Retail is Dying –– What does that mean for employment?

It is no surprise that retail is taking a heavy hit in 2017 with some of the most well-known and largest retail companies closing their doors to the public, or worse, filing for bankruptcy. With the up-roar of e-commerce, consumers choose to shop online for the quick satisfaction of the click of a button instead of making their way through traffic, parking, and rushing through people in an over-sized mall.

The CEO of Urban Outfitters, Richard Hayne described this issue in accordance with the housing market when he said, “Retail square feet per capita in the United States is more than six times that of Europe or Japan. And this doesn’t count digital commerce. Our industry, not unlike the housing industry, saw too much square footage capacity added in the 1990s and early 2000s. Thousands of new doors opened and rents soared. This created a bubble, and, like housing, that bubble has now burst. We are seeing the results: doors shuttering and rents retreating.”

So, what does a massive hit in retail mean for jobs? Unsurprisingly, retailers have publicly announced over 200,000 lay-offs in the last four years and a growing 89,000 in 2017 alone. According to Business Insider, stores are closing at a rate not seen since the recession. When looking at the data, there is an interesting story being told. This chart shows that both traditional and online retail are soaring since the Recession. However, when diving deeper into particular industries is when we see a hit in job loss.

This chart shows the decline of employment from appliance and electronic stores which were a huge industry to shut their doors to the public.

And then we have, of course, the struggling clothing and retail market chart that shows the loss of employment in the last few years.

With no surprise, e-commerce has soared in the last couple of years, but are they hiring those transitioning out of traditional retail positions? Probably not. While the retail industry is known for high turnover rates it is also known for hiring 1 out of 10 American workers within a large age range. That said, most of these workers being laid off do not hold the set of skills that an e-commerce job would entail.

So, is this weird retail hit of 2017 an economic indicator of what the future of the economy holds? Well, according to Mark Cohen, the Director of Retail Studies at Columbia University, the huge hit that retail continues to take is creating a “slow-rolling crisis.” The large amount of people that have lost their retail position and will continue to lose it (considering the way retail is going) are now going to spend less money since they are going through a period of unemployment which will create a “cascade of economic challenges,” says Cohen.

It will be interesting to continue to see the trajectory of retail, but right now it is looking like the start of a very interesting and slow rolling economic indicator. Would it be too big to say that we could be on the path towards another economic recession?

Sources:

http://www.businessinsider.com/retail-job-losses-are-hurting-the-economy-2017-4

https://psmag.com/news/the-long-and-painful-decline-of-the-retail-store

https://www.theatlantic.com/business/archive/2017/04/retail-meltdown-of-2017/522384/

Higher Heels = Worse Economy?

From lipstick to ties, people have long considered fashion items as indicators for the economic climate. According to researchers at IBM, the height of high heels is another economic indicator that has a correlation to economic health.

A team of researchers at IBM led by consumer product expert Trevor Davis used social media sites and blog posts to find that the popularity of flats and low-heeled shoes is a possible sign that the economy is growing, whereas higher heels indicate the opposite. According to an IBM report, low-heeled flapper shoes in the 1920s were replaced with high-heel pumps and platforms during the Great Depression. Although low-heeled sandals were big in the late 1960s, platforms came back again during the 1970s oil crisis. More recently, the median height of women’s heels peaked at seven inches in 2009 during the recession, and then dropped to two inches by 2011 as the economy recovers.

Davis suggests that the reason women turn to higher heels during economic downturns is that more flamboyant fashions serve as a means to escape the harsh reality. There are, of course, other possible explanations for women’s preference of lower heel heights. Women may simply be embracing a more pain-free walking experience, or the natural cycle of fashion trends sometimes happens to coincide with the economic cycle. However, there is still a great possibility that low heels may actually indicate longer-term economic.

Social Media & the Economy

There are billions of social media users around the world, as this number continues to increase. In 2017, almost everything is, or can be, done over the Internet; whether it is wishing your cousin in Australia a Happy Birthday, spreading awareness about your lost dog, researching about why your stomach may be hurting, or even exposing your knowledge and credibility in your craft.

Most importantly, social media has played a huge role in revolutionizing the way businesses operate. Brands are now able to expose themselves right in front of your eyes no matter where you are.

You can be in bed, scrolling through your Facebook timeline, and potentially come across an advertisement that sparks your interest. After about 4 clicks, you can purchase that product and have it arrive at your doorstep as soon as the next day. More importantly, you just generated business for that company while you were in bed.

Businesses are able to use social media to learn more about themselves. Reviews, feedback, and consumer research has never been easier, allowing businesses to spend less money on what is not working and pump more money into what is. This is so important for businesses to pay attention to and utilize, because it is something that can potentially take your company to the next level.

This magical ability through the use of social media has sparked a new wave in the economy. Entrepreneurship is at its highest peak of popularity, because now you can legitimately operate your business from your living room – all you need is a laptop.

This has even impacted the decrease of the unemployment rate. The word “unemployment” has lost a lot of its weight, partially due to the easily accessible online market places; where you can buy and sell almost any item to make money.

“Freelancers” have also gained tremendous popularity with the rise of social media. Let’s say you had enough of your boss so you quit your job, but you haven’t found a job yet, or you recently got laid off and are in the middle of a job hunt: During this time, you can now list your skills and experiences online and find contract jobs to work on for money until you find another job. This may even work out better for you, and the autonomy could be the cherry on top!

Social media has really disrupted the economy – for the better. There is so much opportunity in the world, and the Internet has literally placed it right in front of your eyes.

 

References:

http://ageconsearch.umn.edu/bitstream/162500/2/SAEA%20Econ%20Impacts%20Paper%202014%20Submitted.pdf

https://www.theatlantic.com/technology/archive/2010/10/is-social-media-driving-the-economy/64780/

https://www.forbes.com/forbes/welcome/?toURL=https://www.forbes.com/sites/quora/2017/08/02/how-does-social-media-influence-the-economy/&refURL=https://www.google.com/&referrer=https://www.google.com/

 

Trump’s Tweets and the Dow

President Trump’s recent election has been accompanied by many ups and downs for the United States, but in terms of the Dow Jones Industrial Average, the Trump administration has proved to be a healthy change. After the election, excitement around the new president’s policy promises caused the Dow to soar to record-breaking heights. It reached 22,000 even in the midst of unrest in the administration’s leadership according to CNN. It is interesting to note the disconnect between political turmoil and the Dow as of late. President Trump’s administration has set many precedents so far and one is the number of high-level advisors that have left the president’s side in such a short window of time. With that being said, the Dow has not been severely affected. The president continues to be its biggest cheerleader and tweets predictions about it as well. CNN notes that not only is this unheard of for a president to weigh in so frequently about the stock market, but to target the Dow specifically in his comments is new. This recent rhetoric surrounding the stock market is not only unprecedented, but it will not last. The market is constantly fluctuating and what goes up, must come down. It will be interesting to see how the new president reacts to the Dow going in the opposite direction. Will he remain outspoken or zip his lips? While we are all inclined to look at all of president Trump’s statements with a grain of salt, the Dow does actually indicate the economy is doing well. CNN Money questions if that the rise of the Dow is due to the new president’s pro-business agenda or lasting effects of President Obama’s rule? We will never know. Nonetheless, confidence is high in the stock market since the election in 2016 and as an economic indicator, the Dow is providing no need to worry about the market’s health. What is on the horizon though, is the reality that the stock market is a malleable entity and it will fluctuate. Confidence and campaign promises are keeping the Dow in an upward rise these days and despite threats of Russian probes and potential for a missile attack from North Korea, the stock market has remained stable for the most part. Stay tuned for more updates on the continuing saga of an interesting correlation between a rocky administration and a unique rise of the Dow Jones Industrial Average in next week’s edition of “Trump’s Tweets.”

 

Sources: http://money.cnn.com/2017/07/20/investing/trump-wall-street-stock-market-record/index.html

http://money.cnn.com/2017/08/02/investing/dow-22000-trump-apple-wall-street/index.html

http://www.marketwatch.com/story/trump-tweet-shows-hes-a-dow-jones-industrial-average-man-2017-08-01

What is Consumer Sentiment?

Believe it or not, your opinions count! Your views regarding the health of the economy, long-term economic growth and your personal financial situation play a role in shaping public policy, economic policy and stock markets. You are, essentially, an economic indicator, according to the University of Michigan. Feeling special now?

Consumer sentiment is a measurement of the overall health of the economy, determined by consumer opinion. It directly relates to the strength of consumer spending. The University of Michigan’s Michigan Consumer Sentiment Index (MSCI) is the most popular publications of consumer sentiment. American households are contacted randomly each month via telephone. Here, the chosen ones are asked about their financial situation and attitudes about the economy.

The Force, aka. The University of Michigan, releases the final report of the previous month on the first of the next month. Basically, the index is useful to economists because it gives a snapshot of whether consumers feel like spending. Yep, Leo… We’ve all been there at Chipotle.

Inflation and favorable employment conditions are what give consumers the urge to spend. But, current events also affect how much we spend. Things like bull and bear markets, and geopolitical events.

Why are economists dying to know what consumers are up? Because consumer spending accounts for more than two-thirds of the economy. This is, basically, real-life Gossip Girl… your one and only source into the financial activities of America’s citizenry. Where have they been? And what have they been up to? Who knows? You know you love me, xoxo… the economy. So, the more confident consumers are about their finances and the economy, the more likely they are to spend.

The MCSI is determined by subtracting the percentage of unfavorable consumer responses from the percentage of favorable ones. It is calculated based on the following five core survey questions:

  1. Compare the pair – Would you say that you are better or worse off financially than you were a year ago?
  2. After some crystal ball gazing – Do you think a year from now you will be better off financially, worse off, or about the same as now?
  3. Now, let’s get down to business – As a nation, do you think the next 12-months will be financially good or bad?
  4. Back to the future – What would you say is more likely: the country, as a whole, having a good five-years or so, or periods of widespread unemployment / depression?
  5. To spend or not to spend? Do you think it’s a good or bad time to buy major household items, such as furniture, refrigerator television etc.

After the relative scores have been worked out, and the actual equation of CSI = x1 + x2 + x3 + x4 + x5 / 6.7558 + 2.0 has been left in the school hallway for the Will Huntings of the world to work out, we have the CSI!

And there we have it – the MCSI – one of the leading indicators of consumer sentiment in the United States.

 

References

Investopedia 1

Investopedia 2

Economic Calendar

Here’s One Way to Measure How People are Doing Financially

Gross domestic product growth can provide valuable information about the health of a nation’s economy, but it rarely goes any deeper than that broad lens. Disposable personal income is one way to indicate how people are doing on a more narrow level.

Disposable personal income is a measure of how much money families have once taxes are deducted from their paycheck. Disposable personal income is usually displayed in billions of dollars.

Disposable personal income shows how much people have left over, not just what they spent. If consumption is low but disposable personal is high it could mean people are putting more money towards necessities and/or saving.

This metric can also be compared to other indicators, like food prices, to determine what percentage of a person’s disposable personal income is being spent on necessities.

The USA Today said in a recent article that people are spending almost half of what they used to on food, which may mean that they are spending more of a percentage of their disposable personal income on other necessities, like housing and healthcare.

Disposable personal income has been on a steady upward trend since 1960 and before the great recession between 2008-2009 it briefly spiked from 10.8 trillion to 11.4 trillion (numbers adjusted for inflation). During the recession disposable personal income contracted.

Disposable personal income since 1960.

Since the recession, the trend moved upward, and in 2012 reached a sudden peak of 13 trillion. More recently, in 2017 disposable personal income contracted by around 4 billion.

Disposable personal income in 2016 – 2017.

2017’s lower numbers could account for stagnant wages, higher taxes and a number of other things.

Disposable personal income is a helpful economic indicator because it can be compared easily to other indicators and shows how the average person is doing in the economy. But as it is in the aggregate it leaves economic inequality out of the picture.

Behind Bars and Bonuses: How the U.S. Private Prison System Became a Multi-Billion Dollar Industry

The United States incarcerates more people than any other country in the world, with approximately 2.2 million inmates behind bars in state, federal and private prisons across the country. That’s over half a million more inmates than in China, whose population is four times the size.

The Beginning of the Modern Private Prison Industry

The sharp increase in incarceration levels can be traced back to the 1970s, when the government struggled to combat the nationwide issue of drug-use and crime. When President Nixon declared a war on drugs in 1971, it forced an increase in tough policies against crime across the country.

In the two decades following 1980, the incarceration rate more than tripled, which led to major overcrowding in jails across the country. To tackle this issue, many states turned to private companies to build or run their prisons.

The first modern private prison was built in Tennessee in 1984 by the Corrections Corporation of America (CCA). Its opening marked the first time that any state government had contracted out the full operation of a prison to a private corporation.

What began as a quick-fix solution to the overcrowding of public prisons, the for-profit prison sector now accounts for 10% of the corrections market with an annual turnover of $7.4 billion per year.

As of 2013, the US Department of Justice reported that 19.1% of the federal state prison population is housed in private prisons along with 6.8% of state prisoners. Today, there are over 130 for-profit prisons with 157,000 beds and this number is expected to reach 360,000 by 2026.

For-profit prisons are legal in 29 states across the country with some relying predominantly on private facilities to house their inmates. For example, nearly 44% of all New Mexico prisoners are held in private prisons, followed by 38.7% in Montana.

While the rate of violent crime in the United States has fallen by about 20% since 1991, the number of people in prison or jails has risen by 50%, as roughly 13 million people are sent to jails in any given year.

But how does that make sense?

Proponents against private prisons argue that the contracting of prisoners has created an economic incentive to put people behind and because of this, for-profit prisons rely on the incarceration of prisoners to keep their corporations afloat and their stockholders happy.

 

Private Industrial Complex

This complicated intersection of public and private interests is known as the “prison-industrial complex”. The term was created to explain the correlation between the rapid expansion of the United States’ inmate population and the influence of private prison companies that house and supply labor to government prison agencies.

The corporations who operate under this title include construction companies, surveillance technology providers, private probation companies, lobby groups, and even prison cafeteria vendors. This complex, however, has become highly controversial, as the economic and social implications of “contracting out” prisoners to private companies has placed the privatization of prisons at the forefront of American politics.

The prison-industry complex is one of the fastest growing industries in the United States, with private prisons accounting for the largest business in the group.

 

Why Support Private Prisons?  

 The main argument for establishing private prisons is that they can provide correctional services more efficiently and for a lower price than the government itself. This is because they do not have to compete directly with other state penitentiaries for contracts and are able to decide on the types of inmates that they will house. Similarly, those in favor argue that they provide a financial solution that prevents the government from having to invest major capital into building new prisons and providing other benefits such as pensions, salaries, and health-care.

Supporters of this industry argue that private prisons are more advantageous for American taxpayers, as for-profit owners have more incentives to find efficient practices and lower overall costs. Furthermore, private prison corporations claim that building new facilities generate income for surrounding communities as they create jobs and receive tax revenues.

 

Arguments Against Private Prisons

 However, the validity of these arguments are hard to confirm, as an evaluation of 24 independent studies on the cost-effectiveness of public vs. private prisons found that for-profit institutions were no more cost-effective than public ones. Instead, the report suggests that the most important factors in determining a prison’s daily cost per inmate are the facilities economy of scale, age, and security level. A 2011 report by the American Civil Liberties Union also found that in addition to influencing mass incarceration levels, private prisons are more expensive, more violent and less accountable than public ones.

Since private prisons are created to be more cost efficient than public ones, it is common for them to have lower staffing levels and training than their counterparts. This links to the argument that violence against guards tends to be higher, as a nationwide study found that assaults on guards were 49% more frequent in private prisons than in those run by the government.

The key arguments against the establishment of for-profit prisons are that they are not run with safety in mind, they harm minorities, they create financial incentives to incarcerate and they corrupt the political process. They argue that firms in the prison business reap profits by billing the government more than is needed and find alternative ways to lower costs which can make prisons less secure.

Secondly, it is argued that for-profit prisons marginalize minority groups, as according to a report by the Justice Policy Institute, private companies hold nearly half of the nation’s immigrant detainees. This is double the rate that it was nearly a decade ago.

 

Policy, Politics, and Problems

Moreover, political corruption and the influence of corporations on federal detention policies have become an area of major contention. Because private prisons are for-profit, many of them are funded and invested in by national corporations, investors, and politicians.

Of both public and private correction systems, Corrections Corporation of America (CCA) operates the 5th largest in the US and has 51 owned-and-operated facilities in 16 states and 18 state-owned facilities in 7 states. Their large market share provides them with a staggering market cap of over $3 billion and reported revenues of $1.84 billion in 2015. Likewise, the 2nd largest private corporation, GEO group, reported $1.79 last year.

 

So how much political influence do these corporations have?

 

According to a report by the Justice Policy Institute, private prisons increase their political influence through lobbying, direct campaign contributions, and building relationships and networks. This notion is supported by the fact that both corporations have funneled more than $10 million to political candidates since 1989 and have spent nearly $25 million on lobbying efforts.

Lobbying is a key reason why these for-profit correction corporations have been able to achieve such high margins, as their efforts have influenced government at all levels to underwrite private prison expenses and to pass laws that ensure certain levels of beds will be filled at each prison…also known as an incarceration quota? For example, in 2015 CCA and GEO lobbied for a Congressional mandate that required 34,0000 immigration detention beds be maintained and paid for with tax dollars.

Due to lobbying efforts, these corporations are also exempt from taxpayer oversights, as they have been excluded from the federal disclosure system under the Federal Freedom of Information Act, which denies public access to private prison operation records.

In an interview with the LA Times, Alonzo Peña, former director of US Immigration and Customs Enforcement from 2008 to 2010 said, “he had long been concerned that for-profit prison companies had been hiring former immigration official to help them secure favorable contract terms.” This is extremely problematic as manipulating the system through contracts allows the corporations to be exempt from following governmental standards and protocol.

 

So if the government is not responsible for keeping watch on these private prisons…who is?

 

The haziness between what is legally acceptable and followed by these private prisons continues to cause controversy in the US, as the government’s level of jurisdiction over these corporations becomes increasingly unclear.

What was created as a short-term solution to combating overpopulation has developed into a multi-billion-dollar industry where investors are pouring their money into these corporations’ stocks to watch the value go up on the stock exchange.
However, the tradeoff between public and private interest doesn’t seem to balance…

More inmates? More Money?

A life-sentence for a stock?

That sounds like democracy…right?

 

 


SOURCES:

http://www.globalresearch.ca/the-prison-industry-in-the-united-states-big-business-or-a-new-form-of-slavery/8289

http://www.economist.com/blogs/democracyinamerica/2010/08/private_prisons

http://greengarageblog.org/5-foremost-pros-and-cons-of-private-prisons

http://www.truth-out.org/news/item/21694-shocking-facts-about-americas-for-profit-prison-industry

https://www.propublica.org/article/by-the-numbers-the-u.s.s-growing-for-profit-detention-industry

https://www.washingtonpost.com/posteverything/wp/2015/04/28/how-for-profit-prisons-have-become-the-biggest-lobby-no-one-is-talking-about/?utm_term=.a8418a44291a

http://www.huffingtonpost.com/bernie-sanders/we-must-end-for-profit-pr_b_8180124.html

https://www.theguardian.com/commentisfree/2012/jul/06/prison-labor-pads-corporate-profits-taxpayers-expense

http://cad.sagepub.com/content/45/3/358

https://smartasset.com/insights/the-economics-of-the-american-prison-system

League of Geeky Athletes: E-Sports and League of Legends

“He’s gonna find Santorim right before the dragon. Looks like he’s gonna try to get over the wall. Not gonna work though. Oh chilling spikes and now Santorim is in a lot of trouble.. he’s lost and WOOOOOOOOOO DENIED! HEAD BUTTING AND BACK, OUT OF THE LANTERN!” Believe or not, this quote is from a sports caster. What kind of sports commentary involves a dragon and chilling spikes? You guessed it, the E-Sports. Back in Fall of 2013, there was an unusual event held in Galen Center and Staples Center. The League of Legends World Championship semi-finals and finals were held in those arenas. Those events attracted about 23,000 fans to spectate the video game matches in both event halls.  In case of the finals held in Staples Center, the tickets were sold out in an hour. Even for a professional basketball event held in Staples Center, it is very extraordinary. On top of the arena attendance, the final matches in Staples Center attracted about 32 million viewers worldwide according to Riot Games. In the end, South Korean team SK Telecom T1 won the prize of 1 million dollars. 

It may seem totally outrageous by traditional sports fans because these so-called “Professional Gamers” (or Pro-gamers) are earning millions of dollars by simply playing a video game in front of people. Yet, pro-gaming is more than that. Donghun Lee, scholar at Ball State University, wrote a journal article about how the E-Sports players need to train rigorously just as traditional athletes do. According to Lee, the Pro-gamers need to train their eyes to follow fast movements of pixeled characters and objects on the computer screen, train their hands to react faster for mouse clicking and keyboard button pressing, and train their hearing for reacting to gaming effect sounds. Some pro-gamers like SangHyuck “Faker” Lee plays practice games for over 12 hours a day to master his finesse in League of Legends.

League of Legends is vital to E-Sports because it showcased how serious the professional gaming can be through the outstanding number of viewers over the world. League of Legends is a free-to-play online competitive multiplayer game developed by Riot Games in 2009. Two teams of five players are required to play the game and one match lasts about 35-45 minuets. Since its release, League of Legends has been gathering monthly active users in a very fast pace. The monthly active users have increased from 15 million in 2009 to 100 million in 2016.

As mentioned earlier for the League of Legends Season 3 World Championship, the final matches attracted 23,000 physical fans and 32 million fans streaming online. Chad Millman, the editor in chief of ESPN.com and ESPN magazine, praised how E-Sports market is attractive on Fortune Magazine interview: “We saw how responsive the fan base was, how tremendous the storytelling opportunities were and, for those of us not already immersed in the industry, how similar it was from a competitive standpoint to what we already cover [. . .] It didn’t seem like that much of a stretch then to get aggressive about creating a digital destination.”It is very apparent that the E-Sports industry is growing. In the same article, Fortune states how the revenue from the E-Sports industry will grow from $278 million revenue in 2015 to $765 million revenue in 2018.

Essentially, League of Legends has made E-Sports big enough to attract investors to bring a significant change; once a niche industry is now becoming a profitable mainstream industry. As shown on the info-graph on the left, 2016 League of Legends World Championship had accumulative prize of 6.7 million U.S. dollars to distribute to the competing teams. Besides the prize money, the player salaries are pretty crazy as well. For example, aforementioned star gamer Faker earns $2.5 million per year from his contract with SK Telecom. While being this successful, the model of E-Sport industry actually comes from overseas despite the origin place of League of Legend being in the United States.

South Korea has had the strongest market environment for E-Sports since late 1990’s. According to New York Times Article, the Asian Financial Crisis triggered South Korea to have the best environment for E-Sports because the government allocated its funds in telecommunication and Internet infrastructure. By 2000s, the PC Bangs (PC방, it is directly translated as Personal Computer Rooms) were formed and the wide community of gamers was created. PC Bangs are the Internet cafes on steroids that provide the fastest Internet speed, computers with great CPUs, and superior graphic cards for  very cheap price like a dollar for an hour. With the introduction of StarCraft, a game released by Blizzard Entertainment in 1998, the PC Bangs became the proving ground for early gamers and multiple tournaments were held in different PC Bangs. In my personal experience, PC Bangs are like the neighborhood basketball courts. If someone in my class was good at either StarCraft or WarCraftIII, he would have the same popularity as a varsity football quarterback would have in the U.S. PC Bangs has made an E-Sports culture in South Korea and the market was meant to do well because of the infrastructures.

As the competitive gaming became popular, the South Korean government created the Korean E-Sports Association to manage E-Sports. As a result, a TV station dedicated for broadcasting E-Sports and big companies such as Samsung, CJ, and SK started to organize, manage, and finance their own E-Sports teams. Those companies still act as major sponsors in South Korea. For League of Legends, those sponsoring companies put their players in a training houses so they can practice as a team at least 8 hours a day. This model of hardcore training has influenced other League of Legends teams in the world. According to New York Times, “the country’s success at League of Legends has led several Western teams [. . .] many foreign teams have also tried to emulate the group living and training approach used in South Korea.”

League of Legend’s popularity in global E-Sports market triggered the United States to take actions. The U.S. teams such as Team Solomid, and Cloud 9 are sponsored by HTC. Cer Wang, the chairman of HTC said in 2015, said that “E-Sports has seen significant growth in the past few years and we see synergy between people who are passionate about this sport and our own customer base. It was an easy decision for us to sponsor these talented teams and individuals.” Apart from HTC, many different companies like Red Bull or GEICO sponsor League of Legend Teams because they see the profitability. According to SuperData report, “Brands have taken notice of E-Sports’ popularity and many have become sponsors quicker than projected [. . .] By year’s end, sponsorship of tournaments, players, and esports-related sites will exceed $578 million, just 28 percent less than this year’s NBA sponsorship total.”

Just as Fantasy Sports exists for traditional sports fans in the U.S., the hype of E-Sports seem to extend its reach to the betting game as well. According to the Internet magazine Travelers Today, a casino in Las Vegas started to allow people to bet on the League of Legends. The magazine also mentions that XLIVE, an entertainment organization event, will have a betting panel for League of Legends this month in Las Vegas. Waco Hoover, founder of XLIVE says that “E-Sports  is a burgeoning industry that’s poised for significant growth in the coming years. Some estimates put the global sports betting industry over $1 trillion and with the growing popularity of E-Sports the industry is looking to capitalize on gambling. Unheard of in traditional sports – crowd sourced prize pools in excess of $20 million demonstrate the extraordinary fan bases that exist with E-Sports and their leagues.”

Moreover, there has been a deal going on between Major League Baseball Advanced Media and Riot Games recently. According to Los Angeles Times, Riot Games is finalizing a deal to sell streaming rights for League of Legend matches to MLB’s tech unit for $200 million over two years. This is quite significant because most of the E-Sports matches are broadcast on Twitch or YouTube. What this deal means is that the streaming of League of Legends can be done in MLB app. The LA Times suggests that there could be a synergy for MLB to purchase League of Legends streaming rights because Riot Games has proven the wide audience its game can reach. Both Riot Games and MLB could gain massive profit with advertisers. Yet, there are still concerns regarding E-Sports broadcasting because the profit generation in E-Sports broadcasting is still in early stages. Whereas South Korea has its own TV station dedicated for video games that the station can profit from advertisers, the American E-Sports are broadcast mostly online. In this regard, moving into a premium app may pose a danger to the League of Legends fan community because the matches may lose its audience and perhaps become unpopular.

Though the MLB deal is still not announced to be closed, the concern LA Times brought up is very significant. League of Legends is not the only E-Sports game. Until recently, the League of Legends has been the most popular online multiplayer video game for MOBA (multiplayer online battle arena) genre. According to data on Statista, League of Legends hold 66.3% of the market share based on PC and console revenues in 2016. For the MOBA genre, League of Legends may still be secure in E-Sports arena; however, new competitive game was introduced in this year’s Summer to perhaps bring down League of Legends from its E-Sports throne. Overwatch, a competitive online first person shooter game developed by Blizzard Entertainment, recently gathered over 15 million users according to Forbes. Bringing the E-Sports to South Korea, the PC Bangs are now populated with more Overwatch players than League of Legends. Even though League of Legends matches are still broadcast on Korean TV station, Overwatch matches have been raising a great number of fans.

Does the emergence of Overwatch mean the downfall of League of Legends? According to major video game news outlet Polygon, the first Overwatch World Cup at Blizzcon 2016 had more than 100,000 viewers. According to Polygon, Overwatch definitely has a potential to be big in E-Sports scene. While League of Legends has been focusing on team construction in the beginning of each round, Overwatch provides more fluidity in game. This means that once players select their champion characters in the beginning of the game, the players are locked with the champions they selected; in other words, the strategy is already locked with the character choices in the beginning of the game. Meanwhile, players can switch their choice of characters at any time of the gameplay. Providing more fluidity in strategy, many hardcore gamers find Overwatch to be a great game in competitive setting. Yet, Polygon points out the flaw of Overwatch that may hinder it from entering the E-Sports market. Overwatch is not the best game for the spectators because it is a first person shooter and it confuses spectators on which characters are on the same team. For a fast pace gun-serking game such as Overwatch, it becomes very difficult for the spectators to see what is going on. For League of Legends, each teams’ health bars are color coded so it is intuitively easy to figure out what is happening in the battle field. In case of Overwatch, not so much.

Does an introduction of new exciting competitive game threaten League of Legends? Not so much. It is just like traditional sports. Basketball getting more popular than baseball does not mean that baseball is not relevant at all. Just like how League of Legends have been treated as sport, it will not have the same decline. Older games can still be relevant and profitable in E-Sports. For example, StarCraft I is still relevant in South Korea even though the competitive market started since 1990s. There are still StarCraft I matches in South Korea and they are broadcast, although StarCraft II came out and the tournament of its own has been getting popular. For this regard, I think the emergence of new games is not a threat to the E-Sports community or League of Legends. It just means that more sport genres are added and the fans will have more options to watch the pro-gamers competing with their passion. As E-Sports get popular just like League of Legends, maybe people will see E-Sports being part of Olympics.

When Americans Have Beef with Red Meat

Whether it be for ethical, environmental, or health reasons, vegetarians around the world have long been making a compelling case for why they do not eat meat. However, knowing Americans, perhaps the most persuasive reason of all lies in targeting carnivorous Americans where they would be most empathetic: their pocketbooks, as opposed to their hearts. With the difference of up to $200 billion dollars at stake for reducing meat consumption in the United States, the financial argument is one that could lead many to reconsider what they’re really putting into their mouths. However, red meat seems to be the main victim in an increasingly vegetable-dominated world.  

This is profound news for a country where meat has always been a large cultural and historical component of the American diet. A majority of American holidays include meat as a staple item, including Christmas, Thanksgiving, Fourth of July, and perhaps the most revered American Holiday of all: the Super Bowl party.

For the past few decades, demand for meat has steadily risen or declined, based on the type of meat. Americans have been adjusting their meat consumption patterns in accordance to the variations of meat pricing over the years. Global Meat News reported this past September that beef and veal recorded a three percent decline in consumption, compared to a global increase of meat consumption steady with the world’s growing population. In 1972 alone, the average American consumed 144 pounds of red meat a year, according to the USDA (National Chicken Council). Comparatively, in 2015, the average American consumed only 104 pounds of red meat. However, consumption of poultry has increased from 50 pounds per American in 1972 to 106 pounds in 2015 (National Chicken Council). This increase in consumption of poultry over red meat can be attributed to two factors: recent red meat health fears and rising red meat prices.

Behind the rising price of red meat in the United States is lower supply of cattle due to the drought. Raising cattle requires more room and feed than other animals like chicken or turkey, making it especially costly to raise throughout drought conditions, directly impacting the supply of cattle.

Cattle pricing strategy in an extremely volatile market is incongruent amongst internal sellers and producers. To combat unsteady prices are multiple safety nets are in place to protect sellers and buyers. These vary per seller/buyer relationship, ranging from simple forward contracts and more complex options and plans. Ultimately fueling the volatility in the cattle market is the strong basis levels, or the difference between the cash sales price and the futures price. According to Rabobank’s global strategist animal protein Justin Sherrard:

“In the event a producer has had the opportunity to place a hedge or further position at a price level that offers a positive price for the cattle, a strong basis can be viewed as a bonus. This is because it enables the producer to capture the difference between his cash sales price and the offset to the lower-priced futures position” (Global Meat News, “Extreme Volatility”). With ever-changing prices, both beef processors and buyers become weary as they find difficulty setting prices that will help the overall market.

Further impacting the demand for meat in the United States are alarming headlines and announcements from health organizations, including, “Red Meat causes Cancer” and, “CSPI calls for a cancer warning on processed meat,” Americans have understandably turned to alternative meat products to satisfy their desire for protein (Global Meat News). However, demand for meat in outside countries have remained high, and with the lifting of a Chinese import ban on U.S. beef in September 2016, the price of beef has not yet dropped despite the low demand (Global Meat News, “Food trends”).

Many Americans have not yet considered how their individual meat consumption patterns could have a larger significant economic impact. In March 2016, the Proceedings of the National Academy of Sciences published a global-specific health model study describing the varied effects of adopting a diet with pro rata reduction in animal products, including ruminant meat, total meat, and dairy. According to Marco Springman, one of the study’s researchers, “It’s always hard to really get your head around what it means if you avoid climate change to [a certain] degree, or have one less person dying from diet-related diseases. We wanted to illustrate the scale of those benefits.” In comparing the world’s current meat consumption patterns to diets that abstaining from meat or are less-meat heavy, they were able to examine the subsequent economic impact of current meat-heavy diets.

The five researchers from the University of Oxford compared hypothetical situations set to arise in 2050 if the world were to continue their current meat-heavy eating habits. They compared these hypotheticals to the recommended diets proposed by healthy global diets (HGD), vegan, and vegetarian diets, and examined the subsequent impacts that current diet trends could have on healthcare, environmental, and value-of-life benefits.In order to access the economic valuation of the health benefits associated with dietary change, the study relied on both “cost-of-illness” techniques which included direct and indirect costs of informal care and lost work days associated with deaths from specific diseases– and “value of statistical life” which would estimate the cost of the lives saved under each dietary scenario. They found that changes in diet, particularly in Western high- and middle-income countries would reduce the number of overweight and obese people, by 29-40 percent. Furthermore, in combined healthcare, illness, and “value of life” costs, the study found that current meat-heavy diets are costing Americans between $197 and $289 billion annually (PNAS). In particular, America, for its high per-capita healthcare costs, is in a favorable position to save more money than China, or all of the EU countries combined (Atlantic).

Though the current meat industry as a whole slowly declining as Americans begin to adopt more plant-based diets, meat will most likely remain a staple for a majority of Americans. In recent history, red meat has received its fair share of media backlash, and in conjunction with its steadily rising prices, Americans are filling their carts with more reasonably priced meat alternatives. As beef prices are set to increase, whether Americans continue their health-conscious meat-eating behavior, or revert back to their red-meat eating ways will reveal the true motivations behind their changing diet. However, the study published in Proceedings of the National Academy of Sciences suggests that continuing reducing meat-heavy diets could not only change the hearts of Americans, but also their pocketbooks.

 

Sources:

http://www.globalmeatnews.com/Analysis/Food-trends-meat-consumption-up-beef-declines

http://www.theatlantic.com/business/archive/2016/03/the-economic-case-for-worldwide-vegetarianism/475524/

http://www.pnas.org/content/113/15/4146.full.pdf

Per Capita Consumption of Poultry and Livestock, 1965 to Estimated 2016, in Pounds

http://www.msnbc.com/msnbc/the-decline-red-meat-america

http://www.globalmeatnews.com/Retail/US-beef-industry-targets-millennials

http://www.globalmeatnews.com/Financial/Food-trends-Beef-pork-prices-to-fall

http://us.blastingnews.com/news/2016/09/beef-prices-to-come-down-usda-001146533.html

 

The Wells Fargo Scandal

Below is the link to my interactive timeline of the Wells Fargo Scandal:

https://cdn.knightlab.com/libs/timeline3/latest/embed/index.html?source=1AQDIY0MjwmN8BDMpiQX4jJ-UsBTdBo8gLYDc7qWHypI&font=Default&lang=en&initial_zoom=0&height=650

Attached is the Google Doc I used to build it:

https://docs.google.com/spreadsheets/d/1AQDIY0MjwmN8BDMpiQX4jJ-UsBTdBo8gLYDc7qWHypI/edit?usp=sharing

Works Cited
Blake, Paul. “Wells Fargo to End Product Sales Goals After Accounts Scandal.” ABC News. ABC News Network, n.d. Web. 09 Dec. 2016.
“Business News World.” Business News World – Wells Fargo Asks Court to Force Customers to Arbitration in Fake Accounts Cases. N.p., n.d. Web. 09 Dec. 2016.
Forbes. Forbes Magazine, n.d. Web. 09 Dec. 2016.
@grow_mag. “The Wells Fargo Fallout: How Does the Scandal Affect You? – Grow Magazine.” Grow Magazine. N.p., 29 Sept. 2016. Web. 09 Dec. 2016.
Https://www.facebook.com/CNBC. “How the Wells Fargo Case Will Impact the Broader Industry.” CNBC. CNBC, 16 Sept. 2016. Web. 09 Dec. 2016.
Lab, Northwestern University Knight. “Knight Lab.” 3 – Beautifully Crafted Timelines That Are Easy, and Intuitive to Use. N.p., n.d. Web. 09 Dec. 2016.
Lukomnik, Jon. “Five Steps for Wells Fargo to Rebound from Scandal.” Bank Think. N.p., 05 Oct. 2016. Web. 09 Dec. 2016.
@mjarmental. “Wells Fargo Formally Separates Chairman, CEO Roles.” The Wall Street Journal. Dow Jones & Company, 01 Dec. 2016. Web. 09 Dec. 2016.
Sabatini, Joshua. “SF Reacts to Wells Fargo Banking Scandal.” The San Francisco Examiner. N.p., 08 Dec. 2016. Web. 09 Dec. 2016.
WatchMojo. “Wells Fargo Scandal: 5 Things You Need to Know!” YouTube. YouTube, 15 Sept. 2016. Web. 09 Dec. 2016.