On Now We’re just Making Shit Up

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

Organs Anyone? The Case for Legalized Organ Sales

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

Powerset to Take on Google

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

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

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

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

The Price of Low Prices

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

Mattel CEO Pledges to Improve Toy Safety

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

The Way to Prevent the Looming Recession

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

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

The Rising Tide of Corn

This article was published in the Washington Post.

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

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

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

Baby Boomer Versus Generation X

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

Welcome Back!

For Fall 2007 this blog will be displaying the ideas of my MBA managerial economics class from St. George.

I read an article in Business Week about the growth of Google. The article, which you can find HERE, talks about the incredible growth that Google has had and continues to have. They are even outstripping their own projections for growth and are leaving their competition, Yahoo and MSN, far behind. As I read this article I tried to determine which stage of the business cycle Google is in right now. At first glance I had thought that it was in a more mature stage because Google has been around for a long time and has seen tremendous success and should be reaching a point where their growth will start to slow. However, I later decided that it is most definitely in a growth stage. Not just because of the growth they are now seeing, but because they are constantly doing what needs to be done to ensure that their company will not reach a stage of maturity and decline. Specifically, they are outstripping competition because they are being innovative, not because they are just lucky. They are constantly improving their software and adding new features that are appealing to customers. This is very inspiring because when I think of Google, I think of a company that is constantly striving to better meet the needs of its customers. That is a refreshing thing, and definitely a principle that is taking Google to new heights!

Average Americans and Experts Differ

I recently read an article found in Business Week entitled, "The Economy: Why So Gloomy?" The author of the article made the point that many experts of the U.S. economy and the average consumers do not see eye to eye on the current trend. Over the last three months of the year, the market has been a relative rollercoaster, with some very high days and a large amount of extreme low days. People question whether or not we will head into a recession within the next year, and the buzz has touched my interests. I have never lived through a recession that I can remember, but the idea scares me a little. The experts on the market are optimistic in the face of the declining consumer spending that has occured over the past few months. Some people feel that the consumer spending will drop from 3.6% growth from the end of last year to 2.5% growth for the remainder of 2007. This may not sound like much of a decline, but consumer spending accounts for around 70% of total G.D.P. Where is the market going? Are the experts right? Will the economy continue to grow over the next two years or are the scared consumers foretelling the inevitable future? I think that the consumers are trying to see into the future and may be right on this matter. We should probably prepare ourselves for a recession.

Follow-up on Menu Foods

Earlier in the semester I published a post concerning Menu Foods and their recall of approximately 60 million cans of pet food. I was curious what had happened and how the situation was looking for Menu Foods so I decided to follow up on it. They definitely did the right thing on recalling the pet food. Melamine, a fertilizer used in Asia and aminopterin, a rat poison were found in tests done on Menu Food products. As of March 20, 14 pets were declared dead by the FDA because of tainted pet food produced by Menu Foods. The original recall was on March 16. Since then the recall has been expanded twice to cover all of the suspect gluten used in various Menu Foods plants and products. An article in USA Today says that a “clerical error” was to blame for all of the contaminated gluten not being discovered the first time. While Menu Foods appeared to be taking the necessary steps to be socially responsible, they are now facing several law suits because they failed to properly track and record their shipments.

Google buys ad firm DoubleClick for $3.1 billion

I recently read an article about Google acquiring DoubleClick for $3.1 billion in cash. According to the article this purchase is Googles largest purchase yet, which far surpasses its previous largest purchase of the online video company YouTube for $1.65 billion. Googles stock price recently closed at $466.29/share. According to the article Google is planning to pursue acquiring several other companies. My question is; is there any end in sight for Google? They seem to be everywhere and known by everyone. Similar to Wal-Mart, Google has grown so large that I wonder if they will be able to sustain the growth and momentum they have created? What do you think? Do you think that management will be able to create ways of sustaining and maintaining the growth? Do you think that it is possible for a company to become so large that they can no longer sustain or maintain their operations?

Jobs, Not Subprime, Continue To Drive Foreclosure Rates

I recently read an article on Yahoo entitled, “Jobs, Not Subprime, Continue To Drive Foreclosure Rates.” In this article, the author states that California leads the nation in sub-prime loans, yet its foreclosure rate is below the national average. The author of the article suggests that California’s ability to create new jobs is the reason for not having a foreclosure rate similar to or higher than the national average. I find this article very interesting, because there have been many media sources lately that have been blaming home foreclosures on the sub-prime market. In fact, most sub-prime lenders have recently shut their doors because so many of their loans have gone into default. My opinion after reading this article is that sub-prime borrowers are not entirely to blame for loan defaults, but the lack of jobs is the primary reason for foreclosures. Many companies in the United States are moving their operations overseas in an effort to cut costs. In my opinion, I think that this may be the cause of many foreclosures. I think that if we want to keep our economy strong and avoid foreclosures we must continue to create jobs and offer incentives to companies to keep their operations in the United States. What do you think?

Trade Gap Narrows

In the article “Trade gap narrows, but consumers wary” it points out that for the past two months the trade deficit has gone down, but not fast enough for Democrats. Now that Democrats have control of the House and the Senate they plan on increasing tariffs and putting pressure on WTO. I think it is great to try and close the trade gap but I don’t think we should try to limit products that we import, as much as try to increase the amount of valuable products we can produce.

Low saving rate in U.S. seen as danger

A recent article entitled “Low saving rate in U.S. seen as danger” the European Union’s monetary chief said “the United States low savings rate and large budget deficit pose a risk to the global economy”. He went on to say that “the world’s largest economic powers should take advantage of current prosperity to reform their economic policies”. I completely agree with the European Union’s monetary chief’s statement. I think running a deficit should be reserved for recessions. The United States should run a surplus during times of economic growth such as now.

Low U.S. saving rate

A recent article entitled “Low saving rate in U.S. seen as danger” the European Union’s monetary chief said “the United States low savings rate and large budget deficit pose a risk to the global economy”. He went on to say that “the world’s largest economic powers should take advantage of current prosperity to reform their economic policies”. I completely agree with the European Union’s monetary chief’s statement. I think running a deficit should be reserved for recessions. The United States should run a surplus during times of economic growth such as now.

Who is Right: The People or the Professionals?

I just read an article in business week about the economy in the US today. It talked about the direction our economy is moving presently in relation to how it is viewed by the general public. The article stated that most professionals are optimistic about our economic future and feel that the current low unemployment will continue to remain low for a while. The public, however, feel very differently about this. Specifically the lower income segment of the United States, those below $40,000 a year, view our economy much more pessimistically. The article went on to state that often times the public has been right regarding future economic downturns. This makes sense considering that the people who have these feelings about the market are the same people who influence the market through their buying habits. Personally, I agree with the article when it stated that many of these people are pessimistic about the future economy of the US only because it is an uncertainty and they are afraid of that uncertainty. I think that when people don't know the outcome of something they become more afraid in relation to that thing. With this in mind, people are afraid of what the economy might do in the near future because they are not positive of what it will do. I think that if we look at the economy today, it seems to be moving in a very good direction and I, for one, see that as a positive sign that it will continue to be good in the future.

Supreme Court Ruling

As of this month, the Supreme Court has found that the EPA has shirked its responsibility to regulate carbon dioxide emissions from vehicles. The article “Court Turns Up the Heat on Global Warming” states that the Supreme Court has ruled carbon dioxide a pollutant, and as a pollutant, it falls under regulation by the Clean Air Act of 1970. Environmental groups view it as “a crucial step in the path to federal carbon emissions legislation”. It is obvious that consumers that drive vehicles are not paying the full cost of their action, and they are putting a negative externality on society. I argue that this ruling by the Supreme Court could be a step in the right direction.

2008 Fundraising

2008 Fundraising.

A recent article in New York Times dated April 4, 2007, indicated that fundraising was more than four times higher than this same time period in the 2003 political campaigns. “The staggering sums are an indication that the American people want a conversation.” I disagree. Most of the money comes from big businesses who want a politician in their pocket. The majority of the American’s care but not enough to separate cash from their wallets to help the campaign member of their choice. I believe that this is supported by the lack of news the younger generation absorbs (recent reports indicated newspaper sales and T.V. news viewing are down; understandably they may be getting their news from the internet but I could find no statistics to back that claim) and by the numbers at the polls. Also, this same article clearly states that Obama’s money comes from selling a personal story in two best-selling books. This early in the race the different parties just use the amount of money generated to signal to the media that they are more wanted by the American public then the party with lower funds. Which is not necessarily the case, especially this early in the race.