SAR HS Incentives Vol 3 June 2016 by SAR

I n c en t i v es SAR High School's Econom ics and Business Jour nal Volum e 3 Spr ing 2016 Wr i t er s

Edi t or s i n Ch i ef Avi Siegal

David Adler

Benjam in Klestzick

M anny Kuflik

Jer emy Ber m an

ZoĂŤ M ay

Nate Katz

Jacob Cohen

Jonathan M osesson

Layou t Edi t or

Oliver Feder

Remy Neuhaus

Rafi Kepecs

Nathaniel Goldblum

Am iel Or bach Zachar y Reich

Noah Gr een

Chana Rosenthal

Allison Her stic

Alex Rosh

Feat u r es Edi t or

Jer emy Hor ow itz

Dena Rosm an

Noam Lindenbaum

Nate Katz

Avi Siegal

Rafi Kepecs

Julian Snyder

Shabbi Kestenbaum

Henr iette Weitzen

Bi o Edi t or Andr ew Teigm an

Facu l t y Adv i ser M s. Glor ia Schneider

Copy Edi t or s

Bu si n ess M an ager s

Jer emy Hor ow itz

David Adler

Remy Neuhaus

Oliver Feder

SAR High School 503 West 259th Str eet River dale, NY 10471 Rabbi Tully Har csztar k, Pr incipal School Population: Students: 540; Faculty: 123. Phone: 718-548-2727 Fax: 718-548-4400 1 Incentives SAR2016 High School

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T a b l e o f Co n t en t s A M at t er of Degr ees

Googl e an d GDP

Tax Ref or m Fal l s Fl at

Spor t s an d Th e Ci t y

Fr om Rags t o Ri ch es

Th e Econ om i cs of A Ref u gee Cr i si s

Sh ak eu p at t h e New Repu bl i c

M i n d Th e Gap

Keyn es vs. Hayek : Th e M i n i m u m Wage Debat e

Th e Cost of a Cu r e

Th e Jet Set

Sw eet en i n g Th e Pot

Spot l i gh t : Edi t h Abbot t

Fi n i sh i n g Th e Job

Sh ou l d Th er e by a Fat Tax ?

Bi g Box Bl ack Ou t

Tak i n g A Sw i pe At Love

Bat t l e of t h e Sex es

To t h e Vi ct or Go Th e Spoi l s

Th e Weal t h of Nat i on s

M on ey Tal k s: Leadi n g a Su ccessf u l Li f e. A Ch at w i t h Sach i n Sh ah

Payday f or Pl ayer s

Th e Li br ar y. Book Rev i ew : The Big Shor t

Oi l Tu r m oi l

Bi bl i ogr aphy

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Photo: Josh Dor fm an

A M a t t er o f D eg r ees I s Col l ege St i l l Wor t h I t ? by Rem y Neu h au s

In 1970, 7.9 m illion students w er e enr olled in colleges and univer sities. Now , that num ber has jum ped to 20 m illion, w hile population gr ow th has not gr ow n com m ensur ately. College is essentially the new high school. Significantly m or e students ar e going to college, but w ith tuition skyr ocketing, is it r eally w or th it? Tuition costs ar e at an all-tim e high and show no signs of stabilizing. They have gone up m or e than 500% in the last 50 year s, outpacing inflation by a ver y lar ge m ar gin. The aver age cost of a year at a pr ivate univer sity is about $42,000, and for a public univer sity, it is appr oxim ately $12,000. Keeping in m ind that the aver age household incom e hover s ar ound $50,000,

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this is a steep pr ice to pay for just one student?s education for a year. So how do so m any students affor d all of this tuition, apar t fr om the aid that the gover nm ent pr ovides? The answ er for m ost is student loans. Students take out loans fr om a bank in or der to pay for their education w hen they cannot affor d the full cost at one tim e. M ost stor ies that you hear ar e the hor r or stor ies, but only 3% of students in debt ow e m or e than $100,000, and the m ajor ity of those students have am assed their debts to suppor t gr aduate pr ofessional educations such as m edical school or law school. On aver age, the Class of 2015?s debt per student totalled about $35,000. At fir st glance, this still seem s to be a lar ge num ber , especially for som eone com ing out

of school, and it is. It tr anslates to m onthly paym ents of $400 a m onth, w hich on an entr y level salar y is substantial. How ever , in the big pictur e, it m ay not be as bad as it seem s. Resear cher s fr om the Feder al Reser ve Bank of New Yor k estim ate that college gr aduates ear n about $1 m illion m or e than those w ithout a degr ee. But it gets better. Those w ho m ajor in top paying m ajor s, m ost of w hich fall under STEM (science, technology, engineer ing, and m ath), can ear n $3.4 m illion m or e than som eone w ithout a degr ee. This m eans that w hile student debt can look intim idating and over w helm ing at fir st, on aver age, it is clear ly w or th it as m ost w ill accum ulate ear nings that dw ar f the debt they w er e or igi-

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G O O G LE AN D G D P How You r Googl e Sear ch i s Tr an sf or m i n g M oder n Econ om i cs by Jacob Coh en

hen you w ant to find the answ er to som ething, you google it. W hen you w ant to under stand the r easoning behind som ething, you google it. W hen you w ant to find the cheapest pr ice on the new est Apple com puter , you google it. If you ar e an econom ist, you w ish life could be that sim ple; you w ish you could just "google it." And now , w ith Google, econom ists m ay actually be able to do just that. I am not saying that econom ists can just sear ch "How is the economy doing?" and find the answ er s they need. How ever , the potential value in utilizing the billions of Google sear ches m ade each day m ay leave econom ists dr ooling. This notion is r efer r ed to as the "Google Sear ch Index," or the theor y that one could use Google Sear ch statistics as econom ic indicator s. Could a jum p in Google sear ches for car s pr edict an incr ease in auto sales? Could a r ise in job sear ches be a signal that m or e people ar e being laid off? W ith Google's "big data" available to econom ists, they m ight be able to not just r ecognize patter ns and suspect tr ends like these, but they m ay also be able to find the answ er s they need to adjust econom ic policy efficiently and effectively. So, w hat exactly does the Google Sear ch Index show ? Is the

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index r eliable,and w ill w e see econom ists using it in the near futur e? Or have they alr eady been doing so? Take, for exam ple, a per son using Google to sear ch for the cheapest pr ices on appliances for their kitchen r enovation. Now , suppose this per son

" Th e pot en t i al val u e i n u t i l i zi n g t h e bi l l i on s of Googl e sear ch es m ade each day m ay l eave econ om i st s dr ool i n g. " w as M ar go Sugar m an, a r esident of Tel M ond, Isr ael w ho did exactly that and spent 70,000 shekels on r enovations (appr oxim ately $17,500), using Google to find the best deals on appliances and fur nishings for her new kitchen. Not only did these Google sear ches help M ar go, but they also helped the Bank of Isr ael. Isr ael?s centr al bank is constantly looking for new econom ic indicator s and

w ays to under stand and expand the nation?s r apidly gr ow ing $305 billion economy (as of 2014). Ther efor e, it m akes sense that the bank w as the fir st centr al bank to adopt the idea of using the Google Sear ch Index as an econom ic tool, pr im ar ily to identify tr ends and other econom ic statistics in r eal tim e, pr ior to official econom ic r eleases. Since the Bank of Isr ael began this pr actice, its findings have show n signs of pr om ise in the developing indicator. Other countr ies such as Br itain, Spain, Italy, Tur key, and Chile have follow ed in Isr ael?s footsteps. So, w her e did all of these centr al banks, including the Bank of Isr ael, get this idea? Take a step back into the Gr eat Recession. At that tim e, Google?s chief econom ist, Hal Var ian, r eleased a r epor t ?show ing how to use the com pany's sear ch data to m easur e auto sales and consum er spending, am ong other things.? Tanya Suhoy, a senior econom ist at the Bank of Isr ael, exper im ented w ith the data in Var ian?s r epor t and saw incr edible r esults. Thr ee m onths later , Suhoy r eleased a paper stating that Var ian?s ?Google Sear ch Index? theor y w as able to pr edict econom ic slum ps in Isr ael. After this, it becam e clear that this indicator w as an im por tant one, and m any centr al banks began to

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Ta x Ref o r m Fa l l s Fl a t I s I t Ti m e For A Fl at Tax ? by Ol i ver Feder he cur r ent policy of the United States feder al incom e tax is a pr ogr essive tax, w hich has been a par t of fiscal policy since the Revenue Act of 1862. A pr ogr essive incom e tax is based on the concept of ability to pay, w her e the higher incom e gr oups pay a higher per centage of their incom e than the low er incom e gr oups. For exam ple, on 2015 ear nings, a single taxpayer w ould pay a 25% tax r ate on ear nings betw een $37,451 to $90,750, w hile another taxpayer w ould pay 33% of his incom e on ear nings betw een $189,301 to $411,500. At the tim e of this ar ticle's w r iting, m any Republican pr esidential candidates and for m er Republican pr esidential candidates, including Senator Ted Cr uz and Gover nor Rick Per r y, ar e calling for a flat feder al incom e tax r ate. But w hat exactly is a flat feder al incom e tax?

tages. The cur r ent tax system is incr edibly com plex. Am er icans spend 6.1 billion hour s a year pr epar ing their tax for m s, w ith all the hoops to jum p thr ough and the loopholes. The flat tax w ould close the loopholes and help both businesses and individuals save tim e and m oney on tax pr epar ation. Closing these loopholes w ould also allow taxpayer s gr eater under standing and tr anspar ency w ith their taxes. Another advantage is that the specific flat tax w hich is cur r ently pr oposed by the candidates r em oves the cur r ent policy of double taxation. Don?t know w hat double taxation is? Well, let?s say that you ear n

$100,000 in incom e fr om your job, and you get taxed $25,000. You now have $75,000 left, and decide to invest $25,000 of that m oney. That $25,000 ear ns m oney, and you ar e then taxed w hen you net a capital r etur n on your investm ent. Ther efor e, w ith the cur r ent tax system , you ar e taxed w hen you m ake the m oney, and w hen you invest the r em ainder. Another type of double taxation is cor por ate double taxation, w her e cor por ations fir st pay taxes on their ear nings, then the shar eholder s pay taxes on dividend payouts as a sour ce of incom e. For m er candidate Her m an Cain, for exam ple, w anted to elim inate both per -

Photo: Yakir a Ber gm an

A flat tax is constant tax r ate and is usually applied in the U.S. as a consum ption tax, w her e all consum er s ar e taxed the sam e r ate but it is pr opor tional to w hat they spend r ather than w hat they ear n. Ther e ar e differ ent types of flat taxes, but the one cur r ently being pr oposed by the candidates w ould apply the sam e tax r ate to all taxpayer s r egar dless of their level of incom e, by taxing their w ages and salar ies. Ther e ar e, of cour se, pr os and cons to this plan. Fir st, let?s star t w ith the advan-

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M iam i Heat in 2010, the Cavs m ade it all the w ay to the Easter n Confer ence Finals and ear ned an aver age ticket pr ice of $195. The next year , pr ices plum m eted to an aver age pr ice of $51. W hen LeBr on r etur ned to Cleveland in 2014, the team ?s tickets had an $225- $235 aver age pr ice on the secondar y m ar ket. As ticket sales incr ease, ther e ar e r ipple effects: an incr ease in the am ount of beer sold, t- shir ts bought, and other com m odities a fan can pur chase at a gam e. In addition, because the Cavalier s ar e a str onger team w ith LeBr on, ther e is an incr ease in r evenue for the city's bar s because m or e people show up at city

venues to w atch the team play. Cuyahoga County pr ojects a $50 m illion boost to the local economy. M or e jobs ar e cr eated to m eet visitor dem and and the incr eased ticket sales have r ejuvenated local businesses. LeBr on Jam es plays a key r ole in boosting Cleveland?s economy. Another athlete that has boosted his city?s economy is Kevin Dur ant. Because of his unique talent as a 6'9" sm all for w ar d w ith incr edible scor ing capabilities, Dur ant deliver s so m uch to the table in Oklahom a City. He consistently br ings his team to the playoffs, w hich leads to m or e view er s in the stands and in local bar s. Char les Stout, co-

ow ner of Br icktow n Br ew er y, said, "Ever y tim e the playoffs com e, w e see the dollar im pact r ight aw ay. People ar e staying longer and m or e people ar e com ing out so w ithout a doubt it has an im pact five, six or ten fold.? Destination M ar keting Association Inter national estim ates ever y in- tow n per son spends about $65 on gam e days; out- of- tow ner s, or a per son w ho tr avels over 60 m iles, spends about $216. The dir ect spending associated w ith the attendance of the gam es is in excess of $50 m illion. In addition, Dur ant per sonally affects the city economy thr ough all of his char ities. His char itable foundation gave $35,000 to an Oklahom a City elem entar y school for hom eless childr en. He also donated a new outdoor basketball cour t for the Oklahom a City High School.

Ar t: Sim m i Sausen & Adam Duitz

In econom ics, the ter m netw or k effect is in play w hen the value of a par ticular object r ises as m or e consum er s pur chase and subsequently use that ver y pr oduct. Fr om a m er chandising per spective, nothing sells better than a w inning team . Once devoted fans begin to pur chase item s associated w ith the success of the team , ther e is a snow ball effect. Fan dedication and spending on spor ts them ed pr oducts lead to incr eased pr ofits. In or der for a team to succeed on the cour t and financially, hosting a super star player is a gr eat star t.

Zach Rei ch

is a junior at SAR High School. He is cur r ently involved in the Entr epr eneur s Club, focusing on the fundam entals of gr ow ing star tups. Zach is especially inter ested in spor ts econom ics, but is also fascinated by labor and behavior al econom ics. Zach hopes to continue his study of econom ics in college and possibly pur sue a car eer in finance.

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their factor y. Wom en, w ho had tr aditionally been the w eaver s of cloth, w er e r eplaced by m en oper ating m achines. Childr en w er e also allow ed to w or k in factor ies, often for m any hour s a day. How ever , factor ies could be danger ous, w ith a lot of heavy m achiner y and shar p par ts.

The Industr ial Revolution also cem ented Adam Sm ith?s econom ic philosophy that the w ealth of nations w as gr ounded in their pr oduction and labor for ce r ather than the Physiocr ats? ideas of land or m er cantilist m oney. This w as because as technology im W hile Wester n clothing styles pr oved, less labor and land w as w er e spr eading, the Japanese needed to pr oduce the sam e One of the ear liest r efor m s institextile industr y w as gr ow ing am ount of food to feed the peotuted lim ited the am ount of hour s speedily. In 1900, 63 per cent of ple, and m or e people could only a child could w or k depending on all Japanese factor y labor er s find w or k in factor ies. Industr itheir age, fr om nine year s old for alization is pr oductivity. Instead eight hour s a day to an adult w ith " War of people doing all the w or k neca full 12-14 hour w or k-day. Chilessar y to suppor t them selves indr en w er e sent to school w ith dividually, division of labor an d ar m s r aces al so the extr a tim e. The advent of w as encour aged and m or e m ass pr oduction via factor ies w as able to be pr oduced in h ave been dr i ver s of led to m ass consum er ism , a total. The gr ow th of the for m ational char acter istic textile industr y dur ing of today?s Wester n cultur e. t ech n ol ogy t h r ou gh ou t h i st or y the Industr ial Revolution Today, vir tually ever ym ade Eur ope and Am er thing w e buy is m assica so m uch m or e ecopr oduced and com panies an d h ave h el ped t o i m pr ove t h e nom ically pow er ful than cater to the m asses; thus, the r est of the w or ld. For m oder n econom ies depend over al l pr odu ct i on capabi l i t y exam ple, Br itain sent of constant consum er enor m ous am ounts of spending. The pow er of the m oney to the r est of the of t h e cou n t r i es consum er is dem onstr ated in w or ld in tr ade. At the height the business m axim ?the cusof Br itain's over seas investtom er is alw ays r ight.? i n vol ved." m ents, the Br itish cur r ent acThe m ost notew or thy expr ession count sur plus sur passed its GDP w or ked in of Wester n globalization w as in by seven per cent. textile factor ies. Japan's expor ts the r ealm of clothing, as disThe intr oduction of m ass pr oducexceeded those of m any other cer nibly Wester n styles spr ead tion in textile factor ies soon countr ies, such as Ger m any, thr oughout the w or ld extr aor dispr ead to the w eapons industr y. Fr ance and Italy, and by 1910, nar ily r apidly. Due to the Wester n Factor ies and industr ial pr ocesses Japan w as the only Asian countr y pow er s?dom ination of the w or ld, allow ed for ever ything m ilitar y to to expor t yar n, thr ead and cloth. their styles w er e copied by for incr ease. M or e unifor m s, m or e Fur ther m or e, Japan's textile laeign cultur es. This is exem plified guns, and m or e cannons w er e bor er s w er e the m ost pr oductive m ost fam ously by a photogr aph able to be m ass pr oduced. All of of Asia. W hile m ost of the w or kof Pr ince Hir ohito (Show a Em these advances in pr oduction aler s w er e young w om en, Japanese per or of Japan) and Edw ar d VII, low ed for the lar gest ar m ies the cotton w or ker s incr eased their Pr ince of Wales w ear ing sim ilar w or ld had seen, beginning w ith output by 80 per cent fr om 1907 to outfits fr om Savile Row , the cenNapoleon?s 554,000 m en. As 1924. Thus, Japan inter r upted the ter for custom clothing in Engtechnology im pr oved, ar m ies Wester n m onopoly even though land. This spr ead of style is also w er e able to continue incr easing the West r etained their absolute dem onstr ated by the m achines of in size. Developm ents in the texadvantage. the Singer M anufactur ing Com tile industr y, w hich had been a

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pany: or iginally given as a gift to for eign leader s for fashioning local tr aditional clothing, they w er e later used to copy Wester n gar m ents, such as the fr ock coat, the cor set, the petticoat and the ankle-length dr ess.

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T h e Ec o n o m i c s o f a Ref u g ee Cr i si s Ar e t h e Fear s Ju st i f i ed? by Jer em y Hor ow i t z

ith seven m illion Syr ians displaced by civil w ar , m any countr ies sm aller than the United States have alr eady allow ed in m or e than 10,000 r efugees. As of Januar y 2016, Lebanon has taken 1.1 m illion r efugees w hich is 24.75 per cent of their cur r ent population, Jor dan 630,000 w hich is 9.75 per cent of their cur r ent population, and Tur key 2.2 m illion w hich is 2.98 per cent of their cur r ent population. Based solely on these figur es, it w ould seem likely that the econom ies of these countr ies w ould be declining due to this enor m ous bur den, but they ar e not. The Tur kish economy, as m easur ed by Gr oss Dom estic Pr oduct (GDP), expanded by thr ee per cent and Lebanon?s economy by tw o per cent since the fir st ar r ivals of Syr ian r efugees in M ar ch of 2015. This is not to say that ther e ar e no econom ic detr im ents to accepting Syr ian

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tr y, the econom ic benefits of Syr ian r efugees can offset som e of the econom ic costs. This is m ainly due to the labor m ar ket w hich m any thought w ould be the gr eatest dow nfall if m or e Syr ian r efugees ar e allow ed into neighbor ing countr ies. W ith any im m igr ation conflict, ther e is bound to be the ar gum ent that im m igr ants ?steal? jobs. How ever , this belief has been pr oven false tim e and tim e again due pr im ar ily to the concept of specialization. As r efugees enter for eign countr ies, they typically star t off Ar t: Nathaniel Goldblum w ith jobs that r equir e few language r efugees. The cost of feeding, skills, jobs for w hich ther e can be scr eening, and housing r efugees is low dom estic supply. Natives, in cer tainly expensive. In the long contr ast, m ove to jobs that r equir e ter m , how ever , these costs ar e m or e skills, like m anaging these likely to vanish as Syr ian r efugees new w or ker s, or talking to cusbecom e m or e integr ated in their tom er s and supplier s. This spenew envir onm ent and ar e able to cialization of w or ker s m akes com suppor t them selves. panies m or e pr oductive, w hich allow s businesses to expand. AddiHow ever , as displayed by the intionally, the ar r ival of Syr ian cr easing GDP value of each coun-

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Sh a k eu p a t t h e n ew r epu b l i c A Case St u dy i n Vi r t u al I n t egr at i on i n t h e Di gi t al M edi a Age by Av i Si egal

hen tw o- thir ds of the people on the editor ial m asthead of The New Republic, the 101-year -old pr ogr essive Am er ican jour nal of politics and cultur e, r esigned at the star t of Decem ber 2014, they w er e r eacting to a flur r y of changes fr om the top: CEO Guy Vidr a, br ought fr om Yahoo New s by New Republic ow ner and Facebook co- founder Chr is Hughes, had announced the (for ced) depar tur e of editor Fr anklin Foer and ?a r ecalibr ation of our r esour ces in or der to deliver the best pr oduct possible.? The m agazine w as to m ove to M anhattan and its cir culation w as to be cut fr om tw enty issues a year to ten issues. To m uch of the staff, these steps? the culm inating phase of a shift in dir ection since Vidr a took over thr ee m onths pr ior ? m ade it clear that Hughes and Vidr a w er e bent on The New Republic?s ?destr uction in all but nam e.? Vidr a?s declar ed intention of ?r eim agining The New Republic as a ver tically integr ated digital m edia com pany? cam e at the cost of a m ass exodus fr om the vener able m agazine. To fully under stand w hy the shakeup at The New Republic occur r ed, it is necessar y to

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investigate w hat exactly Vidr a m eant by ?a ver tically integr ated digital m edia com pany.?

Photo: Avi Siegal

Tr aditionally, ver tical integr ation r efer s to a situation in w hich a com pany ow ns tw o or m or e steps in the supply chain of its industr y. For instance, a tir e m aker m ight pur chase a r ubber plantation, or a com puter m anufactur er m ight pur chase a m icr ochip m aker , or an oil r efiner m ight pur chase gas stations. Com panies pur sue the str ategy of ver tical integr ation because its potential advantage is significant: ver tical integr ation heightens a com pany?s ability to contr ol access to (and thus the quality, cost, and tr anspor tation of ) inputs. In a successful scenar io, a ver tically integr ated com pany w ill attr act m or e custom er s and incr ease r evenues. Such an outcom e w as Vidr a?s stated goal w hen ar r iving at a m agazine that had long been unpr ofitable. How ever , the str ategy he adopted w as cer tainly not r eflective of ver tical integr ation as it is nor m ally under stood. Vidr a did not author ize the pur chase of a com pany that, say, m anufactur ed

the devices on w hich som e of The New Republic?s r eader s consum ed its ar ticles. Instead, Vidr a?s use of the phr ase ?ver tically integr ated? aim ed to com m unicate a m or e jar gonistic m eaning? yet a no less im por tant one. Vidr a per ceived a disconnect betw een the pr int and digital sides of The New Republic. The w r iter s w er e not consider ing how their pieces w ould tr anslate for online consum ption; content w as separ ate fr om pr oduct. Vidr a, speaking to Politico, explained his plan to ver tically integr ate The New Republic as ?br eaking dow n the w all? betw een pr int and digital. ?Ther e ar e fiefdom s,? Vidr a said, ?and because of those fiefdom s, ther e's no collabor ation.? By integr ating the fiefdom s, Vidr a hoped to r einvent The New Republic as a ?digital m edia com pany.? M anifested as such, the m agazine w ould ideally be able to tap into the m assive m ar ket of people? m illennials, in par ticular ? w ho r ead the new s lar gely online. To that end, Vidr a w r ote

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m i n d t h e g ap I s Gen der Di spar i t y i n Physi ci an I n com e Du e t o Bi as? by Den a Rosm an

n im por tant political issue that has been r aised by United States pr esidential candidate Hillar y Clinton is the salar y inequality betw een m en and w om en. One ar ea that has been studied is the gender pay gap am ong physicians in the United States. It has been docum ented that fem ale physicians ear n about 75% of the ear nings m ade by their m ale counter par ts. How ever , it is not clear if this pay gap is due to gender bias or other factor s. One possibility is that the em ployer s ar e paying the fem ale physicians less for sim ilar w or k as com par ed to the m ales. For those doctor s in pr ivate pr actices, it is also possible that due to pr ejudice, patients pr efer m ale physicians r esulting in less r evenue for fem ales. In addition to pr ejudices, ther e m ay be other factor s contr ibuting to the w age gap that ar e not due to bias. Deter m ining w hich factor s pr om ote the dispar ities r equir es close scr utiny. Fir st, sur veys have show n that fem ale physicians w or k few er hour s than m ales. The r eason for the r educed hour s is that fem ale physicians gener ally spend m or e tim e w ith their fam ilies. How ever , even after cor r ecting for differ ences in hour s, in 1990, fem ale physicians still ear ned 7% less than their m ale

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colleagues. Another possible cause of w age inequality is choice of specialization. M any w om en choose low er paying specialties such as pediatr ics, psychiatr y and fam ily pr actice; these specialties gener ally per for m few er high paying pr ocedur es and ar e thus paid less. Recently, w om en have been enter ing higher paying specialties. These higher paid jobs include sur ger y, or thopedics and car diology and should m itigate the factor for differ ences in incom e betw een m en and Ar t: M ir iam Ster n w om en physicians. How ever , this genhospitals. These positions tend to der gap still per sists w hen com pay less than pr ivate pr actice popar ing the hour ly pay in specific sitions but pr ovide m or e r egular specialties. hour s. In addition, salar ied physiAnother factor in the gender difcians ar e m or e likely to tr eat pafer ence is the type of m edical tients w ith M edicaid or w ithout pr actice. Fem ale physicians tend insur ance, r esulting in low er to select salar ied positions, such as physician r eim bur sem ent. w or king for healthcar e or ganizaEconom etr ic techniques can be tions, m edical schools, or public

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K ey n es v s. h a y ek Th e M i n i m u m Wage Debat e AFFI RM ATI VE by Sh abbi Kest en bau m

hile fr ee m ar ket capitalism has pr osper ed in the United States, child labor law s, sanitation, and w or ker pr otections w er e often ignor ed or sim ply w ent unr egulated until gover nm ent enacted the pr oper r efor m s. W hile fr ee enter pr ise guar antees ?w inner s? in its system , it also guar antees ?loser s,? and those so- called loser s ar e often the the m ost vulner able in society. Gover nm ents? fundam ental pr inciple is to ser ve the needs of the people, thus it?s quite r eassur ing to the aver age citizen that its ow n gover nm ent is looking out for its inter ests. Gover nm ent over sight and r egulation has been an im por tant aspect in our m ar ket economy, w hich br ings us to the M inim um Wage. W hen signed into law in 1938, at the height of the Gr eat Depr ession, the stated pur pose of the feder al m inim um w age w as to keep Am er ica?s w or ker s out of pover ty, and incr ease consum er pur chasing pow er in or der to stim ulate the economy. It sought to guar antee a livable w age for the bulk of Am er ican w or ker s, pr eventing fam ilies and consum er s fr om com plete econom ic annihilation. Fastfor w ar ding to pr esent day, a full- tim e m inim um w age em ployee ear ns $15,080 annually, so w hile the pover ty thr eshold for a single per son in 2014 w as $11,945, an hour ly r ate of $7.25

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negligibly distinguishes the line betw een pr osper ity and pover ty. Today, the w age m akes sur e that ever y em ployee is guar anteed an incom e that doesn?t r eflect cor por ate m anipulation or exploitation. This gover nm ent m andated pr ice floor sets salar ies above m ar ket equilibr ium and thus, pr oduces higher salar ies and subsequent take- hom e pay. In fact, low er -skilled w or ker s, w hich the m inim um w age m ost dir ectly per tains to, in m ost instances, take that extr a cash and spend it locally, ther eby boosting dem and on a m or e per sonal, com m unal level. Not only does the w age allow w or ker s to escape pover ty, cr eate a local dom ino effect on sm all businesseses, and ensur e w or ker s ar en?t exploited, it actually cr eates m or e gener al em ploym ent. Adjusting for inflation, the m inim um w age w as w or th m ost in 1968, at $8.54 an hour. Today's $7.25 m eans the value of the w age has gone dow n about 8%, so using conser vatism logic against the w age, labor hir ing should have r apidly incr eased as the tight hands of big gover nm ent w er e loosening in the past few decades. How ever , total labor for ce par ticipation and gener al em ploym ent as a pr opor tion to an ever incr easing population has r em ained anyw her e fr om 5070% since Wor ld War II, pr oving that the fear s of disincentivizing

em ployer s due to a m andated am ount is solely based on a ver y nar r ow view point of how econom ies w or k . Inter estingly, Pr ofessor Br ock Haussam en suggests that by putting in place a salar y pr ice floor , the state m ay be saving m illions of dollar s in spending. Em ployees on a m inim um w age ar e less likely to be using gover nm ent w elfar e pr ogr am s and the need for public assistance as a w hole declines ther eby easing the tax bur den on the r est of society. By ensur ing financial secur ity, Am er ican taxpayer s at lar ge ar e aver ting a m assive incr eased expenditur e in the for m of social ser vices to pr ovide m onetar y safety nets for the w or king poor. In changing econom ic tr ends, the m inim um w age in Am er ica today is not for par t tim e jobs for teenager s looking to w or k their w ay up the ladder of success. Rather , the m edian age of a low skilled, m inim um w age w or ker is 35 year s old. 28% have childr en; 55% w or k full-tim e, and 44% per cent have at least som e college exper ience. A m inim um w age dir ectly affects the m ost w or king, econom ically active, and pr essur ed socio- econom ic sector in the United States. Taking that aw ay w ould sim ply be, unAm er ican, and Nate, you?r e one heck of a patr iot.

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low - incom e situations, sm all am ounts of m oney m ay be the differ ence in eligibility for w elfar e pr ogr am s like M edicaid and food stam ps. W hen these low incom e w or ker s no longer r eceive these benefits, they m ay actually br ing hom e less m oney than they w ould if they w er e paid

a m ar ginally sm aller am ount. In addition, m any ar gue that w ithout the m inim um w age, low incom e w or ker s and fam ilies could not live on the w ages that em ployer s w ould pay. How ever , m inim um w age jobs ar e not supposed to be jobs that suppor t entir e fam ilies. Accor ding to a 2013

r epor t by the U.S. Bur eau of Labor Statistics, 50.4% of m inim um w age ear ner s ar e betw een the ages of 16 and 24, and 24% ar e teenager s. The bottom line is that m inim um w age jobs should m ainly be w or ked by young people r ather than those w ho m ust suppor t other s.

Sha bbi Affir ma tive Rebutta l:

pensive, pr ofit m ar gin is alr eady built in and dependant on num er ous var iables such as utilities, r ent, and gener al costs. As pr oven thr ough countless studies, data, and testim ony, a m inim um w age guar antees ther e?s no chance of w or ker exploitation as w e?ve seen in the pr e- m inim um w age past. It insur es that w or ker s w on?t be living in pover ty due to low pay. It m axim izes pr ofits and gr ow s em ploym ent. It m akes w or ker s feel pr oud to w or k for com panies and incentivizes them to do better. It saves m illions of dollar s in gover nm ent spending

in social ser vice pr ogr am s. It pr ovides dignity to the w or ker , and a sense of secur ity. It m akes the hir ing pr ocess for low -skilled w or ker s easier as the em ployee know s upfr ont how m uch to expect. Just like ever y other developed countr y in the w or ld, ther e is a genuine and r eal need and it is in ever yone's best inter est to ensur e ther e is a standar d am ount of m oney that an em ployer m ust guar antee its w or ker s, and ending such a standar d policy w ould put m illions either into or back into pover ty w ith disastr ous r esults.

r ations alike, ther e?s no telling w hen its dictator ial policies w ill end. In fact, the gover nm ent can continue to r aise the m inim um w age to a point that som e em ployer s sim ply cannot pay, like the $15 per hour w age New Yor k Gover nor Andr ew Cuom o says he plans to institute befor e the end of his ter m . Additionally, if the m inim um w age is m eant to ?ensur e financial and econom ic secur ity? as you put it, w hy stop

ther e? Should the feder al gover nm ent for ce em ployer s to pr ovide fr ee housing and thr ee squar e m eals a day? Setting a national standar d can never be fully successful because the m ar ket is differ ent in New Yor k City than it is in Des M oines. Ther efor e, let?s listen to the w ise w or ds of Fr iedr ich Hayek, and let?s allow the m ar ket to deter m ine the best individual standar ds for com panies.

Nate, w hen w ill you lear n? Opponents to a m inim um w age have long ar gued that inher ently, it is not the feder al gover nm ent?s constitutional duty to police w or ker com pensation. How ever , it?s tim e to under stand that the biggest thr eat to capitalism , to fr ee enter pr ise, is not gover nm ent over sight or a com m unist plot to kill incentives but low w age w or ker s not being able to affor d the ver y pr oducts they m anufactur e. M inim um w age doesn?t m ake pr oducts m or e ex-

Nate Nega tive Rebutta l: Shabbi, your vision of a liber al utopian society never fails to am aze m e. The fact of the m atter is fr ee m ar kets, as w ell as fr ee enter pr ise, thr ive best w hen com panies and individuals ar e allow ed to dir ectly com pete w ith each other. It?s one of the pr inciples of our m ar ket economy. Once the gover nm ent asser ts its r egulator y author itative stances on sm all businesses and cor po-

Wr iting for econom ic, histor ical, and political publications for quite som e tim e, Sh abbos Kest en bau m is fascinated by the w ay m ar kets function. Thr ough his num er ous ar gum ents for the debate team and his r ole as founder of the Students of Politics club, Shabbi hopes to expand on his know ledge and eventually becom e a United States congr essm an to ser ve his constituents thr ough m eaningful legislation. In the m eantim e, though, he's #feelingtheber n.

Nat e Kat z is a junior at SAR w ith a keen inter est in behavior al econom ics. Gr ow ing up in the finance capital of the w or ld, Nate w as exposed to econom ic theor y and discour se at a young age. Nate is a m em ber of SAR?s M odel UN team and student gover nm ent, and can often be found r esear ching r ecent cr oss-bor der m er ger s and acquisitions of Baltic banks. A lover of capitalism , Nate attr ibutes his fr ee-m ar ket ideology back to Adam Sm ith?s tim eless classic The Wealth of Nations.

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the Study of Dr ug Developm ent, it takes over a decade to get a new pr escr iption m edicine thr ough the appr oval pr ocess in this countr y. Based on infor m ation pr ovided by 10 phar m aceutical com panies and 106 r andom ly selected dr ugs, the estim ated cost of r eaching FDA appr oval is $2.5 billion for each dr ug. Even after gover nm ent appr oval for use, ther e is still testing r equir ed for new indications, safety and long-ter m side effects. Because this additional testing is a condition of appr oval, the r eal cost r ises to alm ost $3 billion. The Tufts study blam es technical r isks and unsuccessful pr ojects that r aise the cost for each m ar keted pr oduct. 95% of the exper im ental m edicines that ar e studied in hum ans fail to be both effective and safe and cannot be used. Taking into account the dozens of pr ojects a com pany w or ks on to get one to the consum er , the cost per successful pr oduct is $5 billion. Better and safer dr ugs ar e com ing to m ar ket, but Am er icans cannot affor d to buy them . W hen The Wall Street Journal com par ed the pr ices of dr ugs her e to other developed countr ies, they found that pr ices in the U.S. w er e higher for 93% of 40 dr ugs. Am er ica is r esponsible for m ost of the pr ofit for the lar gest phar m aceutical com panies. The r eason for this differ ence in pr icing is the differ ence in the entir e health car e benefit system in this countr y. Stater un health system s in m any Eur opean nations ar e able to dr ive har d bar gains because the gover nm ent is the only lar ge dr ug buyer in that countr y. This gives them the bar gaining pow er to negotiate low er

pr icing. In contr ast, payer s in the U.S. include insur ance com panies, em ployer s, and feder al and state gover nm ents. M edicar e, the single lar gest payer for pr escr iption dr ugs her e, is not allow ed to negotiate pr icing. This additional cost to the U.S. consum er , and r esulting incr eased r evenue for the phar m aceutical com panies, is then spent on the developm ent of new dr ugs and

"It t ak es over a decade t o get a n ew pr escr i pt i on m edi ci n e t h r ou gh t h e appr oval pr ocess i n t h i s cou n t r y. " ther apies. Aside fr om gover nm ent contr olled pr icing, m any Eur opean countr ies, such as Nor w ay, r un costeffectiveness studies. Patient data is r eview ed to com par e a par ticular dr ug?s cost against the benefits of existing, and som etim es less expensive, ther apies. Their gover nm ent uses a m easur em ent called QALY to w eigh a dr ug?s cost per quality-adjusted life year. Rejecting a dr ug often is follow ed by a r eduction in pr ice fr om the m anufactur er. A sim ilar situation is found in England, w her e the National Institute for Health and Car e Excellence (NICE) r ecom m ends

that dr ugs w ith low value not be cover ed by the taxpayer - funded health system . The cost of m edications to consum er s m ight be easier to sw allow if value and innovation w er e par t of the equation. A dr ug?s pr ice should r eflect its effectiveness. For exam ple, a dr ug m ight w or k w ell on one type of cancer , but not on another , yet the cost to tr eat each one is the sam e. Ther e ar e statistics for com par isons. Phar m aceutical com pany Novar tis is speaking w ith insur ance com panies about basing paym ents for its new hear t dr ug on how w ell it pr events hospital visits. It is som etim es har d to tell, though, if it is the dr ug or another factor that led to the im pr ovem ent. Basing pr escr iptions and costs on effectiveness w ould help im pr ove the econom ic and physical w ell being of patients taking m any dr ugs. Phar m aceutical com panies ar gue that they ar e tr ying to contr ol costs, but m ust also have the r esour ces to study and pr oduce new and better pr oducts. If pr icing in this countr y m atched Eur opean levels, r esear ch and developm ent w ould suffer. Som e phar m aceutical com panies have asked char ities to help fund ear ly r esear ch costs for dr ugs to tr eat r ar e diseases, and that w ould keep costs dow n. New technologies ar e allow ing better testing. Since phar m aceuticals lose a patent w ithin tw enty year s fr om discover y, gener ics can be m ar keted. This encour ages com petition for older dr ugs w hich can keep dow n costs to consum er s w hile innovative, new er ther apies can continue to fund developm ent.

Noah Gr een

is a junior at SAR High School. He has been a m em ber of the baseball team , M ath Club, and Investm ent Club. His inter est in econom ics developed w hen he r ealized he could apply his m ath skills to under standing m any of today's issues fr om political statistics to budget deficits. Noah hopes to pur sue a car eer in business or engineer ing.

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Ther e ar e four m ain str ategies that air lines use to hedge against jet fuel pr ice fluctuations: pur chasing cur r ent oil contr acts, enter ing into sw ap contr acts, pur chasing call options, and executing a collar hedge. This ar ticle w ill discuss the use of the call option and w ill br iefly cover the collar hedge.

Ch ar t 3 (Nat i on al Dom est i c Av er age Ai r f ar e)

Fir st up is the call option str ategy. An option is a der ivative, w hich m eans that it der ives its value fr om an under lying secur ity. The option contr act gives the option holder the r ight, but not the obligation, to either buy or sell a secur ity at a fixed pr ice, called the str ike pr ice, at a futur e date. Ther e ar e tw o types of options contr acts. One type of option gives the holder the r ight to buy a cer tain secur ity in the futur e at a fixed pr ice; this is called a call option. The second type of option w ould give the individual the r ight to sell that secur ity at som e point in the futur e at a fixed pr ice; this is know n as a put option. In r etur n for these r ights, the holder w ill pay a pr em ium pr ice or a fee for the option contr act. The pr em ium w ill be deter m ined based on a num ber of factor s, including the differ ence betw een the str ike pr ice and the cur r ent pr ice of the under lying secur ity as w ell as the likelihood that the secur ity pr ice w ill r each the str ike pr ice. Air lines utilize call options to m itigate their exposur e to volatile fuel pr ices. Since air lines w ould like to buy the fuel at a futur e date, it m akes sense that they w ould buy a call option giving them the r ight to buy the fuel at an agr eed upon pr ice at som e point in the futur e. Because of the cor r elation betw een

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Sou r ce: US Bu r eau of Tr an spor t at i on St at i st i cs

oil and jet fuel, the air line has the choice of buying an option on oil fr om w hich the fuel is der ived or dir ectly on jet fuel itself. The benefit to buying cr ude oil options instead of fuel options is that cr ude oil options ar e tr aded in high volum e in the m ar ket and ar e m or e liquid. The w ay that the call option w ould w or k is that the air line w ould pay a pr em ium for the option on either fuel or cr ude oil. As an exam ple, consider the case w her e the pr em ium w as $500 for the r ight to buy 100 units of jet fuel in 1 year for $40. Also let us say that jet fuel costs $30 a unit. (Jet fuel is actually cur r ently a little over $1 a gallon, and w e can say that a unit is equivalent to 30 gallons.) The pr em ium w as $500 for 100 units, or $5 per unit. If w ithin the next year fuel pr ices r ise to $50? up $20 per shar e fr om the tim e w hen the option w as acquir ed? then the air line has successfully hedged its exposur e to fuel. It w ill be able to buy fuel w or th $50 for a gr and total of $45 ($5 pr em ium plus $40 to acquir e the fuel w hen closing on the option). M ultiply the $5 savings

per unit by the 100 units that ar e included in the option, and the air line has ear ned a pr ofit of $500 in a situation w her e it w ould have consider ed the pr ice incr ease fr om $30 to $50 to be a $200 loss. Seem s like a good deal.

Let us also look at w hat w ould happen if the pr ice of fuel did not r ise to the str ike pr ice in that year. If the pr ice of the asset never r eaches the str ike pr ice of $40, then the air line w ill not be able to close out the option and w ill have to pay the m ar ket pr ice for the asset. In addition, the air line w ill have lost the pr em ium that it paid for the option contr act. At best, the pr ice of fuel declines under $30, so that the cost of the pr em ium is offset by the gain of low er fuel pr ice. The w or st- case scenar io is that the pr ice of fuel r ises just under the str ike pr ice so that the air line loses the pr em ium value as w ell as the value of the pr ice incr ease. Ther e is a str ategy know n as a collar hedge that could pr otect the air line fr om losing a por tion of the pr em ium if the pr ice of fuel does indeed decline. In or der to fully under stand the collar hedge, the analysis of options w ould have to get slightly m or e intr icate. The end r esult of the collar hedge is that if jet fuel pr ices spike then the air line w ill be able to buy fuel at a r elatively low pr ice; on the flipside, if the pr ice of fuel dr ops then the air line w ill be for ced to buy the fuel at a pr ice higher than that of the m ar ket. This m eans that ther e is a low er and upper lim it to how m uch the air line w ill pay for fuel. Collar s can be str uctur ed at zer o pr em ium or w ith a slight pr em ium . The hedger is giving up upside benefit for lim iting their

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Sw eet en i n g t h e po t Econ om i c Ef f ect s of Legal i zi n g M ar i j u an a by Hen r i et t e Wei t zen he legalization of m ar ijuana has not only affected our health, but it has also affected our national economy. Once m ar ijuana w as legalized in a num ber of states, m or e people bought the pr oduct, no longer afr aid of the punishm ent and penalization they m ight face. M any taxes have been im posed on the sale of m ar ijuana, but the pr ofit w as not significant enough to cr eate lasting change in the economy.

In Color ado, the gover nm ent w as planning on using the fir st 40 m illion dollar s of tax r evenue collected in or der to build schools, but not enough r evenue w as gener ated to do so. Tax r evenue w as $130 m illion in 2014 due to m ar ijuana sales, but that w as befor e accounting for the additional costs, such as im plem enting a new r egulator y str uctur e, cr eating public health and safety initiatives, and hum an ser vices r esponsibilities in or der to legalize m ar ijuana in the fir st place. These costs m ust be taken into consider ation w hen deciding w hether or not legalizing m ar ijuana positively affects the econ-

omy. Tax r evenues, how ever , ar e not the only aspect of the economy that has been affected by the legalization of m ar ijuana. Once m ar ijuana becam e legal, ther e w as no longer as big of a need to spend m oney on law enfor cem ent over the dr ug w ar. Enfor cing the ban of cocaine, her oine and m eth is expensive, but costs decr eased significantly w ithout the w or r y of m ar ijuana as w ell. In addition to the decr ease in spending on law enfor cem ent, pr ison spending w as heavily r educed. In ever y state, one in four people w er e in pr ison solely due to dr ug offenses, such as possession or sale of m ar ijuana. Releasing these people fr om pr ison not only r educes pr ison spending, but also helps the fam ilies of the r eleased per sons, because they can go back hom e and help suppor t their fam ilies. Additionally, r eleasing dr ug offender s fr om pr ison indir ectly helps the gover nm ent, since they w ould not have to suppor t as m any people in a poor com m unity, as they r etur n fr om pr ison and acquir e jobs.

Ar t: Nathan Kuflik

Wor k industr ies have also benefited fr om the legalization of m ar ijuana. Since it is a cr op, far m er s, fer tilizer fir m s and other m anufactur er s of agr icultur al pr oducts all benefit fr om the sale of m ar ijuana. This w ill also decr ease the illegal far m ing and fer tilizer pollution that existed w hen m ar ijuana pr oduction w as not legal or r egulated and pr ovide a potential benefit to the envir onm ent. Lastly, due to the ease of legally acquir ing m ar ijuana, m or e tour ists w ant to visit states that have legalized the dr ug. These cities benefit not only fr om higher sales in m ar ijuana, but also in the r ecr eational activities of tour ism , such as shopping and eating at r estaur ants. W hile tax r evenue incr eases in cities and states after the legalization of m ar ijuana, ther e ar e other potential benefits to local econom ies. Decr eases in pr ison spending and law enfor cem ent expenses, and an incr ease in cer tain industr ies and tour ism , can pr ovide fur ther benefit to a com m unity w hich legalizes m ar ijuana.

Hen r i et t e Wei t zen

is a junior at SAR High School. Henr iette?s inter est in econom ics stem s fr om her love of the hit show Shar k Tank, and she hopes to follow in the footsteps of esteem ed Shar k Tank investor Bar bar a Cor cor an in becom ing a successful businessw om an. Henr iette is a m em ber of SAR?s Investm ent Club, and has achieved success in the club?s sever al stock m ar ket challenges. W ith her m ind for business as w ell as M r. Gotel?s sage advice, Henr iette hopes to build a successful car eer in finance or econom ic study.

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public w elfar e agency, a m or e gener ous social w elfar e system , and gener al im pr ovem ents in the social facets of legislation. In 1926, she assisted in the establishm ent of the Cook County Bur eau of Public Welfar e. This allow ed for m or e people to r eceive w elfar e. She also helped w r ite the Social Secur ity Act of 1935, w hich attem pted to help people w ho w er e negatively affected by age, pover ty, and unem ploym ent. Abbott w as highly r espected; she ser ved as a consultant to Har r y Hopkins, one of Fr anklin Roosevelt?s closest advisor s. In addition, she w as the pr esident of both the Am er ican Association of Social Wor k and the

National Wor k .

Confer ence

Social

Thr oughout her lifetim e, Abbott w r ote an astounding 100 publications about the field of econom ics and social w or k . Her w or ks ar e still being taught and used in pr actice today. Am ong those ar e Finding Em ploym ent for Childr en w ho leave the Gr ade School to go to Wor k, Wom en in Industr y: A Study in Am er ican Econom ic Histor y, and Em ploym ent of Wom en in Industr ies: Tw elfth Census Statistics. These titles show the tr em endous passion Abbott had for enabling childr en and w om en to r eceive jobs, and under scor e her ultim ate goal? to cr eate an equal and fair

w or kfor ce. In 2015, thanks to Abbott?s effor ts, w e have m ade consider able str ides in cr eating job equality for ever yone r egar dless of their gender , r ace, or any other char acter istic. We continue to m ove in the r ight dir ection. W hile in the ear ly 20th centur y w om en str uggled to find jobs, in 2010, ow ing in par t to Abbott?s influential w or ks, w om en com pr ised appr oxim ately 47% of the labor for ce, accor ding to the United States Depar tm ent of Labor. She w ould be pleased to know that her goals ar e com ing to fr uition. Abbott passed aw ay on July 28, 1957.

Jer em y Ber m an

is a senior at SAR High School, w her e he is know n not only for his unbelievable r apping abilities but also for his love of econom ics. Jer emy is constantly exam ining differ ent com panies in w hich to invest. He is know n for an uncanny ability to pick high-r isk yet high-r ew ar d stocks. Jer emy has been dubbed the War r en Buffet of penny stocks. He is also the co-founder of an econom ic theor y called Br ookenom ics.

FI N I SH I N G T H E JO B Fu l l Em pl oym en t an d t h e U.S. Econ om y by Ch an a Rosen t h al ccor ding to United States Depar tm ent of Labor ?s Bur eau of Labor Statistics, as of M ar ch 2016, the unem ploym ent r ate w as 5.0%, near its low est level since 2008. 63% of Am er icans ar e either w or king or looking for w or k . Som e econom ists consider this 5% r ate as full em ploym ent. Full em ploym ent is defined as the highest am ount of skilled and unskilled labor that

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could be em ployed w ithin an economy at any given tim e. Theor etically, full em ploym ent is possible but the r eper cussions m ay be inflation due to m or e w or ker s now having disposable incom e to spend. If ther e is gr eater dem and for goods and ser vices, fir m s can char ge m or e. This can cause a vicious cycle causing pr oblem s of affor dability of pr oducts for m any people, since pr ices m ay incr ease

faster than w ages and salar ies. A low unem ploym ent r ate can also lead to upw ar d pr essur e on nom inal w ages but that adjustm ent per iod m ay be longer given w age contr acts. The unem ploym ent r ate can have m any effects on our economy. It can affect the stock m ar ket, inter est r ates, the housing m ar ket, consum er spending, inflation and household?s and fir m ?s psychological and em otional out-

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Photo: Jay Eisenstat

Sh o u l d t h er e b e a f at t ax ? Th e Ef f ect i ven ess of a Tax on Ju n k Food by Am i el Or bach

axing junk foods and soft dr inks is a contr over sial issue. On the one hand, m any studies show that such taxes w ould help r educe obesity r ates in r egions w her e an abundance of snacks ar e consum ed. On the other hand, m any ar gue that the bur den of the taxes w ill fall on poor people w ho cannot affor d healthier foods and m ay subsist on junk foods. The United Nations r ecom m ends a 10% tax on soda and foods ?high in satur ated fats, tr ans- fatty acids, sodium and sugar.? Sever al states in the United States have star ted taxing car bonated bever ages by 37%, but the im pact on over all con-

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sum ption has been sm all. Although these taxes have r aised gover nm ent r evenue, they have not affected people enough to stop them fr om buying these unhealthy dr inks. W hile this tactic m ay not have w or ked in the U.S., other countr ies ar e seeing better r esults. Since 2011, countr ies such as Hungar y, Fr ance, Chile, Bar bados, and Dom inica have all instituted taxes on these dr inks, usually ar ound $0.06$0.08 per bottle. In 2014, M exico instituted a 1 peso ($0.06) tax on all sugar y dr inks. M exico w as desper ate to stop their r am pant pr oblem s w ith obesity and diabetes. In a study fr om 2012, over 70% of

adults in M exico w er e over w eight, and 12% of M exicans had diabetes. Soft dr inks w er e becom ing incr easingly popular , w ith sales fr om FEM SA (Coca- Cola M exico) r ising by an aver age of 3.2% per annum fr om 2010 to 2013. In 2014, w ith the intr oduction of the new tax, sales gr ow th w as estim ated by differ ent studies to be betw een -1.9% to +6%. M eanw hile, sales of bottled w ater jum ped by 5.2% that sam e year. W hile low er ing the consum ption of sugar y dr inks is a noble goal, it seem s that the bur den of these new taxes w ill fall pr im ar ily on low incom e fam ilies. Snacks and sodas ar e ver y cheap com par ed to

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BI G BO X BLACK O U T I s Th i s Th e En d of Bl ack Fr i day? by ZoĂŤ M ay

he ter m ?Black Fr iday? w as fir st used by the Philadelphia police for ce in the 1960s, r efer r ing to the tr affic jam s and cr ow ded sidew alks on the day after Thanksgiving, kicking off the holiday season. Since the 1980s, stor es have been pr om oting sales w ith the hype incr easing fr om year to year. Gr adually, r etailer s have opened their door s ear lier and ear lier on Black Fr iday, and stor es have even been opening on Thanksgiving Day. How ever , the Black Fr iday m adness seem s to be changing due to an incr ease in online shopping,

extended sales, and the use of sm ar tphones to check pr oduct availability befor e going out to the stor es. The National Retail Feder ation (NRF) sur vey r epor ted an estim ated 151 m illion consum er s m aking pur chases over the 2015 Thanksgiving w eekend. Of these 151 m illion shopper s, 102 m illion visited br ick and m or tar stor es, w hile 103 m illion m ade pur chases online. This r epor t illustr ates the gr ow ing pow er of Inter net sales. "It is clear that the age-old holiday tr adition of heading out to stor es w ith the fam ily and fr iends is now

Photo: Jay Eisenstat

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equally m atched in the new tr adition of looking online for holiday savings oppor tunities," said NRF Pr esident and CEO M atthew Shay. Fur ther m or e, their sur vey r epor ted that in 2015, alm ost 57 per cent of sm ar tphone ow ner s used their devices to r esear ch, pur chase, and check pr oduct pr icing and availability. E- m ar keter analyst Yor y Wur m ser said, "I think w hat you'r e seeing now is the star t or m iddle of a tr end w her e Black Fr iday decr eases in im por tance." The r eality is that shopper s ar e dr aw n to the Black Fr iday sales. W hile on som e occasions Black Fr iday sales have evolved into "Black Novem ber ," this season, som e r etailer s decided to use a differ ent appr oach. Instead of opening for longer hour s ar ound Black Fr iday, as m any stor es have done in the past, r etailer s like Nor dstr om and Costco chose not to open on Thanksgiving Day at all. These stor es w anted to allow their em ployees to have a br eak befor e the hectic holiday season and enjoy a Thanksgiving w ith their fam ilies. In addition, the com panies hoped they w ould cr eate goodw ill w ith their consum er s, and that custom er s w ould choose to m ake their pur chases at their stor es w hile gift shopping online or in stor es. REI, an outdoor equipm ent r etailer , decided to close their locations on

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pr im ar ily tow ar d a longter m r etur n, Tinder has been able to gr ow w ithout the pr essur es of char ging its custom er s. The m ost im por tant thing about Tinder is the str ategy involved. Com panies such as Tinder fall into a categor y w her e a com pany sacr ifices pr ofits in or der to gr ow in a field. They pum p all the m oney they m ake back into their com panies in or der to m ake sur e that they can incr ease r evenue, w hich is the r eal tar get for gr ow th. Com panies such as these focus m or e on the long ter m than the shor t ter m . M ajor com panies such as Uber , Am azon and Tw itter focus m or e on r einvesting pr ofits than keeping them . They feel that in the long r un the benefits fr om such gr ow th w ill outw eigh the loss of incom e. Tinder has long been a str ong pr oponent of this type of policy, until now ,

lim it, the user can pay $10/m onth to becom e a ?Tinder Plus? m em ber. In addition, Tinder has begun to intr oduce sm all doses of adver tising, w hich JM P Secur ities notes could br ing in $70 m illion in r evenue for the com pany thr ough the 2016. Tinder has r ecently intr oduced som e other new featur es that ar e not quite as appar ent to user s. Tinder CEO Sean Rad told a r epor ter at Fast Com pany of an inter nal featur e w ithin Tinder that r ates individual user s. This r ating, know n w ithin Tinder as an ?Elo? scor e,? is a m easur e of how desir able a per son is. In other w or ds, Tinder is r ating user s based on w hether people sw ipe left or r ight on those user s? pr ofiles. W hile Tinder does not cur r ently tell user s w hat their ?Elo? scor es ar e, it seem s likely that Tinder w ill r elease that infor m ation in the futur e? m ost likely for a fee. Tinder seem s to be on top now , w ith a lar ge subscr iber base and significant nam e r ecognition, but it m ust continuously expand in or der to stay on top.

"Com pan i es su ch

as Ti n der f al l i n t o a

cat egor y w h er e a com pan y sacr i f i ces pr of i t s i n or der t o gr ow i n a

other com petitor s, m ostly sm all star tups w ithout the user base of Tinder , have begun to tw eak Tinder ?s m odel in the hopes of stealing custom er s. Ther e is Bum ble, w hich alw ays allow s the w om an to m ake the fir st m ove to m atch w ith a par tner ; and ther e is Happn, w hich m atches user s up w ith people that they pass on the str eet by using their GPS location. Tinder has also r eleased new fr ee featur es such as ?Super Like,? thr ough w hich, once per day, a user can dir ectly m atch up w ith a per son in w hom he or she is ver y inter ested in w ithout w aiting to be m atched nor m ally. Nonetheless, it is still too ear ly to tell w hether Tinder ?s dom inance w ill pr ove lasting and w hether it can build on its success in dr aw ing in user s in or der to br ing in r evenues and incom e.

f i el d."

Tinder ?s str ategy has r ecently been alter ed fr om a focus on gr ow th to a focus on pr ofits. Tinder has m ade a num ber of changes to its inter face in or der to incr ease pr ofits. Ther e is now a lim it to how m any tim es a user can sw ipe to the r ight w ithin 24 hour s. In or der to r em ove this

Ar t: Nathan Kuflik

W hile Tinder is the king of the hill at the m om ent, tens of

Ju l i an Sn yder

has been a contr ibutor to Incentives for the past tw o year s. He is cur r ently in M s. Schneider 's AP Econom ics class and w ill attend Br andeis Univer sity after his gap year in Isr ael. He has alw ays been a fan of econom ics and is par ticipating in the 2016 NCEE Econ Challenge.

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gender s. Suppor tingly, m en on aver age go into business and engineer ing m or e often, w hile w om en tend to w or k in the hum anities and social ser vices. Sociologically speaking, m en ar e tw ice as likely to w or k 40 hour s per w eek than their fem ale counter par ts, and num er ous psychosocial studies have found that m en ar e alm ost five tim es as likely to aggr essively bar gain or negotiate contr acts and higher hour ly pay and annual salar ies. Fr om an econom ic standpoint, it often r em ains difficult to include exter nal factor s in r epor ting, but biological r eality plays a significant r ole in the decisions m en and w om en m ake w hen choosing car eer paths. As the child- bear er s, w om en w ho have babies or star t a fam ily ar e out of the w or kfor ce for a longer per iod than m en. This explains w hy w om en ar e far m or e likely to enter low er paying m or e flexible pr ofessions, and m or e

likely to w or k par t tim e or for less hour s. This can help explain a study done by the Am er ican Enter pr ise Institute w hich found that the over w helm ing m ajor ity of danger ous w or k positions ar e occupied by m en. The jobs of m iner s, logger s, m achiner y installator s, w hile legally open to w om en, ar e vir tually dom inated by m en, helping to explain w hy m en accounted for 92% of all w or k r elated deaths in the year 2015. Sim ply put, w om en on aver age, sim ply put, choose safer or differ ent car eer s, w hich often don?t pay the sam e as those m en choose. It?s im por tant to note that w hile w om en cer tainly should never be expected to r aise a fam ily r ather than w or k, and fr ee choice m ust alw ays be valued in a Wester n dem ocr atic society, w om en often in fact choose to leave w or k . Fascinatingly, as the econom ist Thom as Sow ell points out, w om en w ho have passed their child- bear ing

age and w or ked continuously ther eafter exper ience r ising incom es, often higher than m en. This theor y is bolster ed by an over w helm ing consensus in the com m unity studying the issue, notably by Har var d econom ics pr ofessor Claudia Goldin w ho str essed how the differ ent lifestyles people live im pact pay. As the var iable of child-r ear ing or m ar r iage changes, the occupational choice or hour s w or ked becom es dir ectly cor r elated w ith pay ear ned, subsequently leading to an incr ease or stabilization of pay. Continuous em ploym ent is found m or e often in m ale w or ker s, w hile tim e off fr om w or k, pr esum ably to r aise a fam ily, m ostly per tains to w om en. Again, it?s im por tant to note w om en should never be expected to solely r aise a fam ily, but they ar e in fact the only ones w ho give bir th, and subsequently r em ain out of w or k for longer per iods of tim e. Thus, the differ ence of salar y is not em ployer s paying differ ently, but r ather the im pact of differ ent biological and sociological char acter istics. W hile sexism and social pr ejudism ar e sur ely pr evalent issues, it?s im por tant to note that the Civil Rights Act of 1964 pr ohibits pay discr im ination based on r ace, r eligion, and gender identification. Any w om an, or m an for that m atter , w ho does feel discr im inated in the w or kplace as it per tains to pay, can and should seek justice.

Ar t: Shoham Calipha

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So does a gender w age gap exist? Nationally, yes. How ever , this can give off w ildly m isleading assum ptions and fails to accur ately depict the econom ic gender balance and equality in the Am er ican w or kfor ce.

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deal of cor r uption in an attem pt to gain the loyalty of politicians to convince them to go along w ith their agenda. This is called cr ony capitalism , in w hich gover nm ent officials ar e deeply invested in businesses and ther efor e help com panies by unfair and illegal m eans. This leads to a lim ited fr ee m ar ket society, w hich goes against the ideology of capitalism . Capitalism also gener ates better quality pr oducts; as ther e is m or e com petition, com panies need to m ake better or the best pr oducts in or der for consum er to buy their goods and ser vices. Com petition also leads to fair pr ices because all pr ices ar e based on the supply and dem and of the pr oduct. Based on the r ecor d of both com m unist and capitalist countr ies,

capitalist societies have been m or e successful thr oughout histor y. Russia and China pr ovide tw o pr im e exam ples of failed com m unist policies in countr ies, and any Wester n countr y is an exam ple of a successful capitalist countr y. These Wester n countr ies have an efficient industr y, a stable cur r ency and significant GDP gr ow th. How ever , ar e these Wester n countr ies r eally succeeding? Ther e is a 15.1% pover ty r ate in Am er ica, w hile the CEOs of For tune 500 com panies ar e m aking m illions of dollar s. How is this society successful if som e people ar e thr iving w hile other s ar e bar ely m aking a living? Is it because they w or ked har d, or because they r eceived or inher ited all their m oney fr om their par ents w hile other s inher Photo: Yakir a Ber gm an

ited only the clothes on their back . Fur ther m or e, under capitalism , com panies can gain a m onopoly over a pr oduct. This is bad because it takes aw ay the com petition betw een com panies, w hich is needed in or der for capitalism to succeed. If ther e is no com petition, the com pany totally contr ols the consum er and because ther e is no other option, it r aise pr ices. As a r esult, the gover nm ent passes law s to lim it a fr ee m ar ket society by not allow ing m onopolies to exist and ther eby encour aging com petition. This is w hat is done in the United States in an attem pt to m ake our society m or e fair ; w e cr eate a m ixed economy w hich com bines the best of capitalism w ith som e of the benefits of com m unism in or der to potentially allow ever yone to succeed. W hile pur e capitalism is not per fect, neither is pur e com m unism . The w ay to cr eate a functioning society is to com bine both of these econom ic system s. Am er ica has com bated the negative aspects of capitalism by adding econom ic safety nets and by the gover nm ent contr olling som e aspects of the business sector. On the other hand, China has m ade effor ts to open up its m ar ket and r educe its m any gover nm ent r egulations. W hen im plem ented in m oder ation, w hether a capitalist society w ith safety nets or a com m unistic society w ith fr ee m ar ket char acter istics, a m ixed economy m ay be the best solution.

In addition to Ben j am i n Kl est zi ck 's passion for the econom ics jour nal, he spends a significant por tion of his tim e taking the Isidew ith.com test to deter m ine w hich candidate a per son should vote for , and becom es m assively fr ustr ated ever y tim e he gets Ber nie Sander s (he feels the Ber n all day long). Despite these hor r id r esults, Ben is ver y pr o-capitalism . This is r eflected in his position as Co-Head of the Investm ent Club. Ben looks for w ar d to next year ?s M odel Congr ess, w her e he can fur ther place him self on the path to being the next Hillar y Clinton.

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befor e, m or e than a billion m or e citizens than the U.S. This changes the gam e entir ely. As it tur ns out, China?s per -capita spending pow er (GDP divided by population) adjusted for PPP has them lagging behind m any other countr ies. This m eans that, although in China you can get m or e for your m oney, the am ount of spending pow er each individual has on aver age is m uch less than citizens of other countr ies. This in tur n r eflects the aver age quality of life w hich is less than optim al in China. The U.S., on the other hand, has a higher incom e per capita and a higher standar d of living due, in par t, to our significantly sm aller population size.

far m er buys m or e m achiner y for his far m ; then the m achine com pany buys m or e m etal for its m achines; and so on and so on until all the num ber s ar e w r itten dow n in the official gover nm ent books. Ther e is

" As i t t u r n s ou t , Ch i n a's

in other w or ldleading econom ies. Additionally , China has been know n to skew their data, accor ding to M atthew Cr abbe, author of ?M yth- Busting China?s Num ber s.? Com par atively, the U.S. has an econom ic r ecor ding system that em ploys hundr eds of people and w or ks like a polished m achine. So w hat does this m ean for the U.S.? W ho gets the econom ic gold m edal? The answ er is: it doesn?t m atter. Technically, China has higher PPP-based GDP, but, as w e?ve seen, ther e ar e m any dr aw backs to this m easur em ent. Technically, the U.S. has a lar ger debt, but w ho is going to do anything about it w ithout collapsing the entir e w or ld economy? And, given the cur r ent pace at w hich China?s econom ic gr ow th r ate is slow ing, it m ight not ow n the PPP pr ize for m uch longer. The conclusion, then, is that ther e m ay be no obvious super pow er in today's globalized, highly- com plex w or ld. So m any factor s have to be accounted for that constantly change and shift that quantifying them is near ly im possible. But that?s okay in the inter connected w or ld w e have; just stop w or r ying about it and get a Big M ac.

per -capi t a spen di n g pow er

(GDP di v i ded by popu l at i on ) adj u st ed f or PPP h as t h em

Another issue w ith using the PPP as a m easur em ent for econom ic pr ow ess, w hich is especially tr ue of China, is that num ber s cannot alw ays be tr usted. Think about this exam ple: a local housew ife buys a chicken fr om the village butcher ; next the butcher buys m or e chickens fr om the far m er ; then the

l aggi n g beh i n d m an y ot h er cou n t r i es." bound to be a m istake or cor r uption in the data som ew her e along the line. W hile this is tr ue of m any econom ies, China?s enor m ous size am plifies the pr oblem to a degr ee not found Photo: Jay Eisenstat

Nat h an i el Gol dbl u m

is a senior at SAR and lives in River dale. W hen he sum m ons the cour age to leave the w ar m th of his bed and com puter , w hich is r ar ely, he can be found w atching TV dow nstair s or eating on the couch. Once ever y har vest, he leaves his hom e to play fr isbee, do ar t, or eat all or ganic m ater ial at other people's houses. Seeing as this is his fir st tim e w r iting anything econom ic, he'd appr eciate a little less judgm ent.

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check?...I have a sister -in-law w ho com es up w ith a new invention ever y other m onth: ?You should invent x.? Give m e $15,000. I?ll go see if w e can get it patented. All of a sudden the conver sation changes; all of a sudden she star ts to ?Ehhhh, I don?t know ? ? Well, that?s w hat it takes. So your idea r ight now ? ther e?s no or iginal idea. Any idea you?ve had, a billion other people have had it. W hat m atter s is, did you put enough tim e, ener gy, m oney, r esour ces behind it to actually execute that idea. Execution?s ever ything. Execution?s m or e im por tant than ideas. M otivation is m or e im por tant than talent. Ther e ar e plenty of talented individuals in this w or ld w ho don?t accom plish anything. It?s the m otivated individual that actually accom plishes som ething. Skills can be taught, but you can?t teach m otivation; you can?t teach entr epr eneur ship. You either have it, or you don?t. You can lear n cer tain skills; I can lear n how to balance a checkbook . But w anting to ow n my ow n business? you can?t lear n that. Av i : Shifting a little bit: let?s go into the nuts and bolts of your business. How do you pick your stor e locations? Sach i n : Ever yone has a differ ent theor y? a lot of people like highw ay stor es, tr affic stor es, com m uter stor es. I like com m unity stor es. It?s alw ays som ething I?ve gr avitated tow ar ds. I w ant the m om or dad on their w ay to w or k in the m or ning, I w ant the gr andm other w ho?s helping to take car e of the kids to br ing the str oller in in the after noon. I?ve alw ays w anted to be par t of a com m unity. I build my business m odel ar ound it? it?s the people I hir e, it?s the w ay I tr ain, it?s the w ay I?ve alw ays envisioned myself being a m em ber of the business. I sponsor little league team s, I do the w hole thing. And so the location is ver y m uch

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Photo: Josh Dor fm an

dependent on w hether or not I believe that that site can fit in into a com m unity. Av i : And a huge par t of w hat you do is m anaging people. W hat?s m ost challenging about m anaging people and w hat values dr ive the w ay that you m anage people? Sach i n : The m ost challenging thing about m anaging people is that you can?t m anage ever yone the sam e w ay. And so you have to be able to adapt to each individual in that m om ent. And individuals actually w ill change fr om tim e to tim e also. You can?t m anage the sam e per son the sam e w ay! How they w or ked tw o year s ago m ay be differ ent fr om how they ar e now ? especially in my industr y, w her e I?m dealing w ith people w ho ar e liter ally gr ow ing up...I?ve had people that star ted w or king for m e at 16 and ended at 25; ther e ar e thr ee differ ent people in that! And so that?s the m ost challenging. I?ve alw ays believed? one of the tenets that I build my philosophies ar ound is? that you w ant to pull out w hat?s ther e, not push in som ething that?s not. So you focus on their str engths, and you focus

on building up those str engths; you don?t focus on their deficiencies, and you don?t focus on instilling som ething in them that?s not alr eady ther e. You know , that goes back to your or iginal question about entr epr eneur ship: you can?t put that into som ebody. If it?s ther e, you can help pull it out. But you can?t put it into som ebody. So if they?r e punctual and or ganized? use that to your advantage. But if som eone is not that, you don?t hir e them to or ganize the closet. They m ight be a gr eat people per son? then you focus on that and you have them out in fr ont of the people. You don?t have them doing inventor y. You have to m ake that decision. Av i : I cur r ently don?t have plans for July and August. So, I and a fr iend of m ine w er e discussing, w hy don?t w e go and star t a business? Let?s do this. We have tim e, w e have a lot of differ ent ideas? let?s go out ther e and star t som ething. But it?s ver y har d to know ? okay, so w e w ant to do this, but how do w e star t? We have an idea, but so w hat? Can you tr y to lay out a r oadm ap for this exam ple but also for anyone w ho has de-

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lucr ative contr acts for player s. To put this into per spective, for the 2015- 2016 NBA season, the salar y cap w as a r ecor d $70 m illion; w ith this new deal in place, the pr ojected salar y cap for the 2016-2017 season is a r em ar kable $90 m illion. The salar y cap w ill continue to r ise, expected to r each $108 m illion for the 2017- 2018 season. Since m axim um contr acts (the m ost a team can pay a cer tain player ) for individual player s and the luxur y tax ar e both calculated based on the salar y cap, this new deal w ill have an enor m ous effect on player s? contr acts by pushing m axim um contr acts thr ough the r oof. In pr epar ation for this m assive incr ease in salar ies, m any

high- ear ning player s like LeBr on Jam es have signed one- year deals w ith their team s so that they w ill be on the open m ar ket w hen the new cap hits in 2016. This cap incr ease m ay negatively im pact the com petitive balance in the league, at least in the near futur e. Som e of the better team s in the league, w ho have r ecently given aw ay lar ge contr acts r elative to the salar y cap, now have elite player s locked up for the next couple seasons, and a lot of r oom to spend under the new cap. For instance, the Golden State War r ior s, w ho r ecently gave lucr ative longter m deals to Klay Thom pson and Dr aym ond Gr een under the cur -

r ent salar y cap, now have the cap to sign fr ee agents that under nor m al cir cum stances they w ould be unable to sign. Ther efor e, the War r ior s, w ho alr eady sit atop the Wester n Confer ence standings, can go after super star s like Kevin Dur ant w ho w ill be in fr ee agency this year. The new cap, coupled w ith Kevin Dur ant, LeBr on Jam es and m any NBA super star s testing fr ee agency this sum m er , w ill r esult in a cr azy July and a shift in the NBA?s landscape for year s to com e. W hile m any technicalities of the new cap ar e still up in the air , one thing is cer tain: player s ar e going to cash in big tim e.

Dav i d Adl er

is a junior at SAR High School. David is know n for his str ong beliefs about how the economy w or ks. David is a big believer in a laissez-fair e system . He believes that the m ar ket place should value a good, not the gover nm ent. David and for m er chair m an of the Feder al Reser ve Alan Gr eenspan ar e seen as sim ilar. Inter estingly enough, David?s par ents m ar r ied on the sam e day that M r. Gr eenspan w as inducted as the chair m an of the Fed.

T H E LI BRARY Book Rev i ew : The Big Shor t by Al l i son Her st i c

m agine placing a bet, but instead of picking the w inner you bet on the loser. That is the basic pr inciple behind "shor t-selling", or shor ting a stock or bond. In this m ethod of investm ent, the buyer anticipates a decr ease in the value of w hat he or she is pur chasing. The nuanced par t of "shor ting" is that to shor t an asset, the seller never has to actually buy it at all. A shor t sale is r ather the sale of a secur ity that the seller has bor r ow ed. In the case of a stock, w hen the pr ice of the secur ity falls, the seller then can buy back the stock and pay

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less for it, r etur n the shar es to the lender and keep the differ ence? now his or her pr ofit. Now im agine shor ting the entir e United States economy. That's the basic pr inciple of The Big Short by M ichael Lew is, an extr aor dinar y and har r ow ing por tr ait of the 2008 banking cr isis. The book begins w ith an explanation of the pr oblem s inher ent in m or tgage backed secur ities, beginning w ith their conception in the 1980s. M or tgage bonds function as a collection of sor ts, a gr ouping of thousands of hom e m or tgages packaged into a

financial pr oduct that can be bought and sold like a bond. These bonds ar e then str uctur ed into tr anches, stacked layer s accor ding to the cr edit of hom eow ner s and their likelihood to pay off their m or tgages. The r iskier the investm ent, the low er the tr anche and the m or e likely that the hom eow ner w ill pr em atur ely r epay his or her pr incipal. But m or tgage bonds didn't stop ther e; soon the idea of a subpr im e m or tgage w as intr oduced. A subpr im e m or tgage is essentially the r iskiest and m ost poten-

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O I L T U RM O I L Pol i cy I m pl i cat i on s of U.S. Rel i an ce on For ei gn Oi l by Raf i Kepecs ntil the 1970s, dom estic Am er ica. U.S. em pow er m ent of w as due to Am er ica?s ener gy inoil pr oduction pr ooil countr ies, including Saudi dependence in 1967 as opposed tected the U.S. fr om beAr abia, tr ansfor m ed oil into a to its r eliance on for eign oil in ing invested in and ther efor e intool that has been used to m anip1973. In 1967, Am er ica w as able fluenced by for eign oil. Texas ulate the U.S. and U.S. for eign to obtain the necessar y oil fr om had pr oduced enough oil to m eet policy. dom estic pr oduction and allied all of Am er ica?s ener gy needs. In countr ies that still had oil r elaThe Ar abfact, Pr esident Eisenhow er institions w ith the M iddle East. How " U.S. tuted quotas defending and pr oever , the em bar go of 1973 had m oting dom estic oil businesses m or e of a sever e im pact due to over oil- im por ting com panies. m or e thor ough boycotting and em pow er m en t of These quotas eventually pr oved the fact that the U.S. r elied on counter pr oductive, how ever ; M iddle Easter n oil for the oi l cou n t r i es, i n cl u di n g they caused m uch of Texas?s countr y to function. oil to be used up ear lier than The Six Day War m ar ked the anticipated. Texas could not Sau di Ar abi a, t r an sf or m ed M iddle East?s fir st use of oil keep up w ith the r ising deas a w eapon. As sever al m ands for ener gy, and its oil oi l i n t o a t ool t h at h as been Ar ab countr ies sur r ounding pr oduction eventually Isr ael began m obilizing their peaked befor e declining. ar m ies, Isr ael attacked the This in tur n led to the aboli- u sed t o m an i pu l at e t h e U.S. Egyptian Air For ce. This detion of the quotas by Pr esident cisive action ensur ed Isr aeli Nixon, but only after ir r evictor y. Never theless, anger ed an d U.S. f or ei gn ver sible dam age had been by U.S. suppor t of Isr ael, Ar ab oil done. Since Am er ica exhausted countr ies im posed an oil em its ener gy r eser ves so quickly, it pol i cy." bar go against any countr ies helpr elied even m or e heavily on for ing Isr ael, including the U.S. They Isr aeli Six eign oil than ever anticipated. By dem anded that the U.S. pr essur e Day War of 1967 and the Yom the 1970s, Texas?s r eser ves w er e Isr ael into leaving the ter r itor ies Kippur War of 1973 both tr igso depleted that in the event of an it captur ed dur ing the w ar. ger ed oil em bar goes dir ected at ener gy cr isis it could not incr ease the U.S. Sever al Ar ab countr ies, The U.S. did not m eet these depr oduction to supply the countr y m ost notably Saudi Ar abia, dem ands, how ever ; for var ious r eaw ith needed extr a oil. As dem onclar ed the em bar goes to pr otest sons, the em bar go did not affect str ated by the Ar ab oil em bar goes U.S. aid of Isr ael, w hich they conthe U.S. ener gy situation as m uch of 1967 and 1973, the U.S. w as sider ed an enemy. How ever , the as the Ar ab countr ies expected. thus r eliant on the goodw ill of em bar go of 1973 im pacted U.S. For one, the em bar go w as not efM iddle Easter n countr ies, and policy m or e than did the em fective enough at lim iting U.S. oil; these nations consequently enbar go of 1967. This differ ence the U.S. had enough ener gy joyed econom ic influence over

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super ior to the Ar ab countr ies, the Ar ab countr ies w ould deem an attack unw ise. W ith r egar d to oil, Pr esident Nixon sum m ed up the gover nm ent?s view s: ?Oil w ithout a m ar ket? doesn?t do a countr y m uch good.? As m entioned pr eviously, the em bar go of 1967 hur t the oil countr ies m or e than the U.S., and the U.S. believed that they w ould not r isk using that tactic again. How ever , Nixon did not expect Texan oil to r un out so quickly; the countr y needed oil, r egar dless of the seller. Nixon w as also oblivious to the Saudi tr ansfor m ation into the new sw ing pr oducer , the m ain oil pr oducer that m eets w or ld needs. This allow ed the oil w eapon to be used m ost effectively since the disastr ous effects w er e unexpected and added an elem ent of confusion. The Saudis r ealized that the w or ld m ar ket had shifted to their benefit; since the U.S. had access to the sam e infor m ation, it also should have r ealized that the conditions w er e r ipe for a successful em bar go. M or eover , since the Saudis w er e usually against em bar goes, the U.S. should have r ealized that they w ould not thr eaten em bar go unless they believed it w ould be successful. As the Shah of Ir an put it, ?It?s Am er ica?s inaction? that has landed us all in this m ess.? Am er ica?s unw illingness to heed the w ar ning signs gave the Ar ab countr ies the oppor tunity to attack Isr ael and im pose an oil em bar go. The Ar abs successfully used the

thr eat of oil em bar go to str ain U.S. r elations w ith Isr ael. Befor e the w ar began, Saudi Ar abia dem anded ?a ?sim ple disavow al? of Isr aeli policies? by the U.S. in or der to pr event the em bar go. Ir onically, this w as the one w ar ning the U.S. took to hear t; Joseph Sisco, the Am er ican Assistant Secr etar y of State, tr ied to placate Saudi Ar abia by r evealing that ener gy w as a deciding factor in M iddle Easter n policy and that Am er ican inter ests ?ar e not synonym ous w ith the state of Isr ael.? Ther efor e, r eliance on for eign oil thr eatened to subver t the Am er ican value of suppor ting dem ocr atic gover nm ents and to str ain r elations w ith the countr y?s ally, Isr ael, in exchange for good econom ic r elations w ith the m onar chic Ar ab nations. W hen Isr ael desper ately needed supplies dur ing the Yom Kippur War , the U.S. near ly did not send any. Am er ica pur por tedly decided to stay out of the w ar so as not to anger the Russians, but it w as clear that m er ely sending supplies w ould not antagonize them ; in fact, Russia had r ecently sent supplies to the Ar ab nations. The U.S. only agr eed to send supplies because the Isr aelis thr eatened nuclear w ar far e if they did not r eceive aid. Am er ica tem por ar ily abandoned its ally to keep the Ar ab nations appeased; even w hen the U.S. finally helped Isr ael, it sent the supplies at night only so the oil countr ies w ould not notice. The em bar go str uck a cr ippling blow to the U.S., str essing its r e-

liance on oil and oil countr ies. Befor e this em bar go, Am er icans thought that r esour ces w er e lim itless; no other shor tage had this m uch effect on day- to- day life. The m ost noticeable lim its w er e on gasoline. Pr ices r ose daily, leading to a panic that gas w ould r un out. Consum er s pur chased gas in a state of anxiety; those w ith near ly a full tank w or r ied that they w ould not be able to get any in the futur e, leading to extr em ely long gas lines. Even the U.S. Sixth Fleet, w hose job w as to pr otect the countr ies that w er e cr eating the em bar go, w as shor t of fuel. W hile this dir e situation continued as a r esult of the em bar go, the Saudis had the ner ve to r equest speedy shipm ents of ar m s fr om the U.S. because they w er e concer ned the U.S. w ould invade their countr y due to the em bar go. The influence of oil m ade the oilpr oducing nations over confident; if oil w er e not such a staple of Am er ican society and life, then the oil countr ies w ould not have becom e pow er s them selves. Additionally, the possibility of the oil w eapon gave Pr esident Anw ar Sadat of Egypt, the m ain instigator of the Yom Kippur War , the confidence that he needed to attack Isr ael. Thus, the entir e w ar m ight not have happened if Am er ica did not r ely on for eign oil. Am er ican r eliance on for eign oil has caused abundant str ife, indicating that the U.S. w ould do w ell to invest in alter nate ener gy sour ces.

Raf i Kepecs is a junior

at SAR High School and a Renaissance M an w ith a passion for m ath, science, engineer ing, histor y and econom ics. Rafi w as a m em ber of SAR's 2016 Robotr affic team w hich w as the only Nor th Am er ican and non-technical school in the com petition and w hich took hom e m any m edals. Rafi has an ar tistic and cr itical eye w hich has helped the Ar duino club students w hom he now m entor s and SAR's M ath M ag on w hich he ser ves as Associate Editor and has been the key to Incentives m aking it to pr ess.

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BI BLI O G RAPH Y Googl e an d GDP "Googling the Futur e." The Econom ist. The Econom ist New spaper , 18 Apr. 2009. Web. 28 M ar. 2016. Ito, Aki, and Alisa Odenheim er. "Your 119 Billion Google Sear ches Now a Centr al Bank Tool." Bloom ber g.com . Bloom ber g, 1 Aug. 2012. Web. 28 M ar. 2016. "Isr ael GDP | 1960-2016 | Data | Char t | Calendar | For ecast | New s." Isr ael GDP | 19602016 | Data | Char t | Calendar | For ecast | New s. Web. 28 M ar. 2016. M ui, Ylan Q. "W hat Sear ch Engines Tell Gover nm ents about the Econom ic Her e and Now." The Guar dian. Guar dian New s and M edia, 2014. Web. 28 M ar. 2016. M ahapatr a, Lisa. "The Google Sear ch Tr ends Indicator : The Stor ies That Google Tr ends Data Tell About The Economy [Char ts]." Inter national Business Tim es. IBT, 2013. Web. 28 M ar. 2016. M ulleinathan, Sendhil. "How Google Sear ches Ar e Leading Econom ic Indicator s." How Google Sear ches Ar e Leading Econom ic Indicator s. M ar ketPlace, 30 Jan. 2012. Web. 28 M ar. 2016. Odenheim er , Alisa. "Google: Centr al Banks' New Econom ic Indicator." Bloom ber g.com . Bloom ber g, 9 Aug. 2012. Web. 28 M ar. 2016.

Schuessler , Jennifer. "The New Republic at 100: A Centur y of Bicker ing." The New Yor k Tim es. The New Yor k Tim es, 18 M ar. 2014. Web. 29 M ar. 2016. Som aiya, Ravi. "Her e's a M em o fr om @tnr 's Chief Executive, Guy Vidr a, W hich Just Went Out. Pic.tw itter.com /qob99sS6kl." Tw itter. Tw itter , 2014. Web. 29 M ar. 2016. Som aiya, Ravi. "Shake- Up at The New Republic: Fr anklin Foer and Leon W ieseltier Ar e Out." The New Yor k Tim es. The New Yor k Tim es, 2014. Web. 29 M ar. 2016. Vidr a, Guy. "A Letter to Our Reader s." The New Republic. 31 Oct. 2015. Web. 31 M ar. 2016. "Ver tical Integr ation." The Econom ist. The Econom ist New spaper , 2009. Web. 31 M ar. 2016. "W hen and W hen Not to Ver tically Integr ate." M cKinsey & Com pany. 2 Feb. 2015. Web. 29 M ar. 2016. M i n d Th e Gap Baker , Laur ence C. "Differ ences in Ear nings Betw een M ale and Fem ale Physicians." The New England Jour nal of M edicine. Cottosovva, Ivanna. "U.S. Is 65th in Wor ld on Gender Pay Gap." CNNM oney. Cable New s Netw or k, 28 Oct. 2014. Web. 31 M ar. 2016.

Tax Ref or m Fal l s Fl at

Lu, Em ily. "W hy Is Ther e a Gender Gap in Physician Salar ies?" KevinM D.com . 03 Feb. 2011. Web. 31 M ar. 2016.

Fr ank, Rober t H. "The Pr oblem W ith Flat-Tax Fever." The New Yor k Tim es. The New Yor k Tim es, 05 Nov. 2011. Web. 31 M ar. 2016.

"Gender Gap in Physician Pay W idening." Am er ican M edical Wom ens Association. 8 M ay 2012. Web. 31 M ar. 2016.

Pom er lau, Kyle. "W hat Ar e Flat Taxes?" Tax Foundation. 19 M ay 2015. Web. 31 M ar. 2016.

Rim m er , Abi. "BM J Car eer s - W hy Do Fem ale Doctor s Ear n Less M oney for Doing the Sam e Job?" BM J Car eer s - W hy Do Fem ale Doctor s Ear n Less M oney for Doing the Sam e Job? 15 Sept. 2014. Web. 31 M ar. 2016.

Phillips, Kelly. "Our Cur r ent Tax v. The Flat Tax v. The Fair Tax: W hat's The Differ ence?" For bes. For bes M agazine, 7 Aug. 2015. Web. 31 M ar. 2016. Schoen, Jon W. "GOP Flat Tax Plans Sim ply Don't Add up." CNBC. 12 Nov. 2015. Web. 31 M ar. 2016. "Them e 3: Fair ness in Taxes Lesson 3: Pr ogr essive Taxes." Under standing Taxes. IRS, 18 Aug. 2011. Web. 31 M ar. 2016. Spor t s an d Th e Ci t y Joe Var don, Nor theast Ohio M edia Gr oup. "LeConom ics: Is the Econom ic Im pact of LeBr on Jam es' Retur n to Cleveland M or e than a Feeling?" Web. 13 Jan. 2016. "LeBr on Jam es: Basketball Star , Econom ic Booster."CNBC. 30 Oct. 2014. Web. 13 Jan. 2016. "OKC Thunder Playoffs Boosting Local Economy."KFORcom . 05 June 2012. Web. 13 Jan. 2016. "Kevin Dur ant's Char ity Foundation Pr esents $35,000 to OKC Elem entar y School for Hom eless Childr en."New sOK.com . 09 Dec. 2015. Web. 13 Jan. 2016. A M at t er of Degr ees Bar r ett, Jennifer. "You Wasted All That M oney on a College Degr ee?" CNBC. 19 Feb. 2015. Web. 31 M ar. 2016. "Is College w or th It?" The Econom ist. The Econom ist New spaper , 05 Apr. 2014. Web. 31 M ar. 2016.Spar shot, Jeffr ey. "Congr atulations, Class of 2015. You?r e the M ost Indebted Ever (For Now )." WSJ. 8 M ay 2015. Web. 31 M ar. 2016. Fr om Rags t o Ri ch es "Color ants Industr y Histor y." Color ants Industr y Histor y. Web. 17 Jan. 2016. Fer guson, Niall. Civilization: The West and the Rest. New Yor k: Penguin, 2011. Pr int. "The Cotton Industr y and the Industr ial Revolution - Histor y Lear ning Site." Histor y Lear ningSite. Web. 17 Jan. 2016. Industr ial Revolution." Histor y.com . A&E Television Netw or ks. Web. 17 Jan. 2016. "Industr ial Revolution Resear ch." Industr ial Revolution. Web. 17 Jan. 2016. "Textile Industr y Histor y." Textile Industr y Histor y. Web. 17 Jan. 2016. "The Textile Industr y." The Industr ial Revolution. Web. 17 Jan. 2016. "The Or igins of W W I." The Or igins of W W I. Web. 17 Jan. 2016.

Keyn es vs. Hayek : Th e M i n i m u m Wage Debat e "2014 Job Cr eation Faster in States That Raised the M inim um Wage." 2014 Job Cr eation Faster in States That Raised the M inim um Wage. Accessed Novem ber 3,2015. "Histor y and Debate of M inim um Wage." M inim um Wage Debate. Accessed Novem ber 3, 2015. "M inim um Wage M ythbuster s." - U.S. Depar tm ent of Labor. Accessed Novem ber 3, 2015. "Pr ice Floor s, Sur pluses, and the M inim um Wage | Foundation for Econom ic Education." FEE Fr eem an Ar ticle. Accessed Novem ber 3, 2015. "5 Facts about the M inim um Wage." Pew Resear ch Center RSS. July 23, 2015. Accessed Novem ber 4, 2015 Br ooks, David. "The M inim um -Wage M uddle." The New Yor k Tim es. July 23, 2015. Accessed Novem ber 4, 2015. "The Advantages of M inim um Wage." Sm all Business. Accessed Novem ber 4, 2015. "The Job Loss M yth." The Job Loss M yth. Accessed Novem ber 4, 2015. "A Reckless Wager." The Econom ist. July 25, 2015. Accessed Novem ber 16, 2015. "Econom ists Agr ee: Raising the M inim um Wage Reduces Pover ty." Washington Post. Accessed Novem ber 16, 2015. "Em ploym ent Policies Institute | M ajor ity of Labor Econom ists Believe M inim um Wage Hikes Cause Unem ploym ent." Em ploym ent Policies Institute. Accessed Novem ber 16, 2015. Feuer , Alan. "Life on $7.25 an Hour." The New Yor k Tim es. The New Yor k Tim es, 30 Nov. 2013. Web. 15 Feb. 2016 Fr eiling, Nicholas. "M inim um Wage: Good Intentions, Bad Policy." Values Capitalism . Values & Capitalism , 2013. Web. Kur tz, Annalyn, and Tal Yellin. "M inim um Wage since 1938." CNNM oney. Cable New s Netw or k, 2013. Web "M inim um Wage | United States Depar tm ent of Labor." M inim um Wage | United States Depar tm ent of Labor. Depar tm ent of Labor , n.d. Web. U.S. Depar tm ent of Labor. "Fair Labor Standar ds Act of 1938: M axim um Str uggle for a M inim um Wage | United States Depar tm ent of Labor." Fair Labor Standar ds Act of 1938: M axim um Str uggle for a M inim um Wage | United States Depar tm ent of Labor. N.p., n.d. Web.

Th e Econ om i cs of A Ref u gee Cr i si s

U.S. Depar tm ent of Labor. "M inim um Wage | United States Depar tm ent of Labor." M inim um Wage | United States Depar tm ent of Labor. N.p., n.d. Web.

Cassidy, John. The Econom ics of Syr ian Refugees. The New Yor ker. N.p., 2015. Web. 29 Oct. 2015.

Th e Cost of a Cu r e

Fakih, Ali and M ar r ouch, Walid. he Econom ic Im pact of Syr ian Refugees: Challenges and Oppor tunities in Host Countr ies. Geor getow n Jour nal of Inter national Affair s. 10 Nov. 10, 2015. M uch ado about nothing? The econom ic im pact of r efugee ?invasions.?The Br ookings Institution. Septem ber 16, 2016. Soer gel, Andr ew. Refugees: Econom ic Boon or Bur den. U.S. New s and Wor ld Repor t. 19 Feb. 2015. Web. 29 Oct. 2015. Sh ak eu p at t h e New Repu bl i c

Her per , M atthew. "The Cost Of Cr eating A New Dr ug Now $5 Billion, Pushing Big Phar m a To Change." For bes. For bes M agazine, 11 Aug. 2013. Web. 31 M ar. 2016. New m an, Peter J. "M easur ing the Value of Pr escr iption Dr ugs ? NEJM ." New England Jour nal of M edicine. 6 Jan. 2016. Web. 31 M ar. 2016. Taver nise, Sabr ina. "Patients Fear Spike in Pr ice of Old Dr ugs." The New Yor k Tim es. The New Yor k Tim es, 22 Dec. 2015. Web. 31 M ar. 2016. "Tufts Center for the Study of Dr ug Developm ent." PR Tufts CSDD 2014 Cost Study. 18 Nov. 2014. Web. 31 M ar. 2016.

"An Inter view w ith TNR's Guy Vidr a." POLITICO. Web. 31 M ar. 2016.

W halen, Jeanne. "W hy the U.S. Pays M or e Than Other Countr ies for Dr ugs." WSJ. 1 Dec. 2015. Web. 31 M ar. 2016.

Gr ove, Lloyd. "The New Republic Im plodes." The Daily Beast. New sw eek/Daily Beast. Web. 29 M ar. 2016.

Th e Jet Set

Haughney, Chr istine. "Guy Vidr a Nam ed as Chief of The New Republic." The New Yor k Tim es. The New Yor k Tim es, 17 July 2014. Web. 29 M ar. 2016.

"Cr ude Oil Pr ices: West Texas Inter m ediate (W TI) - Cushing, Oklahom a." FRED Econom ic Data. N.p., 11 M ay 2016. Web.

"Inside the Collapse of The New Republic - The New Yor ker." The New Yor ker. 12 July 2014. Web. 29 M ar. 2016.

"Ker osene-Type Jet Fuel Pr ices: U.S. Gulf Coast." FRED Econom ic Data. N.p., 11 M ay 2016. Web.

M ahler , Jonathan, and Ravi Som aiya. "Revolt at the New New Republic." The New Yor k Tim es. The New Yor k Tim es, 07 Sept. 2014. Web. 29 M ar. 2016.

Tuttle, Rober t. "U.S. Air lines Ar e Betting Oil Pr ices Won't Rally Any Tim e Soon." Bloom ber g.com . Bloom ber g, 24 Nov. 2015. Web.

"New Republic Ow ner Chr is Hughes Puts M agazine Up For Sale." WSJ. 5 July 2015. Web. 29 M ar. 2016.

"National-Level Dom estic Aver age Far e Ser ies." Bur eau of Tr anspor tation Statistics. United States Depar tm ent of Tr anspor tation, n.d. Web. 13 M ay 2016.

"On M anaging Change: Chr is Hughes and The New Republic." On M anaging Change: Chr is Hughes and The New Republic. 5 July 2013. Web. 29 M ar. 2016.

Tar ver , Evan. "4 Ways Air lines Hedge Against Oil." Investopedia. N.p., n.d. Web. 13 M ay 2016. Sw eet en i n g Th e Pot

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