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Negative Externalities in Russia; Blame Nato and the Taliban February 28, 2010

Posted by Avu in Russia.
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According to this BBC article, Russia is upset with the current state of drug production in Afghanistan. Over the past few years, there has been an offensive that was meant to destroy poppy fields in Afghanistan. However, Obama recently ended the drive, claiming that it alienates the opium farmers and drives them to support the Taliban.

This Guy: IS DESTROYING RUSSIA

The selfish decisions of the United States have caused dismal damage to Russia’s good people. The Right Honorable Victor Ivanov, head of Russia’s federal drug control agency, has blamed Nato for being unable to hinder the production of heroin in Afghanistan. Ivanov reported that at least 30,000 people die in Russia each year from heroin. 90% of this heroin is from Afghanistan. He further criticized Nato for leaving poppy fields and virtually guaranteeing immunity for drug producers. This has led to the black market transfer of cheap heroin to Russia. Ivanov further states that drug production in Afghanistan is now a global destabilizing factor. However, seeing that the trade of such drugs are illegal as it is, it is difficult for the government to regulate. They cannot tax the drugs and have already attempted illegalizing them. The options to combat the problem are limited. For the time being, there is welfare loss and negative externalities of production due to the drugs. People overdose and commit felonies when under the influence, among other notable spill over effects on the general good of Russia. If the government could do anything, they should attempt to better equalize the marginal private benefit with the marginal social benefit. The graph below illustrates this.

Give me STRIPPERS, or give me DEATH! February 28, 2010

Posted by Avu in Section 2.
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This can lead to rape

According to this recent article my the free market mogul, the Texas government considers strip clubs to be a negative externality. The negative externality in mind is that strip clubs supposedly propagate in objectification of women, and even promote domestic violence towards them. This is very well founded I suppose, as strippers are seen as objects of entertainment by their patrons, and this brews intense disregard for the *ahem* greater sex. Furthermore, supporters of the idea that strip clubs are a negative externality claim that many serial rapists and killers have problems with pornography and frequent strip clubs. This claim manifests into the suggestion that pornography and strip clubbing and murder and rape are correlated, which is not completely unfounded. Granted, many of these ornery folk are clinically insane due to indoctrination by the unholy instituions being mentioned. However, one can argue whether or not this supposedly large negative externality is as potent as it seems. Texas believes so, and is therefore implementing a 5% tax per patron at strip clubs. The author of the article seems to disagree with this motion, making a juicy argument for the contrary. Congress claims that most, if not all, serial rapists are strip club patrons. The author suggests that every single 9/11 terrorist was Islamic. By that logic, he claims that the government should tax all who practice Islam. This makes the former argument almost invalid. Regardless of the severity of the negative externality and what the government should do, we can agree that there is a negative externality, as in the graph below.

Drinks & Music is crazy February 15, 2010

Posted by Avu in Section 2.
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Schoolies are an absolutely wonderful time of year where Australian barely legals go partying after finals. Partying includes drunkenness and drinking and drinks. Of course this results in externalities, or third party effects not taken into account by market factors. the externalities in this case are mostly health related issues, as the liberal media says that alcohol is bad for people. Furthermore, a large number of the little people can be hurt by the unseen costs of alcohol abuse. Alcohol promotes rowdiness, public obsenity, and a stepping stone to drugs, which all ruin the nights, and thereby sleep, of locals near the parties. Furthermore, the entire reputation of Australia and its youth is ruined by these socially deplorable acts. This is like how everybody hates Kobe Bryant since he raped a 19 year old maid.

Getting crunk with a suit

The boys in blue must deal with the public drunkenness as this leads to crimes of passion, stupidity, and “yo dude hold my beer and watch this”. The police are similarly ruined when it comes to trying to get rest and relaxation. Some steps have been taken to try and combat the problem. First and foremost, a Schoolies organization of adults has been founded that attempts to monitor and babysit the kids during their binge. This is perhaps the best solution, because as an adult in the video widely remarked, kids will have fun and drink. As an extreme solution, perhaps the government could raise the legal drinking age to a point above the age of most students, in order to prevent the students from legally binging. This would effectively reduce the publicity of the event, as kids wouldn’t be able to abuse alcohol for fear of the Five-O. This would work definitely, maybe.

There are also problems with noise pollution. People are constantly blasting movies and televisions, and their neighbors are suffering because of this. The negative externality, or spill over effect, is that these people are unable to sleep. Therefore, they are unable to work productively, leading to societal problems all around. Because the people are being so negatively effected by the noise, a police patrol system has been set up.

Polluting the world; one half-dollar at a time

This is a negative externality on them as well because the police have to make warnings and extra stops. This is a negative spill over on all of society because there is less law enforcement available to deal with more potent problems. The only positive thing about noise pollution is that there is a potential for jobs to be created in order to get rid of the problem. This would, however, be paid by taxdollars or fines, another negative effect on society.At the time, the solution for noise pollution is the police seizing the problematic property of individuals who are repeatedly causing problems. Another possible solution would be to tax repeat offenders, or perhaps fine them. These fines and taxdollars can be used to pay for the noise patrol as well as to possibly sound proof areas and homes for people who don’t want high levels of noise.

Get the NAACP on this February 10, 2010

Posted by Avu in Section 2.
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Price discrimination. The words let hatred ring like a buckshot, but not just yet; first we must understand the nature of the threat.

Price discrimination is simply a situation in which different people are given different prices based on whatever reason. Examples could be gender, age, income level, you name it. Even offering someone lower prices because of a special membership or coupon is price discrimination. We all experience it. Perhaps on would notice that as a student we get decreased prices at movie theaters and other venues. As foreigners we may get hit or hurt by price discrimination. I think we all manage to accept price discrimination as okay, but even we are sometimes surprised by it. A wonderful example could be seen when me, a handsome young Korean, and a Mexican-Phillipino all went to Osaka on a very eventful evening. The handsome young Korean boy and I ate at a curry shop at a place near Yodobashi Camera. Interestingly enough, when preparing to pay, we noticed a sing that said “Foreginer Minus 200 Yen”. This is an interesting example of price discrimination because it occurred at a restaurant, which is a place that usually offers a fixed rate for everyone.

Price Diiscrimination; The crayons are doing it wrong

Microsoft’s Creative Destruction Fail February 10, 2010

Posted by Avu in Section 2, The Economist Outside of Class.
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Microsoft is showing all the symptoms of a monopoly, accidental or not. It is overly large, a leviathan even, leading to dysfunctional externally and chaos internally. One would hope that competition between parts of the corporation would render the best innovation, products, and working experience. Reality would prove to be quite the opposite. Rather than competing with each other, leading to the best products, the firm has competitive forces that force its forces to get crushed by the older groups. This leads to blockages rather than flow of ideas. Its a college football team with hierarchy and gang warfare rather than a sleek company like Apple is. Microsoft just isn’t cool anymore. Creative destruction can have its positive effects. For example, with the complete destruction of the US steel industry, more opportunities were created, allowing for a stronger economy. I believe that in fields such as agriculture, if the market in the US and EU was destroyed or outsourced to Africa, creative destruction would ensue and the world would be a better place. This of course needs the removal of all trade barriers, but thats not the issue. The issue is that Microsoft’s internal self destruction through combat between sectors of the firm is not resulting in any creation, at least not inside. When was the last time Microsoft came out with anything new or revolutionary? Vista was a failure, XP wasn’t revolutionary. They dabbled in the music industry before getting smoked out. Microsoft simply repackages what already exists with a little logo on the back. Microsoft’s market control has caused it to grow into a behemoth of unmanageable size, and it is now experiencing diseconomies of scale. I expect that it is not long until it falls as GM did to innovation and creativity. This is the simple reason why Apple is a better company than Microsoft. Apple creates; Microsoft destroys. Oh the joys of being a leviathan…

How to run a business in the real world… February 9, 2010

Posted by Avu in Section 2.
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PowerPoint Presentation on Monopolistic Competition

Presentation Reflections February 8, 2010

Posted by Avu in Section 2.
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As a group I think we did very well. Our presentation was entertaining with our use of the JiHyun-It! product, and we covered all the basics and didn’t make any factual errors. Sayaka was very good with the graphs. Johan is a god