in which make it harder for people to advance. Yes, anyone in America can get money for a loan which can make it so that person can advance. There is a push for people to become successful in America too which means, money for schooling and so on. Yet, there is a tendency for the people at the bottom level not to make it to the top. This brings up the fact of regulation and how it makes it harder for the bottom level to advance due to the fact that money is important when it comes to pay off the right people to get what one wants.
The question is are there class and if so are they affected by institutional barriers?
The article then goes on to discuss if there are institutional barriers in which make it harder for people to advance. Yes, anyone in America can get money for a loan which can make it so that person can advance. There is a push for people to become successful in America too which means, money for schooling and so on. Yet, there is a tendency for the people at the bottom level not to make it to the top. This brings up the fact of regulation and how it makes it harder for the bottom level to advance due to the fact that money is important when it comes to pay off the right people to get what one wants.
The question is are there class and if so are they affected by institutional barriers?
Economic Argumanet Against Punctuality
It makes the most economic sense for both parties to show up late for an appointment. Andrew Chamberlain expalins why in "Puncutality is Inefficient". Basically, waiting is costly. In an opportunity cost sort of way. You don't want to wait because it costs you, and so does coming early. As a result, each party assumes that the other person will be late, and therefore to avoid cost, each arrives late.
Chamberlain has a little analogy set up to help expalin this phenomenon. Thank goodness for what he calls "social costs", which are costs that will be incured if one shows up too late. An example of a social cost is the unwillingness of the other party to deal with you in the future. If not for these costs we would all keep second guessing the model. We would assume that the other person is assuming that we will be late, and that they will show up lateras a result. We would then think it was alright for us to show up even later. If this kept going on, nobody would ever show up.
This is a cool way to think about why people are late. But it could be dangerous if misused. Sometimes the opportunity cost of being late is overcome by the benefit of being on time, or early. Employing Chamberlain's theory when going to a job interview could prove to be disasterous. So while the theory may be interesting, it is not necessarily always correct.
Chamberlain has a little analogy set up to help expalin this phenomenon. Thank goodness for what he calls "social costs", which are costs that will be incured if one shows up too late. An example of a social cost is the unwillingness of the other party to deal with you in the future. If not for these costs we would all keep second guessing the model. We would assume that the other person is assuming that we will be late, and that they will show up lateras a result. We would then think it was alright for us to show up even later. If this kept going on, nobody would ever show up.
This is a cool way to think about why people are late. But it could be dangerous if misused. Sometimes the opportunity cost of being late is overcome by the benefit of being on time, or early. Employing Chamberlain's theory when going to a job interview could prove to be disasterous. So while the theory may be interesting, it is not necessarily always correct.
Tsunami could Jump Start Sri Lankan Economy.
The tsunami that devestated parts of Southeast Asia could lead to growing economies in the reigon. An article by the South Asia AFP says that the disater could be a blessing in disguise. Broken Record, Broken Record, Broken Record, Broken Rec... is a blog which disputes this strange point of view. It refers to the "Broken Window Fallacy" to help pinpoint the error in the thought that the tsunami is good for the the economy of Sri Lanka.
The Broken Window Fallacy states that a bad economist confines himself to what is seen and a good economist takes into consideration both what can be seen and what must be foreseen. If a window is broken the owner must pay to have it repaired. That money will go to the window glazer and stimulate the economy, that is seen. What is not seen is that had the window not been broken the owner would have used the money to buy something else, therefore enjoying two items not just one, the window. The money that he paid to the window glazer would have gone to some other merchant stimulating the economy that way. Basically, destruction is never profitable because it causes lost utility.
The blog says maybe we should destroy most of the United States to stimulate our economy. A far fetched idea by anyones standard, but similar to what the conclusion in the AFP article. The fact is obvious that even if the economy of Sri Lanka has picked up a little bit it is not a good thing that the majority of the nation was decimated. What is seen is that the economy seems to show signs of growth, what is not seen is the total cost to the nation due to the devestation. What the nation could have enjoyed from its money is now lost; it has to spend all of the money available to build what was previously there.
There is a saying, "all publicity is good publicity". While a company may have intitial signs of growth due to a scandal or bad publicity, destruction is never profitable. What is not seen in the future might be more devestating to the company than the immediate positive effects of any given occurance.
The Broken Window Fallacy states that a bad economist confines himself to what is seen and a good economist takes into consideration both what can be seen and what must be foreseen. If a window is broken the owner must pay to have it repaired. That money will go to the window glazer and stimulate the economy, that is seen. What is not seen is that had the window not been broken the owner would have used the money to buy something else, therefore enjoying two items not just one, the window. The money that he paid to the window glazer would have gone to some other merchant stimulating the economy that way. Basically, destruction is never profitable because it causes lost utility.
The blog says maybe we should destroy most of the United States to stimulate our economy. A far fetched idea by anyones standard, but similar to what the conclusion in the AFP article. The fact is obvious that even if the economy of Sri Lanka has picked up a little bit it is not a good thing that the majority of the nation was decimated. What is seen is that the economy seems to show signs of growth, what is not seen is the total cost to the nation due to the devestation. What the nation could have enjoyed from its money is now lost; it has to spend all of the money available to build what was previously there.
There is a saying, "all publicity is good publicity". While a company may have intitial signs of growth due to a scandal or bad publicity, destruction is never profitable. What is not seen in the future might be more devestating to the company than the immediate positive effects of any given occurance.
Rising Gas Prices
In an article titled "High Prices At The Gas Pump: NIMBYS, BANANAS, and Greens" by Tom DeWeese, Mr. DeWeese says that if we truly want to know who is behind the rising gas prices then we only need to look at our neighbor or for some just look in the mirror. Mr. DeWeese says that we as a country have let the environmentalists and our own need for a "veiw" stop the production of domestic fossil fuels.
Not only are we limited in our oil production, but we dont have the capacity to refine oil, since there hasn't been any refineries built in the U.S. since 1976. He says that this is because nobody wants to have a refinery in thier town, who wants the smell and the big trucks on the highways.
I think we need to tell our legislators that we want more land opened up for exploration and some of the red tape cut that makes refineries so hard to build.
Not only are we limited in our oil production, but we dont have the capacity to refine oil, since there hasn't been any refineries built in the U.S. since 1976. He says that this is because nobody wants to have a refinery in thier town, who wants the smell and the big trucks on the highways.
I think we need to tell our legislators that we want more land opened up for exploration and some of the red tape cut that makes refineries so hard to build.
China
China is causing major problems with the Amercian business. The United States must find ways to compete with China or learn to go with the flow of what is happening to America. China is dominating low cost production in many products.http://www.businessweek.com/magazine/content/04_49/b3911401.htm
The Chinese are selling their products anywhere from 30 to 50 percent less than what Americans can produce the same product. This is causing many American businesses to go out of business. However, these business men say that consumers would be smart to buy the Chinese products over their own because of high quality and low price.
China's work force is thriving on low wages all across the board, while the workers are putting in 12 hour days and working weekends. China is also set up to produce economies of scale in its domestic market.
Another big boost for China is the young students who perform in areas needed for the economy to continue to grow stronger. Students are studying engineering, business, math, and science much more than any other country, especially America. the future is bright for the Chinese people and they are willing to do what it takes to be successful.
The Chinese are selling their products anywhere from 30 to 50 percent less than what Americans can produce the same product. This is causing many American businesses to go out of business. However, these business men say that consumers would be smart to buy the Chinese products over their own because of high quality and low price.
China's work force is thriving on low wages all across the board, while the workers are putting in 12 hour days and working weekends. China is also set up to produce economies of scale in its domestic market.
Another big boost for China is the young students who perform in areas needed for the economy to continue to grow stronger. Students are studying engineering, business, math, and science much more than any other country, especially America. the future is bright for the Chinese people and they are willing to do what it takes to be successful.
2/10/2005
Devil's Advocate
The marginal value of one contrary opinion may be greater than the sum of all others when a team or class suffers from groupthink. In the business world there seldom is a single right answer. There are opportunity costs, threats, and resources. Managers choose between different alternatives. Because of this it is necessary to have an open mind, to use all resources, and understand all opinions. It is not so necessary to debate about which one is "right" out of context of a specific set of circumstances. In Fair Play the author begins by implying that teachers are horrible for teaching children to not use drugs. In later chapters he then explains how "buying American" was invented by the devil in the form of men like Ross Perot. The truth is he is right, and he is also very wrong. Debate tends to make people become radical and defensive in building up rational and logical resistances. Politicians, lawyers, economists, and philosophers are the easiest people to catch in contradiction (though they will deny it the loudest) simply because there are so many variables which can change the world's paradigm. All of these social sciences have their place, but moderation can add much value to any business endeavor.
eXtreme hotels
On the Fortune Magazine website I found an interesting article titled Taking Boutique Hotels to the Extreme http://www.fortune.com/fortune/articles/0,15114,1025829,00.html?promoid=yahoo. The article talks about Bill Lee and his innovative hotel idea. Lee started a hotel in the Dominican Rebulic that caters to the needs of extreme sports fans. One of the sports that is mentioned in the article is Kite-boarding. I think this is a good example of economics because Lee found a niche that wasn't filled, and now he is one of the sole providers for the narrow demand. I also thought it was interesting that people in there 50's were demanding something that would typically be related to the younger generation.
Market_Based NFL Overtime Solutions
According to the article Market-Based NFL Overtime Solution at www.cornersolution.com, it is referring to the sudden death overtime in football. The sudden death overtime is decided by a flip of a coin. This method is thought to be unfair to some people because basically whoever wins the flip will win the game. All that has to be done is kick a field goal. There are people who do not find this fair, so here is another solution to determining sudden death. This consists of the team going together for a silent auction to decide who will get possession. The teams then decide on the yard line that they are willing to start on. Then the papers are sealed up and given to the referees. The referees then read the papers, and whoever gives the lower yard will receive the ball first. The team to score first then will be the winner. This way both teams get an equal opportunity, and the team that is willing to give up the most will be rewarded. After this idea was reviewed by a high school football coach his remarks were “this is retarded.” I personally think that it is a little different idea. It kind of takes away the momentum of the game to have to get in a huddle and pick a yard line. But in another case it is a lot fairer. Some may think that it is brilliant because it makes each team competitively internalize all of their comparative strengths and weaknesses. What do you think? Would you like to see a change in sudden death or not?
U.S. Trade Deficit Hits Record $600 Billion
According to an article in the New York Times, the American trade deficit broke the $600 billion barrier in 2004. The figure amounts to more than 5 percent of the American economy. Treasury Secretary John W. Snow, said that “the ability of American Consumers to buy more imports demonstrated that the American economy was growing faster than other countries, and according to the Treasury Department spokesman, Rob Nichols, “We are importing more than those other economies, because we are creating more disposable income than they are.” So when is the trade deficit going to go down, and as consumers, what can we do about it? Is this were “Buy American” could come into play? One answer or a factor that will help out the trade deficit is that the US dollar has been declining recently, which should make American exports cheaper and hopefully more attractive to overseas consumers.
Who Will Be Next????
Carly Fiorina, CEO of Hewlett-Packard, was fired this past week after a short, six-year stay with the computer and printing company. Even though the company has doubled sales over the last five years, the HP board still decided to begin the search for a new leader. Part of the problem that led up to the firing of Fiorina was the company purchase of Compaq. As the article states, the ex-CEO had a difficult time in getting the two organizations to combine forces and work efficiently. With this new move, it leaves many to wonder if fresh leadership will be the answer to a slowing corporation.
Article:http://www.businessweek.com/technology/content/feb2005/tc2005029_1044_tc024.htm
Article:http://www.businessweek.com/technology/content/feb2005/tc2005029_1044_tc024.htm
Are we Spending Money Needlessly or Wisely?
President George W. Bush is in the process of presenting his new budget plan to the nation. The new budget is cutting back on some of the nation’s expenditures, in attempt to decrease the deficit in America. I feel the new budget will cause a lot of contention coming from the lower income families in America.
I am sure that President Bush has good reasons for his new budget cuts, but what if we were to look at other major expenditures and see what would happen if we were to decrease them. There is an Internet site called www.costofwar.com that keeps a running total of what the government is spending thus far on the Iraq war; the number is in the hundred billions. The Internet site also compares the money spent in Iraq to other institutions we could have funded instead. Please don’t read into this wrong, I am for Iraq; however I am for America also. We are doing a world of good to the citizens of Iraq today, but are we doing it at the expense of citizens of America?
Equilibrium, I feel, is past the equal point. Are we spending money needlessly or wisely? Perhaps we may not know what we have done until years later when we can look back and see the whole picture.
I am sure that President Bush has good reasons for his new budget cuts, but what if we were to look at other major expenditures and see what would happen if we were to decrease them. There is an Internet site called www.costofwar.com that keeps a running total of what the government is spending thus far on the Iraq war; the number is in the hundred billions. The Internet site also compares the money spent in Iraq to other institutions we could have funded instead. Please don’t read into this wrong, I am for Iraq; however I am for America also. We are doing a world of good to the citizens of Iraq today, but are we doing it at the expense of citizens of America?
Equilibrium, I feel, is past the equal point. Are we spending money needlessly or wisely? Perhaps we may not know what we have done until years later when we can look back and see the whole picture.
GMC recalls-good or bad?
According to a recent article in MSNBC, http://www.msnbc.msn.com/id/6947046/, GM is recalling over 155,000 trucks, SUV's, and vans. This recall is due from a pressure accumulator in the braking system that could crack during normal driving and fragments could injure people if the hood was open. The crack also could allow hydraulic fluid to leak, which could make it harder to brake or steer and could cause a crash.
Would something like this not cause a decrease in the demand of those certain GM vehicles, especially when a few of them are very high dollar vehicles, for example, the Hummer H2, Avalanche, Silverado, and Suburban? This type of recall has to trigger some kind of actions in consumers as to whether they will buy GM vehicles in the future. I know this doesn't compare to the firestone tire recalls that devastated their company in the past, but I feel that it does have a significant impact on us as consumers as to what we think of buying for our next vehicle. If those people that buy the higher class SUV vehicles change their preferences on vehicles, that could have a pretty big impact on GM's sales and profits.
What do you think? Would you change your loyalty to GM because of instances like this, or would you still buy from them?
Would something like this not cause a decrease in the demand of those certain GM vehicles, especially when a few of them are very high dollar vehicles, for example, the Hummer H2, Avalanche, Silverado, and Suburban? This type of recall has to trigger some kind of actions in consumers as to whether they will buy GM vehicles in the future. I know this doesn't compare to the firestone tire recalls that devastated their company in the past, but I feel that it does have a significant impact on us as consumers as to what we think of buying for our next vehicle. If those people that buy the higher class SUV vehicles change their preferences on vehicles, that could have a pretty big impact on GM's sales and profits.
What do you think? Would you change your loyalty to GM because of instances like this, or would you still buy from them?
2/09/2005
Enron's Power Plant Rigging
A recent article published by The Los Angeles Times explained how a company can profit by our problems. Enron Corporation is currently under investigation for accounting fraud, but are now being investigated for conspiring blackouts to make a profit. As we learn in economics, consumers will pay more for a scarce product than if it was overly-abundant. Enron traders figured they could use this economic principle to their advantage.
Enron traders and others were captured discussing in e-mail messages and telephone conversations how they could profit from California's blackouts. Enron employees also suggested that their plans to exploit Western energy markets predated the meltdown of 2000 and 2001, which brought record electricity prices and emergency blackouts. Earlier this week, staff of the Federal Energy Regulatory Commission recommended that Enron return almost $1.7 billion in profit gained through improper energy trading dating back to 1997. Some critics say that this isn't a big enough penalty and that Enron should be charged with more. I personally agree with the critics, we need to make sure something like this doesn't happen again. Especially if it is something as important as electricity. I am curious to what other business students think, should the penalty have been harsher?
http://www.latimes.com/business/la-fi-enron4feb04,0,2187912.story?coll=la-home-business
Enron traders and others were captured discussing in e-mail messages and telephone conversations how they could profit from California's blackouts. Enron employees also suggested that their plans to exploit Western energy markets predated the meltdown of 2000 and 2001, which brought record electricity prices and emergency blackouts. Earlier this week, staff of the Federal Energy Regulatory Commission recommended that Enron return almost $1.7 billion in profit gained through improper energy trading dating back to 1997. Some critics say that this isn't a big enough penalty and that Enron should be charged with more. I personally agree with the critics, we need to make sure something like this doesn't happen again. Especially if it is something as important as electricity. I am curious to what other business students think, should the penalty have been harsher?
http://www.latimes.com/business/la-fi-enron4feb04,0,2187912.story?coll=la-home-business
Will social security be there for me?
Here we are in the prime of our lives. The majority of us are in our mid twenties and just getting ready to start our careers. With all of the concerns we may have about going into the “real world” and finding a job, now the world is forcing us to look to the end of our working career to social security. So I ask the question, “Will social security be there for me?” I am not planning on it and President Bush says it won’t, unless there is a drastic change. Bush has stated that the program will be completely busted in our lifetime if nothing is done. When social security was set up, it was designed to have three workers pay for one retired person. Now the system is turning toward one working paying for three retired. Do the math, it can not be sustained!
I would agree with President Bush regarding privatizing social security. Let us, our generation, have a say in our future. If it is not now it will be later.
I would agree with President Bush regarding privatizing social security. Let us, our generation, have a say in our future. If it is not now it will be later.
Social Security Reform
Are our government leaders neglecting the young to win votes? Social security reform is badly needed and seems to make economic sense and, while it won't completely alleviate the problem of social security, it will certainly lighten the weight of the liability of social security. But, we still find many government leaders who are aggressively fighting necessary and sound planned reform in what looks like an attempt to prey on the fears of the elderly to win their votes. Here is a good article on social security reform.( http://www.mtexpress.com/index2.php?issue_date=02-09-2005&ID=2005101289) Please let me know some of the pro's and con's of social security reform.
Microsoft's purchase of anti-virus companies
In an article from USA today, Microsoft is buying Sybari Software a manufacturer of anti-viruses. This may bring the demand down for more competitive anti-virus producers such as McAfee and Symantec. Microsoft is dominant in computer programming. Microsoft has made computer’s needs revolve around their products. If Microsoft starts building anti-virus technology into their computers, other anti-virus manufacturers could be completely knocked out of the market. Though, in the article it stated that the investment in the Sybari Software Company will only reduce McAfee’s revenues by 8% and Symantec by 5%. I think that Microsoft has bigger plans by investing in anti-virus companies. In 2003 Microsoft bought GeCad Software Srl, a Romanian anti-virus company, and Sybari Software this last Tuesday. Will Microsoft’s purchase of anti-virus software make the barriers into the computer industry more constrained, increasing the demand of Microsoft? Or do you think that the demand for other anti-virus supplies will maintain their existing demand? http://www.usatoday.com/money/industries/technology/2005-02-08-msft-virus_x.htm
2/08/2005
Cutting the Budget With Words
On Monday, President Bush announced his plan for cutting expenditures as he revealed the budget for 2006. Bush's goal is to reduce the deficit by half for the year 2009. While this goal may be feasible and realistic, it appears that the budget does not include projected costs for military projects in Iraq and Afghanistan. How can George cut budget spending if he does not figure in all of the expenditures? With this type of budgeting one is left to wonder if the President of the United States is just giving us political jargon instead of economic truth. Perhaps, as Dr. Tufte stated, this political nonsense is supplied only because America demands it.
Article:http://money.cnn.com/2005/02/08/news/economy/snow.reut/index.htm
Article:http://money.cnn.com/2005/02/08/news/economy/snow.reut/index.htm
2/07/2005
Flashy Drives
All of us at SUU know about the cool Jump/Flash drives that have made college life so much easier. Toshiba and SanDisk recently announced the release of an 1 gigabyte flash drive that runs 40% faster than the previous generation. I remember when my parents bought a brand new computer with 2 gigabytes of memory. Everyone said that we would never need that much space. Now that is hardly enough memory to do all the things school requires. Does the increased supply and reduced cost of memory cause an increased dependency on its use? Why don't companies work as much on making files smaller, more accurate, and more efficient as they do on increasing memory capacity?
Gas Prices are Rising Again
Gas prices rose more than 7% in January, which typically is one of the slowest driving months of the year. Leading experts predict pump prices may surge past last year’s record highs when highway travel picks up late in the spring. One expert, Carl Larry and the article Gas could be costly for Summer Motorists; he suggests that gas prices will rise above last year’s peak due to rising demand for fuel and the higher price of crude oil. He states, “We’re starting to see the economy come back, so demand can only go higher from where it’s at.” It’s the simple rule of supply and demand. As demand goes up, and supply gets shorter, (which OPEC will cut supply if crude oil is less than $40 a barrel), and then price goes up. So as a consumer, what’s the secret to helping keep the gas price down?
Super Bowl Advertising
The biggest day of the year for commercials, Super Bowl Sunday, there was some new ways of advertising. In "Super Sinless" by Krysten Crawford http://money.cnn.com/2005/02/07/news/fortune500/superbowl_roundup/index.htm she reported that the advertisers paid $80,000 per second to have their ads played during commercial breaks. Just like the saying "time is money" but who knew one second could be worth $80,000. This could one of the most expensive ways to change the Indifference curves.
Budweiser made an interesting commercial this year not about partying or crazy frogs, but they told consumers that if they purchased their product they would be supporting our troops over in Iraq. That was very interesting to me because they hit on a new target market.
Budweiser made an interesting commercial this year not about partying or crazy frogs, but they told consumers that if they purchased their product they would be supporting our troops over in Iraq. That was very interesting to me because they hit on a new target market.
2/03/2005
Is it America West or America Worst?
America West, the Phoenix-based airline company, posted a loss of $49.7 million for the last quarter of 2004 on January 21, 2005. The company believes high gas prices and passenger vacancies were the main causes of the reported loss. For many America West customers this may not come as a big surprise. The inherent lack of customer service is enough for many to wonder how the planes remain in the skies. While things do not appear to be getting better for America West, who forecasts another loss for the current quarter, they may find comfort in the fact that other airlines seem to be struggling as well. If America West wants to reverse their current trend, they need to consider providing a more efficient, friendly service for their travelers.
Article:http://money.cnn.com/2005/01/21/news/midcaps/america_west.reut/index.htm
Article:http://money.cnn.com/2005/01/21/news/midcaps/america_west.reut/index.htm
1/31/2005
Opec's Greedy Strategy
Opec has lead the market in "black gold" for quite some time and is quite persistent to keep the momentum going in the area. Opec, since the 1970s has continually pushed all of its customers by trying to maximize revenue while trying to maximize price. Of course, this is something that any good business would strive for but has Opec taken it too far? Fear, Greed & A Barrel Of Crude informs us that gas prices per barrel rose and closed in New York today above $48 a barrel. Before we know it, I bet the price will reach above $50 a barrel and that means well on the road to $60. If this happens I feel quite confident that people will look for other means of transportation or at least development enginneers and others will look to create and perfect other means of giving a vehicle power.
Many countries are already rationing their investments in the area and planning for the future. Opec can clearly see that it walks a fine line to keeping everyone pleased. One Russian observer remarked, "We can assume that the oil prices will not go down in the near future because there are no indications of the coming seasonal drop in the demand for oil, in particular, due to a rather cold winter in the United States." We constantly hear complaints, or perhaps we complain ourselves, about the price for a gallon of gas. Well, things don't seem to be looking too bright in the future for this area. Opec has the strategy figured out: it tells traders one thing and sends false signals while surprising the market on the other hand. Will Opec go on with its greedy ways? Will the world market tolerate it? These are the questions that come to my mind.
Many countries are already rationing their investments in the area and planning for the future. Opec can clearly see that it walks a fine line to keeping everyone pleased. One Russian observer remarked, "We can assume that the oil prices will not go down in the near future because there are no indications of the coming seasonal drop in the demand for oil, in particular, due to a rather cold winter in the United States." We constantly hear complaints, or perhaps we complain ourselves, about the price for a gallon of gas. Well, things don't seem to be looking too bright in the future for this area. Opec has the strategy figured out: it tells traders one thing and sends false signals while surprising the market on the other hand. Will Opec go on with its greedy ways? Will the world market tolerate it? These are the questions that come to my mind.
A Valid Point on Outsourcing
I am open minded enough to see the benefits of outsourcing. Yes, jobs are being deleted and people are losing their job as a result, but in the long run won't they find another or create a job, possibly something where they can contribute to society in a more efficient manner? Not to sound cold hearted, but my concern is not for the welfare of the the working U.S. citizen. Well, I guess it is, but not as direct as everyone elses'. My concern is for the individual business, that despite outsourcing of some positions, still employ U.S. citizens. Lou Dobbs of CNN, who does not favor outsourcing, brings up the point that not only are we losing jobs here in the U.S., but the quality of service is being forfeited as a result. Here lies my concern. I've experienced a decline in quality service with a company that serves me. It discourages me from wanting to use the service because I can't understand the person that is trying to help me, in part due to their strong accent. In addition, the representative I am speaking with sometimes has no experience with the product I'm using. If quality of service declines, customers will go somewhere else, and revenue will drop for a business, possibly causing more job losses. I think outsourcing may have a more indirect effect than the majority of the public are focusing on. What will happen to the economy if the customer service of businesses have poor quality?
Public School or Public Choice?
Although the elections are past, one issue that really struck home with me was the issue of private school vouchers. I have a child that will be entering the public school system soon, and I have grave concerns about the system.
You may have noted that our gubernatorial candidates this past election season didn't mention too much about the specifics of the voucher program. Both candidates basically said that they supported "Utah's children," and yet, they had very different opinions regarding the voucher program.
Following is a link to a site that addresses some criticisms and concerns over the voucher program, www.schoolchoices.org/roo/myths.htm.
Of particular interest when discussing voucher programs is that most people complain that public schools are underfunded. However, the United States spends more on education than most, if not all, other countries in the world, and yet our quality of education continues to decline. Interest groups lobby for more and more money while our schools get worse and worse.
By no means am I saying that the voucher program is a cure all, or that it doesn't come with its own problems (after all, government still has a hand in it), but I do believe it's a great step in the right direction. It would help market forces to begin to work and thus, improve the quality of education our children receive.
You may have noted that our gubernatorial candidates this past election season didn't mention too much about the specifics of the voucher program. Both candidates basically said that they supported "Utah's children," and yet, they had very different opinions regarding the voucher program.
Following is a link to a site that addresses some criticisms and concerns over the voucher program, www.schoolchoices.org/roo/myths.htm.
Of particular interest when discussing voucher programs is that most people complain that public schools are underfunded. However, the United States spends more on education than most, if not all, other countries in the world, and yet our quality of education continues to decline. Interest groups lobby for more and more money while our schools get worse and worse.
By no means am I saying that the voucher program is a cure all, or that it doesn't come with its own problems (after all, government still has a hand in it), but I do believe it's a great step in the right direction. It would help market forces to begin to work and thus, improve the quality of education our children receive.
Opec's greedy strategy
Opec has lead the market in "black gold" for quite some time and is quite persistent to keep the momentum going in the area. Opec, since the 1970s has continually pushed all of its customers by trying to maximize revenue while trying to maximize price. Of course, this is something that any good business would strive for but has Opec taken it too far? Fear, Greed & A Barrel Of Crude informs us that gas prices per barrel rose and closed in New York today above $48 a barrel. Before we know it, I bet the price will reach above $50 a barrel and that means well on the road to $60. If this happens I feel quite confident that people will look for other means of transportation or at least development enginneers and others will look to create and perfect other means of giving a vehicle power.
Many countries are already rationing their investments in the area and planning for the future. Opec can clearly see that it walks a fine line to keeping everyone pleased. One Russian observer remarked, "We can assume that the oil prices will not go down in the near future because there are no indications of the coming seasonal drop in the demand for oil, in particular, due to a rather cold winter in the United States." We constantly hear complaints, or perhaps we complain ourselves, about the price for a gallon of gas. Well, things don't seem to be looking too bright in the future for this area. Opec has the strategy figured out: it tells traders one thing and sends false signals while surprising the market on the other hand. Will Opec go on with its greedy ways? Will the world market tolerate it? These are the questions that come to my mind.
Many countries are already rationing their investments in the area and planning for the future. Opec can clearly see that it walks a fine line to keeping everyone pleased. One Russian observer remarked, "We can assume that the oil prices will not go down in the near future because there are no indications of the coming seasonal drop in the demand for oil, in particular, due to a rather cold winter in the United States." We constantly hear complaints, or perhaps we complain ourselves, about the price for a gallon of gas. Well, things don't seem to be looking too bright in the future for this area. Opec has the strategy figured out: it tells traders one thing and sends false signals while surprising the market on the other hand. Will Opec go on with its greedy ways? Will the world market tolerate it? These are the questions that come to my mind.
Existing-home sales hit all-time high in ’04
http://www.msnbc.msn.com/id/6865971/
This article is a great example of how monetary policy can make a huge effect on the economy. The article states that home buyers continue to benefit from low mortgage rates; home sales have increased 9.4 percent last year. It also stated that sales prices for an existing homes increased 8.3 percent that marked the biggest one-year jump in home prices since 1980. Do you think that these low interest rates have created an inflated price of homes? Is it possible that when rates go back up the price of homes will fall? Would this economic factor be an important consideration to someone who is trying to choose between leasing vs. buying?
This article is a great example of how monetary policy can make a huge effect on the economy. The article states that home buyers continue to benefit from low mortgage rates; home sales have increased 9.4 percent last year. It also stated that sales prices for an existing homes increased 8.3 percent that marked the biggest one-year jump in home prices since 1980. Do you think that these low interest rates have created an inflated price of homes? Is it possible that when rates go back up the price of homes will fall? Would this economic factor be an important consideration to someone who is trying to choose between leasing vs. buying?
Does Corporate Social Responsibility Mean Superior Performance?
Is it true that social and environmental resposiblity goes hand in hand with superior financial performance? According to an article titled "Holy Grail Found", the anwers is an emphatic yes. The article states that two "meta-studies" (studies of studies) were performed and have concluded that a "statistically significant association between corporate social performance and financial performance exists, which varies 'from highly positive to modestly positive.'"
So what does this mean? If a company wants to be superior does it have to focus on being socially and environmentally responsible? Maybe superior financial performance is enhanced because of other factors such as good management, product differentiation, or low cost. Perhaps companies that do well financially just have more resources to invest into being socially responsible. Whatever the case, what is a company that wants to out-perform competitors supposed to do? Focus more on the environment, and use its resources in that manner? Maybe resources could be better distributed to society by other means. What do you think?
So what does this mean? If a company wants to be superior does it have to focus on being socially and environmentally responsible? Maybe superior financial performance is enhanced because of other factors such as good management, product differentiation, or low cost. Perhaps companies that do well financially just have more resources to invest into being socially responsible. Whatever the case, what is a company that wants to out-perform competitors supposed to do? Focus more on the environment, and use its resources in that manner? Maybe resources could be better distributed to society by other means. What do you think?
Dog behavior explains the Margin
Dogs seem to genetically understand the economic principle of the margin. In the article Dogs at the Margin, Don Boudreaux expalins how dogs seem to instictively understand this economic principle. He discribes his findings after his family purchased a second dog. When the old dog tries to eat from the same dish as the new dog, a barking, biting brawl breaks out, but when the old dog drinks from the same water bowl everything is alright. According to Boudreaux, it is related to the anscestor of the dog, the wolf. Wolves knew that there was plenty of water to drink, but that food was much more scarce. As a result, the next meal became much more valuable to the animal than the next drink. This happened despite the fact that an animal can live much longer without food than it can without water. This attribute seems to have been passed down to the modern day dog; they seem to know that food is more scarce than water and therefore more valuable.
This example of the dogs marginal meal applies directly to economics. The principle of the margin is how much value will be placed on the next unit of a product to be consumed. If a good is scarce, it becomes much more valuable than a good which is plentiful. This happens because the scarcity creates more value in the eyes of consumers. Consumers are willing to pay more simply because the good is rare. As goods become more scarce, their marginal value will increase. As in the Diamond verses Water paradox, the water is less valuable because it is so plentiful, eventhough it is more essential to survival.
This example of the dogs marginal meal applies directly to economics. The principle of the margin is how much value will be placed on the next unit of a product to be consumed. If a good is scarce, it becomes much more valuable than a good which is plentiful. This happens because the scarcity creates more value in the eyes of consumers. Consumers are willing to pay more simply because the good is rare. As goods become more scarce, their marginal value will increase. As in the Diamond verses Water paradox, the water is less valuable because it is so plentiful, eventhough it is more essential to survival.
The Effects of Daylight Saving Time
The Concept of Daylight Savings has been around for a long time. In the article “Saving Time, Saving Energy”, it states that there are three economical reasons for the time switch. The first is that it saves energy. By observing it in the months of March and April we save energy that is equivalent of 10,000 barrels of oil each day. The second is that it prevents traffic injuries. Daylight savings allows people who work and have to school to travel home in the daylight which is safer then traveling in the dark. The third is that it prevents crime. Since people get more done in the daylight it leaves them less exposed to various crimes, which are more likely to happen at night then in the light of day.
The tie to economics here is the demand for daylight. The more daylight, the more energy saved for something else. You might even say that energy is an inferior good to daylight. The more daylight, the less energy demanded. The demand for electricity for lighting our homes is directly linked to when we hit the hay and when we rise in the morning. By adding an extra hour of daylight the demand for energy to light our homes goes down and the desired effects of the government to conserve energy reached.
The tie to economics here is the demand for daylight. The more daylight, the more energy saved for something else. You might even say that energy is an inferior good to daylight. The more daylight, the less energy demanded. The demand for electricity for lighting our homes is directly linked to when we hit the hay and when we rise in the morning. By adding an extra hour of daylight the demand for energy to light our homes goes down and the desired effects of the government to conserve energy reached.
Student Aid
While reading in the book fair play, an interesting issue came up. The Author talked about how taxes are wrong because takeing something away from someone and giveing it to someone else is wrong. Reading this makes sense but I have never met a student that would not accept a grant or a gov't subsidized loan. Do you think that Fair Play is correct and people loose there sense of right and wrong as they get older and more educated? or Do you think that the theory of helping the economy by increasing education possibilities is a more sound theory behind Grants and Subidized loans?
Procter & Gamble Buys Gillette.
In the article "Procter & Gamble buys Gillette" Procter & Gamble has made a huge move in wanting to buy The Gillette Company. The stock deal is valued at $54 million dollars. There are those people out there like the Wall Street analyst’s that think it is not a good idea or that it is overpriced. The reasons that they feel this way is because their will be some overlap in a few brands such as deodorants, teeth whiteners, and toothbrushes. Another reason is the advertising and being able to distinguish between the different products. However, I think that it is one smart move by Procter & Gamble. Because with all of the resources that the two companies already have they will be able to combine efforts and resources, and this will create great strength for them that will be hard to compete with.
Learn more about price elasticity
If you are like me some things take a while to sink in, so that I fully understand them. Economics is one of those things that takes a while. As I searched the internet about topics that I could write a post on I came across the website http://economics.about.com. This site is a great tool for me and others like me who sometimes have a hard time learning.
The site has articles about recent economic news as well as instructions and examples about some of the formulas that we have been using in class. The link I looked into was the one about price elasticity of demand which address is http://economics.about.com/cs/micfrohelp/a/priceelasticity.htm.
If you need a little extra help or would just like to learn a little bit more check this out and see if it helps you.
The site has articles about recent economic news as well as instructions and examples about some of the formulas that we have been using in class. The link I looked into was the one about price elasticity of demand which address is http://economics.about.com/cs/micfrohelp/a/priceelasticity.htm.
If you need a little extra help or would just like to learn a little bit more check this out and see if it helps you.
GOV'T PROSTITUTION
Here’s a prime example of socialistic laws gone bad as illustrated in the article “We'd Be No Worse Off Than the Europeans”. In Germany, any person who is out of work is given a form of ‘unemployment’ to survive until he or she can find a job. Sounds great doesn’t it? Well, the downside is that after one year a person on welfare is given a work assignment by a local ‘Job Center’ which is operated by the government. If the person turns down the work assignment, the person is no longer able to receive government help.
I am a strong believer that government aid should be worked for and not so freely handed out but…in Germany, prostitution is legal. The government can call up any woman after one year of being unemployed and force her to work at brothels or as a phone sex operator. “At one job center in the city of Gotha, a 23-year-old woman was told that she had to attend an interview as a "nude model", and should report back on the meeting. Employers in the sex industry can also advertise in job centers, a move that came into force this month. A job center that refuses to accept the advertisement can be sued.”
This is what happens in a socialistic style economy, one which other countries readily embrace and one which America mimmicks in so many ways. Too many handouts are given and now to make up the finacial difference, women are being forced into outrageous professions if they wish to survive. In a more capitalistic economy healthcare is better for some and worse for others; but at least in a capitalistic economy people have the freedom to choose their own professions.
I am a strong believer that government aid should be worked for and not so freely handed out but…in Germany, prostitution is legal. The government can call up any woman after one year of being unemployed and force her to work at brothels or as a phone sex operator. “At one job center in the city of Gotha, a 23-year-old woman was told that she had to attend an interview as a "nude model", and should report back on the meeting. Employers in the sex industry can also advertise in job centers, a move that came into force this month. A job center that refuses to accept the advertisement can be sued.”
This is what happens in a socialistic style economy, one which other countries readily embrace and one which America mimmicks in so many ways. Too many handouts are given and now to make up the finacial difference, women are being forced into outrageous professions if they wish to survive. In a more capitalistic economy healthcare is better for some and worse for others; but at least in a capitalistic economy people have the freedom to choose their own professions.
Is the media telling us the truth?
In a recent article "Iraq election helps the dollar" the media tells us how the dollar gained strength compared to the yen going from ¥103.37 to ¥103.43 early Monday. They assume such a jump is due the recent elections in Iraq. My question is the dollar really “firmer today”?
So I went to another website x-rates.com to inquire about this sudden strengthening of the U.S. dollar. From January 28 to January 31 three out of five major currencies actually gained against the dollar including the European Euro, Canadian dollar, and Austrian dollar. Another currency the British pound stayed the same. According to x-rates.com only one out of five major currencies the Japanese yen gained favor to the U.S. dollar.
So my mind is left with questions like? Is the media out for consumers’ best interests? Do they feed us information that might be tampered with? And how much does our economy depend on the media?
So I went to another website x-rates.com to inquire about this sudden strengthening of the U.S. dollar. From January 28 to January 31 three out of five major currencies actually gained against the dollar including the European Euro, Canadian dollar, and Austrian dollar. Another currency the British pound stayed the same. According to x-rates.com only one out of five major currencies the Japanese yen gained favor to the U.S. dollar.
So my mind is left with questions like? Is the media out for consumers’ best interests? Do they feed us information that might be tampered with? And how much does our economy depend on the media?
You can't cheat on health
In an aritical from USA today reported a new study of frying foods in phytosterol, and additive that reduces LDL cholesterol, or bad cholesterol. I find it fascinating that technology has enabled humankind to make donuts that will reduce your cholesterol. I think even Homer Simpson might be impressed by this new discovery. However, though the overall wellbeing of human kind has improved, and the resources available to generate long prosperous lives are more attainable, I find that, especially in America, the human populous has been trying to cheat themselves of true good health. In addition, I think that foods processed with cholesterol reducing additives may have high selling rates at first, but eventually decline in the market. A few years ago companies made all kinds of chips fried in Olean. Olean made chips fat-free without too much loss in flavor. The rave was huge, until people started having symptoms of stomach craps and diariah. Consumers were confused with the idea that bad food is bad, even if it is fat-free. Bob Goldin stated, “Consumers will have a big problem linking fried foods or snacks with ‘better for you.’ I think there’s so much skepticism” I disagree, America is increasingly becoming obese for a reason, and that isn’t because people who eat high cholesterol foods are worried about how much cholesterol it has. Foods with cholesterol reducing additives give additional value to eat more of that product, which I feel, will create a high short-term demand. I think the idea will be, this food was in my diet before, and now it is “healthier for me and will reduce my cholesterol,” I should eat more of it. The idea of finding a way to cut corners to better health overtime will decline in the overall value it intended.
Mexico Tests Elasticity in Telecommunications.
In the article, by Anthony Harrup, the Mexican government has lost income because people are using more “mobile to mobile” phone calls. The government has implemented a plan to increase revenue by lowering the rate for “fixed to mobile” phone calls. Over the coming years, this plan will increase the elasticity for the “fixed” good. Since mobiles and fixed phones are substitute goods, this new act will give the public more of a reason to make “fixed to mobile” calls. Is lowering the price of an inferior good going to increase revenue? I believe by increasing elasticity, the volume of calls will go up, and the government will eventually see a profit. http://www.smartmoney.com/news/ON/index.cfm?story=ON-20050106-001086-1800.
Lessons from the playground
In Steven Landsburg book Fair Play, he approaches the issue of taxing the rich to feed the poor. Landsburg likens this tax to his daughter on the playground. He said "...I have never, ever, heard a parent say to a child that it was okay to forcibly take toys away from other children who have more toys than you do" (landsburg 8). He goes on to say that he has never heard of children developing a government so that they could take toys from those that had many to give to those that had little (landsburg 8).
Being one of those that do not fit in the rich category I am grateful for the taxes on the rich. However, when I graduate and become one of the rich, I don't think that I will enjoy the tax as much as I do now.
I believe that if there were some benefit for the rich to give their money to the poorer class (such as myself) that there would be more of it. I also think that there are people who are comfortable just living off of the government and the rich citizens income tax. This creates a lazy, idle society. If we were to do away with the tax the rich heavily and give the poor freely method, and go with a flat tax rate method, it would create an incentive to be more productive, be involved with government procedures and expenditures, and overall create a more productive society
Being one of those that do not fit in the rich category I am grateful for the taxes on the rich. However, when I graduate and become one of the rich, I don't think that I will enjoy the tax as much as I do now.
I believe that if there were some benefit for the rich to give their money to the poorer class (such as myself) that there would be more of it. I also think that there are people who are comfortable just living off of the government and the rich citizens income tax. This creates a lazy, idle society. If we were to do away with the tax the rich heavily and give the poor freely method, and go with a flat tax rate method, it would create an incentive to be more productive, be involved with government procedures and expenditures, and overall create a more productive society
Plan B Beats Abortion
The Food and Drug Administration is still deliberating whether to make Plan B available over the counter. The morning-after pill prevents an agg from being fertilized if taken within 72 hours after intercourse. It does not cause abortion. If available without prescription 1.3 million abortions and 1.5 million unintended pregnancies could be prevented, according to the USA Today article, 'Plan B' beats abortion. Critics and the FDA are concerned that unprotected intercourse among teens will increase with easier access to the pill. Barr Pharmaceuticals, creators of Plan B proposed a new plan to require those under 15 to have a prescription. Without more data about how teens will use the pill the FDA feels it cannot make an informed decision.
In order for young girls to safely use the pill some physicians say they must have control over its distribution. Wendy Wright, senior policy director for Concerned Women of America said, " the morning-after pill is a pedophile's best friend. Morning-after pill proponents treat women like sex machines." Although this may be true, easier access to the pill could reduce the number of children born into abusive situations. " The FDA's job, by law, is to judge the safety and efficacy of drugs, not the morality of people who use them."http://www.usatoday.com/news/opinion/2005-01-20-plan-b-our_x.htm
In order for young girls to safely use the pill some physicians say they must have control over its distribution. Wendy Wright, senior policy director for Concerned Women of America said, " the morning-after pill is a pedophile's best friend. Morning-after pill proponents treat women like sex machines." Although this may be true, easier access to the pill could reduce the number of children born into abusive situations. " The FDA's job, by law, is to judge the safety and efficacy of drugs, not the morality of people who use them."http://www.usatoday.com/news/opinion/2005-01-20-plan-b-our_x.htm
1/29/2005
If I owned a business the principal-agent situation ( http://en.wikipedia.org/wiki/Principal-agent_problem) would be one of my biggest concerns. As I have bounced around from job to job it definitely can be recognized who understands this phenomenon and who doesn't. My first job out of high school I was a salesclerk in a sunglass store. I was paid hourly with no bonus or compensation for selling. Hustling on the job didn’t get me very far and I had no motivation to learn the product or to push sales. On the other hand at my current job success is nicely rewarded; not only with bonus cash, but promotions within the organization. With every promotion the rewards grow increasingly better. Money motivates like nothing else. That is the first step in handling the issue.
When Wal-Mart Comes to Town
In an article called "When Wal-Mart Comes to Town" it gives some interesting figures to what happens when Wal-Mart comes to town. It said that stores within a 20 mile radius of 14 Wal-Mart's studied saw sales decrease by 25.4% after five years from when Wal-Mart moved in. Even in our little town of Cedar City you can see where all the business is, and its not downtown. Almost all could relate to the zoo-like atmosphere that Wal-Mart has on a Saturday or Sunday afternoon. It's amazing to see all the people that flock to Wal-Mart to do business. We've all heard about the town meetings that have been held to fight Wal-Mart from coming to towns, and also all the heart breaking stories of mom and pop stores with great history going broke in a matter of months because of Wal-Mart. It's tiring to hear how bad Wal-Mart is. This is nothing more than the growing pains of economic progression. We are not forced to do business with Wal-Mart; we go there willingly because we get more "bang for the buck". It won't be long until we see another "Wal-Mart like" corporation come up the ranks to provide something better to the consumer. It's just economic progression! We're all better off in the end because of it!
Women Beware: Gold Diggers Afoot!
I could see it coming like another Patriots super bowl victory. Times are changing and the days of chivalry are all but gone. Women are dominating every facet of life. Professions, positions, and programs that were once only had by men, are now being occupied by women. There is now a majority of women in graduate school and professional jobs. Some say that the tides are changing. But with this recent shift in gender power, women now are seeing the whole scope of worries that come with this increased economical benefit, Gold Diggers! It use to be a worry that a only successful men would have. Now women have to ask themselves, 'Is he just after me for my money?'. Studies show an all time high of stay-at-home fathers. Women are out bring home the bread, as men stay at home and take care of the homestead and children. I hate to steal a line from Spiderman, but does the phrase 'where much is given, much is expected' even relate? Should women, or anybody for that matter, have to be concerned about 'Gold Diggers'? Are women ready for all that comes with being successful, eventhough it may be unfair in either case?
1/28/2005
DayLight Savings Time
In the article "Spring Forward, Fall Back: Its all about Economics" the athor talks about the economics of DayLight Savings time, and how there is a 10% decrease in energy consumption during that time of year. So I suggest that we stay on daylight savings time year round, I dont know that if the energy savings would remain the same throughout the year, but I know that I for one am sick of the time changes. I say we pick one and stick with it, personally I prefer DayLight Savings Time.
It seems to me that during the winter that it gets dark way to early, and that forces my son to come in from playing and he just bounces off the walls. I think it would be better to have an hour more daylight in the evening than in the morning.
It seems to me that during the winter that it gets dark way to early, and that forces my son to come in from playing and he just bounces off the walls. I think it would be better to have an hour more daylight in the evening than in the morning.
Big Willie's New Gig
Country Music singer Willie Nelson has a new gig and its all about selling to the big rigs, and hopefully the rest of the country. Nelson’s new business venture is about biodiesel. His interest in the newly emerging fuel mixture was piqued when his wife bought a vehicle that ran on biodiesel. When Nelson looked into the new fuel he thought this could be the future. He started the whole project by joining forces with three other businessmen. They started marketing this new fuel to truck stops. It is essentially a mixture of soybean oil and normal diesel fuel. The great thing is that it can be burned in any diesel engine with absolutely no modifications. Willie hopes to get the fuel out to the public as a better alternative to regular diesel, since biodiesel burns much cleaner.
The economic benefit that this could have in the future is amazing in my opinion. Biodiesel opens up vast opportunities of new markets for farmers in soybean country. This is just the tip of the iceberg. Future research could even further refine biodiesels’ capabilities, and someday may even prove to be a much preferred alternative to gasoline. The crucial phase of this new fuel is in its infancy, and that is the task of bringing it to the attention of the public. Even better would be to get the support of large oil carries to refine and distribute biodiesel. Anyway you look at it Willie is on the road again, only this time he is burning biodiesel instead of gas.
The economic benefit that this could have in the future is amazing in my opinion. Biodiesel opens up vast opportunities of new markets for farmers in soybean country. This is just the tip of the iceberg. Future research could even further refine biodiesels’ capabilities, and someday may even prove to be a much preferred alternative to gasoline. The crucial phase of this new fuel is in its infancy, and that is the task of bringing it to the attention of the public. Even better would be to get the support of large oil carries to refine and distribute biodiesel. Anyway you look at it Willie is on the road again, only this time he is burning biodiesel instead of gas.
Why be on time?
In the article “Punctuality is inefficient, Q.E.D.” by Andrew Chamberlain, it brings out the point of how people set a time and place to meet and invariably one or both parties are late in accordance to the time set pervious. Why does showing up late happen so much in society these days? As was pointed out in the article it’s because no one wants to wait and it’s costly if you look at it in economical terms.
The more time you spend waiting on someone the more costly it is too you which is a negative externality. If someone shows up early and the other person is late then it’s even more costly for the early person. Arrival times can be thought of as economical cost factor and the price changes with the arrival time. People hate their time being wasted so the end solution is to show up late and it will not be their time and money being waited.
If one has a time deadline that has to be meet then a good idea would be tell everyone an earlier time therefore, when they are late they really will be one time. An example of this would be you having a dinner at 7:00 p.m. and telling everyone it’s at 6:30 p.m. This way when everyone shows up late, the dinner still will start on time.
http://the-idea-shop.com/
The more time you spend waiting on someone the more costly it is too you which is a negative externality. If someone shows up early and the other person is late then it’s even more costly for the early person. Arrival times can be thought of as economical cost factor and the price changes with the arrival time. People hate their time being wasted so the end solution is to show up late and it will not be their time and money being waited.
If one has a time deadline that has to be meet then a good idea would be tell everyone an earlier time therefore, when they are late they really will be one time. An example of this would be you having a dinner at 7:00 p.m. and telling everyone it’s at 6:30 p.m. This way when everyone shows up late, the dinner still will start on time.
http://the-idea-shop.com/
Is Our Food Storage's Hiking Up Food Prices?
For longer than I have been alive, there has been an issuing for people to get some sort of food storage in case of an emergency. I am not saying that it is not a good idea to have food storage; it’s just that some people that store food might not ever be able to use it in some cases of disaster. Let’s look at a perfect example, St. George, Utah. Flood victims lost more than just personal items; some lost their food storage.
Buying goods is a normal action people interact with day-by-day. The demand of a good becomes sensitive when people buy a lot of that particular good. So, if people only bought what they needed instead of buying more, would the elastic price of a popular item become less sensitive from lack of demand?
In my personal opinion, the buying power people have today will only become better. In other words just because people may buy a lot of one particular good, does not mean stores will increase the price to make a higher profit. When I say that our buying power will only become better, I mean that through technology we [the world] will find new ways to produce goods at a faster rate and less expensive for the consumer. The more we as consumers buy, the more the world will produce, and the more we will help the economy as a whole.
Buying goods is a normal action people interact with day-by-day. The demand of a good becomes sensitive when people buy a lot of that particular good. So, if people only bought what they needed instead of buying more, would the elastic price of a popular item become less sensitive from lack of demand?
In my personal opinion, the buying power people have today will only become better. In other words just because people may buy a lot of one particular good, does not mean stores will increase the price to make a higher profit. When I say that our buying power will only become better, I mean that through technology we [the world] will find new ways to produce goods at a faster rate and less expensive for the consumer. The more we as consumers buy, the more the world will produce, and the more we will help the economy as a whole.
Growth in Saint George, UT
It has been projected that Saint George will continue to grow at a rate of 3.9% each year. According to an article by the Spectrum, at this rate the population will reach 607,000 by the year 2050. The population is currently about 120,000. This projection seems way too high for me. Saint George is growing, it's true, but its a retirement community. There are currently over 1200 practicing real estate agents eager to help retirees settle down in this relatively quite, little community. There are five golf courses and dozens of retirement communities. The problem lies in the business infrastructure. The organization which employees the most people in Washington County is the school district. The city is building a new offramp and preparing to build an airport in an attempt to attract larger businesses to the area. Do you think this is going to help, or will Saint George always be for the non-working class?
Is the U.S. the greatest threat to the world economy?
In this article, by Adam Davidson, the United Nations warn that the greatest threat to the world economy comes from the United States. Even though the global economy grew by 4 percent in 2004, the largest increase in years, the U.S. economy could cause an abrupt and globally damaging correction.
There are many reasons for the U.S. to be in this position, namely the huge tax deficit, which exceeded 600 billion dollars in 2004, the largest in history. Next, is the increasing Government debt that also reached record highs last year. Finally, we have the ever weakening U.S. dollar. This was the meat of the article. It stated the U.S. dollar is the primary reserve currency for most foreign countries. This is a concern because when the dollar is weak; all countries that rely on it will have less money to spend. The article goes on to state the treasury will ask for help from European and Japanese leaders to strengthen the dollar.
I agree with the European bankers when they remarked that the U.S. Government should help itself by encouraging savings and reducing the nation’s debt.
http://www.npr.org/templates/story/story.php?storyId=4467938
There are many reasons for the U.S. to be in this position, namely the huge tax deficit, which exceeded 600 billion dollars in 2004, the largest in history. Next, is the increasing Government debt that also reached record highs last year. Finally, we have the ever weakening U.S. dollar. This was the meat of the article. It stated the U.S. dollar is the primary reserve currency for most foreign countries. This is a concern because when the dollar is weak; all countries that rely on it will have less money to spend. The article goes on to state the treasury will ask for help from European and Japanese leaders to strengthen the dollar.
I agree with the European bankers when they remarked that the U.S. Government should help itself by encouraging savings and reducing the nation’s debt.
http://www.npr.org/templates/story/story.php?storyId=4467938
1/27/2005
The Aging Population
All around the world a big percentage of the workers is reaching retirement age, and there are less people to fill the jobs as they become open. A few of the articles that I read suggest that because of the decline in the number of workers, the world's economy is going to decline. In an article titled "Productivity Can Make Up the Gap" http://yahoo.businessweek.com/magazine/content/05_05/b3918035.htm
the authors suggest that just because there is a declining number of workers, the world's economy can still grow. According to the acticle the average productivity in Japan, per worker, has increased 2% each year since 1980. If the trend continues productivity will rise 169% by 2050, raising Japan's GDP by 72%. I would tend to agree with the latter article, if countries can increase productivity then the world's economy will continue to grow steadily, even with fewer workers. For productivity to increase countries needs to provide education and encourage innovation.
the authors suggest that just because there is a declining number of workers, the world's economy can still grow. According to the acticle the average productivity in Japan, per worker, has increased 2% each year since 1980. If the trend continues productivity will rise 169% by 2050, raising Japan's GDP by 72%. I would tend to agree with the latter article, if countries can increase productivity then the world's economy will continue to grow steadily, even with fewer workers. For productivity to increase countries needs to provide education and encourage innovation.
Is the Dividend Tax Cut really worth it?
In the article, "The Dividend Tax Cut and Interest Rates", by Mike Moffatt, an interesting point of view is brought to light.(http://economics.about.com/cs/interestrates/l/aa012303a.htm The article talks about President Bush's proposed dividend tax cut which will allow us, as taxpayers, a brake or cut in our amount of taxes that we have to pay in dividends. Normally, dividends are treated the same as income we normally earn, but with Bush's proposed plan those dividends would become tax exempt-we wouldn't have to pay on them anymore. But, do we really understand the effect this will have on other aspects, namely bonds and interest rates? As stated in the article, one of the unintended consequences with the dividend tax cut will be a rise in interest rates in the future. Now I don't know about you, but if you are planning on buying a home or car in the future, that isn't real good news. A lot of hardcore studies haven't been done on just how much this will effect the interest rates, but rest assured that they will be affected. It's hard to say which would be better-no dividend tax, or higher interest rates? I guess it all depends on what boat you're riding in.
Why should the rich get tax breaks?
In this election year you heard one side blaming the other side about giving tax breaks to the rich and not caring about the middle class. Why would you give tax breaks to the rich? First the top 50 percent of wage earners are paying 96.03 percent of all taxes. The top five percent of wage earners pay 53.25 percent of all taxes. If the lower 50 percent of wage earners aren't paying taxes, how can you give them tax breaks? Maybe this was an election ploy by one side to get votes. Another reason is that the top 50 percent are your entrepreneurs and businessmen who create wealth to the economy when they get some extra cash. That is the biggest reason why we give tax breaks to the rich. The rich do something productive when extra money comes their way, they don't blow it.
http://www.rushlimbaugh.com/home/menu/top_50__of_wage_earners_pay_96_09__of_income_taxes.guest.html
http://www.rushlimbaugh.com/home/menu/top_50__of_wage_earners_pay_96_09__of_income_taxes.guest.html
Baseball
In this article, by Mike Moffatt, he gives a scenario on baseball and opportunity cost. He believes that baseball fans do not know the concept and just play off of their emotions when a team doesn't sign a certain player. Moffatt gives a scenario that the Totonto Blue Jays had to make in the 2002 season. I think Moffatt doesn't understand opportunity cost. The Blue Jays choice was to pick between Jose Cruz Jr. and five minor league players or sign six average baseball players. Moffatt chose the six average players. The Blue Jays also went with the six players. I think they should of signed Jose Cruz Jr. an emerging young player at the time. That would have given the Blue Jays the opportunity to develop their thriving farm system. Farm system is the minor leagues, by the way. The cost of losing a star player at the time is a bigger cost than not being able to sign six average players and be an average team due to that. Tell me what you think.
http://economics.about.com/cs/sportseconomics/l/aa021903a.htm
http://economics.about.com/cs/sportseconomics/l/aa021903a.htm
1/24/2005
Is the Cost of Getting a Degree Killing You?
If you are like me, the cost of your college degree is probably mounting up. College loans and credit card debt are quickly making Americas young adults the most indebted generation ever. We have all heard our parents and grandparents say “get a good education and you will get a good job” Once you get that well paying career off the ground your problems are all over right? Wrong! Your problems are just starting. Payment of student loans starts, credit card interest haunts you daily, and now you need a car to get to work since you can’t walk to the school anymore. During the 1990s, college costs soared by an average of 38%. To make matters worse the costs of rent and housing prices have increased faster than inflation over the past decade. Does this mean we must enslave ourselves to massive amounts of debt, to get a beginning salary that barely pays all of the bills? The sad but all too real story for some students comes in the way of a trade off. Some students decide to quite while they are ahead by dropping out of school before they finish, getting an early start on the debt they have already amassed. Others choose not to attend a college or university altogether to avoid the pain and suffering. And then there is the die hard student who tries to work 60 hours a week, while going to school full time to avoid debt altogether, and in the process becomes a social recluse. Any way you look at the challenge of getting a good education, there are definite economic trade-offs that we must all consider. So what do you think? Should we amass debt to get a good education a hope that we can pay for it when we finally get a job? Or should we try another more effective alternative? Help me out here.
1/22/2005
Deflation
(This is a post by Dale that I had to cut and paste here due to technical difficulties.)
Is deflation knocking at the door? The Federal Reserve's now have major decisions to make about the deflation threat. Deflation means a general decline of prices. This has not happened since the Great Depression. Before deflation was just a topic of from history, but now it is becoming something to worry about.
Deflation is an issue concerning supply and demand. By having too much supply and too little demand is where lies the problem prices decline at a fast rate. Compaines will struggle trying to out price competition. In such a battle consumers will react at a much slower pace, waiting for the lowest price possible. Meanwhile, consumers are not stimulated to buy, which will cause a major disaster in the economy.
Despite the positive outlook for the economy, deflation poses great dangers of destroying corporate profits, hurting the stock makret, and pressuring companies to fire workers. Interest rates could be lowered overnight, making it harder for the Ederal Reserve's to stimulate the economy. Farmers and compnaies, more than likely, will default on loans which are fixed while the prices they receive fall.
This article found at www.washingtonpost.com concludes that deflation may require bigger deficits and lower interest rates. Just when America is already full of deficits, this could become a bigger problem.
Is deflation knocking at the door? The Federal Reserve's now have major decisions to make about the deflation threat. Deflation means a general decline of prices. This has not happened since the Great Depression. Before deflation was just a topic of from history, but now it is becoming something to worry about.
Deflation is an issue concerning supply and demand. By having too much supply and too little demand is where lies the problem prices decline at a fast rate. Compaines will struggle trying to out price competition. In such a battle consumers will react at a much slower pace, waiting for the lowest price possible. Meanwhile, consumers are not stimulated to buy, which will cause a major disaster in the economy.
Despite the positive outlook for the economy, deflation poses great dangers of destroying corporate profits, hurting the stock makret, and pressuring companies to fire workers. Interest rates could be lowered overnight, making it harder for the Ederal Reserve's to stimulate the economy. Farmers and compnaies, more than likely, will default on loans which are fixed while the prices they receive fall.
This article found at www.washingtonpost.com concludes that deflation may require bigger deficits and lower interest rates. Just when America is already full of deficits, this could become a bigger problem.
Yellow Ribbons Everywhere
In the article “Bumper to Bumper” by Giddings, he comments on the wide use of ribbons on vehicles. Giddings refers to another article “Consumed” by Rob Walker; Walker believes that the ribbons make a declaration about what kind of person has a ribbon on their car. So who cares if your yellow ribbon says that you support our troops. Could it be that those who ride around with their magnetic bows on their cars are saying “I have a husband, wife, son, daughter or a family member who is out there protecting yours and my freedom.
The real economics behind this “yellow ribbon magnet” affair is that someone came up with the idea that a yellow ribbon symbolizes our support for the troops and created a demand for it. This demand is making money for several companies. These five dollar “hot” items have made both consumers and business people alike happy. Isn’t that how our economy should be? It’s not a matter of a particular statement a person it trying to make. It’s about capitalizing off of something the public wants.
The real economics behind this “yellow ribbon magnet” affair is that someone came up with the idea that a yellow ribbon symbolizes our support for the troops and created a demand for it. This demand is making money for several companies. These five dollar “hot” items have made both consumers and business people alike happy. Isn’t that how our economy should be? It’s not a matter of a particular statement a person it trying to make. It’s about capitalizing off of something the public wants.
1/21/2005
The Stock Market Is Falling Again
"The Dow Jones industrial average fell 68.50 to 10,47147" stated the Seattle Time's Michael J. Martinez. This is something that no investor wants to here. The Stock Market has been falling for the past several months. In the article Nervous investors push stocks lower http://seattletimes.nwsource.com/html/businesstechnology/2002156407_stox21.html, Martinez tells of how there are many companies that have not meet their projected earnings for the fourth quarter and are now lowering there projected earnings for this next quarter.
Martinez quotes Rod Smyth, from Wachovia Securities the chief investment strategist saying, "We're in a correction right now from the rise we saw since mid-October. It's perfectly natural for markets to behave this way." But what I want to know is this really normal? Could the online traders have an effect on the way the market fluctuates with extreme ups and down? I think the ups and downs come from the ability of anyone to buy and sell so easily.
Martinez quotes Rod Smyth, from Wachovia Securities the chief investment strategist saying, "We're in a correction right now from the rise we saw since mid-October. It's perfectly natural for markets to behave this way." But what I want to know is this really normal? Could the online traders have an effect on the way the market fluctuates with extreme ups and down? I think the ups and downs come from the ability of anyone to buy and sell so easily.
1/19/2005
Does Wall Street Care About Economics?
It is a common occurrence that when a publicly traded company announces plans to acquire another publicly traded company the “value” of the acquiring company decreases, while the value of the company to be acquired increases. For example, when Oracle Corporation announced its proposed acquisition/hostile takeover of PeopleSoft, the value of Oracle’s stock steadily declined for the nearly 18 month battle while PeopleSoft stock rose $5.1 billion! This seems to occur in spite of whether investors and analysts believe the acquisition will be profitable to the expanded company or not. It is understandable why the public would invest in the company to be acquired- they will usually be paid a premium for their shares. What I question is why the public would believe the acquiring company is so much more worthless because it is venturing to expand. It seems that Wall Street must believe that the economies of scale have reached a saturation point. Of course, there are inherent risks when a large purchase is made. The integration may not be smooth, but in the long run why would the public believe that expansion is devaluing?
1/18/2005
Is There a Light at the End of the Tunnel for Tsunami Hit Economies?
As the tsunami death toll rises past 162,000 and over 800,000 people being displaced from their homes (ABC News) economists say the tsunami may have a relatively marginal economic impact. In the economies of Sri Lanka, Indonesia, India, Thailand, and the other affected countries, tourism and fishing make up only a small percentage of the overall economy. Even as it has destroyed the livelihoods of millions of families in South Asia, the tsunami will shave only a few points off the region’s economic growth this year. Depending on the importance of tourism in each country, the decrease is expected to range from less than one percent for Thailand, to two percent for Sri Lanka, and four percent for the Maldives, according to estimates by Standard Chartered Bank.
These countries economies are based on other factors such as agriculture, clothing factories, gas production, and many others economic factors besides fishing and tourism. In Aceh Indonesia, the tsunami apparently did not damage the region’s most lucrative properties of oil and gas production facilities. Most of Aceh’s population depends on agriculture for their livelihoods such as rice, peanuts, soybeans, maize, cassava, and potatoes. It is unclear how much agricultural land was flooded by the tsunami, but it wasn’t hit as hard as the fishing and tourism industry. Sri Lanka’s economy, which is still heavily agricultural, with tea, rubber, and coconuts, was not hit by the tsunami. Sri Lanka also has many garment factories that supply stores like Victoria’s Secret which employ, directly and indirectly, close to one million people. None of these companies have been affected by the tsunami. Also, many economists are predicting that there will be a surge in the construction industry and the production of raw materials such as cement and steel, because of the rebuilding that will take place.
Yes, the tsunami may be one of the world’s largest human disasters ever, but it may be just a small wave to the economies in the South Asian countries.
These countries economies are based on other factors such as agriculture, clothing factories, gas production, and many others economic factors besides fishing and tourism. In Aceh Indonesia, the tsunami apparently did not damage the region’s most lucrative properties of oil and gas production facilities. Most of Aceh’s population depends on agriculture for their livelihoods such as rice, peanuts, soybeans, maize, cassava, and potatoes. It is unclear how much agricultural land was flooded by the tsunami, but it wasn’t hit as hard as the fishing and tourism industry. Sri Lanka’s economy, which is still heavily agricultural, with tea, rubber, and coconuts, was not hit by the tsunami. Sri Lanka also has many garment factories that supply stores like Victoria’s Secret which employ, directly and indirectly, close to one million people. None of these companies have been affected by the tsunami. Also, many economists are predicting that there will be a surge in the construction industry and the production of raw materials such as cement and steel, because of the rebuilding that will take place.
Yes, the tsunami may be one of the world’s largest human disasters ever, but it may be just a small wave to the economies in the South Asian countries.
1/12/2005
Gov’t Grants Business Immortality
Why is the government handing out money through subsidies and regulations to preserve dying industries? The living and progressing industries are forced constantly to pay taxes, which keep dying industries alive. As Hayek, in the book “Economics in One Lesson" illustrates, do we keep the ‘horse and buggy’ industry alive because it is dying or do we support the growth of motorized vehicles? Perhaps many of the loans and help granted to such dying industries are because of special interests and the “good ol’ boy” attitude towards friends in high places.
Not only does the practice of subsidizing and regulating some industries promote “keeping the dead alive” but it prevents competition which can and will hurt consumers in the long run. The article "The Price of Deregulation: Subsidies" explains what happens in the long run when subsidies and regulations are taken away. “Just between 1976 and 1990 the estimated savings from deregulation were $5 billion to $10 billion per year (in the airlines industry). Taking the low estimate, that’s $70 billion in savings over just 14 years—and that’s just lower ticket prices. Add in better routes, safety, customer service, innovation, and 14 more years of low prices to the present, and that total’s much larger.”
It’s time to start deregulating and let the ‘horse and buggy’ industries die away. Sure, it will hurt in the short run but it will benefit us all greatly in the long run.
Not only does the practice of subsidizing and regulating some industries promote “keeping the dead alive” but it prevents competition which can and will hurt consumers in the long run. The article "The Price of Deregulation: Subsidies" explains what happens in the long run when subsidies and regulations are taken away. “Just between 1976 and 1990 the estimated savings from deregulation were $5 billion to $10 billion per year (in the airlines industry). Taking the low estimate, that’s $70 billion in savings over just 14 years—and that’s just lower ticket prices. Add in better routes, safety, customer service, innovation, and 14 more years of low prices to the present, and that total’s much larger.”
It’s time to start deregulating and let the ‘horse and buggy’ industries die away. Sure, it will hurt in the short run but it will benefit us all greatly in the long run.
12/09/2004
Insurance For the Season Pass Holder
I removed the link to this article (http://www.msnbc.msn.com/id/6667060/) from the title because it was goofing up the overall look of the blog. DT 1/12/05
Recently, National Union Fire Insurance Co. of Pittsburgh brought the idea of insuring against the risk of injury on ski resorts, and the implications created by injury. Unlike most common insurance packages, this new policy covers the loss of season pass capacity. Most season passes cost upward of a thousand dollars. Historically, resort patrons ski and snowboard on parts of the mountain before enough snow has accumulated to cover dangerous hazards. The dangerous conditions often lead to injury. Sometimes, the injury sustained early in winter causes total loss of season pass holders. To remedy the injured pass holder, National Union Fire Insurance has developed an insurance package that covers the loss of a season pass as well as other medical expenses as a result of injury. Incidently the service of indemnifiying someone for a lost season pass is big news, and the source of big time revenue. NUFI has found a niche that is willing to pay for coverage. NUFI got a jump start on a market with high demand. Luckily for NUFI there is a limited number of companies who offer any kind of risk coverage to skiers. The market is an oligopoly. NUFI really cornered the market by offering a product that no other company has. Profit taking is being had right now. Most likely these short term profits and higher premiums will quickly start seeing Cournot model type results as competition stiffens.
Recently, National Union Fire Insurance Co. of Pittsburgh brought the idea of insuring against the risk of injury on ski resorts, and the implications created by injury. Unlike most common insurance packages, this new policy covers the loss of season pass capacity. Most season passes cost upward of a thousand dollars. Historically, resort patrons ski and snowboard on parts of the mountain before enough snow has accumulated to cover dangerous hazards. The dangerous conditions often lead to injury. Sometimes, the injury sustained early in winter causes total loss of season pass holders. To remedy the injured pass holder, National Union Fire Insurance has developed an insurance package that covers the loss of a season pass as well as other medical expenses as a result of injury. Incidently the service of indemnifiying someone for a lost season pass is big news, and the source of big time revenue. NUFI has found a niche that is willing to pay for coverage. NUFI got a jump start on a market with high demand. Luckily for NUFI there is a limited number of companies who offer any kind of risk coverage to skiers. The market is an oligopoly. NUFI really cornered the market by offering a product that no other company has. Profit taking is being had right now. Most likely these short term profits and higher premiums will quickly start seeing Cournot model type results as competition stiffens.
12/08/2004
Lisa's 12/1 Post
That post is broken - it doesn't seem to be allowing comments.
Anyway, I think Wal-Mart learned this Thanksgiving that their demand is more elastic than they thought it was. Someone probably ought to be fired for that blunder: isn't the whole point of Wal-Mart to demonstrate that everyone else's demand isn't as elastic as they thought?
Anyway, I think Wal-Mart learned this Thanksgiving that their demand is more elastic than they thought it was. Someone probably ought to be fired for that blunder: isn't the whole point of Wal-Mart to demonstrate that everyone else's demand isn't as elastic as they thought?
12/06/2004
Monster Burger Is Big Media Talk
There has been a bigger, better, tastier, and more filling burger created in the market place. This burger is huge! As health conscience media and public list concerns over this 1400 plus calorie monster; many burger patrons are finding an answer to their appetite. The “Monster Thickburger” is a double decked burger consisting of bacon cheese butter and other rich in fat amenities. The market strategy for this is reaching those who demand a burger with a more saturated flavor. The strategy thus far is working. Some economist feel that this burger is nothing more then the practice of using excess capacity and inventories to reach those who demand a lot for a low price. There is one who thinks the Angus beef is possibly supplied by an excess of beef supply that is closely reaching expiration dates. The food is then sent to restaurants that have excess capacity; they then treat the meat and resell it at a lower price then it would other wise be sold. The price of the Monster Burger is much higher then an average burger. Thus, the burger is just about reaching a sale that almost generates an almost equal marginal revenue and marginal cost maximizing profits.
Goliath vs. Goliath
It is an oligopoly. Yahoo and Google share 92% of the search engine market. These two companies would seem to have a strong rivalry between the two of them. This is far from the truth. The strategies of Yahoo are night and day and still they somehow are able to compromise to use ideas from each other to better serve their companies. Google encourages their employees to spend a fifth of their work day on crafty innovations to try and find ways to incorporate them into the Google production cycle. Yahoo mainly depends on research and development to innovate new technologies then using other company resources to implement them into the daily framework. The companies also seem to have a common understanding to not compete one against the other but almost create a collusion to help create a larger demand for their product.
Alan Greenspan
With Alan Greenspan being forced to retire in 2006 it will be interesting to see who President Bush puts in his place. Greenspan is a legend, having been at the federal reserve for almost 18 years. It is said that there may be two candidates: Martin S. Feldstein and R. Glenn Hubbard. Feldstein may have a tendency to butt heads with Bush and is said may not be the one to take Greenspan's place. Hubbard worked with Bush before and may be more likely but only time will tell. Greenspan's place will be a hard one to take over. Greenspan has had his own unique risk management method of getting things done. The way he does things cannot just be picked up by the next person to come in. Greenspan is almost a one man show but it will not work that way for the next person. Greenspan has been really good for the United States' economy. Who knows where the nation would be economically if he was not in charge of the Fed. The Fed is more open since Greenspan has been there and the whole structure of the Fed has changed. It will be an economic shock when Greenspan has to leave the Fed.
Airlines Hit Again
It is reported again that Continental Airlines, Pan American World Airways and Eastern are looking at strikes from its employees. Employees feel that because these airlines are either bankrupt or on the verge that their jobs are in jeopardy. It is said that they will not be able to strike because the union does not allow strikes while they are on the contract. Employees say they will strike anyway and that they have a right to walk out on the airlines if something does not happen to them to their advantage. I wonder what would happen to flights if the employees went on strike. It would be interesting to see.
This is not the only thing affecting airlines. There are also rising fuel prices. With jet fuel prices rising 74 percent within the last year, airlines are not sure what will happen to its revenue. Southwest Airlines however are doing really well and are taking the place of many of the airlines. What is happening to the airlines?
This is not the only thing affecting airlines. There are also rising fuel prices. With jet fuel prices rising 74 percent within the last year, airlines are not sure what will happen to its revenue. Southwest Airlines however are doing really well and are taking the place of many of the airlines. What is happening to the airlines?
12/05/2004
You Can Buy Anything on EBAY
When an article in the Spectrum told of a ghost for sale on Ebay, I had to >check it out. The idea of a ghost on Ebay did not surprise me, but amount of the bids did. What’s next?
12/04/2004
"Blogging" was it worth it?
Throughout this class we have created numerous bloggs and comments on individual's bloggs, with the incentive to get extra credit. It is a way we can see the views of our fellow class mates. We can go into real world application of the ideas we learn in our economic class. At least that is what we are suppose to think, right? Does it really help to understand economics or is it a easier way to get an A out of the class. I would have to admit I would not even be making this post unless there was an incentive for me. I need a few extra points.
Is it a good thing for Dr. Tufte to have us do these bloggs? I have heard from numerous people that they don't really care what they get on the aplia assignments. If they do bad they will just do one or two more bloggs and that will make up for any points they missed on the assignment. I admit I would never have read so much about oil prices and how they will effect the economy. Or what the merger between Sears and K-mart will do to the retail industry.
Is it a good thing for Dr. Tufte to have us do these bloggs? I have heard from numerous people that they don't really care what they get on the aplia assignments. If they do bad they will just do one or two more bloggs and that will make up for any points they missed on the assignment. I admit I would never have read so much about oil prices and how they will effect the economy. Or what the merger between Sears and K-mart will do to the retail industry.
Sex Patch Decision could Slow Research
Proctor and Gamble sought allowance of post-marketing trials of the hormone patch Intrinsa, in order to bring the testosterone hormone to market where 3 million women who have had their ovaries removed would be P&G's primary buyers. However a FDA advisory panel, made up primarily of physicians, denied P&G's request citing concerns that in clinical trials cardiovascular safety issues weren't sufficiently tested. This is in part due to a not-for-profit organization's findings that postmenopausal women who take hormones are more likely to develop heart disease -- the number one killer of women in the U.S..
P&G apparently hasn't learned enough from Merck's recent Vioxx woes, if a medicine that turns out to be unsafe goes to market every personal injury lawyer in the nation will soon be filing lawsuits in every state of the nation. Although the potential profits of a drug that can cure sexual dysfunction are great, the potential losses from punitive damage awards could easily be more devastating than the benefits.
P&G needs to be patient and get a safe drug to market and enjoy the fruits with less risk of law suits and health problems for customers.
The article was found at: http://www.cnn.com/2004/HEALTH/conditions/12/03/sexual.disfunction.ap/index.html
P&G apparently hasn't learned enough from Merck's recent Vioxx woes, if a medicine that turns out to be unsafe goes to market every personal injury lawyer in the nation will soon be filing lawsuits in every state of the nation. Although the potential profits of a drug that can cure sexual dysfunction are great, the potential losses from punitive damage awards could easily be more devastating than the benefits.
P&G needs to be patient and get a safe drug to market and enjoy the fruits with less risk of law suits and health problems for customers.
The article was found at: http://www.cnn.com/2004/HEALTH/conditions/12/03/sexual.disfunction.ap/index.html
12/03/2004
Job growth not what predicted, is it really bad?
Every time new job numbers come out there is a negative spin on them. Here is a quote from NBC News that shows my point, “adding just 112,000 new jobs overall in November. It was the weakest gain in five months and about half of what economists had forecast”. Why is this description in the opening paragraph of the story? Why can’t reporters put a positive spin on this and not there normal doom and glum that is ever present in the media. In the same story just further down the page it points out the unemployment rate went down again.
Even though job growth was not what was predicted, any new jobs created is a good thing.
Even though job growth was not what was predicted, any new jobs created is a good thing.
12/02/2004
UPS to pay 100 million dollars for China Deal
On Thursday the United Parcel Service announced that it would acquire operations of a large Chinese firm, SinoTrans. This deal would bring the famous brown clad deliverymen to over 200 cities throughout what could soon be the largest cargo market in the world. Rocketing trade in the recently booming economy is what is driving the need for increased cargo business. UPS said it plans to establish a air hub at Shanghai International by 2007. With parcel traffic out of the company increasing 130%, UPS' increasing presence comes without a moment to spare.
United Parcel, as many other U.S. firms, has seen that as China's Iron Curtain becomes more transparent the need to be a first mover in the world's most populous nation is paramount. For UPS they may be little late as industry leader FedEx has had an established presence in China for some time, and UPS faces an uphill battle in that nation. Nevertheless UPS' move will no doubt prove a positive move for UPS shareholders.
This article was found at: http://money.cnn.com/2004/12/02/news/fortune500/ups_china.reut/index.htm
United Parcel, as many other U.S. firms, has seen that as China's Iron Curtain becomes more transparent the need to be a first mover in the world's most populous nation is paramount. For UPS they may be little late as industry leader FedEx has had an established presence in China for some time, and UPS faces an uphill battle in that nation. Nevertheless UPS' move will no doubt prove a positive move for UPS shareholders.
This article was found at: http://money.cnn.com/2004/12/02/news/fortune500/ups_china.reut/index.htm
Entrepreneurship
Michael Malone, a guest speaker for the MBA program at Oxford School of Business, talked to the students about entrepreneurship. He asked the audience to raise their hands if they considered themselves entrpreneurs. About 200 out of 400 raised their hands. Malone then reported that four years prior only about 20 hands went up in an audience of about 400. What a drastic increase!
More individuals are seeing businesses be successful and want to join in on those profits. However, with so many entrepreneurs desiring to enter the market, demand will decrease within their industry of choice and economic profits will also decrease to zero. But of course, the market will not support this, so some will pull out and profitability will rise again. However, the cycle continues. Others will join the market hoping to find profits and will decrease demand and economic profits. The only companies that are most likely to survive are those with the most capital and equity to sustain them in the long-run.
More individuals are seeing businesses be successful and want to join in on those profits. However, with so many entrepreneurs desiring to enter the market, demand will decrease within their industry of choice and economic profits will also decrease to zero. But of course, the market will not support this, so some will pull out and profitability will rise again. However, the cycle continues. Others will join the market hoping to find profits and will decrease demand and economic profits. The only companies that are most likely to survive are those with the most capital and equity to sustain them in the long-run.
Cell Power
I have been thinking about buying a new computer, but I ran across this article that makes me believe that if I were to buy something now, it will be obsolete in about a year and a half! IBM, Sony Corp. and Toshiba Corp. have been working in secret to produce the powerful new “Cell” processor. Cell will be ten times more powerful than conventional chips and be able to shepherd large chunks of data over broadband networks. The three corporations are currently investing billions of dollars to develop and prepare for mass production of Cell. The COO of Sony said that “current PC architecture is nearing its limits.” Toshiba and Sony are both releasing new Cell powered TV’s in 2006, and the next generation PlayStations will be using the microchip. All of the technical details will be revealed in February.
This is awesome for technology, but what about those of us who can’t afford to keep up all the time?
This is awesome for technology, but what about those of us who can’t afford to keep up all the time?
12/01/2004
The Federal Government Is Gambling With Our Lives
Due to the lack of funds, scheduled testing on the casks used to transport nuclear waste will not be performed. But even without the testing, the federal Nuclear Regulatory Commission has approved the casks. An estimated 3,000 tons of nuclear waste a year will pass through 45 states in its way to Yucca Mountain in Nevada.
The actions of the Nuclear Regulatory Commission are nothing less than gambling with the lives of more than 11 million U.S. citizens.
The actions of the Nuclear Regulatory Commission are nothing less than gambling with the lives of more than 11 million U.S. citizens.
11/30/2004
Holiday Sales
This christmas it will be interesting to see what kind of sales will take place. Just with Thanksgiving sales the retailers did not get enough sales. In an article on MSNBC it talks about how well retailers did for the two days following thanksgiving. Companies such as JC Penny's, Sears, and Roebuck and Co did really well in its sales. The one company that did not do well was Wal Mart. It was said that because Wal Mart did not lower its sales enough like it did last year it was hurt by low sales on the days following thanksgiving. Most sales are expected to be online this year. Stores are worried about sales being better than they have been in the past. Will they get better?
11/29/2004
Daylight Saving Time
Daylight Saving Time can be a real pain come April and October of each year. Why do we really have Daylight Saving Time anyways? I've always thought that we could just have one set time that everyone follows. Of Course, my idea would probably cut down on a lot of confusion, but according to a recent article I found on the internet we would miss out on a lot of energy saving opportunities. The article stated that, "one of the biggest reasons we change our clocks during Daylight Saving Time is that it saves energy. Energy use and the demand for electricity for lighting our homes is directly connected to when we go to bed and when we get up." The article also said that on average about, "25 percent of all the electricity we use is for lighting and small appliances, such as TVs, VCRs, and stereos." Therefore if we can cut down on the amount of time we use these types of applicances we can conserve energy, and Daylight Saving Time does that.
I never really realized how much the time of day could affect our energy consumption, but the idea makes a lot of sense. The United States is not the only country that practices Daylight Saving Time either. The Daylight Saving Time concept is one that is practiced worldwide. Some countries begin and end Daylight Saving Time on different months than the United States, but the idea is basically the same. Some countries are even known to adjust their clocks up to two hours forwards or backwards. Sometimes the time changes can be a hassle, but the logic behind this concept is really quite interesting. I highly recommend you read the article that I have hyper-linked to this post.
I never really realized how much the time of day could affect our energy consumption, but the idea makes a lot of sense. The United States is not the only country that practices Daylight Saving Time either. The Daylight Saving Time concept is one that is practiced worldwide. Some countries begin and end Daylight Saving Time on different months than the United States, but the idea is basically the same. Some countries are even known to adjust their clocks up to two hours forwards or backwards. Sometimes the time changes can be a hassle, but the logic behind this concept is really quite interesting. I highly recommend you read the article that I have hyper-linked to this post.
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