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
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
To begin talking about Net Neutrality, it helps to clarify what the internet is. It’s simply data sent via TCP/IP (the protocol for sending data through routers). Some people host web sites, others connect to their company e-mail, others do other things – it’s all the internet.
Understanding that the internet is just a connection using TCP/IP, then Net Neutrality is simple, too. Net Neutrality simply means that your ISP may not interfere with the internet. They may not censor your packets (the data that is sent via TCP/IP). This means they can’t censor your news, keep you off of Skype, restrict your sending and receiving, or otherwise interfere with your communications.
Any compromise on this is wrong for two reasons: 1) Your ISP should not have the right to interfere with your free speech, and 2) ISPs should not be able to tax the value creation of the media industry.
ISPs should not be able to interfere with consumer access to media companies, nor tax those companies for access to consumers. ISPs should not be able to interfere with our speech or block our access to the speech of others.
ISPs are in the business of providing internet access, but they don’t own the internet; any attempts to eliminate net neutrality would violate our consumer rights and hurt the economy.
Posted in Economics, Law, Media, Public Policy, Rights, Tech, The Future
Tagged human rights, intellectual property, justice, media, net neutrality, politics, privacy, society, software, technology, telecom, USA
Problem: The US has lost some of its competitive advantage with companies in other countries. A major part of this problem is the differences in economic policy and labor standards that prevail in various countries.
Solution: Set specific global Tariff Triggers. For example: 5% on countries that peg their currency, 10% on countries that allow child labor, 10% on countries that outlaw organized labor, etc. These numbers are just examples. The triggers should be set to offset some of the unfair competitive disadvantage.
Benefits: US workers will be competing more fairly with international competitors.
Some foreign countries will improve their labor standards in order to avoid tariffs on their exports. In those cases, US workers will benefit because the foreign competition will have have to operate under similar rules as US companies.
Some foreign countries will not change their labor standards or economic policies, so they will trigger the tariff. This will also protect US workers from those unfair practices (to some degree) because import tariffs drive up the prices of those specific competing imports.
View and comment at SinceSlicedBread
Problem: Homelessness exists. Untrained workers might be worth too little to hire, and they cannot receive training. This is how the cycle of joblessness starts.
Solution: Break the cycle by allowing workers to take jobs even when they pay less than minimum wage; and give them a tax break until they gain financial momentum. Specifically: eliminate the minimum wage and increase the standard tax deduction to $25k.
Implications: A huge new number of low-paying jobs would open up, offering an opportunity for training and experience to young or untrained workers. And everyone earning $25k/year or less would have no tax bill at the end of the year. The large number of new workers and jobs would rapidly grow the economy. This might not completely eliminate homelessness, but it would help a great deal. Far more jobs would be created than would be filled, so those earning the minimum wage now should expect that the job market would become more attractive, and offer better income to those with some experience or training.
View and comment at SinceSlicedBread.