What is Parecon?

This site is dedicated to participatory economics, or “Parecon.” This is a fairly easy to comprehend yet complete economic model that explains the way an economic can be organized as an effective alternate to the Capitalism system and Socialism that’s centrally planned.

The goal of this site is to promote economics among today’s general public and also to provide tools by which readers can explore the model closer.


Capitalism or Socialism concept

During the past century or so the main economic systems could be referred to in general terms as Capitalism and Socialism. Capitalism is centered on various concepts including private people owning productive property, workers earning wages for their labor, and bidding between buyers/sellers via a market system to determine the distribution of goods/services.

True Capitalism has never existed. That’s because it’s dependent on a certain political state in order to regulate it and prevent it from collapse. As a result, different forms of state capitalism throughout the world have existed during the last 100 years. The standard of living of many nations has improved in part due to the modern welfare system, there’s a growing gap between the rich and poor.

Other results include environmental destruction, over-consumption, financial crises, longer workweeks, continuous unemployment, monopolies and several other unwanted results. People also have less control over their work lives. Big corporations also have a large influence on the political system. The result is an injustice for the working and middle classes, and environmental disaster.

Meanwhile, workers throughout the up rose up during the first part of the 1900s. They demanded more economic justice/democracy and more control over their work lives. This resulted in Socialism forming in the USSR as well as other regions of the world. The system that included owning productive property was substituted with central planning. A class of privilege rose up. It took a position of power within the economy that was separated from the working class.

However, state socialism was unable to deliver true democracy/justice. Another issue is that it also had a very bad environmental record. This might be surprising since it might be implied that a left-leaning system would be better on environmental issues.

21st Century Alternatives

Many people throughout the world are growing unhappy with the economic system that’s founded on competition greed. They also don’t have the belief that authoritarian planning is the best system.

So there’s the issue of what should be used to replace the two systems. However, there hasn’t been an adequate answer for many people.

During the 1980s England’s Prime Minister Margaret Thatcher states that there was “no alternative.” However, some people argued that there was another approach that was possible. However, the majority of them haven’t been able to show a clear and strong alternative.

This would help to explain the situation involving Participatory economics. It’s a direct challenge to the There Is No Alternative (TINA) doctrine and an attempt to create a real answer to the issue of economic vision. It’s hoped that Parecon will provide a key contribution in helping experiments/movements that are trying to have a more just/democratic economy.

Participatory Economies

That brings up the issue of what a participatory economy is. It involves a social ownership of self-managed workplaces, productive property, and neighborhood councils. In workplaces, the decisions are made via democracy and every worker has a single vote. Also, jobs rebalanced so people don’t have boring and dis-empowering work. Payment is made based on people’s effort/sacrifice. Citizens in various communities are members of neighborhood councils. There they can help to make decisions about consumption/local public goods.

Workers, as well as consumers’ councils, are connected through a structure of federated structure that’s democratic. It’s made up of bigger geographic units. Democratic planning methods are utilized in order to make the economy’s overall plan.

There are various key values of a Parecon. They include self-management, solidarity, justice, efficiency, diversity, and sustainability. These are all different components that each has an important role in a participatory economy. There are various key institutions that can help to achieve the goals.

Parecon’s History


Participatory economics started from the past few hundred years of ideas/experimentation based on the concept that people ought to be able to manage their lives with others in ways that are cooperative, democratic, ad fair. They shouldn’t be ordered from higher ranks or be required to compete with other groups based on fear and greed.

The roots of Parecon are based on the vision of a particular economy that’s shared by several people who have fought for more economic justice/democracy. However, that resulted in a formal model that explains how that kind of system could function in today’s society that includes millions of people. The model was presented for the first time in 1991 by two economists. Since then it’s gained interest in the economic world.

In the past, there were parts of a Parecon in several different world regions. That includes South America as well as the revolutions in Spain and Russia. In those countries, workers create federations and councils that were self-managed. In today’s world, you can see parts of participatory economics that are implemented.

Their people are working in participatory budgeting. In addition, in the participatory economics being used people are working in participatory budgeting. In the international co-operative movement there are thousands of businesses that are owned and controlled by workers. The goal of the Parecon model is to promote the priorities of worker co-operatives to the entire economy. That’s through connecting them through a democratic planning method. That advances one of the main principles in the movement of cooperation between cooperatives.

It should be noted that there’s also some criticism of participatory economics. Some argue that it’s not only impractical but also impossible. For example, one argument is that it’s a system that focuses too much on the comparison, monitoring, consumption details, and so on. The argument is that other systems would be more effective so they should be implemented instead of Parecon.

Some supporters of Parecon argue that is the goal is only to deal with an alternate economic theory. It must be combined with other important vision in fields such as politics and culture.

Author's Thoughts

Naomi Klein in Earnest

Before I commend The Shock Doctrine: The Rise of Disaster Capitalism to everybody’s reading stock, which I anyhow will, we better wander the twists and knots of the streets of Naples so I can explain to you why Canadian journalist Naomi Klein probably bears the best nose for picketing non-fiction books yet, even if this phenomenal reportage has turned out to be a fiasco.

Here, I want you to meet singer Giovanni Vacca and Vacca’s Grupo Operaio, with their brazen, almost deafening repertoire rooted in the ancient ta­mu­r­riata musical tradition of drums. The Grupo’s is a terrific story.

But you must now travel back in time, too: trust me, this real-life tale will throw a light into the works of Naomi Klein as you never expected.

In the Old Continent, circa 1968, while the teenagers of privileged families shook in disarray universities in a French-May style throughout Western Europe, southern Italy kept things, let’s say, tighter. Professor Giovanni Sartori has published some interesting papers in Cambridge University Press about this particular society-like most of its north Mediterranean neighbours’, a democratic dystopia (across the waters, the dystopia is perfect)-in which Marxism, to name but one modern economics term, hardly applies since industrialisation did nothing to a petrified, medieval mentality.

Accordingly, in this raucous spot of the boot-like country, the spirit of revolution barely amounted to anything more than so­me blue-collar peons agreeing on brotherly gatherings at night.

They would join to compose music, although much later the legend assured candid believers that they spoke of Lenin. Their bodies still aching after exploitative shifts in the car-making factories of the city’s suburbs, workers would bring guitars and flutes and cheap drums that their parents and grandparents had left behind as their only riches. Then, they would sing together.

It is when one learns of Gru­po Operaio’s origins that one realises where Vacca’s wisdoms painfully come from: “E qui và a faticà pur’a morte adela afruntà…” (“those who go to work may die.” )

And this is the trouble with The Shock Doctrine. For all the ambition that prodded Klein to reinterpret the economic and political history of the last half century, her lessons hold the same cogency as a Vacca’s song does.

In The New York Times, literary reviewer Tom Redburn said precisely so when Klein’s book appeared in September, 2007: “If only it were that simple.”

A long list of comments from journalists and economists ensued-to The Shock Doctrine’s credit-, but the flaw proved woeful for an otherwise arresting and inspiring piece of investigative journalism. Joseph Stiglitz was blatant: “There are no accidents in the world as seen by Naomi Klein… there are many places in her work where she oversimplifies.” “This is part of my problem with Klein’s thesis,” Sashi Thardor wrote in The Washington Post, “she’s too ready to see a single enemy where others might discern little more than the all-too-human pattern of greed.”

Outside of the progressive newspapers’ bubble, Klein latest book has been dismissed using much the same tone. Paul Farrell joked about it in Dow Jones Business News: “A hot tip? Invest in Disaster Capitalism, but there is no pressure of reading yet another prognosis of our world’s Orwellian future.”

Farrell was right in both accounts: The Shock Doctrine has been translated into 27 languages as No Logo was, an indisputable market nod to Klein’s success in spreading her pessimistic, nonconformist word.

Nevertheless, we should not be fooled by this riddle, often brandished by the shrewd defenders of wild capitalism-i.e. Nicolas Blincoe referring to The Shock Doctrine in The Daily Telegraph as “an old-fashioned book.” The truth is that there is a bloody line that scars our economic foundations and goes from the extreme ideology that Milton Friedman championed to president Ronald Reagan and prime minister Margaret Thatcher, from the C.I.A.’s involvement in Chilean general Pinochet’s dictatorship to the capitalist conversion suffered in South Africa, Poland or Russia. Ultimately, that very line renders too unambiguous a message on the military operations over the Middle East.

To this day, Klein’s 558-page report has required two minor corrections: if only for this reason, let everyone read The Shock Doctrine.

Although not so to understand the trillion-dollar programmes of the White House and Downing Street, which today sustain the financial sector and breathes oxygen into ailing industries. The state’s hand in the global economy is visible and commanding. This is pure John Maynard Keynes’ principles in action-Friedman’s foe-, something Klein utterly failed to forecast because of the narrow peep-hole of her economic theory.

Still, I have a second complaint. Remember Vacca? At least, his pre-proletarian anthems arise in Naples’ coarse, rusty mother tongue in which a coagulated Greco-Roman heritage drips here and there slices of what feels like working class’ pride. It’s daunting, it’s rough, and it’s profoundly moving.

It even is arousing. “If you want to build a ship,” Oscar Wilde once said, “don’t herd people together to collect wood and work, but rather teach them to long for the endless immensity of the sea.” If there’s no beauty and grace in poverty and oppression, there is no hope, either. That, after thirty years, Grupo Operaio has not forgotten.

Open The Shock Doctrine’s pages and the question bursts in a matter of minutes: why is Klein’s writing so boisterously ugly?

That, I fear, is the consequence of Klein being a stunning 40-year-old, middle-class intellectual. She doesn’t quite get how life under hardship is, does she?

Trade Fallacies

As with everything else in economics, international trade comes with its misconceptions. There are certain common fallacies that are associated with international trade. These often lead to failures, and the reason why is due to the mistake of not considering secondary side effects of some actions. It is most particularly important to remember that the key elements of international trade are closely linked. One cannot change without affecting the other. For instance, if a nation’s government develops legislation that reduces the amount of imports it receives, it will, consequently, reduce its amount of exports. With that stated, it is also important to remember that business, labor, and political leaders who seek to gain from trade restrictions will tell half-truths and plant wrong ideas in the people’s minds to achieve their own personal gain. The two most popular trade fallacies involve the effects of imports on employment and the impact of trade with low-wage countries.

* Trade restrictions that limit imports save jobs and expand employment. This is a trade fallacy that has just enough truth to give it some credit. It is probable that when trade barriers limit imports, they will result in more employment in the industries that are being shielded from the foreign competition. However, this is only half of the effect of trade restrictions. Other domestic industries will be harmed. Imports provide foreigner with the money they need to buy exports, so when trade restrictions such as tariffs, quotas, and exchange rate controls are imposed, causing imports to decline, exports decline as well. Therefore, while certain industries will benefit from trade restrictions, generating more jobs, others will suffer, cutting more jobs.

* Free trade with low-wage countries like Mexico and China will reduce the wages of Americans. This is a fallacy in which many American citizens believe that if free trade with low-wage countries were allowed, with no trade restrictions, that their wages will fall to the wage levels of those workers in poor countries. However, this fallacy is due to a misunderstanding of the source of high wages and the law of comparative advantage. Workers in the United States are generally more skilled and more productive, which is why their wages are higher.

Trade restrictions are often implemented due to the people’s belief in such fallacies. As always with economics, it is important to consider all side effects-not just what is visible on the surface initially. This is essential to avoid being taken in by common fallacies.

Tips for Buying Sous Vide Machines

Are you looking for sous vide machines? If so then it’s important to know how to find the best unit for your needs. There are many to choose from, and here are some tips to make the best selection:

  1. Shop around

There are many sous vide machines to choose from. That includes different models, features, prices, designs, etc. Shopping around will help you to select the best unit for your particular needs, as well as the best price for that unit. Considering both of these issues will help you to find a unit with the best value.

  1. Check out ratings

It’s also highly recommended that you review various reviews or ratings about the particular unit you’re considering. You can find various sources for the reviews/ratings such as review sites, e-commerce sites such as Amazon and eBay, and others.

There’s a good chance that you’ll find some negative reviews. However, it’s important to get the general consensus of the reviews. If the vast majority of the reviews are positive then you’ll likely also have a positive experience. On the other hand, if the opposite is true then you’ll probably have a similar experience.

  1. Consider your needs

When selecting from various sous vide machines it’s important to think about your needs as a consumer, which should include various factors. How many people are in your household? Are you looking for a portable or fixed-capacity unit? Which features are you searching for?

These are all critical issues to take up if you’re in the market for a new sous vide unit. It will help you to pick the right unit for your cooking needs.

  1. Get personal referrals

This is one of the best ways to shop for any item. If you know someone who uses the slow-cooking units they ca give you their opinion about the particular unit(s) they’ve used.

  1. Consider portable units

In the case, you need more flexibility in terms of storage or travel you should definitely consider buying a portable unit. They’re flexible because you can change their capacity, store them easily, and move them to other locations when you need to use sous vide machines.

These are some of the best tips to select from various sous vide units on the market. Make sure to consider them in order to find the best unit for your slow-cooking needs. Are you ready to start shopping for your next kitchen appliance?


Rupees: Where They Are Used?

Rupees are the currency of countries from the SouthEast Asian peninsula – India, Pakistan, Sri Lanka, Nepal, Mauritius and Seychelles. Just like the dollar is prevalant in different countries (eg. Australia and Canada) there are different types of rupees in these countries too.

History of the Rupee

The word Rupya originated from the Sanskrit word Rupyakam, which meant coins of silver. The emperor Sher Shah Suri originally coined the term Rupaya in the 16th century. Back then, the Indian kingdom extended from Kabul to Sri Lanka down south and it had extensive trade relations with countries like Sri Lanka, Seychelles and Maldives – all islands in the Indian ocean. India and East India Company which ruled India in those days had extensive relations with many countries in Africa and the rupee as a currency was prevalant in those countries too at various points in time. the rupee was the major currency in use in most of Africa till the time the East India Company was present there. adparams.getadspec(‘c_billboard1’);

The original rupee was made from Silver as the Sanskrit name suggests. Over a period of time, most of the nations started trading in gold and alongwith that there were large quantities of silver found in these countries. As a result, the price of the rupee devalued during this period. This was called as the “Fall of the Rupee”.

The Indian Rupee

Back in those days, a rupee was divided in 16 annas and 192 pies. But in India, the rupee was decimalised in 1957 and hence divided into 100 paisa. The newly formed paisa was also called as “Naya Paisa” or “new paisa” in those days. This meant that four anna was equal to 25 paisa and eight annas were equal to 50 paisa. Today though most of the transactions are done only in rupees as the anna has devalued to such levels that it is not much used.

The Indian Rupee : Today

Today, the Indian rupee is found as a small coin made of steel with the Ashok Chakra on one said and the denomination of the coin on the other. Paper money has long been introduced for all the current day transactions. Notes, as they are popularly called, range from Rs. 5 to Rs. 2000.

Current Indian Rupee valuation consequences

From the 1970’s when $1 U.S. was equal to 7.56 rupees, today $1 U.S. is equal to nearly 45-50 Indian rupees. This difference in currency is what has led to the recent spate in outsourcing in which Indian companies work for the Western world and earn money in dollars. These dollars when converted to INR are resulting in huge profits for all Indian export oriented companies.

What I Have Learned About Economics from the Bloomsbury Group

The Bloomsbury group designates a group of intellectuals who met in the early twentieth century in London, among its members were: Keynes, the philosopher Bertrand Russell, the writer Virginia Woolf and her husband, Leonard Sidney Woolf, painters Duncant Grant, Vanessa Bell and Dora Carrignton, Ludwigh the philosopher Wittgenstein, and others. Among the group also was the philosopher George Edward Moore, his ideas had a great influence on Keynes and his philosophical concepts were close to Bertrand Russell have been partners in the Trinity College, Cambridge, at the time agreed with Ludwig Wittgenstein who was admitted as a student and later held the chair of Moore. Many of them belonged to the Apostles (Society for the gathering of Cambridge). The Bloomsbury group has essentially a moral purpose in seeking the good in itself as opposed to the prevailing morality in the Victorian era, this was the decisive influence of the philosopher Moore. Perhaps the English culture was not aware of such an accumulation of talent as this group.

Two who had a great relationship among them Virginia Woolf and her husband founded the Hogarth Press which published editorial work of many club members. What began as a hobby later expanded to other publications specializing in psychoanalysis including works of Sigmund Freud.

Much of the members lived in the neighborhood that gave name to the club, initially met at the home of Virginia Woolf and her husband, other meetings were held in a restaurant where they read aloud some texts written by some member of the club in recent years, these meetings were often made at home of Keynes because their health did not allowed him to go out much.

Keynes is remembered as a popular investor Buffet, Kostolany, Lynch, Wenstein, Livermore but if that was a big investor as an investment fund managed on behalf of King’s College Cambridge, from 1928 to 1945 and despite the major blow to received by the Crack of Wall Street in 1929, had an average annual return of 13.2% while at the same time the United Kingdom Stock Exchange lost 0.5% annually. I think it’s interesting to hear the thoughts of Keynes who have spoken on other occasions, the most influential economist of the twentieth century. His contributions to the economy were in parallel with concerns about the reality of the era and his idea of society and I am not clear whether it was the first philosopher or economist. His father was a Cambridge professor of Logic and Political Economy and therefore had access to the great figures of the era, including Marshall.

Galbraith said that Keynes was the only economist who followed his own theories and through them made a fortune in the stock market.

Investment Highlights

I have learned something from their ideas. Your keys to investing are:

  1. Careful selection of low investment considering its low price relative to its intrinsic value today. Its potential in a given period of years and its relation to other investments available at the time.
  2. Long-term investment, possibly several years, until they meet the expectations is evident that his purchase was a mistake. Admitting mistakes and can not maintain a permanent investment.
  3. A balanced investment position, very important and then talk of diversification, not only as a variety but there was no correlation between the assets. Even managers who are now confused with fragmentation of portfolio diversification.
  4. Investing in small companies and have good knowledge of them. Gave much more priority to the analysis of the breadth of the portfolio.
  5. As is clear from his analysis he believed in industrial companies with a low distribution of profits via dividend and reinvestment in the business very profitable in the long term. Possibly the idea of investment in industrial enterprises is not a priority in his time, but if it is valid to the reinvestment of profits is the most profitable for the company.

I dared to make this presentation of the Bloomsbury group, knowing that it is no great contribution to the economy or the stock market but it is a very interesting group that I have raised another daring that is the creation of a virtual group led by Keynes in which they will be killed and thinkers as belonging to various currents of thought that express their views on the current economic situation and stock market.

Of course, the conversation is entirely fictional, but their comments by using the way of thinking that made possible reflections on topics which I think might relate to the current situation. In principle I have decided who will be participating, but it is likely to accompany the statesman Machiavelli Keynes, writers Oscar Wilde (he died when they created the group but as they shared their struggle against Victorian morality) and Baltasar Gracian and some another look by a return to the past.

The characters do not necessarily have to be the economic world, is a heterogeneous group in terms of profession, as it was Blommsbury and from different periods and currents of thought that is a very risky, difficult and laborious but I guess it is fun and I hope understanding of the predictable errors that occur.

Airline Economics: Introduction to the Industry and Fundamentals

The airline industry is an enormous business in terms of operating capacity and expense. This means the industry is bulletproof and brings in huge profits annually. Well, no, not really. The airline industry is fundamentally a service operation. In other words, it is a business that does not trade tangible goods, but instead trades a service for money. The industry is responsible for transferring its customers from point A to B along with their belongings. There are many facets to make the airline industry operationally profitable and the business is in no way bullet proof. When the economy is on a downturn, the industry suffers significantly.

Economically, the United States is arguably in a recession. The country has been slammed with many hardships over the past years. The price of housing has dropped, the credit realm has virtually crashed, and the price of crude oil has skyrocketed. All of the above have a negative impact on the airline industry. The daily operations of the industry require many laborers and large capital. The profit margin is relatively low when factoring in the significant amounts of required operational capital.

When considering the current economically sour factors, the price of crude oil has the most significant impact on the airline industry. Other than labor costs, the price of fuel makes up the most percentage of daily operations, which is estimated at around 16% (Airline Economics, 2008). Oil price increases begin the domino effect and lead to higher operations cost for the industry. This of course cuts into the small profit margin and forces the industry to act. Unfortunately, the actions are typically layoffs, job elimination, customer reward reduction, ticket price increases etc.

Shifts and Price Elasticity of Supply and Demand

The airline industry is considered to be a luxury expense for the average flyers budget. Consumers can substitute the luxury of arriving faster with slower alternatives such as trains, automobiles, and boats. Since the price of oil forces the industry to increase the price of a ticket, the demand to fly will naturally shift to the left. The demand to fly reduces with the increases in price.

Airlines house an elastic service in terms of both supply and demand. The demand elasticity displays that consumers respond to a price increase by flying less. A 10 % increase in price may reduce the demand to fly by 20 %. The supply elasticity displays an increase in pricing also increases the supply. When the airline industry is forced to increase prices to compensate for rapid, steep oil prices the industry ultimately takes big profit margin loss.

Positive and Negative Externalities

In order to sustain airline business consumers must purchase airline tickets. This seems like common sense and it is. The majority of people do not consider how heavy externalities affect the market. The U.S. attacks on September 11, 2001 proved how heavy tragedy’s can impact the industry. Tourists virtually stopped traveling via airliners. Tourism is a large cash flow stream for the industry along with business flyers. The business flyers will generally continue to fly regardless of price increases. The industry was affected by the non market acts of the terrorists.

Airlines pollute the air with several hundred pounds of burnt fuel per typical flight. This is a negative externality that is not factored into the market price of an airline ticket. On the contrary, a positive externality is the benefit that these large machines provide for the American population. Having the ability to cross the country in several hours is at least a phenomenon of the century. Having the ability to travel rapidly is a luxury and a positive externality of the airline industry.

Perhaps a better idea of positive and negative externalities can be provided with a scenario. A massive Earthquake erupts in Mexico. A U.S. airliner has the ability to provide assistance very rapidly. The fast response is a positive externality. The Mexican citizens will benefit from the U.S. fast response. On the contrary however the general public must suffer from the noise and pollution the airliner ejects. This noise and pollution is a negative externality of the airline flight.

In terms of externalities the industry has its share of both. The best thing to remember and understand is the fact that the industry is heavily impacted by market conditions. When the markets are stressed the airline industry is almost guaranteed to fluctuate.

Wage Inequality

Like many other market industries, the airline industry is a competitive market. This means the industry must beat out other service provider’s right? In an effort to do so the industry must maintain low ticket prices. Understanding the high overhead costs of operating an airline business it is not hard to conclude that airline businesses must cut overhead costs somewhere. Recalling that labor is the highest expense item what else is the industry to do but cut wages?

Flight attendants and pilots have often felt the pain of wage cuts. This is one reason the airline industry is very unionized. In an article published by Associated Content, David Card is said to have calculated the wage inequality of the industry.

According to David Card (Deregulation, 2008) airline wages have decreased some 10 % since the deregulation act of the 1970’s. The Deregulation Act sparked the competitive markets and helped evolve the industry into what it has become. The labor wages have no doubt sacrificed along the way. It is all about competition in the free marketplace. It seems unfortunate, but wage inequality is business. It is tough to understand sometimes, and it is tough to justify at times. The bottom line though is competition requires unfortunate business decisions.

The airline industry is considered to be an old fashioned oligopoly. The business prospers by working within a parameter based group. The “big dogs” will sustain business longer than the relatively small guys.

Monetary and Fiscal Policies

It is not logical to discuss monetary and fiscal policy without elaborating on the September 11, 2001 affects. The attacks caused a rapid shift in demand due to the fear of flying and the increased ticket prices. The U.S. government also raised the security standards adding additional cost to the industry. The September 11th security tax fee was also added to the base ticket price. This tax was an effort to sustain the new security standards. September 11, 2001 caused massive layoffs in the airline industry. This again, was a result of flight fears, and fiscal policy adding to the ticket price increases.

As frequently noted economic conditions and policy have large impacts on the airline industry. When markets are stressed, the airline industry suffers dramatically. The industry is very elastic. With such elasticity, high overhead costs, and operational costs the industry struggles to maintain adequate profit margins.

Ticket consumers are the heartbeat of the airline industry. When ticket prices rise to accommodate unexpected expense increases the industry as a whole suffers. When the government imposed the September 11th security tax the industry took another blow at the time. However, since ticket consumers have since realized that the tax increase was for the ultimate benefit of the consumer, the ticket sales have significantly picked back up.

When the U.S. is economically sound the airline industry prospers from the buying confidence and power of the consumer. Vacations pick up and the demand for flight increases. The fact that airliners depend so heavily on market conditions may assist some arguments on whether or not the industry is even stable. Overall, the industry has not been around all that long relative to other industries. The Wright Brothers begin this flight evolution in the early 1900’s.

When considering the history of the industry and how it has maintained its presence it is easy to see why the industry is relatively unstable. The flight phenomenon is really just now in the ‘teenage’ years. Postal services, military needs, and government needs really started the wide array of flight demand. The industry was under heavy regulation for many of its infant years. In 1978 the Deregulation Act came into play and initiated the next chapter of the industry.

The airline industry has been evolving for several years now and will continue to evolve. There have been many airline business launches, and many airline business failures. Once the current sour economic cycle completes, the “top dogs’ will be at the top and continuing business.

Tips for Selling a Business During Times of Tough Economics

There comes a point in many entrepreneurs’ careers when selling a business makes more sense then continuing to run it. Retirement, new business opportunities and fundraising for other enterprises are all common reasons why people sell their businesses. However, when it comes time to sell a business many business owners don’t know what to do, especially when the economy is in a less than fruitful state. The key to selling a business during rough economic times is to know how to package your business to make it appealing to those looking for new business opportunities.

What Are People Looking For

The first thing that you need to do when trying to sell your business during rough economic times is to understand what people are looking for in a business opportunity. During economic downturns and recovery periods people want a business that has a track record of making consistent money, even during rough economic conditions. They also want a business that has an established clientele and that will require little extra investment once purchased.

Collect Evidence of Business’ Performance

Obviously people looking to buy a business want to know that their money is being spent on something that is going to generate income. This is a concern that you need to address when packaging your business for sale. You need to generate financial statements, client lists and income statements that show your business has consistently earned money over the last five to ten years. If your business is a young company then you can provide buyers with some sense of the company’s money making capabilities by graphing the growth rate of the company over its short life, by providing an order history and by creating a report that projects the future earnings of the company based on industry trends and current company performance. Market surveys can also be used to support the demand for the company’s services or products.

Making Your Business a Turn-Key Operation

Another step that you can take to make your business more appealing to buyers is to set it up so that it is a turn key operation. This means that when the person buys the company all they have to do is maintain the business practices established by you to make money. For example, if you are selling an informational website you will need to make sure that it has been properly developed using SEO techniques, that it has a high Google Pagerank and that it has a history of making consistent money. You will also need to provide information to the buyer which tells them how to keep the site in a top position in the search engines and how to maintain viewership through blogs, article directories and social networking tactics.

Economics: Recession Proof College Major

Economics deals with analysis of different markets with models and critical thinking; however this does not mean the math is too hard, you will have to know algebra and basic calculus. Due to the critical thinking involved in the economics major, students will have a variety of options upon graduation such as, employment at a financial institution, graduate school, and law school. Before deciding on which major to choose for your college career read this review!


For anyone still undecided on which major they will choose then it is often helpful to look at the pay scale for each major. According to Forbes economics has the second highest paying college major just short of computer engineering. According to Vanderbilt in 2008 economics majors were expected to earn $52,926 their first year out of college (2008) with expected growth over the next few years. There are many different job opportunities which will broaden the pay scale depending on if you go into private sector or public service upon graduation.


The beauty of the economics major is the flexibility of job options upon graduation. When I was choosing my college major I chose economics due to the wide variety of choices, which will ensure I will never be bored. Some jobs include finance, CEO, financial advisor, teacher, economist, and many, many others. With the economy struggling, having the ability to choose which field you want to go into provides many job and career options which are profitable and fulfilling. Graduate schools as well as law school are favorites for economics majors; they will not only increase your pay scale but also your job opportunities. Economics majors are favored to score the highest on the LSAT and GMAT due to the critical thinking and analysis skills they achieve in their undergraduate program.

Ability to Double Major

Economics is a moderately difficult major; however it ties well into sociology, psychology, math, management, and politics. The ability to be able to double major will give you a specified field of employment upon graduation, which will give you the advantage over other applicants. I do not recommend double majoring if you are easily overwhelmed since it does require scrupulous amounts of work.

Don’t Like The Stock Market?

One of the greatest myths to the economics major is that people are assuming that we know all there is about the stock market. Economists study different habits of consumer spending and behavioral patterns, as well as analysis of graphs and data. Economists can make educated predictions on which way the economy is going, but in reality do not know which way it will go. There are some common misconceptions to the major which should be looked at before choosing it.


Economics as a college major provides job security, good pay, and flexible job opportunities. No matter which field you end up choosing give economics a chance, there are many different career choices available upon graduation that the average student may never have known. The growth of this major is expected, especially as the economy starts to grow, economists do not just work on Wall Street, and almost every business will have a team of economists to help with their growth! If you choose to go to graduate school upon graduation you will have the upper hand in both business and law. Economics majors tend to score the highest on the LSAT for law school and also the highest on the GMAT for business school due to their critical thinking and analysis skills.

Why Do We Disagree About Economics?

Much of our political debate is dominated by disagreements about economics, disagreements that seem irresolvable: One side believes Keynesian economics is bunk and embraces supply-side economics; the other side believes supply-side economics has been disproven and instead accepts Keynesian economics. (There’s actually more options than just these two, but bear with me.)

The people who say that Keynesian economics is disproven point out instances where the government has spent large amounts of money on stimulus but the economy hasn’t gotten better. Likewise, the people who say that supply-side economics is disproven point out instances where the government has significantly reduced taxes but the economy hasn’t gotten better.

These are both lousy arguments.

Consider, there are cases where people have been provided life vests, but they’ve still drowned. There are people who have gotten vaccinations for a disease but have then gone on to die of that very disease. There are people who’ve been given antibiotics to stop an infection but have died of the infection, and people who’ve undergone surgery to fix a certain problem and the problem didn’t go away.

Does any of that prove that life vests, lifeboats, vaccinations, antibiotics and surgery don’t work? No, of course not. They’re not guaranteed to work, because there are all sorts of other factors that can intervene to undermine or overwhelm their potency. But, by and large, you’re better off with them than without them, right?

So, pointing out the cases where the economy has remained poor despite Keynesian stimulus or supply-side tax cuts isn’t enough to prove that either economic theory is bunk. Unfortunately, this flawed reasoning is regularly used in political debates when it comes to economics. “George W. Bush and the Republicans cut taxes, yet we had the fiscal crisis and downturn!” “Barack Obama and the Democrats gave us all this fiscal stimulus, yet the recovery is the weaker than other ones where there was little or no stimulus!” These aren’t valid arguments. Just because you know a person who was an overweight smoker but didn’t have heart disease doesn’t prove that smoking and being overweight don’t contribute to heart disease. Anecdotal evidence isn’t valid reasoning, nor is it scientific proof. It’s just hasty generalization.

How do you prove whether these economic theories are right or wrong, then?

Well, the same way you prove whether lifejackets, vaccinations, and antibiotics work: controlled experiments. With vaccinations, for instance, you set up take two groups of people, as similar as possible, and then give one of them the vaccination. If the group that got the vaccination has a significantly lower incidence of disease, then you’ve got a viable vaccination; otherwise, not. (This, for example, is how James Lind showed that scurvy is best treated with citrus fruits such as limes or lemons.) Obviously, you want to run the experiment a few different times, just to be sure, but you get the basic idea.

Controlled experiment is basically how we prove the effectiveness of anything, from fire extinguishers and antibiotics to air bags and bug repellants. So that’s the approach to take for economics.

Unfortunately, it’s very difficult to run controlled experiments — large-scale ones, at least — in economics. How on Earth are you going to set up two economies, each valued at, say, a trillion dollars, identical in every respect except that one of them has a lower tax rate? Or that one of them is engaged in Keynesian stimulus spending and the other isn’t? It’s just not possible. There are so many variables in economics — weather, earthquakes, population changes, geography, natural resources, etc. — that you can’t control and make constant. You can look at existing economies that are adopting similar policies and try to see if they get similar results, and look at ones that are adopting different policies and see if they get different results. But, again, there are so many other variables that will play a role in how their economies perform that it’s difficult to separate the relevant data out from the “noise”. Not that you can’t make headway like this, but it’s much tougher.

And that’s why there’s so much disagreement about economics. Without controlled experiments, it’s very tough to definitively rule things in or out. That doesn’t stop people from acting as if they have the definitive answers to our economic questions, of course. I’m baffled as to how people are endlessly confident when it comes to economic predictions but thoughtfully tentative about sports predictions, despite the fact that sporting events have fewer uncontrolled variables.

But acting confident and having conclusive evidence are two different things. Keep that in mind the next time someone says that Keynesian stimulus or supply-side economics is bunk and has been disproven.

Let a Major Airline Fail

The busines news is full of chatter about a proposed merger between Northwest and Delta, two of the big six U.S. airlines. Airline lobbyists and mainstream business pundits are applauding the merger, and the subsequent round of mergers among the remaining four major airlines, as the cure for what ails the U.S. airline industry.

What balderdash!

What is ailing the big American carriers is bad management. I see no reason why a merger from two sick companies so recently in bankruptcy, and not really in direct competition with each other, should produce anything but one great big sick company. The problems with U.S. airlines stem from a culture of management that makes the major carriers among the worst run companies in America, only able to survive due to bailouts and public infrastructure subsidies (i.e. public sponsorship of airports). Foreign airlines generally do much better, and provide better service to boot. Low cost U.S. airlines manage to provide cheap intercity flights and still make money. Why is it that the big six can do neither? Bad management.

The example most directly relevant to the case at hand is US Airways, a company run with such genius that their 1996 solution to their loss-making record was to rebrand the company from US Air to US Airways, and spend millions of dollars repainting every plane in the fleet. They introduced Metro-Jet, a low cost subsidiary meant to compete directly with Southwest Airlines, and gave it the oldest, clunkiest, most fuel-inefficent planes in the fleet. Within just a few years, United tried to buy US Air (sorry, US Airways), but the deal fell apart with both sides losing a bundle. Metrojet hemorraged cash, so US Airways blamed 9/11 and closed the company in 2001. Finally, the airline went bankrupt in 2002, after years of struggling along, despite the big 9/11 airline industry bailout granted by Congress. Along the way, US Airways employed the same tried and disproven method of arresting loss-making that every troubled airline in America has used at one time or another when, all to no success: buy a bunch of new shiny planes, expand routes, mass lay-offs, slash employee benefits, slash customer service, and all the incompetent executives get lucrative retention packages. Later, U.S. Airways merged with America West, but still doesn’t know quite what to do with it.

Given that every troubled airline resorts to more or less the same bag of tricks to right its sinking ship, and sinks anyway, one wonders why the same voodoo gets used over and over again. The answer is simple: mergers are good for stock options, and there is that tasty executive retention package at the end!

It is not that mergers are a bad thing in and of themselves, even in the airline industry. There are examples in Europe: Air France and KLM merged rather successfully. Lufthansa bought Swiss Air and is doing well with it. However, those European airlines are well-run. Given that the leadership of the U.S. big six has routinely proven themselves to be little better than a bunch of greedy boobies, any suggestion they make should be taken with a grain of salt. Actually, make that a cannister of salt.

The Market Solution: Let Them Fail

If the mergers are legal, they should be allowed to take place, but we should look elsewhere for a solution to the woes of the airlines. My suggestion is to apply the magic of the free market. By that, I mean Adam Smith’s free market, not the crony capitalist “pro-business” claptrap carted out by well-bribed members of Congress from both parties. The government should get out of the business of helping the airlines, and let a few of them fail. The big six face competition from foreign airlines abroad, and low-cost airlines at home, but by and large their woes are not due to competition. They are due to the incompetence of airline management, so let them run their companies into the ground and be done with it. The companies that are meant to surivive in our little world of market Darwinianism will see shareholder or Board revolts, innovative new management willing to try new, practical solutions to their problems, and will be well-placed to pick up the market share of the failures.

If a foreign airline like Air France-KLM wants to buy, say, a collapsed Continental, let them. They certainly can’t do a worse job running that awful airline than the current crop of executives. My guess is that not only would service improve, but the employee benefits would too, disproving certain greedy and utterly disproven standard measures of the executive ghouls who dominate the airline sector in this country.

Very often in this country, the people who talk free market actually mean pro-existing business. Note that isn’t pro-business, but pro-exising businThat is a mix of policies which transfer wealth from taxpayers to the corporations in question, suppress market entry on the part of innovative upstarts, and help the company weasel their way out of inconvenient contractual obligations to their workers on things like pensions. Whenever I read or hear about what passes for “free market economics” on the part of Republicans and pro-business Democrats, I wonder if they ever read even the Cliff Notes version of Adam Smith. The free market is about free competition, so if you want to see the magic of the free markets fly the friendly skies, let those companies compete freely. Let them rise and fail on their own merits. In particular, just let them fail.

Measuring the Stock Market’s Future: The January Barometer

You’re going to hear a lot of different economists and pundits predicting the how the economy is going to turn out for the new year. One of the ways these “experts” make their predictions is by something called the January barometer.

The January barometer is a theory that basically compares the movement of the S P; 500 at the end of the month to where it was at the beginning of the month. If it is higher at the end of the month, then the theory is that the economy is expected to rise that year. If it is lower, then it is bad news for the economy.

You might think this is just voo-doo economics or something akin to the groundhog seeing his shadow, but think about this for a minute. The economy grows when people spend money. People usually are broke in January because they are paying off their Christmas purchases. So, if the economy is actually growing at the end of January, that is, if the stock market is up at that time, it does tend to follow that it is going to be a good year.

Some studies have shown the January Barometer to have better than a fifty percent accuracy rate but just using the last nine years the January barometer fell short in accuracy with a score of five to four. On the other hand, other studies, which go much farther back in time, show much greater accuracy

Don’t confuse the January Barometer with the January Effect. These two concepts are often used confused and they are quite different. The January Effect is the tendency for small cap stocks to do better than large cap stocks in January.

So should you use the January Barometer to help you make your decisions as to whether to buy or sell stocks? Frankly, I don’t know. Maybe you should get out the magic eight ball, give it a shake, and ask it what it thinks. Buying and selling stocks is a tricky business, and anything can happen. Whether the January Barometer will be correct in 2010 is anyone’s guess. The best that you can do is study the company’s financial statements and buy or sell based on informed decisions.

Environmental Analysis: Macroeconomic Impact on the Education Industry

The education field is one of many field/industries that are affected by macroeconomics. It may not be affected as much by macroeconomic factors as other industries such as the food and restaurant industry or a company that makes clothing or shoes such as Nike, it still is affected. Inflation affects the purchasing power of students in terms of textbooks and cost of living. If prices are higher for textbooks, then students will not have as much money for other things (ex: luxury items such as movies and dinner), which affects the GDP. That’s not to mention interest rates, the higher the interest rates, the more it costs students to borrow money for school (Encyclopedia of Earth, 2007). How does this affect the postsecondary education industry? If there are factors that would keep students from wanting to attend college, such as high-priced textbooks and high interest rates on loans, that will affect the employment of professors, teaching assistants, work-study students and anyone else who desired employment in a college/university environment. Brooklyn College is a school that is a part of the City University of New York and is relatively cheap in terms of price for a good education. It is $2000 a semester for full-time students and $170 a semester for part-time students. (Brooklyn College, 2008) A potential problem for the school is the student activity fee which is over $100 and the accelerated study fee which can be up to $690 for students that take over 24.5 credits. (Brooklyn College, 2008) Another potential problem is that the according to the U.S Department of Labor, the price of college textbooks have gone up in the last five years. As stated earlier if there are financial reasons for a student not to attend a college it will directly affect the employment of anyone with the background to work in a school environment. If there are less students, that could take away jobs from professors, places like the library café can cut to preserve budget which will take away jobs from students and other computer experts. It’s a domino affect that can impact both students and potential employees. This paper will look at the opportunities that exist for Brooklyn College to provide economic stability in order to entice students to attend the college, which would indeed have a positive domino affect on the profitability of the school.

Based on the statistics provided by the United States Department of Labor, colleges have not suffered the same effect of the increasing unemployment rate as other industries have. That makes sense considering that professors are taken into account when the statistics are created and professors are highly educated. With that said there are ways to increase employment at Brooklyn College. The best way is to provide a job placement service in the school for graduates with first priority going to students that have previously completed either work-study programs or student assistant programs while attending the school. That will entice students to not only apply for work-study (which is better for them in the long-term than asking for more loan money), it will also entice them to improve their office skills, which will make them more desirable to not only employers at Brooklyn College, but employers everywhere and that will also help the economy.

When it comes to how inflation has increased the price of textbooks, Brooklyn College should implement several other options to purchase textbooks. For example, encourage professors to use the same textbooks for as many semesters as they are relevant. Another way (besides lowering the prices) to make textbooks affordable for students is to encourage the selling of books between students at lower prices. Not only is it prudent to encourage said selling, but it is also a sound idea to make a place on the Brooklyn College website (ex: a link on the front page) for students to put their books on sale and for students who need textbooks to log on and make contact in order to buy the book. Those ideas keep a balance between students going to the bookstore to buy the used books and having the books be affordable through other means. The theory applied here is akin to absolute advantage (McConnell and Brue, 2008); Brooklyn College does not need the biggest bookstore in the world, let alone CUNY in order to provide a top-notch affordable education. As far as the student activity fee and the accelerated study fee goes, the move to make would be to run polls and use a feedback space in order to find what student activities are most expendable and then cut said activities in order to lessen the activity fees. Once again the theory of absolute advantage is at work, less student activities mean less resources used to provide the same education as a school that is similar.

When it comes to financial aid, because of the interest rates of loans, Brooklyn College has an opportunity to encourage students to try to fund as much of their education as possible through other means. The other means are scholarships and grants. Finding innovative ways to provide scholarships for students is a great way to entice students who are on the fence about attending college the chance they are looking for.

Contests are probably the best way to provide scholarships or grants for students that would not otherwise get one. The interest rates on loans are enough to discourage students on its own. The interest rates for the Perkins Loan provided by Brooklyn College is five percent (Brooklyn College, 2008) and they are even higher for federal loan programs, the William Ford Loan program carries an 8.25 interest rate (Brooklyn College, 2008). That alone is reason enough for students to avoid Brooklyn College, despite the fact that the school is critically acclaimed (school guides, 2008) and should have no problem drawing students.

Brooklyn College is already an affordable school, but because of factors such as the interest rates of student loans and the inflation causing the price of textbooks to rise there may be a dearth in the amount of college students that attend any school, let alone Brooklyn College. Brooklyn College as a critically acclaimed and affordable (in terms of tuition alone) school has a chance to entice students to attend its school specifically as opposed to more expensive schools like New York University. More students attending Brooklyn College can boost the school’s employment options (including the students themselves pre and post graduation) which will decrease the employment rates. While the environment may not allow for newer books to be sold at a lower rate, the school can encourage cheaper ways to buy books. In the same vein, while interest rates may not be able to come down for the moment because of the economy, Brooklyn College can still find ways to provide financial aid to students that will allow them to attend the school such as grants and scholarships.



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