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The Commodity Rally Has Paused. What’s Next for Oil, Copper, and Producers’ Stocks.
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Newswise — Labor negotiations between UPS and the Teamsters Union have come to an angry standstill, with the possibility of 340,000 UPS employees going on strike next month looming more likely than ever. Should that happen, the economic consequences will take place on a national scale.
Jadrian Wooten, a Virginia Tech professor of economics, answered questions about the circumstances that led to this impasse and what the effects could be should the strike go forward.
Q: What’s at stake if UPS workers do go on strike?
“There would be significant consequences. For some perspective, this would be the largest single-employer walkout in U.S. history. The most obvious initial impact would be a disruption to deliveries that would create an inconvenience for businesses and households. UPS delivers 19 million packages per day, which is about 25% of all packages in shipped in the U.S. That disruption could have ripple effects in the broader economy, with higher prices caused by the impact on the supply chain, or a reduction in consumer spending as a result of the uncertainty in delivery options.”
Q: What issues have led to this impasse?
“The union and UPS have already settled some of the issues around working conditions—namely, air conditioning in trucks—but the last remaining hurdle appears to be related to what can be considered fair compensation for drivers. Annual profits at UPS are about three times higher than they were pre-pandemic, and the Teamsters would like to see more of those profits trickle down to drivers.”
Q: What other aspects of this situation should we watch closely?
“The union wants what just about every other union wants to achieve, but it’s likely not clear to many people just how important of a role UPS plays in the United States economy. UPS estimates that it moves 6% of the country’s gross domestic product in its trucks every day. Only the U.S. Postal Service moves more parcels than UPS, but they aren’t known for being incredibly efficient. FedEx and Amazon are the other two major carriers, but those three companies can’t easily pick up all of that business if UPS goes on strike.”
About Wooten
Jadrian Wooten is collegiate associate professor with the Virginia Tech Department of Economics and is the author of Parks and Recreation and Economics. Read more about Wooten’s takeaway on the economic impact from the Canadian wildfire crisis and climate change in his Monday Morning Economist newsletter. Wooten has been featured in USA Today, Inside Higher Ed, WJLA ABC 7 Washington, D.C., and NBC News, among scores of other media outlets. Read more about him here.
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Newswise — Financial materiality pertains to crucial and pertinent data that a company is obligated to reveal in its financial statements. It provides companies with the insights necessary to discern elements influencing their performance and profitability, thereby enabling them to mitigate risks and captivate potential investors. There have been conflicts between shareholders and stakeholders regarding issues that are not directly related to finances, like environmental and social concerns. However, ignoring these factors like ESG (environmental, social and governance) could pose risks to both companies and investors.
Researchers at Kyushu University found that investors consider a company’s response to material environmental issues as a significant risk when deciding whether to invest in it. This highlights the importance of providing information that promotes communication between companies and investors for sustainable investment.
The more people become interested in sustainable investing, the concept of financial materiality is being closely examined. The Sustainability Accounting Standards Board (SASB) has developed standards specifically for different industries to help companies disclose sustainability information that is financially relevant.
The study analyzed data from 1,766 companies listed in the US between 2011 and 2020. By incorporating financial materiality into environmental performance assessments, this study provides new evidence of sustainability investments from the perspective of shareholders. The researchers made three important findings:
・The importance of each evaluation criterion for sustainable investment varies depending on the characteristics of each company.
・Shareholders see a lack of consideration for financial materiality in management strategies as a significant risk.
・Evaluating a company’s environmental performance based on financial materiality provides a better perspective for investors to understand the environmental risk involved. (See the reference figure)
With the growing interest in sustainable investing, there is a need to reevaluate how environmental information is reported by companies. Considering ESG factors in investment strategies provides scientific evidence for the importance of including financial materiality to achieve a sustainable and resilient economy. Using the financial materiality standards provided by SASB could be an effective way to assess and manage corporate environmental risks.
This research was supported by Ministry of Education, Culture, Sports, Science and Technology, Grant/Award Numbers: 20H00648, 22K20176; New Energy and Industrial Technology Development Organization, Grant/Award Number: P14026
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Kyushu University
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Newswise — A new study conducted by researchers at Bar-Ilan University in Israel has shed light on the long-term impact of COVID-19 on the quality of life among different ethnic groups in the country. The study, part of a larger cohort project, highlights a significant discrepancy between Arabs and Druze, and Jews, with the two former groups experiencing a more pronounced decline in quality of life one year after infection.
In this cohort study, researchers regularly followed up with individuals who had been infected with the SARS-CoV-2 virus to assess various aspects of their health. The findings, published in the International Journal of Public Health, demonstrate that the disparity in quality of life between ethnic groups remained even after accounting for socio-economic differences.
“We embarked on this study to investigate the long-term effects of COVID-19 on minority groups in Israel given existing health inequalities in the country,” explains the study’s lead author Prof. Michael Edelstein, of the Azrieli Faculty of Medicine of Bar-Ilan University. Well-being was assessed using the EQ-5D quality of life instrument measuring five dimensions: mobility, self-care, usual activities, pain/discomfort, and anxiety/depression. “Our results revealed that, while pre-COVID quality of life among Jews, Arabs, and Druze in our study was initially comparable, at the 12-month mark after infection the Arab and Druze participants reported a quality of life 11% lower than their Jewish counterparts,” adds Edelstein.
The study’s findings carry important implications for understanding the enduring impact of COVID-19 beyond the acute phase of the pandemic. The research suggests that certain populations may be more susceptible to long-term symptoms and a diminished quality of life, exacerbating pre-existing health disparities. These findings not only have implications for Israel, but also provide valuable insights for global efforts to address the long-term consequences of the COVID-19 pandemic.
“The significance of our research lies in the ability to shed light on the ongoing impact of COVID-19, even as the disease transitions from a public health emergency to a persistent health concern,” emphasizes Prof. Edelstein. “By understanding how the virus affects different communities, we can work towards developing targeted interventions and support systems to mitigate the long-term effects on quality of life.”
Dr. Jelte Elsinga, from Amsterdam University Medical Centre in Holland, led the analysis. The study was partially funded by a donation from the Harvey Goodstein Charitable Foundation.
As part of the larger cohort project, multiple papers have already been published and several more are in progress. Moving forward, the research team will continue to explore the role of vaccines in mitigating the long-term impact of COVID-19, as well as investigate the pandemic’s economic consequences on employment and income among the study participants.
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This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit http://www.djreprints.com.
https://www.barrons.com/articles/inverted-yield-curve-recession-rates-fed-bonds-be519f7c
The bond market inversion reached its steepest since 1981 this week. When investors charge the government more to borrow for two years than for 10 years, it’s often seen as a sign that a recession is coming.
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This Thursday, the United States Supreme Court rejected affirmative action at colleges and universities around the nation, declaring that the race-conscious admissions programs at Harvard and the University of North Carolina were unlawful. Now on Friday, the Supreme Court decided to block the Biden administration’s student debt relief program and sided with a Christian web designer in Colorado who refuses to create websites to celebrate same-sex weddings out of religious objections. Despite their limited federal elected power, Conservatives have racked up more huge wins in the great political battles of the early 21st century.
Newswise is your source for expert commentary. Below is a roundup of recent expert pitches concerning the United States Supreme Court.
Sociologists Available to Discuss Affirmative Action Ruling in College Admissions
– American Sociological Association (ASA)
Law and diversity experts react to Supreme Court’s affirmative action decision
– Tulane University
Three important takeaways from SCOTUS decision in Groff v. DeJoy
– University of Georgia
SCOTUS decision on race-based admission: experts can comment
– Indiana University
U law expert available to comment on Supreme Court decision on affirmative action
– University of Utah
– University of Georgia
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A tariff, in its simplest definition, is a tax imposed on imported goods — but there’s a lot more to it than just that.
Tariffs are a pivotal part of global trade, shaping the ebb and flow of goods between countries. From encouraging domestic industries to sparking trade wars, tariffs have far-reaching effects that ripple through economies.
Understanding tariffs is crucial in today’s globalized world, whether you’re a small business owner, consumer or policy-maker. Keep reading to learn more about tariffs, breaking down their meaning, history and role in international trade.
Related: How Businesses Can Navigate the Treacherous Waters of Trade Wars | Entrepreneur
Tariffs are fees that an importing country charges on foreign goods.
There are two main types of tariffs — specific and ad valorem:
Tariffs can serve several purposes. They can protect domestic industries from foreign competition by making imported goods more expensive. They also generate revenue for the government.
But it’s important to remember that high tariffs can lead to higher prices for domestic consumers, making everything from cars to groceries more expensive. Understanding tariffs is more crucial than ever in a world increasingly dependent on international trade.
Tariffs have been a cornerstone of economic policy for centuries, from the earliest customs duties to modern trade wars.
The World War II period was especially critical for international trade. After witnessing the devastating effects of trade restrictions in the 1930s, countries came together after World War II to establish the General Agreement on Tariffs and Trade (GATT).
This agreement later evolved into the World Trade Organization (WTO), a global body promoting free trade and settling trade disputes.
Throughout history, different countries have imposed tariffs for various reasons.
For instance, high tariffs were a standard part of U.S. economic policy in the 19th and early 20th centuries, designed to protect domestic industries, and in contrast, the post-World War II period shifted towards lower tariffs and more open trade.
Today, tariffs play a significant role in international relations and economic policy.
Tariffs are crucial in shaping the global economy and international trade relations.
Countries impose tariffs on imports for various reasons, such as to protect domestic industries, retaliate against perceived unfair practices or simply as a source of revenue. It’s important to note that the role of tariffs is often closely tied to a country’s trade policy.
Consider the U.S., with a long history of imposing tariffs on imports from countries like China, Canada and Mexico.
Related: 5 Ways to Limit the Damage to Your Business From Trump’s Tariffs | Entrepreneur
Trade agreements, on the other hand, aim to reduce or eliminate tariffs to facilitate free trade. The European Union is a prime example, where member countries have eliminated tariffs on intra-EU trade, promoting the free movement of goods and services.
The effects of tariffs can have wide-ranging consequences for an economy.
According to many economists, while tariffs can protect domestic producers by making foreign goods more expensive, they also tend to increase consumer prices. They may provoke retaliatory tariffs from trading partners. Retaliatory tariffs could hurt the U.S. economy, as we heavily export goods to foreign countries.
Higher prices can result from domestic producers increasing their prices up to just below the price of imported goods, taking advantage of the situation. As inflation soars, increasing prices due to tariffs could be a huge concern to the American consumer.
For example, if a $100 product is subject to a 20% ad valorem tariff, domestic producers might raise their prices from $100 to $119. The product is still cheaper than the imported goods, but the price is higher than it would have been without the tariff.
Moreover, tariffs can have a significant impact on specific sectors.
Agricultural products, for instance, are often a focus of tariff policies. Protectionist measures can shield domestic farmers from international competition, but they can also make it harder for those farmers to export their goods if other countries respond with retaliatory tariffs.
A country’s trade policy can significantly influence its tariff rates.
Countries use their trade policies to outline how they interact with other economies, and these policies often reflect a country’s broader economic goals.
While some countries favor a free trade policy with minimal tariffs and trade barriers, others adopt more protectionist policies to shield domestic industries from foreign competition.
Moreover, tariffs can also be used to achieve non-economic goals. They can be used to penalize countries for perceived unfair practices, such as dumping or intellectual property theft. This makes tariffs not just a fiscal tool but also a powerful instrument of foreign policy.
Tariffs can significantly shape the dynamics of domestic industries.
By taxing foreign goods, a government can make it harder for these products to compete with domestic goods on price. This strategy protects domestic producers, particularly in industries that struggle to compete with cheaper imports.
For instance, the U.S. has imposed tariffs on foreign steel and aluminum to protect its domestic metal industries from foreign competition. However, tariffs can also lead to higher prices for imported products.
Related: Trade Wars: Who Pays the Price? | Entrepreneur
Since the additional tax increases the cost of foreign goods, importers often pass this on to consumers.
For example, if a country imposes a 20% tariff on imported shoes, those shoes will likely become more expensive in the local market. This can disadvantage consumers, particularly if domestic producers raise their prices, knowing they still have a price advantage.
Specific industries can be significantly affected by tariffs.
Consider the agricultural sector: Many countries impose tariffs on imported agricultural goods to protect their farmers.
However, these protectionist measures can be double-edged. While they shield domestic farmers from foreign competition, they can also lead to retaliatory tariffs, making it harder for farmers to export their goods.
Free trade is the economic policy allowing goods and services to move across borders without tariffs or other trade barriers.
Free trade agreements (FTAs) are treaties between two or more countries to establish free trade. These agreements promote economic cooperation and increase trade between the member countries.
However, tariffs and free trade often have a contentious relationship. While free trade promotes global economic integration, tariffs are a form of protectionism — a policy that protects domestic industries from foreign competition through measures like tariffs and quotas.
The trade policy a country adopts depends on its economic goals. Some countries may prioritize protecting their domestic industries by imposing high import tariffs. Others might prioritize economic integration, negotiating FTAs to reduce tariffs and foster closer economic ties.
Beyond tariffs, countries use various other trade barriers, such as quotas and non-tariff barriers, to protect domestic industries.
These barriers can restrict the volume of certain goods entering the country or impose regulatory requirements that make it more difficult for foreign goods to compete.
A customs union is an agreement between countries to eliminate tariffs on intra-union trade and impose a common external tariff on imports from non-member countries. The European Union (EU) is an example of a customs union.
The EU promotes trade among its members by eliminating tariffs within its borders. The common external tariff, meanwhile, provides a level of protection to member countries’ industries from outside competition.
Customs unions like the EU use tariffs to balance free trade and protectionism. They promote free trade among member states while still using tariffs to protect their industries from outside competition.
In this way, tariffs and other trade barriers are vital in shaping international trade.
While we’ve covered the basics of tariffs, it’s worth noting there are specific types of tariffs and duties tailored to unique circumstances.
For instance, anti-dumping duty investigations can be applied to foreign goods sold in the domestic market at a price lower than their value in the exporting country. These duties aim to protect domestic industries from predatory pricing practices.
Import tariffs, as the name suggests, are taxes on imported goods. These are the most common types of tariff and are used to protect domestic industries and generate revenue.
Tariffs can also be imposed for reasons of national security. In these cases, a government might implement tariffs on goods it deems critical to the nation’s security. For example, the U.S. has invoked national security concerns to justify tariffs on steel and aluminum imports, as these metals are necessary to maintain the robust supply chain in which we rely in times of crisis.
Tariffs continue to play a substantial role in today’s global economy. They are tools for enforcing trade policy, protecting domestic industries and influencing international relations.
An essential piece of legislation in this area is the Smoot-Hawley Tariff Act of 1930, which gives the President the authority to adjust tariff rates.
The implications of this act were far-reaching, allowing for rapid shifts in trade policy that have significantly impacted both domestic and international markets.
Throughout this exploration of tariffs, we’ve seen their significant impact on domestic products and consumers. While they offer protection for domestic industries against foreign competition, they can also lead to higher consumer prices and potential trade disputes.
The role of tariffs in economic policy and international relations is multifaceted and ever-evolving. They can be a source of contention but also create negotiation and mutual agreement opportunities.
In this era of increasing globalization, understanding the implications of tariffs is crucial for businesses operating across borders.
For more insights on U.S. tariffs, the impacts of a trade deficit or the economic dynamics between foreign countries, be sure to explore Entrepreneur’s other articles
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Newswise — New research highlights the implications for our future food security as the UK faces a growing disparity between the fish we catch and the fish we desire to consume.
In a groundbreaking study published in the international peer-reviewed journal Reviews in Fish Biology and Fisheries, researchers from the University of Essex and the Centre for Environment Fisheries and Aquaculture Science (Cefas) present a thorough and extensive analysis. This study, spanning 120 years, provides valuable insights into the ways major policy shifts have shaped the landscape of seafood production, trade, and consumption in the UK.
The study reveals that altering our preference for imported flaky white fish, such as cod and haddock, to species that are abundant in our local waters, like herring and mackerel, would not be sufficient to fulfill the UK’s domestic demand or align with the government’s guidelines for healthy eating. It emphasizes that even with such a change in fish consumption habits, UK seafood production would remain insufficient.
Luke Harrison, the lead researcher from Essex’s School of Life Sciences, elaborated on the study, stating that their findings shed light on the impact of policy changes in the mid-1970s. Specifically, the establishment of Exclusive Economic Zones (EEZ) and the UK’s membership in the European Union contributed to a significant disparity between the seafood produced within the country and the seafood consumed domestically.
The widening gap between seafood availability and consumption, which has been intensified by declining stocks due to fishing, climate change, and habitat degradation, surpasses any previous disparities observed, even during times of global conflict like the two world wars. This discrepancy has led to an escalating dependence on seafood imports and a decline in domestic catches.
Fish has emerged as one of the highly traded food commodities globally, and the UK has witnessed a significant surge in seafood imports, a trend that was relatively minimal before the 1970s. Presently, the majority of fish consumed in the UK is imported, while a significant portion of the fish produced within the country is exported from both fisheries and aquaculture. The UK’s preference for large, flaky fish originated in the early 1900s when the nation enjoyed a prosperous distant-water fishery.
Nevertheless, in present times, these desirable species are caught in limited quantities within UK waters. Conversely, abundant and cost-effective bony species, notably mackerel and herring, are caught in substantial quantities. However, instead of being primarily consumed domestically, these species are primarily exported to the Netherlands and France.
Dr. Georg Engelhard, a co-author from Cefas, elaborated on the matter, emphasizing that the increasing popularity of tuna, shrimps, and prawns among UK consumers indicates a failure to adapt eating habits in response to the changing availability of local seafood over time. Despite notable shifts in the local seafood landscape, consumer preferences have remained largely unaltered.
Following the establishment of Exclusive Economic Zones (EEZs) and the UK’s accession to the European Union in the mid-1970s, there has been a sharp decline in domestic landings of fish in the UK. The figures demonstrate a significant decrease, with landings plummeting from 869 thousand tonnes in 1975 to 349 thousand tonnes in 2020.
Presently, the UK population consumes 31% less seafood than what is recommended by government guidelines. Even if local species were to become more popular, the combined production from domestic fisheries and aquaculture would still fall short by 73% of the recommended levels, even when accounting for imports.
Dr. Anna Sturrock, the senior author from Essex’s School of Life Sciences, further commented, stating that in light of climate change, rampant overfishing worldwide, and potential trade barriers, it is crucial to promote locally sourced seafood and offer clearer guidance on non-seafood alternatives. By doing so, we can effectively address national food security concerns while also striving to achieve health and environmental objectives.
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University of Essex
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Newswise — According to a recent research conducted on 3,745 families spanning the United Kingdom, there exists a significant disparity in financial literacy among children, with variations observed across different socio-economic groups.
The study emphasizes notable disparities in the financial competencies of young individuals, underscoring the findings that indicate a lack of essential financial skills among disadvantaged children.
The expert team from UCL, whose findings were published in the esteemed British Journal of Educational Studies, advocates for an increased focus on cultivating financial skills in children, beginning at the primary school level. This emphasis is particularly crucial for children from socially disadvantaged backgrounds. The team highlights the necessity of carefully considering the delivery of financial education specifically tailored to this group.
In the United Kingdom, there is growing apprehension regarding the limited social mobility and the persistent transmission of educational and social disadvantages from one generation to the next. This concern encompasses the cyclic nature of financial difficulties, poverty, and debt that can be associated with socio-economic disparities in the financial skills of young individuals.
Professor John Jerrim, from the Social Research Institute at UCL, emphasizes the importance of public scrutiny and debate regarding the increasing disparities in socioeconomic status, particularly in financial capabilities.
In our study, we discovered that children from disadvantaged backgrounds are less inclined to discuss financial matters during their school lessons. Furthermore, we observed a significant gap in the provision of financial education, especially towards the later years of primary school, highlighting the impact of socioeconomic status.
Socioeconomic gaps become apparent at an early stage of life and often endure into adolescence. While some of these disparities can be attributed to variations in children’s cognitive and socio-emotional abilities, it appears that discrepancies in financial capabilities based on socioeconomic status are not solely a result of inequalities in these other domains.
Based on our findings, it appears beneficial for young individuals from disadvantaged backgrounds to receive early engagement and education regarding money matters.
The study utilized a nationally representative data sample extracted from the 2019 Children and Young People’s Financial Capability Survey. This survey assessed the financial capabilities and behaviors of British individuals aged 7 to 17 years. To gather additional information, the authors conducted both online and face-to-face parental questionnaires.
The findings of the study indicate that children from wealthier backgrounds possess significantly higher financial knowledge compared to their counterparts from less privileged backgrounds. Specifically, young individuals from affluent households tend to have greater exposure to financial education prior to entering secondary school.
According to the experts, a contributing factor to this issue is the level of interaction children have with their parents. Children from more disadvantaged backgrounds have fewer conversations about money with their parents and are less likely to receive guidance on understanding how money functions from their caregivers.
“However,” states Dr. Jake Anders, Deputy Director of the UCL Centre for Education Policy & Equalising Opportunities and co-author of the study, “although we observe that these parental interactions can explain a portion of the socioeconomic disparity in terms of money confidence, money management, financial connections, and financial behaviors, these interactions have less significance in enhancing financial abilities.”
The authors suggest that in the future, the government and financial providers could potentially assume a more significant role in addressing this issue.
Children from disadvantaged backgrounds, especially at a young age, are significantly less likely to possess a bank account, which can hinder their development of a strong connection with the financial realm. To enhance their financial connection, including their mindset and skills, it would be beneficial to promote the utilization of financial services among socioeconomically disadvantaged families and their children.
One possible approach could involve the establishment of a young person’s account that is linked to the government’s Help to Save account, which is accessible to individuals with low incomes. Such an initiative could offer higher interest rates and rewards for fostering positive saving behaviors.
This research, funded by St James’s Place Wealth Management, has certain limitations. One such limitation is that only one parent participated in the survey, potentially limiting the perspectives provided. Additionally, the quality of certain measures, such as the information gathered regarding children’s educational attainment and socio-emotional skills, was somewhat constrained.
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The House is on track Wednesday afternoon to begin considering a bipartisan plan to suspend the nation’s debt ceiling and limit spending, with the nation facing the risk of default if the debt ceiling is not raised by June 1st. The two parties remain deeply divided about how to rein in the federal deficit, with Democrats arguing wealthy Americans and businesses should pay more taxes while Republicans want spending cuts.
More contenders enter the Republican presidential nominees’ list with Gov. DeSantis and Sen. Tom Scott declaring their bids to run. Do they have enough support to take on the front-runner, former President Donald Trump?
Below are some of the latest expert pitches posted in the Politics channel.
-Virginia Tech
GW Experts on Ron DeSantis Presidential Campaign Launch
-George Washington University
University of West Florida Expert Available to Interview on the Debt Ceiling
-University of West Florida
-University of West Florida
University at Albany Experts Available to Discuss U.S. Debt Ceiling Crisis
-University at Albany, State University of New York
GW Experts on Tim Scott 2024 Presidential Campaign
-George Washington University
Social media expert discusses consequences of changes for TikTok, Twitter
-Virginia Tech
-University of West Florida
Media Availability: Experts to Comment on New Hampshire’s First-in-the-Nation Primary Status
-University of New Hampshire
-Virginia Tech
-Southern Methodist University
Politics Experts in the Expert Directory
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Newswise — Only 25% of new businesses make it to 15 years or more, according to data from the U.S. Bureau of Labor and Statistics. Despite vacillating economic conditions between and across markets, that statistic has remained consistent for 30 years. A new study from the Strategic Entrepreneurship Journal suggests an elegant explanation: a business’s long-term success depends significantly on its founding conditions not just changes in its markets.
“A venture’s performance following environmental change depends on its internal processes,” says D. Carrington Motley, an instructor in entrepreneurship at Carnegie Mellon University and co-author of the study. “Environmental conditions at a business’s founding shape those processes, and they quickly become cemented and embedded in beliefs about how to operate.”
Motley and his co-authors, Charles E. Eesley of Stanford and Wesley Koo of INSEAD Asia, examined performance for more than 1,000 ventures founded from 1960 to 2011. The businesses operated in 19 industries ranging from agriculture to energy and utilities. The authors used data from the Bureau of Economic Analysis to quantify dynamism within each industry over time and within each venture’s founding year. They used alumni survey data to establish the composition of each business’s founding team as well as its longevity and ultimate outcome.
“Businesses founded in dynamic environments by a functionally diverse team show meaningfully more ability to survive during market change,” Eesley said. “However, they don’t necessarily have an increased likelihood of a positive exit.”
Businesses founded in dynamic environments typically favor slower, decentralized decision-making and increased creativity and flexibility. A founding team with many distinct functional roles compounds these behaviors — they have broader strategic focus and seek large amounts of information. These risk-averse structures and strategies help businesses persevere during environmental change, but the study also found that these businesses where less likely to gain IPOs or acquisitions if their market stabilized.
“In stable, more predictable environments, being more aggressive can produce better outcomes,” Woo said. “The risk of untested assumptions is less, so continued use of risk-averse processes produces fewer benefits and may detract from a venture’s ability to respond to opportunities.”
The authors argue that the key differentiator for businesses founded in dynamic environments by functionally diverse teams was slower decision-making. They tested the theory by first examining their performance in industries where fast product development was critical to competitive advantage and second by determining how quickly they took to receive angel or venture capital funding. Businesses founded in dynamic environments by functionally diverse teams fared worse in both instances.
Whether an industry is in flux or stabilizing, the study indicates that typically businesses benefit from market change only if that change better aligns with their founding environment. Despite its premise that founding processes become entrenched, it offers an insight to entrepreneurs hoping to both survive chaos and thrive in calm. Businesses need to examine their founding structure and internal processes and consistently re-evaluate whether they are best suited to their market environment.
Find a full explanation of the study and how founding conditions affect performance in dynamic environments in the full text, available in the Strategic Entrepreneurship Journal.
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Strategic Management Society
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Newswise — Toronto – Zachary Zhong had heard his grandparents’ stories about the Japanese invasion in 1944 of neighbouring counties in his hometown in China. As the Japanese army continued their advance civilians were killed and injured, while others fled the invaders’ path, some taking shelter in his family’s ancestral home.
Those events lodged deep into locals’ memory. Curious about the impact of a re-ignited territorial dispute between Japan and China in 2012, Zhong, now an assistant professor of marketing at the University of Toronto’s Rotman School of Management looked at what happened to car sales in the province of Guangxi around the same time. Guangxi had the highest civilian casualty rate of any Chinese province during the war.
“Across generations, those historical memories get passed down to present-day consumers,” said Prof. Zhong.
The invaded counties saw a 6.8 percent drop in sales of Japanese cars and a 5.3 percent increase in Chinese cars following the height of the 2012 dispute, compared to Guangxi counties that hadn’t experienced invasion. Those effects were stronger for larger and more expensive cars and in counties with larger shares of people born before 1936. The impact was not short-lived, lasting more than two years.
Prof. Zhong and co-investigator Nan Chen of the National University of Singapore looked at China’s vehicle registration data for the top 100 bestselling car models as well as provincial archival data on losses and casualties by county during the Imperial Japanese Army’s “Operation Ichi-Go.” Between late September 1944 and early January 1945, the Imperial Japanese Army occupied about two-thirds of Guangxi.
China-Japan relations normalized in 1972. However, a longstanding dispute remained over the sovereignty of a group of islands in the East China Sea. The dispute flared in August and September 2012 after the Japanese government nationalized the main islands and there were large protests in many Chinese cities.
The car purchase effects were seen despite the fact that the Japanese cars were produced in China through joint Chinese-Japanese ventures. However, models with less recognizably Japanese names did not suffer as much.
Meanwhile, sales of a local independent brand created through a Japanese joint venture were not impacted by the “history effect,” providing clues for how foreign brands can mitigate the impacts of past conflicts on consumer behaviour.
“Start a local brand,” said Prof. Zhong. “You can take advantage of the local association.”
Foreign companies can also try to play down the associations of their products with their country of origin.
But in the current era of geopolitical tensions and protectionism, perhaps the best way to avoid the business hangover of history is this: “Our paper shows you should not invade other countries,” said Prof. Zhong. “If you do that, people will hold a long grudge.”
The paper was published in Marketing Science.
Bringing together high-impact faculty research and thought leadership on one searchable platform, the new Rotman Insights Hub offers articles, podcasts, opinions, books and videos representing the latest in management thinking and providing insights into the key issues facing business and society.
Visit www.rotman.utoronto.ca/insightshub.
The Rotman School of Management is part of the University of Toronto, a global centre of research and teaching excellence at the heart of Canada’s commercial capital. Rotman is a catalyst for transformative learning, insights and public engagement, bringing together diverse views and initiatives around a defining purpose: to create value for business and society. For more information, visit www.rotman.utoronto.ca
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Title 42, the United States pandemic rule that had been used to immediately deport hundreds of thousands of migrants who crossed the border illegally over the last three years, has expired. Those migrants will have the opportunity to apply for asylum. President Biden’s new rules to replace Title 42 are facing legal challenges. The US Homeland Security Department announced a rule to make it extremely difficult for anyone who travels through another country, like Mexico, to qualify for asylum. Border crossings have already risen sharply, as many migrants attempted to cross before the measure expired on Thursday night. Some have said they worry about tighter controls and uncertainty ahead. Immigration is once again a major focus of the media as we examine the humanitarian, political, and public health issues migrants must face.
Below are some of the latest headlines in the Immigration channel on Newswise.
Expert Commentary
Experts Available on Ending of Title 42
George Washington University Experts on End of Title 42
‘No one wins when immigrants cannot readily access healthcare’
URI professor discusses worsening child labor in the United States
Biden ‘between a rock and a hard place’ on immigration
American University Experts Available to Discuss President Biden’s Visit to U.S.-Mexico Border
Title 42 termination ‘overdue’, not ‘effective’ to manage migration
Research and Features
A study analyses racial discrimination in job recruitment in Europe
DACA has not had a negative impact on the U.S. job market
ASBMB cautions against drastic immigration fee increases
Study compares NGO communication around migration
Collaboration, support structures needed to address ‘polycrisis’ in the Americas
TTUHSC El Paso Faculty Teach Students While Caring for Migrants
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Case Western Reserve University-led group wins federal grant to accelerate sustainable manufacturing in the region and beyond
Newswise — CLEVELAND–A regional collaboration led by Case Western Reserve University has won a $1 million grant from the National Science Foundation (NSF) to plan economic, environmental and manufacturing growth across the 18-county Northeast Ohio region.
The award will support efforts to develop a robust and dynamic ecosystem for sustainable manufacturing and permit the team to compete for as much as $160 million from the NSF to be awarded in 2025—if the group can prove it has the ideas, relationships, track record and commitment to advance innovation and equitably benefit the regional economy.
The group is one among 44 teams in the country–and the only one in Ohio– to receive a two-year grant to develop an “engine” in response to NSF’s new and innovative program.
“This is an unprecedented opportunity for regional industries, small businesses, community groups, state and local governments and universities to come together and transform, lift up and lead sustainable manufacturing in America,” said Michael Oakes, the project director and senior vice president for research and technology management at Case Western Reserve.
‘Making things that matter…smarter and greener’
The 11 initial planning partners are: Case Western Reserve, the Greater Cleveland Partnership (GCP), the City of Cleveland, TeamNEO, Cuyahoga County, MAGNET, JumpStart, Cleveland State University, the Cleveland Water Alliance, The Urban League of Greater Cleveland and the Northeast Ohio Hispanic Center for Economic Development (NEOHCED).
Their efforts will focus on four areas: technology innovation, technology adoption, workforce and talent development, and leadership and governance.
To become a more sustainable region, group members say, more industries from Cleveland to Youngstown will have to embrace emerging technologies with unprecedented enthusiasm.
Among the priority areas are energy science; electrochemistry; “green” steel and microchip production; carbon capture, storage and sequestration; and production of alternatives to petroleum-based plastics and biodegradable byproducts. Talent pipelines and inclusive growth are fundamental to success.
Individual companies and entire industrial sectors will have to optimize or reduce energy use, water consumption and greenhouse-gas emissions. The Cleveland Water Alliance will guide the environmental innovation and impact efforts for the planning effort.
GCP President and CEO Baiju R. Shah said the motivation for those big environment-related changes is rooted in a shared economic strategy.
“Greater Cleveland is well known as a region where we make things that matter—this is about making things that matter, but making them smarter and greener,” Shah said. “Our leading companies are committed to sustainability for business growth as they see a strategic opportunity and they’re doing it together, not going it alone. Together, we can meet market needs and lead the world in sustainability.”
The Urban League and NEOHCED will lead efforts to attain excellence in inclusion and environmental equity. They will seek to develop inclusive pathways in sustainable manufacturing—including careers in factories and universities—and build entrepreneurial capacity in underrepresented communities across the region.
Ongoing efforts toward sustainability
The broader pitch to become an NSF Center coincides with related efforts at Case Western Reserve and among the partners:
“Ultimately, this is about demonstrating that we have a working regional innovation
ecosystem here for sustainable manufacturing,” said Nick Barendt, executive director of the Institute for Smart, Secure and Connected Systems at Case Western Reserve and co-leader of the Engines planning project. “We’re excited to be working with our partners to make this happen.”
Federal Engines Program
The Engines program was authorized by the CHIPS and Science Act of 2022. Awardees span a broad range of states and regions, reaching geographic areas that have not fully benefited from the technology boom of the past decades.
“These NSF Engines Development Awards lay the foundation for emerging hubs of innovation and potential future NSF Engines,” said NSF Director Sethuraman Panchanathan. “These awardees are part of the fabric of NSF’s vision to create opportunities everywhere and enable innovation anywhere.”
More information can be found on the NSF Engines program website.
View a map of the NSF Engines Development Awards.
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Case Western Reserve University is one of the country’s leading private research institutions. Located in Cleveland, we offer a unique combination of forward-thinking educational opportunities in an inspiring cultural setting. Our leading-edge faculty engage in teaching and research in a collaborative, hands-on environment. Our nationally recognized programs include arts and sciences, dental medicine, engineering, law, management, medicine, nursing and social work. About 5,800 undergraduate and 6,300 graduate students comprise our student body. Visit case.edu to see how Case Western Reserve thinks beyond the possible.
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Newswise — As the cost of living continues to spiral, a new report shows more than half of gig economy workers in the UK are paid below the minimum wage.
The first-of-its-kind study, led by the University of Bristol, found 52% of gig workers doing jobs ranging from data entry to food delivery were earning below the minimum wage. On average respondents were earning £8.97 per hour – around 15% below the current UK minimum wage, which rose to £10.42 this month.
More than three-quarters (76%) of survey respondents also experienced work-related insecurity and anxiety.
Lead author Dr Alex Wood, Senior Lecturer in Human Resource Management and Future of Work at the University of Bristol Business School, said: “The findings highlight that working in the UK gig economy often entails low pay, anxiety, and stress. As food, fuel and housing costs keep rising, this group of workers are especially vulnerable and need to be more adequately remunerated and better protected.”
Equally concerning, more than a quarter (28%) felt they were risking their health or safety in doing gig work and a quarter (25%) experienced pain on the job.
When asked what would improve their situation, basic rights such as minimum wage rates, holiday and sick pay, and protection against unfair dismissal were most wanted.
Unions and platform councils (similar to works councils that exist in some European countries) to represent their needs and help influence how gig economy platforms operate and affect their working conditions also featured on their wish list. More than three-quarters of respondents believed the introduction of such bodies would bring immediate benefits.
Dr Wood said: “A major factor contributing to low pay rates is that this work involves spending significant amounts of time waiting or looking for work while logged on to a platform. Not only is the work low paid, but it is also extremely insecure and risky.
“The self-employed who are dependent on platforms to make a living are urgently in need of labour protections to shield them against the huge power asymmetries that exist in the sector. This clearly warrants the expansion of the current ‘worker’ status to protect them.”
The study involved 510 UK gig economy workers who were surveyed last year. There was representation from across the sector, with around half being remote freelancers using platforms such as Upwork and Fiverr to pick up jobs ranging from data entry to website design. The other half comprised local drivers providing food delivery and taxi services via platforms including Deliveroo and Uber.
More than just side hustles to earn extra cash, respondents spent on average 28 hours a week undertaking gig work, comprising 60% of their total earnings.
Respondents overwhelmingly considered their work to be best described as self-employment and thought an extension of labour rights to include the self-employed would significantly improve their working lives.
This was the first research to investigate what forms of voice gig workers want. The findings suggest strong support for European style co-determination whereby worker representatives are consulted on and approve changes that impact working conditions and employment. Works councils that exist in countries like Germany could therefore provide a model for platform councils and assemblies in the gig economy to facilitate workers having a say over the decisions which affect their ability to make a living.
Brendan Burchell, Professor in Social Sciences at the University of Cambridge and co-author of the report, added: “Respondents strongly felt the creation of co-determination mechanisms would allow workers, and their representatives, to influence platform provider decisions which could instantly improve their working lives.
“These policies include elected bodies of worker representatives approving all major platform changes that impact jobs and working conditions. Our findings emphasise the potential for trade union growth in this sector, with majorities being willing to join and even organise such bodies.”
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Newswise — Gentrification doesn’t erase drug crime and gun violence. Instead, research from West Virginia University economist Zachary Porreca shows that when one urban block becomes upwardly mobile, organized criminal activity surges outward to surrounding blocks, escalating the violence in the process.
Porreca, a WVU doctoral student in the John Chambers College of Business and Economics, analyzed 2011-2020 data on shootings and real estate across various Philadelphia neighborhoods. His paper presenting the findings, published in the Journal of Economic Behavior and Organization, is one of the first of its kind to study the impact of gentrification on crime displacement.
“Over the 10-year window of the study, Philadelphia experienced some 5,800 shootings that can be attributed to gentrification,” Porreca said. “That means that of the 27,000 shootings that occurred across the city during that decade, almost a quarter may have been spillover effects of gentrification.
“Gentrification increases levels of gun violence in neighbor blocks, even more so when the gentrified block itself has a history of drug crime. There’s an average increase of nearly nine shootings in the surrounding neighborhood, or an 18% increase in gun violence on blocks linked to gentrified blocks, as drug crime that existed on a block pre-gentrification is pushed into the surrounding neighborhood by the new development.”
The gentrification of drug blocks specifically, as opposed to all gentrifying blocks in Philadelphia, accounted for roughly 2,400 additional shootings during the 10 years of his study. This suggests that some 8% of Philadelphia’s gun violence can be attributed to gentrification destabilizing the city’s illicit drug markets.
“Those numbers are a striking representation of why it’s crucial that urban development occur responsibly and intentionally,” Porreca said. “Forced displacement of priced-out residents has very real effects on the surrounding neighborhoods.”
Porreca described gentrification as a “destabilizing force that happens when new residents of higher socioeconomic standing move to a traditionally lower-income neighborhood. Gentrified neighborhoods grow wealthier, more educated, exhibit higher rates of home ownership and experience significant racial demographic changes. This process involves replacing many of the original residents, and that makes it more difficult for a criminal organization to operate openly. Gentrification also leads to increased policing and more punitive policing practices, and overall makes a block less suitable for drug competition.”
Porreca emphasized that a criminal organization displaced in this way won’t want to go far. Those with that organization will look for new territory within the immediate surrounding blocks that have not yet begun gentrifying, because the local area is proven to be capable of sustaining drug activity and “because the organization has the requisite local knowledge, some level of community support and access to a proven clientele.”
His research uses data related to shootings, income, housing, home sales and building, zoning and renovation permits to examine gentrification’s effect on crime rates on a city’s “frontiers,” blocks that are newly gentrifying. It shows how gentrification and rapid urban development change the urban landscape of a city, as the emergence of new amenities and residents in traditionally neglected neighborhoods causes the shrinking and reshaping of drug markets’ boundaries, escalating competition and violence.
Gentrification not only constitutes a “shock” to the total viable territory available to rival criminal organizations, bringing them into closer proximity with each other, but it also spurs gun violence by forcing intracity migration — “displacing residents from their long-term homes and forcing them into the remaining viable tracts of affordable housing,” Porreca said.
“As an anecdotal example, a friend whose neighborhood became one of Philadelphia’s trendiest areas told me that his family now lives on the same blocks with families from neighborhoods his original neighborhood once feuded with. These sorts of situations, where disaffected low-income residents are forced to live in unfamiliar neighborhoods surrounded by similarly disaffected and displaced neighbors, have the potential to cause excessive tension. That that can give rise to explosions in gun violence isn’t surprising.”
Porreca suggested that police resources could be utilized in the neighborhoods surrounding newly developed blocks.
“City policy may benefit from efforts to stave off the violent spillover effect through deployment of officers and social workers in areas experiencing significant population displacements,” Porreca said. “Those displacements give rise to volatility and violence, and if we want to prevent community violence, then resources should be deployed proactively alongside the forces of development.”
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BYLINE: Angelita Faller
Newswise — A group of University of Arkansas at Little Rock students won a national Real Estate Challenge in Chicago, winning a $5,000 scholarship that will be used to support finance/real estate students at UA Little Rock.
UA Little Rock was the Undergraduate Division Winner of the Harold E. Eisenberg Foundation’s Annual Real Estate Challenge, which matches teams from selected universities in a competition focusing on a high-profile development/redevelopment project in the Chicago Metropolitan area.
UA Little Rock was one of a dozen teams competing in the high-profile competition, including Georgia State, Tulane, Loyola, Marquette, Michigan State, Ohio State, and the University of Illinois at Champaign-Urbana.
“When they said our name, I was in total disbelief that we had actually won,” said Lamar Townsend, a junior double major in finance-real estate and political science from Maumelle. “We were up against some very elite and highly resourced schools, so I thought our chances of winning were slim. However, I am honored and humbled that the Eisenberg Foundation gave us the opportunity to participate in this opportunity. It was truly a great experience.”
Each team is assigned the same case site and provided the same essential information and assumptions about the property. The students’ development plan must constitute a comprehensive analysis and conclusion of how to maximize the potential of the property from both a quantitative (financial) and qualitative (feasibility) standpoint.
“We decided to place an entertainment venue with retail and restaurants at the waterfront and then an office building and learning center on the interior of the island,” said Adison Cummings, a junior double majoring in architectural engineering and civil engineering from Texarkana. “We wanted to make that area a bustling hub to help bring back life into Goose Island.”
The award-winning students were all a part of the Real Estate Development course taught by Elizabeth Small, director of business networks and instructor of real estate development.
The winning students include Adison Cummings, Paige Goodale, David Lopez, Victoria Temples, and Lamar Townsend. Presenting teams were limited to five students, but UA Little Rock students Jake Anderson and Mika Berry were also members of the real estate class who worked on the project. In Chicago, the team was assisted by industry mentors Jenna Goebig and Siteng Ma.
“We had a wonderful teacher and mentors, coaching us through the process. They provided us with the connections we needed, as well as helping us to present,” said Paige Goodale, a senior double majoring in business finance and real estate. “I learned so much about development that I never expected to learn, like how to create a letter of intent, targeting a market audience, eliminating ideas that don’t work, contacting business owners, creating connections, the process of creating comps, and how financing and construction costs are created.”
Small added that her students went above and beyond on this project, letting nothing, not even a tornado, stand in their way.
“The students’ project paper was actually due at 4 p.m. March 31, the day the tornado struck Little Rock and Central Arkansas,” Small said. “While our Zoom meetings kept getting interrupted for students to take shelter, the paper got turned in with eight minutes to spare. One student, Jake Anderson, had to leave to check on his grandmother’s house in Little Rock, but his first question that evening was whether the paper got turned in on time. I’ve never seen such a dedicated group of students.”
The students traveled to Chicago on April 14 and got to tour Goose Island, the site of the redevelopment project for the Eisenberg Foundation’s Annual Real Estate Challenge, with Goebig. Their second industry mentor, Ma, is in China, but met with the group virtually to give them tips for their presentation. Remarkably, Ma is a graduate of Little Rock Central High School, and his parents have both worked at UA Little Rock in the past, leading to his desire to serve as a mentor to UA Little Rock’s team.
The team made their presentation to the Eisenberg Foundation on April 15, with four out of five students sporting business outfits they picked from UA Little Rock’s Trojan Career Closet. The students proposed what to build on a three-acre empty waterfront lot and a six-story abandoned storage building. They decided on a multi-use office building called “The Cove,” with space for an LA Fitness on the top floor, a STEM innovation hub, an art gallery, WeWork space, and rooftop green space for the abandoned building.
“We wanted to renovate the building with an adaptive reuse technique for sustainability reasons,” Townsend said. “The other waterfront site would be called ‘The Boatyard,’ and this was planned to be a destination entertainment venue with a 125,000 square-foot building with multiple vendors including Keg Grove Brewery and a space for a bowling/ arcade area. We also wanted a lot of green space along the waterfront, a water taxi stop, and space for an outdoor stage.”
Victoria Temples, a senior real estate and finance major from Little Rock, added that the two proposed mixed-use buildings would create a bustling community hub that would complement the area developing around it.
“A new casino, a nearly 3,000-unit apartment complex, and expansive river trail system are currently underway, so our developments greatly enhance the surrounding area,” Temples said. “Because we had a varied mix of uses, our development can be utilized 24/7, which is very important for the Chicago area.”
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Newswise — As recent survey results from the Federal Reserve Bank of Chicago reinforce Fed economists predicting a mild recession from the recent banking crisis, finance professor Albert “Pete” Kyle at the University of Maryland agrees a recession looms –- but more likely as severe.
The crisis, fueled by SVB’s fast collapse, indicates a costly failure – “likely to show up as a recession which is severe, not mild,” says Kyle, Charles E Smith Chair in Finance and Distinguished University Professor for UMD’s Robert H. Smith School of Business.
Regulatory Failure
Kyle says SVB’s failure resulted from bank supervision. “The Dodd-Frank Act focused more on heavy-handed regulation than on higher capital requirements to make banks financially healthy. Bank regulators must have known about the unrealized losses on mortgage and Treasury securities which crippled SVB’s balance sheet. These are transparently obvious from cursory oversight. They apparently did not do enough to force SVB to recapitalize until it was too late. As a result of this regulatory forbearance, the FDIC, which ultimately uses the money of taxpayers to take over failed banks, faces billions of dollars in losses.
The regulatory failure was not the result of exempting banks like SVB from stress tests. Ordinary bank regulatory oversight, operating independently from stress tests, certainly picked up the problems at SVB well before it collapsed.
The idea that uninsured depositors will monitor banks adequately is known not to work well. Its mechanism of enforcement is bank runs, which—once started—spread to the entire banking system and rapidly send an economy into a recession. The government knows that steep recessions are an absurdly high price to pay for bank monitoring. The entire purpose of the Dodd-Frank Act was to provide a regulatory system which would prevent bank failures without causing recessions. Therefore, it is surprising that the government even thought about wiping out uninsured depositors of SVB as a mechanism of maintaining financial discipline in the banking sector.
Commercial Real Estate Disaster
The commercial real estate sector of the U.S. economy is facing a disaster, Kyle says, as office space lease rates are falling, commercial real estate debt is coming due, and many commercial real estate ventures will likely be insolvent when loans fall due. “This disaster is unfolding slowly because leases and loans typically last five to 10 years,” he explains. “It becomes apparent when leases do not roll over and loans cannot be repaid.”
Much of the risk has probably found its way into the banking system, especially into the portfolios of medium-sized banks, he says. “Since regulators failed to force SVB to fix obvious problems with SVB’s balance sheet, investors and bankers alike are likely to infer that regulators will also fail to force banks burdened with less obvious bad commercial real estate debt to recapitalize promptly.”
Perspective from Previous Crises
As the 2008 financial crisis was largely triggered by bad residential mortgage loans, the bad commercial real estate loans will potentially drive another crisis, Kyle says. “I expect a recession to unfold if and when it becomes apparent that banks are too undercapitalized to function properly. This recession might resemble the recession in the early 90s, which was a delayed response to banking problems within the savings and loan industry.”
Whether this recession unfolds sooner or later depends on the speed with which the government acts to force banks to recapitalize, he adds. “The Fed’s prediction of a mild recession this year suggests they will do too little, too late. Immediate action might trigger a more severe recession now, which would be a small price to pay for a healthy economy a few years later.”
Why ‘Sooner Rather Than Later’
In addition to weakly capitalized banks, the Fed’s commitment to bring the inflation rate down to two percent annually “will exacerbate the debt burden of commercial real estate borrowers because the value of their collateral will fall faster with a lower rate of inflation and high interest rates needed to bring inflation down will make rolling over debt more costly,” Kyle says. However, the Fed’s action is inevitable because (unlike government regulators’ commitments to require banks to be well-capitalized) “if the Fed is unable to rid the economy of inflation, the Fed itself will become obviously insolvent and lose so much credibility that the independence of the Fed will be threatened.”
Underlying Problem
Heavy-handed government regulation leading to regulatory capture represents the underlying problem, Kyle says. “The more that is at stake, the more resources regulated entities devote to influencing government policy. The Dodd-Frank Act, rather than creating a healthy banking industry, has created a noncompetitive, undercapitalized banking system, which has captured its regulators and is prone to collapse.” If governments subsidize risk-taking by allowing banks or other companies to function as if things are normal when they are inadequately capitalized, he adds, “the banks or other companies will embrace poor capitalization because they believe they can keep their gains but dump their losses on taxpayers.”
Warnings from History
Ultimately, many banks and other companies will fail because their bets did not work out, Kyle says, and these failed companies will be nationalized by the FDIC or other government agencies. “During the past financial crisis, the government quickly sold off nationalized companies like General Motors and AIG. It gave banks generous bailouts to avoid formally nationalizing them. When banks and other firms start failing again, we do not know whether the government will hold the failed firms as nationalized companies or let them go public again.”
He adds: “In my opinion, the government allowed banks to remain in the private sector last time because bailing out banks (with cheap equity from the TARP program) did not cost taxpayers too much out of pocket: Bank stocks rebounded quickly from their depressed prices. By contrast, in the savings and loan debacle, getting out from under government ownership took more than a decade because the industry did not rebound as a whole. If regulators allow the banking system to become too undercapitalized, the hole to dig out of will become so big that nationalization may not be followed by quick privatization. The road to socialism is paved with debt.”
Finally, Kyle warns that the collapse of the commercial real estate sector may be accompanied by the collapse of the finances of some big cities. “As the politics of many cities–such as Chicago, San Francisco, and New York–moves to the left, many high-income taxpayers are migrating from these cities to other cities with lower taxes and more business-friendly environments. Some of these cities may face major financial stress in coming years, and this will exacerbate their commercial real estate problems.”
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University of Maryland, Robert H. Smith School of Business
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Medicaid benefits were expanded during the COVID-19 pandemic to cover low-income patients without a need for them to prove their eligibility or to reapply. At the end of March, those benefit expansions expired, and states have begun reviewing the Medicaid rolls to remove those who do not qualify, a process that could create new hardships for millions of Americans.
The mass disenrollment also has potential to affect the U.S. economy in ways that reverberate beyond any given household’s loss of affordable access to medical care. Virginia Tech economics professor Jadrian Wooten explained what effects this change to Medicaid could bring about on both an individual and national level.
Q: What would be the most direct effects for the U.S. of the rollout of Medicaid disenrollment?
“The group most immediately impacted by the Medicaid disenrollment will be those who lose their coverage but still require expensive medical care. Unfortunately, some individuals may be unintentionally disenrolled from Medicaid, despite still being eligible, due to errors in the enrollment process or not receiving renewal notices.”
Q: Is there any way that the disenrollment of those on Medicaid can have economic effects on those who are not insured through Medicaid?
“The people who are removed may find themselves without access to affordable healthcare services, which can lead to untreated illnesses and financial strain for those who need medical care. This could also result in increased emergency room visits and hospitalizations, which are more costly and less effective than preventative care, crowd out other people who need attention as well, and drive up medical costs for everyone.”
Q: What could be the economic reverberations beyond healthcare?
“The loss of Medicaid coverage can have effects that extend beyond just health and wellness. For instance, if people lose their coverage and can’t get the medical care they need, they may become less productive at work or miss work because of illness. This could cause a decrease in their earnings, which in turn could affect the economy in various ways. For example, it could reduce spending in local businesses and communities, especially in areas with a high percentage of Medicaid recipients.”
Q: How many could be affected by this process?
“The Department of Health and Human Services estimates that up to 15 million people may be disenrolled from Medicaid, including roughly 6.8 million individuals who will likely still be eligible for coverage. Getting reenrolled in Medicaid can be a time-consuming process that may disrupt families’ and individuals’ work obligations. It’s crucial to keep in mind that more than half of Medicaid beneficiaries are children. While it is the responsibility of their parents or caretakers to enroll their children in the program, cutting off their parents (whether intentional or not) can significantly affect these children as well.”
About Wooten
Jadrian Wooten is collegiate associate professor at Virginia Tech within the Department of Economics. He is the author of the book Parks and Recreation and Economics and of the newsletter Monday Morning Economists. Read more about him here.
Medicaid benefits were expanded during the COVID-19 pandemic to cover low-income patients without a need for them to prove their eligibility or to reapply. At the end of March, those benefit expansions expired, and states have begun reviewing the Medicaid rolls to remove those who do not qualify, a process that could create new hardships for millions of Americans.
The mass disenrollment also has potential to affect the U.S. economy in ways that reverberate beyond any given household’s loss of affordable access to medical care. Virginia Tech economics professor Jadrian Wooten explained what effects this change to Medicaid could bring about on both an individual and national level.
Q: What would be the most direct effects for the U.S. of the rollout of Medicaid disenrollment?
“The group most immediately impacted by the Medicaid disenrollment will be those who lose their coverage but still require expensive medical care. Unfortunately, some individuals may be unintentionally disenrolled from Medicaid, despite still being eligible, due to errors in the enrollment process or not receiving renewal notices.”
Q: Is there any way that the disenrollment of those on Medicaid can have economic effects on those who are not insured through Medicaid?
“The people who are removed may find themselves without access to affordable healthcare services, which can lead to untreated illnesses and financial strain for those who need medical care. This could also result in increased emergency room visits and hospitalizations, which are more costly and less effective than preventative care, crowd out other people who need attention as well, and drive up medical costs for everyone.”
Q: What could be the economic reverberations beyond healthcare?
“The loss of Medicaid coverage can have effects that extend beyond just health and wellness. For instance, if people lose their coverage and can’t get the medical care they need, they may become less productive at work or miss work because of illness. This could cause a decrease in their earnings, which in turn could affect the economy in various ways. For example, it could reduce spending in local businesses and communities, especially in areas with a high percentage of Medicaid recipients.”
Q: How many could be affected by this process?
“The Department of Health and Human Services estimates that up to 15 million people may be disenrolled from Medicaid, including roughly 6.8 million individuals who will likely still be eligible for coverage. Getting reenrolled in Medicaid can be a time-consuming process that may disrupt families’ and individuals’ work obligations. It’s crucial to keep in mind that more than half of Medicaid beneficiaries are children. While it is the responsibility of their parents or caretakers to enroll their children in the program, cutting off their parents (whether intentional or not) can significantly affect these children as well.”
About Wooten
Jadrian Wooten is collegiate associate professor at Virginia Tech within the Department of Economics. He is the author of the book Parks and Recreation and Economics and of the newsletter Monday Morning Economists. Read more about him here.
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