US economy going down?!

Probably you all have heard whispers about economic recessions in US which can be spread to the rest of the world very fast. In a quick response Federal Reserve of US has cut the interest rate for 75 point(The greatest amount I heard in recent years) and speculators are betting that the European Central Bank and the Bank of England will soon be forced by a deteriorating economy to cut interest rates themselves.
I was watching a great show called "Daily show" and I saw that one of the guests was talking about Adam Smith and free market. Among his words there are some points about US budget, war and its effect on US economy and etc. I decided to post it since it shows how US is struggling to avoid recessions.(I'm not making this post too much scientific)

Critical consumption vs dicrimination against consumers

Today, I was thinknig about the several forms of "critical consumption", where for "critical consumption", I intend all the forms of consumption which respect echology, the human rights of workers, and so on.. In this last years the increase in this forms of consumption has been elevate: a share of consumers prefer buyng goods by firms who respect the human rights of workers, several enviromental parameters ("enviromental friendly firms"), and so on and so forth..

This increase in critical consumption could be seen as a parameter of how benevolent people are about enviromental problems, the violation of human rights and son on..Then, in a certain sense, with an increase of this kind of consumption, we can conclude that an higher share of population takes care about some important problems of the world..and this could be seen as a good factor of the world population..or at least as a good phenomenon!

BUT THE QUESTION IS: Is this phenomenon really good for all the consumers?

To go directly to the point, I was wondering if these forms of consumption were egualitarian or not!!!?? I mean: I was asking myself if these forms of consumption discriminate consumers or not?!

The answer is in the affirmative way!

Goods which respect some particular norms - i.e. critical consumption goods - are usually higher in price than the other goods: low income households cannot afford this kind of goods and are forced to buy the minimum price goods which are not enviromental friendly and are created without the respect of human rights..

Of Course, people can answer me:"look, this is not a real problem..if you look at the same problem from another perspective..everything change: richer consumers can afford the critical consumption goods..and if richer consumers buy those kind of goods, there is, in a certain sense, an inderect redistribution of wealth between all the population!! And this is good for everyone, also (and especially) for that consumers who cannot afford that types of goods!!!"

That's fine (if richer consumers pay more to buy critical consumption goods which give benefits to all the population, then also poor consumers will benefit..), but what does it happen if this kind of "critical consumption goods (or services)" are the only goods (services) on the market?

Fortunately, this phenomenon is not actual but there are two cases on which I would like to discuss about:

1) Impossibility to drive old cars during the enviromental Sundays (the Green Sundays) and Enviromental taxes on old cars (which not respect new pollution parameters); and

2) Possibility of regulating GMO food.



1) In Milan, people who onws an old car (which does not respect the new pollution parameters) and wants entering into the city with their cars, has to pay a specific enviromental tax.

This is a case of DISCRIMINATION between consumers: low income consumers which cannot buy a new and enviromental friendly car, has to pay taxes more than rich consumers who can afford new cars!!!???

During the "Green Sundays", a lot of cities prohibite people with old cars to drive into the city: also this phenomenon is a specific case of discrimination between low and high income consumers!!!

2) Some weeks ago, in USA, it has been decided to open the food markets to the GMO food (GMO: genetically modified organisms) without imposing firms to specify that this good is GMO. The reason used by the Food and Drug Administration to permit the sell of those goods is that the cost of production of those goods are lower than the cost of the traditional food and this would give benefits to low income consumers.

The very big problem is however an health one: even if it is not possible to demonstrate that GMO goods are worstly for health of people, it is also not possible to demonstrate the opposite: the unique method to be really sure that GMO food is good for health of people is to consume that kind of food and wainting for at least 20 years..after that time of consuming, science could be really sure about the effect of GMO food on health!!

Actually some GMO lobbies in Europe (where GMO is prohibited) want to obtain the permission to sell GMO food imposing firms to specify that this good is GMO (this is probably because GMO lobbies perfectly know that Europe will never accept to permit GMO food without specifying its provenience!!).

Some of you now is probably thinking: "Europe takes much care of health of people: even if Europe will accept to sell GMO good, health of people will be preserved IMPOSING FIRMS TO SPECIFY THAT THIS GOOD IS GMO!!!!!"

THIS IS NOT TRUE: IMPOSING FIRMS TO GIVE THE SPECIFICATION OF GMO FOOD IS ANOTHER DISCRIMINATION POLICY.

If Europe will accept this proposal, WE WILL DEAL WITH ANOTHER PROBLEM OF DISCRIMINATION BETWEEN CONSUMERS: GMO good will be sold at a lower price than the traditional food and this means that only richer consumers, who care about their health, will afford to buy traditional food, while poor consumers will be "forced" to buy GMO good!!! Poor consumers will be then treat as "laboratory animals": if 20 years of GMO food consuming will not have some influences on low income consumers health then, also richer consumers will start buying it!!!

Thus, this last is another example of how what can seem a "for health" policy, could be, in reality, a discrimination policy between consumers!!! Let's hope Europe will decide either to prohibite GMO food (which is the hypothesis I personally prefer) or to permit it without imposing any kind of specification: any consumer has the same rights (better..the same duties..) to become ill!!!

ciaooo
Domenico

Looking for a TV: Differences in prices between different EU countries. A matter of competition?

Last month, my father decided to change the old TV (in the living room) with a new one. Thus, he decided to look at one of the best TV on the market: SHARP LC-46HD1E!

After having chosen this TV model, he decided to look at its price in one of the most important technological products shops in Italy: MEDIAWORLD (this shop is usually considered - by Italians - a convenient shop for prices and quality!!).

The price for that model at Mediaworld was 3997 euro

http://compraonline.mediaworld.it/webapp/wcs/stores/servlet/ProductDisplay?catalogId=20000&storeId=20000&productId=446258&langId=-1&category_rn=13951 .

Then, considering the price too much elevate, he went on the web looking for a lower price from an italian on-line shop. The lowest on-line price, he was able to find, was from www.onlinestore.it.

The price was 3194 euro

http://www.onlinestore.it/product_info.php?products_id=4851

He was really satisfied about this new price (800 euro less!!! However "onlinestore" does not specify where the TV comes from..I mean from which country!! Moreover the buyer can buy this product only on the web and not from a "real" shop), but since my father is really curious, he looked at the price of the same TV model offered abroad by other shops!!

He was really impressed by the differences in price:

England: 2800 euro

http://www.viking-direct.co.uk/catalog/catalogSku.do?id=LC46XD1E&XREF1=IPUK707999FROGLE&XREF2=LC46XD1E&cm_mmc=SC-_-froogle-_-null-_-LC46XD1E&browsemode=consumer

France: 3035, 34 euro

http://www.twenga.fr/prix-LC-46HD1E-SHARP-TV-LCD-181243-0

Switzerland: 2585 euro

http://www.ldlc.ch/fiche/PB00064631.html

Choosing a generic shop from Switzerland, England and France, He was able to find always lower prices than the italian ones for exactly the same product!!!

Then he realized, without being an economist, that something was wrong in Italy..that, probably, in Italy there are some problems of competition between firms!!!

I totally agree with him.

Considering that the demand of technological products in Italy is almost the same of the other countries taken in consideration (I think there are not big diferrences in the aggregate demand for TV between the countries taken in consideration!), these big differences in price should be explained with some form of collusion between technological firms, or, at least, with some monopolstic power of Mediaworld in technological products on the italian market!!!

Even in the last case (a monopolistic power of Mediaworld), it would be interesting to understand what are the reasons of this situation in ITALY.

THEN..WHAT CAN I CONCLUDE? IF YOU WANT TO BUY A TV..IS BETTER TO BUY IT ABROAD..AND NOT IN ITALY!!! EVEN IF I REALLY COMPLAIN TO BUY A PRODUCT FROM A FOREIGN COUNTRY THE ITALIAN SITUATION FORCE ME TO BUY THE TV FROM ONE OF THE FOREIGN SHOPS MY FATHER FOUND ON THE WEB!!

Thanks for the attention
Domenico

America's Option: a Survey

Dear Readers,

I am looking for a survey on "America's Options". Do you know other than -Hall "Future and Options"- works on such field? I only know this fundamental book, but what else? Specifically I strongly need to find the optimal stopping time mathematic technique on America's Option.

Thank in advance if you will help me! Write me!!

Matteo
www.theye.it

Public and Private sectors: wage distorsions!

In an article on the free press I read that (in Italy) police detectivies abandon their job because they earn low wages with respect to their job' responsabilities and dangers in which they incur. Then, I thought that this problem was strictly connected with the public sector (police detectivies are paid by the public system) and with the wage distorsions generated by it: public system maintains low wages for a wide class of types of public jobs (as teachers, professors, detectivies..which earn no more than 2000 or 3000 euro a month) and very high wages for public managers (which have not the same responsability of private sector managers..)!!!! After a while I change my mind thinking of private sector wage distorsions: as an example, football kickers earn very high wages without risking to be killed..!! AND SO WHAT?? As public sector distorts wages, the same is made by private sector and the free market..as the public sector doesn't assure an elevate wage for some types of public workers, the private sector assures too much elevate wages to some types of private workers!!! Hence, there is no solution: both the public and the private sector create wage distorsions!!!

Byee

Asking for some references..

Dear all,
is there anyone who knows something about:
- studies on different typologies of organizations (hierarchical, horizontal, ..) in term of their effect on efficiency and effectiveness: in pariticular I would like to know if there are some papers in which different types of organizations are compared in terms of efficiency and effectiveness.
- studies on methods REALLY used by firms to price products..in particular, I would like to know if there are papers in which it is explained how firms REALLY make a prevision on the quantity demanded of their products (i.e. a prevision one the demand function, future sales) and then on the methods used to price products.
- studies on the relation between growth rates of developing countries (as China, India, ..) and of the world renewable and non renewable resources (like oil, natural resources, etc...).

Thanks for everything..

Expectations and New Year!

Every year, a month before and after New Year (which is 21 March in my country) we have a high inflation up to 30% including nearly all commodities and services. Why? Perhaps the direct and first answer coming to mind is because of high demand of consumers for commodities before New Year. This is partly true but it is not all the story for my country.

According to above answer, the ministry of commerce performs a policy to inject the highly demanded commodities (highly demanded for New Year) into market (think about supply law) in order to keep prices constant. Does this policy works? No, I think the second answer now is “expectations”. Years after year consumers and sellers has used to face higher prices before New Year so they form their expectation. We have another reason to have higher prices before New Year in my country. I call it traffic of changes in prices which again form expectations.

Every year when we get close to the end of the year a committee will decide how much to increase the minimum salaries for employees of government and other sections for the next year. Another committee will decide how much to increase the price of fuel which has an important role in transportation cost including public transportation and transportation of goods across the country. Another committee will decide how much to increase the price of natural gas (used by households), electricity and other utilities. I call this mechanism “Shock trapy”. Why? The purpose of this once increases in prices and salaries is to avoid persistence inflation. It is assumed by officials that when you increase all prices once like a shock we will have a sudden inflation and then during the year everything will be OK. Is this true? I don’t know. We are going to try dividing these changes across months of years to avoid expectations to form only for New Year. If we assume rationality of people I think this will not be useful in long term and the ultimate solution is to let invisible hand to work but is invisible hand successful in regulating market even for New Year? (This is like a cycle, we are back to first point)