Tag Archives: economics

Uncategorized

shared content

“

Some people say that because it’s so hard to put a dollar figure on such benefits, this principle is of little practical use in Detroit. But the benefits must be substantial — how else to explain the extraordinary efforts of private donors to save the collection?

Fortunately, costs are easier to estimate, and those for displaying a painting derive largely from its market value. Consider “The Wedding Dance,” a 16th-century work by the Flemish painter Pieter Bruegel the Elder. Detroit museum visitors have enjoyed this painting since 1930. How much would it cost to preserve that privilege for future generations?

A tidy sum, as it turns out. According to Christie’s, this canvas alone could fetch up to $200 million. Once interest rates return to normal levels — say, 6 percent — the forgone interest on that amount would be approximately $12 million a year.

If we assume that the museum would be open 2,000 hours a year, and ignore the cost of gallery space and other indirect expenses, the cost of keeping the painting on display would be more than $6,000 an hour. Assuming that an average of five people would view it per hour, all year long, it would still cost more than $1,200 an hour to provide the experience for each visitor.

”

– http://ift.tt/1hPre24

Standard
Uncategorized

shared content

“

In some ways, economics is like medicine two centuries ago. If you were ill at the beginning of the 19th century, a physician was your best bet, but his knowledge was so rudimentary that his remedies could easily make things worse rather than better. And so it is with economics today. That is why we economists should be sure to apply the principle “first, do no harm.”

This principle suggests that when people have voluntarily agreed upon an economic arrangement to their mutual benefit, that arrangement should be respected. (The main exception is when there are adverse effects on third parties — what economists call “negative externalities.”) As a result, when a policy is complex, hard to evaluate and disruptive of private transactions, there is good reason to be skeptical of it.

”

– http://ift.tt/1jrJaSP

Standard
Uncategorized

shared content

“Over at Snapchat, Mr. Spiegel, who is 23, apparently thought $3 billion was not enough for a company that, as yet, does not turn a dime of profit. But here’s another question: When is your number big enough? The most expensive homes in the Bay Area top out at around $30 million. Pick up a few fancy cars at $100,000 a pop. Throw in a Bentley for $175,000, a weekend place in Sonoma for $5 million, a modest pied-à-terre in Manhattan for around $5 million — fine, make it $10 million. And a top-of-the-line private jet for around $50 million. With expenses, taxes and what not, you’re barely past $100 million.”

– http://ift.tt/1fwUSfd

Standard
Uncategorized

shared content

“

Generally speaking, antitrust regulators are most worried about mergers that create monopolies that can raise the prices of goods and services when customers have few or no other choices. But officials should be just as concerned about deals that turn a business into a dominant buyer that can make or break its suppliers.

An all-powerful cable company, for example, would be able to influence and control what Americans could watch or read by refusing to carry channels or certain Internet services, or it could favor its own content. Comcast, for example, might find it tempting to treat programming from NBC Universal, which it owns, better than shows from rival networks and movie studios.

Officials at the antitrust division of the Department of Justice and the F.C.C., who have spoken recently about the importance of competition in the increasingly concentrated communications industry, need to study this deal closely. If they find that the merger would give Comcast too much power, the agencies can demand that the company make significant divestments (Comcast has offered to divest three million customers to get regulators to look upon the deal favorably) or they could sue to block the acquisition altogether.

”

– http://ift.tt/1dtqr9m

Standard
Uncategorized

shared content

“

A shift at Darden, which calls itself the world’s largest full-service restaurant owner, encapsulates the trend. Foot traffic at midtier, casual dining properties like Red Lobster and Olive Garden has dropped in every quarter but one since 2005, according to John Glass, a restaurant industry analyst at Morgan Stanley.

With diners paying an average tab of $16.50 a person at Olive Garden, Mr. Glass said, “The customers are middle class. They’re not rich. They’re not poor.” With income growth stagnant and prices for necessities like health care and education on the rise, he said, “They are cutting back.” On the other hand, at the Capital Grille, an upscale Darden chain where the average check per person is about $71, spending is up by an average of 5 percent annually over the last three years.

LongHorn Steakhouse, another Darden chain, has been reworked to target a slightly more affluent crowd than Olive Garden, with décor intended to evoke a cattleman’s ranch instead of an Old West theme.

”

– http://ift.tt/1bncmsx

Standard
Uncategorized

shared content

Mr. Finkelman’s perhaps quixotic legal campaign hinges on the difference between the face value of his tickets, about $500 each, and what he had to pay to get them. The league’s own website explains the situation with an understatement: “The demand for tickets to the Super Bowl greatly exceeds the supply.” The vast majority of seats — and this year there are more than 80,000 — are never made directly available for purchase by the public. First, 75 percent are distributed among the N.F.L.’s 32 teams, with 17.5 percent given to each team playing in the game and about 6 percent given to the host team (or teams, in this instance, with the Giants and the Jets splitting that allotment). Another 25 percent are kept by the league itself and are given to officials, the media and important corporate sponsors.

That leaves just 1 percent or so for ordinary fans like Mr. Finkelman, whose only chance to buy a seat at face value was to enter the lottery that is held each year by mail starting in February and ending in June, well before many people are thinking about the game. Mr. Finkelman admitted that his interest in the contest was not fully piqued until late in the season, when the lottery was long over and the league’s face-value tickets, starting at $500, were already gone. The delay compelled him to conduct his search in the secondary market, where, according to the ticket service TiqIQ, the average seat last week in the relatively inexpensive mezzanine level was $2,900, and the costliest corporate suite was going for the mansion-like sum of $962,000.

Common wisdom holds that Super Bowl XLVIII is unique because it is the first championship game in N.F.L. history to be held outdoors in a cold-weather stadium. But there is an additional distinction, said Bruce Nagel, Mr. Finkelman’s lawyer: It is being played in New Jersey, a state that has an uncommonly expansive consumer protection law.

Standard
Uncategorized

shared content

“

Nintendo, which is based in Kyoto, Japan, said revenue in the first three quarters of the current fiscal year, or through December, fell to 499 billion yen, or $4.83 billion, from ¥543 billion a year earlier.

Nintendo’s president and other executives said they would take a pay cut for five months to take responsibility for the poor performance. The pay of the president, Satoru Iwata, will be cut in half.

”

– http://ift.tt/1iQVJKz

Standard
Uncategorized

shared content

According to a new Pew survey (pdf), there has been a sharp increase in the number of people calling themselves lower class, and a somewhat smaller rise in the number calling themselves lower-middle, so that at this point the combined “lower” categories are close to a plurality of the population — in fact, closing in on, um, 47 percent:

Standard
Uncategorized

shared content

“

By paying a wage that was significantly above what the market required, Ford was betraying his fellow business owners and putting the whole of American enterprise in jeopardy. The Wall Street Journal editorial page, then, as now, a hotbed of revanchism, sniffed: “To double the minimum wage, without regard to length of service, is to apply Biblical or spiritual principles where they do not belong.” Ford may have been seeking a place in heaven, the Journal warned, but this action would more likely consign him to hell. Ford has “in his social endeavor committed blunders, if not crimes. They may return to plague him and the industry he represents, as well as organized society.”

Of course, Ford was motivated more by self-interest than by altruism. Turnover was huge in the growing auto industry, as workers hopped from factory to factory in search of better wages. The nation was in the midst of a rising wave of labor activism that frequently turned to violence. International networks of communists, socialists, and various other types of radical syndicalists were organized and active in America’s largest cities—and occasionally tossed bombs at business owners. Raising wages proactively was clearly a way to buy some short-term labor peace.

But Ford was playing a deeper, longer game. The Ford Motor Company was in the business of building an expensive durable good. The first cars he had built in number, the 1903 Model N, cost about $3,000, and so were accessible only to that era’s one percent. Henry Ford recognized that the automobile would be more successful as a volume business than as a niche product. “I would build a motorcar for the great multitudes,” he proclaimed. Through relentless innovation, vertical integration, and the obsessive development of an assembly line, Ford had already managed to bring the cost of the Model T, the first democratic car, down to about $500. And the company was moving about 250,000 cars a year. But per capita income was only $354 in 1913. The U.S. didn’t have a developed consumer credit industry. People paid for things with the wages they earned and their savings.

So this was Ford’s theory: Companies had an interest in ensuring that their employees could afford the products they produced. Put another way, employers had a role to play in boosting consumption. While paying higher wages than you absolutely needed to might lower profits temporarily, it would lead to a more sustainable business and economy over time. If the motorcar was going to be a mass-produced product for typical Americans, not a plaything for the rich, Ford would strive to pay his workers enough so they could afford the products they worked on all day.

”

– http://www.thedailybeast.com/articles/2014/01/06/henry-ford-understood-that-raising-wages-would-bring-him-more-profit.html#url=/articles/2014/01/06/henry-ford-understood-that-raising-wages-would-bring-him-more-profit.html

Standard