Several weeks ago, Jay Ambrose explored this issue and reached an interesting conclusion: while the complex models used by economists largely failed to forecast our current predicament, the flawed assumption in economics that individuals always behave rationally produces projections with varying degrees of accuracy.

So, is economics a flawed science? As someone who recently graduated college with a degree in economics, I obviously hope that I didn’t just spend the last four years of my life studying a fraudulent subject matter. In defense of my degree, I would argue that economic theory has never intended to always keep the market booming, as upswings and downturns alike are part of the natural progressions of an inherently volatile financial system. However, I think that Mr. Ambrose makes a very interesting observation. Economics, especially as it relates to financial forecasting, assumes that the actors involved in its broader models will behave in a robotically rational manner, and thus it is flawed to a certain extent. It would be extremely difficult (and probably impossible) to account for the irregularities and random actions made by individuals in financial markets on a supply or demand curve, and thus these models can only provide us with an educated guess when applied to global financial scenarios. In short, financial economics never has been and never will be an exact science.

While financial economics may have its flaws, I think that the field of social economics will become increasingly more relevant in the future. If you haven’t read the book Freakonomics by renowned University of Chicago economist Steven Levitt, I suggest you do so. The book doesn’t contain any yield curves or elasticity graphs, but instead it uses the more basic theories of economics (supply and demand, incentives, etc.) to analyze practical situations in the world, such as abortion, crime rates, baby names, real estate agents, and the Ku Klux Klan. Leavitt himself admits that he has little interest or expertise in finance and has no idea how you should invest your money; instead, he enjoys applying economic principles to help explain some of the more controversial and perplexing social questions in our culture.

Even if economics may not be able to accurately predict the next financial meltdown, I think that the principles of the subject are still fascinating to study and will be relevant in the future. Personally, I believe that the concept of incentives is one of the most important foundations in economics and can be used to help solve many of the public policy problems we will face in the future. Take healthcare, for example. As I alluded to in a column last year, the idea of incentives helps explain why a government run healthcare program will ultimately lead to a comprised system for all Americans. Inevitably, a universal system subsidized by the government will lead to lower wages for physicians. If you don’t believe me, look at these figures from 1995-2003, which show that doctors’ wages fell 7% after being adjusted for inflation in direct response to the Clinton Administration’s expansion of government healthcare programs. Roughly during the same time period, medical school admissions were on the decline as well. What can we infer from this? As there was less incentive to become a doctor, college graduates stayed away from medical school. The result? A less competitive medical school admissions process which leads to less qualified doctors. With President Obama recently proposing a “public option” to subsidize healthcare in America, I can confidently predict that we will likely see another decline in both medical school applications and the quality of those applicants in the years to come, as the most qualified college graduates will follow the money and go to law school or get an MBA.

While some may cite that the inaccuracies of “renowned” economists contributed to the financial meltdown, I think that the subject of economics as a whole is still very relevant to many of the problems facing our society today. What do you think? Is economics a flawed science, as Ambrose suggested? Post your comments below.

If you go by the Centers for Disease Control’s recent numbers, then were are progressing towards a rate in which half of all marriages currently end in divorce.  This figure seemed rather high to me, until I considered just how many friends and family members of mine have been impacted by failed marriages.  For all the talk about the sanctity of marriage, very little is ever made of how casually the bonds of marriage are currently being taken in our society.  Decades ago, divorces were much more infrequent compared to today’s figures, which suggest that divorce has become almost commonplace in our culture.

Why is marriage being taken less seriously all of the sudden?  There are no definitive answers, but I think that a finger can certainly be pointed at the entertainment industry.  Television shows such as The Bachelor, Rock of Love, and Who Wants to Marry a Multi-Millionaire have trivialized the notions of love and marriage solely for ratings and financial gain.  Yesterday it was reported that Fox is currently developing a new series entitled I Married a Stranger, in which the “bride” does not meet her future “husband” until they are at the wedding altar.  How romantic.  Not to be outdone, CBS similarly has a series in development entitled “Arranged Marriage.”  Unfortunately, there are people in America today who are desperate enough to exploit themselves in this way on network television for fame and money, and there are entertainment executives who are all to happy to provide them with a forum to achieve this “goal.”

The moral decay in American society has been evident for some time now.  And while I am against gay marriage, I think that fighting against it while turning a blind eye towards the other assaults on marriage that are so prevalent in our society today suggests a level of ignorance towards the overall problem. Traditional marriage advocates must also fight the television networks whose programming degrades and trivializes the sanctity of marriage and the advertisers whose subsidies make these shows possible.

What are the biggest threats to traditional marriage in today’s society? What factors do you think have contributed to the staggering rise in divorce rates in America?  Post your comments below.

The NBA, as described in a recent article by Bill Simmons, (a great read, by the way) is in for a bumpy ride. In late February, the league announced that it had secured $200 million in loans from Bank of America and JPMorgan Chase to be distributed to twelve financially vulnerable franchises. This should serve as a bleak sign of things to come for the league, as David Stern and NBA executives have undoubtedly seen the writing on the wall and are anticipating sagging season ticket and luxury suite renewals next season as corporations and individuals alike curtail their spending.

As alarming as the potential problems for the NBA are, they pale in comparison to what could soon become reality for the NHL. In the pecking order of the “Big 4” professional sports leagues, the NHL has always been a distant fourth behind the NFL, Major League Baseball, and the NBA, and the work stoppage of the 2004-05 season certainly did nothing to alleviate the NHL’s last place position. The simple truth is that hockey is largely a regional sport, popular throughout Canada and in the Northern and Midwestern United States. Sure, there have been some success stories of professional hockey galvanizing a community around the sport in the South, (most notably in Dallas) but the failures have certainly outnumbered the success stories. In Atlanta, Phoenix, Nashville, and South Florida, attendance figures have typically ranked well below the league average, and several of these franchises have been targets for relocation.

The most notable case is in Phoenix, which in the last three seasons has ranked 24th, 29th, and 28th out of 30 in average attendance. Since moving from Winnipeg in 1996, the franchise has never once turned a profit. Compounding the problem, the franchise is tied to an awful lease in the City of Glendale and recently filed for bankruptcy. By all accounts, the NHL’s experiment in Arizona has been a complete failure, and even before this past season (in which the franchise lost $30 million) the Coyotes were ranked last in Forbes’ annual rankings of NHL franchise values. If only Commissioner Gary Bettman had a potential owner willing to buy the struggling franchise and move it elsewhere, the NHL could save itself from any further embarrassment. Of course, there is such an investor, Research in Motion (think Blackberry) co-CEO Jim Balsillie. Balsillie has made two other attempts before to purchase an NHL franchise, with the understanding being that whatever team he purchases will be relocated to Hamilton, Ontario. Last month, Balsillie made a $212.5 million bid to purchase the Coyotes, (Forbes values the franchise at $142 million) and yet Bettman incredibly seems determined to block such a deal and continue the league’s embarrassment in Arizona.

Bettman and other top NHL brass claim they oppose the sale because a franchise in Hamilton would infringe on the territorial rights of the Toronto Maple Leafs and the Buffalo Sabres. Nevermind the fact that the southernmost area of Ontario is one of the most populous regions in Canada, Bettman and his cronies have tirelessly tried to keep the Coyotes in Phoenix. The NHL currently has three franchises in the New York metropolitan area, two franchises in the Los Angeles area, and two franchises in Florida, but apparently another franchise in hockey crazed southern Ontario is undesirable to the league.

It seems that through the NHL’s expansion and relocation in the late 90’s and at the turn of the century was aimed at expanding the league’s fan base and forcing hockey on American markets which were ill-equipped to support an NHL franchise. The global recession may, in a sense, provide the league with a way to save face for their own expansion and relocation mistakes and correct its flawed business model while pegging its problems solely on the economic downturn. As it stands today, Hamilton has an investor willing and able to spend the money necessary to relocate a struggle franchise out of a subpar hockey market and move them back to Canada, where they will undoubtedly be viable. In Winnipeg, the MTS Centre was completed in 2004 and would be perfect for an NHL team (Atlanta? Nashville?), and yet Bettman has complained that with a capacity of 15,015 it is “too small” for NHL standards. And what standards would those be? Granted, even a sold out MTS Centre would rank a Winnipeg franchise towards the bottom of the NHL’s attendance rankings, although it is important to remember that those attendance figures are artificially inflated by giveaways and discounted multigame ticket plans in many struggling markets.

In 2008-2009, twelve of the NHL’s 30 teams averaged capacity crowds over the course of the season. Included in those twelve franchises were all six Canadian teams (Calgary, Edmonton, Montreal, Ottawa, Toronto, and Vancouver) and just one franchise outside of Canada or the Northern United States (San Jose, which has been another success story in an atypical hockey market). Today, Balsillie is determined to bring a team to Hamilton, and Winnipeg and Quebec City are other markets which are hungry for an NHL franchise after losing their teams to Phoenix and Colorado respectively in the 90’s.

The NHL is currently at a pivotal crossroads in terms of its business model. Although the global economic climate is bleak, the league can find hope in young superstars such as Sidney Crosby and Alexander Ovechkin, who have bolstered the league’s exposure and quality of play. Now is the time for the league to focus on its core consumer base and operate franchises in the most financially viable markets, because if the NHL’s expansion and relocation of the past fifteen years has taught us anything, it is that forcing hockey on oversaturated American markets is surefire way to lose money.

Not surprisingly, Christie easily won the primary, much to the chagrin of some conservatives. However, in a left-leaning state like New Jersey, Republican voters made the right choice in nominating a candidate with the best chance of winning rather than the candidate who was best aligned with their political views. New Jersey isn’t Nebraska (or North Carolina, for that matter), and it takes a certain kind of Republican to be competitive in such an overwhelmingly liberal state. The last time a Republican was elected Governor of New Jersey came in 1997, when ultra-moderate Christie Todd Whitman barely defeated future Democratic Governor Jim McGreevey by a single percentage point. Twelve years later, the state’s political makeup remains the same, and perhaps the only reason the Republicans have a fighting chance this year is because of the poor performance by incumbent Democrat Jon Corzine, whose approval ratings have dropped below 40 percent in recent months amidst rising state budget deficits.

Had Corzine been a popular incumbent with a strong chance of winning re-election, then New Jersey Republicans might as well have thrown an ultra-conservative candidate to the wolves in a general election. But in 2009, the GOP would be foolish to jeopardize their chance of defeating a Democratic governor in a liberal state by nominating someone whose chances of winning the general election were suspect. Christie had raised almost twice as much money as Lonegan during the primary campaign, and led Corzine by double digits in some head-to-head polls (Lonegan, by comparison, was virtually dead even with the incumbent Democrat).

The biggest problem facing the GOP today is a lack of power. It has nothing to do with the party’s message, platform, or core ideology. Liberal commentators chastise Republicans today for being the “Party of No,” but that’s just what the Democrats were in the wake of the 2004 elections, when many overzealous Republicans predicted their demise – and look what happened four years later. As it stands today, Democrats control the White House, 59 of 100 Senate seats, 256 of 435 seats in the House of Representatives, and 28 of 50 state governorships. And many political analysts have speculated that the GOP could lose even more seats in Congress in the 2010 midterm elections. In recognition of such staggering numbers, Republicans need to be realistic about the people they elect to run on the GOP ticket. It simply doesn’t make sense to nominate someone for office with little or no realistic shot of winning, especially if there is a more politically viable alternative, as we saw in the New Jersey primary race. As a staunch conservative myself, I am bothered by the constant calls from RINOs who wish to redefine our party and make it a watered down version of the current Democratic Party. But I also think that it is foolish for us to stubbornly stand by and insist that all of our candidates for office adhere to strict conservative principles. If it is a gubernatorial primary in Utah or Mississippi, then by all means, make it a contest to see who is the most conservative. However, if the Republican Party is serious about making a comeback, then it must make inroads in traditionally liberal states and force the Democrats to play defense in their own backyard. This is exactly what the Democrats did from their resounding defeat in 2004 until last November, and now they’re reaping the benefits of it by forcing through their radical agenda at both the federal and state levels.

The 2009 gubernatorial elections in New Jersey and Virginia will serve as an indication of how much progress the Republican Party has made since being driven out of power last November. Fortunately, the GOP has nominated two very solid candidates in Chris Christie and Bob McDonnell, and victories in these two states (which both went for Obama in 2008) would certainly give us some much needed momentum going into the 2010 midterm races.