Sunday, December 27, 2009
Here is a brief overview of 2009's Black Friday. More shoppers headed over to the discount and department stores at 5 AM (23% of all shoppers) and targeted clothing (51% of all shoppers) and toys above all else. Favoring quantity over quality, most shoppers favored many items that were priced less than a few items at higher prices. Therefore, clothes, books, and toys were more profitable than large scale electronic products. Moreover, the magic word was discounts, discounts, discounts this holiday season. It is safe to assume that the stores that promised 75% to even 80% off favorite items reaped in the profits this Black Friday with $41.0 billion spent by shoppers all together, says the NRF. On average, most of the Black Friday shoppers (63%) did not intend to engage in the also popular "Cyber Monday" but hadn't completed the majority of their holiday shopping. Instead, not even 11% of shoppers had completely finished their shopping for November and December. Another study done by the NRF shows that most shoppers still hadn't checked off their holiday lists by December 9th and that most intended to continue shopping until the week before Christmas, prolonging the holiday season.
And with that I wish you all joyous and safe holidays as we all prepare for 2010, which will hopefully be a year of immense progress for America.
Question of the Post: Any predictions for 2010?
Statistics retrieved from: The National Retail Federation (www.nrf.com)
Wednesday, August 12, 2009
Tuesday, July 14, 2009
In Jonathan B. Wight's fictional adventure Saving Adam Smith, Adam Smith channels his spirit into the mind of Harold Timms, a Romanian immigrant, in order to communicate with doctoral student, Richard Burns. Burns is on the verge of being launched into the highly privileged domain of academia with a revolutionary dissertation, much to the interest of his mentor, Bob Lattimer, and the WorldChemm, a major corporation. However, his attention is diverted when Harold comes to Burns regarding the voice of Adam Smith, who is taking over Harold's mind. Adam Smith is infuriated with the current state of the economy. Forced to listen to this voice, Richard goes on a road trip (from the Virginia to the Silicon Valley) and learns the "morality behind markets" from his conversations with Adam Smith. However, their lives are soon endangered when radical Max Hess plots to kill them. A jam-packed journey filled humor (including a poker game with your favorite Enlightenment thinkers), peril, romance, and economic theory, Saving Adam Smith is certainly a page turner. Wight aims to bring attention to The Theory of Moral Sentiments, the essential root to Smith's later novel. Now, if Saving Adam Smith has piqued your economic interest, I highly recommend it!
Now that you know the basic plot line, here's a brief discussion:
This book brings light to the true intentions of Adam Smith and the core of his philosophy as it differentiates between self-interest and selfishness, explains that justice is needed in a society before free markets can be adopted, and emphasizes the need for "healthy competition."
People are often mistaken with Smith's philosophies and believe that he glorified any and all means to make a profit, which is untrue. Yes, Smith was an advocate for free markets and capitalism, but he also believed that justice is essential to a society before such economic models can be implemented. All of this is explained in his lesser known work, The Theory of Moral Sentiments, which emphasizes that morality is the foundation for an economically sound world. Smith also believed that a balance of competition in the market leads to technological progress. As stated on page 127: "The perennial search for profit leads to unending innovation and business transformation! Every business re-makes itself to survive."
And that is just a small nibble of the wonderful insights this book has to provide, now go read it!
Wight, Jonathan B. Saving Adam Smith. Upper Saddle River: Prentice Hall, 2002.
Question of the Post: If Adam Smith were able to come back to life, what do you think he would suggest to fix the economy?
Friday, June 19, 2009
Sorry I haven't been blogging for a while (you gotta love high school)! My exams ended and I just started working on another post which should be up soon! Keep checking back and thanks for the support!
Sunday, April 12, 2009
Well, I came up with a few possible answers: lack of a sufficient education for the masses, expensive health care, natural disasters, and corruption of the government.
If you want to become a CEO of a major company or a powerful lawyer, how are you going to get there? The answer is simple: an education. However, many children do not have access to a local school because either the school is too far or too expensive. Some children do not even have parents to provide for them. How are we going to get children off plantations and into classrooms with teachers? If an educated man loses his job, there are still so many other opportunities he still can branch out to. An uneducated man, however, can only perform one form of job, manual labor.
Well, we can even take this down a notch. What if you were a miner but can't afford the proper health care to oversee your health? If you break your arm, your job is gone. Your life spirals down into the abyss of poverty. Some causes of poverty are beyond our control, like a corrupt government. What if your nation's government claims to be creating all these awesome reforms and providing benefits for those below the poverty line, but just eats up all that money for itself?
Let's say you have a farm. It's profitable and life for you is going pretty swell. Alas, a devastating storm hits your area. Your land is no longer fertile and is ravaged by the brutal environmental factors. Now, I don't know about you, but I'm not exactly the one who controls the storms of the world.
Is poverty an ugly side of our socio-economic model? You tell me.
Question of the Post: What do you think is the cause of poverty? How can this issue be resolved?
CIA - The World Factbook https://www.cia.gov/library/publications/the-world-factbook/geos/ke.html
Sunday, April 5, 2009
Tuesday, March 31, 2009
So, the other day, I was reading my AP World History textbook and the following excerpt came up: "In 1929 the normalcy of the twenties fell apart. Stocks plummeted; businesses went bankrupt; prices fell; factories closed; and workers were laid off." Um, HELLO? I don't know about you but to me, doesn't that sound awfully familiar? It's like deja-vu all over again. The rest of the section in my book went on about the Great Depression...which got me thinking...is America going into another depression?
Or more generally, what's the difference between a depression and a recession? One of my oh-so eloquent friends described the difference as so: A recession is like not being able to buy your fave Coach shoes...but a depression is like not even being able to buy Payless shoes! Yes, I have such great friends now don't I ;-).
In more technical terms? Well there are a multitude of definitions, so there isn't really a perfect right answer. Most economists state that a depression is a severe recession that is marked with high levels of unemployment, a decrease in the GDP, and a stock market crash. But then again, different people have different definitions.
An old economists joke to add some humor (or not) to your day: A recession is when your neighbor loses his/her job. A depression is when you lose your job!
Question of the Post: Is this the start of a depression?
Bulliet, Richard, Pamela Crossley, Daniel Headrick, Steven Hirsch, and Lyman Johnson. The Earth and Its Peoples. 3rd ed. Boston: Houghton Mifflin Company, 2005.
Tuesday, March 17, 2009
We see his face plastered on every news channel and his name constantly mentioned in everyday conversation. Madoff this, Madoff that, Madoff, Madoff, Madoff. He organized one of the largest investment scandals of all time. He has been compared to Ponzi, a notorious scam artist from the early 1900s. Madoff, a former chairman of NASDAQ (a highly prestigious position), took roughly 65 billion dollars from investors and now faces 150 years in jail (even though he is already 70).
So, this a failure of the checks and balances system and lack of regulation in companies by the government. Not to mention the product of greed. After all, he is human, just like us all (including investors). However, this is not a failure of economic models.
But really, what I wonder is why the most experienced investors in the nation didn't realize what was going on. For example, if you give me $10 and I tell you that it will become over $50 in just a few months, would you buy into it? Wouldn't you think it was all a scam (especially with the weak economy)? Why didn't the top investors (few who also were said to be experienced economists) take the initiative to question the rationale behind the whole thing?
Now you may be wondering how all this relates to you. Well, Madoff was extremely involved in philanthropy for charities and universities, which have greatly suffered as a result of the scandal. If the average cost for an education for one year at a private college is...let's say about $40,000 and we divide how much money was involved in his scheme by the tuition cost, 1,625,000 students would have had full scholarships for one year at a private college. 1,625,000 people. Wow.
Question of the Post: What do you think of the Madoff scandal?
Friday, March 13, 2009
Well, Merriam-Webster.com defines recession as..."a period of reduced economic activity" (Source: http://www.merriam-webster.com/dictionary/recession).
Sure, sure, but that's just "dictionary language." What about in everyday-when-I'm-living-my-normal-life language? Well, for some teenagers, recession can mean that your parents refusing to buy you a shiny new Ipod Shuffle or people's mood being ruined upon seeing their stocks plummet. Recession is ubiquitous and affects (almost) all of us.
Let's assess a major effect of the recession which can even impact our students' life, the credit crunch. Simply stated, a credit crunch occurs when it is harder to obtain a loan from the bank. For example, when we head off to college, it will be more difficult to get a loan because of stricter requirements and higher interest rates. Hopefully, President Obama has an effective solution for the student loans in the future.
So, the ever probing question is, when will all this end?! Alas, Adam Smith (if he were to be alive right now) probably wouldn't even know. I mean, come on, we're not fortune-tellers. Asking about the end of the recession is like asking a weatherman if its going to rain in five weeks. But, I think the real question is not when the recession will end, but what will end it.
Question of the Post: What do you think will end the recession? Leave a comment to contribute!
When people meet an economist, they immediately ask, "When will America come out of this recession?" However, I do not know the answer to this question...neither do the top economists who write for the Wall Street Journal. Not even my all-knowing dog Penelope (Penny for short) can. I am here to slay the misconception that economics is the "dismal science."
Feel free to contribute to the discussion by commenting! (Any inappropriate comments will not be tolerated)
Once again, welcome!