People often assume that the big three factors of the market: wages, job opportunities, and company earnings all significantly degrease during an economic crisis. However, contrary to popular belief, wages tend to be unaffected by recessions and only suffer minimal change. The idea behind this misconception is that most people hear “recession” and think “lower pay,” when in reality, companies focus on paying workers fairly to boost morale and, in turn, production.

As shown in the graph above, most workers who still had their jobs in 2007 and 2008 reported approximately the same earnings as before the recession. While workers tend not to lose any pay, it is highly unlikely that they receive a bonus.

Unfortunately, businesses have to do something about money they lose, which is where unemployment comes into play. As a company continues to keep wages high, it must also keep prices high to maintain a balance. During a recession, consumers generally have trouble affording pricey goods, which leads to a decrease in demand and reduces company earnings. Therefore, companies compensate for the money they lose in the market by laying off more of their workers.

Images and References:

http://www.businessweek.com/articles/2014-09-18/cutting-wages-is-hard-to-do-why-thats-bad-for-unemployment#r=nav-f-story

http://www.frbsf.org/economic-research/publications/economic-letter/2013/july/wages-unemployment-rate/

In the past twenty years, China has undoubtedly become an advanced, industrialized nation. Averaging eight percent growth in gross domestic product (GDP) per annum, China’s growth has been jaw dropping. Big cities such as Shanghai and Hong Kong have sprouted with skyscrapers, factories, and financial centers, but these economic improvements came at the cost of China’s environmental sustainability.

Studies by the Ministry of Environmental Protection and the World Health Organization produced astonishing results. Only three out of 74 Chinese cities met the official minimum standards for air quality in 2013. Also, as shown in the chart below, China’s most polluted city surpasses 15 times the level of pollution considered to be hazardous to health.

Clearly, China has struggled to draw the line between industrialization and environmental protection. No matter how much the country tries to advance economically, it will always be burdened by the resulting air pollution. Despite its efforts to cut down carbon-emitted pollution, such as pledging to reduce the amount of carbon it emits to 40 to 45 percent below its 2005 levels, the Chinese government must make mass changes to environmental and health regulations in order to actually create an effect.

Images and References:

http://www.theatlantic.com/international/archive/2014/04/2-charts-that-put-the-chinese-pollution-problem-in-perspective/360868/

http://www.nytimes.com/2014/03/28/world/asia/most-chinese-cities-fail-pollution-standard-china-says.html

http://www.nytimes.com/2014/09/01/business/international/china-plans-a-market-for-carbon-permits.html

While the goal of a running a business is to thrive and profit off of the lowest possible investments, a company without a foundational customer base has no chance of surviving in the market. That being said, when the main and, often, only concern is to make a significant amount of money, companies tend to hurt their own customers and stain their reputations.

In 2010, following a recall of millions of vehicles, Toyota admitted to delaying a rule for tougher door locks and phasing in side air bags, which, in total, saved the company over $135 million. Toyota then faced a vast decrease in customers, dropping 11% in customer loyalty and 42% in first-time buyers. As shown in an article published by Forbes Magazine, positively disposed consumers decreased by 59%, while negatively disposed consumers increased by 41%. Clearly, this single action forced many of Toyota’s customers to reconsider purchasing Toyota-produced cars due to safety concerns.

This incident shows the importance of customer loyalty and how a single, unethical action can turn the tide. Indeed, companies need big profits to compete, but at the same time, they need their customers to financially back them. In my opinion, Milton Friedman’s ideology on business ethics is accurate; success in the business world must stay within the “rules of the game.” However, it’s how these rules are defined, respecting the safety of consumers and workers, that should be emphasized.

Images and References:

http://sloanreview.mit.edu/article/what-really-happened-to-toyota/

http://www.forbes.com/sites/annemariekelly/2012/03/05/has-toyotas-image-recovered-from-the-brands-recall-crisis/