Trouble Finding a Job in The States? Try Europe...

After spending five months studying abroad in Barcelona, Spain and traveling all over Europe, I am extremely happy to attend school and live in the United States.  Spaniards between the ages of 18-25 have an unemployment rate of over 50%.  So in a lecture of 80 people, less than 40 will have a job leaving college.  Compare that to U.S. rate somewhere in the mid-teens, and no American student should complain. In addition to the college student age group, overall unemployment in Spain is about 25% while the U.S. is 8%.  Most people wouldn't complain about an 8% unemployment rate, but everyone still sees the "American Dream" and expects perfection- a type of utopia.  But as we have seen primarily over the past four years, this view of America is dwindling as jobs are lost rather than created.

With so many differences culturally, politically and geographically, it is difficult to accurately compare America and Europe.  The point is: American citizens need to realize that their country is still in a much better position than most places in the world.  This should not be taken for granted as people must continue to work hard and not expect the government to clean up the mess and fix everything all at once.  Consumers must continue to consume and investors must continue to invest.

While America's current economy is weaker compared to previous decades, the government still has the ability to turn things around through "normal" reforms.  On the other hand, Europe, particularly Spain, has turned to some rather radical measures to turn around their economy.  For example, in a recent post on the blog "ThinkFast ThinkNow" the idea of a EuroVegas is outlined and discussed.  The basic idea involves constructing a Las Vegas-like area either in Madrid or Barcelona to create jobs and pump money back into the economy.  Certain barriers such as smoking laws and tax issues must first be figured out, but the fact that the government is building casinos to jolt their economy is quite scary. In the end, while the situation in the U.S. may seem bad, it is nothing in comparison to what Spain and the rest of Europe is going through.

Fertility Rates and Economic Change

What fifteen-year-old girl gets shot on the way to school?  Pakistani teen, Malala Yousafzai recently was by Talibani militants as she attempted to attend school for the first time.  The Taliban share a common fear: the more education a woman receives, the fewer children she will have- going against customary practices.

Population growth is rising.  Gaps between the rich and poor are widening.  Depletion of natural resources is rapid.  Something has to give. In order to increase education and development in poor, third world areas, fertility rates must decline providing women with the time and money needed to improve their lives as traditional rural families adapt to an urban lifestyle causing tremendous economic change.

My academic career revolves around business and economics.  As an accounting major numbers come easy to me as I naturally observe patterns and trends.  Recent issues regarding fertility rates and population growth provide an intriguing issue inline with my interests.  My father does business in developing areas known for these issues and I hear secondhand from him about their severity.

Looking specifically toward third world areas in India and Africa, the population is growing out of control.   India’s population is on pace to pass China’s within the next forty to fifty years.  Living standards will drastically decrease as the poor face increased economic hardships.  That is, unless something is done to reduce fertility rates.

In an article from the Economist, families have begun to move from the middle of nowhere, farming lifestyles into a town or village with schools, markets and factories nearby.  This process is referred to as “The Abandoned Hamlet.”  In the old lifestyle families were poor and could not afford to hire labor in the fields.  Children were born in order to provide labor at low cost and provide social security for parents.  Once their village changes or they move into a more civilized area, the cost of children rises due to education and taxes.  The state may even provide a pension, and families no longer need children as the primary form of social security.  In this scenario, the cost per child may outweigh the benefits, thus reproduction will slow down.

Where will population rise most rapidly?  In places that can’t handle the growth: developing nations stricken with hunger, political instability and environmental degradation.  These places have no family planning institutions in place and contraceptives are extremely rare.  In America family planning programs pop up everywhere at all times to prevent rapid population growth as seen in places like India and Africa.   According to Gopi Gopalakrishnan, the President of World Health Partners, women in India “are desperate for family planning services, to take control of their lives.”  The demand is there, the supply is not.

Of course there are benefits to high fertility rates and population growth.  Many ethnicities and religions call for large families and at least one son.  Governments view high growth rates as a positive due to an increase in labor force and a larger military recruiting pool.  As mentioned previously, more children for extremely rural families provide social security as the parents become older.

The economic benefits are much more promising and imperative.  With lower fertility and growth rates women will enjoy more free time and the opportunity to enter the workforce, earn an income and buy goods and services in the market.  More income per family will equate to more savings, which will turn into more investment to boost production and overall GDP.  Increased investment will also allow for more capital expenditures such as schools, roads and hospitals.  Overall if you want higher standards of living then reduce fertility. 

Driven by the desire to improve her life and future, Malala was determined to attend school and escape the typical role of a Pakistani woman.  Why did these Talibani militants attack?  For the fear of altering the status quo and dealing with the changes that educated females would bring.  These changes need to happen in order to preserve living standards in areas of high fertility rates.  Malala may not realize this now but her bravery might just spur activity leading to positive economic shocks in the future. 

Interesting 2012 Ballot Initiatives

http://www.cnn.com/2012/11/01/politics/ballot-initiatives/index.html?hpt=hp_t1

Concussions: Listen to the Doctor.

Since when did a little shaking of the brain become such a big issue?  Lawsuits regarding concussions and head trauma tear into the beloved physicality of professional football.  In a game destined for pain and potential injuries, the NFL can only provide so much protection to players who voluntarily put their health at risk.

With all of the lawsuits, too much blame is placed on the NFL while the players are the only ones who can prevent concussions.  The NFL commissioner has no way of slowing down the strongest athletes in the world.  Retired players and advocates for change need to recheck their arguments, not increase litigation.

I love sports, contact sports.  Through ice hockey and football, a large portion of my life has been spent inside a helmet.  My dad is in his forty-sixth straight year of ice hockey and his father played linebacker at Princeton.  My whole family knows contact sports and the associated health risks.  I have been knocked out, concussed three separate times.  Never once did I hesitate to return to the game, nor did my family or myself blame others for my head trauma. 

From my own experience and love for sports, I am sick with the actions of former NFL players.   First of all, I have no clue why retired players are surprised by the long-term effects of their past head injuries.  It comes as no surprise that a career full of blows to the head increases the chances of neurodegenerative diseases such as Alzheimer’s and dementia.  After all, a concussion is technically a type of shaking of the brain.  That can’t be good. 

The players are the ones who are voluntarily playing this brutal sport.  No one is forcing them to collide at full speeds.  It takes an incredible athlete to perform in the NFL.  Only the strongest, fastest and most violent get to start for a professional team.  It doesn’t take a neuroscience genius to acknowledge the high risk of injury in this situation.

Initially athletes play football for fun, for “the love of the game.”  It is their dream to play in the NFL.  This somewhat childish utopian view instantly changes once dollar signs are thrown into the mix.  Just like investing, higher risks equal higher rewards, or losses.  Despite having a concussion, players will lie and cheat on medical exams in order to get back on the field where performance is complimented with compensation.   

The NFL continues to implement mandatory medical tests to determine if a player is concussed.  Also, the NFL provides the absolute best material and technology in their helmets.  The NFL donated thirty million dollars to concussion research for players and military members. Finally, the NFL fines players for head-to-head contact and unnecessary roughness on defenseless players.  In short, the NFL has done everything in their power in an attempt to prevent concussions.

These mandatory tests are only effective if every player, coach and trainer honestly follows them.  In a recent ESPN article, rookie sensation Robert Griffin lll took a huge hit to the head and underwent concussion tests.  The Redskins training and coaching staff labeled Griffin as “shaken up” on the team’s formal injury report.  If labeled as concussed, Griffin would miss games.  The Redskins could not afford that.  Despite actually suffering a concussion, Griffin’s shaken up status prevented him from missing any playing time.

What good are these mandatory tests and regulations implemented by the NFL if teams don’t abide?  Picture this: you are sick.  You go to the doctor and he prescribes you medications and dietary adjustments.  You do not follow the doctor’s orders.  You become even sicker.  Can you honestly blame the doctor? No- you were given precise instructions and failed to abide.  Now substitute the Doctor for the NFL and the sick patient for the combination of players, coaches and trainers.  Bottom-line: listen to the doctor.

Retired players are suing the NFL claiming that information regarding head trauma was purposely withheld from the public.  Are you kidding me?  As cliché as it may sound, everyone is responsible for their own actions.  These players knew the risks of this physical sport and made their own decision to play.  Current players should try this: if you don’t remember the previous play, notify the trainer and keep your future in mind.  If time flies when you’re having fun, then time teleports when you don’t remember anything.

RIP BCS- You Will Not Be Missed.

This past summer brought hope to the world of college football.  Finally, a four-team play was put in place following the end of the 2014 season.  After the constant debate over the current and unfair Bowl Championship Series, or BCS, the right decision was finally made.  This BCS dominated for the past fourteen years in college football, which used a combination of formulas and various computers to determine the overall champion, or champions, after the final bowl games.  

Several obvious and key benefits come from the implementation of a playoff system.  The current BCS system gives no chance for a "Cinderella" type team, like a Boise State, to ever have the chance to play in the national title game, despite suffering zero losses in the regular season.  The playoff, despite only being four teams, gives more teams a chance to be crowned number one.  Losing one game in a season doesn't completely crush the national title hopes for teams.  If USC were to lose their second game of the year, they still have as good of a chance as anyone to make the playoff and potentially win the title.  Human bias will be largely decreased with this playoff system as the votes of experts weigh less and the actual performance of teams determine their fate.  Don't forget that most NCAA championships are determined through a playoff system already, such as March Madness, which is arguably the biggest sporting event of the year. 

What about money? The playoff system will provide schools with a higher percentage of the earnings of each game.  This money is used for academic purposes in a addition to some athletic upgrades.  According to a Huffington Post article regarding the new playoff:

"this new format figures to more than double the TV revenue of the current BCS and Rose Bowl contracts. Those pay out about $155 million annually. The commissioners want to lock in this format for 12 years with a television partner. The current four-year BCS deal with ESPN runs through the 2013 season. The new format will be presented to potential TV partners in the fall, starting with ESPN."

Of course money was a key contributor to the acceptance of this new format.  Any national TV partner would be stupid to pass up this deal for the new playoff system.  Doubling the current $155 million annual deal and multiplying it by twelve years brings the estimated TV revenue to $3.72 billion.  Now that is lotta money!  TV ratings for playoff games will be through the roof.  With these incredibly inflated revenue figures, the playoff system will be here for a long time and potentially increase in size in the future. 

While all of the benefits sound great, is there any downside to the playoff system?  The season becomes longer for those teams that continue to advance in the playoff.  Players will be kept out of school for longer periods and the chance for injury increases with an elongated season.  There could be a financial lose due to less advertisements and television contracts. 

To me the decision is obvious- the pros heavily outweigh the cons: bring on the four team playoff!  America was built on the idea of equality, so why not allow more college football teams a shot at the national title?  The NCAA already passed Title IX- forcing colleges to offer equal scholarships to male and female athletes.  It's time for college football to join other NCAA sports in the thrill, excitement and opportunity of a playoff. 

The Legacy of Lance

Lance Armstrong doped.  Its a fact.  He can never go back.  It will always be part of his resume.  But does that one mistake outweigh his success not only on his bike, but philanthropically as well?  Don't forget the man did win a battle with cancer and used his high profile status to raise and donate millions of dollars to charity and cancer research.  But wait- he used steroids! So he has to be a villain, right?

Yesterday was nothing short of a nightmare for Armstrong.  The series of unfortunate events started when he announced that he was stepping down as chairman of Livestrong- his beloved cancer-fighting charity.  Following this announcement, Armstrong was dropped by Nike, Anheuser-Busch and other sponsors.  This was all caused by a recent announcement from the anti-doping agency disclosing evidence of drug use by Armstrong.  Why did he step down as chairman? Armstrong wanted to minimize the damage caused by the U.S. Anti-Doping Agency's report that led to Armstrong being banned from the sport for life.  Armstrong was also stripped of all his Tour titles.  After his statement to step down as chairman Armstrong released the following to the Associated Press:

"This organization, its mission and its supporters are incredibly dear to my heart... Today therefore, to spare the foundation any negative effects as a result of controversy surrounding my cycling career, I will conclude my chairmanship."

In the report by the U.S. Anti-Doping Agency, Armstrong was apparently part of "the most sophisticated, professionalized and successful doping program that the sport has ever seen."
Not only did he just cheat, but he could be the biggest doper in the history of sports.  But it still takes one incredibly fit human being to win the Tour de France not once, not twice, but seven times!

Armstrong used performance enhancing drugs to help win all of those prestigious events and to become the best cyclist in the history of the sports, but what about all of his accomplishments off-the-bike?  Since Livestrong started in 1997, the charity has raised over $470 million for cancer research.  Armstrong was the man in charge, the chairman of this great charity that led way to many breakthroughs in the fight against cancer.  Beating his own testicular cancer was not enough, he used his high profile statues to increase the chances of survival for all others fighting the disease.  It is a shame that all of this information is now being overlooked as he is ridiculed for his usage of steroids.  Yes what he did was wrong but how can you hate a guy who raised nearly half a billion dollars for charity?  The future of Lance Armstrong is tricky to predict.  There will be haters.  There will be devoted fans.  But the most important thing, there will be thousands of lives changed due to his philanthropic achievements.  It is for this reason, that Lance Armstrong should not be seen as a cheat doper, but as a role model for all.

NHL Lockout: A Cold Road Ahead

What a surprise- there is another lockout in professional sports.  This time the National Hockey League, or NHL, has temporarily frozen the 2012-2013 season due to financial issues.  On September 14th the NHL's Collective Bargaining Agreement expired and the league was officially locked out.  The root of this terrible issue stems from the disagreement between the owners and the players on how to split up the $3.3 billion in total revenue.  The owners came out for blood over the summer with an initial offer to drop the players' percentage of the revenue from 57% to 43%.  Despite the large contracts, can you blame the players for getting upset? No- its human nature. 

After two of the most profitable, popular seasons of 2010-2011 and 2011-2012 the NHL was ready to break into the fan base of baseball and football this year.  Events such as the "Winter Classic" played every New Years Day and the excitement of shootouts has revamped professional hockey into one of the most exciting sports to watch and attend.  While the MLB, NFL and NBA have constantly had labor disputes and popularized financial issues, the NHL, until recently, seemed to be the only professional sport free of economic downfalls.  So much for that reputation, as once again the greediness of the owners separates the players from the ice.

The impact on the sport of hockey has already been drastic and will continue to get worse. Recently the NHL cancelled the first 82 games of this upcoming season.  According to a recent article from TSN the lockout has cost the league $100 million dollars to this point and the number continues to climb.  Looking beyond the dollar signs for a minute, the players are beginning to leave the country as well: 

"With the industry bracing for another long work stoppage, players have scattered around the globe. More than 100 have already found jobs in Europe -- roughly 15 per cent of the union's total membership -- and that number is expected to climb now that meaningful games are gone."

Not only will this be detrimental for the teams who are losing their superstar players, the fact that athletes are signing with European teams indicates that this lockout could be around for a while. 

Who is to blame? The owners? The players? I blame the capitalistic system and mindset that dominates American business.  Most corporations will go to extremes in order to maximize profits- including professional sports.  In a discussion of a more political topic, a recent blog post on That's Annoying highlights the issues of a tax loophole abused by California corporations.  The author states that, "corporations, whose goal it is to make as large of a profit as possible, they will choose whichever formula will result in a lower tax rate."  While the overall goal to make money by business and corporations will never go away, there needs to be a shift of primary focus to improve the world and lives of all citizens.  With dollar signs preventing the NHL season from happening, the league may lose much more than just one season of games- fans and respect for the sport.  Sorry hockey fans, this lockout looks to be a stage-5 clinger.

Sports Economics: Mo' Money, Mo' Problems

Home Runs. Touchdowns. Slam Dunks. Big Hits. High Scores.  What more could a sports fan ask for?  It’s all about the action, the show, the big time plays.  What are sports without the highlight reels? Those plays that you watch over and over again the following day on YouTube.  The home run launched  450 feet.  The fastball hurled at 101 miles per hour.  The safety delivering a devastating, blindside hit to a wide receiver in the open field.  Fans love these plays no matter what the cost is to the players or management.  

Over the past decade the amount of money being pumped into professional sports has been substantial to say the very least.  Players are rewarded with huge contracts based on previous performance and the ability to attract fans.  Expectations skyrocket as the combined pressure from fans and management to perform dawns on professional athletes. This pressure can cause them to turn to alternative routes to gain a competitive advantage.  While the abundance of money and investments in the world of professional sports provides obvious and easily observable benefits, there are a handful of detrimental issues stemming from financial and cultural pressures, distorting the influence of professional sports finance.  Due to the prevalence and availability of monetary incentives rewarding performance, athletes seek to maximize the profitability of their limited careers through the usage of and participation in activities that violate the rules of professional sports.  Despite taking all the blame and criticism, players are not solely to blame as they face sky-high expectations from fans and management who initially praise enhanced performance only to later condemn the methods used to achieve desired results.

Over the past decade or so in professional sports there has been a substantial increase in the multi-million dollar contracts offered to and signed by athletes.  When discussing a potential contract for a big free agent, it isn’t about whether or not he will receive a multiyear deal, but, instead, media buzzes around the issue of how many millions, or hundred millions, the contract will be worth.  While organizations do not necessarily want to pay these athletes millions of dollars each year, they have no choice—the market is set.  It’s simple: if you want the best, you must pay the most.  The Major League Baseball (MLB)contract responsible for starting this trend occurred in 2000 between shortstop Alex Rodriguez and the Texas Rangers.  Rodriguez signed with the Rangers in December of 2000 for an unheard of amount of $252 million for ten years with a “base compensation of $23 million [which] shall be increased $2 million above the highest average annual value of any other shortstop in major league baseball”  (Verducci, “Terms”).Along with a quarter of a billion dollars, the Rangers promised that Rodriguez would be the highest paid shortstop in the league, implying that making the most money among their peers is important to the player.  Along with the base salary, Rodriguez was incentivized by a list of award bonuses based on his performance.  For instance, Rodriguez would earn $500,00 to win the Most Valuable Player award, $100,000 per All-Star Game selection, $200,000 to be World Series Most Valuable Player and $1,000,000 if named Most Valuable Player a second season.  Every contract in professional sports has performance-based bonuses such as these to drive players to go above and beyond expectations.  Large monetary incentives through mega contracts and additional performance bonuses have become a staple in professional sports.

While the largest deals in professional sports are found in the MLB, due to no salary cap, the National Football League (NFL) teams pay ridiculous amounts of money to the first overall draft pick each year.  In 2009 the Detroit Lions drafted Matthew Stafford and offered him a deal worth $41.7 million guaranteed, but this contract was dwarfed the following year as the St. Louis Rams paid their top pick, Sam Bradford, $50 million guaranteed with the overall contract having a maximum value of $86 million  (Leahy).  This absurd amount of money was offered to a twenty-two year old athlete who didn’t play most of his final college season due to a shoulder injury, and before he had set foot on a professional field.  The Rams front office based this decision solely on Bradford’s potential as an elite quarterback and his ability to draw fan attention for increased ticket sales, expecting future revenues to outweigh the contract’s cost.  Despite having the lowest average salary of the four major professional sports, the National Hockey (NHL)has recently followed suit with large contracts.  This is best exemplified through the contract $110 million dollar contract highly touted defensemen Shea Weber received from the Nashville Predators to be paid over fourteen years (Proteau).  This high dollar, lengthy   contract sets the precedent for future NHL deals.  The statement has been made: these multimillion dollar deals are here to stay and will continually increase.

What does this mean for current and future professional athletes?  Sports is no longer simply a physical game, but it is now a game of numbers.  Most players only receive one major contract and this needs to last for the rest of their lives.  In one of the most famous Sports Illustrated articles, Pablo S. Torre discusses the trend of athletes going broke shortly after their departure from professional sports.  Despite the fact that salaries have risen steadily during the last three decades, Torre reports the following facts:

“By the time they have been retired for two years, 78% of former NFL players have gone bankrupt or are under financial stress because of joblessness or divorce.... Within five years of retirement, an estimated 60% of former NBA players are broke.... Numerous retired MLB players have been similarly ruined” (Torre- SI).

It is obvious that athletes have not made smart financial decisions with these large contracts in the past and athletes today do not want to follow suit.  Unlike a typical, steady career for most of society, professional athletes have a very short window of opportunity to make enough money for themselves and their families for the future.  As reported by RAM Financial Group, the average careers of NFL, NBA, MLB and NHL athletes are 3.5, 4.8, 5.6 and 5.5 years respectively (RAM Financial Group).  Given this extremely short period of time to become financially set for the future, professional athletes have an incentive to maximize the profitability of their careers at all costs.

            If the burden of becoming financially secure for life within a very short time frame isn’t enough, sports fans put additional pressure on athletes to perform.  Athletes who sign huge contracts are expected to come in and win right away, not just have a winning record but make it to the playoffs and win a championship.  Take NBA superstar LeBron James for example.  Two seasons ago he signed with the Miami Heat and expectations for the upcoming season were championship or bust.  Miami lost in the finals and the entire blame was put on James as he did not live up to expectations.  Following up that disappointment with an NBA Championship this past season, the future expectations are even higher as fans expect him to lead the team to win it all for years to come.  While this trend may never end, fans must allow players to adjust to new surroundings before demanding the world from them.

            How do players cope with and live up to these ridiculous expectations?  The combination of monetary incentives, a small window to make a lifetimes worth of money and pressure from the fans often lead professional athletes to abuse performance-enhancing drugs, such as anabolic steroids.  For the past decade, steroids have dominated sports media as big name athletes continue to test positive for these illegal substances.  Is it really the players’ fault? It takes an incredible human being to handle of the pressure placed on superstar athletes.  After testing positive for using performance-enhancing drugs, Alex Rodriguez made the following statement:

“When I arrived in Texas in 2001, I felt an enormous amount of pressure, felt all the weight of the world on top of me to perform and perform at a high level every day. Back then, it was a different culture. It was very loose. I was young, I was stupid, I was naive and I wanted to prove to everyone that I was worth, you know, being one of the greatest players of all time. And I did take a banned substance.” (“Rodriguez Admits”)

As one of the hottest young players ever, Rodriguez was bombarded with not only the largest contract in professional sports history but with the weight of an entire community on his back to turn around the then struggling Texas Rangers.  This was all at the age of twenty-six.  Now that’s a lot of pressure for young man to handle all at once.  Rodriguez turned to performance enhancing drugs to try and live up to these expectations, and they worked.  During his four seasons with the Rangers, Rodriguez put up phenomenal stats and won the Most Valuable Player award in 2003.  Not until Major League Baseball began testing athletes for steroids in 2003 did anyone believe that steroids were aiding to his success.

            While the majority of cases and media coverage of steroids revolves around baseball, a wide range of athletes have tested positive for performance enhancing drugs.  Recently Lance Armstrong was found guilty of doping during his stretch as the world’s number one ranked cyclists- winning seven Tour de France contests.  Female track star and Olympic medalists, Marion Jones tested positive for using steroids and was stripped of her medals.  In the National Football League star linebackers Bill Romanowski and Shawne Merriman have both admitted to using steroids.  As discussed in his book, Jose Canseco explains how numerous minor league baseball players see no hope to make the major league on their own unless they separate themselves from their peers. (Canseco)  With a stagnant career in the minor leagues the usage of steroids seems like the last option before giving up the game completely.  For example, the Twins drafted Dan Naulty in 1992 as a tall, skinny pitcher who didn’t throw the ball very hard but had a lot of potential upside due to his height.  Naulty was one of four right-handed pitchers fighting for a single open roster spot for the Minnesota Twins major league team.  Winning the spot through an unexpected increase in velocity and physique, Naulty made the major leagues due the fact that, “Naulty used steroids to transform himself from a fringe minor leaguer into a massive big leaguer throwing 96 mph.” (Verducci- “To cheat”)  Every aspiring athlete dreams to become a professional athlete for the fame, the experience and for the money.  Driven by this desire for more, Naulty did what he had to in order to fulfill his dream.

In reality, everyone in our today’s society searches for enhanced performance in most areas of life.  As Paul Finkelman explains, “In our bottom-line, performance-based culture, we rarely ask how the performance is achieved as long as we like the outcome.” (Finkelman)  Investors research past performance of stocks and bonds in order to predict future performance in order to improve portfolios.  Television advertisements promise Viagra users enhanced performance in sexual activity.  Famous musicians such as the Rolling Stones and Bob Marley were know for using illegal drugs which in turn enhanced their performance.  No one called them out for this act because it entertained the audience.  In a sense, professional athletes are entertainers as well; putting on a show for fans as the troubles and stress of real life are momentarily put on hold.  If that is the case, then why are professional athletes given so much grief for using steroids in order to hit more home runs or throw one hundred mile per hour fastballs? 

The answer is simple- doping in professional sports is against the rules and viewed as cheating.  The term “cheater” has negative connotations attached to it that alters the view of the public.  No matter the achievements or success of a professional athlete, once testing positive for performance enhancing drugs, the player’s fan-favorite status is thrown out the window.  Those players once idolized by fans and media for success are now the same people condemning the player for steroid usage.  Take the career of all-time home run king Barry Bonds for example.  No body questioned the fact that in the twilight of his career he added increased muscle mass and added an inch to his head size because he was hitting home runs and the fans loved him.  Once news broke of his history of steroid use, he was seen as a cheater and the sports world did a complete one-eighty as Bonds was criticized and condemned by previous fans.  What provoked Barry Bonds to use these substances?  Bonds knew that extending his career would be extremely profitable.  Examining Bonds’ salary per season, his four highest salaries happened to be the final four seasons of his career.  From 2004 to 2007, Bonds made annual salaries of roughly $18 million, $22 million, $19million and $15.5 million respectively. (“USA Today - Salaries”)  Performance enhancing drugs allowed Bonds to increase the window of opportunity to earn large sums of money to guarantee financial security for the future.  Everything ties back to monetary incentives rationalizing the choice to violate league rules through usage of steroids.

While steroids are obviously illegal and dangerous to the health of athletes, the results often outweigh the risks as money is earned for increased performance and career longevity.  The fans and the general public must understand the situation of professional athletes and the combined pressures they must endure.  If the general public were informed that partaking in activity ‘x’ would increase their salary and reduce external pressures, the majority would take that offer in a heartbeat.  It is unfortunate that professional athletes are idealized to the point where once they are revealed for breaking the rules, the scrutiny is much worse then the praise for their performance and success.  Everything they accomplished in response of seeking more money and appeasing the fans was for nothing.  Is there a solution to this devastating cycle of steroid abuse in professional sports?  The only way to prevent the continued use of steroids is through monetary rewards and fines.  A Freakonomics article titled “Hitting Sports Cheats in Their Wallets” discusses the following plan:

“Remove 10 percent of an athlete’s salary and place it in an interest-bearing escrow account. If the athlete tests positive for steroids during his career, he loses out on all money paid into that account during his playing days. He would involuntarily make a large anonymous donation to a youth anti-steroid program. If he stays clean, or doesn’t get caught, he gets a large lump-sum payment when he retires — exactly the time when he is most likely thinking about long-term financial security.” (“Freakonomics”)

While there is no evidence that this plan will actually be implemented, the effectiveness is obvious as there is now a monetary incentive to stay clear of rather than use steroids.  The issue of steroids in professional sports may never be completely controlled, but the blame is not solely on the players as they continue to search for methods to meet expectations and maximize the profitability of their career.

            In addition to the massive concern of performance enhancing drugs, financial incentives are increasing the dangers of professional sports.  Recently the New Orleans Saints football organization was under investigation for a bounty scandal.  Eventually the truth was released about a program where the coaching staff of the Saints was rewarding players with monetary bonuses, or bounties, to injure opposing players.  As disturbing as this may sound, it might spread beyond the Saints organization.  In an interview with Sports Illustrated’s Peter King, defensive players on the Saints were offered close to $10,000 to knock out the opposing quarterback in order to increase chances to win.  (King) Players in the NFL are so blindsided by dollar signs that they are willing to purposely injure an opposing player to earn some extra change.  The act of purposely injuring another player goes against an unspoken bond that all members of the NFL share, but when money is involved, players forget this bond.  One of the greatest linebackers of all-time, Junior Seau, had the following reaction, “"When you say bounty and you talk about intentionally taking someone out, in essence you're talking about affecting his livelihood... That's not football." (Trotter)  While the players responsible for actually attempting to injure opponents should be punished, the greatest fault should be placed on the coaches running the system.  These coaches realized that players in today’s game are overly interested in the financial benefits of professional sports.  With this in mind, coaches took advantage of the players by offering monetary rewards.  While this issue is now under control by the NFL, the detrimental effect of money in professional sports is easily observed through the bounty case.

            A final issue of professional sports caused by the increased presences of money is the reoccurrence of lockouts cancelling or postponing seasons.  The most recent lockouts for the big four sports have occurred within the past twenty years.   There was no Major League Baseball season in 1994.  The National Football League faced a shortened season last year and currently the National Hockey League is experiencing a lockout.  All of these situations came down to one thing: money.   The owners and players both want higher percentages of revenues, known as revenue sharing.  The current method of approaching a professional sport season is reversed.  Only once the financial issues are settled can the actual sporting events begin.  Both parties involved have become way too greedy and distracted by dollar signs.  This causes unrest among the fans as they begin to disrespect the players and owners for their greediness.  Let the sporting events happen and settle the monetary issues at a later date.

             The increased emphasis on finance of professional sports has led to detrimental issues such as steroid usage, bounty scandals and increased lockouts as all parties involved seek to maximize personal wealth through any means necessary.  While professional athletes are responsible for their actions, the combination of pressures and expectations placed on them can be overwhelming leading them to participate in rule-violating activities.  Fueled by the desire to experience their team winning a championship, fans drive the decisions made by the players and management.  Management must pay big bucks in order to sign high profile athletes who will in turn put fans in the stands, boosting revenues.  What the fans do not realize is the amount of power in which they hold in the world of professional sports.  Fans buy tickets for entertainment.  Will fans still be entertained without the big hits, crushed home runs or blazing fastballs?  As long as money dominates the world of professional sports, we may never find out.

Works Cited

"Athlete Services." RAM Financial Group. Web. 3 Oct 2012. <http://www.ramfg.com/RAM-Financial-Group-Solutions-Professional-Athletes-Athletes-Services>.

Canseco, Jose. Juiced: Wild Times, Rampant 'roids, Smash Hits, and How Baseball Got Big. New York: Regan Books, 2005. Print.

Finkelman, Paul. ""Performance-Enhancing Drugs" in a Peformance Based Society: Reflections on the Mitchell Report." Huffington Post 29 12 2007, n. pag. Web. 4 Oct. 2012.

"Hitting Sports Cheats in Their Wallets." Freakonomics. N.p., 26 08 2009. Web. 2 Oct 2012. <http://www.freakonomics.com/2009/08/26/hitting-sports-cheats-in-their-wallets/>.

King, Peter, dir. What Bounty System Scandal Means for NFL's Future. PBS NewsHour, 2012. Film. 3 Oct 2012. <http://video.pbs.org/video/2206940368/>.

Leahy, Sean. "Rams agree with No. 1 overall pick Sam Bradford on record contract with $50 million guaranteed." USA Today 30 07 2010, n. pag. Web. 4 Oct. 2012. <http://content.usatoday.com/communities/thehuddle/post/2010/07/rams-agree-with-no-1-overall-pick-sam-bradford-on-record-contract-with-50-million-guaranteed/1

"MLB Player Salaries - Barry Bonds." USA Today-Salaries . N.p., n.d. Web. 3 Oct 2012. <http://content.usatoday.com/sportsdata/baseball/mlb/salaries/player/Barry-Bonds>.

Proteau , Adam. "Shea Weber contract magnifies disparity in NHL markets." Hockey News. (2012): n. page. Web. 4 Oct. 2012. <http://www.thehockeynews.com/articles/48092-Shea-Weber-contract-magnifies-disparity-in-NHL-markets.html>.

"Rodriguez Admits to Using Steroids." Sports Illustrated. 09 02 2009: n. page. Web. 4 Oct. 2012. <http://sportsillustrated.cnn.com/2009/baseball/mlb/02/09/arod.admits/>.

Torre, Pablo S. "How (and Why) Athletes Go Broke." Sports Illustrated. 23 03 2009: n. page. Web. 4 Oct. 2012. <http://sportsillustrated.cnn.com/vault/article/magazine/MAG1153364/1/index.htm>.

Trotter, Jim. "The Conscience Of The Locker Room." Sports Illustrated 116.11 (2012): 36-37. SPORTDiscus with Full Text. Web. 4 Oct. 2012.

Verducci, Tom. "Terms Of Endearment." Sports Illustrated. 18 12 2000: n. page. Web. 4 Oct. 2012. <http://sportsillustrated.cnn.com/vault/article/magazine/MAG1021378/index.htm>.

Verducci, Tom. "To Cheat or Not to Cheat." Sports Illustrated. 04 06 2012: n. page. Web. 4 Oct. 2012. <http://sportsillustrated.cnn.com/vault/article/magazine/MAG1199041/3/index.htm>.

The World of Accounting: Change is Coming

Large corporations and companies have been and continue to expand globally in order to gain a competitive advantage in their industry.  Leading professional service firms such as Ernst & Young and McKinsey & Company have offices all over the world specializing in specific cultures and markets.  While benefiting companies, there have been numerous issues regarding the proper accounting procedures that the companies should perform.  Specifically there are large differences between the rules of U.S. Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting Standards (IFRS).  Due to these differences, the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) have been working to converge the two sets of rules into one global set of accounting standards.  This convergence has been in process since 2003 but has been troubled with reoccurring delays to finalize the project.  Within the next two years the convergence will be complete. 

What does this mean for global corporations?  What are the pros and cons of the convergence? In an article by EisnerAmper the costs and benefits are summarized:

"Several groups oppose the convergence, stating that inconsistent auditing and enforcement of international rules make it difficult to ensure credible financial statements. Significant hurdles still need to be overcome with respect to the convergence to one international set of accounting rules. Those hurdles include: time needed to convert existing records by CFO's and tax directors, anticipated corporate tax impacts, effect on the U.S. Uniform CPA Exam and adequacy of training for U.S. investors as well as U.S. audit firms...On the flip side, the notion of having one single set of standards worldwide is appealing...leading to investment comparisons on a worldwide basis as well as enable cross border transactions to be more transparent and reliable...and cut down the costs to which foreign companies investing in the U.S. markets will have to adhere."
 
In addition, the process of reconciling foreign investment and financial information to conform to U.S. GAAP has continually been a deterrent to foreign companies trying to raise money in the U.S. capital markets.  While this debate exists, the convergence will be completed no matter what within the next two years.  The impact of these changes will extend way beyond simple accounting issues.  As one of the world's top public accounting firms, PwC has researched and analyzed the future effects for companies.  On a section of their website, PwC gives their professional advice and recommendations regarding the upcoming convergence.  A large amount of the new standards will have significant business and operational implications, causing companies to change their current practices.  In return this will cost larger companies more time and money due to their size.  PwC recommends companies to heavily research and understand the changes and their impacts on respective businesses and to develop a plan for implementation of each change. 

The key takeaways for the common public are to understand that change is coming and the market could take a couple unexpected turns as companies adjust to the new accounting guidelines.  There should be no public fear or freak out if the market temporarily reacts negatively to the convergence. Once the necessary adaptations are made, the uniformed set of accounting standards will be a great success for global business.

What Do You Know About Going Green?

Everyone today talks about "going green" or throws around the term "sustainability," but do people really know what these ideas mean?  Does everyone in society truly take actions towards becoming more green?  Or do people just throw these terms around trying to cast a certain self-image?  There is a huge disconnect between what people think they know and what they actually know about the current environmental issues.  A little over a year ago, Richard Matthews wrote an article that described Americans' misconceptions about the green movements.  Matthews explains how,

"more Americans than in previous years 1) think that they're doing more than they really are, 2) think that they're doing all that they can, or 3) think that they've done enough already.  All three of these perceptions are troubling because they increase resistance to taking on the more substantial home improvements that truly reduce energy consumption."

What Matthews points out is scary for any future success in green initiatives and movements.  People must completely understand the cause of all the environmental issues and what exactly they can do to help.  Despite what some may think, simply recycling cans and bottles is not enough.  There are larger actions that must be taken by everyone around the globe in order to truly reduce the consumption rate of natural resources.

In addition to the large group of people lacking knowledge about the environment, there are also those who flat out don't care.  Either not interested or perhaps too well off to worry about these issues, the fact that people honestly don't care about the environment is absurd.  Take global warming for instance.  In a recent post on Call a Spade a Spade, the author discusses the severity of climate change and global warming. The post describes how these issues are not just a problem to be brushed off and hope that others take care of the mess, but rather it is a "global issue and only the global community will be able to reverse and overcome it."  With all of the money being invested into these go green initiatives, they must create future benefits to the environment.  This will not happen unless every person on this Earth realizes the severity of the situation and actively participates to transform society into a more sustainable community.

Are you ready for the iPhone 5?

Gary Becker: The Ideal Public Intellectual

         The term public intellectual in today’s world has become a loose and sometimes misused term, leaving us to wonder what exactly a public intellectual is.  Is a public intellectual anyone with a Ph.D. from a prestigious university who writes a book? Does winning a Nobel Prize or similar award make someone a public intellectual? Stephen Mack attempted to tackle this issue in one of his essays, touching on the recent trends of public intellectuals in our society.  In his essay, Mack explains that,

“our notions of the public intellectual need to focus less on who or what a public intellectual is—and by extension, the qualifications for getting and keeping the title. Instead, we need to be more concerned with the work public intellectuals must do, irrespective of who happens to be doing it.  Those concerned with public intellectuals as a class will inevitably fret about the health of that class.  Or, they’ll hyperventilate about class purity, or the “appalling decline” in quality of most other public intellectuals.”

Mack points out that public intellectuals should not have to worry about what education or certifications they have to successfully spread an idea or message through society.  More emphasis needs to be placed on what these public intellectuals discuss in order to put less pressure on them to achieve new qualifications, which may in turn prevent further research and knowledge to be spread.   With this said, it is now time to bring up well-known economist Dr. Gary Becker.  Becker has an extremely prestigious academic background, including a Ph.D. in economics from the University of Chicago. Becker was able to use his resources and knowledge to alter the traditional view of economics.  Facing criticism from his peers and colleagues, Becker broke the norm for economists as he was the first to combine social issues with economics to shape various aspects of society, proving that public intellectuals must focus on their audience’s interests and needs to make a significant impression.  

Tracking back through Becker’s childhood and family life, it is no surprise that he embarked on a career in economics.  Born in a small coal-mining town in Pennsylvania, Becker lived with his parents, two sisters and one brother.  Becker’s father had left school after the eighth grade in order to make money and  owned a small business by the time his children were born.  This lack of formal education did not provide the best example for a father of four, leaving Becker in need of learning the value of education later in life—which he did.   The Becker family moved to Brooklyn when Becker was four years old.  His father soon after tragically lost most of his eyesight.  This tragedy brought about a learning opportunity for Becker,  read his father stock quotations and other reports on financial developments daily.  This was Becker’s first exposure to the business world and, just like most children; he found the content rather dry and boring.   In high school Becker faced what he thought to be one of his toughest life decisions at the time: whether to join the math team or the handball team because practices met at the same time.  Though claiming a great affinity for handball, Becker chose math, and for that, we thank him.  In addition to reading business material to his father, the Becker household was constantly buzzing about politics and justice.  According to his autobiography, it was this family atmosphere that gave Becker an urge to do something useful for society and not just to focus on math.  

After his childhood and high school years in Brooklyn, Gary Becker attended Princeton University for his undergraduate work.  Interestingly enough Becker enrolled in an economics course due to a complete accident during his first year of college.  He was instantly drawn to the subject and decided to graduate in only three years in order to enter the real world.  Becker succeeded in this ambitious goal by teaching himself a handful of courses and maxing out his course load every semester and summer.  After graduating Princeton in 1951 with a B.A., Becker moved on to the University of Chicago for graduate work in economics.  Why did Becker want to extend his education further into economics, particularly at Chicago?  He viewed economics as a powerful tool to analyze the real world and the University of Chicago was home to some of the most prestigious economists at that time period, such as his professor, Milton Friedman, who reinvigorated Becker’s excitement for the subject.  

After completing his graduate program and earning his Ph.D., Becker began researching and applying economics to social issues.  In 1957 he wrote a book based on his Ph.D. dissertation, which was the first organized work that used economic theories to analyze the effects of prejudice on the earnings, employment and occupations of minorities.  For an expert in the field of economics to begin analyzing information like this was unheard of and Becker received a lot of criticism.  Economists didn’t view racial discrimination as economics and sociologists and psychologists felt that Becker wasn’t contributing to their respective fields.  Despite the criticism, Becker continued his research as an assistant professor at the University of Chicago, determined that his work would make a difference in the future.

Looking for a change of pace, Gary Becker took a joint job at Columbia University and the National Bureau of Economic Research in Manhattan.  Continuing his research of social issues, Becker wrote a book on human capital along with articles on allocation of time, crime and punishment and irrational behavior.  Most of the research done for these works was conducted at the National Bureau of Economic Research, proving that more people started to believe Becker’s ideas.  At Columbia Becker started leading a workshop on labor economics and related subjects.  What exactly did Becker mean by “related subjects”?  Anything of interest to the students or Becker and his co-director, Jacob Mincer, was considered a “related subject.”  Students were fascinated with the workshop and it was a huge success for years.  This is a great example of how Becker used the interests and wants of his audience to spark interest and spread information.  Becker adapted his workshop to his audience and students couldn’t stop talking about the workshop, causing it to become extremely popular and crowded.  The popularity of Becker’s strategy ties back to the conclusion that Mack makes in his essay regarding the true measure of public intellectuals, stating:

“if public intellectuals have any role to play in a democracy—and they do—it’s simply to keep the pot boiling. The measure of public intellectual work is not whether the people are listening, but whether they’re hearing things worth talking about.”

Gary Becker does just that by presenting the students in his workshop an opportunity to discuss anything of interest to them and their peers.  Unlike most professors who lecture on what is in the course guide, Becker connected with his students who in return heard “things worth talking about,” as Mack discussed.  
            Not only did Becker give his students freedom over topical coverage in class, he forced them to participate and contribute to class discussions.  Last fall Gary Becker had his eightieth birthday and the University of Chicago Law School held a reception to honor the legendary professor.  A number of key economists spoke about current economic issues and complimented Becker on an incredible career.  As stated in a recap of the celebration, the following anecdote about Professor Emeritus William Landes was shared:

“Landes recounted meeting Becker when he was a student at Columbia University, where Becker was teaching at the time. “Gary was 31 and students were in awe of him,” Landes said. “I wanted to know who Gary was. I never found out until I arrived in class.” Though Landes was auditing Becker’s human capital class, Becker called on him every day. Later, Landes became his teaching assistant. Landes eventually followed Becker to the University of Chicago, where he achieved legendary status among students and the legal academy.”

As Landes described, all of the students at Columbia were obsessed with the young professor to the point where Becker gained celebrity status on campus at the age of thirty-one.  This is quite a feat for someone who was criticized by his peers for his initial research.  Becker further demonstrated that you must engage your audience in order to capture their interest, shown by forcing Landes to participate in class even thought he was auditing the course.
          After his success at Columbia, Becker returned to the University of Chicago in 1970 where he primarily focused on family issues.  These issues included marriage, divorce, altruism toward other members and investments by parents in children; all of which had never been viewed through an economic lens before.  Becker’s new research and work on families was ignored or strongly disliked by most leading economists.  The younger generation offered sympathy as they found it refreshing to learn about new studies and ideas developed from someone well respected.  Becker continued to branch away from the typical economist as he was offered a joint appointment in Sociology Department at the University of Chicago.  He was finally given acknowledgement for the success of his research and studies as he was given free reign to his two areas of expertise: economics and sociology.  Becker made the most of this new joint appointment as he was awarded the Nobel Memorial Prize in Economic Sciences in 1992 for his application of economics to human and social behavior.  Along with this huge honor, Gary Becker was awarded with the Presidential Medal of Freedom in 2007 to acknowledge his contributions to the nation.
          While Becker researched and developed a number of theories and ideas, the true depth of his success and contributions are seen through changes in paramount social issues.  According to his profile in the Concise Encyclopedia of Economics:

“Becker showed that discrimination will be less pervasive in more competitive industries because companies that discriminate will lose market share to companies that do not. He also presented evidence that discrimination is more pervasive in more-regulated, and therefore less-competitive, industries. The idea that discrimination is costly to the discriminator is common sense among economists today, and that is due to Becker.”

In a country such as America with a history of racism and stereotypes, the fact that Becker could reduce discrimination in society is unmatched.  In addition, Gary Becker conducted numerous studies on the costs and benefits of education.  After much research, Becker, in the early 1970’s, was the first person to discuss education as an investment.  Today a college education is absolutely mandatory to have a successful career; this is also due to Becker. Another area that Becker has contributed to with his research and work is crime and punishment.  Becker was able to explain how the decision to commit crime is a function of the costs and benefits of the crime and in order to reduce crime the probability of punishment must increase and/or make the punishment more severe.  With these studies and research, Becker helped spawn a new branch of economics, which gave a fresh vision on how to reduce crime. These long lasting contributions have been commonplace in society for the past few decades and they all stemmed from Becker’s work.
          Over the course of his career, Gary Becker has been anything but a conventional economist.  As portrayed above, Becker received all of his inspiration from his audience as he gave them the freedom to express their interests and what is personally important to them.  Becker was able to translate these interests of his audience into research and public works that have forever changed the view of economics and several key social issues.  While he was questioned a handful of times during his journey, Gary Becker is a model public intellectual as he put more emphasis on the significance of his work rather than personal qualifications.