Dot.Demarche

Talking to myself about foreign policy, US politics, technology, &c.

Archive for the ‘Economy’ Category

Bad economy? Throw da bums out! And if you can’t?

Thursday, January 22nd, 2009

A friend forwarded me some analysis from UBS’ China desk. The expert cautioned that economic growth this year might only hit 6.7% in the Middle Kingdom. 

Not too shabby compared to the US – we had an anemic 1.2% last year, and it will probably be significantly negative in 2009. (Though I expect miracles of our new President.)

China’s got a problem, though. With population growth, migration out of the countryside, and the ongoing dismemberment of what remains of the state-owned dinosaurs, Chinese economists see 9% as the real floor to prevent social unrest and make sure there are enough jobs to go ’round.

Here, we just have the habit of taking it out at the ballot box and kicking the bums to the curb.

So whaddya do in China? Considering the ongoing problems of mass incidents and social unrest (for which there are no longer numbers available) there’s some disgruntalment out there. If the CCP can’t deliver on ongoing prosperity, people no longer believe in their ideology, and the government is seen as ridiculously corrupt and ineffective.

Things could get interesting.

Bear-ly tolerable?

Sunday, September 21st, 2008

Tom Friedman (the Mustache of Understanding) wrote a book aeons ago (ok, last century) called “The Lexus and the Olive Tree”. The book, and most of Friedman’s writing, gets dismissed as layman’s schlock by highbrow IR folks, along with progressives who hate him, mostly for Friedman’s early support for the Iraq war. And his ridiculous metaphors. And perhaps the fact that his writing does really well. Me, I like him ‘cuz he’s a Minnesotan.

Anyhoo. In LntOT (not to be confused with LotR) Mr. F talks about the “golden straitjacket” applied by international financial institutions, banks, and investors. No modern economy can survive without the capital, liquidity, and confidence provided by a decent investment climate. I leave the discussion of the current American disaster to the real eggheads - but  it certainly emphasizes that no modern economy can really function without these fat cats behind them.

Maybe that’s not the right turn of phrase, because it looks like the investors have indeed been leaving Russia behind them. After an already-bad summer, the main Micex index has lost another 30% since the Georgian invasion. Gobs of money have fled Russia. Increasingly, folks are getting the sense that Putin’s Medvedev’s Putin’s Russia is not, well, normal. Not-normal places are bad for investment. Not-normal places with tremendous oil teats to suckle at sound all right, until you realize that you’re either gonna get locked up or nationalized. After that, well, they mostly sound like a bully who happens to control the playground where everyone wants to ride the hydrocarbon swings.

Er, sorry. Channelling Friedman. Anyway, the point is that Russia is paying a price for this incursion, and perhaps the neoliberal market economist dovish peace-love-dope hippies will be right, and Russia will find that crime trans-border conflict does not pay. So you can hold on the panicking for the moment.

If they go for Ukraine, well, then you can panic.

 

23%-40% of Homeless are Veterans

Thursday, November 15th, 2007

National Alliance to End Homelessness

The US Department of Veterans estimates that as many as 200,000 homeless people are veterans, and that over the course of the year, as many as 500,000 veterans experience homelessness. … Recent media accounts highlight a small but growing trend of veterans from Iraq and Afghanistan showing up in shelters.

Happy Veterans’ day!

The Pharma Grinch’s Heart Grows 3 Sizes

Wednesday, March 7th, 2007

Evil heartless No. 4 drug company Sanofi-Aventis came out with a new antimalarial drug that will be delivered at cost to suffering people in Africa. Amazingly, a simple 3 day regimen can cure the disease.

big Canadian mosquitosIt’s nice to see. Malaria’s cost on Africa is monstrous; the deaths are only a fraction of it. The sick are a drain on the economy. Infected children are incapable of learning in school and are therefore less productive down the road.

One of the most innovative elements is their planned distribution. For people who can pay, the company will attempt to charge several times as much per dose. Branding, packaging, prestige – people pay lots more than they have to for Prada bags; why not anti-malarials?

The bigger question for me is: why? What makes Sanofi-Aventis invest the time and money into creating this treatment? Loads of my classmates are into corporate social responsibility – the idea that soulless Capitalist Pig Dogs can be convinced to Do the Right Thing. One of my friends suggested that press (they got NYT editorial applause out of it), altruism and (potential) profit make this an easy win for the company.

Ironically, one of the best treatments for malaria is DDT. Mosquito nets soaked in the stuff coupled with hosing the walls of your hut down with the insecticide can dramatically drop the number of infections. ‘Course, it got a bit of bad press in the 60s – enough to launch the modern environmental movement. But when you’re not blanket spraying across all your crops, it makes a lot of sense.

New Economist Blogs – two thumbs down.

Monday, December 4th, 2006

My favorite news-weekly, the inimitable Economist, has a new set of blogs, including US domestic politics and general economics.

I don’t like them.

The great thing about the Economist is their condescending, pretentious, more-brilliant-than-thou attitude. Coupled with their excellent analysis and fantastic writing, it works. The oracular voice is amplified by the lack of bylines, encouraging blind worship which I usually blindly give.

The problem is that they still write this way on their blog. And if you’re going to be an insufferable know-it-all, you really should, er, know everything about which you speak. And when you blog, you usually don’t have the time to pull it off.

When they write regarding unaffordably high insurance premiums “But what about the poor? It is hard to see any reason why insurance companies should subsidize them” it demonstrates an ridiculously blinkered ivory-tower economist’s point of view. Their analysis of American politics is thin and conventional, and particularly infuriating with their disdain for Democrats, despite the shellacking they just gave the Republicans.

So subscribe to the magazine, but not to the RSS feeds.

Surplus economist removed by Invisible Hand; Market achieves balance.

Thursday, November 16th, 2006

Milton Friedman died today. Interesting reading the obits to see what a huge impact he and his Chicago cronies had on economic theory- and how much of that eventually influences policy. I sure wish that those dealing with foreign affairs got equal attention from presidents and congresses.

Also interesting to see how the current beliefs of someone like me, who considers himself a moderate in the field of political economy, would have been radically right-wing pre-Friedman. The man obviously wasn’t right about everything, but he was right about a lot. As Paul Samuelson was amusingly quoted “Just because Milton Friedman says it doesn’t mean that it’s necessarily untrue” – and his policies taken to their logical extreme would have lead to the most appallingly amoral economic systems imaginable.

Interestingly, he actually evolved a bit in his later years. Friedman came to realize that “the market” that economists salivate over is not an organic and naturally occurring phenomenon, but one that requires a great deal of state assistance to set up the rule of law and stability required for such a system to operate. The fact that we live in developed societies with advanced legal systems makes such requirements invisible to us, but the difficulties with privatization in the developing world demonstrated that laissez-faire is not simply the answer to all things at all times.

Yellow River to Change Name

Tuesday, October 24th, 2006

In another sign of how awful environmental problems in China are, the Yellow River turned red the other day.

The Chinese people are starting to pay attention to the environment; now that incomes are on the rise, people can afford to consider the world in which they live. And so the government is listening.

One of the colossal issues China faces is whether it can get a grip on its environmental problems before it turns most of the West into a wasteland. Right now the government is still myopically focused on growth – especially in the west – so things are going to get a lot worse before they get any better.

Several thouand words on the way….

Monday, July 17th, 2006

The Camera is back. (crossposted from gscruff.com)

Exciting times here in Kyrgyzstan: the camera my parents so generously sent to us showed up today!

The Camera
Actually, “showed up” gives entirely the wrong impression. It is important to note for the rest of this narrative that we are dealing with the main post office for the sovereign nation of Kyrgyz Republic, the central switching point through which all its correspondence with the wider world must pass.

I’d been increasingly mopey for the last few days, as I thought the camera was never going to come (or more likely was a nice Bastille Day bonus for some underpaid postal employee) and Allie and I are planning to head out on a whirlwind of travel over our last weeks here in Central Asia. So I asked our noble office manager at Internews, Batma, to call the central post office one more time to tell us if they had any record of a package from Winter, WI (population: 300) arriving. This time, rather than a flat denial, they said they could not give that information over the phone. Fine. So with a friend from work as a translator, we trekked over to the central post office.

What ensued proved that you can take the Kyrgyzstan out of the Soviet Union, but you can’t take the Soviet Union out of Kyrgyzstan. The people were so abysmally unhelpful that our friend Aisuluu was steaming from her ears. They reported that there was no such package. Then they looked again. Then they took a break to fill out some important paperwork and chat, telling us that they were “very busy, and couldn’t be bothered right now.” Then after carefully sounding out my name and verifying that my drivers license looked legit they looked yet again. Then Aisuluu pointed out that in Latin script my name looked different. Eventually a bag with my name clearly printed on it emerged.

Then the ordeal of actually getting it began. I had to fill out a form, mostly stuff I made up. No, we couldn’t borrow their pen; they were doing Very Important Things. The form was incorrect. We re-filled it out with more gibberish. All this while the bag with my box was sitting tantalizingly almost within reach. Eventually, they released the bag, and blandly asked us if we had any complaints. At this point there was several minutes of untranslated dialogue from Aisuluu enumerating a few of our issues with their efficiency, calling into question their intelligence, and wondering a bit at their parentage. My friend asked if I had any complaints to follow up with. After I was assured by all it was perfectly normal that the package was not actually delivered to me, I had nothing to add.

The helpful civil servants behind the counter pointed out that we would have to fill out more forms if we wanted to register a complaint, and that it would probably take an hour. We signed the “no complaints” line, took the camera, and fled.

The upshot: thanks, mom and dad! I’m so delighted with the new camera- it’s wonderful, and even better than my last one. The first pics can be seen off to the left.

Organic Farming and the American Farm

Monday, June 27th, 2005

Saw the very cute Store Wars pro-organic farming short the other day. It’s a hoot- Cuke Skywalker saves the day through the power of the Farm under the wise tutelage of Obi Wan Canoli. Take a look.

I did get into some good discussions of organic farming with friends over it. I haven’t held forth here yet about my opinions on the tragic demise of the Jeffersonian ideal of the family farm, though I doubtless will at some point. However, I think that organic foods could be the salvation of these small operations. Standard evolution- can’t out-compete the big boyz with modern mass-production of food, so you have to move up the value-add chain. Small plot, pesticide and fertilizer free organic farming is just that kind of special addition that can command higher prices to justify their inefficiency, and people are willing to pay for the ecological and alleged health benefits of it.

Now, organic food ain’t the answer for everything. Actually, I think it’s the answer for very little, apart from those of privilege or high idealism who are willing to pay for it. Cheap food is a good thing- the fact that 5% of our population can feed the US and a lot of the world with modern farming techniques is positive. Even more people would be going hungry around the world if everyone used high-intensity, low-yield organic techniques. So for now it has to remain a niche product.

The unsubstantiated fearmongering of organic backers is my other problem with the industry. We’ve been genetically modifying organisms since the we first wandered out of the trees- grafting, crossbreeding, manipulating for specific genetic traits. However, we’re a lot better at it now. If genetically modified corn has the potential to feed the starving, how dare people try to prevent it in the absence of any evidence that it is a problem? This field seems to hit the hot buttons that cause people to become irrational. I particularly love the scenes in Europe- rich folks talking about the dangers of genetically modified organisms while taking drags on their cigarettes and eating food from their ridiculously subsidized farmers.

As an aside, did you know that about half of the EU budget goes to these distorting farm subsidies (largely within France) which prevent developing countries from competing on an even playing field?

The thing I’m most interested in is the corollary to organic farming with animals: free range/humanely treated meats. I’m carnivore who loves a tasty steak, but I am willing to pay extra to know that the animal was well cared for when alive, and treated acceptably when slaughtered.

The Corporate Social Contract

Saturday, June 4th, 2005

Corporations are one of the great the great bugbears of the left. I had a particularly fun time at my local precinct caucus a couple of years ago when my neighbors agreed to the elimination of the concept of corporate personhood, bedrock on which business has been built since, oh, we’ve had corporations. Sigh.

The problem with the soak-the-corporations logic, as Paul Tsongas pointed out at the 1992 Dem convention:
“You cannot redistribute wealth you never created. You can’t be pro-jobs and anti-business at the same time. You cannot love employment and hate employers.”

So if we don’t want to destroy them, we should instead embrace the age-old concept of doing good by doing well and enlightened self-interest. I feel one of the most important roles of the government in our market economy is to tilt the financial incentives such that businesses have profit motivations to do things that are in the public good; tax writeoffs for charitable donations are an excellent example. Some find that to be silly; that maximizing shareholder return is the only moral obligation for a corporation. Indeed, market forces do work in interesting ways; pressure groups spawned by outrage over Nike sweatshops, for example, probably did more to change working conditions in their factories than any regulations in the US could have. Target, on the other hand, reaps great publicity from their commitment to donate 5% of profits to charitable causes in local communities- it leaves folks with warm fuzzies. Contrast that with Wal-Mart’s public persona.

Anyway, the Economist had a very thought provoking article on on the Social Contract and corporations. It’s written by Ian Davis, a worldwide managing director of the huge consultancy McKinsey & Company- obviously not a raving commie.

The core thought as I read it is to extend the concept of the Social Contract, as we widely think of it between governed and government, to the consumer and producer relationship. He suggests that executives should be focused on “[T]he efficient provision of goods and services that society wants” rather than a slavish and short-term fixation on shareholder value. In such a bigger picture, profits come from following this implicit compact. For example, the recent obesity scandals and whiffs of lawsuits have caused Mickey D’s to radically overhaul their menus- profitably, it’s worth noting. What’s more, ignoring the mores of society and shifting preferences for acceptable environmental and social impact can come at catastrophic cost to a business. Development of a reputation as evil can sink billions in shareholder value, or even destroy a corporation (see: Arthur Anderson).

The legal code is something of a trailing indicator of the opinions of society. It behooves a corporation to not be caught flat footed by this, or any other change. It is accepted by the vast majority of scientists that global warming due to carbon emissions is a fact. Eventually, as in Schwarzenegger’s (!) proposal in California, legislation will catch up to societal opinions, and corporations will be forced to implement carbon abatement systems. By being ahead of the curve, they can reap the PR benefits of being on the side of the angels, and be able to adjust now, at their own pace, to the forced changes coming down the pipe. Sounds like that’s maximizing shareholder – and societal – value to me.

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