Some general feedback on the brand projects

 Obstacles overcome: well done 

This course was about having you learn through experiences and exercises. It works best when we are all in the same room. We couldn't do that, but maybe next year.

Some things I saw you accomplish:

• Your research was very thorough and impressive, and the experience should serve you well in future courses. 
  
• You managed to do an in-depth assessment of a brand in four minutes, a significant challenge.
  
• You analyzed technical business documents, which should also serve you well in future courses.
  
• You coordinated work as teams across distances and time zones.
  
• You showed patience in dealing with the technical difficulties associated with Zoom classes, for which I thank you.
  

Suggestions for future presentations

• Practice your oral presentations. And then practice them again. And again. They become smoother and more conversational the more that you practice. You gain confidence. You don't trip over difficult words. Your message becomes more persuasive.
  
• Present with conviction and enthusiasm as though you have discovered something interesting (which you have) and are excited to share your discovery with others.
• Make sure that you understand every technical term you use, such as "negative net cash flow and negative net liquidity". Look them up so that you do understand them, and then use them with confidence.
• Start making a portfolio of your best work for future internship and job applications.  

Be an influencer 

Marketing is about knowing who your customers are, identifying their needs and wants, and satisfying those needs and wants. Be the kinds of marketers who influence people with creativity, humor, powerful language, compelling images, and, above all, honesty and integrity. In a world full of disinformation, people value credible, trustworthy brands. My hope for you all is that you will be those kinds of influencers.

Week 13, Nov. 23, 27: The Global financial Crisis of 2008

 Week 13, Nov. 23, 27, First readings of Global financial crisis of 2008

1. Three years after the crash, in 2011, there was still a worldwide financial crisis. This 11-minute video explains how it happened, The Credit Crisis. 

 1. 

2. The Giant Pool of Money, a one-hour radio report, with transcript available. This walks you through the step-by-step process of how lots of people fooled themselves, and others, in a greedy money grab that led to a global financial crisis. It shows how radio can cover a complex financial topic in an easily understandable way.

3. In preparation for Monday's class, I am sharing the slides for the class here


4. And here are four short clips of 30 seconds each that tell some of the story of how the crisis occurred.

Glen Pizzolorusso, the mortgage broker, making $60,000 a month 
Glen lived the high life, champagne at $1,000 a bottle
The chain or irresponsibility: everyone passed the problem to the next guy
The experts fooled themselves; they were using the wrong data
 
For Friday's class

The Crisis goes Hollywood in the movie "The Big Short" with Ryan Gosling, Christian Bale, Brad Pitt, Steve Carell, and a cameo of Margot Robbie. Here is an explanation of some of the technical aspects of the film clips from the movie. 

How four men saw the financial crisis coming
Christian Bale´s character outsmarts the Wall Street Banks, who think he is a fool
Ryan Gosling, The Jenga clip, he talks about credit default swaps
The Big Short ratings agencies, a conflict of interest

Even more clips from The Big Short:
Michael Burry (Christian Bale) discovers the housing market is propped up by bad loans, Margot Robbie helps  
Michael Burry closes out his investment fund with 489% return, 2.7 billion dollars 
As always, the big bankers and politicians say the crisis was the fault of poor people and immigrants

If you want to dive deeper,  two Wikipedia articles explain more background on how the crisis occurred.
How government policies contributed to the crisis.
Explanations for innacurate credit ratings agencies and the subprime crisis.

Grading standards, la rúbrica, for brand projects

 These are the main criteria I take into account when I grade projects. 

1. Quality of Research

• Depth of the inquiry
• Quality of sources consulted
• Innovation if sources are scarce or unavailable
• Initiative in finding solutions

2. Quality of Analysis

• Description of the issue is complete, accurate
• Analysis considers the "why" or the "how" of the issue
• Analysis proposes solutions to problems uncovered
• Innovation in approach to solutions
• Initiative in finding solutions

3. Quality of Communication

• Writing: Clear, precise language; correct spelling, grammar
• Writing: Eloquence in communication, skilled use of rhetoric
• Graphics, charts, images that eloquently help communicate
• Oral presentation engages audience
• Oral presentation makes effective use of visual elements

Week 11, Nov. 9, 13: Financial Markets (replaces labor markets) and preparation for Week 12, final project presentations

 For Monday, Nov. 9:

1. A CHANGE: Read Mandel Chapter 13 on Financial Markets, in ADI-Contents-Mandel Chapters  (I believe the Financial Markets chapter will be more useful to you on your final projects than Labor Markets).

 

Important concepts in Financial Markets:

• Why businesses borrow and lend money
• How businesses raise money--they issue bonds (debt) or sell shares 
• The stock market and the bond market (intermediaries)
• The risk-return principle
• Diversification of investments
  

Week 12: Final Project Presentations

The presentation order is listed below.   

Teams 11-20 will present on Monday Nov. 16

Teams 1-10 will present on Friday Nov. 20. 

1. Post the link to your slides, or the PDF of your slides, in ADI-Final project. They are due at 8am on the day of your presentation. Each oral presentation will be limited to 4 minutes. 

1a. For those who wish to prepare your oral presentation in advance in video format, that video is due at 8 am on the day of your presentation. Your video should be no longer than 4 minutes.

2. Post the text report of your final project in PDF format by 8 am. on the day of your presentation. 

I expect all students to attend both sessions (Exception: those in the Americas can watch later on Zoom). We will go straight through with no breaks.

Week 10, Nov. 2: Final Project 3 and 4; Inflation

 Project 3, due Monday Nov. 2. Identify the largest competitors by number of employees, revenue or market share that compete with your brand. Upload your document to Project 3 in ADI. Be sure to include your brand's name and names of all the team members on the document. Only one person from the group needs to do this.

Project 4, due Friday Nov. 6, present a 1-page outline of your brand presentation. List the key points that you plan to make about your brand. Upload it to Project 4 in ADI. Only one person from the group needs to do this. 

 For Friday Nov. 6: Read Mandel Chapter 8, Inflation, in Contents in ADI.

Important concepts:

•   Consumer Price Index

•   How inflation is calculated

•   Real vs. nominal dollars, the money illusion

•   Hyperinflation 

Week 9, Oct. 26, 30: The role of the state in the economy

Readings from "The Economics Book", all having to do with the role of government in the economy. All these chapters are short. Page numbers and ebook locations are listed.

Readings for Monday Oct. 26

p. 64 - Make taxes fair and efficient, Location 1162
p. 76 - Borrow now, tax later, Location 1444
p. 130 - Make one person better off without hurting the others, Location 2467
p. 140 - The poor are unlucky, not bad, Location 2695

Readings for Friday Oct. 30

p. 100 - Let the ruling classes tremble at a Communist revolution, Location 1868
p. 142 -Socialism is the abolition of rational economy, Location 2739
p- 148 - Capitalism destroys the old and creates the new, Location 2839
p. 282 - The East Asian State governs the market. Location 5506

 Final project

Project 1, due Monday, Oct. 26. Each work group will pick a brand (or suggest a topic for the professor's approval). You can all enter this document and edit it to show which brand your group has chosen. Those who act sooner get first choice. If you have a different proposal, put it at the end of the document. 

Project 2, due Friday Oct. 30. Find 10 sources, you plan to use for your final project: books, company annual reports, industry-focused magazines, news articles, etc.

The sources can be in Spanish or English. Write a sentence or two in English about why this source is relevant to the study of your brand. Be sure to include your brand's name and names of all the team members on the document. Upload in Project 2 in ADI. Only one person from the group needs to do this.

Project 3, due Monday Nov. 2. Identify the largest competitors by number of employees, revenue or market share that compete with your brand. Upload your document to Project 3 in ADI. Be sure to include your brand's name and names of all the team members on the document. Only one person from the group needs to do this.

Project 4, due Friday Nov. 6, present a 1-page outline of your brand presentation. List the key points that you plan to make about your brand. Upload it to Project 4 in ADI. Only one person from the group needs to do this. 

What is an outline? It simply lays out how you plan to organize and present your information. It could look something like the image below.

Preview to Friday's class on fiscal policy vs. monetary policy

In simple terms, monetary policy describes the tools used by a central bank to control the supply of money in the economy. This increases or decreases the flow of money and thus increases or decreases economic activity.  

On the other hand, Fiscal policy describes how a government's chief executive and congress pass laws to 1) raise money (mainly through various taxes) and 2) spend money. Fiscal policy involves making decisions about what the government believes should be their spending priorities, such as national defense, public safety, public health, public education, scientific research, public welfare, social security, pensions, and so on. 

Mandel Chapter 11 (it's in ADI-Contents-Mandel Chapters) goes into great detail, but this graphic captures several key points.

National debt as a percentage of GDP

A key question for politicians and government officials to make on Fiscal Policy is: Should we borrow money to pay for programs if we don't generate enough from taxes. The risk of borrowing is that you accumulate more debt than you can pay back. Many governments have been adding debt rapidly.

Supposedly, the debt of a well managed government should not need exceed 60% of GDP (this metric is part of Exercise 4).  But look at the recent national debt figures. As you can see in the chart below, the euro zone average in December 2019, before the effects of the corona virus, was 84.1%. The U.S. was at 107% and Spain was at 95.5%. Those percentages are now much higher for all countries as they borrow and spend to reverse the financial crisis. We will talk more about this on Friday. 

Week 8, Oct. 19, 23: Monetary policy

 Readings for Monday Oct. 19  

1. "World Happiness Report, 2018", Read p. 17, the predictors of happiness; pp. 20-21, Finland is the happiest country, and where does your country rank; pp. 25-27, U.S. and Spain's happiness declined, but Venezuela the most; pp. 114-115, why are Latin Americans so darn happy?

2. From "The Economics Book".

p. 196 Government should do nothing but control the money supply. Location 3727
p. 202 The more people work, the higher their bills. Inflation. Location 3834

3. Mandel, Chapter 12, Monetary policy, on ADI.

You might like . . .

The Indicator podcast  "The Fed's sweet spot for interest rates" (transcript here) is a really good explainer on monetary policy, how the central bank's policy on interest rates can stimulate the economy (which can cause inflation), or slow down the economy (when inflation is too strong.)

 

Midterm exam summary of results, and some answers

The overall performance on the midterm exam was an average score of 7.4 with a median of 7.8. I was generally pleased. Some of you put a lot of thought into your answers and the examples you chose. Answers that introduced more elements to consider and more compelling examples received higher grades.

 

Students also got more credit for answers that were well expressed with good grammar and spelling.

For each question below, I have included a student answer that I thought deserved full credit. However, these were not the only acceptable answers.

Q1. President orders that the price of eggs will be half the current market price. A good student answer is below.

If the sale price of eggs gets cut by half, egg producers will not have any motivation to produce eggs anymore.They will begin to look for alternative revenues as their margins will get cut off.
If egg producers start to look for alternative revenues because of egg prices dropping, this will lead to a shortage of eggs.Egg consumers would most probably purchase more eggs, which would potentially cause a shortage in supply.
It is likely that store owners run out of eggs and stop making a profit as high as they could make before because producers could charge the same cost for the eggs as before this price cut.If the sale of the eggs from egg producers to supermarket increase this would contribute to the shortage.
In conclusion,if the eggs' prices would get cut in half by law,this would most probably lead to an egg shortage,causing eggs to get sold at a higher price on the black market.

The best answers to this question pointed out that this situation leads to shortages and a black market.

Points were reduced for answers that suggested producers will produce more eggs, consumers get more eggs, making everyone happy.

 

Week 7, Oct. 16 From the micro to the macro: GDP

 Readings for Friday Oct. 16, in “The Economics Book” about Macroeconomics and GDP (PIB)

• The economy can be counted, p. 36, Location 644
• Money and goods flow between producers and consumers, p. 40, Location 735-837
• The aim is to maximize happiness, not income, p. 216, Location 4161-4236
• "Has GDP outgrown its use?" from the Financial Times.
• Confused about GDP? Watch this video for an explanation of the circular flow of money in GDP. 
  

Exercise 4: This is a group exercise. WORK IN THE SAME GROUPS YOU WERE IN BEFORE. It is designed to have you analyze several key economic indicators of any country you choose. Download this document and fill it out. Upload your spreadsheet or PDF in Attach Files below. Deadline is Friday, Oct. 23, before class.  Can't find the data? Here are some authoritative sources.

 Suggestions for Exercise 4: Some countries report numbers for inflation, unemployment, and central bank interest rates by yearly average, by quarter, or by month. Annual average is preferred, but use what's available. Be consistent.

 Readings for Monday Oct. 19  

1. "World Happiness Report, 2018", Read p. 17, the predictors of happiness; pp. 20-21, Finland is the happiest country, and where does your country rank; pp. 25-27, U.S. and Spain's happiness declined, but Venezuela the most; pp. 114-115, why are Latin Americans so darn happy?

2. From "The Economics Book".

p. 196 Government should do nothing but control the money supply. Location 3727
p. 202 The more people work, the higher their bills. Inflation. Location 3834

3. Mandel, Chapter 12, Monetary policy, on ADI.

You might like . . .

The Indicator podcast  "The Fed's sweet spot for interest rates" (transcript here) is a really good explainer on monetary policy, how the central bank's policy on interest rates can stimulate the economy (which can cause inflation), or slow down the economy (when inflation is too strong.)

Feedback on interest rate exercise

Overall you did well on this research. Here is the link to the information from the 20 groups; I've summarized some of the information (if you have trouble opening the link, sign in to your university account).

The research is not easy and not straightforward. It is the kind of research that your boss might ask you to do about a competitor if you were working at a bank. Sometimes these banks make it difficult for a consumer to find the real, true cost of a loan, or the real true rate they will receive for their deposits. You have to dig below the surface.

On the spreadsheet, notice the pattern of interest rates on auto, mortgage, and credit card loans. The interest rate is the price the bank is placing on the loan; the higher the risk of the type of loan, the higher the interest rate. The banks pay a much lower interest rate to depositors; they then turn around and lend those deposits at higher rates to other customers.

You will notice that some groups researching the same bank came up with different numbers. In some cases it's because more detail was needed. For example, Santander offers 3% interest on deposits--much higher than anyone else in Spain--but only if the depositor maintains a balance of at least 3,000 euros. There was also a lot of variance on credit card rates--possibly because they offer a variety of products. 

 

Week 6, Oct. 5, 9--Midterm review and exam

1. The exam will be given to you after class on Friday Oct. 2. It is individual work. You are not to collaborate with anyone else, but you can consult any materials we used for the class: books, articles, Zoom recordings, slides, class notes, as well as doing independent research. It's an open-book exam.

2. You will have a week to complete the exam. This process is designed to relieve some of the stress of a timed exam.

 

3. You will have to answer three or four essay questions with a strict word limit of 150 words. Answers should be direct, with data, evidence, reasons, the why, the how. 

 

4. There will be a graphic to draw and interpret.

5. You will email the completed exam to jbreiner@unav.es by noon on Friday Oct. 9, Pamplona time. There will be no class that day. 

 

6. Again, this work is to be done individually. You are not to collaborate with anyone else. You are on the honor system. I am trusting you to work individually. 

 

7. In class on Monday Oct. 5, I will have an exam review class in which you can ask me to review or clarify some concepts.

The following are some concepts and important people we talked about and read about. You will need to understand many of them to answer the questions on the exam. All of them are in materials we have used for the class.

Week 5, Sept. 28, Oct. 2, Money, banking, and interest rates

Readings for Sept. 28

From "The Economics Book".

p. 24 You don't have to barter when you have coins. The function of money. Location 366

p. 26 Make money from money. Financial services, Location 410

p. 30 Money causes inflation. Location 504

New: A recent podcast on the invention of paper money 1,000 years ago, and its meaning for today (transcript here).

* Recommended: A blockchain explainer, the technology behind cryptocurrencies 

Planet Money Summer School podcast: Advertising and Race. The podcast is here; the transcript is here. 

Blackrock Letter to CEOs: do more than just make a profit


In class exercise for Sept. 28, to be finished by Oct. 2

Work with the members of your work group: here is the list of groups and members.

Find the following interest rates for a bank in your home country or here in Spain and post them to this survey form in SurveyMonkey:

1. The interest rate paid to depositors by the bank. (Sometimes banks offer CDs, certificates of deposit, which pay a slightly higher rate for a 6-month commitment by the depositor.)
   
2. The interest rate that the bank charges customers for auto loans (4 or 5 years)
3. The interest rate that the bank charges on home mortgages (hipotecas), on a 30-year mortgage
4. The interest rate that the bank charges its credit card customers. (Don't just use the "teaser" rate or introductory rate.)
   

Use effective interest rate or TIE (tasa de interés efectiva), not nominal interest rate, or TIN (tasa de interés nominal). For example, if the nominal interest rate on a loan is 5%, but the interest is calculated monthly and added on to the monthly payment, the effective rate is 5.12%.

Week 4, Sept 21, 25: market failures, public goods, shared resources, externalities, monopolies

Homework readings Sept. 21 and 25

1. In  The Economics Book. All have to do with market failures: externalities, monopolies, imperfect competition, public goods, and shared resources.

• Private individuals never pay for street lights – provision of public goods and services, p. 46, Loc. 840-872.
• Phone calls are dearer without competition – monopolies, p.92, Loc. 1718-1811
• Make the polluter pay – external costs, p. 137, Loc. 2626-2637
• The biggest challenge for collective action is climate change – economics and the environment, p. 306, Loc. 5965-6045

2. The anti-monopoly case against Facebook, Google, and Amazon
3. European Union fines Google $2.7 billion for monopoly violations
4. Europe's anti-monopoly regulators take aim at how tech giants use data 

Recommended: Planet Money Summer School podcast, Scarcity and Pistachios

Pistachio growers in California use so much water, that entire communities have lost water service to in homes.
The podcast
The transcript of the podcast

Concepts:

• Tragedy of the commons
• Externalities
• Scarcity
• Cap and trade

 

Week 3, Sept. 14, 18: Introduction to markets: prices, supply and demand, rational man, invisible hand

 Readings for Monday, Sept. 14

Readings:

1. Economics Book, Prices come from supply and demand, p. 108-113, location 2025 - 2119 in the Kindle edition.

2. From The Economics Book   The Age of Reason", read the Intro, Man is a cold, rational calculator; and The Invisible hand of the market brings order. Loc. 884-1108 in Kindle, pp. 47-61 in print edition.

3. Chapter 3 of Mandel, Market Equilibrium and Shifts, in Contents in ADI.

Why you aren't paying more for bananas, but retailers are . Wall Street Journal article on how low prices on one item can drive people to choose one store over another.

The banana is one step closer to disappearing, National Geographic report on a fungus that is threatening Latin America. 

Recommended: Planet Money Summer School podcast, Markets and Pickles
The podcast
The transcript of the podcast
A food bank in Alaska gets sent a truckload of pickles, more than it could ever use. A food bank in Idaho gets sent a truckload of potatoes, the last thing it needs. With the help of economists, the food banks figure out a way to create a trading market, complete with information sharing and prices.
Concepts:

• Supply and demand
• Local knowledge problem
• Gains from trade
• Information asymmetry
• Monopoly
  

Exercise 2, Where are the jobs in Marketing?

The goal of this exercise is for you to see what the labor market is seeking from graduates in communication.

1. Create a document in Word

2. You will  search for a total of five items: either job advertisements for graduates in communication OR articles about the job market for graduates in Marketing. These can be in English or Spanish.

3. Put the links in the document along with the headline (in any language).

4. Make a list (in English) of the requirements and expectations they list most often in the job advertisements or the articles.

In other words, what are employers looking for? What kinds of skills? What kinds of abilities?

5. Upload the document to Exercise 2 in ADI. Due Friday Sept. 18.

Students who aren't on campus: form groups for the exercises

 Dear students who will be arriving late to campus or won't be on campus all semester, or are temporarily in quarantine, here are the names of other students in the same situation. I invite you to introduce yourselves via email and form groups. 

For Exercise 1, comparing online prices at Carrefour and Amazon, you will have to substitute a local retailer in one of the countries where you live. It might be hard to find exact equivalents. Do your best. 

Family names	Name	email	country
Alvarez Del Castillo Huerta	Camila	calvarezdel@alumni.unav.es	Mexico
Arenas García	Luisa Fernanda	larenasgarc@alumni.unav.es	Colombia
Arguello Valle	Gustavo	garguellova@alumni.unav.es	Nicaragua
Chelala Cortes	Emilio	echelalacor@alumni.unav.es	Mexico
Flores Galvez Cano	Sofia	sgalvezcano@alumni.unav.es	Guatemala
Genao Baez	Veronica	vgenaobaez@alumni.unav.es	Dominican Rep.
Madrigal Bejarano	Ignacio	imadrigalbe@alumni.unav.es	Costa Rica
Marusic Siles	Andrea	amarusicsil@alumni.unav.es	Bolivia
Montalvo Leon	Nathalie Victoria	nmontalvole@alumni.unav.es	Ecuador
Nufio Movil	María Inés	mnufiomovil@alumni.unav.es	Guatemala
Pérez Carvajal	Diego	dperezcarva@alumni.unav.es	Mexico
Rodriguez Carlos	Sophia	srodriguezc@alumni.unav.es	Venezuela
Saavedra Cardona	Paola María	psaavedraca@alumni.unav.es	El Salvador
Smith	Aaliyah	asmith.8@alumni.unav.es	USA
Sánchez De La Vega	Mariana	msanchezdel@alumni.unav.es	Colombia
Tapia Malpartida	Chiara	ctapiamalpa@alumni.unav.es	Italy
Ufer Girón	Sabine	sufergiron@alumni.unav.es	Germany
Navarrete Caldera	Carlos Eduardo	cnavarretec@alumni.unav.es	Nicaragua
Alcazar Salazar	Abraham	aalcazarsal@alumni.unav.es	Bolivia

Flores Vazquez                Paola                    pfloresvazq@alumni.unav.es  Mexico

Escudero                        Telmo                    tescuderoal@alumni.unav.es       Spain

Burusco                          Iñigo                     iburuscoald@alumni.unav.es       Spain

Calderon Garcia                Natalia                          ncalderonga@alumni.unav.es        Mexico

Arenas Garcia                    Andrea                        aarenasgarc@alumni.unav.es        Colombia 

Arias                                   Gerardo                        gariasmachu@alumni.unav.es        El Salvador