future growth papers. writing style the lede (first sentence or graf) is the most important thing...

Future growth papers

Writing style

The lede (first sentence or graf) is the most important thing you will write. Grab the reader into your essay, make them want to read what follows. Get this right and the rest will flow.

Writing style

Companies are always an “it,” not a “they.” “Starbucks has increased its sales by 29

percent thanks to customers such as Sophie.”

Writing style

Two adjectives before a noun get a hyphen: “The triple-mint Fender guitar is a bargain at $149,999.”

Writing style

Two adjectives before a noun get a hyphen: “The triple-mint Fender guitar is a bargain at $149,999.”

Use of numerals, a general rule: one through nine, spell out. 10 and above, use numbers. “The five dogs coughed up 32 hairballs.”

Does not apply to money!!!

Writing style

How to properly write about money: $3.5 billion… not three billion five hundred million dollars or some combo

$27$144 million$.50

Writing style

Sales: all revenues from sale of product and services

Profits: that which remains after the cost of the products and other expenses are deducted. Profits are also often expressed as “income” in business writing

Few more style things

Etc. Generally, don’t use in your papers.

Few more style things

Etc. Generally, don’t use in your papers.“More than” vs “over” Proper to use

“more than” when you mean greater. “She has more than 240 posters of One Direction.”

And one last style thingie

Like vs such as They are not the same! It’s proper to say: “Spencer own several exotic cars such as the Ferrari Enzo and the Lamborghini Aventador.”

Big Business and Government

Corporations

An organization with limited legal liability so that individual owners are not personally liable for its financial obligations

Corporations


Johnson & Johnson has 2.77 billion shares. Mr. and Mrs. G are proud owners!

Corporations


Johnson & Johnson has 2.77 billion shares. Mr. and Mrs. G are proud owners!

What is important that corporations can do big things that individuals couldn’t handle… and economy benefits from efficiencies… economies of scale

Who runs corporations?

And they report to a board

What do they make?

CEOs of 500 largest companies averaged $10.5 million in 2012

Includes salary (small), bonus (big) and stock options (bigger)

What do they make?

CEOs of 500 largest companies averaged $10.5 million in 2012

Includes salary (small), bonus (big) and stock options (bigger)

Starbucks’ Schultz made $28.9 million… that’s a latte

Key point to remember

Not all, or maybe even most, big business are proponents of free markets

Adam Smith excoriated big business because he know its propensity to limit competition

Non-profit organizations

We have thousands of non-for-profit organizations in the U.S.

Ranges from local churches to National Geographic




Doesn’t mean they don’t make a profit or pay well: prez of University of Chicago makes $3.4 million




Doesn’t mean they don’t make a profit or pay well: prez of University of Chicago makes $3.4 million

They compete with private businesses: YMCA vs local fitness clubs

What is a monopoly?

What is a monopoly?

Monopoly: one seller. Examples, old regional phone companies, Alcoa in old days, railroads in old days. Could even by a tiny store if it’s the only one around... i.e., da boyz ‘nade stand (for a fleeting moment)

Monopolies

Monopoly causes harm not just by charging prices higher than they would be with competition, it also affects the total wealth of an economy

Monopolies


Monopolies cause consumers to buy less at the higher price and cause inefficient use of scare resources that have alternative uses

Monopolies


Monopolies cause consumers to buy less at the higher price and cause inefficient use of scare resources that have alternative uses

Luckily, monopolies are almost impossible to maintain without government protection

More on Monopolies

But they do exist: just take a taxi in New York… or try to, especially in the theater district on a rainy night at 11 p.m.

More on Monopolies

But they do exist: just take a taxi in New York… or try to, especially in the theater district on a rainy night at 11 p.m.

If cabs and drivers were freely allowed to compete, fares would come down and there would be more prosperity

Monopolies

“Most big businesses are not monopolies and not all monopolies are big businesses.”

What’s an oligopoly?


Oligopoly: a small number of sellers who may cooperate with one another in setting prices; can produce results similar to a monopoly



Examples: Four companies have 94% of U.S. wireless market (AT&T, Verizon, Sprint, T-Mobile)… although no evidence they collude



Examples: Four companies have 94% of U.S. wireless market (AT&T, Verizon, Sprint, T-Mobile)… although no evidence they collude

Usually defined by having xx% of market share

What’s a cartel?

What’s a cartel?

Cartel: an international syndicate, combine or trust formed specifically to regulate prices and output in some field of business

What’s a cartel?


OPEC (Organization of Petroleum Exporting Countries) is the classic cartel

What’s a cartel?


OPEC (Organization of Petroleum Exporting Countries) is the classic cartel

But even OPEC cannot control oil prices... consumers respond to higher prices, OPEC members cheat, alternate fuels, technology such as fracking and the Prius

Anti-Trust Laws

Anti-Trust Laws

Some huge biz organizations were known as trusts, hence “anti-trust” laws passed by governments

Anti-Trust Laws


Intent was to prevent monopolies and cartels from artificially raising prices

Anti-Trust Laws


Intent was to prevent monopolies and cartels from artificially raising prices

Sherman Anti-Trust Act of 1890:

Sherman Anti-Trust

Sherman: Not specifically intended to prevent the dominance of an industry by a specific company. Any company that "got the whole business because nobody could do it as well as he could" would not be in violation of the act.

Sherman Anti-Trust

The law attempts to prevent the artificial raising of prices by restriction of trade or supply. In other words, innocent monopoly is perfectly legal, but acts by a monopolist to artificially preserve its status, or nefarious dealings to create a monopoly, are not.

Anti-Trust Laws, Take 2

However, we always look at ________ not intent


However, we always look at consequences not intent

And as you read……….. Yep, business soon learned to lobby government to use anti-trust laws to restrict competition


However, we always look at consequences not intent

And as you read……….. Yep, business soon learned to lobby government to use anti-trust laws to restrict competition

Some of the most famous anti-trust cases involved business that charged lower prices

More Anti-Trust Stuff

Morton Salt, Borden milk, Microsoft giving away Internet Explorer



Problem is the issue of how much of the market a company “controls”



Problem is the issue of how much of the market a company “controls”

In actuality, in a free market, competition will dictate your market share, if you’re really efficient it can get quite large... iPod, Google, Microsoft for PCs

Anti-Trust redux

Consumers win when companies such as Wal*Mart lower prices, but benefits gets lost in the confusion

Anti-Trust redux


Also forgotten is that alternate products can substitute when prices get too high… i.e., limits on newspaper ownership in one city are absurd with internet, news radio, etc.

Anti-Trust redux



Key to monopoly is not market share, but the ability to keep others out

Anti-Trust redux



Key to monopoly is not market share, but the ability to keep others out

Good part of anti-trust: illegal to collude on prices

Regulatory Commissions


ICC, Public Service Commissions, SEC, FDA, EPA, FEC, FCC, APHIS, DUMB, CRAZY... There are an estimated 1,300 federal agencies alone

Total regulatory costs?

Total regulatory costs?

Estimates range from $1.2-$2 trillionWith a GDP of $17.1 trillion, that’s 7-11% of

our total economy is spent complying with government rules


ICC, Public Service Commissions, SEC, FDA, EPA, FEC, FCC, APHIS, DUMB, CRAZY... There are an estimated 1,300 federal agencies alone

Functions are nearly impossible to do properly

Regulating power companies shows futility of regulation


Only the actual functioning of the market could reveal what the price should be, with less efficient firms being eliminated by bankruptcy


Only the actual functioning of the market could reveal what the price should be, with less efficient firms being eliminated by bankruptcy

Cost of electricity can vary tremendously… time, fuel sources

Regulations under Obama

Tremendous increase in number of agencies and regulations under President Obama

159 new federal agencies, programs and offices for Affordable Care Act (aka Obamacare) alone


In practice, regulated business use the commissions to keep out competitors, thus preventing lower prices... ICC protecting trains from truckers


In practice, regulated business use the commissions to keep out competitors, thus preventing lower prices... ICC protecting trains from truckers

Remember: cheaper to ship blue jeans from Taiwan to Dallas, than to ship them from El Paso to Dallas

Assignment 2/25

Read chapter 9: “Productivity and Pay”

Assignment 2/25

Read chapter 9: “Productivity and Pay”Write a 350-word essay: “Is _______

overpaid?” Pick out a CEO, entertainer or athlete making

more than $10 million year. Using Sowellian thinking, answer the question and the reasons for your conclusion. Any personal opinions must be backed by facts.

future growth papers. writing style the lede (first sentence or graf) is the most important thing...

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