Norway Is a Model for Encouraging Electric Car Sales

Norway, in an effort to wean their drivers off of fossil fuels, are offering subsidies and incentives for Norwegians to buy electric cars. The idea behind this is for Norway to reduce the amount of greenhouse gas emissions and reach its United Nations climate goals.

The current amount of electric cars in Norway is still only 2 percent, but that is quite high compared to other countries. And with a population of 5.2 million, that's still a decent amount of electric cars on the road. More than one-fifth of new car sales in Norway are electric cars. According to some predictions, there are going to be about 50,000 electric cars in Norway by 2017.

However, with the rapid increase of electric cars, the Norwegian public doesn't think the government has the proper accommodations for the cars. In Oslo, there are only 700 charging stations, though there are expected to be 1,000 by the year's end. And some city and regional governments are recording losses in profits from a decrease in the use of public transportation.

It'll be interesting to see how this program turns out. Will they be doing a program like cash for clunkers but for electric cars? Would this work in the United States? Will this program be successful?

http://www.nytimes.com/2015/10/17/business/international/norway-is-global-model-for-encouraging-sales-of-electric-cars.html?ref=business

Economic Policy and politics

This post might appear very political in nature but I am trying to be objective while connecting a current situation to a recent class topic. That being said, here is my post:

While I didn't watch the full Democratic debate, I have seen some highlights and some press covering the hot points. Perhaps the most talked about is Bernie Sander's economic approach. His message has been against high income inequality and power of large corporations/high net worth individuals and a policy called democratic socialism (quoted from his response from the most recent debate).

My initial browsing for an article was aimed at finding more analysis on Sander's plan and what is similar/different compared to the nordic countries. The article I found here suggests that Sanders may need to reconsider policy objectives and wording. Firstly, the article confronts the use of "socialism" as incorrect because countries like Denmark, Sweden  and Norway allow people to own the factors of production, which is capitalism. After that, the article tries to sort out the key points Sanders uses when comparing the US and the nordic nations, which may be achieved differently than discussed. Ultimately, the article is saying that the results Sanders desires to bring to the US are not achieved the way he is describing.

What do you guys think? Does his policy make sense in light of the factors we discussed in class that make the nordic system possible - i.e. culture, active labor policy, flexicurity, market solutions, etc. Also, what would you recommend as an advisor? (things to add to the policy goals, changing terms, etc.)

http://www.forbes.com/sites/timworstall/2015/10/14/bernie-sanders-wants-the-us-to-become-more-neoliberal-and-perhaps-more-unequal/

Danny Meyer Restaurants to Eliminate Tipping

In American culture when people go out to eat it is a common practice that once they have finished, they pay their bill as well as leave a tip for the service their waiter or waitress has given them.  But what if this is no longer the case?

Restaurant owner Danny Meyer, who owns 12 restaurants in New York City employing 1800 is trying to how restaurant staff are paid.  This change would entail the elimination of tipping.  He was stated in the article saying, "There will be one total, as if you were buying a sweater at Brooks Brothers."  By doing so, he will increase the prices of the food on the menu to reflect the hourly wages of the staff. By this increase in price he will be able to increase the pay of the cooks from $11.75 to $15.25 which he said is a necessity to attract culinary talent due to the high cost of living. To reiterate this point he said, "The gap between what the kitchen and dining room workers make has grown by leaps and bounds,” Mr. Meyer said. During his 30 years in the business, he said, “kitchen income has gone up no more than 25 percent. Meanwhile, dining room pay has gone up 200 percent." While wait staff may not have as high of income as they have enjoyed in the past this will create a more equal income distribution among the restaurant workers.  

However as Meyer states, "Tipping is a way of life in this country,” he said. “It may not be the perfect system, but it’s our system. It’s an American system."  This will not be an easy adjustment for the workers or for the customers as it is ingrained in our culture and will be one that will take some time to adjust to.  Will customers be willing to pay higher prices for their food and embrace the new no tipping policy?  Will wait staff and other restaurant workers leave the company due to the potential decrease in pay? Is this system one that will fix the issues surrounding the business, or do you see potential flaws in this plan? 

http://www.nytimes.com/2015/10/15/dining/danny-meyer-restaurants-no-tips.html?ref=business&_r=1

Daraprim: the drug that skyrocketed over 5,000% hasn't come down in price yet

After news hit the market weeks ago that the common drug Daraprim would increase in price to over 5000% of what it used to be, many became outraged by this decision. The commonly known drug is typically used by cancer and AIDS patients to help rebuild their immune system and has been on the market for over 60 years now. This announcement came after a statement from CEO Martin Shkreli that “copious amounts of money are needed to fund further research and development on new drugs” and so a price increase has to be implemented to sustain these on-going operations. He also stated that if needed, people can receive the drug for little to nothing and all they must do is petition for assistance. As one can imagine, this sudden increase in price of a very common drug did not bode well with the general public. That being said, after much opposition from interest groups and people alike, Shkreli stated a little over two weeks ago that the price of the drug would fall in the coming weeks so that those who cannot afford it because of the new price hike could once again afford it.

While many thought this scandal was over, the affect has yet to be felt and the spotlight has now been placed back onto Shkreli and the pharmaceutical company. In the latest news statement released defending the hike of the price of the commonly known drug, Shkreli said that “our price increase is a good thing for patients because until now no one has been interested in developing a new drug for [the infection] toxoplasmosis” that has been left unchanged for over 60 years.  That being said, how do you think Shkreli and the rest of the company will fare in this on-going price war? Is $900.00 too much for this drug or is it fairly priced for the operations that must be sustained from its profit? Do you think that the company will allow the price to fall back down or will they leave it where it is at now?

Link to the article: http://money.cnn.com/2015/10/09/investing/drug-ceo-daraprim-price/index.html

China concerns pushing back rate hike

There has been a lot of talk recently about The Fed and their impending increase in the interest rate. On Friday, Fed Vice Chairman Fischer said that China's economic slowdown and its effects are delaying the Feds decision to raise the interest rate. The question now becomes how long will they wait.

Some of the members of the Fed are advocating a more lengthy wait, pointing to the fact that what happens internationally has an effect on the US. On the other side, members are recommending that the increase happen as soon as the US reaches 2% inflation.

In my opinion I think the Fed should wait a little longer to see how the China slowdown effects the US. As soon as the effects have been gauged then an increase could potentially happen.

Coffee fanatics are now even more wired

The coffee industry is probably one of the largest industries in the world, and many people feel very strongly about their coffee. A recent acquisition by Peet's Coffee & Tea of Stumptown Coffee Roasters is causing a lot of unease going forward for faithful Stumptown goers. They worry that the original and unique taste of the much smaller chain is going to be compromised by Peet's. Peet's is claiming that it has no interest in changing the style of Stumptown coffee because its reputation is what attracts customers. They simply plan on providing Stumptown with more cash in order to produce more coffee, specifically the bottled iced coffee that it is known for. Coffee connoisseurs are not convinced, and worry that the taste will change with mass production. To be determined if this acquisition will actually increase sales for both Peet's and Stumptown. Mostly likely the increase in production will result in an increase in sales, and Stumptown will go from a more local chain to a nationwide name.

Oil Prices Rise up - Again

If You got your car filled up with Gas this week, You have probably noticed that oil prices went up around 35-40 cents a gallon on average. This is no coincidence and the reasons for this rise in prices can be summarized in the following 5 points. Keep in mind that the Oil market is highly susceptible to various shocks and this does not mean that these 5 reasons are the only ones affecting the aforementioned market.  

1. OPEC Secretary General Abdalla Salem el-Badri announced that Global investment in the oil market would drop by 22.4 percent which essentially means that there will be a lesser supply of oil which in turn will lead to oil prices rising. 
2. There has been a decline the amount of crude oil production in the US, the Us Energy information centre has reported that it expects the amount of barrels produced per day to drop from 9.2 million to 8.9 million further increasing the pressure of supply based pricing.
3. Countries like Venezuela and Russia, two major oil producers as well as OPEC members are meeting on the 21st of October to discuss the lowering demand for oil worldwide and they could in fact cut production to simulate demand.
4. The Fed is currently undecided on whether or not it will increase interest rates. If it does then that means oil companies will have a higher times financing their investment projects and decreasing oil production.
5. Ironically enough, the Iran nuclear deal meant that there was potential for sanctions to be lifted off Iran and there being the possibility of a return for Iranian oil into the market. However tensions between Congress and the US public as well as tensions within Iranian political circles have so far delayed the lifting of sanctions which means that Iranian oil reserves might not be tapped into. 

http://www.thefiscaltimes.com/2015/10/09/5-Reasons-Oil-Prices-Are-Moving-Higher

Airlines Find Travelers Accept Fees Wrapped Up in Bundles

http://www.nytimes.com/2015/09/22/business/airlines-find-travelers-accept-fees-wrapped-up-in-bundles.html?ref=business

The article I chose came from the New York Times, written by Martha White titled “Airlines Find Travelers Accept Fees Wrapped Up in Bundles.” She explains and discusses how airlines have been introducing bundles with add-on fees onto their original base fares. Travelers seem to be embracing these bundles that the airline company’s are offering, and is a win-win for both the company and their customers. Airlines offer such bundles that are different from their basic fares by raising the price of the tickets; however, these tickets have more value than just the general airline ticket. They add perceived value by naming the bundle with something that catches the customer’s attention. For example, the author mentions the Delta Airlines bundle called a “Comfort Plus ticket”, which provides travelers with a more enjoyable flying experience that consists of more legroom, early boarding access, overhead bin storage access, and free drinks. This bundle costs their customers an extra 48 dollars per ticket, but the features of the bundle are appealing enough for some of their travelers to upgrade and all the while making them feel like they have gotten more than a fair deal. As far as the numbers go for the airlines, these bundles are generating more revenue per passenger, which also in turn is generating fewer complaints. This then translates to a more enjoyable flight experience that leads to a loyal returning customer base. With the idea of bundling in this industry, airline companies are saying that it is all about creating value to the customer. Airline companies are offering different bundle options for their customers, so they must decide which factors are more important to them. The bundle they then chose would be a result of their own personal preferences, so now the extra money they paid for the bundle is justified in their minds resulting in higher satisfaction with their decision.

Bank of England economist proposed to abolish cash

According to British media reported on the 10th, the chief economist at the Bank of England hopes the abolish of cash be able to implement negative interest rates to people with using  digital currency instead.

 Bank of England chief economist said that the global economy is entering a third phase of a protracted crisis: Following the 2008 - after the "Anglo-Saxon" crisis and the 2011 crisis in the eurozone, and now entering into another "disaster."

Since the interest rate is restrickted, the chief economist is worried that if  the banks would set a negative interest rate, then people would turn to keep the money in cash by themselves, it might help to  stimulate people to spend more money. And according to him, with using digital currency, they can set negative interest rates to stimulate consumptions.