Martin Shkreli: Snake or Signals Master? Or both?

As someone who most of the time tries to see the good in all people, I have searched long and hard to find that in Martin Shkreli. However, I have tried and failed. Shkreli, a wealthy executive of Turing Pharmaceuticals, has been called "one of the most hated men in America" by many due to his despicable price hikes. In August of 2015, Shkreli purchased the exclusive rights to Darapim, a life-saving drug for AIDS patients. Shkreli seized the opportunity of his newly purchased monopoly and has since changed the prices from $13.50 per pill to $750 per pill. This is a 5000% hike. I know we've been talking about the risk of good intentions lately, but Shkreli truly overdid it and seemingly feels no shame about it. See below:

He ended up pleading the fifth and refused to answer the Congressmen's very justified questions. While he knows he has no legal obligation to drop the price he "price gouges" consumers just as many companies did/do to storm victims (thank you Zoë pointing that out, it's terrible). 

Taking your money "Feels good, man!"

While technically Shkreli may have took charge of his purchasing power and he saw it as a good move, this made his new company already seem like just a big, bad business and was certainly portrayed as such (and in my opinion, justifiably so). This whole situation just goes to show that even if the incentive for not raising the price is simply to let people live or seem like a good person or feel like a better person for maintaining these prices, it still doesn't matter to some people in the economic cycle. No matter how hard we try, some people will try to squeeze every last nickel possible out of this economy whether it's morally sound  to do so or not.

High key I still hate Shkreli doeeeeeeeeeeeee

Can We Pretend That Airplanes In The Night Sky Are Like Not So Flipping Expensive?

       So if we've learned one thing in economics, it's supply and demand. Honestly even if you've never taken economics, you've probably run into this phrase countless times in your life. At least of few of those times it was being used incorrectly I'm sure, but whatever your background, you probably have at least some understanding of supply and demand. There's a bunch of stuff involved with supply and demand (which is of course part of why it's so ubiquitous), but for this blog's purposes, we'll reiterate how they affect each other directly: if demand is high, supply will go up because people want to sell things that people want to buy. And the inverse is true as well. Then of course the stuff with price applies to how supply and demand go up: the same increases and decreases caused by changes in supply and demand apply when they are looked at together. But we all know that, right?

This is first grade stuff, guys. 

   So if something is in high demand, prices are higher. But sometimes demand rises sharply and either unexpectedly or with no remedy. For example, right now demand and price for Diet Coke is pretty reasonable, right? Sure people want it and the companies make a tidy little profit on it, but it's not one of life's essentials (to the average person, unless you're me), it's not very scarce,  there are substitutes, so the price is reasonable and consistent. Again, this doesn't apply to me because I would pay crazy amounts for Diet Coke because I need it to function and no, Pepsi is not okay.

Actual picture of me without caffeine.

So, Diet Coke is amazing but not amazing enough for most to pay exorbitant prices for it. However, let's say that suddenly there is an alien invasion, and we discover that their only weakness is Diet Coke. 

Yeah how's that for a twist, M. Night Shyamalan?

So of course Diet Coke would be readily available, cheap or even free as humanity's only chance against impending doom, correct? 

Lol, no, but I admire your optimism. If we've learned another thing from economics its that people are pretty unlikely to sit around braiding each other's hair and singing Kumbaya if there's money to be made. And if Diet Coke suddenly became an essential weapon, demand would be pretty high and purchase would be pretty much unavoidable, which means that suddenly anyone with Diet Coke to sell can sell it at crazy high prices. This is called price gouging, which is defined as prices being raised in an effort to exploit demand. 

The Diet Coke thing may seem like an extreme example, and it may seem like this is a process that doesn't really happen, but price gouging extends far beyond the realm of theoretical alien invasion. The airline industry is one of the worst offenders of price gouging, and rather than coming on unexpectedly like an alien invasion, airlines' price gouging occurs yearly. And, even more crazily, we buy into it every single year. 

Wipe that smile off your face you smug, capitalist puppet. 

Basically, airlines know that around the major Western holidays (Thanksgiving, Christmas) a lot of people are trying to travel. So the airlines take full advantage of this and charge crazy high prices. Now, obviously if a price is too high we can decide not to buy plane tickets, but the problem with price gouging is that it isn't an arbitrary raise in prices, it stems from demand. The demand is still there no matter the price, because for so many people these are the only times of year they can get off from work or school. People also want to spend time with family during these family-based holidays. Knowing this, airlines can hike their prices and not expect too many people to choose not to travel, because Todd still has to come home from college for the week and Aunt Betty will be hurt if you don't come out to Boca to have your share of her pumpkin pie and cat stories. 

She's not mad, she's just disappointed.

So, is it moral for companies to raise their prices to exploit high demand? Probably not. But the thing about economics is that morality can be pretty subjective, while money is pretty easy to quantify. This is why, in mixed economies, the government often intervenes with measures like price ceilings so that prices can't be too exploitative. Free market supporters argue that the market will fix itself in these situations and that eventually price will exceed what people are willing to pay and be brought back down to encourage consumer spending. Well, I think that these free market supporters have never had to deal with a disappointed Aunt Betty.

Hurri-Can You Not Raise Prices So Much?

Price gouging. It sounds like some painful torture method to gut people out of their money.


Oh wait.
.
.
.
It is.

Okay, well maybe not actually gut people open like little, squishy money piñatas, but many businesses have tried to find some completely legal, non-lethal (okay only partially non-lethal) ways to successfully pull off the metaphorical meaning of this painful act.

Remember those wonderful watery days of 2013, where a super huge storm rocked New Jersey like a hurricane. Because it indeed was a hurricane. And her name was Sandy. She already sounds horrible. Anyways, Hurricane Sandy brought lots of lovely water to the people of New Jersey, but unlike a normal guest, Sandy decided it was totally okay to just drown the coast with water and blow down all sorts of cities. Well she's from the Atlantic Ocean, so she's not too familiar with our customs.

No Sandy, this is not how you treat your hosts.

After Sandy left, so many people were in need of help. This is where the devil comes in, disguised as businessmen (so essentially exactly the same, but with a nice suit). When you're homeless and in need of help, you tend to worry about only the necessities for living. Unfortunately for the New Jerseyans, some stores and businesses found it in their best interest to take advantage of their vulnerability. How did they accomplish this? By driving up the prices of their extremely essential items, otherwise known as price gouging.

You're probably asking, "Wait. Can't these people just find some better prices somewhere else?" And that would earn you a good pat on the shoulder and a pitiful look, because oh you poor, misguided child. When you're down on your luck, have no house, and a family to worry about, you aren't really given the opportunity to be picky about these sorts of things. Not to mention, people understandably have some economic reasoning behind the high prices. Let's take for example, the hotels. Lots of people lost their homes, so it's obvious that the demand for a furnished, temporary room is pretty high. So, if you really are in need of shelter, and so are hundreds of other people, do you really have the time and the stinginess to be picky about these things?

Of course, this line of thinking is what these businesses are betting on, which is how they get away with their criminal acts. And it's not just shelter either! There were gas stations and even a hardware store trying to benefit off the sadness of these really desperate people, just to earn extra cash.

Oh Satan, I didn't know you moved to New Jersey.

Thankfully, the people of New Jersey got their just desserts, in the form of sweet, sweet retribution. Yea sure these businesses temporarily got away with their price gouging and earned some sweet pocket money in the end, but man, did they really pay for it in the end. The whole issue of the price gouging ended up going to court and the New Jerseyans won, with a settlement totaling $282,844 over 8 businesses. That's a lot of regret for some selfish business practices.

Of course, price gouging does still happen, and sometimes it's much more subtle, and back-stabby. But at least we can confidently say in this case, Justice was the judge, jury, and executioner, and the penalty was death by shame and compensation. Ahhh, what a wonderful justice system we have sometimes.

Want to read the punishment in full HD detail? Well then let's go for a swim.

Scroogenomics

Joel Waldfogel, earned a PhD in economics from Stanford University and a BA in economics from Brandeis University. Waldfogel was a professor of economics at Yale University and Department chair at University of Pennsylvania. Waldfogel has accomplished many other things as can be seen in his bio. Waldfogel sounds pretty smart at this point right? If you said yes, then you might be thinking that since he has so much knowledge on the subject of economics that he probably knows good ways to help it. That you should even listen to what he has to say and carry it out to better help the economy. Well lets hope this isn't the case, because Waldfogel has become known for his Scroogenomics, and argues against gift giving. 

Joel Waldfogel in his role from How the Grinch Stole Christmas

Joel Waldfogel is the author of Scroogenomics: Why You Shouldn't Buy Presents for the Holidays. In his book, Waldfogel argues that giving Christmas and Hanukkah presents is bad for the economy. Waldfogel's argument is that people spend a lot of money over the holidays on presents and these gifts make price signals incorrect. Say you buy a sweater for your colleague, it costs $25. You give the sweater to your colleague for Christmas and she says she loves it (but only because she's being polite). Your colleague actually doesn't like the sweater because she doesn't like the color or its not her style. You paid $25 for the sweater and that's what the price signals are going to show, that people like this product and more need to be made. But the person who actually received this sweater doesn't value it at $25; maybe she would value it as $15 or maybe she wouldn't have even bought it at all. In an interview with TIME magazine, Waldfogel says, "We spend in order to produce satisfaction for the buyers. . . If the spending we engage in doesn't produce any satisfaction, then it's hardly a measure of well-being. I'm not against spending. But whatever amount of spending we do, we should get as much satisfaction out of it as we possibly can." Waldfogel suggests that money is a better gift, because people can spend it on gifts they value. 
In this same interview, Waldfogel later explains that there might be a loop hole to this error in gift giving. Waldfogel states, "I'm not against giving gifts in the situations where we have a good idea what people want." This may be a good thing because if I'm understanding him right then he's saying I should only give gifts to people I'm really close to. This is amazing! Next Christmas I'm just going to give gifts to my close friends and family and everyone else I can say, "sorry I'm just listening to Joel Waldfogel and trying to help our economy. No gifts this year."  
Sorry I was hard on you Waldfogel. I see now that you are just trying to help the economy, and hey maybe I should send a copy of your book to my grandma so I can stop getting ugly sweaters every year. So maybe Scroogenomics isn't that bad. Everyone thought Scrooge and the Grinch were bad, but his heart grew 3 sizes that day, as will my wallet next Christmas. 

God bless us, everyone 

Donut Trust Alyssa to Improve the US

What happens when hypothetical, future you decides that voting Alyssa for President was a good idea? Find out in this podcast, where our extremely capable Madame President tries to keep the nation afloat by receiving much-needed counsel from her trustworthy VP, Zoe, and the Federal Reserve Chairman, Zoë.

Link to Podcast

Diversity + Hollywood

I know what some of you may be thinking. "We've progressed so much!" and that "There isn't a problem with this anymore!". However, while the past few years has seen a general increase of people of color in mainstream media, the problem is still pretty prevalent. Hence, why the hashtag 'Oscars So White' was trending on all forms of social media after this year's nominations. Many celebrities and others called for a boycott of the awards ceremony amid the controversy. Those who contradict this sugguestion, such as actors Michael Caine and Helen Mirren, use the argument that "you can't vote for an actor just because he's black". I agree that this is a fair point, but it's important to look at the bigger picture. The Film industry has a lack of diversity in general, and thus fewer big, quality films are made with a central character that is a person of color. Disproportianately, therefore, there are far less employed actors of color. But interestingly enough, the TV industry has figured out that not only is diversity "cool" right now (which is kinda weird to think that it's some new trend), but it also can cause economic growth.

Shocking amirite? 

For example, ABC in particular has definitely figured this out. Their "Shondaland" (Shonda Rimes) shows have an incredible amount of diversity and continue to bring in high ratings after high ratings each season. Take How to Get Away with Murder, a gutzy and twisted drama series that stars Viola Davis. 

SLAYYYYYYYYYYYYYYYYYYYYY

This show, like any Shonda show, is dramatic to a point of ridiculousness, but has proved to be force to be reckoned with ratings wise. All three Shondaland shows typically rake in about 8 or 9 million viewers per week which is insanely great. You could attribute the popularity of Shonda shows to the dramatic and fun plots in each series and each episode. But I honestly believe that the diversity in the shows is what kept many viewers watching and led to economic growth and successes for ABC. 

Now it's just one more week till #TGIT comes back, & I will continue to help economic growth by upping those ratings as much as I can...

Buying The Stairway To Heaven (It's Still Probably Cheaper Than A Concert Ticket)

Old people like to start sentences with "back in my day..."
This is the preferred hobby of many old people. Traditionally these sentences also tend to continue on with a diatribe against smart phones, a condemnation of modern morality, or, most commonly, a comment on how something was once purchased for only a nickel.
We get it, old people, things used to cost less money.

The official sponsor of the baby boom.

As irritating as it can be, however, the elderly do have a point. Things have gotten more expensive due to a process called inflation. Inflation is defined as "a sustained increase in the general level of the prices of goods and services." Basically, inflation changes the way our purchasing power works. A dollar back in "the good old days" could be a pretty exciting possession (I mean, that's like 20 whole nickels), but now a dollar is not as exciting, because while it's still the same dollar, what you can get with it has changed drastically. So while a nickel may have once covered a whole grocery trip, the primary purpose of the nickel nowadays is to have something to dump into the tip jar at Starbucks so you can fulfill your good deed of the day. Thanks inflation.

One of the most inflated goods of today is concert tickets. I know we've all been there: there's a concert that you are just dying to see but a ticket costs more than your car, so instead you listen to Spotify (with ads) and eat Ramen noodles. Sometimes ticket prices are just insane. For Adele's upcoming concert at American Airlines Center in Dallas, some of the cheapest tickets are still more than $200, and the most expensive listed price for a ticket to this show is $9495. For comparison, the net value of a year of tuition at University of Washington, Tacoma, is $9,123. You can literally get a year of college tuition for less than a ticket to an Adele concert. 

Rumor has it if you play an Adele song backwards,

you can hear yourself getting screwed out of all your money.

As old people love to point out, it was once possible to see the Rolling Stones for $6, which is a low price even when adjusted for inflation. So what's the deal? Why are concert tickets so expensive now?   Well, first of all, there are two different methods of buying tickets that make prices pretty unregulated and outrageous. There's a primary market for tickets, where you buy straight from credited sources, or the secondary market, where you buy tickets from people who bought tickets from the primary market in order to flip or scalp them. We'll get to the cost issues within the primary market in a second, but first, let's examine the problem with scalpers. 

Not that kind of scalpers.

Crazy high inflation tends to happen in the secondary market because of supply and demand. For someone to turn to the secondary market, it's a pretty good sign of desperation. There will always be a scarcity of tickets for any given show because there's a finite number of people that can fit in a space. Scalpers love to buy hoards of tickets from primary sources so that supply goes down and people are unable to get tickets to a certain show. Demand won't have diminished for that show, so as long the demand is there, people can then sell their tickets to interested buyers with way inflated prices. And because Adele has somehow become an necessity instead of a luxury, people continue to buy tickets at the high prices, driving prices up even further. Now, Leonardo DiCaprio I would understand, but Adele? Eh.

Regrettably, there is also a scarcity of Leonardo DiCaprios.

However, the solution to finding cheaper concert tickets is not just buying tickets from primary markets, because those prices are also inflated. If some tickets were still $6, it would be much harder to convince people that an Adele ticket on a secondhand market was worth thousands of dollars, even if the show were sold out and someone was really, really in the mood to sob and drink white wine. There are two main reasons that all concert tickets have gone up in price: people's continued willingness to pay more for concert tickets and the fact that concert tickets have become a main source of revenue for many artists.

As we know from our lessons in supply and demand, if demand is high for something, price is going to go up. Tickets for lesser-known or relatively unpopular artists are still pretty cheap. I've gone to concerts for $20. However, companies know that certain artists are in high demand-- people want to see certain artists for the experience and, often, for bragging rights -- allowing tickets to be expensive under the stipulation that people will still buy them. Older artists like the Rolling Stones may have more limited opportunities to tour, so tickets can be expensive because of demand and the expectation that in the future, there may be no supply of Rolling Stones tickets at all. Immensely popular artists like Adele also can have higher prices because she is at the height of demand for her: people want to jump in on the craze while they have the chance. 

Mick Jagger and Keith Richards at an upcoming show.

Additionally, tickets are also more expensive now because many artists no longer make money on album sales. While artists get paid for their music to be licensed and played, so much music is now readily available illegally online that musicians can no longer rely on album sales to make money. Concert tickets are now a vital source of income for musicians, so the prices have been raised to compensate the lack of music sales. 

With overall inflation raising all prices and lowering the purchasing power of money in general on top of the specific reasons that concert ticket prices are going up, it seems concert tickets will continue to be irrevocably expensive. Oh well. There's always Spotify and Ramen Noodles. 

The official sponsor of being too broke to have fun. 

For more information on ticket inflation, click here.

Beware the Inv-Asian

If you've seen the news as of late, you'd notice that China is once again in the headlines. What?? China?? In the headlines??? How preposterous! But this time, instead of drawing attention for something blatantly disconcerting, it's something tame: their stock market. Or could their be more than what meets the eye?

China is not typically noticed for their stock exchange, but recently it has been all the talk in media outlets worldwide, and not for a particularly good reason. China's largest stock index has dropped dramatically in the latter half of 2015, returning back to significantly lower levels seen earlier in the year. However, there is something peculiar about this market crash. There's widespread panic, and yet the market has stabilized, though lower, following the large drop, so what makes China's predicament so noteworthy?

If you guessed that it was--once again--the government's fault, you were right!

In case you didn't know, red is not a good color for stocks

The stock market and the economy aren't always coordinated. The market doesn't always reflect the health of a nation's economy, and the economy isn't so reactive to the health of the stock market.  But it is correct to say that things the government dictates will have a particular reaction in the market. Often times, the government respects the strange, other-worldly nature of the workings of the market by letting it crash and burn and heal itself on its own because it's a grown market now and it needs to learn how to fix itself without depending on Papa Government's money. However, apparently Papa China can't let baby bird out of the flock quite yet and thinks it can save the day, because communism is alive and well and needs to do what it can to make sure every baby bird is flying as well as the other. As a result, here comes the government, invading the market to save the prosperity of its people. How does it do that exactly? And more importantly, why is it doing that?

Okay, China is just like every other nation; it has a central bank, that controls the monetary policies by altering things such as interest rates or government bonds.

At its best, it's a bank. At its worst, it's China's really, really bad financial advisor.

So, with the typical responsibilities of a bank, the People's Bank of China has been continuously cutting interest rates because inflation rates have been uncomfortably lower than what a healthy, growing economy typically wants to see. This would allow consumers to borrow more money, allowing them to spend more. That's all fine and expected from your average nation; but China doesn't like being average, so it breaks the norm, does the unthinkable, and starts controlling the stock market to save the day. Unfortunately for China, in this superhero comic, its beautifully built bridges, which let the markets run smoothly, are actually completely fragile and a terrible idea and causes literally everything on the bridges, that being the stock market, to plummet down more than a third of the way below China's sanity level.

Yea, the stock market isn't quite fond of its new room in the house, Papa China.

And, cue panicking investors, in 3... 2....1..... 

See, the problem was that China had projected a downfall in their current economic growth, considering the widespread success of their market in the last year, as well as the low inflation rates. If China's economy had reached its peak growth, that meant it was headed towards a downward curve of deflation and contraction, which no country wants to have on their plates. So, the government thought that if the market was more involved in the economy, and the government had more say, a rallying market could point to better days for China. Except, that's just not how it is. Unlike corporations and people in the United States, China's stock market has little impact on the prosperity of the people and companies. So, the government's invasion of the market only made things worse, because not only did it not fix problems that were not there, it also caused the crash of the indices, which still doesn't say much about China's actual economy. 

But, we can safely say, Papa China has learned a valuable lesson in all of this mess. It can't stay holding on to every one of its fledgelings forever, and its dear stock market can't continue to be a growing, successful supporter of the household unless Papa lets it be independent, and this is something China would surely never forget.

In case you aren't convinced by the ridiculous amount of economic terms as it is, check out the only link that is full of even more stock market and economic jargon, now with new locations in the U.S., Europe, and China!

The Cost of an Oscar

Many people assume that actors make millions of dollars per movie or television show, and some do, but not always. Even famous actors like Jonah Hill, Chris Evans, and George Clooney don't always make millions for appearing on screen.
Chris Evans made $300,000 for the first Captain America movie, which seems like a lot until you compare it to the $500,000 Robert Downey Jr. received for his role in the first Iron Man movie. Maybe you are still thinking, thats not too much of a difference, but when you look at the salaries for the Avengers, Chris Evans made $2 million while Robert Downey Jr. made $50 million. Now see the difference. Some times even well known famous actors don't get paid as much and one reason for that can be seen by productivity. Actors get paid extremely large salaries because of all the money the movie or tv show will earn. Because not only does productivity increase with a well known actor, it can also increase with toys, apparel, and other products made for the movie. If a movie does well other products will be made, like all the action figures of star wars characters. Many actors get paid extremely large salaries in the hope that it will attract more viewers that are a fan of that actor.
Productivity can also affect the salary of the actors. Look at the jump in Chris Evans' and Robert Downey Jr.'s salary from their first movie in that role to the next. Because the last movie made so much money, the actors got a higher salary the next. Now not all famous actors get paid extremely well as can be seen here. Some actors even turn down major films to work on smaller ones that they would rather do, and usually end up with an Oscar nomination, such as: George Clooney in Good Night and Good Luck and Jonah Hill in Wolf on Wall Street. Jonah Hill made $60,000 and Clooney made $120,000 for writing, directing, and starring in the movie. 
Now not all actors are willing to accept small salaries such as RDJ, Sandra Bullock, and Leonardo DiCaprio who are well know for being well paid as seen here. Now don't think I'm hating on them for making a lot of money because I'm not I love RDJ he's my favorite. Some companies are just willing to pay extremely large salaries because they know the revenue that these big name actors and actresses are going to bring in.

The effect that productivity has on an increase in an actor's salary can be obviously seen in the extremely famous sitcom - Friends. The salary of Friend's actor Jennifer Aniston can be seen here. The cast started off being paid $20,000 dollars for all of season 1. By the last season, the six friends made $1,250,000 per episode! This is because of all the revenue that the actors brought in. Friends received many Golden Globe nominations and even a win, along with many Primetime Emmy nominations and wins. Even today Friends is still a widely known and loved show.