Re Ken Lay - it's by no means clear he is guilty. Unlike the others he was not a benificiary of the so-called "special partnerships". And prosecutors tend to follow the money trail:- if you benefited finacially from illegal acts, then you're probably guilty. "The Smartest Guys in the Room" is a terrific book about Enron and well worth a read.
But, I think you hit the nail on the head when you said "since the collapse of the Soviet Union the U.S. also lost some of the incentive for installing anti communist dictators."
Frankly, the world has benefitted from not having two super-powers with nuclear weopons installing client states. (Tell me the Soviet Union wasn't guilty of funding some very unpleasant communist regimes.)
My fear is that we now have two super-powers again (China and the US), and both will go back to sponsoring client regimes with little regard for local people.
But still, to come back to my original point: people get in boats to leave communist dictatorships to come to the US, not the other way round.
OK. There's a fair amount of truth in what you say. But there is also a fair amount of WTF in there too...
"Venezuela is in transition from being a Fascist country like Columbia, like most countries in the Western Hemisphere because the U.S. installed Fascist dictators in most of them."
I'll assume you're talking about the Americas. Because that's the kindest assumption. But it's still a ridiculous assumption that most of the countries in the Americas are "fascist dictatorships installed by the US government". Canada? Nope. Mexico? Nope. Argentina? Nope. Chile? Nope. Brazil? Nope. Right: now we've dealt with more than 90% of the population of the Americas, would you like to run by me - with examples - all those fascist dictatorships that still exist supported by the US?
I'm not saying that the US has not been guilty of backing some particularly evil and mendacious regimes. (And even being responsible for a number of coups.) But, this hasn't happened for quite a long time now. George W at least has the guts to invade countries directly.
The other thing I have a tiny problem with is the knee jerk anti-capitalism in your statement. Equality is terrific. (I believe everybody should have as equal a chance as possible of becoming as unequal as possible. Equality of opportunity, if you like.) But if the choice is between being poor in Dafur or Havana, and being poor in Detroit or Houston, I'm afraid I'd go for the latter. (There is remarkably little malnurishment in the US, for all the income inequalities.)
The fact is, most people in the world are queing to get into capitalist democracies. People are voting, if you like, with their feet. The boats are not leaving Miami bound for Havana. (And the political oppresion in Cuba is also rather nasty. Check those notorious right-wingers at Amnesty if you don't believe me.)
"If you are affluent you get off when charged with crimes, if you are poor you rot in jail.
The US criminal justice system is a scandal. (Particularly in Texas.) But statements like this are ridiculous. About 30 seconds with Google will find you a list of rich people who have gone to jail recently (and you could do worse than start with the bosses of Tyco, Worldcom, Enron or evan Martha Stewart). Or aren't these people rich enough?
Anyway: please tone down the rhetoric. You have some good points, but they are not backed up by data or facts. Mindless assertions - no matter how they are moderated - are not "insightful".
Looking at some real data rather than some made up data, we find the top 1% have 34% of the total wealth in America.
Also, there is a very interesting Stanford study that shows that these numbers massively overstate the wealth of the richest Americans because they are gross numbers. Bill Gates has $26bn of Microsoft stock. *But*, if he sold it he'd have to pay capital gains taxes. His "after tax" wealth would be a (still obscenely large) $18bn. If we assume that capital gains have been disporortianately earned by the richest then this skews the numbers quite considerabley.
Anyway... I'm not saying America doesn't have terrible wealth inequality, just that people have a tendancy to make up stats in this area:-)
You have a problem with that, because it is a silly analogy.
This is all about a contract signed between Apple and a developer. It is obvious and clear that Joe cannot sign a contract with Bob that imposes conditions on Claire. The only way to "break" the NDA is to sign the NDA.
Now, compare this with your banking example. Well - stealing money from somebodies bank account is illegal in almost (if not all) countries in the world. Posting details of running OS X on an x86 is not illegal. When Bob Smith collects your financial info he has not broken the NDA; but when empties out your account he has committed theft and will (hopefully) go to jail.
Cisco would also have to pay a premium to buy Nokia. The deal would also have to be almost entireley "paper" based as Cisco has neither $90bn or so in cash, nor the realistic proposition of borrowing that money. Paper based deals require even higher premiums.
It's also worth remembering that the Finns might be a little upset to lose their only large world class company.
0.3% of GDP on Windows licences! Are you having a proverbial "laugh"?
UK GDP - source Google - $ 1,782,000,000,000
0.3% of UK GDP = $5,346,000,000 or $5.4bn
I'm sure the UK spends a lot on Windows. But bear in mind that Microsoft's total annual revenues are only about $40bn, of which roughly half is client (Windows XP, etc.) and server (Windows 2003 Server). (In fact this over-states total Windows licenses, as there is also SQL Server, etc. in there.) But even on a best case, you're saying that the UK buys more than a quarter of all Microsoft Windows licenses. In fact, what you're really doing is making up sprurious statistics to get some temporary kudos.
Next item of absurdity: "the United Kingdom spends 0.3% of GDP on it's transport infrastructure". Really? Source please. Of course there is no source, because this is a ridiculous made up number. Lets go to the UK Office of National Statistics: oh! it turns out that the UK government (excluding what is spent by private industry) spends, da da, £20bn on transport infrastructure. (Which, at today's exchange rate is about $35bn, or around 2% of GDP.)
Congratulations, you made up some numbers and now will be modded all the way back down to -1, troll.
Now, I could be wrong. But RTFA, nowhere does it say touch sensitive. In fact, it's very clear there are a number (four?) of buttons on there, plus it is able to recognise a "rocking" motion.
Nothing too revolutionary, me thinks.
(But hey... this means I can through away my Logitech mouse and use a kewl white one!)
I don't mean to pick, but she's nine years old. At that age I had some pretty peculiar political and sociological views too. I admired Microsoft too.
So, shall we cut her a little slack?
(Also, don't forget that Pakistan is patriarchal Muslim country; a little movement towards sexual equality wouldn't be a particuarly bad thing. Not, I hasten to add, that Pakistan is among the worst offenders in this area, what with having had a woman prime minister for example.)
I'm about to go on a little rant, because I think economics are fairly poorly understood on Slashdot.
Firstly: why does the US have a trade deficit?
Because, American consumers have chosen to buy goods from foreign manufacturers (Toyota, Sony), rather than American ones (Ford, errr...) The American consumer has *chosen* (and you are one of those consumers, I would bet) to buy from a foreign company rather than an American. Next time you whinge about the trade deficit, remember that your HiFi system contributed to it.
Secondly, we've always bought stuff from abroad, but never had such a big trade deficit before - this must be the fault of the pesky Chinese, yes?
Well, firstly - and I've quoted this before - China does not have some massive trade surplus, sucking in money from around the world for their own nefarious purposes. See http//http://www.uschina.org/statistics/2005tradep erform ance.html> for details.
The reason that the US has such a serious trade deficit is because the government is borrowing more than it is spending. And it is borrowing a lot more than at any time in the past.
Think about this: normally when a country buys more than it sells, then the currency declines. (Investors say - ouch this country has a large trade deficit, money flows out the country, and the currency declines.) The effect of a currency depreciation is to rebalance the terms of trade; essentially the country which is doing well sees its currency rise, and the country doing less well sees its currency fall. The effect of this simple: goods become cheaper from the country with the depreciating currency.
Yet the US currency has not been falling like a stone. In 2000, there were 110 yen to the dollar; nowe there are 111. Against the Korean Won, the US dollar has moved from 1100 in 2000 to 1050 now. These are not big moves. Only against the Euro has the dollar weakened, and even this was relatively modest (and probably due to other factors).
Why has economic theory been repealed? Well, as I mentioned earlier, it is largely the result of the US Government Budget deficit. When the US government spends more than it earns it needs to sell Treasury Bonds to people. And in this case, that means people in the Far East. (Why people in the Far East? Because the US saving rate is so low, and because the US government knows it will pay lower interest charges if it sells its debt to investors in Hong Kong and South Korea, than Ploughkeepsi and Kansas.)
So, you have this problem: the US buys goods from the Far East - which should lead to a depreciating currency, but it doesn't, because it then sells Treasury bonds to those same people. America is becoming a massive debtor to the world. This is the problem.
For anyone who is interested in these things, can I recommend you read Stephen Roach at Morgan Stanley, or John Mauldin's Front Line Thoughts.
Lets start with dividends, and dividend payout ratios. Over the last 120 years the proportion of corporate profits paid out in dividends has varied a fair amount, from under 20% at the hight of the dot com bubble, to about 60% at its highs. Right now, the average payout ratio on the S&P Composite is about 38% - so, it's low by historic standards, but not insanely low. (Like it was in '99. Although, as we all discovered, the profits in '99 weren't all they were claimed to be. And some corporate executives, although probably not enough, are going to jail on the back of it.)
So, I don't think your first point is really fair: there is not a huge divergence between corporate profits and dividend payouts. (Shareholders, through their agents like the CalPers or TREF or Fidelity, get very upset if companies make money and don't return that cash to shareholders, and are quite prepared to boot out managaments that choose to horde it. Although, in the US in particular, this probably doesn't happen enough.)
Now the second question is the more interesting question: how much income inequality is OK? And do we care more about absolute levels of income or relative ones?
Now, in continental Europe, for example Sweden, income inequality (as represented by the Gini curve) is relatively low. The ratio between an average worker's pay and a CEO's pay is much, much lower than in the US. In Finland, the guy who runs Nokia, earns a fraction of what a US CEO at a similar company would get. At Siemens in Germany (a company with $100bn+ of sales and hundreds of thousands of employees) earns a pittance relative to the CEO of, say, a loss making networking equipment company in the Valley (pop quiz: guess the CEO!)
These countries all have significantly lower crime rates than the US, which is at least partly to do with lower income inequality, but is also to do with better public education systems.
But there is a problem with this Utopia: European unemployment rates are much, much higher than in the US. And I'm not talking small numbers: more than 10% of the workforces (and that is only those *actively* seeking work, not those who would like work but aren't collecting unemployment benefits) of these countries are unemployed. That hurts.
There is a trade off: in the US you have extreme income inequality, but also relatively low unemployment; in Europe you have high unemployment, but low wage differentials.
Take your pick. It's all a balancing act (and I tend to believe the UK, which is half way between the US and continental Europe has got it about right.) But remember this: if you raises taxes too much the most talented people - the people who start Microsoft or Intel or Bill's Corner Shop - will leave. (In the '70s in the UK this was known as the "brain drain".) Perhaps they'll go to India where an all new tax regime encourages people to make money. And perhaps they'll start Microsoft. And then you won't have to worry about income inequality, because all the rich people, and all the succesful companies are in another country.
And at the risk of sounding wantonly capitalistic, share ownership - i.e. wealth - is far more widely spread than has historically been the case.
Thanks to 401Ks, mutual funds and the like, corporate ownership has become *much* more widely spread.
Some numbers to illustrate my point:
In 1950, the top 10% of people owned more than 90% of listed companies' shares! Insane, but true.
Now, the number is more like 50%. Fidelity's Magellan fund is open to all. The California Public Teacher's Pension Fund owns tens of billions of dollars of shares. Owning corporates - through shares - is something that was practically unknown to our parents' parents' generation.
Of course, most Slashdotters are young and have few if any savings or shares. But over time - and assuming you save instead of buying a 60" Plasma Screen from South Korea - then you too will own your share of corporate America. And that share will pay for your retirement. (Yes, all those retirees are calling out for higher profits from companies, 'cause they care more about their pension than some valley bum's programming job.)
So... I guess what I'm saying is "stop blaming the rich people".
Cheers,
Robert
(Who does, admittedly, wish to become rich one day.)
Well: the Supreme Court typically (and this is by no means always) tends to split into two seperate camps:
(1) The "progressives" or "liberals", who have tended to favour an "expansionist" interpretation of the constitution, and have typically been in favour of Roe vs Wade.
(2) The "conservatives" who typically are more "creationist" and who believe that "if it ain't in the constitution, we shouldn't try and add it."
Because many issues fall clearly into one of the two camps, and there are some justices that reliably support one side rather than the other (i.e. Stevens is as liberal as they come for example) the decision often depends on the "swing" justices.
Of course, there are issues that transcend this simple left/right analysis, and even within this there are sub-groupings: states rights are one area (Clarence Thomas is normally staunchly conservative but voted that California's pot laws should not be overturned ), and religion another. The recent Grokster case is also interesting, if only because of the dissenting opinions filed. (Which indicate that the decision might have been entirely different if just 10% of the traffic was for "legitimate" purposes.)
Anyway: this is all very interesting, and for anyone with an enquiring mind I highly recommend reading some of SCOTUS's rulings.
Whoops. Sorry about all the bold. And I should have proof-read what I wrote.
What I meant to say was: (1) the WTO found that the US and EU sanctions on Hynix were not fair, and that the company - while the recipient of illegal state aid (re bail-out) - was not dumping. And (2) free trade is great. We, consumers, benefit from dumping. (And good government must always be run for the benefit of consumers.) Any economics textbook will tell you that dumping is insane and stupid. And the "dumper" loses.
Please mod my earlier comment as Flamebait (-1), and this as Insightful (+3).
"Hynix is receiving financial support from Seoul so that Hynix can afford to sell at a loss or at no profit. Such financial distortions (which are common in Korea) materially impact the American economy because Washington opens the American economy to "free" trade with Korea."
What absolute rubbish. Your disregard for the facts is astonishing, and you've never taken Economics 101. Which fallacy would you like me correct first?
Lets start with Hynix recieves financial support from the Korean government. Well that'll be just like Boeing in the US. Or, indeed the entire US sugar industry. Or, for that matter, most farmers in Europe and the US. Result: the US and Europe dump aeroplanes and food onto countries, stifling their own food/aeroplane businesses.
But this is besides the point: the World Trade Organisation recently concluded that the South Korean state (which bailed out Hynix in '02) was no where near as guilty as people claim. Hynix also no longer recieves any subsidy from the Korean government.
(If you think the government bailing out failing businesses is wrong - and it is - then ask yourself when the US government recently spent 10s of billions of dollars proping up companies. Like the airlines.)
Now, I know there are people who don't like the British Crime Survey. But their methodology is simple. Every year they ask 30,000 people "have you or a close friend/relation been the victim of a crime, if so what was it and how many times did it happen?" Essentially, the survey strips out the absurdities of police crime reporting changes. (See http://thelawwestofealingbroadway.blogspot.com/200 5/04/crime-figures.html for details.)
Now, I'm not claiming that guns cause crime. But the evidence is certainly more mixed people (on either side of the debate) believe. And the main argument, I believe, against letting the populace bear arms is the risk of accidents. (See http://www.kidsandguns.org/study/states_deaths.asp ?National)
Where did you get your economics degree? Perhaps you ought to consider asking for your money back.
Here's is the shocker: China does not run a large trade surplus. (Serious, it's very very small, and was in '04 only slightly in the black.) Now, the numbers "experts" give you tell you that the US ran a $160bn trade deficit with China in the year to April '05. But that is against an overall trade surplus of just $26bn (which, trust me, isn't a lot of money when it comes to surpluses and deficits.)
But this is not relevent: China imports as much as it exports. It just happens not to import a lot from the US. It does however import a lot from Germany (which, along with Japan is the world's largest manufacturer of capital goods). So, China has a trade deficit with Germany, and a trade surplus with the US. Now: go to Germany. Who do they buy from? Well, lets start with the US. Germany imports a terrific amount of software and financial services from the US.
So: money goes US -> China -> Germany -> US ->...
(Now, this isn't great if you work in the manufacturing sector in the US, and your job goes to China. But it is great if you're selling fund management products to the Germans.)
Here's another shocker. Between 1998 and 2005, the US lost 2m manufacturing jobs (while, it should be noted, manufacturing output rose). And those jobs went to China, right? No. China lost 15m jobs. Yes, you heard that right fiftenn million manufacturing jobs were lost. (The result, I should add, of moving from an inefficient state system to a marginally more efficient private system.)
Anyway: the point I make is a simple one. Focussing on bilateral trade surpluses or deficits is stupid. You have to look at the system. You also have to remember that those trade deficit/surplus numbers are vey bad at capturing so called "invisible" exports, such as financial services.
I work in finance, and checked Bloomberg yesterday (in order to argue Allen was a significant shareholder). Shockingly, it appears as if Paul Allen has sold almost all of his shares. Very quietly.
I tried to Google for a news story, but was unable to find one. Nevertheless, I would be very surprised if Allen had more than a small fraction of his wealth in Microsoft. (Certainly, compared to Vulture Ventures, Charter Communications, and that sports team he bought...)
I hate to say it, but companies are not run for the benefit of employees. (Except, of course, for workers co-operatives.)
It's funny; everyone slags off the railways privatisation. But (coincidentally, I'm sure) their privatisation marked a reversal of the trend of downward rail passenger miles that had started in 1945. Rail passenger miles are up 30% from the bottom. If the new railways are so awful, why are more people using them?
Actually, you need to add (at least) component sourcing as well. Lets assume that the finished mobo is sold for $80 to Dell or whoever. This has to cover:
(1) The Intel (or nVidia, etc.) chipset - c $40 (2) Various other components from Murata, Rohm, etc. - $10 (3) Labour (4) Land, rent (5) Manufacturing equipment (6) Employees used to make the mobo (7) Employees in R&D (8) Employees in sales and marketing (9) Management (10) Taxes (11) Random other overheads (telecoms, bandwidth, auditing fees) (12) Transportation of the finished product to the US, or wherever and, finally, (13) Profit
Automation doesn't help that much. The cost of the employees actually making the mobo is tiny. Depreciation of components, or even shipping, are probably bigger expenses.
Little wonder that motheboard manufacturers make so little money. This a super-competitive industry. And we - as consumers - benefit mightily.
This is completely false. There are stringent Japanese ownership rules, but there is no hard-and-fast-law saying non-Japanese companies may not buy Japanese ones. Shinsei Bank, for example, is owned by Ripplewood Holdings, an American firm.
Slashdot Mirror
Re Ken Lay - it's by no means clear he is guilty. Unlike the others he was not a benificiary of the so-called "special partnerships". And prosecutors tend to follow the money trail :- if you benefited finacially from illegal acts, then you're probably guilty. "The Smartest Guys in the Room" is a terrific book about Enron and well worth a read.
But, I think you hit the nail on the head when you said "since the collapse of the Soviet Union the U.S. also lost some of the incentive for installing anti communist dictators."
Frankly, the world has benefitted from not having two super-powers with nuclear weopons installing client states. (Tell me the Soviet Union wasn't guilty of funding some very unpleasant communist regimes.)
My fear is that we now have two super-powers again (China and the US), and both will go back to sponsoring client regimes with little regard for local people.
But still, to come back to my original point: people get in boats to leave communist dictatorships to come to the US, not the other way round.
Sorry - Slashdot removed the "humour" tags around "George Bush at least has the guts to invade countries directly."
Whooo whooo whooo...
OK. There's a fair amount of truth in what you say. But there is also a fair amount of WTF in there too...
"Venezuela is in transition from being a Fascist country like Columbia, like most countries in the Western Hemisphere because the U.S. installed Fascist dictators in most of them."
I'll assume you're talking about the Americas. Because that's the kindest assumption. But it's still a ridiculous assumption that most of the countries in the Americas are "fascist dictatorships installed by the US government". Canada? Nope. Mexico? Nope. Argentina? Nope. Chile? Nope. Brazil? Nope. Right: now we've dealt with more than 90% of the population of the Americas, would you like to run by me - with examples - all those fascist dictatorships that still exist supported by the US?
I'm not saying that the US has not been guilty of backing some particularly evil and mendacious regimes. (And even being responsible for a number of coups.) But, this hasn't happened for quite a long time now. George W at least has the guts to invade countries directly.
The other thing I have a tiny problem with is the knee jerk anti-capitalism in your statement. Equality is terrific. (I believe everybody should have as equal a chance as possible of becoming as unequal as possible. Equality of opportunity, if you like.) But if the choice is between being poor in Dafur or Havana, and being poor in Detroit or Houston, I'm afraid I'd go for the latter. (There is remarkably little malnurishment in the US, for all the income inequalities.)
The fact is, most people in the world are queing to get into capitalist democracies. People are voting, if you like, with their feet. The boats are not leaving Miami bound for Havana. (And the political oppresion in Cuba is also rather nasty. Check those notorious right-wingers at Amnesty if you don't believe me.)
"If you are affluent you get off when charged with crimes, if you are poor you rot in jail.
The US criminal justice system is a scandal. (Particularly in Texas.) But statements like this are ridiculous. About 30 seconds with Google will find you a list of rich people who have gone to jail recently (and you could do worse than start with the bosses of Tyco, Worldcom, Enron or evan Martha Stewart). Or aren't these people rich enough?
Anyway: please tone down the rhetoric. You have some good points, but they are not backed up by data or facts. Mindless assertions - no matter how they are moderated - are not "insightful".
"The top 1% of Americans own 40-50% of the wealth in America, more than the bottom 95% combined."
i st.html
:-)
Actually, http://tiger.berkeley.edu/sohrab/politics/wealthd
Looking at some real data rather than some made up data, we find the top 1% have 34% of the total wealth in America.
Also, there is a very interesting Stanford study that shows that these numbers massively overstate the wealth of the richest Americans because they are gross numbers. Bill Gates has $26bn of Microsoft stock. *But*, if he sold it he'd have to pay capital gains taxes. His "after tax" wealth would be a (still obscenely large) $18bn. If we assume that capital gains have been disporortianately earned by the richest then this skews the numbers quite considerabley.
Anyway... I'm not saying America doesn't have terrible wealth inequality, just that people have a tendancy to make up stats in this area
You have a problem with that, because it is a silly analogy.
This is all about a contract signed between Apple and a developer. It is obvious and clear that Joe cannot sign a contract with Bob that imposes conditions on Claire. The only way to "break" the NDA is to sign the NDA.
Now, compare this with your banking example. Well - stealing money from somebodies bank account is illegal in almost (if not all) countries in the world. Posting details of running OS X on an x86 is not illegal. When Bob Smith collects your financial info he has not broken the NDA; but when empties out your account he has committed theft and will (hopefully) go to jail.
Nokia sells as many mobile phones each year as there are TVs sold. That's economies of scale for you...
Cisco would also have to pay a premium to buy Nokia. The deal would also have to be almost entireley "paper" based as Cisco has neither $90bn or so in cash, nor the realistic proposition of borrowing that money. Paper based deals require even higher premiums.
It's also worth remembering that the Finns might be a little upset to lose their only large world class company.
0.3% of GDP on Windows licences! Are you having a proverbial "laugh"?
UK GDP - source Google - $ 1,782,000,000,000
0.3% of UK GDP = $5,346,000,000 or $5.4bn
I'm sure the UK spends a lot on Windows. But bear in mind that Microsoft's total annual revenues are only about $40bn, of which roughly half is client (Windows XP, etc.) and server (Windows 2003 Server). (In fact this over-states total Windows licenses, as there is also SQL Server, etc. in there.) But even on a best case, you're saying that the UK buys more than a quarter of all Microsoft Windows licenses. In fact, what you're really doing is making up sprurious statistics to get some temporary kudos.
Next item of absurdity: "the United Kingdom spends 0.3% of GDP on it's transport infrastructure". Really? Source please. Of course there is no source, because this is a ridiculous made up number. Lets go to the UK Office of National Statistics: oh! it turns out that the UK government (excluding what is spent by private industry) spends, da da, £20bn on transport infrastructure. (Which, at today's exchange rate is about $35bn, or around 2% of GDP.)
Congratulations, you made up some numbers and now will be modded all the way back down to -1, troll.
Goodnight.
Now, I could be wrong. But RTFA, nowhere does it say touch sensitive. In fact, it's very clear there are a number (four?) of buttons on there, plus it is able to recognise a "rocking" motion.
Nothing too revolutionary, me thinks.
(But hey... this means I can through away my Logitech mouse and use a kewl white one!)
Your medical problem is that you have a friend in Nigeria who needs you to help him move $100m?
Is this the first ever case of 419itis?
I don't mean to pick, but she's nine years old. At that age I had some pretty peculiar political and sociological views too. I admired Microsoft too.
So, shall we cut her a little slack?
(Also, don't forget that Pakistan is patriarchal Muslim country; a little movement towards sexual equality wouldn't be a particuarly bad thing. Not, I hasten to add, that Pakistan is among the worst offenders in this area, what with having had a woman prime minister for example.)
I'm about to go on a little rant, because I think economics are fairly poorly understood on Slashdot.
p erform ance.html> for details.
Firstly: why does the US have a trade deficit?
Because, American consumers have chosen to buy goods from foreign manufacturers (Toyota, Sony), rather than American ones (Ford, errr...) The American consumer has *chosen* (and you are one of those consumers, I would bet) to buy from a foreign company rather than an American. Next time you whinge about the trade deficit, remember that your HiFi system contributed to it.
Secondly, we've always bought stuff from abroad, but never had such a big trade deficit before - this must be the fault of the pesky Chinese, yes?
Well, firstly - and I've quoted this before - China does not have some massive trade surplus, sucking in money from around the world for their own nefarious purposes. See http//http://www.uschina.org/statistics/2005trade
The reason that the US has such a serious trade deficit is because the government is borrowing more than it is spending. And it is borrowing a lot more than at any time in the past.
Think about this: normally when a country buys more than it sells, then the currency declines. (Investors say - ouch this country has a large trade deficit, money flows out the country, and the currency declines.) The effect of a currency depreciation is to rebalance the terms of trade; essentially the country which is doing well sees its currency rise, and the country doing less well sees its currency fall. The effect of this simple: goods become cheaper from the country with the depreciating currency.
Yet the US currency has not been falling like a stone. In 2000, there were 110 yen to the dollar; nowe there are 111. Against the Korean Won, the US dollar has moved from 1100 in 2000 to 1050 now. These are not big moves. Only against the Euro has the dollar weakened, and even this was relatively modest (and probably due to other factors).
Why has economic theory been repealed? Well, as I mentioned earlier, it is largely the result of the US Government Budget deficit. When the US government spends more than it earns it needs to sell Treasury Bonds to people. And in this case, that means people in the Far East. (Why people in the Far East? Because the US saving rate is so low, and because the US government knows it will pay lower interest charges if it sells its debt to investors in Hong Kong and South Korea, than Ploughkeepsi and Kansas.)
So, you have this problem: the US buys goods from the Far East - which should lead to a depreciating currency, but it doesn't, because it then sells Treasury bonds to those same people. America is becoming a massive debtor to the world. This is the problem.
For anyone who is interested in these things, can I recommend you read Stephen Roach at Morgan Stanley, or John Mauldin's Front Line Thoughts.
Interestingly, in the UK they have done just that. Local information is provided by "Yell", the British Yellow Pages company.
Good questions!
Lets start with dividends, and dividend payout ratios. Over the last 120 years the proportion of corporate profits paid out in dividends has varied a fair amount, from under 20% at the hight of the dot com bubble, to about 60% at its highs. Right now, the average payout ratio on the S&P Composite is about 38% - so, it's low by historic standards, but not insanely low. (Like it was in '99. Although, as we all discovered, the profits in '99 weren't all they were claimed to be. And some corporate executives, although probably not enough, are going to jail on the back of it.)
So, I don't think your first point is really fair: there is not a huge divergence between corporate profits and dividend payouts. (Shareholders, through their agents like the CalPers or TREF or Fidelity, get very upset if companies make money and don't return that cash to shareholders, and are quite prepared to boot out managaments that choose to horde it. Although, in the US in particular, this probably doesn't happen enough.)
Now the second question is the more interesting question: how much income inequality is OK? And do we care more about absolute levels of income or relative ones?
Now, in continental Europe, for example Sweden, income inequality (as represented by the Gini curve) is relatively low. The ratio between an average worker's pay and a CEO's pay is much, much lower than in the US. In Finland, the guy who runs Nokia, earns a fraction of what a US CEO at a similar company would get. At Siemens in Germany (a company with $100bn+ of sales and hundreds of thousands of employees) earns a pittance relative to the CEO of, say, a loss making networking equipment company in the Valley (pop quiz: guess the CEO!)
These countries all have significantly lower crime rates than the US, which is at least partly to do with lower income inequality, but is also to do with better public education systems.
But there is a problem with this Utopia: European unemployment rates are much, much higher than in the US. And I'm not talking small numbers: more than 10% of the workforces (and that is only those *actively* seeking work, not those who would like work but aren't collecting unemployment benefits) of these countries are unemployed. That hurts.
There is a trade off: in the US you have extreme income inequality, but also relatively low unemployment; in Europe you have high unemployment, but low wage differentials.
Take your pick. It's all a balancing act (and I tend to believe the UK, which is half way between the US and continental Europe has got it about right.) But remember this: if you raises taxes too much the most talented people - the people who start Microsoft or Intel or Bill's Corner Shop - will leave. (In the '70s in the UK this was known as the "brain drain".) Perhaps they'll go to India where an all new tax regime encourages people to make money. And perhaps they'll start Microsoft. And then you won't have to worry about income inequality, because all the rich people, and all the succesful companies are in another country.
And at the risk of sounding wantonly capitalistic, share ownership - i.e. wealth - is far more widely spread than has historically been the case.
Thanks to 401Ks, mutual funds and the like, corporate ownership has become *much* more widely spread.
Some numbers to illustrate my point:
In 1950, the top 10% of people owned more than 90% of listed companies' shares! Insane, but true.
Now, the number is more like 50%. Fidelity's Magellan fund is open to all. The California Public Teacher's Pension Fund owns tens of billions of dollars of shares. Owning corporates - through shares - is something that was practically unknown to our parents' parents' generation.
Of course, most Slashdotters are young and have few if any savings or shares. But over time - and assuming you save instead of buying a 60" Plasma Screen from South Korea - then you too will own your share of corporate America. And that share will pay for your retirement. (Yes, all those retirees are calling out for higher profits from companies, 'cause they care more about their pension than some valley bum's programming job.)
So... I guess what I'm saying is "stop blaming the rich people".
Cheers,
Robert
(Who does, admittedly, wish to become rich one day.)
Well: the Supreme Court typically (and this is by no means always) tends to split into two seperate camps:
(1) The "progressives" or "liberals", who have tended to favour an "expansionist" interpretation of the constitution, and have typically been in favour of Roe vs Wade.
(2) The "conservatives" who typically are more "creationist" and who believe that "if it ain't in the constitution, we shouldn't try and add it."
Because many issues fall clearly into one of the two camps, and there are some justices that reliably support one side rather than the other (i.e. Stevens is as liberal as they come for example) the decision often depends on the "swing" justices.
Of course, there are issues that transcend this simple left/right analysis, and even within this there are sub-groupings: states rights are one area (Clarence Thomas is normally staunchly conservative but voted that California's pot laws should not be overturned ), and religion another. The recent Grokster case is also interesting, if only because of the dissenting opinions filed. (Which indicate that the decision might have been entirely different if just 10% of the traffic was for "legitimate" purposes.)
Anyway: this is all very interesting, and for anyone with an enquiring mind I highly recommend reading some of SCOTUS's rulings.
Thanks,
Robert
Whoops. Sorry about all the bold. And I should have proof-read what I wrote.
What I meant to say was: (1) the WTO found that the US and EU sanctions on Hynix were not fair, and that the company - while the recipient of illegal state aid (re bail-out) - was not dumping. And (2) free trade is great. We, consumers, benefit from dumping. (And good government must always be run for the benefit of consumers.) Any economics textbook will tell you that dumping is insane and stupid. And the "dumper" loses.
Please mod my earlier comment as Flamebait (-1), and this as Insightful (+3).
Thanks,
Robert
"Hynix is receiving financial support from Seoul so that Hynix can afford to sell at a loss or at no profit. Such financial distortions (which are common in Korea) materially impact the American economy because Washington opens the American economy to "free" trade with Korea."
What absolute rubbish. Your disregard for the facts is astonishing, and you've never taken Economics 101. Which fallacy would you like me correct first?
Lets start with Hynix recieves financial support from the Korean government. Well that'll be just like Boeing in the US. Or, indeed the entire US sugar industry. Or, for that matter, most farmers in Europe and the US. Result: the US and Europe dump aeroplanes and food onto countries, stifling their own food/aeroplane businesses.
But this is besides the point: the World Trade Organisation recently concluded that the South Korean state (which bailed out Hynix in '02) was no where near as guilty as people claim. Hynix also no longer recieves any subsidy from the Korean government.
(If you think the government bailing out failing businesses is wrong - and it is - then ask yourself when the US government recently spent 10s of billions of dollars proping up companies. Like the airlines.)
Anyway. I'm ranting. So I'll shut up.
Actually, only half wrong. But I thought I'd take the opportunity to use my favourite "subject" heading.
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Lets talk British crime rates. Yeah, baby!
Violent crime has fallen by over a third since 1995. So, since they tightened gun laws violent crime in the UK has *fallen*. (Not risen, fallen.)
Source: http://www.homeoffice.gov.uk/rds/pdfs04/hosb1004.
Now, I know there are people who don't like the British Crime Survey. But their methodology is simple. Every year they ask 30,000 people "have you or a close friend/relation been the victim of a crime, if so what was it and how many times did it happen?" Essentially, the survey strips out the absurdities of police crime reporting changes. (See http://thelawwestofealingbroadway.blogspot.com/20
Now, I'm not claiming that guns cause crime. But the evidence is certainly more mixed people (on either side of the debate) believe. And the main argument, I believe, against letting the populace bear arms is the risk of accidents. (See http://www.kidsandguns.org/study/states_deaths.as
Anyway, just my thoughts,
Cheers,
Robert
Where did you get your economics degree? Perhaps you ought to consider asking for your money back.
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...
Here's is the shocker: China does not run a large trade surplus. (Serious, it's very very small, and was in '04 only slightly in the black.) Now, the numbers "experts" give you tell you that the US ran a $160bn trade deficit with China in the year to April '05. But that is against an overall trade surplus of just $26bn (which, trust me, isn't a lot of money when it comes to surpluses and deficits.)
(For details on China's trade performance, check this http://www.uschina.org/statistics/2005tradeperfor
But this is not relevent: China imports as much as it exports. It just happens not to import a lot from the US. It does however import a lot from Germany (which, along with Japan is the world's largest manufacturer of capital goods). So, China has a trade deficit with Germany, and a trade surplus with the US. Now: go to Germany. Who do they buy from? Well, lets start with the US. Germany imports a terrific amount of software and financial services from the US.
So: money goes US -> China -> Germany -> US ->
(Now, this isn't great if you work in the manufacturing sector in the US, and your job goes to China. But it is great if you're selling fund management products to the Germans.)
Here's another shocker. Between 1998 and 2005, the US lost 2m manufacturing jobs (while, it should be noted, manufacturing output rose). And those jobs went to China, right? No. China lost 15m jobs. Yes, you heard that right fiftenn million manufacturing jobs were lost. (The result, I should add, of moving from an inefficient state system to a marginally more efficient private system.)
Anyway: the point I make is a simple one. Focussing on bilateral trade surpluses or deficits is stupid. You have to look at the system. You also have to remember that those trade deficit/surplus numbers are vey bad at capturing so called "invisible" exports, such as financial services.
Cheers,
Robert
Tears!
Surely with electronics in his eyes he should be careful. It would be terrible if he short-circuited his artificial retina.
*BZZT* WRONG.
I work in finance, and checked Bloomberg yesterday (in order to argue Allen was a significant shareholder). Shockingly, it appears as if Paul Allen has sold almost all of his shares. Very quietly.
I tried to Google for a news story, but was unable to find one. Nevertheless, I would be very surprised if Allen had more than a small fraction of his wealth in Microsoft. (Certainly, compared to Vulture Ventures, Charter Communications, and that sports team he bought...)
Cheers,
Robert
I hate to say it, but companies are not run for the benefit of employees. (Except, of course, for workers co-operatives.)
It's funny; everyone slags off the railways privatisation. But (coincidentally, I'm sure) their privatisation marked a reversal of the trend of downward rail passenger miles that had started in 1945. Rail passenger miles are up 30% from the bottom. If the new railways are so awful, why are more people using them?
Actually, you need to add (at least) component sourcing as well. Lets assume that the finished mobo is sold for $80 to Dell or whoever. This has to cover:
(1) The Intel (or nVidia, etc.) chipset - c $40
(2) Various other components from Murata, Rohm, etc. - $10
(3) Labour
(4) Land, rent
(5) Manufacturing equipment
(6) Employees used to make the mobo
(7) Employees in R&D
(8) Employees in sales and marketing
(9) Management
(10) Taxes
(11) Random other overheads (telecoms, bandwidth, auditing fees)
(12) Transportation of the finished product to the US, or wherever
and, finally,
(13) Profit
Automation doesn't help that much. The cost of the employees actually making the mobo is tiny. Depreciation of components, or even shipping, are probably bigger expenses.
Little wonder that motheboard manufacturers make so little money. This a super-competitive industry. And we - as consumers - benefit mightily.
Cheers,
Robert
This is completely false. There are stringent Japanese ownership rules, but there is no hard-and-fast-law saying non-Japanese companies may not buy Japanese ones. Shinsei Bank, for example, is owned by Ripplewood Holdings, an American firm.