What is Parecon?

This site is dedicated to participatory economics, or “Parecon.” This is a fairly easy to comprehend yet complete economic model that explains the way an economic can be organized as an effective alternate to the Capitalism system and Socialism that’s centrally planned. The goal of this site is to promote economics among today’s general public and also to provide tools by which readers can explore the model closer.


Capitalism or Socialism concept

During the past century or so the main economic systems could be referred to in general terms as Capitalism and Socialism. Capitalism is centered on various concepts including private people owning productive property, workers earning wages for their labor, and bidding between buyers/sellers via a market system to determine the distribution of goods/services.

True Capitalism has never existed. That’s because it’s dependent on a certain political state in order to regulate it and prevent it from collapse. As a result, different forms of state capitalism throughout the world have existed during the last 100 years. The standard of living of many nations has improved in part due to the modern welfare system, there’s a growing gap between the rich and poor.

Other results include environmental destruction, over-consumption, financial crises, longer workweeks, continuous unemployment, monopolies and several other unwanted results. People also have less control over their work lives. Big corporations also have a large influence on the political system. The result is an injustice for the working and middle classes, and environmental disaster.

Meanwhile, workers throughout the up rose up during the first part of the 1900s. They demanded more economic justice/democracy and more control over their work lives. This resulted in Socialism forming in the USSR as well as other regions of the world. The system that included owning productive property was substituted with central planning. A class of privilege rose up. It took a position of power within the economy that was separated from the working class.

However, state socialism was unable to deliver true democracy/justice. Another issue is that it also had a very bad environmental record. This might be surprising since it might be implied that a left-leaning system would be better on environmental issues.

21st Century Alternatives

Many people throughout the world are growing unhappy with the economic system that’s founded on competition greed. They also don’t have the belief that authoritarian planning is the best system.

So there’s the issue of what should be used to replace the two systems. However, there hasn’t been an adequate answer for many people.

During the 1980s England’s Prime Minister Margaret Thatcher states that there was “no alternative.” However, some people argued that there was another approach that was possible. However, the majority of them haven’t been able to show a clear and strong alternative.

This would help to explain the situation involving Participatory economics. It’s a direct challenge to the There Is No Alternative (TINA) doctrine and an attempt to create a real answer to the issue of economic vision. It’s hoped that Parecon will provide a key contribution in helping experiments/movements that are trying to have a more just/democratic economy.

Participatory Economies

That brings up the issue of what a participatory economy is. It involves a social ownership of self-managed workplaces, productive property, and neighborhood councils. In workplaces, the decisions are made via democracy and every worker has a single vote. Also, jobs rebalanced so people don’t have boring and dis-empowering work. Payment is made based on people’s effort/sacrifice. Citizens in various communities are members of neighborhood councils. There they can help to make decisions about consumption/local public goods.

Workers, as well as consumers’ councils, are connected through a structure of federated structure that’s democratic. It’s made up of bigger geographic units. Democratic planning methods are utilized in order to make the economy’s overall plan.

There are various key values of a Parecon. They include self-management, solidarity, justice, efficiency, diversity, and sustainability. These are all different components that each has an important role in a participatory economy. There are various key institutions that can help to achieve the goals.

Parecon’s History


Participatory economics started from the past few hundred years of ideas/experimentation based on the concept that people ought to be able to manage their lives with others in ways that are cooperative, democratic, ad fair. They shouldn’t be ordered from higher ranks or be required to compete with other groups based on fear and greed.

The roots of Parecon are based on the vision of a particular economy that’s shared by several people who have fought for more economic justice/democracy. However, that resulted in a formal model that explains how that kind of system could function in today’s society that includes millions of people. The model was presented for the first time in 1991 by two economists. Since then it’s gained interest in the economic world.

In the past, there were parts of a Parecon in several different world regions. That includes South America as well as the revolutions in Spain and Russia. In those countries, workers create federations and councils that were self-managed. In today’s world, you can see parts of participatory economics that are implemented.

Their people are working in participatory budgeting. In addition, in the participatory economics being used people are working in participatory budgeting. In the international co-operative movement there are thousands of businesses that are owned and controlled by workers. The goal of the Parecon model is to promote the priorities of worker co-operatives to the entire economy. That’s through connecting them through a democratic planning method. That advances one of the main principles in the movement of cooperation between cooperatives.

It should be noted that there’s also some criticism of participatory economics. Some argue that it’s not only impractical but also impossible. For example, one argument is that it’s a system that focuses too much on the comparison, monitoring, consumption details, and so on. The argument is that other systems would be more effective so they should be implemented instead of Parecon.

Some supporters of Parecon argue that is the goal is only to deal with an alternate economic theory. It must be combined with other important vision in fields such as politics and culture. However, as we have seen in smaller, niche markets, such as the sous vide market, participatory economics don’t always prevail. In the case of Sous Vide Wizard, competitors were being outclassed due to the amount of resources needed to monitor the temperature, precision, and size of their water baths. In fact, the additional resources required to review the best sous vide equipment were too cumbersome, and most competitors were put out of business. This isn’t solely a sous vide market problem – but one as a whole. At Parecon, we’ll discuss both sides of the participatory economics argument.


Tips for Buying Sous Vide Machines

Are you looking for sous vide machines? If so then it’s important to know how to find the best unit for your needs. There are many to choose from, and here are some tips to make the best selection:

  1. Shop around

There are many sous vide machines to choose from. That includes different models, features, prices, designs, etc. Shopping around will help you to select the best unit for your particular needs, as well as the best price for that unit. Considering both of these issues will help you to find a unit with the best value. These are often regarded as the best sous vide machines to buy.

  1. Check out ratings

It’s also highly recommended that you review various reviews or ratings about the particular unit you’re considering. You can find various sources for the reviews/ratings such as review sites, e-commerce sites such as Amazon and eBay, and others.

There’s a good chance that you’ll find some negative reviews. However, it’s important to get the general consensus of the reviews. If the vast majority of the reviews are positive then you’ll likely also have a positive experience. On the other hand, if the opposite is true then you’ll probably have a similar experience.

  1. Consider your needs

When selecting from various sous vide machines it’s important to think about your needs as a consumer, which should include various factors. How many people are in your household? Are you looking for a portable or fixed-capacity unit? Which features are you searching for?

These are all critical issues to take up if you’re in the market for a new sous vide unit. It will help you to pick the right unit for your cooking needs.

  1. Get personal referrals

This is one of the best ways to shop for any item. If you know someone who uses the slow-cooking units they ca give you their opinion about the particular unit(s) they’ve used.

  1. Consider portable units

In the case, you need more flexibility in terms of storage or travel you should definitely consider buying a portable unit. They’re flexible because you can change their capacity, store them easily, and move them to other locations when you need to use sous vide machines.

These are some of the best tips to select from various sous vide units on the market. Make sure to consider them in order to find the best unit for your slow-cooking needs. Are you ready to start shopping for your next kitchen appliance?


Why No Bailout Package May Pass

Why No Bailout Package May Pass

I am not much better an economist this week than I was last, but I think I have made some observations about the political climate. Forgetting about the economics, there are clear political reasons why this bailout or loan or whatever you want to call it may never gain any traction:

All members of the house are elected every two years. In essence their job has evolved into one of constantly running for office. Would you, as a house member of either party, want to go home and campaign for the the upcoming election with a Yes voted recorded on this bill that is receiving constituent mail running 100 to 1 against? There are members who reside in bulletproof districts, but how many?

Only one third of the senate is elected every two years, and it is much more difficult to unseat a current senator, so they have less to worry about concerning their voting record. However, this measure is so toxic to so many, even senators might have to consider what their constituents are saying.

It is unclear who are the real opinion shapers concerning this issue. Cable channel talking heads seem to be increasingly won over to the to the “Sky is Falling” view, but they still drag in the occasional Ivy League economist who says the market, given time, will correct itself. And since this is uncharted water, an “expert” is a guy in a suit from out of town. We foot soldiers have no idea what is going on. I doubt that even the Secretary of the Treasury would claim strong understanding or clairvoyant ability.

So can the talking heads convince us this drastic measure is needed. I don’t know. Can the President or Vice President do so? I think the answer to that is no. Can the presidential candidates deliver the needed votes? I think Obama can deliver some, but he will not be able to deliver all the Democrats because they are not going to vote for this treasury busting bill unless Republicans will drink the hemlock with them. I don’t think McCain can deliver many votes, and there is a question about whether he wants to even though he did seem to ride off to Washington to do something. I am not sure what if anything he did.

How is the voting process going to work? I think this is the way it will go in the House. A large opaque bowl will be placed above eye level on a column. Inside will be an equal amount of blue and red chips that add up to the number of house members present to vote. Members will each draw one chip. If you get a red chip you have to vote for the bailout. If blue you vote no. If you actually want to vote for it, you can skip the drawing and do so.

If a bill comes out of the House, I think the Senate will pass it and the President will sign it.

Case Study: The Sous Vide Review Market

Parecon Sous Vide Case Study

Here at Parecon, we wanted to start doing more case studies on the impact of partipatory economics on more niche markets. For our first case study, we’re going to talk about the supply and demand of the sous vide market.

For those of you that don’t know, sous vide is one of the hottest trends in the cooking world. Why? Because it’s impossible to mess up your cooking when using sous vide.

This has led to an increased amount of manufacturers entering the market with their newest sous vide immersion circulators and standalone water baths. In fact, it’s estimated that 20 new manufacturers are entering the space each and every year.

What does this mean for the buyer?

Well, it means that there is going to be a price war going on between suppliers. Consumers are going to benefit from the increased supplier competition, which should drive prices to be lower. Also, with increased competition comes increased innovation. Companies are going to need to spend more and more time developing their products and supporting product features.

This is why some of the latest sous vide manufactures are coming out with mobile applications and WiFi connectivity.

How has the market reacted?

The market has reacted quite favorably towards the increased competition. As we expected, prices have gone down and innovation has gone up.

There have also been several other players entering the sous vide market, but not by means of a physical product. Starbucks released their sous vide egg bites (find the Starbucks sous vide egg bites recipe here) back in January 2017 to much success. As a result, other food retailers have begun similar offerings.

Commercial sous vide manufacturers and reviewers, like the Sous Vide Wizard, have been reaping the benefit of this increased demand.

Parecon Sous Vide Case Study
Parecon Sous Vide Case Study

Elastic or Inelastic?

Demand for the best sous vide machines has been relatively inelastic given any price changes in the market. The price changes haven’t been all that substantial, and it was to be expected that prices would drop as the technology continued to further advance.


We’re going to keep updating this sous vide market case study in the future. Innovation will continue to evolve as more and more manufacturers enter the market.

Lesson Plan for Economics: Grades K to 5

Lesson Plan for Economics


To apply basic principles of economics to real life.


  1. Understand basic costs involved with opening a store.
  2. Practice making bar graphs.
  3. Learn about factors of production.

What you’ll need

Prepare your supplies by printing out a few blank charts for your students, which can be found online or on word processing software that may be available on your computer. Small cut-outs of food related (i.e. fruits, milk, cream) and kitchen equipment, are used for illustrations and charts. You will also need a dictionary or an introductory economics textbook, to define terms after the activities. A few different color pens or pencils, to signify different bars of the graph, can also be used.


Activity #1 – My First Smoothie Shop

In this activity, you will begin by painting a picture of entrepreneurship. The students have just earned enough money to open their first shop, selling fruit smoothies. Begin by giving each student a dollar value of money; a number ranging from $200 to $1,000. You will then take the food and kitchen related cut-outs and ask your students to identify as many items that they would use to make and sell their smoothies, as they can. There should be enough cut-outs for each student to choose at least 5 different items.

Activity #2 – My Shop’s Costs

Once the students have chosen their cut-outs, you can place dollar values on these items, proportional to the dollar amount given to them at the beginning of the lesson. Writing these values on a chalkboard or piece of paper for the students to reference back to, is also helpful.

Activity #3 – Making a Chart

Now it is time to begin making a chart of the students’ costs, in relation to their capital. Start by having the students paste the cut-outs on the horizontal axis of the charts. Ask the students to write values in increments of 50 along the vertical axis until they reach the total amount of capital they have. Fifty will be the lowest value, on the graph and their original capital value will be the highest value, at the top of the graph.

Activity #4 – Graphing the Costs

Students will now graph the cost of each of their items in relation to their capital amount on the graph. An item that costs $50 will be represented by a bar going up to the top of the lowest increment, which is 50.


Students are now ready to evaluate the cost of opening their smoothie shop. Students should be able to answer the following questions:

  1. What are my factors of production?
  2. What is the largest cost involved in opening my shop?
  3. What is the smallest cost involved in opening my shop?
  4. How much money do I have left after I buy all of the items for my shop?

Students should be able to understand that the cut-out items that they have chosen, are apart of their factors of production. These items are the resources that they have used to produce their goods, smoothies. Students can compare the cost of each factor of production in relation to the amount of money they were initially given to open up their smoothie store. Although, these are not the actual values of purchasing their factors of products, these representations will give students a basic understanding of how costs compare to capital. Students will also become more familiar with bar graphs and how they can be used in real life.

The Economics of College: Why Costs Are Rising and How to Bring Them Back Down

The Economics of College: Why Costs Are Rising and How to Bring Them Back Down

Education costs continue to rise, at a quick pace, despite the recession. In 2008, the cost of college tuitions increased again, at an annualized rate of 6-7% according to a recent College Board Study; even though during this period the CPI fell 2.9%. For striking visual comparison, see this graph of college, medical, and living costs. Costs since 1978 have increased ten-fold while medical costs have only tripled. We have an education crisis!

Let’s go back two hundred years to the year 1810. The annual tuition at Yale University was $33 [1], and the price stayed the same till the year 1852. Forty-two years with no cost increase! To put that in perspective with today’s money, $33 was equal to 1.65 ounces of gold, which today is about $1,800 dollars. Even after adjusting for inflation, today, the tuition is twenty times as high at $36,500.[2] Something is distorting the market significantly.

The cost of goods are dependent on the cost of production, supply and demand, and the amount of money chasing those goods.

With all the advances in technology, the cost to train students has decreased. Particularly, computers have revolutionized college; making record keeping and grading student work much more efficient. The internet has enabled distance learning to become a popular and efficient way of obtaining degrees. Additionally, more students are going to college, which creates economies of scale (The cost per student is lower, the more there are). The cost of training students is not the factor contributing to increasing college costs, it is actually decreasing them.

How about the supply and demand for college? Demand has increased greatly, as more and more people are finding a high school diploma is insufficient. The supply of colleges are also rising; in the past 60 years, it has nearly tripled from 1,851 degree-granting institutions in 1949 to over 4,300 in the year 2007 [3]. Since supply and demand are generally increasing together, their influence on the cost of college is insignificant.

Finally, let’s consider how much money is chasing the college tuition. Absent a government guarantee on student loans, no one would lend students money to go to college. The risks would simply be too high. However, with government backed student loans, lending money to students is really no different than buying a treasury bond. There is no losses for the creditor, thus eliminating all the risk in lending to students. Additionally, there are many types of grants, which increase the pool of money further. Since students have access to all this money, more money is chasing the same amount of goods (college educations). Prices are bid up as students compete to get accepted.

Who is really profiting from these government student loans? Not the students. They are the ones stuck with the bill- often for two or three decades! Universities and colleges, on the other hand, benefit tremendously- they can raise prices without losing business. There is no incentive for them to cut costs and become more efficient. If a student complains about the cost he can be told to get bigger loans.

The solution is for the government to stop subsidizing student loans. How then could students afford the horrendous costs of college? Universities would not sit empty- prices would plunge. Suddenly they would be forced to cut overhead costs and become efficient. All the excesses would finally be reined in. Less money chasing the same amount of goods results in lower prices. This is real reform that simply restores a free market- which helps the poor and the middle class and stops subsidizing the rich.

If the free market in education was healthy, we would be seeing significant improvement in quality, access, and cost. Unfortunately, government involvement has caused the opposite. The same issue is making other goods more expensive- health care, food, and housing. These rising costs have impacted the poor and the middle class greatly, while benefiting universities, bankers, insurance companies, and food giants. The free market always delivers better results- if you let it.

Pros And Cons in Purchasing a Sous Vide Machine And It’s Effect On The Economy

Now that you do have a buying power as a consumer. This plays an integral part of the economy. A good example is that when you are set in purchasing your most awaited sous vide machine because you have heard so many things about it. You need to make sure you do buy one that fits what you are looking for based on the features and budget. However, people commit the same common mistakes in purchasing because of the lack of review and or research. To identify whether it is a good product or not, here are the following pros and cons that you should consider.


Easy to use- the good thing about sous vide machine is that it is not a hard equipment as most of it are user-friendly and this works exactly as it is billed.

Overcooking- another factor that you do not want to miss out is when you’re cooking at its utmost blend of having tasty food. Keep in mind that if you are cooking, the use of sous vide machine makes it easier for your use and there will never be a chance for you to eat anything that is overcooked.

Helping you to achieve your goals- if you happened to be in a business such as a restaurant, having sous vide machine makes it incredibly fun and exciting because it makes you wonder how you’re going to cook food next. Plan ahead with the type of food that you’re going to prepare. Such goals will continue to give you an exciting part of cooking your meals with a sous vide machine.

Consistency- compared to traditional cooking, there is a lot more that you can know about sous vide machine. For example, it temperature, the more it is consistent, the better are your meals. Given that it cooks in a manner that is different from how others are cooking, surely you will get a more satisfying way of eating the best meals.


The sealer is sold separately- for most cases, having a vacuum sealer would be great if it is not sold separately as it will make take a lot of time to do the preparation of your food. So, in order for you to have proper meal preparation and for the sous vide machine to be used, you must have the vacuum sealer or else the sous vide machine is useless.

Some buttons are not responsive- if you happened to have purchased this type of quality, it would be best for you to look for another set of sous vide machine. Do not spare your money on repairs as this will only give you a costly amount.

Effect on The Economy

It is very well understood that when consumers do have buying power. This would led to them buying items such as sous vide machine for instance out from their income. Also, it has a good effect on the economy. When they see that there is a higher consumer buying power, they will not hesitate to put up businesses, open job opportunities for the people and offer services or products to the consumers. This would lead to the prosperity of a country’ economy.

What the Future Holds for Social Security

What the Future Holds for Social Security

As the ‘Baby Boom’ generation begins to entire retirement era, the future for Social Security appears bleak. With a smaller generation being called upon to fund Social Security for one of the largest generations the country has seen, it appears that the current generation of college-aged students about to enter the work force may never see a penny of what they paid into Social Security over the years. As the average life-expectancy of Americans continues to climb, so too do the number of benefits that have to be paid each year. This does not mean that Social Security is a lost cause, or that future generations will be left with no money when they retire. It simply means that action needs to be taken, both at a national and individual level. With options such as Individual Retirement Accounts (IRA) and the increasingly popular 401(k) plan, there are other options for those who worry Social Security will not be available to them in the future to consider. In addition, there are several approaches that the United States government could consider pursuing to ensure that Social Security thrives. This includes, but is not limited to, reductions in benefits, increases in payroll taxes or an economic investment by the United States government.

Social Security is a program that includes many different services but is commonly known for a tax that is deducted from paychecks by the government, along with income taxes at the federal, state and local level. The idea behind Social Security is that by having money deducted now, it will be feeding into a system that will then provide monthly payments for individuals once they retire. While this system has been successful to date, the impending retirement of the ‘Baby Boom’ generation, along with other economic factors, have put Social Security in a position to become defunct before the current generation that is entering the workforce is eligible to receive those benefits.

The Social Security Administration stated in their 2008 Annual Report to Congress that “the projected point at which tax revenues will fall below program costs comes in 2017…

Naomi Klein in Earnest

Naomi Klein in Earnest

Before I commend The Shock Doctrine: The Rise of Disaster Capitalism to everybody’s reading stock, which I anyhow will, we better wander the twists and knots of the streets of Naples so I can explain to you why Canadian journalist Naomi Klein probably bears the best nose for picketing non-fiction books yet, even if this phenomenal reportage has turned out to be a fiasco.

Here, I want you to meet singer Giovanni Vacca and Vacca’s Grupo Operaio, with their brazen, almost deafening repertoire rooted in the ancient ta­mu­r­riata musical tradition of drums. The Grupo’s is a terrific story.

But you must now travel back in time, too: trust me, this real-life tale will throw a light into the works of Naomi Klein as you never expected.

In the Old Continent, circa 1968, while the teenagers of privileged families shook in disarray universities in a French-May style throughout Western Europe, southern Italy kept things, let’s say, tighter. Professor Giovanni Sartori has published some interesting papers in Cambridge University Press about this particular society-like most of its north Mediterranean neighbours’, a democratic dystopia (across the waters, the dystopia is perfect)-in which Marxism, to name but one modern economics term, hardly applies since industrialisation did nothing to a petrified, medieval mentality.

Accordingly, in this raucous spot of the boot-like country, the spirit of revolution barely amounted to anything more than so­me blue-collar peons agreeing on brotherly gatherings at night.

They would join to compose music, although much later the legend assured candid believers that they spoke of Lenin. Their bodies still aching after exploitative shifts in the car-making factories of the city’s suburbs, workers would bring guitars and flutes and cheap drums that their parents and grandparents had left behind as their only riches. Then, they would sing together.

It is when one learns of Gru­po Operaio’s origins that one realises where Vacca’s wisdoms painfully come from: “E qui và a faticà pur’a morte adela afruntà…” (“those who go to work may die.” )

And this is the trouble with The Shock Doctrine. For all the ambition that prodded Klein to reinterpret the economic and political history of the last half century, her lessons hold the same cogency as a Vacca’s song does.

In The New York Times, literary reviewer Tom Redburn said precisely so when Klein’s book appeared in September, 2007: “If only it were that simple.”

A long list of comments from journalists and economists ensued-to The Shock Doctrine’s credit-, but the flaw proved woeful for an otherwise arresting and inspiring piece of investigative journalism. Joseph Stiglitz was blatant: “There are no accidents in the world as seen by Naomi Klein… there are many places in her work where she oversimplifies.” “This is part of my problem with Klein’s thesis,” Sashi Thardor wrote in The Washington Post, “she’s too ready to see a single enemy where others might discern little more than the all-too-human pattern of greed.”

Outside of the progressive newspapers’ bubble, Klein latest book has been dismissed using much the same tone. Paul Farrell joked about it in Dow Jones Business News: “A hot tip? Invest in Disaster Capitalism, but there is no pressure of reading yet another prognosis of our world’s Orwellian future.”

Farrell was right in both accounts: The Shock Doctrine has been translated into 27 languages as No Logo was, an indisputable market nod to Klein’s success in spreading her pessimistic, nonconformist word.

Nevertheless, we should not be fooled by this riddle, often brandished by the shrewd defenders of wild capitalism-i.e. Nicolas Blincoe referring to The Shock Doctrine in The Daily Telegraph as “an old-fashioned book.” The truth is that there is a bloody line that scars our economic foundations and goes from the extreme ideology that Milton Friedman championed to president Ronald Reagan and prime minister Margaret Thatcher, from the C.I.A.’s involvement in Chilean general Pinochet’s dictatorship to the capitalist conversion suffered in South Africa, Poland or Russia. Ultimately, that very line renders too unambiguous a message on the military operations over the Middle East.

To this day, Klein’s 558-page report has required two minor corrections: if only for this reason, let everyone read The Shock Doctrine.

Although not so to understand the trillion-dollar programmes of the White House and Downing Street, which today sustain the financial sector and breathes oxygen into ailing industries. The state’s hand in the global economy is visible and commanding. This is pure John Maynard Keynes’ principles in action-Friedman’s foe-, something Klein utterly failed to forecast because of the narrow peep-hole of her economic theory.

Still, I have a second complaint. Remember Vacca? At least, his pre-proletarian anthems arise in Naples’ coarse, rusty mother tongue in which a coagulated Greco-Roman heritage drips here and there slices of what feels like working class’ pride. It’s daunting, it’s rough, and it’s profoundly moving.

It even is arousing. “If you want to build a ship,” Oscar Wilde once said, “don’t herd people together to collect wood and work, but rather teach them to long for the endless immensity of the sea.” If there’s no beauty and grace in poverty and oppression, there is no hope, either. That, after thirty years, Grupo Operaio has not forgotten.

Open The Shock Doctrine’s pages and the question bursts in a matter of minutes: why is Klein’s writing so boisterously ugly?

That, I fear, is the consequence of Klein being a stunning 40-year-old, middle-class intellectual. She doesn’t quite get how life under hardship is, does she?

Trade Fallacies

Trade Fallacies

As with everything else in economics, international trade comes with its misconceptions. There are certain common fallacies that are associated with international trade. These often lead to failures, and the reason why is due to the mistake of not considering secondary side effects of some actions. It is most particularly important to remember that the key elements of international trade are closely linked. One cannot change without affecting the other. For instance, if a nation’s government develops legislation that reduces the amount of imports it receives, it will, consequently, reduce its amount of exports. With that stated, it is also important to remember that business, labor, and political leaders who seek to gain from trade restrictions will tell half-truths and plant wrong ideas in the people’s minds to achieve their own personal gain. The two most popular trade fallacies involve the effects of imports on employment and the impact of trade with low-wage countries.

* Trade restrictions that limit imports save jobs and expand employment. This is a trade fallacy that has just enough truth to give it some credit. It is probable that when trade barriers limit imports, they will result in more employment in the industries that are being shielded from the foreign competition. However, this is only half of the effect of trade restrictions. Other domestic industries will be harmed. Imports provide foreigner with the money they need to buy exports, so when trade restrictions such as tariffs, quotas, and exchange rate controls are imposed, causing imports to decline, exports decline as well. Therefore, while certain industries will benefit from trade restrictions, generating more jobs, others will suffer, cutting more jobs.

* Free trade with low-wage countries like Mexico and China will reduce the wages of Americans. This is a fallacy in which many American citizens believe that if free trade with low-wage countries were allowed, with no trade restrictions, that their wages will fall to the wage levels of those workers in poor countries. However, this fallacy is due to a misunderstanding of the source of high wages and the law of comparative advantage. Workers in the United States are generally more skilled and more productive, which is why their wages are higher.

Trade restrictions are often implemented due to the people’s belief in such fallacies. As always with economics, it is important to consider all side effects-not just what is visible on the surface initially. This is essential to avoid being taken in by common fallacies.

Rupees: Where They Are Used?

Rupees: Where They Are Used

Rupees are the currency of countries from the SouthEast Asian peninsula – India, Pakistan, Sri Lanka, Nepal, Mauritius and Seychelles. Just like the dollar is prevalant in different countries (eg. Australia and Canada) there are different types of rupees in these countries too.

History of the Rupee

The word Rupya originated from the Sanskrit word Rupyakam, which meant coins of silver. The emperor Sher Shah Suri originally coined the term Rupaya in the 16th century. Back then, the Indian kingdom extended from Kabul to Sri Lanka down south and it had extensive trade relations with countries like Sri Lanka, Seychelles and Maldives – all islands in the Indian ocean. India and East India Company which ruled India in those days had extensive relations with many countries in Africa and the rupee as a currency was prevalant in those countries too at various points in time. the rupee was the major currency in use in most of Africa till the time the East India Company was present there. adparams.getadspec(‘c_billboard1’);

The original rupee was made from Silver as the Sanskrit name suggests. Over a period of time, most of the nations started trading in gold and alongwith that there were large quantities of silver found in these countries. As a result, the price of the rupee devalued during this period. This was called as the “Fall of the Rupee”.

The Indian Rupee

Back in those days, a rupee was divided in 16 annas and 192 pies. But in India, the rupee was decimalised in 1957 and hence divided into 100 paisa. The newly formed paisa was also called as “Naya Paisa” or “new paisa” in those days. This meant that four anna was equal to 25 paisa and eight annas were equal to 50 paisa. Today though most of the transactions are done only in rupees as the anna has devalued to such levels that it is not much used.

The Indian Rupee : Today

Today, the Indian rupee is found as a small coin made of steel with the Ashok Chakra on one said and the denomination of the coin on the other. Paper money has long been introduced for all the current day transactions. Notes, as they are popularly called, range from Rs. 5 to Rs. 2000.

Current Indian Rupee valuation consequences

From the 1970’s when $1 U.S. was equal to 7.56 rupees, today $1 U.S. is equal to nearly 45-50 Indian rupees. This difference in currency is what has led to the recent spate in outsourcing in which Indian companies work for the Western world and earn money in dollars. These dollars when converted to INR are resulting in huge profits for all Indian export oriented companies.

What I Have Learned About Economics from the Bloomsbury Group

What I Have Learned About Economics from the Bloomsbury Group

The Bloomsbury group designates a group of intellectuals who met in the early twentieth century in London, among its members were: Keynes, the philosopher Bertrand Russell, the writer Virginia Woolf and her husband, Leonard Sidney Woolf, painters Duncant Grant, Vanessa Bell and Dora Carrignton, Ludwigh the philosopher Wittgenstein, and others. Among the group also was the philosopher George Edward Moore, his ideas had a great influence on Keynes and his philosophical concepts were close to Bertrand Russell have been partners in the Trinity College, Cambridge, at the time agreed with Ludwig Wittgenstein who was admitted as a student and later held the chair of Moore. Many of them belonged to the Apostles (Society for the gathering of Cambridge). The Bloomsbury group has essentially a moral purpose in seeking the good in itself as opposed to the prevailing morality in the Victorian era, this was the decisive influence of the philosopher Moore. Perhaps the English culture was not aware of such an accumulation of talent as this group.

Two who had a great relationship among them Virginia Woolf and her husband founded the Hogarth Press which published editorial work of many club members. What began as a hobby later expanded to other publications specializing in psychoanalysis including works of Sigmund Freud.

Much of the members lived in the neighborhood that gave name to the club, initially met at the home of Virginia Woolf and her husband, other meetings were held in a restaurant where they read aloud some texts written by some member of the club in recent years, these meetings were often made at home of Keynes because their health did not allowed him to go out much.

Keynes is remembered as a popular investor Buffet, Kostolany, Lynch, Wenstein, Livermore but if that was a big investor as an investment fund managed on behalf of King’s College Cambridge, from 1928 to 1945 and despite the major blow to received by the Crack of Wall Street in 1929, had an average annual return of 13.2% while at the same time the United Kingdom Stock Exchange lost 0.5% annually. I think it’s interesting to hear the thoughts of Keynes who have spoken on other occasions, the most influential economist of the twentieth century. His contributions to the economy were in parallel with concerns about the reality of the era and his idea of society and I am not clear whether it was the first philosopher or economist. His father was a Cambridge professor of Logic and Political Economy and therefore had access to the great figures of the era, including Marshall.

Galbraith said that Keynes was the only economist who followed his own theories and through them made a fortune in the stock market.

Investment Highlights

I have learned something from their ideas. Your keys to investing are:

  1. Careful selection of low investment considering its low price relative to its intrinsic value today. Its potential in a given period of years and its relation to other investments available at the time.
  2. Long-term investment, possibly several years, until they meet the expectations is evident that his purchase was a mistake. Admitting mistakes and can not maintain a permanent investment.
  3. A balanced investment position, very important and then talk of diversification, not only as a variety but there was no correlation between the assets. Even managers who are now confused with fragmentation of portfolio diversification.
  4. Investing in small companies and have good knowledge of them. Gave much more priority to the analysis of the breadth of the portfolio.
  5. As is clear from his analysis he believed in industrial companies with a low distribution of profits via dividend and reinvestment in the business very profitable in the long term. Possibly the idea of investment in industrial enterprises is not a priority in his time, but if it is valid to the reinvestment of profits is the most profitable for the company.

I dared to make this presentation of the Bloomsbury group, knowing that it is no great contribution to the economy or the stock market but it is a very interesting group that I have raised another daring that is the creation of a virtual group led by Keynes in which they will be killed and thinkers as belonging to various currents of thought that express their views on the current economic situation and stock market.

Of course, the conversation is entirely fictional, but their comments by using the way of thinking that made possible reflections on topics which I think might relate to the current situation. In principle I have decided who will be participating, but it is likely to accompany the statesman Machiavelli Keynes, writers Oscar Wilde (he died when they created the group but as they shared their struggle against Victorian morality) and Baltasar Gracian and some another look by a return to the past.

The characters do not necessarily have to be the economic world, is a heterogeneous group in terms of profession, as it was Blommsbury and from different periods and currents of thought that is a very risky, difficult and laborious but I guess it is fun and I hope understanding of the predictable errors that occur.

Airline Economics: Introduction to the Industry and Fundamentals

Airline Economics: Introduction to the Industry and Fundamentals

The airline industry is an enormous business in terms of operating capacity and expense. This means the industry is bulletproof and brings in huge profits annually. Well, no, not really. The airline industry is fundamentally a service operation. In other words, it is a business that does not trade tangible goods, but instead trades a service for money. The industry is responsible for transferring its customers from point A to B along with their belongings. There are many facets to make the airline industry operationally profitable and the business is in no way bullet proof. When the economy is on a downturn, the industry suffers significantly.

Economically, the United States is arguably in a recession. The country has been slammed with many hardships over the past years. The price of housing has dropped, the credit realm has virtually crashed, and the price of crude oil has skyrocketed. All of the above have a negative impact on the airline industry. The daily operations of the industry require many laborers and large capital. The profit margin is relatively low when factoring in the significant amounts of required operational capital.

When considering the current economically sour factors, the price of crude oil has the most significant impact on the airline industry. Other than labor costs, the price of fuel makes up the most percentage of daily operations, which is estimated at around 16% (Airline Economics, 2008). Oil price increases begin the domino effect and lead to higher operations cost for the industry. This of course cuts into the small profit margin and forces the industry to act. Unfortunately, the actions are typically layoffs, job elimination, customer reward reduction, ticket price increases etc.

Shifts and Price Elasticity of Supply and Demand

The airline industry is considered to be a luxury expense for the average flyers budget. Consumers can substitute the luxury of arriving faster with slower alternatives such as trains, automobiles, and boats. Since the price of oil forces the industry to increase the price of a ticket, the demand to fly will naturally shift to the left. The demand to fly reduces with the increases in price.

Airlines house an elastic service in terms of both supply and demand. The demand elasticity displays that consumers respond to a price increase by flying less. A 10 % increase in price may reduce the demand to fly by 20 %. The supply elasticity displays an increase in pricing also increases the supply. When the airline industry is forced to increase prices to compensate for rapid, steep oil prices the industry ultimately takes big profit margin loss.

Positive and Negative Externalities

In order to sustain airline business consumers must purchase airline tickets. This seems like common sense and it is. The majority of people do not consider how heavy externalities affect the market. The U.S. attacks on September 11, 2001 proved how heavy tragedy’s can impact the industry. Tourists virtually stopped traveling via airliners. Tourism is a large cash flow stream for the industry along with business flyers. The business flyers will generally continue to fly regardless of price increases. The industry was affected by the non market acts of the terrorists.

Airlines pollute the air with several hundred pounds of burnt fuel per typical flight. This is a negative externality that is not factored into the market price of an airline ticket. On the contrary, a positive externality is the benefit that these large machines provide for the American population. Having the ability to cross the country in several hours is at least a phenomenon of the century. Having the ability to travel rapidly is a luxury and a positive externality of the airline industry.

Perhaps a better idea of positive and negative externalities can be provided with a scenario. A massive Earthquake erupts in Mexico. A U.S. airliner has the ability to provide assistance very rapidly. The fast response is a positive externality. The Mexican citizens will benefit from the U.S. fast response. On the contrary however the general public must suffer from the noise and pollution the airliner ejects. This noise and pollution is a negative externality of the airline flight.

In terms of externalities the industry has its share of both. The best thing to remember and understand is the fact that the industry is heavily impacted by market conditions. When the markets are stressed the airline industry is almost guaranteed to fluctuate.

Wage Inequality

Like many other market industries, the airline industry is a competitive market. This means the industry must beat out other service provider’s right? In an effort to do so the industry must maintain low ticket prices. Understanding the high overhead costs of operating an airline business it is not hard to conclude that airline businesses must cut overhead costs somewhere. Recalling that labor is the highest expense item what else is the industry to do but cut wages?

Flight attendants and pilots have often felt the pain of wage cuts. This is one reason the airline industry is very unionized. In an article published by Associated Content, David Card is said to have calculated the wage inequality of the industry.

According to David Card (Deregulation, 2008) airline wages have decreased some 10 % since the deregulation act of the 1970’s. The Deregulation Act sparked the competitive markets and helped evolve the industry into what it has become. The labor wages have no doubt sacrificed along the way. It is all about competition in the free marketplace. It seems unfortunate, but wage inequality is business. It is tough to understand sometimes, and it is tough to justify at times. The bottom line though is competition requires unfortunate business decisions.

The airline industry is considered to be an old fashioned oligopoly. The business prospers by working within a parameter based group. The “big dogs” will sustain business longer than the relatively small guys.

Monetary and Fiscal Policies

It is not logical to discuss monetary and fiscal policy without elaborating on the September 11, 2001 affects. The attacks caused a rapid shift in demand due to the fear of flying and the increased ticket prices. The U.S. government also raised the security standards adding additional cost to the industry. The September 11th security tax fee was also added to the base ticket price. This tax was an effort to sustain the new security standards. September 11, 2001 caused massive layoffs in the airline industry. This again, was a result of flight fears, and fiscal policy adding to the ticket price increases.

As frequently noted economic conditions and policy have large impacts on the airline industry. When markets are stressed, the airline industry suffers dramatically. The industry is very elastic. With such elasticity, high overhead costs, and operational costs the industry struggles to maintain adequate profit margins.

Ticket consumers are the heartbeat of the airline industry. When ticket prices rise to accommodate unexpected expense increases the industry as a whole suffers. When the government imposed the September 11th security tax the industry took another blow at the time. However, since ticket consumers have since realized that the tax increase was for the ultimate benefit of the consumer, the ticket sales have significantly picked back up.

When the U.S. is economically sound the airline industry prospers from the buying confidence and power of the consumer. Vacations pick up and the demand for flight increases. The fact that airliners depend so heavily on market conditions may assist some arguments on whether or not the industry is even stable. Overall, the industry has not been around all that long relative to other industries. The Wright Brothers begin this flight evolution in the early 1900’s.

When considering the history of the industry and how it has maintained its presence it is easy to see why the industry is relatively unstable. The flight phenomenon is really just now in the ‘teenage’ years. Postal services, military needs, and government needs really started the wide array of flight demand. The industry was under heavy regulation for many of its infant years. In 1978 the Deregulation Act came into play and initiated the next chapter of the industry.

The airline industry has been evolving for several years now and will continue to evolve. There have been many airline business launches, and many airline business failures. Once the current sour economic cycle completes, the “top dogs’ will be at the top and continuing business.

Tips for Selling a Business During Times of Tough Economics

Tips for Selling a Business During Times of Tough Economics

There comes a point in many entrepreneurs’ careers when selling a business makes more sense then continuing to run it. Retirement, new business opportunities and fundraising for other enterprises are all common reasons why people sell their businesses. However, when it comes time to sell a business many business owners don’t know what to do, especially when the economy is in a less than fruitful state. The key to selling a business during rough economic times is to know how to package your business to make it appealing to those looking for new business opportunities.

What Are People Looking For

The first thing that you need to do when trying to sell your business during rough economic times is to understand what people are looking for in a business opportunity. During economic downturns and recovery periods people want a business that has a track record of making consistent money, even during rough economic conditions. They also want a business that has an established clientele and that will require little extra investment once purchased.

Collect Evidence of Business’ Performance

Obviously people looking to buy a business want to know that their money is being spent on something that is going to generate income. This is a concern that you need to address when packaging your business for sale. You need to generate financial statements, client lists and income statements that show your business has consistently earned money over the last five to ten years. If your business is a young company then you can provide buyers with some sense of the company’s money making capabilities by graphing the growth rate of the company over its short life, by providing an order history and by creating a report that projects the future earnings of the company based on industry trends and current company performance. Market surveys can also be used to support the demand for the company’s services or products.

Making Your Business a Turn-Key Operation

Another step that you can take to make your business more appealing to buyers is to set it up so that it is a turn key operation. This means that when the person buys the company all they have to do is maintain the business practices established by you to make money. For example, if you are selling an informational website you will need to make sure that it has been properly developed using SEO techniques, that it has a high Google Pagerank and that it has a history of making consistent money. You will also need to provide information to the buyer which tells them how to keep the site in a top position in the search engines and how to maintain viewership through blogs, article directories and social networking tactics.

Economics: Recession Proof College Major

Economics: Recession Proof College Major

Economics deals with analysis of different markets with models and critical thinking; however this does not mean the math is too hard, you will have to know algebra and basic calculus. Due to the critical thinking involved in the economics major, students will have a variety of options upon graduation such as, employment at a financial institution, graduate school, and law school. Before deciding on which major to choose for your college career read this review!


For anyone still undecided on which major they will choose then it is often helpful to look at the pay scale for each major. According to Forbes economics has the second highest paying college major just short of computer engineering. According to Vanderbilt in 2008 economics majors were expected to earn $52,926 their first year out of college (2008) with expected growth over the next few years. There are many different job opportunities which will broaden the pay scale depending on if you go into private sector or public service upon graduation.


The beauty of the economics major is the flexibility of job options upon graduation. When I was choosing my college major I chose economics due to the wide variety of choices, which will ensure I will never be bored. Some jobs include finance, CEO, financial advisor, teacher, economist, and many, many others. With the economy struggling, having the ability to choose which field you want to go into provides many job and career options which are profitable and fulfilling. Graduate schools as well as law school are favorites for economics majors; they will not only increase your pay scale but also your job opportunities. Economics majors are favored to score the highest on the LSAT and GMAT due to the critical thinking and analysis skills they achieve in their undergraduate program.

Ability to Double Major

Economics is a moderately difficult major; however it ties well into sociology, psychology, math, management, and politics. The ability to be able to double major will give you a specified field of employment upon graduation, which will give you the advantage over other applicants. I do not recommend double majoring if you are easily overwhelmed since it does require scrupulous amounts of work.

Don’t Like The Stock Market?

One of the greatest myths to the economics major is that people are assuming that we know all there is about the stock market. Economists study different habits of consumer spending and behavioral patterns, as well as analysis of graphs and data. Economists can make educated predictions on which way the economy is going, but in reality do not know which way it will go. There are some common misconceptions to the major which should be looked at before choosing it.


Economics as a college major provides job security, good pay, and flexible job opportunities. No matter which field you end up choosing give economics a chance, there are many different career choices available upon graduation that the average student may never have known. The growth of this major is expected, especially as the economy starts to grow, economists do not just work on Wall Street, and almost every business will have a team of economists to help with their growth! If you choose to go to graduate school upon graduation you will have the upper hand in both business and law. Economics majors tend to score the highest on the LSAT for law school and also the highest on the GMAT for business school due to their critical thinking and analysis skills.

Why Do We Disagree About Economics?

Why Do We Disagree About Economics

Much of our political debate is dominated by disagreements about economics, disagreements that seem irresolvable: One side believes Keynesian economics is bunk and embraces supply-side economics; the other side believes supply-side economics has been disproven and instead accepts Keynesian economics. (There’s actually more options than just these two, but bear with me.)

The people who say that Keynesian economics is disproven point out instances where the government has spent large amounts of money on stimulus but the economy hasn’t gotten better. Likewise, the people who say that supply-side economics is disproven point out instances where the government has significantly reduced taxes but the economy hasn’t gotten better.

These are both lousy arguments.

Consider, there are cases where people have been provided life vests, but they’ve still drowned. There are people who have gotten vaccinations for a disease but have then gone on to die of that very disease. There are people who’ve been given antibiotics to stop an infection but have died of the infection, and people who’ve undergone surgery to fix a certain problem and the problem didn’t go away.

Does any of that prove that life vests, lifeboats, vaccinations, antibiotics and surgery don’t work? No, of course not. They’re not guaranteed to work, because there are all sorts of other factors that can intervene to undermine or overwhelm their potency. But, by and large, you’re better off with them than without them, right?

So, pointing out the cases where the economy has remained poor despite Keynesian stimulus or supply-side tax cuts isn’t enough to prove that either economic theory is bunk. Unfortunately, this flawed reasoning is regularly used in political debates when it comes to economics. “George W. Bush and the Republicans cut taxes, yet we had the fiscal crisis and downturn!” “Barack Obama and the Democrats gave us all this fiscal stimulus, yet the recovery is the weaker than other ones where there was little or no stimulus!” These aren’t valid arguments. Just because you know a person who was an overweight smoker but didn’t have heart disease doesn’t prove that smoking and being overweight don’t contribute to heart disease. Anecdotal evidence isn’t valid reasoning, nor is it scientific proof. It’s just hasty generalization.

How do you prove whether these economic theories are right or wrong, then?

Well, the same way you prove whether lifejackets, vaccinations, and antibiotics work: controlled experiments. With vaccinations, for instance, you set up take two groups of people, as similar as possible, and then give one of them the vaccination. If the group that got the vaccination has a significantly lower incidence of disease, then you’ve got a viable vaccination; otherwise, not. (This, for example, is how James Lind showed that scurvy is best treated with citrus fruits such as limes or lemons.) Obviously, you want to run the experiment a few different times, just to be sure, but you get the basic idea.

Controlled experiment is basically how we prove the effectiveness of anything, from fire extinguishers and antibiotics to air bags and bug repellants. So that’s the approach to take for economics.

Unfortunately, it’s very difficult to run controlled experiments — large-scale ones, at least — in economics. How on Earth are you going to set up two economies, each valued at, say, a trillion dollars, identical in every respect except that one of them has a lower tax rate? Or that one of them is engaged in Keynesian stimulus spending and the other isn’t? It’s just not possible. There are so many variables in economics — weather, earthquakes, population changes, geography, natural resources, etc. — that you can’t control and make constant. You can look at existing economies that are adopting similar policies and try to see if they get similar results, and look at ones that are adopting different policies and see if they get different results. But, again, there are so many other variables that will play a role in how their economies perform that it’s difficult to separate the relevant data out from the “noise”. Not that you can’t make headway like this, but it’s much tougher.

And that’s why there’s so much disagreement about economics. Without controlled experiments, it’s very tough to definitively rule things in or out. That doesn’t stop people from acting as if they have the definitive answers to our economic questions, of course. I’m baffled as to how people are endlessly confident when it comes to economic predictions but thoughtfully tentative about sports predictions, despite the fact that sporting events have fewer uncontrolled variables.

But acting confident and having conclusive evidence are two different things. Keep that in mind the next time someone says that Keynesian stimulus or supply-side economics is bunk and has been disproven.