The famous Hollywood sign, year-round warm weather, and the beautiful beaches along the coast attract millions of people to travel to Los Angeles each year. According to Discover Los Angeles, the tourism industry in this city generated this year alone $34.9 billion dollars (Los Angeles’ Tourist Industry Generates…).

What makes Los Angeles a hot spot?

As the capital of the world for celebrities, performing arts, acting, and music, you will be sure to spot your favorite artist either walking on Rodeo Drive or performing in a packed concert hall. If concerts are not your favorite, Los Angeles boasts many famous art galleries, like the Getty, Museum of Natural History, Museum of Modern Art, Los Angeles County Museum of Art, the Broad, and many more. From Los Angeles to Santa Monica, tourists can shop until they drop and recover by soaking up some strong UV rays at the beach. Within a 50 mile radius of Los Angeles County, tourist can take advantage of ski slopes, mountains, and amusement parks, as well.

The statistics by Discover Los Angeles found that 41.2 million domestic individuals and 7.3 million international travelers visited the city of angels in 2017 alone. These tourists spent $22.7 billion dollars directly into the local economy, resulting in $34.9 billion in economic impact, which include induced and indirect benefits (Los Angeles’ Tourist Industry Generates…).

How? The tourism industry in Los Angeles encourages investments in infrastructure, attractions, and hospitality, allowing the city itself to thrive, along with all the Los Angeles County residents. Tourism helps fund this county, bringing in $2.7 billion in state and local tax revenues, which in turn saves each household in Los Angeles $837 per year (Los Angeles’ Tourist Industry Generates…). This tax money is translated into improving the city.

Tourism also opens the job market. According to Discover Los Angeles, “Tourism supported 523,800 jobs in L.A. County’s Leisure & Hospitality sector, one of the area’s largest and strongest economic sectors, employing 1 in every 8.5 workers” (Los Angeles’ Tourist Industry Generates…). It is apparent that tourism is an influential economic driver for the local economy.

Daniel J. Stynes writes a report about the economic impacts of tourism and finds many direct, indirect, and induced effects on the economy from tourism. While direct effects would include hotel room sales, indirect effects would include the changes in the job market and business growth in a booming tourism region (Stynes).

Although, this dramatic increase in tourism has also resulted to inflated prices for Los Angeles residents and an increase in traffic.  The book, Global Tourism, written by William Theobald, emphasizes that people study the impact of tourism on the economy because it is “easily quantifiable and measurable. In addition, it was presumed that the income derived from tourism could make up for any negative consequences of tourism. However, over-emphasis on economic benefits have often led to adverse physical and social consequences” (Theobald). It is important for the city to take action managing Los Angeles tourism in a sustainable way.

 

Works Cited

“Los Angeles’ Tourism Industry Generates Record $34.9 Billion in Economic Impact.” Discover Los Angeles, Discover Los Angeles, www.discoverlosangeles.com/press-releases/los-angeles-tourism-industry-generates-record-349-billion-economic-impact.

Stynes, Daniel. Economic Impacts of Tourism.

Theobald, William F. Global Tourism. Routledge, 2016.

Wall Street and its investors are anxiously anticipating the results of the current midterm elections. The expected results are that the Republicans will win the Senate and that the Democrats will win the House. Many investors are hoping for this result as it would cause gridlock. This means that the existing economic agenda would stay relatively the same. If Democrats were to win both houses, there would be sharp sell-offs. If Republicans were to win both houses, then stocks may rally in favor of tax cuts. 

Many of the major banks agree that there will be a split in Congress, however each bank has their own interpretation of how the market will react to this split. The Bank of America Merrill Lynch believes that base case is a boon for equities since markets typically do well under gridlock. Goldman Sachs believes that there will be modest reactions, weaker fiscal stimulus and growth, and no major changes in trade policy. Morgan Stanley believes that a trade risk will be present regardless of the outcome of the election. (Franck)

If there is an upset and the Republicans win both houses, US equity markets will rally broadly as companies sensitive to tax cuts and de-regulation will outperform. Additionally, in bonds, 10-year Treasury yields most likely would break the high end of their recent range. The win would validate the current administration’s aggressive trade approach. Non-US equity markets would be likely to underperform since investors will pursue deregulation and more tax cuts. Finally, the win would result in a strong dollar, which would be bad for emerging markets. (Rapoza)

In opposition, if the Democrats were to win both houses, then deregulation would slow down. It would also create a higher chance of Trump’s impeachment and the creation of legislation designed to constrain Trump. (Rapoza)

There may still be some uncertainty about the elections which is causing many investors to hold back on making big bets just in case there is a surprise outcome. Despite this, Wall Street realistically has very little to worry about. In midterm elections since 1946, the S&P 500 Index has had an average price return of 16.7 in the twelve months following the elections. (Jay, Veiga) While Wall Street as a whole will not be harmed, there may be minor political shifts causing shifts in investments. For instance, shares of gun makers may change as Congress reshapes gun control laws. Additionally, there may be more possible investments in infrastructure because that is an area when Trump and the Democrats may be able to find a common ground. Adversely, pharmaceuticals could suffer because both parties favor drug price control. 

The likely outcome of the midterm elections will be gridlock. This will result in the predictable rise in investments post midterm elections and then subside to the United States continuation of its economic agenda. 

Sources:

https://www.cnbc.com/2018/11/06/heres-what-every-major-wall-street-firm-expects-from-the-election-and-how-to-play-it.html

https://www.forbes.com/sites/kenrapoza/2018/10/04/midterm-alert-what-happens-if-republicans-actually-keep-congress/#694cc3857412

https://www.detroitnews.com/story/business/2018/10/18/midterm-elections-stocks/38201061/

In the aftermath of the disappearance and murder of Saudi-Arabian journalist Jamal Khashoggi, President Donald Trump said that he “really wants” to give Saudi Prince Mohammed bin Salman the benefit of the doubt.

Despite the Trump administration’s condemnation to whoever was behind the killing, Trump, in an interview with Fox Business, said that Saudi Arabia has “always been a very good ally” and that the cost of severing ties with the oil-based state could cost “500,000 jobs.” In a separate interview with the Wall Street Journal, however, Trump upped the number of job losses to the “millions.”

Trump is alluding here to the arms deal with Saudi Arabia back in 2017, in which $110 billion in arms contracts were signed in a meeting with Prince Salman and his cabinet. The press release stated that the deal would support “tens of thousands of new jobs in the United States,” not quite a million.

Saudi Arabia is currently the biggest purchaser of U.S arms exports, far ahead of the United States’ next biggest clients—Iraq, Australia, the United Arab Emirates, and Qatar. However, a labor market study by the Aerospace Industry Association showed that total A&D exports accounted for about 1.42 million jobs as of 2016, about 0.9% of the total U.S labor force. Private sector defense workers made up even less, at about 0.5%.

Even still, it’s hard to believe that by cancelling the arms deal, pulling back from our longstanding support of the Saudi monarch, or even embargoing them would cost “tens of thousands” of jobs. Plus, if those jobs are in the public sector, why not put tha labor to use in less mass-murderous activities? It is the aerospace industry after-all. Plenty of profitable investments besides weapons can be made there.

But what about the oil? Over the past few years, the United States has become less reliant on foreign oil. We now produce most of our oil in house, exporting far more than we are importing. From 2005 to 2015 alone, U.S reliance on petroleum imports fell from 60% to 25% while exports increased by over 300%.

And even of those imports, Saudi Arabia makes up about 9% of them. Almost half of current imports come from our neighbors Canada and Mexico. Combined with the fact that the U.S is slowly increasing investment in clean energy, one has to ask ‘what the hell does Saudi Arabia have on us’? There is no reason why we shouldn’t be sanctioning the Saudi business community, at the very least for their near-genocidal war against the Yemeni people using our tax dollars. Nor should we play dumb and look the other way with a thug like Salman. The fact that Saudi Arabia’s got dollars invested in AMC, Uber, and Magic Leap shouldn’t prevent us from taking a very elementary moral stance

Airbnb has arrived in the Crescent City.  After the city loosened restrictions on short-term rentals, except most of the French Quarter, it only took a license for homeowners to lease out a room.  By December 2017, in one district near the French quarter, one in 10 residences are registered as Airbnbs.Residents need a license to rent out their spaces up to 90 days a year. In October, the New Orleans City Council is moving toward restricting short-term rentals to commercially zoned areas after about 18 months of allowing “temporary” licenses in residential zones.

In February 2018, a report announced that for 10 cities with the largest Airbnb market share in the US, the entry of Airbnb resulted in just 1.3 percent fewer hotel nights booked and a 1.5 percent loss in hotel revenue. But the economic effect of Airbnb goes beyond the Hotel Industry: one study of 100 U.S. studies showed that a 10-percent increase in Airbnbs causes a 0.4-percent increase in rents.

 

Are all short-term rentals Airbnb-style arrangements in the city? Not necessarily.  The Jung Hotel, a newly renovated hotel on Canal Street has leased 111 residences on the hotel’s upper floors to the short-term rental company Sonder, which uses a smartphone application and an online website for booking. Unlike AirBnB, the only people that ever stay in Sonder apartments are guests. None of the 111 units, which had a price tag of $3,900 and $5,900 per month, ever found renters.

 

Sonder applied and received a hotel licence instead a short-term license, exempting them from the future short-term rental regulations.

 

“We’re a deconstructed hotel,” said general manager of Sonder New Orleans to Nola.com. “”It’s a different expectation of service. That’s why I think we’re the future.”

 

 

But what does the economic future look like for New Orleans and short term rentals? Unlike Los Angeles, San Francisco, or Los Angeles, New Orleans is economic profile is different. The city’s tourism industry accounts for nearly 40% of tax revenue. 18 million visitors spent more than $8.7 billion in 2017, according to the New Orleans Advocate. After Hurricane Katrina,  the city’s rebounding Tourism industry helped bring more people back to New Orleans.

 

Airbnb has shared details regarding the positive economic impact of the business, citing that Airbnb guests “stay longer and spend more in diverse neighborhoods throughout the city.” In 2017, Airbnb said that they delivered  $3 million in fees and taxes for short-term rentals for the city.

However, a study released in July tells a slightly different story about how short term rentals are changing the city. The study, which utilized data from  from the Bureau of Labor Statistics, the Census and Airbnb in addition to Yelp reviews, showed that while  white “Airbnb” neighborhoods saw a growth in restaurant employment, restaurants in black or Latino “Airbnb” neighborhoods did not see a similar increase in employment or Yelp engagement.

 

In New Orleans, the parts of the city that have the highest Airbnb concentration are nearly are nearly 50 percent white, compared with 34 percent in the city as a whole.

In study by Loyola University New Orleans professors John D. Levenis, Ph.D., and Mehmet F. Dicle, Ph.D. from 2015 estimated that the Airbnb’s visitors accounted for 4,480 additional jobs that year, with a total value added to the New Orleans economy of 135 million dollars.

Since deregulation in 2017,  locals say that the economic benefits of Airbnb are speeding up the pace of gentrification in the city as well. An investigation by The Lens and HuffPost reported that though tourism lowers crime rates and and cleaner streets, rising rents and home prices are pushing long-time residents out.

“On our block we didn’t have neighbors; we had guests living on our block Thursday to Sunday,” said Christian Rhodes, a New Orleans resident to Huffpost. “Airbnb kind of guaranteed there would be no families.”

 

Sources:

 

https://www.theadvocate.com/new_orleans/news/business/article_3e30be30-5301-11e8-ac87-2f04ffdf5e01.html

https://unsplash.com/photos/ZofZqMM3UU0

https://www.nola.com/politics/index.ssf/2018/10/sonder_jung_hotel_short-term_r.html

Technology has begun to dominate our lives. Older generations have been forced to adapt to the changes it brings, while younger generations are growing up with iPhones, iPads and more. Elementary schools all over America now require students to bring tablets or laptops to class. Many children are being handed iPads before they say their first words. The impact on being raised on technology cannot be properly studied yet because it is still so new to our society. However, it is telling that the engineers who are making these products that have invaded our lives are not letting their children anywhere near the technology. New studies have revealed that lower income, minority group children are spending the most time on screens daily.

In Silicon Valley, parents are implementing no-phone use contracts with their nannies, which requires a nanny to agree to not use any screens – including phones, computers or TV – in front of the child. Many parents who work in the technology industry have decided to get rid of screen time completely for their children instead of just limiting time. Kristin Stecher, a former social computing researcher who is married to an engineer at Facebook said, “Doing no screen time is almost easier than doing a little. If my kids get it at all, they just want it more.” Parents like Kristin understand the addictive nature of technology more than most adults in the United States. Athena Chavarria, who has worked for Mark Zuckerberg for years, has said she is, “…convinced the devil lives in our phones and is wreaking havoc on our children.”

It is obviously ironic that those concerned about their own child’s screen time are the ones creating the technology that will invade millions of other children’s lives. Parents without the awareness of this issue, or the means to hire a nanny to enforce no screen time rules, have kids spending a significant portion of their day on screens. These parents are actually being sent the message that screen time will help their children, and there are valuable educational tools available. The below graphs by Common Sense demonstrate the shocking amount of time tweens and teens are spending on screens in any given day.

When this data is broken down by demographics, inequalities are revealed. According to the Common Sense survey lower-income teenagers spend an average of eight hours and seven minutes a day on screens. Higher-income teenagers spend about five hours and 42 minutes. A Northwestern University study revealed minority children watch 50 percent more TV than white children. These statistics are even more alarming when it is taken into account the inequality of ownership of technology by income. While children from lower-income families are spending more time on screens, they own less screens than higher-income families. The dramatic digital inequality is demonstrated below.

Again, there is no effective way to study the impact growing up with screens has on a child yet. Technology is a continual experiment. However, leading technology executives understand the likely impact and are raising their children to play board games and learn how to socialize – not spend all of their time of screens, if any at all. Instead, they are using children from lower-income families and/or minority groups without the shame knowledge to test this experiment. In as soon as ten years, our society may begin to noticeably see the effects of this inequality play out in higher education enrollment and the work force.

Increasingly warm summers, terrible wildfires, destructive hurricanes—these are just three visible and tangible impacts of our warming planet. But these symptoms of climate change also have another destructive impact, which is an economic one. A 2017 estimate by the Universal Ecological Fund found that the “economic loses from weather events influenced by human-induced climate change and health damages due to air pollution caused by fossil fuel burning are currently costing an average of $240 billion a year—or about 40% of the current economic growth of the United States economy.” Furthermore, researchers have found that if we managed to slow the rising earth’s temperature to be 1.5 degrees Celsius above pre-industrial temperatures instead of 2.0 degrees, “per capita GDP would be 5% higher by 2100.” Thus, the higher the temperature rise, the greater the negative impact on GDP.

 

 

Source: CarbonBrief

One potential solution that seeks to curb both the negative environmental and economic effects of climate change is a carbon tax. According to the World Bank, a carbon tax sets a direct price on carbon by defining a tax rate on greenhouse gas emissions, or the carbon content of fossil fuels. If implemented across the globe, $200 billion in potential revenues could be created to be re-invested into the economy to reduce emissions, promote energy efficiency, and move away from our world’s destructive reliance on fossil fuels.

Source: The Economic Case for Climate Action in the United States

Some countries have already employed such a tax. In 2012, Japan implemented a carbon tax, but to some, “at less than $2 per ton it provides a weak incentive.” This year, Canada has also set plans to implement a carbon tax. Perhaps the most robust supporter of such a tax has been the Nordic nations, where in Denmark the tax is $25 per ton, in Norway and Finland around $50 per ton, and in Sweden a whopping $130 per ton. Carbon is also taxed in some capacity in other nations like Ireland, Chile, Australia, and New Zealand.

With no sign of such a policy in the works by Congress in the United States, states are taking action. In Boulder, Colorado, where a carbon tax has been in place since 2007, emissions have been reduced by over 100,000 tons a year and $1.8 million is raised by the fee. Tomorrow in Washington, voters will evaluate a carbon tax on the ballot—for the second time. In 2016, citizens said no to a similar initiative on the ballot because it was “revenue neutral,” meaning that the money raised from the duty went back to poor households. This year, Initiative 1631 puts the proceeds of the tax to programs specifically focused on reducing the impacts of global warming, such as lowering greenhouse gas emissions, preserving environmental habitats, improving public transit, and upping the use of clean energy.

The benefits are theoretically twofold—a tax forces people to slow their use of unsustainable energy sources, and also redirects funds from those who continue to burn fossil fuels towards addressing global warming. In this key difference, the ballot this year does not propose a tax, but instead a fee – it’s a regulatory mechanism that can collect revenue to specifically address climate change.

Those skeptical of carbon taxes argue that such a levy would hurt our nation’s economy, since fossil fuels produce around 85% of the energy we consume in the US. In Washington specifically, supporters of the tax have been up against the entire oil industry, which has spent over $31 million to get voters to vote against the initiative. Furthermore, The Seattle Times came out in opposition to the tax after concluding that the initiative would originally cost a suburban family with two vehicles around $240 a year. However, that argument assumes that families will continue to use the same amounts of gas, electricity, and other sources of energy that they do currently, even though the entire purpose behind the levy is to get corporations and regular people to think twice about how they can better incorporate renewable sources of energy into their lives.

Ultimately, Washington’s choice tomorrow comes down to whether the state wants to be a progressive leader on climate change in our country. While experts admit that the measure isn’t perfect, those serious about combatting climate change agree that Initiative 1631 seems like a reasonable way to address the environmental—and the resulting economic—impacts of global warming while still funneling money back into the economy. While the shift towards sustainable sources rather than harmful fossil fuels is sure to be an upward battle, given the current state of our planet, it’s also one worth fighting.

Amazon’s power over specific producer markets and Facebook’s dominance over advertising are eerily reminiscent of Standard Oil’s monopoly on oil in the late 19th century. By owning or controlling 90 percent of the U.S. oil refining business, Standard Oil was able to form trusts with other oil companies and drive out competition with others in the same business. Though Standard Oil was able to provide a quality product at a reasonable, stable price, the company uncomfortably wielded too much power in one of the nation’s most important industries. Ultimately, the government put antitrust laws into practice, breaking down Standard Oil’s trust and, ideally, preventing further monopolies from forming.

Now in the digital age, the large-scale presence of Amazon and Facebook isn’t as tactile as, say, oil, but that doesn’t mean their potential to monopolize isn’t as — if not more — dangerous. The way consumers interact with these companies may be primarily online, but their impact is both felt and seen in the real world.

World domination is taking on a more pixelated form. As these digital dominators revolutionize modern life — from making purchases to how people interact — many of their victims may not realize how dependent they’ve become. The relationship is reciprocal: These digital entities would not exist without consumers to collect information from, while consumers could not function in their everyday lives without these digital entities.

Yes, Amazon and Facebook are the culprits of seeking world domination, and the widespread economic impact they’ve had in the past two decades is both intriguing and alarming.

On one hand, the accessibility Amazon and Facebook provide have made modern life easier than in times past. Facebook has 1.6 billion active users. Amazon is predicted to end the year with 50 percent of the United States’ e-commerce market. Clearly, the two companies have an extensive presence in society. For the consumer, the instant communication and near-instant gratification offered by the digital sphere are shaping the ideal marketplace. This may be a great situation for consumers, but it doesn’t come without a cost.

Amazon holds the largest portion of U.S. retail ecommerce sales. Source: CNBC

These digital companies buy users’ information in exchange for a curated service that is basically guaranteed to fulfill customers’ exact wants. Facebook especially has been accused of being an “ad-targeting machine” that tries to pass as a social networking site. Consumers, however, are unquestionably becoming increasingly dependent on these large digital companies to make economic decisions, with ambivalent feelings about online privacy. According to a survey of 1,600 people by the University of Sydney, over half of 18-29 year-olds agree with or are indifferent about the statement “There is no privacy — get over it.” Customers’ lives may be simpler by allowing Amazon and Facebook to take the reigns, but the grand digital dominance of these companies may prove more dangerous than anticipated.

Young people are conflicted about privacy in the digital age. Source: ABC News

Amazon, as most any digitally literate citizen knows, is an online retailer where consumers can buy nearly anything — anything — and have it shipped to their door. As discussed by Jonathan Taplin in his book “Move Fast and Break Things,” Amazon has created a monopsony over certain goods, which is essentially the inverse of a monopoly. A monopsony is when a buyer, as opposed to a seller in a monopoly, has control over who can enter a specific market to sell goods.

“Amazon has a near-monopoly position in the distribution of ebooks,” Taplin writes. “Beyond books, Amazon captures fifty-one cents of every dollar Americans spend in online commerce. It wasn’t supposed to be this way.”

Ironically, in 2014, New York Times opinion writer Paul Krugman published an article titled “Amazon’s Monopsony Is Not O.K.,” where Krugman dissected Amazon’s role in the ecommerce market.

“Amazon doesn’t dominate overall online sales, let alone retailing as a whole, and probably never will,” Krugman writes. “Don’t tell me that Amazon is giving consumers what they want, or that it has earned its position. What matters is whether it has too much power, and is abusing that power. Well, it does, and it is.”

Come 2018, research by eMarketer tells an updated story: Amazon now shares 49.1 percent of retail e-commerce sales, which is nearly 5 percent of the total U.S. retail market online and offline.

Further, Taplin points out that the main consequence of Amazon’s monopsony in the book business forces authors and publishers to work for less money. He details how Amazon is able to practice a form of “rent-seeking” by denying publishers access to its large customer base and extracting excessive “rents” from publishers because the company has driven out seller competition. Arguably, Amazon’s path to digital retail dominance came rapidly and without much question because of the convenience the company brought to consumers. As a result, however, the consequences of Amazon’s presence are only recently being studied.

VIDEO: Here’s Amazon’s impact on the economy

Beyond damaging competition with selling in the book market, Amazon has established other monopsonies that have had disastrous effects for classic physical retailers.

“Amazon has changed the market in many ways. By the end of this week, Sears will file for bankruptcy. That’s a direct result of Amazon. Kmart will file for bankruptcy probably within the next two months. There’s really no place for the old-fashioned retail to exist in a world where Amazon can undercut their prices,” said Taplin in an interview. “Amazon wants to rule the world. It’s simple.”

Facebook is a whole other beast.

As mentioned, Amazon holds a monopsony over particular retail markets, like ebooks. This makes it harder for other buyers to enter the market because Amazon’s prices are so competitive that any smaller seller would have a hard time being successfully profitable. Facebook, on the other hand, is the largest social network in the world with over two billion monthly active users or MUAs. The platform also owns Instagram and WhatsApp, which each has over a billion MUAs.

Facebook’s MUAs only continue to grow. Source: Statista

With such a large reach in the social media realm, Facebook has a near-monopoly on affinity side advertising, according to Dan Faltesek’s Medium article “Social Monopsony.” Taplin discusses Facebook’s business model in the same light, noting that the platform centers around selling advertising at a higher rate than comparable internet sites.

“In short, if you are looking to make a large social buy, Facebook is your only option,” writes Faltesek. “The case that Facebook has a near monopoly on in-stream affinity network advertising is fairly clear.”

The “Big Two” Facebook and Google control over 60 percent of internet advertising. No other online advertising platform has a market share exceeding 5 percent, according to Forbes.

Why is Facebook’s advertising scheme so successful? It’s simple: Microtargeting.

Microtargeting is a marketing strategy where a company collects specific information on consumers — where they live, what they like, what their friends like and so forth — and push advertising content their way that directly reflects their specific interests. While this can be an effective strategy for marketers, in a world where there is only one buyer of user attention, regulation is necessary, as Faltesek points out.

Based on the aforementioned details of both companies, Amazon and Facebook clearly have successful business models. In 2017, Facebook raked in over $40 billion in revenue while Amazon earned over $177 billion. Their overwhelming dominance, however, has taken a large toll on competition, which is essential for a free marketplace. With all other digital retailers fighting for a tiny portion of online advertising and physical stores being driven out of business because of Amazon, more regulation must be adopted to keep the marketplace stable and democratic.

“We’ve got ourselves a little challenge here in America: On one side you have Jeff Bezos and on the other side you’ve got democracy,” said director of the New America Foundation’s Open Markets program Barry Lynn in a New Republic article. “We can choose who we want to trust in. Do we want to trust in America and Americans and American history? Or do we want to trust in Jeff Bezos? That’s what this comes down to.”

As history has shown, the digital sphere has had a large societal impact despite evolving over a short period of time. Now, it’s just up to consumers to decide how digitally dependent they want to be.