Adam Smith

Will Trevor Luke

1-5-10

Adam Smith
1723-1790
Scotland

Major Work: The Wealth of Nations



Key Ideas:
-Self Interest: provides incentive for economic improvement; benefits             everyone, not just self

-Free Market: provides competition, which stabilizes the economy, less       govt. regulation

-Invisible Hand: self-regulation of the marketplace

 

Other Notes:
-American Colonies not worth keeping (for the British) because they were  self sufficient, didn't need the British
-Didn't want education regulation
-Opposed to slavery


Legacy:
-Some of his ideas sparked theories of comparative advantage (one country can produce a product with lower opportunity than another country)
-His economic thinking provided a foundation for classical economics
-The economies of many modern countries rely on his basic ideas of self         interest in a free market

Vermont Ski Resorts Feel The Downturn, Look Forward

The recent economic downturn has put a damper on capital improvements for many Vermont ski resorts. As I mentioned in a previous post, Northeastern skiing, including Vermont resorts, saw decent profits last year despite the economy. But the economy is still down, and this is having a pretty big effect on how resorts are spending this summer/fall in the lead up to the 2009-2010 season.
Most resorts across the state have necessary improvements that they can't do without, but beyond that they are cutting spending short this year. For example, Killington/Pico, the largest ski area in Vermont, located east of Rutland, will make upgrades and repairs to its world-class snowmaking system, including replacing 2,000 feet of old pipe. For a destination resort such as Killington, these are very minor investments. Bolton Valley, a resort in northern Vermont east of Burlington, is only adding extending snowmaking on a single trail this year. This shows how even with a solid season last year, the economy is still hitting Vermont hard and they can't take as many big risks.
There are some resorts, though, that are going through with major projects that have had years of planning, despite other resorts holding back. Jay Peak, a ski mountain on the border with Canada, is building a new Tram Haus lodge that will include lodging, retail shops, and a new lodge. This $20 million dollar complex will greatly increase lodge space at the resort, which is greatly needed. The other major project happening in Vermont is at Stowe resort. Last year they built a brand new base lodge, the Stowe Mountain Lodge, and this year the resort is continuing construction around it with condominiums and a performing arts center. These projects are both quite expensive, but the two resorts have been planning these projects for a while, and determined that the long term benefit will outweigh the current costs.
Of course, resorts across the state are hoping an improvement in the economy will help them all make more improvements in the years to come. In general, most of what's being spent by resorts this year is for long term capital investments that will attract more guests not just this season, but for a number of years.

A side note, Magic Mountain, a recently reopened ski area, is selling shares of the resort in order to raise capital to make improvements in the future. This approach is not very commmon in the ski world, although another Vermont resort, Mad River Glen, is owned by share holders. This skiers-only mountain, although small, is loved by its die-hard skiers and seems to be quite successful by maintaining a low-key vibe that is just about natural skiing and nothing else. Perhaps this strategy will work out well for Magic Mountain too. Maybe more small resorts will use this strategy to get some initial investment so they can grow. It will be interesting to see how it pans out for them this season.

http://www.rutlandherald.com/article/20090802/BUSINESS/908020321/0/FEATURES08

Effect of Economy on Colorado Ski Industry

The recent economic downturn has effected industries across the globe. One of these is the ski industry in Colorado. Usually a haven for wealthy skiers coming from all over the U.S. and the world, Colorado saw a huge drop in skier visits and occupancy this past winter season. The number of skier visits was down 5% in the 2008-2009 season, and occupancy was down 16.3%. Ski resorts tried to bring in more customers though, decreasing accommodations rates by 9%, but the bad economy just is not cooperating.
Interestingly, Northeastern ski resorts breezed through this past season seeing significant profits. What is the cause for this discrepancy within the U.S. ski industry? There are a number of causes. Primarily, Colorado ski areas are destination resorts, and much of their revenue comes from traveling skiers, who stay at their hotels, buy their food, and purchase daily lift tickets. With an economic downturn, Colorado ski resorts are a very expensive vacation, especially with the rising cost of travel. It is much more economical for families to stay home by their local ski mountain and buy season passes and bring bag lunches. There are no airline tickets to pay for, no $10 hamburgers at the cafeteria, and no daily lift tickets that cost upwards of $80.
Because Colorado ski resorts rely heavily on vacationers, they lose the most in a poor economy. But small, local ski resorts, such as those on the east coast, benefit from this situation. Not only do these ski areas rely more on local populations for their revenue, but they also lose less customers to the bigger ski resorts out west because families can't afford big vacations in a slumping economy.
It will be interesting to see how this coming season fares for Colorado and other western ski destinations. The economy has improved somewhat from the beginning of last year's season, so there will most likely be an increase in skier visits from the 2008-2009 season, but I don't think any records will be broken. As for the east, families may have realized this season that they don't need to go out west every year, and that staying home makes the most sense, monetarily. I expect eastern resorts will see increased skier visits along with Colorado and the rest of the ski industry.

Employee Loan Program at Olympics

With a little more than 6 months left until the start of the Olympic games, there are still over 1500 part-time jobs left to fill. In this tough economy, the Vancouver Organizing Committee for the 2010 Olympic and Paralympic Winter Games (VANOC) has begun a creative program to fill most of those remaining positions through an employee loan program. VANOC is offering businesses and governments the opportunity to send employees to work temporarily at the Olympics. This will help them manage their budget effectively, while still maintaining a sufficient workforce for the games. The jobs available run from 8-weeks to 6-months. Positions are available in 32 of VANOC's 53 departments, ranging from Energy Deputy Manager to Sport Writer.
This is an excellent opportunity for local and even distant employees to gain unique experience working at one of the largest sporting events in the world. Not only will it be a once-in-a-lifetime experience that they will always remember, working at the games will also provide them with skills and confidence that they can bring back to their employers. Seconded staff were also used in the 1988 Olympic Winter Games at Calgary, and those loaned workers still remember the expierence as life changing. This program will stimulate not only individual careers, but also the companies they work for. More experienced employees will enrich their companies with new perspectives, and with 1500 jobs available, many businesses have the opportunity to be positively impacted by sending staff.
Overall, it is a win-win for both the Olympics and those companies that send employees. This is just another way the Olympics can stimulate not only local economies and businesses, but also international corporations and governments.

Mixed Impressions of Economic Impact of 2010 Olmpic Games

As with every host city, Vancouver has seen many studies about the social, environmental, and economic impact of the Olympic games. Many studies suggest huge economic benefits, up to $10.7 billion (Canada), which takes into account new jobs, the value of a new convention center, and tax revenues. Without the convention center, the highest economic benefits are estimated at $4.2 billion. The new convention center is actually an expansion of an old one built in the '80s. The expansion will triple its capacity, and will be the broadcasting center for the 2010 Winter Olympic Games. Some estimates say that, when completed, the Center will help generate $107 million more in convention delegate spending than before the expansion, and help create 7,500 full-time jobs. Obviously there are long term benefits to this expansion other than just for the Olympic Games.
In past Olympic Games, expectations of impact studies done before the games were sometimes exceeded, but in other cases expectations were not met at all. One example is Lillehammer in 1994. The host city wasn't able to take advantage of the possible tourist opportunities, and 40% of their hotels went bankrupt after the games. This is a clear example of how the games can have a negative impact on the local economy.
One of the factors often overlooked when analyzing the economic impact of the Olympic Games is whether or not the money spent in the host city will stay in the host city. For example, an increase in hotel profits doesn't translate into an increase in wage for hotel employees, but more likely benefits shareholders at the corporate headquarters in some far away city, such as New York.
But the outlook isn't all bad for Vancouver. Far from it. For example, Lillehammer's local population is only around 20,000, but Vancouver has over 2,000,000 people in the city and surrounding area, making the games very accesible for many people, perhaps stimulating ticket sales. And with the current recession, not as many people are willing to travel very far for vacations, but this should have a minimal effect on the games because of Vancouvers population. In fact, ticket and merchandise sales have already exceeded expectations for the Games. Furthermore, a majority of the economic benefits of the Games is in broadcasting, so all those people staying home instead of vacationing will aadd to television viewership of the Games. In addition, a previous Canadian host city, Calgary, has seen long term benefits from hosting the '88 Winter Olympic Games. Facilities built specifically for the Games have added $925 million in GDP since the '88.
In all, it will be interesting to see how the economic expectations for the games turnout for Vancouver. If the economy begins to improve, and more people are willing to spend more money, it could be a very lucrative venture for the city. And in general, any profit is good for the city, especially during the current economic downturn.