Economy Archives - Page 93 of 132 - the patient investor

January 4, 2013

Currency manipulation cost US economy up to 5 million jobs

Extract from a research brief by by C. Fred Bergsten and Joseph E. Gagnon, at Peterson Institute for International Economics, published December 2012:

More than 20 countries have increased their aggregate foreign exchange reserves and other official foreign assets by an annual average of nearly $1 trillion in recent years. This buildup — mainly through intervention in the foreign exchange markets — keeps the currencies of the interveners substantially undervalued, thus boosting their international competitiveness and trade surpluses. The corresponding trade deficits are spread around the world, but the largest share of the loss centers on the United States, whose trade deficit has increased by $200 billion to $500 billion per year. The United States has lost 1 million to 5 million jobs as a result of this foreign currency manipulation.

Hat tip to Simon Kennedy at Bloomberg.

January 2, 2013

Taoism and Libertarianism

George H. Smith at Libertarianism.org draws parallels between Libertarianism and Taoism, quoting from the Tao Te Ching:

If you want to be a great leader,
you must learn to follow the Tao.
Stop trying to control,
Let go of fixed plans and concepts,
and the world will govern itself.
The more prohibitions you have,
the less virtuous people will be.
The more weapons you have,
the less secure people will be.
The more subsidies you have,
the less self-reliant people will be.
Therefore the Master says:
I let go of the law,
and people become honest.
I let go of economics,
and people become prosperous.
I let go of religion,
and people become serene.
I let go of all desire for the common good,
and the good becomes common as grass.

Taoism identifies the following five principles of leadership:

If leaders have no clear direction they will confuse their followers. To achieve clarity of mind, eliminate the unnecessary.
A clear mind leads to simplicity in thought and action.
A good leader is adaptable. Like water, they are yielding and pliable but “yielding water dissolves the hardest stone.”
A good leader reflects the will of the people. They pay attention and listen. They follow, rather than lead.
A good leader is sparing in exerting authority. They know when to stand aside and not interfere.

The best leaders are those their people hardly know exist……

The best leaders value their words, and use them sparingly.
When they have accomplished their task,
the people say, “Amazing!
We did it, all by ourselves!”

January 2, 2013

Don't be fooled: The Republicans are winning | Business Insider

Henry Blodget:

Yesterday, the American government voted to extend almost all of the Bush Tax Cuts permanently. Not temporarily, as a stimulus measure. Permanently.

January 2, 2013

Rogoff: The Unstarvable Beast | Business Insider

Kenneth Rogoff, professor of economics at Harvard University, writes:

As US President in the 1980’s, the conservative icon Ronald Reagan described his approach to fiscal policy as “starve the beast”: cutting taxes will eventually force people to accept less government spending. In many ways, his approach was a great success. But government spending has continued to grow, because voters still want the services that government provides. Today, it is clear that reining in government also means finding ways to shape incentives so that innovation in government keeps pace with innovation in other service sectors….

January 2, 2013

Why the fiscal cliff deal offers little to celebrate | Quartz

Gwynn Guilford writes:

Most immediately worrisome is that [lawmakers] ……let a cut in the payroll tax (which pays for social security) expire. Though doing so will close the 2013 budget deficit by some $126 billion, it means that 160 million Americans — including two-thirds of the lowest quintile of earners — will see around $600-$2,000 skimmed off their paychecks this year. That exacerbates a trend of falling wages in the past few years, and is particularly worrying given that consumer spending is a critical engine of the US economic recovery. In fact, Goldman Sachs’ Jan Hatzius expects that the expired payroll tax cut alone will drain 0.6% off 2013 GDP growth, in the form of reduced consumption.

January 2, 2013

China: Easing one-child policy may not slow aging population [video]

China could ease its one-child policy to address a rapidly aging population — but as Jane Lee reports, rules aren’t the only thing stopping Chinese families from expanding.

http://youtu.be/0XAYxilsEJc

January 2, 2013

Congress Passes Fiscal Cliff Deal – WSJ.com

WSJ writes that Congress passed a compromise bill to avert the fiscal cliff:

The bill …… was passed over opposition from conservative Republicans in the House who objected to the fact that it contained no long-term spending cuts of any significance. Both the U.S. Senate and House of Representatives approved a bipartisan deal to block most impending tax increases and postpone spending cuts. The WSJ’s Mark Cranfield explains what the deal means for the U.S. deficit. The House voted 257-167, with 172 Democrats joining 85 Republicans in supporting the measure. Voting against the bill were 151 Republicans, and the GOP leadership split over the issue: House Majority Leader Eric Cantor (R., Va.) voted against it, while House Speaker John Boehner (R., Ohio) voted for it. Also supporting the bill was Rep. Paul Ryan (R., Wis.) the GOP vice presidential nominee who has been an ardent opponent of increasing taxes.

January 1, 2013

Disappointing fiscal cliff compromise

Vice President Joe Biden and Senate Minority Leader Mitch McConnell (R, Ky) brokered a deal that is likely to be approved by the Senate early Tuesday before being put to a vote in the House later in the day. The WSJ writes:

By waiting until the last minute, and reaching a deal on a much smaller scale than either side once envisioned, Washington also deferred many of its thorniest questions for perhaps as little as a few weeks. In late February of early March, the Treasury Department will run out of extraordinary measures to deal with the government’s borrowing limit — which it reached on Monday — and Congress would need to approve an increase. The delay in the spending cuts will run out about the same time. In effect, Congress has delayed the fiscal cliff by erecting a new and potentially more dangerous one.

Read more at The Fiscal Cliff – WSJ.com.

December 23, 2012

How the Welfare State Traps the Poor in Dependency, the British Version « International Liberty

Dan Mitchell describes how withdrawal of welfare benefits as your income rises can create a tax cliff that discourages the unemployed from seeking more work.

A graphic from British newspaper The Spectator gives this example:

John 21, works 25 hours per week at a gross wage of £5.70 per hour.
Of which 63p in tax/National Insurance and £4.18 in benefits (housing and council tax) is withdrawn.
Net income from work: 89p per hour.
84% of wage is lost in tax and benefit withdrawal!

December 19, 2012

Cutting taxes is a largely ineffective strategy for attracting foreign investment | EUROPP

Aidan Regan writes:

The Irish have the second best trade surplus in the eurozone, and productivity per worker is three times higher than Germany….. The truth of this fairy-tale is that US multinational corporations are engaged in transfer pricing. They locate profits in Ireland to take advantage of the low corporate tax regime.