Monday, May 20, 2013

Hornets to Bobcats to Hornets

Today, the worst franchise in the NBA took back the former name from the team who bolted from Charlotte    to New Orleans back in 2002. With the New Orleans changing their name to the Pelicans for the 2013-2014 season, the opportunity for Charlotte to reclaim their name was right in their palms. Or wings.

Either way, Michael Jordan, majority owner of the former Bobcats, recognized an opportunity to rebrand the team and potentially ditch the negative vibes of the worst team in the league. On the other hand, the past Hornets have failed to achieve higher bragging rights over the past few years themselves. But change is good. Change cannot hurt.

The small market teams in the NBA hang tight to the revenue sharing that is mandated by the league. These teams, including Charlotte and Cleveland, have had trouble sustaining high levels of interest in their teams. For a few, winning has been a formidable solution (Memphis). These standards, do not hold up throughout the Big 4 sports (Tampa Bay Rays) and are always questions of what will draw crowds to games.

All in all, this is by far the right move for the Bobcats. The team is definitely rising (take note they are not "on the rise"), but proper rebranding may help bring national interest to a team that has been nothing but an eyesore since 2004.

Sunday, May 19, 2013

Revisiting Predictably Irrational: Beauty and the (Slightly Less Attractive) Beast

Dan Ariely's Predictably Irrational is one of my favorite books that I have ever read. The topic combination of economics and the truth behind human nature was a match made in heaven. Today, I recall one study that Ariely specifically discusses: relativity.

The understanding that humans are bound to act against the rational decision making is tough for many stiff minded scholars to grasp. Sure, we can assume that all competitors will reach economies of scale, allowing the customer the lowest price at all times. In reality, the key for any goods and services does not matter in the grand scale of things, but more so what is going between you and the competitor in the vicinity. This delves into matters of recognizing the differences between Comparative and Absolute advantages.

Ariely's best relativity example in my opinion was the relativity of beauty. The main argument is that if you were to go out with one of your friends (preferably one who looks more or less alike), whoever is naturally more "attractive" will ultimately have an easier time finding a mate. Reasoning? Yes, justification exists.

Say you are set to compare 3 subjects. A and B would be both you and your closely (yet less attractive) looking friend. C, on the other hand, will be a person similar attractiveness to A, yet will look completely different (blonde hair and blue eyes, or vice versa to your own traits). Your admirer will look at all 3 of the potential mates, but find a natural base of relativity when judging A and B. Because there is a benchmark for A to be judged, the ability to recognize attractiveness  is likely to ensue, allowing a higher probable victory over C.

While this will never be a 100% sure thing, I can state that the relativity theory will up the probability higher than a standalone challenge between A and C. For more information, purchase Predictably Irrational and enjoy the rest of the fun, exciting tests that Ariely runs on the guinea pig undergrads of Duke University! 

Note: Ariely advises to never let your less attractive friend know your actions. I advise the same.

Saturday, May 18, 2013

A Return to the Blog

Tomorrow will embark my return to the blognation. For many reasons, I have decided that I need to continue working on my writing abilities, while also keeping up with today's current events. Instead of my previous economics-only posts, I hope to diversify the blog out to matters related to anything that surrounds everything. 

So, in essence, I will cover all that I feel like covering. Tomorrow is a new day. A new blog day indeed.

Thursday, May 10, 2012

The Way of the Future? Self-Driving Cars

The self-driving car may have seen as a futuristic joke in the 90’s, but in 2012, we can see the cars as a reality.  CNN Money reports on Google’s progress in creating a self-driving car, where the “driver” can be the passenger. 

While the driver must remain in front of the steering wheel, Google uses GPS, wheel motion sensors, and radar in order to properly maneuver on surface streets and freeways.  The car has the ability to recognize objects (people or cars) that are within striking range, and properly adjust to avoid any accidents.

Peter Valdes-Dapena believes that these cars will help save lives in the future.  As of right now, some of the technology has already been put into effect on normal cars for better safety measurement.  As long as the product is fully tested, Valdes-Dapena believes that wreckless driving may be a thing of the past.

I believe that the self-driving car can protect lives, avoid speeding tickets, and overall create a better environment on the road.  But these thoughts go with some concern.  First, what will be the cost of the self-driving car?  There seems to be no doubt that having the ability to not have to drive will be invaluable, but will customers be interested in paying a premium for driving?  Many believe that they are qualified drivers who can man the wheel, but there are always will be accidents with this inherent mindset.  Sure the person next to us has gotten into an accident, but that will never happen to us.  So why pay that premium for the self-driving car?

Next, we should consider the art of driving.  There are those out there who love to drive.  I personally enjoy getting behind the wheel and cruising on the highway.  Will people really care that much about safety to give up an activity they thoroughly enjoy doing?  I can’t see that happening.  As long as people are manually driving, accidents will still occur at alarming rates. 

Another note on personally driving can be seen in the sports industry.  Formula One, NASCAR, and any other driving sports can’t be happy about the self-driving car movement.  NASCAR, a dying sport for numerous reasons, can’t afford to tack on the fact that more and more people could be pushed away from manually driving their car.  The reactions of the auto racing industry will be interesting to view as the self-driving car continues to develop.

Lastly, there is going to be some debate over safe driving in a self-driving car.  Will the same rules apply to drinking and driving?  While the car may be able to drive it, as stated in the article, a person still needs to be in the front seat overseeing the actions of the vehicle.  How will law enforcement be able to determine the state of a person driving a car that may seem to be driving rationally?  There are so many variables that make me nervous about levels of intoxication and the appropriate times to get into a self-driving car.  Only time will tell on whether being able to distinguish intoxicated drivers and intoxicated drivers in a self-driving car is actually different (or better).

  1. Valdes-Dapena, Peter. Why Google’s Self Driving Car May Save Lives”.  CNN Money.

Monday, March 12, 2012

Pensions in California Go Wild...

Pensions incentivize people to stay employed with companies for the long haul.  Pensions avoid relocation loss in efficiencies.  But what happens when pensions lead to the destruction of entire cities?

Steven Greenhut writes a piece about the current status of Stockton and its near bankruptcy run due largely to the heavy amounts of money due to government pension plans.  In the article, Greenhut states that there are 94 people who are currently receiving over $100,000 a year in their pension plan in Stockton.  That number is double the amount of a relatively similar sized city in California.  There are also 15,000 total Californians receiving $100,000+ pension plans, which take away a big question mark to where government money could be better off spent.

Now, this is all within Greenhut’s opinion.  It is true that these people who are receiving these luxurious pension plans have worked hard and deserve a solid foundation heading into retirement; however, the problem exists when we see the state of the economy.  It would seem logical that these numbers would be adjusted when times have changed in order to benefit the entire economy.  Instead, California is stuck with a few wealthy government retirees and tons of troubled civilians in the rest of the state.  Balance within the economy is the crux to a successful state, and unfortunately, this isn’t benefiting anyone in the long run.

While it seems largely unfair to strip retired government officials from their golden parachutes (to some degree), our government should be reevaluating the way that pension plans are structured in the future.  If we are giving the same rates that have been offered in the past, we will never be able to dig ourselves out of this crisis in the future.  Yes, creating flexibility in pension plans would be violating the exact reasoning the plans themselves are typically established, but in times of uncertainty, it is difficult not to readjust. 

Take for example quantitative easing.  If we hadn’t been able to print more money to try and stimulate our economy, the United States would have crashed and burned so hard that we would still remain in a recession.  

There is always a need to reevaluate situations and adjust to the surrounding environment.  Sometimes this occurs at huge costs, but as long as the benefits are higher, especially for the long run, we must be willing to sacrifice for the greater good of the country.       

  1. Greenhut, Steven. “If Stockton is Broke, Then Why Isn’t San Diego?” Bloomberg.

More on Education, Krugman's Logic

Here is a further pursuit on the effects of policy on the US education system.  Paul Krugman wrote a piece about the current state of our education system, and Krugman specifically targets the right wing for impeding on the growth of youthful minds.  The whole argument surrounds religion, and how colleges in the south have even parted away from certain majors that may contest what the bible has stated.

This question really sparks what I believe is a greater problem beyond the point of hindering human capital in America.  The standards that have been set by each party is something that I have had a problem with. 

Especially in the recent election, the GOP has reached out to focus on social hot button topics that ultimately ruin the opportunity for the fiscal policy to be implemented.  The economy should come first in the government system with the struggles of current times.

Another point to note is the final argument in Krugman’s piece.  If colleges are taking away certain majors in science departments, we are seriously crippling diversity in college education.  As of today, science majors have some of the highest growth potential, with innovation continuously occurring in the fields of science. 

The consequences of fewer schools offering science courses could cause a heavier flow of other majors to become impacted, including business and economics majors (two of the higher impacted majors already). 

My opinion is that it is likely that students going to colleges that aren’t offering these majors are schools with religious backgrounds.  Because of this, students aren’t going to be likely to partake in the same beliefs, hence little effect to the development in major diversification.  Even though it may not be the best for human capital growth in America, everyone should have a choice in what they want to pursue as a career.  In this case, Professor Krugman may be overlooking this matter, and should respect people’s decisions to follow their beliefs in their careers. 

  1. Krugman, Paul. “Ignorance is Strength”. NY Times.

The Retail Numbers Should Be Marching

As we see growth in the US job market, we can only hope that we begin to see growth in the retail market as well.  Reuters reports that currently, the United States economy hasn’t quite built up to the proper level of retail sales since the growth of the economy has started to climb back over the past months.  Stella Dawson insists that because retail is responsible for 2/3 of the economic activity in the US, the stability of the economy will eventually rely on consumers continuing to buy products. 

Dawson points out that not only has the job market improved, but more people are starting to buy cars in 2012.  As historical data can explain, people choose to save more during tougher times.  In the past few months, more Americans are feeling confident with the state of the economy.  In the next few months, it would be safe to bet that people are going to continue to trust more in the economy.

The Personal Savings Rate in the United States shows that people are saving less of their money as the US has started to climb out of the Great Recession.  Hopefully this is a sign that the tougher times are behind us.

The growth in the United States economy has come at a time when most of the other major countries are struggling.  China has forecasted slower growth in the GDP.  Europe is still dealing with the constant threat of default by Greece.  But among all of this, the US still has a chance to benefit and bounce back. 

“Personal Savings Rate”. FRED.