Monday, October 25, 2010

Wading Into Publishing

Publishing is one of those industries that increases in size, and opportunity, with the introduction of every new innovation.

Stone age cavemen used the walls of their caves to record, with pictures, the stories of their exploits.  This was good but limited by the number of caves available and blank wall space on their caves.

The Babylonians developed both an alphabet and new medium, soft clay, for recording their stories.  Not only were the clay tablets transportable but with clay being less expensive and more readily available than caves there was more opportunity for writers as the medium was less expensive and in greater supply which made the output more affordable for consumers thereby increasing demand for content.

The invention of paper broadened the market even further increasing both demand and supply for content.  And some of the content  from the ancient world has continued to sell down to the present - think of the Judeo-Christian Bible, the writings of Socrates, Plato, Aristotle, the Odyssey of Homer, etc.

With the Gutenberg's invention of movable type the cost of books was reduced further which, again, increased opportunities for writers - a profession whose ranks grew exponentially.

Then came the Internet.  The cost of adding content dropped to near zero which made entry into the market affordable for everyone.  The cost of access to content by consumers also dropped drastically with the result that demand for content is going through the roof.

The Internet Has Opened the Doors for Many Aspiring Writers

A good example of this is HubPages.com in which its huge number of writers have published a total of 1 million Hubs (articles) in the little over four years of its existence.  And much of this is very good content as seen by the three and four figure monthly incomes many of the writers are earning with their part-time writing.   Just take a look at their new Success Stories page. 

Not to brag, but my story is one of those that appear on the Success Stories page and I can personally attest that I have done well both financially and professionally with HubPages.  Because of this success, my son and I have decided to expand our publishing efforts by joining the publishing site Lulu.com and moving into writing books along with our HubPage writing.

Our first foray into publishing is our just released 2011 calendar titled Chika's Dog  Trivia for 2011.  While we have more ambitious book plans, this was a relatively simple project we have been considering for some time and figured it would be a good way to get some hands on practice using the tools on the Lulu site. 

We have now completed the project and have set up our store on the site where it is displayed for sale.

  Calendar Cover

Monday, October 18, 2010

In Elections Free Speech is Not Without Cost

Everybody knows that the First Amendment to the Constitution, which reads:

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.


Freedom here refers to Congress putting restrictions on what people can say or, as some recent court rulings have decided, how they can express themselves.  Of course, Congress can put some limits on what people can say, or at least pass laws punishing people who violate these restrictions.  National Security is one area where speech can be restricted and libelous comments or harming someone's reputation with false and slanderous comments about them.


However, having the right to say what one wants is not the same as having free access to the means to communicating one's political opinions.  


Ask any politician.  They are perfectly free to talk about their ideas and describe what they will do if elected.  However, in order to spread their words far and wide they need money.  Money to travel and meet the voters, money to rent halls to speak in, money to pay for radio and TV time, etc.  


Simply having one's name on the ballot generally won't result in people voting for that person.  One has to get out to meet and talk to voters so that the voters get to know them and want to vote for the candidate.  


We are now about two weeks from Election Day and candidates are scrambling to get the word about their candidacy and convince as many potential voters as possible to vote for them.  However, in this election as in many past ones, significant trends are emerging that indicate that Republicans have the momentum and appear set for a big win.


In addition to polling data and the general mood of the voters - this year Republican voters and others favoring Republican candidates seem excited and eager to get out and vote for their candidate while Democrats and others not wanting a Republican victory seem increasingly resigned to defeat.  


In addition to polling data, candidate fund raising can also be an indicator to predict an election outcome.  As I stated above, candidates need money to get the word out about themselves in order to win.  However, there is an opportunity cost to donating money to campaigns.  Large donors often expect to get access to the candidate once he or she is elected while small donors are generally satisfied with the opportunity to help the person who shares their views win.  


Obviously a large donor won't get any access to an office holder for his or her money if the candidate loses and small donors won't enjoy the satisfaction of having helped the person they believed was best suited for the job win if the candidate loses.  So while supporters may still voice support for a candidate that is losing most will be reluctant to throw money away on a losing candidate.  


So, the ease or difficulty with which a candidate can raise money as an election season draws to a close is another indicator of an election outcome.

Sunday, October 10, 2010

Columbus Day

Tomorrow, Monday October 11, 2010 is Columbus Day, the holiday that honors the Italian navigator Christopher Columbus and his discovery of the New World.

While Columbus's nationality is still subject to debate in some quarters, it is generally agreed that was born in what is now Italy. As I pointed out in my article on Columbus Day on HubPages, Columbus Day began as an Italian-American holiday.

Of course Christopher Columbus' fame rests on his discovery on the New World while in the service of Spain. Although technically, Columbus was employed, not by the Spanish government, but rather in the employ of Queen Isabella of Castile. Castile had been combined with the Kingdom of Aragon by Isabella's marriage to Aragon's King Ferdinand and the the combination of these two kingdoms, both located on the Iberian Peninsula, formed the basis for the modern nation of Spain. In addition to being King of Aragon, King Ferdinand was also the ruler of the Kingdom of Naples on the Italian peninsula.

In addition to being privately financed by Queen Isabella (unlike today, the finances of monarchs were closely linked with that of their kingdoms), it should be remembered that the real purpose of Columbus' voyages was more for the purpose of discovering a new, and more direct, trade rout to Asia rather than exploration per se.

Europe, at the time of Columbus was entering a period of economic growth that was driven in part by both population growth and by a period of global warming. A desire to expand trade was a part of this economic growth and, while the New World proved to be a big barrier to a western sea route to Asia, the the New World itself became a major trading partner for Europe.

Links for Further Reading:

The Origins of Columbus Day - my article on how the Columbus Day Holiday came about.

Lief Erikson Day October 9th - Some five centuries before Columbus Lief Erikson and his fellow Vikings attempted discovered the New World and attempted to establish a colony in North America. Lief Erikson is recognized with a holiday in October but it is observed mainly in Wisconsin, Minnesota and the Dakotas.

Global Warming and the Discovery of America - a major reason for the failure of the Viking settlements in North America and for the economic decline of the Viking colony in Greenland was a period of global cooling. The warming period that followed this cooling period resulted in those who followed Columbus being able to successfully colonize the New World.

Wednesday, September 15, 2010

Profits and the Poor

Many people are uncomfortable with the concept of profit. For them there is an underlying belief or feeling that profits made by entrepreneurs and their businesses are made at the expense of the rest of society.

However, profit is defined as the excess of the total revenues of a business over its total costs. Profit is the surplus left over from the revenues after paying for the raw materials needed for production, paying the workers, paying the lenders and investors and, of course paying all of the various taxes due to all government entities having jurisdiction over the enterprise.

For the business there are two ways of increasing profit.

The first is to increase sales and revenue while holding costs constant. This can be done by expanding and finding new customers, improving the quality and desirability of the product to attract new customers, better marketing of the product, etc.

The second is to keep revenue constant while reducing costs. This involves finding less expensive ways of doing things without reducing the quality of the product.

Costs can be reduced in many ways. A business can invest in more efficient equipment which enables its workers to produce more in the same amount of time with the same or less effort. This saves on labor costs because it allows a business to expand its output without hiring more, or as many more workers, as would be needed in the absence of the labor saving machinery.

Costs can be reduced by eliminating waste. In the era before digital photography when photographers had to use film when taking pictures the giant film producer and developer, Eastman Kodak, was a big consumer of silver which, in the form of silver nitrate, was used in the making of photographic film. The amount of silver used to make each roll of film was small but, when multiplied by the number of rolls of film produced each year it added up to a very large amount.

After taking pictures with the film, photographers would send the film back to Kodak to be developed and developing film made up another large portion of Kodak's business. In the developing process the silver nitrate used in making the film was literally washed down the drain as it was no longer needed once the picture had been taken. Again, the amount of silver nitrate was minute. However, when multiplied by the hundreds of thousands of rolls of film developed by Kodak each year a lot of silver was going down the drain. Because of this Kodak invested in equipment to recapture this used silver nitrate and recycled it for use on new film thereby reducing the cost of purchasing silver for film making considerably.

Another example of cost saving by recycling was described in a 2008 entry on this blog entitled Saving Money and the Environment by Recycling old Roadbeds. In this case, companies that tear up and remove the old, broken asphalt from roads that are being enlarged or replaced no longer send the truckloads of asphalt they remove to landfills, instead, they use a recycling process that extracts up to 80% of the bitumen, the basic ingredient in asphalt, from the chunks of old road and use that in the building of the new road thereby reducing the cost of building the new road.

The point of this is is that while the hard life of the poor is mitigated somewhat by government programs and private charities, the real force that alleviates poverty is the pursuit of profit by driving down the cost of production which, in turn drives down the price of goods brought by consumers both rich and poor.

It is this lowering the cost of living that has been and still is, the main force improving the lot of the poor.

Links to Related Articles:

Prices, Profits and Low Income Consumers

Going Green Is Not Cheap

Solar Energy and Economic Efficiency

Friday, September 03, 2010

Deflation and Wage Stickiness

In a recent article on HubPages, I described what deflation is and the two types of deflation which are generally referred to as good deflation and bad deflation. While I go into more detail in the HubPages article, basically the term good deflation refers to falling prices resulting from increases in worker productivity while so called bad deflation is the result of falling aggregate demand.

A major obstacle to combating a major deflation resulting from a fall in aggregate demand is the so called stickiness of wages. Minimum wage laws, union contracts, government mandates and regulations, etc. all combine to prevent wages from falling.

Unlike other prices which fall when aggregate demand declines, wages tend to remain the same. Of course, while individual wages tend to remain unchanged, employers’ wage costs do adjust as workers are laid off and employers are freed from having to pay those laid off employees.

While no one, including me, likes the idea of having their wages fall, market forces will force a new equilibrium some way and the most common way is layoffs (I didn’t like that either when it happened to me during the major downturn in the late 1980s).

Here is a simple example showing how reducing wages or laying workers off each achieve the same result.. A company employs ten people, with each one earning $10 per hour. The total hourly wage bill for the company is $100 (ten employees times $10 pay per hour = $100 per hour wage bill). Now, if business is such that the employer can only afford a total wage bill of $90 per hour they have two choices.

The first choice is to reduce everyone’s pay by $1 which makes the wage $9 per hour. Since $9 per hour times ten people equals $90 the employees’ wages have been reduced to what the employer can afford to pay. This is the free market response and is one of the assumptions behind Say’s Law (which states supply creates its own demand and was named after the nineteenth century French economist Jean Baptiste Say).

The second choice is the Keynesian solution (after the mid-twentieth century British economist John Maynard Keynes) which is to keep the wages at $10 per hour but lay off one worker thereby leaving nine workers each earning $10 which results in the same $90 per hour wage bill that the employer can afford to pay.

While the initial result for the employer is the same under each option, namely that the total wages paid fall to what employer can afford to pay, the second choice, keeping individual wages unchanged causes a couple of problems.

First of all, unemployed people lose their wages and are now forced to cut back even more on their consumption which further reduces aggregate demand. At the same time, workers who are still employed remain fearful of losing their jobs so they also choose to hold money rather than spending it which reduces aggregate demand some more.

Unemployed workers frequently cannot afford to make the payments on their mortgages, car loans, etc. and the defaults on these loans, coupled with the decline in values of the assets securing these loans cause problems for banks as the value of their assets decline leading them to pull back on making more loans.

Second, even though the laying off of workers reduces payrolls to the amount that employers can afford in the new declining business environment, keeping wages at current levels makes it too costly for employers to rehire the laid off workers or for new businesses to hire new workers.

This fear or reluctance on the part of employers towards expanding and hiring new workers becomes a vicious circle in which aggregate demand falls because unemployed workers can’t afford to buy things which, in turn, causes employers to decide not to expand and increase output by hiring more workers.

The solution to this problem is to try to reverse the decline in aggregate demand with so called stimulus spending in which the government pumps millions of dollars into the economy in an attempt to artificially stimulate aggregate demand. This was the policy, that was prescribed by John Maynard Keynes during the Great Depression of the 1930s and followed, without success, by President Franklin D. Roosevelt and his New Deal Administration.

Instead, the solution, which President Ronald Reagan employed in fighting the stagflation of the 1970s and early 1980s, is to concentrate on calming fears and enacting policies designed to stimulate aggregate supply. This policy has been successful in the past while the Keynesian policies have never worked.

Links to My Other Articles on This Topic:

The Real Cost of Paying Employees

Deflation - What It is and Why We are Worried About It

Combating Deflation - Option I The Keynesian Prescription

Monday, August 30, 2010

Labor Day 2010 - Bad News for American Workers

Next Monday, September 6, 2010, is Labor Day in the United States and Canada. This is a holiday that was originally created in June of 1894 by the U.S. Congress to honor American workers (less than a month after this Act of Congress, the Canadian Parliament followed suit and declared the same day -first Monday in September - as a national holiday in Canada honoring its workers).

Unfortunately, for many American workers, this will be the second Labor Day holiday in a row in which over 14.5 million American workers (9+% of the American labor force) find themselves listed as being officially unemployed.


Official unemployment refers to civilian workers who are both unemployed AND actively looking for work. In addition to the over 14.5 million officially unemployed workers there are an additional 1.2 million so called discouraged workers or workers who have seen unemployed so long that they have given up looking for work.

Since the discouraged workers are no longer looking for work they are not included in the official unemployed category - however, they still have no job.

While the official unemployment rate is about 9.6% overall (and this does NOT include the 1.2+ million discouraged workers) it is not distributed evenly throughout the workforce. Some regions with in the U.S. have rates higher than the national average while others have a lower rate. Similarly, the rate for college graduates is a little lower than than for non-college graduates.

The worst hit are teenagers. According to a recent report from the U.S. Bureau of Labor Statistics (BLS) a full 26.3% of teen workers are unemployed. Again, these appear to be those who have been laid off and are looking for work. Many more are no longer looking for work.

For the past two years the current Administration and Democratic controlled Congress have been trying to pull us out of the current recession and reduce unemployment with failed Keynesian policies. It is time to accept the fact that the theories and policy prescriptions of the late John Maynard Keynes are useless and replace them with new pro-growth policies.


Links to My other Labor Day Articles:

Labor Day and the North American Labor Movement

What is Labor Day?

Labor Day in America

Selling Last Semester's Textbooks Online

In a previous posting four years ago I discussed how the Internet was changing the college textbook market.

At the time I published that post my daughter had recently graduated from college and I estimated that I had I had paid about two-thirds less for her books by buying them online than if she had purchased them used from the bookstore.

I haven't had as much luck with my son saving on textbook costs. First of all, he hasn't been as good as my daughter was at getting the ISBN numbers for me. A big part of his problem is that the college bookstores have been using various tactics that make it difficult or impossible to obtain the ISBN numbers needed to get the exact textbook each course requires. Tactics like shrink wrapping the book with the ISBN number covered up or having students hand a list of the needed textbooks to a clerk who then retrieves them rather than allowing students access to the shelves with the books are two such tactics that make it impossible to to get the ISBN.

However, despite the problems with obtaining the information needed to accurately order books online, the cheap used textbook market on the Internet is not only still going strong but is also continuing to provide strong competition to college bookstores and textbook publishers. The competition has been so great that bookstores and publishers are being forced to discount their prices.

While I am finding it more difficult and time consuming to save money buying my son's college textbooks online, I am offsetting some of my costs by selling his textbooks from last semester online. Amazon.com, eBay and eBay's Half.com division are among the many sites that make buying and selling of used textbooks and other books easy.

The main key to successful selling is to have your books listed on a site before the start of a new semester. I put my son's most recent collection of textbooks from last semester on Half.com (a site I have been using for years to buy and sell books)a couple of days ago and have already earned $60 from the sale of three books. Prices, of course, vary greatly depending upon supply and demand but, in today's economy every little bit helps.

Half.com and similar sites are also great places to sell books other than textbooks as well as other media such as DVDs and games.

Thursday, February 11, 2010

Honoring Dogs During Chinese New Year Festival

After thinking her challenge over for a few hours, I decided to accept the challenge and start right away as I had just published the Hub article linked below.

The Hub, Honoring Dogs During Chinese New Year is about the second day of the Chinese New Year Festival in which, among other things, is considered to be the birthday of all dogs. I developed that idea into a short Hub article and had our little Chihuahua, Chika pose for a series of birthday party pictures to illustrate the article.

Below is a link to the first of thirty Hubs I intend to write as a part of a challenge from a fellow HubPages writer Darlene Sabella. Click on the link below to read that Hub.

Honoring Dogs During Chinese New Year Festival


Hub 1 of 30 Hubs in 30 Days




Click here to view my colleague Darlene Sabella's current Hubs for the challenge.

Wednesday, February 10, 2010

Chika


Business Management Daily Quote