fa15 master final v4

A League of their Own: Daily Fantasy SportsRegulatory pressures could shut down

the industry just as it gets started

From Startups to ShutdownsStartups like Snapchat are worth more than ever—

have their valuations gotten out of control?

The Business of Beauty:The Islamic State and the Black Market

CORNELLBUSINESSREVIEWFall 2015 | Volume VI | Issue 1

cornellbusinessreview.com

REGGIE FILS-AIMÉPresident & COO, Nintendo of America

Exclusive Interview With

FINANCE18 All About Anabel’s Grocery: Facts, Opportunities, and More

by Todd Wei

25 Then There Were Three...by Emma Nelson

32 Puerto RicoAmerica’s Broke(n) Colony

by Ignacio Garcia Conway

INTERNATIONAL

27 The Business of Beauty:The Islamic State and the Black

Market by Andrew Billiter

34 Can Infrastructure Projects Save the Egyptian Economy?

by Ethan Coy

39 Australia’s Economy:Can Turnbull Turn The Tables For

His Nation?by Jeffrey Fung

41 Quo Vadis, Economy?by Shohini Kundu

INDUSTRY

04 A League of Their Own:Daily Fantasy Sports

by Casey Breznick

07 Will WeWork Work Out?by Dylan Magee

09 The Cost of Drugsby Nick Rawlinson

11 From Startups to Shutdowns

by Bjorn Bjornsson

16 Crude Oil Conspiracy:Starring Saudi Arabia

by Avirook Upmanyu

03 Letter from the Editor

EXCLUSIVE INTERVIEWS

21 Reggie Fils-AiméPresident and COO, Nintendo of America

13 Jake MillerProduct Team, Tasting Table

36 Raul RomanCo-Founder of UBELONG

29 Rachel TrimarcoCEO and Founder of Bride and Blossom

CORNELL BUSINESS REVIEWFall 2015 | Volume VI | Issue 1

BY CASEY BREZNICK

On December 15, 2014, the Chicago Bears lost to the New Orleans

Saints 31-15 in both NFL teams’ final game of the season. At the start of the game no one expected it would have any historical significance. That all changed early in the fourth quarter when Chicago quarterback Jay Cutler made a 1-yard touchdown pass to Marquess Wilson.

That 1-yard touchdown was a $1 million payday to Drew Dinkmeyer, a 31-year old investment analyst who so happened to have Wilson on his fantasy roster for a “Millionaire Maker” tournament hosted on DraftKings. Since then Dinkmeyer has become the poster boy of the daily fantasy sports industry, dominated by FanDuel and DraftKings, and neither he nor the industry giants show any signs of relenting in their pursuits to change the world of sports and to make a lot of money doing so.

Get Rich Quick: The Daily Fantasy Sports Business ModelFantasy sports is a very real and very lucrative business. According to research conducted by Ipsos for the Fantasy Sports Trade Association, close to 57 million people in the United States and Canada, about one-third of their combined adult male population, will participate in fantasy sports this year. Of those, the average spender will shell out approximately $465 on contest fees and materials. In other words, in these two countries alone, fantasy sports is a $26.5 billion industry.

In traditional fantasy sports games, competitors select a virtual roster of real-life players. After every real-life game the players’ statistical performances

are converted into points. The virtual team with the highest number of points wins. As the popularity of fantasy sports has boomed, thanks to the Internet and mobile apps, two companies specializing in a new approach to fantasy sports emerged: FanDuel in 2009 and DraftKings in 2012.

These two companies have created the answer to the major drawback of traditional fantasy sports. Previously, participants were more or less stuck with

their roster throughout the entire season. However, FanDuel and DraftKings offer a daily fantasy sports model that allows for the customizability of fantasy sports. The business models and mechanics of the tournaments are basically identical to those of traditional fantasy sports, except that on FanDuel and DraftKings one can enter multiple tournaments in of various sizes, buy-ins, payouts, scoring rules, sports leagues, and, perhaps most importantly, different rosters. And, the next day, it starts all over.

With entry fees ranging from cents to thousands, and cash prizes eclipsing $1,000,000 in some tournaments, daily fantasy sports attract all ranges of spenders and easily captures the imaginations of sports fans looking to cash in. Like Dinkmeyer, many financial analysts, statisticians, and sports aficionados are quitting their jobs and becoming full-time fantasy sports players, and the likes of Rotoworld and Fantasy Sports Ventures represent a cottage industry of fantasy sports news and analysis that has sprung up to capture a slice of the rapidly growing daily fantasy sports market. It is no wonder FanDuel reports having over 1 million active users.

Naturally, most of the money is flowing into, and out of, FanDuel and DraftKings. Among their investors and

INDUSTRY

Because the law is vague and there is no objective

way to measure skill, the daily fantasy sports

industry since its inception has existed on a tenuous

legal standing.

A League of Their Own: Daily Fantasy SportsDaily fantasy sports is rewriting the rules of sports and gaming, but competitive and regulatory pressures could shut down the industry just as it gets started.

CORNELL BUSINESS REVIEW | 4

It is an honor to announce that it is Cornell Business Review’s 5th anniversary! Ever since its inception in the Fall of 2010, Cornell Business Review has been the premier busi-

ness publication at Cornell University, delivering time-relevant business content and encouraging students, faculty, and the Cornell community at large to “Join the Conversation.”

Cornell Business Review has grown tremendously within these past 5 years. It started as an idea to bring together business-minded students to discuss business trends and topics while produc-ing a publication to engage fellow students.

Now, with 38 members divided into Business, Editorial, and Design teams, we continue to grow in number and influence. Internally we regard ourselves as a start-up; we pride ourselves on an entrepreneurial spirit dedicated to adding value to our readers. This semester we launched CBR Online hosted on our website (cornellbusinessreview.com). The digitalization of these time-sensitive current events articles has made CBR more accessible and relevant.

We are delighted to share the Fall 2015 issue of the Cornell Business Review with you. In this 11th issue, our writers have focused on a breadth of topics including the healthcare industry, daily fantasy sports, the sale of art on the black market, and Cornell’s planned student-run grocery store.

We also had the privilege of interviewing four prominent alumni in a wide range of industries. In an exclusive interview with Reggie Fils-Aime, the President and COO of Nintendo of America, he shared insight into the gaming industry. Our Entrepreneurship Spotlights feature Jake Miller (Prod-uct Team at Tasting Table), Rachel Trimarco (CEO and Founder of Bride & Blossom), and Raul Roman (Co-Founder of UBELONG).

We would like to thank Cornell for its financial support, our advisor Professor Deborah Streeter for her strategic guidance, and our Alumni Board. We sincerely appreciate alumni Reggie Fils-Aime, Jake Miller, Rachel Trimarco, and Raul Roman for taking the time to share how their Cornell journeys translated to their successes.

It has been truly rewarding to have led the Cornell Business Review for the past couple semesters. I would like to personally thank our members and look forward to reading the publication for years to come. Happy reading!

Susan JiangClass of 2016Editor-in-Chief

3 | CORNELL BUSINESS REVIEW

CORNELL BUSINESS REVIEWFall 2015 | Volume VI | Issue 1

EDITOR-IN-CHIEF Susan JiangMANAGING EDITOR Nicholas PicconeBUSINESS MANAGER Nabiha KeshwaniDESIGN EDITOR Alvin Cao

EDITORIAL TEAM Andrew Billiter, Bjorn Bjornsson, Casey Breznick, Hunter Bosson, Ignacio Garcia Conway, Ethan Coy, Jeffrey Fung, Isaac Greenwood, Jack Henry Kapp, Shohini Kundu, Dylan Magee, Emma Nelson, Sang Hyun Park, Nick Rawlinson, Sanjana Sethi,

Samantha Torre, Avirook Upmanyu, Todd Wei & Dean Xu

BUSINESS TEAM Archana Choudhary, Nicole Feibelman, David Hauser, Jen Juliano, Nathan Kashdan, Julia Krupski, Minesh Patel, Rosie O’Regan, Jenna Roland, Rhea Somaiya, Savanna Steinberg & William Van Ullen

DESIGN TEAM Grace McBride, Rosalyn Xu & Julie Zhu

Letter from the Editor

with sophisticated statistical models and algorithms that enable them to submit multiple rosters in any given tournament and pinpoint the weakest opponents have tremendous advantage over less sophisticated players. The sharks, many of whom are or were Wall Street traders, end up winning most of the prize money. Average Joes might strike it lucky every once in a while, but the only skill involved is mathematical and statistical in nature, as opposed to sports knowledge.

These analyses have led some to conclude daily fantasy sports is, for the vast majority of players, a game of chance. Still, the companies and supporters argue that the games are fundamentally ones of skill, irrespective of what skills players use and how many are actually playing skillfully.

In a feat of great irony, in mid-October the state of Nevada, the only state where sports betting is legal, declared daily fantasy sports to be a form of gambling, thus banning all industry

operators until they become licensed. FanDuel and DraftKings shot back, accusing the state of hindering innovation and ignoring the skills-based nature of their games, but it seems the consumers’ voice is clear: the two companies alone are expected to handle more in entry fees than all of the sportsbooks in Las Vegas.

A League of Their OwnAside from legal issues, the other problem FanDuel and DraftKings face is making profits. Like many other “unicorn” companies—those that have reached valuations above $1 billion based entirely on fundrais ing—neither is in the black. Their massive advertising budgets—and perhaps now, growing legal and lobbying budgets—soak up all their revenues, which are capped at 10%

of entry fees. The marketing campaigns, though, serve the purpose of building a critical mass user base that is key to the companies eventually making profits. Retention, however, poses the greater obstacle to the industry’s survival. If the small minority of sharks almost always defeat amateur players, it is only a matter of time before the latter give up on daily fantasy sports. At the same time, FanDuel and DraftKings do not want to alienate the sharks because they spend up to tens of thousands of dollars per day in entry fees. How the two companies will play the delicate line between appeasing the sharks and maintaining the interest of

amateur players is yet to be seen. Some possible solutions include limiting users to one tournament a day or one entry per tournament; another solution is to rank users based on winnings and not allow high-ranked users to enter tournaments designated for low-rank users.

With the legality of FanDuel and DraftKings in jeopardy and their business model headed on a collision course with impracticability, the future of the daily fantasy sports industry is in limbo. Yet, as is often said in the world of sports, sometimes the best defense is a good offense. In the legal and political arena where FanDuel and DraftKings now find themselves in the midst of battle, the free market and the people’s dollar-votes are sometimes the strongest of voices. Backed by popular support, the two companies can heed on to growing their user bases, improving their business models, and generating profits to become part of what would truly be a league of their own.

Casey Breznick is a junior in the Dyson School of Applied Economics and Management.

The collective verdict has been that skill does play a role, but not the type of skill many associate with fantasy sports—that is, applying knowledge of sports.

INDUSTRY

Fantasy Sports Revenue

Already valued at above $1 billion and with ample room to grow, FanDuel’s and DraftKings’ road to financial riches seems straightforward and a slam-dunk for its employees and investors.

In millions of dollars:

2004 2005 2006 2007 2008 2009 2010 2012 2013

$394

.7

$453

.2

$487

.3

$635 $7

08.9

$737

.9 $850

$951

.8

$111

4.6 $1

231.

5

41%Annual growth rate of daily

fantasy sports

$2.6 BEstimated entry fees generated by daily fantasy sports this year

2011


strategic business partners rank all the major sports leagues including the NFL and NBA, media giants like Comcast and ESPN, tech giants like Google, and private equity firm KKR. Eilers Research estimates daily fantasy sports games will generate about $2.6 billion in entry fees this year and grow at a 41 percent annual growth rate, reaching $14.4 billion in 2020. This means in 2015 the tournament providers collecting the industry standard 10% of entry fees have $260 million in revenues to fight over. Last year, FanDuel reported revenue of $57.3 million and $621.7 million in entry fees, and DraftKings reported revenue of $30 million on $304 million in entry fees. These figures represent 33% growth for FanDuel and a whopping 650% growth for DraftKings, which was in part fueled by acquisitions of the No.3 and No.4 market competitors.

Already valued at above $1 billion and with ample room to grow, FanDuel’s and DraftKings’ road to financial riches seems straightforward and a slam-dunk for its employees and investors. But just when the going seems good, enter the politicians, regulators, and courts, and all can change very quickly.

A Game of SkillJust before the start of this year’s NFL season, both FanDuel and DraftKings launched massive advertising campaigns. In September alone, DraftKings was averaging a television ad every 1.5 minutes, and by the beginning of October the two had spent a combined $205 million.

Despite the best efforts of this media blitz, in early October people were no longer focusing so much on the prospect of winning thousands of dollars daily as they were on the daily stream of headlines proclaiming the near-end of FanDuel and DraftKings. As one politician after another publicly aired doubts over the legality of daily fantasy sports, the biggest shocker came from a Wall Street Journal article announcing the U.S. Justice Department and the Federal Bureau of Investigation were investigating the two companies for possible violation of

federal anti-internet gambling laws.Both FanDuel’s and DraftKings’

websites declare they are “100% legal” under federal law and most state laws (they do not operate in some states, like Arizona and Washington), and under the longstanding interpretation of Congress’s Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA), they are.

The UIGEA distinguishes between placing an online “bet or wager” such as in a game of poker or blackjack, which is illegal, and paying an online entry fee for a fantasy sports tournament, which is legal so long as certain conditions are met. Chief among these conditions is that the cash prize is determined before the game starts rather than being based on the number of participants or buy-ins, and that the outcome of the game is determined by “the relative knowledge of the participants or by their skill” and “by accumulated statistics of sporting events” rather than by chance. The latter stipulation has become what is known as the “game of skill” standard, and it is what keeps daily fantasy sports legal—for now.

Because the law is vague and there is no objective way to measure skill, the daily fantasy sports industry since its inception has existed on a tenuous legal standing. As Major League Baseball Commissioner Rob Manfred ‘80 put it, “The difference is one’s legal and one is not.”

Technical FoulAs doubts about the legality of FanDuel and DraftKings spread, a number of media outlets began investigating the degree to which skill determines winnings in daily fantasy sports. The collective verdict has been that skill does play a role, but not the type of skill many associate with fantasy sports—that is, applying knowledge of sports.

A Bloomberg headline from September put it bluntly: “You Aren’t Good Enough to Win Money Playing Daily Fantasy Football.” The article, citing anecdotal and quantitative evidence, argues that “sharks” armed

INDUSTRY

HEAD COUNT

FACEBOOK LIKES

TWITTER FOLLOWERS

REGISTERED USERS

MARKET SHARE

CAPITAL RAISED

TOTAL REVENUE

125 90

380,000 300,000

63,000 80,000

350,0001,000,000

69% 31%

$77million

$81million

$166million

$371million

VS

$111 x 41.5MAverage spendingannually

Fantasy sports players

= $4.6billion

TOTAL MARKET VOLUME

41,500,000fantasy sports players

The Fantasy Sports Industry


as San Francisco and Manhattan, there are many top-tier cities bustling with startups in the U.S. and abroad that could see the market valuation expand tenfold.

While WeWork’s fortune is undoubtedly pointing up, there are some market risks to this boom. The tech bubble is on the verge of bursting as the IPO market is screeching to a halt and money-losing startups are being ousted as overvalued while private companies are becoming more enticing for fresh capital. WeWork attracts a majority of tech startups which means it can lose a great portion of the consumer base if the tech bubble bursts. This could mean many freelancers and young entrepreneurs would be forced to move away from WeWork’s incubator-like offices and return to more traditional, professional settings.

Other challenges related to the real estate market are also prevalent. For example, the leases it inked at conception had rents of about $30 or $40 per square foot, yet, according to CompStak, they should cost far more today. Adam Neumann, the company’s founder, says, “There is a ceiling on what he can pay and talks of moving to the margins.” The company’s binge on office space has made potential landlords skittish, as has the brash style of the overly self-promoting company. The rapid expansion cannot be sustained as it takes time to rent and renovate buildings to fit the company’s signature. If the demand rises too high, startups could seek quicker and cheaper office spaces that let them, rather than WeWork, brand themselves fully. The sheer volatility of startups following the 2000 dot-com crash and Uber’s fall from grace more recently has made WeWork a risky operation as they assume fixed-long

term commitments based on assumptions from an unpredictable customer base. The company will either become a developer, or the partner with a developer, Matt Zuckerman postulated.

Furthermore, the industry for cheap, alternative office spaces benefitted from poor economic conditions that led to many professionals to act as freelancers following the 2008 recession. This situation may reverse with improving jobs climate. Some professionals and corporate tenants may have a problem with the extremely casual atmosphere that is prevalent in the offices of WeWork; and thus once the climate for jobs improves, such workers could seek offices elsewhere. The laid-back work culture of many startup customers may also have to yield in the long-term as the business matures and grows. With alcohol being the company’s signature amenity, the informality could bring perils to mundane tasks at such jobs. Furthermore, the client base of up-and-coming businesses may balk at the open lobbies at WeWork that make it difficult to maintain privacy and secrecy.

Another crucial future challenge the company will eventually face is customer retention. Regus, who had possessed the largest market share prior to WeWork’s rise, lacked the synergy and collaboration startups desired, inciting a great migration to their trendy competitor. Regus, however, just announced two new brands in order to win over the younger generations of workers; ThinkKora and Spaces. ThinkKora is geared towards startups, with open lobbies and collaboration-friendly layout, while Spaces is geared towards the corporate lifestyle that promotes professionalism, security, and privacy. If the members flock from WeWork to this rejuvenated, diverse competitor using cheaper rent to gain market share, WeWork would face a serious problem. Thus, concerns about professionalism in the offices paired with clashes of cultures

between lessees, as well as potential market volatility from competitors such as Regus, means that WeWork has plenty of obstacles still to hurdle before it can truly revolutionize the workplace.

The return of Regus and its expansion to two new brands in the market is evidence that WeWork’s business model is working. As a result, new companies are eager to enter to the space currently dominated by WeWork. However, the company stands out among its competitors because of its commitment to its mission of revolutionizing the office space. In order to maintain success, WeWork must stick to its roots in attempting to breed a new type of culture-seeking customer who looks to find meaning in work and a connection to the workplace community. WeWork has thus found a strong customer base in the newest generation of workers and is working to turn the traditional idea of an office on its head. The client base has embraced this change which should translate into a steady

and long term share of the market.

W e W o r k ’ s staggering market valuation is therefore based on the belief that the company is a visionary disruptor who will continue to innovate in order to maintain their market share. Although there have been declining margins on the rent

arbitrage that WeWork relies on as well as increased competition in the industry, the company continues to bustle with deal-making activity. WeWork has signed a dozen large leases over the past two years and other deals are in the works, with backing from investors such as Goldman Sachs and JPMorgan Chase. WeWork has met every challenge encountered thus far and has tapped into a real shift in the way people wish to work. That growing shift is unlikely to reverse, so expect WeWork to be in for the long haul.

Dylan Magee is a sophomore in the Dyson School of Applied Economics and Management.

INDUSTRY


Will WeWork Work Out?By DylAn MAgEE

WeWork is a New York City-based startup that aims to revolutionize

the the billion-dollar office space industry and, as a result, was recently valued at $10 billion. Adam Neumann observed that the workforce was about to undergo a culture shift following the 2008 financial crisis when there was a spontaneous demand for office space to accommodate the barrage of freelancers pursuing their startup dreams. Neumann had the incentive to revolutionize traditional office spaces into communal, incubator-like spaces. While competitors had existed in the market beforehand, most notably Regus, a company offering basic office space leases since the early 2000s, none offered the collaborative atmosphere WeWork prides itself on. This unique space has led to WeWork’s staggering $10 billion valuation—over three times the $3.4 valuation Regus received at its peak in 2001—and will ultimately drives its success against both traditional competitors as well as newcomers to the space.

WeWork sublets office space in major business to various, smaller businesses and independent workers seeking a more social workplace of the next generation. The company prides itself on being a new kind of workplace for the startup-centric generation that has never known a cubicle and aspires to create a place you never want to leave—with ping pong available and kegs on tap throughout the day, in addition to scheduled social events for the lessees. It is a revolutionary concept to galvanize their own brand of workplace that is as much a social act as it is a space itself. The company further attracts customers by covering expenses such as furniture and cleaning, as well as providing intangible benefits through in-house networking that can foster business relationships between members.

The successful WeWork model has now grown to 29 locations in major U.S. cities as well as overseas—in cities such as London and Tel Aviv. The workplace

company with its own mobile app has now intentionally placed properties in up and coming neighborhoods in major cities, such as Washington D.C.’s Shaw neighborhood, in order to introduce itself and subsequently dominate the area’s market. After leasing nearly 1.6 million square feet in New York City, WeWork has

more net capacity than the Empire State Building and saves nearly 25% annually for workers. WeWork provides genuine value as they have multifaceted benefits ranging from an internal social network with healthcare benefits and several legal services for lessees use. Even if WeWork were to be eventually outpriced of creative havens such

INDUSTRY


capacity for particularly dramatic price increases. Traditionally, after a brand-name drug loses its patent, a generic version of the drug can become available at a significantly lower price. Generics thus play a key role in the affordability of American’s prescriptions. Yet it is within the generic market that companies like Turing have come under fire for attempting to monopolize products with little consequence when prices are raised. The systemic flaws run deep: as Dr. Peter Bach, Director of Health Policy at Sloan Kettering writes, “It really is a system where there’s no downward pressure on drug prices, at least for the vast majority of drugs in the specialty space. There’s no natural binding mechanism on price, such as using value. Competition does occur sometimes, but it’s rare and reasonably ineffective.”

Barriers to market entry, such as the FDA’s expensive and time-consuming approval process, make it less likely

a competitor will enter the field. Additionally, if the drug treats a condition that only affects a small number of people, as with most specialty generics, the likelihood of sufficient market demand to justify entry is even rarer. It is worth noting, however, that dramatic price increases similar to those observed in 2014 are less likely going forward. According to IMS executive director Murray Aitken, the next few years will see the expiration of more brand-name drug patents, leading to an increase in lower-cost generic alternatives. At the same time, Aitken expects the usage of “pricey and widely used hepatitis C treatments” to stabilize after its surge over the past year.

While critics attack companies like Turing and Valeant for raising prices without creating improved products for patients or added benefits for the

healthcare community, this is obviously not true of drug makers as a whole. As James Surowiecki writes in The New Yorker, “Monopolies are inherent to the drug industry in the U.S.: patents,

in effect, are temporary monopolies. But we have patents because they give drug companies an incentive to invest in developing new drugs.” Industry-backed reports estimate that it costs on average $2.6 billion to develop new prescription drugs. For drug makers investing heavily into research and development, policies like those proposed

by Hillary Clinton to force companies to reinvest a fixed level of their profits into R&D seem misdirected. Additionally, there is nothing to suggest most pharmaceutical companies are coming up short in their R&D efforts; if anything, many continue pouring resources into critical stages of development despite the lengthy and complicated approval process. Some experts, like Amitabh

Chandra, Harvard’s Director of Health Policy Research at the Kennedy School, call Clinton’s proposal “astonishingly naïve” as it could incentivize wasteful research spending without combatting the causes of high drug prices. A multi-step approach is needed: to prevent the type of price rises seen in cases like those of Valeant and Turing that stifle competition while also promoting the development of better products.

Instead of vilifying pharmaceutical companies or attempting to smack a one-size-fits-all regulation on an incredibly diverse industry, policymakers should recognize the importance of viewing each drug based on both the difficulty of its creation as well as its benefits. Through the creation of practical methodologies that can determine the so-called ‘medical value’ of a new drug, prices can be more

effectively negotiated, leading to the comprehensive and consistent system of negotiation that the U.S. direly needs. Such a system can effectively respond to profit-boosting abuses in both brand-name and generic drug pricing, and it will make it significantly more difficult to arbitrarily set balloon prices for a drug that disregard the cost of creating and marketing the drug or its innovative qualities. A value-based methodology for pricing shifts rewards toward those producing novel drugs and therapies, saving Americans money and incentivizing continued progress in pharmaceutical development.

Dr. Bach as well as academics such as Professor Chandra have been acting to promote a form of this value-based pricing system in the U.S. Bach explains that while such a system can potentially increase the government’s role in the sector, it effectively enables the industry to behave in a way that more closely resembles other goods markets by prioritizing free-market principles like heightened competition. Bach explains, “A system where we reward companies for being good at research, for cracking the code, for developing a new product, or for opening up a new avenue: that makes a lot of sense. That’s what every other market looks like.” By bringing drug makers to the table for actual negotiation centered around a consistent value-based pricing methodology, the industry can gain a more productive relationship with regulators and move through the drug-approval process with heightened efficiency.

Rhetoric that demands a continuation of the status quo on one side and inflexible regulation on the other will fail. Neither allows the government to play a role in curbing abusive drug pricing behavior, nor do they lead to a more competitive and innovative pharmaceutical industry. Only through letting market forces correct rampant prices can the American family pay a reasonable amount for pharmaceuticals in a regulatory climate that prioritizes medical value and working with and not against an industry where success is a matter of life and death.

Nicholas Rawlinson is a senior in the College of Arts and Sciences majoring in Government.

INDUSTRY

$1010American

pharmaceutical spending per capita

$540OECD average

A value-based methodology for pricing shifts rewards toward those producing novel drugs and therapies, saving Americans money and incentivizing continued progress in pharmaceutical development.


BY NICHOLAS RAWLINSON

It has been a challenging few months for the public relations departments of the

pharmaceutical industry. Attacking “Big Pharma” over prescription drug prices is nothing new, but the severity and extent to which criticism has increased of late continues to escalate. Over the summer, the industry received a host of negative press when the Senate questioned drug maker Valeant for its decision to raise the price of a common cardiac medicine, Isuprel, from $215 to $1,246 after acquiring the rights to the drug. Then in September, those skeptical of pharma’s pricing strategies received the gift of a lifetime when Martin Shkreli, the CEO of Turing Pharmaceuticals and a former hedge-fund manager, announced that his company was raising the price of Daraprim, a 62-year-old drug used by AIDS and cancer patients, by nearly 5,000%.

The ensuing scandal saw Shkreli attacked from all sides of the media and political arena, with Hillary Clinton calling the behavior “price gouging American families” and Donald Trump labeling Turing’s decision “a disgrace.” Following public outrage directed at both Valeant and Turing, early October saw Valeant receive two federal subpoenas seeking information on its pricing, distribution, and patient support practices, while prosecutors have

also opened investigations into Turing’s pricing practices. With the cost of drugs becoming a cause célèbre for lawmakers on the left, including aspiring Democratic nominees Hillary Clinton and Bernie Sanders, as well as a host of state and federal prosecutors pursuing pharma companies with newfound intensity, the issue shows no sign of fading. While these Presidential candidates have recently

unveiled their plans for taking on the industry, some prominent academics and medical experts are criticizing the efficacy of their policy proposals, and have called for a nuanced view of the issues at hand.

Public disapproval of the pharmaceutical industry is growing, with a Gallup

Poll in September showing only 35% of Americans holding a positive view of the industry, compared with 40% in 2014. Behind this is the public’s negative perception of exorbitant drug prices and the questionable ethics that cause pharma companies to raise them. The U.S. certainly is an outlier when it comes to drug spending. American pharmaceutical spending per capita is $1,010, compared to an OECD average of $540. In terms of this expenditure, the second-highest ranked country, Canada, spends about 40% less per capita than the U.S. While this has been the case for some time, 2014 was also an exceptional year for drug spending.

U.S. prescription spending increased 13.1% in 2014, the largest annual increase since 2001 according to a report from IMS Institute for Healthcare Informatics. The largest factor driving this surge in spending was the price increases for medicine—6.5% for traditional medicines and 25.2% for specialty medicines.

The U.S. differs from most developed countries by not having a system in which the government can regulate drug prices. In the United Kingdom, where brand-named patented-drugs cost half as much as those in the U.S., the British Department of Health formally negotiates drug prices with the Association of the British Pharmaceutical Industry (ABPI), which then determines how much the National Health Services charges for the drug nationally. According to the ABPI, the basis of the pricing mechanism is a “limit on the level of profit which companies can make on sales of branded medicines.” Within this limit, companies can only change prices of their drugs in line with certain considerations agreed upon with the Department of Health. The British Government will only agree to pay for a drug when they feel that the price is justified by its benefits and will sometimes refuse to purchase a drug it believes to be priced too high.

This type of bargaining power with pharma companies is virtually nonexistent in the U.S., where there is no centralized buyer. Instead, the U.S. has many independent insurance groups and plans that individually negotiate prices. Consequently, they lack the type of bargaining power that leads to lower prices. The lack of negotiating leverage helps explain why American insurers typically accept the price of a drug set by the manufacturer. In fact, Medicare, one of the largest prescription purchasers in the U.S., is actually prohibited from negotiating drug prices at all.

Without proper mechanisms to negotiate on pricing, the sort of large and seemingly arbitrary price surges investigated by Congress occur within legal boundaries. In subindustries where competition is limited, such as for specialty drugs, pharma companies have greater

The Cost of DrugsAn introduction to the bizarre way that drugs are priced in the United States.

INDUSTRY

Valeant’s price of Isuprel now:

$1246Before acquisition:

$215


When a startup goes public, one of the largest changes to its shares is a dramatic increase in liquidity, or an asset’s ability to be sold quickly without substantially reducing its price. Publicly traded shares are usually quite easy to sell at their current value, as they are frequently bought and sold. Companies that stay private, on the other hand, pose a problem to venture capitalists: if liquidity remains low, then selling their share at a profit is nearly impossible. To make matters worse, a venture capitalist trying to sell his or her stake suggests declining performance, making other investors less likely to buy. Current valuation overshoots only exacerbate this problem: who would buy your shares if they were overvalued in the first place? Thus, as avoiding a IPO becomes the norm in Silicon Valley, the eagerness to invest in new startups could diminish.

More concerning, however, is what could happen to startups that have already been through a few rounds of funding. If a startup has a “down round” of financing and fails to attract new investors, then its value is bound to decrease markedly. In some cases, this does not pose a significant threat to investors. Usually, affluent investors provide capital in exchange for convertible debt, so if the startup faces a down round, then the investors’ proportion of shares increases to compensate. On the other hand, startup founders are not so lucky; in a down round, their proportional stake decreases. If the down round is significant enough, the overwhelming dilution of founders’ stakes may push them to leave their startups for a new venture.

Such a scenario is far from just hypothetical. Staying private, the deal-hunting startup LivingSocial followed a very similar path. Founded by Facebook developers, LivingSocial showed a lot of promise in its initial stages: its basic premise was to be a provider of daily deals, similar to Groupon but focused

in local markets. In 2012, the startup had 50 million users and reached a peak valuation of $5.7 billion. The following year, the company received a purported emergency bailout of $110 million, primarily from Amazon. “The company was basically handed over to the funders,” said Adriana S. de Lozada, a senior analyst at investment research firm PrivCo. “The stock options of employees and stock of the founders are practically worthless.” Although LivingSocial avoided bankruptcy, its ownership changes left the founders with little capital, and investors undoubtedly felt the blow of the dramatic fall in valuation.

Private companies like LivingSocial highlight the biggest difference between today’s bubble and its dot-com predecessor: in the dot-com era, many more companies were publicly traded, and the average investor took a larger hit when the bubble popped. Nowadays, with more and more companies staying private, public investors are less likely to lose their money. However, the public has access to some privately traded tech companies through mutual funds, which pool money from many investors to purchase securities. The PowerShares QQQ Trust, for example, is one of the

most popular mutual funds on the market, and invests quite heavily in the technology sector. QQQ’s recent dramatic growth has some investors worried. “If this behavior continues, it is bubble-like trading activity,” said Mike O’Rourke, chief market strategist at Jones Trading. “Going further back in time, the [last] instance of such activity was the historic date of March 24, 2000,” the peak of the dot-com bubble.

Private or public, the lofty valuations in Silicon Valley hint at unfortunate consequences. One can look again at the case of Snapchat: if the startup stays private, it risks following in the footsteps of fallen giants like LivingSocial, should it ever face a down round. But if Spiegel plans to take Snapchat public, an entirely different set of problems could await him. Much like the dot-com bubble, a sudden spike in liquidity could cause doubtful investors to pull out and the company to crash. Although experts remain divided on whether the current bubble will ever pop, the topic is far from needless alarmism. On a company-by-company basis, the tech industry will undoubtedly continue to see soaring prices followed by devastating crashes. Whether a larger domino effect will arise remains to be seen. If 2000 is any indication, however, such a risk remains a very real possibility.

Bjorn Bjornsson is a sophomore in the College of Arts and Sciences majoring in Biology and Spanish.

In 2012, LivingSocial had 50 million users and reached a peak valuation of $5.7 billion. The next year, the company received a purported emergency bailout of $110 million.


Below: Evan Spiegel, co-founder and CEO of Snapchat

INDUSTRY

In late May 2015, Snapchat’s raising of $537 million in new venture capital

funding reportedly put the company’s valuation at up to $16 billion. This puzzled some investors; even when Google offered to purchase Snapchat for $3 billion in 2013, many deemed the valuation irrational. At the time, Business Insider Editor-in-Chief Henry Blodget speculated, “for Snapchat’s $3 billion valuation to be reasonable, you have to assume that Snapchat will some day generate, say, $500 million of revenue and $200 million of profit.” In the first eleven months of the following year, however, Snapchat only generated $3 million in revenue, and racked up $129 million in expenses. Now that Snapchat has more partnerships with news and entertainment outlets, along with increased opportunities for advertising, the startup is aiming for $50 million in revenue for 2015, according to Re/code. Although this would be a considerable improvement, $50 million is one-tenth of the revenue Blodget deemed necessary when the company was valued at less than one-fifth of its current value. Snapchat’s lofty valuation doesn’t stand alone—

Uber is valued at up to $50 billion with only $415 million in revenue last year, and Airbnb is valued at approximately $25.5 million with an estimated 2014 revenue of $423 million. Such markedly disproportionate valuations are becoming increasingly common, and have some investors worried about a bubble in the tech industry.

The last time companies were valued this high was at the turn of the century, when the dot-com bubble was about to pop. In the heat of the dot-com craze, Yahoo acquired GeoCities, arguably the first social network, for $3.6 billion in 1999. Although GeoCities was the third most-visited site on the internet, it failed to become profitable and was closed in 2009 after years of stagnation. The hallmark of the bubble, however, was Pets.com, which went from IPO to liquidation in 268 days. In its first fiscal year, Pets.com saw a revenue stream of $619,000, yet spent $11.8 million on advertising. Pets.com eventually raised $82.5 million in an IPO. Nine months later, the company had crashed. Pets.com’s tale of woe does not stand alone in the dot-com era, and it shares troubling

similarities with Snapchat’s current fiscal situation: poor revenue streams, high expenses, and questionable valuation are shared qualities.

Back in the dot-com era, rapidly successful companies like Snapchat would now be preparing to go public. Recently, Snapchat’s chief executive Evan Spiegel seems quite open to the idea. “We need to IPO. We have a plan to do that,” said Spiegel last May, who has yet to disclose the IPO’s timing or rationale. The 24-year-old’s interest in an IPO clashes with his peers: tech IPOs are at a seven-year low, with only sixteen companies going public so far in 2015. Staying private may appear prudent—startups could receive funding from venture capitalists instead, and avoid the risk of going public only to watch stock prices fall drastically. Recent high-profile cases like Twitter, whose share price quickly shot up after going public but has since fallen 59%, may deter today’s companies from doing the same. On the other hand, tech companies now staying private pose a new financial predicament to the industry.

FROM STARTUPS TO SHUTDOWNS

Following valuation trends from the dot-com era, Silicon Valley faces the possibility of another bubble.

BY BJORN BJORNSSON


Snapchat’s Valuation StoryIn 2013, Google offered to buy Snapchat for $3B. Here’s what a company would typically have to achieve for that level of valuation.

Company X

VALUATION: $3B VALUATION: $3B

$500M

$3M

Snapchat

$200M

Revenue Profit

$200M

-$129M

RevenueProfit

What was the most rewarding part of your Cornell Experience?

Jake Miller: For me, it was the exposure to be in one institution where you could stumble onto somebody that is passionate about a field you’ve never heard of. Just being able to learn from them, sharing that equal passion that you may have for your own industry, and looking at the potential to collaborate. I would constantly talk to people that were engineers or architects just to look at how they think about the world because they may be solving different problems but the way they think is so unique. This definitely prepared me to not only better work with different facets of people in the business industry, but also to be able to better empathize with people from other cultures or that may just approach a very similar, or even the same, task in a completely different way because of how they like to approach what they love in life.

How did you begin your journey with DINE?

JM: Unfortunately, after multiple interviews, emails, follow-ups and visa issues, I was left in between my last summer and didn’t have anything to do. Through very good friends, I was contacted by some gentlemen in venture capital. I really didn’t know what venture capital meant at that point in time. And they had an idea for something regarding restaurant discovery. We wanted to eliminate that noise provided in a platform that was designed forward, but best represented a city’s food scene and only offered a curated experience for restaurants. Regardless of what that experience was, we wanted people to find exactly what they were looking for without any bad choices.

What were some factors that you considered before deciding to make the app free? Where did your profits come from?

JM: The app was always destined to be free. There’s a lot of high barriers to entry with paid apps. That drop-off is so high that having a paid app in this day and age is very non-advantageous and I would not recommend anyone going about doing it for most problems that should be solved. In terms of a revenue source for Flavour as an app, we raised venture money, so we did not actually have a revenue model that was in place. It turned out to actually last the entire lifecycle of the Flavour app, up until the acquisition with Tasting Table.

What are the biggest challenges you faced during the development stage and after the launch of DINE?

JM: It’s interesting because I basically came onto the developmental stage of a tech startup without very much technical experience. I was not proficient in any other languages besides Spanish. I had to figure out how to communicate with these developers, how to translate an idea that we have into the mechanics of how mobile application is going to work. So, for me personally, it was learning how to think again in a new way. You can’t talk to a developer the same way that you talk to somebody about a restaurant or hospitality related issue. It’s just a very methodical, different mindset.

For the company and the products as a whole, the largest issue I think that Flavour faced externally was creating an authoritative voice as in “this is where you should go eat. Trust us.” That’s essentially building a brand, and it’s a brand which, again, was in a space with a lot of noise. It’s about, “how do you get the user to truly understand that this is the best app to accomplish that goal?” You

can do that in person and I was so used to being able to make these decisions in person with restaurant issues. But how do you use that 45 second experience when someone may download an app and open it and then either they like it or they don’t? So that was very, very challenging for us.

However with the launch of DINE, it was a matter of transferring the brand reputation of Tasting Table’s content on other platforms to an exclusively mobile experience. There are still very high barriers for doing this, but it’s not as multi-dimensional of what was required to create and grow the brand of Flavour.

Do you drive users to DINE as opposed to competitors through just reputation and word of mouth, or do you invest in advertising?

JM: We actually did a partnership with Tasting Table before any talks of an acquisition happened, and the conversion was stellar. They have a very loyal and engaged audience, and we saw the highest conversions from those opportunities rather than paid ones. This is simply because of that barrier between, not only opening an email, but tapping on a link in your phone, going to the App Store and downloading it, from just a random brand presence that you may see somewhere on Facebook or Instagram or anything else like that. Tasting Table is a trusted publication that they’re already going to and they, again, have that authority for their loyal base to say, “Hey, we actually really believe in this product and we’ve used it. We think, because you like us, you’ll also like them.” So when that really aligned, not only with our user base but with the experience that those readers were going towards, it converted very, very well for us for downloads.

Stay hUNgRy aNd ExpLORE EVERy aSpECt Of thIS CampUS BECaUSE

It REaLLy COmES BaCk tO that mINdSEt aNd hOW OthER pEOpLE

thINk IN REgaRdS tO WhatEVER pROBLEmS thEy’RE faCINg.


MILLERJake

EXCLUSIVE INTERVIEW WITH

Jake Miller is on the Product Team for Tasting Table, where he works with DINE by Tasting Table—a foodie app that allows users to discover a city’s best restaurants. Jake

graduated in 2014 from Cornell’s School of Hotel Administration; while a student, he met venture capitalists and was recruited to join Flavour. Recently, Tasting Table—a website and newsletter for culinary enthusiasts—acquired the app and relaunched the product as DINE by Tasting Table.


Product Team at Tasting Table


ALL IT TAKES IS A YEAR. Crude oil prices have tumbled 66% from a

high of $118 per barrel in mid-2014 to near $40 per barrel in 2015.

The major reason behind such a sharp decline in oil prices is Saudi Arabia’s refusal to curb over-production of oil. This over-production has led to a global oil glut that has devastated heavily oil dependent economies with fairly modest foreign exchange reserves such as that of Venezuela. In essence, the Saudis are trying to price their competitors out of the oil market.

While Saudi Arabia, the world’s largest exporter of oil, can afford to meet oil demand at the prevailing market

price because of its enormous $700+ billion reserve fund, other countries, even other OPEC members, certainly cannot. Russia, a non-OPEC country blessed with abundant energy reserves in the form of the world’s largest known natural gas reserves, second largest coal reserves, and eighth largest oil reserves, is a perfect example of a nation that simply cannot act as the Saudis do. In spite of such a plentiful and diverse bounty of natural energy reserves, Russia loses $3 billion every time the price of oil falls by a dollar. Still, it cannot afford to cut oil production to

reduce exports in a bid to drive prices up. By reducing oil supply to European countries that are heavily dependent on Russia to meet their demand, the nation would be alienating itself from its trading partners. Based on data from Russia’s

Federal Customs Service, sales of fuels accounted for 68% of Russia’s total export revenues in 2013. This means that losing partners to a competitor is not an option for the Russian Federation—especially when that competitor is Saudi Arabia, whose cavernous

pockets enable it to withstand low prices for the foreseeable future with relative ease.

There is thus a prevailing paradox in the global oil market. The economic principles behind “excess supply” are sound: competition amongst sellers lowers price. Moreover, in theory, a reduction in the price of oil should then lead to a decrease in the number of suppliers, returning the price to equilibrium levels. But for countries like Venezuela, which attains 96% of its dollar earnings from oil exports, dropping out of the oil supplier’s survival race is simply not an option. So while basic economic theory suggests a decrease in quantity supplied should occur soon, in reality what is happening is that the total quantity supplied continues to increase, thus creating a senseless oil glut. This glut

Crude Oil Conspiracy: Starring Saudi ArabiaBY AVIROOK UPMANYU

Above: A man gazes at Saudi Arabia’s oil reserves, the second largest in the world. Estimated to be 268 billion barrels, the reserves are about one-fifth of the world’s total conventional oil reserves.

-66%Change in crude oil prices from 2014

to 2015

INDUSTRY

How has Flavour changed since the Tasting Table acquisition?

JM: A lot of things did change with Tasting Table after the acquisition. Definitely more voices in the room. It definitely changed our process in terms of how we are going to onboard restaurants to the platform now that we have a wonderful editorial team to sort of work and collaborate with. Also, it did solve the problem of how a revenue component would be introduced to the app. Once you’re part of a larger company, you don’t have to worry about making money independently. So we can rely on the revenue streams of Tasting Table as a whole. While we do get to have more resources to accomplish what we always set out to do, we get exposed to additional problems that maybe we are best equipped to solve simply because of challenges that we may have faced with Flavour that Tasting Table just hasn’t been exposed to or had the know-how to fix. So our roles within Tasting Table grew with the product and with the other people that are now involved in these decision making processes.

How important is the Cornell network?

JM: It’s a very exciting time for entrepreneurships and engineering, especially with what’s going down at Cornell Tech. The east coast venture side of things is very small, but also Cornell has a lot of stake in the game in terms of VC, entrepreneurs. So, to be honest, DINE would not exist without the Cornell network because we were introduced through a Cornellian that I met here and somebody else met during his time in D.C. and connected on that point. It’s a very exciting time in the next five years for Cornellians, regardless of whether they’re strictly in tech or not.

Do you encourage entrepreneurs to start their companies as soon as possible or to learn from internships or jobs first?

JM: I definitely think that there is so much value in terms of an internship experience, and there’s so much value in the mentorship relationship. I’ve had dozens of mentors and they grow with you. Sometimes you

outgrow them and you find more. That internship experience doesn’t have to be industry specific, but finding someone that you really admire their work or how they think or the things that they’ve built, is imperative. I had mentors that better fit for the restaurant industry and now the amount that I’ve learned from one of my cofounders at Flavour, I consider him a mentor as well in certain regards. So I say, yes, the internship to validate and better give you an understanding of real world processes is imperative before trying to tackle something. That doesn’t mean there’s a certain amount or sort of a threshold you have to pass in order to start a company or begin solving a challenge. But, again, it’s exposing yourself to a multitude of different experiences which will only help at the end of things.

If you had one piece of advice for an aspiring entrepreneur at Cornell, what would it be?

JM: Stay hungry and explore every aspect of this campus because it really comes back to that mindset and how other people think in regards to whatever problems they’re facing. There might be something that’s going on in the Fiber Science department of Cornell that your studies in the Hotel School, or even in Engineering, can really optimize or even fix as a process. It’s not really about being industry specific, but it’s about using your skill set to sort of solve challenges that you may never have been exposed to. It’s about maximizing that exposure so you can help as many individuals and solve as many problems as possible.



After the Student Assembly and the Cornell

Campus Planning Committee’s provisional approval of the project’s $320,000 funding grant, President Elizabeth Garrett gave the final and official authorization for the opening of Anabel’s Grocery, the proposed student-run grocery store.

Since February of 2015, a team of Cornell undergraduates has been intensively developing an initiative to tackle an issue on Big Red’s campus – food insecurity. In hopes of being a crucial part

of the overall solution, the student group plans to operate an on-campus grocery store in the basement of Anabel Taylor Hall, located at the corner of Central Avenue and Campus Road.

Origins: Food InsecurityThe topic of food insecurity has

become more evident across college campuses throughout the nation. CNNMoney reports that at least 100 food banks have been opened at American universities in the past six years to help serve the rising number of food insecure college students. These figures suggest that students have limited and unreliable access to affordable food on college campuses, causing them to skip meals or make unhealthy dietary choices to save money and time.

The online Cornell PULSE survey conducted in the spring of 2015 states that 8.4% of its 4892 student respondents reported skipping meals or not having enough food to eat because of financial constraints; 5.1% often and 3.3% very often. Another 13.8% of students reported skipping meals occasionally for the same reasons.

For Robert Hendricks ‘17, co-director of Anabel’s Grocery, the issue has personal significance. In high school, he led programs to combat hunger and food insecurity for low-income areas in Cleveland. He says that the PULSE survey is one of the most comprehensive studies of food and security issues on college campuses and that his team has also “gone out and collected dozens of student testimonies on food and security issues”.

The true reasons are uncertain, but some possible explanations for why students are going hungry or following unhealthy dietary patterns may be a result of increased food prices, insufficient numbers of available or convenient eateries, unaffordable alternatives, and food illiteracy. When shopping for groceries, Cornell students must typically take a 15-minute bus or car ride to Wegmans or Target. While there are also multiple

dining halls on campus, some students opt to forgo or scale down their meal plans in favor of finding cheaper options.

The Anabel Grocery Initiative

The initiative’s goals are wide-ranging, centered on affordability, accessibility, nutrition, and education.

The mart intends to sell a healthy and diverse selection of groceries including fresh seasonal produce, staple foods, culturally specific foods, frozen meats, dairy products, spices, and condiments. In addition to the store, Anabel’s will provide pot and pan rentals as well as free cooking

lessons, meal planning classes, and budgeting workshops.

To further address food insecurity, the organization plans to offer a 10% subsidized discount for students that qualify for aid. The store will set aside a subsidy fund collected from profits and donations to cover losses from this discount program. A concern commonly raised by its critics is the potential for fraudulence on need-based aid when

“I think access to healthy and

affordable food is a fundamental right.”

-Emma Johnston ‘16

8.4%of Cornell students

reported skipping meals or not having enough food to eat because of financial

constraints


FINANCE

has benefited countries that are net importers of oil, like India and China, but has harmed suppliers like Russia, Venezuela, Nigeria, and Colombia. So while Russia loses $3 billion every time the price of oil tumbles by $1, China saves $2.1 billion and this adds up to a $60 billion reduction in its annual import bill. To a certain extent, China is winning.

The U.S. also stands to benefit from this unique set of circumstances, but only

marginally. Being the world’s second largest importer and largest producer of oil at the same time somewhat negates the effects of falling prices. Low oil prices have a positive impact on the American economy from the perspective of its import bill but on the other hand they also simultaneously reduce the profitability of extracting oil from deposits like the shale reserves in the Bakken formation in North Dakota. The impact of low oil prices may soon become apparent in the economy of North Dakota, a state where the unemployment rate was at a nation-wide low of 2.8% in September of 2015, symbolic perhaps of its dependency on oil production.

At the other end of the spectrum, while Saudi Arabia appears to be holding strong for now, it will not forever. Clearly, losing $10 billion a month in foreign exchange reserves to maintain low oil prices is unsustainable. The fact that Saudi Arabia is now being forced to borrow money in the international financial markets for the first time since 2007 highlights the sort of stress its economy is under. For a country that prides itself on having the third most foreign exchange reserves, that action is a problem. Even Saudi Arabia’s gulf allies, such as Kuwait, are staring fiscal deficits in the face for the first time in nearly twenty years.

Now contrast Saudi Arabia to Venezuela. If a currency reserve

juggernaut like Saudi Arabia is showing signs of economic stress, then one has to wonder how Venezuela, with its humble $20 billion in foreign exchange reserves, has held out? The answer is that it has not. If long bread lines and fist fights to steal already stolen food are considered to be symbolic of ‘holding out’, then yes, Venezuela is doing well; otherwise, there are serious problems that need to be carefully resolved as soon as possible. For instance, Venezuelan food imports in the first quarter of 2015 are down to $1.5 billion, that is $1.3 billion less than the $2.8 billion in food imports in the first quarter of 2014. This has led many analysts to predict Caracas to become home to the world’s 57th instance of

hyperinflation and just the 2nd in the 21st century. Clearly, Venezuela is on the brink,

with inflation rates at a staggering 68.5% in December 2014 and food inflation even higher at 102.23%, the common Venezuelan citizen is struggling mightily. The impact of such a rapid decrease in the value of the Venezuelan Bolivar has reduced the value of its largest currency denomination to a scandalous low of $0.18.

While this situation may already seem bad, there is a high probability it will get worse. As the Chinese economy

inevitably slows down, the world’s second biggest consumer of oil will scale back its demand. This, coupled with increasing American self-sufficiency further widens the demand-supply gap in the international oil markets. On top of a reduction in demand, there will also be an increase in global oil supply as American and Canadian oil floods into global markets in the near future.

So what does all this mean? It means that there is a very high chance the Venezuelan economy may default in the near future. This has resulted in investment in 5-year Credit Default Swaps on the Venezuelan Economy being at its highest point since the beginning of the financial crisis of 2007. So, while bigger and more powerful countries with political clout such as Russia are relatively safer than Venezuela, if current oil prices persist, nobody is safe enough to make that call with any hint of sincere confidence, let alone bet on it. Not even Saudi Arabia is safe, the leader of OPEC and the country that started it all.

Avirook Upmanyu is a freshman in the Dyson School of Applied Economics and Management.

INDUSTRY

RussIA lOsEs $3 BIllIOn AnD CHInA sAVEs $2.1 BIllIOn

EVERy tIME tHE pRICE OIl fAlls By $1.

Saudi Arabia Trounces Venezuela(2013-2015)

Price of crude oil

Saudi Arabian crude oil production

Venezuelan crude oil production

Oil prices begin to slide as the impact of increased production from non-OPEC countries is felt

As prices drop, Saudi Arabia increases production to gain market share

The fall accelerates as OPEC refuses to curb production to relieve the glut

10%

0

-10%

$54.15

$114.01

CARACAs COulD BE HOME tO tHE WORlD’s 57tH InstAnCE Of HypERInflAtIOn.


All About Anabel’s:Facts, Opportunities, and More

BY TODD WEI

for consuming healthier foods grows, Anabel’s Grocery may be setting itself up as a reliable food provider on campus, along with the added bonus of its 10% discount for qualified students.

Additionally, this initiative provides abundant programming opportunities to teach students valuable life skills such as budgeting and cooking. These programs can help students lead healthier lifestyles, contributing to higher overall success on campus. Plenty of published literatures, such as those from the American Journal of Public Health and the Center for Disease Control, show that healthy students are better learners and that poor nutrition leads to lower levels of physical and academic performance.

According to Johnston, “access to healthy and affordable food is a fundamental right. Creating a low-cost grocery store that will also help students learn to cook and gain valuable experience running a social business fulfills both a social and educational mission.“

Outside of its social dimension, Anabel’s Grocery provides future opportunities for students to develop real, professional skills by working for a non-profit organization. Since most of the workforce is expected to consist of volunteers, there would be room for students to gain practical experience in various business functions including finance and advertising. The store also plans to hire paid work-study individuals to ensure accountability throughout the year.

Another educational aspect of the store is that it will be partnering with undergraduate courses to help students learn about the store’s operations and its social mission. So far, students that are enrolled in two courses, Education 2610 and Design and Environmental Analysis 2700, have engaged with Anabel’s Grocery through group projects and health impact assessments, respectively.

By having partnered with various food distributors, local businesses, and outside organizations, Anabel’s could also be opening up networking opportunities for interested students and student-led groups. The team may

even find it rewarding to work with other organizations that are fighting food insecurity in the community such as the Cornell Food Recovery Network. In such a way, multiple efforts working towards a similar goal could prove to be very effective and pave the way for more student involvement.

Naturally, only time will tell how Anabel’s Grocery will fare if its operations begin as early as next semester as planned. Moving forward, the team will need to be

perceptive and organized because more significant challenges await them. For Johnston and Hendricks, access to healthy and affordable food is a “fundamental right”. The sentiment shared by the whole team is that Anabel’s Grocery is a social project worth fighting for and the best way to begin resolving food insecurity at Cornell.

Todd Wei is a junior in the College of Agriculture and Life Sciences majoring in Biometry and Statistics.


FINANCE

applicants complete the questionnaire. Hendricks disagrees with such concerns: “Being fraudulent on need based aid is a gross misconception”, pointing to national data to show that such acts of dishonesty are unlikely. Still, Hendricks says that if the team deems it necessary, there are provisions to audit applications to determine a student’s eligibility.

Former President David Skorton disapproved of the project proposal submitted in April due to funding concerns and lack of financial detail. However, after a summer of planning and networking, the Anabel Grocery team found greater success with their fiscal plan in the fall. One of the most scrutinized issues was overcoming large overhead costs, so the team has tried to minimize initial startup and renovation costs. The Anabel Grocery team has now received approval for its $320,000 grant request from the Student Assembly’s Student Helping Students Fund, and most of it is expected to cover the design and construction of the store’s rental space.

Anabel’s Grocery is also sponsored by the Center for Transformative Action, an educational 501(c)3 organization, which means the project has been approved as a non-profit organization that does not operate for the benefit of private interests.

As a CTA organization, the store is tax-exempt, freeing it from federal income tax liabilities. Additionally, Cornell University Religious Works, the rental owner of Anabel Taylor Hall, has agreed to offer the store’s space rent-free for five years and utilities-free for one year.

Further, as a means to better understand the nature of the business, the Anabel team has reached out to their advisory board and to students at other colleges that share a similar vision for

combating food insecurity. “We work closely with Georgetown’s student-run grocery stores, The Corp, to develop our plans for operations and succession. We’ve also worked with Student Agencies here on campus, as well as the UC Berkeley Food Collective and the UC Davis Food Pantry” writes co-founder Emma Johnston ’16 in an email about collaborating with other student-run, college grocery stores.

A Grocery Store on CampusAnabel’s Grocery aspires to be known

not only as a provider of healthy and affordable goods but also as a resource for food insecure students to become self-sufficient. The convenience of an on-campus grocery market could appeal to a significant proportion of students who regularly travel off campus for groceries or purchase a campus meal plan.

The promise of a nutritious selection of groceries could also be appealing, as the store will be selling mostly healthy products sourced from local farms and wholesalers. As the global trend

Overcoming overhead costs will be the

primary assessment for how the mart will fare in the long-term.


How has being a graduate of Cornell University and the Dyson School impacted your career in sales and marketing?

Reggie Fils-Aime: It was helpful to be active with a number of professors at the Dyson School, helping as a teaching assistant and a grader. It was through those relationships that I was afforded the opportunity with my first job out of

school with Procter & Gamble. Executives from Procter & Gamble reached out to me because of the recommendations of professors in the Dyson School, and it was through that recruiting process that I was offered a position at P&G as an undergrad that typically would go to graduate students. And so right off the bat my opportunity at Cornell, and specifically within the Dyson School, afforded me career options and the opportunity to prove myself and to make things happen, and I’ve never looked back. So the relationships, obviously the education, the things that I learned in the classroom and out of the classroom have been invaluable throughout my 30 plus year career.

Is there anything you would change about your time at Cornell?

RF: If I have a regret, it’s that I wasn’t diverse enough in taking classes throughout the school and throughout the University. Said another way, I think all of the AEM classes provide a value to the undergraduate community, but my strong encouragement would be to go beyond what’s offered in your major, to stretch yourself and to use your time at Cornell University to expand your mind.

As the first American to hold the position as the President and Chief Operating Officer of Nintendo America, how have you assimilated or challenged the Japanese way of conducting business? What are the major differences you see between the two cultures?

RF: I’ve been at Nintendo coming up on 12 years and I would say that Nintendo is not a classic Japanese company. It’s headquartered in Kyoto, the old emperor’s capital, not Tokyo. It derives roughly 80% of its revenue and profit outside of Japan. Its successes have been global in nature and so it is not a traditional Japanese company. Secondly, I would say that I’ve been effective here because I have brought a sensibility and a perspective to the company that is global, and it values not just an American way of doing business, but the Japanese, European, and Latin

American ways, and it values a global orientation to meeting consumer needs in a hugely powerful way everyday. And so I don’t often think of myself as an American leading the North American arm of a Japanese company. I think of myself as a global executive driving the global results for a global company.

Mattel recently launched the “Imagine the Possibilities” Barbie ad to encourage girls to dream about their future careers. How are you expanding the Nintendo consumer base “beyond the typical teenage boy and into a much more diverse audience,” especially marketing to young girls?

RF: Nintendo has a core philosophy that our products are truly for everyone, ages 5-95. Girls tell me that their favorite games are the Legend of Zelda, Mario, Donkey Kong, or Pokemon. We have always believed in driving product appeal across all ages, all consumers, male and female. From a performance standpoint, we’ve done this with our Wii and Nintendo 3. We’ve always had a much broader perspective than the typical gaming demographic; in fact, our effectiveness over the past ten plus years in getting a range of consumers to play our content has helped the overall gaming industry become much more diverse. So we’re not going to have to create a special line of products to help reach out to girls, our core products do that all the time.

Nintendo has a core philosophy that our products are truly for everyone, ages 5-95. Girls tell me that their favorite games are the Legend of Zelda, Mario, Donkey Kong, or Pokemon. We have always believed in driving product appeal across all ages, all consumers, male and female. From a performance standpoint, we’ve done this with our Wii and Nintendo 3. We’ve always had a much broader perspective than the typical gaming demographic; in fact, our effectiveness over the past ten plus years in getting a range of consumers to play our content has helped the overall gaming industry become much more diverse. So we’re not going to have to create a special line of products to help reach out to girls, our



Reggie Fils-Aime is the President and Chief Operating Officer for Nintendo Co., Ltd. of America. Under his leadership, he has evolved the company’s brand. Fils-Aime has expanded Nintendo’s product line while revenue has quadrupled since his promotion in 2006. Reggie

grew up in Long Island, NY and is currently living in Kirkland, WA. Fils-Aims attended Cornell University and received a BA in Applied Economics and Management in 1983.

EXCLUSIVE INTERVIEW WITH

REGGIE FILS-AIMÉPresident & COO, Nintendo of America


What has been the biggest challenge as President and COO of Nintendo of America?

RF: The biggest challenge is developing an organization that can continue to drive strong results well after you’ve left the organization. What I mean by that is that I want to make sure that I believe Nintendo is better off on the day that I leave than the day I joined. That means I need to develop my team, that I need to hire in smart and exceptionally talented people, it means that we need to continue to evolve positively, all to make the company stronger.

You are known in the gaming world as the “Regginator.” How important is a personal brand, especially for students just graduating Cornell?

RF: Creating your personal brand is critically important. How you are perceived in your work life, being perceived to be exceptionally capable, the “go-to” person when senior people in your organization have challenges, all of those are critically important. Having said that, things happen—like for me

being recognized and being seen as a popular figure, and the opportunities I’ve had to literally present to thousands of people, to be on TV shows reaching millions of consumers—I recognize that is a very unique situation. So I would certainly counsel Cornell students that not everyone will have that same type of opportunity and have that same type of personal brand, but thinking about how you impact others and what that means to your own personal reputation is a critically important thought.

What other advice would you give a Cornellian aspiring to work in an entertainment or tech role?

RF: A big thought that I would leave all students with is to be open to alternative outcomes, to be open to chance and the opportunities that creates for you. As I speak to young people, I’m shocked by how folks believe they have to have their entire life planned out. Certainly there’s a value to planning, but I would argue there is a big opportunity in opening your mind to alternatives. For me, it was opening my mind to take a first job with Procter & Gamble versus a first job in

the banking industry, which I had always envisioned. I was a finance major, I had interned at banks, I saw myself working in the banking industry, getting an MBA two years later, but I was fortunate enough to be open to an alternative outcome and it reshaped my life, and it reshaped my life for the better. So my counsel would be, open your mind to alternative outcomes.

How would you characterize the culture of Nintendo?

RF: Our culture is very fun-oriented, and it recognizes that we are in an entertainment industry and the products we make make people smile. We are a global culture, we think in terms of global terms, we pride ourselves on having wide-ranging, multi-cultural experiences and the value that creates. We are a culture focused on developing our people and having employees that stay with us for 20, 30 years. We’re a culture that is focused on excellence—excellence in the products we make, excellence in the ideas that we execute.

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Nintendo initiated a limited test launch process prior to nationwide release. The first test launch saw the NES and its initial library of eighteen games released in New York City, with an initial shipment of 100,000 systems.

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core products do that all the time. On a college campus it’s easy for millennials to keep up with the latest trends in the video game and tech world. How do you personally keep up with these trends?

RF: I have three millennial children who certainly work hard to show me what’s going on in their lives, what technology they’re using, and what they’re finding interesting. I’m also fortunate that I have a number of millennials in my company, and we use their personal experiences to be smart about what’s happening and what’s motivating younger consumers today. Thirdly, I spend a lot of time traveling, in stores, in our own Nintendo World store in New York. I find it valuable to have individual conversations and to leverage individual experiences, then apply that to the wide range of research that we receive to validate our decisions and to validate

our direction. So it’s both small base and large base data that I enjoy that helps us to be smart on what millennials are excited about, what Gen Xers are excited about, what every cohort is excited about, because then our business is built on the backs of a very wide-ranging consumer base.

With the upcoming E3 Conference in June 2016 what kind of marketing are you doing to get gamers excited about what’s going to be announced?

RF: Our focus is always taking the message directly to our consumer. For the last couple of years, we have issued the traditional model of big press conferences. Instead, we’ve streamed our message to millions of consumers directly so that they can understand the benefits of the products; it’s a strategy that has worked

very well for us.

If you were a Nintendo character which one would you be and why?

RF: My favorite series is the Legend of Zelda series, and I think I am the hero of that series—wielding a master sword and taking on my enemies. What I love about that series is the adventure, and the drive to take on all challenges and enemies. I literally have a replica of a master sword in my office.

What would you say are the major differences between the U.S. markets and international markets?

RF: I am responsible for Canada, Latin America, and the USA. I have done business throughout Asia and Europe. Key differences I see: first, the US consumer has a level of affluence and disposable income that is very different from the rest of the world. That means that Americans spend a lot on discretionary products, which bodes well for a company like Nintendo. Secondly, Americans have a huge capacity for charity and thinking about others. It’s interesting how that plays out when there are natural disasters. The American consumer has a high degree of empathy and looks to do a lot for their fellow citizen. The US consumer is very mobile and internet progressive, meaning that we are the leading edge of new businesses and new inventions in the broad internet connected space. That means that Nintendo here has to be very aggressive at looking at those opportunities and look at driving it forward. Those are key differences I see from a US consumer perspective.

AS I SPEAk TO yOUNG PEOPLE, I’m ShOCkEd By hOw FOLkS BELIEVE ThEy hAVE TO hAVE ThEIr ENTIrE LIFE PLANNEd OUT. CErTAINLy ThErE’S A VALUE TO PLANNING, BUT I wOULd ArGUE ThErE IS A BIG OPPOrTUNITy IN OPENING yOUr mINd TO ALTErNATIVES.

Above: A Nintendo World store in New York City



of enormity, I’m not sure becoming even bigger confers more economic benefit.”

Additionally, a chief fear for many is that the massive clout held by companies of this size would allow them to raise premiums and reduce the options in their coverage plans. This ability is entirely dependent on smaller insurance companies being able to compete with insurers of this size. For example, there remains significant competition from regional or state-based nonprofit Blue Cross and Blue Shield plans on the big three’s Medicare and Medicaid plans. However, their presence varies significantly by state and type of coverage plan, and as a result the regions that lack such competition to Anthem and Aetna could be susceptible to rising prices. Another benefactor under the Affordable Care Act has been “consumer-oriented co-op plans,” with large systems like Ascension (a local Catholic systems) and North Shore-LIJ taking advantage of their good standing with local communities. So while smaller provider will still have the ability to compete on price and network, the slim profit margins that the insurance industry faces offers no margin for error in this competitive landscape.

While many health insurance providers initially opposed the Affordable Care Act, it has created many opportunities for the industry. One of the primary drivers of these opportunities is the expansion of Medicaid, which has opened the floodgates for health insurance providers to millions of previously uninsured people buying private plans for the first time. Currently, about 16.8 million people are enrolled

in these subsidized programs and that number is expected to increase to about 22 million by the end of the decade. Coupled with the privatization of Medicare, these massive changes brought about by the Affordable Care Act allow insurance companies to reach new low-income buyers of health insurance. But with the increased regulation from the Affordable Care Act putting pressure on company profits, these companies require scale to provide insurance to these clients without hurting their bottom line. One way they are accomplishing this balance is so called “wellness plans” like the one offered currently by Cigna. For low-income clients, they offer insurance that strip typical plans of many medical tests and procedures. Running counter to the intent of the Affordable Care Act to bring good healthcare coverage to millions of uninsured Americans, this type of bargain brand insurance policy is what many in the healthcare industry and regulators fear will continue to occur if these consolidations will continue to take place.

In a critical move, the American Medical Association sent a 17-page letter to the Department of Justice calling for the rejection of the proposed mergers and labeling the likely outcome tantamount to monopsony power for the insurers—in that insurers will have monopoly buying power in the health services market—which will erode consumer choice and patient care. The letter goes on to state that the increased clout of these insurers “will deny physicians the rates necessary to support delivery reforms associated with value-based care, the cost of

which the physicians—not the health insurers—must bear.” Simply put, along with higher premiums, patients—as in the case of Cigna’s “wellness plans”—may begin to expect a reduction in plan quality as divestitures from certain plans and product lines will start to occur in an effort to cut costs.

So while the efficiencies created by these insurance mergers may benefit the Big Three’s bottom lines, it remains to be seen if the synergies outweigh the clearly growing concern legislators and regulators have for the American public. The sheer scale of a decision of this nature, which will inevitably affect almost every insured person in this country, warrants immense scrutiny. Of course companies have the right and obligation to their shareholders to cut costs and create synergies through mergers, but what really troubles me about these proposed mergers is that they seem to lack any innovation and consumer focus. These companies will not be using their massive scale to revolutionize patient care or allow their top of the line plans to be more accessible to the newly insured people the Affordable Care Act was designed to protect, specifically young people and those living below the poverty line. There just does not seem to be any value added for consumers to justify this type of limitation. It would appear that in an effort to cut costs, these insurers are cutting consumers out of the equation.

Emma Nelson is a junior in the College of Arts and Sciences majoring in Economics with a minor in Math.

FINANCE


The Big ThreeControversial proposed deals between several health insurance companies would leave three giants atop the industry. But will the mergers benefit patients or profits?

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Projected Revenue in 2015

BY EMMA NELSON

Recent headlines in the U.S. have been host to massive consolidations

and acquisitions across industries from Anheuser-Busch’s proposed acquisition of SABMiller to the Dell-EMC leveraged buyout. With markets still choppy and future stability uncertain, it seems that companies have been seeking to buy rather than generate growth internally for some time now. Nowhere is this trend more evident than in the healthcare industry. With deals working to consolidate the health insurance markets into just three big names still pending under regulatory channels, the entire healthcare provider network is poised to undergo an enormous overhaul. One must now ask what changes will occur after the dust settles in the wake of these deals and how will the consumer be affected? And, more importantly, to what degree was this chain of rapid consolidation set off by the Affordable Care Act and the growing strain it has placed on the healthcare markets in the U.S. under a single-payer system?

Some of the country’s biggest names in the health insurance industry have decided to merge. This past July, Anthem reached an agreement to pay $54 billion for rival Cigna. Similarly, Aetna will pay $230 per share for Humana in a $37 billion cash and stock deal, marking the

largest-ever deal in the health insurance space. This leaves just three major players in the health insurance space: Anthem, Aetna, and UnitedHealth Group.

The Anthem and Aentna transactions are thus part of a larger wave of consolidation not unique within the insurance space, but rather indicative of a larger shift within the greater healthcare industry. For example, through a series of calculated acquisitions, CVS has expanded their pharmacy services to rebrand themselves as a reputable healthcare name through purchases of Target’s pharmacy and clinic business and Omnicare, a specialized pharmaceuticals services company, among other smaller strategic acquisitions. Furthermore, in 2014, there were 95 hospital mergers and acquisitions. These deals were supposed to give healthcare providers more leverage in negotiating coverage and rates with these now massive insurance providers. Similar trends have been seen in pharmaceutical and biotechnology companies leading many to question how far can the healthcare industry take this trend and if a limit exists to the actual value experienced by consumers as a result.

The mergers of Anthem with Cigna and Aetna with Humana are expected to affect 90 million people—3 of out 10 Americans—who have insurance with

these four companies. Any merger of this size would face rigorous antitrust scrutiny from the U.S. Justice Department because of the companies’ size and national impact. In hearings on Capitol Hill in September, these deals were examined by legislators and had vocal activists on either side of the fight. These companies claim that the mergers will lead to substantial reductions in administrative costs by creating synergies that will inevitably innovate the markets. Thus, the mergers will result in lower prices paid to providers. They claim that the Affordable Care Act encourages insurers to be more efficient and to experiment with different methods of payment, a step away from the traditional fee-for-service model. They argue that the incredible scale of their companies will boost earnings and diversify their products.

On paper, these deals sound amazing for the consumer. Yet many have become wary of this type of consolidation. The President of the American Medical Association, Dr. Steven J. Stack, has stated that the “recently proposed mergers threaten to increase health insurer concentration, reduce competition, and decrease choice.” The question remains of how consumers will be directly affected by these measures. For example, there is the potential that policies for each company will be reduced in order to streamline the practices of the two companies, thus limiting consumer choice to shop around in a competitive market place. Furthermore, as the former president of Wisconsin’s Blue Cross and Blue Shield plan stated, “When you already have most or all of the benefits

ThEN ThErE wErE ThrEE...

FINANCE


As healthcare markets continue to rapidly consolidate in response to the Affordable Care Act, there is growing concern that consumer choice may be limited if the deals between Aetna and Humana as well as Anthem and Cigna are allowed to proceed.

The sheer scale of a decision of this nature, which will inevitably affect almost every insured person in this country, warrants immense scrutiny because it would appear right now that in an effort to cut costs, these insurers are cutting consumers out of the equation.

with the exception of the previous owner, in cases where stolen works are ransomed back to them. Even then, without the intense bidding that drives up prices at legitimate auctions, a thief can only expect to receive 5-10% of a painting’s value. While the FBI reports an overall recovery rate of roughly 10% for stolen art, virtually all stolen masterworks are recovered, and those that remain missing are almost certainly hidden away somewhere in storage once thieves realized that nobody is willing to purchase them. Criminals have much better luck with artworks worth less than six figures, which aren’t worth intensive background investigations by prospective buyers and frequently end up selling at local markets. Better still are pieces that are not considered unique, as with art from I.S. territory, which are generally indistinguishable from other Mesopotamian or early Islamic artworks. Rather than smoky rooms filled with mobsters and a Rembrandt in the corner, the face of the illegal art trade is a legitimate market filled with pieces that nobody recognizes and are sold without attracting any kind of attention. For all of I.S.’s iconoclastic rhetoric, the only sin of artworks they destroy is that they are too large or too well-known to be pulled from the ground and sold; the lack of profitability, and not ideology, condemns these pieces to destruction.

In a perverse display of good business organization, the Islamic State has “outsourced” antiquities theft in their newly-conquered territories, allowing others to do the digging and not spending time or resources on activities that aren’t among their core competencies. After the U.S.-led invasion of Iraq, destabilization in the Middle East has encouraged looting and illegal excavations on

an industrial scale at countless archeological sites across the region. Looters sell the pieces they dig up to unscrupulous middlemen who sell the artworks at local or European markets or to dealers who can wait long enough for law enforcement to move on to different

investigations before selling the stolen wares locally. When I.S. assumes control of an area, they allow the digs to continue provided that the looters pay a tax on all items collected and sold, with any shirkers swiftly executed. Estimates on the income I.S. receives from looting vary wildly, with some putting it as high as $300 million and the Syrian archaeologist Amr Al-Azm, who is familiar with the sites and museums plundered by militants, giving a more conservative figure at a few million per year. Either way, by monetizing theft in this fashion, I.S. has neatly incorporated antiquities looting into their economy and tapped into a regrettably lucrative source of income.

This extremely efficient system, exacerbated by the size of I.S.’s domain and their recent establishment of an “archaeological administration” with its

own set of excavation equipment and paid employees, has flooded the market with objects of questionable provenance. The FBI’s Art Crime Squad, composed of 14 agents trained to locate and recover stolen cultural property, in addition to investigating other art crimes such as forgery, has issued repeated warnings that “robust due diligence is necessary when purchasing any Syrian or Iraqi antiquities,” with professional art dealers and collectors most at risk of unwittingly

purchasing stolen pieces. Along with the financial loss that accompanies the discovery of an illegal purchase, affected parties can even be prosecuted for providing financial assistance to a terror organization, no matter how unaware they were of the object’s connection to I.S.

The damage inflicted by the plundering and destruction of historic sites goes deeper than the erasure of culture. In their rendering of history, the Islamic State characterizes the pre-Islamic Middle East as an undeveloped wasteland, and the magnificent remnants of proud civilizations from these eras is incompatible with this fiction. The nationalism and sense of community fostered by historic sites also impedes

I.S.’s ability to shape their disparate territory into one so-called caliphate. People in Iraq and Syria not only lose a shared history, but also the money gleaned from looting these sites helps finance the ordnance that destroys their homes and the militants who take their lives. The defilement of archaeological sites is not just a tragedy for historians and museum curators, but to all those whose lives are ruined by the fallout it produces. As the human tragedy continues, as people flee the barbarity spread by the Islamic State, structures that have stood for millennia are wired for demolition, unprotected by an international community that has proven, all too often, its unwillingness to intervene.

Andrew Billiter is a junior in the Dyson School of Applied Economics and Management.

fBI tOp tEN aRt CRImES1. Looted and Stolen Iraqi Artifacts2. Isabella Stewart Gardner Museum Theft

3. Theft of Caravaggio’s Nativity

4. Theft of the Davidoff-Morini Stradivarius

5. The Van Gogh Museum Robbery

6. Theft of Cezanne’s View of Auvers-sur-Oise

7. Theft of the Gertrude Vanderbilt Whitney Murals

8. Theft from the Museu Chacara do Céu

9. Theft of Van Mieris’ A Cavalier

10. Theft of Renoir’s Madeleine

Rather than smoky rooms filled with mobsters and a Rembrandt in the corner, the face of the illegal art trade is a legitimate market.

INTERNATIONAL


When Islamic State militants seized control of the ancient Iraqi city of

Nimrud in April 2015, they wasted little time before methodically picking the site clean of artworks and antiquities. When the pillaging was complete, the terrorist group demolished the ruins of the famed Northwest Palace of Ashurbanipal and bulldozed the rest of the site before gleefully releasing videos of the destruction online. I.S. has repeated this process in dozens of locations, most recently in the UNESCO World Heritage site of Palmyra in Syria. While the destruction of archaeological sites is widely reported, less publicized is the plunder I.S. takes from them before demolition, and how their trade in stolen artworks has become, after oil production and ransoms, one of the quasi-state’s largest sources of revenue.

The group’s robust social media presence ensures that stories such as the destruction in Nimrud and Palmyra are given extensive coverage in Western media. Governments, cultural centers, and the U.N. respond with distress and condemnation, but ultimately do nothing. I.S. goes unpunished, and the group uses examples such as Palmyra to broadcast their ability to act with impunity and the inability of Western countries to do anything about it. These demonstrations of power encourage further enlistment from

those considering joining the most successful terrorist group in history.

The Islamic State’s pillaging of archaeological sites comes at a time when the art market is experiencing what one Christie’s executive proclaimed to be “a new

age” of soaring prices and sales volumes. Art sold at auction and in private transactions are shattering records, with Gaugin’s When Will You Marry? selling for nearly $300 million in February, defeating the incumbent Card

Players by Cezanne as the most expensive artwork ever sold. Valuation in the art market has always fluctuated due to shifting tastes and preferences, but what elevates the market today is the influence of a new breed of collectors: wealthy investors and even

investment banks who buy up artworks as a store of value. With the global economy still shaky and commodities like gold losing their allure as safe investments, hedge fund managers and other custodians of extreme wealth are increasingly turning to art and other luxury goods as investments.

These returns can be extremely lucrative: a recent Forbes article cited examples of a Jackson Pollock painting sold for $58 million in 2013 (a return of 2,317% off of its original sale price twenty years earlier), and a Gerhard Richter that sold for 931% more than the original sale. However, art dealers and critics are quick to point out that a painting worth millions today can be worth a fraction of that in the future if the market shifts to favor art from a different period or particular artist. Those who purchase for aesthetic reasons, they say, almost always end up more satisfied than those who buy art as investments.

On the other side of legality, the black market is enjoying an estimated $7 billion trade

in stolen heritage, particularly in lower-valued pieces. Almost no high-profile artworks are successfully moved on the black market: their fame and the media attention surrounding their disappearance make it impossible to find a willing buyer

Number 19, 1948, a Jackson Pollock painting, sold for $58.3 million in 2013

The Islamic State and the Black MarketBY ANDREW BILLITER

tHE BusInEss Of BEAuty:

INTERNATIONAL


It’s really difficult to manage expectations, especially where people have inspiration overload and their budgets might not coincide with the inspiration images.

I originally started my business and had a friend of mine work with me. I brought her in, and she didn’t really have much to bring to the table initially in terms of a contribution financially or any contacts, but I always thought that she was a hard worker. She was intelligent and well educated. Then when it came time to actually working, it was a challenge for her. I realized very early on that if I was going to have a partner, it needed to be somebody who had something to bring to the team that was going to complement me as opposed to me having to sort of carry the weight. I also learned that partnering with friends might not be the best idea because it really does destroy a friendship. So when you’re partnering with somebody, you have to be very, very careful. Sometimes you just learn through experience. From that time, I’ve never wanted another partner, and what I realized is I don’t necessarily need another partner because all I need are really good people that I can incentivize with equity. I’ve had runs with a couple of disasters, especially when it comes to the creative side. It was

very challenging because one of them was very experienced and he was extremely talented, but I think a lot of times this goes hand in hand with them not being organized or responsible. I think in that industry and that world, it’s really hard to find a perfect combination of a super creative and professional corporate type person.

What role has technology played in the development of your company?

RT: I do have to give credit to my husband, in terms of being able to really build my business, because I built my business on web-based marketing which is sort of unique in the florist industry or wedding industry. The wedding industry is extremely fragmented and you have a lot of old school vendors who have a completely different mentality than what contemporary people have today. I never sought out to compete with them, I just sought out to have a different model. So we started solely web-based marketing. I didn’t do any sort of, you know, paper mailing. I didn’t try to get the venues to refer so I would then have to give them a kickback and have to take some of my profits or charge my clients more to accommodate for that kickback.

I just basically started on Google and that went really, really well until it became supersaturated over the past couple years. If you started Google advertising ten, eight years ago, before everybody was doing it, you could get a lot more for your money. That then transitioned into Facebook, and Facebook ads have been incredible for my business, especially because it’s so targeted. As soon as somebody becomes engaged, they update their status and then the ads start to target them very directly as opposed to even Google or Bing or Yahoo is capable of doing.

Social media has really revolutionized the wedding planning industry and the floral design industry as well because my brides share images. We get tagged, photographers tag us, we tag photographers. We have everything on our Instagram scroll and Pinterest feed.

Organically we’re getting a lot more traffic than ever before. And, you know, even just being featured on the wedding blog. In the past, you would need to tell a publicist and try to get onto the local news or try to get on the shows or have somebody pitching you in that way. But these days, it’s not even necessary. I had considered hiring a PR firm and don’t even think it’s worth it because I can get so much more. Nobody’s watching TV anymore. No one’s on TV looking for wedding advice or inspiration. They’re on the blogs. For me, it kind of was at the perfect time because the whole industry changed about three years into me starting my business which was basically right at the time where I was ready to start taking it to the next level and had learned enough at that point to feel confident to do so. What differentiates you from other companies in the industry?

RT: Our proposals are super detailed, unlike anyone else in the industry. We actually provide the count of each bloom. So we’ll tell you how many roses,

Above: A floral arrangement by Bride and Blossom


Exclusive Interview with

Rachel Trimarco

Rachel Trimarco is the founder and CEO of Bride & Blossom—a designer bridal flower boutique. She graduated from Cornell University in 2002, majoring in Applied Economics and Management and minoring in Communications. Rachel’s career has

included financial sales, public relations, event planning, and television news production. Rachel discovered her passion for designing floral landscapes while planning her own wedding. In an effort to avoid paying premium prices without sacrificing her vision for elegant floral décor, Rachel assembled a skilled team and negotiated with distributors; soon after, Bride & Blossom was formed.

Do you feel like there are any resources or experiences you had at Cornell that helped form that entrepreneurship role in your life?

Rachel Trimarco: I think it was the professors and the classes, a lot of the case studies that we did. It always did pique my interest in terms of being able to do something entrepreneurial for myself. But, of course, it’s a path that’s sort of scary for a lot of people coming out of college. I think it might actually make more sense in some ways to get experience, whether you end up pursuing that ultimately or not, just to kind of have your feet wet and to get a sense of what

it’s like being in the corporate world, whether that be through internships or other jobs. So you can eliminate what it is that you don’t like and also have some experience to rely upon when you do end up pursuing your own.

So I think maybe start at a point when you’ve had a little bit of a background and are able to have some funds together, to have a cushion in order to take that risk. Because when you have your own company, the employees come first. When there’s a gap, you always have to fill that gap. There’s nobody that’s going to hand you a salary or pay for your health insurance. So if you’re the kind of person that’s risk averse, I don’t think becoming

an entrepreneur is good for you. But if you’re a risk loving person, and I always have been sort of a risk taker, I think that it probably is a great path for many people to pursue. When you are consulting with the bride, it’s really important to have a strong team.Can you elaborate on how you found your team?

RT: I think that’s probably the biggest challenge—finding the right people, especially in a business where there’s so many variables and it’s something to do with design and beauty and everybody has a different sense of what’s beautiful.


OuR pROpOsAls ARE supER DEtAIlED, unlIkE AnyOnE ElsE In tHE InDustRy.


BY IGNACIO GARCIA CONWAY

When American troops invaded Puerto Rico on July 25, 1898 as

part of their offensive against Spain, General Nelson Miles assured the people of the island: “We have not come to make war against the people of a country that has been oppressed, but to bring them protection, promote prosperity, and bring them the blessings of the liberal institutions of our government.” Over a century has passed and Puerto Rico is now near bankruptcy, unable to pay its crippling debt, while an inefficient local government, poisoned by partisanship, fails to solve the crisis. In short, Puerto Rico is far from reaching its promised prosperity, as it receives little to no help from the “liberal institutions” of the U.S. federal government.

A Turbulent Past

After Spain ceded the island and Guam to the United States, Puerto Rico came under the control of American imperialism, and the military government put strain on the local economy. Most market prices increased dramatically as the Dingley tariff, which established a 25% levy on all imported and exported goods in the island, took place, and the law of 500 acres scaled down local production by limiting firms to using and owning a maximum of 500 acres. By the beginning of the 20th century, poverty was at an all-time high while the agrarian industry, which had been the island’s largest, was near collapse. All economic and social issues were intensified as the U.S. entered the Great Depression. Yet by the time the U.S. economy began to stabilize, Puerto Rico showed little signs of full recovery, in part due to the island’s previous economic

state and lack of U.S. aid. It was not until 1947, with the

implementation of “Operación Manos a las Obras” or Operation Bootstrap, that the island entered a new economic stage: rapid industrialization. Under the administration of Luis Muñoz Marin, who was the first governor of the newly created commonwealth in 1952, dozens of companies came to Puerto Rico and hastened the already fast pace of industrialization. The textile industry soared, as thousands of Puerto Ricans left the island in search of more opportunities in the continental United States. As the 1960’s approached, the island began to seek foreign companies with high capital intensity. In 1963, the Law of Industrial Incentives was ratified in order to provide a seventeen-year period of tax exemptions and incentives to companies that would invest in the island. But after more than twenty years of working under

one economic plan, the Puerto Rican government was in need of a new agenda.

As different administrations came and went, a new spectrum started to emerge in Puerto Rican politics over the question of political status. The island was divided into two major political parties, the New Progressive Party, which sought statehood for the island, and the Popular Democratic Party, which argued in favor of the commonwealth. Unfortunately for Puerto Rico, the failing economic structure of Luis Muñoz Marin’s commonwealth, or “Estado Libre Asociado,” was not called into question. Muñoz Marin’s agenda mainly concentrated on short-term reform, which contributed to the island’s rapid industrialization, yet few effective long-term policies were put into place. The lack of long-term solutions and actions led Puerto Rico to enter a period of economic downturn accompanied by uncontrolled public spending, inefficient public agency management, and political corruption that would steer it into today’s crisis.

The Crisis Looms

In August 2015, Puerto Rico defaulted on its debt, paying only about 1.1% of the debt payment that was due. The island’s public debt is now around 72 billion dollars and unemployment is at 12.2%. On June 29, 2015 the Puerto Rican

Puerto Rico: America’s Broke(n) ColonyPuerto Rico struggles to solve a crisis that has its roots in colonialism and governmental mismanagement.


Puerto Rico Plagued by Rise in Debt

2005 2010 2014 2005 2010 2014

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$70

$60

$50

$40

$30

$20

$10

$0

$20,000

$15,000

$10,000

$5,000

$0

+ 37% + 27%

TOTAL DEBTIn billions of 2014 dollars

DEBT PER CAPITAIn 2014 dollars

how many orchids, what you’re getting for the price that you’re paying. People in the industry have told me, too, “You shouldn’t include that because what if you have to change it? No one else does it”. But from day one I have and it’s really resonated.

I always tell my clients, “When you’re comparing apples to apples and you’re looking at another proposal, they might describe it as a “lush beautiful arrangement of whatever” but you don’t know what’s going into that. They don’t tell you what you’re getting for that price. I think with today’s brides, who are much more contemporary, they expect information. They appreciate transparency. I think that has really resonated.

In addition to that, we don’t have any hidden fees or other costs. Everything is very clearly outlined. I think that managing expectations in that sense has really, really helped. We do not put a single wrap on the bouquet without it being listed on the proposal, we’re super detailed in that way. So I think that that really is what’s worked, and when it comes time for the day of the wedding, we do exactly what is on that proposal and nothing more, nothing less. As a result, we have very happy brides, thank God.

As an entrepreneur, how do you maintain your work-life balance?

RT: You know, I always say, if I didn’t have kids, I could do so much. I mean I am probably one of the top florists for weddings now in New York, but I think I could probably be like the top if I didn’t have kids. But, you know, it’s definitely a give and take. I just don’t have the time I would love to put into it at this point. But that will change, obviously, over the next years.

I am grateful. And the advice I do have for women at Cornell and anyone thinking about becoming an entrepreneur is to start it before you have your first baby. If I had tried to start it after she was born, I don’t think I ever would have done it because just the amount of work and sacrifice and effort you have to put into it. Not that you can’t, not that it’s not possible, but I think that the fact that I had a running start, and I had a lot of it already put together, I was sort of two or three years in at that point in time. I had a foundation. I didn’t have a maternity leave, I was still working. I can remember her being a week old when I had my laptop on my lap with her too, you know, and that’s just the way it is. The girls who work for me, one of them had her baby. She had her maternity leave which is totally fine, but you can’t expect to have all the perks that you would have in a typical job.

I’m sure a lot of women have the same approach that you did in the beginning, and they’re a little cautious and nervous to be confrontational. What advice do you have for these types of women?

RT: In terms of being confident and comfortable and being able to negotiate, the mindset that I sort of remind myself that I should have is that they are having no qualms by negotiating with me, or trying to get over on me, or trying to overcharge me. So then I should have no qualms about sort of pushing back on that, whereas, I might have felt uncomfortable before.

I also think about how essential it is to my business to make these numbers in order to afford the overhead that we have and sustain the employees and sustain the salaries and everything else that goes into the business. If I don’t meet those numbers, that means that I am then taking, And that’s the other issue in this business, sometimes the flowers arrive and they’re not great quality because, obviously, they’re a live product. There are huge companies that are getting the best of the crop a lot of times, you know, especially when there is a flower that is in high demand or in the peak of wedding season. But you have to be confident enough to say, you know, this is not up to par. This is not the standard, the quality that we want to offer our clients. Return the flowers and demand a credit.



I DIDn’t HAVE A MAtERnIty lEAVE, I WAs stIll WORkIng. I CAn REMEMBER HER BEIng A WEEk OlD WHEn I HAD My lAptOp On My lAp WItH HER tOO, yOu knOW, AnD tHAt’s Just tHE WAy It Is.

BY ETHAN COY

On August 6, 2015, Egypt held a ceremony on the edge of the Sinai

desert to showcase the newly widened and deepened Suez Canal. The $8.2 billion project to renovate the Suez Canal, which provides a sea route between Europe and Asia, has been a cornerstone of President Abdel Fattah el-Sisi’s economic agenda. El-Sisi proclaimed, “The new canal will become a symbol of the new Egypt, a gift from the nation to the world, and a demonstration of the determination and commitment of the Egyptian people.” By enabling two-way traffic, the new canal will enable 97 ships to pass daily, an almost 100% increase. The project comes with high expectations, yet many question its future benefits.

The Suez Canal is representative of the Egyptian government’s unwise reliance on infrastructure investment to boost an economy that the International

Monetary Fund says is in need of structural reforms, such as dismantling monopolies, shrinking energy subsidies, and curbing government spending. Egypt needs to address its crumbling infrastructure, but the plans el-Sisi has outlined are overly optimistic and face enormous headwinds.

Infrastructure investment puts thousands of Egyptians to work, making it politically attractive, but it fails to address the larger issues facing the Egyptian economy. A host of problems, including

corruption and the lack of competition in the economy, are limiting Egypt’s growth potential. According to the World Bank’s Egyptian Labor Market Report 2014, more than 75 percent of the country’s unemployed are between 15-29 years of age, despite the fact that young Egyptians are two to three times more educated (as a percentage of the population enrolled in tertiary education) than the previous generation. The report also notes the preferential treatment given to older firms which were previously state-owned enterprises. These firms receive various subsides which prevent smaller firms from becoming competitive.

Experts have expressed doubts about the lofty goals el-Sisi and his administration have set for the canal. The Suez Canal Authority, the arm of the government that oversees the Suez Canal, projects that the canal will earn $5.3 billion of revenue in 2015, and $13.2 billion in 2023. Moody’s doesn’t quite agree: it sees revenue in 2023 not even reaching $5.6 billion. Moody’s also points out that in order for the Suez Canal Authority’s projections to be accurate, there would need to be a ten percent annual growth in world trade. To put this figure into context, economists at The World Trade Organization project world trade growth to be 2.8% for 2015, and 3.9% for 2016, according to International Business Times. Furthermore, the expanded canal has underperformed thus far. In September 2015, the canal experienced a 4.5% decrease in revenue compared with the same month a year prior.

Since the mid-20th century the Egyptian military has used its influence to shape the economy and earn profits for themselves. The expansion of the Suez

Canal is consistent with the military’s nearsighted economic policies, argues Robert Springborg, a Visiting Professor in the Department of War Studies at King’s College, London. Bloomberg quotes

Can Infrastructure Projects Save the Egyptian Economy?President Abdel Fattah el-Sisi’s plans for the Egyptian economy lack foresight and are reminiscent of previous Egyptian presidents’ failures.

MOODy’s AlsO pOInts Out tHAt In ORDER fOR tHE suEz CAnAl

AutHORIty’s pROJECtIOns tO BE ACCuRAtE, tHERE WOulD nEED tO

BE A tEn pERCEnt AnnuAl gROWtH In WORlD tRADE.

INTERNATIONAL

1956-1970Nasser ordered the construction of the Aswan Dam, a dam built to halt the yearly flooding of the NileRiver. Suspend-ing the flood also brought repercus-sions; coast line ero-sion, and an increase in soil salinity (which leads to health problems) undermine the ben-efit of the dam.

1981-2011In the mid-2000’s Mubarak tried to alleviate the congestion in Cairo by launching an initiative to provide affordable housing outside of Cairo. Haram City, a major component of this initiative, has failed to live up to expectations because potential residents had no means of transportation to reach the city.

5.6 km2

4,200,000 m2

Nasser ordered the construction of the Aswan Dam, a dam built to halt the yearly flooding of the Nile River. Suspending the flood also brought repercussions; coast line erosion, and an increase in soil salinity (which leads to health problems) undermine the bene-fit of the dam. Mubarak tried to al-

leviate congestion in Cairo via an initiative to provideaffordable housing outside of the city. Haram City, a major component of this initiative, has failed to live up to expec-tations because potential residents had no means of transportation to reach Cairo.

El-Sisi is spearhead-ing the development of a new capital east of Cairo. According to The Guardian, thenew capital city is planned to have a population of over 5 million, a park twice the size of Central Park, and a theme park four times the size of Disneyland.

GAmAL ALdEL NASSEr 1956-1970

FOLLIES OF AmBITIONEgypt has repeatedly embarked on massive infrastructure projects with mixed results.


hOSNI mUBArAk1981-2011

ABdEL FATTAh EL-SISI2014—Present


government gave public access to “Puerto Rico—A Way Forward,” a report on the financial and economic crisis prepared by Anne O. Kruguer, former Deputy Managing Director of the International Monetary Fund, Ranjit Teja, and Andrew Wolfe. In this study, the immediate fiscal and economic origins of the crisis were presented as well as strategies for growth and the efforts of the current governor, Alejandro Garcia Padilla.

Yet a handful of government officials were unmoved by the findings described. Some said that the conclusions Kruger and her team reached were obvious while her solutions were too broad. Others were convinced that the government had not released the complete version of the report and demanded that the rest be made available. But the implications of “the Kruguer report,” as it is known as on the island, were huge. Understandably, most blamed the government and its politicians and disregarded the structural problems the island faced. The Kruguer Report was the first transparent publication made available to the public that delineated the causes of the crisis and possible solutions. This was revolutionary. Sadly, few Puerto Ricans read the report, reflecting the unavailability of information in certain areas of the island. However, those who did read it began to demand answers from the government: the causes of the fiscal crisis were defined; now the people wanted action.

Governmental efforts to alleviate the crisis have been in place since before the publication of the Kruguer Report. In early 2015, Governor Garcia Padilla announced his tax reform proposal to the public, which involved changing the sales tax to a value added tax (VAT) of 16%. By implementing a VAT system, the governor argued, tax evasion would be reduced and revenue from taxes would increase. However, Puerto Ricans saw a 16% tax as a threat to local business and consumption; moreover, public education and medical services were included in the reform, which people felt was an attack on their basic human rights. Economic data was unable to convince the people of Puerto Rico to support Garcia Padilla’s plan, yet

the governor would not back down from pursuing his agenda. His administration was under pressure from owners of Puerto Rican debt, such as vulture funds, to pursue austerity measures.

After much debate, the Puerto Rican congress and the governor reached an agreement: the current sales tax was to increase from 7% to 11.5% until April 1, 2016, when a VAT of 10.5% would be imposed. Since then, the governor has created a task force to find a permanent solution to the crisis. Naturally, this “task force” is composed of members of his party and politicians such as former Secretary of Treasury and current president of the Puerto Rico Development Bank Melba Acosta, who have not proven to be effective at fixing, or even alleviating, the financial crisis.

Where are you, Uncle Sam?

In an interview, Secretary of Economic Development and Commerce Alberto Bacó was asked if he still had hope that Washington would rescue the island, to which he answered: “One never loses hope, but they have been very negative. As American citizens we feel abandoned by Washington. They have treated us as third- and fourth-class citizens and in some subjects, they have discriminated us.” Baco’s answer summarizes public opinion with respect to the aid, or lack thereof, provided by the U.S. Federal Government. In fact, some islanders believe that without federal help, Puerto Rico is helpless.

On October 21, 2015 the Obama administration officially addressed the Puerto Rican economic crisis and ensured that they had been working extensively with Puerto Rican officials, but that only Congress had the power to set the foundation for the island’s recovery. Yet, the administration’s stance on the issue has not been well received. Massachusetts Senator Elizabeth Warren questioned the administration’s, specifically the Department of Treasury’s, minimal efforts to aid the Puerto Rican people in a Senate hearing on October 22. She urged Treasury to be “just as creative in coming up with solutions for Puerto Rico as it was when the big bank called for help.” Moreover,

Senator Warren pointed out that “ordinarily a city in this kind of financial trouble would declare bankruptcy, a country would go the IMF, and in either case they would work out a reasonable debt reduction and a repayment plan. But Puerto Rico, by American law, cannot do either one of these.”

Resident Commissioner Pedro Pierluisi has been actively pushing Congress to allow Puerto Rico to declare bankruptcy under Chapter 9 of the U.S. bankruptcy code and acquire equality for the people of the island. Puerto Rico has been a victim of colonialism and American policies, such as the Jones Act and the cabotage laws, which hinder growth and economic potential. The freight and transportation costs consequent to these laws have led to higher living costs as well as higher costs of certain goods. The law prohibits foreign flagged ships from bringing cargo to the island, forcing them to stop in the U.S. mainland so the goods could be then transferred to U.S. flagged ships. Colonial law imposed a dependency on America to the island and created a lucrative trade center for the United States. Studies by economist Rosario Rivera Negron show that in a typical year (2008) Puerto Rico receives 4.6 billion dollars from the U.S. government while the island contributes $58.1 billion to the mainland U.S. economy. Uncle Sam has always been in Puerto Rico, just not as a hero.

Leaving Congress to deal with a crisis that has roots deeper than fiscal troubles seems irresponsible. Puerto Rico has been stuck in a colonial, unincorporated, structure since the Spanish American War. For this crisis to end, Puerto Rico needs two things: economic reform and an end to the commonwealth status, which American imperialism hides beneath. It is the responsibility of the Puerto Rican government and the U.S. Executive and Legislative branches to cooperate and work towards change. It is time for America’s broke(n) colony to be put back together.

Ignacio Garcia Conway is a sophomore in the College of Arts and Sciences majoring in Economics.

INTERNATIONAL

RaUL ROmaNCo-Founder of UBELONG

Raul Roman is the co-founder of UBELONG, an affordable international volunteering organization. Raul is originally from Seville, Spain and completed his undergraduate studies there before obtaining a PhD in International Development from Cornell. Before founding

UBELONG with his co-founder, and fellow Cornell alum, Cedric Hodgeman, Raul developed a distinguished career serving different United Nations agencies and other leading international organizations, governments, corporations and nonprofits in more than 25 countries across Africa, Asia and Latin America. In its first year of inception, UBELONG was able to send 500 volunteers abroad, and has grown grown substantially since to have opportunities available in 12 different countries.

What was the inspiration behind starting UBELONG?

Raul Roman: My co-founder Cedric Hodgeman and I wanted to create an organization to make high-impact international service and learning accessible. For most people, engaging in international affairs tends to be perceived as “that cool thing other people do”. We believe that everyone can make a difference.

My personal story at UBELONG is very connected to my Cornell story. I was probably one of the luckiest graduate students in Cornell history. I had an extraordinary mentor, Professor Royal D. Colle, the most important person in my career. During my time at Cornell, as an M.S. and Ph.D. student, I had the opportunity to do work in over 10 countries in Asia, Africa and Latin America. At Cornell, I learned something really important. I am from Seville, Spain, and I really had very little experience when I arrived at Cornell. But my mentor believed in my potential and he used a very simple method: just go and get the job done. It’s like learning how to swim for babies: throw them in the pool and they’ll learn and survive. This simple life lesson is ingrained in UBELONG’s vision for popularizing international

engagement.At Cornell, I also learned that what

academic institutions call ‘international relations’ is mostly about international relationships: people-to-people cooperation is at the base of social change. The field of international affairs and development is also very elitist and there are many barriers to entry to engage in international projects on the

ground. However, as a student, I saw plenty of opportunity in the field for people of all backgrounds to collaborate. I experienced how international outsiders liked myself could be powerful catalysts to bring people together. Moreover, every time I came back from the field I realized most of my friends wondered how they could engage, even if it was just for a couple of weeks. In


Above: Cedric Hodgeman (left) and Raul Roman (right) are the founders of UBELONG and met at Cornell.


Robert Springborg as saying, “There’s an air of unreality to the grand project idea, and it’s remarkably consistent going back to the early 1950s in how the military has thought about the economy.” He adds that former Egyptian leaders, including Gamal Abdel Nasser, Anwar Sadat, and Hosni Mubarak all had similar plans, yet none of them yielded the promised results.

El-Sisi’s reliance on infrastructure is not limited to the Suez Canal. He announced plans to spend $300 billion to build a new capital city that is scheduled to be completed in just seven years. Cairo currently suffers from over congestion, and its population is expected to grow dramatically, raising the need for new housing. But plans for the new capital city seem fit for a world power, not a country with a GDP per capita of less than $3,200. According to CNN, the new capital city will feature “new embassies and government buildings, … an international airport bigger than Heathrow, solar energy farms, 40,000 hotel rooms, nearly 2,000 schools, and 18 hospitals -- all linked together by over 6,000 miles of new roads.” Reuters reports that the “new capital is eventually designed to cover some 700 sq km (435 sq miles), roughly the size of Singapore, contain 1.1 million homes and create 1.75 million jobs.”

Like the Suez Canal plan, the new capital city evokes memories of Egypt’s previous mistakes. Reuters notes that “Ill-conceived ‘new cities’ have sprung up on the outskirts of Cairo before, only for many to end up largely empty or just housing the super-rich, with a lack of infrastructure and transport deterring ordinary people from relocating.” David Sims, a Cairo-based urban planner and author of “Egypt’s Desert Dreams: Development or Disaster?” raises questions about the viability of the project. He questions the ability to create the infrastructure and address pressing issues such as how to provide water. The challenges facing the new capital remind experts of Haram City, a development which promised to alleviate congestion in Cairo. Haram City suffered because

of its lack of transportation to Cairo; its occupants typically worked in Cairo, but were forced to buy cars that they could not afford. In the case of the new capital city being proposed, the lack of cars

and public transportation will serve as another headwind to the project.

Many argue that Egypt’s overly ambitious infrastructure projects have made it overly dependent on Saudi Arabia and the United Arab Emirates. Because of Egypt’s weakened relationship with the United States, Egypt has had

to turn to these countries for support. These two Gulf nations have an incentive to keep Egypt stable, as it is one of the few nations in the region which has had success in fighting Islamic extremists, but they also benefit from projects such as the new capital city, whose development

is being directed by Emirati developer Mohamed Alabbar, who is best known for developing the Burj Khalifa (the world’s tallest building).

Ultimately, Egypt cannot assume that infrastructure investment, which has worked so well for the UAE and China, can revive its economy. Part of the reason infrastructure worked for other countries were cheap financing costs. Egypt must pay 7.5% for its 10-year, dollar-denominated government debt. Investors are wary of investing in unstable countries such as Egypt, which is emerging from years of political turmoil. As of late, emerging and frontier markets have fallen out of favor as investors dial down risk amid uncertainty about global growth. Egypt cannot rely on foreign direct investment to turn around its

economy. It must come to terms with its structural issues and commit itself to reforms that will benefit all Egyptians, not just the military.

Ethan Coy is a junior in the Dyson School of Applied Economics and Management.

sInCE tHE MID-20tH CEntuRy tHE EgyptIAn MIlItARy HAs

usED Its InfluEnCE tO sHApE tHE ECOnOMy AnD EARn

pROfIts fOR ItsElf.

ACCORDIng tO Cnn, tHE nEW CApItAl CIty WIll fEAtuRE ‘nEW EMBAssIEs AnD gOVERnMEnt BuIlDIngs, ... An IntERnAtIOnAl AIRpORt BIggER tHAn HEAtHROW, sOlAR EnERgy fARMs, 40,000 HOtEl ROOMs, nEARly 2,000 sCHOOls AnD 18 HOspItAls—All lInkED tOgEtHER By OVER 6,000 MIlEs Of nEW ROADs.’

INTERNATIONAL



give their all to causes that are larger than themselves in collaboration with local communities—it’s very much what UBELONG is all about. For the first photojournalism expedition, we decided to go to Mexico and focus on immigration, an issue we deeply care about. We interviewed and photographed 35 families in three communities with high levels of migration to the United States. Our goal was to help humanize the immigration debate. We partnered with Lonnie Schlein, a Pulitzer Prize-winning photojournalist who worked at The New York Times for 40 years. The expedition team wanted to create something special and we did—something that was featured in leading media across the world, and became a major photography exhibit in New York this Fall. We did something similar in Vietnam: a team of 17 individuals from six nationalities interviewing and photographing North Vietnamese veterans to uncover the human side of the Vietnam War in the 40th anniversary of the Fall of Saigon. We think that photography and storytelling can help the world learn about the most pressing issues of our time, and inspire them to take action. If you look closely at the portraits taken by our Expedition teams you can see your own face. As President Roosevelt said once, the whole world is one neighborhood. UBELONG expeditions are about bringing people together and giving real meaning to Roosevelt’s words.

What are some misconceptions about social entrepreneurship and how is UBELONG different from other social enterprises?

RR: Social entrepreneurship aims to marry social impact and financial success. Some outsiders may forget that social enterprises require healthy revenue streams to allow them to scale their social impact. It’s a very difficult thing to do. But the main misconception

is thinking that social entrepreneurs are heroes. I certainly don’t consider myself a hero. I consider myself a person who is passionate about certain things and willing to take risks to get there. There is nothing special about it, really.

Social enterprises are very diverse in scope and approach, so it’s difficult to say how UBELONG is different unless we compare it with a specific example. What I can tell you is that the start-up movement today revolves around tech

companies. While UBELONG has a strong technology backbone, we are not a tech company. We’re all about face-to-face interaction and the power of direct human collaboration—quite the opposite of Facebook, actually.

Do you have any advice for students interested in social entrepreneurship and creating impactful change the way

that UBELONG does? How would you encourage people who are interested in social entrepreneurship but don’t feel like they are the right person to engage in change, or don’t have the right skillset?

RR: I always tell people “try to become your best self ”. And that’s a long journey, it’s not a path that can ever be finished – and there are many bumps on the road, and many crossroads. Try always to be your best self and follow your heart.

If you have an idea that you think can work—don’t wait. Don’t postpone it if your heart is telling you to start something—you will always be unprepared anyway. All starting entrepreneurs are unprepared, and build their own businesses without fully knowing what they’re doing: they learn by doing it. Anyway, if you’re not going

to take risks, then what are you here for, really? For those people dreaming of making a difference, I think there is more opportunity now than ever before. Be very careful of your wishes though, because if you are—like most Cornellians are—an overachieving nut, there is a high likelihood that you will get what you were wishing for and then you have to stick with it!


All stARtIng EntREpEnEuRs ARE unpREpARED, AnD BuIlD tHEIR OWn BusInEssEs WItHOut fully knOWIng WHAt tHEy’RE DOIng: tHEy lEARn By DOIng It.

sum, at Cornell I thought: “if, against all odds, I am here doing what I am doing, anybody can”. Or, “if I belong, you belong too”—UBELONG! This partly explains how the UBELONG mission and vision reside in my heart and have deep Cornell roots.

You met your co-founder, Cedric Hodgeman, at Cornell—how did you two decided to become partners and start UBELONG?

RR: As I said, Cornell is important in explaining how UBELONG started and why it started and its trajectory. It started in the Spring semester of 2003, when I was a Teaching Assistant for a course called Visual Communication and Cedric was an undergraduate that happened to be in one of my labs. At the time, I didn’t know him well—all I knew was that he was a serious, extremely intelligent student, and I ended up giving him an A+. A few months later, through common friends, we met each other at Rulloff ’s one Friday night and ended up becoming close friends.

I was finishing my Ph.D. and he was finishing his undergrad and at that point he was entering investment banking on

Wall Street and I was continuing my career in international development. After Cornell, we kept in touch and our friendship developed. Several years later he decided he was going to take a year off and go volunteer in Cusco, Peru before going to business school. I ended up visiting him in Peru for Thanksgiving weekend—a weekend that truly changed our lives. On Saturday morning, we were walking around Cusco when the whole idea of UBELONG came upon us, like falling from the sky. This sudden lightning strike wasn’t planned, it just happened. That weekend we wrote the mission and the values of UBELONG, as you see them now on the website, and the UBELONG story officially started.

Since Cedric’s background is in business and yours is in international development, how have your different skillsets contributed to founding UBELONG and having a successful partnership?

RR: I think that it’s obvious that we complemented each other. UBELONG is the product of a deep collaboration between close friends who became business partners against all odds. Particularly at the start, we did everything

together, to the point I cannot remember who contributed what—it’s been deeply collaborative. I was more into providing the ethos of how the company should look like, how it should talk, what action areas we should focus on, for example, and Cedric was more involved in bringing in the business acumen that he had. We learned a lot from each other along the way—and we continue to learn from each other. I think that if Cedric had partnered with someone like him there would not be a UBELONG like you see today, and if I had partnered with another Raul I am convinced there would be no UBELONG. So this is the result of a relationship and a partnership of two people that were not—on paper—supposed to be working together, but we did and that’s why UBELONG is here.

UBELONG has recently completed citizen-photojournalism projects in Mexico and Vietnam that have received a lot of media attention. What was the inspiration behind these photojournalism projects, and how are they connected to the mission of UBELONG?

RR: Our expeditions are ten-day trips that empower ordinary citizens to

Above: Raul Roman, Lonnie Schlein, and the rest of the expedition team for Ubelong’s pho-tojournalism project in Mexico


As pREsIDEnt ROOsEVElt sAID OnCE, ‘tHE WHOlE WORlD Is OnE nEIgHBORHOOD.’

uBElOng EXpEDItIOns ARE ABOut BRIngIng

pEOplE tOgEtHER AnD gIVIng REAl MEAnIng

tO ROOsEVElt’s WORDs.



struction have become more common as people now prefer to stay in their current homes rather than relocate. Home reno-vations and reconstruction have taken up 40% of the total residential construction activity to offset the slowing home con-struction sector. Regulators should be cautious not to take their measures too far in restraining house price increases lest they dampen consumer confidence and cause construction activity to shrink further. Another potential growth driver is personal savings. For quite some time, Australians have been saving 8 cents per dollar earned in income. With the right incentives from Turnbull, these savings can now be channeled into consumption spending. A lower Australian dollar val-ue also aids the growth of the economy as tourism and education industries pick up steam to offset the job losses in the man-ufacturing industry.

There are also other areas in which the government could improve, such as public infrastructure investment and other forms of government spending. With net debt at just 14% of GDP, there is a lot of room for the government to gear up for infrastructure investment and im-prove employment without risking its current AAA- sovereign credit rating. Turnbull can use this to improve public

transportation and increase the produc-tivity of the cities. Turnbull should also carefully review the uses of the nation’s tax revenues. He has approved the Family Tax Benefit plan, which will result in cuts to periodic family payments by the gov-ernment. This would amount to a savings of $3.7 billion in government spending. All low-income families would also lose their end-of-year payments that the gov-ernment normally provides. These sav-ings in spending could be channeled into productive investment conducive to eco-nomic growth. The government should also dedicate efforts to increase efficiency in the economy by reducing the rate of unemployment and underemployment associated with unskilled labor. Turnbull should allocate more resources to educa-tion, especially with regards to the use of high-tech equipment and applications. As the population’s know-how and abil-ity to utilize technology increases, more job opportunities would be created. Greater public government support for Australian higher education institutions would also aid efforts to retain Australian talent within the region.

For a long time, Australia has heav-ily relied on its natural resources and mining industries as well as the trade that came along with them. It may now be time for the government to let agricul-ture return to its glory days as an import-ant sector of the economy. With the pop-ulation continuing to expand, estimated to reach 9 billion by 2050, and as global per capita income continues to grow, it is clear that demand for food and agricul-tural products will only increase, and at an astonishing rate. Turnbull should look at efforts to revive this sector and give it a leading edge by spending adequate re-sources on research and development.

Another important source of eco-nomic and business growth, which is prevalent in the United States and Eu-

rope but underdeveloped in Australia, is startup ventures. The government should play a more active role in encouraging venture capitalists and implementing a long term innovation policy. This poten-tial policy shift would foster the rise of a new generation of entrepreneurs and their business ventures instead of con-tinuing to rely on the passive investments in stock markets and properties.

Lastly, the Australian government should take measures to improve its in-ternational relations and global reputa-tion. The public interpreted Australia’s covert “Operation Sovereign Borders”, which involved Australian officials hiring crewmembers to escort 65 asylum seek-ers back to Indonesia, as abusive, danger-ous, and a violation of democratic beliefs. Additionally, lowering the nation’s car-bon emissions reduction target in August 2015 sent a negative image to the rest of the world as it went against global efforts to increase environmental sustainability. Australia’s public image and the world’s perception of the nation play an import-ant role in shaping its economy and its trade relations, especially as the world shifts towards globalization.

Malcolm Turnbull’s appointment could be the trigger needed to steer the Australian economy back in the right direction. Many saw Abbott’s decisions, including his hasty move to sign the ChATFA, as irrational and blamed his policies as an impediment to Australia’s economic recovery and growth. How-ever, if the Australian government finds the necessary stimuli to increase its rev-enues, improve economic efficiency, and encourage consumption, Australia may soon witness above-average growth in the near term.

Jeffrey Fung is a junior in the College of Arts and Sci-ences majoring in Economics.

INTERNATIONAL

Malcolm Turnbull’s appointment could be the trigger needed to steer the Australian economy back in

the right direction.


BY JEFFREY FUNG

In the second quarter of 2015, Australia’s economy grew at a disappointing rate

of 0.2%, with annual growth slowing to 2%—below the average annual growth rate of 3%. Many viewed this as a failure on former Prime Minister Tony Abbott’s part and also as a result of Australia’s position as an export-dependent nation. Some believe Australia is overly tied to the fate of China, but there are many possible ways in which Australia could revive its economy and strengthen its economic backbone. With Malcolm Turnbull’s government now in power, a

turn of events could be just around the corner.

Australia has recently experienced a slight setback. In the past year, commod-ity prices have tumbled and Australia has had fewer exports, including a 7% decrease in sales of its mining products overseas. The jobless rate fell to 6.2%, but that is still painfully high relative the nation’s 13-year peak of 6.3%, fuelling fears of the lingering impact of unem-ployment. Additionally, interest rates are already near a record low at 2%, leaving little room for further loosening of mon-etary easing in the future. These are just a few of the statistics that exemplify the downward trend that Australia has been heading towards.

While Tony Abbott and the Aus-tralian government have strived to im-prove trade relationships with other re-gions, many have opined that this could, in fact, dampen Australia’s economic growth in the near and long term. One example of Abbott’s initiative was the China-Australia Free Trade Agreement (ChATFA). While the ChATFA could bring positive benefits for Australia such as making Australian goods and exports more competitive in the Chinese as well as global markets, it could also increase Australia’s dependence on the economic success of other nations. The agreement, scheduled to commence at the start of 2016, would effectively remove tariffs for Australian and Chinese companies en-gaging in trade, rendering 95% of Aus-tralian exports to China cheaper. More-

over, Australia has now established free trade agreements with three of its major trading partners, including Japan and South Korea. While these trade agree-ments may help export-oriented indus-tries such as the food, dairy, and energy sectors, any optimism from such bene-fits is outweighed by concerns regarding the role of China in Australia’s growth. China’s slowing economy has already brought serious ramifications to Austra-lia’s economic growth in terms of trade for the natural resources and commodi-ties industries. With China looking to its own citizens for consumption and inter-nal growth, it seems unlikely that Aus-tralia would see much greater activity in cross-border trade despite the free trade agreements. In addition, these agree-ments would allow investors or compa-nies with at least 15% Chinese ownership to bring in overseas workers, undermin-ing the Australian labor market.

However, there are many reasons to be optimistic about Australia’s econom-ic future. The nation’s inventory to sales ratio is at a record low, meaning that the ensuing increase in production will lead to more employment and future revenue growth for firms in Australia, especially retail companies. Due to high property prices, home renovations and recon-

Australia’s Economy: Can Turnbull Turn the Tables for Australia?Due to domestic and foreign factors, Australia’s economy grew at a disappointing rate of 0.2% in Q2 of 2015, but a change in government power could see Turnbull restore the nation to its former glory.

INTERNATIONAL

Australia’s Economic Growth Rate

2.0%

6.2%unemployment rate

2% interest rate

The jobless rate fell to 6.2%, but that is still painfully high relative to the nation’s 13-year peak of 6.3%, fuelling fears of the lingering impact of unemployment.

particularly in China, has improved rapidly. China produces more than 50,000 PhDs a year, several thousands more than the U.S. The improvement in the quality of the labor force is certainly paying dividends for China.

Why should the developed world care about growth in China and India? There are reasons aplenty. First, China is the third largest buyer of U.S. goods after Canada and Mexico. India also currently ranks ninth in U.S. trade but is growing at a fast rate. Growth among any of the large trading partners will subsequently translate into growth in U.S. economy.

Although China is currently a formidable trade partner, India looks more favorable for future growth due to its youth bulge. Two thirds of Indians are below the age of 35; nearly half of all Indians are below the age of 25. If India can turn this favorable demography into a productive economy, it can enjoy a great demographic dividend. Many economists, however, have cautioned that a demographic dividend is not a foregone conclusion—if the youth bulge surpasses economic capacity, India’s demographic dividend can also turn into a demographic disaster as can be seen in

certain Middle-Eastern countries such as Egypt, which suffers from a crippling lack of infrastructure currently. To build the economic capacity for productive labor, India needs to invest in infrastructure, health, and education, necessitating high levels of capital investment.

Presently, western nations have surplus capital simply sloshing around for good investment choices anywhere. With the right policies, this money can easily find its way into Indian infrastructure. For that to happen, India has to loosen up its restrictions on foreign ownership and foreign holdings of domestic equity and real-estate.

However, investment alone will not drive growth in U.S. exports; corporations must also adapt their products for export to meet varying consumer needs in order to drive economic growth. For example, when Toyota started selling their cars in India, the gear ratios were not adapted for the Indian road conditions. Drivers in India rarely used higher gears and they disliked the fact that they were stuck using only low gears, costing them fuel efficiency. All big motor companies, including Ford and General Motors, have since learned

this lesson and adapted their products accordingly. Similarly, KFC in China serves Congee, a rice porridge that is difficult to make in the U.S., but popular with Chinese customers. While large conglomerates have done their research and adapted products for local market condition, other smaller exporters are lagging. Adapting products to local needs sometimes requires innovating completely new products. As Unilever found out, Indians with meager earnings aspire to have consumer products that are nominally out of their reach. In response, Unilever started packaging their shampoos and detergents in sachets to bring these products in smaller quantities, gaining them enormous market success. Thus, the expansion of companies into new markets brings with it the opportunity for new products and services made available for such people in exchange for revenue that will fuel growth domestically.

Global economic growth is in a nation’s self-interest. We should be working to promote growth wherever the ground is fertile. While national self-interest is decidedly local, enlightened self-interest is surely global.

Shohini Kundu is a junior in the College of Arts and Sciences majoring in Economics.

We have entered a phase of “secular stagnation.” If the economy grows at a rate of 2-3% and the national debt grows at a rate of 5-6%, prospects for a better future look bleak.

INTERNATIONAL

QUESTIONS, COMMENTS, OR FEEDBACK?


BY SHOHINI KUNDU

From a historical perspective, economic prosperity is a very recent

human achievement. In the decades preceding the Roaring Twenties, the U.S. economy grew at a rate of just 2-3%. Considering population growth rate in the same period, the per capita economic output essentially remained flat. From the 1940s through the 1960s, U.S. and the Western European economies registered an unprecedented annual rate of growth of 5-6%. Today’s economic growth rate stands at 1.3% for Western Europe and 2.4% for the U.S. To put these numbers in perspective, excluding the recent refugee influx from the Middle East, the European Union has experienced a population growth rate of 0.11%, while the U.S. has experienced a current population growth rate of 0.7%. After discounting for the population growth, real economic growth barely ekes past 1%.

One might ask, so what? Do we really need economic growth? The compelling reasons to increase our

industrial output may not be so obvious to the regular consumer. Additionally, many consumers may find it difficult to justify current consumption levels given the ever-increasing harm to the environment and global health risks associated with climate change.

However, without economic growth the world’s governments will be in serious trouble in servicing national debt. Consider this: the national debt in the U.S. is currently growing at a rate of $1 trillion per year when our total national debt is already around $18 trillion. That is a growth rate of 5.6%. If the economy grows at a rate of 2-3% and the national debt grows at a rate of 5-6%, prospects for a better future look bleak. Governments in the U.S., Japan, and across Europe will be forced to cut back on welfare programs that transfer wealth to the retirees and the indigent, impeding economic growth further. Our governments are hooked on economic growth without which government transfers will cease and economic disparities will mount.

Much of economic consumption in

western liberal democracies is fueled by credit. Imagine a world without inflation. In such a world, consumers will not feel nudged to make purchases, making it difficult to sustain equilibrium. Thus, growth is also crucially needed to sustain our credit-based economy.

Furthermore, some economists believe that we have entered a phase of “secular stagnation”, characterized by low growth in demand but large industrial capacity, making it difficult to raise prices. What has caused growing demand to halt? The explanation is twofold: after steady growth in the past century, population in the industrialized world has not only stabilized, but is at the precipice of decline. This naturally lowers the level of demand. Second, changes in satiation have shaped demand curves. Life from the 19th century to early 20th century was poor, miserable, and short; there was not any incentive to postpone consumption. As people have started living longer and more satisfying lives, they have also postponed consumption, creating a glut of savings and depressing demand. On the other hand, development in technology has enabled industrial capacity to scale rapidly, banishing the kind of inflation known in the past.

The narrative is quite different in some developing countries like China and India. China’s share of current global economic output in terms of purchase power parity is $18.5 trillion out of total global output of $108 trillion. Compare that to $18 trillion for E.U. countries, $17.5 trillion for the U.S. and $7.4 trillion for India. The Chinese economy is currently growing at a rate of 6.9% while India is growing at a rate of 7.4%. These two economies currently account for more than 40% of global economic growth. Two important factors are driving this growth: the size of the labor force and improvement in labor productivity. Quality in the workforce,

Quo Vadis, Economy?What is the state of global economic growth, and where should we look next?

INTERNATIONAL


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