You drank my milkshake!
Independent globalists optimize after-tax returns, labor, and supply chains into the tax and regulatory regimes that are most favorable.
It’s an optimization exercise and a chess game. This seems to be the dominant strategy:
1) After-Tax Returns
The equation: taxes + regulation. Taxes are simple; they reduce your profits by their rate. Regulation is more complicated because it costs money to comply, but there are also opportunity costs from business activities that are no longer available.
The game: reduce and eliminate taxes and regulation. Express the stresses of international competition to pressure national politics using one issue at a time in the countries where you do business.
The equation: salary + benefits, including long term commitments. Retirement, health care, and other benefits have costs, but also may reduce employee turnover.
The game: reduce and eliminate costs within each role. Divide operational units and move them to locations with optimal rules and costs. Use the placement of these units to pressure politics to reduce labor’s collective bargaining rights.
3) Supply Chains
The equation: price. Commodities and other non-labor costs are priced on global markets, and are mostly fungible.
The game: reduce and eliminate regulations that internalize costs of production for your suppliers.
Posted in Freakonomics, Law, Public Policy, Rights, Taxes
Tagged capitalism, corruption, Democracy, globalization, human rights, incentives, international trade, justice, labor, macroeconomics, politics, society, tax, USA
Investors lost $2.5 Trillion on Monday because stock markets were down. Who still thinks stimulus is a bad idea? How can anyone argue that it is a bad investment to spend a few hundred billion in the form of infrastructure or other stimulus when the effects are 1000%+ in the form of rising market valuations across the economy. Stock prices rise in value within minutes when stimulus is announced. American Freedom does not eliminate our right to make great investments for our economy.
Policy makers – and the rest of us – should pay more attention to ROI.
Posted in Economics, Freakonomics, Public Policy, Rights, Stocks, Taxes
Tagged capitalism, Democracy, globalization, macroeconomics, politics, society, Stocks, USA
Americans are mad at Pakistan. Last night, Jon Stewart showed a clip of Fareed Zakaria asking if Pakistan is complicit in hiding Osama Bin Laden – or just incompetent.
Do you blame Pakistan for bin Laden living there? Do you think our relationship with their government should be strained by this? Should we reduce support? Sanction trade?
No. That’s wrong. Here’s why:
Pakistan is not one thing and their government is not monolithic. There are many power structures in Pakistan. You shouldn’t blame “the government” for sectarian separatists, terrorists, or others who secretly hide within their borders. Thinking that way is like blaming a person when their body grows a cancer.
Did we blame the American Government when Timmothy Mcveigh was a terrorist in Oklahoma City? No. America was a victim. And Pakistan is the victim now. Pakistan has been in a complex civil war with multiple armies of radical extremists for many years. Some of them are politicians trying to consolidate power with secret affiliations, others attack India trying to incite a broader war, others hide like rats. Pakistan is suffering from these cancers.
We should be offering tax incentives to increase trade with Pakistan, increase aid, and increase support for democratic stability, secular and academic institutions, and human rights. Economic sanctions and saber-rattling are counterproductive because they attack the commercial economy. It would be better to empower the population through the commercial economy – enable them to overtake and stamp out radical separatists and would-be religious fascists. Help them get on a path to become a productive and educated economy that has the power and will to suppress it’s own cancers. Use economic levers to achieve better outcomes.
Posted in Economics, Freakonomics, Public Policy
Tagged capitalism, Democracy, human rights, incentives, international trade, justice, Military, politics, society, USA
[The following article is part of a larger commentary, available here.]
After monitoring this calculation for a long time, I’m happy to announce this new and unusual arbitrage.
Pennies are composed of 97.6% zinc and 2.4% copper, with a total weight of 2.5 grams. After several years of rapid appreciation, copper prices have been stagnant for about 6 months, but zinc has been rising toward $4,000 per metric ton (or about 4/10 of a cent per gram). That places the value of the zinc at 0.994¢, and the value of the copper at 0.045¢, bringing to total cost of the raw metals to 1.04¢.
So if you collect pennies, melt them down, separate and purify the metals, then sell the metal on the public exchange, you make 4%. This is a new phenomenon, and may not last. I would expect to hear an announcement that the penny will be modified, replacing zinc with aluminum. This would bring the value of the metals down to less than 7/10 of a cent, and gives the government another couple years before they are forced to drop the penny as a unit of currency.
The new aluminum pennies will still be clad in copper, but will feel much lighter. You heard it here first.
“The Century of the Self” is a documentary from the BBC which discusses how groups behave, and why. The psychology of individuals has implications when studying populations. Understanding the dynamics of groups has been used to engineer demand and consent for products and political views. This is a very interesting documentary, with detailed historical references.
“Consumerism was a way of giving people the illusion of control, while allowing a responsible elite to continue managing society”
- The Century of the Self (1 of 4)
- The Century of the Self (2 of 4)
- The Century of the Self (3 of 4)
- The Century of the Self (4 of 4)