measuring success

We are hours into the new year and I find myself contemplating and gauging the success of 2014 for myself, as some of you may also be doing, at this time.

Some of us may not have had the banner year we were hoping for. For one reason of the other, certain things may not have worked out. Hell, everything may have even failed, at least in “our heads”. That’s definitely NOT to say the year wasn’t a success.

Success is very relative to each individual. Our perceptions/definitions of success are constantly evolving with time and new experiences. Being successful generates a positive state of mind that one may not necessarily be fully aware of unless said one really takes the time to step back and reflect. Let me make this clearer.

2014 for me was probably my most defining year. It really shook and challenged some of my most fundamental beliefs and aspirations on many different levels. The struggle didn’t just start and end with graduating college and finding a job but really struggling with being able to take calculated risks with my future. Risks that could potentially promise me the moon and stars if paid off. To add to this struggle, I’d have people telling me that I was making excuses for myself and taking the easy way out by not taking those risks. Funnily enough, looking at some of their life decisions it is clear that they are hugely averse towards taking risks themselves. All said and done, they followed the well treaded path and emerged successful in their own right. Do I therefore follow a path similar to theirs or do I take the road less traveled? Thinking back, this and many other micro struggles really put life into perspective for me. I may not have made a lot of headway in terms of pursuing my dream but all this time has given me the strength to make informed decisions. I now know exactly what I’m going to do given the options and the time I have. It also goes without say that I grew up a hell of a lot in a very short timeframe. This, to me is progress/success.

This sort of success, if I may, should never be discounted and regarded as being inconsequential. It may be intangible but is still highly crucial and consequential in driving progress. It is VERY important, just as we affirm tangible changes in our lives, to affirm intangible changes like this and continue working at our goals with just as much focus, if not more.

Bottomline, try rehashing everything negative that had happened in the past year and find any growth/realization, however infinitesimal. I promise you’ll find it. That previously disregarded bit of success could in fact be the small key opening a little door towards enabling you to achieve the many tangible successes and affirmations we so desperately desire.

Happy New Year everyone! x

The hardest thing about graduating is coming to terms with the realization that our paths may never cross again. We have such limited time on this planet that it seems wasteful not to be able to spend every precious moment with each other.

home. finally.

oh Starbucks. never thought of this one somehow

Saving LaGuardia

By Vishnu R | October 13, 2012 – 6:55 pm |

*This was something I wrote for an Economics Blog. Thought I’d just keep this blog alive by sharing it here. Feel free to trash/comment on anything I say.

 About this time a month ago, I was making my way to Ann Arbor for school all the way from an Island in another part of the world. I vividly remember taking a cab from JFK to LaGuardia (LGA) to catch the 4pm flight to Detroit and was somehow not looking forward to it at all. Having transited through LGA a couple of times before, I wasn’t entirely sure if I’d reach Detroit at the promised 6pm arrival time, simply because of the possible delays I’d experience at LGA.

As one of the busiest airports in terms of passenger traffic, LGA is the biggest single aviation market in the world.  With “just two intersecting runways and overcrowded terminals, taxiways and gates.” (WSJ) LGA’s efforts to ease flight delays and regulate air traffic for the last decade have yielded no effective long-term solutions. It is still facing the same problems it faced since before 911.

Delta Airlines Inc. hopes to capitalize on this by making it more attractive for passengers to travel. According to the WSJ, “After acquiring a large block of landing slots and gates from US Airways Group Inc.” Delta has “added more than 100 additional flights a day at La Guardia” (WSJ). The basic idea is that, with careful planning and scheduling of flights within the ‘Delta Hub’, expanding its terminals and its expertise in handling overcrowded hubs, Delta hopes to become the first choice of travel in LGA by winning over the confidence of people in it ability to manage flights efficiently. And with flights spread out in JFK as well, this would ultimately enable Delta to claim a greater portion of New York’s aviation market share.

Delta therefore becomes the more attractive flying option for connecting passengers and passengers flying out of New York because of its management efficiency. There would be decreased waiting times and delays. Delta is also able to profit from this by ‘thinking at the margin’.  It is able to fill more empty seats on planes with connecting passengers and sell tickets to them and standby travelers at a lower price thus profiting marginally from defraying the marginal costs of perhaps what the passenger consumes on the plane for instance.

Of course, it can be easily foreseen that Delta’s rise will be matched by competition from its contemporaries. Other airlines operating in LGA would be collectively seen as second choice after Delta assuming that ticket prices remain roughly the same.  This pressures airlines to end up increasing the frequency of their flights to cater to more consumers or lowering their ticket prices. Lowering ticket prices might increase the demand for these second choice airlines, but this does nothing to solve congestion and delays. Passengers would eventually realize that they’re better off sticking to Delta by paying just a little more on their tickets.  Also, airlines would not be able to increase the frequency of their flights easily without paying more.

This new development could go either way. It could be beneficial or it could just perpetuate the problem. At the end of the day, congestion could either worsen with airlines paying more to increase the frequency of their flights to compete with Delta or Delta could eventually become the airline of choice with its new acquisitions from US Airways Inc.  Sometime in 2000, Congress lifted restrictions on the system by allowing an unlimited number of new flights to underserved markets like Buffalo and Savannah, GA. It could be assumed that at this point, it would’ve cost less to increase the number of flights to these locations. Because of this, airlines proposed adding 600 new flights a day. However, according to a NEWSDAY article published on the 9^th of April 2001, “About 300 new flights were added, and the resulting jam pushed LaGuardia past Chicago’s O’Hare as the nation’s worst airport for delays.” If this were to happen today, once again the Port Authority would have to intervene when the congestion situation gets worse and this would be detrimental to the reputation of the airport and the airlines concerned.

Delta’s plans of building a hub and increase the number of flights could either work or fail. If it fails, like the WSJ says, it could be ‘expensive and embarrassing.’ Whatever the case, it is a step in the positive direction to help relieve LaGuardia of its congestion woes. Only time will tell whether or not it’ll work.

References

http://online.wsj.com/article/SB10000872396390443749204578048374059969436.html

http://web.mit.edu/airlines/news/news_archives_documents/laguardia-quandary.pdf

Brief Principles of Macroeconomics 6^th Edition – N. George Mankiw.

 

Pre-Gaming, Binge Drinking and a Doomed Economy

*This was something I wrote for an Economics Blog. Thought I’d just keep this blog alive by sharing it here. Feel free to trash/comment on anything I say.

By Vishnu R | October 5, 2012 – 10:56 pm |

Earlier in the year, David Cameron (PM of the UK) announced price revisions for alcohol purchases in the UK to deal with errant and irresponsible drinkers.  His office cites that “irresponsible drinking costs the U.K. £21 billion a year. There were almost a million alcohol-related violent crimes and 1.2 million alcohol-related hospital admissions in the country last year.” (WSJ).

Of course, we know that a high amount of alcohol consumption is a negative externality and adversely affects the economy. Productivity and efficiency drops. People would not report to work on time and even if they do report to work after a night of debauchery, their productivity levels would not be optimal. They’d also take days off from work to recover from their alcohol-related problems, especially for those hospitalized. Employers would find the costs incurred from this to be high. They may be forced to downsize or rehire. Unemployment would thus rise. With a rise in unemployment, so would crime. Apart from the usual larcenies to fund day-to-day living necessities, other forms of crime would involve alcohol related crime due to alcohol addiction. Addicts who’ve lost their jobs and sources of income would probably steal in order to gain access to alcohol just to satisfy their cravings. This would be an after effect of bankruptcy perhaps. If the British government doesn’t intervene, this could bear terrible long-term consequences. Long run output and demand would get affected because of this and growth, as a consequence of that.

To tackle all of this, the government had decided to impose a price floor on alcohol drink purchases in the UK. As we’re all aware, price floors deter alcohol suppliers from lowering prices any lower than they’re supposed to. A price floor would be effective in this case if it were above the equilibrium price. As shown in Figure 1,

it would be illegal for alcohol suppliers to set their prices any lower than the price floor. The government pegs it at a level where supply exceeds demand, at a position higher than the equilibrium position where supply is meeting demand. This deters more people from buying alcohol and “”pre-gaming,” or loading up on cheap store-bought booze” (WSJ) before getting fully sloshed at a pub or nightclub. In addition, it also reduces violence and crime rates.

When you read the article by the Economist, you can’t help but wonder what all the hoopla is about. After all, “Since 2004 alcohol consumption has dropped by one-eighth, to 8.3 litres per person per year, according to an official survey.” (Economist). The Economist goes on to argue that David Cameron’s proposed intervention measures are based off of outdated data.

Even if it were indeed based off of outdated data, imposing the aforementioned price floor measure would supposedly do little to really hurt the alcohol trade. According to the article, companies are looking to boosting their profit margins as opposed to achieving greater sales. This could be due to the fact that alcohol doesn’t go bad easily. It can be preserved for long periods of time (for a year or more). So there isn’t any wastage costs incurred by alcohol companies. Therefore, even if short run demand drops, retailers are able to make better profits from the sale of alcohol, exceeding usual profit margins.

Just going off of The Economist article, it seems unnecessary for the government to intervene, but based on statistical evidence alone, in the first paragraph, it makes it imperative for the government to step in. While alcohol consumption may have dropped over the years, it still seems like a big problem in the UK based on just the hard facts and it thus makes full sense for an external corrective force to step in to correct this externality.

References

http://online.wsj.com/article/SB10001424052702304724404577297814271968518.html

http://www.economist.com/node/21564220

Image Courtesy:

http://ingrimayne.com/econ/AllocatingRationing/PriceAsRationer.html

The Detroit-Ontario Bridge Project

*This was something I wrote for an Economics Blog. Thought I’d just keep this blog alive by sharing it here. Feel free to trash/comment on anything I say.

Trade has always been the trademark of the free world economy. It brings about a more efficient allocation of resources within individual economies based on their respective comparative advantages. It is an excellent means of fostering good long-term diplomatic and harmonious relations between nations. Having said that, it is as important to engage in Trade as it is finding new means of facilitating it in a more efficient and effective manner. The new Detroit-Ontario Bridge venture known as the New International Trade Crossing (NITC) hopes to achieve this goal.

This new bridge will be fully financed by the Canadian government as the Michigan Republican Legislature has blocked proposals for public funding from its side. They feel that the bridge would be “a potential white elephant whose costs will be borne not by bridge users but by taxpayers.” (WSJ) If taxes increase people would not be happy, especially since they’d be paying unnecessarily for another bridge across the same 2 states. Also for the “economically hard-hit Del Ray neighborhood in Detroit, projected as the site of the bridge’s U.S. landing point.” (WSJ) this would be a double whammy, since the people in that neighborhood would have to pay for the bridge as well as contend with the din created by 24/7 incoming and outgoing traffic.

Previously, the Ambassador Bridge, owned by Billionaire Manuel Maroun was the only connecting pathway between Detroit and Windsor. This 4-lane bridge alone “is the busiest commercial crossing in North America, and congestion at peak times is a problem.” (The Economist) Also, lorries that enter Windsor, end up mixing with traffic in Central Windsor and cause congestion problems there as well. Traffic Congestion is an example of a negative externality that could negatively impact trade and investment. This is especially so for the car industry as highlighted in the articles. According to The Economist, “Complex cross-border supply chains mean that some components of a car may cross the border up to seven times”. If there were huge traffic delays every time parts were being transported, this would collectively long time for cars to be made. As such, this could negatively impact the economy in that the countries might lose their comparative advantages in producing cars. Other countries would import less from them, and this would negatively impact GDP and Economic Growth in the long run.

The bridge promises to help ease traffic flow as the NITC intends to have 6 lanes “with special lanes for preapproved traders”. This would help reduce labor costs as well as manufacturing time. As reported by Canadian policy makers in the WSJ article, “Canadian exporters have complained for years the congested border crossing connecting Windsor and Detroit costs the economy the equivalent of nearly US$16 billion a year in delivery delays and increased compliance burdens.” Hence it would be in the interests of both states to come together and make this happen. Also, traffic on the bridge would not be directed into Central Windsor. It would be directed “into motorways on either side of the border.”. This would help ease congestion within Central Windsor as well.

Apart from being a great way to boost GDP and ease traffic flows, the bridge would help create more jobs thus reducing unemployment and boost investor sentiments. According to The Economist it would help create 6800 permanent jobs to help manage the bridge and an additional 6600 new jobs over 4 years to assist in road repair works in Detroit that would be funded by the American Federal Government should the project be given the green light. This causes long run output to rise and as a result the natural rate of employment for both economies. As the result, the long run aggregate supply shifts to the right. Also, observing the ease at which materials and labor inputs are transported across borders, investors gain greater confidence in the efficiency of the economy and the general allocation of resources.

The Bridge project is something that should definitely happen just because it adds to the GDP of both countries, eases traffic congestion, provides employment and boosts long run investor sentiments. $550 million is a small price to pay for an increase in annual GDP to the effect of “US$16 billion” (WSJ).

References

http://online.wsj.com/article/SB10001424052702303822204577468383034028286.html

http://www.economist.com/node/21563756

The Double Edged Sword of FDI

*This was something I wrote for another Economics Blog. Thought I’d just keep this blog alive by sharing it here. Feel free to trash/comment on anything I say.

India’s recent Foreign Direct Investment (FDI) policy stance has raised strong opposition and criticism from smaller businesses and enterprises in the country. This move by the Indian Government comes in lieu of India’s slowing economic growth and isn’t entirely unexpected given the government’s intentions of wanting to “regain investor confidence” (WSJ).

Based on the policy upgrade, “The new regulations allow foreign investors to buy up to 49 percent of domestic airlines and, more controversially, to invest up to 51 percent in retail industry.” (IB Times). The buying of domestic airlines would mean that investors get a greater say in restructuring these airline companies. This would then give foreign firms the ability to set new regulations for airlines companies to meet. Rehiring could also take place and they might send staff from their home country to India to take control of core operations in these airline companies, either as pilots, ground staff or administration personnel. Many Indian citizens might thus become unemployed. Investing up to 51% in the retail industry could damage local Indian small time business enterprises. Locals would choose to make purchases from big brands like Wal-Mart or Carrefour where one’d get better quality goods for the same price. Of course, if small time businesses end up lowering their prices drastically due to the inflow of these retail giants, people might decide to frequent these smaller enterprises instead. This would start a price war and would be good for consumers in the short run as they can take advantage of the lower prices. However, in the long run prices wars might end up threatening the survival of smaller enterprises simply because they wouldn’t be able to compete with these larger firms and would have to shut down from not being able to profit.

There are advantages to having an influx of FDI, however. Big foreign retailers would end up employing the locals, as they wouldn’t have to pay the locals as much. Even in the case of the airline industry, foreign investors would avoid sending talent from their country to India to work as far as possible, as they’d have to pay them more to compensate them on top of other miscellaneous fees (i.e. accommodation, travel etc.). Specific and high skill job positions like pilots might of course be an exception to this. Judging by the number of yearly airline pilot strikes in India, this might not be a good idea either. In addition to exploiting cheaper labor costs, an influx of FDI would ‘help foster stronger economic growth and get unsustainable budget and trade deficits under control’ (WSJ). Output (GDP) is directly related to Investment. Therefore if Investment increases, so would GDP, which would thereby result in long term growth. Also consumers spending at these foreign enterprises would indirectly help relieve India of its budget and trade deficits. If these foreign companies are successful in India, this might further boost investor confidence in the country and pave the way for more Foreign Direct Investments in the future. It would however take a long time for India to reach that point, simply because “The new regulations governing the FDI in retail will have to be adopted by the state governments. But several state governments have said that they will not do so.” (IB Times). Also, things like poor infrastructure might act against the interests of foreign investments.

Having said all this, it isn’t prudent and pragmatic for the Indian government to hand foreign investors such huge stakes in the Indian market. While it may help boost investor sentiments, in the short run, would cause a lot of internal opposition and act as a deterrent to foreign investors as they might feel that it wouldn’t be safe to set up their companies or operations in India due to instability. Also, it wouldn’t give smaller businesses enough time to ease into the new market conditions and find ways to adapt by making structural changes to cope effectively. I feel like it would be a better move for the Indian government to consider giving foreign investors a lower stake in the airline and retail sectors and assure them that they would make the increase with time. Also the government could assure its citizens that it would help them get through the transition. They are already doing that but they should however take a more pro-active approach in the matter. This would be useful in helping quell the immediate violent objections at the very least, which would go a long way in boosting consumer and investor confidence in the government.

References

http://online.wsj.com/article/SB10000872396390444165804578005890328484724.html

http://www.ibtimes.com/india’s-fdi-reforms-boost-investor-confidence-their-implementation-likely-be-slow-794533

The Economics of the iPhone

*This was something I wrote for another Economics Blog. Thought I’d just keep this blog alive by sharing it here. Feel free to trash/comment on anything I say.

Apple recently launched its brainchild the iPhone 5 and trade analysts are already projecting sales figures surpassing that of the iPhone 4 and 4S. What do the increase in sales mean for the economy? The Wall Street Journal (WSJ) answers this question by stating that it could offer a substantial boost to GDP and in turn boost economic growth from a quarter to as much as half a percentage point.

Chief Economist of J.P. Morgan Chase, Michael Feroli mentions in the WSJ Article “IPhone 5 Sales Could Offer Big Boost to GDP” that a growth of 0.33% in GDP from the sale of the iPhone 5 remains reasonable. He makes this assertion comparing it with data during the period of the iPhone 4S sales October 2011 by claiming that the launch of a new iPhone would boost sales of other related goods. He claims ‘over half of the 0.8% increase in core retail sales came in the categories of online sales and computer and software sales.’ when the 4S was launched.

What does this mean in economical terms? From a microeconomic perspective, to a large extent, the iPhone is in joint demand with public goods like computers and online products. For synchronization and arrangement of data/media the iPhone utilizes the iTunes computer program. In addition, one is able to easily access the iTunes store on a personal computer to pay for the applications they download (it usually takes longer on the iPhone). As such, iPhone users would realize the need to upgrade/invest in a computer when they purchase an iPhone. If iPhone sales increase, so will the sale of computers and online products, which would eventually result in a rise in online, and software sales. Collectively the sales would boost GDP and thus result in an increase in economic growth.

From a macroeconomic perspective, the US will see a surge in consumer expenditures from the both American and World Markets. Consumption is directly related to Aggregate Demand (AD) and output. Y = C + I + G + (X-M). With a rise in consumption impacting aggregate demand by shifting it to the right, one could expect to see a rise in short term economic growth (in line with the WSJ article) and standards of living.

The iPhone 5 is an upgrade of the iPhone 4 and 4S. Some of the major new features that it highlights include the new and improved design/display, ultrafast wireless and a powerful new A6 chip designed to make applications run smoother and faster. It however doesn’t offer any feature worthy of regaining dominance of the smart phone market share, which it lost to Samsung earlier in the year. Previously, with the iPhone 4, it offered the voice-based application Siri that gave Apple that edge over other smart phones. Examiner.com examines the competitiveness of the iPhone 5 in the smart phone market and ends by saying “If you find apps and games unimportant and you mainly just make calls with your phone, save your money and use it for a nice weekend with your special someone.”.

Some of the major features on the iPhone 4S are on the iPhone 5 with no change (battery life, 8 megapixel camera) or are already present in other smart phones. For instance, Samsung already has the panoramic feature enabled in its cameras, which Apple newly introduces in the iPhone 5. The lack of anything new for consumers might therefore affect their decision to purchase the phone. Why would consumers switch to an iPhone 5 if they already own a Galaxy Tab, which could do all that the same things? Current iPhone users might prefer to wait it out for the next iPhone and in the meanwhile if another smart phone catches their fancy, they might end up switching to that. Apple thus could possibly end up losing some of its consumers and demand for the iPhone would drop. In turn, the demand for computers and online products would fall causing a decline in GDP growth. Therefore, the maximum economic growth rate projection of between 0.25%-0.5% that Feroli provides might be slightly exaggerated in the idealized scenario above. In the ideal situation presented above it might hover somewhere around 0.1%.

But then again, we’re talking about Apple. The evaluation above therefore might likely be a hugely oversimplified one. In fact, current figures estimate that “The initial supply of iPhones for Apple preorders went in less than an hour, which is much faster than years prior.” according to CNET News. They also speculate that this could be because Apple might not have had “as many available for the preorder crowd” to meet demand. Either way, if the iPhone 5 does end up the fastest selling iPhone, it would be because of its track record and the pre-existing consumer confidence in the brand and not necessarily because it had anything substantial to offer.

 Edited Version

References:

http://blogs.wsj.com/economics/2012/09/10/iphone-5-sales-could-offer-big-boost-to-gdp/

http://www.examiner.com/article/iphone-5-are-the-new-apple-iphone-5-features-worth-the-wait-on-release-date

http://news.cnet.com/8301-33692_3-57513335-305/iphone-5-preorders-indicate-hot-demand/

Summer Update

So I rejoined the service at the end of April. It’s been so wonderful to see so many familiar faces after such a long time away. Some, preparing to leave the service and move on with their lives. Others, dealing with the long seemingly endless wait by choosing to look positive, their eyes and their actions telling a whole different story.

As I prepare to finally ORD (leave the service) I look back with mixed feelings. I feel fortunate to have been part of an experience that doesn’t parallel any other in my life thus far. From, losing all that excess weight when I was a recruit, to marching for the National Day Parade, to being groomed to assume a leadership position in my department, I feel like I’ve had the opportunity to experience and grow from it all. At the same time, I feel like the end of my time in the service signals the end of an era. I’ll never get back a similar period in my life, ever again. Learnt so many valuable lessons without perhaps the pressure of an examination looming ahead. Forged so many new friendships with people of all walks of life (something I essentially never really got to experience given my association with people who had it all). I guess, these are the main takeaways from my time in the service. The lessons learned will surely stand the test of time. It remains to be seen if the friendships will, however. I look forward to the end, however bittersweet it may be. It’s time to finally move on to other adventurous undertakings.

I foresee I’ll be doing quite a bit of traveling before school starts. I can’t quite stay in one place for long periods of time. If I stay in one place for too long, I’d end up feeling suppressed/restless. Looking back, I could never really stay in my dorm room for long periods of time as well. Needed to keep moving around.

Here’s looking forward to what remains of summer!

06/18/12
10:43 AM