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.

The IMF is interesting to US policymakers for the wrong reason

The International Monetary Fund is an immensely useful organization, able to deliver substantial amounts of financial and technical assistance at short notice to almost any place in the world. It also has the great advantage of almost always being perceived as incredibly boring…

In the realm of international economics, being perceived as boring confers power to the extent that it allows major decisions to be made without a great deal of external scrutiny. From 1918 to 1939, international economic cooperation was hard to come by – in large part because all of the attempted deals were put together at high-profile international conferences. Following the creation of the IMF in 1944, many of the same decisions became routine, a lot less interesting, and much easier to implement…

The US does not dictate what happens at the IMF, but it does have a disproportionate influence. Given the Fund’s origins in helping to rebuild Europe after World War II, European countries are also very well represented on its executive board and in terms of ownership shares (and thus voting weight on important decisions).

One major goal in recent decades has been to shift representation at the IMF somewhat away from Europe and toward the world’s emerging markets. These countries’ global economic and financial significance has grown rapidly, yet they have relatively little representation at the Fund.

A package of reforms has been agreed. Like most products of international negotiations, the agreement is not perfect; but it does move the ball forward…These reforms need to be agreed, in legislative form, by the US Congress before they can take effect. For whatever reason, President Barack Obama’s administration did not push this item hard in 2013 and early 2014 – and the agenda of encouraging further IMF reform has therefore languished.

The Obama administration proposed to tie IMF reform to the presumably imminent approval by Congress of funding for Ukraine. This is sensible legislative tactics but not appealing as an economic strategy. In effect, the administration tried to make the IMF more interesting, particularly to encourage Republicans in the House of Representatives to support the reforms.

The latest indications are that the Republicans will not be so enticed. But the bigger problem is that Ukraine does not really need a massive loan from the IMF. What Ukraine needs is a sharp reduction in corruption, as well as real legitimacy (through the ballot box) for people who want to rein in the influence of oligarchs – a group that has sapped the economy through plunder and incompetence over the past two decades.

Mostly, what looks like happening is typical of Congress and Congressional Republicans. Money for war is always available – so, the White House and the Pentagon will make Ukraine aid sound like war is imminent.

The need to reform the IMF and why – will probably be swept under the rug.

The need to reform Ukraine will simply be ignored. Most of Congress has no interest in anything concerned with real reform vs. the phoney sort they talk about all the time. The kind that means screwing working people even more.

Electoral college reform = 50 equal states


Click to enlarge

The electoral college is a time-honored, logical system for picking the chief executive of the United States. However, the American body politic has also grown accustomed to paying close attention to the popular vote. This is only rarely a problem, since the electoral college and the popular vote have only disagreed three times in 200 years. However, it’s obvious that reforms are needed.

The fundamental problem of the electoral college is that the states of the United States are too disparate in size and influence. The largest state is 66 times as populous as the smallest and has 18 times as many electoral votes. This increases the chance for Electoral College results that don’t match the popular vote. To remedy this issue, the Electoral Reform Map redivides the fifty United States into 50 states of equal population. The 2010 Census records a population of 308,745,538 for the United States, which this map divides into 50 states, each with a population of about 6,175,000

Do I agree? Uh, nope. Just decide elections on the basis of one person = one vote. Get rid of archaic crap.

Thanks, Ursarodinia

A report on the all-round reform from the 3rd Plenum

The King of Bahrain Hamad bin Isa Al Khalifa Visits China
The cranes are flying

I finally tracked down a release of documents detailing the sixty points of reform from the 3rd Plenum just concluded in China. Aside from wanting to read through it and form my own opinions – I’d like to make it available for any of my readers.

What I am posting here is linked to an 8-page summary from the online edition of the China Daily. I’ll put up a couple of categories just to note the breadth of the document. I’m confident what I’m looking for is online already – Here is a brief note from China’s president Xi Jinping, as well. Google hasn’t been much of a help, frankly.

Much has come from the third plenum regarding the management of State-owned assets, particularly State-owned enterprises. The reforms are not going to wipe SOEs out of existence, however.

The communique said China’s basic economic system is one that depends on public ownership as its main body but allows for the prosperity of various ownerships. Both public and nonpublic ownerships are important components, it said…

China must accelerate construction of a new agricultural management system and give farmers more proprietary rights, to realize the equal exchange of production factors, achieve a fair allocation of public resources between urban and rural areas, and promote healthy urbanization, the communique said…

This milestone will bring concrete benefits to farmers, lay a foundation for modern agriculture, and pressure local governments to end their reliance on land transfers for large profits…

Guo Jianguang, a professor at the Central University of Finance and Economics, said the market, rather than the government, is likely to play a more important role in deciding China’s exchange and interest rates. As an effective measure to control the macroeconomy, the exchange and interest rates have long been tightly regulated, he said…

The communique points out that to better adjust to the new realities of economic globalization, China must accelerate the pace of opening-up, both internally and in terms of the outside world. The country will lower the thresholds for investment, accelerate the construction of free trade zones, and boost opening-up in inland and coastal areas…

The communique said China will strive to make social welfare fairer and more sustainable. Reform of social affairs is vital to guarantee all citizens enjoy the fruits of China’s development, it said.

Guan Xinping, director of the department of social work and social policy at Nankai University, said China has almost met the goal of universal social welfare coverage for its urban and rural populations, but a great disparity still exists among different professions and regions…

Regardless of personal and political ideology, the proposed structural changes in China will affect the world economy. Primary source information is always useful. There will be no shortage of analysts and pundits.

How ’Death Panels’ can prolong life — and should they?

Average life expectancy is one of two statistics commonly used to compare the health-care systems of different nations. (The other is infant mortality.)

One of the puzzles about the U.S. system is that we spend far and away the most money per capita for health care, but we rank 50th in average life expectancy — after Macau, Malta, and Turks and Caicos, among others.

We are all familiar with statistics about how much of health-care spending takes place in the last year of life, and with stories about old people who are tortured with costly treatments they don’t want and which prolong dying but don’t extend life in any meaningful sense.

Certainly, ailing old people should be allowed to die in peace, if that’s what they want, and not be subject to excruciatingly painful surgeries and drugs that will do nothing for them. These are more the fault of lawyers than doctors. In our experience, doctors can be all too cool and rational in their thinking about the end of life. It’s fear of lawsuits (or, in a few cases, trolling for customers) that prevents doctors from behaving rationally when prescribing treatment for the old and terminally ill…

So what do we do about old people who, on balance, would rather get even older — whatever that means in terms of “quality of life” — than give up? This is one of the indelicate, unmentionable questions in the health-care debate…

In short, all the Republican talk during the health-care- reform debate about “death panels” was melodramatic and unfair, but not ridiculous. One way or another, holding down health-care costs will require policies that deny treatment to people who want it. And want it because it will extend their lives.

This goes on already, all the time. Health insurance companies have been known to deny payment for treatments deemed unnecessary. Age limits for organ transplants are another example. All policies that involve denying care because of “quality of life” considerations are, in effect, “death panels.” But no society can afford to give every citizen every possible therapy…

How do you persuade fellow citizens to accept limits on their right to consume health-care resources? The trick, we think, is to ask them when they’re healthy, not when they’re sick. If you think a $200,000 operation is going to give you a few more years to live, it’s going to be hard to convince you that it’s not worth the cost. But before then, when your odds of needing that expensive operation are the same as everybody else’s, you might well choose a system that offers a higher life expectancy, even though it costs less. In fact, why wouldn’t you?

Bloomberg View articles don’t always try to answer the questions they ask. This is one that sort of suggests alternatives; but, the final resolution isn’t settled yet. We’re stuck with politicians, insurance companies, healthcare corporations and their own versions of “death panels” in charge of negotiating with us.

You already know who has the most power in that dialectic – and it ain’t us.

The Bush tax cut Armageddon could yield a better tax code

How much does the federal government actually spend? About $830 billion more than you think.

That’s the conclusion of a recent study by Donald Marron and Eric Toder. They analyzed so-called tax expenditures — the deductions, breaks and loopholes that clog the tax code — and sorted them into two groups: “spending substitutes” and “tax policy design…”

Other expenditures, however, are simply government spending programs by another name…

Marron and Toder counted about $600 billion of such expenditures in the 2010 tax code. Add in $230 billion in “user fees” that are counted as “negative spending” but are more like tax revenue, and you reach the $830 billion total — “almost 30 percent more than officially reported…”

But here’s the rub: Although the looming expiration of the Bush tax cuts adds urgency to reform, they also stand in its way…

The Bush tax cuts have created a “baseline” problem. The two parties can’t agree on a plan because they can’t agree on a common equation for how much revenue counts as “revenue neutral.”

Republicans work from a baseline that includes a full extension of the Bush tax cuts. The Democrats’ baseline assumes the expiration of the tax cuts for families earning more than $250,000. The Congressional Budget Office uses yet another baseline, one that assumes that all of the Bush tax cuts will expire, because that’s what current law says will happen at the end of 2012. The difference in revenue between the Republican and the current-law scenario exceeds $4 trillion over 10 years.

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Here’s what Obamacare delivers, this week:

The health-reform law is changing the health-insurance marketplace in big ways. The first changes—those that happen right away—take effect Sept. 23, 2010, six months after the health-reform bill was signed.,, Consumer Reports offers a free health-insurance guide [.pdf] to how the new law affects you.

Preserves job-based coverage

If you get health insurance through work, your coverage will likely remain pretty much the same, but with some new consumer protections. Lifetime caps on coverage are banned, for example, and insurers will have to adopt new procedures allowing workers to appeal coverage denials.

Offers new protections for consumers

According to the new Patient’s Bill of Rights insurers can no longer do the following: Cancel your coverage if you get sick; set lifetime limits on coverage; put annual dollar limits on coverage (this is phased in over three years); deny coverage to children under age 19 who have pre-existing conditions; and impose barriers to or refuse to pay for emergency care even if it’s at a hospital outside the insurer’s network.

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