Category: Economics

What a free trade zone is all about – Amazon ready to expand in China!

amazonchina

Amazon.com will set up shop in China’s Shanghai free trade zone, the company said on Wednesday, aiming to take advantage of less stringent trade regulations to sell a wider range of products in the country.

The U.S. online retailer’s move shows an intent not only to remain in China but to beef up its presence in an e-commerce market dominated by Alibaba Group Holding and Beijing-based JD.com, the second-biggest player.

Amazon did not say when the company is likely to begin operations in the free trade zone, which enjoys more relaxed import and export regulations than the rest of China.

The company is also pushing its Amazon Web Services (AWS) cloud computing business in China and said in December that the country will have its own AWS region to improve speeds for its mainly corporate customers…

Amazon’s move to the free trade zone comes nearly a year after the zone was launched, attracting attention from overseas businesses and hailed as one of China’s boldest reforms in decades. However, there has been a lack of specific policy details since the initial fanfare.

Foreign banks, such as Citigroup and HSBC Holdings have set up branches in the zone, but many foreign companies have been reluctant to follow suit, citing a lack of clarity on what will and will not be allowed in the zone.

The 2nd half of that last sentence is representative of what investors call the chickenshit index. Since Reuters was purchased by Thomson you’re bound to find some editorializing by omission. It’s the imperial disease.

In truth, this first free trade zone has been so successful that another dozen or more cities around China are lobbying to follow Shanghai’s model.

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1 in 7 Americans relies on food banks


Photo from 1983. Things haven’t gotten any better.

Nationwide, 25% of military families – 620,000 households – need help putting food on the table, according to a study by Feeding America, a network of 200 food banks.

“The results are alarming,” says Bob Aiken, chief executive officer of Feeding America. “It means that people in America have to make trade-offs. They have to pick between buying food for their children or paying for utilities, rent and medicine.”

One in seven Americans – 46 million people – rely on food pantries and meal service programs to feed themselves and their families, the study found…

Linda Patterson, executive director of Lorton Community Action Center, says stereotypes of the people who need food assistance are misleading.

“The people who come here are hard workers. They are employed. They are the school bus drivers, the lab techs in doctors offices, receptionists, the janitors who clean the floor of your children’s school,” Patterson says. “They just can’t make ends meet because some kind of crisis has hit them.”

The Hunger in America study found that of people who use food banks:

• 26% are black, 20% are Hispanic, 43% are white and 11% are other.

• 33% of households have at least one family member with diabetes.

• 65% of households have a child under 18 or someone 60 or older…

In the past year, food banks have increased their focus on healthy foods. The study found that 79% of people who use food banks report purchasing inexpensive, unhealthy food just to have enough to feed their families…

“The people who come to us for help are coming more regularly,” says Allison Majewski of the Capital Area Food Bank. “We aren’t a one-time emergency stop anymore. We are a staple for them, so it’s very important that we make these healthy foods available.”

Last time I read about anyone in Congress trying to live on a food stamp budget it was a couple of Democrats and one Republican. They may have lasted a week.

Everyone else was away at fund-raising banquets.

Our species’ environmental footprint is not sustainable

Substantial, fundamental changes in the world economy are required to reduce humanity’s overall environmental footprint to a sustainable level. This is the conclusion of Arjen Hoekstra, professor of Water Management at the University of Twente. He publishes his findings in the article “Humanity’s unsustainable environmental footprint[.pdf] in Science magazine.

Hoekstra, mainly known for the water footprint, has published the research together with his German counterpart Thomas Wiedmann, employed by the University of New South Wales in Australia. In Science, the authors describe how intertwined the global economy, politics, consumption and trade are in their effect on global land, water and raw material consumption and on the climate.

“Our article mainly focuses on understanding the interdependence of the different types of footprints and the role that businesses, consumers and governments play in creating our overall footprint,” says Hoekstra. “We know that we are not sufficiently sustainable in our actions. But the interdependence has not previously been shown in this way. The various players have divergent interests and take too little responsibility. Consumers do not feel responsible for what producers do and politicians focus too much on growth, exports and cheap imports. For example, who feels responsible for the distress caused when we deplete the resources in China because of cheap imports? If you buy a stolen bicycle, you are liable to punishment and individually responsible. But isn’t the consumption of products that are not produced sustainably also irresponsible behaviour? Rethinking the global supply chain, that’s what it’s all about.”

Hoekstra and Wiedmann map out mankind’s total environmental footprint in a scientific, unique manner, but also realize that a solution is not immediately obvious. “This of course requires fundamental changes in the global economy and international cooperation. But understanding the role of the various parties and the enormous complexity underlying our overall footprint is a first step. Everyone should assume and be given greater supply-chain responsibility; only then can we sustain our society“, concludes Hoekstra.

I don’t think this will provoke anymore examination and thought in the bowels of our government than, say, in the boardrooms of Western Capitalism.

That is not to say it will be ignored in the ever-burgeoning hinterlands of Brazil or China or the few centers of Realpolitik that engage with science. None of which are within the borders of the United States. Unfortunately.

Thanks, Mike

He’s in the top 1% of the 1% — and he wants a $15 an hour minimum wage

nick-hanauer

The fundamental law of capitalism is that if workers have no money, businesses have no customers. That’s why the extreme, and widening, wealth gap in our economy presents not just a moral challenge, but an economic one, too. In a capitalist system, rising inequality creates a death spiral of falling demand that ultimately takes everyone down…

Policy makers debate incremental changes for arresting this vicious cycle. But perhaps the most powerful and elegant antidote is sitting right before us: a spike in the federal minimum wage to $15 an hour.

True, that sounds like a lot. When President Barack Obama called in February for an increase to $9 an hour from $7.25, he was accused of being a dangerous redistributionist. Yet consider this: If the minimum wage had simply tracked U.S. productivity gains since 1968, it would be $21.72 an hour — three times what it is now…

Raising the minimum wage to $15 an hour would inject about $450 billion into the economy each year. That would give more purchasing power to millions of poor and lower-middle-class Americans, and would stimulate buying, production and hiring.

Studies by the Economic Policy Institute show that a $15 minimum wage would directly affect 51 million workers and indirectly benefit an additional 30 million. That’s 81 million people, or about 64 percent of the workforce, and their families who would be more able to buy cars, clothing and food from our nation’s businesses.

This virtuous cycle effect is described in the research of economists David Card and Alan Krueger (the current chairman of the White House Council of Economic Advisers) showing that, contrary to conventional economic orthodoxy, increases in the minimum wage increase employment. In 60 percent of the states that raised the minimum wage during periods of high unemployment, job growth was faster than the national average.

Some business people oppose an increase in the minimum wage as needless government interference in the workings of the market. In fact, a big increase would substantially reduce government intervention and dependency on public assistance programs.

An objection to a significant wage increase is that it would force employers to shed workers. Yet the evidence points the other way: Workers earn more and spend more, increasing demand and helping businesses grow.

Critics of raising the minimum wage also say it will lead to more outsourcing and job loss. Yet virtually all of these low-wage jobs are service jobs that can neither be outsourced nor automated.

Raising the earnings of all American workers would provide all businesses with more customers with more to spend. Seeing the economy as Henry Ford did would redirect our country toward a high-growth future that works for all.

Nick Hanauer really is in the top 1% of America’s 1%. One of the original investors in Amazon.com, he and his partners in Second Avenue Investors own their own bank. He sold his ad agency to Microsoft for $6.4 billion in 2007 – in cash. He is a self-described plutocrat.

He would like to prevent a revolution. Something on the order of French peasants and workers rolling out the guillotine in 1793. He believes economic justice will rescue our economy from the crapper it was dropped into by investment bankers in 2007 – and rebuild a prosperous nation with a healthy middle class.

Or you could pay attention to the scumbag side of class warfare in the Republican Party.

Stodgiest outfit on Wall Street agrees inequality is causing slower growth

Income-inequality

Is income inequality holding back the United States economy? A new report argues that it is, that an unequal distribution in incomes is making it harder for the nation to recover from the recession and achieve the kind of growth that was commonplace in decades past.

The report is interesting not because it offers some novel analytical approach or crunches previously unknown data. Rather, it has to do with who produced it, which says a lot about how the discussion over inequality is evolving.

Economists at Standard & Poor’s Ratings Services are the authors of the straightforwardly titled “How Increasing Inequality is Dampening U.S. Economic Growth, and Possible Ways to Change the Tide.” The fact that S.&P., an apolitical organization that aims to produce reliable research for bond investors and others, is raising alarms about the risks that emerge from income inequality is a small but important sign of how a debate that has been largely confined to the academic world and left-of-center political circles is becoming more mainstream…

Because the affluent tend to save more of what they earn rather than spend it, as more and more of the nation’s income goes to people at the top income brackets, there isn’t enough demand for goods and services to maintain strong growth, and attempts to bridge that gap with debt feed a boom-bust cycle of crises, the report argues. High inequality can feed on itself, as the wealthy use their resources to influence the political system toward policies that help maintain that advantage, like low tax rates on high incomes and low estate taxes, and underinvestment in education and infrastructure…

The report itself does not break any major new analytical or empirical ground. It spends many pages summarizing the findings of various academic and government economists who have studied inequality and its discontents, and stops short of recommending any radical policy changes favored by the likes of Thomas Piketty (who is among those cited).

And the S.&P. researchers are relatively limited in their policy prescriptions, avoiding much discussion of politically explosive debates over marginal tax rates and the scale of the social welfare system. They instead emphasize the usefulness of investing more heavily in education…

Anyone who wants to explain why the United States economy is evolving the way it is needs to at least wrestle with the implications of a more unequal society for the economy as a whole.

Overdue. Response to the problem from the talking heads in the White House has been limited to slogans and talking points. Response from our Do-Nothing-Congress has been to do nothing.

Thanks, Mike

Daylight is best medicine for nurses

In a forthcoming Cornell study…Rana Zadeh, assistant professor of design and environmental analysis, discovered nurses who had access to natural light enjoyed significantly lower blood pressure, communicated more often with their colleagues, laughed more and served their patients in better moods than nurses who settled for large doses of artificial light.

Letting natural light into the nurses’ workstations offered improved alertness and mood restoration effects. “The increase in positive sociability, as measured by the occurrence of frequent laughter, was … significant,” noted Zadeh in the paper.

Nurses work long shifts, during non-standardized hours. They work on demanding and sensitive tasks and their alertness is connected to both staff and patient safety. Past evidence indicates natural light and views have restorative effects on people both physiologically and psychologically. Maximizing access to natural daylight and providing quality lighting design in nursing areas may be an opportunity to improve safety though environmental design and enable staff to manage sleepiness, work in a better mood and stay alert, according to Zadeh…

Access to natural daylight, and a nice view to outside, should be provided for clinical workspace design, said Zadeh. In situations where natural light is not possible, she suggests optimizing electric lighting in terms of spectrum, intensity and variability to support circadian rhythms and work performance.

Yes, I know most folks would consider this an automatic goal. Tell that to some of the Scrooges who manage hospitals and clinics as if they paid for each lightbulb and window from their own pocket.

Oh no! A global chocolate shortage

Surging consumption of chocolate in Asia is pushing cocoa-bean prices to the highest level in three years as buyers including Barry Callebaut AG expand their search for more supply.

While demand in the region ranked as the world’s lowest per capita in 2013, the market will grow at almost twice the global rate over the next four years, according to researcher Euromonitor International Ltd. Barry Callebaut, based in Zurich and the world’s largest producer of bulk chocolate, has doubled capacity in Asia since 2009 as Cargill Inc. and Archer-Daniels-Midland Co. added bean-processing plants.

Growth in Asian demand has contributed to a rally in cocoa, the key ingredient for chocolate, which climbed to the highest level since August 2011 in New York on July 3. Rising consumption in emerging markets including China and India may spur shortages that extend into the next decade, with the global bean deficit seen reaching 1 million metric tons by 2020, according to Hardman & Co., a London-based research firm.

“In the longer term, the scarcity of quality cocoa is a serious concern for our entire industry,” Barry Callebaut Chief Executive Officer Juergen Steinemann said by e-mail in reply to Bloomberg questions.

A serious concern for chocoholics, too!

I already checked. The climate here in high desert country is not amenable to growing cocoa trees. What will we do?

The hardest places to live in the United States

Healthy & wealthy or struggling
Click for interactive map at article site

Annie Lowrey writes in the Times Magazine this week about the troubles of Clay County, Ky., which by several measures is the hardest place in America to live.

The Upshot came to this conclusion by looking at six data points for each county in the United States: education (percentage of residents with at least a bachelor’s degree), median household income, unemployment rate, disability rate, life expectancy and obesity. We then averaged each county’s relative rank in these categories to create an overall ranking…

We used disability — the percentage of the population collecting federal disability benefits but not also collecting Social Security retirement benefits — as a proxy for the number of working-age people who don’t have jobs but are not counted as unemployed. Appalachian Kentucky scores especially badly on this count; in four counties in the region, more than 10 percent of the total population is on disability, a phenomenon seen nowhere else except nearby McDowell County, W.Va.

Remove disability from the equation, though, and eastern Kentucky would still fare badly in the overall rankings. The same is true for most of the other six factors.

The exception is education. If you exclude educational attainment, or lack of it, in measuring disadvantage, five counties in Mississippi and one in Louisiana rank lower than anywhere in Kentucky. This suggests that while more people in the lower Mississippi River basin have a college degree than do their counterparts in Appalachian Kentucky, that education hasn’t improved other aspects of their well-being

At the other end of the scale, the different variations on our formula consistently yielded the same result. Six of the top 10 counties in the United States are in the suburbs of Washington…but the top ranking of all goes to Los Alamos County, N.M., home of Los Alamos National Laboratory, which does much of the scientific work underpinning the U.S. nuclear arsenal. The lab directly employs one out of every five county residents and has a budget of $2.1 billion; only a fraction of that is spent within the county, but that’s still an enormous economic engine for a county of just 18,000 people.

RTFA for details and differences. Poisonally, I think including Los Alamos is an anomaly. All it proves is the American way to achieve the highest per capita income is through a subsidy dedicated to death and destruction.

The broader implication of this study is that the end result of the ideology and bigotries of the Confederacy is poverty, ignorance and ill health. As expected.

BRICS nations found bank to rival Western-dominated World Bank and IMF

The so-called BRICS countries agreed to form an international development bank with aspirations to challenge the dominance of the World Bank and the International Monetary Fund.

Leaders of Brazil, Russia, India, China and South Africa said Tuesday that the New Development Bank will start with $50 billion in capital and $100 billion as a currency reserve fund for liquidity crises…

Still, the BRICS bank, which could add more member nations, represents a bid to expand the influence of the BRICS emerging markets and act as a counterbalance to institutions run by the U.S. and other developed nations…

As developing countries began playing a larger role in the world economy, their leaders repeatedly complained that they have not been given correspondingly larger voices in international financial institutions such as the World Bank and the IMF, both based in Washington. The U.S. typically appoints the World Bank president, and European countries appoint the IMF chief.

“International governance structures designed within a different power configuration show increasingly evident signs of losing legitimacy and effectiveness,” said the official statement signed by the BRICS leaders, who met in Fortaleza, Brazil, on Tuesday. “We believe the BRICS are an important force for incremental change and reform of current institutions toward more representative and equitable governance.”

Brazilian President Dilma Rousseff, Russian President Vladimir Putin, Indian Prime Minister Narendra Modi, Chinese President Xi Jinping and South African President Jacob Zuma hammered out some of the final details before signing the agreement Tuesday.

Among the terms are that the bank will be in Shanghai, its first president will be from India, and the first chair of the board of directors will be from Brazil…

Analysts expect that other countries – like Indonesia, Mexico or Turkey – will join the bank over time. Certainly, they and their neighbors have no shortage of conflicts with restrictions important to the fiscal bears directing the IMF or the World Bank.

I doubt anyone expects either of the banks under the thumb of the US [and to a lesser extent, the EU] to modernize, to actively support the developing nations in any goal beyond being a source of cheap labor, raw materials, for Western corporations.

US court overturns Obama’s decision that wind farm is a security risk

wind-farms-US

A US Federal Court has overturned a ruling backing President Barack Obama’s decision to block a Chinese-owned company’s from building four 10MW projects in Oregon.

The US Court of Appeal for the District of Columbia reversed the decision made in October by the Federal District Court, which said Obama followed correct procedure in refusing Ralls Co. permission to build the Oregon projects and forcing the company to sell them.

Ralls Co., which is owned by Chinese firm Sany Electric, sued the US government in 2012 after Obama’s decision. It was the first time since 1990 a US president blocked a foreign business deal.

The president ruled, in 2012, the location of the four projects near the Naval Weapons Systems Training Facility in the US northwest posed a threat to national security

Now, the Federal Court of Appeals has backed Ralls Corp and ordered the company be provided with the evidence the President used to block the application.

The lizard brains in Washington were afraid that airspace used for training naval aviators might somehow be compromised by wind generators producing carbon-free electricity.

Will our nation ever weary of hypocrites and paranoids in charge of our destiny? Populists on the Left and Right wail and whine about foreign investment in the United States as an appropriate alternative to American corporations offshoring jobs whenever and wherever they can save a couple of pennies on the dollar. But, when foreign investors happen to be the wrong political color, when folks roll ashore carrying dollars from the profits they made from your friendly neighborhood capitalist – the Cold War is somehow more appealing to the blivets sitting in air-conditioned DC offices. And, yes, there are other wind farms in the same area also operated by foreigners: one Danish company and another German.

There aren’t a whole boatload of elected officials dedicated to helping us out. Cripes, we can’t even get the leadpants brigade in Congress to ante up the geedus to repair our roads and bridges. But, we’re supposed to trust their history of dedication to job security when they disapprove of clean air from a project owned by the “wrong kind” of furriner.