Boosting Jobs by Spending More

The global economy has become volatile. The new year began, and financial markets became erratic. People started to be wary about the United States’ economy after seeing a dip in China’s economy and prices for assets fall. Additionally, oil prices are decreasing sharply, leaving the country to worry that credit markets will fall. The International Monetary Fund has been keeping a close watch on the global economy, and they have come to the conclusion that, in order to lower the amount of unemployed people in the world, taxes on employment must be lowered and public spending must increase.

If implemented, these would be highly controversial changes. Higher public spending to help unemployed people find work is ideal, of course, however cutting unemployment benefits would be met with a lot of resistance. In the International Monetary Fund’s opinion, this would be an incentive for unemployed individuals to take lower paying jobs, however this shift in policy would have short-term ramifications for those already employed. It is expected that, if it were implemented, cushions would be in place to offset the short-term consequences.

Long term, however, these reforms would be expected to lower unemployment drastically, and repair the global economy overall. It would be easier for firms to enter different industries, and therefore increase necessary hired labor. Historically, many of theses changes have been put in place to combat unemployment. The result has been positive, with effects such as increased private investments and hiring. When employment protection legislation is altered, additionally, companies become more willing to keep the employees they already have while continuing to hire new ones.

If there is a time to introduce new reforms into the labor market, this is it. The volatile global economy is increasing the amount of unemployed people, and it is difficult for said people to get back into the job market when they are out. Of course, these changes will have to be executed the right way in order to have the positive effects for which we hope. It is crucial to understand what incentives will be the most effective, and which ones must be pushed through their short term detriments to reach long term success.

For example, fiscal stimulus is the single most valuable incentive. It should be implemented in the labor market as soon as possible to start lowering unemployment. However, narrowing unemployment benefits will have short term detriments that must be offset with other policies until the long term is reached.

Overall, the International Monetary Fund has looked at history to decide what reforms need to be made in order to lower unemployment. Whether or not these historically effective policies will work now remains to be seen.  

  

Deadpool's Movie Market Disruption

A different kind of market news has been trending as of late, all thanks to a new highly anticipated film that is hitting movie theaters tomorrow. This movie is a different kind of ‘superhero’ film, about Deadpool, a mercenary with expedited healing powers. This is not your typical Marvel-type hero film with superhumans fighting for good. This one is Fox’s attempt to disrupt the movie market with an edgier, more inappropriate film about someone with special abilities, while being able to retain the movie and franchising rights so they can make more money. So far, the movie has incredible reviews on popular movie review websites and everyone interested in comic books is planning to rush to the theater the second it is released. It seems Fox will be successful in its endeavor.

Deadpool as a character is likeable in his humor, but also has a disturbing, psychopathic personality. Fox chose him as the focus for their next movie for this very reason - they could not make money on widely known superhero figures, so they focused on a smaller franchise which is quickly growing. Deadpool’s obscurity should have made it more difficult for Fox to disrupt the movie market, as many do not buy into that with which they are not familiar. However, Fox ran a series of successful marketing campaigns to spread awareness of Deapool’s disturbing, yet hilarious, personality.

They have taken risks that probably would not have worked with a character any less weird. The first jarring campaign involved a poop emoji on a billboard. Risky? Of course. However, it did catch the attention of the public. They also took the newsletter route, posting funny blurbs with pictures of Deapool in front of a fire. It can be agreed that none of their marketing tactics have been conventional, which fits perfectly with such an unconventional character.

They then took to social media, as all good marketing campaigns should. The Deadpool campaign continued with a new slew of Deadpool emojis and a fake instagram feud between the Deadpool character and Hugh Jackman’s Wolverine. Ryan Reynolds, the actor playing the character Deadpool, has been flooding his Twitter page with movie promotions for at least a month. Deadpool the character even has a profile on the popular dating app Tinder.

All of these tactics has made Deadpool a highly anticipated movie by fans all over the world. Fox has done its job talking up this movie to the public, now we will just have to wait until tomorrow to see just how much it affects the movie market.

For more information on how the Deadpool movie will affect the market, read Forbes’ article on Deadpool cornering the comic book movie market.

2016 Venture Investment Fall

2016 marked the first time in 5 years that the growth of the stock market slowed down. It is not likely we will see any significant stock market growth in 2016 either. This prediction is due to things like interest rates and less of a demand for oil. The venture capital market is no exception to this fall.

After many years of experiencing rapid growth, it seems the venture capital market has calmed down. Business valuations for startups began to flatline in 2015, meaning that investors have had reason to focus their money on other industries. This is not only problematic for startups just entering their industry, but it is a phenomenon driven by flawed principles.

When investing In a company, venture capitalists are now looking for ‘unicorns,’ or companies that can quickly earn a lot of money. Another flawed principle is that the software industry is the only industry worth investment; the hardware industry has fallen by the wayside. These are followed by the belief that the only worthwhile startups come from Silicon Valley.

Some careful research and examination would prove these three principles to be foolish. The truth of the matter is, unicorn valuations do not equate with a company’s actual value, the software industry is not the only worthwhile startup industry, and, of course, successful startups exist in places other than Silicon Valley.

The unicorn valuation is a widely disputed concept in the startup world. There is a risk behind investing too much money in one company, no matter its projected potential. Even Uber, which is now a household name, does not have a value that matches its valuation. Venture investors would be better off investing smaller amounts in multiple companies. Furthermore, studies have been done that prove focusing on one concentrated geographical area is detrimental to the startup industry as a whole. Also, software innovations are creating industries that make hardware necessary as well, which means that the software industry is no longer the only worthwhile industry in which to invest (take, for example, 3D printing.)

All of this information together predicts different trends in the 2016 venture investment industry. Entrepreneurs and investors alike have to look at all of their options, in terms of which industry to join. The software industry cannot be the sole focus. Also, what many have learned about ‘unicorn companies’ needs to be unlearned as quickly as possible.

All in all, we cannot do the same things and expect positive change in 2016.

For more information on venture investment in 2016, read this Forbes article.