SOS: Consolidation in the Music Industry

Earlier in the quarter we discussed The Great Merger Movement in which many industries went through horizontal and vertical integration in an effort to keep prices high. This article discusses the recent consolidation of the music industry from four major labels to three as EMI was purchased by Universal. With digital music and the internet the music industry has greatly suffered through a dramatic decrease in record sales. Currently Universal and Sony are the top labels in the industry right now with Warner Music Group falling behind. While consolidations during The Great Merger Movement were an effort to control consumers, the music industry consolidation seems to be driven in an effort to control artists. With advances in technology artists have been able to be relatively successful without major labels. Thus not only are labels hurt by a decrease in record sales, but they also are losing business to smaller labels and even the power of the internet. It will be interesting to see how the music industry will shift in an effort to bolster sales and artists signings, but it seems that consolidation is the right step to take.

http://www.nytimes.com/2011/11/12/business/media/emi-is-sold-for-4-1-billion-consolidating-the-music-industry.html?scp=2&sq=industry%20consolidation&st=cse

Democracy? Nope, Oligarchy

This article from the New York Times, written by an economist I know all too well thanks to his contributions to Econ textbooks, Paul Krugman, gives his opinion of the Occupy movement. In particular, he points to the flaws in the argument against the Occupy movement, asserting that they're just flat out wrong. We learned a lot about the rising income inequality in lecture including some reasons and solutions, but we talked little about the consequences of rising income inequality. Krugman makes a point to discuss the potential effects which he sums up in saying that our society will become an oligarchy in nature, but democracy by name. With political votes largely influenced by who can raise more money, and policy decisions influenced by elite corporations, not only will the wealth remain with the top 1%, but so will societal decision making. The issue goes beyond economics and into political, potentially effecting our societal DNA forever.

http://www.nytimes.com/2011/11/04/opinion/oligarchy-american-style.html

Women in Wall Street

In class, we discussed the gender disparities in education levels and focused on the increasing education levels of women. We further noted that more women were pursuing majors in business and management, whereas men tended to pursue a broader array of degrees. Our reading by Goldin and Katz confirmed that women's educational levels exceeded that of men as of the late twentieth century. With that in mind, the continued disparity and divergence in incomes between men and women in Wall Street—especially in the past decade—seems surprising. This article implies that these differences as well as the differences in income among races may arise from institutional discrimination or from favoring school systems with fewer minorities. Regardless, the data still suggests the continued existence of a glass ceiling.

http://online.wsj.com/article/SB10001424052970204012004577072751740866044.html

"Report Parses Wall Street Workforce" --Sumathi Reddy

Unemployment For Women Not Getting Better

This article discusses how women's struggles in the current recession has been less well-known than that of men in the decade of declining wages. Sixty-six percent of government jobs lost since the recovery began were once held by women. Instead of passing bills that could have saved thousands of government jobs held by women, Congress has instead, earmarked funding to create jobs for underrepresented groups in male-dominated industries such as construction. This may be because there is still a lingering belief in our culture that it is more important to put unemployed men back to work than it is to put women back in their jobs.

source: http://www.huffingtonpost.com/2011/12/02/many-baby-boom-women-going-bust-in-recovery_n_1126244.html?ref=business

A Sign of Hope in the Job Market?

This article discusses November's recent drop in the unemployment rate to 8.6%, down from 9% most of the year. However, while the article focuses on the extension of unemployment benefits, a measure that has seemed effective in stimulating the economy, it also points to a more pessimistic view when talking about factors from abroad that threaten this decrease in the unemployment rate. Foremost is the euro zone crisis which could drastically impact the world economy if any country were to default. We discussed exchange rates and devaluation of currency in class noting that foreign markets can have a large impact on America's economy. In a world where European and American markets are intertwined an imploding of Greece or Italy's economy could be detrimental to trade, stocks, and the debt crisis. Expansionary efforts have begun in an order to contain the crisis to the European economy through an increase of liquidity in European banks. Continued effort by the U.S. and Europe continues, but it's probably safe to say we shouldn't be too optimistic about the unemployment rate.

http://www.nytimes.com/2011/12/03/business/economy/us-adds-120000-jobs-unemployment-drops-to-8-6.html?ref=economy

The Global Jobs Challenge

Project Syndicate had a piece on the jobs and the future of the global economy. With the growing population, the world economy has seen hundreds of millions of new workers enter the global economy just in the past three decades. Most of this is from investments in human capital. Though this fact brings growth in income levels, new opportunities, and expand the global economy, it also has downsides as well. For instance, the article notes that there is a challenge for advanced and developing countries to have the new entrants in the labor force match the skills of and capabilities of new and existing technologies; the article notes this as an "disequilibrium". Like we learned in class, the article states the adjustment to technologies as a lagging indicator to structural change. It its further up to the institutions to provide new and efficient policies to help new entrants in the labor market to adapt to the structural change.

http://www.project-syndicate.org/commentary/spence28/English

At Colleges, Women Are Leaving Men in the Dust

This article examines the new roles of women, and how an increasing number of them are pursuing higher education - relative to our discussion of the "Quiet Revolution." There have been a higher women to male ratio in secondary schooling and higher education, coupled with changes in attitude.


source: http://www.nytimes.com/2006/07/09/education/09college.html?pagewanted=all

Recession Woes Winning the War for Retail

The below article examines the increase in consumer confidence as indicated by the influx of sales during Black Friday and Cyber Monday. We see how the retail industry plays a big part in US GDP - making up nearly 2/3 of it. Through this example, we see in context how consumption is a large part of GDP, even today.

source: http://www.forbes.com/sites/lydiadishman/2011/11/30/recession-woes-winning-the-war-for-retail/

What Does One Really Need to Succeed?

This blog post touches on a lot of things we covered in class. It ties together numerous concepts including the decrease in the return on education and the necessity to have skills that go beyond the classic undergrad education. It was also interesting how it touched the both the good and bad aspects of computers. How they enhance the skills of the truly talented but replace those with more generic skills. This post also delves deeper into the idea will more range in skill level the more inequality will result. Overall the conclusion is in order to succeed in the new economy real and tangible skills need to be learned.

http://www.npr.org/blogs/money/2011/11/23/142698972/the-dwindling-power-of-a-college-degree

Should the 1% have less?

This piece of commentary by Robert Reich looks at whether is would be beneficial to the economy as a whole if the 1% had a smaller piece of the economic pie. This is linked to the distribution of income that we looked at in class and what would happen if the bell-shaped curve was made steeper. However, Reich directs the discussion to the idea that the economy is very complex and that everyone(all 100%) can be better off at the same time if the economy functions more effectively.

http://www.marketplace.org/topics/economy/commentary/reich-if-1-had-less-would-99-be-better

NYT: 6 Central Banks act to buy time in Europe crisis

6 central banks today reach agreement to support Europe financial system. The agreement helps calming down the fear of Europe crisis. The central banks will loan US dollar to European banks. The action does not directly solve the problem of European government’s debt, but it will help to restore European market and global economy. As a response, Dow surges 490 points. However, the problems of European government’s debt and budget woes still remain.

Source: http://www.nytimes.com/2011/12/01/business/central-banks-move-together-to-ease-debt-crisis.html?ref=business

Private Sector Job Growth Accelerates

Some studies shows that labor market is working its way toward healing, especially in the private sectors. As we know, the demand and supply of labor is a important indicator of the health of economy. If the demand of labor is increasing, it shows business and investment are expanding. According to the senior economist at ITG Investment Research in New York, "after slowing in the late spring and early summer, is back firmly at its 2 (percent) to 2.5 percent growth rate" He believe that this number indicate that economic growth is accelerating. However, some people express worries on the optimism on jobs. Because the weak labor marker still remains one of the biggest problem for the economic recovery.

Source: http://www.nytimes.com/reuters/2011/11/30/business/business-us-usa-economy.html?ref=economy

Incomes to fall 7.4% in three years, says IFS

According to the independent institute for Fiscal Studies, economic plans will mean a sharp drop in household income. In fact, in past two years, real household income has been fall by an average of 7.4%. As we learned in economic class, a drop in household income will decrease the demand for consumption, therefore, the overall GDP will be hampered. More over, Paul Johnson, the director of IFS said that people's income will be no higher in 2016 than they were in 2002. They believe that the current economic climate needed to be changed in order to relieve the situation. However, the paradox is that the Office for Budget Responsibility need must cut public spending to meet target of cutting the deficit. The cutting of public spending, especially in education, has a serious consequences on overall economic performance. This is because as people receive lesser education, there will be lower increase on their income.

Source: http://www.bbc.co.uk/news/business-15969165

WSJ: Small business faces a tough choice as wages rise

Small business today has already faced a tight budget. However, eight states including Arizona, Florida and Washington rise the minimum wages for 32 cents more. Many small businesses pay employees at minimum wages. The rise of minimum wage can cause reduce in jobs and work hour, although some expert believe the rise will compensate employees’ living expense and motivate them work more efficiently.

Source:

http://online.wsj.com/article/SB10001424052970203935604577066750082299954.html?mod=WSJ_hpp_MIDDLE_Video_second

Collecting Sales-Tax becomes a big cost

Under the Supreme Court ruling, retailers have to collect sales-tax and pay back to each state. It becomes a burden for online retailers because it is very difficult for online retailer to collect sales-tax for each state. Oftentimes, buyers are locating in many states. It will cost a lot for online retailers to collect local and state taxes even thought they are not physically present in the area.

Source:

http://online.wsj.com/article/SB10001424052970204012004577070383697704146.html?mod=WSJ_hpp_MIDDLE_Video_second

U.S. Vacation Cutbacks

In a recent article by CNN Money reporter Jessica Dickler titled "Americans to forfeit $34.3 billion in vacation days", Americans are continuing to tighten their purses within the field of leisure. Through surveys conducted by travel agencies such as Expedia, it seems as if the average American will forgo 2-6 days of vacation in a year. The overwhelming reason from respondants was that they did not have the economic means to do so.

Internationally, the story rather different. Within EU countries such as Britain and France individuals where polled as using all of their available leisure time. However, Asian nations such as Japan also had populations that under-utilized their vacation time. The differences between the more socialist governments of many EU nations and that of the U.S. might be a factor in these statistical differences. In an environment where people see themselves as having much less of a government safety net as in the case of the U.S., there is less demand for vacation time, and more emphasis on work.

http://money.cnn.com/2011/11/30/pf/unused_vacation/index.htm?iid=SF_BN_River

U.S. deportations reach historic levels

Sep.18, 2011 – This article “U.S. deportations reach historic levels” by Jim Barnett discusses the arguments for U.S. deportations rate this year. Even though the deported parties often contain criminal records some feel that the growth in deportation puts a strain on taxpayer dollars. Considering that the deported aliens are of the criminal society and do not contribute to the economy but rather devalue the communities they occupy, the move to further continue, if not increase, the deportation of such aliens should be encouraged rather than diminished. On the other hand, it is interesting to notice that as Homeland Security is criticized for wasting taxpayer dollars on deporting illegal aliens the Dream Act is proposed allowing kids of illegal aliens to study in public universities having taxpayers cover their expenses. Should deportation be extended to all illegal immigrants and not focused simply on the criminals? This motion might introduce a double hit to economic growth as taxpayers must pay for deportation and the work that undocumented workers do for less than low wage will now be empty of workers willing to do it for such low wages. This will however allow unemployed Americans to fill those niches and hopefully kill the Dream Act allowing the taxpayers money from that project to go to support Homeland Security investigations instead. From this viewpoint, supporting illegal immigration of any kind appears to be fruitless. But, one must always consider the fact that attempting to rid American society of all illegal aliens is perceived as a never-ending matter which become entangled in social, economic, racial, and other societal problems. Perhaps, it would be easier to simply allow residential status to illegal children through programs such as the Dream Act.

Source:

http://articles.cnn.com/2011-10-18/us/us_immigrant-deportations_1_removals-deportations-effective-immigration-enforcement?_s=PM:US

Possible Euro Failure

In the article "Is The Euro About to Capsize?" by Laurence Knight, the author argues that the Euro is at this point in grave danger of failing as a currency. Specifically, Knight attributes this coming failure to the positive feedback cycle that government bonds create. By leveraging themselves increasingly more and more, governments are not in fact helping to avert the crisis, but rather building up its severity.

The other problem is that due to the Euro being used amongst governments of different economic strength, there is a tendency to buy bonds from certain governments such as France or Germany. The bonds from countries such as Greece are ignored, thus not giving the Greek government any way of raising capital. What this potential cycle could create is a move towards not exactly income inequality, but greater international economic inequality between nations such as Greece and Italy and those such as France and Germany.

http://www.bbc.co.uk/news/business-15592197

Supreme Court To Review Obama's Health Care Overhaul

I read an article in the Washington Post that the U.S. Supreme Court has decided to review the constitutionality of President Obama's 2010 health care overhaul, the Patient Protection and Affordable Care Act. This federal statute, which was signed into law by President Obama on March 23rd of 2010, gave Congress the power to require every American to obtain health insurance by 2014 lest they pay a penalty on their 2015 income tax returns. A ruling by the Supreme Court is expected by late June of 2012.

This reminded me of FDR's New Deal that we discussed in class. The New Deal greatly expanded the scope of the federal government's powers. Many aspects of the New Deal were pretty dumb, such as the Agricultural Adjustment Act, where the federal government was essentially paying farmers to burn their crops. The New Deal was originally declared unconstitutional by the Supreme Court on the grounds that it was an overextension of the federal government's powers, but then FDR said "screw the American system of checks and balances" and threatened to pack the court, after which point the Court changed its initial stance.

It will be interesting to see how the Court rules on Obama's health care reform, and how that decision will affect Obama's bid for re-election come 2012.

Source: http://www.washingtonpost.com/politics/supreme-court-to-hear-challenge-to-obamas-health-care-overhaul/2011/11/11/gIQALTvrKN_story.html