Citizens of the world,
Item 1: The shoe heard 'round the worldI, for one, was appalled at the recent shoe-throwing incident targetted at President George W. Bush. Regardless of what you think about Bush the man, the president or his wars, it is simply boorish to treat a guest that way. I fully agree with Tunku Varadarajan's assessment of the incident and the Arab world in this article. Quote: "His celebration across the Arab world shows how low that region has sunk, how bereft of inspiration and pride it is." Wake up, folks. Industrialise. Make, sell and recycle shoes instead of throwing them away.Owh, barely two days after the incident, this found its way into my inbox.Item 2: Learning from the New Deal's Mistakes by Erich Rauchway in The American Prospect- Roosevelt's New Deal enabled economic recovery:
i. Saved the banks - audited banks and established Federal Deposit Insurance Corporation (FDIC)
ii. Attracted foreign investments - reduced the dollar's value to $35 per ounce of gold (approximately 60 percent of its former value) - inadvertently created much more public and private sector jobs.
- Key errors in New Deal:
i. Too much public power in private hands - established National Recovery Administration (NRA) to set prices, wages, and conditions of work - created arena for businesses to coerce and collude (e.g. fix prices) with each other - declared unconstitutional by the Supreme Court in 1935.
ii. Too slowly and cautiously to provide fiscal stimulus - big projects took a long time to plan and start.
iii. Tax code was also unkind to ordinary people - much of the federal revenue derived from excise taxes, especially those on alcohol and tobacco, disproportionately affecting the worse off - controversial wealth taxes of 1935 affected hardly anyone (the top bracket captured only John D. Rockefeller)
Item 3: Newsweek's 50 Global ElitesMirror, mirror on the wall, who's the most Elitist of them all?Item 4: George W. Bush: Worst president ever?Think again.i. Economy - six consecutive years of economic growth from the Fourth Quarter of 2001 until the Fourth Quarter of 2007 - increased labor productivity gains that have averaged 2.5 percent annually since 2001, a rate that exceeds the averages of the 1970s, '80s, and '90s - real after-tax income per capita increased by more than 11 percent, and there was a 4.7 percent increase in the number of new businesses formed.
ii. Tax - across-the-board tax cuts provided tax relief to every American who pays income taxes, created a new bottom 10 percent bracket rate, doubled the child tax credit to $1,000, and actually increased the share of the Federal income tax burden paid by the top 10 percent of individual earners from 67 percent in 2000 to 70 percent in 2005 - removed 13 million low-income earners from the income tax rolls completely.
iii. Foreign Policy - established the Proliferation Security Initiative, which now includes more than 90 nations, and other multilateral coalitions to stop the proliferation of weapons of mass destruction - pushed for expanding NATO membership, generated international pressure on Iran to stop it from developing nuclear weapons, and organized the Six-Party Talks, which have resulted in North Korea committing to give up its nuclear weapons and abandon its nuclear programs - ties in Asia have been strengthened over the past eight years, and has built strong relationships with China, Japan, and South Korea
iv. Environment - From 2001 to 2007, air pollution decreased by 12 percent, and fine particulate matter pollution is down 17 percent since 2001. Ethanol production quadrupled from 1.6 billion gallons in 2000 to 6.5 billion gallons in 2007, wind energy production has increased by more than 400 percent, and solar energy capacity has doubled. In 2007, solar installations increased more than 32 percent and the U.S. produced 96 percent more biodiesel (490 million gallons) than in 2006 - provided nearly $18 billion to research, develop, and promote alternative and more efficient energy technologies such as biofuels, solar, wind, clean coal, nuclear, and hydrogen.
v. Others - Teenage drug use has declined 25 percent; in 2007, the violent crime rate was 43 percent lower than the rate in 1998; between 2005 and 2007, the chronically homeless population decreased approximately 30 percent; funding for veterans' medical care has increased more than 115 percent; and as of 2005, the most recent abortion rate is at its lowest since 1974.
Item 5: The Obama Trade TeamUS Trade Representative - Ron Kirk, former Mayor of Dallas - NAFTA proponent
Labour Secretary - Hilda Solis, Congresswoman - CAFTA opponent
Commerce Secretary - Bill Richardson, former Governor of New Mexico - Fair-trader
Director of National Economic Council - Lawrence Summers, Harvard Professor - Free-trader
Seems that Obama is following Clinton's theory on forming a team: gather 'em from all sides of the spectrum, and let them argue. From good arguments, come good policy. Economic recovery and expansion will follow, creating increased demand for imported goods and services, including those from Malaysia. More jobs and income for us. Lets all just hope it works.Item 6: Where do we go from here? by Robert Skidelsky in ProspectThree kinds of failure of the market system:
i. Institutional - banks, regulators and policymaker succumbed to the "efficient market hypothesis"
ii. Intellectual - Alan Greenspan admitted that the Federal Reserve's regime of monetary management had been based on a "flaw."
iii. Moral - a system built on debt - worship of growth for its own sake, rather than as a way to achieve the "good life."
Arthur Schlesinger Jr. in his Cycles of American History defined a political economy cycle as "a continuing shift in national involvement between public purpose and private interest." - Liberal periods succumb to the corruption of power, as idealists yield to time-servers, and conservative arguments against rent-seeking excesses win the day. But the conservative era then succumbs to a corruption of money, as financiers and businessmen use the freedom of de-regulation to rip off the public.
Robert J Shiller, Yale economist, likens the financial system to an early aircraft: Just because it is prone to crash doesn't mean we should stop trying to perfect it.
Globalisation has increased instability by producing a shift in world GDP shares from wages to profits as the release of low-wage populations into the global economy has undermined the bargaining power of labour in rich countries - led to a crisis of under-consumption, staved off only by the expansion of debt - A greater equality of incomes would create more stable purchasing power.
John Maynard Keynes in his The General Theory of Employment, Interest, and Money: classical economics had ignored the two main causes of systemic financial failure:
i. Existence of (unmeasurable) uncertainty - led to periodic collapses of confidence
ii. Role of money as a "store of value" - led investors to hoard cash if interest rates fell too low, making automatic recovery from collapses difficult
The French social democratic slogan of the mid-1990s—"market economy yes, market society no"
A top American CEO now earns 367 times more than the average worker (against 40 times in the 1970s)
Item 7: Daddy, where do bailouts come from?Smart kid.
