3 Business Replies - FOR 1 HOUR WRITER

Instructions:

Each of your 3 replies must contain at least 1 or 2 paragraphs including a minimum of 200 words. One of your replies must cover a topic different than the one you discussed in your thread. Seek to understand your classmate’s thread, including the economic theory and facts he/she presented as well as his/her points of view and real-world example. Aim to communicate your own understanding of relevant facts, your values, and your perspective on the topic. Each reply must contain at least 1 citation in current APA format.

Reply to these two:

#1 Daniel

Human Capital

 

Human capital is the knowledge and abilities possessed by people. Investing in human capital is a very beneficial decision. “Investment in both physical capital (machines) and human capital (knowledge and skills) can expand the productive capacity of a worker. For example, farmers working with modern tractors and plows can cultivate many more acres than could their great grandparents, who probably worked with hoes. Similarly, a cabinetmaker, skilled after years of training and experience, can build cabinets far more rapidly and efficiently than can a beginner. In turn, people who produce more goods and services valued by others will tend to have higher incomes” (Gwartney. Pg. 322).

            Many times when we thin of capital we immediately think of things that we can invest in, such as stocks, a bank account, or a corporation. But investing in a person can be just as important as investing in something else. “Schooling, a computer training course, expenditures on medical care, and lectures on the virtues of punctuality and honesty are also capital. That is because they raise earnings, improve health, or add to a person’s good habits over much of his lifetime” (Becker).

            There are several companies that see the need to invest into people. Upstart is a company dedicated to investing into brilliant people, not just companies or things that have already been started. Dave Girouard started the company Upstart to invest in human capital directly. “What makes human capital contracts unique is that the investment made is not in a particular company or idea, but in a person. After all, supporters argue, companies are no more than the product of the people who create them. So why not simplify the investment process? Why not treat the person as the startup — or, by Girouard’s clever inversion — the upstart?” (Griswold)

            An interesting biblical parallel is the fact that God invested everything in human capital. John 3:16 tells us that “God so loved the world that he gave His one and only son, that whoever believes in him shall not perish but have eternal life.” I think we can all stop and remember that we should be investing in ourselves, in our relationship with God, more than just investing in things of this world. After all, our real treasure is not on earth, but in heaven.

 

 

 

 

 

 

Gwartney, James D.; Stroup, Richard L.; Sobel, Russell S.; Macpherson, David A. (2014-02-03). Economics: Private and Public Choice (Page 322). Cengage Learning. Kindle Edition.

 

Becker, G. (n.d.). Human Capital. Retrieved October 5, 2014 from http://www.econlib.org/library/Enc/HumanCapital.html

 

Griswold, A. (2014, February 22). A Group Of Investors Is Buying A Stake In The Next Generation Of Geniuses. Retrieved October 5, 2014 from http://www.businessinsider.com/upstart-and-pave-investing-in-human-capital-2014-2#ixzz3FEsLcw4L

 

The Holy Bible

# 2 Ashley

Economic Freedom

            Economic freedom is based off the idea that everyone has a right to choose how they spend their own time and how they utilize their own resources.  However, each individual does not have the right to other’s time and resources.  Therefore, individuals may not demand or take from others for themselves.  Economic freedom is defined in our text book as, “method of organizing economic activity characterized by (1) personal choice, (2) voluntary exchange coordinated by markets, (3) freedom to enter and compete in markets, and (4) protection of people and their property from aggression by others” (Gwartney, Stroup, Sobel & Macpherson, 2013, p.337).  Violence or any criminal act is not allowed but otherwise people may act as they see appropriate when it comes to trading and consuming products.

            On the “Economic Freedom” website, it goes into detail on how economic freedom is measured.  The site talks about five subcomponents to measure the level of economic freedom, “These subcomponents include the size of government based on expenditures and taxes; the legal structures and its protection of property rights; access to sound money; freedom to trade internationally; and regulation of credit, labor and business” (What is Economic Freedom?) According to this website and the interactive map that it provides, the United States is ranked 17 overall for economic freedom.  The map allows you to see the rank for each subcomponent as well and it worth taking a look at.

            A real world example of economic freedom is trading with other countries.  However, there are tariffs.  Maybe if tariffs didn't exist there’d be an increase in trade and economic freedom?

Though I could not find scripture that directly pertains to economic freedom, I found this one to be appropriate, 1 Timothy 6:10 states, “For the love of money is a root of all kinds of evil.  Some people, eager for money, have wandered from the faith and pierced themselves with many griefs,” (The Holy Bible, NIV).

References:

Gwartney, J., Stroup, R., Sobel, R., & Machpherson, D. (2013). Economics Private and Public

Choice (15th ed.). Stamford: Cengage Learning

The Holy Bible.  New International Version.  Zondervan Publications

Whatis Economic Freedom? (2011, January 1). Retrieved October 1, 2014, from

http://www.economicfreedom.org/about/what-is-economic-freedom/

.

#3 Justin

            In summary, this week’s discussion board is about an auditor at a CPA firm that notices that one of his clients, Mayberry-Cleaver Industries, has changed its inventory costing method from LIFO to FIFO.  The auditor notices that there are some executive stock options that are available but only if the company meets certain net income requirements.  The auditor does calculations and notes that by making this inventory change the level of net income needed will be attained.  The question asked is whether or not there is an ethical dilemma here (Spiceland, Sepe, Nelson, 2013, 1198)?

            In my opinion whether or not this is ethical depends on several factors.  If the company is following the appropriate steps in order to change its inventory method, and it is truly to align with other in the industry, then it is ethical.  The steps the company would need to follow in this situation would be to see whether or not this change would impact prior year financial statements, and if so, go back and apply the newly adopted method to those years to maintain consistency with the company’s financial statements.  Also, the company needs to request permission from the IRS in order to change its inventory method.  The company would need to contact the IRS and request and obtain permission in the year that they decide to implement the new inventory costing method  (Deeb, n.d., 1).  So if the company follows these steps and is truly doing this change to align with others in the same industry, then yes the move makes sense and is ethical.  The fact that this will give the executives an added bonus is just a factor that would come from these decisions.

            On the other hand, if the company is making this change solely because the executives will receive compensation for hitting the income target, then this move is unethical.  This means that the executives are not doing what is truly best for the company and are using the excuse that they are trying to align the company with others in the industry, when in actuality they are just trying to line their pockets with more money.  Unfortunately, this happens all too often in business.  If this is the reason for the change, then the company and everyone associated with the company will be impacted.  The shareholders could potentially lose their investment and the employees could lose their jobs because the company could potentially go under.  In this instance, the executives would be the ones to benefit in the short-term from the increased compensation; however, actions such as this could turn into an unfavorable situation for the executives also if the company suffers financially because of this decision. 

            The biblical implications of this situation also depend on what the reason was for the change.  If the change was made based off of it being a benefit to the company, then the executives’ higher compensation will be justified and they will have nothing to answer for.  On the other hand, if the executives made this decision solely for personal greed, then they will have to answer to God ultimately for their decision.

References

Deeb, C.  (n.d.).  Can a company change its method of cost in inventory?  Demand media.

    Retrieved October 2, 2014, from http://smallbusiness.chron.com.

Spiceland, J. D., Sepe, J. F., & Nelson, M. W.  (2013).  Intermediate Accounting (7th ed.).  New

    York, NY:  McGraw-Hill/Irwin.