Saturday, July 21, 2007

The New Racism: Xenophobia and Protectionism

"Both major political parties (and most of the minor ones) are infested with protectionist fellow travelers, who would discriminate on the basis of national origin no less virulently that David Duke or any other overt racist would discriminate on the basis of skin color. But if racism is morally repugnant - and it is - then so is xenophobia (fear or dislike of foreigners), and for exactly the same reasons."

~Steven E. Landsbug, from the chapter "The New Racism" in his new book "More Sex is Safer Sex: The Unconventional Wisdom of Economics"

MP: The xenophobic sign above is posted in the parking lot of the UAW Local #659 in Flint, Michigan. As I queried in a comment on a previous post on this topic (and about this sign) last September, is there really any difference between a sign that says "No Mexicans allowed on this property," and "No cars built by Mexicans allowed on this property?" From a moral standpoint, I really don't think there is any difference. If you object morally to blatant discrimination and racism against people of Mexican or Chinese origin, then you can't logically support protectionism or discrimination against products made by Mexicans or Chinese.

(Corrected) As Landsburg points out, "If it's OK to enrich ourselves by denying foreigners the right to earn a living, why shouldn't we enrich ourselves by invading peaceful countries and seizing their assets? Most of us don't believe that's a good idea because we believe human beings have human rights, whatever their color and wherever they live. Stealing assets is wrong, and so is stealing the right to earn a living (with protectionism), no matter where the victim was born."

Friday, July 20, 2007

Michigan Jobless Rate Rises in June, Highest in US

Michigan's June unemployment rate of 7.2% is the highest of any state in the country, according to the BLS, and is more than a full percentage point higher than the next highest joblesss rate of 6.1% in Ohio. Mississippi has the third highest rate at 6.0%. Read more here.

12 States Set Record Low Jobless Rates in 2007

State unemployment rates for June were released today by the BLS, showing that 18 states have set historical record-low jobless rates in the last year, and 12 of those record lows were set this year (see 18 states in red in the map above). The states of Arizona (3.4%), New Mexico (3.2%), and Texas (4.1%) all recorded historical record low unemployment rates in June 2007. Here are the 18 states that have set historical record-low jobless rates in the last year:

Alabama: 3.3% in April 2007
Alaska: 5.8% in April 2007
Arizona: 3.4% in June 2007
California: 4.7% in November 2006
Florida: 3.2% in October 2006
Hawaii: 2.0% in December 2006
Idaho: 2.3% in May 2007
Illinois: 4.0% in November 2006
Louisiana: 3.3% in July 2006
Montana: 2.0% in March 2007
Nevada: 4.1% in May 2006
New Mexico: 3.2% in June 2007
New York: 4.0% in March 2007
Pennsylvania: 3.8% in March 2007
Texas: 4.1% in June 2007
Utah: 2.3% in February 2007
Washington: 4.4% in April 2007
W. Virginia: 4.0% in January 2007

Thursday, July 19, 2007

Outsourcing Display Ad Production to India

Media backoffice specialist "Express KCS," with offices in India, the U.K. and the U.S., provides world-class offshore display ad production to newspapers and magazines, including the Fresno Bee, San Jose Mercury News, and Minneapolis-St. Paul Star Tribune (soon).

Rich Farmers Harvesting Cash, Hooked on Subsidies

For decades, American taxpayers have provided tens of billions of dollars in federal farm subsidies ($35 billion between 2003-2005) to some of the largest and wealthiest farm businesses in the nation.

According to this report, "Farm subsidies have been distributed to Fortune 500 companies such as John Hancock Life Insurance ($2,849,799) and Westvaco ($534,210); as well as celebrity hobby farmers like David Rockefeller ($553,782) and Ted Turner ($206,948). Even Members of Congress who vote on farm legislation have received subsidies, such as Sen. Charles Grassley (R-Iowa, $225,041) and Rep. John Salazar (D-Colo., $161,084)."

And if you think small farmers also benefit, think again.

"Small farmers are harmed the most by farm subsidies. Excluded from most subsidies, they must endure the lower crop prices, higher farmland costs and industry consolidation that result from subsidies to agribusiness."

Michigan farmers received about $247 million in direct payments from the federal government in 2006, according to this report. But now get this:

With corn prices above $3 a bushel this summer and occasionally reaching as high as $4, growers are worried that the U.S. House Agriculture Committee could approve a new five-year farm bill that trims federal farm subsidies.

Farmers are now "porkaholics," addicted to subsidies!

Our Broken Corporate Tax Code

We now have, on average, the second-highest statutory corporate tax rate (including state corporate taxes), 39%, compared with an average rate of 31% for our top competitors -- the democratic, market-oriented nations that form the Organisation of Economic Cooperation and Development (OECD). (See chart above from 2003, click to enlarge. Note that Germany's rate is now slightly lower at 38%.)

Ireland, for example, has engineered its own economic miracle, in large part due to a reform program that cut corporate tax rates to a level one-third that of the U.S. And the trend continues. Germany will reduce its total rate from 38% to 30% in 2008. France, Japan and the United Kingdom have signaled they may also lower their corporate rates. China, though not an OECD member, has recently passed legislation that will unify domestic and foreign corporate taxes at rates substantially below the OECD average. This trend raises a crucial question policymakers should be asking: Are these countries learning a lesson that we have forgotten?

Read more here of Treasury Secretary Henry Paulson's editorial in today's WSJ, aruging for a reduction in U.S. corporate tax rates to help the U.S. economy remain competitive in a world of falling corporate tax rates.

"Two Americas," And They're Both Getting Richer

"The U.S. is a rich nation getting richer. According to Census figures, the average inflation-adjusted income in the top quintile of American earners increased 22% between 1993 and 2003. Incomes in the middle quintile rose 17% on average, while the incomes in the bottom quintile increased 13%." (See chart above, click to enlarge).

In other words, the "rich" are getting rich faster than the "poor" are getting richer. So what?

Read more here it today's WSJ article by Syracuse Professor Arthur Brooks.

Wednesday, July 18, 2007

McDonald's, Starbucks, Wal-Mart, Now Foot Locker

NEW DELHI: New York-based $5.75-billion Foot Locker (FL: NYSE), the world’s leading retailer of athletic footwear and apparel, is firming up its India entry plans. According to sources, the U.S. major has started due diligence for the Indian market and is looking at setting up its first store through a franchisee arrangement early next year.

Lou Dobbs and fellow populist protectionists, Listen Up:

Globalization, outsourcing and trade help the U.S. economy. As the Indian economy grows and expands (partly as a result of globalization and outsourcing), and as the Indian middle class grows larger and more prosperous, Indian consumers can afford more products from American companies like Foot Locker (founded in NYC in 1879), which will help support more jobs in the U.S.

(HT: Sanil Kori)

Blogging's 10th Birthday

From the Wall Street Journal:

It's been 10 years since the blog was born. Love them or hate them, they've roiled presidential campaigns and given everyman a global soapbox. Twelve commentators -- including Tom Wolfe, Newt Gingrich, the SEC's Christopher Cox and actress-turned-blogger Mia Farrow -- on what blogs mean to them.

The daily reading of virtually everyone under 40 -- and a fair few folk over that age -- now includes a blog or two, and this reflects as much the quality of today's bloggers as it does a techno-psychological revolution among readers of news and opinion.

We are approaching a decade since the first blogger -- regarded by many to be Jorn Barger -- began his business of hunting and gathering links to items that tickled his fancy, to which he appended some of his own commentary.

A Global Company Goes Even More Global

From today's WSJ:

"Chinese computer maker Lenovo Group plans to centralize its global advertising operations in Bangalore, part of a move by multinational companies to tap the creative firepower of India's low-cost work force.

Lenovo's India team will help dream up global marketing campaigns aimed at dozens of countries, including the U.S., France and Brazil, though not China.

Lenovo's decision reflects the continuing erosion of the geographic hierarchies that have long ruled the advertising industry.

Lenovo is already an unusually global company. It has a Chinese chairman and an American chief executive, and it rotates its headquarters between Raleigh, N.C.; Hong Kong; Beijing and Paris, depending on where its top executives are at any given time. The India-born chief marketing officer, Deepak Advani, is normally based in Raleigh, but he is spending the summer in India."

MP: What a great example of globalization! Corporations shop globally to find the best talent, and search globally to source production for the greatest value, and American consumers should do the same: engage in guilt-free global shopping for the best products and best value.

Quote of the Day: Free Markets v. Control/Coercion

"Free markets are simply millions upon millions of individual decision-makers, engaged in peaceable, voluntary exchange pursuing what they see in their best interests. People who denounce the free market and voluntary exchange, and are for control and coercion, believe they have more intelligence and superior wisdom to the masses. What's more, they believe they've been ordained to forcibly impose that wisdom on the rest of us. Of course, they have what they consider good reasons for doing so, but every tyrant that has ever existed has had what he believed were good reasons for restricting the liberty of others."

~George Mason Economist Walter Williams

Tuesday, July 17, 2007

Cuba's Dismal "Human Rights" Record

ClustrMap of visits to Carpe Diem blog, none from Cuba:
Top 10 Reasons that Human Rights don't exist in Cuba, from the Human Rights Watch 2006 Report on Cuba:

1. Cuba remains the one country in Latin America that represses nearly all forms of political dissent. President Fidel Castro, during his 47 years in power, has shown no willingness to consider even minor reforms. Instead, the Cuban government continues to enforce political conformity using criminal prosecutions, long- and short-term detentions, mob harassment, police warnings, surveillance, house arrests, travel restrictions, and politically-motivated dismissals from employment. The end result is that Cubans are systematically denied basic rights to free expression, association, assembly, privacy, movement, and due process of law.

2. Cuba’s Criminal Code provides the legal basis for repression of dissent. Laws criminalizing enemy propaganda, the spreading of “unauthorized news,” and insult to patriotic symbols are used to restrict freedom of speech under the guise of protecting state security. The government also imprisons or orders the surveillance of individuals who have committed no illegal act, relying upon provisions that penalize “dangerousness” (estado peligroso) and allow for “official warning” (advertencia oficial).

3. In early July 2006 the Cuban Commission for Human Rights and National Reconciliation, a respected local human rights group, issued a list of 316 prisoners who it said were incarcerated for political reasons. Serving sentences that average nearly 20 years, the incarcerated dissidents endure poor conditions and punitive treatment in prison.

4. The Cuban government forbids the country’s citizens from leaving or returning to Cuba without first obtaining official permission, which is often denied. Unauthorized travel can result in criminal prosecution. The government also frequently bars citizens engaged in authorized travel from taking their children with them overseas, essentially holding the children hostage to guarantee the parents’ return. Given the widespread fear of forced family separation, these travel restrictions provide the Cuban government with a powerful tool for punishing defectors and silencing critics.

5. The Cuban government maintains a media monopoly on the island, ensuring that freedom of expression is virtually non-existent. There are currently 23 journalists serving prison terms in Cuba, most of them charged with threatening “the national independence and economy of Cuba.” This makes the country second only to China for the number of journalists in prison.

6. Access to information via the Internet is highly restricted in Cuba (see map above showing visits to this blog, none are from Cuba). In late August 2006 the dissident and independent journalist Guillermo Fariñas ended a seven-month hunger strike in opposition to the regime’s Internet policy. He began the strike after the Cuban authorities shut down his e-mail access, which he had been using to send dispatches abroad describing attacks on dissidents and other human rights abuses.

7. Prisoners are generally kept in poor and abusive conditions, often in overcrowded cells. They typically lose weight during incarceration, and some receive inadequate medical care. Some also endure physical and sexual abuse, typically by other inmates and with the acquiescence of guards.

8. Under Cuban law the death penalty exists for a broad range of crimes. It is difficult to ascertain the frequency with which this penalty is employed because Cuba does not release information regarding its use.

9. Refusing to recognize human rights monitoring as a legitimate activity, the government denies legal status to local human rights groups. Individuals who belong to these groups face systematic harassment, with the government putting up obstacles to impede them from documenting human rights conditions.

10. International human rights groups such as Human Rights Watch and Amnesty International are barred from sending fact-finding missions to Cuba. In fact, Cuba remains one of the few countries in the world to deny the International Committee of the Red Cross access to its prisons.

Cuba Ranks #156 Out of 157 for Economic Freedom

According to the 2007 Heritage/Wall Street Journal Index of Economic Freedom, Cuba has a score of 29.7 (29.7% economically free) out of 100, and ranks 156 out of 157 countries, see the ranked list here. North Korea is #157 with only 3% freedom, and Libya ranks #155 with 34.5% freedom.

Hong Kong ranks #1 with 89.3% freedom, and the U.S. ranks #4 with 82% freedom.

From Cuba's profile in the report: "Cuba is ranked 29th out of 29 countries in the Americas, and its overall score is so low that it is less than half of the regional average.

Highest Tax Increase in History?: 20,000%

"I'm not sure in the history of man, since our forefathers founded the country in 1776, that there's ever been a tax increase of 20,000 percent," said Newman, who runs the Tampa business founded by grandfather Julius Caesar Newman. "They had the Boston Tea Party for less than this."

Find out more here.

(HT: Juandos)

Castro's $1 Billion Net Worth vs. $628 Avg. Income

Elian Gonzalez's home town of Cardenas, but not the block where Elian lives, that was fixed up:
Typical refrigerator in a Cuban home, all food is rationed.
Pictures are from TheRealCuba.com, a website mentioned in today's IBD editorial:

Castro's partying offspring can be seen in photos on Web sites such as TheRealCuba.com. He has a lifestyle that's the envy of any billionaire who's ever fantasized about owning his own island.

Castro's net worth of $900 million, compared to the $628-a-year incomes of average Cubans is particularly damning.

Under his 49 years of rule, Cuba has gone from having the highest standard of living in Latin America to either the poorest or second-poorest.

The Heritage Foundation ranks Cuba rock bottom on economic freedom in the region, and second-worst in the entire world, topped only by another communist "paradise,"North Korea.

Monday, July 16, 2007

Economics of Auctions: eBay Provides Rich Data

Before eBay, economists had few ways to test their theories about auctions. They could recruit and test volunteers, but that often meant subjects already knew they were being watched. Some experiments in the mid-1990s involved digital auctions on primitive Internet message boards. But the pool of potential bidders was too small back then to draw any broad economic conclusions.

Now, thanks to eBay, economists can watch and document this 2-­millennium-old idea play out.

Behind the millions of online auctions like Ebay lies a virtual mini-economy flush with raw data. Harvesting this information has fed a new branch of economics, one that has proved again and again that shoppers act in unexpected ways.

Read more here of the Christian Science Monitor article "Why We Do What We Do on eBay: Economists Mine the Online Auction Site to Find Out Why Shoppers Act Irrationally."

From Wikipedia's entry on "
Perfect Competition": eBay auctions can be often be seen as perfectly competitive. There are very low barriers to entry (anyone can sell a product, provided they have some knowledge of computers and the Internet), many sellers of common products and many potential buyers.

(HT: Ben Cunningham)

China to Overtake Germany as #3 Largest Economy


Chinese statistics due this week are likely to show that the country is on track to leapfrog Germany as the third-biggest national economy this year, sooner than expected -- yet another sign of just how quickly the global economic balance of power is shifting.

Overtaking Germany in absolute terms may not be seen as an important triumph to China's leaders, whose priority is raising incomes and living standards that remain far below those of the developed world. And it might not be surprising that a country with 1.3 billion people produces more in a year than Germany's 82 million inhabitants. But passing that milestone could add to increasing anxieties in wealthy nations about China's rise.

Recent estimates put the size of China's gross domestic product last year at $2.8 trillion, breathing down the neck of Germany's $2.9 trillion national output for the period. Only the U.S. ($13.2 trillion) and Japan ($4.4 trillion) have bigger economies, according to International Monetary Fund data (see chart above from Wikipedia, figures are slightly different than the WSJ's).

Chinese government data for the second quarter, due out on Thursday, are expected to show that Chinese output grew by around 11% in this year's first half, a rate that economists think China will maintain this year. Even optimistic predictions for German growth, at close to 3%, are no match for that.

Low Cost Indian Medicine: Antidote to High US Cost

From an article in the Times of India, "American Sicko Can Reach Out to India":

There's not a single mention of India in Moore's documentary even as he rails against the American system and its off-the-wall costs.

In 2004, Maggi Grace arranged for her friend Howard Staab, like her a North Carolina resident, to visit India for a heart surgery. Like some 50 million Americans, Staab, an otherwise healthy carpenter, did not have health insurance. A routine exam revealed a serious heart problem. Worse news followed fixing it without insurance cover would cost $200,000.

That's when Grace began hunting on the Internet for a way out and discovered India. Staab and she came to Delhi in September that year and got the mend for less than $20,000, with a trip to the Taj Mahal thrown in.

Grace has related the experience in a forthcoming book called "State of the Heart" to be published by Harbinger. The book's subtitle is "A Medical Tourist's True Story of Lifesaving Surgery in India."

MP: Outsourcing can save lives. And costs.

See previous post here on this topic.

(HT: Sanil Kori)

Sunday, July 15, 2007

Big Three Market Share May Slip Below 50% in July

A year ago, the Big Three had a 56% market share, now it is barely holding a 50% market share (50.2% in June, see chart above), and it may slip below 50% this month.

Here's a TV interview I recorded in Flint last week on the local ABC station about the Big 3 losing market share, and the upcoming contract talks with the UAW.