Archive for the ‘Economics’ Category

Schumer proposes 20% tax on non US calling centers

May 31st, 2010 No comments

Schumers protectionist stance is regrettable. He is using a day of heightened nationalist sentiment (Memorial Day) in a very dangerous way. He isn’t reacting to increased use of overseas calling centers, which have been declining over the last three years, but instead is reacting to an increased nationalist public sentiment in the US at a time of hardship and to which he wishes to appeal. I hope these aren’t his real views. He should know better.

The reality despite the pandering we hear, is that we need to encourage free trade, and are members of the WTO. We would be brought before the WTO if we took government action designed to reduce free trade in products or services, and would then have to reverse the legislation. It isnt just policy, but a realization that we have far more to loose by isolating ourselves. There is no future in being a high cost economy just for the sake of nationalism.

Dont think that global companies dont read these comments and reduce their commitment to the US for fear of nationalist policies and unequal treatment. We no longer have such a strong local financial system, and need global companies to want to offer cost effective services and to invest heavily in the US, if we are to recover. It is a choice. But please don’t follow people like Schumer’s rhetoric. He isn’t thinking it through, or more likely is just talking unrealistically in order to win nationalist votes. Either way it is not helping us frame effective policies.

Defense Spending

March 12th, 2010 No comments

It’s tax season again. A good time to think about the ridiculous amount that we spend on defense. The following table is the annual spending on defense for the most recent year available, largely from WIkipedia’s page on defense spending and then dividing that by the population figure given by the national page on the Wikipedia. The numbers could come from different years so don’t worry about a few dollars here or there. The disparities are so great that it is very easy to see the contrasts.

Country Budget Population Spending/Person
US $667b 308m $2100
Israel $8.9b+2.38b (US Grants) 7.5m $1507 (1190+317)
UK $57b 62m $919
Germany $38b 81.76m $464
Japan $42b 127m $330
Russia $39.4b 142m $277
China $32b 1.3b $25

Unfortunately the high defense bills are not due to any threat or by those who care about the interests of others. Comparing the above figures with development aid is illuminating. I don’t mean defense grants, financing of exports and military crisis aid but the minuscule development aid amounts from the highest defense spender. Over half of overseas aid from the US for example is military aid to two countries.

I suggest we reduce defense spending to below $500 / person over the next five years. We simply can’t afford to starve the federal budgets with defense spending at the current levels when we need to develop a true national government. Between 1991 and 1997 Russia’s defense spending fell to an eighth of their 1991 levels in US dollars and has since risen to the $39.4b in 2009.

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Who moved my burger grill job ?

February 5th, 2006 No comments

I sit in a local Manhattan restaurant watching the skill with which the Spanish speaking grill chef across the counter from me, works while chatting with the four or five other staff in a language I still don’t understand, despite having been in New York for over ten years. I can’t help wondering if it is exploitation or constructive that I am enjoying and paying $13 for a burger with fries while he and his cohorts earn I suspect around half that in the time it takes to cook about a dozen burgers. In Europe he would be twice as well paid and my burger would cost twice as much.

Does the owner exploit his staff ? It would be a harsh judgment as I expect that he doesn’t make a fortune on a single store but maybe it is more that he is able to maintain his compensation by not sharing the revenue with a lot of aspiring wage hungry locally born staff. Or more accurately that this is the only price at which he can stay in business in an unregulated labor market. That also appears to be how we cope with the global wage economy. We do as much work as we can with cheap labor either offshore or here. Using insecure cautious immigrants to prop up the salaries of the few still managing the business. Are we growing our economy by allowing all the aspiring locals to run their own burger restaurant – partly – but as a trend the surplus of talented local people who grew up expecting to pay for a burger increasingly have to scratch around to find our own burger joint to run and somebody to sell to.

Given that the supply of underprivileged people in the world includes most people in the world what will this trend eventually result in? Almost certainly continually eroding differentials. This is after all the only fair outcome.

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