By G.L.C., on August 26th, 2008
In 1911, Dr. Miles Medical Co, a maker of relaxants and other medicines, sued a distributor, John D. Park & Sons Co., for selling at cut rate prices. The company lost the case when the Supreme Court held that it was trading too close to cartel-like trading. The judgment in the case Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373 (1911) became a precedent in antitrust law and came to be known as Dr. Mile Rule. Under that rule minimum prices manufacturers set on what dealers can charge customers for their products are deemed as illegal per se under the Sherman Act, no matter what evidence might be presented.
This precedent has now been revered by the Supreme Court in Leegin Creative Leather Prods. v. PSKS, Inc., 127 S. Ct. 2705 (2007). The Supreme Court in a 5-4 decision held that minimum pricing pacts between manufacturers and retailers could benefit customers under certain circumstances and should be considered on a pact by pact basis. The pact could foster competition by giving retailers enough profit to promote a brand or offer better services. The Supreme Court upheld the manufacturer’s right to enforce minimum prices on its own products.
Before this judgment, a manufacturer would be violating the antitrust law by punishing or discriminating against a retailer who sells at cut rate prices. This judgment gives the manufacturers new powers and can change the face of discount retailing in the United States. Manufacturers can now require retailers to abide by minimum pricing pacts or have their supplies cut off.
This ruling has in effect allowed price fixing to make a comeback. It undermines the free market by limiting the consumer’s power to decide for himself whether to buy at rock bottom prices from a no frills retailer or pay the full price at a retailer offering better services and other benefits. From a consumer’s point of view, it is very difficult to prove that such minimum price fixing pacts are anti-competitive.
The judgment has failed to consider one important aspect of retail trade – competitive environment. A uniform price might not work for all retailers.
This judgment will most probably result in many manufacturers fixing the minimum price at which the retailers must sell their products. This could feed inflation. Among the dissenting judges, one judge estimated that legalizing price setting could add $300 billion to consumer costs every year.
Manufacturers have welcomed this decision. Many manufacturers look upon discounts as tarnishing their image. Many have used this decision to get price fixing allegations against them dismissed. Cendant Corporation, the owners of Avis and Budget rent-a-cars, was facing price fixing allegations in a case filed in the U.S. District Court in Anchorage, AK, filed by one of its franchisees. The very next day after the Supreme Court’s ruling, Cendant asked the court to dismiss the allegations. The court dismissed the allegations citing the Supreme Court judgment.
Welcome to the new era of legalized price fixing.
By Cheryl Grey, on August 25th, 2008
Is the United States starving the world to save its citizens from high energy costs? Is processing corn into ethanol lowering global food supplies and leaving people hungry elsewhere?
There have been numerous attempts to link worldwide food inflation with U.S. attempts to lower oil imports through increasing production of ethanol. Most of these discussions are simple supply-and-demand models: by siphoning corn into ethanol production, the amount available to feed the world’s hungry people is reduced. This pushes up demand for other grains as alternative food sources, raising prices across the board and leaving poorer nations to do without.
The theory became widespread as grain prices on the Chicago Board of Trade spiraled during the first half of the year and wasn’t helped by droughts in Australia and South Africa. When Russia slapped a 40% export tariff on their wheat crop, when Argentina refused to share their wheat and Vietnam their rice, when food inflation protests exploded in Mexico, Italy, Pakistan, China and Indonesia, many fingers pointed to ethanol as the prime culprit.
There’s just one problem with the theory: it’s not supported by the facts.
Ethanol’s Place in the Food Chain
Ethanol is mainly produced from animal feed corn, as in “Iowa corn-fed beef.” Because this crop isn’t intended for human consumption in any country, directly linking ethanol to global food supplies is nonsense.
Ethanol production does not use the entire corn kernel, only the starchy part; the remainder is used for animal feed as originally intended. Industry advocates claim these by-products, termed distiller’s dried grains with solubles (DDGS), offer greater nutritional availability because of the processing, as breaking the kernel’s tough outer shell makes the grain’s innards more accessible to the animal’s digestive tract. (Feed corn is often cracked prior to feeding for this very reason, even if no ethanol is produced.)
Because removing all of that starch from the corn leaves a higher protein feed that’s loaded with vitamins, DDGS is in growing demand as a feedstock. It’s now being exported to the Eurozone, Canada and Mexico, while an Australian feedmill has requested a sample shipment for trial in the local dairies.
Ethanol in context
However, the real problem with the food-or-fuel theory is that it looks at food prices outside of the context of the global economy.
As is the case for many other commodities, several factors came together in 2008 to drive up prices. These include the usual suspects of financial market turmoil due to the subprime mortgage fiasco, a commodities price bubble caused by investors looking for safer places to park their funds than global equities markets and an historically weak U.S. dollar. Because most commodities are priced in dollars, when its value falls on the world market, prices must rise in an inverse ratio to compensate. Metals prices also shot through the roof, but ethanol production had nothing to do with that, either.
The unfortunate fact is that energy costs are more directly related to the price of processed foods than are the costs of raw materials. Value is added by processing, packaging, storing, shipping and refrigerating foods, all of which require energy, which also skyrocketed in price this year. No matter how high the cost of a bushel of corn rises, it remains less than 5% of the cost of a box of corn flakes. Even shipping unprocessed grains to hungry people overseas has become more expensive, with ocean freight charges just beginning to recede from record levels, too.
The U.S. heartland remains the breadbasket for the world. The 2008 corn crop is currently estimated at 12.288 billion bushels from 87 million acres, the second largest on record despite the spring flooding in the Midwest and close behind 2007’s record-breaking crop of 13.1 billion bushels. Around 20% of that will be exported, accounting for almost 70% of all world corn exports—without export tariffs.
Meanwhile, the growing ethanol industry contributed $47.6 billion to the U.S. economy in 2007, influencing or creating 238,541 jobs in various industrial sectors including 46,000 manufacturing jobs—jobs that must remain near the corn-producing states and therefore cannot be outsourced to India or China—and generating $4.6 billion in tax revenue for the federal government and another $3.6 billion for various local and state governments. The 6.5 billion gallons of ethanol produced meant that 228.2 million barrels of oil were not imported.
Perhaps the U.S. really can have its cake and let the world eat, too.
By Evelyn Black, on August 25th, 2008
My last post here at Amateur Economists was all about the crazy run-around I experienced trying to get heating oil delivered to our house this summer for the coming winter. We ordered the tank filled in early June; but it was just last week that I finally got a heating oil company to fill our tank. CBS News also ran a special report last week about how the credit crunch in the financial markets is making it difficult for small East Coast oil companies to purchase heating oil for delivery. Subsequently a number of such companies in New England have already gone belly up.
While everyone I called here in Michigan staunchly denied that Mid-west supply problems or credit issues were crimping the availability of heating oil, the fact remains that, for the first time, it took a summer of arguing with various heating oil distributors to get one to finally deliver some to us, even though we were prepared to pay for it in full (and did). This is very unusual, since in the past these companies have always been anxious to deliver oil out of season, and even offer a discount for ordering it early.
Those days appear to be past.
Last winter it cost us about $2300 to heat a 1000 square foot, well insulated home with our oil burning furnace, and the cost per gallon is higher this year, even now. So we decided to research alternative ways of heating our home without committing to any one particular plan. After getting prices and reading up on all sorts of heating methods, we decided to buy a wood pellet stove.
Wood pellet stoves burn much cleaner than wood stoves. They make so little ash that they can be vented directly outside via a three inch pipe, much like a clothes dryer. They do not require a chimney and they do not build up dangerous creosote. The wood pellets are relatively cheap (currently about $350 for a pallet of bags that will keep a home this size heated all winter), and save the homeowner from constant scrounging for wood and the labor involved in splitting and storing wood.
Best of all, wood pellets are made from waste wood and sawdust that is compressed to remove all the moisture, so no trees are destroyed solely for the purpose of fueling pellet stoves. This is wood and wood products that would be thrown away anyway, and the burn is so clean it produces very little smoke. Some pellet stoves will also burn dried corn. Others will burn switchgrass pellets. So basically, the energy source is almost completely renewable.
One drawback: Because the pellets are fed into the burner from a hopper electronically, a small amount of electricity is needed to run the stove. This means that if you plan to rely heavily on a pellet stove, you want to make sure you have a back-up generator or another source of heat, just in case the electricity goes out.
We found a pellet stove for $1100. The installation will run about $400, and the pellets for the winter between $350 and $500. This means we will completely recoup our investment our very first winter, and we do have a full tank of oil and a working oil furnace that we can use for back up if necessary. Speaking with friends who actually live in larger homes and have used pellet stoves for several years, we discovered they rarely needed to use their original source of heat (the furnace). The pellet stove was sufficient.
So far, so good. But consider this: Almost every place we went to look at these stoves had a story to tell. The first store manager told us that last year he sold two pellet stoves in July. This July he sold 46. The next two places we visited have been unable to obtain the stoves for months and have tons on backorder. Three stores told us the stoves are no longer available from East Coast distributors, but some Mid-west distributors still have them in stock. We felt lucky to find a company that did have some still available for delivery. Ours should be here in about five days.
An article in the New York Times explains that even though oil companies made record profits this year, all of them are having supply problems due to geopolitical issues. U.S. oil supplies have been dropping for five consecutive quarters now, with the most recent quarterly drop being the steepest of all.
Western oil corporations deny vehemently that the scary “peak oil” scenario is responsible for this decline. Instead, they refer to “geopolitical peak oil”; which means that countries like Venezuela, Russia, and Iraq want to keep their oil profits in their own nations, even if it means having to develop the oil fields themselves and shut out multinational oil corporations.
It is completely understandable why developing nations would want to nationalize their oil profits. What is somewhat harder (for me) to understand is why our own government isn’t addressing what could turn out to be a real crisis here in the U.S. should we get hit with a very cold or severe winter.
Last winter, in the Michigan city in which I live, an elderly woman froze to death in her own home because the only disconnect notice legally required of the utility company was a warning flier tucked in her front door. It was still tucked in her front door when relatives found her body. She had been dead of exposure for several days. Family members said she was probably embarrassed to ask for help.
By G.L.C., on August 25th, 2008
A recent study by the Paris-based Organization for Economic Co-operation and Development which examined the national tax burdens and their impact on the growth and incomes in member countries concluded that corporate taxes are most harmful for growth. The study also concluded that investment is adversely affected by corporate taxation and that the most profitable and rapidly growing companies tend to be the most sensitive to high business tax rates.
With an average combined federal and state corporate tax rate of 39.3%, the United States has the second highest corporate tax rate in the world, next only to Japan. The corporate tax rate in the United States is even higher than socialist Sweden and welfare-states Germany and France. If the business is based in states like California, Iowa, New Jersey, or Pennsylvania which have high corporate tax rates, then the tax on business income is even higher than in Japan. Economists have long argued that this high rate of corporate taxation has made the United States uncompetitive, driving away capital. But the lawmakers in Washington, D.C., feel otherwise. A Government Accountability Office (GAO) study in 2005 came to the conclusion that almost 28% of the large American companies paid no tax that year.
Although the corporate tax rate is almost 39.3%, the share of corporate taxes in the Gross Domestic Product (GDP) is 2.5%. Ireland has a corporate tax rate of 12.5%, but the share of corporate taxes in its GDP is 3.4% – higher than the United States with its higher corporate tax rate.
The irony of the situation is that while the United States has the highest corporate rates, there are a lot of loopholes which favored businesses can use to avoid the high rates. The Tax Foundation looked at the 2005 GAO study and found that among the large companies that paid no taxes, 85% of them made no profits that year. The same year, two large companies – American Airlines and General Motors – used the loopholes and avoided paying taxes by reporting losses of $862 million and $10.5 billion. The loopholes also affect the economy adversely. Businesses spend millions of dollars to exploit these loopholes.
The United States taxes businesses on their worldwide income. This has important implications for American companies competing in foreign markets. Because of higher tax costs, American companies may lose foreign market share, generate lower returns for American shareholders, and hire fewer skilled workers in the United States.
In an effort to remain competitive, some American companies are changing their structure to become foreign-owned firms – the American company places itself under a new foreign parent company formed in a lower-tax jurisdiction. The firm still pays taxes to the U.S. government on all U.S. income, but it no longer pays U.S. tax on its income earned outside the U.S.
Other countries are cutting corporate tax rates because they’ve learned the importance of having a competitive tax climate. Countries cannot attract new business and job creation if their corporate income taxes are significantly higher than comparable nations. Most other major countries do not tax foreign business income as aggressively as the United States. In fact, most countries have “territorial” tax systems that tax businesses on domestic income only.
It’s time for the lawmakers in Washington to wake up and reform the tax code. In this ultra-competitive world, countries are going all out to woo businesses. The United States is becoming a less competitive place to do business. The inaction on the part of the lawmakers is only making it easier for other countries to woo American companies with lower tax rates.
By Cheryl Grey, on August 22nd, 2008
In many impoverished and economically undeveloped parts of the world, jobs are scarce and people without one must earn their living through some sort of self-employment. Unfortunately these “microbusinesses” often provide barely enough income for a family to survive, without paying for education, healthcare or a higher standard of living, leaving the poverty cycle unbroken.
But a small infusion of capital, sometimes less than US$200, can offer these entrepreneurs a chance to expand their businesses, bring in more money and even hire employees, thus helping other families in the process. Such microloans foster grassroots economic growth and, proponents say, can change the world, one poverty-stricken community at a time.
Microlending is being touted as the next and best wave in foreign aid. With around US$4 billion invested annually around the world, the strategy offers alternatives to those with none, while leaving out such middlemen as usurious moneylenders, despots and their bureaucracies. Produce sellers in Tanzania, grocery store owners in Mexico and dairy farmers in Azerbaijan have all benefited from this concept, and, perhaps most amazing of all, it boasts a repayment rate of 95% or better.
Criticisms
The strategy is not without its critics. Microlending, they say, does not truly help the poorest of the world’s poor. After all, people without food or shelter must manage their survival, their families and their health before they can manage a business or contribute to their community, and in such cases perhaps profits would be more appropriately used to upgrade living standards than repay a loan, no matter how micro. For this reason, Trickle Up, an agency working with the most poverty-stricken people in the world, issues microgrants rather than microloans.
In areas of extreme poverty, such as rural agricultural areas, local businesses have a limited clientele with money to spend, even for the necessities of life. This puts a low cap on earning potential before the business even opens its doors, the so-called “thatched ceiling,” and while a microloan may make all the difference in reducing one family’s poverty, it may not bring about a significant change in the regional economic malaise.
Additionally, microlending can carry high overhead. Some agencies, in addition to small loans, also offer business education, insurance, depository facilities, payment transfers and other financial services, all of which require staff, office space and equipment. For these agencies, according to the International Labour Organization, efficiency becomes extremely important as an overhead-cutting strategy. While it’s true that microlending is generally perceived as more of a poverty-fighting tool than an investment, nevertheless if the cost far exceeds the return then it becomes difficult to maintain the microlending institution as a going concern, never mind a profitable one.
Because of this dual bottom line, many microloans are made to women, and some organizations intentionally target them as clients. The data suggest that men tend to invest their profits in their businesses, but women fund their families—educating, feeding and providing healthcare for their children, thus reducing the effects of poverty and giving the next generation a chance for a better future. Interestingly, women are also seen as more likely to repay their loans than men, another reason they are often preferred as clients.
“Village Banking”
To be truly effective, microfinance must be local. An understanding of an area’s culture, needs and infrastructure (or lack thereof) is required before the lender can make knowledgeable decisions regarding the best use of the funds available. One solution to this problem, used with success by FINCA and other international microfinance organizations, is the concept of “village banking,” where loans are made not to individuals but to communities, who decide amongst themselves how best to use the funds and who support each other should one member prove unable to make a scheduled payment for any reason.
With these issues, microfinance is unlikely to completely replace traditional foreign aid anytime soon, and perhaps the absolute best alleviation for world poverty lies in some combination of these strategies. However, microlending’s potential for helping the world’s poor to help themselves is vast and undeniable. Unlike handouts, there’s at least the possibility of a partial return on the investment—sustainability figures for non-profit microfinance institutions currently run around 70%—which can then be used to foster economic growth in other regions. And even after the loan is paid off, what remains is an entrepreneurial spirit, healthy and educated children and a positive sense of accomplishment.
By Anthony Luafalealo, on August 22nd, 2008
Amateur Economists is still less than 2 months old, but some major sites are beginning to notice.
News aggregators that currently index our content are Google News, Alltop, Healthcare 100, and Wikio.
The only site so far that has syndicated one of our articles is Seeking Alpha. However, we are working with a syndication company to have more of our articles syndicated, so bookmark us or, for greater convenience, subscribe to our newsfeed/email updates for future updates on this.
Other notable sites that have linked back to our articles are:
Additionally, we are also a member of the HITSphere.com network and the Freakonomics blogroll.
However, I’d like to take a few moments to talk about Alltop, the most recent aggregator we joined. They began including our content in the Economics category (or site) on Sunday, August 17. Their sites cover all the topics you can think of, from ADHD to Yoga. And they’re adding more everyday.
By visiting the Economics site, you can see that they display the 5 latest stories published by each website or blog along with links to the individual articles and the website/blog itself. Alltop sees itself “as a ‘digital magazine rack’ of the Internet. To be clear, Alltop sites are starting points—they are not destinations per se. The bottom line is that we are trying to enhance your online reading by both displaying stories from the sites that you’re already visiting and helping you discover sites that you didn’t know existed.”
Another neat feature of their site is that it allows you to hide the sites/blogs you don’t want to read, which can be very helpful since there are dozens of them in each Alltop site. If you can’t find your favorite site or blog on there, they are always open to new suggestions (see their About page). They are also working on adding more customizing features.
I encourage you to visit their site to find out more about them and other interesting sites and blogs you have yet to discover.
Finally, I’d also like to thank all of you for loyally reading Amateur Economists, some since the beginning on July 7. We’re happy to bring you the current events affecting the areas that economics has branched out to. We also enjoy your feedback, whether it be in the forums, in our feedback inbox, as comments in the blogs, or as pingbacks from your own blog. We also hope you enjoy our magazine and share about us with your family and friends. Feel free to use the “Bookmark & Share” link below each blog post and in the right-hand menu of each earticle to share your favorite articles/blogs via email or social networking sites.
By G.L.C., on August 22nd, 2008
The high oil prices have forced the government to act once again. Earlier it was the Stop Excessive Energy Speculation Act – an attempt to rein in speculations in the oil market.
In July 2008, when the price of oil touched $150 a barrel, the Federal Trade Commission came under increasing pressure from lawmakers to act tough. The lawmakers felt that the main reasons for the high oil prices were excessive speculation and possible manipulation. The Excessive Energy Speculation Act tries to rein in speculation. To combat possible manipulation in the oil market, the FTC has proposed the anti-manipulation rule. This is an attempt by the FTC to fulfill its Congressionally-mandated responsibility to prevent manipulation in wholesale oil and petroleum distillate markets.
Perhaps the biggest and most well hidden goal of the oil manipulators is in their long term strategy. By creating a public perception that there is a shortage of oil, the blame will fall on OPEC. With an angry public attacking some of their politicians to make it better, legal restrictions prohibiting drilling in ecologically sensitive areas might be rescinded. Drilling in the Gulf of Mexico, along the California coast, in Prudhoe Bay Alaska, along the Alaskan coastline – everywhere where they were heretofore prohibited from drilling would be opened by public demand. This long term windfall would make the present flow of cash look like peanuts. And the damage done to fragile environments would be incalculable.
The rule defines manipulation as knowingly using or employing, directly or indirectly, a manipulative or deceptive device or contrivance – in connection with the purchase or sale of crude oil, gasoline, or petroleum distillates at wholesale – for the purpose or with the effect of increasing market price thereof relative to costs.
The proposed rule covers both spot and futures market and prohibits petroleum market manipulation. Under the rule, the FTC can levy fines up to $1 million per violation a day. The FTC hopes to conclude the rule making process by this year end.
The rules would bar any fraud or deceit in the purchase or sale of crude, gasoline, or other petroleum product. Fraudulent or deceptive acts, including false reporting to private reporting services or misleading announcements by refineries, pipelines, or investment banks, will be covered by the proposed rule.
The rules are modeled after the market manipulation prohibitions maintained by the Securities and Exchange Commission and targets fraudulent or deceptive conduct “that threatens the integrity of wholesale petroleum markets.” It would be unlawful for any refineries, pipelines, investment banks, or any other outfit to directly or indirectly commit fraud in the purchase or sale of crude oil, gasoline, or petroleum distillates at wholesale. There would be no new obligations or record-keeping requirements.
The proposed rules also cover the futures market – the domain of Commodity Futures Trading Commission (CFTC) and is likely to spur a regulatory turf battle between the FTC and the CFTC. The CFTC is authorized by the Commodity Exchange Act to bring an action against anyone who has unlawfully “manipulated or attempted to manipulate the market price of any commodity.”
Many experts feel that the new rules will serve no purpose. Why? An FTC report issued on May 22, 2006, found no situations that might allow one firm or a small collusive group to manipulate gasoline futures prices by using storage assets to restrict gasoline movements into New York Harbor, the key delivery point for gasoline futures contracts.
By Mary Nichols, on August 21st, 2008
Extremist political groups and parties often flourish in regions of economic deprivation, where populations feel alienated from the establishment, disillusioned by mainstream politics and seek convenient scapegoats for their circumstances. This may mean that one outcome of the current global economic downturn and its exacerbating impact on already disadvantaged areas may be a expansion of the neo-Nazism which is already taking a grip in some rural areas of Eastern Germany and has been making its presence felt in other European countries.
In Germany, the spread of neo-Nazism especially in the former Communist-controlled rural eastern provinces has been a growing problem over the past decade. Although Nazi organizations have been officially banned in Germany since the end of World War II, poor clarity and enforcement of the laws have allowed a large number of mainly small neo-Nazi groups to emerge – it was estimated in 2001 that these had a total membership of at least 50,000. Blatantly racist neo-Nazi activity came to public attention as a result of media coverage of violent racist attacks as well as high-profile campaigns such as the 2001 Berlin demonstration against the opening of a Crimes of the Wehrmacht exhibition, which resulted in violent clashes between neo-Nazi demonstrators and left-wing anti-Nazi opponents. Between 1999 and 2000 the number of racist and other far right crimes rose by 59% to 16,000 in Germany, with violent crime accounting for more than 1,000 cases, including more than 30 brutal murders of foreigners. Neo Nazi racism and xenophobia was partly fuelled in the late 1990s, as in other parts of Europe, by the influx of large numbers of refugees and asylum seekers. Members of these groups became the most common targets of neo-Nazi racial violence, purportedly because they were stealing jobs from German nationals, committing crime and ruining traditional German communities.
Mainstream Racism
Although many German neo-Nazi groups are small and operate outside the formal political system, a more sinister force is reportedly driving the escalation of far right extremism through the use of official political channels and by strong marketing of nationalism to disaffected German youth. The far right National Democratic Party (NDP), which blatantly promotes its own fashion brands and nationalistic pop music to young people, has been making significant gains in mainstream politics at state level in rural eastern Germany in recent years. The party secured 9.2% of votes in Saxony in 2004 and nearly 7.3% in Mecklenburg-Vorpommern in 2006, giving it a number of seats at state parliament level. It has recently been forecast to take control of a significant number of town councils in local elections to be held in 2009, which would extend its stronghold over a vast area of eastern Germany from the Baltic Sea coast to its southern borders. Already, anti-racists have been warning racial minorities to avoid this area, where the NDP would like to establish “freed zones” of white Germany supremacy, a sentiment which is spookily reminiscent of the anti-Semitism of 1930s Germany. In May 2008, the German Government responded to the resurgence of neo-Nazi activity in eastern provinces by banning two explicitly neo-Nazi groups, Collegium Humanum and the Association for the Rehabilitation of People Persecuted for Denying the Holocaust, yet the NDP continues to make political strides. Perhaps most alarming is its strong appeal to rural east-German youth: 28% of under-18s expressed support for the NDP in a recent survey in Saxon Switzerland, a region near the Czech border.
Germany is not the only European country which is witnessing a growth in neo-Nazi and far right political activity and racial violence. In Russia, a number of extreme Nationalist groups and parties have recently held rallies and demonstrations in Moscow and the Russian provinces, and there have been increasing numbers of reported violent attacks and murders of foreigners throughout the country. A 2007 report by a Human Rights group noted that in both France and Britain, anti-Semitic threats and acts had risen dramatically in the previous year. More generally, political parties on the far right, whose main agenda is preventing further immigration to their respective countries, have been making significant gains in a number of countries including Belgium, the Netherlands, Italy and Denmark. It remains to be seen whether such parties and the various neo-Nazi groups and organizations throughout the continent are able to capitalize on the economic difficulties now facing Europe.
References
Anonymous (2001). Europe: Charlemagne: Otto Schily puts the cuffs on Germany’s far right. The Economist 358, 8213, Mar 17, 2001.
Anonymous (2001). Europe: An untamed beast; Germany’s far right. The Economist 377, 8448, Oct 15, 2005.
Anonymous (2008). Russian human rights activist comments on rise of neo-Nazism
BBC Monitoring Former Soviet Union. London: May 10, 2008.
Benoit, B. (2007). On the march – how Germany’s extreme right is making gains in the blighted east Europe: Patient fieldwork is enabling the National Democratic party to build a power base at local level in poor parts of the countryside. Financial Times, Jan 9, 2007.
Besser, J.D. (2007). Human rights groups recognize rise in European anti-Semitism
Jewish News, 61, 23, June 7, 2007.
Kulish, N. (2008). Germany: 2 Groups Banned For Neo-Nazism. New York Times. Late Edition (East Coast). New York, N.Y.: May 8, 2008.
Paterson, T. (2001). (December 2, 2001). Berlin police use tear gas to quell anti-Nazi protest. Telegraph.co.uk, December 2, 2001.
By Stephan Zimmermann, on August 21st, 2008
The Internet, television, and magazines or newspapers are full of features concerning economics. So is Amateur Economists. The gamut runs from economic philosophy to politics to econometrics and more.
Readers have many questions. Undoubtedly, you will too.
I’ve always subscribed to the maxim that the only stupid question is the one you didn’t ask.
Here’s your chance to prove that you’re not stupid. Ask me.
There are, of course, a few guidelines. Fortunately, you won’t find too many.
Obviously, I want to answer questions about economics, not why the sky is blue.
Of course, I don’t want porn, filth, smut, or anything that our editorial staff or readers will find offensive. Go visit the millions of sites where those things are acceptable.
Try to keep your questions to a sentence or two. Please don’t try to write a question the length of James Joyce’s novels.
I’m not afraid of controversial questions. Just make sure they deal with the economics of an issue.
If you’ve been following the economic talks of the various political candidates during this election year, you should find tons of questions that the normal media doesn’t ask.
Do you have a pet peeve in economics? Maybe I can find an answer for you.
Ever wondered why we grow enough food to feed everyone in this world, yet we don’t? The answer may surprise you.
What’s so “dismal” about the “dismal science”? Nothing, if you know who first coined the phrase.
Do you have to believe in economics even if you’re not a card-carrying capitalist? You bet! Marx or Lenin or Chairman Mao all dealt with the issue in their own way.
My favorite question? What is a widget, anyway?
As the saying goes, if you laid all the economists end to end, they would never reach a conclusion. So it may be with Amateur Economists. Chances are your questions will lead to a lively, stimulating debate. The questions are yours. The answers come back from a real person, not a preprogrammed computer format. Come back often to see how No Widgets Here answered your question.
***
Stephan Zimmermann is former department chair for economics and taught at various colleges and universities at both graduate and undergraduate levels. He was also a private economic consultant for firms ranging from entrepreneurial ventures to multinationals. Stephan studied at the University of California at Berkeley, Cambridge University, and the Monterey Institute of International Studies. He is currently retired and devotes his time to writing both fiction and nonfiction.
Submit your questions in the comments area.
By J.C., on August 21st, 2008
In any small business, including running a physician’s office, the most valuable piece of your business is the real estate. Most people have heard the McDonald’s story of founder Ray Kroc, who believed that the most valuable aspect of McDonald’s was the real estate underneath each restaurant. For small business owners including physicians, getting a piece of the dirt underneath their business is essential.
As I have mentioned in other posts about physician’s offices, the top two expenses in running a business are payroll/benefits and overhead. The most costly part of overhead is rent or leasing of space to run your business. Thus, aside from cutting staff to reduce payroll and benefits, the best thing you can do for your business is to negotiate a better lease or to purchase your office space and pay it off over time. Most retail businesses must choose the best location for their business that generates high traffic and lots of willing customers. Similarly, physicians must also choose locations that are either part of existing hospital medical complexes or are close to large populations and ancillary facilities. Physician’s must also ensure that their offices are accessible to public transportation as many patients must use public transportation to travel.
Many physicians starting out cannot afford to purchase their own space. Thus they must lease space until they have the means to purchase. If you choose not to own your space, then in order to build some wealth you need to invest your income and savings wisely. For when that day comes that you must shut down your practice or your business, it will be the only thing you have to show for all of those years of hard work. If you are able to sell your practice or your business then that is a big bonus. But unlike other retail businesses, most physician’s practices are not sold for much.
One strategy some physicians utilize is to buy larger space than they typically utilize. Then they rent out space to other physicians. This is an excellent strategy for those physicians who have the means to do this. In some respects it turns the physician into a real estate investor rather than just a business owner. Thus for smart doctors who think in advance and invest in their practices, they will have a lasting asset that goes beyond the life of their practice.
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