Coachella Valley’s Economy and Music Festivals

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Coachella Valley Music Festival is the largest music festival in the U.S., and its home, the Empire Polo Fields in Indio, California has become the host to festivals several weekends of the year. These few weekends a year have a huge impact on the area due to the mass amounts of people it draws.

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Here’s a breakdown of the economic effects from the two Coachella weekends and Stagecoach in 2016:

  • $704 million – estimated overall economic activity, made up of consumer spending and business spending that was generated by the three festival weekends.
  • $403 million – spent in the Coachella Valley area
  • $106 million – that went into the city of Indio’s economy- benefitting their businesses
  • $3.18 million – in tax revenue for Indio that was made from ticket sales
  • Estimated 10,000 people stayed in Airbnbs
  • Estimated 100,000 people there during each day of Coachella
  • Estimated 70,000 people there during each day of Stagecoach

Now that there has been Desert Trip, a new festival this year at the Polo Field’s, it is estimated that there has been an economic impact of $805 million in 2016 from the three festivals combined. It will be interesting to see the outcomes and information on the Desert Trip festival’s impact. So far, it has been estimated that Desert Trip brought $250 million into the Coachella Valley economy. This all has been a huge move forward since 2012 when the Polo Field’s contract with Golden Voice begun.

Some of the economic outcomes from Coachella and Stagecoach in 2012 were-

  • $254 million – spent in the Coachella Valley area
  • $90 million – that went into the city of Indio’s economy- benefitting their businesses
  • $1.4 million – in tax revenue for Indio that was made from ticket sales

This can partly be attributed to ticket prices increasing and many more people attending each day now.

These effects on Indio’s economy and the Coachella Valley area’s economy have allowed for renovations to business and infrastructure. It has also brought new businesses, hotels and other tourists due to the city’s new “City of Festivals” reputation and mystique. This effects will most likely grow as the festivals continue to grow. The city of Indio recently approved Golden Voice’s proposal to increase Coachella’s attendance by 26,000 people and Stagecoach’s attendance by 10,000 people. The proposal also included expanding the festival site by 42-acres and adding more parking and camping sites. It allows sound checks to start at 8 a.m. instead of at 10 a.m. as well. It is predicted that the growth in attendance would give Indio $1 million more in ticket taxes.

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Moving forward, the city of Indio is making efforts to bring more people to their city year-round rather than just during those few weeks during the year.

Sources:
http://www.kmir.com/story/31553258/goldenvoice-proposes-attendance-increase-to-coachella-and-stagecoach
http://www.cvindependent.com/index.php/en-US/news/politics/item/3385-to-lead-the-city-of-festivals-seven-candidates-compete-for-two-seats-on-the-indio-city-council
http://www.latimes.com/business/la-fi-coachella-impact-20160723-snap-story.html
http://www.desertsun.com/story/news/local/indio/2016/03/22/goldenvoice-concerts-coachella-economic-impact/82141410/

Gold Mine in the Desert


http://www.cnbc.com/2016/10/07/oldchella-set-to-be-a-boon-of-at-least-250-million-to-coachella-valley.html

The Dark Web: A New Supply Chain for Drug Dealers?

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Black market economies are often subject to many of the same economic developments as legal economies. One industry that has not changed much is the illegal drug trade, which still usually involves the risky transaction of buying drugs in person with cash from a drug dealer. However, the Internet presents new opportunities for people to purchase drugs from the comfort of their own home without ever having to meet a drug dealer.

Internet drug deals have been made possible through the deep web. The deep web refers to parts of the internet that are not indexed by conventional search engines such as Google and Yahoo! Instead, they are accessed through special browsers that encrypt web communications and then randomly relay it multiple times throughout the globe, encrypting it at each step (Tech Crunch). This makes it near impossible to track web traffic run through an encrypted browser, the most popular of which is Tor, or The Onion Router.

Encrypted browsers can be combined with bitcoin to create untraceable online marketplaces, or cryptomarkets. Bitcoin is an online cryptocurrency that can be electronically exchanged for any real global currency (CNN Money). Bitcoin transactions do not log user names, making them anonymous and untraceable. This has led to the rise of entire markets on the deep web devoted to Bitcoin transactions.

Many of these bitcoin transactions involve illegal products because they cannot be easily traced by law enforcement. According to a Carnegie Mellon research study that monitored bitcoin transactions on the deep web, there is an active market for illegal drugs on the deep web, known as the dark web. The study estimates that there is a steady market for illegal drugs on the dark web ranging in $100 million and $180 million a year in total sales volume (Wired). This does not reflect the explosive growth of the dark web in its early stages, when a cryptomarket known as the Silk Road selling everything from marijuana to illegal weapons made an estimated $1.2 billion over two years before being shutdown in a joint FBI-DEA sting (Coin Telegraph).

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The dark web illegal drug market differs from the street market because it is made up primarily of small scale dealers. According to the Carnegie Mellon study, 70% of dark web dealers sold less than $1,000 worth of products while only 2% sold over $100,000 (Wired). Dark web drugs actually tend to cost more than their street counterparts. A study by The Economist reveals that in most countries, a gram of heroin costs roughly twice as much online as on the street while the markup for cocaine is around 40% (Economist).

This markup in cost may be accounted for by the postage and parceling needed for each package, which can be as high as 28% of the price for just the product (Economist). Another potential reason is that dark web drugs are higher quality. A study by Spanish think-tank Energy Control that analyzed samples of dark web drugs against street drugs showed an average purity level of 71.6% for dark web cocaine vs. 48% for street cocaine (Economist).

The dark web is still a fledgling market compared to the large-scale operations run by drug cartels. Drug cartels still have monopolies due to undisrupted supply chains that can move tons of drugs rather than small packages. They are enforced by smuggling, intimidation, violence and corruption that do not translate well to the Internet. However, just as online marketplaces such as Amazon and Alibaba have put huge dents in retail, the anonymity of cryptomarkets may become too appealing for customers, and dealers, to ignore.

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Demonetization of Indian Currency

On the 8th of November 2016, along with the US, even India, one of the fastest economies in the world, was also going through a turning point in the history of its country. India’s recently elected prime minister demonetized a large proportion of its currency by ceasing the usage of all 500 and 100 rupee notes as legal tender and replacing with them with new currency notes. Also, limitations have been placed on cash transactions, and laws have been passed for large and unusual bank deposits to be under extensive tax scrutiny.

 

This major step is aimed at combating several serious issues that the country is facing, like black money, corruption, the inflow of fake currency from neighboring countries like to fund terrorism and even the problem of smuggling.

 

Through the implementation of this revolutionary policy, any drastic increases in income of people that do not seem consistent with their past earning patterns are much easier to question and examine under tax assessment, because all the cash will now be discernible by banks and the government. To escape these tax assessments and pay fines for tax evasion and having huge sums of money accounted for, many businesses have completely wiped out their cash. There have been numerous reports of people burning down or throwing away their black money because it now has no monetary value. An expected number of one trillion rupees are to be not exchanged.

 

Also, to strengthen this step taken towards tax evasion is the imposing of more than a 200% penalty for those making deposits of cash worth more than 250,000 rupees that cannot be accounted for.

 

However, in addition to the affects on taxation and corruption, this de monetization has also had an interesting macroeconomic effect. In India, there are major industries that entirely thrive on a parallel economy run by black money. Demonetization will bar these industries and businesses and that significantly lower India’s GDP for the last quarter of 2016. However, this would only be a short-term impact that would be a small price to pay for the increasing the GDP and the overall health of the economy of the country. Additionally, as banks will experience a major influx of deposits, interest rates are likely to fall, and lower lending rates might help boost the economy. Also, the value of the rupee might enhance in the foreign exchange market because of the major decrease in circulation of currency notes in the economy.

 

As of the business forefront of the situation, investing in the real estate, luxury and jewelry industries might not be prudent as of now. This is because housing finance companies will not be willing to give real estate companies loans to companies and individuals that might be currently facing a liquidity crisis. Also owning luxury goods, especially luxury cars or jewelry is often a representation of high earnings and extra wealth, and hence the luxury industry might be adversely impacted because people might refrain from displaying their income levels by involving in such forms of indulgence. Hence investments and stock markets will definitely see volatility.

 

Comprehensively, the Modi administration has made a very forward-looking, unique and distinctive step towards counterfeiting this parallel black money economy, corruption and the circulation of fake currency. As of now, the demonetization has been having a three-fold effect on interest rates, taxation and the stock market. Nevertheless, the increasing magnitude of these impacts, volatility and destabilization to be caused by it is yet to be seen.