Fall 2016

FALL 2016 www.theifj.com

THE IFJ TEAM

DESIGN & LAYOUT

EXECUTIVE BOARD

PAUL MEUSER HEAD OF DESIGN & LAYOUT

MATTHEW OSTROW PRESIDENT EMERITUS

CLAIRE SU, KATHERINE WEBB, KATHLEEN CHAI,

AMANDA BEAUDOIN PRESIDENT CLAIRE SU PRESIDENT

SOCIAL MEDIA & MARKETING

DHEERAJ NAMBURU HEAD OF OPERATIONS & EVENTS

JULIA WATSON HEAD OF SOCIAL MEDIA & MARKETING

MINGYI WU HEAD OF OPERATIONS & EVENTS

ARTON DOKIC HEAD OF SOCIAL MEDIA & MARKETING

BIANCA BARCELO HEAD OF WEB PUBLISHING

XUECHEN (REBECCA) LI, EVAN PANDYA, JOE VUKEL

NATALIA SABATER-ANAYA HEAD OF WEB PUBLISHING JORGE L. MARTINEZ HEAD OF WEV DEVELOPMENT

INTERCOLLEGIATE EXPANSION

JULIA WATSON HEAD OF SOCIAL MEDIA & MARKETING

YUTA INUMARU HEAD OF INTERCOLLEGIATE EXPANSION

ARTON DOKIC HEAD OF SOCIAL MEDIA & MARKETING

NITISHA BARONIA UC BERKELEY CAMPUS MANAGER

PAUL MEUSER HEAD OF DESIGN & LAYOUT

ANKIT BILGI UNC CHAPEL HILL CAMPUS MANAGER

YUTA INUMARU HEAD OF INTERCOLLEGIATE EXPANSION

BILL WANG UNC CHAPEL HILL CAMPUS MANAGER

BRIAN LEE HEAD OF ADVERTISING

FRANK CHIANG UNIVERSITY OF CHICAGO CAMPUS MANAGER JOSH GOLDMAN COLUMBIA UNIVERSITY CAMPUS MANAGER

EDITORIAL BOARD

ABHI PANDYA VANDERBILT UNIVERSITY CAMPUS MANAGER

SARAH PARK EDITOR-IN-CHIEF EMERITUS

DUSTIN CAI VANDERBILT UNIVERSITY CAMPUS MANAGER

TIFFANY CHEN EDITOR-IN-CHIEF

MICAELA QUE UNIVERSITY OF THE PHILIPPINES DILIMAN CAMPUS

GILLIAN LEE MARKETS EDITOR

MANAGER

KATHARINE JESSIMAN-KETCHAM TECHNOLOGY EDITOR

ROWLAND MAYOR UNIVERSITY OF RICHMOND CAMPUS MANAGER

MICHAEL JANIGIAN POLITICAL ECONOMY EDITOR

MIRZA UDDIN HARVARD UNIVERSITY CAMPUS MANAGER

NIKHIL KUMAR ON CAMPUS EDITOR

SHUN HAGIWARA UCLA CAMPUS MANAGER HUMBERTO BRINGAS UIUC CAMPUS MANAGER

SENIOR STAFF WRITERS

ARI SHUSTERMAN, JOSH GELBERGER, EILEEN MAYSEK, ALAN YU

BENJAMIN BOSIS, BENJAMIN CHICCHIA, EMILY WINSTON, JONATHAN SILIN, SPENCER GREENE, TRAVIS FULLER, VANESSA ZHANG

OPERATIONS & EVENTS DHEERAJ NAMBURU HEAD OF OPERATIONS & EVENTS

STAFF WRITERS

MINGYI WU HEAD OF OPERATIONS & EVENTS

AMANDA CHOW, ARTHUR TRAN, BENJAMIN WINSTON, CALVIN CHU,

ALEC FUJII, ANDREW PARK

ELIZABETH DOYKAN, HALLIE WOLFF, JAKE GOODMAN, RYAN MA, THEODORE ROSEN, VARUN NARAYAN, VIKAS RAJASEKARAN, WAYLON JIN

ADVERTISING BRIAN LEE HEAD OF ADVERTISING

WEB

JONATHAN GOMEZ, AMY XU, VIKAS RAJASEKARAN, CHRYSTAL CHEN,

NATALIA SABATER-ANAYA HEAD OF WEB PUBLISHING

WILLIAM ZHOU, YUTONG LIU

BIANCA BARCELO HEAD OF WEB PUBLISHING

TITLE PAGE IMAGE: ISTOCK.COM

JORGE MARTINEZ

TABLE OF CONTENTS

Political Economy 28

Markets 4

Jake Goodman

IS SPOTIFY BEING HEARD ON THE STREET?

How the Music industry’s premier streaming service is preparing for Wall Street

7

Ted Rosen

9

Lizzy Doykan

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I SPY WITH MY LITTLE EYE Insight into the eyeglass market

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Emily Winston

PRINTED PUBLICATIONS PERSIST

In spite of the digital age, there is no extinction of printed books

On Campus 18

Waylon Jin

MILLENNIALS JUST WANT TO HAVE FUN How the next generationis changing the Leisure Market

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RED STATES VS. BLUE STATES

Vikas Rajasekaran

THE GREEK ECONOMY. WHAT HAPPENED AND WHAT NOW?

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Vanessa Jingjing Zhang

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OKTOBERFEST: FEST OR DEPT? Ben Chiacchia

BORDER WALLS AND TRADE WALLS

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Technology 46

Ben Bosia

2030: A LAND ODYSSEY

A glimpse into the Driverless Future of Cars

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Benjamin Winston

A NICOTINE PATCH FOR THE 21ST CENTURY

Wearable Technology is Revolutionizing the Way Smokers Quit

A WHALE OF A TIME

Jeb Bush

Varum Narayan

An Interview with Visiting Assistant Professor Grigorious Siourounis

Ryan Ma

Making a splash in the world of preppy clothing

A DIAMOND ISN’T FOREVER

How Democratic- and Republican-run states stack up in variety of comparisons

DOWNWARD SWING Arthur Tran

Spencer Greene

Lev Leviev & the World’s Biggest Diamond Compnay

Is the End Near for the Declining Golf industry?

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BREXIT: THE NEW ENGLISH REVOLUTION

The potential effects of Brexit upon trade agreements and Britains economy

PYRAMID SCHEME OR A GREAT IN VESTMENT? The Billionaire Battle over Herbalife

Amanda Chow

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EDUCATION REFORM IN AMERICA

Hallie Wolf

LENDING IS TRENDING

The next big thing in loan underwriting? Face book stalking

From the Havard Economic Review

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Jorge Martinez

DONE WORKING? CLICK HERE TO CHECK OUT Are fully-Automated Businesses the Thrid industrial Revolution?

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Travis Fuller

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SNAPCHAT RELEASES SPECTACLES

Jake Goodman

IS SPOTIFY BEING HEARD ON THE STREET? How the music industry’s premier streaming service is preparing for Wall Street

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of financing — $1 billion in convertible debt, which is a debt security that can be converted into the underlying company’s equity at the financiers’ discretion.

rom its early roots in Stockholm, Sweden, Spotify AB (Spotify Inc. in the United States) has grown to become a tectonic force in the music industry — a true market disruptor in the way it transformed the consumption of music. Since its inception, the firm has managed to dramatically increase its paid-membership service, as opposed to its free service rife with advertisements. Daniel Ek, the company’s CEO, recently tweeted that “40 is the new 30. Million.”, referring to the streaming service’s recent milestone of 40 million paid users, compared to 30 million in March 2016. The firm has 100 million total users, both free and paid. Spotify’s largest competitor, Apple Music, lags behind with a mere 17 million users.

This new round of debt was issued by a group consisting of the private equity-firm TPG, the hedge fund Dragoneer Investment Group, and Goldman Sachs. The Wall Street Journal reports that the debt’s interest rate will increase the longer Spotify waits for an IPO, and investors are entitled to a 20 percent discount on shares if they decide to convert their debt into equity. Yet, to improve its margins before an IPO, Spotify will have to grapple with its net loss of $200 million last years despite revenue doubling to more than $2 billion, and the firm thinks it has found a solution.

As Spotify grows, it is increasingly under pressure to file for an initial public offering, which is the first time a private company’s stock is opened to the public to purchase. According to Bloomberg Businessweek, the company plans to go public in the second half of 2017 with a valuation of $8 billion. The pressure to go public largely stems from a recent round

A Music Industry Super Brawl As Spotify anticipates its IPO, its chief focus is on restructuring its music rights. According to public filings, Spotify’s commissions to the music industry totaled $1.8 billion last year, with 55 percent of its currently paid to

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record labels and artists and an additional 15 percent to music publishers and songwriters.

The major record labels — namely Universal Music Group, Sony Music Entertainment, and Warner Music Group — each hold undisclosed minority stakes, forming a conflict of interest as CEO Daniel Eks attempts to lower the labels’ checks to around 50 percent.

Lower sales to labels would encourage Spotify’s chances of profitability with an IPO on its horizon.

music in 2015. After struggling from declining sales of CDs and digital downloads, US record companies, posting revenues of $3.4 billion in the first half of 2016, are increasingly pivoting toward streaming services, giving Spotify greater leverage in negotiations.

The record labels also maintain a certain edge over Spotify. Online streaming services have tended to create losses for corporate parents, as evidenced by the struggling Pan-

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Spotify currently operates on a short-term month-to-month basis with the labels. With long-term negotiations underway, there is insight into the positions of both sides of the table. On Spotify’s side, the streaming service has a couple advantages. Additionally, Spotify has offered additional data and promotion to artists and has hinted at the possibility of a limitation on the length of time one can remain a free user for. As the labels all hold minority stakes in Spotify, they have a vested interest in seeing the streaming service succeed. Spotify also has some special treats it can offer the labels. The labels, and notably artists such as Adele and Taylor Swift, have taken issue with Spotify’s availability of its complete catalog to free users. There has been discussion about giving the labels the ability to restrict certain new releases to the paid tier. However, Spotify is concerned that doing this will drive consumers to free platforms, such as YouTube.

dora, which went public in 2011. Spotify also faces competitive pressure from its rivals in the industry: Apple Music, Amazon Prime Music, YouTube. Whereas these other services can lean on their respective corporate parent, Spotify does not enjoy such a luxury. Ultimately, with discussions centering on amending Spotify’s free service aspects, compromises will have to be made, and Daniel Ek and his team will have to balance the firm’s need for increased profit margins with its relationships with record labels and artists.

The Times They Are A-Changin’ Whatever happens with Spotify, it is clear that consumers can expect changes in the months before an IPO. Spotify seems to be increasingly ambitious in its projects. Spotify’s recent partnership with Tinder, integrating a user’s music taste into their dating profile, is a recent example. A single song, dubbed an ‘anthem’, is chosen to represent one’s personality on the dating app. Spotify has also worked with another dating app, Bumble, to work on a similar idea, displaying what users have been streaming. These recent

Finally, Spotify holds a key position as a mainstream consumption platform and a major source of revenue for record companies — the largest source of sales for recorded

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developments are part of Spotify’s goal to provide a broader experience to users. The company spent $250 million on research and development last year, including the purchase of a dozen original music-based TV series. It’s evident that Spotify does not envision itself as part of the general trend in the music industry — to soar and plummet fast — rather seeks the means to ensure its survival.

However, with the pressure on, this series of negotiations seems to be a key test for Spotify’s leadership and for its future on Wall Street. Despite this pressure, Spotify has other options besides Wall Street. A possible acquisition by Facebook is not even off the table, according to the investment firm GP Bullhound, a partial owner. Overall, an $8 billion dollar valuation is hard to live up to, especially in an industry notorious for its lack of profitability, but Spotify seems to have the drive to forge a permanent position in the music industry. Hopefully for Daniel Ek and the rest of his team, Wall Street feels the same way.

Ted Rosen

PYRAMID SCHEME OR A GREAT INVESTMENT? The Billionaire Battle over Herbalife

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or those interested in reading about a story that includes tens of billions of dollars at risk, warring hedge fund titans, and a federal criminal investigation of allegedly malicious business practices, then look no further.

Those unique headlines have been synonymous with a company named Herbalife.

A negative growth spurt Herbalife recently agreed to pay a $200 million fine to federal regulators at the Federal Trade Commission (FTC).

The company, Herbalife, a nutritional supplement company, paid this massive fine for consumer relief because of issues over the company’s deceitful marketing practices that wrongfully inflated the amount of money that product distributors could potentially make. In addition to the fine, the FTC ordered the firm to

hire an outside monitor and to restructure its promotion and marketing business so that Herbalife will not be able to make more money from recruiting new distributors than from actual product sales.

This settlement is unique because Herbalife does not fit the typical profile of a company that would receive such a large fine from the federal government. In the post 2008 financial crisis era, the vast majority of companies that paid large fines to the government on behalf of consumers have been financial companies on Wall Street - namely, banks that used frivolous lending practices to create financial instability. Herbalife’s alleged crime is different because the offense has no resemblance to the exploitative Wall Street practice of originating loans to those who had no ability to repay, but was instead centered around the predatory marketing practices of a basic nutritional supplement product.

However, there is a distinct and crucial similarity between Herbalife and the financial institutions that were ordered to pay fines after the financial crisis in 2008. The most outspoken influencers of these companies and their morally egregious business practices have been billionaire money managers who have

7

taken huge bets for and against the companies - especially in the case of Herbalife.

The Roots of the Trade Bill Ackman, the founder and CEO of the $12 billion hedge fund, Pershing Square Capital, has been the most outspoken critic of Herbalife’s business practices since 2012. In a comprehensive and detailed presentation to an investor conference in 2012, Ackman made his bear case for Herbalife in which he accused the company of being a pyramid scheme that was doomed for $0 per share once the government shut Herbalife down.

HERBALIFE STOCK CHART 80

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Ackman’s bearish thesis, which is that the company’s products have very little real demand outside of distributors who look to resell the products and that the growth of the company has been a result of aggressive distributor recruiting, which is a hallmark of a pyramid scheme, is supported by the fact 89 percent of distributors earn nothing from the company, the top 1 percent of distributors receives nearly 90 percent of all distributing profits, and that the vast majority of Nutrition Clubs (brick and mortar sales locations) fail within months of opening. Ackman also revealed that he had a $1 billion short (a bet against a stock) on the company’s stock and that all

the profits from the short sale would go toward charity.

Another legendary billionaire and notorious corporate raider, Carl Icahn of Icahn Enterprises, has been on the other side of Ackman’s trade for the past four years. In other words, Icahn is bullish on the stock owns a 21 percent stake in the company, which amounts to over $1 billion in equity. In addition, Icahn also has a seat on the company’s board. As shown through Icahn’s company role and major holding in Herbalife, he believes that Herbalife’s core business is not fraudulent, and therefore the company’s strong financials and growth rates are justified, making it an attractive value investment for his firm.

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2016

It is important to note that this is not the first time Ackman and Icahn have been adversaries. In 2003, a deal between the two over a commercial real estate transaction turned into years of litigation when Icahn refused to pay Ackman a previously agreed upon amount of money. In 2011, Ackman won the lawsuit and Icahn was ordered to pay Ackman and his investors $9 million. Then when the Herbalife debacle started, the two had an intense uncensored phone debate on live television that displayed their disdain for one another to the entire world. And in 2014, the two appeared to make amends by hugging each other on a panel hosted by CNBC. Despite this, both remain in commercial conflict with each other over their Herbalife positions.

An Unlikely Market Reaction So, given that Herbalife just paid a $200 million fine and was slapped with other government contingencies that force Herbalife to reform its

allegedly unscrupulous marketing practices, many on the outside would assume that Ackman’s bearish bet is paying off. Yet, on the day the fine was announced, Herbalife shares rallied 9.9 percent higher as investors cheered the seemingly discouraging news.

This counter-intuitive market reaction was most likely based on the notion that the fine was a much more positive result of a two-year investigation by the FTC as opposed to the alternative, which likely would have been a forced shutdown of the company. Even though the FTC chairwoman, Edith Ramirez, said that Herbalife had “deceived hundreds of thousands of hopeful people,” she did not go as far to label the company a pyramid scheme, which, at least in the short-term, vindicated the hopes of bullish investors such as Carl Icahn, who even purchased more shares after the announcement.

The Fight Continues In response to the FTC’s forced restructuring penalty, Ackman’s hedge fund released a press statement which said that although they expect the “fundamental structural changes will cause the pyramid to collapse as top distributors and others take their downlines elsewhere.” Even after the FTC failed to find evidence to shut down Herbalife, Ackman remains convinced that the company will eventually become defunct.

In the four-year long battle over the true fundamentals of this company, Ackman has spent $50 million on due diligence and an anti-Herbalife marketing campaign, a federal investigation occurred, and the company’s stock has become one of the most volatile on Wall Street thanks to the public escapades of activist investor billionaires like Icahn and Ackman. Now only time will reveal what will come next in this epic Wall Street drama over the fate of Herbalife.

Lizzy Doykan

DOWNWARD SWING Is the End Near for the Declining Golf industry?

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ne glance at the empty, run down state of Pine Crest Golf Club in Houston, Texas tells a whole story. What used to be one of the most bustling, popular public golf courses in the city, now appears to be on the verge of closing down for good. The long row of unoccupied hitting mats and still atmosphere are not unusual characteristics 9

for any public (or even private) golf course today. Pine Crest is an example of one of the many golf courses in financial trouble and is analogous to the dying industry of golf as a whole.

This is nothing new - golf has been on a downward trend for over a decade now. The National Golf Foundation reports that national golf participation had dropped to 24.1 million people in 2015 from a height of 30.6 million people in 2003.

Back then, Tiger Woods dominated the sport with an electrifying presence and contributed to the surge of interest in golf from the nineties to early 2000’s. However, a publicized marital affair and a progressively worsening game led to his irrelevance in the eyes of many fans. The sport’s loss of their biggest ambassador definitely affected golf sales, but a number of other factors, including a shift in consumer preferences, also contributed to the market’s slump.

Stuck in the Rough Excitement and value are two major factors inhibiting the average consumer from playing golf today. The sport faces even more difficulty marketing itself to a rapidly changing demographic towards millennials. Most adults in this category, ages 18 to 34, are focusing on careers, paying off student debt, and seeking out leisurely activities that cater to a shorter attention span. Golf may have a deterrent effect as it requires

lots of patience to learn and play. For example, a full round of 18 holes typically lasts from four to five hours. Golf also requires a lot of different purchases. Retail essentials such as clubs, equipment, and proper clothing, in addition to golf course fees and swing lessons, may be enough to ward off the average consumer. More consumers today are turning to healthier, more cost-effective lifestyles. Many adults are instead choosing to bring friends and business clients to faster-paced activities such as

bankruptcy in mid-September.

Over the summer, the company’s original buyers had forfeited ownership due to millions of dollars of piled on debt that they could not keep up with. Since then, Golfsmith has persistently searched for new buyers to acquire their nation-wide store chain, but without any luck, according to Alltechnews.org. Sales in golf equipment have always struggled due to costly inputs of manufacturing and R&D, but a severe lack of participation and interest by younger people

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Soulcycle and Crossfit.

Signs of a declining market have become even more flagrant this past August when big name sportswear brands, Nike and Adidas, decided to drop most of their golf brands in their retail lines. Nike officially announced that they would stop manufacturing golf clubs, which had become popularized by Tiger Woods, their most well known endorser. In addition, one of the largest golf-specific retail stores in the world, Golfsmith International, made big financial news headlines by declaring

in 2016 has worsened the blow.

On the Flip Side...

Although the struggle appears evident, the golf industry may not be as doomed to failure as it appears to be. Even though dying golf courses and troubled sportswear companies paint a depressing picture, a closer look at the industry actually gives insight into a promising future. In addition to their findings from the last decade, the National Golf Foundation also has reported that the first half of 2016 “saw an increase of 10

3 percent in total rounds played in the United States, and 2015 marked an increase of 1.8 percent.� This statistic substantiates the argument that interest in golf is on the rise again. Additionally, while Nike, Adidas, and Golfsmith suffered heavy losses, big name brands Callaway and Taylormade reported positive growth earnings in 2016. The setbacks faced by these three retailers may have been the result of flawed company strategy rather than a lack of consumer demand.

Another major headliner for golf occurred this

past summer too, when the Olympics welcomed golf as an official sport for the first time since 1905. The International Olympic Committee made the decision seven years ago to include golf in the 2016 and 2020 Summer Games as a way to provide countries with more

sport to national attention.

Paulo Pacheco, the President of the Confederation of Brazilian Golf, visualized the future of golf in Brazil, stating that “ten years from now, Brazil will be the biggest golfing force in South America”. Already, Brazil is just the start of something

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outlets for competition. In addition to this extra opportunity, this decision also meant giving golf an entirely new level of international exposure.

that could turn into an international movement for increased participation in golf.

Now, millions of people around the world can tune in to watch some of the best players from their home country tee it up at Rio alongside their favorite athletes in swimming or gymnastics. For Brazil specifically, hosting Olympic golf for the first time in 112 years meant bringing a virtually untouched

Whether one wants to deem golf as dying or thriving, it is hard to deny that it holds more barriers to entry than most other sports. However, when looked at from a business stand point, the sport has tons of potential. Already, major golf organizations such as the USGA and PGA have

Community Greens

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introduced initiatives like “Tee it Forward” and “Play Nine” to present the game as less challenging and time-consuming.

The same organizations are also making promotional use of today’s top professional golf athletes in lieu of Tiger. Rickie Fowler, Jordan Spieth, and Rory McIlroy for example, have been great for reeling in younger audiences through social media platforms and bringing in a more hip, athletic style approach to the game.

To target youth audiences, programs The First Tee Foundation are teaming up with public elementary and middle schools to include golf in Physical Education classes in kid-friendly formats. Marketing the game to millennials is key as it is the fastest growing demographic in the nation. It is also important to consider the role that the public government could play into this effort. For many middle class folks, their friends, and their family, a publicly backed municipal golf course is a go-to destination. More publicly backed funding for local golf courses will not only benefit the sport, but will foster a great community and reputation in the surrounding region. As it is, the future of golf looks optimistic as long as the strategy continues to focus on making the sport more accessible to the working class and attractive to younger people.

Arthur Tran

I SPY WITH MY LITTLE EYE Insight into the eyeglass market

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yeglasses are increasingly becoming a statement of style and not merely a necessity for those with myopia. Besides functioning as a treatment for nearsightedness, glasses also serve as a beacon of individuality. With hundreds of frames and lenses to choose from, one can easily spend hours searching for the perfect pair. Glasses were first made in the late 13th century, and over the years, technological improvements have made them lighter, more comfortable, and more effective in correcting vision. And yet, most of us find ourselves with sticker shock: how can pieces of metal and plastic cost so much?

A Closer Look The U.S. eyeglass market is worth over $19 billion, with $8.6 billion of sales from frames and $10.4 billion from lenses. Even though contact lenses and laser surgery are rising in popularity, the eyeglass industry is still expected to grow steadily, as myopia is

on the rise in the United States.

Glasses are sold across a wide range of retailers, from independent optometry practices to mass retail stores. The key player in this market is probably one you’ve never heard of: Luxottica.

Luxottica is a vertically integrated company that designs, manufactures, distributes, and sells its extensive eyewear brand portfolio. It wholly owns many well-known brands, such as Ray-Ban and Oakley, while also possessing licensing rights for the likes of Armani, Burberry, Chanel, Prada, and Versace.

Luxottica also owns EyeMed Vision Care, the second largest vision insurance company, and controls 66 percent of the mass optical market under the Lenscrafters, Pearle Vision, Sears Optical, Target Optical, and Glasses.com storefronts.

In other words, it’s very possible to have an eye exam done by a Luxottica optometrist, purchase a pair of Luxottica brand glasses, and have insurance claims also processed by Luxottica. Such supply chain integration allows Luxottica to cut costs and quickly adjust to changes in consumer taste.

At the same time, it raises the question of market power. Although Costco and Walmart Optical are competitors, they are concentrated in the lower end of the market, whereas Luxottica dominates the midto premium-priced sector.

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revenues of $7 billion in the U.S. last year, far outpacing Walmart Optical, its nearest competitor, which reported $1.5 billion in earnings. Luxottica’s large market share has led some critics, such as Forbes and 60 Minutes, to decry a monopoly. They argue that Luxottica is able to charge

considered “uncool�: something to be worn only when absolutely necessary. Nowadays, glasses are considered a valuable accessory, even for those with perfect vision.

Models strut down runways with glasses perched on their noses, and fashion magazines advise readers on finding the

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hundreds of dollars for frames because the company has the market power to set prices far above actual production costs.

The company’s CEO, Andrea Guerra, disagrees, arguing that Luxottica has transformed glasses from being a medical device to a fashion statement.

Not long ago, glasses were

perfect frame style based on face shape. Luxury fashion houses such as Coach, Tiffany, and Bulgari have transformed glasses into a type of “face jewelry,� with little details like gemstones and threaded leather that make the wearer stand out. Guerra says that consumers are willing to pay for comfort, style, and quality 14

-- and Luxottica charges prices accordingly. But fashion forwardness has not only been confined to the high-end market; in fact, many affordable frames mimic runway styles at a less eye-popping price tag.

A Sight for Sore Eyes Recently, new companies have attempted to disrupt the eyeglass industry. In 2010, Warby Parker was established as an online retailer of stylish, affordable glasses starting at just $95. Its launch was an immense success, with its frames being featured in fashion magazines and endorsed by high-profile celebrities such as Oprah. Just last year, Warby Parker was valued at $1.2 billion, standing out as a superstar among online retail startups. In an unusual move, the company has also began expanding into brick and mortar locations, focusing on trendy neighborhoods in large metropolitan areas like Boston and Los Angeles. And it has proven to be a success, with sales reaching $3,000 per square foot -- a

measure of sales productivity that is second only to Apple stores. Central to the Warby Parker’s business strategy is its commitment to social responsibility: for every pair of glasses purchased, one is donated to someone in need.

Additionally, many smaller online retailers have emerged, hoping to lure consumers with the prospect of low prices, hassle-free exchanges, and a broad selection of fashionable frames. The number of prescription eyeglasses purchased online totalled 2.3 million in 2013 and is poised to increase further as consumers embrace e-commerce. Even Google has jumped onboard, with the introduction of Glass, a wearable electronic that combines cutting-edge technology with key health features. The Mountain

View-based company recently partnered with Luxottica to make Glass more stylish, in hopes of increasing its broad market appeal.

As consumer tastes evolve amidst technological advancement, the eyewear industry must respond accordingly.

Though online sales are increasing, having a brick-andmortar presence will still prove to be critical due to the personal nature of glasses.

New startups like Warby Parker have the potential to break Luxottica’s grasp of the market; meanwhile, the concept of glasses both as a fashion and tech accessory is gaining traction. These exciting changes make the eyeglass market wellpoised for future growth and innovation. Who knows what we’ll see next?

Emily Winston

PRINTED PUBLICATIONS PERSIST

In spite of the digital age, there is no extinction of printed books

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he print revolution of the 1800s greatly altered the American way of life. The linotype machine, an operator that enters text on a 90-character keyboard, introduced the concept of printing many papers at a fast rate. Though the linotype machine catalyzed the way in which people communicated information, for thousands of years earlier the printed word had been doing just that. Today, readers have many outlets to receive information, in the form of eBooks and in printed version-books, newspapers, magazines, textbooks.

The Electronic Revolution The Internet played an important role in the electronic age and continues to infuse all aspects of daily life today.

With the Internet and the digital shift in society, the idea of reading text online in the form

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of an eBook was an appealing alternative to a printed book.

The Amazon Kindle, released in 2007 and the Apple iPad, released in 2010, both encouraged reading off a screen rather than off a printed page.

Other new devices such as the Nook Tablet, Sony Reader, Kobo Reader and Pocketbook Reader make it incredibly easy to download and read books digitally and saves readers the time from taking a trip to the bookstore.

With only the touch of their fingers, readers can select from online libraries rather than searching through shelves. In terms of practicality, eBooks occupy significantly less space than bound books and have unique features that traditional books don’t offer. Some eBooks integrate a dictionary, some have built-in lights, while others possess text-tospeech software. In conjunction with social media outlets and self-publishing advances, eBooks seem to have made printed publications obsolete.

As the benefits of the tangible novel lose pace to the virtual page, it appears that online readers no longer yearn to hold a bound book.

Printed Text: Just a Phase or Here to Stay?

Printed text lost the limelight when online text had its time to shine in 2011. But despite digital trends, in 2016 printed book sales showed an increase for the first time in four years.

The rise in adult coloring books and best-selling hardcover books may be responsible for this recent increase in printed book sales.

While once the purview of only children, coloring books now appeal to people of all ages and their prominence has helped revive the printed book industry. Though there are capabilities to “color� using technology, adults and children alike will concur that nothing compares to coloring on a physical piece of paper.

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Johanna Basford’s Lost Ocean: An Inky Adventure & Coloring Book is one such artistic outlet that is both tangible and gives adults the chance to relieve stress. Just as the increased sales of coloring books has helped bring readers back into bookstores, the release of heavily anticipated novels has also revealed that people still yearn to read printed books that can be purchased from the bookstore or library.

Familiar Authors and New Novels Help the Publishing Industry Thrive The response to J.K. Rowling’s newest addition to the Harry Potter series, Harry Potter and the Cursed Child, is evidence that people are still buying and reading printed text. Not only were 2 million copies of her play script sold in North America within the first 48 hours of being released, but also stocks of major book companies drastically rose. Barnes and Nobles, for instance, experienced a 15 percent stock increase in the month of July due to the heavy demand for the new Harry

Potter story. To date, Harry Potter and the Cursed Child is the fastest-selling book since the release of Harry Potter and the Deathly Hallows in 2007.

Though her first novel To Kill A Mockingbird was printed over half a century ago, Harper Lee’s sequel, Go Set a Watchman, attracted a wide audience of readers. In fact, the 3.3 million hardcover books sold of Lee’s novel surpassed the sales of digital copies by a factor of 2 to 1. Likewise, The Complete Alice and The Girl on the Train were also released this past year. The Complete Alice comes 150 years after Lewis Carroll’s initial Alice’s Adventures in Wonderland became a classic, and Paula Hawkins’s The Girl on the Train comes just a few years after Gillian Flynn’s thriller novel Gone Girl captivated readers. The success of these novels substantiate the fact that readers are loyal to printed text.

Hardcover books remain resilient despite the allure of eBooks. Whereas eBooks may be a 21st Century trend experiencing a decline in sales growth, printed books have been instrumental in the shaping of literature and communication over thousands of years and continue to do so.

Waylon Jin

MILLENNIALS JUST WANT TO HAVE FUN How the next generation is changing the Leisure Market

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Despite a national median postgraduate debt of $37,172, millennials are striving to pay for the trends that comprise their active lifestyle.

In general, they seem reluctant to enter the housing market and marry, opting instead to gain access to products without the thought of ownership. As Alistair Owen, a 28-yearold engineer, described in a Bloomberg article, “I’m not saving up to buy anything. I prefer to go out for dinner at a nice place, pay a round at the pub or explore a new area of the world. I feel like I would be losing out on living if I chose to own stuff instead.”

ith numbers exceeding 92 million, millennials are one of the largest generations in American history.

This demographic strength means that their decisions to buy and sell will have the ability to reshape the economy. Despite the competition and shrinking numbers of job spots among them, recent graduates in finance and tech comprise about 40 percent more than they were just 10 years ago. The first generation of digital natives growing up in a time of rapid change, millennials are focusing on their quality of life through wellness, eating right, and making good use of their free time.

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Leisure over Retail

Millennials are traveling well while promoting their activities on social media, creating indirect marketing for the companies. In a sense, millennials’ habits have created an unseen marketing strategy.

For millennials, there’s a greater emphasis on creating memories from experiences that can be shared with friends. Harris Poll, a market research firm, conducted a survey which showed that 78 percent of millennials would rather pay for an experience than spend money on material goods. A comparison of the S&P 500 Leisure Time Index to the S&P 500 Retail Index reveals that the Leisure Time Index has performed 20 percent better over 5 years. This shift in purchasing focus demonstrates millennial consumers’ immediate impact on the overall economy. Furthermore, a survey from the Commerce Department shows the $51 billion spent on dining this year has just surpassed the $50 billion spent on groceries. 20 years ago, annual restaurant spending was about half of the $30 billion spent on groceries, suggesting that millennials perceive dining as more of a social event than the baby boomers did.

The Future of the Digital Generation As millennials approach their peak spending years, it’s projected that their expenditures will increase by 15 percent due simply to the fact that they are getting older. While millennials aren’t afraid to shop for what they want, they understand the value of what they’re purchasing. More than ever, millennials are using technology to make themselves better shoppers. Thanks to the growth of platforms like Google and Amazon, analytics company Aimia says that over 50 percent of millennials are using smartphones to research products and find the best deals.

As this generation of “digital natives” becomes more and more educated, competition in all fields will increase, and millennials will continue to look into creative, meaningful work while embracing leveraged social media platforms and technology. This will trigger a new generation of communication for all.

With a lack of appealing entry level jobs, some millennial job seekers may opt to spend more of their time and money on leisure. Millennials will surely find their footing in the new technological generations to come, but until then, we should all “let them live their life.”

So what do these trends mean for companies in the leisure industry? Restaurants and airline companies in particular are reaping the benefits from a socially-engaged generation.

Airlines like EasyJet have seen a sevenfold increase in stock price since their low of $279.29 in 2008. Elsewhere in the realm of travel, established industries like hotels are seeing negative effects from the advance of living rental services. Airbnb, an apartment and home rental service for travelers, is evaluated at approximately $30 billion, compared to Marriott’s net worth of $500 million.

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Ryan Ma

A WHALE OF A TIME Making a splash in the world of preppy clothing The daily nine-to-five workday is not for everyone. Thankfully for those who love preppy clothing, it was not for Shepard and Ian Murray either.

The Murray brothers grew up in Greenwich, Connecticut, a quintessential New England town. Shepard, the elder brother better known as Shep, attended Skidmore College, graduating in 1993, and went on to work on the trade floor of the New York Stock Exchange.

Ian, the younger brother, attended Lafayette University and graduated in 1997. He then took a job in Manhattan, working for a public relations agency. Shep and Ian quickly grew tired of their corporate jobs, though. So, in 1998, the Murrays decided to close up shop and open a new one: Vineyard Vines.

The two brothers frequented Martha’s Vineyard as children, spending summers with family and friends on the 20-milelong island. After many years spent on the Vineyard, the Murrays decided it was time to share their true appreciation and love for the island. Upon quitting their jobs in Manhattan in 1998, Shep and Ian began selling handmade silk ties, each with its own dash of Vineyard spice, with an $8,000 cash advance on their credit cards. Shep and Ian hawked their wares in bars, beaches and even shipyards on the Vineyard, selling ties out of their backpacks, hoping that their tasteful ties would hit close to home for many of the locals. “There was no real reason for ties,� said Shep to Connecticut Magazine in 2012. “The whole idea was that you could go to a place and, aside from T-shirts, there was nothing to tell anyone that you had been to the Vineyard. And we said, ‘Why not make ties that represent the things that we love to do on the Vineyard?’� And they did just that. The Murrays embroidered their ties with everything from street signs to native fish, epitomizing the Martha’s Vineyard lifestyle.

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After creating a little buzz, the Murrays began offering ties to retailers on consignment, making them more accessible to both locals looking for new preppy clothing and tourists who wanted to take a little piece of the island home with them.

All In When Shep and Ian delivered their first batch of 800 ties, they sold out in less than a week. Like miners who struck gold, the Murrays just kept digging. Expansion began quickly, spreading from Martha’s Vineyard to Cape Cod and the brothers’ hometown of Greenwich, most notably at clothing retailers Darien Sports Shop and Richards. As the ties’ popularity increased, so did the demand for other articles of clothing. Thus, Vineyard Vines rolled out their first line of clothing, including polos, shorts, pants, swimwear, and totes for women.

Shep and Ian’s first stand-alone store was located on Greenwich Avenue in Greenwich.

They learned the ins and outs of retail, including their philosophy of metaphorically “hugging� customers, which is the act of being overly personable and welcoming in order to create a friendly environment for all shoppers. Through hugging, Shep and Ian hope all customers feel valued and appreciate during and after their shopping experiences.

A People’s Brand So just why is Vineyard Vines so popular? The brand exudes a feeling of leisure and relaxation along with a positive mindset which the company sums up as living “the good life.”

“We sell an experience,” Shep told Forbes in 2013. “The key to success is generating repeat customers. We’re not selling

clothes — we’re selling a lifestyle.” Both Shep and Ian believe in, support, and are a part of this lifestyle, sporting vibrant colored shirts and ties with shorts. And almost every article of clothing and accessory is painted in vibrant pastel and neon colors and tagged with the signature smiling whale logo.

The original whale is not any ordinary whale, though. The original pink smiling whale was designed when the two brothers first opened shop, a tribute to the wooden whale that hung outside their family home on Martha’s Vineyard.

Shep and Ian decided to make the whale pink with a blue

border to reflect a faded, sunkissed Nantucket red and the blue blazers meant to be worn with their signature ties. The beloved whale is featured on everything from tee shirts to car magnets.

An inclusive feature of Vineyard Vines is that they do not use models in their catalogs.

Many large-scale clothing companies fill their catalogs with pictures of models wearing their clothing. Vineyard Vines took a different approach, candidly shooting real people wearing the brand for their catalog pictures. Back when it all began, Vineyard Vines was operating on a shoestring budget and could not

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By 2008, Vineyard Vines had opened in four more states: Connecticut, Massachusetts, Washington D.C. and Florida. Now, the company claims ownership over 59 stand-alone locations, almost 100 retailers, and 15 outlets.

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afford to hire models, so rather than try to pass off regular people as models, Vineyard Vines embraced its inclusive character and even encouraged people to send in their own photographs for the catalog.

Vineyard Vine’s social media is also flush with pictures of Vineyard Vines phanatics flaunting their favorite apparel.

In addition, Vineyard Vines has created a motto unmatched by any other brand. Shep and Ian coined the mantra “Every Day Should Feel This Good.”

The motto appears on many items and as a hashtag on social media platforms. Vineyard Vines aims to dress people for fun, rather than going to work, which draws attention and business of many young adults, college students and even high schoolers who resent the suitand-tie look pushed by competitors like Polo or Lacoste.

Jeb Bush

EDUCATION REFORM IN AMERICA From the Harvard Economic Review

Shep and Ian believe that lifestyle is the future of Vineyard Vines, and, according to Bloomberg, the brothers are looking to dive into fragrances, footwear and quite possibly a restaurant. Vineyard Vines has grown exponentially in the last eighteen years, but its time has just begun. The company plans to continue to expand, hoping to spread their East Coast vibes across the nation, so that everyone can experience “the good life.”

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As adults, we are responsible for the educational success of our children. And as adults, we can thwart young learners.

Let me ask you a question. A child enters kindergarten. His mother is single-parent who works a minimum wage job.

Perhaps he lives in the inner city or he is an immigrant learning English. What do we expect of him?

Do we expect him to read by the third grade, learn fractions or write coherent sentences?

Do we expect him to graduate from high school equipped to

attend college, begin a career or join the Armed Forces?

Or do we look at his circumstances, dumb-down his expectations, and give his school excuses not to make every effort to ensure he learns. Do we just shuffle him through the system? Promote him out of third grade even if he can’t read. Let the fourth grade teacher deal with it, who will let the fifth grade teacher deal with it until he is so far behind nobody can deal with it. Sadly this isn’t just a hypothetical question, but it is reality for

countless students across our nation. Their dreams and potential are being crushed under system that neglects its true purpose.

When you boil down education reform to one guiding principle, it is this – every child can learn. And so, we must refuse to accept excuses that only set children up for failure and deny them the opportunity to achieve the American Dream.

That is immoral on an individual level and unsustainable on a national level if we plan to be world leaders in the 21st

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century. We must set high expectations for every child and put in place the strategies to achieve them.

Many important figures in education have contributed tremendously to education, inspiring the rest of us. Iranetta Wright, a principal in Jacksonville, was assigned to the worst performing high school in Florida. She transformed a perennial F school to a B school, and she now helps other principals improve their schools. Wright advises these principals, “You have to be

white students. This year, only 25% of students taking the ACT qualified as college-ready on all four sections. How will America remain the most dominant naPublic education has become a tion on earth when we are a midlabyrinth of political, bureau- dling nation in the classroom? cratic and union empires that depend on a captive population If trying to reverse this is a war of students and minimal qual- on public education, we need ity control. In education, there to revisit the definition of pubis a resistance to change and a lic education. My suggestion is desire to maintain the status this: It is the public’s obligation quo, with many groups fighting to provide each child with the back against reform. Despite best education possible without these efforts, education reform regard to provider. is maturing into a broad-based, bi-partisan movement to com- As parents, teachers, employbat decades of failure and fiscal ers and leaders, our society has recklessness by an education sys- a responsibility to provide stutem dominated by union politics dents with an education that and enabled by pass-the-buck prepares and inspires every child to achieve his or her God-given politicians. potential. To accomplish this, we For decades, our most vulner- must rely on a variety of reforms, able kids have fallenthrough starting with early literacy. Ilthe cracks and under the radar. literacy destroys lives. Students Half of our Hispanic and Afri- who can’t read are four times can American fourth graders are functionally illiterate; they more likely to drop out. Eightyare two and a half years behind five percent of kids who enter relentless about it, and it’s not for the faint of heart.” We must heed her words and champion our students.

the juvenile-justice system are functionally illiterate, and 70% of prison inmates cannot read above the fourthgrade level.

Literacy is the ground upon which students gain knowledge and build their skills, and we need to make sure each child has that foundation before they are promoted to fourth grade.

Next, we need school choice.

With the most diverse student population in history, it defies common sense to corral them all in the same early 20th-century education model and expect them to thrive. Bureaucracies are not designed to innovate or compete, and they don’t like accountability. Consequently, we have an education system isolated from the very forces that drive American innovation and success. We need more options – charter schools, home schools, vouchers, tax-credit scholarships, and Education Savings

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Accounts – so parents can shop for a school that best fulfills their children’s needs.

Third, we need to make education relevant to 21st century kids. Today’s kids are digital natives, and with digital education, they can go to class anytime, anywhere, in their own style and at their own pace.

Digital learning is an education equalizer. It enables kids in rural Mississippi to take the same Advanced Placement courses available to students in Boston, and allows a math whiz to complete Algebra 2 in six months while other kids might need 11 months. Yet, in most states, protectionist laws hinder the advancement of digital learning because it threatens union jobs. We cannot let our past thwart the future and put students at a disadvantage.

Another vital area of reform is accountability. The old model of education that made student achievement optional had predictable results: kids who learned easily got the best education and kids who struggled got the worst education. We can stop this by demanding all kids be taught and sanctioning failure and rewarding success when we measure results.

The best accountability system I know of is a simple A-F grading scale based on student learning. Transparency should be encouraged, not feared, and this system gives parents

and the public an easy-to-understand snapshot of the state of education at their child’s school. The best part is, this grading system works. For example, in 2005 Florida began including the progress of students with disabilities in our grades. Since then Florida has

effectiveness – would determine a layoff decision, and if the great teacher got frustrated and quit, little if any effort would be made to keep her.

While the current model based on tenure and seniority may be a union-friendly model, it is certainly not a child-friend-

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led the nation in learning gains by students with disabilities, according to the Nation’s Report Card.

Next, we must upgrade the teaching profession because great teachers matter a lot.

A child in the classroom of a great teacher gets a year and a half of learning in a years’ time while a student in the classroom of an ineffective teacher only gets half a year worth of learning. So when school lets out in June, the student who had a great teacher walks out the door a full year ahead of the student who had an ineffective teacher.

Yet we pay both teachers the same, seniority – not 25

ly model and it fails to attract the best and brightest into the teaching profession. Great teachers must be recognized and rewarded. That will happen if we eliminate tenure and evaluate and pay teachers based on their performance instead of how long they’ve been on the job or how many degrees they’ve accrued.

Finally, high standards are the most basic element of reform.

Standards define what children are expected to learn over their school year and what they will need to know to succeed in each grade. Ultimately, the quality of the standards determines whether a high school diploma is worth more than the paper it is printed on.

To compete with the rest of the world in the 21st century, we must produce competitive high school graduates ready for college or meaningful careers. That means we have to raise the bar to make sure the skills they are learning are aligned with what employers and college presidents expect high school graduates to know.

These skills include critical thinking, problem solving and verifying work. The Common Core State Standards were designed based on these skills.

I understand there are those opposed to the standards. But we need to hear more than just opposition. We need their solutions for the hodgepodge of dumbed-down state standards that have created group mediocrity in our schools.

Criticisms and conspiracy theories are easy attention grabbers, and solutions are hard work. We need problem solvers willing to be decisive and resolute. Delay is a strategy designed for the comfort of adults, not the progress of children.

In 1984, the Florida education commissioner complained that the pace of reform was overwhelming and that Florida need “some more time to chew what we already have bitten off.’’ When I became governor 14 years later, Florida was still chewing, and our kids were at the bottom of the barrel in national academic rankings.

We abandoned delay and

started moving full steam ahead. This strategy made many adults very uncomfortable, but in a few short years, Florida became a national leader in advancing the academic achievement of its children. We discovered kids have a remarkable ability to meet expectations; we just have to get adults on the same page.

There was a beloved pediatric surgeon in Orlando named Dr. Ronald David. Diagnosed with terminal cancer, he spent his last years in the operating room, restoring the most fragile of lives. When asked why he was so passionate about his job, he had this simple response, “I like the duration of the cure.’’

Saving a young life produces the potential of a lifetime of purpose and meaning. We need to think of education in those same terms.

A quality education helps cure poverty, drug abuse, crime and imprisonment. While education reform is tough, taxing and politically risky, it is absolutely necessary because it shapes the futures of millions of children. Ultimately, the effect of the cure is wonderful when we succeed; and the extent of the consequences is frightening when we fail.

Meaningful futures hang in the balance for millions of children. So let’s commit to making changes that better serve our children, the leaders and innovators of tomorrow.

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The IFJ Team

WHERE DO I FIT IN...IN FINANCE? From the Editorial and Executive Boards of The IFJ

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Helped clients analyze ƓQDQFLDO SHUIRUPDQFH of acquisition targets Researched potential add-on acquisitions and product line divestitures Created a CIP marketing a client company to prospective buyers )XOƓOOHG WR GXH GLOLgence requests from buyers Created pitch books Attended meetings with Private Equity clients Updated comps

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Created pitch books Updated and analyzed comps to price a theoretical debt issuance Discussed client FRPSDQ\ DQG ƓQDQFLDO markets with the team to construct presentations accordingly Attended client meetings Stayed up to date with news and debt issuances Synthesized each day’s events into market update emails tailored WR VSHFLƓF FOLHQWV Reconciled market data with news

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Built complex tables and graphs on Asia FX fund ŴRZV Read and analyzed Central Bank statements for clues on potential rate hikes and cuts Summarized headline news for supervisors Helped create a Powerpoint deck for a presentation to the NY Fed Reserve on China

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Implemented the new records management program by analyzing Fed documentation for regulation evidence Analyzed bank contingency plans and reported to the BOG Took notes, attended lectures in the research department, and networked

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The Federal Reserve

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Researched distribution channels Edited client testimonial videos Helped build a model to analyze loan quality Helped rebuild a website for product relaunch when CTO quit unexpectedly Updated social media chann

Responsibilities vary widely, ranging from marketing, research, web development, and product testing, to crisis management, and brainstorming at team meetings

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Amanda Chow

BREXIT: THE NEW ENGLISH REVOLUTION The potential effects of Brexit upon trade agreements and Britain’s economy

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it may join the European Free Trade Area (EFTA), which currently includes Iceland, Liechtenstein, Switzerland, and Norway. This possibility increases when one considers that the United Kingdom was once a part of the EFTA when it was first formed in the 1960, before formally moving over to the EU in 1973. Joining the European Free Trade Area allows participating countries to engage in a single market similar to the EU.

he face of Europe changed this year when the United Kingdom (UK) voted to leave the European Union (EU).

The new prime minister, Teresa May, has definitively stated that “Brexit means Brexit”, reinforcing the government’s intent to follow the results of the referendum and exit the EU. However, there are many aspects of this process that are still unclear, especially with regards to the economy. Predictably, the main economic issues that have generated much debate include how British companies will do business and how trade agreements will change. As the UK undergoes preparations to break away from the economy of the EU, what does this mean for trade agreements?

With the exception of Switzerland, the countries of the EFTA participate in a free flow of goods with the majority of EU’s member states. However, EFTA member states may block Britain from joining. The Norwegian government has expressed reluctance to welcome Britain into the agreement, since Britain is substantially larger than the other four countries combined and could dominate the partnership, particularly in issues where there is a conflict of interest. For instance, different views regarding protecting domestic farming

In Between Days One of the most likely possibilities of the British referendum is for Great Britain to leave the European Union, but instead of breaking off all economic ties to the European continent,

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The process of exiting the EU has no precedents that are comSDUDEOH WR D FKDQJH RQ WKLV magnitude

is an issue that could cause division: Britain exports billions of pounds in food while Norway imposes high tariffs to protect Norwegian farmers.

Love Will Tariff Apart On the other hand, the United Kingdom could also decide to leave the European Union completely and sever all economic ties by leaving the EU’s single market. Should this happen, businesses in the United Kingdom will be forced to pay the Common Customs Tariff, a set of tariffs required to import goods from within the EU. Paying the Common Customs Tariff would be heavily unpopular with British businesses, as access to the European Common Market significantly decreases their operating costs in terms of both buying supplies and selling finished products.

countries outside of the single market to remedy the loss of several of their highest trading partners. This will likely extend to countries where the UK already does a large share of its business, particularly the United States, China, UAE, Hong Kong, South Korea, and Saudi Arabia.

Because of the increased tariff that British businesses could face when initiating trade with Europe, businesses in the UK could potentially focus their attention on doing business with 30

)ULHQGV :LWK %HQHƓWV Since the initial announcement of Brexit, many leaders have reached out to the UK expressing a desire to negotiate new trade agreements. Notably, the Australian government has stated that it is eager to establish a strong free trade agreement with the UK. The UK Chancellor of the Exchequer has also begun talks with the Chinese government in negotiating a free trade agreement, citing New Zealand’s free trade agreement with China, established in 2008, as a model. If this trend continues, it is likely that the UK could feasibly establish new free trade agreements globally, even with countries with which the EU has no free trade agreement.

Additionally, if talks with EU leaders do not result in a new trade agreement, international law would dictate that trade agreements would fall to the default of the World Trade Organization’s rules. Under these rules, the UK would trade with the EU as it does with the rest of the world, applying tariffs and restrictions as it does to any other country. The WTO rules only allow special relationships between trade partners under a limited number of circumstances.

How Soon Is Now? Another point to consider is Brexit’s unpopularity with many British businesses, which will likely lobby against any legislation to formally exit the EU. Since the referendum technically has no binding legal power, it is possible that Brexit will never fully occur, and the UK will continue to remain in the EU and the single market despite nominally being in the process of leaving. The process of exiting the EU has no precedents that are comparable to a change on this magnitude.

While Greenland left the EU in 1985, its economy and size are dwarfed by Britain. Britain will be the largest member nation to trigger Article 50, which simply states “Any member state may decide to withdraw from the union in accordance with its own constitutional requirements.” The wording is vague and the specifics are left for Britain and the EU to negotiate. The only requirement in

place is that the country initiating the leaving process will have two years to carry it out.

Currently, increased distance between the UK and the EU is certain to be the outcome of the Brexit referendum. Recent polls show that the among the public, the majority of Britons are still in favor of Brexit, but the population is less decided on the extent of separation, which will be determined by how much importance is placed on access to the EU common market.

Spencer Greene

A DIAMOND ISN’T FOREVER Lev Leviev & the World’s Biggest Diamond Company

Though founded by Cecil Rhodes in 1888, Ernest Oppenheimer was the man who turned it into a monopoly. In order to keep diamond prices high, the global supply on the market had to be kept low. So Oppenheimer merged Anglo-American (another mining company) with De Beers in 1926. The history of Oppenheimer’s Syndicate lies at the intersection of imperialism, globalization and every jewelry district in the world.

New Player on the Block The Oppenheimer family maintained prices and the monopoly by selling to handpicked direct buyers known as sightholders. Lev Avnerovich Leviev was one of these privileged purchasers. Born in 1956 to a Jewish family in modern-day Uzbekistan, Leviev learned the diamond cutting process at the age of 16. He established his first diamond cutting factory soon afterwards. Roughly 10 years later, Leviev was Israel’s biggest diamond polishing manufacturer, and De Beers invited him into the fold.

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hroughout the 3,000 years since the earliest recordings of diamonds in Ancient India, no corporation has controlled the diamond mining industry more completely than The De Beers Group of Companies, also known as The Syndicate.

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A deeply religious person, Leviev expanded his cutting factories in Eastern Europe after the fall of the Eastern Bloc by receiving the blessings of important Hasidic community leaders there. Leviev particularly enjoyed the support

of Rabbi Menachem Mendel Schneerson, probably one of the most influential Jewish leaders of the last century.

His religious activity would come to seriously endow his business. Leviev made Vladimir Putin’s (deputy mayor at the time) acquaintance in 1992 when Putin greenlighted the construction of a Leviev-financed Jewish school in St. Petersburg. By the 1990s, Leviev was big enough that he was invited to help Alrosa, the Russian state mining company,

ascension can’t be entirely attributed to his religious philanthropy though. It’s almost certain that a few Kremlin-backed slush funds were involved.

De Beers screws up Someone at De Beers in the 1990s clearly underestimated the volatility of the firm’s control over the Russian government. Despite a relationship dating to the 1950s, when Alrosa first signed a deal with De Beers to exclusively sell their diamonds, Russian

It’s almost certain that a few .UHPOLQ EDFNHG VOXVK IXQGV ZHUH LQYROYHG set up its own cutting plants.

This meant that Alrosa could mine, cut, and polish its own diamonds — cutting De Beers out completely. Leveraging his contacts there, Leviev was introduced to Mikhail Gorbachev.

These relationships unlatched new possibilities for Leviev.

He’s likely the man who helped the Russian government liquidate nearly $12 billion worth of gold, art and antiques in 1995 — circumventing De Beers almost entirely. Today, Leviev owns the main diamond cutting facilities in Russia because of these connections. Leviev’s

officials began to suspect that their old friends weren’t paying them a fair price — but the market for billions of dollars worth of raw diamonds is intensely narrow. Until Leviev set up Russia’s first cutting factories, Russian officials couldn’t compare De Beers’s bid with anyone else’s because there was no one else.

Leviev’s assistance to Alrosa represented the first time in a long time that a diamond was cut and polished in its country of origin by a company that wasn’t controlled by The Syndicate. Alrosa’s transition to Leviev angered De Beers 32

The history of Oppenheimer’s Syndicate lies at the intersection of imperiDOLVP JOREDOL]DWLRQ DQG HYHU\ MHZHOU\ GLVWULFW LQ WKH ZRUOG so much that it booted him from its Sightholders Circle in 1995. However, 1995 was the same year that Russia started liquidating its state assets through Leviev. Essentially, De Beers relinquished any leverage it had over Leviev when it dropped him. Others would follow Leviev’s lead and help crush De Beers’s nearly century-long monopoly.

The Times They Are A Changin’ From 1995 on, Leviev was clearly driven to become more independent from any single access point to the network of diamond mines that fed his cutting factories. The De Beers drama had been enough for a lifetime, but unfortunately it wasn’t over for Leviev. Aiming to minimize his exposure to Russia’s political instability, he disassociated himself with

Boris Yeltsin, the Russian leader after Gorbachev.

He also distanced himself from the group of businessmen that had assembled around Yeltsin. Originally entrepreneurial smugglers of jeans and computers under Gorbachev’s transitionary economic policies, Yeltsin turned them into billionaires under a voucher-privatization program that sold different state corporations in natural resources like oil and gas. Leviev missed out on the voucher-privatization program, but in the world of fickle Russian politics this actually turned out to be a saving grace.

Back in the USSR Vladimir Putin’s imminent, meteoric rise to the Presidency in 2000 is the reason why.

Yeltsin’s oligarchs kept their

33

assets in private Swiss bank accounts instead of reinvesting it in Russia. They vaulted Yeltsin to reelection in 1996 and used insider information about Russian financial decisions to expand their wealth and control. All of this made them extremely unpopular with Russian public, which went through a deep financial crisis in the late 1990s. So Putin had lots of reasons to be wary of them, including the fact that some of them openly opposed him. By 2004, Putin had eliminated them through asset seizure and self-exile. A new wave of oligarchs, friendly to Putin’s government, was installed in their place.

Believe in Leviev By 2005, Leviev decided it was time to diversify his assets. He expanded to include real estate, chemical manufacturing, telecommunications and media, however he invested too much in real estate. When the Great Recession hit in 2008, about $3 billion of his wealth evaporated. But he still sits comfortably atop more than $1 billion — and he holds the legacy as the man who shattered De Beers.

Varun Narayan

RED STATES VS. BLUE STATES How Democraticand Republican-run states stack up in a variety of comparisons

B

oth major parties love to boast about their leadership’s track record.

About their history. About their results. In particular, Democrats and Republicans love to claim that Americans are migrating to their states.

It’s time to see how these assertions actually stack up.

While the definition of what constitutes a “red” or “blue” state is admittedly subjective, it revolves more around the party affiliations of governors and state legislatures than other criteria. For example, Florida — traditionally a swing state in elections

— is a red state because of its Republican-dominated state legislatures and Republican governor. You may not think of Florida as cut-and-dry Republican, but because parties use their control, and not their vote share, to wield a state for political purposes, for our purposes Florida will be Republican.

The Grass is Always Redder The numbers speak for themselves: Americans are moving to Republican-run states. Of the seven states with net migration rates of over 1 percent, five are Republican, including the larger populations of Florida and Texas, with rates of 1.65 percent and 1.00 percent respectively at the end of 2015.

These two states, in fact, are an important part of our discussion because their overweight size leads to their accounting for over 600,000 net migrations. The best rates among the blue states belong to the Pacific Northwest; Oregon’s 1.07 percent and Washington’s 0.97 percent lead the way, but blue states in general lag far behind.

The next two closest states are Delaware, with a net migration rate of 0.76 percent and

'HPRFUDWV DQG 5HSXEOLFDQV ORYH WR claim, in particular, that Americans are moving to their states 34

Massachusetts’ 0.32 percent.

Simply put, red states seem to hold the edge.

Below the 1 percent cap on the red state side, there are a plethora of high migration rates.

Arizona and Georgia boast respective rates of 0.93 percent and 0.62 percent, and five more Republican states’ rates lie at or above 0.4 percent. Importantly, a great number of the red states that have seen immigration booms lie in America’s heartland or Upper Midwest, the region that benefited most from the American oil boom.

An Economic Flight Risk Negative rates usually spell trouble. Negative net migration rates indicate that more people have left a state than have moved to it, which for our purposes signals lower economic activity. The states that are bleeding? Both red and blue. Generally blue states like Illinois and Connecticut as well as deep red states like Mississippi and Wyoming are losing residents in droves.

Paying attention to the largest states, however, casts a more credible shadow: New York ranks as the 12th worst in regard to net migration. Other large states in bad shape include Republican states such as Ohio (again, though a Presidential battleground state, both state houses and the governorship are in Republican hands), Wisconsin, Michigan and Pennsylvania. In fact, if we judge states

less on their migration rate in a numerical sense and more on their size and the hard number of residents they are gaining or losing, Republican states look worse off.

RED AND BLUE STATES BY GOVERNOR

Method by the Migration We have to consider each state’s reasons for in- or out-migration. North Dakota, for example, has had the highest net migration rate for the past few years. Much of its economic boom can be attributed to a surge in oil drilling and fracking — and perhaps you, the reader, might see that fact as evidence of superior Republican governance.

After all, perhaps Republican acceptance of the use of fracking allowed the North Dakota oil boom to reach its full potential. But then again, as oil prices have plunged and many rigs sit idle, countless businesses in North Dakota have been forced to or are nearing shuttering their windows. Next year’s net migration rate may very well be negative, and then Democrats, not Republicans, will use the state as evidence in their favor. Maybe migration, like countless other patterns, has become nothing more than a stump-speech statistic.

Independent Governor

Republican Governor

Democrat Governor

RED AND BLUE STATES BY GDP GROWTH

-158 to -25 net loss

-25 to 0 net loss

0 to +25 net gain

+25 to +203 net gain

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Vikas Rajasekaran

THE GREEK ECONOMY. WHAT HAPPENED AND WHAT NOW? An Interview with Visiting Assistant Professor Grigorious Siourounis

G

rigorios Siourounis is a Steven Rattner Visiting Assistant Professor of Economics at Brown University. Previously, he was a Fin Tech Advisor at Safemarket Ltd and an Advisory Board Member at FXCM Hellas.

Everyone has heard the old adage “if you owe the bank $100, you have a problem. If you owe the bank $100 million, that’s the bank’s problem.� In Europe, this is exactly what happened. Greece consistently ran budget deficits ranging from 4 percent to 16 percent of Gross Domestic Product (GDP) from 2000 to 2016, creating a national debt to GDP ratio of 176.9 percent. Although the Greek government certainly made mistakes by borrowing so much cash leading up to the crisis, who was lending all of this to Greece?

The Creeping Debt

Just how an individual must borrow to spend more than they have, a country must do the same to fund a deficit.

Greece borrowed billions from German banks, foreign

government seemed clueless to react in what was happening, so initial thoughts were that politics was the problem, not the economy. This impression was reinforced from the fact that the new cabinet main-

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investors, and other countries in order to maintain spending levels, only adding to the debt in the process. These years of over-borrowing suddenly came to the tipping point during the Great Recession.

Global liquidity was suddenly gone, investors shoveled cash out of the market, and Greece was stuck in the crossfire.

The problem was that Greece couldn’t actually fulfill its current obligations with its trade deficit leaking capital and its habitual overspending.

When the Greek economy first started collapsing, what was your initial perspective?

Siourounis: When the crash first reached Greece, there was not much information in the media about what was happening in public economics, so uncertainty was the initial impression. The only observable measure was increased pressure in the yield curve, so bond yields kept rising. The 36

tained the status quo and even increased public benefits. Central banks knew what was happening, but politicians were speaking a different language at the moment.

Currency devaluation is often an option for a country to boost exports during a recession, but since Greece was part of the Eurozone, it couldn’t devalue. During the height of the crisis, many discussed the possibility of Grexit. Looking back, should Greece have left the euro?

Siourounis: The issue wasn’t just the currency, but the economy itself. The budget deficit in combination with the trade deficit simply wasn’t sustainable. It imports far too much.

Internal devaluation solved this but public and private debt kept rising. Leaving the Euro would not have solved the crisis because Greece’s production base couldn’t satisfy the minimum needs of the

required demand. Hyperinflation would have occurred since the country does not produce enough of even the necessary goods.

Another point, devaluation impacts the assets of the country if it deteriorates its future growth prospects. Those assets are used to source financing for collateral in both the public and private sector. Floating alone, without production lines for natural resources and technology, means there will be a severe impact in the long term prospects of the country.

Thus the current value of the collateral will drop significantly, thus you can’t borrow enough and can’t finance any short term liquidity shortage.

Others like Varoufakis, the former Greek finance minister, and economist Paul Krugman have argued that Germany has played a role in limiting the economic recovery of Greece by securing profitable military contracts, using European bailouts as a way to bail out German banks, and preventing devaluations. How much of a role do you feel Germany has played in the Greek recovery?

Siourounis: Germany is a major player due to its size and importance in the EU. Since the EU stepped in, Germany has played a significant role in the recovery, but it needs also to signal that Greece will bear some of the costs during the crisis. Although Germany might be making money off Greece in interest rates, that does not mean it is not doing enough. Germany is not alone in closing arms deals with Greece. Greece needs monitoring, and being a part of the EU with Germany allows the European Central Bank (ECB) and other EU mechanisms to monitor the economic situation, which is, of course, a good thing.

Has the Greek government and ECB responded appropriately?

Siourounis: Given the time period and tools at hand, the response was as effective as it could be. Unlike the United States, which had great speed of reaction with fiscal and monetary policies, the ECB and the Greek government didn’t have the proper mechanisms to deal with the crisis. EU structures such as the European Stability

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37

Mechanism (ESM – agency designed to provide up to 500 billion euros in emergency loans) and the subsequent Single Supervisory Mechanism (SSM – power of ECB to track strength of Eurozone economies) have since been created to monitor and enact policy to prevent a similar situation from happening. Many of the bankers and politicians had not had any experience in dealing with a situation of this magnitude.

What steps should be made to bring Greece back?

Siourounis: Greece is now in a different economic path with a completely different consumption pattern prospect.

Corporates need to stop focusing on securing contracts from the government and turn their attention to targeting the global market. Every Greek is competing with every other person on the planet; they need to be more willing to take risks, rather than safe, under-the-table bets. A major problem plaguing Greece is the brain drain: Greece lost 380,000 skilled workers during the crisis.

To change the economy, we have to change the way we educate people. Education in Greece is too cumbersome, without enough mobility and an inexistent monitoring system. There is a reason that the United States has many of the best universities in the world. It is necessary to teach the younger generations to be innovative, see what is going on in the rest of the world,

and then make them believe in themselves. They have to be aware that they have to change themselves, in order to change the country.

I see the recovery as a long process that will take at the minimum 10 years if people wake up and change their way of thinking and the Government does the bare minimum of unlocking long lasting frictions, otherwise it might end up in a permanent self-sustained misery.

Jonathan Silin

TOO LITTLE TOO LATE? Land Reform and Migrant Rights in China

A Systemic Problem The current austerity measures have forced Greece to upend power of special interest groups in government. Riots, public backlash, and even a secret plan for a parallel banking system have resulted from the crisis. To transition from a culture of a government-dependent economy to a more competitive, innovative driven and diverse one takes years of institutional reform. It is not an easy fix.

L

ast year, migrant rights activists at China’s State Council released the highly anticipated outline of its hukou reform policy. Entitled China’s Urbanization Plan, 2016-2020, the thirty-one chapter initiative specifically focuses on the human facet of urbanization.

Since 1978, China has experienced the largest internal migration in world history, with over 160 million holders of rural hukou (residence permits not unlike internal passports) migrating to urban centers. The plan traces out a scheme that would bestow 100 million urban residence permits onto Chinese migrants by

2020, thereby helping to curb the ever-growing gap between China’s urban and rural populations. These migrant workers have been the driving force behind China’s rapid economic growth; in the past 30 years, migrant labor has been responsible for 40 percent of national aggregate labor productivity.

Yet while coastal cities have flourished as a result of migrant labor, the rural hometowns of workers have not shared in the rewards. In 2002, the per capita income of hukou holders in eastern urban areas such as Fujian was 13,029 RMB (approximately $1,950 USD), whereas the per capita income of holders of hukou for western rural areas like Guizhou was a paltry 2,005 RMB ($300 USD).

An Economic Case for Reform While the Chinese government has allotted migrant workers urban hukou, they by and large tend to be in small town and county-level administrative districts. Available employment opportunities in commercial centers like Beijing or Shanghai, if any, are extremely limited.

However, similarly sized towns and small cities in coastal China are economically vibrant with a high demand for

Leaving the migrant population in a OXUFK ZRXOG EH D PDMRU HFRQRPLF PLVcalculation 38

&KLQDōV PLJUDQW ZRUNHUV DQG UXUDO populations must still wait for the day WKH\ DUH IUHHG IURP WKH VKDFNOHV RI VRFLR HFRQRPLF DSDUWKHLG labor and a local population not large enough to sufficiently supply it. This is precisely why local governments should welcome migrants from interior provinces; the relationship would be a beneficial exchange for both parties involved.

China’s GDP growth rate has fallen from 10.7 percent in 2010 to 7.7 percent percent in 2013, but the inflow of migrants to smaller, vibrant coastal cities would diversify economic productivity to underserved markets there. In the short run, this inflow of migrants could help to mitigate a slowdown in growth. In the long run, opening the eastern coast to rural migrant workers will help improve both their disposable personal income and social status.

Having an economically and educationally well-off population across the nation also ensures that China can successfully transition from a low-skilled labor economy to an innovation-led one. Leaving the migrant population in a lurch would be a major economic miscalculation in and of itself. Incentives to increase the disposable incomes of rural citizens should be seen as beneficial to the well-being of the economy, since citizens

with more income will be able to invest in and spend more on the market. If China wants to sustain current levels of economic growth, it should ensure that rural Chinese migrants have access to opportunities in small, yet growing cities on the coast.

Can Beijing Return the Favor?

China may have been able to get away with exploiting its migrants for economic gains in its ascendant past, but as it attempts to take on the role of a first-world country on all fronts, China needs a solid and practical policy that reduces the urban-rural divide and promotes economic and social modernization. China’s manufacturing and export led economy of the last twenty-five years was built on the backs of migrant workers. But where

is the government when they need a favor in return?

While it would be incorrect to say that the Chinese government has ignored the issue of urban residence and land tribute reform, policy-makers have displayed a lack of both insight and courage in tackling these problems—the result is an overhyped, do-little agenda that skirts between action and inaction. Rapid urbanization of 300 million migrants is not without danger. However the government overestimates the risks and pays little attention to the rewards. It is only a matter of time before China’s growth rates decreases further as a result of its failure to address these problems, and by then it could be too late to reform and avoid further economic backlash. The State Council’s announcement of urban residence reform is certainly a public policy step in the right direction. Nevertheless, China’s migrant worker and rural populations must still wait for the day they are freed from the shackles of socio economic apartheid.

INTERNAL MIGRATION IN CHINA SOURCE: www.bpb.de

39

Vanessa Jingjing Zhang

OKTOBERFEST: FEST OR DEBT? What the Market Says about Costs DQG 3URĆ“WV

T

aking a break from the burden of the European debt crisis, internal conflicts regarding refugee influx, and debates on nuclear energy usage, Germans are letting loose with countless beers, neverending dancing, and everlasting music at Oktoberfest. As the largest German folk festival and one of the most popular folk festivals in the world, the official Oktoberfest is held in Munich, Bavaria from mid-September to the first week of October each year, with this year’s festival being the 183rd in history.

In 2015, there were 5.9 million visitors with each person drinking six beers on average.

Fourteen large tents were set up with seats for up to 10,000

people and eighteen smaller tents provided seats for a few hundred more guests. In sum, the gross average beer consumption throughout the festival exceeds 60,000 hectolitres each year. Oktoberfest adds great dynamics to the market, due to a gigantic wave of tourists that generate a significant increase in demand for goods and services ranging from food, beer, and clothes to transportation and living accomodations.

A Nation’s Oktoberfest ,QĹ´DWLRQ As both domestic and foreign demand boost the market for goods and services, prices, the most direct signal of market activities, undoubtedly experience a drastic rise in various sectors. The official beer for the festival, MaĂ&#x;, costs between â‚Ź10.10 and â‚Ź10.40 during Oktoberfest, while it normally costs about â‚Ź9. According to a report by UniCredit in 2011, beer prices increase by 5.8 percent, price of spirits increase by more than 11 percent, and price indices rise by 3.3 percent in the advent of Oktoberfest. Such an increase in prices appears especially astonishing when compared to the latest number of consumer price index inflation in Germany,

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which was only 2.4 percent.

Taking a closer look at this year, the UniCredit Wiesn Visitor Price Index (WVPI), which designates a basket of goods and services commonly consumed during Oktoberfest and monitors the change in its prices before and after the event, has already exceeded 3.7 percent even when the fest is still half-way on progress, a slight acceleration from last year’s 3.6 percent growth rate.

In comparison with the Eurozone’s annual inflation rate of 0.2 percent and Germany’s rate of 0.3 percent, the data substantiates a conspicuous inflation trend during Oktoberfest.

Such a market phenomenon is often referred to as the “Wiesn economy� or “Oktoberfest inflation.� This has been evident for more than one hundred years, so both consumers and producers are aware and prepared for rising prices. Historically, however, the overall inflation usually still exceeds the public’s expectation, and even though it only takes place as a cyclical and frictional inflation, its effect on market prices could be longer lasting.

Emptying the ment Wallet

Govern-

Even though the huge influx of tourists brings great consumption that stimulates multitudinous commercial opportunities, the government and local corporate sponsors have to shoulder the heavy responsibility to facilitate the event with a large budget for infrastructure,

group is officially in charge of security protection and surveillance during Oktoberfest each year. After the deadly terror attacks in the Istanbul airport, Brussels bombings, and the Munich shooting, the city of Munich has spent an additional €2.2 million on security guards in 2016. The additional employment of 100 personnel, a larger loudspeaker system, and 450 security guards will bring additional costs to €2.8 million.

The Hangover

German economy has plenty of adjustPHQW WR XQGHUWDNH DIWHU 2NWREHUIHVW security services, and energy supply. Given that Oktoberfest is a free-entry folks event, a debt on the government’s and sponsors’ sides seems structurally inevitable.

Acknowledged as “Bavaria’s biggest recurring building project,” the construction of the Oktoberfest site takes more than 70 days. This includes

efforts from more than 600 vendors to build 15 halls, and to construct and operate amusement parks. “In total there are 3,000 workers building up 600 locations in ten weeks for seven million people. Several millions of Euros are spent for two weeks.”

In addition to infrastructure, labor is also costly. TÜV SÜD 41

While the visitors and participants of Oktoberfest will probably need one or two days to recover from euphoria, the market experiences a longer hangover. Rational citizens should understand that the €1 billion value of overall benefit to the economy and an additional employment of 13,000 temporary workers are only illusions of the market’s well-being — sudden increases in prices and market demand will be followed by an exhaustive recovering fall of all economic measures.

Fest or debt? Germany’s balance sheet may or may not be positive this year, but it will definitely experience reasonable ups and downs. To shift prices back to equilibrium levels, retain market order, balance imports and exports, and alleviate the government budget deficit, the German economy has plenty of adjustment to undertake after Oktoberfest.

ben chiacchia

BORDER WALLS AND TRADE WALLS What the Market Says about Costs DQG 3URĆ“WV

only part of the story, however; this election cycle has also raised heated debates over immigration, with some even going so far as to link free trade deals from previous decades with mass migration from Latin America. The rise of these issues to the forefront of political debate raises the question of how, if at all, these two issues have influenced the other.

Going with the Flow

I

ntroduction: Few things seem able to unify Democrats and Republicans in our age of partisan division.

While security is always somewhat unifying, another issue has become the target of united outrage. Trade is now being shunned from both sides of the aisle, by Republican nominee Donald Trump and Democratic runner-up Bernie Sanders.

Both see the free trade deals of previous decades as a threat to American workers, and while former Secretary of State Hillary Clinton had previously supported trade deals like the North American Free Trade Agreement and the Trans-Pacific Partnership, she too has begun to back away. Trade is

The United States seized the end of the Cold War as an opportunity to extend Atlantic institutions and liberal proscriptions globally. Part of this effort included the liberalization of trade through the creation of groups like the World Trade Organization, and trade deals like NAFTA and CAFTA-DR, which serves as a NAFTA-esque deal for Central America and the Dominican Republic. This period also saw the expansion of immigration from Latin America. Though immigration from Latin America began to pick up in the 1950’s, the most noticeable increase did not start until the 1990’s during the presidencies of Georege H.W. Bush and Bill Clinton. The official case made by the Clinton administration at the time was that

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43

the expansion of trade would promote industrialization in Mexico, thus providing jobs to incentivize Mexican citizens to remaining rather than immigrateing to the U.S. This proved wrong, however, and immigration from Mexico skyrocketed following NAFTA’s implementation from approximately one million legal immigrants in the 1980’s to over 2.7 million in the 1990’s, with many more undocumented migrants entering during this window.

Similarly, the Bush administration pushed for a free trade area for known as CAFTADR. As in the case of NAFTA, immigration from member countries to the U.S. increased, though these immigrants have primarily entered without documentation, as financial barriers to legal entry have incentivized illegal crossings via Mexico. Most noticeably, the undocumented population from Central American countries like El Salvador and Guatemala increased markedly, from 430,000 in 2000 to 690,000 in 2012 for El Salvador and 290,000 to 560,000 for Guatemala during the same

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Red Herring This conclusion, however, reveals a failure to understand the full story. While trade was an important impetus for the uptick in immigration, it was not inevitably so. Much of the reason immigration increased so rapidly in the wake of these agreements, especially NAFTA, has to do with the responses of the governments involved.

Both the U.S. and Mexican governments are responsible for the seismic impact of NAFTA on labor and immigration. First, the U.S. government’s push to allow subsidies for domestic agriculture sent an influx of artificially cheap American corn and wheat into the North American market, thus eliminating the jobs of Mexican farmers from predominantly poor regions such as Chiapas and Oaxaca. Most of the jobs NAFTA created in Mexico were in the country’s

Additionally, few resources were provided to American law enforcement and border control authorities, as NAFTA was sold as a quick fix to illegal immigration. To conservatives, the influx of immigrants that followed became associated with the decline in jobs, creating a false sense that immigration was killing jobs, rather the inability or poor planning on the part of the respective governments. The global left, as seen in the 1999 WTO protests and the Zapatista rebellion of the 1990’s and 2000’s has viewed NAFTA and other moves negatively, either as an extension of American economic hegemony or merely as another instance of capitalism gone awry. Here too is the reaction is understandable, but not actually valid. Had the agreement not been pushed so hard, and had it been better designed, with provisions allowing subsidies on goods for export scrapped from the start, 44

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northern industrial region where industry was already successful. This in turn began to drain jobs from an already struggling American manufacturing sector, leading to much of the domestic opposition to free trade on the American right.

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period. For opponents of globalization, the connection is clear: free trade policies have made the U.S.country vulnerable to foreign competition and an influx of documented and undocumented laborers who have taken away jobs.

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free trade would have benefitted both economies without the negative perceptions currently surrounding it.

Why we trade Protectionism is not the answer to shortcomings of NAFTA or CAFTA-DR. Opponents of free trade have consistently failed to recognize the benefits of inexpensive goods to consumers, especially at a time when real wages have been so stagnant. Furthermore, critics have largely downplayed the ability of free trade to lift millions of people out of absolute poverty and to foster cooperation amongst states despite an increasingly difficult time for global politics. Of course, some sectors, like manufacturing, have been hurt by the current deals in place, partially because of Mexico’s subsidies to its domestic manufacturing sector. The negative impact to some, however, does not outweigh the benefit to the country as a whole. Instead of prioritizing protectionism, it would better serve the nation

as a whole to pursue real free trade, free from subsidies, and to utilize the gains from trade to help reinvent and revitalize those areas of the economy that are adversely impacted by trade. In trying to end free trade, they threaten some of the most important developments seen in human history, as well as relegating millions to poverty and weaker socioeconomic states.

Work smarter, not harder To remedy the concerns surrounding trade, new agreements will need to incorporate the lessons of NAFTA. First, states need to embrace the free market. If one sided subsidies and price manipulation continue, then trade will undermine rather than compete with domestic production of goods, leading to the collapse of entire sectors of domestic economies.

Additionally, the American immigration policy needs to be approached with real reform.

The current model of Byzantine complexity for legal entry and a nearly unprotected border relative to its side incentivizes illegal entry, which creates a regulatory nightmare and real security risk for the United States. This reform should entail smart fixes to both areas. While prescriptions like Trump’s idea for a border wall may seem to be more feasible than monitoring, the effectiveness of the wall as a solution is questionable, and the introduction of modern surveillance technology would help to mitigate the costs associated

with increased manpower on the border. Additionally clarifying the process for legal immigration and reducing the financial barriers to entry would create a more transparent entry process. The U.S. has every right to turn away immigrants if it chooses to do so, but imposing fees to entry does not help vet the potential pool so much as it encourages otherwise law abiding people to violate U.S. law and enter illegally. Decreasing the financial burden to entry may result in more legal immigration over all, but with legality comes transparency and the ability to actively monitor potential immigrants, whereas undocumented migration prevents authorities from determining the types of people who are entering and what kind activities they are participating in.

with the times, and her consistent inconsistency leaves nearly everything to the imagination.

On immigration however, her position is one that is more clearly established., withShe her emphasizess lying on reforming immigration (though with less talk of related security measures) and on a path to citizenship for those already in the country without legal status.

Talking Heads

Conclusion:

American politics have become bogged down in these issues recently, and the Both Hillary Clinton and Donald Trump have touched upon these contentious issues more than once, though with radically different interpretations of problems and solutions.

With one candidate whose opinions should come dated and marked with a margin of error and lacking much substance on our best course of action, and another who seems to be preparing for a Mongol invasion of Arizona, policy is lost in this election cycle. The way forward should treat these two key issues as related, and shape policy around this reality. We cannot afford to lose the benefits of either force, but much can and should be done to mitigate their unintended consequences.

Secretary Clinton has been ambiguous on trade throughout her career. A vocal supporter of NAFTA, a fair-weather friend of the TPP and opponent of CAFTA-DR, her stance on trade has been aligned to her strongest political advisor: opinion polls. Her support of trade has ebbed and flowed 45

Mr. Trump has been more boisterous in his opinions. Presenting himself as a crusader against the ills of both trade agreements and immigration, he has called for building a border wall with Mexican money, leaving NAFTA, dropping the TPP, and possibly barring immigration from predominantly Muslim countries as a matter of security.

Ben Bosis

2030: A LAND ODYSSEY A glimpse into the Driverless Future of Cars

world. The biggest companies in the industry have broken into a full on race to be on the right side of the coming transportation evolution.

Pittsburgh, Pennsylvania was once the center of one of the most significant industrial movements in the world. Previously the world’s largest producer of steel, Pittsburgh now has no steel mills within its city limits, and only employs 25% of its workforce in manufacturing, as opposed to a previous 68%. Though it has maintained a relatively stable economy, Pittsburgh has not recently enjoyed the industrial spotlight that it held for so long. But some of that attention is returning with tech company Uber’s first driverless car testing held home to Carnegie Mellon University’s world renowned robotics and engineering programs. The story of driverless cars has largely developed across the country, in California. Only ten years ago, the idea of completely automated vehicles seemed like a far off prospect, if not an impossible one to all but those most involved in the tech development field. While not a consumer reality, however, driverless cars have already arrived and are making huge waves in today’s tech

A BATTLE BETWEEN GIANTS You probably already know that which companies have made significant progress in autonomous vehicles (AVs), or at least which have received the most media attention for doing so. But though there is a lot of parallel research being done, the methods and missions between some of the most invested companies differ in very important ways.

There are two sides to the current AV race: the tech giants who started the movement towards unmanned vehicles, and the much older auto giants who have a huge stake in keeping their car brands relevant. Members of each side have begun to partner up, sharing their respective advantages in an attempt to get ahead. GM recently invented 500 million

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in ride-sharing service Lyft, and announced plans to man an autonomous Lyft fleet with GM cars. The same partnership exists between Volvo and Uber, who use each other’s technology exclusively in their pursuits. Several companies remain solo, however, such as the oldest member of the race, Google, Elon Musk’s Tesla, and Daimler, parent company of Mercedes-Benz. A move by Apple to participate in the push for AVs, if speculations are true, would most likely be independent as well, since the company’s only real instance of sharing is with Foxconn, a company that just owns the factories where Apple device components are constructed.

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YOUR MISSION, SHOULD YOU CHOOSE TO ACCEPT IT...

The big competitors also disagree on how driverless cars will be best implemented in the next age of transportation. Tesla, the first company to actually put driverless technologies in the hands of consumers, believes in autonomy not only for the car-driving-system, but for the car owner as well, and seems to be betting that Americans won’t give up the freedom of car ownership so easily. The owners of Uber and Lyft envision a less familiar future, in which car ownership disappears entirely. They plan to market their products as the mechanism of a world in which an autonomous network of vehicles operates constantly to carry people back and forth to their destinations, vastly decreasing the number of cars on the streets and thereby decreasing pollution and space dedicated to parked cars.

Others, such as Google and Daimler, hope to corner a specific aspect of the driverless car market. Google, limiting its AVs to 35 mph, has not signalled a desire to move beyond an exclusively urban autonomous taxi service; in 2015 Daimler became the first company to put a self-driving 18-wheeler on the road to transport goods.

LEGISLATORS REACT Legislators across the country have reacted very differently to the prospect of self-driving car research on their public roads. California, usually the center for tech development like this, has driven some companies efforts elsewhere by considering significant regulations.

The potential law would require all autonomous vehicles to have brakes, accelerators, and a steering wheel as cautionary measures inside the car, which would also necessitate a human operator in all test vehicles. That takes us back to Pittsburgh, where Uber in particular has centered their commercial testing efforts. Pennsylvania lawmakers (who

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clearly have more to gain than those in a state already home to some of the biggest companies in the world) made no signals toward any regulation on AV testing until the federal government put out an official policy, with which PA said it will align its legislation. And the federal government, clearly hopeful for what the industry could do for the American manufacturing economy, have remained extremely lenient and supportive, necessitating only minimal safety precautions and reserving the right to require reports of all tech failures from any company.

OVER-TRUST, OR NOT ENOUGH? Consumer confidence, however, is another thing. With such a green light from the federal government, many worry that companies pushing too fast will cause fatal accidents in the testing process. One such accident has been reported, a case in Florida where a Tesla owner let the car take control and had stopped paying attention when the car failed to see a white trailer pull in front across a particularly bright sky. Investors are particularly wary, and Tesla’s stock dropped 3.2 percent only hours after the crash was reported. The reputations of companies hoping to put fully driverless cars on the road are paramount. Google knows this, and is taking a particularly careful approach, moving testing more slowly than Uber and Tesla but

declaring that their goal is to develop driverless cars without having to sacrifice any lives in the name of convenience.

Key Players in the AV Market:

THEY’LL GET HERE WHEN THEY GET HERE In all the excitement of the current flurry of AV related activity, companies have declared decidedly optimistic timelines for their product development. Typically ranging from 3 to 6 years before commercial production, companies have tried to present the best face of their efforts. Tech analysts at Mckinsey, however, have taken stock of expert opinions and constructed a more realistic timeline. They separate the stages of self-driving progress into three stages.

The development process may only last slightly past 2020, as companies predict, but most believe that the cars will not be primarily adopted until after 2030. So for those of you hoping to own a completely autonomous car, that handsfree commute may not be so

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far off. As for Lyft CEO John Zimmer’s dream of a unified fleet of networked cars and the end of private vehicle ownership - He might retire before he gets to take one to work. But these cars are coming, sooner or later, and a brighter, cleaner future is coming along with them.

Benjamin Winston

A NICOTINE PATCH FOR THE 21ST CENTURY Wearable Technology Is Revolutionizing the Way Smokers Quit

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or the past few years, wearable technology has gained popularity for its advanced capabilities, convenience, and precision. From the iWatch to the Fitbit, wearable technology is changing how we make phone calls or exercise on a daily basis. We watch in awe as athletes wear

Motus Sleeves to track muscle fatigue and the elderly wear devices to monitor their health.

Now, wearable technology has found its next market -- helping smokers quit.

to quit, only six percent succeed. According to addiction specialists, users become more dependent on nicotine than on heroin, cocaine or marijuana.

A Challenging Task

The Oldest Tricks in the Book

The dangers of smoking are nothing new. It’s the leading cause of preventable deaths in the world, harms all organs in the body, causes 23 different types of cancer and accounts for 5.4 million deaths per year.

It can cause vascular stenosis, lung cancer, chronic obstructive pulmonary disease and may shorten a smoker’s life by more than 13 years. Many smokers start young and become hooked for decades.

Kicking the habit is a herculean task; while television advertisements and health warning labels on cigarette packs inform smokers of the consequences of their actions, of the seventy percent of smokers who want

Common smoking cessation techniques include behavioral therapy, nicotine replacement therapy, and medicine. In behavioral therapy, counselors help smokers identify triggers and work to avoid the urge to smoke. Nicotine replacement therapy uses nicotine gum, patches, inhalers and sprays to replace tobacco as a source of nicotine. Medicines such as Zyban and Chantix are prescribed to decrease the urge to smoke. The crowd favorite, “going cold turkey,” may be one of the more common but least effective smoking cessation techniques. Not everyone is responsive to the traditional options available. Wearable

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technology may be the key to unlocking habitual behavior and overcoming nicotine addiction.

Technology Meets Biology Chrono Therapeutics, a biotechnology startup, created a product that merges successful pharmacological and behavioral approaches. Their product improves nicotine replacement therapy by using timed release of nicotine to coincide with cravings. As a worn device that transfers nicotine through the skin, the programmed patch delivers biologically-timed doses of nicotine to its user upon awaking in the morning and as needed throughout the day. In addition to the physical provision of nicotine, the device also contains a Bluetooth sensor that syncs with the smoker’s smartphone. Data gathered includes the amount of nicotine needed and the time of day for nicotine delivery. Positive coaching messages are downloaded to the wearer’s phone and links with

family and friends for additional emotional support.

By striking contrast, customary nicotine patches applied in the morning miss the earliest cravings and fail to deliver enough medicine later in the day to suppress cravings. By combining behavioral approaches with nicotine replacement therapy, Chrono Therapeutics aims to increase its cessation success rate to the 40-60 percent range.

A Targeted Program that Can Read You like the Back of Your Hand While Chrono Therapeutics is concerned with the actual delivery of nicotine, Somatix, a data-analytics software platform, has a smoking cessation program, SmokeBeat, which analyzes users smoking habits in real time to make users aware of their habits. Specifically, the software platform uses hand to mouth gesture recognition, gathers data, and implements cognitive psychology in its programs. With

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hand-to-mouth gesture recognition, sensors on the user’s smartwatch or wristband record the user’s gestures. Users observe their habits, learn when they are most vulnerable, and use behavior modification to help decrease the number of cigarettes smoked. Once the app knows its user’s rituals, the app reinforces traditional cessation methods. Incentives such as money saved by fewer cigarettes smoked, as well as time saved by less time smoking are constantly uploaded to one’s phone. Self-awareness, personal responsibility, social support, and financial incentives help each user decrease and ultimately quit smoking.

Acceptance and Commitment Therapy Since the financial burden of smoking related illnesses is enormous, smoking cessation success is critical to curtailing healthcare costs. SmartQuit, an iphone app, integrates frequent daily exercises that interfere with cravings for cigarettes and offers the user the chance to self-administer nicotine in place of a cigarette.

The app seeks to distract users from smoking by having them focus on mental and physical exercises. Health plans, employers, and even certain states offer the SmartQuit app to those they cover.

The New Frontier Smoking is just one of many habits to be conquered. For

instance, Chronos Therapeutics also hopes to end opioid addiction by utilizing its drug delivery device along with its behavioral support. Finding safe and effective methods to stop smoking with wearable technology can open the door for other behavioral changes.

Hallie Wolff

LENDING IS TRENDING The next big thing in loan underwriting?

Facebook stalking.

In the age of Facebook profiles, Twitter posts, LinkedIn pages and Instagram feeds, it often seems like a person is a sum of their social media accounts. With all the personal information that is shared through public and private profiles, the social media sphere is rife with data just waiting to be aggregated and analyzed by commercial entities.

It seems practical for advertisers to observe social networks in an effort to develop online marketing strategy, but in recent years, this practice of social media “mining� has actually been employed for quite an unexpected

purpose: determining financial creditworthiness.

One Size Does Not Fit All Traditionally, a consumer’s worthiness as a borrower is reflected in a credit score that takes into account factors such as bill payment history and outstanding debt, which signal to future lenders how likely the borrower is to repay a loan. Most of the time, lenders will grant loans to those applicants with the highest credit scores only since the chance of these borrowers defaulting on their debt obligation is lower.

With traditional credit scoring methods, similar credit scores are often given to extremely dissimilar people. For example, a newly-employed mother of three who is struggling to pay off student debt may have a credit score nearly equal to that of an avid (though not particularly successful) online gambler. A normal bank or lending firm might judge these candidates based upon their pitiful credit scores alone, deciding that neither deserves a loan. This outcome seems unfair--credit scores can be tarnished by habitual fiscal irresponsibility, or by a one-time mistake. They can represent poor decision-making, or they can be the result of economic

market instability or a downturn.

However, with more insight into each applicant’s personal life, lenders can mitigate their risk by making an educated decision as to which borrowers are the most trustworthy.

We’re Not Worthy One might ask, when and why would a lender loan funds to someone with a poor credit score? Isn’t that like lending to a friend who is sure to never pay you back? But what if that friend agreed to pay interest on the loan (maybe 15 percent or higher) at a future time? If the friend were desperate enough and thought he or she would have the money for a future payment, both sides would be happy with the deal.

This, in essence, is what bad credit or non-traditional lending looks like. Increasingly, many financial tech (“fintech�) lending companies grant loans to borrowers with poor credit scores or even nonexistent credit histories, creating enhanced access to credit and personal finance management. These bad credit loans come with incredibly high interest rates, making the transactions extremely lucrative for lenders -- and potentially dangerous for borrowers with historically poor

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credit. If a borrower defaults on their loan, sometimes they lose their collateral (a possession they gave over to the lender as insurance against defaulting), their credit score plummets, and/or the lending company is forced to take legal action. In simpler terms: bad things happen when a borrower fails to pay back a loan.

Your Virtual Footprint These bad credit lenders are beginning to understand that people are much more than their bill payment history. They believe that other factors, most notably behavior online and on social media, can signal something about a borrower’s fiscal responsibility that can’t be taken into account when calculating a standard credit score. At the most basic level, lenders use social media to verify the information that a candidate gives on an application, such as name, address, education and work history. The lender may also look for information that is consistent with the borrower’s stated purpose for requesting a loan. As a lender delves deeper, they may be able to find data relating to the borrower’s spending habits or social preferences. Just as parents warn their teenagers to keep their Facebook profiles clean for college admissions, non-traditional lenders are now issuing warnings for social media users to post responsibly in the event that they become desperate for a loan down the road.

A Picture’s Worth...Your Credit Rating In 2011, a technology company

called Lenddo was established “to improve lives of the emerging middle class in developing countries” by using “non-traditional data to compute people’s credit scores” and subsequently grant micro loans, according to its website. The “non-traditional data” that the company studies comes largely from social media.

During the application process, a candidate may opt in to allow the company to access their browsing, email and social media behavior. The company collects data and uses it to confirm an individual’s identity, make predictions about their willingness to pay, and determine whether the applicant is of good character.

Lenddo representative Florence Lenoir says that, when analyzing online habits, the company looks “for evidence of behavior such as stability and consistency which empirically correlate with credit risk.”

Let’s say a Lenddo underwriter is perusing our hypothetical single mother’s purchasing history and sees that her main expenditures include groceries, diapers, gas, and the occasional children’s book. Such a pattern might indicate that the mother is quite fiscally responsible with her meager income, even though her credit score indicates otherwise. On the flip side, suppose the same underwriter is doing research on our less-than-successful gambler and finds Facebook photos of said candidate bar-hopping with friends decked out in expensive clothes, and a location check-in at a downtown casino. An underwriter could quite easily cite these findings as evidence against

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granting this candidate a loan.

Scoring with Algorithms Kreditech, a German startup lending company, also looks at a variety of factors when judging a candidate. It boasts its use of “proprietary credit scoring technology which uses artificial intelligence and machine learning” to judge candidates with low credit scores (a group that the company calls “the underbanked”). The company sifts through all the information it can get its hands on: online shopping habits, frequently visited locations, and even sophistication of vocabulary used in posts. The company can also access and analyze information about the manner in which an application for a loan was filled out.

If a candidate copied and pasted information into the application or used capital letters when answering a question, the algorithm detects it. Kreditech believes such seemingly insignificant actions, in the view of Kreditech, can show whether a candidate is inserting false information or has not invested time and energy into filling out the application. Thus, their degree of creditworthiness might be lower by Kreditech’s standards.

Rooted in Compassion, 'ULYHQ E\ 3URƓW It would be nice to assume that pure altruism has driven bad credit lending companies to use these updated methods of underwriting, but such a simplistic analysis would be naive. At their cores, these lending companies are profit-seeking entities. Their

main goal in determining creditworthiness is to lend to the most trustworthy of the “underbanked.” However, while their motives are rooted in compassion, they are primarily monetary.

While the companies advertise how their methods grant many candidates a second chance, it also must be noted that these same lenders refuse to issue loans based on information that still may not accurately represent the applicant.

Consider the example of a candidate who copies and pastes information into their application.

Kreditech deems this action punishable, or at least fairly indicative. But suppose the candidate was actually taking the time to write answers to the application in a Word document. Suppose she was making sure her sentences were complete and her spelling was perfect before copying and pasting into the actual application. Why should a lender be able to judge her on this action when the intention can’t truly be known? Similar questions can arise when thinking about the possible fallibility of judgement based on some data points.

used by the firms is the idea that no two applicants can or should be judged the same way. Fintech lending companies are justifying their practices on the grounds of this simple concept: for lenders, insight into social media behavior opens the door to a plethora of information on which to base judgements about potential borrowers. For borrowers, granting lenders access to often very private information might just be the golden ticket to financial security—or at least the tools necessary to achieve it.

Jorge Martinez

DONE WORKING? CLICK HERE TO CHECK OUT. Are Fully-Automated Businesses the Third Industrial Revolution?

A Win-Win? With these doubts in mind, it is clear that there can be winners and losers in this type of bad credit lending. However, fintech companies like Kreditech and Lenddo are redefining what it means to be worthy of credit and, to be sure, this lending style produces more “winners” than would exist without it. Inherent in the algorithms

employee or do all of the work themselves. However, through the rise of online storefronts, worldwide shipping networks, simplified web design and more, a new generation of fully automated stores have sprung up with minimal work for their owners. As these businesses continue to become more streamlined and seek larger markets, many will move towards automated online storefronts and selling worldwide.

The day might not be so far off where a factory will consist of robotic arms on a conveyor belt loading up self-driving cars to fulfill an order that was placed online halfway across the country.

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uite obviously, the dream business would be one that completely runs itself and pays you every penny it makes. Until now though, this dream was unattainable to business owners – who had to either hire an 53

Sit Back, Relax, and EnMR\ WKH 3URƓWV E-commerce websites can be purchased for less than 10 dollars a month, assembled in minutes with WordPress and WooCommerce, and the entire shipping, processing, and storage process can be handled for you Amazon. A wide variety of these sites exist, some focus on “create-once, sell forever” products such as t-shirts, e-books, and online software.

Others dedicate themselves to reselling existing products to a niche audience at a higher price -- for instance, countless online business in Asia sell

Through the rise of online storefronts, worldwide shipSLQJ QHWZRUNV VLPSOLƓHG ZHE GHVLJQ DQG PRUH D QHZ generation of fully automated stores have sprung up ZLWK PLQLPDO ZRUN IRU WKHLU RZQHUV luxury products to American consumers who can’t obtain them anywhere else. There are also semi-automated businesses that require lighter workloads such as hand-made specialty goods or artwork that can be sold by artists and craftsmen who are simply creating for the love of it. In 2016, BuiltWith estimates that on the entire internet, there are more than 1,564,050 websites with some form of shopping cart capability -- and that number will only increase as the technology gets simpler, easier, and more widespread. $QG WKH 3URƓWV .HHS 5XQnin’ Runnin’, and Runnin’ Runnin’ E-commerce is experiencing a sustained, consistent growth unlike that of 2001 dot-com bubble. Over the last 10 years, E-commerce sales have risen from 3% of total retail sales to almost 9% of all retail sales.

While this may seem like a small percentage at first glance, total e-commerce sales were almost $100M in a single quarter. In just the last year alone, E-commerce sales have seen quarter-after-quarter growth, while total retail sales have stagnated or decreased. And the profits for website owners? In 2013, 102,728 online

stores were generating at least $12,000 a year in revenue; and of those stores, almost 40,000 of them were generating more than $50,000 in revenue a year.

Considering that real median household income was only $56,516 in 2015, some E-commerce retailers are making more money than entire families can in a year. Indeed, many entrepreneurs have found that by owning upwards of a dozen of these online stores, they can earn more income than by having a traditional job.

Everyone is Doing It and So Should You It is unlikely that any given person will strike it rich online -- but that shouldn’t be a deterrent to trying. Considering that the maintenance costs are minimal and the

workload required to set it up is light, the potential for having an online-store as your side job is very real. Even modest online sales can make a huge difference for a struggling person or household. Just one thousand dollars worth of sales could help you live a more comfortable lifestyle in which your day job is supplemented by the online store.

Income You Don’t Have to Work For While the future impact of this increasing trend isn’t exactlyy clear, one thing is – automated online businesses are here to stay. And as businesses continue to become more streamlined and seek larger markets, many more will move towards automated online storefronts and sellingg worldwide. It is increasingly possible to imagine that owning and operating an automated online business of your own will soon be a common form of passive income (like rental properties) for most people.

U.S E-COMMERCE SALES FORCAST 400

350

300

250

200 2012

2013

2014

2015

2016

2017

Data Source: Forrester Research (data in billions)

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Travis Fuller

LOOK MOM, NO HANDS! Snapchat Ventures into Camera-Enabled Glasses

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van Spiegel stands at table with a draped towel over a mysterious object in Venice Beach, California at an unmarked building. He is full of excitement to the point of jitters. He asks the select few in the crowd, “you wanna see it?� He then lifts the towel and cries, “BOOM!�

Under the towel are what appear to be sunglasses -- but they are more than that, they are Spiegel’s newest creation: Spectacles.

Coming this fall in one size fits all with colors including black, teal, and coral, the video sunglasses will give users a whole new way to snap.

Record, Rewatch, Relive The images produced by the Spectacles are fundamentally different than a phone camera. The camera of these revolutionary glasses uses a 115-degree-angle lens to give a much closer eyes’ natural point of view. The footage

that is recorded is circular, more like human vision. As you record, your hands are free to do a cartwheel, flail around at a concert, or do a cool stunt on a bicycle. Spiegel’s new “toy� syncs wirelessly to a smartphone making it easily shareable, essentially combining Snapchat with GoPro to create an ultimate user experience.

Spiegel reflects on his first testing of a prototype in early 2015 when

to use them. Actors could wear them on set and professional skateboarders could wear them riding down the half-pipe. It gives the users a whole different experience than they are used to.

The “big� problem that could arise with the use of these glasses is that stars like Kim Kardashian would not be able to take selfies with them. All joking aside, the question becomes, can Snapchat

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he went on a hike with his fiancĂŠe in Big Sur: “we were walking through the woods, stepping over logs, looking up at the beautiful trees. And when I got the footage back and watched it, I could see my own memory, through my own eyes—it was unbelievable.

It’s one thing to see images of an experience you had, but it’s another thing to have an experience of the experience. It was the closest I’d ever come to feeling like I was there again.�

Reaching a Broader Market There is a huge market for these glasses if companies, celebrities, and even celebrities -- all of which advertise on Snapchat -- decide

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be the company that dismantles the Google Glass stigma? If Snapchat can demonstrate the masterful marketing and execution required to produce a product that won’t die on the shelves, than these Spectacles have a real chance at being the next big tech gadget.

The Roll-Out The Spectacles will be released at a price of $129.99 with limited distribution. The new product won’t be relied on for immediate revenue. Spiegel explains, “We’re going to take a slow approach to rolling them out...It’s about us figuring out if it fits into people’s lives and seeing how they like it.�

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