Free trade

Krugman's article here touches many areas that pushes people's buttons - unions, free trade, social safety nets, and Trump.  What it does not talk about and something that is outside the economist's domain  - is social order, break down of communities, and widespread anger and despair due to loss of jobs due to trade.  Free trade is not without social implications. If you are not good at anything - then you would start buying everything from the rest of the world and run huge deficits. If you don't have anything to export - then free trade will come and bite you. It will cause mass unemployment and social unrest. The same champions for free trade will turn and speak against it. So what is the problem. It is because corporate America is not investing enough in productivity and getting better at producing goods than the rest of the world. If the private sector is not getting involved and not doing what is necessary for the long term good of the country - then government should get involved - not in inefficient programs but mandating the private sector to do their share for the greater good. If mass consumers cant afford because they have no jobs - the companies wont have anything to sell or reason to serve.  

Back from the hiatus

After a long gap - I decided to get back into posting here. This will be just for freewheeling musings - nothing more. With rampant travel I would love to have a place to dump my stuff - from where I or someone else can read it. Digital journal - if you like. I still get a kick reading stuff from the past. Life moves on quickly - and what is today will be a memory very soon. So without any high bars or high expectation - this is it.

Minimum wage

Quite dissatisfied with Becker's take on minimum wage.  He cites France in his example.  France is in the pits not simply because of minimum wage but also because of other factors.  There is a sluggish economy, messed up immigration policy. There is not much assimilation of the migrants into the society.  As far the minimum wage is concerned, what needs to be looked into is the skill and education gap which is causing the problem... that someone who is earning minimum wage today cannot progress out of it.  Earlier one did not work in Mcdonalds to run a family. Rather they worked to get a temporary pocket money. So a low min wage was adequate --- now we need to look at the root cause - not the symptom. Raising min wage is not the issue. Temporarily I think they should but in the long run a more detailed and deeper solution to alleviate income disparities and growth to create more opportunities need to be resolved.


http://www.becker-posner-blog.com/2013/12/minimum-wages-employment-and-inequality-becker.html

War of wits on BP Exxon

Reading this makes me wonder... On one side BP spins the Deepwater blowout disaster as an industry wide issue - it just happened to them.  On the other side, Exxon Mobil spins it as a BP issue and not an industry-wide systemic matter.  Time will tell.  But odds state I believe there is some truth on both sides.  I don't think it was all an industry matter- management oversight was an issue.  But that it cannot happen to Exxon, is a stretch of faith that only the foolhardy can take.

Dynergy - waiting for a better deal?

All the saga that has been going on with Dynegy (with Blackstone and Icahn) leaves me with one curious point.  The deal did not go through with Blackstone is because Dynegy thought they can get a better deal.  Alas, it is yet to come through.  Wonder -  if companies cannot get this correct, what about individuals.  FT has an update

US Corporate Tax

In this article, Martin Feldstein gives few key points of problems with higher US corporate taxes.  Higher taxes causes
- a shift of capital to sectors such as, housing where there are tax benefits
- companies tend to raise capital more with debt than equity
- less foreign capital flowing into US for corporate investments

Even foreign income by US corporates are taxed in a manner that puts US companies at a disadvantage relative to other countries.  Income is taxed at a rate equal to difference of US tax rate and foreign country rate.  End result is - companies prefer not to bring in foreign income into US but use it in the foreign country itself.

This is quite interesting - come to think of it - in India, where I grew up, under the protectionist era - restrictive policies were used on foreign companies to prevent capital from flowing out.  Seems like US tax policy is quite the reverse - or as they in DC - an "unintended consequence"  

Frustrated with Office 2007

Just got a new laptop with Windows 7 and Office 2007. I now believe Microsoft has gone over the tipping point now and heading for doom. Way over-designed, feature over-load, and just a hogger for time that is killing my productivity. I don't need the option of 20,000 fonts or 2000 options as features staring at me. This is a bread and butter software that has to lean and easy to soft through its use. It is like a store offering 60 cereals when I just buy one, at the most two. If you have to go smart with choices, I should have the option of dumming it down to what I am comfortable. How about a feature that makes my Word look like 2003. And for those folks who like the look and feel of anything new ... they are happy too. Hope someone in Redmond is listening.