Monthly Archives: November 2011

Up in the Air

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For the airline industry, maintenance is the single most important task to be performed with care and precision. In Curtis’ blog about Southwest Airlines, it seems like Southwest is not taking enough precautions before letting their planes fly, or the company is just simply trying to cover up the incident with “internal confusion”.

As we have seen many times before, poor maintenance is the number one cause for fatal flight accidents, including metal fatigue, missing/damaged parts…etc. If an aircraft does not go through rigorous tests EVERY TIME before they fly, it is risking hundreds of lives. Southwest seems to be more concerned with profit before the incident and public relations after rather than examine what went wrong.

Safety should always be the top priority when comes to air travel, and poor maintenance is the number one cause of fatal accidents. In order to prevent tragedy such as China Airlines 611 in the future, transportation authorities and the airline itself really needs to treat this issue seriously, and cannot leave it “up in the air”.

If anyone is interested to gain further knowledge on aircraft safety, I recommend checking out the TV series Mayday (sometimes called Air Crash Investigation), which provide comprehensive reports on a number of accidents.

https://www.youtube.com/watch?v=-t_15aSSLzY

Lockout – NBA Style Pt.2

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In response and to add on top of Adrian’s blog about NBA Lockout

The NBA 2011-2012 season was scheduled to begin on November 1st. However, due to the unsettled Collective Bargain Agreement, the future of the season remains unknown. As Adrian has pointed out in his post, the players union had rejected owner’s offer multiple times over the dispute of BRI, Basketball Related Income, share between owners and players. It is evident to see why the players would reject the proposal since the owners want to cut the share from 57% player to 47-50%. The players are taking a pay-cut of at least 7% since the owners claim to be losing money. The previous blog on NBA (Accountant’s Magic – NBA Style Pt.1) discussed the issue of teams claiming to be in deficit. One interesting thing to note is that, Michael Jordan, basketball legend, now the majority owner of Charlotte Bobcats, has been one of the hardline owners who want to cap the share at a dreadful 47% due to team loss. However, in 1998 under a similar dispute over labour agreement, Jordan, then a player, criticized the owners with the famous quote, “If you can’t make a profit, you should sell your team”. We can definitely see some hypocrisy from Jordan.

NBA Commissioner David Stern VS Head of Players Union Derek Fisher

From a marketing perspective, the lockout is not healthy at all for the basketball industry. The NBA has reached record viewership last season, having a lockout could cause a loss of fans, since in the US does not seem to lack choices of sport entertainment. If the NBA stays idle, it can be hurting not only the players and owners, but also many related businesses and workers.

College Tuition: University or Degree Store?

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The college tuition is rising year over year. However, the establishment of new universities and educational institutes and enrollment in the recent years does not seem to slow down in any way. A college degree is more and more common, with the value depreciates quickly. It is time for us to take a closer look at the cause of the inflation and recognize the problem.

1. Establishment of “Degree Stores”

Many new universities are established by big corporations, and the primary objective of these institutes are maximizing profit. These universities accept many students without much challenge, and loosely monitor the quality of education. This leads to excessive amount of university degrees being handed out to many unqualified.

2. Inelastic Demand for College Education

It has been a common understanding that college education is required for a “better future”. In my opinion, it is merely a propaganda and misconception. Many people who go into trades end up much better off than someone who complete their college education. It is definitely not the case all the time, but recognition should be given that people can do well even without a degree or pursuing the degree at a later date.

3. Easy Student Loan

Banks and government give out loans to students with little, if any, credit check. It is easier than ever to attend college, therefore the demand for college is hiked up artificially which also drives up the cost.

Many graduate from college with heavy debt load (and increasing), and the degrees they receive have much less value. This also caused some protests from students all over the world. I can’t help but wonder, if the decision of going to college is really worth it if you cannot afford it?

 

Tax Cut ≠ Jobs

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On the news, we see business top-dogs complaining tax is hurting the job market and the company’s operation. In economics class, we learn that free market is the way to go and tax would create dead weight loss for the society. But is it really the case? A blog post by billionaire entrepreneur and my favorite sport team Dallas Mavericks’ owner Mark Cuban explained the relationship and pretty much nailed the issue.

When a CEO publicly criticized a tax, it is not because he is concerned with the company’s well-being, it is for his PERSONAL gain. Lower tax means more money in his pocket. Companies do not stop hiring people because of high tax rates, or vice versa. Taxes do not stop companies from investing either. Mark Cuban phrases:

I wonder if Amazon hesitated in developing and releasing the Fire because they were concerned about corporate tax rates ? I wonder if Dish looked at corporate tax rates before they determined the strategic value of buying spectrum. Think Apple looked at tax rates before it decided to open their stores ? Did McDonalds bring back McRibs because the tax rate was low enough ? Companies make strategic decisions every day.  They invest because they want to grow the company. They invest because they are competitive and they want to win. They invest because they want to make more money. They don’t invest because they just had their tax rates lowered.

Theories are always theories. No matter how much you learn, it does not matter if it does not apply realistically. Too many economic ideas over simplify the real situation. They might sound great, but communism is a great idea in theory, too. Maybe policy makers can realize this and make decisions according to real numbers and stats if they want to fix the economy, instead of relying on advisers who care only about their personal gains.

(On a side note, Mark Cuban is probably the only “1 percenter” who is in favour of more taxation on the rich. “Be happy that you have the chance to write a big cheque to the government” and “Tax the hell out of Wall Street” are some quotes from his blog. For more, visit blogmaverick.com)

CouchSurfing – No Room, No Problem

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With over 3 million users/participants, the couch surfing project and its founder Casey Fenton demonstrated that a simple idea that benefits every traveler can earn you millions.

If you are familiar with the website, you might wonder, “isn’t CouchSurfing not-for-profit?” Not anymore. As of August 2011, Couch Surfing accepted $7.6 million investment from Benchmark Capital. Fenton cited that CouchSurfing’s application of the non-profit organization was never granted by the US government, which led him to seek for other options.

Sleep on couch, save money! (and earn me money)

That aside, it is a great example of entrepreneurship, where the company was able to earn investments just by a simple growing concept. Even better, Fenton assumed no risk and is using other people’s money to get rich! Paid features are now added to the website and are projected to generate significant revenue for the company. The innovation also triggered many other similar ideas being established in other industries, such as gift-giving and car-sharing websites.