This class has been interesting and fun. I like the use of WordPress as our class medium. I feel like I could effectively do all those things on the list prior to the class. However, I found it useful to revisit those subjects and improve upon them. As an econ and public policy major, all of the listed course objectives have at one time been part part of those studies. But it was refreshing to exercise all of them at once in a single class. For the most part, all of the course material was current and relevant, which was a nice change from the normal provided materials. Overall, it is important for all consumers to understand everything they can about the markets that they participate in. If more people had good understandings of this courses subjects we would live in a very different world.
As a US Army Veteran of Operation Enduring Freedom Afghanistan, I have become quite familiar with the concepts of death and mortality. Despite losing many members of my battalion, division and branch of service during my time there, I never had to experience losing anyone close to me in combat. Ironically, I have lost 3 brothers and sisters in arms of whom I served with to suicide and illness since our return. Of course there is more to the story about my time in the Army, but it’s difficult to talk about so I’m going to leave it where it is. What I can mention, as a consumer though, is that in the Army we all had life insurance, which was there to help cover burial cost as well provide some sort of financial buffer for our next of kin.
However, recently my grandma died just a few months ago. The family and friends of the family are still dealing with the fallout of her death, even though she will be missed at least it can be said that she lived a full life; having reached the ripe age 89. Fortunately, she had a Will written before she died, so her assets were secured and taken care of after her death.
As consumers it is very important to have our loved ones taken care of if we should depart before our predicted times.
Coffee is the life blood of the modern world, and probably has been seen the birth of civilization. Coffee’s heritage can even be traced back to the ancient plateaus of Ethiopia (NCAUSA.org, 2017). The actual cultivation and trade of coffee began in the Arabian Peninsula in the 15th-16th century, coffee became was known as the Wine of Arabia (NCAUSA.org, 2017). Coffee arrived in Europe in the 17th century and quickly gained popularity across the continent (NCAUSA.org, 2017). In England, coffee houses were referred to as Penny Universities, because of the low cost of the beverage and the interesting conversation that could always be found there (NCAUSA.org, 2017). Finally, once coffee had reached the British colonies that later became the United States and the events of the Boston Tea Party took place, coffee quickly became the American drink of choice (NCAUSA.org, 2017).
“Coffee – the favorite drink of the civilized world.” – Thomas Jefferson
To answer my first question, “What choices do I have?” Well, the answer is both simple and complicated. There are lots of companies to buy from, and many sources of coffee beans (Businessinsider.com, 2011). Conversely, despite all the different flavors of coffee that is advertised, there are actually only two types of coffee (Businessinsider.com, 2011). The two types of coffee bean are Arabica and Robusta. Arabica makes up about 70% of all coffee beans sold and Robusta, which is cheaper, is typically used in instant coffee (Businessinsider.com, 2011).
My second question is “Who’s selling me what?” In the US, there is really only five top brands that dominate the market: Keurig, Folgers, Starbucks, Maxwell House and Dunkin’ Donuts (Fortune.com, 2015). Of course, there are many independent coffee brands in the market, but none of them come close to the leading five. Besides that, they most likely buy their coffee from the same distributors or producers. Here is a list of top 10 coffee producing countries (WorldAtlas.com, 2016).:
Rank Country Coffee Produced in Kilograms
10 Guatemala 224,871 US tons
9 Mexico 257,940 US tons
8 Uganda 314,489 US tons
7 Honduras 380,296 US tons
6 India 385,786 US tons
5 Ethiopia 432,287 US tons
4 Indonesia 814,629 US tons
3 Colombia 892,871 US tons
2 Vietnam 1,818,811 US tons
1 Brazil 2,859,502 US tons
Coffee is a $100 billion industry, second only to oil (Businessinsider.com, 2011). I found it interesting to learn that there are only two kinds of coffee bean, even though coffee is made out to be more diverse by coffee companies. Per the National Association of Coffee USA, Arabica beans are grown at very high altitudes, between 3600-6300 feet above sea level, and are the best beans to be used in coffee beverages.
As a consumer and a coffee enthusiast, it is good to know that Brazilian Arabica coffee beans are the best on the market. Thankfully, Brazilian Arabica coffee is also the most common, which means that it all comes down to how the beans are roasted, which I’m sure is considered some form of a trade secret because I could not find any information on how exactly it is that so many companies, like Starbucks and D&M, can have so much variation in flavor.
The photos used for this project were more artistic in nature, rather than informative. However, they server their purpose since coffee is more artistic than anything else. In a lot of ways coffee’s trade craft resembles that of the beer industry, and it seems to carry a similar narrative with it as well. These photos help to illustrate the majestic beauty of coffee; they capture the exquisite light as it is reflects off the many forms of coffee, unleashing feelings of bliss and happiness. I can accredit these photos to pexels.com, which is a free license, open source, online photo data base.
Goldschein, E. (2011, November 14). 11 Incredible Facts About The Global Coffee Industry. Retrieved July 26, 2017, from http://www.businessinsider.com/facts-about-the-coffee-industry-2011-11#after-crude-oil-coffee-is-the-most-sought-commodity-in-the-world-1
The History of Coffee. (n.d.). Retrieved July 26, 2017, from http://www.ncausa.org/About-Coffee/History-of-Coffee
Szenthe, A. (2015, March 08). Top Coffee Producing Countries. Retrieved July 26, 2017, from http://www.worldatlas.com/articles/top-coffee-producing-countries.html
Groden, C. (2015, September 29). Here Are the 5 Top-selling Coffee Brands. Retrieved July 26, 2017, from http://fortune.com/2015/09/29/top-coffee-brands-keurig/
Free high quality photos · Pexels. (n.d.). Retrieved July 26, 2017, from https://www.pexels.com/
What is ‘Taxes’
Taxes are generally an involuntary fee levied on individuals or corporations that is enforced by a government entity, whether local, regional or national in order to finance government activities. In economics, taxes fall on whomever pays the burden of the tax, whether this is the entity being taxed, like a business, or the end consumers of the business’s goods.
BREAKING DOWN ‘Taxes’
Taxes are levied by states upon their citizens and corporations to fund public works and services. Payment of taxes at rates levied by the state is compulsory, and tax evasion, the deliberate failure to pay one’s full tax liabilities, is punishable by law. Most governments utilize an agency or department to collect taxes; in the United States, this function is performed by the Internal Revenue Service.
There are several very common types of taxes:
- Income Tax (a percentage of individual or corporate earnings filed to the federal government)
- Sales Tax (taxes levied on certain goods and services)
- Property Tax (based on the value of land and property assets)
- Tariff (taxes on imported goods imposed in the aim of strengthening internal businesses).
However, tax systems vary widely among nations, and it is important for individuals and corporations to carefully study a new locale’s tax laws before earning income or doing business there.
Like many developed nations, the United States has a progressive tax system by which a higher percentage of tax revenues are collected from high-income individuals or corporations rather than from low-income individual earners. Taxes are imposed at federal, state and local levels. Generally speaking, the federal government levies income, corporate and payroll taxes, the state levies sales taxes, and municipalities or other local governments levy property taxes. Tax revenues are used for public services and the operation of the government, as well as the Social Security and Medicare programs. As baby boomer populations have aged, Social Security and Medicare have claimed increasingly high proportions of the total federal expenditure of tax revenue. Throughout United States history, tax policy has been a consistent source of political debate.
Capital gains taxes are of particular relevance for investors. Levied and enforced at the federal level, these are taxes on income that results from the sale of assets in which the sale price was higher than the purchasing price. These are taxed at both short-term and long-term rates. Short-term capital gains (on assets sold less than a year after they were acquired) are taxed at the owner’s normal income rate, but long-term gains on assets held for more than a year are taxed at a lower rate, on the rationale that lower taxes will encourage high levels of capital investment.
What is the ‘Internal Revenue Service – IRS’
The Internal Revenue Service (IRS) is a U.S. government agency responsible for the collection of taxes and enforcement of tax laws. Established in 1862 by President Abraham Lincoln, the agency operates under the authority of the United States Department of the Treasury, and its primary purpose includes the collection of individual income taxes and employment taxes. The IRS also handles corporate, gift, excise and estate taxes. People colloquially refer to the IRS as the “tax man.”
BREAKING DOWN ‘Internal Revenue Service – IRS’
Headquartered in Washington, D.C., the IRS is an expansive organization that services the taxation of all Americans. For fiscal year 2014, the IRS
processed nearly 147.5 million personal income tax returns and more than 2.2 million corporate income tax returns. These types of returns brought the federal government close to $2 trillion of revenue.
Individuals and corporations have the option to file income returns electronically thanks to computer technology, software programs and secure Internet connections. During the 2015 tax filing season, more than 91% of all returns came through this e-file option, which comes to more than 128 million out of 150 million returns from January to October 2015. The number of returns that use e-file has grown steadily since the IRS began that program. By comparison, 40 million out of 131 million returns, or just 31%, used the e-file option in 2001. More than 128 million taxpayers received their returns through direct deposit rather than a traditional paper check in 2015, and the average direct deposited amount was $2,935.
As part of the enforcement mission of the IRS, the agency audits a select portion of income tax returns every year. For the 2013 tax year, the agency audited approximately 1.4 million income tax returns, or 0.7% of all returns filed. This number breaks down to 0.9% of individual income tax returns and 1.3% of corporate tax returns. Around 71% of IRS audits occur through the mail, while 29% happen in the field.
After rising to a peak in 2010, the number of audits has steadily declined. The amount of funding set aside for tax enforcement declined 5% from 2014 to 2015, which indicates even fewer audits should occur. Reasons for an IRS audit vary, but some factors may increase the odds of an examination. Someone who makes more than $200,000 in one tax year has a 2.71% chance of having an audit. One out of every 13 returns of those earning more than $1 million per year undergo an audit.
Other red flags for an audit include failing to declare the right amount of income, claiming a higher-than-normal amount of deductions, running a small business as self-employed, making large charitable donations compared to income and claiming rental losses. There is no one single factor that determines who does or does not face an IRS audit each year.
Staff, I. (2016, June 05). Taxes. Retrieved July 24, 2017, from http://www.investopedia.com/terms/t/taxes.asp
Staff, I. (2003, November 23). Internal Revenue Service – IRS. Retrieved July 24, 2017, from http://www.investopedia.com/terms/i/irs.asp
What is a ‘Giffen Good’
A Giffen good is a good for which demand increases as the price increases, and falls when the price decreases. A Giffen good has an upward-sloping demand curve, which is contrary to the fundamental law of demand which states that quantity demanded for a product falls as the price increases, resulting in a downward slope for the demand curve. A Giffen good is typically an inferior product that does not have easily available substitutes, as a result of which the income effect dominates the substitution effect. Giffen goods are quite rare, to the extent that there is some debate about their actual existence. The term is named after the economist Robert Giffen.
What is the ‘Laffer Curve’
The Laffer Curve is a theory developed by supply-side economist Arthur Laffer to show the relationship between tax rates and the amount of tax revenue collected by governments. The curve is used to illustrate Laffer’s main premise that the more an activity such as production is taxed, the less of it is generated. Likewise, the less an activity is taxed, the more of it is generated.
BREAKING DOWN ‘Laffer Curve’
The Laffer Curve suggests that, as taxes increase from low levels, tax revenue collected by the government also increases. It also shows that tax rates increasing after a certain point (T*) would cause people not to work as hard or not at all, thereby reducing tax revenue. Eventually, if tax rates reached 100%, shown as the far right on his curve, all people would choose not to work because everything they earned would go to the government. Governments would like to be at point T*, because it is the point at which the government collects maximum amount of tax revenue while people continue to work hard.
Picardo, C. E. (2015, July 24). Giffen Good. Retrieved July 24, 2017, from http://www.investopedia.com/terms/g/giffen-good.asp
Staff, I. (2015, September 11). Laffer Curve. Retrieved July 24, 2017, from http://www.investopedia.com/terms/l/laffercurve.asp
If I were asked what my top three reasons are for why we need to rethinking how Direct to Consumer advertisements are regulated I would first deliberate on the statistic involved with DTC ads. Which we all have access to the information at this point so I’m not going to rattle on about it. However, it is important to point out the growth that comes from the DTC ads and the increase of drug consumption.
The first reason we should rethink how DTC ads are regulated is as pointed out by the FDA, there is minimal oversight of how accurately the drugs are advertised (Health Affairs, 2003). Essentially, drug companies that falsely advertise their products are served little more than a slap on the wrist from the FDA (Health Affairs, 2003). There needs to be a better way for the FDA to penalize companies for misleading the public.
Second, there is a notable increase in consumers being prescribed drugs by their physicians that are DTC advertised (Health Affairs, 2003). Which isn’t necessarily bad for the consumers, but if the drug companies are falsely reporting facts about the effects and side effects of the product. Then there can be less than desirable consequences to the consumers, all the while the drug companies continue to profit (Health Affairs, 2003).
Third, allowing drug companies to directly advertise to consumers enables them to do what is called branding. Meaning that they can inflate drug prices because of the brand name the product carries with it once it has become available in the market. One of the effects of branding is consumers being misinformed about what their options are in regards to treatment. Often enough, even after the drug patent has expired, consumers will choose the more expensive brand name drugs over the lower costing generic drug simply because of the established brand recognition. And in some cases, the pharmaceutical companies are producers of both the brand and generic products allowing the companies to have near or total control of a particular market for that drug. Basically, they can double dip into consumers’ pockets with little to no competition. This is referred to as a monopoly and can mean much higher prices for consumers, as well as a lack of potentially lifesaving drugs, since a single company can only produce a certain number of units regardless of how much of the market they control.
The best solutions to these problems would be to limit drug companies to only being able to advertise in less popular mediums, like magazines, or only in doctor offices. An alternative solution in congruence with limiting advertising mediums would be to require drug companies to only advertise directly to medical service providers. So that way only the medically informed individuals are making the decisions in regards to patient treatment, not consumers that normally don’t have a medical background. This could make drug companies more competitive and more accountable by giving them a more well educated audience to appease. Most importantly, regulations need to be changed which would allow the FDA to be able to better hold drug companies accountable as mentioned in the above paragraph. Additionally, the government needs to be able to reduce the number of pharmaceutical monopolies and lower the barriers to entry so there can be more drug producers in the market. By doing this drug prices will be reduced and there will be more drugs available. Furthermore, an increase in competition should lead to more innovation and better drugs for consumers. In conclusion, besides making conditions better for consumers, these afore mentioned solutions would also result in a major blow to big pharma. Which would have even larger implications than just helping consumers, it could affect everything from politics to the war on drugs and the opioid crisis. But that is where I am going to leave this post because otherwise it will surpass the assignment threshold.
Health Affairs. (2003). Retrieved July 21, 2017, from http://content.healthaffairs.org/content/suppl/2003/12/05/hlthaff.w3.120v1.DC1
For my project I have elected to research the vary life blood of modern society, coffee. I will try to answer two of the most important bullet points listed in the photovoice guidelines; What choices do I have? Who’s selling me what? It seems to me that these are some very important questions involved and it will be interesting to see what the level of consumer health is in regards to coffee drinking in America. Especially since America is the worlds largest consumer of coffee, and pretty much everyone in the US population drinks it.
The fiduciary rule is a regulation put in place by the department of labor that will require financial advisers to act in their client’s best interest rather than in their or their firms interest (True Measure, 2016). The rule will also cause the industry to change how financial advisers are payed by changing it to a fees based system rather than commission based (True Measure, 2016). This will help to eliminate any conflict of interest and disincentives the sale of bad retirement plans to retirement investors (True Measure, 2016).
Out of the two resources, the John Oliver show did the best job explaining the fiduciary rule and the state of the current retirement investment market. John Oliver speaks the language of the people and knows how to use a comedic light that makes the otherwise boring financial information more palatable for the average American consumer. The True Measure website does a good job debunking common myths surrounding the fiduciary rule. However, the information was not presented in an interesting way, and I do not believe the average person would understand it much less want to take read the information.
4 Arguments Against the Fiduciary Rule Debunked. (n.d.). Retrieved July 16, 2017, from http://www.truemeasure.com/blog/2016/4/14/5-argument-against-the-fiduciary-rule-debunked
Blog. (2016, June 14). Retrieved July 16, 2017, from http://www.uspirg.org/blogs/blog/usp/last-week-tonight-john-oliver-retirement-industry-minefield-here%E2%80%99s-answer
Federal Trade Commission – FTC
What is the ‘Federal Trade Commission – FTC’
The Federal Trade Commission (FTC) is an independent federal agency whose main goals are to protect consumers and to ensure a strong competitive market by enforcing a variety of consumer protection and antitrust laws. These laws guard against harmful business practices and protect the market from anti-competitive practices such as large mergers and price-fixing conspiracies.
BREAKING DOWN ‘Federal Trade Commission – FTC’
The Federal Trade Commission deals with complaints that are filed regarding unfair business practices such as scams, deceptive advertising and monopolistic practices. It reviews these complaints to determine if businesses are in fact engaging in harmful practices. The FTC is also responsible for reviewing mergers in the market to ensure that they do not hurt competition in the market and potentially harm consumers. Generally speaking, the FTC does not have the ability to directly enforce its rulings, but it can go to the courts to have them enforced.
Staff, I. (2005, August 04). Federal Trade Commission – FTC. Retrieved July 14, 2017, from http://www.investopedia.com/terms/f/ftc.asp