WPBA

The Wharton Politics & Business Association Presents “Paving the Road to a Pre-eminent Philadelphia”

Sam Oldak — Mon, 12 Apr 2010 03:19:38 +0000

Purpose:
The purpose of the competition is for students to analyze competitive practices in the global economy and make recommendations based on their own research into superior practices aiming to transform Philadelphia into pre-eminent, global city. Students are encouraged to draw on examples from around the world and are free to focus their research in one of a number of fields. For example, a student may wish to investigate how distinguished health care institutions can be better leveraged as economic generators and prestige builders.

Process:
Students interested in submitting a piece for the competition should contact Cortney Charleston with “Pre-eminent Philadelphia” in the subject heading. The student shall then be forwarded a more detailed prompt. Following this, interested students shall submit a brief abstract or description of the topic they plan to write about. This abstract/description serves as confirmation of participation. All contest participants will then have until April 26th to complete their submissions.

Contest Summation:
Abstracts (Brief Description of Paper Topic) Due: April 16, 2010
Final Paper Due: April 26, 2010
Other Submission Guidelines: Paper should be no more than 10-pages double-spaced, one-inch margins (citations included). Abstract must be submitted before writing can begin.
The best proposals will be published in a document titled after the contest. This publication will be available/distributed during Reading Days across campus.

Contact: Cortney Charleston (cortneyc@wharton.upenn.edu)

Ranting with Reason, By David Vinnikov

Sam Oldak — Sun, 10 Jan 2010 01:15:52 +0000

I just read a NYT op-ed that I found very interesting. It states as follows:

“In the ‘90s, broke state and city run transportation services, like the Metropolitan Transit Authority (NYC) and SEPTA, needed cash. The economy was good, but they were in constant budget troubles for the same reasons they are today (unions, zero innovation, fiscal carelessness etc.) Since these organizations need cash actively, they looked for it. No takers came, seeing their poor economic state.”

The government came in and said “tax breaks for anyone who does leasebacks.” A leaseback is when I take ownership of assets for some time, collect interest, and then hand the asset back to you after some time. No one wanted to do this with defunct companies like the MTA, because no one wanted their worthless railroad cars and tunnels. They were a sure loss, at least until the government guaranteed profit.

The 90s are sublime because the growing economy covers up problems. The chief financiers of these leasebacks are big, big banks. Banks get guaranteed profit, government transport agencies get their cash flow for nothing (while keeping all needed control of their rail cars), and the growing economy covers the taxpayer’s share. Life is good.

Economic turmoil now enters the scene. The collapse of 2008 is reality and large banks (most prominently AIG) go under the waves, meaning that the people they were supporting go under too.

The correct economic action for a company in such a time is to call back the liabilities in your balance sheet, since all the assets are pretty much up in smoke. As you know, a balance sheet that doesn’t have assets equal its liabilities is a recipe for disaster. It is in fact, impossible. So AIG decides it wants to exercise its right to call back these contracts, as they have all expired, and try to save itself and become free from taxpayer cash. Selling “leasebacks” means that transport agencies pony up the interest cash they owe after getting to use railcars and tunnels for free the past decade (along with nice, subsidized access to international capital markets, courtesy of AIG, which does it courtesy of US Federal Government).

This is really bad news for SEPTA and MTA. They already have no cash, and AIG exercising its legal right to use its contracts would destroy them. Services would get hammered and balance sheets would be in worse shape than they were already.

So what are the options for resolution? Obviously this use of law and fiscal sense is not in our current interest. The government steps in to protect its baby brother, quasi-government. Those like NJ Senator Menendez, whose state owes $150 million, say “Let’s have a 100% tax on all leaseback earnings.” With a Democrat Congress already angry with the AIG monster is created, this call is taken up heartily. 100% taxes can be imposed on behalf on little Johnnie MTA at any time.

Let’s say AIG gets upset and says, “this is ridiculous, our contract is backed by the basic law of this country, and we want our money. Taxes or no taxes, we will pull the trigger, because we are trying to stay alive just as badly.” Government comes in and says “No way. MTA and NJT are my favorites, and I won’t let you hurt them. If you do anything I’ll just pull your TARP money, and then you’ll really be in trouble.” AIG, and hundreds of companies like it who didn’t take TARP, can’t afford this public condemnation by the government and back off.

MTA continues to run broken, eating taxpayer money. AIG, unable to take the needed steps to fix itself, eats taxpayer money. Neither can break out of the lock; they are totally interwoven by government policy, and will head to the grave together. Neither NJT nor AIG can afford to lose the $150 million at stake between them. Both rot, crippled by inability to get money (since both have a credit rating of zero and government promises of “Workers before debtors”) or pay it. Both industries, billions of dollars in value, sink to the sea floor, anchored by government.

Can government stop this? No. No one will want to ever risk the repercussions of letting one or the other fail. While the benefits of letting the economy go to work naturally are great, no one can stomach short-term failure. Every representative is afraid his district will be the one hit. The individual representatives from the districts affected threaten boycott if they are harmed. The larger assembly cannot fight it. Why?

The reason: in a democratic welfare state the power distribution is skewed. 51% of the vote wins you all the marbles, while 45% is a blowout. Roughly 15-20 states suck up all the cash. They each end up giving 5-6%. Interconnected companies like MTA are even more vulnerable. Giving up any one state or district for the obvious good of all 50 is a straight ticket to 45% from 51%. Government is helpless to break anything.

Government traps all three parties. No one can cut off a finger to save an arm so to speak. Billions of dollars are quite literally allowed to go utterly unused, as no one can use the money due to government favoritism and unenforced law.

What are the solutions to this bind? Voting won’t work, because while giving out 100-dollar bills to everyone is bad, you won’t say no if it’s offered to you. Everyone wants more for himself. Since no one can properly solve the financial situation, having the Fed print cash and hand it out to everyone who is owed money might work. However, that is a quick fix, which destroys the economy long-term through false incentives and inflation. Everyone can act knowing Uncle Sam will clean up the mess. An alternative is authoritarianism. No Republicans, no Democrats; just one party and one leader who decides what is right and wrong.

Am I paranoid? Not really. Extend this to banks, autos, traditional government work, and anything else our heart desires on a full economy-wide scale and this happens everywhere. What the free market would have cleaned up instantly the government prolongs and deepens hundreds of times over. Government entities (transport) negotiating with government entities (banks) overseen by government (playing itself) cannot possibly lead to anything other than this.

What Kind of Agriculture Are We Subsidizing? By Curt Ellis

Sam Oldak — Sun, 10 Jan 2010 01:07:55 +0000

Hot Question: Is it unethical for developed nations such as the United States or those in the European Union to subsidize their agriculture? Do these subsidies affect the agricultural industries of undeveloped nations and should international bodies do anything about this?

Let’s be honest: agricultural subsidies aren’t anybody’s favorite topic.

Farmers don’t like to talk about them; what self-reliant yeoman wants to admit they’re on welfare? Urban people don’t take an interest in them either; a good reading of the Farm Bill will send even the most stubborn insomniac into a slumber. The right dismisses farm programs as government distortions of the free market, and the left sees them as handouts to agribusiness conglomerates. So why are farm subsidies still in full force? Probably because it’s difficult to have anyone engaged enough to reform them.

There are signs that change is on the horizon, though. In the last few years, farm programs have begun attracting attention from unlikely quarters.

Public health experts have drawn a convincing connection between the kind of farming we subsidize and the quality of food we eat. With CDC research predicting that one in three children born in the year 2000 will in time develop Type II diabetes, incentivizing all-out production of high fructose corn syrup, partially hydrogenated soybean oil and fast-food meat may only deepen our healthcare catastrophe.

Leaders in the climate change community have recently taken up the topic, too, pointing to soil as one of the only carbon sinks capable of storing a meaningful amount of atmospheric CO2. Under subsidized row-crop production (itself powered by fossil fuel fertilizer, petroleum-derived pesticides and diesel tractors), environmentalists warn that this climate-stabilizing potential is––quite literally––eroding.

It is the fallout from the 2008 Global Food Crisis, however, that has spurred much of the recent debate over farm subsidies. The riots that erupted in Senegal and Egypt and toppled the government in Haiti forced legislators in subsidy-driven Europe and the United States to acknowledge the international consequences of distorting agricultural markets at home.

So, with our global economy staring down a climate crisis and an obesity epidemic, we have to ask ourselves: what kind of agriculture are we subsidizing?

For much of the last 40 years, American farm subsidies have rewarded the all-out production of a handful of commodities. These policies delivered processors a ready supply of cheap raw materials for processing into snacks and feeding to confined livestock. What food companies couldn’t convince American consumers to eat (though judging from our waistlines, we did our part!) was exported. Often, barges of subsidized corn, soy and wheat reached foreign shores, where their contents could be sold at below the local cost of production.

The ripple effects of these policies have been dramatic, and are nowhere more apparent than in Mexico. There, corn farmers saw the price of corn plummet by half when NAFTA opened the door to subsidized imports. Unable to compete, millions of Mexican farmers left the land, pursuing economic promise in impoverished cities or across the US border. When the Food Crisis began, however, with a spike in imported corn prices related to ethanol, drought, and expensive oil, the price of a tortilla in Mexico shot up more than 400%. For many, the effects of skyrocketing staples were devastating.

This scenario of subsidy-induced dependence has repeated itself across the globe. American exports flood foreign markets with cheap grain; local farmers see their profit margins dwindle and leave the land; without the infrastructure for self-sufficiency in place, a shock felt in one part of the system––US grain production––suddenly leaves everyone vulnerable, and without a safety net in place.

America’s 20^th century production-oriented agricultural policies have––under the banner of abundance and affordability––only made the world’s food systems more fragile. At home, subsidies have enabled an obesity epidemic and ecological degradation. Abroad, they have replaced local production and processing with a reliance on imports.

With any broken system, the tendency is to throw everything out and start from scratch. That’s rarely the best course, however. In the case of agricultural subsidies, there’s little logic to doing away with government incentives altogether. Some fundamentals––water, food, education––are important enough that the government should keep a hand on the tiller. Slashing farm programs tomorrow would leave farmers indebted and in the lurch, add another shock to fragile markets around the world, and likely lead to more corporate consolidation in a food processing industry already stifled by monopolies.

So, what kind of agriculture should we be subsidizing? Unfortunately, the answer isn’t tidy enough to be enacted all at once; nor is it the kind of policy that can be passed in a vacuum. It’s a policy that looks long-term, and across borders and disciplines.

First, 21^st century farm policy will have to be––first and foremost––food policy. If we put good nutrition at the top of our priorities, we will begin promoting fruit and vegetable production at home, instead of fast food. Internationally, we will help developing nations grow their internal agricultural capacity (as the Obama administration has already pledged to do in Africa), and will cease to see foreign markets as a dumping ground for American surplus.

Second, next-generation farm policies will put long-term sustainability ahead of short-term, extraction-dependent yields. Green payments will compensate farmers for their contributions to climate stability, and those who work at the forefront of sustainable agriculture––testing perennial crops instead of soil-depleting annuals and pushing the limits of local and organic production––will be rewarded for their investments in a post-petroleum future.

Weaning ourselves off present agricultural subsidies won’t be an easy process, but it can be an incremental one.

Curt Ellis is a Food and Society Fellow with the Institute for Agriculture and Trade Policy and the WK Kellogg Foundation. He co-created and starred in the Peabody-winning documentary King Corn, and produced and directed the sequel, Big River.

For the Free Market

Finding Success in the Policy Cup Competition

Sam Oldak — Sun, 10 Jan 2010 01:00:44 +0000

Though a young organization, the Wharton Politics & Business Association has been building a healthy legacy on Penn’s campus. Much of this is due to the club’s annual Policy Cup Competition in which students across the University of Pennsylvania community, representing undergraduates and graduates across various fields of study, submit researched policy proposals to be judged by a panel of esteemed academics. The proposals fit within the club’s yearly focus. Of course, this academic year’s theme is “Globalization.” While the theme and applicable research questions change with every year, the process behind it is very consistent; the key to writing a successful policy paper is largely the same regardless of topic.

This October, WPBA Co-VP of Policy Development Doug Eckhardt gave an introduction for this year’s participants. What he presented was an overview of the questions for the current competition as well as tips on how to research and answer the competition prompts. Mr. Eckhardt himself is a former policy cup participant (he and his partner placed third in the competition last year). Perhaps the most pertinent advice given to 2009-2010 Policy Cup competitors regarded choosing a topic on which to write a proposal. Here is a brief summary of his recommendations:

The topic should be “controversial,” meaning that it will spark debate and require the audience to question what you are presenting. Being forced to respond to difficult questions will require more meticulously researched proposals.
The proposal should address an important issue rather than be more obscure. In other words, choose something you believe people will care about.
Manage the scope of the topic your proposal discusses. If you have a general area of interest try to narrow it down to a specific problem under that umbrella. This will give your research greater focus.
The topic should be of interest to you. Find an issue that will motivate you to remain committed to the competition and produce a well-polished proposal.
The chosen topic should be “intellectually approachable” to you, meaning it will generate critical thought for you that will be mirrored in those reviewing your proposal.
Lastly, be sure there are ample statistical references available to augment the roots of your arguments.

To those participating in the policy cup, I hope the following have helped you in some way. For prospective participants in future competitions feel free to keep these in mind as you mull over your decision. The PowerPoint presentation used by Mr. Eckhardt is available online.

A World-Class Evening – Josh Sevin Visits WPBA

Sam Oldak — Sun, 10 Jan 2010 00:48:12 +0000

Philadelphia, Pennsylvania: the birthplace of American democracy and a city endowed with immense cultural deposits ranging from cuisine to music. Yet, despite a legacy of innovation the city itself seems to be struggling to distinguish itself in the international context. The City of Philadelphia has yet to reach “world-class” status. At least, that’s the assessment of Josh Sevin of the Economy League of Greater Philadelphia. Mr. Sevin, a Philadelphia native and Yale University graduate spoke with WPBA on November 23^rd about the city’s challenge to build a globally recognized identity comparable to other American goliaths like New York and Chicago. It is an interesting predicament considering the Greater Philadelphia region has the 9^th largest economy in the world; obviously there is more to this matter than simple economics.

“So what does it mean to be world class?” Mr. Sevin proposed to an intimate crowd huddled in Huntsman G65. He went on to explain that in the definition of the Economy League, being world-class means leveraging the assets of the city (culture, higher education, health care) to inspire more people to live, work and invest in the area. Over the course of the past year the organization has worked to identify what cities are world-class and which qualities they generally possess. This is the mandatory step needed to identify what the city must do to remain globally competitive. Mr. Sevin explained that a number of metrics were pooled into five broader categories by which cities are typically judged: human capital, economy, infrastructure, governance and quality of place.

Mr. Sevin then proceeded to present Philadelphia’s current standing. Generally, the region tends to fare well in measures regarding of quality of life, buoyed by a diverse set of housing opportunities and the presence of outstanding medical and educational institutions in the city and surrounding area. However, this is favorable standing occurs only in comparison to other American cities. In the larger international pool, Philadelphia often isn’t ranked or studied. It is also never at the top of any domestic rankings and suburban areas often appear in rankings drawing a contrast with the inner city. It is apparent Philadelphia has great strengths, but how are these packaged to make the city more attractive for living and commerce? Here are some recommendations presented by Mr. Sevin:

Converting visiting students to Philadelphia’s universities into long-term residents, thus improving the quality of the labor pool
Continued support of local health care institutions
Reform of the public education system
Maintenance and expansion of transportation infrastructure, particularly high-speed rail

Following his presentation, Mr. Sevin opened the floor to questions from the audience. One member in particular stressed the need of unified leadership to provide vision for the city going foreword. He stressed, and Mr. Sevin agreed, that without such a spark the city would try to replicate the success of others rather than define itself as unique. Philadelphia’s 2016 Olympic bid was also mentioned as an example of synchronized community spirit exemplified in relations between government officials. This type of vigor and excitement must be at the center of any improvement plan. Considering the changing dynamics of the international economy, this revolutionary thought and dedication on the part of civic leaders is more necessary than ever if Philadelphia shall ever be “world class.”

Political Ticker with Prof. Lustick of the Poli Sci department

Doug — Sun, 29 Nov 2009 20:20:11 +0000

Event has been postponed.

Topic: Conflict in the Middle East and Afghanistan

Brown bag lunch, RSVP required.

Location TBA

RSVP to smallsa@wharton.upenn.edu

WPBA, The Who and Why

Sam Oldak — Sun, 11 Oct 2009 18:45:43 +0000

The Wharton Politics & Business Association is Penn’s only undergraduate club dedicated to the discussion and formulation of public policy, with a focus on the intersection of private and public interest. The club puts on an on-going lecture series stocked with academics and professionals dealing with the signature theme of each academic year. The purpose of the series is to increase dialogue between the student population and leaders of business, government and other institutions with strong influences in public policy.

In addition, WPBA seeks to develop it’s own policy proposals for distribution. It is through writing these proposals that WPBA may make it’s most lasting impact. One paper addressing the concern of income tax credits was cited and considered by the Pennsylvania state legislator. This past year, former VP of Publications Madeleine Evans worked extensively with Penn administration to create a greener-campus by lowering energy consumption. WPBA is a mechanism of student action; a pool where our ideas that pebbles that can cause ripples beyond what we can see.

In short, get involved!

From,

Cortney Charleston
VP of Publications

The Policy Cup 2009-2010: Globalization

Sam Oldak — Sun, 11 Oct 2009 18:43:26 +0000

Why Get Involved with the Policy Cup?

WPBA’s Policy Cup is a unique experience on Penn’s campus. A chance for students to explore a passion, develop and argue a poignant opinion, hone research skills and have fun all at the same time. College life makes it very easy to get lost in the monotony walking from class to class, meeting to meeting. Sometimes we forget the wider world is out there. But seclusion in the face of changing times is something we collectively cannot afford. As students at an Ivy League university, we are often told how much potential we have and how we will be the leaders of the next generation. Although it can be construed as useless fodder, it’s much more true than we often realize and it means something else: many people notice your words, opinions and are influenced by them.

The Policy Cup is where artistry meets academics, and participants are allowed to create a pragmatic piece that can have impact far beyond the scope of campus. A good idea here is a good idea anywhere. That is why WPBA seeks to generate as much participation on the part of the student body as possible to help solve problems that face us in an increasingly complex society, where barriers of nation, creed and color are diluted as markets and environment ties us together. For this reason, globalization has been chosen as the focus of this year’s Policy Cup.

Here are the three prompts of this year’s competition:

What is the most efficient way for the US to balance environmental and developmental concerns in developing countries?
What role should state governments play in mitigating the effects of globalization on local employment?
How should the US alter foreign policy in order to balance international cooperation and national security concerns?

For further information or inquiries regarding the Policy Cup, please contact Doug Eckhardt at eckh@wharton.upenn.edu. We hope to hear from you all!

Policy Cup Recap

Sam Oldak — Sun, 11 Oct 2009 18:38:23 +0000

The Wharton Politics & Business Association experienced a great deal of success last year, largely due to the high-level of interest in the club’s annual Policy Cup. Coinciding with a presidential election and inauguration of a new administration, both raising major questions regarding Health Care reform, the Policy Cup saw participation on students from across the university – both undergraduates and graduate students. After a yearlong process of research, seminars and useful information from WPBA guest speakers, hopeful contestants handed in their final policy papers. A panel of expert academics judged the submitted proposals. First, second and third place teams all received cash prizes for their diligence.

Below are the placing teams from last year’s Policy Cup:

1st Place – Seung-Kyum Lee & Michael Harhay
2nd Place – Alan Hsu & Thomas Hou
3rd Place – Adam Bloch & Doug Eckhardt

Congratulations to all our finalists and winners and thank you for making the experience memorable for all of us at WPBA. It is our hope that the spirit you displayed shall rise again in this year’s competition.

Steve Strongin Speaks

Sam Oldak — Sun, 11 Oct 2009 18:37:00 +0000

A student raises his hand with purpose, itching to ask a question of the night’s guest speaker. “Would you mind explaining how Goldman handled the financial downturn differently than other firms?” His proposition is then met with a straightforward and candid reply ripe with details only an industry veteran of the speaker’s caliber could possibly know.

On the evening of September 16th, even the winds of Locust Walk calmed in anticipation for WPBA’s first guest speaker of the year: Steve Strongin. Mr. Strongin has been an employee for Goldman Sachs for just under fifteen years. He is the current Managing Director of Global Investment Research, having served in this capacity since 2007. His tenure at Goldman began in 1994 when he became Global Head of Commodities. In 2006, he moved from this position to become Chief Operating Officer and Interim Research Head.

The name ‘Goldman Sachs’ is certainly no stranger to the ears of students across the campus of the University of Pennsylvania. The allure of its name likely brought many in the audience to Steinberg-Dietrich Hall Room 1206 that night. But if those individuals expected an information session on the company’s operations or a Goldman sales pitch they were in for a surprise. Comfortable and personable, Mr. Strongin stepped before the crowd to speak of the intimate details of the financial crisis. Mr. Strongin was primarily presenting a series of three papers titled collectively “Effective Regulation,” which explain why the economic meltdown occurred and how the vigor of the global financial system can be restored.

Mr. Strongin asserted that the global market failure occurred because of an excess of foreign capital investments from East Asia and petro-producing nations, both of which were unable to successfully funnel this into investments domestically. Instead, this capital found it’s way overseas, clustering in the developed housing markets of the United States and other industrialized nations. Many reputable firms, taking advantage of this capital and laxer mortgage lending standards to securitize risky assets exchanged on the global market. Such activities were perfectly acceptable so long as housing prices continued to rise. But when they leveled off, problems puffed out of the system like chimney smoke.

In an honest statement to the crowd Mr. Strongin stated, “We at Goldman and other firms did not adequately assess the risk of low-quality mortgages included in the pools backing securities.” This may be the closest admission of guilt you may ever find from someone on Wall Street. But the practices investment banks were only part of the problem. Mr. Strongin also discussed the lack of oversight from regulators whose purpose it is to monitor the sale of securities and business reporting (many firms had securities listed as assets on one side of the balance sheet).

After explaining the interworking of the problem, Mr. Strongin sought to outline a series of recommendations for repairing the financial system. He makes a call for domestic regulatory agencies across the world to control risk in their borders. Capital flows through borders, and because international consolidation is a difficult, and probably undesirable goal, local entities must take charge. Mr. Strongin believes that good regulation ultimately leads to desirable qualities in the marketplace, such as transparency. Principle-based regulation rather than rules-based regulation is also argued to attract commercial activity, leading to capital market viability necessary for economic growth as well as minimizing risk. Only time will see if any of Mr. Strongin’s suggestions are implemented in the rebuilding process.