Family Dollar Makes Moves

In an effort to increase their profits, Family Dollar is making moves. The discount store will cut prices and jobs, and close stores that are not performing well enough. Profit decreased by 35% between quarters, and sales fell 3.8%. Despite not competing well with stores like Dollar Tree, Family Dollar increased prices which ultimately is what led to such significant decreases in profit and sales. With over eight thousand stores in the US, 370 of them will be closed. Following these closings, the firm will begin a slow expansion of about 400 stores next year. Family Dollar is hoping that this expansion will bring them up to par with their competitors.

http://www.cnbc.com/id/101572250

Climate Panel Sees Global Warming Impacts on All Continents, Worse to Come

http://dotearth.blogs.nytimes.com/2014/03/30/climate-panel-sees-global-warming-impacts-on-all-continents-worse-to-come/?_php=true&_type=blogs&_r=0

Global warming is becoming an issue of increasing importance as it has altered the environment and natural resources that are used daily to produce goods. Global warming continues to change animal migration patterns, precipitation patterns, and crop yields. Although global warming has only accounted for small number of animal extinctions, many species are moving from their natural habitat and are reproducing in different quantities. Crop yields for the most part are negatively impacted in lower latitude regions (where most crops are grown). These disruptions to food production and water supply act as a supply shock. Economies across the world have to deal with extreme weather conditions that negatively impact their output, which in the short run causes the prices of those goods to increase. These shocks to food production across the world show that ecosystems across the world are very delicate and are extremely vulnerable to climate-related changes.

Higher education: Is college worth it?

This article from The Economist looks at a recent study conducted by PayScale, a research firm, which collected data from graduates of over 900 universities and colleges on their degree and earnings. The results of the study are consistent with much of the recent rhetoric; the return on investment for higher education is less than the return on the decision to forgo college, unless you study a lucrative field or attend one of the best universities. Prestigious universities like UVA, Georgia Tech, and Harvard have average annual returns after 20 years of over 15 per cent, whereas schools like Fayetteville State University and Shaw University have double-digit, negative, average annual returns after 20 years.

By the way, OWU ranks 191 with an annual ROI of 5.7% (8% with aid) and Denison ranks 565 with an annual ROI of 4.6% (6.8% with aid).

The job market is still tough

http://money.cnn.com/2014/03/31/news/economy/janet-yellen-raise/index.html?iid=SF_E_River
       The central bank hopes help "Main street" not just "Wall street" by boosting job market firstly. "In some ways, the job market is tougher now than in any recession." Said by Federal Reserve Chair Janet Yellen on Monday. She listed six signs to explain why does she think the job market is still weak. First of all, the average of 2% per year rising rate of wage is too slowly. Secondly, the Long-term unemployment is high. Thirdly, too many workers are doing part-time jobs rather than full-time jobs. Then employers didn't create a lot of new jobs and some people are leaving their position. Last but not least, the labor participation rate is still low.
      All these signs shows that the job market is not good as we imagine although the economy is recovering. The government needs to offer more new jobs and increase labor participation rate, which can make unemployment rate fall and increase the output.

Energy Investment Increment

http://cleantechnica.com/2014/04/05/china-1-renewable-energy-investment-us-2-japan-3-chart/




Lots of countries are investing in Solar power, since it is considered as a practical source of electricity, after fossil fuel.

China is investing in a massive amount in installation of solar panels, ranking number 1 in renewable energy investment. The United States got the second place and Japan right behind them. Surprisingly America is behind China in investment of renewable energy. Moreover we could view that China is planning to boost their economy in various ways: Recently China announced the increased pace of railroad construction and reducing the taxes of small firms. At this rate, China might have a great increase in economy growth rate after 2~4 years. Moreover China would probably create a more cleansed environment over time. Quantitatively China is putting way more effort than any other country. The difference in investment between China (#1) and The United States (#2) is more than $10 billion. America also is a massive producer of industrial pollution and one of the largest energy consuming nations, thus an additional investment is required. Fossil fuels are depleting and it is time for every country to consider an establishment of system of renewable energy production.

Business and Government: The new age of crony capitalism

As the regime of former Ukrainian president Viktor Yanukovych collapsed, protestors were found outside of One Hyde Park (which is a luxurious development in west London). These people were targeting the Ukraine's richest man known as Rinat Akhmetov, they chanted "discipline your pet".

The problematic state of the Ukraine has long been dominated by oligarchs. These wealthy individuals engage in a practice known as "rent seeking". Economists refer to this as a special type of money making which is made possible through political connections. This practice can range from outright graft to discourage competition, intentional lack of business regulation and transfers of public assets to firms at below market prices. Some people have made fortunes through this practice. This system reached its climax in America in the late 19th century. Antitrust rules broke monopolies apart such as John D. Rockefeller's Standard Oil. Since then the flow of bribes to senators in America has substantially shrank.

Although rent seeking isn't much of an issue anymore in the United States, it however still is in other countries. Turkey's prime minister has been engulfed with scandals involving construction firms, millions of Turks want him to be incriminated. India has also experienced capitalist corruption as well. Last year 182,000 public officials were punished for discipline and legal violations, which was an increase of 40,000 from 2011.

Even though capitalism based on rent seeking is unfair, it more importantly is bad for long term growth. Resources aren't properly allocated which leads to poor infrastructure, which is the case in India. Competition is also repressed, which can result in the overpricing of goods. Mexicans pay far above the market price for cell phones.

In my opinion, I think that governments need to be more diligent in regulating monopolies. They should promote honest competition and ensure that public asset sales are transparent. What would you do to prevent rent seeking?

http://www.economist.com/news/leaders/21598996-political-connections-have-made-many-people-hugely-rich-recent-years-crony-capitalism-may      

The Decline of Foreign Investment in South Africa
http://www.economist.com/news/middle-east-and-africa/21600176-some-recent-business-bills-pander-populists-deterring-foreign-investors-why?fsrc=scn/tw/te/bl/ed/whyinvest

Two separate mining bills were constructed by the South African Parliament that are expected to decrease foreign investment into the country. In class we recognized that foreign investment is critical for the expansion and growth of a countries economy as a whole. As foreign investors continue to invest less into South Africa the growth and expansion of the South African economy is unknown. The decline in foreign investors is due to a clause in the bill that will allow the government of South Africa to purchase an additional 20% stake in the petroleum venture at an agreed price. This causes investors and businesses to re-think and re-evaluate investing into this venture. If the venture is profitable, it will pay off for the South African economy and the government will be granted more control.

Many problems are being raised in South Africa because of bill changes taking effect. Security guards have more then doubled because of an increase in ownership into security firms. G4S and ADT are two British security firms that have had direct relations with South Africa. These bill changes are pushing these two firms away to create a sense of nationalism. South Africa's president decided not to attend the European Union-Africa summit in Brussels to try to send a message that South Africa is tired of foreign influences. The main objectives of these bills is to weaken property rights, reduce private sector control by displaying right of self government, and hurt investor confidence.

Chinese tourists boost U.S. businesses

http://money.cnn.com/2014/04/01/smallbusiness/chinese-tourists/index.html?iid=HP_River

       With the development of globalization, the whole world is becoming smaller and smaller. People would like to spend their time traveling abroad with improvement of life quality, especially Chinese people. According to the U.S. Commerce Department, there were almost 1.5 million tourists visiting United States in 2012. Comparing to under 400,000 visitors in 2007, it is a huge jump. These tourists spent almost $9 billion in the United States in 2012.

      Needless to say, rich Chinese boost U.S. business. Shopping is the biggest activity they enjoy. In particular, they would like to spend a lot of money on luxury. Not only the luxurious bags, dresses, jewelry but also houses. 

Venezuela tackles food shortage with ID card system

bit.ly/1myYCyl

Because of food shortages, Venezuela is now introducing a new ID system to track families' purchases. This is because there has been a problem of people stocking up on groceries and then illegally reselling them for profit. The cards will be voluntary and will contain incentives like discounts and entry into raffles. 

The articles states, "Rigid currency controls and a shortage of US dollars make it increasingly difficult for Venezuelans to find imported basic products such as milk, flour, toilet paper and cooking oil."

What do you think? Will this work? 

Connecticut Raises minimum wage to gradual $10.10/ per hour

the democrats are touting it as a victory, republicans everywhere are absolutely heaving. Connecticut became the first state that is going to be adopting president Obamas proposed $10.10 hourly minimum wage. They will not do this all at once however and will do it in steps. however by 2017 the state hopes to have had the minimum wage gradually increased to this point. There are two ways to look at this minimum wage in terms of economic (and ironically political consequences). The first being that according to a democrat, this is good news. they feel the wage increase will not only put more money into an employees pocket but it will also result in employees spending that increased disposable income back into the economy. This will result in economic growth. The model may be a bit more complicated than that but that is essentially what the democrats feel is going to happen. However, the republicans feel that this minimum wage increase is going to not only increase unemployment, it will inevitably result in increases business costs. Businesses that they feel may be affected by this wage are mainly small businesses and the service sector which make up a critical crux of the economy. this will thus result in economic downturn. The fact of the matter is that economic theory is something that I feel has never encountered a situation like this. I feel as if in the short run, we may see some downturn in economic growth as the state gets used to increased costs but in the long run as the amount of money that flows from minimum wage workers into the economy is increased, we may see some economic benefits. At the end of the day, the true consequences of the minimum wage hike can only be seen in the long run and not until the middle of the 2020s will we truly be able to judge whether or not the policy has worked or not.