Wednesday, May 27, 2015

The Growth of ISIS

Jack Ellington
Mrs. Straub
Econ
May 26th, 2015
The Growth of ISIS
ISIS (or the Islamic State of Iraq and al-Sham) is a dreaded organization of terrorists that are threatening the US. By now, almost everyone has heard of ISIS, due to coverage in the news and their brute beheadings. Many politicians have made it their focus to stopping them and actions have been taken by using drone strikes. They have gained many followers within the last few years and have been considered the biggest terrorist organization in the world. The US government is having trouble stopping ISIS primarily because of their strong impact on the mid eastern economics and their strength in numbers.
ISIS is located in Syria and Iraq and has done significant damage to the citizens of both countries. The primary focus of ISIS is to spread their Islamic extremism to the government of Syria and Iraq. Their goal is to rule a government under the strict laws their extremist Islamic beliefs. The war in Syria has propelled their movement and strength in numbers
That is specifically why ISIS is so dangerous. ISIS reaches out to the public and offer spots for their “noble” and “holy” army. On top of their dangerous numbers, they have a solid financial plan to keep their organization on track. ISIS obtains revenue by collecting taxes from the public in Iraq, stealing money from banks, selling oil and kidnapping ransoms. However the most significant is collecting taxes. ISIS doesn’t invest too much in oil and more in the public, so drone strikes on oil refineries  might impede their growth, but will not topple them over. The only way to stop the terrorist organization is to stop the army head-on, but Syria is in no condition to do so.

ISIS has taken over a significant power plant Baiji located in Syria and the government can do nothing to stop it. Syria has decided that it is more cost effective to live with the fact that ISIS has taken over a power plant, and due to extreme demand in energy, Syria has decided to buy energy from the organization that seeks to destroy their government. Since there is also little competition for energy near Syria, ISIS can lift the prices as high as they want, and soon they could have a monopoly. If ISIS manages to expand their reach on oil refineries, we could see a change in gas prices on American soil. As it is right now, ISIS has “The Baiji refinery, the largest refinery in Iraq, [which] has a capacity of processing up to 310,000 barrels of oil per day.” Since ISIS is only providing energy to Syria right now, the US economy shouldn’t be affected.
ISIS seems like it is far away, overseas, however it is closer than we think. ISIS members have risen in the US and all over the world, ISIS is growing and will not likely stop growing unless action is taken in the Middle East. Whether US troops are sent, drone strikes are launched, or the UN takes action. All are viable options, and if we do not want ISIS to grow, then action needs to take place.

Almukhtar, Sarah. "ISIS Finances Are Strong." The New York Times. The New York Times, 18 May 2015. Web. 26 May 2015. <http://www.nytimes.com/interactive/2015/05/19/world/middleeast/isis-finances.html>.
Cairo, S. B. "What ISIS, an Al-Qaeda Affiliate in Syria, Really Wants." The Economist. The Economist Newspaper, 20 Jan. 2014. Web. 26 May 2015. <http://www.economist.com/blogs/economist-explains/2014/01/economist-explains-12>.
Fisher, Max. "How ISIS Is Exploiting the Economics of Syria's Civil War."Vox. Vox, 12 June 2014. Web. 26 May 2015. <http://www.vox.com/2014/6/12/5802824/how-isis-is-exploiting-the-economics-of-syrias-civil-war>.
Sharma, Riddhima. "ISIS & the Economics of Terrorism." Model Governance. Model Governance, 5 July 2014. Web. 26 May 2015. <http://modelgovernance.com/the-economics-of-terrorism/>.

Blog

Jacob Becker

We all have our favorite foods and enjoy eating certain foods, however as we know prices for these items fluctuate over time and lucky for us now is the best time in the past five year to eat a peanut butter jelly sandwich. Along with the super healthy side effects it has also become one of cheaper options that can make a superb snack to eat during school, post workout snack, or if you’re really feeling interesting it could make an excellent option to pack for a picnic on the beach.

If you’ve ever walked through a pick n save I’m sure you looked at all the food and had the question all of us have had “what makes food cheaper or more expensive”? While that question is as complex as the milky way, if we look deeply at peanut butter we see why that creamy jar has remained cheap. The US has both a absolute and comparative advantage in producing peanuts because while we only have roughly 3 percent of the entire peanut growing population, we produce 10 percent of the world's peanuts (Peanut Country, U.S.A). This means we don’t have to worry about trading with other people and aren’t impacted by tariffs or any of the other trade barriers that could raise the price of peanut butter.

That means peanut butter should always be cheap then an educated man or woman may think, however inflations always tinkers the prices of goods. In 2011 the peanut butter jelly enthusiasts became fearful of what may occur in the future as the national CPI dropped lower than the CPI of peanut butter. This meant compared to the rest of the food items peanut butter was slightly more expensive than it normally is. Fortunately the demand for this fantastic healthy good didn’t drop because the demand is less elastic than one would think. Thats thanks to the many healthy qualities of this substance make you look as great as you feel. Fortunately for us, of the late peanut butter jelly prices have fallen in comparison to the rest of the foods. White bread prices have fallen 2.7 percent while Jelly has dropped prices by .7 percent and peanut butter 3.8 percent! In addition to these price drops, the CPI index for food has risen 2.3 percent in the past year (Food Production),  making peanut butter jelly sandwiches cheaper now than ever.

(This graph shows national CPI levels to show how cheap peanut butter is currently)

If you’re as stoked as me about the cheaper price of peanut butter and jelly, you probably have grasp of how much money this could save you for college. A recent study found that the average high school student will consumer 1,500 pb&j sandwiches prior to graduating. With prices being where there are now you could save more money than thought possible, however there are some opportunity costs. As much as I love Peanut butter and jelly, I could be getting my second favorite, crescent rolls. So the choice is yours, do you want to eat boring crescent rolls or any other foods or indulge in a healthy, tasty and currently cheap peanut butter jelly sandwich?


"Peanut Country, U.S.A." National Peanut Board Peanut Country USA Comments. N.p., n.d. Web. 27 May 2015.

Food Prices Have Been Rising for Six Months in a Row, and Are up 2.3% from a Year Ago. "It's 'peanut Butter Jelly Time' as PBJ Prices Fall."CNNMoney. Cable News Network, n.d. Web. 27 May 2015.

Tuesday, May 26, 2015

Economics in a Bottle

Madeline Arzbecker
Mrs. Straub
B4 AP Economics
26 May 2015
Economics in a Bottle
A virtually free commodity has been turned into one of the world’s most profitable industries: water. Water is a vital part to the survival of all organisms -- plants, animals, and humans. Throughout history, water has been a free natural resource for everyone, but now households are spending a substantial amount of their paycheck on bottled water. The industry of bottled water has changed the economy as a whole by providing jobs and revenue, but it also has hurt individual consumers by putting a price tag on a free resource.
Although the earth is almost entirely made up of water, fresh drinking water makes up a miniscule percent of the earth’s water. Furthermore, over half of the available drinking water is trapped in icebergs. Check out this video to get a good visual on the scarcity of water. The supply of usable water is limited, but the demand for water is unlimited, so water is a scarce resource, which causes people to have to make choices. The opportunity cost for buying bottled water would be the the ability to purchase other items, however the opportunity cost to not buy bottled water would the luxury having a necessary item readily available, purified, and clean. The interesting thing about this situation is that water is need, but bottled water has now become a want. Bottled water is not necessary; however, water is and obtaining clean water has become very difficult in our industrialized economy (Water Scarcity).
The entire industry of bottled water has changed our economy. It was a rather brilliant idea to put a price tag on a free resource. Bottled water has become the second largest commercial beverage industry. In 2013, it made $102.3 billion in output -- making up just below 1 percent of the United States GDP -- and it employed over 137,000 Americans. Bottled water has raised our nation’s GDP, Gross Domestic Product,  and has lowered our unemployment rate. $2.7 billion in sales tax is generated throughout the country from bottled water. The entire process of creating bottled water has positive externalities that benefit agriculture, manufacturing, construction, transportation and many other businesses (Economics). However, bottled water hasn’t always been this profitable. Over the past fifteen years the industry has grown exponentially with with the United States alone consuming 13 billion liters of bottled water (Water Is Life).
Although bottled water benefits the economy by raising the GDP, GDP fails to address environmental impacts and individual consumer impacts. The amount of plastic waste generated from water bottles has significantly increased pollution. Additionally, most cities spend $70 million every year to dispose of water bottles. Many people believe that bottled water is cleaner than tap water, so they spend on average $0.89 to $8.26 per gallon of water instead of just $0.002 per gallon for tap water. In fact, the city of New York claims that their tap water is just as safe as bottled water. About 40% of bottled water actually comes from tap water, so consumers are paying hundreds of dollars more for a false sense of safety (Problems). This increase in consumption positively affects GDP and unemployment by shifting the aggregate demand curve in the US to the right, but it hurts the environment and consumers.
Overall, the bottled water industry reflects the advancement of our nation. We have figured out how to make a necessary item readily available, while most developing countries don’t have enough drinkable water to keep their citizens alive. Although bottled water hurts the environment and eats up consumers’ money, it helps the economy as a whole and shows that businesses can market anything and create a high demand -- even a free resource like water.


Works Cited
"Economics." Bottled Water Matters. N.p., 19 Sept. 2011. Web. 21 May 2015.
"Five Years after Deepwater Horizon." Voices. N.p., n.d. Web. 21 May 2015.
"Inhabitat | Design For a Better World!" Inhabitat | Design For a Better World! N.p., n.d. Web. 21 May 2015.
"Problems With Bottled Water." Riverkeeper RSS. N.p., n.d. Web. 21 May 2015.
"Water Is Life - Bottled Water Industry." Water Is Life - Bottled Water Industry. N.p., n.d. Web. 21 May 2015.
"Water Scarcity." YouTube. YouTube, n.d. Web. 21 May 2015.

The U.S. Trade Deficit

Danny Ketterman

Mrs. Straub

AP Economics

3 April 2015

The U.S. Trade Deficit
The United States in recent years has had a major problem with their national debt. The U.S. national debt is over 18 trillion dollars which equates to each American owing over $56,000 as their share of the national debt. Why is this so high? In recent years the national deficit, which is the amount of money the country goes in debt per year, has reached over one trillion dollars at its peak and with the U.S. spending as much money on interest on the debt as they are for defense we will only continue to run deficits each year unless we are able to cut our spending.
One large part of the U.S. debt problem is the U.S. trade deficit. The U.S. imports many more goods than it exports. This creates a deficit in the U.S. current account which measures goods and services that are traded. This years trade deficit was over 450 billion dollars. This may seem low compared to the enormous debt that we have, but keep in mind that is the deficit thus it is occurring each year. Beyond that, there are additional costs to this than just the 450 billion dollars. This deficit shows that we are not self sufficient in making our own products, it shows that jobs may be being sent abroad and it shows that there may be an imbalance with which countries have a comparative advantage because of their costs of production. Close to ⅔ of our trade deficit is with the country of China. The reason why we often see that China makes and sends so many products to America, has to do with the fact that China does not have the same wage laws as here in the U.S. In the U.S. our minimum wage laws are much more stricter thus we have a higher cost of production than in China which causes companies to ship their factories abroad to take advantage of the higher margins they will have with this lower cost of production. This allows the Chinese government to not give their citizens a fair wage and it also takes jobs away from the U.S.
United States Balance of Trade
So how does a problem like this get fixed? There are many benefits to free trade. Some of those benefits would include the fact that countries can gain output by taking advantage of specialization. The U.S. has had benefits of this in the past, by creating the North American Free Trade Agreement in the 1990’s which allowed free trade between the countries of Canada, Mexico and the U.S. There comes a time however, when action needs to be taken with another country to improve trade. One option I propose is called a protective tariff. This would be an excise tax on products that are made in China, in order to protect from foreign competition. An excise tax is a high tax on a certain product to discourage people from buying that product. For example the U.S. has an excise tax on cigarettes. If we were to tax specific products made in China, this would cause American companies to want to produce their products right here in the United States instead. We would then become more efficient with our resources and not have to import as many goods since we would be making them ourselves.
Our trade deficit would go down, and our employment would go up. This would also cause our employment rate to go up. Even though unemployment has been going down, employment has been fairly flat because people who drop out of the labor force are not counted in the unemployment rate. This however, would fill jobs and increase the labor force before the baby boomer generation begins to retire. If China were to improve its conditions, we would be able to lift the tariff and again take advantage of comparative advantage without having to worry about companies traveling abroad. China gets better workers rights and the U.S. gets less imports and more jobs. Everyone wins.

For more on the U.S. trade deficit check out this video https://www.youtube.com/watch?v=JEQO0PBC5L8

Sources

"U.S. National Debt Clock : Real Time." U.S. National Debt Clock : Real Time. Web. 3 Apr. 2015.

"U.S. Balance of Trade." Tradingeconomics.com. 2 Apr. 2015. Web. 3 Apr. 2015.

"The U.S. Trade Deficit." YouTube. YouTube, 23 Oct. 2012. Web. 3 Apr. 2015.

Unemployment

Sam Murray

As graduation season is upon us, it only seems fitting that we examine what happens next. Though the majority of us seniors are looking into post-secondary education, not all of us are and those that aren’t will be entering the workforce. Also joining the workforce will be many college graduates as they complete their tenure in college. As seen in the graph below, since 2000 the unemployment rate of persons aged 20-24 is rising.
The unemployment rate is found by taking the number of unemployed people who are actively searching for jobs and divides that number by the total amount of people in the labor force both employed and unemployed.  With increases in the unemployment rate, that will also discourage some workers from looking for jobs which will take them out of the labor force and create a statistic that is actually lower than the actual number that it should reflect. In addition, with increased difficulty finding jobs, many college graduates will lower their standards and become underemployed. When a worker is underemployed, it means that their skill set is overqualified for the job that they are doing, for example, if a person with a Master’s degree in Business Administration, were to be flipping burgers in the back of the local Buffalo Wild Wings, that would be considered underemployment. In June of 2013, “the Federal Reserve Bank of New York reported that a whopping 44% of graduates were underemployed.” The graph below shows the underemployment rate of recent college graduates versus all college graduates in the work force.
As we can see, the underemployment rate of these recent graduates is higher than the rate for all college grads, which is horrific due to the fact that the costs of college are increasing over the recent past. Therefore, being underemployed is often tied to a lower salary and the massive debt built up, which for the class of 2012, is approximated at an average of over $29,000, can spell a lifelong financial trouble. If a whole generation faces long-term financial distress, that could easily lead to extended economic downturn because the spending of those in debt will diminish. Since consumer spending is the largest part of GDP, if that falls for a whole generation for an extended period of time, our national output will fall.
Therefore, the future prospects of our youth both out of high school and college will determine the future of our national economy, and since the prospects are looking bleak with rising unemployment and underemployment rates, the future of the economy could be at risk especially if more people go to college, accumulate massive debt, and then find themselves underemployed with a salary that will not help them in the long run. Let this be a cautionary tale for all of those who are going to college that they try to avoid or limit debt through their collegiate journey, and to attempt to find jobs at their education level upon graduation so that we as a nation can avoid a long-term economic recession.

Works Cited:
Ellis, Blake. "Average Student Loan Debt: $29,400." CNNMoney. Cable News Network, 5 Dec. 2013. Web. 25 May 2015. .
"Employment Rates of College Graduates." Institute of Education Sciences. National Center for Education Statistics, 5 Jan. 2014. Web. 25 May 2015.
Weissmann, Jordan. "44% of Young College Grads Are Underemployed (and That's Good News)." The Atlantic. Atlantic Media Company, 28 June 2013. Web. 25 May 2015.

Thursday, May 21, 2015

2015 Summerfest

Andrew Diedrick
Mrs. Straub
Economics
5/19/2015
2015 Summerfest
The 2015 Summerfest opening day is drawing near. On June 26 the Henry Maier Festival Park along the lakefront of Lake Michigan will open its’ gates for all ages. People from all over the nation, if not the globe rush to this event to listen to their favorite bands, hangout with friends, and try to have a nice night. If you’ve ever been to Summerfest you know what all of the hype is about: the smell of the lakefront, the commotion as the crowd rushes towards their favorite venue, and most of all, exact moment of when the band members come out on stage. Summerfest runs over a course of 11 days, and in that span all of the money generated from the patrons will help pay expenses, incomes, insurance etc. So what am I getting to? There needs to be consumers to fund this event: according to the article Report says Summerfest 2013 had $227 million impact on Wisconsin: “CEO Don Smiley reported that Summerfest 2013 attracted 840,356 patrons”. If all of those 840,356 consumers paid only $20 for general admission, Summerfest would’ve made 16,807,120. This could pay the $1,881,318 annual rent for the next nine years! Sadly however, there are expenditures that must be paid off in full before CEO Don Smiley is allowed to spend anything else, but with all expenses covered it still left summerfest with a profit of $816,904 in 2013. This money was then reinstated into the park: CEO Don Smiley believes that reinvesting into the festival is the best way to bring back a larger audience (Summerfest 2013 had $227 million impact on Wisconsin). As the events gets larger and larger more money will be generated and it will further impact the world’s largest music festival.
Summerfest doesn’t just draw in a crowd that helps further develop next years event, but it also supports the city of Milwaukee and Wisconsin. Inside the gates there are multiple producers that carry food and drinks outsourced by their restaurants, for example a restaurant in downtown Milwaukee called Saz’s normally has a venue out on the grounds selling chi-fries, and mozzarella sticks. These sales generate profit, which will be reinvested into the company, which will hopefully bring in more consumers. Multiple restaurants of Milwaukee have the same ideas as Saz’s by bringing in their food within the gates, and when enough sales occur it (hopefully) results in an overall improvement of the food industry of Milwaukee. These financial gains have helped fueled the city of Milwaukee and Wisconsin itself. According to Summerfest generated $187 million in positive economic impact: “Summerfest 2013 generated $187 million in positive economic impact for the City of Milwaukee; $226 million for the state of Wisconsin” (Doctor). Clearly Summerfest is a positive externality for the city of Milwaukee, and Wisconsin itself.  Overall Summerfest has proven to have a major economic impact on restaurants in the City of Milwaukee, the City of Milwaukee itself, and Wisconsin.


"Report Says Summerfest 2013 Had $227 Million Impact on Wisconsin."
OnMilwaukee.com. 5 Dec. 2013. Web. 19 May 2015.  

Doctor, Carter. “Summerfest generated $187 million in positive economic impact”.
Fox6news.com. 5 Dec. 2013. Web. 19 Way 2015.

Avengers 2

Hannah Dillemuth
Reuter
Econ B4
17 May 2015
Avengers 2
Practically every person has seen a trailer for the sequel to Marvel’s Avengers, their best opening weekend movie at $207 million, domestically. No Marvel movie has yet topped it, although its sequel was close. Avengers: Age of Ultron was released on May 1st, 2015, and has already earned over $1.1 billion globally (Lang). It’s opening weekend made $191.3 million just in the United States alone. Many paid to watch it on as big of a screen as they could find; 16.6% watched the movie on IMAX or PLF (Premium Large Format) screens (Mendelson). Another 29% watched it in 3-D screenings, which typically have larger screens. There wasn’t much demand to watch the movie on a big screen, yet it still managed to bring in over $30 million, although this may be due to the supply of cinemas that actually have IMAX screens.
Recently released in China, Avengers: Age of Ultron is the second highest grossing debut in the country’s history, right after Furious 7 (Lang). Globally, Age of Ultron is the eighth highest grossing film of all time with its $1.1 billion in revenue after just under three weeks.
Getting tickets for an opening day showing, especially one so highly promoted as Avengers 2, would be difficult. On April 28th, when presale tickets were available, 84% of tickets bought in a 24 hour period were for Age of Ultron (McKnight). But even with the staggering amount of tickets sold for opening night, most people aren’t going to go and wait through the crowds all anxiously waiting to see the very first showing. With $5 Tuesday’s, the less die-hard fans would rather wait three days and pay a much cheaper price than opening night. However, even regular Tuesday priced tickets are scarce. If everyone were to have this mindset, the scarcity of Tuesday tickets would skyrocket.
The sheer amount of advertising for the movie helped gain viewers. Everything from trailers on Disney Channel to the press tour was focused on selling the money to as many people as possible. With a total of 4 different trailers, 42 TV spots, and 16 clips of the movie, there was no way to escape the movie (Mendelson). However, all of this advertisement could’ve turned people off at the idea of seeing a movie where almost every major twist had been shown as a “teaser”. Yet the movie was still successful, but not in the way Avengers was (but sequels never surpass the original).
Image from Business Insider
Plus, movies themselves are advertisements. Big name brands like Samsung and Audi and Under Armor are seen throughout Age of Ultron (Acuna). Most companies do this to try and sway the audience's personal preference. Because who wouldn’t want to wear Under Armor just because Iron Man does too? While this may seem like a ridiculous concept, brands have seen an increase in demand for their products. Avengers 2 didn’t even have largest brand exposure of the Marvel franchise; in fact, they were behind Iron Man, Captain America 2, Avengers, and Iron Man 2 (in that order) (Acuna).
Most people, by now, have seen Avengers 2. Considering that it’s already made $1.1 billion, it may even continue to make more money as the weekends progress. But I think it’s fair to say that Avengers: Age of Ultron was fairly successful.  

Works Cited
Acuna, Kirsten. "Here Are the Brands That Appear the Most in 'Avengers: Age of Ultron'" Business Insider. Business Insider, Inc, 6 May 2015. Web. 18 May 2015.  
Lang, Brent. "Box Office: 'Avengers: Age of Ultron' Opens Huge in China." Variety. Variety Media, 17 May 2015. Web. 17 May 2015.  
McKnight, Brent. "The Avengers: Age Of Ultron Ticket Presales Are Even Bigger Than Expected." - CINEMABLEND. Cinema Blend LLC, 28 Apr. 2015. Web. 18 May 2015.  

Mendelson, Scott. "Box Office: 'Avengers 2' Snags Sad, Shameful $191.3M Weekend." Forbes. Forbes Magazine, 3 May 2015. Web. 18 May 2015.