Welcome to Rye Country Day's Economic Blog. Here you will find perspectives by students taking Economics at Rye Country Day School. It is meant to be a forum where students can openly express their ideas and take positions on relevant economic issues. I urge everyone to participate in presenting their own ideas in an open manner so that we can all learn from each other. Regardless of whether you are currently taking Economics, everyone is invited and encouraged to comment on articles and get involved. Feel free to e-mail me, Alex Osborne at alexander_osborne@rcds.rye.ny.us , with comments or suggestions.

Sunday, January 21, 2007

Featured Entry - Dice-K Matsuzaka - Worth $51.5 million? Is anyone?

This week the Boston Red Sox made a big expenditure. How big? $51.5 million! The worst part is that this fee is merely for the rights to talk to Matsuzaka, a Japanese pitcher, about a contract. This price, paid to his team in Japan is just to talk to the young star, not to mention what he will be paid in salary. What price do Americans put at winning? I mean, granted the Red Sox are frustrated after a season of not making the playoffs, finishing third in the AL East, and worst of all yet again inferior to the New York Yankees. But when does the spending end? The U.S. government in my opinion needs to step in and do something. They need to somehow regulate the spending of the Red Sox, Yankees, and other baseball franchises especially when upwards of $50 million will not exchange hands ever again in America. The Red Sox are taking a big risk on an unproven, foreign player with an investment they will doubtfully see ever again. The spending needs to stop. Now this expenditure alone will likely not hurt the U.S. economy but the principle remains as a bad trend has continued of spending U.S. dollars accross U.S. borders. A value rooted in American history of a Protestant work-ethic and putting money back into your community so you can see the benefits has seemed to fade away, at least for now.

-T. A. Canning

Featured Entry - Amazon

Amazon wants to add an online food store to their inventory. By doing so, they will enter in competition with other services such as Pea Pod. However, with Amazons current popularity and American Dependency on the Internet, I think Amazon might actually profit. “Prime” is now a major competitor of Amazon. However, because of “Prime’s” inventory, they are able to ship cheaper, holding the upper hand in control of both company’s profit margins. As a result, Amazon raised prices in order to match “Primes” prices. Amazon also has a huge impact on related industries such as gas, local shops, and public mailing. If Americans are buying everything online, they are depriving the small local businesses. This also means that the gas and travel isn’t necessary. In contrast lower gas usage means that the goods need to find an alternative method of reaching its customers, meaning UPS gets a lot of business, upping the UPS shipping companies.

-Chelsea Gaulin

Featured Entry - Wal-Mart Plans to Test Online Films

Wal-Mart is planning to test, much the way itunes has, the selling of full movies online. The program will be launched next year, and the business plan is pretty fantastic. In order to avoid the extinction of DVD’s, Wal-Mart will have its consumers buy the DVD of any given movie, and charge only a bit extra for online downloading. Essentially, a user who – because we live in a society that demands instant satisfaction – cares to watch a movie can buy a DVD online and pay an extra few dollars to download that same film to his or her personal computer. Wal-Mart is smart to strategize as they have. In doing so, they will protect their own DVD stock, as users will be able to watch the movie right away on a personal computer, but will also be ordering the $10 to $15 DVD, which will be received by mail.
With the exception of launching this new program, hosting films online cost Wal-Mart little extra and is almost certain to generate more revenue. It also helps them to, possibly in the future, phase out some products offered at stores by offering them online instead.

-Matt Shapiro

Featured Entry - Space To Spare

The article in the New York Times is about American self-storage, a storage facility in New York City. The facility has benefited from the recent housing boom, as those moving have been in need of temporary space to store items nonessential to their adjustment to new living conditions. Many people who upgrade move from larger apartments in decent neighborhoods to smaller apartments in better locations. It’s become somewhat of a trend lately, and has allowed for storage companies such as American Self Storage to flourish. However, execs did mention that they have become more cautious. A burst in the real-estate bubble – as has been predicted – could very well topple them. So although American self-storage is expanding, they’re doing so incrementally.
I tend to believe in a more cautious approach. Though hypothetically, now is the time to capitalize on market wealth, it’s also a time to reconsider the market’s stability. It’s a bit of an unhealthy balance at the moment and the American self-storage industry is taking it in stride.

-Matt Shapiro

Featured Entry - How Art Is Maintaining its Value

How is art maintaining its value over time? If, as we assume, new artists boasting considerable talent, conceiving of fine work and applying innovative concepts emerge – perhaps in great clusters – how will the prices of “older” art respond? Will these prices flood the market and lessen the value of art in general or not? How deep are the pockets of this consumer base? Will there continue to be a buyer willing to pay six figures and more for what is, essentially, a useless ornament? I, personally, like the idea of Galenson using statistics to reason how age might correspond with the prices of art. Just as Billy Beane uses stats to build a highly successful baseball franchise, Galenson uses statistics to determine the prices of great masterpieces. Some ask how one can quantify art (the way someone can baseball statistics). However, I believe the art itself and economic aspects of it are two completely different parts.
Just as there are two buyers, one who buys simply to invest and another who appreciates the aesthetics of the piece – are two different lenses through which we can view art. One is aesthetic analysis, and the other is art’s place in an individual’s financial plan, as well as the economy as a whole. It’s bewildering to me how much people spend on art. However it seems a worthwhile investment for some assuming prices continue to rise as they have, and there’s more demand for spectacular old than there is supply.

-Matt Shapiro

Friday, January 19, 2007

Featured Entry - Melé in Miami

I can agree with the belief that emotions and ethics should not get in the way of economic thinking. What I cannot agree with is that the lure of financial gain should not get in the way of moral judgment. After the brawl that took place between Florida International University and Miami University's football teams just over three weeks ago, punishments were not appropriately handed-down. The images of brutality and thug-like behavior on the field should have been enough for Miami's President to harshly punish the team for such conduct. The President should have made a statement and layed down harsh punishments to set a precedent and discourage similar behavior in the future. So why didn't she? Miami has not missed a bowl game in over twenty years. Her thinking was that she was not about to let that streak end now. The lure of that paycheck from sponsers of the bowl game was too much too tempting. Miami depends on that income from bowl games to help its program. Now suspending key players for more than a game would jeopradize their overall record and likely keep them from a good final record and therein bowl eligibility. She missed out on a big opportunity. Those players have not learned a thing from this incident, excuse me, one thing: athletes can get away with anything. Behavior like that can be expected now in future years because no example was set. One losing season back in 2006 then will not seem as bad alternative as what the future holds for Miami's football program.

- T. A. Canning

Thursday, January 18, 2007

Featured Entry - Overpricing Art

As we learned in Mat’s roundtable, people are spending unbelievable amounts of money on art. In class we spent most of the time discussing art’s liquidity, and the idea that it is only taxed once. The major conclusion we came to was that the rich wanted wealth in something other then money in case anything goes wrong with the monetary system, but I have a different idea. Maybe people actually like art. But only the rich have money to buy the expensive art. Also many people enjoy auctions. The commotion of Auctions, and the thrill of so much money makes the art exciting to buy and overpay for. Though I am sure the liquidity of art is maters to many of the buyers, but my two other points must be major contributors to the overpricing of art as well.

-Alex Buckingham

Featured Entry - Over Fishing of Salmon in Russia

The over fishing of salmon near Russia is becoming a serious problem. Fish are being hunted so quickly and effectively that they are unable to spawn at a fast enough rate to maintain the population. The over demand for salmon for an under supply of fish is causing prices to go higher. So how do we solve this problem of over fishing? Tax both the fish, and the licenses needed to fish the salmon. Tax for selling salmon, and then tax buying salmon. Though this would probably hurt the economy and the fisherman, it is important to stop this problem.

-Alex Buckingham

Featured Entry - Wal-Mart in China

Wal-Mart is opening in china. It is competing with one other similar store. At first I thought Wal-Mart would do great. A whole new market with a booming economy, how could they lose? But the general feeling in class was that the difference in values would people wouldn’t buy from a store like Wal-Mart. For instance it is common to go shopping every two days or so, meaning most people probably buy in small amounts. Another problem is that the products wont be that cheap, as they are made in china anyways. However I believe he values of the Chinese people is changing. They are becoming more western every day. However with a communist government, how will they react. Surly they don’t want to be America, and Wal-Mart is about as American as a store can get. Therefore I think Wal-Mart in china will fail.

-Alex Buckingham

Featured Entry - Tivo, the Best Thing to Happen to TV?

On the surface Tivo appears to be on of the best ideas for television in a long time. The customer can record his favorite show and then watch it at a more convenient time and just fast-forward through those borting and time-consuming commercials. Now, as we look deeper into the impact of Tivo on the industry there is a major loser in this new technology. The companies that advertise on television programs can deal with it, they can find other ways to spend their money. The group that will feel the biggest impact of the Tivo phenomenon is the television networks. With Tivo's increasing popularity, networks can no longer demand the same money from companies to advertise on their programs with the knowledge that there is a chance their commercial will not be seen. I think it may be too early to think about price controls. Although this could be a bigger problem in the future, TV networks have two things still working in their favor that will keep them afloat for the time being. At this point, Tivo is not yet in every household in America, most likely due to its price or the reluctance of people to deal with the technology. Secondly, networks have the luxury of charging a lot for advertizing spots on live programs like sports, where Tivo has less benefit. The whole thing has sparked great competition between networks for the big live games because they have become the most sought after shows as people are more likely to be glued to the TV set for three hours. Clearly one side would say no to the question raised by the title, it is like anything where there are two sides to the debate but in this case only one side matters, that of the customer, for they dictate and it's the responsibility of the networks to adjust.

- T. A. Canning

Wednesday, January 17, 2007

Featured Entry - Cheap Sneakers

I lead a discussion on the release of the new Stephon Marbury sneakers and there effects on the sneaker market. These new sneaker are sold for ten to fifteen dollars without tax. The questions I wanted to answer during the discussion were: will they be successful? Will they lower the demand for more expensive products from major companies such as Nike? Can a company make a good profit off the selling of sneakers at a very low price?
After researching the topic I found that the cheap sneakers were in fact very successful within the first month of there release. However, I predict that like any other sneaker the demand will fizzle, maybe even more so for these sneakers because the popularity was due mainly to the price. This sneaker will not have an effect on bigger companies such as Nike, this is because consumers constantly worry about quality and most are fine with buying expensive shoes as long as good quality is ensured. Company profit will be small and there fore it will not match that of a regular priced shoe simply because low pricing limits marketability and makes it a lot harder for the consumer to obtain them due to the fact that the aren’t available in all of the major distributor stores such as Modells.

-Josh Anderson

Featured Entry - Google CEO: Free Cell phones for all if…

I recently read a document about Google CE0 Eric Schmidt and how he predicts that in the near future cell phone prices will be reduced significantly, possibly to the point of being free. Schmidt believes this because of the increase in big business advertising which has taken place over the last few years. This document sites a statistic which says that the average person spends at least 10 hours a week on the phone. Because of this cell phones have become the newest target for the spread of advertising. However, despite all this it will be hard for a phone to become free because the companies that sell them don’t want to lose that profit. I feel that advertising will most likely drop the prices, but not as significantly as people would think. Still any drop in price is a win for the consumer.

-Josh Anderson

Featured Entry - The Rise of Itunes

The impact of Itunes on the music business has been heavily felt. More and more people are flocking to Itunes for easy attainability of the latest music, the lower product prices, and the added bonus features which come along with the music. I can’t remember the last time I actually went to the store and bought a new CD. If I go to a store for music, it’s to buy an Itunes card. These cards allow you to purchase a variety of music rather then be locked into one artist. Albums on Itunes normally cost twelve dollars. This is two dollars less then a store bought CD would cost. This leaves you with three dollars left over on your card which you can use to buy three additional songs or just save for later. The left over credit is exactly what the Itunes Company wants because people will buy more songs then they would if they were to only buy a CD. However, music stores such as Sam Goody suffer greatly from the rising popularity of Itunes. The one in Rye just closed up due to lack of customers. Maybe it wasn’t totally due to the emergence of itunes but that store lost a lot of customer creating a surplus of product, which in turn generates less income for these music companies. Itunes eliminates the middle men which in this case are the Music Stores, creating more profit for the artists and giving the consumers what they want for lower prices.

-Josh Anderson

Tuesday, January 16, 2007

Featured Entry - Physical Education in the School Systems

The roundtable about physical education in schools caused a lot of controversy in the class. I believe this is because the subject involves the role of the government in personal lives. It is fair to assume that most people believe the government can control certain aspects of our lives, but eating and workout habits are very personal. Some argue that obesity puts a strain on the government so they have the right to control it, while others believe that people should be responsible for their own health.
In schools, it is hard to say how physical education should be governmentally controlled. Even adding time to PE classes usually just means more time sitting around in gym class. In order for kids to get a good workout they must continue to be active. The problem then becomes how to regulate the actual activity of the kids during gym class. Although exercise in school is hard to control, eating habits are not. Schools have started to (and should continue to) increase the amount of healthy food in cafeterias. Promotion of healthier foods in schools will definitely help kids become healthier.
The discussion ties into the American value system that we have been discussing in ID. Things that used to be taught at home are now expected to be taught in school. Although schools should require exercise and promote healthy eating habits, I believe it is ultimately the parents’ job to educate their children on health issues.
-Whitney Kamin

Featured Entry - Pop-Tart Problem

This is a perfect example of the butterfly effect right here. It all starts with one price increase, and everything else soon follows suit. But that first change, what triggers it? In this case, the scarcity of fuel. Oil prices go up and corn, a potential alternative fuel source, also rises in price. But in this situation there doesn't seem to be much of a solution. Oil is scarce, so gas prices will go up if nothing is done. On the other hand, if corn does become reliable as a fuel source, then cereal prices rise as well. I suppose this is where prioritizing comes in; what's more important, fuel or cereal? It's tough to say.
-Economics Student

Featured Entry - Highway Robbery at Rye Country Day School

It was early September and I was signing out of school to got get lunch when it hit me, "you are wasting 900$!" Rye Country Day School has a meal program which charges roughly 900$ for an entire school years worth of food. As a student everyone who pays the fee is allowed to eat lunch at RCDS. This system is great, but I beleive the school takes advantage of seniors. Seniors are given off campus priveleges and are allowed to eat off campus. Assuming it only costs $4 to eat at Lenny's bagels, it would cost a senior about 700$ a year to eat out every day. What I don't understand is why parents and children are willing to pay the $900 cafateria fee, then go off campus to eat (sounds like Rye Country Day though). The School makes a large profit from this "priveledge" awarded to seniors. FLIK, the schools food service provider does not have to order food for almost 90 adults on a daily basis. This is a loophole that I thought was very intersesting. On one hand, families are wasting large amounts of money while the school benefits from this waste.
-Matthew Pollinger

Featured Entry - Incentives for using an AmEx

I read an article from BusinessWeek called “AmEx’s Holiday Gift Fever” that discusses American Express’s simulated Black Friday. They created a website that allows customers to buy sought after and expensive items for cheaper prices than retail. This program, available only to certain American Express customers, will create incentive not only to buy more products, but also to get an AmEx credit card for the benefits it provides its elite customers. AmEx also hopes to build brand loyalty among its card holders. They want to do something that competitors cannot match so that card holders appreciate the company and its benefits. Brands such as Porsche and Sony participate in the website, giving them exposure and advertisement to all American Express customers. This provides incentive for companies to offer things up for sale on the site. This year is not the first time the wish list site has existed, however membership has been growing rapidly. In 2004, membership was 235,000 while in 2005 it grew to over 400,000. Clearly, the site is having the anticipated and desired response. It is a great idea, I think, because everyone benefits. The site helps consumers, producers, and its sponsor—American Express.
-Whitney Kamin

Wednesday, January 10, 2007

Featured Entry - The Art of Pricing Great Art

The concept of spending millions of money on a piece of Art is very strange to me. My first reaction was, how could you have That much Extra money? And can you think of nothing better to do with it? But then again, from a financial perspective, investing those extra millions in art is actually a good idea. With the fluctuation in economy and tax rates, buying expensive art is an easy way to protect your money from being taxed and re-taxed as the rates change, allowing buyers to only paying a purchase tax. Also, it prevents your money from being effected by any temporary inflation and deflation. However, the purpose of the article, and quite an interesting question, - Who determines how much any given piece of art is worth? I think the key to this has much less to do with the type of Art (As much as I try to rebut that) and who the artist is as we think. Along with how much the artist might ask for, I think the worth and the value of a piece of Art work, is as much someone else is willing to pay for it at any given time. And I truly believe that logic applies to most things not holding a set price.

-Chelsea Gaulin

Featured Entry - Olive Oil: A Guide for the gift-giving Season

Olive oil has become so much more than a simple ingredient. It is often considered the new wine! Now also considered a decoration, a gift, a collectable and so much more - that the value of a bottle of Olive oil has sky rocketed. Bottles of Olive Oil are being sold any where from $20 and up to $60 on average. However, depending on where it was made, and how virgin, or pure, it is - the bottle may well reach other $100. Similar to wine, good oil lasts gaining value over time. Imported oil have also become quite popular. Some of the best Olive Oils are imported from counties such as France and Italy, boosting the price per bottle even more. "It is worth the splurge for one of the more expensive extra-virgin Oils." According to the author of this article. In fact, in many ways, Oil is more "worth it" than wine. Wine tends to run rather expensive per bottle, and usually only lasts one sitting. Olive oil on the other hand is not only cheaper, and more prestigious and rare, but can last for months per bottle.

-Chelsea Gaulin

Featured Entry - China’s Surge Raises Fears

China’s 11.3 percent growth is making other nations fear a “hard landing” and they are encouraging China even more to lift the value of its currency (the yuan). I am wondering about the articles suggesting though- is it possible for a country to grow rapidly without inflation? China has grown more now than ever before and they are on the way to reaching the 1 trillion mark, and have also surpassed Britain in economy size. China has avoided all major downfalls so far, so to me this means they must be doing something right. Instead of trying to change China, maybe we should try to learn from them.

-Hayley O'Neil

Featured Entry - Increased Speed Limits

States around the country have recently increased speed limits. This presents a huge danger to fuel efficiency causing the new alterations to be widely disputed. Experts say that the connection between speeding and fatalities is actually not so accurate, and increased speeds may actually protect drivers. The cost of owning a car has spiked though in the select states; for every 5 miles a person drives over 60 mph, it costs that person an extra $20 a gallon and over a year it costs an additional $180 more to drive 75 mph as opposed to the traditional 60 mph. It is questionable as to which is a higher cost; possibly safer roads (created by the higher limits), or even more outrageous auto costs.

-Hayley O'Neil

Featured Entry - NY Dollar

The NY dollar is only equaled to $0.76 compared to the American dollar. Costs to build and live in NY exceed other American cities significantly. I think when people weigh the opportunity costs of living in NY the pros beat the cons. It is expensive, but wages are higher, and because there are no other cities quite like it (being the hub of business/stock market/foreign interaction) people are immediately and inevitably attracted. The fact that the NY dollar has a value decrease is negligible compared to what you are getting in return.

-Hayley O'Neil

Tuesday, January 9, 2007

Featured Entry - Housing Depreciation in U.S

I would like to discuss the recent depreciation in housing costs in the United States. After the country reached a point where houses were overvalued, the prices have started to drop. The main reason for this price drop is that the demand for new housing is not meeting the enormous supply that has boomed in recent years. The depreciation of housing prices also has its effects among the people of the country and the economy as a whole. Since the values of people’s homes are decreasing, the individual feels less wealthy, and therefore, is less likely to spend money. This causes the economy to recede. In this way, the decrease in housing price lowers the total consumption of the American people.

-Omar Zamir

Featured Entry - Inverted Yield Curve

Because of the current state of the economy and future predictions, the country’s interest rate yield curve is inverted. This means that for short term government bonds, interest rates are higher, and for long term bonds the interest rates are lower. The main reason for this inversion is that the economy has slowed, and the predictions lead to the Fed cutting interest rates in the future. When the country is experiencing inflation, the yield curve is opposite, as the Fed would tighten, and interest rates would go up in the future. I felt that this was an interesting issue to write about because the yield curve is a very simple graph, but is an important economic indicator that can say a lot about the state of a country’s economy.

-Omar Zamir

Featured Entry - Border with Mexico; Economic Pros and Cons

The issue concerning illegal immigration over the border with Mexico is one that directly relates to the economy of the United States. Although President Bush has created a plan to build a wall across a vast majority of the Mexican border, there are many economic advantages of having undocumented Mexican immigrants in the U.S. I do not believe that the economy of the United States would function the way that it does without Mexican immigrants. These people provide cheap labor that many Americans are not willing to do at such a low price. However, I feel that accepting illegal immigrants does nothing to help Mexico’s economy, which is the main source of the problem. Also, undocumented immigrants are often subjected to exremely low wages and poor working conditions that are a virtual form of slavery. Another negative is that the Mexican immigrants drain resources such as hospital funds from the US. In the end, I believe that a larger amount of border patrol is needed.

-Omar Zamir

Featured Entry - Varsity Books Alternative

The month is August and we have just spent the last three months relaxing (hopefully) and enjoying the summer. However, the dreaded RCDS envelope arrives mid-August to remind us that summer's almost gone. We are given the list of classes that we will be taking and also given detailed instructions on how to access Varsity Books and order books that we need for each class. Due to us still being in "summer-mode" it is almost impossible to resist Varsity Books appealing and simple website that fogs the reality that we are paying inflated prices for textbooks. A simple Googleing of the names of the textbooks you need will lead you to finding the same textbooks, brand new, for a LOT cheaper. Now the question is does RCDS make a profit with their "monopoly" with Varsity Books? I would be inclined to say yes, as students do not even receive a list of the books they need but rather they must log on to Varsity Books just to know exactly what books they need. Most likely, even if you were planning on Googleing the textbooks and finding the cheapest prices, after visiting Varsity Books it is almost impossible to resist clicking "Add to Cart" and taking out your parents credit card. Due to the fact that the list of books each student needs is only available through Varsity Books, RCDS creates an image that Varsity Books is the only way to order books. This is absolutely not true and I have been ordering books through various sources each year (Amazon as well as Half.com- an affiliate of EBay). Should RCDS change its policy and send a list of books needed for each class in the mail with the class list, people would certainly look at other options of buying books. I urge everyone to take a look at other sources besides Varsity Books when it comes time to order new books for next year or next semester and show your parents how economics helped you save money on your textbooks.

-Alex Osborne

Featured Entry - Television at the Pump

In the first couple days of class we have been disscussing the descisions and reasoning behind simple economic choices. The class learned that choices are made rationally, and often include a sacrafice that will result in benefit of some sort.
My father runs a money management firm, he and his partners are often involved in ventures that hopefully lead to a profit. I could not help but link a recent deal his firm made with the ideas we have been disscussing in class. In a nut shell, the firm was interested in funding computer screen technology for gas station pumps. Research the firm conducted indicated that investing in a company that provides such technology could be extremely lucrative, however, the company that produced the computer screens was on the brink of bankruptcy. The firm, Klingenstein Feilds & Co. L.L.C., still decided to invest in the struggling company. The cost to revive the company was unimaginable. Eventually Klingenstein Feilds was able to revive the television screen company. With the company revived, the idea has been sold to reputable gas companies such as Hess and Shell. The idea is to put T.V screens on all gas pumps. These screeens will advertise an assortment of different things ranging from soda, T.V shows, and news networks. The idea has been a success, and is starting on the West Coast (the weather is better for the T.V screens) and will slowly move East as the technology gets better.

-Matthew Pollinger

Thursday, January 4, 2007

Featured Entry - Monopoly on Athletic Center Apparel

You know what grinds my gears? Walking into the athletic center's gym in blue gym shorts and a white T-shirt, and within 5 minutes of my arrival on the bench press, Mr. McGhee comes up to me and kicks me out after chastising me for not wearing the correct attire. Apparently, the proper gym attire consists of blue and grey RCDS clothing AND if signed up for fitness center you can receive a detention if you don’t have the right stuff to wear. Now at first this might seem pretty acceptable. But, is it acceptable for an institution to force its subjects to wear products that can only be bought through them? Doesn't this sound like an extreme monopoly where not only is there one supplier of the good we need but that supplier is forcing us to buy that good or go to detention. Rye Country Day School has an illegal monopoly on acceptable athletic apparel. Every overpriced $20 shirt we buy, they collect a handsome profit. While the whole time we could be walking into Costco and getting 10 shirts for the same price
-Louis DeSantis

Wednesday, January 3, 2007

Featured Entry - RCDS Bookfairs

I want to discuss some economic factors of bookfairs at RCDS. For one, the concept of a bookfair has clearly changed over the years into “a fair that also has books,” as I like to call it. This likely transpired due to noticeable economic advantages in broadening the scope of a bookfair, especially with kids growing further away from entertainment in reading as each day brings about another technological benefit to today’s fast-paced, ADD-fixated youth. With food also, the school can charge a lot of money to kids for meals, but they have no problem paying it, as it gets charged to their school account instead of requiring cash. Also, with various “kiosks” selling products hardly associated with students (bags, jewelry, candles, etc.), it is obvious that the very parents who bring their children to the book fair are targeted just as much, if not more, than kids as consumers.

- Andrew Citrin

Featured Entry - Economic Systems in Professional Sports

The professional sports leagues in America, although often associated with each other with similarities, are pretty diverse in some key economic parts. Notably, the National Football League and Major League Baseball use very different systems when it comes to acquiring players. Personally, from the stance of making the league more interesting (resulting in more interest in, and thus, more profit), I think the NFL has an advantage in its method. The NFL has something called a “cap,” which is set the same for each team, so when trying to keep a good team and bringing in draft picks & free agents, no team has any fiscal advantage over the other. That is why standings change so drastically each year and dynasties are far and few. In the MLB, however, the monetary gains of a team (products, advertising, tickets, food sales, etc.) connect with its player spending money, so teams with higher fan bases and/or that are located in big cities are at a large fiscal advantage (ex. NY Yankees vs. Kansas City Royals). That way, the same teams can stay good for more years than it should be allowed to, in a sense. That is one reason why I personally like the NFL much more than MLB.

- Andrew Citrin

Featured Entry - Hybrid Cars

In writing up my last economic journal entry [it was an analysis on an article discussing the importance of good products and strong business models for a business to thrive], the concept of hybrid cars kept running through my head. It appears as if they are the future of driving, the best environmentally sound option next to the now defunct electric car. But at this stage, many people do not realize that contrary to advertisements, hybrids are not yet the best economic choice for consumers. Buying one for the environmental benefits is one thing, but for the most part, the saved cost on gas is countered by the car itself being much more expensive than others. The point at which the fiscal decision works to the advantage of the buyer usually takes years longer than people own/lease the car for. At least at this point in time when hybrids are relatively new to the market, the opportunity cost is simply too big. Economically speaking, if one wants their car to be sound, they should go with a normal one now, and by the time they need a new car, hybrids, being more commonplace, will likely be cheaper with the kinks worked out.

- Andrew Citrin

Tuesday, January 2, 2007

Featured Entry - A Battle for Control of the Web

People’s usage of the internet is increasing more and more as the years progress.  Services such as Yahoo and Google are causing user to need and use much more bandwidth.  To accommodate for the increased usage, internet service providers spend millions of dollars to lay down more high speed cables.  These internet service providers want to begin charging these web companies  because they should incur some of the charges since they are causing the need for cable lines.  I believe that if web companies are charged, then they may start charging users to use their services, something I am definitely not looking forward to.
-Christian Joseph

Saturday, December 16, 2006

Featured Entry - Investing Ahead of The Crowd

People invest their money in the stock market searching for more maximum gains that are not availible in fixed-rate interest CD's or Money Market Accounts. With the chance for a higher reward, the higher risk is certainly there. CDs are one of the safer investments someone can make yet people feel as if a measly 5% ROI is not enough in the expensive and materialistic world we are living in. Investors tend to put their money in companies that they feel are undervalued and will either sign more contracts in the future, or have more demand for their products. The key to success in the market is certianly being "ahead of the crowd" and investing in stocks that do not attract much attention....yet. I decided to take a look at today's news and see if there are any markets that are "untapped" and ready to be invested in. Global Warming seems to be a big issue now; in my hometown we have yet to see one day of snow and it is already December 15th. A smart investor would see how he or she could take advantage of this issue. With warmer weather all year round certain products will be used more and certain less. Natural Gas, Sleds, and Snow Apparel are the first few products that would be less demanded were the weather to constantly be warmer. Outdoor sports such as golf and tennis would be played more. I beleive Global Warming is seen as being too far in the future to currently take interest in financially, but after noticing that I have yet to see any snow this year, I believe this is the right time to start looking at options in the Global Warming field. I believe any investor who does his "homework" and figures out a product that will be in high demand in the future or in low demand will be a successful investor and the future will hold huge gains.

-Alex Osborne

Featured Entry - Fairness of School Systems

We read an article in ID from the New York Times called “Shadow Lines That Still Divide”. The article was from May 2005, but tied into our ID discussions about American values. The article discusses class divisions in the US and whether or not the distinctions between classes have become more defined or less clear. One important issue brought up was that of public education—a topic we discussed in Economics. The success of a person’s education is largely linked to class, according to the article. This is most likely because in America, school systems are mostly funded by local taxes, making the schools in more well-off areas wealthier. Wealthier children who attend public school are more likely to get a good education (not to mention those who attend private school).
In American recently, merit has seemed to replace the system of inherited privilege. There are more self-made billionaires then there use to be and fewer and fewer of the wealthiest people in the country are wealthy because of family money. Still, the problem becomes that the people who most often earn their success had opportunities and were raised by parents who had money and provided their children with a good education. Even though they earn their success, merit is still seen as partially class-based.

-Whitney Kamin

Featured Entry - Brian Davis's Logic?

I'm trying to understand Brian Davis's logic behind his attempt to buy 70% of the Memphis Grizzlies. Davis is a former Duke and NBA basketball player who has made lots of money in real estate (he's also 36 years old). He wants to buy the Grizzlies to "redevelop" the neighborhoods in downtown Memphis, which he calls the "black belt." Although I admire his goals, I wonder about the fiscal wisdom of his decision to do this. In order for hiim to become managing partner of the Grizzlies, Davis personally has to invest $54 million of his own money. He says he has the money, but he bases his claims on, for example, the value of a house he has in Baltimore, which he says is worth $20 million. However, "Baltimore city tax rolls" value the house at about $4.4 million. It seems to me that Davis is stretching his finances a bit thin; he is also bidding for a stake in Major League Soccer's D.C. United team. The Grizzlies lost $40 million last year, so Davis will need a lot of luck if he's going to make a profit from this investment.


Featured Entry - Wal-Mart's Expansion

Wal-Mart is going to China! Wal-Mart is the worlds largest retailer and it's expanding. They are planning on buying out 31 stores over the next 3 years. They already have 66 stores in China but they are adding more in order to become the number one retailer there. The company is growing by acquisition, which means they are buying out other stores in order for them to grow; kind of like Ned's example with the movie stores somewhere in the south. Wal-mart has been withdrawing from a few companies like Germany and South Korea, so they need to grow again. Wal-mart sells everything at low prices, their slogan is even "everyday low prices." They already do well in China so expanding is a good idea.

-Marianna daCosta

Featured Entry - Personal Health Not Enough?

Obesity is definitely a problem for Americans. Since the United States is so wealthy, Americans have to worry about eating too much and gaining too much weight (while in Africa, people are trying not to die of starvation). How does America solve the ridiculous problem of obesity?
It’s simple. The most important economic principle (according to me) is that people respond to incentives. If people eat too much McDonalds or ice cream, there are obvious healthy risks; however, people seem to care about that less than money and convenience. As a result, I propose an alteration in health insurance that will make living unhealthily more expensive. This is a great monetary measure to get people to stay healthy. If a person belongs to a gym, then their health plan (and if old enough, life insurance) is less expensive. In addition, the government should force unhealthy food producers to place a warnings on their product and advertisements. For example, at the end of a McDonalds commercial, there would be a short sentence saying that consumption of McDonalds may lead to high cholesterol and high blood pressure which could lead to hear attack. Even though the government can educate the American people through advertisements, the government has little control in the problem. It is unconstitutional for the government to regulate a free market like fast food. Burger King is producing a good and there is a demand for it, the US government can not artificially raise the price with taxes because it is an abuse of their powers. The government does have the right to force Burger King to inform consumers of its
product’s health risks. I believe my two solutions, education and monetary measures will go a long way in solving the problem of obesity.

-Sam Cross

Tuesday, December 12, 2006

Featured Entry - Supply and Demand for Hugs

It was very late one night, and Chris and I were talking on AIM. Ofcourse, we started to talk about our Economics class and how we were enjoying learning the subject. Our conversation then converted into an in-depth discussion on an economical opinion of hugs. The subject in question was very mundane, but somehow we were able to make it work. We decided that scarcity was apparent when it concerned hugs. Some people rarely hug others, and so their hugs are obviously scarce. On the other hand, people who always give hugs have too much supply and therefore there isn't too much demand for them. Our conversation also inculded the opportunity costs and incentives for certain people's hugs. This may have seemed as an absolutely absurd topic to be discussing economically but it was really fun to make it work...and it made so much sense!

- Riddhima Hinduja

Featured Entry - Shopping for food on Amazon?

Personally, I just don't see why people would shop for food online. Yeah, it saves time but I think doing things like food shopping every once in a while is healthy. It makes sense for older people but for some reason I've never been a big fan of getting things delivered. In Brasil everything can be delivered right to your door. Supermarkets, pharmacies, McDonalds, electronics, everything. I think that makes people lazy. A lot of people don't have time to go food shopping so they shop online. I guess that works for them but I like the supermarket and food shopping. The article says that Amazon getting into the food market makes sense economically. It only ships non-perishable items so the market is limited. The real money is usually in the shipping when it comes to online shopping and Amazon offers a lot of cheap shipping options so it might not be as profitable. They mention that online shoppers are more loyal but I don't see that. I can't build a relationship with Amazon food but I go to the supermarket and I have the opportunity to meet new people.

- Marianna daCosta

Featured Entry - Economic Decisions on a Night Out

The night on which I went to see Borat with a group of friends featured lots of economic decisions. Mostly they were choices involving the balancing of risk and reward. First was how much to pay for parking at the parking garage. Do I underestimate the length of my stay and incur the risk of a ticket, or do I overestimate and risk wasting $0.50? Let's be realistic, there's no way to pay exactly the right amount. That night I decided to pay the extra $0.50 for the extra hour. What was ironic was that after I met up with my friends, I learned that some had only paid for one hour of parking because "they never check." Oh. How silly of me.
Another decision that was made soon afterwards was where to eat. One person seemed set on Legal Seafoods; this is understandable, given that Legal Seafoods is fantastic. However, we had to make a 7:40 movie (that was sold out), and it was 6:45. There was a Famiglia Pizza across the street - much faster, and quite good. However, the draw of Legal Seafoods was too much; we had clam chowder and then sprinted to the theater, where we found seats together - in the second row, on the right side, in an area from which the screen looks a bit distorted. The risk we had taken turned out to be an actual cost, but in my mind the reward outweighed the terrible seats. We still had a good time. Of course, had I received a parking ticket, the night would have been much worse.


Monday, December 11, 2006

Featured Entry - Starbucks: A Way of Life

Starbucks is not just a store that sells coffee; it is a way of life. Millions of people world-wide wake up in the morning, get dressed and pick up a cup of Starbucks coffee before heading off to work. With no competitors, Starbucks coffee holds a monopoly on the coffee industry. However, the company is not settling for getting adults addicted, they are thinking for the future by making kids a part of the Starbucks community. By releasing a new series of drinks that obviously are more appealing to kids than to adults (even though Starbucks claims this was not their intention), Starbucks are making their store the new after school hang out.
As a business move, Starbucks’ new project is very smart. By pounding on their brand name at an early age, Starbucks guarantees themselves a generation of life-long consumers. In addition, the drinks geared towards kids are more expensive. Regardless of the monetary expense, parents are still buying these drinks for their kids. The Starbucks organization created a demand shift because they have added a whole new pool of consumers to their products.
The new consumer (which is probably a parent) is making a choice. While the opportunity cost is possibly an unhealthy diet and additional money, adults are choosing to bring their kids to Starbucks because it is a safe and welcoming environment. Instead of getting into trouble after school, kids are in Starbucks, drinking a frappacino and talking with friends. Parents are willing to take the health and fiscal risk in order to make sure their kids are in a secure environment.
Ethically, there is nothing wrong with Starbucks selling their drinks to kids because the trade is voluntary: the consumer has a choice. Although the drinks are fattening and loaded with sugar, this is part of the risk that consumers are taking. The most shocking part of this event is that consumer demand is high enough for Starbucks to make a profit from this experiment. A teenager can now go to Starbucks with his friends and enjoy a $5.00 Mocha Frappacino, which could probably feed an entire family in Africa for a day. Wow that’s equality.
-Sam Cross

Featured Entry - Tax free Cigarettes

Right now there is no tax on Indian cigarettes and they are significantly cheaper. Indian reserves are like a Costco for cigarettes because when people have the chance they like to buy a lot at once and save some money (I know Costco has taxes but the whole buying in bulk idea carries over). NY state is trying to pass a law that would place a tax on the cigarettes. NY state loses about 600million dollars a year to untaxed cigarettes and now wants part of that money. The new tax would be about $1.50 (still less than other cigarettes). The tribes are worried because most of the revenue they make is from tax-free cigarettes and if the tax is imposed their revenue would be significantly less. The tribes would be in serious trouble if this law is imposed and it is unfair to impose the tax so all of a sudden. Maybe if the government did something to keep them in business but they can't just take away such a large part of their revenue and not expect consequences.

-Marianna daCosta

Featured Entry - Rethinking Taxes

Taxes, ugh. Every year people are forced to give away their hard-earned money to the government so that politicians can decide where the money can be most beneficial to society. American citizens are losing their incentive to work since a huge amount of their paychecks are being seized by the government. Although taxes serve a positive purpose to society, they also destroy the moral and purchasing power of the American people. Seeking a compromise between the American people’s incetive to work and the government’s need to improve the nation’s problems, I had the idea that Americans could receive a tax reduction if they accomplished a certain number of community service hours. At each tax bracket or level, a citizen must do a certain amount of hours of community service to get a tax deduction on their taxes. In considering political fiscal policy, democrats would welcome this idea because it is concerned about helping the little guy and improving society while republicans would like the idea because of the tax breaks. All the while, the American people will be enthusiastic about the idea because they can see a direct effect of their tax payments (community service) and they will have more money to spend on goods. The American economy will boom because of the increase in consumer demand because of the rise in purchasing power. Even though one may be against giving the government this much power in society, I would say it also lessens the power of the government by giving it a smaller payroll to spend recklessly Tax reductions from community service hours allows people to help their country without giving away their salary. With this system, people have a choice. In addition, community service work now creates two incentives, self-satisfaction and additional capital. The American people are using the resource of time more efficiently than they used the resource of money when paying taxes. With the tax reductions through social actions, people choose how to allocate their resources more efficiently.

-Sam Cross

Featured Entry - The Burden of Textbooks

Textbooks seem to have fallen behind in our fast paced world of technological development. Living in a wireless world, we still find ourselves lugging around 5 pound textbooks to each class. Not only are they extremely expensive but publishers come out with "new editions" every year where it seems as the only difference is an updated cover and we must buy this new edition to be "on the same page" as everyone else. So, how can we fix this problem? RCDS is blessed with having a laptop program starting in 7th grade, yet, we still do not take advantage of this program. Virtual textbooks would solve this problem. Instead of going through a middleman manufacturer who needs to assemble the book, you would be, in essence, buying directly from the author(s). There is an incentive for everyone here; the author(s) is now selling his product directly to the consumer and his/her profit margin will now be huge. The incentive for students is obvious; no more carrying around heavy backpacks. Another advantage of this method, is when the author "updates" his textbook all he would need to do is edit the textbook and repost it or resend it to his buyers. Lastly, with a virtual textbook the possibilites are endless. With websites like Youtube and Webshots, you could now have more interactive excercises in the textbook such as games or videos that would involve the student more. In conclusion, the benefits here are tremendous and besides having less work for the manufacturer, there seem to be almost no downside. Making textbooks a click away would truly change the environment of school and make it more enjoyable.

-Alex Osborne

Featured Entry - The Benefits of Raising Gas Prices

CBS market watch today reported an unhappy future for gasoline prices worldwide. As hinted at in the article appearing on the last test, natural gas production is going to be cut by OPEC countries (based on the belief that it is a highly elastic market). This will raise gas prices again, though probably not to the same levels we saw this summer. However (and I can say this now that I have to pay for gas) I don't think higher gas prices are such a bad idea. In fact, the American government should follow Europe's lead (perhaps looking to Great Britain as a prime example) and raise prices drastically through taxes. Not only would that promote changing in driving patterns, it would also raise much needed money for the government that could go to social programs, education, and, perhaps, researching alternative energy sources.

-Philip Waller

Featured Entry - Copyrighting a Name?

The Mongolian Parliament in Ulan Bator has, for the past few weeks, been thinking about a very interesting bill, one to "protect the name of Genghis Khan." The world-conquerer, whose name was banned under communist rule, has been used to endorse everything from vodka to toilet paper in the years following the downfall of the USSR. In a year-long, country-wide celebration of the remarkable man, the parliament has begun to question whether or not the myriad companies using the Khan's name are demeaning the national hero. Though, at first, this seems odd, even comic, the Mongols have a valid point. To use the national hero's name to try to shamelessly sell anything does take away from the majesty surrounding the most famous Mongol ever born. If the bill is passed, it will help to protect his legacy.

-Philip Waller

Featured Entry - College Spam

As I think back on the past year, there have been very few constants. However, one thing I could always be sure of was having one or two pieces of mail from colleges waiting for me at the Post Office. I've narrowed it down to there really being three types of this mail. The first is a greeting, a hello, an introduction. This type obviously makes business sense from the college's point of view as it increases the number of students who are aware of the college's existence (something very important if the college wants people to apply). The second type also makes sense, follow-up mail from colleges that I have expressed an interest in. The third, however, makes, to me, no sense whatsoever, second, third, fourth, fifth, or even sixth mailings from colleges that have never heard from me at all. Yes, by now I know their names, but their incessant mailings have hardly made it more likely that I will apply there. As I toss my sixth piece of 'college spam' from Hood into the recycling, I wonder just how much money must be wasted with all of these mailings. Perhaps this is one of the reasons for the high cost of a college education. The solution seems, to me, to be simple, to only send one piece of mail unless interest has been expressed. The money colleges will save from this practice will more than make up for the handful of students they might possibly miss out on.

- Philip Waller

Featured Entry - Marketing Strategies

I found an article online called “Heineken Tops 007 Fever”. It talks about the company’s new advertising campaigns linked to the new James Bond movie, Casino Royale. The commercial first showed up on YouTube a few weeks before the movie aired in London on November 14, 2006. There is a 55 country marketing campaign tied to Casino Royale. Many companies want to tie their name to the movie to increase sales and advertising. James Bond popularity gives companies incentive to connect with the film. The movie allows companies to reach a large-scale, international audience.
Also in the article was a little bit about Heineken’s marketing strategies. It is very interesting that unlike other companies, Heineken does not do all marketing with one company. Instead, they use dozens of ad-agencies and give them a template approved by Heineken headquarters. This allows them to support local ad agencies while keeping a somewhat uniform add. This technique, combined with the James Bond ties, gives Heineken the best of both worlds when it comes to marketing. The company’s technique is very smart because they support companies locally while working towards appealing to a much more global audience.

-Whitney Kamin

Sunday, December 10, 2006

Featured Entry - Ticketmaster's Monopoly

TicketMaster is a problem. Ticketmaster is an automated capacity distibuter program for venues and arenas during shows and games. While on one hand very convenient, it is also strong reminder of why monopolies are no good. Last week, i purchased a ticket to a show in New York City that cost 20$ at the door. To secure my ticket, i decided to purchase it on ticketmaster. Instead of just giving me a 20$ ticket, they gave me a $20 ticket, a $6 convenience charge, $8 processing fee, and charged me $2 to print it out of my own printer. this brought my ticket to a grand total of $36. At a grand total of 36 dollars, it was almost twice the cost of the ticket. TicketMaster is making almost as much money as the cost of the band. this shows how a monopoly like ticketmaster has arbitrary control of the price of the ticket distribution service. At it's very best, the ticket distribution industry can be called an oligopoly becuase of services like LiveNation and Fidelity tickets. But the power of ticket control is still weilded and abused by these few.

-Louis DeSantis

Saturday, December 9, 2006

Featured Entry - The Key to Success in Today's Market

Response to Article Designing a Business, Not Just a Product

The business and product article was very enlightening to read, since it demonstrates just how difficult it is to be successful in today's market. With the "niche market" developing, producers cannot just simply create a product and be finished with their work. They must advertise it, make sure it has an edge over its competitors, and most importantly, provide it with good complements while eliminating alternatives. This is no easy feat. The best example available of this, which is used by the article, is Apple with its iPod. Apple didn't just make an mp3 player, they went far beyond. They created an amazing complement in the iTunes service, where you can organize and purchase music. They made it accessible to many more people by creating different version like the Shuffle, Nano, and Video so that people could get some sort of iPod regardless of how much they were willing to spend. Also, Apple made it compatible with different computers, music files, and made it work no matter what you had. And it is much simpler to use and to transfer music to other mp3 players as well. And with new upgrades being released all the time, people are tempted to buy newer ones all the time, and Apple is able to increase their profits. Apple created a whole iPod business, not just an iPod, and that is the key to success in today's market.

-Ivan Kukharkin