Can Free Cell Phones Be Profitable?

Ok, so this isnt really a science post, but its cool nonetheless! Personally, im sick of paying $100 bucks a month for my iphone (which is basically a glorified mini-lapotop). This begs the question...can a company profit off a free phone? Gizmodo thinks that this is possible, and who better to do it than....Google. Thats right, Google. Read the Article! [Link]

Obama & keynesian Economics

A paper I wrote for Economics about Obama, Keynesian economics, and the upcoming Green revolution.
Enjoy!

Macroeconomics : President Obama and Keynesian economics

Introduction

            Barack Obama took office in January of 2009 and despite running on a campaign of hope and optimism, was already facing a mountain of economic problems. A mortgage crisis, a collapsing banking and auto industry, and increasing unemployment have plagued the Obama presidency, and have hugely influenced a lot of the decisions that the President has had to make regarding economic policy. Many Economists have argued that due to the sheer amount of economic problems that the administration has faced have led the Presidency to take a Keynesian stance towards the US economy¹. This Keynesian approach to the economy has divided not only political parties, but also the American public, and has led to a difficult start to the Obama presidency.

Background

                                When a candidate is running for presidency, one of the cornerstones of a presidential administration boils down to one key issue: the Economy. A president, and more broadly, the political party he is tied to, cannot make significant gains politically if there is high unemployment, high deficits, or both, and unfortunately, this has been the economic condition that Barack Obama has “inherited” from his political predecessors.

                                Usually the administration can choose to tackle economic problems in one of two ways; the administration can take a “hands off” approach to the economy (The Classical Approach) or it can choose to use a more Keynesian approach. Keynesians, unlike classical economists, don’t rely on the “Invisible Hand” of the free market to solve economical problems. Keynesians believe that the market is riddled with imperfections, and corrective actions need to be taken to solve problems in the short-run. Although the Obama presidency is still in its infancy, it is quite clear that the Obama White House has chosen a more Keynesian approach to the economy.

                The Banking Crisis

One of the first Keynesian policies Obama enacted when entering the White House was continuing the Bush policy of investing US Tax payer dollars into US banks. Starting in 2008, nearly every U.S. bank began reporting that a lot of their mortgage-backed securities had lost a lot of value as the housing industry collapsed, and in essence, went “toxic”. This was followed quickly by the collapse of Lehman Brothers, which was feared would cause a “domino effect” in the banking industry, since all of the banks in the United States have such an inter-dependent relationship². To curb this banking industry collapse, the federal government decided that instead of letting the free market decide the outcome of this impending financial disaster, the government would instead bail out the banks using taxpayer funds. Although free markets, reflected in Classical economic theory, are the best way to organize market activity, this is not the case when a market collapse occurs. The Federal Government feared that if the banks in trouble did not receive capital, firms affected by the crisis would not only face bankruptcy because of a lack of liquidity, but would be unwilling to give out loans to individuals and industries that needed it. Many U.S. companies rely on easy access to loans, and if banks failed and the credit markets “Froze”, that would mean a decrease in the ability of a firm to produce, leading to a decrease in the nations PPF, a decrease in GDP, and shrinkage in aggregate demand. The government facing a potential crisis, under the guidance of Bush Treasury Secretary Hank Paulson and a policy continued under Obama’s Treasury Secretary Timothy Geither, decided that the Federal government needed to “invest” $700 Billion of taxpayer money (TARP funds) into several U.S. Banks, including Bank of America, Citibank, and Merrill Lynch³. Though this act might have prevented a worldwide credit catastrophe, and helped keep the “Circular-Flow” (Figure 1) of the economy going during its darkest time, some economists argue that banks which accepted TARP money were, effectively, nationalized⁴.

                                Why is distribution of TARP funds considered a Keynesian economic policy? A classical economist would have refused to get involved in the crisis, and let the “invisible hand” of the free market run its course. However, with so much at risk, and facing a potential credit crisis that could lead to an economic meltdown, the Obama Administration chose to take a more Keynesian approach by lending TARP money to banks at risk, insuring that the “Circular flow” of the economy would not be disrupted.

Federal Interest Rates

                                The Obama Presidency, under the leadership of Ben Bernake, has also tried to increase aggregate demand for goods by lowering the Federal Reserve interest rate to historic loans since the financial crisis hit.

                                The Federal Reserve is the agency responsible for loaning out money to banks, and recently has aggressively brought down interest rates to historic lows in a very short time. In mid 2008, the Federal Reserve interest rates were around 4.5%, whereas now they are as low as 0% (see Figure 2). The Federal Reserve is hoping that if it can loan money to banks at a very low interest rate, banks who receive Federal Reserve money will be willing to lend firms and individuals loans at lower rates.

From a Keynesian point of view, this is a great benefit to the economy. Why? This decrease in Federal Interest rates would help boost aggregate demand in the economy; firms, now with access to cheap capital, could hire more employees, build more factories, and increase output of goods. Hopefully, this increase of hiring and output would result in an increase in household income which would feed back into the “circular flow” of the economy, encouraging spending, and hopefully, lead to a cycle of economic growth.

If the Obama Administration and Federal Chairman Ben Bernake did not take an aggressive stance towards cutting Federal Reserve Interest rates, it could have led to a longer credit crisis. With a higher interest rate, Banks, even with TARP funds, would have been hesitant to lend money to individuals and firms.

                “Green Industry”

               

The American Recovery and Reinvestment act⁵ was another attempt by the Obama administration to spur economic growth through reinvestment of US funds into industries that are expected to grow in the future. These industries are mostly focused on energy infrastructure and renewable energy. A classical economist would not dare interfere with the free market, however the Obama administration feels that this is a necessary step to not only increase “green” production output of energy in the United States, but also decreasing potential frictional unemployment by subsidizing job-training related to renewable energy . Essentially, the government is acting as a large household in the “Circular Flow” of the economy so that it can purchase a massive amount of goods and services, in this case, renewable energy. The government is also investing heavily into its most vital source, labor, by spending over 600$ million dollars to train a “Green” workforce. Investment in labor is one of the best ways that a society can increase its PPF model and also, with time, it’s GDP.

Conclusion

                The fact that America faced such a huge financial crisis in such a short time pushed the Obama Administration to choose a more Keynesian economic policy to alleviate the escalating economic problems faced by the U.S. Keynesian policies, although they interfere with the free market, are necessary to correct market imperfections, especially in the short run. However, after writing this essay I am faced with an interesting question; if this mortgage crisis was tackled from a “free market” policy, would the US have been able to recover from this financial crisis? If the Obama administration would have taken a “Classical approach”, would the U.S. be stuck in an economical Catch-22, where banks would be unwilling to lend money because of a lack of available capital to the point that, eventually, the “Circular Economic Flow” would collapse? Also, does the recent bank bailout, coupled with soaring national debt and a reliance on consumer credit for economic growth mean that the Federal Government can no longer take a classical economical view because, in essence, the Federal Government is now a major investor in U.S. Banking firms? Is Classical Economic policy, from a federal standpoint, dead?

References

Main Article

1.       National Public Radio – Obama gives Keynes his first Real-World Test

January 29^th, 2009

http://www.npr.org/templates/story/story.php?storyId=100018973

Supplementary Articles

2.       Frontline PBS – Breaking the Bank

 June 16^th, 2009

www.pbs.org/wgbh/pages/frontline/breakingthebank

3.       CNN Money, Bank Bailout: Change is coming

January 18^th, 2009

http://money.cnn.com/2009/01/18/news/economy/bank_rescue/index.htm

4.       Washington Post, Stressing Solvency

Februrary 26^th, 2009

http://www.washingtonpost.com/wp-dyn/content/article/2009/02/25/AR2009022503349.html

5.       The White House Energy & Environment

March 19, 2009

http://www.whitehouse.gov/issues/energy-and-environment

Young CEOs

Think your too old to start your own company? Well, heres a list of 13 CEOs who started under the age of 30 and turned their ideas into multi-million dollar companies. The list ranges from titans such as Bill Gates and Steve Jobs to Good ole' Hugh Hefner! Hey who knows, maybe your idea could be the start of something big...

[Link]

MBA in...Healthcare?

Thats right, the MBA is no longer just for people who want to do finance or accounting based careers as you might believe. Actually I just read an interesting article that talks about Healthcare (an ever popular topic nowadays) and how recruiting for Healthcare managers has continued to grow even in The Great Recession. Healthcare in general has continued to grow (and will continue to grow) becuase, simply put, we have a generation of baby boomers that are heading into their 50's and 60's, and with an increasing life-expectancy that can only mean one thing...tons of doctors visits. Not only that but Hospitals and Biotechs are increasingly looking for people who have a healthcare and business background, which has lead to an increasing demand for Healthcare Management MBA's. Harvard, Duke, Northwestern, UCSD, and UMass Boston are a few Universities that offer a Healthcare Management MBA. Check out the Article to read more. [Article]

Prepping for Winter...Geek Style

Ok, so now that BB has moved from Southern California to Boston ive realized 2 things. 1) Boston has these things called "seasons", unlike SoCal, and 2) Winter in Boston = not too fun. Whats a Business savy executive or Lab Geek to Do? Read LifeHacker of course! Life hacker has posted an article about keeping up productivity during a snow-day, and will also be posting articles relevant to you geeks out there who want to make sure you keep busy with projects during those cold winter months. Check out Lifehacker this month for cool (wait..or Hot?) Winter tips...[LifeHacker] [Snow Day Productivity]

Dell goes a bit Green...

Well, environmentally that is. Apparently, the hip new thing to do for tech companies is to go green, and Dell is no exception! Dell has cleverly installed Solar Panels in their parket lots, not only shading cars from the blistering Texas heat (Have you guys been to Texas? You could fry an egg on the sidewalk), but also generating 160 kW of power! Not only is it offsetting power costs for Dell, but its also utilizing space that the company already owns...a parking lot. There no reason any company with an outdoor parking lot shouldnt be doing this. Good move Dell! Now if you would only improve your shoddy tech support, I would be a bit happier...[Article]

Cleantech Needed in the U.S.?

Well, Obama just gave a speech at MIT and he agrees with Broken Beakers previous article... Clean tech is the way to go! Obama just spent 20 minutes lecturing (and praising) MIT efforts to go green, and discussed that this nation NEEDS to pursue clean energy, not only because the world might depend on it, but because its a 2 TRILLION dollar industry (and i think republicans AND democrats can agree we could use that money right about now). Read the story here. [Article 1]

Cleantech...the answer to economic recovery?

An article at CNN talks about how Cleantech is supposed to become "The next big boom", and I agree! The article focuses on how new companies which focus on environmental concerns are getting a lot of money thrown at them by Venture Capitalists... similar to what happened to the computer industry in its early days! The article also mentions GreatPoint Energy, a Cambridge based company which focuses on converting biomass and coal into natural gas! Pretty good read, check it out here. [Article] [GreatPoint Energy]

Rise of the Robots

Ok, i am now convinced that we will all be replaced by robots one day. Yamaha has just built a robot with a voice synthesizer that can sing pitch-perfect. Not only that but it looks VERY similiar to a real human being. Scary. On the bright side, if these robots become standard in the music industry they can avoid embarissingly akward moments like this one. [Article Link to Robot Voice! Robot voice! All the kids love...the robot voice!]

The Fall of Bob.

You've probably heard of Bob, the guy in all those Enzyte commercials. Enzyte made a huge impact on the herbal supplement market, making millions of dollars in sales its first couple of years due to its wide-spread marketing and exploitation of men with small, *ahem*, well you know. Well guess what, Enzyte CEO Steve Warshak is now facing prison time for defrauding thousands of customers. "Waaaayyyyy to go Bob!" Full Story here. [Article]

Big Bada-Boom!

So what happenes when you put a bunch of undergraduate chemists in charge of making methylcyclopentadienyl manganese tricarbonyl (MCMT, a gasoline additive)? Only one of the largest explosions to be investigated by the Federal Chemical Safety and Hazard Board. Yes, this lab explosion was so large that it actually managed to throw debris a mile away! Readmore about it here! [Article]

Were Back! JIT For Fall!

So fall has arrived, and Broken Beaker is now in Boston! Our first story is about...Fashion. Hey, i told you well cover EVERYTHING relating to the science world. Yes, Boston magazine has done a pictorial on the upcoming fall fashion trends using nothing but scientists! Some of the items in the article are rather pricey (featuring designers such as Yves Saint Lauren and Roberto Cavalli), but that should be no problem for you Biotech dynamos. Get some fashion tips form it, and see what the CEO's and Managers at biotech SHOULD be dressing like. [Article]

Broken Beaker moving to Boston!

Yes, Broken Beaker is moving to Boston, home of the Bruins, Celtics, and Har-vuhd! It will take me a couple of weeks to get settled into my new home (and Grad-student life) and updates will be rare until mid September, but rest assured we will be back online reporting from the hub of bio-tech in North America!

Stylin Sonar Panels

Solar Panels are starting to get a bit more fashionable, thanks to SRS Energy, which has designed solar panels which can integrate seamlessly with Spanish tile. Along with being fashionable, the average homeowner will produce 860 kwH per year! [Article]

DNA Sequencing...Half off!

Well, not really, but researchers at Stanford have figured out a really cheap (and effective) method for sequencing the human genome. The entire process only required 3 researchers and less than $50,000! Countdown until health insurance companies require a submission of its customers entire genome starts now! [Article Link]

Wyeth Under Fire

Wyeth (Just purchased by Pfizer for a whopping $68 Billion) is, well...screwed. Reports have surfaced today in the New York Times that claim Wyeth has been paying "Ghostwriters" to basically write articles for scientific journals saying how great Wyeth-produced horomones are. I guess thats not a big deal, except for the fact that, well, thats kind of a conflict of interest. Not to mention kind of illegal. Oh and did I mention that Wyeth has been caught up in a class action lawsuit? By whom you may be asking? Well, by the 8000 women who used Wyeth horomones such as Premarin and Prempro and said it made them sick. Well see how this is going to pan out, and maybe the allegations are un-founded, but my guess is that Wyeth is going to eat it on this one. [NYT Article Link]

Wanna Build A Startup?

Need a little inspiration to start up your own Biotech? An article over at Inc Magazine talks about 7 startup started by ordinary people, who, through hard work, innovation and a little bit a cash, grew their companies to be worth millions! I know, its a little more cost-intense to start a biotech, but there's definitely something to take away from this article! Check it out! [Link]

Big Pharma vs Generics, Round 2

Man, are generics becoming a hot topic or what!? The Associated Press has released a new article about the battle heating up between generic drug-makers and Big Pharma (Amgen, Pfizer, etc). In case your unfamiliar with whats going on right now (and you definetly should be, it effects anyone in the healthcare industry), Obamas recent push for Healthcare reform has riled up the big pharmaceutical companies, because theyre afraid that to cut down on costs, generic drugs will be allowed to be made sooner than later (Lower patent time = lower profits). Big Pharma is asking for a 12-year generic ban, while generic drug makers are pushing for a 5 year cap. Congress has voted on a 12 year ban on generics, but will it pass the Senate? What about the threat of a presidential veto? And how will this effect the stock-market, since recently a lot of the healthcare companies have been carrying a lot of the rallys occuring recently on Wall Street? Read the full article. [AP Article] [Past Broken Beaker Article]

BMS Future rests...on Mice?

Bristol Myers Squibb recently purchased 90% of the shares of a company called Medarex. What does Medarex do? Well, they make it easy for pharmaceutical companies to develop drugs from mice for use in humans. Why should you care? Well, it just so happens that many of the blockbuster drugs manafactured by Novartis, Amgen and BMS are manafactured by "humanizing" antibody-excreting mouse cell lines, and if Mederex's method of doing this, dubbed UltiMab, proves effecient enough, it could speed up the development time for BMS drugs, giving them a head up on the competition. Why else should you care? Well, It should also be noted that pharmaceuticals derived from cell lines are the exact same drugs being targeted by the 12 year "generic ban" being talked about in the Senate nowadays (and that weve talked about in previous articles), so any new drugs developed from cell lines will be exclusive to the company that develops it for a long time, meaning big money for the pharmaceutical companies. BMS stock is only $20 a share, now might be a good time to buy...[Article Link] [UltiMab Link]

The Zen of Zappos

What does Zappos, an online shoe retailer and Amazon.com have anything to do with Biotech or Business? Everything. I read this article a couple of months ago about Tony Hsieh, and how his unique management style has pushed Zappos to the top of its game in online shoe sales. I was really intrigued about how he employs unique ways of keeping his employees motivated and making sure they are dedicated, such as offering new trainees $2000 to walk away from the company (read the article to find out why). Every company should read this article (especially Biotechs, which are plagued with antiquated management systems) and really re-evaluate their management style, maybe they can learn a thing or to from Tony. Apparently Amazon.com thought Tonys method of management was so intriguing and worked so well that they bought Zappos for $900 million dollars., yet will let it remain an independent company, which is pretty rare for a buyout. [Link]