This video on YouTube is more revealing than the media. After printing 1.2 Trillion dollars on the pretext of saving jobs and the economy, the Obama Administration bails out Chrysler motors, nationalizes it by becoming its “owner”, then saves our jobs and economy by closing the Chrysler plant in St Louis, leaving the area in economic devastation and shipping the equipment to Mexico where the automobile will most likely be manufactured now.
This is a crime of magnitude on the part of our elected officials. Write your congressmen and the president and DEMAND they return American jobs to American soil.
Government stimulus and bailout money used to move Chrysler jobs to Mexico
Obama economics uses stimilus money to move Chrysler jobs to Mexico
When her elderly parents became ill, she gave up her job, her security, and her comfortable middle-class existence. If something isn’t done soon, she says, Baby Boomers will become the New Poor.
Many Boomers are devoted to their aged parents. But my friend Suellen stands out as a model of filial dedication. Five years ago, when her Dad became too sick from Alzheimer’s disease for her mother to cope alone, Suellen quit her full-time accounting job and moved into her parents’ apartment.
“Dad was lucid enough to be adamant about not leaving home,” she tells me. “And Mom absolutely refused to shut him away from her. Unfortunately, she was getting progressively more frail, too.”
While Suellen, who is in her mid-50s and single, was not only happy but proud to put her life on hold to make her parents’ lives better, from Day One, she heard from a variety of busybodies who loudly disagreed with her decision. Distant relatives, people in the neighborhood, and “friends” of all shapes and forms chided her for a decision they felt was “unrealistic” and “destructive of her life.”
“The general message was that in the United States, the proper way to handle this kind of situation would be to put your Dad in a nursing home, tell your Mom to learn to live with it, and go back to earning as much money as you can to pay for it,” Suellen says. “Some people said I should bite the bullet and take two or three jobs, if necessary, which would have meant I never saw my parents at all.”
She stuck to her guns and kept her family together, losing emotional support from the naysayers in the process. When her Dad died two years ago, even some of his closest relatives refused to visit Suellen and her Mom when they were “sitting Shiva,” the Jewish custom of mourning at home. “Yes, it was pretty shocking,” she says, in what sounds like a big understatement.
Suellen’s stubbornness – and courage – are characteristic of this feisty Brooklyn girl, whose compassion and intelligence are apparent in every word she utters. As an only child, she was the apple of her parents’ eye. “Of course, I wanted to return their love and caring when they were the ones in need.
“In nearly every other country in the world,” she goes on, “sons and daughters are expected to take in and lovingly care for aged parents who become sick or helpless. That’s what you do. And it benefits all involved – the parents, the children, any grandchildren in the household. Only in America are we actively encouraged to give Mom and Dad the heave-ho.”
Attracted to the Tropics
Over the past decade or so – even before her parents’ health crises – Suellen became attracted to the idea of joining the growing community of Boomer ex-patriates in the Caribbean and Latin America. This reverse emigration is occurring, she believes, because in many cases, it is much cheaper to live abroad, while the intangible “quality of life” may actually be more appealing abroad than on the Mainland.
When her Dad became seriously frail, she made a trip to Panama – a popular ex-pat haven – and tried to persuade her parents to relocate with her there. “My mother was reluctant,” she explains. “She thought the environment would simply be too foreign. But lately, she’s changed her mind, telling me, ‘You know, Sue, maybe we should have done it.’ “
Back home in Brooklyn, Suellen and her mother, a former secretary – her Dad owned a limousine service – are struggling to survive. For one thing, they could get evicted. “My parents were renters, because they loved their classic Brooklyn building. With recent inflation and a limited income, though, it’s tough keeping up.”
There are also problems with utilities. The electric company, for example, touts its “senior discount” to all and sundry. But they won’t allow Suellen’s mid-80’s mother to have one, because her monthly Social Security check is too high. “It’s under $1500. But to them, it’s a king’s ransom,” she quips. “These so-called authorities are living in La-La-Land. They don’t understand that there are all sorts of health and other very basic expenses that the standard programs just don’t cover. My Mom has to visit some kind of health practitioner nearly every week, for instance. Just the transportation to and fro is a burden.”
Suellen herself can no longer afford private health insurance, and she is too young to be eligible for government programs. A long-term breast cancer survivor, she should be going in for regular check-ups but hasn’t been able to do so for over a year.
A while ago, she applied to a religious-based charity which was widely touted as helping out those who were “falling through the cracks” in terms of healthcare protection. “It was a humiliating experience,” she reports. “The representative they sent to visit us commented on my Mom’s ‘high’ Social Security income, as well as the general attractiveness of our apartment and our dress. Then she demanded to know what we were eating, as if we must clearly be squandering our meager income on lobster, caviar, and champagne.”
Needless to say, the charity turned them down.
We’re Here, We’re Angry, We’re Compassionate
Suellen is outraged at what she calls a “Culture of Meanness” permeating the US right now. “Income disparity is becoming too striking to be ignored much longer,” she feels. “There are the few who are obscenely wealthy and the many who are struggling to make ends meet – a large proportion of whom are Boomers.”
Our generation, she believes, has to acknowledge that if we do not unite and act together, we could be in big trouble just up the road. “My family’s story is anything but atypical,” she says. “What happened to me could happen to nearly any Boomer with elderly parents. One day, you’re comfortably middle-class. The next day, you’re part of the New Poor.”
Although a lifelong Democrat, Suellen is so far unimpressed with either major party’s approach to what could be a coming healthcare crisis for elderly Americans and those who take care of them. “Instead of rabid partisanship, we need honest discussion and compromise on this issue,” she believes. “And we have to consider not just the situation today, but also the situation twenty years from now, when Boomers themselves will be elderly.”
Suellen finds herself moving more and more towards the center of the political spectrum today, where she believes the majority of Baby Boomers now are. “Very few Boomers are on the fringes,” she says. “We are Centrist Republicans, Centrist Democrats, or Centrist Independents – but they key word is Centrist.”
She’s also disturbed and concerned by the ongoing propaganda campaign which seeks to brand the Boomer generation as a whole as inward-looking and selfish. “I think the exact opposite is true,” she says. “There are exceptions, of course, but most Boomers are concerned, compassionate, and caring. Look at our record on civil rights, women’s rights, volunteerism – or pure political activism.
“In fact, Boomers have possibly cared too much about righting every wrong in the country except those wrongs directed at us. It’s high time we demanded some reciprocal compassion towards our own generation.”
What Do You Think?
Have you had to decide whether or not to place a frail, elderly parent in a nursing home or assisted-living facility? Tell us your story.
What do you think of Suellen’s decision to put her career on hold caring for her parents?
Do you agree that most other countries in the world respect and revere the elderly more than we do in the US?
Are government agencies and charities all wrong when they evaluate which elderly people need help and which don’t?
Do you agree with Suellen that those of different political opinions need to compromise to ward off a healthcare crisis caring for our aged population?
Are Boomers not only the Angriest Generation right now, but possibly also the Most Compassionate?
For the Introduction to Baby Boomers-The Angriest Generation, please go to: http://bit.ly/6kby6
For Ellen’s take on activities for the elderly, Summer Camp for Seniors: http://bit.ly/XTAaE
For Ellen’s idea of a University for Elders: http://bit.ly/1bCAID
For Recession? What Recession? Not in the Senior Services Sector: http://bit.ly/s3zRv
This post was meant to be a reply to the comments made by an acquaintance of mine. As usual, however, I have a terrible tendency to be verbose. So instead of writing it as another reply and thus make unreasonable demands on the readers’ time and patience, I have decided to write this as a separate post. It is a response as to why I believe efforts among countries to get out of the economic crises we’re facing should be coordinated and why I tend to advocate for free trade among nations, although only a few of the reasons I favor free trade are here.
To the extent that different factors are affecting each country in economic crisis differently, a coordinated effort among the major economies to pull the world out of recession will have a better chance of success than if each went their separate ways. However, to be realistic, coordination is likely to take some time to get the cooperation of the major nations, and time is something that is in short supply as the crisis seems to be spiraling ever faster. Thus countries may no longer have the luxury to engage in a cooperative effort in some areas.
As for the US trading relationships, the trade agreements we have with other nations do take some of our sovereignty away as the US cannot unilaterally abrogate those agreements without retaliatory consequences and in some cases violating the US Constitution’s provision that treaties between the US and other nations that are ratified by the US Senate are to be treated as “the law of the land.” We are interconnected with other countries whether we like it or not.
As someone who believes in the dignity of every human being, I would like to see a world without human poverty. For now, I realize that this is not possible. Nevertheless, more people can rise out of poverty if they are able to have the opportunity of selling their creative efforts, either the goods they create with their hands or the intellectual output of their minds, to the people of the more prosperous countries of the world such as the United States. This is one reason why I favor open markets. However, you are correct to say this is a hard sell to a public that seen jobs shed as industries have declined for many years, and many of those jobs won’t be coming back. Yet I cannot help but think that the nation’s efforts to retrain, reeducate, and reintegrate displaced workers back into the economy have been abysmally ineffective and inadequate.
Now for the “full disclosure” statement that will give you an understanding of my position. I am the son of immigrants to the US. I have cousins who are citizens of other countries on two continents. Their well-being is very important to me. If I had the dichotomous choice of seeing my foreign cousins or my American neighbor prosper, I’d would choose to see that my foreign cousins should prosper. After all, blood is thicker than water. Fortunately, such a dichotomous choice need not have to be made. Both my neighbor and my cousins can prosper together. My neighbor can do the work that he is best-suited for and my cousins can do the work they are best suited for and they all will be rewarded for the fruits of their labors together.
Liberal Vision have hosted a post by Rob Waller of the Libertarian Party on the Minimum Wage (he usually blogs here).
Now you might remember from comments below this post about the absence of good right wing economics sites that I am sceptical of libertarianism for being simple minded. It ticks the box of Econ 101 thinking perfectly: the supply and demand graphs are given, the historical/path-dependent, dynamic aspects of economics are missing or buried, and the real world evidence that things do not always meet neatly at the cross of the S and D is somehow ignored.
Sadly this post does nothing to disabuse me of this belief. Here are the objections to paying above the Min W:
The first and most obvious is that it raises the cost of business — unnecessarily — as businesses are forced to raise the wages of low skilled employees . . . The second — and most important — reason is that the minimum wage will never actually raise the value of labour. It is impossible to raise an asset’s value by simply declaring it has a greater value.
A mighty big straw man is knocked over right there. The intention of the minimum wage is not, surely, to tell people blindly what labour is worth.
It is to change the incentives for businessmen. Being skin-deep, libertarian economics can only look at the first-order question: given my existing markets, levels of capital, technology and so on, what would putting a floor under a wage level produce? And then, yes, the answer is obvious. Higher W, lower Q of Labour. Easy. Vote Libertarian.
But there are other decisions. When a business makes decisions, it also decides what mix of capital (K) and labour (L) to work with. In France, for example, the (overly) restrictive laws on hiring and firing put a large cost on hiring labour. So decisions are biased in favour of K. So each unit of L has more K to work with and – hey presto! – France also comes out as a more productive economy.
But France botches it, in my view. It produces a sort of two-tier economy – one where there are a number of high-value jobs, secure and life -long, but then a lower employment rate. The UK economy has 31 million employed, the French just 28million. Same population.
Would the minimum wage produce the same result for the UK? I don’t think so. It is a floor, not a general levy on all labour at whatever level. What it does is, in effect, say to businesses:
‘If you are looking to found productive enterprises, you must do so on the basis of relatively valuable labour. Why? Well, if you start running businesses that are so unproductive per capita that you can only make profits when paying 3 pounds per hour you will:
be passing on many of the social costs of low-waged labour onto society in general (tax credits etc). That is clearly ineffecient, or wrong.
be contributing to the UK being on the wrong economic model. ‘
What does the last point mean? Recall the massive debate about why Europe pulled ahead of China (from Right to Left). In a nutshell, human society breaks free of drudgery and gets into prosperity when it starts becoming more productive per head of labour. There is a compelling case for saying that Europe pulled ahead because its starting conditions tended it towards being more productive per head: and therefore, towards having a big incentive to creating labour-saving machines. Whereas the Japanese, for example, were geniuses at finding ways of being more productive per acre: they could get so much rice out of a paddy field, it was silly.
Trouble is, this implied a massive, continuous use of low-paid labour. Weeding continuously.
The minimum wage is good because it skews British incentives towards doing things that ultimately increase the productivity of each person, as opposed to finding any way possible to make economic value, even if that means getting teams of adolescents to do lots of low value things. It says ‘below here, we will not go’. Ultimately, inequality is solved by increasing the productive potential of individuals, through education and higher capital per head.
Investment, education, rather than trapping people in low-learning zero potential jobs just because it suits the sort of simple minded economics that only libertarians fall for.
(BTW, if the minimum wage were 10 quid, I could see the point. But 5.80? jeez).
The word “Patriotism” is used a lot these days. Some people understand patriotism to be the unconditional and unquestioning support of the government, others hold that patriotism is the defense and advocacy of certain values, and still others maintain that patriotism is any participation in the process of government. But what is true patriotism? At its most basic level it’s simply a love of one’s country- but what does that mean exactly? Who is being patriotic, the person who supports the war in Iraq or the person who opposes it? Who loves their country more, the person who opposes high taxes or the person who lobbies for them? In reality, you can’t attach patriotism to any one side of the political spectrum- after all, a person who believes that strict gun control is right for the country is being just as patriotic as the person who wants as little gun control as possible (provided his motivation is a desire to do what is right for his country).
Sadly, the word “Patriotism” is often misused to the point where its meaning changes altogether, resulting in what we would call “Jingoism”- the belief that one’s government is right in all things. We see this on both sides- people are labeled as unpatriotic (even anti-American) for protesting the war in Iraq and people are labeled as unpatriotic for refusing to support Obama’s policies. If patriotism is “the love of one’s country” then jingoism is a dangerous obsession.
Communists have experienced this more than others- indeed, the 1950s government detachment for investigating and combating the Communist ideal in America was called “The House Un-American Activities Committee”. Now were several problems with the committee, primarily that its creation was a gross violation of the constitution, and also because of the assumption it made that Communism was somehow unpatriotic and anti-American.
Now this raises an interesting question- which of these two world views is more patriotic? Capitalism or Communism?
Well, firstly let us investigate the ideals of Capitalism. As has been stated many times by now, the purpose of Capitalism is capital- money, which is to be obtained through the buying, selling, and general exchange of goods and services. Government regulation is equated with corruption, and tariffs and subsidies (created primarily for the purpose of benefiting the country’s local infrastructures and citizens) are deemed to be nothing more than hindrances to the economy’s growth. So is Capitalism patriotic? Absolutely not. If the purpose of Capitalism is the acquisition of money, then the Capitalist’s loyalties are not to his country but to the markets- and a country is made up of people, not economies. For example, a person in one country could attempt to acquire money through selling products- this is Capitalism. However, if the products he is selling are the country’s natural resources, or even sweat-shop labor, then this- while Capitalist- is far from patriotic. Or take for example the selling of faulty or shoddy products. If a person sells products decorated in lead-based paints, then he- while fully following the creed of Capitalism- is damaging the public and the country.
So what about Communism? Well, the primary purpose of Communism is an attempt to improve society by creating justice and equality through the abolition of the class system, private property, and currency, and the establishment of a free, democratic government. Simplified by Chairman Mao, the Communist’s primary goal is to “serve the people”. Now as stated above, a country is not comprised of its wealth or markets or economy but of its people. What could be more patriotic than a system where serving the public is the end goal?
In short, in a contest between the two, Communism is by far more patriotic than Capitalism can ever hope to be.
I first happened upon the Economics version of the “Professor” series of these Social Sciences and Arts sites, each of which has the subject preceding Professor. They include:
EconomyProfessor.com
PoliticsProfessor.com
SociologyProfessor.com
PhilosophyProfessor.com
TheologyProfessor.com
ArtProfessor.com
Each of the different sites is of the same format, generally with terms categorized into theories and theorists, or their equivalent for the particular subject. Each of the terms is then defined, in a similar way to that in a dictionary or glossary of terms. The definitions are trawled from primary or secondary sources, and you can suggest amendments or additions.
There also tends to be a couple of useful links out from each site, be that to a discussion forum or online journals, etc.
These appear to be useful sites to students of the subjects, however, these aren’t my particular subject areas, so, as always, you’d need to assess them against other sources to validate accuracy.
In this series about Job Insurance, I have discussed both the technical and intellectual means of a Job Insurance system. But it’s also important to explain what the ultimate purpose of a Job Insurance system is – namely, the establishment in enforceable legislation of the right to a job.
And no term has been so abused – witness the capture of the term “the right to work” – or so contested as the right to a job. So we must begin within explaining what this idea means, and where it came from?
History of an Idea:
Well before the advent of capitalism, human societies frequently established the idea of a basic right to subsistence. The ancient Romans distributed subsidized grain to the common People of Rome to provide even the poorest with enough to survive on; in the Middle Ages, the village commons were established and maintained to ensure that even the lowliest cropper would have a patch of earth to graze an animal or grow some crops. The right to work emerged very early on, more or less as soon the Industrial Revolution in Europe created a substantial population of people whose survival hinged upon finding steady work.
While it is little remembered in the histories of the French Revolution, one of the acts of the revolutionary government was to declare that democratic governments had an obligation to provide work for the unemployed, and establish a series of public workshops or ateliers across France. In these workshops, the unemployed poor would be given a living wage as a right of citizenship; along with the Rights of Man and Citizen, the leaders of the Revolution argued that “chaque homme ayant droit à la subsistance.” Work ranged from public works (roads and bridges were priorities in rural areas where poor transportation systems were a great hardship for peasant farmers; the expansion of harbors and canals were vital to the well-being of port cities), to the production of market goods like spun wool and rope (important for areas that depended on seasonal industries such as wine-growing or silk production), as well as charitable schemes for workers with disabilities. And in the public factories of Paris, the link between the right to a job and the ideology of revolutionary republicanism was made most clear - the sans-culottes of Paris would put 750 muskets a day into the hands of the revolutionary armies sent out to fight the forces of monarchy in the name of “liberté, egalité, fraternité.”
Thereafter, the right to work became a recurrent theme across the 19th century Atlantic world. In the 1848 Revolution, the call to establish a right to work through national workshops found itself realized in France, and a common element of workers’ organizations’ platforms throughout Europe. In the United States, the demand for the right to work emerged after the Civil War and the rapid expansion of industrial labor, especially in the North. Henry George’s Progress and Poverty (1879) noted that “The ideas that there is … that it is the duty of the government to furnish capital or to furnish work, are rapidly making way among the great body of the people who keenly feel a hurt and are sharply conscious of a wrong.” His proposed single tax on the value of land rent would provide the finances for the provision of “full employment.” Edward Bellamy’s Looking Backwards in essence predicted a future in which government workshops would completely replace private corporations, and thus ensure lifetime full employment by right (with retirement at age 45!). Coxey’s Army – the very first March on Washington, in 1894 – proclaimed that:
“It is the crime of the Nineteenth century that three millions of our fellow citizens are in involuntary idleness, thus causing an irretrievable loss of millions of dollars daily, hence we demand that whenever any state, territory, township, municipality or incorporated town or village deem it necessary to make public improvements they shall be permitted to so as to furnish employment for all surplus or unemployed citizens in beautifying and improving the country when there is a surplus production or no demand for labor in production at living wages.”
And yet, each successive wave of economic revolt broke against the bulwarks of Victorian liberal orthodoxy – the gold standard, the balanced budget, and the free exchange of currency – the right to a job remained unfulfilled, living in the imaginations of social reformers, industrial workers, and street-corner revolutionaries. Even at the height of the Progressive movement in 1912, the right to a job was seen as too expensive, too vulnerable to patronage, too socialistic. Not until the Great Depression demolished those three pillars and through necessity expanded the realm of political possibility to include the provision of public employment through the WPA could the right to a job begin to be included within the bounds of practical politics. By 1945, Swedish Social Democrats had been perfecting their jobs programs for over a decade, in Britain, William Beveridge looked to Keynesian economic planning to establish Full Employment in a Free Society, and in the U.S Franklin Roosevelt gave the right to a job pride of place in his Second Bill of Rights.
And, at least in the United States, that’s as close as we got.
Meaning of an Idea:
Part of the problem is that the right to a job belongs to that most contested of intellectual categories, social rights. While in most countries, the concept is (mostly) uncontroversial, in the U.S the idea that social rights exist has been in intellectual disrepute for over thirty years. When we talk of the New Deal order, what we often mean are a series of social rights – the right to Social Security is the best known, but you can also think of the FDIC-guaranteed right to security of bank deposits, the GI Bill of Rights’ commitment to veterans, and so on. The Great Society, while ultimately less successful, still succeeded in establishing a limited social right in health care (at least for seniors and the poor). In the 1970s, the Supreme Court came within a hairsbreadth of establishing a right to welfare. And yet since then, the idea of social rights has been essentially excised from the political discourse as too radical, too 60ish, and hostile to the overriding logic of the market.
However, the right to a job is different from other social rights in two key ways. First of all, the right to a job is closer to the right to Social Security in that it stems, not from the rights of citizenship or humanity, but from the status of a worker. Historically, this has been a problematic issue. “Economic citizenship” or “employment-based entitlements,” given the limitations of New Deal policy in regards to race and gender, tended to be limited to white men in industrial jobs. However, the privileged status of workers also meant that work-based rights were also politically secure, especially in comparison to citizenship-based access to programs like Medicaid and AFDC. In this regard, the right to work seeks to leverage what is otherwise a politically conservative trend on behalf of the currently and future unemployed, a group that has held virtually no political power save in periods of extreme economic crisis.
Second, the right to a job is an earned right, as is the case with contributory social insurance programs. In a job insurance system, of course, the claimant can point to their status as a premium-payer as a source of benefit by right. However, in any jobs program (regardless of the mechanism of financing), the worker receives wages in exchange for their labor. Although it’s rarely acknowledged these days that labor is a source of value (that would raise too many questions as to whether workers are being paid fair value for their labor), the goods and services that American workers can be valued just as easily in public employment as they can in private employment. (More on this in future installments.) While it is difficult for most taxpayers to draw a line between their taxes and the public services they receive in return, the return to taxpayers from jobs program is visible all around them:
In this sense, the right to a job creates a horizontal social compact between employed citizens and unemployed citizens, (as opposed to a vertical social compact between citizens and the state), where the state acts merely as an intermediary manager. (Note: in representative governments, all social compacts are ultimately horizontal, but more on that later.) And this kind of social compact has a name – solidarity. It is not an accident that Sweden’s jobs program was historically contemporary with the expansion of the Swedish labor unions to about 80% of the workforce and a near-half century of Social Democratic Party political dominance – the three phenomena all fed into the other. If a job insurance program were to be enacted in the United States, it is my strong belief that we would see a similarly change in social attitudes, as the employed and unemployed benefit from the same social and economic programs, and as the unemployed shift from “a drain on my taxes” to “the people who built my kid’s school.”
Conclusion:
That last thought points to something that progressives often ignore when it comes to social and economic policy – the success or failure of a program is as much an artifact of public opinion as they are a question of policy design. There is a technocratic tendency within progressivism, in part inspired by progressive attachment to scientific inquiry and a belief in technological progress, that policy should really be a scientific question, in which getting the details right leads to success.
But the most successful progressives, like FDR, always understood that changing people’s minds was critical to policy success. When it comes to jobs policy, we are ultimately engaged in a conflict with the intellectual instincts of people who’ve been taught to blame themselves for losing their jobs rather than blame the economy, who’ve been told that individual striving is more important than social protection, and who have been taught that the poor and the unemployed are a dangerous, dislikable “other.”
I used to think that all the Mexicans who can would move to the US and never leave. Recently I’ve been having my doubts. Even if another country is wealthier than yours, you may be poorer there because you do not speak the language, have no recognized education and do not know anything about the local customs.
You also would be away from your family and friends, and from the life that you know, which may be worth more than a small improvement in your finances.
The problem with Mexico is that it’s not just marginally poorer than the US, it’s massively poorer. It’s not as if a person is going from $6 an hour to $10 an hour. He’s going from $10 a day to $10 an hour.
I went to Mexico several times just this year, both on and off the beaten path. A lot of the people I met were returnees from the US. During my previous trips, I didn’t see nearly as many Mexicans who went back.
Those who can speak English well make a lot of money there. Waiters, cab drivers who speak English make almost as much money in Mexico as they would in the US, but life is much cheaper there than here.
I was wondering how Mexico can be improved to make it good enough for Mexicans to stay there. It doesn’t have to be on par with the US, but it can’t be as poor as it is now.
Building the wall would certainly help slow down Mexican immigration down to a trickle, but it would do nothing to get rid of the 12 million who are already here.
I said before that I would support expulsion of all illegals, but it’s not going to happen in the foreseeable future. If anything, we might get amnesty rather than deportation. It’s not a matter of what I want, it’s a matter of the government that we have. Realists like to berate others for not being realistic and preferring facts they like to those that exist. As one wrote, facts don’t change based on our ability to stomach them.
But that is certainly true for our government. We may not like the government that we have, but that’s our government and there’s no better alternative for the foreseeable future. Quick, name one major politician who support massive deportation of all illegals?
Improving the Mexican economy would be something that even liberals would support. I don’t support outright foreign aid, but I wonder what can be done in terms of building American resorts in Mexico, building condos for retirees who want to live in a warm climate but can’t afford Florida or California, investing in Mexican oil, etc.
All that would be done with private money by investors looking to make a profit. Maybe the Mexican government can be persuaded to lift taxes on major investors, while at the same time relaxing regulations.
I would also support paying some money to illegals who agree to leave and invest the money in the Mexican economy, such as buying a home or a business. France has a small version of this program. If we pay $10,000 per illegal immigrant and 5 million Mexicans leave, that’s only $50 billion, chump change for a country with a $4 trillion annual budget. Considering that the illegals will take a couple of years to leave, we are really only talking about a $15-25 billion hit, about 0.5% of the annual federal budget.
For illegals, this may be a great opportunity. A family of 4 would get $40,000, enough to buy an apartment and a small business in Mexico. If they invest in the Mexican economy, the former illegals will be less likely to want to move to the US, especially if we make it hard for them to cross the border again.
It would also be a significant boost to the Mexican economy, creating all sorts of construction and small business jobs. Just the $50 billion brought back by illegals would boost the economy several percent, enough to create several years of rapid economic growth.
American investors, meanwhile, would be keen on hiring English-speaking Mexicans, and illegal immigrants would be perfect. If taxes on large investments could be lifted at least temporarily, there would be a lot of investment. Mexico is close, relatively familiar and already has some Western infrastructure, both in terms of business and tourism.
Having 5 million small scale investors and thousands of big-time American investors suddenly flooded into the Mexican economy should boost the country’s economy from $14,000 GDP per capita to something close to $20,000, which is almost as high as Europe.
I get that there are 12 million illegals and this would have to be done on a massive scale. What other ideas do others have?
There’s no reason why Mexico can’t be the new California – warm weather and oil. Maybe it will bring us back the old California.
One in three Mexicans would migrate to the United States if they had the chance, and many would go illegally at a time of rising drug violence in Mexico, a survey released on Wednesday showed.
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For resources on Making It Happen contact us @ www.teddecorte.com.
This post very briefly touches some aspects of the informal sector in India. Since, this sector is not organised strictly on the lines of capitalist systems, theoretical models find it difficult to accommodate them. And owing to the wide cultural and social differences in India, the informal sector is to that extent heterogeneous and differentiated. But, the first step is to identify such a sector and to broadly identify similarities, especially with respect to the production process and the organisation of the production process.
The significance of the unorganized sector is seen when one takes a look at the NSS survey 1999-2000 – around 92% the Indian workforce (around 370 million workers) is employed in the unorganised sector. This is an extremely large section of India. Hence, any macroeconomic analysis (fiscal policy, monetary policy, international trade, etc) ought to look at this section of the Indian society.
The unorganized sector consists of small economic entities which are diverse and differentiated in nature. This sector (a.k.a. informal sector) is larger than the organized sector in terms of the relative share in GDP as well as the workforce. Moreover, the unorganised sector produces about 60 per cent of India’s GDP and also provides livelihood to nearly 93 per cent of the work force. [Kabra 2003] Whereas a report by National Commission for Enterprises in the Unorganised Sector (NCEUS) “estimated the un-organised/informal sector workers as comprising about 86% of work force in the Indian economy in 2004-2005 and informal employment both in the organised and unorganised sector as 92%.” How can any macroeconomic analysis/model leave this sector out?
Now, let us move on to how data is generated for this sector. As the ‘establishments’ in the informal sector are not governed by any legal provisions, no regular data is available such as that of the corporate (organised) sector. The Annual Survey of Industries (ASI) “provides statistical information to assess and evaluate, objectively and realistically, the changes in the growth, composition and structure of organised manufacturing sector comprising activities related to manufacturing processes, repair services, gas and water supply and cold storage” pertaining to the organised sector. [ASI 2005-06] Based on the Population Census (PC), the Economic Census (EC) is prepared which forms the reference for carrying out surveys to capture the informal sector. These surveys are conducted by the NSSO and are called as enterprise surveys.
To sum up, it is evident that the informal sector is an important contributor towards GDP as well as in terms of providing ‘livelihood’ to a large section of the Indian populace. And, we have data sources such as NSSO data which try to capture the process of production in the informal sector and their economic characteristics, which need to be looked at urgently. For any development process that does not explicitly address the informal sector will be blind towards the Indian reality!
References:
Kabra, Kamal Nayan (2003), The Unorganised Sector in India: Some Issues Bearing on the Search For Alternatives, Social Scientist, Vol. 31, No. 11/12 (Nov. – Dec., 2003), pp. 23-46.
ASI 2005-06, Introduction, Accessed at http://www.mospi.nic.in/stat_act_t3.htm on 26th September, 2009.
There’s a debate in the US about cap-and-trade as a means to curb greenhouse gas emissions. In a short article in the Harvard College Economics Review, Charles Kolstad, an economist at UC Santa Barbara, claims that a cap-and-trade system is not a tax in disguise, something which has been claimed.
In your first environmental economics class, you’ll learn how a cap or quota on something, pollution for example, is equivalent to a tax in some aspects. They may spread income around differently, but not necessarily. They may also differ when it comes to efficiency. An important issue is how the price (the price of the quota or the level of the tax) is set. Kolstad writes
A [...] subtle advantage of a cap-and-trade system is that the pollution price is induced by a market, not chosen by a bureaucrat [p. 23].
But how does Kolstad argue his claim?
What is the difference between a tax and a revenue-raising cap-and-trade? The primary purpose of a tax is to raise revenue; a secondary purpose is to modify incentives (perhaps even perversely). The primary and fundamental feature of a cap-and-trade system is that it induces a price on pollution, providing an incentive for polluters to innovate and clean up their act. A secondary feature is that revenue is collected. That secondary feature can be neutralized by reducing taxes elsewhere in order to make the program revenue neutral. This is why a cap-and-trade system is not the same thing as a tax [p. 23].
The argument is semantic and I don’t find it convincing; I’m tempted to say not even true. To be sure, the encyclopedia entry for tax on dictionary.com says:
[I]mposition of compulsory levies on individuals or entities by governments. Taxes are levied in almost every country of the world, primarily to raise revenue for government expenditures, although they serve other purposes as well (my emphasis).
Landing fees on harvested fish, for example, is a tax whose primary purpose is to modify incentives and not raise revenue. Further, any tax can in principle be made revenue neutral. However, Kolstad is more concerned with the political process of getting cap-and-trade through legislation, where, presumably, semantics are important.
[A] revenue-neutral cap-and-trade, which cannot be labeled a tax, may have the easiest time making it through the tough political obstacles it faces [p. 23].
The G20 conference, being held in beautiful downtown Pittsburgh, has apparently led to a decision to shift the gravity of international coordination on economic policy from the G8 to the Group of 20, according to the Financial Times. The G8 will turn its focus to international security. I question the effectiveness of this decision if the goal is to avoid financial crises such as the one that we have been engulfed in for the past 20 months for two main reasons. Attempts to establish a new international norm for evenly distributed development, financial regulation, and trade are inherently distributional. These will bestow different costs and benefits to various countries which will make finding, let alone implementing, a common solution increasingly difficult as the number of actors involved in the negotiations increases. Because of the difficulty in finding a solution with so many more actors, any agreement reached is likely to be of the third- or fourth-best variety (if that). Coordination is a good thing, but formalizing it in this manner is likely to result in no better (perhaps even worse) outcomes because of the inability of a few countries (G7 or G8) to come to an agreement which sets the standard and the agenda for other industrialized countries.
World leaders are gathering in Pittsburgh to discuss banking reform and other pressing matters. According to the Guardian, the discussions are likely to be rocky.
European leaders appeared to be on a collision course tonight with Barack Obama and Gordon Brown after Angela Merkel, the German chancellor, warned that the G20 summit must not be diverted from clamping down on bankers’ bonuses and hedge funds.
The article continues.
Sarkozy has suggested that bankers’ pay should be capped at a certain percentage of their institution’s assets or revenue.
Fredrick Reinfeldt, the Swedish prime minister and current president of the European council, promised a “specific discussion” on bonuses including proposals for individual caps on bankers’ bonuses, that bonuses would be linked to achievement and not given if there were losses, and that there would be transparency on precise decisions taken by boards. “We from the EU will ask to be very clear on that” he said.
Putting aside the ethical and political debate, if Fredrick and Nicolas have their way, this would particularly riveting for anyone in the business of HCM software.
It looks to me this is a demand for an integrated employee goals / performance management, compensation and incentive compensation system that also integrates into a corporate performance and risk management system, combined with a significant dose of compliance reporting.
Ed Morrissey a Hot Air got hold of the summer 2009 Congressional Budget Office report on the health of the Social Security “Trust Fund”, and the news isn’t good. The CBO is now saying, at least to certain Congressmen, that Social Security will run a primary deficit in 2010 and 2011, briefly run a cash surplus between 2012 and 2015, and return to what is presumably a permanent deficit in 2016.
Recession woes.
Can’t the government just print more money, yep, that’s what is doing right now.
According to data released by the Organization for Economic Cooperation and Development may indicate that the answer is yes. “The relationship is not perfect, but it is persistent,” The New York Times reports:
To no one’s surprise, France followed the most leisurely schedule of dining; those surveyed reported they spent an average of 135 minutes each day. The fastest eaters were in North America; the United States, Canada and Mexico were the only three nations to report fewer than 75 minutes a day devoted to eating and drinking.
As the accompanying chart shows, the 10 countries where people spend less than 100 minutes eating and drinking each day have, as a group, consistently shown higher economic growth than those that took more than 100 minutes to savor their daily repasts.
(Click to enlarge)
But of course, correlation does not prove causation:
There are cultural factors at work, and the picture could change if there were data from more countries. Certainly eating habits alone do not determine economic growth.
Even if there is a relationship, it is not obvious which is cause and which effect. Do people spend more time eating because they have less to do in economies that are not growing? Or do economies stumble because people are savoring a glass of wine when they should be working?
So there’s a decent chance you’ve been to college or taken a college course or know someone who has been to college. Now, books for college are *very expensive*, even though there’s a lot of competition in most subjects and it’s not nearly so expensive to print a book. The problem is that it’s not the students (the payers) who choose the books, but the professors, who are not affected by the price of their choice of textbooks. So, publishers of textbooks can set extremely high prices for textbooks without fear of losing their customers, since it’s not their customers, per se, who are choosing their product, but a third party. You kind of have the same problem in healthcare, where neither doctors nor patients shoulder the cost of good health. Doctors are not rewarded for healthy patients, but rather for running lots of tests, and it’s not patients who pay the cost of having these tests, but rather insurance companies.
Finally, I had to buy a ton of paint and it cost a ton of money and some other bullshit about economics yadda yadda yadda.
The East European states fear (and not just the Atlanticists), that Washington was moving closer to Moscow in order to sacrifice them, and to reduce even further the importance of the region is still very low in the United States. Barack Obama’s decision was perhaps the worst of the Poles. advertisement Barack Obama recent decision to the United States withdraws from the much debated and Eastern Europe to install anti-ballistic missile defense system installation, arrange a number of areas in Washington’s foreign policy.
The official announcement is in the background that the proposed system on the one hand it is already unable to fulfill the tasks which have been established, and Iran has intercontinental ballistic missiles (ICBMs) rather than medium-and short-range missile development has placed the emphasis in recent times. The Czech Republic (radar), Poland (rocket) and a yet unnamed Middle Eastern country (an early detection radar system) to install complex from the beginning there were a number of critics, saying, in addition to the suspected Iranian nuclear atomic bombs were not able to protect the United States, even the extra sensitive issues between Washington and Russia in NATO against the tuner. The installation of the withdrawal decision in this context should be investigated. The Obama administration’s action since the appreciation of relations with Moscow. The Medvedev-management in many ways seems indispensable to the West. One reason is Afghanistan, where the gradually growing international force (ISAF) in the supply of up to 2008 occurred predominantly from Pakistan. However, since the local extremists are almost daily attacks have prevented the ISAF logistics, alternative routes have to look after. Afghanistan’s northern neighbors, the various excellent opportunity to do so, but there is only overland through Russia to get to Europe. In 2009, the year of convergence can be seen as a sign of Moscow’s first rail shipments transiting allowed, then a few months ago, mainly U.S., NATO crosses as well. Another area in which there is no progress without Russia, the Iranian nuclear developments. Moscow has so far of any major American initiative, which aimed at the United States, that Tehran give up – always denied – through research for military purposes. Today’s announcement after Medvedev administration expressed satisfaction for the statements were made immediately, and it is not accidental, if the local foreign commentators have accounted for a major diplomatic victory. Washington now needs Russia’s support is much greater than even a year earlier. The 2009th Iran’s June presidential elections until after the much criticized President Mahmoud Ahmadinejad may continue a policy, while the general opinion that the Iranian leadership has strengthened the influence of the Islamic Revolutionary Guard Corps. This body is charged, inter alia, the Iraqi Shiite militia, Hezbollah or Hamas support. The U.S. administration fears that Tehran will become more radical and accelerate the nuclear and ballistic missile development. Washington’s decision, however, not only the concerns raised in Prague and Warsaw, but all the eastern European members of NATO, Russia, who still held the potential military threat. The North Atlantic Alliance, there are two basic position in relation to the eastern neighbor. One group led Germany to a balanced and pragmatic relations seeks allies in the future and it basically looks Moscow. The other group are the Atlanticist countries there are people who – often because of past history – is not considered outdated Russian military threat in relation to talk. In particular, the Baltic states and Poland, to play key role in the NATO mission has been underway since the fall of the Cold War and in spite of reflection, the task will continue to consider the potential to maintain a military capable of protecting all members of the traditional conflict. In such circumstances, the East European states fear (and not just the Atlanticists), that Washington was moving closer to Moscow in order to sacrifice them, and to reduce even further the importance of the region is still very low in the United States. Barack Obama’s decision was perhaps the worst of the Poles. Warsaw, individual governments regardless of political orientation from the outset with the Atlanticist policy, and Washington, NATO’s presence in their country to guarantee the safety of the Russian threat. Accordingly, a major role in Poland as far as strength in Iraq and Afghanistan wars. In the latter area, as many troops as Spain or Italy, while political and economic terms, there is not a league with these countries. What do you offer the American missile defense shield instead of driving? Acknowledging that the previous plan would have provided full protection, the new vision of a multi-platform development system based on first part of Iran from the short-range ballistic missile threat. The Intercontinental, half the world is able to fly, 7 km / sec speed aircraft missiles for decades, researchers can capture, but has so far failed to secure the establishment of effectively functioning system (Moscow denies this connection, of course, its own system). The missile defense shield, which emerged after the withdrawal of any opinions nyilatkozatdömpingben also spoken to the technology evolves from a canceled program, similar to the current system will also be installed again. But Russian leaders probably the best liked the idea of a joint US-Russian defense establishment shield raised. That would be to re-sign to the world, especially the United States has in this area also need Russian help.
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On September 8th, 2009, 50 Cent became the first rapper to write a book of management advice: The 50th Law. Its unfortunate that the book boils down to a cliche “be authentic” self-help management book, writes Lucy Kellaway of the Financial Times. 50 Cent’s drug dealing tenure gives him much to offer managers, particularly during a recession.
Dealers are fitting models for conducting business during a credit crunch since “they live permanently in a world of zero credit,” Kellaway writes. Nick McMaster explains that “cost-cutting CEOs must detach themselves from employees whose jobs are in peril, just as hustlers must disregard customers’ welfare.” One difference, Kelleway points out, is that “in an emergency a drug dealer must be able to pop his product in his mouth and swallow it at a moment’s notice—whereas the CEO seldom finds call for such extreme action.”
One investment guru listed him as top 10 Malaysian CEO’s in the last 50 years. Quite a modest estimate considering his accomplishments. Indeed CIMB is a force to be reckoned with. Below is Nazir’s interview with FinanceAsia. I’ve highlighted some of the key points of the interview.
Nazir (left) with CIMB Chairman (C) and the King (R)
What has been the key to CIMB’s positive financial performance over the past year?
I think the performance has been pretty consistent with the rest of Malaysian banks. This is fairly surprising to some people, as we have a fairly large business involving capital markets and indeed we are the most active in the global financial markets. We were able to achieve this in part because in 2008, the turnaround of our consumer banking business actually came through and therefore that was able to offset the 35% decline that we saw in our capital markets business. At the same time, we took rather big steps with regard to our counterparty risk positions and also managed our liquidity very prudently and so this helped insulate the firm from many of the global shocks.
What was the most challenging decision you faced during that period?
Actually, the most challenging decision I faced was whether to proceed with the acquisitions we had embarked on during that period. If you looked around in the region and elsewhere at the time, people were reneging on deals left, right and centre. And there were times when some people thought that finance was going to fall off the cliff. So it was quite hairy as we had M$5 billion ($1.4 billion) worth of acquisitions on the plate. We had to look at it all very carefully, steady ourselves and believe in our view, which is that this is for the long term and we can still create value even though valuations were off, relatively speaking.
What was the original motivation behind the strategy of acquiring more banks and becoming a regional player? In the early part of 2004 we were a liquid, Malaysian investment bank that had 30%-40% market share, and when we looked ahead we were wondering where to go to grow? So we decided we had to look around regionally. And then we made this rather dramatic acquisition of GK Goh. Then we started looking around even more in the region and quickly we realised we were not going to get very far without a bigger balance sheet. At the same time, I looked at the way accounting was going — mark-to-market accounting, etcetera — where accountants lost their prudence and basically decided to go with anything that smoothed out earnings. That made it very difficult to be a listed pure investment bank. And the third thing that came into play was a convergence of interests. The GRC [governance, risk management and compliance] reform in Malaysia was just beginning, and the new Khazanah [the investment holding arm of the government] mandate came into play — they were encouraging companies to re-energise themselves [and merge]. So we had a sister bank, Bumiputra Commerce Bank, that was in dire straits. There was a convergence of interests. The holding company of BCB hired McKinsey and asked them what to do. And when they came to me and asked me what I thought, I said to them, ‘Look, for the first time as consultants you are actually going to get a solution. This is the solution. We merge the investment bank and the commercial bank and I will run it.‘ In the past, there had been overtures for me to just cross over and go run the commercial bank but I thought that lacked scale. The best thing to do was to merge the two entities, to merge the people. And all that came together in 2005. From a larger perspective this was also about economies of scale. I think a commercial bank needs a regional-level scale. We feel the right position for us is to be between mindlessly global and hopelessly local. And I think we’ve found that position.
How difficult is it to manage the transition from being a Malaysian bank to a regional player?
In some ways it is actually easier for us. Think about it — is it easier for me to go to Indonesia or for a global bank to go to Indonesia? And in terms of solutions that we offer, do I understand the requirements of say the development of a rupiah-bond market better than a global bank, given the Malaysian experience in the region? I do. You must also remember that when we go into these markets we try very hard to make sure that it is not just CIMB, but rather it is a combination of CIMB and a local franchise coming together. As a result, people see us as local. If you go to Indonesia they see us as the old Bank Niaga franchise plus CIMB. If you go to Thailand they see us as the old Bank Thai guys plus CIMB. And even in Singapore they see us as the old GK Goh franchise plus us. In a way, we want to be seen as a local brand.
I do remember when you were making some of those early acquisitions a lot of people said: ‘This isn’t going to work’. Were your investors among those critics or were they on board from the beginning?
They weren’t all onboard. When the group first entered Indonesia in 2002 the stock got panned and we lost about 25% in value when we announced the acquisition of Bank Niaga. Keep in mind this was at a time when some people thought Indonesia was in bad shape. We were the first — and only — people who bid for Bank Niaga. At the time the feeling was: ‘Why are you going into Indonesia? Do you know what you’re getting into?’ So on and so forth… But since then we have proven that we can do business in Indonesia, and indeed in general, that we can do business abroad. But you know we have been very careful about winning investor confidence. One of the things we do is that every time we do a transaction we take investors through, in quite a lot of detail, every step of what we plan to do and why we think this is a good transaction. We actually show the books and explain the synergies.
What’s the importance of Asean as a region and how has that changed with China’s growing economic and political power?
I think, in many respects, we are a microcosm of what Asean is all about. I think the individual Southeast Asian countries on their own will struggle unless they come together as an asset class and as an economy. I see a lot of upside, specifically with intra-Southeast Asian trade and travel, if we come together. So we have to come together from the external perspective, if you like, because when investors look across their options they need the size and potential of a 600 million population investment choice. And then you have China. Asean has a lot to offer in the new global landscape given our proximity and connections to China. And I think we are very comfortable with that point. When [Ming Dynasty admiral] Cheng Ho came to Malaysia he dropped off a princess for our royalty to marry in view of building relationships. When the Portuguese came we got invaded. We prefer the Chinese approach.
What is CIMB’s strategy in China? I know you already have a presence there.
I think it’s going to be very step-by-step. We see ourselves first as a regional bank, but you have to have some operations in China. We have to facilitate our companies that are investing in and doing business with China. And the ability to do that is strengthened when you have some presence in China. So our first step, is a very tentative step, it is a small investment in a bank in Yingkou [in Northern China]. First we will see how we do and then we will go back to our shareholders and let them know how we want to move forward longer-term.
There is a view that Malaysia is still overbanked. As banking sector libereralisation opens Asean markets to foreign rivals, how well placed is CIMB to compete?
We’ve seen different stages of liberalisation over the years. If you play it right, liberalisation is always an opportunity for stronger banks to become even stronger. When we were an investment bank we saw the liberalisation of that industry actually strengthened us, while the smaller, more marginal players struggled to survive. I think in [commercial] banking it won’t be dissimilar, I don’t disagree that we are overbanked. I don’t know what the right number [of banks] is, perhaps five or six, rather than the nine today. For us, our strategy is to become very regional so I don’t think we’re going to play a big part in any consolidation.
How important, longer term, is investment banking to CIMB group?
You know we are very strong believers, despite what some people say today about the concept, in the universal banking model. I think there are very strong synergies between capital markets, treasury and retail. At the heart of the franchise is just this — this model, which is very powerful. But it is very tough to manage. From the beginning I’ve always said it’s all about the ability to manage both traders and tellers in one organisation. Can you get them to talk together and work together? In that regard, we think it is very important to be strong in both areas.
What has to happen, or at what point do you think you will have achieved your vision of CIMB?
In 1996 we had a clear vision of what we wanted to be. We announced a mission statement that we wanted to be the No. 1 investment bank in Malaysia. In many respects that was achieved and that is why we have had to move on. Now, that vision statement is to lead in regional universal banking in Southeast Asia. We are far from it. To be there, we would have to be really seen, in terms of earnings, in terms of customers’ attitude, in terms of shareholder composition, as a truly regional bank. Today, yes, we have the best regional platform but we are still predominantly a Malaysian bank. The transformation will take several years, but it will happen. I am on the record as having said that by 2015 Indonesia will make up a bigger component of our business than Malaysia. But we also want to be seen — be it by the international investor or the Thais or the Filipinos — as a truly Southeast Asian franchise.
The global banks have been badly shaken by the financial crisis, but Asia’s banks have been relatively unscathed. Was this a result of good luck or good judgment, or both?
I don’t know whether you describe it as luck or judgment but a lot of it is because Malaysian banks and regulators learnt very hard lessons during the Asian financial crisis. I know some people say we caused this current crisis because we all started saving like hell — but if you look at the way we are regulated we are all clearly operating based on a very strong memory of what happened. And today, I don’t think a couple of weeks can go by without Bank Negara speaking to Bank of Thailand or Bank Indonesia about CIMB — and I think years go by without the Fed speaking to the state regulators in Europe.
We have seen the consequences of poor oversight and regulation of the financial services industry in the developed market. What lessons do you think this current financial crisis presents for banking industry reform in Asia?
If the global financial crisis had happened say five years later, the damage in Asia would have been worse. I think it is for us, at the very least a sanity check. For the world, it is forcing a very hard look at finding out what is the right way of banking. But one of the difficulties is, we obviously have to agree on what were the causes of the crisis and move on from there. Yes, there were causes that were outside banking per se, but there has also been under-regulation of global banking. There has been the issue of globalised networks that are governed by a wide variety of domestic and local regulation. That doesn’t work. But yet, can anyone really see a global regulator? How do we deal with this? But it’s absolutely required that we do deal with this. If you look at the leverage or arbitrage that was going on, it was incredible. I can’t for the life of me understand how banks were 50 to 60 times leveraged. But they were able to do it because they were regulated in one country and leveraged in other markets and their primary regulator didn’t know about it and couldn’t see it quite clearly. All this has to be dealt with, otherwise this crisis will happen again.
The economic downturn will likely cost as many as 25 million people their jobs by end-2010 as the unemployment rate nears a record 10 per cent in the OECD group of countries, according to a report released on Wednesday.
The Organisation for Economic Co-operation and Development said 15 million jobs were lost between end-2007 and July 2009 and 10 million more could go by the end of next year despite signs that the economy is picking up.
“A major risk is that much of this large hike in unemployment becomes structural in nature,” the report said.
The OECD-wide unemployment rate has already hit the highest on records going back to World War Two, surging to 8.3 per cent by June 2009 from 5.6 per cent at the end of 2007, the annual report from the Paris-based OECD said.
The latest aggregate readout, for July, is 8.5 per cent.
Spain, Ireland and the United States were worst hit, with unemployment rates rising by 9.7 percentage points, 7.8 percentage points and 4.5 percentage points respectively between the start of 2007 and mid-2009, it said.
“The labour market outlook would be even worse if governments has not pursued expansionary monetary and fiscal policy,” said the OECD, estimating that government spending on anti-recession projects will raise total employment next year by about 0.8-1.4 per cent more than would otherwise have happened.
This downturn is destroying considerably more jobs than other recessions since the early 1970s, the report says.
Most of the world’s high-income countries and a few others are members of the OECD but others such as China and India are not.
The Obama administration has privately concluded that a cap and trade law would cost American taxpayers up to $200 billion a year, the equivalent of hiking personal income taxes by about 15 percent.
A previously unreleased analysis prepared by the U.S. Department of Treasury says the total in new taxes would be between $100 billion to $200 billion a year. At the upper end of the administration’s estimate, the cost per American household would be an extra $1,761 a year. http://www.cbsnews.com/blogs/2009/09/15/taking_liberties/entry5314040.shtml
Remember that oaf econ half-teacher I smeared on earlier about? She’s back. And she really thinks even more highly of herself even though I can see Mrs. R evaluating crap about her at the back of the class as she goes on and on with her amateurity.
She picked on me again today. As far as I recall, the saying’s something like “Pick on someone your own size.” And I’m not exactly sized like a pachyderm. Yes, she most definitely is.
So anyway, I was minding my own rules and not even paying heed to any of the bull she was feeding the class, (because really, what she teaches is not economics fit for eleventh graders. She drags emphasis on jibberish for six year olds during their recess), and it’s simply a waste of classes.
I sneezed. The maniacs behind me began laughing. And she walked up to my row and rested her thick eyebrowed eyes on my inherent countenance.
“I really don’t understand why you have to distract the class like this everytime. What’s so funny? Just what makes you laugh so much?” she asked. *Whaaaaat?!* I thought to myself. “When did I laugh?!! I think, I just sneezed. And it’s called an allergy, the cause of it.” I shrugged it off. But duh, she had to have the last dialogue in.
Gaahd, she frustrates me.
She went back to the head of the class, and asked for the assignments. No one, barring a bunch of the geeks, had completed them. Plus, I was absent in class on Monday, so I didn’t know the topic for the report.
“This much papers only?” she sounded surprised at the number she was holding in her hand. “This many.” I whispered under my breath. So soft, that even Arad sitting next to me couldn’t comprehend.
And I went back to revising my French verbs.
Completely oblivious to the fact that she’d now walked up almost to my desk.
“Yes, I completely unerstand you don’t like me, but you don’t have to *show* it,” she said with distaste.
“Seriously, what?!” I asked her, astonished. “I didn’t even say anything!” I exclaimed with little annoyance. Resentment, resentment.
“Why are you getting so hyper? I get it that you don’t like me, but you don’t have to take it out by distracting the classroom and making a face a me every time I look at you.” *She* then proceeded to use up all her facial muscles to make the very worst, disgusted expression. Hyper? Should I *get* all hyper and show her what me in a hyperactive state actually is?!
“Really ma’am. I didn’t even say anything. And it’s them who are laughing at you, not me.” I threw my hand back. People around me were just asking me to keep quiet. Why?! But okay, if I wouldn’t have kept my mouth shut, she would have taken all pavements to argue till the end of the day.
Honestly, I have better things to worry about that to try and figure how mad that female was at me.
“Where’s your homework?” she asked with spite. “Exactly where everyone else’s is. On my computer desktop.” I wanted to say. Instead I just chose some amount of grumbling and coherent “I’ll give it to you on Tuesday. No one else has done it anyway.” Jeez, woman. Your teaching sucks, and so do the assignments you set out.
“And what is your name?” she asked, trying to preen hard at my SNEH club badge, which yeah, has my name on it. (And I hate it, because the surname doesn’t say Agarwal. Stupid school, stupid management, stupid laws. Long story, call me later )
“Why, Urmika.” I said. “Urmika.” She repeated, venom spewing out of her ten pound fleshy face. “I want the homework on Tuesday.”
“Gladly.” I told the class, and laughed to myself. Really, I could have opened my mouth. She isn’t even my teacher, or anything. She’s a lump of junk.
Everytime Mrs R leaves the class, she transforms into a dracenae. I’m leaving now, I think I have Business Studies next. No wait, Accounts.
“Yeah, whatever.”
Really. The maturity that such a sordid population posessess.
At the end of a good movie, oftentimes apparently unrelated events are woven together and it becomes clear how and why things happened. If, today, it feels as if we are at the end of an era, it is because we are; and, just like the movies, only at the end do certain events and the reasons for them become clear.
The removal of gold from the global monetary system was not by accident. It allowed governments to do what they could not otherwise do. Gold cannot be printed. Paper money can. Therein lays the cause and consequence of what is happening today.
BEFORE THE WELFARE STATE WAS THE WARFARE STATE
The introduction of paper money allowed war to be conducted on credit with credit-based paper money. In return for allowing bankers to issue England’s money in the form of paper script, bankers allowed King William, England’s king, to wage war on credit, giving England an advantage over other nations which England parlayed into world dominion.
Good ideas spread and the idea of waging war on credit also spread. Prior to World War I, both France and Germany went off the gold standard in order to go to war backed by limitless amounts of paper money, instead of being constrained by limited amounts of gold.
The resultant carnage would not have been as extreme had France and Germany been forced to pay good money, instead of bad, for their arms. But even after WWI and WWII, in the wake of the greatest suffering humanity ever endured, the desire to wage war on credit continued.
When WWII ended, the US emerged as a world power. Unlike Europe and Asia on whose continents the conflict was waged, the US emerged relatively unscathed and realizing it was now the world’s only superpower, the US decided to insure its new found status by maintaining and enlarging its already formidable military machine.
It did so by spending all the gold it had accumulated; up to that time, the largest amount of gold ever owned by any nation in history. In 25 years, from 1946 to 1971, the US overspent its entire gold reserves of 21,775 tons in the pursuit of world dominion.
During those 25 years, the US had a positive balance of trade with the rest of the world so its gold reserves should have substantially increased, not disappeared. Prior to 1971, gold was used by nations to settle trade imbalances but the US imbalance was not caused by trade, it was caused by the costs of maintaining a worldwide military presence and the overseas expansion of US corporations.
GOLD—THE LAST STRAW
The complete removal of gold from the world monetary system finally occurred in 1971 when the US refused to pay other nations in gold what it then owed. The US refused to do so because the US no longer had enough gold to redeem the vast amount of US dollars it had printed and spent (the US did keep what gold it had).
To this day, what was set in motion in 1971 has yet to be fully grasped and understood. Lack of understanding, however, will not prevent its consequences and the US and, indeed, the world, are now about to experience what was then set in motion, an economic meltdown of epic proportions.
When the US removed gold from the world’s monetary system, it removed the one critical element upon which the entire world economy was based. Because the removal had been gradual, the essential role gold performed had been forgotten—but forgetting gold’s role did not mean it had none as many believed, e.g. Keynes, Friedman, Krugman, Volcker, Bernanke, etc.
A description of the critical role of gold and the gold standard was written by Professor Antal Fekete in his essay The Gold Standard Strikes Back……With A 36-Year Lag
…Gold has the same role to play in the monetary system as the fly-wheel regulator does in an engine, the brake does in a train, and circuit-breakers do in an electrical network. Gold is the regulator of the quantity of debt in the economy that can be safely created and carried. It is also safeguarding quality by rejecting toxic debt before it can start metastasis. Debt-based currency utterly lacks safeguards limiting quantity and vouching for quality of debt. Debt-based currency is an invitation to disaster, that of the toppling of the Tower of Babel. Its effects are far from being instantaneous. There is a threshold and there is a critical mass involved. We have long since crossed that threshold and passed that critical mass. By no rational calculus can the outstanding debt be expected to be repaid without inflationary or deflationary adventures, even if further increase were stopped dead in its track. The discussion of the present financial crisis by academia and media avoids all reference to this fact. Under the gold standard a fast-breeder of debt was unthinkable, and debt was retired in an orderly manner.
Using Professor Fekete’s metaphors, with the regulator of debt now disabled, the brakes discarded, and the circuit breakers removed, it is now understandable, as the last and final act of our financial drama plays out, why we now find ourselves buried beneath unbearable and unpayable quantities of toxic debt.
Removing gold from the international monetary system in 1971 allowed the US to then begin issuing US dollars in increasingly excessive amounts as the US was no longer constrained by gold to maintain any semblance of fiscal restraint.
While consequences may be delayed they cannot be avoided. It’s been 38 years since the US removed gold from the international monetary system. As a consequence, the system is now beginning to collapse. Someday, it will collapse completely.
FEAR-BASED OPTIMISM
Increasingly, the sound-bites of politicians, economists and the media are becoming more positive, indicating that an economic recovery is underway. It is not. If it were, governments would be able to slow or stop the spending they are desperately hoping will rescue their respective economies. None are so doing.
But despite trillions of dollars, the global economy is still contracting. Signs of improvement are due only to the massive amounts of government aid being spent in the hopes of reviving private demand, demand irrevocably crippled by now unpayable levels of debt.
GREENBACK GASES AND THE MELTDOWN
OF THE WORLD FINANCIAL SYSTEM
As China in particular has now observed, the US is increasingly exhibiting signs of monetary incontinence. The US has been unable to control its spending for decades, it is clearly incapable of balancing its budget, and fiscal restraint in the US has gone the way of the Constitution and the Geneva Accords.
China is especially distressed at the apparent inability of the US to control itself. China is holding the vast majority of US debt and, as a self-declared socialist state, finds itself in the incongruous position of having underwritten US wars in Iraq and in Afghanistan along with tax cuts George Bush dispensed to the wealthy.
China and the world has, in effect, been held hostage by the US as a result of the US dollar still being the world reserve currency even after the US defaulted on its gold obligations in 1971.
The world’s acceptance of a fiat currency as a world reserve currency has now destabilized the global economy beyond its ability to recover. For decades, the US has been able to buy goods and services and to repay its extensive borrowings with increasingly worthless paper script. Those days are numbered.
The increasingly fragile house of cards constructed of credit and paper money is now in its final stages of collapse. The global economy is lurching from one bubble to another and we are approaching the end of bankers’ and governments’ ability to pass off their paper money as a store of value. Gold is a store of value. Paper money is not.
GOLD’S ASCENT
In the last two weeks, gold moved strongly upwards. It did so as the US dollar fell. Perhaps the two events are linked, perhaps not. But over the last decade, the price of gold has quadrupled in terms of US dollars, rising as the US dollar has fallen.
No longer having to play the part of the monkey dancing to the tune of government organ grinders, Alan Greenspan recently remarked on gold’s sudden ascent:
Sept. 9 (Bloomberg) — Gold prices that jumped above $1,000 an ounce this week are signaling that investors are buying metals to hedge against declines in currencies, former Federal Reserve Chairman Alan Greenspan said.
The gains are “strictly a monetary phenomenon,” Greenspan said today at an investment conference in New York. Rising prices of precious metals and other commodities are “an indication of a very early stage of an endeavor to move away from paper currencies,” he said.
A recent study showed why Greenspan and other economists did not predict the greatest economic collapse in recent history. As befits the profession, the reason for economists’ poor judgment was money.
To succeed in the field of economics, it is virtually necessary that economists support the policies of the Fed. The following is from “How The Federal Reserve Bought The Economics Profession”, http://www.huffingtonpost.com/2009/09/07/priceless-how-the-federal_n_278805.html :
One critical way the Fed exerts control on academic economists is through its relationships with the field’s gatekeepers. For instance, at the Journal of Monetary Economics, a must-publish venue for rising economists, more than half of the editorial board members are currently on the Fed payroll — and the rest have been in the past.
The Fed failed to see the housing bubble as it happened, insisting that the rise in housing prices was normal. In 2004, after “flipping” had become a term cops and janitors were using to describe the way to get rich in real estate, then-Federal Reserve Chairman Alan Greenspan said that “a national severe price distortion [is] most unlikely.” A year later, current Chairman Ben Bernanke said that the boom “largely reflect strong economic fundamentals.”
The Fed also failed to sufficiently regulate major financial institutions, with Greenspan — and the dominant economists — believing that the banks would regulate themselves in their own self-interest.
It is clear the lure of money is as seductive to economists as it is to those they study. Money, while a very powerful incentive, rarely improves the quality of truth. It is erroneous to believe, however, that all economists who agree with the Fed’s role and mission have been bought. Others may be sincerely mistaken in their beliefs.
One of the primary reasons I attend Professor Fekete’s seminars is the opportunity to hear academically rigorous discourse untainted by the all-too-common orthodoxy that passes today for economics. As I have previously written, the study of modern economics is like the study of religion in a time of idolatry.
It is the Fed and its stranglehold on economic debate that has confined discussion within the bounds that do not threaten the Fed or its interests. This is tantamount to discussing religion during the Middle Ages without discussing the power and ambition of the Church. Such discussions leave much to be desired.
November 2-5, Professor Fekete will be speaking in Australia on “The World Financial Crisis and the Vanishing Gold Basis”. For those wishing to know more about the professor, the wikipedia reference, http://en.wikipedia.org/wiki/Antal_E._Fekete, is invaluable. I also discuss Professor Fekete on my YouTube channel, http://www.youtube.com/user/SchoonWorks. For information about the up-coming event in Australia, see http://www.professorfekete.com/gsul.asp . I, and others, will be speaking as well.
THE LAST WALTZ
The current economic crisis is now moving quickly towards resolution. How and when it will end is as uncertain as that it will. Systemic death is never easy and the banker’s paper money, like the fatal virus it is, is now everywhere. Its end will not be easy.
Severe climate change, food shortages, and the possibility of a pandemic are taking their place beside the ever-present possibility of military conflict. The collapse of the financial system will not be the only crisis that confronts humanity in the near future.
We are moving from one era into the next. Change is never easy and significant change is significantly more difficult. The bankers’ credit was responsible for much of what happened in the last three hundred years. It is impossible to imagine what life will be like in its absence.
President Obama slapped a duty on Chinese made tires on Friday, which looks like it will set off a trade war. The Financial Times reports:
In his first big test on world trade since taking office in January, Mr Obama sided with America’s trade unions, which have complained that a “surge” in imports of Chinese-made tyres had caused 7,000 job losses among US factory workers.
Chen Deming, China’s minister of commerce, condemned the decision, saying that it “sends the wrong signal to the world” at a time when Washington and Beijing should be co-operating to deal with the worst economic and financial crisis in decades.
The Financial Times quotes Eswar Prasad, a trade professor at Cornell on the potential impact of the U.S. imposed tarriff: “These protectionist measures, some of which amount to domestic political posturing rather than substantive restraints on trade, could easily ratchet up into a full-blown trade war and inflict serious economic damage on both countries.”
When it comes to trade, too many only look at one side of the ledger: the job losses caused by outside manufacturers producing lower cost goods and driving U.S. manufacturers out of business. Yet the U.S. wins more than it loses from trade: we have more markets in which to sell our own products and we save money, which can then be put to other uses, by buying cheaper products from elsewhere. Encouraging the closing of markets around the world is exactly the opposite of what we should be doing in the midst of a recession.
From the WSJ article “Tariff on Tires to Cost Consumers“:
1. Consumers who buy low-price Chinese tires — the bulk of the tires China exports to the U.S. — will be hit hardest by the new tariff, as shortages in this market segment cause retailers to scramble to find alternative sources in other countries.
2. The tariffs won’t just hit Chinese producers. Both of the U.S.’s remaining domestic manufacturers — Goodyear Tire & Rubber Co. and Cooper Tire & Rubber Co. — make tires in China that they sell in the U.S. Cooper this year is on track to import 2.5 million tires that it made in China. It was planning to boost that to four million next year.
MPerry: In other words, the “punitive tariffs” on the Chinese will actually punitively penalize our own American consumers, especially poor and middle-class, the largest buyers of low-price Chinese tires, and we’ll also punitively punish two of our own Ohio-based tire companies, which combined employ more than 88,000 full-time employees, many in the U.S.
Obama Subsidizes President Obama with Tire Tariff
Posted by Daniel Ikenson
Who benefits from 35 percent duties on Chinese-produced tires?
U.S. producers? No, they are the ones who, pursuing profit-maximizing strategies, have consciously shifted production of low-end tires from their U.S. plants to their Chinese plants over the past few years. They will now have to incur the costs of shifting production from China to production facilities in Brazil, Mexico, Indonesia and other developing countries, where it makes economic sense to produce low-end tires.
U.S. workers, then? Nah. Low-end U.S. tire production workers won’t see an increase in U.S. capacity, capacity utilization, hours worked, or wages because, as implied above, production isn’t coming back to the United States. Meanwhile, U.S. workers in tire wholesaling, distribution, and other segment of the supply chain are likely to see a decline in business in the short-run, as higher prices reduce demand for tires. Things may improve once adjustments are made to the new production locations, but that will involve certain adjustment costs and lower profit margins because presumably China is the profit-maximizing production location. Right? Why else would producers have chosen China?
Does the tariff benefit consumers, then? Come on. Not only will it lead to higher prices for consumers, but it will hit cost-conscious consumers the hardest. And you thought President Obama opposed regressive taxation?
No, the only beneficiary of the tariff is President Obama, who presumably gets some political mileage for his Chicago-style payback of Big Labor.
But make no mistake that any benefits to the president will be fleeting, as the direct costs of the tire tariff and the costs of copycat protectionism start to squeeze economic recovery. As the president is flooded with similar requests for protection from other unions and producers, he will have to choose between disappointing those favor-seekers or strangling economic prospects entirely.
Vanity Fair’s Politics & Power blog: “Bruce Feirstein charts the 100 people, companies, institutions, and vices most responsible for the economic mess.”
Surprisingly fair for a list put together by a Hollywood screenwriter. Senators Dodd and Frank get a mention. All of the U.S. Congress actually.
But no Obama or Biden. How come? We know that if Obama hadn’t signed the Stimulus, things would be better. And Biden runs the Stimulus. How about at least listing the Stimulus?
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Osama bin Laden: Obama Tidak Berdaya
AP PHOTO
Osama bin Laden
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Artikel Terkait:
Putra Osama bin Laden Tewas Dirudal AS
Osama Vs Obama
Osama Diyakini Sudah Meninggal
Senin, 14 September 2009 | 13:32 WIB
WASHINGTON, KOMPAS.com — Dalam sebuah rekaman video yang dirilis Minggu oleh sayap media Al Qaeda, Osama bin Laden mengatakan, Presiden AS Barack Obama tidak berdaya untuk menghentikan perang di Afganistan.
SITE Intelligence Group, perusahaan yang memantau sepak terjang teroris, yang menerjemahkan pidato Obama itu, mengatakan, Osama bin Laden menyalahkan perang itu pada lobi pro-Israel dan kepentingan perusahaan. Jaringan teroris Al Qaeda pimpinan Osama bin Laden berada di belakang serangan 11 September 2001 atau 9/11 di Amerika Serikat (AS) yang menewaskan sekitar 3.000 orang.
IntelCenter, perusahaan lain yang juga memonitor propaganda para teroris, mengatakan, video berdurasi 11 menit itu menunjukkan sebuah gambar diam (tidak bergerak) Bin Laden ketika rekaman suara berputar.
Amanat Bin Laden kepada orang Amerika itu datang dua hari setelah peringatan delapan tahun serangan 11 September. Tujuan dari amanat hari Minggu itu, kata Bin Laden dalam terjemahan SITE, adalah “Untuk mengingatkan Anda (orang AS) tentang sebab-sebab serangan 11 September, terutama dukungan Anda terhadap sekutu Israel Anda yang menempati tanah Palestina kami.”
Bin Laden membantah bahwa perang itu penting untuk keamanan AS. Dia mengatakan, kebijakan Gedung Putih masih mengikuti strategi mantan Presiden George W Bush dan mantan Wakil Presiden Dick Cheney. Ketika Obama menjadi presiden dan tetap mempertahankan petinggi militer dari zaman Bush, seperti Menteri Pertahanan Robert Gates, “Orang tahu bahwa Obama tidak berdaya, dia tidak dapat mengakhiri perang sebagaimana janjinya. Jika Anda mau mengakhiri peran, silakan lakukan itu. Namun, jika sebaliknya, yang akan kami lakukan adalah meneruskan perang terhadap Anda di segala kesempatan,” kata suara rekaman itu.
About $8 million in fake greenbacks found in U.S., another $18 million in Peru
(Newser Summary) – American officials have seized some $8 million in high-quality counterfeit US bills made in Peru, reports the Los Angeles Times. South American raids have uncovered another $18 million. The massive number of fake bills costs businesses and individuals millions, and threatens to undermine confidence in US currency, warn officials. “It’s a form of economic terrorism,” said a Secret Service agent.
Early this year, US officials launched a special task force to train Peruvian police and bankers to identify and capture counterfeiters. Columbia used to print about 70% of fake dollars passed in the states until a similar crackdown cut production to about 5%—which still accounts for millions of fake bills. Police action may have driven some Columbian counterfeiters to Peru. Human “mules” bring the money across borders, often with it strapped to their bodies.
