Newspaper Update

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

Boo on Southern Utah's local newspaper

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

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

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

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

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

Boo on The Spectrum.

Boo on Southern Utah's local newspaper

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

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

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

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

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

Boo on The Spectrum.

Derivatives adding risk

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

Effects of inflation from globalization

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

Don't Blame the Consumer

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

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

On the Border with Economic Incentives

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

From MySpace to Safer Place

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

High Times for Luxury Watch Makers

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

Blackberry vs. Redberry

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

Asymmetric information

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

America’s Top 10 Private Companies

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

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

Womenomics

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

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

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

Too Many Products?

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

Bush vs. Gasoline vs. American Deaths

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

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

Outsourcing

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

Global Warming, The Result of Cleaner Air?

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

Who Says A Name Is Just A Name?

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

Hugo Chavez, Venezuelan President

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

Federal deficit, a record for March

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