China and the International Box Office

As a film student, I was curious about the importance of the international box office to the economy of the movie industry, and how money is influencing art. For this post, I wanted to research and get the facts on how much the international box office actually earns for movies.
According to World 101, “Today, nearly 70 percent of Hollywood box office revenue comes from abroad, up from just over 30 percent in 1991.” Deadline reports that in 2018, Disney’s domestic gross was $3.092 billion, but international gross was $4.233 billion. The Hollywood reporter stated that China specifically is projected to pass the U.S. box office to become the globe's top movie-going audience this year. Generally, the international market is extremely important and earns a lot of money
But how much of that money actually goes to the studio? How Stuff Works stated that, “In the U.S., $100 million in box office revenue can ultimately generate around $175 million in total revenue. That same $100 million in box office revenue generates about $27 million in revenue in China, $65 million in Russia, $83 million in Japan and $130 million in the United Kingdom.” This demonstrates how, despite the fact that a lot of money is gained from overseas, the domestic box office remains the biggest bringer of money. This means that in order to get the most money possible, movies may pander to audiences overseas.
China, being such a huge market, is one that many filmmakers likely want to have under their belt. However, censorship laws in China can get those movies banned, so there is no advantage to the filmmakers. Movies that have been banned are Brokeback Mountain, Alice in Wonderland, The Dark Knight, and Mad Max: Fury Road. They are all banned for their own reasons, and none of these movies were financial failures by any means. But now that China is predicted to surpass domestic box office, some changes may be seen or have previously been seen in movies.
The Washington Post points out in a 2015 article a few movies they believe to have adapted plots meant to “woo” Chinese audiences. “Transformers IV,” “X-Men: Days of Future Past,” “Looper,” “Gravity,” and "Iron Man 3” are the ones they specifically brought up. At that time, only 34 movies per year were allowed in, so competition was tough. There is no reason that someone wouldn’t add in characters, subplots, or other narrative devices to edge themselves ahead of the competition in order to access the second biggest box office in the world.
Hollywood also changes their films for Chinese Censors. Recently, “Bohemian Rhapsody” was censored of drugs and gay content. This left many asking what movie was even left after so much would have been taken out. Other movies cut violent scenes or scenes involving the supernatural. Directors and producers are often willing to hack up their films to get money.
So, what does it all mean? Well, there are a lot of different opinions people have about censorship and pandering to international markets. Some people see no problem with it, saying if it isn’t censored in the US or in other countries, China doesn’t really matter. Others argue that no censorship should happen and that Hollywood shouldn’t be so accepting of it. LGBT issues also come up, as China is often an excuse as to why there aren’t gay characters in mainstream movies. Still, others retort that, saying it could just be cut for China and we could still have it here, that we shouldn’t be doing things just for China, or that it’s just an excuse to continue homophobic practices in movies.
Personally, I’m still coming to my own conclusion. It’s frustrating to know that art is edited for the sake of money, but that’s the world we live in, and so much great art is still able to stay the same and get the revenue needed to stay afloat. In the end, I think It’s most important to know how the economy affects all aspects of our lives, even things that seem more “pure” like art and culture.

Sources:
https://www.washingtonpost.com/news/wonk/wp/2015/10/10/stephen-colberts-pander-express-is-a-brilliant-takedown-of-how-hollywood-sucks-up-to-china/
https://world101.cfr.org/global-era-issues/globalization/big-china-global-market-hollywood-movies
https://deadline.com/2019/01/highest-grossing-movie-studios-2018-record-international-global-box-office-market-share-chart-analysis-2019-forecast-1202528459/
https://www.investopedia.com/articles/investing/093015/how-exactly-do-movies-make-money.asp
https://entertainment.howstuffworks.com/movie-box-office2.htm
https://en.wikipedia.org/wiki/Film_censorship_in_China#cite_note-:1-100

How the Coronavirus is Impacting the Economy

In the past few weeks, an outbreak of the coronavirus from Wuhan, China has left over 100 people dead. China has issued a mandatory quarantine to many cities, which has left many travelers stranded. However, behind China’s effort to stop this virus is the economical impact of this virus on many companies.

With Lunar New Year around the corner, many Chinese families have plans to travel, a practice that boosts the tourism industry in surrounding regions. As China’s outbreak continues, the quarantine has affected the tourism industry. Thailand, one of the many countries taking the biggest hit, has reportedly lost over a billion in revenue. The tourism industry has been hit especially hard, causing a fall in the global stock market.

As many companies such as Honda and IKEA have recently relocated manufacturing to China, halting work means less production. The virus outbreak has prompted many companies to scramble and relocate their production lines to Southeast Asia in hopes to recuperate lost gains. The relocation of many production lines has cost companies lots of money. In the meantime, companies have been relying on the temporary relocation of production lines in Southeast Asia. As some production lines rely on parts coming from China, companies are still working on how to solve the production issue. The issue has slowed production, leading to fewer products being sold. Many workers, especially migrant workers coming from rural China have faced the effects, with no income coming in.

Although the quarantine provides a temporary solution for the virus outbreak, the economy will not be able to sustain for a long term as the cost will only increase. As governments struggle to decide on whether to protect public health or a small economic gain, the disease has currently put a toll on the global economy. The negative impact on the economy should not be downplayed, but the severity is too early to measure at this stage.

Sources: 

Image from: Rapoza, Kenneth. “China Coronavirus Is Now Halfway To SARS.” Forbes, Forbes Magazine, 27 Jan. 2020, www.forbes.com/sites/kenrapoza/2020/01/27/china-coronavirus-is-now-halfway-to-sars/.

Gerry Shih, Simon Denyer. “Asia Faces Steep Economic Price as It Moves to Curb Links with China over Virus Fears.” The Washington Post, WP Company, 28 Jan. 2020, www.washingtonpost.com/world/asia_pacific/coronavirus-china-live-updates/2020/01/28/da7664f2-414d-11ea-b503-2b077c436617_story.html.

CollegeBoard: Does it Help or Hurt Students?

The SAT. AP Tests. SAT Subject Tests. PSAT. What do all of these things have in common? They come from one source: CollegeBoard. They provide aptitude tests that can help colleges determine the college readiness of a student–a major factor in their admissions processes. However, how much does it actually help or hurt students?

SAT and all that is related to it are a significantly stressful but necessary challenge for students. It would be impossible for a college's admission board to meaningfully get to know everyone applying to their school. It would be way too much work on their end and the student's end. The SAT and other tests are a way for colleges to know what an applicant is like quickly.

However, the standardness that allows colleges to understand it quickly makes it a difficult measure of the complexity of actual people. It is unfair to judge everyone on only one thing that contains more advantages to some. For example, in our area, there are many SAT prep classes available, which typically range from $500-Thousands of dollars, which many students take especially at Los Altos High School. However, take an area such as small towns in the South or the Midwest–not only are there no test prep courses, but the people who live in these areas cannot afford them either.

The same applies to aspects such as taking tests and AP classes as well. In more affluent areas, many AP courses are offered, while in less affluent areas, there are few, if any. In fact, AP exam fees are also very expensive and they've been increasing from $83 in 2007 to $95 in 2018. As we've seen with the increasing costs this year, they are only getting higher. SAT Tests also cost upwards of ~$50 as well to take each test. And to send these scores to colleges, they cost $12 for each college.

In fact, even applications for financial aid cost money. For example, the CSS Profile is something that many colleges require in order to apply for financial aid to their school. It costs $25 for the first report sent and an additional $16 for each additional college receiving the information.

While fee waivers can help individuals take these tests, the access to taking these tests is limited as with the offerings from schools and the test prep techniques. Some students cannot afford to study for long intervals and go to expensive test prep places. Some students don't even have the resources to take APs as schools don't offer them. The CollegeBoard claims to be a nonprofit organization, but one with $1.1 billion in cash and investments. (so much for a 'not-for-profit' organization)

While there are definitely exceptions to this reality with low-income students getting high scores and going to Ivy Leagues, the true reality of CollegeBoard suggests what I have indicated in this blog post. It helps those who have resources and the support necessary to apply to colleges and take these tests. It hurts those who don't have as many resources and puts them, ultimately, in lower standings as compared to their more affluent pairs. This, in turn, helps push the economic inequalities that already exist.


Sources:
https://www.financialsamurai.com/its-time-to-ban-the-sat-and-the-college-board/
https://www.forbes.com/sites/michaeltnietzel/2019/05/16/four-reasons-why-the-college-boards-new-adversity-score-is-a-bad-idea/#38aaff506c0e

Universal Health Care: A promising future or too good to be true?

With the 2020 Presidential Elections coming up, the idea of Universal Health Care–or more well-know as "Medicare-for-all"–has been supported by most Democratic candidates and has remained a topic of discussion in politics. But is it the future of health care or is it too good to be true?

The most well-known supporter of this bill is Bernie Sanders, well, because he "wrote the damn bill." Sanders’ bill would replace all other health insurance, including privatized health insurance, employer-based insurance, current Medicaid/Medicare programs, and the Affordable Care Act–with exceptions to aspects such as cosmetic surgery. Under the program, all US citizens would receive health insurance as a right, which means that all medical bills will be covered–with no financial burdens or additional burdens placed on the patients under the program.

With the current environment of the US' healthcare system, with the increasing medical costs of insulin, Daraprim, and other medicines, people are demanding change to the current, profit-based, medical system. In fact, while the healthcare in the US is 3x more expensive than the rest of the world, the US has been ranked the lowest in healthcare quality and access compared to all of the developed countries.

This has led many to appeal to the idea of Medicare-for-all as the future of health care in the US, following the example of many other developed countries that have implemented a form of Universal Health Care such as Canada, countries in Europe, and others. Under this system, costs would be lowered as health care is guaranteed to all citizens since the government controls the price of medication and medical services through regulation and negotiation. Additionally, it could lead to a healthier population. Studies show that preventive care lowers expensive emergency room usage. Before the Affordable Care Act, 46% of emergency room patients were there because it was their only option due to high costs. Medicare-for-all would decrease these numbers due to increased access to health care and insurance.

However, there are also risks to take into consideration when thinking about implementing Universal Health Care in the US. In order to keep costs low and affordable, hospitals, pharmaceutical companies, and doctors may decrease the quality of their care. Because of decreased funding and profits, drug companies may lose the incentive to innovate for new life-saving technologies and medicines. Additionally, some countries who have implemented similar systems have seen doctors being paid less, which means that doctors may also have less incentive to provide quality care for their patients in order to keep their costs down.

Therefore, given the climate of our current health care system in the US, there is definitely a need for change. But is Medicare-for-all and Universal Health Care the solution? Before an answer to this question can be made, we must consider both the risks and benefits of such a system.

Sources:

https://smartasset.com/insurance/medicare-for-all-definition-and-pros-and-cons

www.health.harvard.edu/blog/millions-skip-medications-due-to-their-high-cost-20150130767

Incentivizing a More Diverse World

Biodiversity is the variety of life on Earth and is one of the most important characteristics to have on Earth. Countless interactions among different organisms produce a balanced and healthy planet. Biodiversity serves as a source of many produces, including food, pharmaceutical products, and chemicals. However, through human actions such as deforestation and industrialization, Earth’s biodiversity has been decreasing dramatically.

Economic incentives have been proposed as a method of increasing biodiversity. These incentives increase the returns on actions that conserve, restore, or increase biodiversity. Examples include payments for environmental service schemes, such as conserving natural resources, certification of “biodiversity-friendly products,” and ecotourism. Incentive measures can be directed at those who benefit from biodiversity and conservation, those who increase biodiversity, and those who harm and decrease biodiversity. Positive incentives are targeted at the first two groups, while disincentives are mainly for the third group.

Mainly focused on biodiversity conservation, these incentives do not take into account the opportunity costs of conserving biodiversity. For instance, conserving biodiversity may mean preventing a road from being built. In order for the incentives to work, they need to be worth more to the people than the opportunity costs.


Sources:
https://www.iied.org/using-incentive-mechanisms-conserve-biodiversity
https://www.sciencedaily.com/releases/2017/08/170802120647.htm
https://www.oecd.org/env/resources/2089495.pdf

A History Of The Dollar

I know some of this is US history stuff, but I think it sets up a blog post I'm going to do later this week. We looked at a lot of global economies being affected by globalization, but we never focused on US as a country. We learned that all currencies are valued compared to the dollar, but why? And how?

After WWII, US was the only country to emerge as a more powerful country. It's not to say that all other countries were devastated, but U.S. came out with an even stronger economy and military force. At the time, we had a gold standard: meaning our currency was tied to gold reserves at $42 and ounce. If you wanted to walk in with some money, you could technically get gold in return. All other countries valued their currency to our currency, because who doesn't like gold.

Inflation and fast economic growth made it so we didn't have enough gold to trade for money, and people became wary of this. in 1971, Nixon "cut" the gold standard, which made our currency floating. It was a dangerous economic move, because without the gold to anchor our currency, there was no way of seeing what would happen to our economy. This was one of the reasons we switched to producing corn and soy, because it was cheaper than buying cane sugar. 

At the most basic level, currency is valued when people want it. That means that we have to sell more things than we consume. But Americans consume waaaaaaaay more than we sell, so we found a way through foreign relations. Basically, we started selling and providing weapons to Saudi Arabia and a handful of other Middle Eastern countries. In return, they would sell their oil to every other country in U.S. dollars. It's called petrodollars. This would keep the U.S. dollar strong, and continue to have its high value. In 1975, a bunch of Middle Eastern countries joined together into a sort-of-union, OPEC; and all agreed to sell their oil in dollars for American military protection and weapons. 

This is also why the U.S. is involved in a lot of Middle Eastern conflicts, because we have our currency at stake when we fight for oil. Early 2000s, Iraq decided they wanted to sell their oil in Euros as well, and the U.S. just wasn't having it, so we invaded to get them to revert back to dollars. This is a theory, an alleged motivation, known as petro-warfare. This is also why the U.S. has so much military funding, because without it, we wouldn't have anything to trade for keeping our currency valued.

Sources:
Mr. Donnelly
https://en.wikipedia.org/wiki/Iraq_War
https://en.wikipedia.org/wiki/Petrodollar_warfare

Legalize what now? (part 2)

This is a continuation of the discussion surrounding the legalization of drugs. The last post talked about the economic reason why banning does little since there is still a demand. This time we are going to take a closer look at those who feed that demand.

When it comes to drugs the risk of operation is incredibly high. Mots governments have banned drugs so those who create them work outside the law. This has many consequences. One that I believe is not talked about enough is the health danger of a lack of regulation. When a thing is legal most governments implement some sort of regulation simply to maintain standards and ensure that the consumers are as safe as possible. This is the exact opposite of drugs since there are no regulations but there is almost infinite profit to make it is common to cut drugs with other chemicals or other items to reduce cost. When this is done it usually leads to death or horrendous health issues separate to the effects of the drugs themselves. It is a fair statement to say that it is more dangerous for people when drugs are illegal as a consumer because there is a lack of clear regulation and safety.

This is compounded by the issue of the criminal underworld. Cartels, Gangs and other groups conduct criminal activity which impacts the lives of millions and leads to the death of thousands. What keeps these groups in power? Drugs. Most of the income of these groups comes from drugs. This fuels the other criminal activity and creates a cycle of pain. This cycle could be broken with the legalization of drugs as the power would be stripped away from the cartels and gangs and placed on businesses who can operate in the open safely so they are encouraged to follow laws.

Pyramid Schemes: An Economic Breakdown

      Pyramid schemes, a type of MLM(multi-level marketing), are easy to get involved with but hard to leave.  Such companies like LuLaRoe, an expensive women's fashion company, recruit people, specifically women, who are lonely and/or need to make money on the side.  Frequently, they target military spouses and stay-at-home moms with the promise of being your own boss and being able to build your own lifestyle from the comfort of your own home.  However, if it seems to good to be true, that's because it is.

     MLM's and pyramid schemes like LuLaRoe require a minimum investment of $5,500 to pay for things like inventory.  This does not include things like parties, which sellers of LuLaRoe host to get other women hooked.  The company, however, does not advertise this.  They instead advertise success stories of women who found their purpose or found wealth through their company.  Unfortunately, this is hardly ever the case.
     To be a sponsor, which is the lowest level in the pyramid and 99% of retailers are, you are likely to get no bonuses through the company itself and instead have to make all of your money off of commission.  This, of course, is before your 'mentor' or the people that got you hooked take their cut of your commission as well.  According to Business Insider, sellers have to sell their inventory at an estimated 40-50% markup to make profit.  You have to sell a significant portion of your inventory at a significant markup to break even at first, before you continue to buy more packages to increase your ranks and inventory.  This can lead to many women making minimal profit or even no profit at all.
     The whole theory around companies like this is that women who are vulnerable and feel little fulfillment in their lives, such as military wives or stay-at-home moms are so desperate to have control over their own lives and to make friends that they are willing to pay thousands upon thousands of dollars.  The image LuLaRoe pushes of being a "boss babe" and going on expensive vacations is just a ruse to increase personal gain and enrollment in the company.  It's despicable and it's costing women thousands. 
     And because it's a business made of out direct communication between mentors and trainers, escape is nearly impossible.  To afford their inventory and other packages, women are often encouraged to take out second mortgages and temporarily stop paying their bills by their trainers, who all claim that they'll be able to make back enough money to pay the bills and then some.  According to CTPost, one woman was convinced to pawn her car to have more money for inventory.  It's all-too-common for women to take out multiple credit cards in a fruitless attempt to rise in the company's ranks. 
     According to the FTC, there are simple ways to tell if the company you are being encouraged to join is an MLM/pyramid scheme:
1.  You are required to buy a lot of inventory(product you have to sell to others to make profit).
2.  Other members of the company are constantly pushing you to buy more things.
3.  They brand your position as "having uncapped commission", being able to "choose your work schedule", or specifically advertising to military spouses.
     Some known MLM's include:
- Mary Kay
- Herbalife
- Avon
- LuLaRoe
- Rodan & Fields
- Young Living
- It Works!
- Plexus
- Team Beachbody
     So if you ever get a random message from someone claiming to have the ability to change your life via working from home and being your own boss, know that all they see in you is profit.

https://money.howstuffworks.com/pyramid-scheme1.htm
https://directsellingstar.com/pyramid-scheme-list/
https://www.businessinsider.com/how-much-money-lularoe-consultants-make-2017-8
https://www.ctpost.com/technology/businessinsider/article/LuLaRoe-is-making-some-women-rich-while-11007161.php
https://www.consumer.ftc.gov/blog/2014/05/telltale-signs-pyramid-scheme
https://www.google.com/search?rlz=1CAPQVW_enUS709US710&ei=uzAvXproDNrD0PEPhKqv8AY&q=popular+mlm%27s&oq=popular+mlm%27s&gs_l=psy-ab.3..0i13j0i7i30l2j0i30l7.528.1668..2280...0.2..0.289.1386.0j1j5......0....1..gws-wiz.......0i71.pvMFDNqBiyM&ved=0ahUKEwjasdKKuaTnAhXaITQIHQTVC24Q4dUDCAs&uact=5&safe=active&ssui=on

Tiger Nations

The four Asian Tigers have been dominant in Asian since the 1960s. Hong Kong, Singapore, South Korea, and Taiwan game into the global economy after World War II when Japanese rule began to recede. They rebuilt their infrastructure and industrialized to focus on strengths and export-based economies. The economies expanded beyond industrialization when the income rose and new classes developed. Their smooth exporting logistics, developed infrastructure, and strategic locations made them the perfect places for international companies to expand to East Asia.

Hong Kong with its policies of no import tariffs and excise duties (except for hard alcohol, tobacco, hydrocarbon oil, and methyl alcohol), made it the most aggressive free trade nation of the four. While its location and connection to China allow companies to have a large market, also susceptible to the political system.

After gaining independence in 1959, Singapore’s economic development combined its previous title of a regional trading epicenter and encouraged foreign investment. Its growth is now shifting from the resources nearby to information and tech companies.

South Korea focuses on promoting foreign investment and helping companies pay for industrial sites. With its location between China and Japan, there are “more than 60 cities with at least one million people in each city”(Velocity Global), which yet again creates large markets. However, there are still complicated visa and immigration systems.

Taiwan initially focused on heavy industries (steel, electronics, and petrochemical). However, after competition with China, Taiwan pushed towards high skill manufacturing. 70% of Taiwan’s exports are intermediate goods and about 94% percent of motherboards and laptops are produced in the nation.

The four Asian Tigers had opened up the East Asian markets to international companies and each nation has its own opportunities and barriers.

“Why the Four Asian Tigers Should Be on Your Radar.” Velocity Global, 14 Oct. 2018, velocityglobal.com/blog/why-four-asian-tigers-should-be-on-your-radar/.
https://i.imgur.com/oiIECa9.jpg

Incentivizing Nutrition

Can people be incentivized to eat healthier?

According to the US Department of Agriculture, yes, they can.

Under the 2008 farm law, the USDA launched a pilot program. In 13-months, the USDA observed 55,000 households receiving food stamps in 2012 in Hampden County, Massachusetts, the state’s poorest area. 7,500 families were randomly assigned to be eligible to receive 30 cents back for every federal food stamp dollar spent on certain produce. The results showed that 70% of low-income families in the study said they “felt that fruits and vegetables had become more affordable," according to the USDA.

This program showcased that receiving just a small amount of money helped lower-income individuals improve their shopping habits to buy healthier, better quality foods. It found that people on food stamps who received such incentives also ate 25% more produce than those who did not. In other words, this is equivalent to about an extra fifth of a cup of fruits and vegetables each day, which adds up to 6 extra cups, or 1.42 liters–in just a month–of healthier, quality foods and produce.

These findings show much promise in terms of incentives allowing populations of lower-income individuals to be more nutritious and eat healthier–which could ultimately improve lifestyles and potentially reduce obesity rates. The high costs of healthier and better quality produce cause a significant financial struggle in low-income families as processed food tends to be a lot cheaper. This causes families to struggle to be nutritious and healthy due to financial barriers. Therefore, to provide more food for their family, they may choose the processed food options over the healthier, fresher produce.

Ultimately, this study shows the benefits that can occur if incentives–or more specifically, small monetary incentives–can have in increasing the nutrition of individuals, specifically those living in lower-income households.


Sources:
https://www.reuters.com/article/usa-health-foodstamps/usda-study-shows-incentives-can-help-poor-eat-healthier-foods-idUSL1N0FU1AK20130724

A Study on Universal Basic Income (part 2) - Welfare Traps: Getting Less Money with More Income

A Layman's Guide to Getting Less Money with More Income

 

Income and wealth are traditionally considered to be in a linear, positive correlation. It makes sense too, after all, if you have a higher income, you would take in more money right? Generally, this statement holds true, save for a small group of people hovering at around a gross monthly income of 130% of the poverty line and a new monthly income at the poverty line. 

This is because making 130% of the poverty line marks the qualification barrier for means-tested welfare. This embodies the 79 different programs that subsidize necessities such as food, housing, or medical care for those who have trouble affording it. For instance, the qualification barrier for SNAP (supplemental nutrition assistance program) is a gross monthly income of $2790 (130% poverty line) for a family of four. This same family of four averages a monthly benefit of $465 thanks to the SNAP program. If SNAP were the only benefit that they took advantage of (fully hypothetical since families that qualify for means-tested benefits take advantage of multiple), then this family would essentially take in $3255 per month.

However, it's crucial to recognize what happens at the this boundary of qualifying for means-tested welfare. A family of four that has a gross monthly income of $3000 will not qualify for means-tested welfare, which means that they don't have access to the same benefits that the family with a lower income has. Without these benefits, the family that earns more income actually takes in less money because the money they take in is solely based off income, rather than income plus welfare benefits. 

Let's look to actual examples. The CATO institute cites in 2014 that "a single mother with two children who increases her hourly earnings from the Illinois minimum wage of $8.25 to $12 only sees her net income increase by less than $400. Even worse, someone in this scenario who works hard and increases her earnings all the way to $18 an hour, a wage level which would place her in the middle class, would actually see her net income decrease by more than $24,800 due to benefit reductions and tax increases".

This is the gist of the welfare trap, wherein people are incentivized to earn less money in order to keep access to their welfare benefits. Welfare ends up working as a negative incentive for people to put less effort into their work and discourages them from climbing the employment ladder. After all, why would they work harder for a promotion that only costs them their free welfare benefits? 

This then begs the question: is welfare a suitable system in the United States? If it only serves to de-incentivize people from working harder and traps them in cyclical poverty, then how can we incentivize people to climb the career ladder?

https://www.fns.usda.gov/snap/recipient/eligibility
https://www.cbpp.org/research/food-assistance/a-quick-guide-to-snap-eligibility-and-benefits
https://www.cato.org/blog/new-study-finds-more-evidence-poverty-traps-welfare-system

A Study on Universal Basic Income (part 1) - General Background

Down you lie or up you stand, either way you'll earn a grand:)



A Universal Basic Income. It's something that's been talked about more and more lately, as presidential candidate Andrew Yang's main tagline. But is a universal basic income truly feasible and is it really better to replace means-tested welfare?

In this multi-part (I can't predict how many) blog series, I'll be delving into the pros and cons of universal basic income, and maybe provide some insight into a policy that seems to have captivated many people (maybe this'll even influence your voting choices later this year).

This first post will serve as some type of background that introduces both Universal Basic Income and means-tested welfare, the current system challenged by Universal Basic Income. The welfare system was implemented in 1935 by FDR as part of his New Deal, aiming to rebuild the country after the Great Depression. In 2011, the federal government spent more than a trillion dollars on the 83 welfare programs. Universal Basic Income plans are projected to either coexist (Andrew Yang's plan) with or completely replace means-tested welfare.

Plans for universal basic income have already been tested in countries such as the Netherlands, Finland, Canada, and Alaska. While it's not fully accurate to looks at empirics and experiments in other countries to apply Universal Basic Income to the entirety of the United States. The general plan is some form of set cash payment to every person over the age of 18 (typically a thousand dollars). Some plans offer money to children below 18 as well. Even though the effects of implementing a Universal Basic Income can never be accurately predicted before it occurs, the next best thing to do is to analyze the pros and cons on the economy.


http://www.themarketforideas.com/public/store/images/articles/2017/09/7-8/universal-basic-income-a-challenge-for-social-and-economic-policies-a461.jpg
https://www.crf-usa.org/bill-of-rights-in-action/bria-14-3-a-how-welfare-began-in-the-united-states.html
https://www.budget.senate.gov/imo/media/doc/CRS%20Report%20-%20Welfare%20Spending%20The%20Largest%20Item%20In%20The%20Federal%20Budget.pdf

Legalize what now? (Part 1)

So I have been thinking a lot lately on how the US handles crime. In particular drug crime. Nonviolent drug offenders make up 18% of the prison population as of 2004. That is insane and just adds to the issue of overcrowding and cost the taxpayers more money that could go to filling potholes or infrastructure. While thinking I also thought about all the issues created by the war on drugs, Cartels, the opioid crisis and lack of government aid in support. I talked to a lot of people with differing opinions but since we're all in Micro econ it felt like a good opportunity to make a blog post and have a conversation about the economics and policies around drug use. I'm going to break down the discussion into three different posts each focusing on different reasoning on why drugs should be decriminalized in the united states. The focus of this post will be on the black market.

The black market surrounding illegal substances is estimated to be worth 450 Billion Dollars and that is only expected to increase in the following years. While that would be no issue since its an illegal black market most of the money will never be reintroduced or used for positive purposes. The fact that no government can implement any regulation or control over the market leads to a big black hole of wasted potential along. Imagine for a moment that the government did what we have done with Cigarets and Alcohol for years on those illegal substances. Taxes on drugs, regulations on safety and educational campaigns and focused on highlighting the health risks and negative effects of drugs. This would not only generate billions of dollars of tax revenues but would reduce pressure on the prison systems.

There are arguments against the legalization of drugs and most of them involve the belief that if all drugs where legalized that use would increase drastically. The opposite is true. The legalization of items does not make them more attractive to people as everyone knows the horrible consequences of substances. Those who choose to use them and continue to use them illegally are a minority and the idea that the population of people who want to try cocaine is going to explode after legalization is fearmongering. Even if you choose to accept the argument that it is better to keep them illegal with the hope that it will protect people the fact remains that there is a demand. Demand for drugs will not go away and that demand is strong enough to generate billions of dollars while being hindered by government laws. That demand is not going to go anywhere but instead gaining nothing why not legalize the drugs and gain something that can help everyone?

Is College Worth It?

Any decision will have costs and benefits associated with it; college is no different. In today's educational system, college is thought of as an investment to ensure success in one's future. Some candidates are pushing for reduced, or even free college educations, which of course as we have learned, there is no such thing as a free meal. But I wonder how hard it really is to succeed without a college education. Of course, there are some fields and jobs that require a college education, but even then, how important is it that the school you go to is some large, private, name-brand, extraordinarily expensive university?
With competition for employment being so extensive, having a college education on your resume could definitely serve as a boost for your chances. Colleges can also be helpful in providing "ins" and opportunities such as internships and overall networking. But how about the opportunity cost? For film students for example, the 4 years spent in a classroom learning "the craft" you could have spent in the industry learning hands-on, gaining experience, and making a name for yourself. Or atleast, you can begin getting coffee for the big guns 4 years earlier, starting your career early. So the question is, is college worth it. The answer: it depends. Depending on what field you are attempting to go to, how much money you plan on spending, and your intention, college can be exactly what you need, or it could be a large waste of both time and money.

Work Cited

https://www.huffpost.com/entry/college-investment_b_1989876

When Diplomas Become Worthless

Pop quiz: What do we do when we get sick? The answer is obvious - we go to the hospital to get treated by a doctor. What allows this answer to be so obvious is the trust we have in our doctors; we trust that they have received a good education and we trust their med school diploma. But what if this diploma was actually worthless, or worse, a symbol of nation-wide fraud? 

Surprisingly, this situation exists in our world today. Let's take a small trip and travel a little east...Welcome to Indonesia, where temperatures are high, doctor wages are low, and the public healthcare system is just around corrupt. 

This issue arose from good intentions. In Indonesia, the higher your grade, the lower your medical school tuitions. At first glance, this policy seems fair. The harder you work, the less you have to pay, so what better incentive than a cheaper degree? Unfortunately, whoever created this policy overestimated the integrity of people. They failed to see that this policy actually rewards schools that take in less smart people. Over time, med schools fill with students that achieve lower grades. It may work out in the end if there was a solid national system that tested students on their medical knowledge before they received their diploma. However, their standards are very low. Indonesia has a chaotic public healthcare system, and it can all be traced back to one bad case of policy economics.

When it comes to education, money, and the future, it is no doubt difficult to design an effective system. This example proves that no matter how well-intentioned the policy may have been, there is almost always a way to cheat and corrupt the system. One of the causes may be that policy-makers often forget that people behave like humans. For example, for Indonesia's case, they didn't take into account that when reversed, this policy could be used maliciously. It's dangerous to assume that everybody will use the system for good; reality is, many will take advantage when they can.

One misstep in Indonesia created a public health care system that is so far away from the international standards, that doctors who only have Indonesian PhDs are not permitted to practice medicine outside the nation. To prevent these errors, when creating policies, it's important to consider multiple perspectives; failing to do so may result in a disaster. 


Source:
S.l. “Troubling Issues with Indonesia's Healthcare.” Just Landed, 26 June 2017, www.justlanded.com/english/Indonesia/Articles/Health/Troubling-issues-with-Indonesia-s-healthcare.

It's simple: sugar tastes good.

It is simply common knowledge: sugar..... tastes.... good.

From the cognitive impacts such as the release of dopamine and the less scientific understanding that it just plain tastes good. While this may be an assumption, and everyone is different, for me the utility I gain from a cupcake is much higher than the utility I gain from say broccoli. While in the long-run the broccoli may make me feel better, in the moment my satisfaction is optimized with the sugary dessert. And with the prices often being lower and less effort being put into making it taste good, "bad" food is just too good. This is what makes issues such as obesity and diabetes so hard to combat, it is an absolute internal conflict. It comes down to cravings. When going to the store you are surrounded with colorful labels and advertisements that reach out to you and make you crave it. Also your past experiences with food (ie. marginalism) you remember the utility you had the last time you consumed something, and while with the theory of marginalism as you consume it more and more, that utility may fade, your body remembers the joy you had from the desserts you love.
Tips to fight junk food cravings:
- distance yourself from the cravings
- drink water (you may be thirsty, not hungry)
- eat mindfully
-NEVER go to the store hungry

Overall just look for balance in your diet and habits. There is no need to track your caloric intake and hate yourself for splurging on a dessert every now and then.

works cited:

https://www.healthline.com/nutrition/11-ways-to-stop-food-cravings

https://lifehacker.com/why-your-brain-craves-junk-food-and-what-you-can-do-ab-1469120841

Call Center Outsourcing

With increased globalization and communication, many companies now outsource their customer call center services. These companies first began to outsource to other locations and countries when they realized that it was a way to save money. If the call centers were located in an area where the average wage and cost of living was lower, they did not need to pay their workers as much. This gives them a comparative advantage, the ability to have the same effect with less cost. This decrease in spending gave them an advantage over their competitors.

At the same time, international outsource centers also gave many companies an absolute advantage. As companies expand overseas, their customer base grows and includes many different cultures, languages, and references to popular media. By having local call centers where their customers were in many places around the world, they are able to better connect with the customers and provide greater quality and quantity of service with the same number of employees.

Although outsourcing is a good way to gain advantages on competitors, there are still many things to consider before a company should begin outsourcing. Depending on where the centers are located, communication may sometimes be an issue because of natural accidents or foreign accents. In addition, the cultural difference may make it difficult for customers to trust the company and the distance from the base may create a lack of knowledge on the product and services the company offers.


Amadeo, Kimberly. “How Call Center Outsourcing Affects the U.S. Economy.” The Balance, The Balance, 9 Jan. 2019, www.thebalance.com/how-does-call-center-outsourcing-affect-the-u-s-economy-3306191.

“Guest Blog: 5 Reasons Why Outsourcing Your Customer Service Can Be a Smart Move.” Shep Hyken, 23 July 2019, hyken.com/customer-care/guest-blog-5-reasons-outsourcing-customer-service-smart-move/.

"Food Deserts"

A question we focused on last week was : What can be done for people in terms of scarcity and resources when they are trying to eat healthy? As we know, fresh vegetables and fruits are not equally accessible to everyone, forcing people to take the easy route - eating unhealthily. The opportunity costs of the lack of these resources for people can pile on, beginning with obesity and eventually leading to lower worker productivity, early death, and more expensive medical bills. But can we really say that the lack of access to healthy food causes obesity? Or is it more fitting to say there is only a correlation?

This issue of not having enough resources in certain areas relating to food specifically, or having a scarce amount, is known as a food desert. A food desert is generally considered to be a place where residents do not have access to affordable nutritious foods. The nearest supermarket can be up to 20 miles away. These areas typically only has convenience stores and gas stations, which are filled with cheap, sugary, processed foods. In the United States, it is said that there are at least 23 million people who live in a food desert. 82% of these people reside in urban areas, but food deserts can be in rural communities as well.

Michelle Obama even looked at food deserts at their height in 2009. She declared that she focused on food deserts "because access was a social justice issue." The people proportionately affected by food deserts were low-income African- American communities leading too extreme, unfair health issues. But people tested this idea by exposing these low-income, food desert communities to the same availability and prices that high-income households were having. After following the study, they concluded that the addition of supermarkets only reduced nutritional inequality by 9%. This study and many others that are similar have all shown that projects to improve food deserts have not helped diets or weight status for shoppers.

So why do many people believe that there is a causation between food deserts and obesity? I think because it makes sense, but also people try to be kind and compassionate. Of course we all want to fight obesity, so blaming the environment is more comfortable than the person's personal responsibility to their health. Also, in order to address personal behavior we need to address parts of the environment in which people live in at the same time.

Regardless of the what the study found, adding supermarkets to food deserts can slowly get the ball rolling. Even though obesity cannot be fixed by the introduction of grocery stores, it can help people raise awareness that there are more options. There are other marginal benefits that can come with the addition of a supermarket, such as jobs, more investment, and a safer community. In order to improve low-income communities in multiple ways, grocery stores need to be completely accessible.

Sources: https://www.verywellhealth.com/what-are-food-deserts-4165971

https://www.washingtonpost.com/lifestyle/food/food-deserts-dont-cause-obesity-but-that-doesnt-mean-they-dont-matter/2018/08/22/df31afc0-a61b-11e8-a656-943eefab5daf_story.html

Obesity: An Indicator of Economic Status

Last week in class, we looked at the growing epidemic of obesity in the US. However, I couldn't help but ponder on the aspect that poverty and income level had as a factor of the growing obesity epidemic.

Growing up, I have lived in three different places: Los Altos, CA; Starkville, MS; and Columbia, MO. In Los Altos, the poverty rate is only around 3%. However, in Columbia, the rate rises to 22.9%, and in Starkville, it is even higher, at 30.2%.

Watching the documentary, I reflected on the various environments that I was surrounded by living in these areas with different income and poverty rates. Los Altos, a more affluent area, with an average household income of $208,309, has a lot of higher-priced and healthy foods available. Just take a look at our restaurants downtown: Morsey's Farmhouse, Le Boulanger, Lulus, etc. On the other hand, in Starkville, an area with a median household income of $36,700, there are significantly fewer healthy dining options with fast food places dominating the small town.

These differences are exemplified when comparing obesity rates: 33.1% in Oktibbeha County (County that Starkville, MS is in) and 19.0% in Santa Clara County (County that Los Altos, CA is in). In Starkville, people are more likely to purchase cheaper, unhealthier foods because 1) it's more affordable and 2) it's more accessible. The differences in the poverty rate and median income of the two areas showcase the differences in their obesity rates as well. This means that an area's obesity rate could be an indicator of affluence and economic status.

So the question remains: Is obesity a choice, a result of one's bad dietary decisions? It's hard to say.

Sources: 

• https://datausa.io/profile/geo/los-altos-ca
• https://datausa.io/profile/geo/columbia-mo/https://www.opendatanetwork.com/entity/0500000US28105-0500000US13009/Oktibbeha_County_MS-Baldwin_County_GA/health.health_behaviors.adult_obesity_value?year=2015
• http://www.city-data.com/city/Los-Altos-California.html
• https://datausa.io/profile/geo/starkville-ms
• https://patch.com/california/paloalto/palo-alto-children-significantly-less-obese-than-average

How the Cobra Effect came to be

 

The "Cobra Effect" story is a popular economic anecdote relating to when India was under British colonial rule. Officials from the British government were concerned with the large population of cobras in Delhi, so they created an incentives program that rewarded hunters for bringing in dead cobras. Some, seeing the program as an easy way to get rich, started to breed cobras for the program. Understandably, the British government was not happy to find out that they were being taken advantage of, so they ended the program.

But what happened to the cobras in captivity? Well, seeing as there was no use in keeping venomous snakes around, the breeders set them free, thereby increasing the number of cobras in the wild. While this story is only anecdotal, people have been taking advantage of the "Cobra Effect" throughout history.

In 1897, Hanoi was under French colonial rule. The French modernized Indochina with new age infrastructure, with the most notable improvement being a functional sewer system. However, that sewer system also meant the rats who normally had to hide away in dark alleys and trash heaps now had a safe highway to scurry into. Concerned with the spread of bubonic plague, the French government employed a similar program to the British. They employed Vietnamese rat hunters to kill the rats. Proof would be submitted through dismembered rat tails.

The rat hunters, realizing that outright killing the rats would not generate the most money, took advantage of the system. They started to amputate the tails, so that the tailless rats could reproduce and breed more rats. Some Vietnamese followed their Indian counterparts, breeding rats so that their tails could be farmed. Just like with the British, the French ended the program.

People will always take advantage of incentives, it is only a question of if the benefits of the incentives (for example, compensating people for weight loss) outweigh the "cobra effect" (people intentionally bulking and then slimming down).


Sources:
https://economictimes.indiatimes.com/markets/stocks/news/heard-of-cobra-effect-be-careful-what-you-ask-for/articleshow/60866402.cms?from=mdr
https://www.atlasobscura.com/articles/hanoi-rat-massacre-1902

The Economics Behind Impulse Buys

           We've all been there.  In the checkout aisle of a Safeway or a Target, items like candy and travel-sized products somehow make their way into our carts.  Large companies purposely place these items in a way they know will be hard to resist.  All of this was designed with the motive of getting customers to buy as much as possible.

           According to Shopify, stores use several tactics like creating a path for customers where they must interact with the impulse buys and choosing items specifically that either require little consideration or are in stock for a short time (think seasonal or clearance items).  They understand that we as consumers can be swayed off-course by a quick and seemingly beneficial purchase.  We think that because we probably haven't already seen these items elsewhere in the store, we perceive the item to be scarce and thus worth buying. 
          They also know that we get a lot of short-term utility out of impulse buys.  The joy of eating a candy bar bought while waiting in line is short, but still leaves us with a brief sense of satisfaction.  If the product is something else, like a magazine or travel-sized item, we look forward to using it and frequently do so as soon as we get home. 
          Impulse buys also occur online.  When we're checking out on an online store, last-minute sales like "buy two more of the item in your cart and get them all 50% off" can cause us to buy more than we actually intended or need.  According to CNBC, customers spend an average of $5,400 per year on items we probably don't even want.
         How can we stop these toxic spending habits? There are several ways to combat giving into impulse buys.  We can:
1. Avoid shopping online when possible.
2. Be mindful of your feelings surrounding the impulse item. Will I really want this tomorrow?
3. Stick to a list when shopping.
         If we stick to these tips, we can hopefully reduce warrantless spending and find more utility out of things we actually want to consume.

https://www.shopify.com/retail/10-tactics-for-impulse-buying
https://www.cnbc.com/2018/02/23/consumers-cough-up-5400-a-year-on-impulse-purchases.html
https://www.google.com/search?q=how+to+stop+impulse+buying&rlz=1CAPQVW_enUS709US710&oq=how+to+stop+impulse+buy&aqs=chrome.0.0j69i57j0l4.3496j0j9&sourceid=chrome&ie=UTF-8&safe=active&ssui=on

Proshot Broadway: Maximizing Profit in the Theater

There has been a large argument about whether or not Broadway shows should be professionally filmed and released. Many fans argue it gives people more access to the shows, while others argue that theater is best experienced live. But what are the economics of the situation?

I personally believe that if professionally recorded shows were released to the public, similarly to how movies are released on DVD after the movie is shown in theaters, that this would bring in more profits for Broadway.

How would proshots, or professionally shot musicals, do this? Firstly, they would give access to Broadway shows to people who wouldn’t have spent money to see them live. Depending on the show, tickets on Broadway can be hundreds of dollars. People also have to drive to the venues and make time to watch the show. There are people who don’t have time, money, or the transportation to do any of these things. With a proshot, these people could pay much less money to see these shows. And importantly, they’re now paying for the shows. Rather than make $300 or $0 from a person, Broadway could suddenly be making $15-$20 per person in an untapped market.

This strategy would also help stop the spread of illegal videos of the shows, or bootlegs. With a bootleg, people can get the show for free, but the quality is often very bad and the websites to get these recordings can give your computer a virus. Plenty of fans would much rather pay for a professional looking HD version of their show, especially if they are supporting something they love by paying for it.

Proshots could also cause exposure to broadway, bringing in more people who had never heard of the shows otherwise. Someone who has never heard of Les Miserables or Phantom of the Opera is unlikely to spend hundreds of dollars on a ticket to see them. But someone who paid $10 to see a recording might realize they really like the show and want to see it live.

Google trends shows that when the Newsies proshot was released in 2017, there was a huge spike in popularity for searching the term up, and there are still occasional spikes in popularity.

(This graph uses a scale that shows searches from the last 5 years)

A similar thing happened to Legally Blonde: The Musical when it was filmed for MTV in 2007.

(This graph uses a scale that shows searches from 2004 until now)

Overall, Broadway shows could actually make more money from filming and releasing their shows. They could get sales from people who would have never paid hundreds of dollars for tickets in the first place, getting money from a new source. They could also expose more people to Broadway, thus getting more ticket sales in general.

There is a counter argument saying that if people could just watch musicals at home, why would they buy theater tickets? One only has to look at sports games and movie theaters to see that even if something is easy to watch at home, people will go out of their way to pay more money to see it.

Broadway should release proshots of their musicals. It’s the economically sound thing to do.

The World is Getting Fatter Because of America

This past week, we have been learning and talking about the obesity epidemic in America, but we have yet to further discuss how companies exploit everyone's consumption incentives all around the world. Obesity is more than just an American issue, it is becoming a global issue.

In Brazil, there have been an added 1 million cases of obesity every year. China has almost 50 million cases of obese children, which may or may not have to do with the old one child policy and the culture of raising children. Since the 1970s, obesity has tripled globally. The first part of it is what we discussed in class, socioeconomics and poverty. 

In the early 70s, the price of food went up. So Nixon, being the economic genius that he is *sarcasm*, encouraged farmers to grow more corn, which led to excess high-fructose corn syrup, which is cheaper than sugar. Because of this cheaper costs, high fructose corn syrup started being used by a bunch of foods like bread, ketchup, chips, and most importantly: soda.

These are correlations that don't paint the entire picture of the cause of global obesity. Another side of it is corporate greed. (Fun fact: CapriSuns are just sugar water...I used to think it was juice)

Around 20 years ago, scientists began to publish papers about how bad sodas were for consumers, so Coca Cola funded around 400 academic papers to undermine the connection between diet and weight. Coke tried to point out that too many people were worried about what they were eating, and not enough about their exercise regimen. Everyone disliked that.

This isn't the first time Coke has tried this either. In the 1970s, Coke became the first American company to enter communist China's economy. In the 40+ years there, the number of obese individuals went from 10% to 32%. Now it controls over 1/2 of the soft drink market in China. When China tried to control Coke consumption, Coke pulled the same act they did in the U.S., but it actually worked: policies were enacted to encourage people to exercise more.

But by far the country that has been affected the worst is Mexico. With the NAFTA free trade deal, U.S. had a dumping ground for all of its cheap, processed junk food in return of over half of Mexico's fresh fruits and vegetables (like your fresha vocados). Before NAFTA, 34% of Mexico was overweight or obese; today, over 75% are obese. Mexico has also become the leading consumer of Coke in the world, and now the leading cause of death in Mexico is diabetes.

With free trade and interconnected economies, the markets of each country becomes a lot more complex. We are seeing a new age of obesity around the world, all stemming from private American companies having a dominant influence in the world. 

Sources:

https://www.who.int/news-room/fact-sheets/detail/obesity-and-overweight

https://futurism.com/the-byte/coca-cola-killing-nutrition-research

https://www.nytimes.com/2017/12/11/health/obesity-mexico-nafta.html

https://chinachannel.org/2019/02/06/coke-in-china/

The Good Student Discount

How do insurance companies decide how much to charge people for driver's insurance? Besides the initial packages that are offered, auto insurance companies often offer policy discounts to certain groups. For young drivers, an average Good Student Discount could save you around 7% of your driver's insurance. Each company uses policy economics, which involves using the data of grades, test scores, and accidents, to set their own guidelines.

This package incentives students to achieve in school in order to save money. The insurer will want to see proof of good grades or SAT scores in the top 20% of the national average. Since parents want to save money, they will encourage their children to fit into these brackets. For companies, this policy is beneficial because the good students they insure may be less likely to get into accidents, and thus save payout money. Although this may seem like a good deal for all parties involved, the opportunity cost of trying to get these deals is less time and practice on the road which may actually result in more accidents.

Since the policy is largely reliant on previous data and the theory that if someone is more responsible when they are studying, they will be more responsible when they are driving, there is also a danger of fallacy of composition. Being a good student does not mean they will be a good driver since correlation does not mean causation.

However, if this package is beneficial to you, make sure to bring your transcripts to the insurer when you set up your auto insurance plan.

Kagan, Julia. “Good Student Discount.” Investopedia, Investopedia, 18 Nov. 2019, www.investopedia.com/terms/g/good-student-discount.asp.

The Film Industry: An Economic Breakdown

People underestimate the film industry, without the knowledge, the common assumption is that wanting to work in the film industry is a risky move, comparable to wanting to be a famous actor or painter. Have you ever stayed for the ending credits of a Marvel movie? In reality, there are so many departments and pieces to those departments. In summary, the film industry is huge and has a lot of employees at many different levels with many different levels of involvement. 

Simply put there are two sides to the film industry: the artistic side, and the business side. Producers, when deciding how to allocate money, must have knowledge of the market. They require an in-depth understanding of what makes a successful film, understanding the costs on set and comparing that to an estimated profit allows them to designate sums of money. They also consider the cast and whether or not a specific actor is worth the cost for the film. It is all a math game in terms of what projects get x money. 

With that, the directors, screenwriters, and producers must develop an understanding of what sells. Maximizing the utility for people and using the study of past films to learn what satisfies viewers. Considering marginalism, there are some movies you only feel inclined to see once, while others (often considered classics) you could watch over and over again over the course of the year. What is your favorite movie? How many times could you watch it until your utility diminishes? What do you like about it? Producers keep in mind these questions to audiences when allocating resources to projects.

Work Cited

“Taking Note: The Film Industry's Contributions to National and State Economies.” NEA, 1 Mar. 2018, www.arts.gov/art-works/2018/taking-note-film-industry%E2%80%99s-contributions-national-and-state-economies.

“Theory of Economics in the Film Industry.” UKEssays.com, www.ukessays.com/essays/economics/theory-economics-film-industry-1578.php.

Robots are Taking Our Jobs And Other Key Takeaways from Automation

A CNC Mill: https://www.flickr.com/photos/johnrhawk/3964417019

It’s no secret our world is becoming increasingly digitized. Between biomedical supercompanies like Intuitive Surgical assisting doctors in high-precision surgery, to the robots that help stock and maintain Amazon’s warehouses, robots are doing more labor for us than ever before. In fact, Tesla maintains fully-automated assembly lines for their electrical vehicles, and Google’s Everyday Robot Project is developing new robots that will assist people throughout their daily lives. In fact, there are 1.79 robots for every 1,000 workers according to The Federal Reserve Bank of Saint Louis. It’s clear that robots are automating the tasks that we used to do ourselves, but what is the impact of this wide-spread automation?

In terms of microeconomics, the effect of robots in certain industries is vast. We no longer see many United States citizens working on the assembly line because they simply don’t have to. Jobs with simple, repetitive tasks are the ones most likely to be taken by a robotic counterpart-- jobs that involve sorting, categorizing, etc.. For companies, it is often easier (and more cost-effective) to “hire” a robotic machine than to pay a worker compensation and benefits. If the robot gets hurt, after all, the company will not have a potential lawsuit on their hands. With increasing economic scarcity, companies are fighting over resources to build the best products with the highest profit margins. Therefore, it makes sense that these jobs that are easiest to automate and being “taken” by the robots.

In fact, for a manager considering opportunity cost for these jobs, the robot wins every time. Why? Robots are a one time expense, while workers must be paid compensation on a timely basis. The robot quite literally pays for itself over time, all while saving the company valuable resources. Not to mention, but on a macroeconomic scale, the automation of these jobs creates even more “future-ready” jobs in technology and robotics. Robots may be “taking” the jobs that require the least thought, but in the process, increasing automation actually creates more “future-proof” jobs in STEM, jobs that require dynamic thought rather than routine labor. Is this pervasive automation a positive thing? That is up to you to decide. However, Oxford Economics recommends choosing a career that is “future-proof regardless.”

What does future-proof mean? It means choosing a job that is dynamic, one that often cannot be done by a robot. Jobs that involve unpredictable motions, human analysis, and general creativity are the hardest to replicate. This means that jobs like welding, trucking, and many research fields likely will not be automated within the coming century. However, jobs such as machining and manufacturing may be. It’s up to you what career path you take, but making sure it is future-proof is essential in this day and age.

Robots may be taking our jobs, but their potential impact on economic growth is vast. Just make sure to pick a future-ready job!

Works Cited

Bharadwaj, Asha, and Maximiliano A. Dvorkin. “The Rise of Automation: How Robots May Impact the U.S. Labor Market.” St. Louis Fed, Federal Reserve Bank of St. Louis, 29 July 2019, www.stlouisfed.org/publications/regional-economist/second-quarter-2019/rise-automation-robots.

“How Robots Change the World - What Automation Really Means for Jobs, Productivity and Regions.” Oxford Economics, www.oxfordeconomics.com/recent-releases/how-robots-change-the-world.