Santorum Talks Economics, But It Doesn’t Matter

In every presidential election there are always two issues at the forefront: jobs and the economy. There is an established rule of thumb based on these issues. If the economy is good and the supply for jobs is higher than the demand, the current president will be re-elected. If this is not true, the current president cannot expect a second term without a fight.

          According to Voice of America (voanews.com), during the final quarter of 2004 “the U.S. economy registered stronger than expected growth in the final three months of the year, taking the 2004 growth rate to 4.4 percent, the best showing in five years.” This is consistent with the rule of thumb. According to Kiplinger (http://www.kiplinger.com), the US economy is expected to grow by 2.3%, which is greater than the 1.7% trod in 2011.If this holds true and the rule of thumb holds, the current presidential incumbent may see an easy re-election. However nothing is free nowadays, so the fight as previously mentioned comes down to two important issues: economy and job outlook.

It is becoming more apparent that Romney and Santorum will become the last Republican candidates standing, before a final one is chosen to represent the Republican Party. The table below highlights this assumption by showing the latest stats on the Republic primaries are provided by the Huffington Post (http://elections.huffingtonpost.com/) with updates provided every five minutes.

	Romney	Santorum	Gringrich	Paul
States Won	4	4	1	0
Delegates	123	72	32	19
Votes	1,183,384	569,830	836,885	337,787
GOP Endorsements	100	3	12	4
Fundraising	$63,650,764	$6,698,440	$18,320,430	$31,083,281
PAC Support	$2,217,278	$3,611,937	$7,562,619	$3,683,027
PAC Attacks	$5,557,001	$2,535,187	$17,411,757	$133,332

Michigan has become a battle ground for these two potential candidates, while Paul and Gringrich’s appearances in Michigan remain with little or no mention in the media. An article from Pennlive.com discussed Rick Santorum’s visited Muskegon to talk about economics. He promised to “revive manufacturing, cut taxes, and shrink government.” Everyone applauded but this is not that statement’s first time in the election road show. If the current economy and job outlook will play the most important role in the election, it doesn’t matter which candidate will be selected as the Republican candidate or what their economic plan is. According to a quote from the New York Times article “Through an Economic Lens, an Election Too Close to Call” written by Jeff Sommer, C. Fair - the Yale economics professor – predicts Obama can expect “50.17 percent of the vote, giving him a margin so small that it falls within the 2.5 percent “standard error” of the equations.’
"Interpreting the Predictive Uncertainty of Elections" published in the Journal of Politics serves as a forecast for how political parties should spend their money. The article operates with the assumption that” ranking assumption concerning dependencies across U.S. states.” This assumption was tested and proved valid in the 2004 Presidential election and the 2006 Senate election. If valid, the political parties should focus all of their money on a few states. This was done in the 2004 election.

Michigan ranks 8^th concerning the number of electorate votes the state holds, but Michigan happens to have voted Democratic consistently since 1992. Discussions surrounding the other candidates’ lack of presence in Michigan have begun to rise in the local news. If the theories asserted by "Interpreting the Predictive Uncertainty of Elections" and “Through an Economic Lens, an Election Too Close to Call” hold true, the update from Pennlive.com is essentially a waste of time. Despite the role of the economy and job outlook, all the the pre-candidates should focus advertising dollars in Michigan. Michigan is considered to be a medium sized state but it can be a competitive state. Prior to 1992, Michigan was a Republican state for a few years. More importantly, no Republican candidate will win if the economy holds steady. So, the campaigns are sure to be negative in the upcoming months if the economy remains healthy.


Inspiration for this blog is from the MLive article "Presidential Hopeful Rick Santorum, in Muskegon, Outlines Differences with Obama, Romney. (www.mlive.com). Photo credit is also given to the source.

Kellogg's to Buy Pringles: A Quick Glance at the Snack Industry Market Structure

One of the top cookie and cracker makers in the country is planning an acquisition of another favorite American snack food item: chips. Earlier this morning food giant Kellogg and Procter & Gamble (P&G) announced the newest expansion to Kellogg’s snack division. P&G will sell its Pringles product line to cereal-maker Kellogg for $2.7 billion. Kellogg’s was able to snag the deal after the original deal with Diamond Foods feel apart because of accounting problems and changes in executive leadership.

The deal between P&G and Diamond Foods was announced in April of 2011 to be a $1.5 billion deal. With speculation on the deal rising and the replacement of Diamond Foods CEO and CFO following an investigation of improper payment accounting for walnut growers, Diamond stocks their ability to finance the deal slid through the cracks. However, it seems the worst is not over for Diamond Foods. If the deal had occurred it would have not only made Diamond Food’s the largest snack maker in the nation following PepsiCo Inc. but it would have also been the company’s largest acquisition. Instead, Diamond Foods might have to pay a $60 million breakup fee to Procter & Gamble, up to $6 million in related costs, as well as restating two years of financial results in relation to the results of the investigation.

P & G publically disinvested in the deal last week as it stated the Pringles was "attract[ing] considerable interest from other outside parties." Because snacks account for about 30% of Kellogg's sales, it makes sense for Kellogg’s to take advantage of this failed deal. Kellogg’s purchase of Pringles will complement its growing snacks division, which includes Keebler, Cheez-it, and Special K crackers. With PepsiCo under criticism for moving away from its soda line toward healthier snacks like Quaker granola bars and baked Frito-Lays potato chips and Kraft increases its snack markets, it is a great time for Kellogg’s to take advantage of the market growth. "Pringles has an extensive global footprint that catapults Kellogg to the number two position in the worldwide savory snacks category, helping us achieve our objective of becoming a truly global cereal and snacks company," Kellogg President and CEO John Bryant said in a statement.

There are millions of buyers and sellers in today’s marketplace. In economics there are four types of market structures: perfect competition, monopolistic competition, oligopoly, and monopoly. The three market structures most often seen in the U.S. are monopolistic competition, oligopoly, and monopoly.

If one product is too expensive, a buyer can choose to get another product. The cereal industry is a great example of this premise in action. The Kellogg’s deal in reference to the emerging growth of snack industry is best seen as monopolistic competition. There are many firms, products are heterogeneous, barriers to entry/exit are low, and the information in the industry are good. While PepsiCo, Kellogg’s, and Kraft are recognized brands they do not exclusively hold market shares. If these three companies continue to acquire others the snack industry will quickly move to an oligopoly.

Sugar Tax? : An economically conscious consumers point of view

More than 35 million deaths each year result from non-communicable diseases, including diabetes, heart disease and cancer. The greatest influences of these deaths are given to tobacco, alcohol and diet. Tobacco and alcohol are government regulated, but diet is not. The goal of a sugar tax is ultimately to discourage the consumption of added sugar. The plan would include a sugar tax, fast-food outlets and convenience store zoning ordinances in low-income communities and around schools, drinking age requirements for sports drink and sugary beverages, limiting or banning television commercials for sugar enhanced products, and the removal for fructose from the U.S. Food and Drug Administration’s list of items recognized as safe products which would force sugar enhanced products to seek FDA review.

In the book “Alcohol: No Ordinary Commodity” there are four criteria listed that justify government regulation: It’s unavoidable in society, its toxic, it can be abused, and it’s bad for society. According to Lustig sugar meets that entire criterion and needs government regulation. “The U.N.’s Food and Agriculture Organization says that in 2007, Americans consumed more than 600 calories' worth of added sugar each day.” The argument made by Lustig suggests that can no longer be seen as a supplier of empty calories. Metabolic syndrome is the main reasoning behind Lustig’s call for government regulation on sugar. Figure 1 shows the percentage of adults who had metabolic syndrome diseases such as diabetes, heart disease, high blood pressure, and non-alcoholic fatty liver disease. “20% of obese people don’t have these diseases, but 40% of normal-weight people do.” Based on these figures, Lustig believes the sugar is to blame.

Figure 1: Percentage of Adults with Metabolic Syndrome Diseases in 2007

The sugar tax is coined the “Possible Dream” instead of the “Pipe Dream” because it has been implemented abroad. Canada and some countries in Europe already have sweet taxes, and Denmark is starting to focus on a sugar tax after creating a fat tax. “For both alcohol and tobacco, there is robust evidence that gentle ‘supply side’ control strategies which stop far short of all-out prohibition – taxation, distribution controls, age limits – lower both consumption of the product and the accompanying health harms,” the Lustig’s UCSF trio writes. “Consequently, we propose adding taxes to processed foods that contain any form of added sugars.”

Karen Kaplan author of the article from Los Angeles Times argues that a sugar tax is a good idea. However, I do not believe sugar tax is the solution. The food industry has numerous issues with product quality and price, but it will never have an issue with demand. Because food is a commodity, it is viable to solicit government regulation. Government regulation serves two purposes: to discourage certain activities and to create revenue. Discouraging sugar use is the benefit to the citizens, but potential tax revenue might be a good incentive as budget cuts are becoming a familiarity. If a sugar tax is implemented, it will most likely be subject to tax increases like cigarettes and alcohol. This will be counterproductive for the benefits government may reap because tax increases ultimately decrease the transactions surrounding the good. So doubling the excise tax rate on a good or service won’t double the amount of revenue collected. 

Pillars of Social Entrepreneurship

Social Entrepreneurship is an interesting emerging field. While Sneakers & Speakers is not exclusive to topics on Social Entrepreneurship it is one of few motivations for beginning this blog. I hope you will enjoy the month of February as I explore the field social entrepreneurship.

Fact #1: I am not an expert. I am an explorer.

With that said, I like to think I know a few things and one of them is the power of individual opinion. So, I'm currently working out the kinks of Social Entrepreneurship pillars. Currently, I'm operating under the notion of five pillars: Culture, Community, Funding, Real Estate, and Technology.

Culture 

Culture focuses on creating an identity and entertainment for the city. Culture defines the pulse of the city. It is what provides meaning to the lives of residents through events, programs, or services designed to bring people together.

Community

The difference between community and culture is found in the level of necessity. Community innovates new ways to address basic community needs such as healthcare.

Funding

Funding focuses on the monetary capital available to social entrepreneurship. This includes but is not limited to crowd funding, grants, donations, competitions, and incubators/accelerator programs.

Real Estate

Real Estate focuses on the living, working, and retail spaces available to city residents. Innovations in design, layout, and materials as well as rehabilitated spaces are part of the social entrepreneurship ecosystem.

Technology

Technology focuses on the use of technology to deliver culture and/or community. It is a separate category because of industries like biotech and cleantech. Also, the rise of the internet and integration requires this to be a separate category for inclusion.

So, let me know what you think.

Social Entrepreneurship Curriculum Study

Social Entrepreneurship Curriculum Study

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Area of Focus

The area of focus in this social entrepreneurship curriculum study includes Midwest, Southeast, and Eastern universities with strong brands of entrepreneurship and academia. The following institutions were excluded: institutes branded as Ivy League universities, institutions tripling the representations from individual states, institutions similar to sampled institutions, and institutions with enrollment numbers or academic vision incomparable to Grand Valley State University.

The following universities are the samples institutions for this study: Babson College, Baruch College, Northwestern University, Notre Dame University, Rowan University, Rutgers University, Tulane University, University of Chicago, and the University of Michigan. Four institutions were supplied by USASBE for consideration (Tulane, Rutgers, Rowan, and Notre Dame).

University Name	Location	U#	G#	Type of courses
Babson College	Babson Park, MA	7	3	Only electives offered
Baruch College	New York, NY	4	6	Only electives offered
Northwestern University	Evanston, IL	39	0	Social Entrepreneurship Major
Notre Dame University	Notre Dame, IN	1	1	Only electives offered
Rowan University	Glassboro NJ	1	0	Only electives offered
Rutgers University	Newark, NJ	2	2	Only electives offered
Tulane University	New Orleans, LA	3	3	Mostly Independent study
University of Chicago	Chicago, IL	3	0	Only electives offered
University of Michigan	Ann Arbor, MI	4	0	Only electives offered

As the Program Coordinator for the Center for Entrepreneurship & Innovation, I randomly get the opportunity to do a little research. Recently, I was asked to do some research on Universities that offer courses in social entrepreneurship. Education in social entrepreneurship is buzzing around the nation and has provided motivation for consistent blogging here on my new blog. Below you will find a glimpse into the study I conducted. I hope you enjoy February's lens on Social Entrepreneurship. - The Urban Voice