What makes Apple so special?

This is an adaptation of a previous article on the iPhone 6 and Apple Watch.

So, just a few days ago the iPhone 6 and iPhone 6 Plus went on sale worldwide, to much fanfare, and, as with many Apple products, the traditional queuing outside Apple Stores in anticipation.

The traditional iPhone queue outside Covent Garden Apple
Store, London [Luke Westaway, CNET]

No other technology product (or any product in fact) receives this much attention. Why is it that Apple have become so desirable a brand?

Their products alone can be argued to be not that revolutionary.
The iPhone's larger displays? The Samsung Galaxy S5 currently on sale worldwide already has a 5.1 inch display, bigger than the expected 4.7 inch iPhone. The HTC One Max has a whopping 5.9 inch display, larger than the 5.5 iPhone.

NFC on the iPhone? Not a big deal. The Google Nexus 7 had that two years ago, and via Google Wallet you can already perform touch and pay payments.

Heard of this before? Don't blame you...

The Apple Watch- the first digital watch companion? Wrong again Bob- the past year has been chock full of watch announcements, from Samsung, from Motorola, and various other tech companies. They can relay notifications, they can monitor your heart rate, and they've been out for ages- heck, Samsung has already released two iterations of its Samsung Galaxy Gear.

A few weeks ago, if you didn't follow tech closely, you may not have heard of Samsung's Gear (which was first announced a year ago), or Motorola's 360 smartwatch, yet you probably would have heard of Apple's mystical 'iWatch', whose existence we were not even certain of.
Isn't this weird? Why is this?

There are numerous reasons. Many indeed. A key reason is of course the quality and consistency of Apple's product environment, and the products themselves- but Apple's business strategy also has been hugely successful.

Apple has built for itself a truly iconic brand. An Apple logo, be it on an iPod nano, an iPhone or a 27-inch iMac, carries with it connotations of high quality materials (note how commonly that silver aluminium material is used in Apple products), luxury (take a look at some of Apple's prices) and reliability (most Apple product owners would agree on this one).

A large part of this has been thanks to consistency- a key factor in a business' success, but only if it is done right- of course no company should be creating consistently poor products (*cough*Blackberry*cough*).

Apple has created consistency at every corner of its business. Take a look at the two screenshots from Apple's webpage below, and the event invite at the top of the article. The same font (Helvetica Light I am led to believe) is used consistently, the same white-grey colours, the same minimalist design in general is consistent throughout most of Apple's site.
Of course certain products are given their own display style reflective of the product's character, but in general Apple's design (be it the design of the site, the design of the advertisements or the design of the products themselves) are all cohesive. They are certainly decisively minimalist- Apple doesn't make use of any cheesy patterns or frilly designs, it just selects one or two colours and sticks with it throughout the product. And this is throughout Apple's whole product line.
The Mac line is a particularly good example of such consistency- the distinctive aluminium material used as the outer shell for the devices act as a cohesive for all Macs- it links them all together, it lets you know that an iMac is from the same family as a Mac Mini. Not only is this beneficial from a design standpoint, but it creates a subtle familiarity in product users, one that makes people more comfortable in purchasing a second or third or fourth Mac computer.

Consistency spreads further than just the design of Apple products- Apple's retail stores are among the most valuable in the world, thanks largely to their design. Apple makes use of the same materials for all the tables, the walls to give customers familiarity and comfort in their environment- while still allowing for stores to have their own individual appeal (such as the Regent Street store in London).

Consistency goes into the use of the products, too- Apple is well known for its lack of device software fragmentation (basically most Apple users are always running the same latest software on their devices, as opposed to say Android where people are spread across numerous iterations of the software, or Windows where many people are still running XP), its iCloud service allows people to access photos and videos across all of their devices without having to transfer anything manually, and features of the upcoming Mac OSX computer operating system will allow Mac users to send and receive phone calls and text messages on their computers- provided there is an iPhone connected to the same wifi network.
This feature, named Continuity, is another genius move from Apple. Creating this greater connection between the Mac and iPhone is a very effective way of attracting customers to purchase both- as items that complement each other rather than separate items completely. This could easily sway an iPhone user to purchase a Mac, and vice versa.

Through design, brand and functioning consistency Apple is successfully crafting not just a line of products but more an environment of products, all related and cooperative with one another.

We know this, perhaps unawarely, but this expectation of consistency that many people have come to associate with Apple is perhaps the greatest reason why we are so interested in the Apple Watch and the iPhone 6s, despite the competence of these products' already existent competitors.

Consistency is key in a business- and clearly for Apple, when combined with quality products, it has paid dividends, big time.

SOURCES (and recommended reads):
apple.com/iphone
http://www.techradar.com/reviews/phones/mobile-phones/samsung-galaxy-s5-1226990/review 
http://www.htc.com/uk/smartphones/htc-one-max/
http://techcrunch.com/2014/09/06/apple-iphone-6-event-predictions/
http://www.engadget.com/2014/09/05/what-to-expect-when-youre-expecting-an-iphone-6-or-iwatch/
http://www.cnet.com/how-to/how-nfc-works-and-mobile-payments/
http://www.cnet.com/uk/news/apple-iphone-6-goes-on-sale-around-the-world/

Scottish Independence: INFLATION INCOMING?

So today's the day- the final installation of our short series on Scottish Independence is here.
Oh, and it's the Scottish referendum today.

If Scotland are to become independent a great argument of the 'No' campaign is that Scottish consumers would be hit by increased prices, for everyday goods and luxury items alike.

This could have pretty bad consequences, and it is certainly possible that these increases will come in the event of independence. Recently the Chairman of the John Lewis Partnership (John Lewis and Waitrose) Charlie Mayfield claimed a Yes vote would have consequences because of the apparently higher cost of trading in some parts of Scotland, causing prices to rise in their stores.

Supermarkets Sainsbury's and Asda have also claimed they would raise their prices, citing potential increase in costs that would occur, as technically they would have to adjust to trading in a foreign country, without being at the cost of the rest of the UK. Morrisons have also stated similar claims; though apparently they have kept open the possibility of even lowering prices if possible.
Many supermarkets claim to already have lower profit margins in Scotland due to its more spread out, rural nature- transport costs are presumably higher due to how far Scottish cities such as Aberdeen are from distribution centres.

Tesco have remained impartial on any potential consequences of the referendum on prices; though perhaps this is partly due to their unwillingness to risk backlash after their recent profit troubles rather than a commitment to not increase prices.

This seems to be a clear warning from some major businesses to the Scottish 'Yes' party, but will they really follow through?

It is certainly a possibility that this is part of the large scare policy being used by the 'Better Together' campaign- rumours are abound that these statements have been made upon special request by PM David Cameron, whose job would be in huge jeopardy in the event of a Scottish Independence.

Nevertheless, could the aforementioned businesses really raise their prices after Independence?

Inflation from the major supermarkets could serve to the benefit
of the likes of Aldi and Lidl.

Take the supermarkets- already we have seen in recent years the rise of the value-driven Aldi and Lidl , and supermarket price inflation could really make a field day for the bosses of these countries.
Aldi has steadfastly refuted any claims that they would raise prices after Independence: they cited their existence in 18 markets and how they are already adaptive enough to adjust to an Independent Scotland with no price increases.
So what will happen if Sainsburys and Co. increase their prices? Well it seems natural that even better value would drive customers to the budget supermarkets Aldi and Lidl, certainly bad news for the big supermarkets.

So what we are hearing from the supermarkets could certainly be simple another scare tactic from the 'No' campaign. If they are to follow through on their claim to inflate prices, it could really cost them even more customers to the already threatening value-driven competitors such as Aldi and Lidl.

Sources for this article can be found linked within.

SCOTTISH INDEPENDENCE: Oil's Well That Ends Well? (VIDEO)

Scottish Independence: THE CURRENCY QUESTION

VIDEO: https://www.youtube.com/watch?v=4CZjyXH3FTc&feature=youtu.be
Thursday has the potential to be the most significant day in 2014 for Britain, or even perhaps Europe- it is the day of the Scottish Referendum. It's been talked about for months, with various 'Yes' and 'No' campaigners working tirelessly to attack the other side whenever possible, notably in the form of numerous intense televised debates between Scottish firebrand Alex Salmond and curiously black-eyebrowed pro-unionist Alistair Darling.

The world has never been quite certain over what the result of the referendum is to be- while an ICM poll for the BBC on the 11th of September claimed 42% to vote No, and 40% to vote Yes, a poll from the same agency for the Daily Telegraph on the 13th of September found 54% of Scots to be in favour of a 'Yes' vote. It really is shaping up to be an incredibly close call.

But what are some of the economic arguments for and against separation?
This is the first part of a series looking at some of these arguments.

It's been one of the biggest conflict points in the independence debate- in the event of a Scottish Independence, which currency would it use? Well there are three main possibilities, and they all don't seem too welcoming:

Currency Union- the most likely possibility in the event of independence, this would mean Scotland would continue using the pound and relying on the Bank of England. 
A Currency Union would in the main be in the interests of both an independent Scotland and the UK- Scotland is the UK's second largest trading partner, and the UK is Scotland's principal trading partner. 
A Currency Union would allow for trade between these two partners to continue relatively smoothly- there would not be the currency exchange fiasco that would be inevitable should Scotland create its own currency. It would allow the flow of money and labour to continue more smoothly.

'Sterlingisation'- this would be similar to a currency union, in that Scotland would continue to use the pound- but the similarities would pretty much stop there. The Scottish would have even less power than currently over the currency, and the UK would be less careful of Scotland when designing monetary policy- meaning certain policies that affect the pound could have negative effects on Scotland. 
Sterlingisation is kind of like desperate hitchhiking- you can't really control the car, or the route to a certain extent, but at least you can get a lift.

Creation of a new currency- This would certainly have the most interesting outcome of the three mentioned options. A new currency would indeed extend Scotland's powers of autonomy- a 'Bank of Scotland' would be able to control money supply and programmes such as Quantitative Easing, though it could have serious ramifications with regards to Scotland's international trade.
A new currency, especially one created by an independent Scotland whose international political power would not be as solid as it is currently, would create uncertainty in its initial years. Businesses may hesitate to trade in whatever currency Scotland create, unsure about its long-term stability, and as a result transaction fees (costs for making sales in ones own currency) would increase for Scottish businesses trading abroad. 
This would make it more difficult for the new Scottish currency to achieve that initial boost that it would need to announce itself on the worldwide stage.

So Independence would indeed have a profound effect on Scottish currency.
Despite the numerous warnings from the pro-unionists, it seems as though an Independent Scotland would go on to form a currency union with the UK- while it's not the ideal result for Westminster, perhaps the alternatives present complex and fiddly issues both the UK and Scotland would prefer to avoid.

iPhone 6, Apple Watch: why today, Apple will the centre of the world's attention.

Tuesday September 9th will be a huge day for the technology industry worldwide.
One of Apple's famous presentations will be made in just a few days, in front of selected journalists and no doubt thousands of online spectators, who will be waiting with bated breath to hear what exactly the largest publicly traded corporation in the world has up its sleeve.

Apple hasn't made any major hardware announcements this year- so what can we expect after all this silence from the technology giant?
Let's explore two rumoured products.


iPhone 6
Perhaps one of Apple's less secret revelations, the iPhone 6 is a shoe-in to be announced on Tuesday. Rumours suggest Apple will not announce one but two models- both of which will sport larger displays, up from the iPhone 5S' 4-inch to 4.7 and 5.5 versions.

The new models are expected to have a new case design also, which, following previous trends, will most probably be thinner than its predecessor (at this rate what will the iPhone 16 be, a sheet of paper??).

Another key rumoured addition will be that of NFC- Near-Field Communication. This technology basically allows devices to communicate with each other within a short distance, but Apple's specific application of this that is expected to create most waves in the tech community is how it could make the iPhone 6 into a 'digital wallet'- allowing you to simply use your phones at a checkout to pay for your shopping, just as you would a credit card.
Commentators expect Apple to pioneer further the digitalisation of commerce- we've already seen online payments grow hugely, and now it could be time for digital real world payments to lift off.

iWatch
A product that has been rumoured for almost forever, but is not quite as certain to be announced as the iPhone 6. The general consensus among the tech community is that Apple may announce the legendary device in Tuesday's event, but hold sales until early 2015.
Despite the fact it has not even been announced yet, the iWatch has gained a huge following. Many expect it to be the product that launches off another technology product category, just as the iPad kicked off the tablet market in 2010, or the iPhone in 2007.
The iWatch is expected to act like a mini phone- relaying emails, messages, notifications and whatnot to your wrist- rumours suggest it may even allow you to view maps and receive navigation.
Apple is also rumoured to set fitness as a key component of the iWatch- with health applications such as Apple's Healthkit and the Nike+ app, and numerous sensors for various bodily measurements, set to be key attractions in the device.

And what's more, we could even see the aforementioned NFC make its way to the iWatch- meaning you could pay for your daily coffee with your watch!

Perhaps you've noted this article to be not quite the usual poponomics article- where is the economics, or business in this? Well, here we come to the juicy bit. Listen up.

The iPhone 6's larger displays? The Samsung Galaxy S5 currently on sale worldwide already has a 5.1 inch display, bigger than the expected 4.7 inch iPhone. The HTC One Max has a whopping 5.9 inch display, larger than the 5.5 iPhone.

NFC on the iPhone? Not a big deal. The Google Nexus 7 had that two years ago, and via Google Wallet you can already perform touch and pay payments.

Heard of this before? Don't blame you...

The iWatch- the first digital watch companion? Wrong again Bob- the past year has been chock full of watch announcements, from Samsung, from Motorola, and various other tech companies. They can relay notifications, they can monitor your heart rate, and they've been out for ages- heck, Samsung has already released two iterations of its Samsung Galaxy Gear.

But if you don't follow tech closely, you may not have heard of Samsung's Gear (which was first announced a year ago), or Motorola's 360 smartwatch, yet you've probably heard of Apple's iWatch, which we don't actually know exists yet. Isn't this weird? Why is this?

There are numerous reasons. Many indeed. A key reason is of course the quality and consistency of Apple's product environment, and the products themselves- but Apple's business strategy also has been hugely successful.

Apple has built for itself a truly iconic brand. An Apple logo, be it on an iPod nano, an iPhone or a 27-inch iMac, carries with it connotations of high quality materials (note how commonly that silver aluminium material is used in Apple products), luxury (take a look at some of Apple's prices) and reliability (most Apple product owners would agree on this one).

A large part of this has been thanks to consistency- a key factor in a business' success, but only if it is done right- of course no company should be creating consistently poor products (*cough*Blackberry*cough*).

Apple has created consistency at every corner of its business. Take a look at the two screenshots from Apple's webpage above, and the event invite at the top of the article. The same font (Helvetica Light I am led to believe) is used consistently, the same white-grey colours, the same minimalist design in general is consistent throughout most of Apple's site.
Of course certain products are given their own display style reflective of the product's character, but in general Apple's design (be it the design of the site, the design of the advertisements or the design of the products themselves) are all cohesive. They are certainly decisively minimalist- Apple doesn't make use of any cheesy patterns or frilly designs, it just selects one or two colours and sticks with it throughout the product. And this is throughout Apple's whole product line.
The Mac line is a particularly good example of such consistency- the distinctive aluminium material used as the outer shell for the devices act as a cohesive for all Macs- it links them all together, it lets you know that an iMac is from the same family as a Mac Mini. Not only is this beneficial from a design standpoint, but it creates a subtle familiarity in product users, one that makes people more comfortable in purchasing a second or third or fourth Mac computer.

Consistency spreads further than just the design of Apple products- Apple's retail stores are among the most valuable in the world, thanks largely to their design. Apple makes use of the same materials for all the tables, the walls to give customers familiarity and comfort in their environment- while still allowing for stores to have their own individual appeal (such as the Regent Street store in London).

Consistency goes into the use of the products, too- Apple is well known for its lack of device software fragmentation (basically most Apple users are always running the same latest software on their devices, as opposed to say Android where people are spread across numerous iterations of the software, or Windows where many people are still running XP), its iCloud service allows people to access photos and videos across all of their devices without having to transfer anything manually, and features of the upcoming Mac OSX computer operating system will allow Mac users to send and receive phone calls and text messages on their computers- provided there is an iPhone connected to the same wifi network.
This feature, named Continuity, is another genius move from Apple. Creating this greater connection between the Mac and iPhone is a very effective way of attracting customers to purchase both- as items that complement each other rather than separate items completely. This could easily sway an iPhone user to purchase a Mac, and vice versa.

Through design, brand and functioning consistency Apple is successfully crafting not just a line of products but more an environment of products, all related and cooperative with one another.

We know this, perhaps unawarely, but this expectation of consistency that many people have come to associate with Apple is perhaps the greatest reason why we are so interested in the rumoured iWatch and the iPhone 6, despite the apparent competence of these products' already existent competitors.

Consistency is key in a business- and clearly for Apple, when combined with quality products, it has paid dividends, big time.

SOURCES (and recommended reads):
apple.com
http://www.techradar.com/reviews/phones/mobile-phones/samsung-galaxy-s5-1226990/review 
http://www.htc.com/uk/smartphones/htc-one-max/
http://techcrunch.com/2014/09/06/apple-iphone-6-event-predictions/
http://www.engadget.com/2014/09/05/what-to-expect-when-youre-expecting-an-iphone-6-or-iwatch/
http://www.cnet.com/how-to/how-nfc-works-and-mobile-payments/

7 Shocking Facts about Economic Inequality in the USA.

VIDEO: https://www.youtube.com/watch?v=a4QkvGJgDoc

The GDP growth rate in the United States of America has averaged 3.27% between 1947-2014- such a growth rate is a sign of a healthy, thriving economy. And certainly the USA's economy has thrived, but have its citizens enjoyed their fair share of the pie?

It appears not; wealth inequality has become one of the major problems in the US; numerous presidents have come and go promising reform on the matter, but little effective change has been made. 

Here are some shocking facts about just how bad the problem of economic inequality is in the USA right now.

1. CEO PAY (Business Insider)

Between 1990 and 2005, CEO pay had tripled- meanwhile the minimum wage dropped, and the pay of the average production worker increased just 4%.  
CEOs in 1965 made 24 times more than the average production worker; whereas in 2009 they made 185 times more.

2. THE USA IS THE MOST UNEQUAL ADVANCED ECONOMY... IN THE WORLD (Credit Suisse Global Wealth Databook)

The USA's GINI coefficient (the most widely accepted mathematical calculation of economic inequality) is the highest of all developed economies- at 85.1%, this high GINI scores confirms America's place as the most economically unequal developed country in the world. To compare, the UK scored a modest 67.7%, China 69.5% and India 81.1%. 

3. "THE POOR STAY POOR, THE RICH GET RICHER" (Emmanuel Saez., Berkeley)

In 1982, the top 1% families in terms of salary were earning 10.8% of all income in the USA (pre-tax)- the bottom 90% received 64.7%. 
However, in 2012 the top 1% received 22.5% of pre-tax income- while the share of the bottom 90% dropped to just 49.6%.

Berkeley economist Emmanuel Saez also estimates that between 2009 and 2012, the time of America's 'economic recovery', the top 1 percent captured 95 percent of total income growth.

4. CLOSE, BUT NO BISCUIT (MOTHER JONES) 

This drop in share of wages experienced by the bottom 90% comes despite the fact that productivity has drastically increased in recent decades- though this is also attributed to developments in work methods, technology- Americans are more productive today than ever- yet overall wages have overall stagnated. 

This graph shows quite clearly who has benefited from the increase in productivity.

Had median household incomes kept up with the growth of the economy since 1970, they would be around $92,000. The current median wage being $50,000 is quite a clear indication that something is out of balance.

5. DEEP IN DEBT (Domhoff, UCSC)

Meanwhile the bottom 90% enjoy responsibility of 72.5% of the US' debt, as opposed to the paltry 5.9% held by the top 1%.

6. HOMELESS AMERICA (Western Regional Advocacy Programme)

An estimated 22,000 children live homeless on the streets of New York City alone; the largest such number since the time of the Great Depression. But these children represent just a part of a nation wide problem, with roughly 1.2 million children being reported homeless in March 2014.

7. THE AMERICAN NIGHTMARE? (Saez., Kopczuk., Song., Columbia University)

Despite the grand vision of the 'American Dream', the 'land of opportunity', since the 1950s probability of socio-economic mobility has been almost constantly decreasing.

The benefits of privatisation.

In the previous article we went through a brief introduction of privatisation; now let's go onto the benefits of it.

The benefits come under various categories, however a theme runs throughout- that is of efficiency, a key component of business management.

A prominent difference between private and state companies is the (usual) difference in motive. Whereas state companies can have an unclear, difficult-to-measure motivation (usually to 'serve the public'), private companies are generally far more strictly profit-driven; they seek to serve shareholders primarily (who want their pockets to be lined handsomely).
Now there is debate over whether profit is such a good motive for companies (that we'll discuss in the next article), but profit motivation usually drives companies to increase their efficiency.

A common criticism of state-owned enterprise is its tendency to over-employ, often in order to score the ruling political power popularity points when it came to annual employment figures. Another crucial factor in this overemployment was the power of unions- public-owned enterprises were often under strong pressure from labour unions to avoid firing staff, which in many cases was not so helpful in terms of keeping staff in line and also efficiency.

Overemployment is crucial as it leads to increased losses in the form of wages, for employees who the company could, essentially, perform healthily without. Private companies tend to avoid inefficient practices such as overemployment- in fact they look at doing the contrary, to shed costs: and cutting down on staff is often the easiest way to do this.

British Airways, under Lord King's leadership developed from
an oversized, outstretched struggler to a world-class airline.

The privatisation of British Airways was notable for its crackdown on 'unnecessary' employees. Before privatisation, BA were employing almost 60,000 staff; a huge number, especially when compared to close competitor Qantas' 15,000.
However, following privatisation and under the rugged leadership of Lord King, the workforce was reduced to 38,000 in a period of just three years- among these over 50 senior executives, the company was rebranded entirely to a more 'American' style- enlisting help of a San Francisco-based design firm to lead rebadging, and cutting costs wherever possible- in inefficient flight routes, in excess staff members and so on.
These almost ruthless cutdowns paid dividends indeed- in 1987 BA posted after-tax profits of around £166 million, among the highest airline profits globally and certainly one of the highest BA had ever experienced.

Introduction of competition is often heralded as a crucial feature of privatisation. Privatisation often comes with an opening of the market to other private companies as well, a good example being the gas market following the privatisation of British Gas. Competition is often a great thing to have in a market, as it forces companies to innovate and provide what consumers want, in order to maintain and expand their market share (and receive more profits, of course). Competition introduces pressure on businesses; often a good influence from a customer's perspective.
This argument has its pitfalls- but in general competition in a market is necessary for development (think how competition between Apple and Samsung has boosted the rate of development in the technology market, or BMW and Mercedes the car market).


Another feature of privatisation is that it is a a way for a government to quickly raise some cash, to reduce deficits in particular. Between 1979 and 1999, the Treasury raised over £70 billion from asset sales such as that of British Airways, British Gas and other companies that were privatised.
However, this is not such a strong proponent of the pro-privatisation argument as we'll explore in the next article (but I'll give you a hint: *cough* Royal Mail *cough*)

So efficiency is the general theme of the pro-privatisation argument. Privatisation can cut down on the poor decisions driven by political motives rather than efficiency, it can introduce competition into a market by smashing state monopolies and it can be a quick boost to a nation's coffers.

Stick around: next time we'll explore the other side of this argument, and have a look at why privatisation may be in fact quite a bad idea.

SOURCES:
http://www.baserler.com/onur/isletme/Privatization%20of%20British%20Airways-Before%20and%20After.htm

http://news.google.com/newspapers?id=R1YVAAAAIBAJ&sjid=a-QDAAAAIBAJ&pg=4326,3087813&dq=staff+british+airways

https://www.princeton.edu/~achaney/tmve/wiki100k/docs/British_Airways.html

http://www.telegraph.co.uk/finance/personalfinance/investing/shares-and-stock-tips/9989430/Thatchers-legacy-how-has-privatisation-fared.html

Poponomics trailer (short)

The first poponomics trailer- giving you a reminder of what's happened and a taste of what's to come! 

Privatisation: what is it?

Royal Mail- the latest major privatisation. 

Privatisation: it's been a contentious issue in the UK, especially since the Thatcher era. It's salvation to some, a criminal act to others.

Thatcher, guided by the principles of free-market, non-interventionist saint Friedrich Hayek, led the privatisation of over 50 British public sector companies- notably British Gas, British Telecom (BT) and British Leyland (see, the names all make sense now). It's interesting how privatisation has integrated into our society over the last 30 years or so- while there was outroar from many when Thatcher privatised utility, automotive, financial industries and so on, nowadays it's difficult for much of the youth to believe that companies like BT, Jaguar and British Airways could be owned by their government.

So what is privatisation? It's a relatively simple concept to explain- there are various particular types of it, but privatisation is essentially the transfer of public, nationally owned assets (companies in this case) into private hands, which can be via sale, like we saw recently with Royal Mail.
Royal Mail was until recently a public sector company, essentially run by the government- but in October 2013 the company was broken up into shares and sold on the stock exchange (it was later
discovered to have been shockingly undervalued). It was open to investment from anyone.
A portion of the Royal Mail is still owned by the government via an intermediary, 10% by its 150,000 staff, and significant amounts are owned by foreign state-backed organisations from countries such as Kuwait and Singapore.

So, that's a basic introduction to privatisation- but stick around for a more detailed evaluation of the benefits and negatives of this controversial transformation. It'll certainly be an interesting ride.

SOURCES (and recommended reads): 

Margaret Thatcher: one policy that led to more than 50 companies being sold or privatised http://www.telegraph.co.uk/finance/comment/alistair-osborne/9980292/Margaret-Thatcher-one-policy-that-led-to-more-than-50-companies-being-sold-or-privatised.html

Royal Mail: Government of SINGAPORE is the second biggest private owner of our postal service

http://www.mirror.co.uk/money/city-news/singapore-governments-sovereign-wealth-fund-2558278#ixzz3BaHXfUtW 

Royal Mail: Sovereign Funds To Get Shares
http://news.sky.com/story/1152622/royal-mail-sovereign-funds-to-get-shares

The Uber Issue

Uber, a relatively new business seeking to revolutionise the taxi services of cities around the world, has been one of Silicon Valley's hottest new startups. Valued in June 2014 at $18.2 billion, the company has taken the world by storm, with its simple model: you can, via your smartphone, hail a taxi to your GPS destination, and get it to take you to any destination you choose on your device. You don't need cash- money is transferred via online payment, with a credit
card or PayPal, just with a press of a button.

Uber's driver hiring process is relatively simple- you need a car, a driving licence, insurance and need to pass various background checks. Uber takes commission from every ride and pays drivers the rest of their fees weekly.
What's more, passengers can rate and review drivers (and drivers can rate passengers), giving all parties involved the incentive to give good service.
It's a simple, efficient system.

However, Uber has come under increasing attack in recent times- not so much from its customers, or the public in general, but from its competitors (unsurprisingly) but most importantly the governments of various local and national authorities.

Cabbies took to the streets of London to protest against Uber

The main issue seems to be that Uber is undercutting local taxi fares- at most times offering fares lower than their standard counterparts. Also, Uber drivers are not forced to pass the same background checks and inspections as their counterparts- a separate background check is needed. Local cab services claim this is too dangerous and should be outlawed.
London has seen protest from taxi drivers against Uber in the form of 4000 cabbies causing a huge traffic jam in the centre of the city, claiming that Uber illegal due to its lack of a meter on every cab.

There has been anger across the world from drivers part of the same cause- to remove Uber from their streets.
Is this a fair point from the taxi drivers or are they simply trying to eradicate what they may see as a growing threat to their comparatively dated services?

Firstly, it's important to consider that Uber is usually cheaper than the regular taxi services. I took an Uber once from Paddington to a friend's house; normally it cost £24 by cab, but by Uber the same route at roughly the same time was £15.
The cheap fares, quick payment, the lack of a need for cash, these are all advantages that have made Uber so popular- and undoubtedly their nearing obsoletion is frustrating many traditional taxi drivers (though they may not admit it).
As for the question of Uber background checks, perhaps more needs to be done- Uber drivers have received their fair share of bad press, but so have taxi drivers. However, perhaps a unified background check system would ensure all transporters are relatively reliable (background checks don't ensure total safety).

As for meters, it's fair to say that they can prevent exorbitant fares- though perhaps regulation should allow for different systems of fare calculation and regulate those, rather than give them all a blanket ban.

My personal opinion is that the taxi drivers must accommodate innovation in their industry, and, even better, take it up themselves. As a customer of taxi services I want a low fare, I want to be free from the worry of 'do I have cash?', and I want to be able to pay quick and easily. I want a service like Uber, that is innovative and not caught up in 'tradition'- and obviously I am not alone, considering the company's popularity.

So perhaps taxi drivers should embrace change, and innovation. Uber has shown that in this case (though refinement is needed), it will be for the best of the average consumer.

SOURCES (and recommended reads)
http://www.heraldsun.com.au/business/breaking-news/uber-drivers-will-be-fined-sa-govt/story-fnn9c0hb-1227036403657?nk=c226658d765e4f3742a7ba82aefc4ed4

http://www.ft.com/cms/s/0/f07810f6-293f-11e4-8b81-00144feabdc0.html#axzz3BPEs4lxZ

http://www.bbc.co.uk/news/uk-england-london-27799938

http://www.theguardian.com/commentisfree/2014/jun/11/why-london-taxi-drivers-protesting-uber-tfl

What Happened To Freddos Being 10p? Deflation; Part Two

So, in the previous article we looked through the negative effects of inflation- how it can spiral, leave people impoverished, and so on- and we also looked at a positive if you like borrowing.
However, let's talk deflation- the reduction of general prices in the economy.

What causes deflation? It's exactly the opposite of inflation. Inflation is caused by an oversupply of money in the economy- deflation is caused by an undersupply of money. Whereas inflation decreases the value of money, deflation increases it, causing things to become cheaper. Sounds good, right?

There are many consequences of deflation however that can be damaging- profit loss for businesses being the root of the major ones. Dropping prices to an extent are beneficial- it can grant more people access to essentials such as heating, which, as discussed in the previous article, can save lives.

However if deflation gets out of control, falling prices will mean profits of businesses will fall- and thus most businesses will cut down on costs, leading to people being made redundant, factories and offices shutting down, work being outsourced, and so on.
Unemployment would increase, and even those fortunate enough to keep their jobs would see their pay decrease.
Unemployment can be devastating- it would lead many to default on any loans or mortgages taken out, it can cause people to lose their homes (though this is more likely in the USA than the UK).

You may be thinking, why have we heard so much more about inflation in the news than deflation? Well deflation can often be more easily controlled by governing authorities. In the USA, the Fed (the central bank) prevents deflation by flooding the market with money, thus increasing prices. The UK follows a similar protocol- we mentioned previously the idea of Quantitative Easing.

So should we be happy that the price of a Freddo has increased over the past two decades? Not really- but perhaps the fact that it didn't drastically fall in price is something we should also be well aware of.

What Happened To Freddos Being 10p? (Part One).

The humble Freddo. Once the posterchild of the consumer chocolate boom, the first word in affordable sugary snacks, one of the only things you could actually buy with a 10p coin. Almost every British child has fond memories of the little sugary frog-shaped friend.
But fewer such memories are being gifted to the youth of today. No, the Freddo has been attacked viciously in recent years.

Since the introduction of the Freddo as we know it in 1994, the price has risen from a humble 10p to a more maverick 15p, to a dangerously inconvenient 17p (who carries around exactly 17p change) to its frankly outrageous current retail price of 20p. That's a 100% increase- a double in price!
There's been an outrage over this price change- a quick glance at the numerous facebook pages on the subject would confirm this.

But why has the price increased? One might say the greed of Cadbury itself- perhaps rightly so, however considering the presumably low profit margins on such a low-priced chocolate, it would be a questionable business decision to increase the price for no reason other than hope for more profits.

The answer in fact is one that you will have heard of- it affects all of us, and not just products like the Freddo- INFLATION.

Charting the scandalous Fredd-flation.

Inflation, simply put, is the increase in price of products or services.
A decade ago, 10p in your pocket could buy you a tasty little Freddo- but today, 10p cannot buy you the Freddo. So, because of inflation, your purchasing power, the possibilities of what your money can do, has decreased. You're worse off- you have to pay more than you did before, but you're not getting a larger, tastier Freddo; it's the same thing.

But inflation is not all that bad, especially if you're of the borrowing type. Let's have a theoretical (simplified) example. Say you buy a house in a period of low inflation. You pay with a fixed interest rate mortgage you've taken out from the bank. If a period of high inflation follows, your house price will rise (theoretically, as inflation=higher money supply=more money to spend, HOWEVER often other minor factors affect house price), and while you have the option available to profit from this increase (you can sell your house and make a profit), the total amount you have to pay the bank is still the pre-inflation price.
So, by the end of the mortgage payments, if inflation is still up, you've paid less than the market value of your home. So inflation has helped you!

But of course, inflation can lead to terrible consequences. Inflation is gas and energy prices has been reported to have fatal consequences on the poorer members of society (according to the Office for National Statistics, unaffordable energy bills contributed to 24,000 deaths in the UK in the winter of 2011), and that an inflationary spiral can occur- due to higher prices in the market, usually profits of companies will increase- meaning they can hire more staff- meaning more people will have income to buy products/services- meaning prices will continue to inflate as demand rises.

Inflation can also be caused by the government. You may have heard of the programme of quantitative easing- essentially money is pumped artificially into the economy to try to stimulate spending. One of the strong arguments against QE is that pumping more money into the economy causes inflation.
To understand this, think of money as a commodity- think gold. The more abundant gold there is, the less its value- and the less abundant it is, the more the value.

Money was easy to come by in Weimar Germany.
Too easy.

Of course a balance must be struck- but QE decreases the value of money, and historically some extreme QE-style programs have led to hyperinflation (think wheelbarrows of money in 1920s Germany), where money became so abundant due to printing of cash that it became worth more in paper than actual purchasing power.

So excess inflation does not sound too appetising- but neither does its opposite, deflation.
But take a nice rest. Have a nap, a little reflection and come back on Tuesday for part two, where we'll expand on deflation and more good stuff. 

SOURCES
24,000 'died because of cold homes' last winter http://www.dailymail.co.uk/news/article-2240716/24-000-died-cold-homes-winter-Fears-grow-figure-higher-year-spiralling-bills.html

investopedia.com

On digital piracy. (Part Two)

VIDEO: https://www.youtube.com/watch?v=vjm6Hv4JBYw&feature=youtu.be

In our previous article we discussed the attractive nature of digital piracy, especially with consideration to the difference in our attitude between outright shoplifting and online illegal downloads.

Now to answer the question- does digital piracy really matter?

Glancing at some of the statistics, the effects do certainly seem alarming.  We mentioned them in the previous article- how in 2011 the International Federation of the Phonographic Industry claimed 95% of the music in the world was illegally downloaded, and how 42% of software running in the world was illegal. With digital piracy continuing to spread and diversify, these statistics are likely to be even higher right now.

But let's put the statistics aside for a while, and get a real life case study of digital piracy and its effect on content producers. Who better to choose than creator of the UK's most pirated music album of 2012, Ed Sheeran. In 2012, in the UK his debut album + had sold 1.2 million copies- while there were reportedly 8 million illegal downloads of the same album. This sounds a horrific imbalance, but Sheeran himself has shrug (honestly or not, only he knows) the statistic off- he instead lauds the fact that over 9 million have his music, but more importantly he claims that it does not have too much of a negative impact on the economic aspect of his career- he cites increasing ticket sales as something to balance the money 'lost' to piracy.

And there is valid reason to this- digital piracy is very effective in spreading the talent of new artists to the music scene. Clearly, many people were not prepared to pay full price for Ed Sheeran's debut album, and perhaps rightly so (not many people knew of him at the time)- but the spreading of his album via digital piracy opened it to a huge audience. Once people heard his full songs, those who liked them would then be more willing to pay the price of a concert ticket, or buy future songs (of course, the latter would not be reflective of all fans).

This opinion is part of a view that the music industry is changing- that the function of the music album is changing from an ends itself to more of a means- a means to attract people to pay for concert tickets, to buy merchandise, etc.

One could say that Ed Sheeran is not representative of the music industry as a whole- he is indeed one of the most popular and thus wealthiest artists in the world. Digital piracy may not damage him too badly, but what about the smaller artists trying to make their big break? Won't illegal downloads damage them and make their desire to make music financially unsustainable?

Well, no doubt this has happened to artists- however a simple response to this (as well as the aforementioned potential benefits of piracy) is that few small artists have their content available online to illegally download in the first place. Whereas you can easily find an illegal download of Ed Sheeran's latest album, finding one of a new, independent artist is definitely more of a task.

You wouldn't want to cross the Expendables cast by
illegally downloading their films....

It is possible to say that digital piracy has a positive, promotional effect on the movie or games industry too. Illegal viewings of 'The Expendables 2' may have encouraged many people to shell out for a cinema ticket to watch 'The Expendables 3' if they liked it. However in most cases where there is only mild interest in a film or a game, perhaps an illegal viewing may encourage someone to wait until they can illegally download the sequel.

However the effect of digital piracy on movie industry revenues has been almost invisible. A famous study by the London School of Economics stated “Despite the Motion Picture Association of America’s (MPAA) claim that online piracy is devastating the movie industry, Hollywood achieved record-breaking global box office revenues of $35 billion in 2012, a 6% increase over 2011,”. 

This growth in the face of rising internet piracy can be attributed to numerous reasons- perhaps better (and/or more) films, people recovering economically and spending more on entertainment, growth in more expensively-ticketed 3D films. It also suggests that piracy does not have a profound effect on the industry- not as many sales are 'lost' as believed.

I put 'lost' in quotation marks because it is another question we must consider- is a sale really 'lost' every single time an illegal download occurs? Globally speaking, the answer is no in many cases. A 16 year old boy illegally streaming the latest Fast and Furious film in an internet cafe in Botswana is not a 'lost' sale- it is likely that the film would not be showing in his locale anyway, or he would have more urgent things to spend money on than a ticket even if there was a showing. 

A Chinese university student illegally downloading Command and Conquer Generals wouldn't count either- because even if he wanted to purchase it legally, the game is banned in his country. 

We must be wary that such instances are included in the global statistics that we hear- and the globalised, developing nature of the world means that countries such as China do account for a large amount of the digital piracy we hear about, and in many of these cases legal sales are not possible, and thus not 'lost'. 

So we must consider all sides and dimensions of this debate. Yes, income is sometimes damaged by digital piracy, but then again income can be boosted by the positive promotional effects of pirated content. Piracy makes media widely available to all, and can be a launching pad for a music artist to become the favourite of millions, whereas perhaps if piracy was unavailable they may not have received the widespread reach that gave them their big break. 

The effects on the movie and game industries are arguably similar but of less strength- though statistics often exaggerate the cost of 'lost' sales due to piracy, and these industries are in fact flourishing (due to various reasons).

So, that's an overview of the economic effects of digital piracy- it is a matter that is certainly not as clear as it first seems.

What do you think? Comment below with your opinions and thoughts! 

SOURCES (and recommended reads):
LSE Report http://www.scribd.com/doc/172985274/LSE-MPP-Policy-Brief-9-Copyright-and-Creation
http://www.cbc.ca/news/business/digital-piracy-not-harming-entertainment-industries-study-1.1894729
http://www.bbc.co.uk/news/technology-19599527