Revised Project 1: “America first” immigration reform may put America last, economically

The RASIE Act, immigration reform proposed by U.S. Senator for Arkansas, Tom Cotton, and back by President Donald Trump, was introduced to diminish the number of low-skilled, unskilled and non-citizen immigrants taking American jobs. The sectors that have highest number of foreign workers are seen in agriculture, construction and services. It is no coincidence that low- to medium-skilled jobs are dominated by immigrants. The high number of foreign workers in these sectors is not due to non-citizens taking Americans’ jobs. Rather, it is because of the work conditions.

“Low-skilled jobs are low status, pay low wages, and are physically challenging,” Dean and Professor of Public Interest Law and Chicano/o Studies at the University of California, Davis, Kevin Johnson said. “Employers often say that they cannot get U.S. citizens to fill these kinds of jobs.”

The main aim of the RAISE ACT is to protect American taxpayer workers, taxpayers, and the economy. However, the repercussions of this reform could instead worsen the U.S. economy. If enacted, a rise in low- to medium-skilled job openings will occur. This will put a strain on businesses to operate with fewer employees. An attempt to operate with fewer employees working longer hours or increasing the wage to attract workers will in turn increase the cost of goods and services. This could potentially send many companies out of business. If the government decides to offer incentives to encourage Americans to take low- to medium-skilled jobs, it will be out of their pocket, or the Americans taxpayers’ pockets. Neither is desirable. Nor is this reform.

The proposed merit-based immigration system will prioritize immigrants based purely on the skills and knowledge they bring to the U.S. The proposed merit-based immigration proposal is modeled on the current Canadian and Australian systems. The reason behind modeling these two countries is that Canada and Australia attract highly skilled workers and see healthy growth, productivity and income per capita.

The skills-based system rewards applicants points based on individual merit. The system rewards points in areas such as higher education, English language ability, high paying jobs, and past achievements. The various ways that migration and population growth can be linked to Canada and Australia’s productivity and income per capita growth include, supply of labor; capital, investment; government expenditure on services and taxation; competition; natural resources, land and environmental externalities; and international trade.

The RAISE act doesn’t take into consideration the aging population. The U.S. population is aging rapidly as baby boomers enter old age and retirement. The Population Reference Bureau reported the number of Americans aged 65 years and older is projected to more than double from 46 million today, to over 98 million by 2060. The 65 years and older group share of the total population will rise to nearly 24 percent from 15 percent. An aging population has a direct impact on the labor force. This will result in a dependence on immigrants to replace current workers and fill new jobs.

In fact, The Raise Act would have the opposite desired effect of what the Trump administration propose the legislation will do, and sharply reduce legal immigration, and increase illegal immigration. The graphs below show legal immigration as a percentage of population since 1850.

Both graphs demonstrate The RAISE Act would be a significant reeducation in total legal immigration, and it would have no direct impact on illegal immigration. It is almost certain that more restricted access to legal immigration for family members of current immigrants would result in higher levels of illegal immigrations by those family members.

Deputy Dean and Director of the Public Law and Policy Research Unit at Adelaide Law School at the University of Adelaide in Australia, Alexander Reilly, said increasing skilled migration at the expense of family migration can impact on the desires for family reunion of existing U.S. citizens.

“In Australia, parent migration is very difficult,” Reilly said. “It may be that partner and child migration, which is currently considered a matter of right here, will have quotas or waiting lists imposed.”

A problem Reilly sees in Australia with independent skilled migration is that migrants find it hard to get jobs in their area of expertise and end up unemployed.

“Skilled migrants’ success is better if they have family support, so merit-based migration definitely needs a strong family component.”

Johnson agrees, believing a merit-based immigration system that halves the number of legal immigrants entering the country will unintentionally increase the number of undocumented immigrants.

“The goal of the U.S. government is to reduce legal immigration from one million a year to 500,000 a year, and this reduction will be seen in family immigrant visas,” Johnson said. “With the current limits on legal immigration, this has bought in roughly 11 million undocumented immigrants to the U.S.”

“Making legal immigration even more restrictive will increase the likelihood that those who want to immigrate lawfully will resort to doing so illegally.”

In 2015 to 2016, Australia accepted 189,770 permanent migrants through its skilled and family immigration streams, and settled 18,000 refugees and humanitarian migrants. Sixty-seven percent of migrants came through the skilled stream, and 30.8 percent through the family stream. These numbers add almost one percent to the Australian population each year, a much larger proportion than the U.S. admits through its migration program.

Immigration is the largest contributor to population growth in Canada since the early 2000s. Canada’s permanent immigration program is divided into three main streams: economic, family and humanitarian. In 2015 to 2016, Canada admitted 271,845 permanent immigrants. Of this number, the economic stream accounted for 60 percent of migrants, family made up 24 percent, and the remaining were humanitarian migrants. These proportions have remained fairly stable over the past 15 years.

In Australia, there are two pathways for skilled migration. The first, general skilled migration, requires applicants’ occupations to appear on a skilled occupations list. Most of these occupations are in professional areas such as medicine, engineering, or trades. The list is updated regularly based on an assessment of Australia’s economic needs at the time. The second pathway is for skilled migrants with an employer sponsor. This pathway is open to migrants with a wider range of skills. Employers must demonstrate they have a skilled position available and there are no Australians willing or able to take up the position.

A merit-based immigration system will transform the U.S. immigration system from primarily family-based to employment-based. Under the U.S.’s current system, most employment-based immigrants are highly skilled, but make up only 14 percent of those who receive green cards. Under the RAISE Act, employment-based immigrants would make up the majority of those who receive green cards.

In the proposed points system for the U.S., applicants would earn points for meeting criteria to do with age (preference for persons between ages 26 and 30) and having a degree. Extra points would be awarded for degrees earned in the U.S. and in a STEM (science, technology, engineering and mathematics) field. Nobel Prize winners, professional athletes and English language speakers would also receive extra points.

Johnson said that while the Australia and Canada case studies were worth reviewing, the U.S. has its own history and political, social and economic forces that contribute to immigration pressures and flows that may not exist in Canada or Australia.

“Australia and Canada don’t operate in the same context as the U.S., so those main factors must be considered in any reform of U.S. immigration law,” Johnson said.

When asked if the RAISE Act will reduce poverty, increase wages and save taxpayers millions of dollars, as stated by President Trump, Johnson replied, “There is no empirical evidence to support this claim.”



Camarota, S. A. (2015, September 10). Welfare Use by Immigrant and Native Households: An Analysis of Medicaid, Cash, Food, and Housing Programs (Report.). Center for Immigration Studies. Retrieved October 4, 2017, from Center for Immigration Studies website:

Infographic: Annual average growth rate, natural increase and migratory increase per intercensal period, Canada, 1851 to 2056. (2017, March 30). Government of Canada. Retrieved October 04, 2017, from

Mather, M. (2016, January). Fact Sheet: Aging in the United States. Population Reference Bureau. Retrieved October 04, 2017, from

Reilly, A., Paquet, M., & Johnson, K. (2017, September 17). RAISE Act: Global panel of scholars explains ‘merit-based’ immigration. The Conversation. Retrieved October 04, 2017, from

Salerian, J. (2006, May 17). Economic Impacts of Migration and Population Growth (Report.). Retrieved October 4, 2017, from the Australian Government, Productivity Commission website:

Singer, A. (2016, August 02). Immigrant Workers in the U.S. Labor Force. The Brookings Institution. Retrieved October 04, 2017, from

Stone, L. (2017, August 3). Everything You Need To Know About The RAISE Act Without Reading It. The Federalist. Retrieved October 4, 2017, from

The White House, Office of the Press Secretary. (2017, August 2). President Donald J. Trump Backs RAISE Act [Press release]. Retrieved October 4, 2017, from President Donald J. Trump Backs RAISE Act

U.S. Congress, Senate – Judiciary. (2017, February 13). (T. Cotton Sen., Author) [Cong. S.354 from 115th Cong., 1st sess.]. Retrieved October 4, 2017, from

Modern Monopolies

Google and Amazon don’t look like traditional monopolies, but that doesn’t mean they don’t have monopoly power. Google dominates 80% of the online search market and Amazon 87% market share of the e-book market.

It is harder to recognize these tech giants as monopolies because they do not have a tangible product. Whereas, it is easier to notice how our choice of airline or cable company is limited.

A Brief History of Antitrust in the United States

The United States Congress passed the Sherman Antitrust Act in 1890 in an effort to prevent companies from having monopolies that stifle competition, harm consumers or raise prices. The Sherman Act, along with the subsequent Federal Trade Commission Act and the Clayton Act, is the core of American antitrust law.

These antitrust regulations were enforced aggressively by the Justice Department from the 1930s until the 1960s. Then came Robert Bork, the Yale Law professor and failed Supreme Court nominee. Bork argued that the only concern of regulators should be if prices for consumers were dropping. His ideas became the policy of the US Department of Justice when he became solicitor general under Richard Nixon and have remained the mindset of the government until today. Bork’s ideas on antitrust are at the center of modern American antitrust regulation enforcement.

In Move Fast and Break Things Jonathan Taplin argues that Amazon, Google, and Facebook would all be prosecuted under antitrust laws if it wasn’t for Bork.

Are Google and Amazon Monopolies?    

In the post-civil war era, John D. Rockefeller’s Standard Oil had a monopoly over the oil industry. Standard Oil controlled every stage of oil production and distribution. They did everything from own the refineries and pipes to building their own oil barrels and hiring scientists to discover new uses for oil products. Standard Oil’s monopoly ended when, in 1911, the relatively new Sherman Antitrust Act was used to break up Rockefeller’s monopoly into 30 individual companies.

Unlike the monopolies of the robber baron era, Google and Amazon lack a tangible product. They don’t have physical control over all production of steel or ownership of all phone lines. With Google or Amazon, there isn’t anyone or anything standing in the way of someone creating a new search engine or e-book market. However, their domination of their respective markets limits the ability for a new competitor to be successful.

The Supreme Court has defined monopoly power as “the power to control prices or exclude competition.” This definition also includes an assumption that the company has a majority market share. Using this legal definition as a guide, let’s see if Amazon and Google have monopoly power.

Source: Author Earnings

86% of all e-book sales in the United States occurred on Amazon in 2016, according to Authors Earnings’ February 2017 report. Amazon’s monopoly market power gives them the ability to control prices or even stop all books from a publisher from being sold on Amazon. Amazon’s ability to control prices makes them not only a monopoly but also a monopsony.

An example of Amazon’s monopsony power was evident in Amazon and Hachette Books’ 2014 pricing dispute. During their pricing dispute, Amazon stopped all presales of Hachette books and caused shipping delays. In this case, Amazon was exhibiting more monopsony qualities, when one buyer controls a market because through their control of the distribution of books they are the largest buyer of books. Since Amazon is the largest seller of books Hachette was forced to bend to Amazon’s will. Hachette was ultimately able to win a little and in the resulting deal with Amazon was able to gain more control over how their e-books are priced on Amazon. As a whole because Amazon occupies such a dominant share of the e-book market its sheer dominance allows it to set prices.

Source: Stat Counter

Google, like Amazon with their sector, has monopoly market share in search. According to Stats Counter, in September 2017 Google had an 85% market share of internet search in the United States.

Further proof of the market consolidation of the search market is the Herfindahl-Hirschman Index (HHI) score, which measures the concentration in a particular market. Antitrust agencies consider a market with a score of 2,500 to be highly concentrated. For example, after the American Airlines and US Airways merger, Reagan National Airport had an HHI score of 4,959. The search market has a score of 7,402.


Google’s monopolistic power goes beyond just its monopoly market power over search does. Google not only controls search, but they are also own the most popular created the modern version of horizontal integration.

Google, along with Facebook, dominates the online ad market. Google and Facebook essentially have a duopoly of all online advertisings with more the 60% of all internet ad revenue, according to an analysis by Reuters of their quarterly reports. Google controls everything from the service that hosts ads on websites to the service that buys ads to put on the website to the website user analytics to the web browser people use to access a website. John Marshall, the publisher and editor of Talking Points Memo (TPM), describes being a publisher that relies on Google’s suite of products as like being “a serf on Google’s Farm.” If Google changes how they distribute ads they can completely ruin someone’s livelihood. For example, earlier this year there was the YouTube “apocalypse.” Google changed its policies and algorithm for determining if a video on YouTube should not have ads. The result was some video creators losing 80% of their daily income.

Are These Monopolies Good?

For consumers, Amazon’s monopsony of the e-book market looks appears to be good because they get lower prices. Amazon has not done anything to harm customers. Their low prices are one reason why regulators have not come after Amazon.

Nobel Prize-winning economist Paul Krugman argues that one of the reasons why Amazon is able to control the market is its ability to kill buzz. Book sales rely on buzz from word of mouth. However, if Amazon does not carry a book you are less likely to buy a book and then the book will not be as widely read, have less buzz and not sell as many copies. Krugman asserts that “By putting the squeeze on publishers, Amazon is ultimately hurting authors and readers. But there’s also the question of undue influence.”

Monopoly power can also lead to a stagnation in innovation. If a company does not have another company with the potential to compete with them there is no motivation to innovate. If you have such a large market share there is no incentive or need to innovate to get new users or to maintain your existing user base or its revenues.

Even if Bing had a substantially better product it would still struggle to make a dent in Google’s user base. It wouldn’t necessarily lead to Google to innovate as well because Google’s market power and horizontal integration make the switching costs high. These high switching costs reduce your likelihood of using a new search engine. Furthermore, even though the barrier of entry for creating a new search engine or website is low, but Google’s horizontal integration makes it difficult for any new company to break through.

Snapchat Story

Instagram Story

An example of competition and the potential for innovation is Facebook and Snapchat. In 2013, Facebook tried to buy Snapchat for $3 billion, but Snapchat turned them down. Snapchat and its growing user base remained a Facebook competitor. This competition should indeed push both platforms to innovate. However, instead, Facebook chose to essentially copy Snapchat’s features. Instagram introducing stories was an attempt to copy Snapchat stories. Facebook only tweeted Instagram stories a little to differentiate themselves from Snapchat, Facebook. Even though Instagram stories were not an innovation, they are still an example of completion producing new features for consumers. Facebook’s cloning of stories appears to be on track to both maintain and grow its user base. Currently, according to Jumpshot, Snapchat currently has the largest share of new users, but their share is shrinking and Instagram’s is growing.

How to Deal with These Monopolies

Those who align with Robert Bork would argue that there is no need to break up Amazon or Google because the prices for consumers are not being raised. In the case of Google, there was never even a price paid by the consumer.

But as we explored there are downsides to these monopolies, so what should we do about them? Are our antitrust laws from over a century ago built to regulate companies with products the bills’ author could have never imagined?

Jonathan Taplin has purposed a series of possible ways to break up or regulate digital monopolies like Amazon and Google. In a New York Times opinion piece, he laid out three possible regulatory options: option one is to block the major digital players from acquiring each other. Another possibility is to treat them like public utilities—which would require them to license out their patents. Or a third option would be to remove the “safe harbor” clause from the 1998 Digital Millennium Copyright Act, which according to Taplin allows companies “to free ride on the content produced by others.”

Actually, breaking portions of these new monopolies would require the Justice Department to return to its pre-Bork hardline position on antitrust. So maybe the best way to deal with these tech monopolies is to institute some creative regulations to curtail some of the more negative effects of their monopoly power.



Many people lost their manufacturing jobs to robots, but will the same thing happen with trucks? (Revised)

Big tech money is chasing the development of self-driving trucks. Google, Uber and Tesla are investing heavily in this technology and a new autonomous truck startup called Embark has already pulled in $17 million of series A funding.

Though Silicon Valley is pouring money into self-driving trucks, it’s hard to tell when this technology will become widespread and cause an economic dislocation for a significant part of the American workforce.

Accurately pinpointing a time frame for when this disruption will occur is important for trucking, its related industries and consumers. But there are many variables that still need to be accounted for when estimating how many years it will realistically take for these trucks to become widespread.

Because of the inherent uncertainty in self-driving trucking projections, it is unclear how immediate the labor problem is. According to an Obama-era White House report, two million trucking jobs out of 3.27 million are already threatened. Automation is going to happen, but when it does and the extent to which it will affect jobs is up in the air, said University of Pennsylvania professor of economic sociology, Steve Viscelli.

“There’s a dichotomy of it’s [automated trucks] either never going to happen,” Viscelli said, or automation could happen in the near term and create a trucking jobs crisis.

As of now, most truckers are still employed. But within three to ten years though, Viscelli says Google, Uber and Embark, along with other companies could surmount the difficulties that self-driving trucks are currently facing.

But Jerry Lake, who runs a trucking business with his son and wife out of small-town Montrose, Colorado, says the variables that he faces daily on the road are hard for a machine to predict and he thinks it’s a bad idea. He doesn’t see the complete switch to self-driving trucks happening as soon as Viscelli predicts or even happening at all.

“I don’t even know what the advantage is or what they are trying to accomplish other than the fact that they can do it,” Lake said. “Then you’re taking jobs away from people in America.”

For Lake’s local business, it doesn’t make any sense for him to switch to automation at all for his small fleet of two trucks.

First, retrofitting trucks for full automation is expensive. It costs about $23,400, according to the American Transportation Research Institute, and would not be cost effective for Lake’s business. Second, the specialized, localized trucking that Lake does requires extra knowledge of county and city roads, as most of the driving he does — 65 miles one way between Montrose and Grand Junction — aren’t on interstates.

Lake has trouble believing self-driving trucks can keep up with the monotony of long-haul trucking. “I have a problem with all the variables you run into — accidents and weather — that the truck can react in time and the drivers can’t always do that either,” he said.

Mapping roads in a way that is compatible with these trucks is another difficult variable to overcome. Google claims that they have mapped 99 percent of public roads in the United States, as of 2014; but that still leaves around 40 thousand miles of unmapped roads, or 8 round trips from L.A. to Miami.

Viscelli said basic sensor limitations hold back trucking as well. Most light detection and ranging (LIDAR) systems in use on these prototype trucks can only see three to four hundred feet in front of them. But driving at 55 miles per hour, it will take over 400 feet to stop a truck with an air brake system, according to the Department of Motor Vehicles. The automated system leaves no room for error and can pose a safety risk.

In an economic sense, the cost-benefit analysis doesn’t make sense yet. It will cost more to total a truck and possibly kill people on the road due to faulty automation programming or equipment than to deliver freight or a package without paying a driver.

At the same time, self-driving technology is making major strides in its development. Uber’s truck Otto transported 51,744 Budweiser cans for 120 miles between Fort Collins to Colorado Springs. The delivery had a police escort and a driver observed from inside the truck. Still, the proof of concept is rock solid.

The TraPac terminal in the Port of Los Angeles is completely automated; from the cranes to the four-legged trucks that load crates onto still human-operated tractor-trailers. And Long Beach isn’t too far behind. Amazon warehouses use robots instead of fork lifts and they are already working on using drones for deliveries.

The manufacturing sector has lost around 8 million jobs because of automation (which was started by General Motors in 1961), globalization and the Great Recession from 2008 to 2010. Trucking could also displace a large majority of America’s workforce with the allure of a more technologically-oriented supply chain.

Not having to pay for driver’s wages and benefits will translate to lower prices in the store for consumers, but at the expense of a large portion of the population being unemployed and failing to reach their productive capacity.

The trucking industry is dominated by white males with an average age of 45. Around 95 percent of people who work in the industry are male and 75 percent are white. That matches up surprisingly well with the rest of the U.S., which is 77 percent white. So if trucking were to ever be completely automated in any way at least 10 percent of America’s workforce will go away.

Race distribution in trucking.

Truckers have won a small battle in U.S. Congress to ban legislation on self-driving trucks and cars that are under 10,000 pounds, but as more pressure from tech companies mount, it’s unlikely to hold forever.

When self-driving trucks eventually become commonplace, the driver demographic will have trouble finding other work that requires higher level education. Most truckers don’t have college degrees, according to the Bureau of Labor Statistics. And middle-aged drivers will find that university education has skyrocketed at a rate faster than inflation. In a Bloomberg report, college tuition and fees have increased 1,120 percent since 1978.

Plenty of other professions are at risk too. An Oxford survey predicted that 47 percent of jobs around the world will be taken by robots in the coming decades. And it’s probably going to hit truckers first.













Grameen Bank and Microfinance: Debates and Controversies

Microfinance was born in the early 1980s when an economist named Muhammad Yunus came across women in poverty from the villages of Bangladesh. In face of the widespread famine and poverty, some of these women and their families were controlled by loan sharks, and had no other resource to turn to because traditional banks considered them not creditworthy. Muhammad Yunus repaid the women’s debt and helped them get loans from the bank as a guarantor. Soon, working with the poor made him realize that lending money to the disadvantaged is a great business opportunity: they were trustworthy, hardworking people. He then created Grameen Bank, what we consider a pioneering model of social enterprise, to help break the cycle of poverty.

Muhammad Yunus has received a Nobel Peace Prize in 2006 and a US Congressional Gold Medal in 2010, among many other prizes, as recognition of his contributions to the fight against global poverty. Despite the approbation Yunus has received, the concept of microfinance has been the subject of many debates and controversies. Some critics question whether microfinance is truly an effective way to lift the poor out of poverty. Others make the claim that instead of helping the poor, microfinance institutions (MFIs) make their clients poorer, as they become victims of a vicious spiral of over-indebtedness. It is important for us to understand this debate to keep us attentive to ensuring that we remain on the right track as we’re trying to fight global poverty. However, in order to understand the debate and the truth about microfinance, we need to first understand how the model works.

For over three decades, the Grameen Bank has succeeded in reaching the poor, while traditional banks ignore this population. Grameen bank established branches and sent representatives into remote areas of developing countries, and took on many clients there. The reason why Grameen was able to do that is that borrowers do not need collateral to get a loan. This policy allows access for the disadvantaged to get loans more easily to support their small businesses and livelihood. These loans are typically made in very small amounts, averaging at $200 with an interest rate below 20%, hence the “micro” in microfinance. Grameen Bank is also different from traditional banks in that it has a financially self-reliant model. In an article published in The Round Table, Yunus explained his bank’s business model: “Grameen has funded 90 percent of its loans with interest income and deposits collected, aligning the interests of its new borrowers and depositor-shareholders since 1995.” Essentially, the bank encourages all borrowers to become savers, so that their local capital can be converted into new loans to others.

In addition to the no-collateral borrowing system, another fascinating fact about Grameen Bank’s operation is that 97% of the borrowers are women. It is a brilliant business strategy because women statistically have a much higher loan repayment rate than male, for that women tend to make more conservative investments. Yunus have recognized this, and made women his target client. In an interview with The Guardian, Yunus said that he expanded the program into the US and established 19 branches in 11 cities, including eight in New York. “We have nearly 100,000 borrowers there now and 100% women. Not a single man.”

Yunus’s decision to give microloans to women isn’t just good for business, it accomplishes so much more. In rural Bangladesh, many women are essentially confined to their husband’s family compound, and are in a rather powerless position both socially and economically. Girls are usually married by 16, sometimes as young as 11. Most of the time, there are no medical professionals in attendance when women give birth. Women are expected to keep their eyes down and their voice soft, even at home. It is not considered proper for women to go to the market, or to be seen by men outside their family. Microfinance serves and empowers these women, who are often overlooked in society by giving them access to a small amount of capital so that they can buy seeds, chickens or a cow and start and grow their small businesses. Often, this allows them to earn enough to provide three meals a day instead of two for their family and their children, of whom 40% are malnourished. It also gave them a bit of cash to pay for medicines if a family member got sick.

The main criticism microfinance face is that borrowers may face abusive interest rates and end up become overwhelmed by their debt. While some institutions like BRAC have models similar to Grameen and provide services with the goal to combat poverty, other banks that label themselves as MFIs use predatory lending and collection practices. These companies charge up to 200% for interest, and some of them employ collection methods so harsh that they had driven some borrowers to commit suicide. According to an article from The Atlantic, critics often use SKS Microfinance as an example to argue that microfinance is a plot to steal from the poor and give to the rich. The company held a public IPO in 2010 that made millions for its founder, ex-McKinsey-consultant Vikram Akula. Another example is Banco Compartamos, a Mexican bank that Compartamos charges an annual percentage rate in the range of 75-100%, and raised nearly half a billion dollars in its IPO.

However, these banks do not fit the microfinance model Yunus proposed. In fact, Yunus himself is outraged by this kind of microfinance companies that make huge profits off of the backs of the very poor. He blasted Compartamos, saying, “microfinance was created to fight the money lender, not to become the money lender.” The majority are still small or very small entities that are working hard to achieve financial self-sustainability. A BYU study found that among the 148 MFIs they interviewed, only 57 are self-sufficient, and fewer report profits. The majority of the MFIs around the world are not influenced by the predatory model mentioned above, and are operating as non-profits. For-profit MFIs that uses abusive interest rates are only a small fraction of the microfinance market, and should be a reason to motivate more effort put into regulation, instead of being used to denounce microfinance as a whole.

Moreover, Aneel Karnani, a professor of strategy in University of Michigan comma published an article in Stanford Social Innovation Review, in which he argues that microfinance is not an efficient way to alleviate poverty. He claims that instead of microfinance, best way to eradicate poverty is to create jobs and to increase worker productivity. Karnani points out that most microfinance clients are not “micro-entrepreneurs” by choice, and that these borrowers would “gladly take a factory job at reasonable wages if it were available.” Therefore, he believes by people are strying away from the real effective way to fix the economy. It is true that on a macroeconomic scale, most people agree that employment is the fundamental link to poverty reduction.

However, the problem that MFI clients face in these rural areas of Bangladesh is precisely the limited opportunities for steady employment at reasonable wages. Within the status quo, microfinance is still the best opportunity for people who seek temporary financial relive and are hoping to kick start their small business. The story of Manjira who, years before, was living in extreme poverty in Bangladesh, illustrates the impact a Grameen loan can have. She had lost a young son to a sudden illness. She told the reporter at New York Times that her most painful memory was the day before her son died. He asked her for an ice cream that cost one taka (about 2 cents), but she didn’t have the money to give him that. A few years later, she managed to get a small loan through Grameen, and had become a successful seamstress. Now, she is one of the board members of Grameen Bank, along with three government representatives and eight other village women elected by the bank’s more than 8 million members.

Over the years, many other women like Manjira have found means to provide for themselves and their family with the help of microloans. As women build up their business, overall consumption increases and its benefits also extend outward to the entire community, including those who are participating in the program. However, it is important to keep in mind that microfinance does not automatically empower women. Governments and international organizations in developing nations should tighten regulation over microfinance institutions and be sensitive to the country-specific and cultural factors that play a key role in determining how microfinance interacts with the local community.

Clouded Business Models – The Complex World Behind Electrical Vehicle Charging Stations

According to Google Maps, the Mobil gas station located at 8489 Beverly Blvd in West Hollywood is surrounded by charging stations for electrical vehicles. This isn’t surprising, because the number of EVs in California is increasing, and this particular area is ideally located at the intersection of two main arterial roads in Los Angeles: Beverly Blvd and La Cienega Blvd. This image raises an important question: are these charging stations competing with gas stations?

Bhulu Ahmed, the Mobil station’s owner, said that he hasn’t seen any change in his business over the past few years. “To be honest,” he added, “I do not see many EVs around here.” He explained that he has been working in the area for almost thirty years and, although the number of EV drivers has increased, he still serves the same number of customers as usual.

Perhaps the reason why Ahmed hasn’t experienced significant changes is related to the clouded business model behind charging stations. Indeed, it is still unknown whether EV charging stations will replicate the gas station’s business model, or whether the electricity offered for free by many plug-ins’ owners could prevent entrepreneurs from opening stations where drivers must pay to charge their vehicles. This current situation is a combination of two main factors.

On one hand, the state of California has set ambitious targets for EVs and made automakers commit to putting EVs on the market. Lisa Chiladakis, manager at Veloz, a Sacramento-based non-profit organization dedicated to increasing awareness about EVs, pointed out that the government’s goal is to have 1.5 million EV drivers by 2025. But people will not buy more EVs if they do not see an increasing number of charging stations, and the state will not provide more charging stations if the number of electrical vehicles does not increase. On the other hand, there are neighborhoods, such as Beverly Hills, that  offer power for free, as an incentive to attract shoppers. Accordingly, a new set of free-electricity providers has evolved; as stated by PlugShare’s chief executive Brian Kariger, some malls, supermarkets, and stores have chosen to offer free electricity because “some businesses install charging stations to attract customers.” This type of free-electricity business model makes it tough to see how EV charging stations could become the gas stations of the future.

Sorean Kim, a woman I interviewed at The Grove, said that she was taking advantage of the free charging station while shopping: “I found free places near my work and my home and actually my commute is not so far, so I do not have to charge my car very often.”


It’s Complicated

According to PlugShare, one of the most popular apps that allows users to find and review charging stations, none of the five charging stations close to Ahmed’s Mobil station has the same connector type or charges the same price. The closest one, at the Sofitel Hotel, has two J1772 EV plugs that cost $18 to use, once under six hours of parking is purchased. Another charging station in the area, at the Elan Hotel, has a Tesla plug type and the J1772. Unlike the Sofitel, the Elan does not require parking payment, just charging payment. Nearby, between Burton Way and La Cienega Blvd, there are also charging stations at Trader Joe’s; there, drivers do not pay for parking, but they have to pay a fee for the charge through Blink, a network of charging stations for EVs. From this, it is easy to see that all these places, within just a few miles, are assigning different values for the same product.

“The cost of the electricity is determined by the owners of the charging equipment. Some choose to charge. Some offer free charging as a customer incentive. Some fold the cost of the charge into parking or HOA fees,” stated Jennifer Allen, the supervisor of the zero-emission vehicle and infrastructure office within the California Energy Commission’s Fuels and Transportation Division. Moreover, the owners determine prices according to the type of charger level; a level 2 usually requires between $1 and $5 per session, while the DC fast-charging plug-ins require drivers to pay higher prices for the convenience of charging their cars in a very short time.

Kariger explained how payment methods work in EV charging stations: “Station owners and operators choose pricing. For example, if you own a parking lot you could choose to purchase a charger from SemaConnect, one of our partners, and once it was installed in your lot, you’d log into a website to set pricing as you see fit. Your station would then appear in PlugShare, and drivers would enter their credit card information into the app to pay and be on their way.”


Not Yet Defined

Might the free charging station model endanger the emergence of other models as well as the expansion of EVs? When I asked my interviewees if they see a potential long-term business model based on charging EVs with free electric power, each of them answered that it is unlikely.

Allen, of the California Energy Commission, stated that there are even gas stations selling electricity for electrical vehicles right now. Indeed, even though it seems that the free charging station model is still growing, “free stations aren’t always the best option.” Indeed, from its data analysis, PlugShare found that drivers are willing to pay for features like faster charging and for being able to plug in at convenient locations along the highway during a long-distance trip.

Yet business models are being developed, even though there are free charging stations available. They range from the home-model; the networking-model pursued by companies such as ChargePoint, Blink, SemaConnect, and eVgo; and the super-fast-charging-model. As Kariger pointed out, “one of the effects of having all of these less expensive, and in some cases consumer-owned, distributed energy resources is that it is opening up the energy business to more open models; for example, peer-to-peer energy trading. Electric vehicles themselves are mobile energy resources, and there are already pilot programs underway in which utilities and grid operators pay EV drivers for sending energy back into the grid. So not only will EV drivers be able to get reduced rates or free electricity, they will be able to sell energy to others as well.”

Overall, it seems that electrical vehicles are slowly reshaping the gas station business model that we are used to. We do not know yet which model will be the winning one, but surely many others are yet to come as the industry continues to evolve.



Revised: Education: A Catalyst in Gender Pay Gap


Education: A Catalyst in Gender Pay Gap

In President Barack Obama’s 2015 State of the Union Address, he stated that women “make 77 cents for every dollar a man earns.” If a woman had a dollar, or even 77 cents, for every time she heard that statistic, it would cover lunch for a week. While this statistic, a ratio of two medians for full-time, full-year workers, can be problematic in that it doesn’t account for pay for the same work, it is true that a gender pay gap still exists in the United States; the female-to-male earnings ratio in 2016 was only 80.5%, although up from 70% in 1990 (U.S. Census Bureau).

Determining the causes of the gender pay gap is not a simple task. Communication surrounding the disparity is plagued by inaccuracies, as evident in Obama’s SOTU. Media coverage tends to say that the gap is caused by discrimination. Claudia Goldin, professor of economics at Harvard University, explains that while this was once the case, it is no longer a significant cause. She also reasons that another popular argument, categorical differences such as competitiveness and negotiation skills, doesn’t go the full degree in explaining the pay gap either. When featured on the Freakonomics podcast “The True Story of the Gender Pay Gap,” she deemed that the main reason for disparity is the high cost of temporal flexibility, valued more by women than men.

Temporal flexibility is “the variation in the number of hours worked and the timing of the work” (Oxford Reference).  Women value this flexibility so highly because they disproportionately have caregiving obligations—watching the kids, looking after their parents, assisting sick family members, etc.—which require them to work differently. It is important to note that not all women desire this temporal flexibility. In fact, the National Longitudinal Survey of Youth found that in 2006, women without children or spouses earned 96 cents for every dollar a man earned. The gap between men and women who place similar amounts of importance on temporal flexibility is somewhere in the 95% range, according to Princeton Professor Anne-Marie slaughter, who was also interviewed on Freakonomics. But since many other women disproportionately dedicate time to caregiving without compensation, they are willing to pay the high costs for flexibility of hours scheduled and worked.

This high price that women pay is reflected in their salaries. Glassdoor reports that the top five jobs in which women earn less than men, four of which are the following: chef, dentist, c-suite, and psychologist, all of which have at least a 27.2% base pay difference. The costs of temporal flexibility in these types of jobs are the highest because they are so specialized.  A chef’s signature dish cannot be made by a different chef, and a patient’s wellness is dependent on his intimate relationship with his specific psychologist. These workers aren’t substitutable, so the handoffs are more costly. These handoff costs are reciprocated to costly workers, who work fewer or their own hours and thus cause more handoffs.

When women enter these types of careers, they are initially paid similar wages to their male counterparts. However, when they begin to have children, or start caring for someone else, they can no longer adhere to the requested hours set by their employers. Since they cannot devote all of the hours needed by their clients to them, they don’t receive raises, aren’t made partners, and can’t grow their careers. Women work fewer employer-requested hours and consequently notice negative effects on their salaries. The high cost of temporal flexibility is a partial cause of vertical segregation, defined by Stanford University’s Topic Report as “the overrepresentation of a clearly identifiable group of workers in occupations or sectors at the top of an ordering based on desirable attributes.” In this case, men are overrepresented as c-suite workers, dentists, etc. because they possess a desirable trait—a low value on temporal flexibility.

The difference in the value of temporal flexibility by gender also influences horizontal segregation, “the concentration of men and women in professions or sectors of economic activity” (Stanford).  In choosing occupations, men tend to choose sectors where levels of responsibility are high. The UNC Population Center published North Carolina’s largest jobs by sex, and men’s were drivers, managers, supervisors, laborers, and salespersons. The majority of these do not allow for flexibility in work hours, an adverse effect of requiring lots of responsibility. Inversely, many women go into careers that are compatible with their family lives. In North Carolina these were elementary school teachers, nurses, secretaries, and health aides. The flexibility for teachers and nurses stems from their abnormal work schedules. Teachers work shifted hours, which align with children’s school schedules. They additionally have summers off and longer holiday breaks. Nurses do not have typical 9-5 hours either. They have options to work night shifts, allowing them to be home during the day. These types of occupations offer more part time employment opportunities and have smaller penalties for career pauses, so women gravitate toward them.

There is a bright side, though. In 2012, Pew found in its analysis of the U.S. Census Bureau data that the number of women enrolled in college outnumbered men by 11%, (See Appendix A). And female earnings increased 2.7% from 2014-2015, while men’s only increased 1.5%. Hence, the gender pay gap is shrinking. Hannah Rosin, in her Atlantic feature, “The End of Men,” argues that economic success is shifting away from being determined by attributes typical of men, e.g. physical strength and stamina. More women are entering the work force. Women entering new fields are dedicating less time to unpaid domestic work, making them more valuable workers who are paid more. This also creates a new need in the labor force for domestic workers. These jobs are being filled by women.  The typical working wife earns on average 42.2% of the household annual income, which was 2-6% in 1970. Four out of ten mothers are now the primary moneymakers in their families. Wage gaps are shrinking for these ideologically normal women who have traditional families and are of high socio-economic statuses. But how can the United States shrink the gender pay gap for all of its women?

The countries with the smallest gender pay gaps are Iceland, Finland, Norway, and Sweden–all Nordic countries, whose populations combined roughly equal that of Texas. They’re all also welfare states with little population diversity. The differences between the United States and the Nordic countries are significant in explaining their differences in gender pay and illustrative of why they will continuously rank highly while the U.S. will not.

Over time, traditionally male professions are becoming increasing female-dominated. In a study on occupational feminization and pay, researchers found that when controlling for skill and education, professions with more women pay less than those with less women. This is seen in recreation, design, housekeeping, and biology. The reverse happened in computer science; when men started flocking to the field, salaries rose significantly. These changes in pay can be partially attributed to the devaluation of work done by women, a result not of temporal flexibility, but of creeping gender bias. Tangible solutions to the devaluation of women’s work lie in creating structural, systematic change, which would be a huge undertaking for the United States.

One area with huge practical potential to decrease the gender pay gap for everyone is the U.S. school systems. Primary education is an enormous hindrance on working parents, especially in the case of mothers who disproportionately handle childcare. It’s also a huge handicap for working single-mothers and other non-traditional working caregivers. Primary education reforms can reduce the amount of temporal flexibility that working women need.

Take, for example, Germany, which ranked 13th best in global gender pay in 2016 (the U.S. ranked 45th out of 144 countries). Kerri Shigo, former senior marketing manager at Microsoft, moved to Munich with her husband and four children in 2008. Shigo had previously worked part-time at Microsoft to take care of her children. Upon moving to Germany, she took a long-term break from working. In conversation, Shigo expressed that she regretted quitting work for the years that she lived abroad. A large factor that led to this regret was the pre- and primary-schooling in Germany. Her youngest child attended kindergarten, Germany’s version of pubic preschool, from age three to six. The kindergarten school week ran Monday through Friday, and days lasted from 8:00 am until 4:00 pm. Kindergarten school days are set-up so that mothers who need to drop-off and pick-up their children can still work a full eight-hour workday. Another benefit of the German school system is its calendar year, which runs on a somewhat year-round schedule; students are in class for two months, then they have a break that alternates between one and two weeks. Working mothers don’t have to worry about arranging flexibility of timing at work to care for their children during a lengthy summer vacation. Instead, their holidays align more closely with their children’s, so they can use their paid vacation for the other breaks.

Germany’s public-school system is supportive of reducing the amount of temporal flexibility that working moms need, effectively contributing to its smaller gender pay gap. It would be beneficial for the United States to reform its education system, borrowing from some of Germany’s ways. Lowering the age in which children start school would allow working-mothers to return to their jobs after childbirth earlier, if they choose to do so. Shifting the school day to more accurately reflect the work day could allow women to work on their companies’ hours instead of their own. Lastly, reforming scheduling of the school year to eliminate a lengthy summer break and instead have shorter breaks more reflective of the holidays would let mothers better align their paid time off with their children’s breaks.

There are several other approaches and combinations of approaches that would be effective in reducing the U.S. gender pay gap. One such is politics, which is currently at play in Canada, where a cabinet member is pregnant. It’ll be interesting to see how Canada decides to handle its first political pregnancy, and if they use policy change to address it. Other potential solutions are offering paternity leave, uprooting recruiting practices, or improving performance reviews and feedback. Education is merely one route to take in diminishing the U.S. gender pay gap. What is most important is that the causes of the disparity become more widely known, so that more action can be taken to help mitigate the already shrinking gender pay gap.






This graph, from the World Economic Forum, highlights the Global Gender Gap Index in contrast to its four subindexes, which determine its value. A Y-Axis value of zero equals inequality, and an X-Axis value of one equals equality. The Education Subindex is much higher than the Economic Subindex, as illustrated by the current environment in the United States—more women are in college than men, yet they are still earning less in their post-graduate careers. This difference indicates a need for a higher Economic Subindex to raise the Global Gender Gap Index.


As PASPA repeal begins, leagues gear up for the inevitable

After more than two decades, the Supreme Court has agreed to hear the repeal of the Professional and Amateur Sports Protection Act. PASPA, a federal law enacted in 1992, outlaws single-game sports wagering outside of Nevada. While opening arguments will commence in early December, a decision will likely not be reached until early 2018.

Still, this is the furthest that the argument for a modernized and regulated sports betting market has ever reached. A decision in favor of repealing the law, which the state of New Jersey has claimed is unconstitutional, can unlock a market worth several billion dollars.

Leagues have tried to distance themselves from gambling, however, as disruptions occur, gambling has become the newest medium for sports fans and even non-sports fans to enjoy the game.

Leagues now find themselves in unfamiliar territory and must adapt to the future while upholding the integrity of the game or be left behind. A regulated and legalized market across 50 states could prove to be the catalyst for major change and the loss or gain of billions of dollars.

Fortunately, while the Supreme Court gears up to hear opening arguments in this case, leagues across the world have begun to prepare for what is seen believed to be the inevitable. Through partnerships, changes in stances, and sponsorships, leagues have been preparing for quite some time.

PASPA was enacted to protect the sanctity of the game. Fears of point shaving and match fixing forced the public and Congress to accept a bill that would seemingly fix such problems. Prior to PASPA states such as Oregon and Delaware offered sports parlay cards through their state lottery. However, in the years since daily fantasy leagues have taken their place in American society, sports leagues have taken sponsorships from casinos, and most importantly have led way to an offshore illegal market worth $150 billion.

Take for example the popular NCAA March Madness tournament. The annual affair draws fans from across the United States to fill out tournament brackets in which they predict who will move on.

In recent years, more and more fans have turned towards wagering their picks online through various websites such as Bovada and BetUS. There can bet on individual teams, current matchups, future matchups, and the title game itself.

The American Gaming Association estimates that roughly 40 million people fill out 70 million brackets with the average bet per bracket hanging around $29. This year, the AGA estimated that Americans wagered $10.4 billion dollars on March Madness, but only 3 percent, or roughly $295 million, will have been done so legally through Nevada sportsbooks.

While the Supreme Court has agreed to hear the repeal of PASPA, it does not come on the heels of the unfounded fears against match fixing or the billions of dollars being pumped into organized crime, but rather if PASPA violated the 10th amendment and state sovereignty when it was enacted. Nonetheless, the result of this decision can lead way to ending such widespread problems.

SportRadar, a company that deals with sports data related to teams and players partnered with three of the four biggest leagues in the United States. The company provides real-time statistics for NFL, NBA, and NHL games and players. In addition to providing statistics used by broadcasters and bookies worldwide, SportRadar also monitors and reports on unusual betting trends. The company is also the parent company of BetRadar, a major player in the gambling industry.

Likewise, the MLB which represents the fourth biggest league in the United States, has a partnership with Genius Sports, which acts in the same manner as SportRadar. Its executives met with sportsbook operators in September to gain a better understanding of how the industry operates.

These partnerships with data companies provide a stark shift in stance compared to just one decade earlier, when representatives from the four major leagues filed a letter dismissing the idea of monitoring books and the data that make them up.

Apart from partnering with outside agencies, the NFL and NHL have both elected to move and create franchises in Las Vegas. The Oakland Raiders of the NFL are set to arrive in 2019, while the Las Vegas Golden Knights opened play this past month.

Attendees of Golden Knights home games will be able to readily bet within the confines of the T-Mobile Arena. The NHL had the opportunity to file a prohibition preventing sports betting from occurring as the game happens, however, elected not to.

The NFL in recent years has held games in London, where sports betting is regulated and legal. Outside of moving the Raiders to Las Vegas, the NFL has also eyed creating a franchise in London where it is set to play several games this season featuring marquee teams. Fans at these games are can bet on their phones and outside in the streets before, during, and after the game. The ability to gamble in-game without the result being compromised is a look at the potential for such a feature in the United States.

NBA commissioner Adam Silver wrote in 2014 in the New York Times, “Times have changed since PASPA was enacted,” Silver said in his piece. “I believe that sports betting should be brought out of the underground and into the sunlight where it can be appropriately monitored and regulated.”

Should PASPA be repealed, over a dozen states have already filed legislation this year that would permit wagering on sports in some way. The AGA estimates that a legal sports betting market would provide over 150,000 in jobs, a substantial estimate given that a large majority of gambling takes place online and not physically.

Steve Doty, director of media relations, says that the company is committed to moving past PASPA in favor of a legal and regulated market. “AGA is committed to overturning this failing federal ban on sports betting; once it is removed, AGA looks forward to leading the conversation in states across the country to educate local lawmakers on sports betting.

Company Eilers & Krejcik Gaming has taken a conservative approach to estimating the potential for a legal and regulated betting environment. They estimate in a base case that by 2023, if 32 states were to legalize sports betting in some form, the market will be worth approximately $6.03 billion in annual revenue.

If every state were to legalize gambling, including online wagering, the number expands to $16 billion, which comes from $245 billion taken in. While $245 billion is estimated to be taken in keep in mind that a large portion is often paid out.

All of this comes on the heels of a Washington Post poll published in September, which sees more than half of Americans supporting a legal and regulative sports betting environment. 55 percent approve of such an environment, which serves as a considerable shift from nearly 25 years ago, when PASPA was first enacted and 56 percent of Americans disproved of legalized sports gambling.

In the decades since PASPA was enacted the landscape of gambling and sports has grown closer and as with such more people are willing to accept it as a medium. While sports and the leagues that govern them did their best to distance themselves, they can’t help, but find themselves growing closer together. One factor to this close relationship is the rise of fantasy sports.

In 1988 before the dot com boom, Fantasy Sports Trade Association details that an estimated 500,000 players were engaged in weekly/daily fantasy sports.

Between 1991 and 1994 that number grew upwards to three million and now in 2017 has reached an all-time high of 59.3 million people.

Amongst leagues themselves people began to bet on individual games and between each other’s teams. This interest would lead way to companies such as DraftKings and FanDuel to sprout up and offer daily fantasy sports with the benefit of being able to bet and win money with people from across the United States.

The act of fantasy sports gambling is not inherently illegal even though it requires users to pick players from different teams and earn points based off their real-life performances.

Eventually more sophisticated gambling involving parlays and futures among other means would find its way into sports fans lives and lead way to the multi-billion-dollar industry aforementioned.

All of this begs the question: Why are leagues finally warming up to any of this? The answer is a lot simpler than most would imagine.

It’s no secret that television is a dying medium. The age of cord-cutting is fully underway and more and more people are cutting their cable bill down or outright eliminating it altogether. In some instances, people have turned their attention to online streaming services such as Hulu or Netflix and in other instances people have left television behind altogether.

This greatly impacts sports as a large majority of league revenue comes from various deals that allow channels such as ESPN and Fox the ability to broadcast games and utilize footage across their various platforms and shows.

Take for example ESPN and the NBA. In 2014, the NBA struck a deal with ESPN and Turner Sports for nine years, $24 billion, a 180 percent increase in money for the league.

With such a large deal it can be assumed that ESPN is drawing record viewers and must keep up with the demand, however, that cannot be further from the truth. Reuters reported that ESPN is losing viewers at an alarming rate. 88.4 million households carry ESPN as of December 2016. In February 2011 that number was well over 100 million.

Not only are more and more ditching cable, but their simply not tuning in. The NBA recently faced a problem in which marquee players such as Lebron James and Stephen Curry opted not to play in throwaway matchups in favor of rest, knowing full well that their teams would make it to the postseason.

While the league has done its best to limit that issue this upcoming season by working around the schedule to limit the number of back-to-back matchups, the problem remains. The Wednesday matchup that ESPN paid millions to bring to viewers between San Antonio and Golden State is now boring by default. Less viewers equals less advertisers and less advertising dollars puts companies like ESPN in the red and eventually force them to lay off staff to cope.

When the nine-year deal between the NBA and ESPN is up and the numbers are looked at, the NBA and ESPN will strike a much lower deal if any deal at all. The NBA will now be out of billions and will need to recuperate it in some way.

As with such leagues such as the NBA must pivot now more than ever to where fans are currently flowing and that is the world of gambling. Daily fantasy sports as well as gambling parlays and futures are currently dominating fans as the newest way to enjoy the games and make some money as well.

It’s highly self-contained and does not require participants to sit down and physically watch the game. In-fact many of these websites carry with them explainers on how to get involved as well as daily articles relaying information on why (X) team is expected to win over (Y) team and why player (A) is projected to hit a homerun against pitcher (B).

Utilizing factual statistics brought to participants by the various data companies outlined above is more logical than listening to hosts and commentators rant about the intangibles of the game such as why player (C) does not historically play well at sundown in Houston in October on a Tuesday. Suddenly, now even the shows on these networks become an even bigger afterthought then the games that drive the conversation.

Leagues are now in a way forced to move towards the future for fear of being left behind. At the same time, there is a lot to fear if you are a commissioner of any one of these leagues. Because the leagues themselves will not hold individualized betting websites sponsored by them, they must think of new ways to drive revenue.

The partnerships outlined above are one such example as are sponsorships such as DraftKings owning a restaurant within the Staples Center which is home to several professional sports teams.

However, partnerships and sponsorships alone are not nearly enough to make up the billions that will eventually be lost in television deals. In a potential future where television viewership is in the low millions and attendance continues to stagger, how can leagues and individual teams turn a profit.This is what makes the December opening arguments for PASPA interesting and most importantly, supremely significant for leagues.

Industry Demographics

Poll: For first time, majority of Americans approve of legalizing sports betting – The Washington Post

Recent U.S. gambling legalization: A case study of lotteries – ScienceDirect

U.S. Sports Betting: A Sector On The Cusp Of Major Change | GamblingCompliance

Gambling – Where does sports betting legalization in the U.S. stand right now?

Sports Betting Ban Has ‘Perverse Effect,’ Says Casino Group – Poker News

NFL’s presence in UK shows how gambling can be done

March Madness Betting to Top $10 Billion | AGA


Crude Oil Prices – Contract to the Future!

Economies can rise or fall depending on the fluctuations of oil prices. Industries that are reliant on fuel costs can experience either a good or bad quarter due to these fluctuations. The volatility of oil prices always gets people thinking – “What is the price of oil going to be 6 months from now? Next year? In 2 years?” These are valid questions to consider while managing your budget at either a personal level, such as purchasing or leasing a car, or even while making important business decisions. Unfortunately, there are no analysts, experts, or commentators that will be able to decisively and accurately forecast the price of oil. However, it is certainly possible to make a well-educated guess about the short-term and long-term direction of oil prices by looking at future contracts.

According to The Options Guide, “Crude Oil futures are standardized, exchange-traded contracts in which the contract buyer agrees to take delivery, from the seller, a specific quantity of crude oil (eg. 1000 barrels) at a predetermined price on a future delivery date” (The Options Guide). In other words, a futures contract guarantees the buyer his or her commodity at the contract price, regardless of the market price at that specific date. These futures are traded in the New York Mercantile Exchange (or NYMEX) and the Intercontinental Exchange (ICE) where West Texas Intermediate (WTI) and North Sea Brent crude oil are traded respectively. Traders can buy or sell oil for delivery many months or years ahead. Historically, the majority of activity in commodity futures markets had been focused on oil for delivery in the next few months. However, in recent years, the activity has increased for more future deliveries as more investors had begun pouring money into it.

These future contracts evolved many years ago, with farmers being known as the pioneers of it all. Farmers, or sellers, and dealers, or buyers, would agree to a future exchange of grain for cash. For example, a farmer would agree to deliver 7,000 bushels of wheat to the dealer at the end of July for a set cost. This exchange would be beneficial for both the farmer and the dealer. The farmer would know how much wheat would be in demand so he would not come too short or have a surplus, as well as knowing how much he will be getting paid in advance. On the other hand, dealers were able to budget accordingly by knowing their costs in advance.

These contracts became very common and were even used as collateral for bank loans. But soon enough, the consequence we face with any contract arose; how do you back out if you are locked in? As a result, farmers and dealers began selling contracts before the delivery dates. For example, if the dealer still had a surplus of inventory as the new delivery date approached and he did not want to purchase the new wheat, he would sell the contract to someone who did. Or, if the farmer did not have the capability to produce and deliver the wheat, he would sell the contract and obligation to another farmer. This caused the prices of wheat to go up and down, depending on what was happening in the wheat market. Weather conditions would play a role in the pricing as well. If there was bad weather, the sellers of the wheat in the contract would hold more valuable contracts because the supply would be lower, and if weather conditions were ideal then the sellers’ contracts would become less valuable. Not everyone had a reason to buy and sell wheat, but saw this as a way to make money. It did not take long before people began to make side bets and trade these contracts, hoping to buy low and sell high, or sell high and buy low.

This concept, first developed by farmers, is mirrored in the oil industry today. Companies that have an interest in oil for their daily operations are known to participate in future exchanges, such as refineries or airline companies. Their intent is to reduce the risk of volatility in the price of oil, and are known as “hedgers.” Producers of crude oil can engage in a “short hedge,” which locks in a selling price for the oil they produce. This allows them to manage their operations to produce just the right amount to not experience a shortage or surplus. Also, similar to the farmers, it allows producers to know how much they will be getting paid in the future, which can impact key business and budget decisions. Businesses that require crude oil can participate in a “long hedge,” which will guarantee a purchase price for the commodity for a specific quantity at a specific date. Similar to the dealers involved with the wheat contracts, businesses that purchase oil will know exactly how much their oil costs will be in the future and can operate and budget accordingly.

So, if the wheat market attracted people to make side bets and trade contracts, shouldn’t the crude oil market do the same? The answer is yes. Crude oil futures are also traded by “speculators,” who make an assumption on the price risks that hedgers aim to avoid in efforts to gain a profit. In other words, crude oil futures allow you to make money of the fluctuations of the price per barrel, but are very different than buying oil or stocks of a gas company. The stock market involves trading investments in different publicly traded companies, and similarly, people also trade in commodities at financial markets. Speculators will purchase crude oil futures if they believe that the crude oil price will go up, and will sell the futures when they think the prices will fall.

Obviously, these investors have no desire to acquire the thousands of barrels of crude oil they are trading. Fortunately, participators in trading do not have to actually deal with physical deliveries if traded and finalized before the expiration date of the contracts. It is necessary to have a margin account with a broker and maintain a certain amount of equity in the account in case you experience a loss. According to Dan Caplinger, a writer and Director of Investment Planning for the Motley Fool, “For NYMEX crude oil futures, the current margin maintenance requirements range from $2,900 to $3,400 depending on the date of the contract” (The Motley Fool). If the losses result in a decrease of available capital below that level, more money must be deposited in order to keep the futures position.

Crude oil prices are important for investors in energy companies, even if the investor does not personally trade in futures. Energy companies that people invest in are likely to use futures for their own account. Knowing the mechanisms of how crude oil futures work gives you a better understanding of why the share prices of these companies are either going up or down as a reaction to the change in oil prices. For example, if a producer has sold a lot of futures that cover almost all if its future production, it should not experience that much of a reaction when oil prices change since it is already locked in. People that do not participate in futures markets will notice the volatility of oil prices as they increase or decrease and do not have the balance.

Crude oil futures play an essential role in how the energy industry operates. Future contracts will allow companies to manage their operations and potentially boost their profits by planning accordingly. However, futures markets can be very risky for investors to participate in. Understanding how futures work are not only important to companies and investors, but even average individual consumers that rely on different energy companies as their primary sources of energy. The price we pay at the pump is a reaction to how well the energy industry is doing.

Although these is no definite way to know which direction the price of oil will sway, it is possible to conduct an accurate forecast for both the short and long run. There is no hidden “secret” for how to predict the future price of oil. The balance of supply and demand causes the prices to fluctuate, but it is not the supply and demand for the actual oil. Instead, it is the supply and demand of the investment. The increase or decrease in demand in relation to the supply of investment will ultimately determine the price of oil. This is all apparent in the oil futures market where futures are traded. Investors will make a prediction, derived from different economic predictions, on whether to purchase futures that will reflect them, causing prices to go either up or down. Studying how much these future contracts are that are being traded for in the short run and in the long run will allow you to make a well-educated guess on what direction oil prices will be going.

“Struck Oil!” Oil Prices Are on the Rise, But How Long Will the Sunup Last?

Oil markets are positioned for yet another wild ride. With academic and Wall Street analysts predicting prices of anywhere ranging from $40 to $70 per barrel by the end of the year, oil is looking far more handsome to investors. Over the last two and a half years, the industry experienced its deepest downtown since the 1990s. When using the past as a guide, after every oil bust comes a significant recovery, if not a market boom. With much volatility surrounding pricing numbers alone, analysts and the public seem to only focus on the cost of the everyday essential commodity. This almost myopic focus leaves one resounding question unanswered: what is the future of oil demand?


According to the World Petroleum Council, Oil is one of the most important raw materials humans have access to on this planet. Every day, hundreds of goods and services are used that are either sourced from or contingent upon oil and gas. Thus, it comes as no surprise that oil and gas are also important due to the large number of jobs they provide. According to Economics Online, in 2016, the United States produced an average of approximately 8.9 million barrels of crude oil per day, which means about $3.9 million a day for U.S. citizens.  A total of 7.21 billion barrels of petroleum products were consumed that same year, reflecting significant demand for the resource.


One of the most basic, yet most important economic principles is the law of demand. This edict states that, if all alternative factors remain equal, the higher the price of a good, the less the demand for that good will be. Essentially, the higher the price, the lower the quantity demanded. With demand increasing in the advanced OECD (Organization for Economic Cooperation and Development) economies, which comprise approximately 66 percent of total global demand, one could consider the implications of the recent upturn in oil market prices. Between 1980 and 2008, world oil demand increased by 40 percent, from 60 million barrels per day to over 85 million barrels, Forbes reported.


According to the Industry Tends section of PwC’s Strategy&, recent oil price cans can be attributed to a rebalancing of supply and demand fundamentals, which were accelerated by the Organization of Petroleum Exporting Countries’ (OPEC) recent decision to cut production. Wall Street and academic analysts vocalized confidence that these price gains are expected to remain in place. According to Barclay’s latest E&P Spending Survey, oil and gas industry capital expenditures are anticipated to increase by up to seven percent by the end of 2017. Additionally, global rig counts, particularly in the United States, have been quickly on the rise since the middle of 2016, stated Baker Hughes, one of the world’s largest oil field service companies.


Yet, when delving deeper in the background surrounding demand for oil, it is evident that the demand for the resource has historically been relatively inelastic with respect to price in, given that oil has very few direct substitutes. Contrastingly, however, an obvious problem when predicting the effects of oil-price movements is that the decrease in global price could result from either an increase in global supply or decrease in global demand.


It is important to note that with a significant portion of the global economy flowing through oil, if the demand were to shift, the world power balance would follow suit. While a great deal of activity in the oil and gas sector is focused on OPEC countries and the U.S., other regions will likely play key roles in the coming years. To illustrate, the investment environment in Latin America is rapidly improving. Some domestic oil and gas industries are on an upswing, stimulating and creating jobs.


An excellent example of this is Mexico, where energy reform is currently opening the door for more nontraditional oil and gas operators to establish a presence in the country. Companies successfully bidding for acreage in the recent Deepwater auction in that country include China’s Offshore Oil Corporation, France’s Total, Australia’s BHP Billiton, Japan’s Index, and American firms Chevron and ExxonMobil, cited PwC. The geographical variation of the countries vying to get involved show just how significant oil is to the global economy.


Several countries’ economies are regarded as petroleum economies based on oil, meaning the majority of their economic success is contingent upon the success of oil. Unlike other countries, which largely finance their governments through taxation, petro-states rely on their oil and gas revenues. To provide an idea of which economies rely most heavily on oil as an export, the World Bank released data showing oil revenue as a share of each countries’ GDP. Saudi Arabia ranked third, after Libya and Kuwait, with roughly 45 percent of its GDP dependent upon oil. In terms of government income, Russia obtains about 50 percent through oil and gas, Nigeria receives a more impressive 60 percent, and Saudi Arabia weighs in at a whopping 90 percent.


Countries where fuel accounts for more than 90 percent of total exports include Venezuela, Libya, Sudan, Kuwait, Iraq, Bruni Darussalam, Algeria and Azerbaijan. Therefore, if a demand shift were to occur driving down oil prices, the petroleum-reliant economies would suffer. Additionally, if oil demand were to decrease, the countries that currently import oil would be forced to reallocate money locally. This would benefit individual country economies, but damage the global economy and international trade.


Prior to 2014, when oil was selling at approximately $100 per barrel or above, petro-state countries were able to finance lavish government projects and social welfare operations, securing widespread popular support. With oil prices dancing around a $50 per barrel value, petro-state countries find themselves curbing public spending and forced to fend off rising domestic unhappiness and even incipient revolts.


At the peak of their glory, the petro-states played a colossal role in world affairs. I 2013, members of OPEC earned an estimated $821 billion from oil exports alone. With the corresponding influx of capital, these countries were able to exercise influence over other countries through a wide variety of aid and patronage operations. For example, The Nation discussed how Venezuela sought to counter U.S. influence in Latin America through its Bolivarian Alliance for the Peoples of Our America, which is a cooperative network of mostly left-leaning governments. Additionally, Saudi Arabia spread its influence throughout the Islamic world by financing efforts of its ultra-conservative Wahhabi clergy to establish madrassas, or religious academies. Under the leadership of Vladimir Putin, Russia used prodigious oil wealth to rebuild and refurbish its military which had largely deteriorated following the collapse of the soviet union.


That influential dominance was then, of course, and this is now. While the power of these countries still matter, what currently worries their presidents and prime ministers is the increasing likelihood of civil violence or state collapse. According the The Nation, internal strife and civil disorder are likely in oil-producing states like Algeria and Nigeria, where the potential for growth in terrorist violence during times of chaos is always high.


Now that the past and present of oil demand has been established, it is important to consider what is driving the change. Petroleum is used primarily for transportation and has held more than 90 percent of the transportation market for the past 60 years. According to Forbes, to this date, there have been no scalable economic competitors in the transportation space.


During the second half of the last decade, however, biofuels made a competitive push in the U.S. as the Renewable Fuel Standard (RFS) mandated increased ethanol in the gasoline supply. This resulted in a one million barrel per day (bpd) global increase in biofuel consumption, which was a scarce drop in the bucket compared to the nearly seven million barrel a day increase in crude oil consumption during that same timeframe. Therefore, despite numerous claims that biofuels would essentially “kill” the crude oil industry, the demand growth for crude oil has been resoundingly consisted, rising by an average of one million bpd for over 30 years.


In February of 2016, Bloomberg published an article on electric vehicles (EVs) that made many similar arguments to the biofuel proponents that were being exercised over the last decade. The article, titled, “Another Oil Crash Is Coming, and There May Be No Recovery,” urged oil investors to “start taking electric cars seriously.” One side of the electric car argument is to encourage individuals to buy electric and reduce their overall environmental footprint. The devil’s advocate may argue that encouraging more people to purchase electric cars may drive them away from public transportation, like buses and trains, and may ironically aggravate environmental problems and cause traffic jams.


Yet, what would happen if public transportation too moved into the electronic sector? Demand for oil would plummet if the major “gas guzzlers” that enable efficient public transportation relied solely on electricity to run, which would throw off the entire oil-market dominance in the global economy. With areas like China, India, European Countries and even the state of California implementing policy changes to move away from gas-run transportation, this shift may be a more realistic reality than many analysts anticipate.


So, where will demand for crude oil go? There are a number of determining factors waiting in the wings, ready for their big moment. Only time will tell which factor will outperform them all.


Works Cited

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Klare, Michael T. “As the Oil Industry Collapses, What Will Happen to the Countries That Depend On It?” The Nation, 22 June 2016,


“Oil Prices and the Global Economy: It’s Complicated.” IMF Blog, 14 Apr. 2017,


Randall, Tom. “Another Oil Crash Is Coming, and There May Be No Recovery.”, Bloomberg, 24 Feb. 2016,


Rapier, Robert. “Is The Electric Vehicle A Crude Oil Killer?” Forbes, Forbes Magazine, 25 Feb. 2016,


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