Wednesday, November 05, 2003

economy, and lack thereof

Red tape grows like kudzu, and needs to be aggressively pruned back every year.

Individually people all over the world have approximately the same natural endowments. What makes a difference is the nurture provided by the environment. And that environment is exogenous to an individual but endogenous to the entire collection of individuals which is called the society or the economy.
...India could have leap-frogged the manufacturing stage and gone straight from the agricultural stage to the information/service stage. The snag was that we neglected universal primary education and therefore hobbled ourselves....

via bonobo land, India economy watch:
The Chinese leadership seems to have its act together. The Chinese lucked out. It is India's karma that it got saddled with a bunch of self-serving narrow-minded weak-kneed myopic corrupt criminals as its leaders...

NY Times on call centers in India:
...coveted here. While the salaries are hardly lucrative by technology industry standards - anywhere from $1,600 to $2,100 a year - they beat those for most clerical positions.

"In the U.S., these jobs are taken by housewives or kids who haven't decided what they want to do with their lives," said K. Ghanesh, 39, the founder of Customer Asset. "Here, they are career jobs for college graduates." government and sausages:
It is an iron law of international economics that the Exploitation Police will swoop down and denounce anyone who creates new jobs, particularly in relatively poor areas. The common complaint is that call-centre companies set up shop in places (New Brunswick is a good example) where they can find well-educated workers at relatively low wages. The Exploitation Police make this sound almost criminal. In fact, it's the way capitalism has always expanded and the way that poor regions have traditionally turned themselves into less poor regions.

On the growing U.S. trade deficit, The Mercantilist's Tale by Warren Buffett:
....take a wildly fanciful trip with me to two isolated, side-by-side islands of equal size, Squanderville and Thriftville...
[Eventually] the Squanders are forced to deal with an ugly equation: They must now not only return to working eight hours a day in order to eat -- they have nothing left to trade -- but must also work additional hours to service their debt and pay Thriftville rent on the land so imprudently sold. In effect, Squanderville has been colonized by purchase rather than conquest.

The Debt Tax, published in Boston Globe (if not there, try here (scroll down)):
In recent years, much has been made over the repeal of the estate tax -- or "death tax." Much less attention has been paid to a far more pernicious tax -- the "debt tax" -- which is bigger than the estate tax, capital gains tax, and so-called "marriage tax" combined.
As a result these factors -- rising interest rates, growing spending, and massive tax cuts -- the debt tax burden will continue to mushroom. The administration's own projections show the debt growing by half through 2008. This means that in five years, the average family could be paying between $4,500 and $6,000 or more each year in debt tax alone.

words of wisdom from Bonobo Land, here -
if the dollar falls substantially, and the internal US labour market practices the structural reforms it advises for the rest of the world, I don't doubt jobs can be produced in large quantities. The question is: where on the value chain will these jobs be situated?

And he links to this great British article on the karmic aspect of the jobs flight to India ("The jobs Britain stole from the Asian subcontinent 200 years ago are now being returned..."):
If you live in a rich nation in the English-speaking world, and most of your work involves a computer or a telephone, don't expect to have a job in five years' time. Almost every large company which relies upon remote transactions is starting to dump its workers and hire a cheaper labour force overseas. All those concerned about economic justice and the distribution of wealth at home should despair. All those concerned about global justice and the distribution of wealth around the world should rejoice. As we are, by and large, the same people, we have a problem.
...For centuries, we have permitted ourselves to ignore the extent to which our welfare is dependent on the denial of other people's. We begin to understand the implications of the system we have created only when it turns against ourselves.

Julian Sanchez:
At a time when nationalist "us versus them" thinking is back in vogue, the temptation is strong to find someone - ideally brown people with funny accents - to carry the blame for our economic woes.

Paul Krugman, Waiting For Our Wile E. Coyote Moment -
...The timing of such crises [currency crises like those that struck Southeast Asia in 1997 and Argentina in 2001] is hard to predict. But there are warning signs, like big trade and budget deficits and rising debt burdens.
And there's one thing I can't help noticing: A Third World country with the United States' recent numbers -- its huge budget and trade deficits, its growing reliance on short-term borrowing from the rest of the world -- would definitely be on the watch list...

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