Monday, November 22, 2010

2010 Fall Accounting CPE Day Seminar

Thursday, Dec. 9
8:00 a.m. to 4:45 p.m.
Cost: $150
Business and Aerospace Building, State Farm Lecture Hall
Credit: Up to 8 hours CLE
Sessions include:
  • Tennessee Ethics, Mark Crocker, executive director, TN Board of Accountancy
  • General Ethics, James E. Burton, dean, Jones College of Business
MTSU Department of Accounting faculty presentations:
  • GASB Update, G. Robert Smith Jr. (Smitty), chair
  • Legality of Accounting Topics, Sandy Benson, Business Law
  • FASB Update, Paula Thomas
  • Accounting for Gift Cards, Charles Kile
  • Issues in Taxation, Tim Koski
  • Constitutionality of SOX (Sarbanes-Oxley), Lara Daniel, Business Law
  • International Financial Reporting Standards, Jeannie Harrington
G. Robert Smith Jr. (Smitty), Chair, MTSU Department of Accounting 

Monday, November 15, 2010

Like to start a business? Might help to listen to some who have...

Martin Kennedy teaches economics at MTSU. In this column he discusses business news and invites reader input. Views expressed are not necessarily those of the Jennings A. Jones College of Business.

Global Entrepreneurship Week at MTSU

When an interviewer says, "Tell me a bit about yourself," you'd better be ready to launch that 60-to-90-minute commercial.  First, of course, you need to develop that commercial; that's what I tell my students.

Perhaps Douglass Tatum's presentation, The Art of the Elevator Pitch, will give you some insight.  The Associate Professor in the Department of Business Communication and Entrepreneurship and chairholder of the Wright Travel Chair in Entrepreneurship will give his presentation this Friday, Nov. 19, at 10:20 a.m. in room S324 of the Business and Aerospace Building on MTSU's campus.

That's just one of many presentations during this week's Global Entrepreneurship Week at MTSU.  The presentations, coordinated by the Department of Business Communication and Entrepreneurship, bring together the College of Mass Communication, the Department of Recording Industry, and the MTSU School of Music.  For information on presentation times and content, see the schedule here or call 615-898-2902.

Entrepreneurship is important and interesting.  It is a primary driver of the economy. Read here about the role entrepreuneurs played in the development and growth of New York City. Here's the money paragraph:
Between 1977 and 2007, the American counties with the smallest firms enjoyed employment growth of 150 percent; employment growth in the counties with the biggest firms was one-third of that.... Similarly, as an area’s share of employment in recently formed companies rose, employment growth rose as well. In both cases, the impact on payroll growth was almost the same as the impact on employment growth. Entrepreneurial cities are successful cities. 

Friday, November 12, 2010

Week's Business Roundup

Martin Kennedy
Martin Kennedy teaches economics at MTSU. In this column he discusses business news and invites reader input. Views expressed are not necessarily those of the Jennings A. Jones College of Business.

The Deficit Commission

Here's a pretty good rundown of the basics from the LA Times on the outline of the commission's proposals:

1. Enact tough discretionary spending caps.
2. Tax reform: reduce rates, simplify, and broaden the tax base.
3. Address reforms to the health care system to reduce spending.
4. Cut farm subsidies, and adjust civilian and military retirement costs (pensions).
5. Raise the retirement age to improve Social Security system solvency.

You can see why a commission was appointed. This is the stuff that costs elected officials votes. Better from their perspective to have to make an up-or-down vote and later argue to angry constituencies that they too opposed cutting this or that but had no opportunity to amend what the commission put forth.

On tax reform, the approach is sound. Taxes lead to inefficiencies; they distort behavior. Better to have a broader and lower tax than a higher, narrower tax base. So the commission recommends lower rates and scrapping various deductions like the mortgage interest deduction.

Social Security? We indexed benefits to inflation (1960s), but we never indexed the retirement age to the increases in life expectancy. Sounds reasonable.

There's a recommended tax hike of 15 cents per gallon on gasoline. Arguably that tax could enhance efficiency (anytime negative externalities or spillovers are present, a tax can improve efficiency). Here's a powerful argument for a gas tax hike from Greg Mankiw, who served as the Chair of the President's Council of Economic Advisors under George W. Bush.

Do What You Are Doing

In economics, we assume that people strive to maximize utility. Plausible and intuitive, of course, but we leave it to psychologists to study the nature of utility. Here's a pretty interesting study that suggests we'd be better off if we just paid attention to what we're doing rather than letting our minds wander. Is this new or just forgotten? As I read this — focus on what you're doing — I thought of the centuries-old Jesuit admonition: "age quod agis"—“Do what you’re doing!”

Even when what you are doing isn't pleasant? Or in a pleasant environment? Seems so, according to the Jesuits.

What Do Academic Types Write When Recommending Job Candidates from Their Departments?

Depends on whether the job candidate is a man or woman, according to this study. Interesting, no doubt. I wonder what you'd find if you controlled for the gender of the letter writer. Are female letter writers more likely to describe female candidates as "nurturing" or "warm?" What about the position applied for? "Nurturing" and "warm" might be better suited to impress people in some disciplines... words like "bold" and "aggressive" more appropriate for others.

Markets Are Interesting

Here's a case where a small piece of cardboard sold for over $260,000. The picture on the card was the thing—some old baseball player—but a good story. I have an Ernie Banks (Mr. Chicago) baseball card lying around somewhere.

Then there's the case of the Lingerie Football League. Someone thinks there's a market in Oklahoma City, but the mayor won't allow it.

From Bangledash

MTSU economist Dr. Richard Hannah will be in Bangledash for MTSU's Yunus Program for two weeks in December. I look forward to hearing from him and keeping you up to date on Richard's wonderings (and his wanderings).

Tennessee Housing Market 3rd Quarter

Tennessee's economy improved somewhat, as employment gains pushed the unemployment rate down to 9.6% from 10.3% in the 2nd quarter. Unemployment remains high: 16th highest among the states.

Friday, November 5, 2010

Global Entrepreneurship Week Nov. 15-21

The Department of Business Communication and Entrepreneurship and Wright Travel Chair in Entrepreneurship in the Jennings A. Jones College of Business in conjunction with the College of Mass Communication, Department of Recording Industry, and the MTSU School of Music will celebrate Global Entrepreneurship Week from November 15 – 19, 2010.


MTSU Global Entrepreneurship Week has a number of outstanding events planned for the week. On the fin├íle day, Nov. 19, nationally syndicated columnist Deroy Murdock will speak on Obama vs. Free Enterprise. Murdock's columns appear in the New York Post, Boston Herald, Washington Times, National Review, Orange County Register, and many other newspapers and magazines in the U.S. and abroad. His political commentary has aired on ABC's Nightline, NBC Nightly News, CNN, Fox News Channel, MSNBC, PBS, other television news channels, and numerous radio outlets. 

Also speaking at Friday’s event will be Sheilah Griggs, vice president of Point 3 Media and executive director of Ladies Who Launch. Griggs has a diverse real-world background in public relations, media relations, and marketing. Leading the Nashville chapter of Ladies Who Launch, Sheilah gives her heart to inspire entrepreneurship and creativity as a lifestyle. While Sheilah is a sought-after motivational speaker, the Point 3 office is consistently the backdrop for workshops providing essential resources for women to take their project to the next level. 

Other events include local and national speakers as well as a viewing of the film Ten9Eight, which will be shown in the Keathley University Center. Ten9Eight is a thought-provoking film that tells the inspirational stories of several inner-city teens (of differing races, religions, and ethnicities), from Harlem to Compton and all points in between, as they compete in an annual business plan competition run by the Network for Teaching Entrepreneurship (NFTE). 

Events will be held in the Business and Aerospace Building and Keathley University Center. The public is invited to attend. Off-campus visitors may obtain a campus map and parking pass at the Linebaugh Public Library, 2nd Floor Reference Department, 105 W. Vine Street, Murfreesboro, Tennessee. For further information call the BCEN Department at 615.898.2902. 

Translation Services Offered for Fed Statements

Column by Martin Kennedy

All this talk of Quantitative Easing (aka QE2 or monetizing the debt) is a bit perplexing.  Planet Money (NPR) breaks it down superbly.  (Click on the Fed's statement line by line to get the translation). 

Meanwhile, the unemployment numbers came out today - still 9.6%.  The private sector added about 159,000 net new jobs.  So why didn't the unemployment rate fall?  Well, we need a monthly net gain of roughly 100,000 jobs just to maintain the unemployment rate due to increases in population.  The labor force includes all those working or looking for work.  Then there is the labor force participation rate.  Changes in the labor force participation rate have an impact on the rate of unemployment.  If someone enters the labor force by starting to look for a job after, say, being engaged in home production (perhaps being a full-time caregiver), then the unemployment rate goes up.  Here's a good, short explanation of the labor force participation rate: "Labor Force Participation Rate Drops To 25 Year Low, At 64.5%."  Note that it is low by historical standards.  Many people leave the labor force in a difficult job market.  They go back to school, a training program, focus on home production, or just give up because they are discouraged. 

Finally, a bit of microeconomics, or as an early professor of mine called it, "the non-fiction side of economics."  Price discrimination is when firms charge different consumers different prices.  We see this all the time.  Consider airlines that charge business flyers more than leisure flyers or early-bird specials at restaurants and matinee prices at the theatre.  Sometimes night clubs have "ladies' nights" where female consumers are not charged a cover.  Car dealers routinely sell their product at different prices to different customers. (Don't tell a salesman you're looking for a red car).  

Here is a particularly interesting example of price discrimination from J-Walk Blog.  It will take you 15 seconds to see it but a bit longer to explain it.  In the cases listed, it is easy to see that different customers have different demands.  To the extent that a supplier can segment the market and identify different types of consumers, he can charge different prices to different people for the same good or service.  Capital One, in this case, is quoting different lending rates.  The question here is whether users of different Internet browsers have different demands.  My guess is it's plausible.

Martin Kennedy teaches economics at MTSU. In this column he will discuss business news. Views expressed are not necessarily those of the Jones College. He invites reader input. 

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Culture Fest 2010

Are you interested in learning more about your neighbors and fellow classmates?  Come to Culture Fest 2010, hosted by Students in Free Enterprise (SIFE).  Culture Fest will be held on Thursday, November 18th from 6-9PM in the Tom H. Jackson Building on MTSU’s campus. 

The purpose of this free event is to raise awareness and acceptance of people of all cultures and bring everyone together for a night of performances, speakers, fellowship, and a taste of the great things other cultures have to offer.

There will be booths and speakers representing various cultures.  Entertainment will be provided by a Brazilian dance group and MTSU students performing the Salsa.

To delight the palette, three local restaurants will provide samples of regional cuisine.  Carmen’s Taqueria, Samurai’s Cuisine, and Pad Thai are official sponsors of Culture Fest 2010. Each person attending will have the opportunity to win door prizes.

Students in Free Enterprise (SIFE) is a network of MTSU students and business leaders working together for a better world through the positive power of business.

Wednesday, November 3, 2010

You Can't Always Get What You Want ... but You Can Move Around and Improve Your Situation

by Martin Kennedy
"The whole business thing is predicated a lot on the tax laws.... It's why we rehearse in Canada and not in the U.S.  A lot of our astute moves have been basically keeping up with tax laws, where to go, where not to put it. Whether to sit on it or not. We left England because we'd be paying 98 cents on the dollar. We left and they lost out. No taxes at all."  
— New Yorker, Nov. 1, 2010, p. 104
That's not a CEO but just Keith Richards of Rolling Stones fame.  People and firms respond to incentives.  The editors of Site Selection Magazine have decided that Tennessee ranks second in the nation in terms of business climate.  As reported in the Daily News Journal (Murfreesboro, TN):
In compiling the rankings, site selectors were asked to rank the most important factors in making decisions about investment. They cited workforce development, state and local tax policy and transportation infrastructure as their top three factors.
Martin Kennedy

Martin Kennedy teaches economics at MTSU. Views expressed are not necessarily those of the Jones College. 

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Monday, November 1, 2010

Column: How Can We Help?

by Martin Kennedy

I'd argue that the general understanding of economic concepts has improved over time. Policymakers are better informed regarding fundamental economic concepts. (Various policies that are condemned by most economists persist due to rent-seeking behavior — some policies benefit an organization or industry even as they reduce overall efficiency.)

Economists do sophisticated research, but what simple concepts — if better understood — would improve policy formation?  A better understanding of deadweight loss is one place to start.  I like the following from Economist Tyler Cowen (George Mason University).

Imagine that you want to go to New York on a trip.  You value the trip at $50, and a bus ticket costs $40.  Do you take the trip? 
A. Yes.  The value ($50) of the trip exceeds the cost of the ticket ($40), so you travel to New York.

How much consumer surplus (net value) do you get from the trip? 
A. $10=$50-$40. 
The government taxes bus tickets, which raises the price of a bus ticket to $60.  Do you take the trip? 
A. No. The value of the trip is now less than the price of the ticket. 
What happened to the $10 consumer surplus you used to get when there was no tax? 
A. It's gone since no trip takes place. 
Did the government get any tax revenue from you? 
A. No.  
Key Idea: Consumers lose, but the government does not gain, from trips that are not taken.
Conclusion: Deadweight loss is the value of the trips (trades) which do not happen because of the tax.

Martin Kennedy

Martin Kennedy teaches economics at MTSU. In this column he will discuss business news. Views expressed are not necessarily those of the Jones College. He invites reader input. 

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