Inflation.

http://http://dallasfed.org/news/speeches/fisher/2006/fs061219.cfm
Inflation is going to continue to hurt the economy. Inflation can hurt the us economy far more then the housing market. Interest have not been raised for fear of the impact on the housing market. The housing market was inflated and has to come back down.
Inflation can kill the us economy if nothing is done. The US needs to do something within the country (raise interest rates). To try a help the economy with promoting trade is a difficult tasks as many times other countries benefit when the dollar declines in value. Their currency rises and increases their wealth with in their country.
If we raise interest rates we can stop this problem before it takes a bigger toll on our economy.
The economy may stay slow now, but will be better as we go forward.

Economic impact of a Draft

As I was browsing through the articles online, I noticed an article written about the draft. I have heard about a draft recently and was interested how this would impact society if a draft was pushed through. The military services would definently decrease and change their bonus programs to get the right personnel in the right job. There would still be certain incentives for joining say the Marines over the Air Force, or vice-versa. Would there be a clause that would allow top athletes to pursue sports related goals, meaning recruitment into either the pro's or a college program? Would there be a clause that allows for religious activities, like a mission? Or, what if a young man is married, is he exempt? There would be a different focus for the young men and women if the draft was passed. The economies around training areas such as Fort Sill, and Fort Bragg would increase dramatically due to the large influx of soldiers.
In closing, other countries have a mandatory service period for all young men, and in some cases women. Would America be better off economically and socially by instituting a mandatory service period rather than a draft?

Microloans

I read an article about microloans in the New York Times. Microloans are a hot new topic in economics that allow people in les developed countries to get loans. Typically it is hard to get a loan in these countries because property ownership rights are shady, thus banks don't have very good collateral. Microloans work by using social pressure as a replacement of collateral enabling them to get a loan.

My concern is that the level of success that microloans have will vary greatly on a particular culture. Some cultures are more likely to have social structures that will motivate than others.

Here is the link to the article:

http://www.nytimes.com/2006/08/10/business/worldbusiness/10scene.html?ex=1312862400&en=f61d24534e36d822&ei=5090&partner=rssuserland&emc=rss

The Sky is the Limit?

Recently I have learned that the sky is no longer the limit. Air (space) is being traded between large companies in New York City. The space above skyscrapers is limited, so particular restrictions have been placed on the height of buildings in that area. Also, with regards also to the pollution rights that are being traded, there is money to be made and lost in new markets. My economic take is that these rights, which on the surface appear to be different, are actually a good thing. I would just like to make one point on the particular subject of selling rights, more especially for small businesses who are barely making it. One example that I read, was a small business who was asked to cut back it's level of pollution production by X amount over the next couple of years. In order to meet these demands the small company will need to invest a large amount of money in scrubbers that will clean up the pollution being released by the company. It could not afford this type of investment on its own; however, because it had extra pollution credits it was able to sell these credits to a larger company that needed more pollution rights. I see these markets as helping the smaller businesses to become more competitive. It helps in this way, to level the playing field a little more and offer more investment opportunities to these smaller companies who would not have the opportunity otherwise.

Utah needs a living wage

I have read several articles and blogs concerning minimum wage propositions, both for a minimum wage increase and against it. Both sides of the table have good reasons for their decision. I would like to introduce a living wage increase for Utah. There are several reasons why employees want to make more money. I will only cite a few that I feel are more relevant. First, we want to make more money,whether this increase is for toys, savings, furnishings, education, or clothinng. Second, there is this little thing called inflation that is knocking on the financial door each year. While Governer Huntsman collects his report that says that less only 19,000 employees in the state earn minimum wage, he then discounts the remainder of the report that tells of the many employees that are working within $1 of minimum wage. The link to an article in the Salt Lake Tribune on this report, which is due out tomorrow, is http://www.sltrib.com/news/ci_4823586. When a person starts at minimum wage, thier increase after 90 days, or whatever probation period that the company has set, is very minimal. And lastly, there are many people that need to support families.
As far as being against a mimimum wage increase, there are many good supporting reasons as well.
But rather than argue about the minimum wage, I would like to purpose a living wage for Utah. While we argue that the minimum wage should not be increased, many well trained employees have had to pack up and leave our beautiful state due to wages. Before you say that we do not need them here if they cannot "hang," or that it was something they should have known before arriving here; I would first like to point out that these people were teachers, police officers, and firemen. And that is just to name a few of the occupations that are suffering from lack of sufficient income to live, no survive in Utah. Utah needs to focus on a living wage, an income for public servants that will allow them to survive in our burgeoning metropolis-to be. The proponents are simple, review the cost of living for that demographic area and pay the wage that supports the people there. There will be incrimental differences between those who support themselves, and those who have others who depend on them for their support.
In closing, minimum wage is just that, a minimum that employers should pay. If there are some people that think it is fine where it is, or that we do not require it, try living below that "suggested" hourly amount (without food stamps, medicare, and without living at home under mom and dad's roof). You may change your mind.

Kyoto

I would like to bring up a discussion about the Kyoto Protocol. The Kyoto Protocol is, as you all know, a treaty to combat global warming from greenhouse gases. The main issues behind this protocol is whether or not the U.S. should be more involved with it. Because of the economics of the protocol it has advantages and disadvantages to actively participating.

One disadvantage I see from joining the Kyoto project would be the increase in costs companies would have to bear. These costs would be passed onto the consumer and could be harmful to the economy.

Benefits from joining would be a decrease in greenhouse emissions because companies would strive to be more efficient in order to reduce costs.

I think greenhouse gas emission is a problem and it should be addressed, but at the same time I would be hesitant joining the Kyoto project because it could have implications on the balance of our economy.

Minimum Wage

Since the elections in November and the news of the Democrats taking the majority I have been particularly aware of more news about the raise in the minimum wage. I hear a lot from people that the minimum wage should be increased and that people are getting taken advantage of. On the other side I hear how bad it would hurt business if the minimum wage is increased. I can see valid arguments to both sides.

However in my opinion I believe that the federal government should leave the minimum wage where it is and let the market decide. In fact I belief that is already happening. In a recent article I read it stated that business are moving more towards a bonus oriented form of wage increases. This does a couple things, first it allows business to be more flexible. Instead of increasing the wage a business can simply give monthly bonuses according to how company profits are. The second thing it accomplishes is an alignment of goals between businesses and it's employees. With aligned goals it will motivate employees to work harder so that their company is successful.

I personally fear for a mandated wage increase because our economy is somewhat delicate right now. I don't know if companies would be able to compete as well on the global market if the minimum wage is increased.

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.