Turns out, mo’ money does mean mo’ problems for many Democratic candidates in the midterm elections– as long as those problems are part of a political agenda. This year, contributions to Democratic campaigns in the midterms have topped $1 billion, while contributions to Republican ones have only reached half of that amount. This high influx of cash has possibly contributed to the Democrats taking the House majority for the first time since 2010, which the New York Times predicts will be at a margin of almost 10%. That would be the highest margin the U.S has seen in years.

Democrats are even getting record funding in deep red districts. Kentucky’s 6th district is notoriously pro-Trump, but this year, things have been shaken up. Retired marine fighter pilot and Democratic candidate Amy McGrath received three times more funding than her opponent Andy Barr. Although incumbent Barr still took the win, McGrath walked away with 47.8% of the vote. To put that in context, Barr’s opponent in 2014 only received 40%.

 

Donations have also crossed state lines. In the Texas senatorial race, Ted Cruz received $24 million from voters, while his opponent and Democrat Beto O’Rourke received $70 million. The Center for Public Integrity reported that a chunk of O’Rourke’s donations came from notoriously blue states like California and New York. Cruz still beat O’Rourke this year with 50.9% of the vote, but in 2012, he won with 6% more breathing room.

 

However, my home state of Illinois may best exemplify the effect of campaign donations on election results. Growing up in Chicago, I knew exactly who the Pritzker family was– they have donated countless buildings, parks, and pavilions to the city. They also own the Hyatt hotels. Now, J.B Pritzker is the next governor. While his opponent Bruce Rauner is worth a measly few hundred million dollars, J.B Pritzker is worth well over $3 billion. Moreover, Pritzker’s campaign spent over $170 million dollars, while Rauner spent around $70 million. To put these numbers in perspective, University of Illinois in Chicago Professor Dick Simpson estimates that a gubernatorial campaign might cost $20 million.

So why have so many people been donating to democratic campaigns this year? Some analysts say the reason is Trump. Donald Trump is nothing short of a polarizing figure, and in an effort to take back political power, Democrats are making sure to donate. In 2018, 64% of American political contributions flowed to democratic candidates; In 2014, that number was 48%.

With Democrats pushing such a strong monetary effort this election year, it begs the question: Will donations be just as high in the 2020 presidential election? If Trump is the driving force that motivates people to dip into their pockets, the blue wave may take over.

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.

Last year, Sonia was diagnosed with stage three uterine cancer which had spread to her lymph nodes. She has gone through six months of aggressive chemotherapy and twenty-five rounds of radiation. Still, her cancer is progressing rapidly. But she is still fighting, and hoping to be eligible to try a new trial drug from Henry Ford Health System in Michigan. The cost of each treatment is $10,000 – Sonia would need about five or six to have a chance at beating her cancer. This $50,000 – $60,000 figure has her worried about paying her bills and keeping open her small business, Klueless Cupcakes. However, her main priority is to do everything she can to fight her cancer. Sonia’s mother started a GoFundMe campaign with a modest goal of $10,000 – the cost of just one trial drug treatment.

There are many stories like Sonia’s: individuals who have been fighting cancer for years and are no longer able to work, but are left paying hefty bills for each doctor’s appointment, surgery and mainly, treatment. Friends and families of these cancer patients have created GoFundMe campaigns to ask for the money their loved ones need, but are likely too ashamed to ask for themselves.

The healthcare crisis in the United States is multi-faceted. It involves the question of who has access to healthcare, health insurance costs, political interests, lobbying power, mergers and more. But the overwhelming issue is that healthcare costs are so much higher in the U.S. than other countries. According to The Wall Street Journal, the United States spends more per capita on health care than any other developed nation.  Soon, the U.S. will spend almost 20 percent of its GDP on health.

While the U.S. is a rich nation, and it is logical to be spending more on healthcare than other counties, it should not be that much more.

There are obvious inefficiencies in the United States healthcare system, particularly related to insurance. The price of insurance is extremely high when it is not an employee benefit, leaving it unaffordable to many and the cause of millions of uninsured Americans. Ironically, the uninsured options for care are the most expensive – for example, emergency rooms. Often, uninsured individuals reach a point where they need extensive and expensive care because they never received preventive care.

Insurance policy prices and the high costs of care for the uninsured are two aspects of the increased medical spending in the United States, but there are many components that contribute to the overall high spending. Another contributor to increased spending is something called defense medicine – doctors are worried about malpractice lawsuits, so they run a lot of unnecessary, expensive, tests to cover themselves. Doctors and nurses in the U.S. are also paid more than in other countries. Administrative costs, like paperwork and marketing, are higher as well. But none of these reasons are as significant to spending increases as many think. What contributes most to high spending in the healthcare industry is a result of the way healthcare in America functions.

There is a mixture of private and public components of the healthcare system in the United States – from insurance carriers to healthcare providers to research and development companies. However, the majority of the U.S. healthcare system operates within the private sector. This differs significantly from single-player systems in Australia, Canada and the UK where healthcare services are mostly provided by the government.

The structure of the American healthcare system means there are many different players behind a single patient – but they are not on the same page. The insurer wants the patient to receive the least number of tests possible, in order to pay the least amount of money possible. The provider wants to run as many tests as possible to protect themselves from malpractice lawsuits and to rake in more money for their hospital or private practice and, of course, themselves. The patient hopes for the best care possible, ideally without spending too much out of pocket. However, if a patient feels they need care, they will do whatever necessary and pay whatever price is set.

One would think the increased competition in the marketplace due to lack of government involvement would keep prices low. However, little negotiation of prices for medical products and treatments takes place. Providers and manufacturers are not motivated to keep prices low because people will pay for the care they need regardless, and if they are told their insurance will not pay for something, they will go to another company.  Insurers have no leverage to negotiate because there are so many players in the marketplace that will pay for the same care. Additionally, insurance companies are able to cover the costs with increased premiums. There is inelastic demand for healthcare – if a patient is told they need to pay $100 for a treatment and then that price changes to $1,000, they will still pay. They need the treatment no matter what the cost.

This system has led people to pay high prices for insurance policies and, subsequently, the care they need.  Elisabeth Rosenthal said in a New York Times article, “Whether directly from their wallets or through insurance policies, Americans pay more for almost every interaction with the medical system.” A Commonwealth study reported by the San Diego Union Tribune found that among industrialized nations, there were significant pricing differences for many medical procedures. An MRI scan in the United States cost $1,145 on average in 2013, compared with $138 in Switzerland, $350 in Australia and $461 in the Netherlands. An appendectomy cost $6,645 in New Zealand and $13,910 in the U.S. And these prices are rising fast. According to Mayo Clinic, before 2000 a year of cancer drug therapy cost between $5,000 and $10,000 in the United States. In 2012, that average price increased to more than $100,000. Additionally, these costs in the U.S. are 50% to 100% higher than the same patented drug cost in other countries.

The pharmaceutical industry has significant power to set their prices and make high profit margins because of the inelastic demand of most of their products. Therefore, they have set life-saving treatments and drugs at high, unaffordable prices. Pharmaceutical companies justify these high prices with a few main arguments: there is a high cost of research and development, there are comparative benefits to patients, and that controlling prices limits innovation. It is true that most research spending is done in the U.S., and the innovations made are propelling science forward significantly with many individuals reaping the benefits. But these arguments do not justify the six figure numbers that Americans must pay for treatments when people using the same drugs in other countries are paying far less.

People like Sonia are being directly affected by the healthcare system in the United States. Healthy individuals pay their annual insurance fees and go to their yearly physicals without much extra cost. The sickest people in America are suffering, but because of a desire to fight for their health, they will continue to pay astronomical prices for their care if there are not systematic changes.

While the economy of Los Angeles is booming right now, finding an affordable place to live is increasingly difficult for many residents. If the mounting housing crisis is not addressed soon, the city’s future will likely be fraught with economic turbulence and crippling infrastructure.

Data from the National Low Income Housing Coalition indicates that on average, a worker in 2017 would need to earn $29.71 an hour in order to afford a 2-bedroom apartment. In the case that a worker can’t find a job at that wage, they would instead have to work 113 hours per week—almost 3 times the number of hours worked by the average American—at California’s minimum wage rate of $10.50 in order to afford a 2-bedroom. Additionally, over the past year, the average price per square foot in Los Angeles rose 8.7%, from $584 to $635. And that increase is indicative of a larger upward trend in cost over the past few years.

Source: LA Times

Rising unaffordability should be a point of major concern. The higher cost of buying or renting pushes the working poor out of the housing market all together, leading them to slip into homelessness, and also keeps those without a home at all on the streets. It also is causing more people to leave California than the number currently moving to the Golden State. Plus, unaffordability means Angelenos are living further from where they work and enduring a grueling commute, which Alan Greenlee, Executive Director of the Southern California Association of Nonprofit Housing, notes has “all kinds of bad outcomes” ranging from greenhouse gas emissions to straining infrastructure. Thus, these implications equate to growing inequality and pose a long-term threat to the stability of the city’s economy.

Los Angeles is not alone. Rather, the city is one of many major metropolitan areas that is experiencing extraordinary unaffordability. In Denver, builders cannot keep up with the pace of migration into the city, which is one factor causing the housing market to slow. In the now notoriously-expensive Bay Area, the New York Times’ Karen Zraick reported in summer 2018 that the “the federal government pegs the ‘fair market rent’ for a two-bedroom in the San Francisco area at $3,121” where the median home price “has climbed above $1 million”. On the other side of the country, the majority of homes in Boston cost between $500,000 and $1 million. In Miami, the city offers only 26 affordable housing units out of every 100 extremely low-income (ELI) renter households, compared to a still-abysmal national average of 35.

Median list prices per square foot since 2011 in five U.S. cities that have experienced an unaffordability crisis (Zillow)

What’s causing the crisis in these cities? First, rising mortgage rates have made buyers wait to purchase homes, leading to less on the market and thus an increase in prices. Plus, residential investment has been falling steadily for three consecutive quarters across the country, meaning construction and brokers fees are continually shrinking.

In Los Angeles specifically, Greenlee says the housing affordability crisis can be traced back to “a pretty simple economic issue. Supply under-paces demand, and as a result, prices go up.”

Rising mortgage rates across the United States (LA Times)

One way to curb the higher costs that come with less supply may be through higher wages. Higher wages translate to more money in people’s pockets to spend on housing, and L.A. has set a progressive schedule for raising the minimum wage until 2020. However, Los Angeles Times writer Kerry Cavanaugh concludes that, “even $15 an hour won’t help much in Los Angeles as long as the cost of housing remains so high.” In the most recent quarter of 2018, annual home price appreciation was higher than weekly wage growth in Los Angeles, as it has often been recently. Thus, although wages are rising, prices are rising faster.

Another policy option to curb the crisis would be to increase rent control across the city. Recent research indicates that moderate rent control would stabilize rents, and thus overall help quell the crisis. Although rent control could help, even proponents acknowledge its only one of many necessary steps that should be taken. Plus, like raising minimum wage, it’s another strategy that merely puts a Band-Aid on the larger problem.

According to Greenlee and other experts, the ultimate answer to the crisis—and the only one that addresses the root problem—is to build more. Doing so would not only help to decrease housing unaffordability, but it would also address a connected epidemic in Los Angeles: homelessness.

Although homelessness is a result of many contributing factors, on the most basic level, “homelessness is primarily a housing issue,” says Dr. Benjamin Henwood, a professor at the University of Southern California and an expert on homelessness and affordable housing.

In Los Angeles today, homelessness is unavoidably obvious. Between 2012 and 2018, experts believe that homelessness in L.A. increased 75% from 32,000 to around 55,000 individuals. However, recent data by the Economic Roundtable tells a different story, with analysts finding that 102,278 people in Los Angeles became homeless at some point last year. Either way, the rise in homelessness is one of the clearest signs of a broken housing system.

Source: LA Times

Henwood argues that as a whole, “housing shortages will continue to undermine best efforts to address homelessness.” Although not all affordable housing addresses the needs of homeless individuals who are out of the housing market entirely, building more affordable housing in general would still help to curb both homelessness and housing unaffordability.

Research backs up this argument. In 2017, Zillow researchers found that the “relationship between rising rents and increasing homelessness is particularly strong in four metro areas currently experiencing a crisis in homelessness,” one of which was Los Angeles.

Source: Zillow

Therefore, greater supply and lower prices for Angelenos would help not just those currently searching for a home, but would also have the trickle-down effect of reducing the number of homeless. While a combination of tactics is needed to address homelessness, to address the larger housing crisis, building more homes is a good place to start for everyone.

Through the visibility of rising homelessness, Los Angeles has already taken some first steps to improve the greater housing crisis. After voters had to live and breathe in direct contact with the sprawling homeless population for a number of years due to changed regulations, they took action, and in November 2016 passed measure JJJ, which ensured that “if developers are going to make something, it had to include housing that was available for low-income people” says Greenlee. That same year, voters also passed Proposition HHH, which funded affordable housing through a bond program. And before that, the county in 2015 decided to dedicate $100 million a year to support affordable housing development.

According to Greenlee, those policy changes were driven by the fact that “people decided our current situation related to homelessness was intolerable.” While the programs in place have admittedly run into roadblocks, they are certainly steps in the right direction by Greenlee’s standards.

Looking ahead, the next steps are for policymakers to continue to promote and propose programs to fund affordable housing, and also to ensure they are properly executed. But beyond building rapidly and intentionally, Angelenos also need to get out of the way for real change to occur. Greenlee notes that one of the biggest impediments has not been to convince people to support propositions that would build affordable housing, but rather to coax people to accept greater density in their areas.

As an example, Greenlee noted a recent housing development program put forward by the mayor of Los Angeles, in which council districts would be required to create temporary housing. In some areas – like Koreatown, Venice, and Sherman Oaks – local residents met that proposal with furry, enraged that they would have to live in close contact with the homeless. Instead of standing in opposition, Angelenos should vocalize their support for greater density in their areas rather than—as Greenlee described— “going bananas” when they hear affordable housing is coming.

Protestors in Koreatown, Los Angeles reacting to plans for homeless housing in their area (LA Weekly)

While on the one hand, people want to be as far away as possible from the poor, many Angelenos are also worried about seeing a decline in the value of their properties if low-income housing is nearby. However, if the city is serious about solving the crisis, Angelenos need to acknowledge that the homeless likely already live in their neighborhoods—just on the street rather than inside—and that building more affordable housing helps not just those without homes, but everyone who is seeing skyrocketing prices due to extreme demand.

Citizens also need to educate themselves about the issue. Experts are generally in agreement that the most comprehensive solution to the crisis is to build more homes. But, a recent USC Dornsife/ LA Times poll indicates that many constituents believe the housing unaffordability crisis is a result of a lack of rent control. While rent control is an issue, this data indicates that people still don’t actually understand the crisis. If instead, Angelenos better understood the issue, they would perhaps be more likely to support additional legislation, and to accept shifts in the make-up of their neighborhoods as necessary.

As a whole, this is not the type of crisis that is impossible to solve. Rather, the solution is relatively clear, but the largest obstacle blocking the way forward is Angelenos themselves.