Money CAN Buy Happiness

You have probably heard the very common phrase, "Money Can't Buy Happiness." However, according to a study by psychologists from Purdue University and the University of Virginia, it can, to an extent.

By cross-referencing the earnings and life satisfaction of 1.7 million people across the world, they believe they have found the ideal income for life satisfaction. This number is $95,000 a year. For just emotional well-being, this number is only $60-75,000. Of course, if you have children this number goes up.

Just because you make this amount of money doesn't necessarily mean you will be happy. There is a  reason that there is a threshold. Basically, money can get us access to better homes, health care, and nutrition, which of course will better our well beings. However, once you reach a point where you have everything you need, these positive effects are offset by negative ones. To keep making money, people will work long hours at more stressful jobs.

There are ways to use the money you have to actually contribute to your happiness once you have covered your basic needs. One is to spend it on experiences instead of material goods. New items give us temporary happiness, and then just become a normal thing. Most of us have experienced this. For example, when you buy a new phone, it is super exciting at first and makes you very happy, and then after about a week, that feeling fades away. Experiences, however, will continue to make you happy for much longer Another is to spend your money on other people. Many studies show that donating money makes people much happier than just spending it on themselves.

https://www.marketwatch.com/story/this-is-exactly-how-much-money-you-need-to-be-truly-happy-earning-more-wont-help-2018-02-14
https://psychology.unl.edu/can-money-buy-happiness

Buying in Bulk

Due to Coronavirus restrictions, shopping has become a very unusual experience. We need to think a lot harder about how we shop and what we buy, as we cannot go to the store as much as we used to. One strategy that has become very popular is buying in bulk. I wanted to find out if in general, this is a good tactic, even outside of a pandemic. 

There are many advantages of buying in bulk.

1. You are almost always spending less per use of that product. In other words, it is cheaper per unit.
2. When you have that much of a product, you are unlikely to run out all of a sudden. This reduces the amount of impulse buys you make.
3. Buying in bulk is environmentally friendly. There is much less packaging used on each product. For example, buying several small boxes of cereal uses much more plastic and cardboard than buying one huge box of cereal.
4. If you buy essentials in bulk, you will be very prepared for emergencies. This is especially relevant right now, as people who did not buy in bulk realized that they did not have nearly enough to last them and started panic buying everything.
5. Buying in bulk also means you won't have to take as many trips. This is another huge advantage at a time like this since every trip to the store is risky. It is also helpful in many other ways, including fewer opportunities to impulse buy and less money spent on gas.

However, there are also several disadvantages.

1. It is an upfront expense. Spending $50 all at once rather than $10 at 5 different times can be difficult for some. It is especially hard if you are living paycheck to paycheck, as you are unlikely to have enough in your account at one time to do that.
2. When you buy that much of a product at once, you can be prone to overusing that product. This is especially apparent with food, as many of us will eat more of a food item as long as we know we have more of it for later. 
3. It takes up a lot of storage space. You need a relatively large space to store things if you are planning to buy in bulk.
4. What you buy will lack variety. Again, this is especially apparent with food. It can be an issue because you are likely to get sick of that food after eating too much of it and waste the rest.
5. The most obvious disadvantage is that things can expire. Of course, this is easy to avoid by only bulk buying things that don't expire or you know you will use in time. However, if you don't do that, it can be very wasteful.

It seems to me that the best way to shop is a mixture of bulk buying and smaller purchases. However, during a time like this, the advantages of bulk buying make it the better option.

https://money.usnews.com/money/blogs/my-money/articles/when-buying-in-bulk-is-really-worth-it

Unemployment During COVID-19

Since March 15, over 26 million people have filed for unemployment in the US; however, not all of these workers are receiving their unemployment benefits. Trump signed a $2.2 trillion emergency relief bill in March that expanded eligibility to receive benefits to part-time and self-employed workers and adds an extra $600 in benefits a week for individuals (in addition to what the state would offer). However, many people aren't receiving this money; states have seen delays in issuing the additional money. As companies continue to close and lay off their workers, the unemployment rate continues to rise. States have already spent billions of dollars in unemployment insurance benefits due to the coronavirus, and that amount is only going to increase.

Sources:
https://www.nytimes.com/2020/04/09/business/economy/unemployment-claim-numbers-coronavirus.html
https://www.cnet.com/news/coronavirus-testing-what-you-need-to-know-about-antibody-tests-antigens-and-serology/
https://abcnews.go.com/Business/americans-wait-unemployment-checks-month-pandemic/story?id=70292528

Expensive Prescription Drugs

The costs of prescription specialty drugs, drugs that require special storage, handling, administration, or monitoring and are used to treat cancer and other rare conditions, including HIV and hemophilia, have been rising. Compared to healthy people, cancer patients are 2.5 times more likely to declare bankruptcy. Furthermore, going bankrupt increases patients’ risk of dying by 80 percent. This “financial toxicity” of cancer results from the high costs of cancer treatment and the side effects of being treated, such as not being able to work for extended periods of time. Costs of cancer drugs have been steadily increasing – about 18% after adjusting for inflation between 1996 and 2012, and some treatments even cost over $100,000 per year. This is due to the R&D costs, wayward practices of pharmacy benefit managers (PBMs), health insurance companies, and "financially tainted medicine." As a result, pharmaceutical companies are making huge profit margins at the expense of patients.

Sources:
www.aarp.org/money/credit-loans-debt/info-2018/the-high-cost-of-cancer-treatment.html
www.investopedia.com/ask/answers/060115/how-much-drug-companys-spending-allocated-research-and-development-average.asp
www.statnews.com/2018/08/27/pharmacy-benefit-managers-good-or-bad/
www.cancer.org/latest-news/study-shows-us-cancer-drug-costs-increasing-despite-competition.html

Trust-busting with Disruption

“Disruption” gets thrown around a lot in Silicon Valley circles. Every new company wants to position themselves as a “disruptor”--the bringer of a paradigm shift that will change markets and put themselves on top. Though this line gets the VC money flowing, “disruption” is actually an established theory of innovation with a very specific meaning.

Take, for example, Uber. Though they were near first to market with a gig-economy taxi service, they entered the market by offering lower prices for an established service. Most customers were likely already taxi users.[1] If anything, they created increased demand by increasing ease of use. They didn’t technically disrupt the taxi market.

Disruption, as coined by Clayton Christensen, refers to a new firm creating new market segments or catering to low-end customers, and then capitalizing on their advantage to pivot into the higher-end customers that incumbents have been exploiting for higher profits[2]. This strategy entices big players to cede unprofitable segments of the market, only to subsequently lose the profitable segments because of it.

The classic example of this is personal computers. Before the PC revolution, computer companies were focused on charging huge sums to enterprise customers for mainframe systems. They willingly ceded the consumer market to new entrants, as it was opened up by low-cost integrated circuits made by the likes of Intel. These new entrants then created business applications for their products and drove mainframes to price obsolescence. Though IBM once held 70 percent of the computer market[3]--where economies of scale definitely affect production--their market share dropped precipitously due to this disruption.

History has also shown that firms that don’t “disrupt” and immediately target higher-end market segments tend to get bought-out or out-competed by incumbents[1].

Despite the many false claims to disruption in modern business, there are a few interesting companies poised to end pseudo-monopolies via disruption. As the internet grows in importance, the effective monopoly of internet service providers has come under the political spotlight[4]. Lobbying efforts, faulty-data collection, and local government deals have ensured they fly under the antitrust radar while pushing out competitors[5]. Elon Musk is planning to circumnavigate local restrictions, however, by going into space. SpaceX’s Starlink satellite constellation is posed to create a new market segment as well as take over the low end. The low-earth-orbit satellites are planned to deliver higher internet speeds to rural customers at competitive prices.[6][7] Many rural areas are too remote to make financial sense for traditional ISPs. Further expansion could provide internet services to developing countries as well and could eventually replace wired internet entirely for certain classes of customers.


[1] https://hbr.org/2015/12/what-is-disruptive-innovation
[2] http://claytonchristensen.com/key-concepts/
[3] https://cs.stanford.edu/people/eroberts/cs181/projects/corporate-monopolies/government_ibm.html
[4] https://www.eff.org/deeplinks/2019/05/broadband-monopolies-are-acting-old-phone-monopolies-good-thing-solutions-problem
[5] https://tlpc.colorado.edu/tlpc-releases-white-paper-for-eff-reevaluating-sharing-obligations-for-the-modern-u-s-wireline-broadband-market/
[6] https://www.starlink.com/
[7] https://www.businessinsider.com/elon-musk-spacex-starlink-will-launch-beta-test-six-months-2020-4

How Covid-19 is killing Social Security

Amidst the Coronavirus pandemic, many government agencies are still running and trying to provide help and relief to its citizens. One of the largest and oldest agencies running, the Social Security Administration (SSA), is still providing financial aid. However, people are concerned with how much longer Social Security will be able to last in its given form. This Wednesday, the Social Security Board of Trustees released a report that detailed the current state of the SSA. One of the notable pieces of data was that Social Security will likely only last until 2035. While this is consistent with last year's previous estimate of the longevity of Social Security, it fails to take into account the recent effects of Covid-19.

Social Security is a buy-in program where, “workers pay Social Security taxes into the program and money flows back out as monthly income to beneficiaries”(National Academy of Social Insurance). This tax however is calculated based on a person's earnings. The problem with this is that the recent stay at home orders and closure of nonessential businesses has created mass employment across the nation. While Social Security will continue to give out their monthly benefits, expending their money, they won’t be earning as much from taxes as they won’t be able to tax as many people's earnings.

Social Security has seen the effects of an economic downturn affect longevity. From the 2008 financial crisis, Social Security had an expected lifetime of 33 years, but after another estimate in 2012, the lifetime was down to 21 years. During that time, the SSA saw, “the claims for Social Security Disability Insurance could rise and more older workers could also retire and begin to claim benefits”(Yahoo Finance). We could see a sharp decrease in the expected lifetime of the Social Security program if changes aren’t made. With less money flowing in, and most likely more people applying to get Social Security payments, the program could soon collapse.

Sources:
https://www.washingtonpost.com/opinions/2020/04/23/covid-19-threatens-yet-another-victim-social-security/
https://www.nasi.org/learn/socialsecurity/who-pays
https://www.ssa.gov/coronavirus/
https://finance.yahoo.com/news/coronavirus-could-deplete-social-security-as-early-as-this-decade-analysis-220347671.html

Sean Parker

        After being kicked out of Napster for sending an incriminating email of copyright infringement, Sean Parker started his first venture called Plaxo in 2002. Plaxo was essentially an online address book and social networking service that was a precursor to companies like LinkedIn, Zynga, and Facebook. Two years after its founding, Parker was ousted by the companies financiers. In 2004, Parker joined Facebook in its early stages and became its president. In 2005, he was pressured to resign from his position of president after policed raided a vacation home he was renting and found cocaine, but he remained involved. In 2006, he became a managing partner in the Venture Capital fund called Founders Fund. In 2010, still while working for Founders Fund, he invested $15 million in Spotify, as he'd always hoped to legally further what Napster started. And in 2014, Parker backed a new initiative with $9.3 million called Brigade, an online civic engagement platform saying he felt that politics were the most impacted thing by the web.

Debt-Free Economics

In my previous post discussing China, I drew a distinction between two modalities of foreign investment, debt-based (providing a loan with the expectation of payback) and equity-based (providing capital for a share of the profits). I portrayed debt-based as the less-noble of the two, in which the capital-rich party takes on less risk for a mostly guaranteed upside on the back of someone else’s labor. Equity-based investment, on the other hand, shields the recipient from downside, while the capital-rich party risks losing their investment.

Generally, the moral distinction is hard to argue. Given the choice between receiving an investment and receiving a loan, few would choose a loan. However, the two accomplish effectively the same thing: giving an individual the capital necessary to create wealth, who will share some with the provider of said capital.

Despite this, ordinary people seem to be inundated with debt while having very little access to equity-style investment. We have home loans, car loans, student loans, and lay-away, while investment is reserved for startup companies in new fields, established businesses, and large infrastructure. Why won’t someone invest in my homeownership?

One reason is that homes and cars aren’t wealth-generating assets[1]. Though houses can appreciate in value, there are numerous risks associated with actually owning the home, and there’s no incentive for an investor to participate in those risks rather than just invest in the housing market more generally. Cars depreciate the moment they leave the dealership, with the only possible return being access to jobs for the owner. Creating a contract that would allow for profit-sharing in this scenario is too complicated for investment, so instead the government steps in as arbiter of all externalities with welfare programs. However, some have proposed private investment in the poor as well[2].

A college education, on the other hand, is a wealth-generator. Though debt is the norm for many reasons, income-sharing programs are becoming increasingly popular[3][4], especially for software engineering bootcamps (which are closer to vocational training than a college education). Income-share agreements waive or reduce tuition for students that agree to pay a portion of their future income for a given period. The institution effectively invests in the student’s future.

There is one place in the world where banks will invest in your homeownership, in a way. For a long time, usury (collecting interest on a loan) was illegal primarily for religious reasons[5], and today some Islamic banks still follow that precept. Despite not being allowed to collect on debt, they still manage to emulate many western-style bank services[6] and even exist in the US[7]. For example, rather than loaning you money to buy a house and taking the house as collateral, the bank may buy a house they believe to be a wise investment and lease it to you until you’ve paid off its full value. And though most American small businesses in need of capital must turn to debt (though equity investment is available[8]), these banks can only offer equity investment or loans in which payback is contingent on profits.

Though a life without debt may seem nice, debt undoubtedly serves a purpose. Granting investment requires more confidence than giving out a loan due to the lack of legal recourse or collateral in the case of defaults. As a result, it would be much harder to own a home, attend school in a less lucrative field, or get access to the impact-multiplying effects of capital injection. Indeed, despite the clear benefits of Islamic-style bank programs, they’re criticized internally[9] and have relatively low popularity. Another important note is that debt allows banks to effectively create additional money, pulling economic growth out of thin air (with some caveats[10]). Modern monetary policy relies on this behavior, so it’s unlikely debt is going away any time soon.


[1] https://www.forbes.com/sites/jamiehopkins/2018/07/28/housing-is-not-a-good-investment-its-a-service/#3f15e5f95c9d
[2] https://www.startribune.com/how-investing-in-the-poor-creates-wealth-for-all/307187611/
[3] https://archive.is/KOCNc (https://www.wsj.com/articles/instead-of-tuition-students-give-schools-cut-of-future-salaries-11577804401)
[4] https://www.theatlantic.com/education/archive/2018/06/an-alternative-to-student-loan-debt/563093/

[5] https://aeon.co/essays/how-did-usury-stop-being-a-sin-and-become-respectable-finance
[6] https://omanlawblog.curtis.com/2012/07/islamic-banking-brief-introduction.html
[7] https://www.cnbc.com/2016/12/02/under-the-radar-islamic-banks-rise-in-th.html
[8] https://www.sba.gov/funding-programs/investment-capital
[9] https://financialtribune.com/articles/economy-business-and-markets/39654/usury-free-banking-flawed
[10] https://www.forbes.com/sites/francescoppola/2017/10/31/how-bank-lending-really-creates-money-and-why-the-magic-money-tree-is-not-cost-free/#644740dc3073

Shawn Fanning: After Napster

   After Napster was shut down, Shawn Fanning went on to found several other companies. He founded Snocap which tried to be a legitimate marketplace for digital media. However, due to a lot of technical issues and poor customer support, didn't do well and Fanning left just before the mass layoffs and eventual buyout of the company. At the end of 2006, Fanning went to work on Rupture which is a social networking tool that publishes gamers' individual profiles to a communal space and facilitates communications between World of Warcraft players. Then, after it was acquired by Electronic Arts, he was laid off at the end of 2009. A few months later, in early 2010, he helped launched Path, a social networking service that offered photo sharing and messaging. By 2011, Fanning was working on another company called Airtime, this time reunited with Sean Parker, but when on the launch date in 2012 it repeatedly crashed and failed to work after vast sums were paid to celebrities to show up, the company failed. His final venture was Helium Systems in 2013, which is an Internet-of-Things developer platform.

Watch The Throne

The recent spread of the coronavirus pandemic fueled new demand for the U.S. dollar, as investors rapidly sold off assets and cross-currency swap rates (the price of exchanging euros for dollars) reached record highs [1]. 

However, the Federal Reserve rapidly intervened in order to offset the dangerous combination of dollar shortages and heightened demand.  Newly-instated policies like the reestablishment of swap lines (which keep U.S. dollars flowing across foreign financial channels) and the slashing of interest rates suggest that the dollar’s resurgence in value is a short-term trend [2].   

These policies are specifically designed to overrun the sudden demand for the dollar, and experts like Mark McCormick of TD securities claim that “We’ll see a market top…in the next couple of months as the Fed story overrides the dollar” [2]. 

In fact, swap rates for the dollar have already fallen precipitously, as European borrowers accumulate U.S. currency at a discount [3].  What does this all mean for the United States’ financial quarrels with China?  

Several factors leave China poised to someday usurp the U.S. dollar’s stranglehold on the international economy, especially as our currency’s rise in value peters off.  

Above all, China remains a strong and reliable debtor.  It’s bonds have return rates that are comparatively better than those of the United States, and it has shown resilience in the face of global downturns (see: the drop in emerging-market bonds in Q1) [1].  In the future, China will be able to leverage its technological dominance to uphold the yuan.  Powerhouses like Tencent and Ant Financial are planning on investing across Asia, propagating the yuan along the way [1].  

With this in mind, the U.S. dollar’s current ascent is a backdrop in the face of a much larger struggle- one that China has a chance at tilting in its favor.  

[1] : https://www.economist.com/finance-and-economics/2020/04/16/the-dollars-dominance-masks-chinas-rise-in-finance

[2] : https://business.financialpost.com/news/economy/why-the-u-s-dollars-record-breaking-surge-will-reverse-by-the-end-of-this-year

[3] : https://www.nasdaq.com/articles/dollar-borrowing-costs-drop-to-lowest-in-decade-in-fx-swap-markets-2020-04-06

CBDC: A Pandemic-induced Fad or the Future?

A single screenshot of a payment-centric app made headlines recently, as it unveiled that a far broader project was underway- the testing of a central bank digital currency (CBDC) in China [1].  The payment app, available to a select group of citizens in specific regions of China, is utilizing a “digital yuan” that might someday replace traditional currencies in China and beyond [1].

The development of a CBDC in China began as early as 2014, as online transactions began skyrocketing.  Fearing the consequences of relying on payment-based apps during times of crisis, China set out to provide a government-sponsored take on digital payment [2].  

A CBDC would foster numerous other benefits for the Chinese government, such as an increased capacity to deploy highly nuanced loans and detect tax evasion [2].  However, many feel that recent developments in CBDC technology are owed to the coronavirus pandemic. 

In particular, the desire to avoid the spread of infection had lead countless banks (including the People’s Bank of China) to desensitize their bills (employing methods like UV radiation).  As a result, many are starting to see the appeal of digitized cash [3].  This has been exacerbated by the need for relief checks and rapid stimulus in order to combat the economic side-effects of the pandemic.  Digital cash could be a mechanism by which such relief efforts are deployed, as suggested by the President of UnionBank in the Philippines [3].  

However, one professor of competition law at Leeds offers an opposing viewpoint, claiming that the “primary drive behind” CBDCs has little to do with the short-term needs of the pandemics [3].  The implication is that a downward trend in the spread of coronavirus will coincide with a decline in interest towards CBDCs.  This is especially true to the current instability of the global economy- the unfamiliar and relatively untested nature of digital cash could make it a source of economic fallout, as posited by experts like Giancarlo of the CFTC [3].  

With a strong group of proponents- both within governments and academia- as well as fervent opponents, it remains to be seen whether CBDC will truly revolutionize transactions.  

[1] : https://www.ledgerinsights.com/china-digital-currency-wallet-dcep-cbdc/

[2] : https://www.economist.com/finance-and-economics/2020/04/25/china-aims-to-launch-the-worlds-first-official-digital-currency

[3] : https://cointelegraph.com/news/coronavirus-crisis-accelerates-cbdc-race-cash-no-longer-untouchable

Why Small Businesses Aren't Getting Financial Relief

In order to protect many small businesses in danger of filing for bankruptcy, the federal government created the Paycheck Protection Program. The program was aimed to provide emergency loans in order to pay workers. While a loan may not seem like a very fair form of financial relief, the Small Business Administration (SBA) said they would, “forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.” This way, companies that properly use the relief money won’t actually have to pay back loans, but those that do will face the penalty. At a glance, this seems like a great program.

That is, until earlier this week, where many people saw how unfair this program was. There was lots of outcry when the restaurant chain Shake Shack received a 10 million dollar loan. Shake Shack is no means a small restaurant chain, as it has 189 outlets and nearly 8,000 employees in the United States. Shake Shack was not in dire need of cash, and certainly not 10 million dollars, yet it came out with more than many small restaurants that needed it. While Shake Shack apologized and said that they would return their money to the government, many other large businesses most likely won’t.

In the relief program, it said that businesses that employ fewer than 500 people are eligible for loans. However, it also added that “businesses, including restaurant and hotel chains, with no more than 500 employees “per physical location” are also eligible”. This loophole allows many large businesses to swoop in and steal financial aid meant for smaller businesses. The government has already exhausted their 349 billion dollar fund, so the future for many small businesses is looking quite grim. With this screw up on the government's part, it seems that many small business owners are going to have to close up unless something changes quickly.


Sources:
https://www.businessinsider.com/treasury-department-public-companies-give-back-small-business-loans-report-2020-4?amp&utm_source=reddit.com
https://www.nytimes.com/2020/04/20/business/shake-shack-returning-loan-ppp-coronavirus.html
https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program

Law of Demand Exception: Griffen Goods

The law of demand is the inverse correlation between the price and the quantity that a certain product demands. The question is are there exceptions to this law? It is known that if a price for a certain product increases, the demand for that product decreases. But does this include luxury or essential goods? If your favorite mascara or your essential shampoo increased in price would you no longer buy it? Or would you buy less of it? Giffen goods seem to be the exception to the law of demand. Giffen goods are low luxury products that defy the law of demand because as price increases, so does the demand. Examples of Giffen goods include bread, rice, and wheat. The discovery of the Giffen good was when Sir Robert Giffen observed that during the 19th century the price of bread increased and as a result the low-paid British purchased more bread. This was because bread was the main food staple for the British, making it very essential for them. When a food staple increases in price, so do other expensive foods and people with lower incomes will more likely buy more of that essential food instead of superior goods. So the answer is, the main exception for the law of demand is with low income essentials.

https://www.intelligenteconomist.com/exceptions-to-the-law-of-demand/ 

https://www.investopedia.com/ask/answers/032715/are-there-any-exceptions-law-demand-economics.asp 

Nurses Underpaid

With nurses being at the frontline and working so hard to save so many lives during this difficult time, it should be considered how underappreciated and underpaid nurses are. Many nurses are dying and having to work for long hours and deal with very limited supplies. They work in very stressful situations with the constant fear of getting infected. With all these risks and sacrifice, they are being paid very low amounts and are mistreated. Many nurses are dissatisfied with their salaries and getting paid minimum wage. Even before the coronavirus,the average nurse who is working hard saving lives gets paid about $50,000 a year, whereas people who play sports professionally get paid $117,000 a year. I am not saying that professional athletes should not get paid this amount, but I just find it ironic that workers that are working long hours saving lives are getting paid much less. A survey conducted by the American Nurses Association displays how high the stress levels are for nurses. They are reported to have the highest levels of job stress from all the health-care professions as they are overworked and underpaid. 

https://www.onlinenursingdegrees.org/nursingfacts/reasons-why-nurses-quit.htm

https://www.ajc.com/news/local/low-pay-and-supply-shortages-have-frontline-nurses-begging-for-relief/Q7pRuG8Ej6Ep6EUzFL1IOK/ 

https://www.timesfreepress.com/news/life/entertainment/story/2016/jan/26/overworked-underpaid-uber-stressed/346116/ 

Trump's Time Could Be Up

              The economy is probably one of the biggest factors in political races.  Bad economy under a Democrat?  Swing right.  Well, as a result of Trump's ridiculous handling of the coronavirus pandemic, many swing states may be hanging left come November this year.

               Trump himself must first be held responsible for his inconsistent messaging and delayed/objectively incorrect decision-making.  Firstly, Obama and Team warned Trump of a predicted global pandemic arising soon, and yet Trump within a year disbanded the US Pandemic Response team to "cut costs".  Oh no, what would the US Defense be without that extra cash for Viagra?  Then, Trump rejected a large supply of tests from the World Health Organization (WHO) knowing full well that the US government was not prepared to provide any.  On top of that, he denied the potential severity of the disease and its outbreak, promoted racism against Asians and Asian-Americans, encouraged the "liberation" of states with coronavirus orders, and waited to speak and regulate until the virus had reached too many to control it and support those affected.

               Ron de Santis, the current Florida governor, is a close Trump ally and leads the state that just barely voted red in 2016.  In recent days and weeks, de Santis has made an absolute fool out of the sunshine state by closing public spaces far too late and opening up beaches prematurely.  Just three days prior to reopening the beaches, Florida had a death spike from coronavirus.

                The part I always find funny is that these people put their entire argument on the economy.  Yes, there will be a point at which the economy cannot handle these restrictions, but there is far worse damage that will come should we take any of this too lightly.  And there will be long-term political costs for Republicans—Biden is already leading Trump in many key swing states that went red in 2016 (Florida, Michigan, Pennsylvania, Wisconsin).  Maybe the Blue Wave consequence will not show in its fullest even this election, what with Congresspeople forcing votes while enforcing stay-at-home orders and completely alienating a huge group of Democratic voters, but that wave is coming.  And I can't wait.

Oil Prices Plummet via Covid-19

Source: https://www.cnbc.com/2020/04/01/5-charts-that-explain-the-saudi-arabia-russia-oil-price-war-so-far.html

It's a classic question of supply and demand. Oil is no longer being demanded at the rate which it once was. This, coupled with the fact that Saudi Arabia and Russia, two of the world's largest oil suppliers, increased production rates throughout 2020 due to them being competitive market. In fact, Saudi Arabia was predicted to increase oil production over 25 percent since January 20th, and that they did.

Thus, with both these factors in mind, the price of oil plummeted from 68 dollars a barrel to 23 dollars a barrel in mid-April. On April 22, the oil price hit an all-time low at 20 dollars a barrel. Since then, the price of oil has been steadily rising, back up to 25 dollars a barrel, but with states opening back up due to COVID-19 as well as extended fears over the virus, experts are unsure of their predictions.

Overall, I think this is an interesting situation to analyze especially in this class. We are seeing the dramatic shifts in demand curves due to COVID-19 lowering many people's incomes, especially for normal goods. I guess it's history we're living through.


Sources:
https://www.cnbc.com/2020/04/01/5-charts-that-explain-the-saudi-arabia-russia-oil-price-war-so-far.html
https://capital.com/oil-price-analysis-in-april-2020

Why Is Everything Chrome?

Cash. An essential to life. How many times have you logged onto TikTok today? How about Snapchat? YouTube? Have you ever noticed that TikTok has countless ads on Snapchat and YouTube, yet TikTok itself doesn't host any "commercial breaks"? 

For other social media platforms such as Snapchat and YouTube, paid advertisements are the main ways to make money. Often, TikTok does show some sponsored content, yet most of them seem like regular videos rather than advertisements. So how is this growing company making any money?

One word holds the answer: Coins. Coins are essentially to pay your favourite creator to thank them for producing content. Users pay real money to buy these Coins, which will allow them to buy virtual gifts. These gifts include virtual diamonds and emojis that each have a different value. For example, currently users can buy 65 Coins for $0.99. These Coins can buy emojis like a Panda or an "Italian Hand" for 5 Coins, or a "Drama Queen" for 5000 Coins. Once these emojis are purchased, they're ready to be given out. They can be given out to other people while they have livestreams. Whatever emojis you purchased with your Coins, you can virtually give to the person going live. Much like a real gift, if you decide to give an emoji to someone, you now have one less of it. The best part of this gift exchange is that the receiver can cash out these gifts. For example, 80,000 diamonds can be worth $250. 

According to chinabrands.com, users globally spend up to $3.5 million on Coins, per month. Though not completely clear on how TikTok makes money off of this, there are two theories:

1. There are only certain "gifts" that can be cashed out. For instance, diamonds may be able to be exchanged for cash, but emojis may not. In this case, TikTok would gain any and all money users spent to purchase Coins that were used for anything other than diamonds. This would undeniably bring about a large cash flow. 

2. All "gifts" can be cashed out, but TikTok takes a small amount off the Coin purchase. What this means is that, for example, cash paid for 65 Coins does not equate what can be cashed out of gifts worth 65 Coins. Though 65 Coins was $0.99, if a gift receiver received 13 Pandas each worth 5 Coins, they may be only be cashed out for $0.9. Of course, this is not a real example 13 Pandas may be cashed out for more or less than $0.9. It seems like a "tax" that the users pay to TikTok.

Either way, what is most interesting about TikTok is that it has its own changing currency rate. Much like any foreign money exchange, the ratio of a Coin to a dollar fluctuates frequently. It is as though TikTok is a country of its own, with its own economy and money value.

Sources:

https://www.chinabrands.com/dropshipping/article-tik-tok-business-model-16615.html

Online Coffee Sales

During this time, it’s necessary to reflect on what we take for granted. In this case, simply getting coffee with a friend. Now, during this time, individuals are getting their coffee fix using online systems. Coffee has an inelastic demand, as individuals who drink coffee, usually do in a habitual manner. 

Since lockdown, packaged coffee sales have soared 24.9% in a four week period with a substantial 73.3% growth over another one week period. Starbucks is seeing a 9.7% increase in package coffee sales despite closing stores, while Keurig increased sales by 18.7%. Now that consumers are forced to make their own coffee at home, these sales are demonstrative of the “pantry-loading” effect. Even though their online sales have increased, what about coffee shops?

Los Angeles indie coffee brand Go Get Em Tiger (GGET) started as a popup and has expanded to 9 cafes in Vernon. Since COVID-19, GGET’s team of 128 employees reduced to just four, forcing them to close half their cafes outright. However, thanks to digitalization and app services, their web sales have increased by 300%. Now, they’re sending morning coffee to hospitals every day this week for underserved essential workers. 

Even though local coffeeshops have definitely taken a hit, it’s nice to see that people are unifying even if it’s over a cup of coffee. 

Sources:

https://www.foxbusiness.com/lifestyle/coronavirus-coffee-sales

https://www.eater.com/2020/4/20/21227910/coffee-shops-affected-by-coronavirus-pandemic-pivots

https://www.cnbc.com/2020/03/20/new-york-city-businesses-are-hit-hard-by-coronavirus-pandemic.html

Gender Pay Gap: Paying people based on utility?

The gender pay gap exists in most countries, some more extreme than others. But this statistic takes into more variables than we may think, such as: career preference, personality, psychological and economic factors, just to name a few. And whether or not the presentation of this data is done correctly, is a debate that lasts longer than a short blog post can cover. I wanted to talk about 2 points that are interesting (and the 2nd being related to economics) that make up a fraction of the gender wage gap.

Jordan Peterson is a professor and clinical psychologist that works with a variety of clients in his professional career. He notes that there is a personality trait of “agreeableness,” which is often associated with being kind and compassionate and also associated with women, that has a part in the complex equation of what determines our salaries. Being less agreeable means that you are more willing to argue and fight for a higher salary, and we see this trait among men more. To add to that, the numbers show that women who work in unions to fight for higher salaries are paid 89 cents for every dollar men make compared to women who aren’t in a union, who make 82 cents for every dollar.

Besides personality traits and interests, women also pay what is known as a “motherhood penalty,” and it’s not unreasonable. While not all women have children, if we look at average numbers and statistics of wage, we would have to look at the average number of children women have: 1-2 children. Once they do have children, women’s wages do see a penalty, based off of unquantifiable evidence that measures women’s working utility. Even though it is unquantifiable, that doesn’t mean it is non-existent, women spend around 50% more time than men engaging in care activities within a home. Businesses and employers recognize that this time gone to care-taking is time lost from working, so the question remains: “Is it unethical to account for economic losses due to an individual's private/home life?” This is only one aspect of the reasoning behind women receiving less pay than men on average, but it does show a more complex equation behind statistics we see and accept. 

Is there discrimination in the workforce and economy due to gender? Yes. But it’s not as dramatic as we assume it is, as the statistic of men having higher pay on average compared to women takes into account a multitude of variables, gender just being one of them. If you are still curious, I did link my sources in which there are long analyses of this issue.

Sources:

https://www.epi.org/publication/what-is-the-gender-pay-gap-and-is-it-real/

https://www.vox.com/2014/5/7/18076944/income-inequality

The Great Recession, but maybe worse?

           This morning we woke up to the news that there are now more than 26 million Americans who have filed for unemployment in the last five weeks.  You may have heard parents or newspeople talking about how we're going back to 2008, the time of the Great Recession that resulted largely from over-speculation in the housing market.  And while we may be able to look at today and say that the coronavirus and its collateral damage is no American's fault, it doesn't change the reality for most Americans: the economy is tanking, and they are going to suffer.
            8.7 million jobs were lost in the Great Recession.  22.4 million jobs have been created since then.  And today, all those jobs that we added to the US economy are gone.  In five weeks, 11 years' worth of development has disappeared just like that.  What does this mean for our families?  Well, to be honest, a large group of our school will be fine.  There will be adjustments to our lifestyles, surely, as money clearly does not grow on trees: a casualty of a suffering economy is a damaged stock market.  Business and consumer confidence alike must increase for anyone to be doing better than they have been doing financially speaking especially.  But our school is also home to many families that cannot afford these losses.  The 2 trillion dollar stimulation package has still not made its way to most, and it is barely covering minimums for most that rely on it.
             The major issue that the administration has seen for students in our switch to online learning is not access to WiFi, nor is it an extreme lack of motivation: it has been that we have many students in our district with unstable housing.  If that was already a problem, as it was for many families already, imagine what this tumultuous situation must be doing to their living situations.  Today, I ask you to think of the students at our school who are facing life-changing circumstances.  No one knows when our economy will recover from this, or even stop sinking, and there haven't been any positive signs yet.  We may not see some of our friends again.  We must use our knowledge from microeconomics to ensure that when we are making the decisions as adults, we never again allow such a preventable and petrifying situation to happen.

Why Healthcare Is So Expensive in America

Every time we go to the doctor’s office or the hospital, we get a bill mailed to us a few weeks after. We pay the bill and never question how the number came to be. Why is healthcare in the U.S. so expensive?

According to a study done by Brookings Institute, Americans go to the doctor less often than other countries. Americans may have certain health problems, but due to the huge bills after, Americans have decided against going to see the doctor often, especially those who simply can’t afford it. 

One reason American health care may be so expensive is that the American healthcare system has more specialists than other countries. Specialists typically earn more than physicians, which could increase the spending on our healthcare system. Another reason may be that the health care system in America spends more money on administrative and pharmaceutical costs. The U.S. spent about $1400 per capita on pharmaceuticals comparatively to Sweden who spent about $750 per capita.

Although U.S. healthcare is expensive, other countries also face long wait times for treatments. The U.S. had the best record for treating heart attacks and strokes. However, in 2016, 10% of Americans still did not have health insurance. Congress has worked towards helping Americans regarding the healthcare system. After the Affordable Care Act passed, more Americans are able to afford healthcare. 

Healthcare has been a prominent issue in the U.S.. Without the decrease in healthcare bills, it will cost more lives. 

Sources:

https://www.onhealth.com/content/1/costs_medical_conditions

https://www.cnbc.com/2018/03/22/the-real-reason-medical-care-costs-so-much-more-in-the-us.html

Liberias Shipping Empire

When one thinks of shipping juggernauts the small west African nation of Liberia is not the first to come to mind. But as with many thing in our complex world looks can be misleading. This small nation with very limited industry and infrastructure control 12% of the world's shipping vessels making it one of the three leading nations when it comes to the number of registered vessels. How and why is this possible?

The reason that Liberia is able to claim to have one of the world's largest fleet of merchant ships without any real industry, infrastructure or capital has to do with private corporations and the interaction with international regulation of shipping. International law stipulates that all vessels must be registered to a nation, those vessels are subject to inspection and regulation by said nations. These shipping vessels do not want to waste time on lengthy inspections or regulations that increase the cost of transport so there was a demand for shipping agencies looking for a country to register with low restrictions. Liberia filled this demand. Their regulation is minimal along with there inspections and this I by design. The nation of Liberia is attempting to encourage economic growth with a very low amount of cost associated with partnering with them. This overtime led to more and more nations signing with Liberia. Leading to the growth of Liberia's grand mercantile fleet.

This at a glance can appear scummy as Liberia "control" of the shipping is one based upon the abuse of global regulation, but this also helps the small country grow its economy in ways that would otherwise be impossible while providing a service that drastically reducers cost for the shipping industry.

Negative Oil Prices

      On Monday, April 20, the benchmark oil price in the US fell to $-37.63 due to the lack of demand caused by the current pandemic. Obviously, since many countries have issued shelter in place orders and travel bans, the demand for oil have drastically dropped to the point where traders are willing to pay to have people take oil out off of their hands due to limited storage. According to the New York Times, "Without a use for it [oil], the world’s biggest producers — the United States is high on that list — is running out of places to store all the oil that companies have continued to pump out of the ground". Since oil had a more inelastic demand curve, the operation to maintain a steady and consistent supply likely contributed to an inability to simply produce less oil.
    This crisis is reflected in reflected in the nationwide decrease in gasoline prices, as oil companies struggle to profit with the rapid decrease in demand. From a consumer point of view, this doesn't make that much of a difference since the reason for the inelastic demand of gas was because we only bought what we needed and now since we don't need to get around, there is no reason to buy more gas.

Laziness is Expensive

An average gel manicure costs $35. To me, this seems a little to pricey to get more than once every two months. Having pretty nails is a great feeling, but for someone like me, who gets only one simple, solid colour painted, the $35 is mostly service fees; I'm not asking for any fancy patterns that only professionals can paint, so the main reason I even go to nail salons is laziness. So the 35-dollar-question is, are the fees worth it?

A typical treatment starts with an electric nail file, then a non-electric nail file, as well as a cuticle trimmer. Then, the base coat, 3 coats of colour, and top coat are applied, using a blue light nail dryer in between each coat. Afterwards, the cuticle oil and lotion are applied.

Let's assume that I get my nails done exactly once every two months. If I did my own nails and followed these exact steps once every two months, would it be cheaper? If someone were to do all of this at home, how much would it cost?

First, the electric nail file costs about $50 on Amazon and lasts around 4 years. This means that one use for me would cost around $2.08. Next, a 10-pack of non-electric nail files is $6.99 and the salon uses a new one per customer, so one use for me at home would cost around $0.7. The most popular cuticle tools on Amazon cost $17.99, and assuming it lasts about 3 years, one use for me is about $1. As for the nail polish itself, one bottle can coat nails 147 times, according to "Nail It!" A base coat bottle costs $17.99, so one use is $0.12 for me. The colours cost around $20.99 a bottle but one use is 3 coats, so it would be $0.42 per use. A bottle of top coat is $17.99, so the price is the same as the base coat, with $0.12 per use. The blue light machine is around $40.99, and can be used up to around 10 years. This makes each use worth $0.68 Cuticle oils are around $9.99 and assuming it can be used 150 times, one use is around $0.7. Finally, hand lotion is $10.99 for 3 oz, and each ounce lasts 60 times. Therefore, each use of this hand lotion is $0.06, which brings the total up to $5.88.

One round of nail treatment at home costs less than 1/6 of what nail salons charge us. Of course, this excludes electric and water bills, but that wouldn't make a significant difference. One factor that might be bringing nail salon prices up, however, is the variety of colours they have. Nail salons usually have 200+ different colours stocked, and some are more popular than others. A typical bottle of nail polish lasts up to 2 years. It is unlikely that every single bottle will be empty by the time its expiration rate comes along. In these cases, the salons actually lost money for keeping these bottles around. Therefore, a lot of the $35 that we pay may be compensating for these losses. Other fees we are indirectly paying include water and electric bills, workers' salaries, profit for the company, and equipment such as chairs, tables, and register machines.

Every time we pay to have something done that we could have done ourselves, chances our, we are losing so much money. This applies to industries outside of manicures. Doordash is a common example. It would be interesting to see how much our laziness is costing us on a monthly basis.


Sources:
Prices - amazon.com and walmart.com
https://www.nailsmag.com/390467/ive-got-an-electric-file-question
https://www.nailitmag.com/nail-polish-bottle

The Economics of Disneyland

      Disneyland is self-proclaimed to be the happiest place on earth.  It is estimated that 18 million people visit the park per year, which means that Disneyland itself is making a LOT of money.  I think the genius part of the Disneyland revenue model is that it tricks you into spending a lot of money, but not in a way where you immediately regret it because none of the things that you're buying seem unreasonable or impulse buys.
      Park tickets can cost between 110 and 124 dollars for a single-person day pass to either park.  However, you really feel like you are getting a lot of bang for your buck.  There is an infinite amount of things to do at the parks, and each person is sure to find something that they really enjoy.  There are themed restaurants, rides, and experiences, like the ferry boat or meeting a Disney princess.  While being so happy after riding the Cars ride or meeting Minnie Mouse, you naturally feel okay with buying 40 to 50 dollar Mickey ears to commemorate your time.  Not to mention it's easy to do this because they're sold at basically every vendor in the parks. 
     Basically, if you want to buy something Disney themed at Disneyland, you can.  There are Disney themed EVERYTHING's for sale.  And even though you consciously realize how expensive things are, you don't care as much because they're filled with an element of cuteness or nostalgia or the "if we're going to Disneyland, we HAVE to get one of these" factor, from everything from Mickey pretzels to a literal diamond ring.  There is a Pandora jewelry store on the park grounds.
     Overall, I feel like whenever I go to Disneyland I'm constantly being tricked into buying things, but I don't feel nearly as bad about it because at least this impulse buy is in the form of a baby groot stuffed animal.

How is Broadway Doing?

Broadway is not just any theatre company. It is one of the biggest and most popular theatre companies in the United States. With shows held on Broadway in New York and other venues across the nation, it holds many popular plays that people would love to see. However, with the recent Coronavirus outbreak, Broadway has had to cancel many of its planned shows. Broadway shut down in March because of the CDC guidelines for what they thought would be a month. However, this has been extended by the New York governor Andrew Cuomo, until at least June 7th, and most likely much longer. So is Broadway going to be okay?

You might think that an industry whose selling point is having people watch a live performance would crash and burn due to the Coronavirus. However, there are many backup plans to keep them afloat. Already, there is a streaming service called BroadwayHD, which allows users to stream past showings of films. BroadwayHD provides compensation to the unions, guilds and associations behind Broadway. By having some older films available, they can still earn some cash through this form of entertainment. That being said, newer films set to premiere later this year have been put in danger, as they might not earn any profits.

To fix this, Broadway announced that they would create another streaming service called Broadway on Demand. This newer service is set to allow live streamed videos and pay per view models for consumers at home who still wish to see Broadways plays. This new service is supposed to premiere sometime in May. Hopefully with this additional service, Broadway will still be able to earn money and stay alive during this crisis.


Sources:
https://nypost.com/2020/04/17/another-broadway-streaming-service-will-debut-next-month/
https://www.npr.org/sections/coronavirus-live-updates/2020/04/08/830290047/broadway-to-remain-closed-until-june
https://www.playbill.com/article/new-streaming-service-broadway-on-demand-to-offer-live-benefit-concerts-more
https://www.entrepreneur.com/article/311450

Coronavirus and the Stock Market

Stock markets have taken a drastic hit in response to the current global pandemic. The US Securities and Exchange Commission has enforced a circuit breaker in order to prevent another market crash like the one in 1987 where the Dow decreased by 22.6%. But, in March alone, the circuit breakers have been triggered 4 times. Since 1987, they have only been triggered once in the 1990's, so having it happen 4 times in one month is not a good sign. There are certain guidelines to when a circuit breaker will happen, that being when the S&P 500 Index decreases by 7% or more. The S&P 500 is a stock market index that measures the stock markets of 500 large companies in the United States. When the circuit breaker is triggered, there is a 15 minute pause on all stock market exchanges in the US. Though if the index drops by 20% then trading stops for the entire day. With all this happening, the Chicago Board of Exchange Volatility Index (VIX) has been fluctuated a lot in the past 2 months, meaning it will take investors months to truly understand the economic impact of the coronavirus at hand. Market shocks in the past caused the VIX to fluctuate too, sometimes taking anywhere from 5-15 months for the levels to normalize again. Though because the current situation was caused by health issues, it could take a lot more time than 5-15 months for VIX to fully go back to normal. Only time will tell how destructive this virus really is on the stock market.

Sources:

https://www.weforum.org/agenda/2020/03/stock-market-volatility-coronavirus/

https://www.reuters.com/article/us-health-coronavirus-vix/vix-futures-point-to-coronavirus-worries-for-months-to-come-idUSKCN21Q2ZS

Why Are People Hoarding Toilet Paper?

Going to the stores during this difficult time of the coronavirus, I am always so curious to see why the toilet paper ailes are always so empty. I never understood the connection between a large pandemic and toilet paper and why people feel the need to stack up on such a random essential item that isn't even having a supply issue. Looking into this I realized that a lot of this has to do with Psychology. 

As the virus was becoming more and more serious, Americans began to worry about supply shortages and lack of essential items. This fear increased through social media and people began hoarding this item. People were beginning to feel insecure about not having their essentials and hoarding seems to be the cure to this insecurity. Since people are not used to having such little control about what is happening in their lives, having control on having enough essentials soothes their fears. There is something called the zero risk bias that is basically summarized to the phrase, “better safe than sorry”. People do silly things to eliminate superficial risks. Another reason for hoarding could be related to our biological background. Animals are commonly known to hoard essentials as a tactic for survival. 

Although toilet paper isn't having a major supply issue, these items take more space on a shelf so it gets empty faster than any other item. Bigger items that leave visible gaps, provides us with the illusion that there is a shortage. We are social animals, so whenever we see people doing so on the news or on social media, we tend to copy the same behavior. 

In order to keep humanity sane, we need to learn to ration essential items as a community. We need to be logical about things and purely purchase only what you need at the moment. The stores will continue to be open and there needs to be enough items for everyone. If people purely purchase only what they need, shortage is unlikely. 

https://arstechnica.com/science/2020/03/this-is-why-everyone-is-hoarding-toilet-paper/
https://www.socialsciencespace.com/2020/03/why-are-people-hoarding-toilet-paper/

Is covid-19 racist?

Is COVID-19 racist?

 Now obviously COVID-19 is not racist it's a virus it affects Everyone practically the same way. But the question about equality versus Equity comes down to people's ability to respond to the virus. The virus is spread through close contact between non-infected and infected individuals the closer the contact in the closer the proximity of people the faster the virus spreads. when I was thinking about this the first thing that came to mind was apartment buildings and how often in lower-income apartments air ducting is shared throughout multiple units so therefore through vents almost all of the units in the building could be connected. Which then led me to think about the fact that lower-income individuals are going to live in tighter proximity to other low-income individuals when in contrast higher-income individuals usually have the number of resources to own more land and space and therefore not have to be in such close contact with other people who could be infected with the virus. This then led me to my final conclusion a disproportionate number of minorities more specifically African-Americans live in these impoverished conditions which means once COVID-19 becomes more contained I believe that a great disparity is going to be seen. between wealthier individuals almost always being white for able to avoid the virus by staying away from individuals and having things delivered to their homes and using expensive services to avoid contact with other people and poor mostly African-American individuals who are going to be forced to be in close proximity to other people do to living Arrangement and not have the resources to use the services to avoid contact with other people forcing them to go to the grocery store or go out and get supplies. I think this disparity is going to cause a racial disparity in the ratio of infections and I believe very quickly once COVID 19 begins to become more manageable this disparity will become much more illuminated.

The OPEC Strikes A Crude Deal

The OPEC Strikes A Crude Deal

The Organization of the Petroleum Exporting Countries (OPEC) establishes uniform policies that govern the petroleum markets of its thirteen members, culminating in a collective that manipulates nearly half of the world’s oil production. 

Recently, however, the organization’s dealings with its allies have been fraught with conflict.  In particular, Russia’s Energy Minister refused to acquiesce when Saudi Arabia demanded that the country slash its oil production in response to the ongoing pandemic [1].  An agitated Saudi Arabia responded by significantly increasing its own production, flooding the markets until the price of Brent crude (a type of oil that acts as a benchmark for prices) plummeted by 30% [2].   

Concurrent to this breakdown in negotiations was a sudden uptick in coronavirus cases, creating a perfect storm that slashed demand for jet fuel, among other oil-based products.  The shale industry within the United States was particularly devastated, as producers like Whitling were unable to cope with precipitating prices and shut down [1]. 

This fragile situation set the stage for one of the largest (in theory) oil deals in history.  Despite a rocky start, during which Mexico refused to adhere to Saudi Arabia’s lofty demands [3], a deal between OPEC and its allies was signed on April 12th.  In it, these countries agreed to cut oil production by 10% of the world’s overall oil supply [4]. 

The deal is quantitatively recording-breaking in its attempt to offset the sudden decrease in demand, but its implementation is riddled with holes. For one, millions of barrels of oil will continue to flow into the markets as countries scramble to put the deal into effect [4].  The dollars lost during this time interval will undoubtedly shatter firms, as suggested by the closure of American oil producers.   

Even in the long-term, several issues threaten to undermine the deal.  Most glaringly, there are countless questions about the pandemic that remain unanswered.  Businesses are unaware of the impact it will have on consumer trends, as well as whether or not a lockdown will be reinstated after an initial removal.  These factors may spur owners to reduce supply purchases, downsize, or shut down entirely.  Thus, demand for oil may continue to decrease irrespective of production cuts [5]. 

On the level of the actors involved, it remains to be seen whether countries like Russia and Saudi Arabia will put the cuts in place.  These countries have a notable history of circumventing OPEC rulings, and the earlier tussle with Mexico suggests that such circumvention could squash the entire deal [5].  

Thus, while the OPEC’s attempts at staunching its virus-induced wounds are admirable, the reality of its past failings and future uncertainties remains a daunting opponent.  

[1] : https://www.bloomberg.com/news/articles/2020-04-13/trump-s-oil-deal-the-inside-story-of-how-the-price-war-ended

[2] : https://www.ft.com/content/dab75720-618a-11ea-a6cd-df28cc3c6a68

[3] : https://www.spglobal.com/platts/en/market-insights/latest-news/oil/041020-mexico-rejects-oil-cut-deal-opec-to-regroup-for-talks-friday-sources

[4] : https://finance.yahoo.com/news/real-oil-market-drowning-opec-230000442.html

[5] : https://www.economist.com/finance-and-economics/2020/04/13/a-historic-opec-deal-to-curb-oil-output-faces-many-obstacles