Economics

Foreign Policy Economics

This entry was posted in bush Economics Iraq US Foreign Policy War on Terrorism on by

I have not seen any statistics on the impact of the many cries to boycot French products we heard during the buildup to the Iraq war and I wonder just how happy the bushies corporate funders will be if current foreign policy has a large negative impact on worldwide sales.

Echoing harvard Professor Business School Professor John Quelch’s April warning:

Selling the American dream has paid off handsomely. Eight of the ten most valuable brands in the world, according to the Interbrand consultancy, are American, and each derives more than half its sales from outside the United States. But now a deepening opposition to American foreign policy is threatening the long-term strength of these brands.

Newsweek reports:

Does the rising tide of anti-Americanism hurt American multinationals? The vocal antiwar protesters would like to think so, but there hasn�t been much evidence for a broader consumer turnoff, until now.

Reporting on the same study the Independent headlines:

Americans are used to resentment of their global dominance. Since the war on Iraq, however, this hostility has begun to hit them where it hurts: in corporate balance sheets.

Countering the gloomy reports Nike and Mcdonalds say that their European revenues are respectiviely either up or flat. It will be interesting to watch these figures over the next 6-12 months.
Via Alternet.

The Deficit

This entry was posted in bush Economics Election 2004 on by

The bushies would like to blame the economy. There are some other opininions though. For instance, a detailed analysis by The Angry Bear (via Thinking it Through) suggests:

Of the 80% of the deficit not related to terrorism, roughly 1/3 of the blame goes to increased spending and 2/3 to the Bush tax cuts

Max Sawicky isn’t that concerned with the size of the deficit:

Today’s deficit number is a yawn for we sad few who take the trouble to follow this. More annoying is what the Bushies are saying.
Quoth new OMB Director and reputed whiz kid Josh Bolten: “Restoring a balanced budget is an important priority for this administration,” he said, “but a balanced budget is not a higher priority than winning the global war on terror, protecting the American homeland, or restoring economic growth and job creation.”
Only trouble is, the war cost for FY2003 is only $90 billion, and the DoD increase is $80 billion. The rest is due to you know what.

but does think the composition of the deficit should be changed:

The real problem with the deficit for this and next year is composition. Given the opportunity, I wouldn’t reduce it a penny. Instead I would redirect the tax cuts to the working class, reserving a nice chunk of change for aid to state and local governments. This sort of tax cut could be designed to limit long-term deficit effects. The latter are the real problem, insofar as there is one. Now is a clear case where the distribution of the tax burden has an urgent macroeconomic policy significance.
Otherwise the Democrats’ harping on this has limited, if non-zero, value. Given the podium, I would emphasize the jobs gap, the holes in the Medicare drug benefit, children left behind by the tax cuts, and the potential problems with Medicare financing.

Kevin Drum agrees that the real problem is in the future:

By 2007 the economy should be booming and the government should be planning to run modest surpluses to cool things down a bit. Instead, it’s deficits forever, because seemingly nobody in this administration cares a whit about anything beyond the next election.

Good or bad the deficits will be used mercilessly to hammer bush and this along with the administrations repeated fabrication of reality will lead to a change of administration in 2004. History will judge whether this change will be good or bad.

Corporate Rights

This entry was posted in Capitalism Democracy Economics Libertarianism on by

Emma at Late Night Thoughts joins Dave Pollard and Thom Hartman, author of Unequal Protection, in taking on corporate personhood. A thorough fisking of these folks arguments would find some individual points to argue but I think the essence of what they are saying holds true:

our elected and appointed legislative, executive and judicial ‘public servants’ have enacted, approved and upheld laws that imbue corporations with rights that should belong only to natural persons*

Read Emma’s post and then the Pollard/Hartman material and give it some thought.

Emma observes that:

The screams you hear from the corner are coming from those conservatives that want to protect “capitalism” and “free markets”.

I can’t think of reasons why folks who truly support capitalism and free markets would disagree with the essence (see above) of this discussion. Capitalism does not thrive in an environment wrapped in special protections, subsidies, etc. Most likely those screaming are more of the statist variety and come from both the right and the left.

Thanks to Jeanne at Body and Soul for the pointer.
*orginal text read

our elected representatives have approved laws that imbue corporations with rights that should belong only to natural persons

Foreign Investment in US Declines

This entry was posted in Economics on by

The Progressive Policy Institute (related to New Democrats Online) sends out interesting stuff (irrespective of their politics) from time to time.

Their most recent Newsletter provides the following data on foreign investment in the US and worldwide(in billions):

US World Wide
2000 $314 $1500
2001 $144 ?
2002 $30 $530

It is not a surprise that both figures have declined. But note that foreign investment in the US has declined from about 20% to less then 6% of the world wide total. Here are PPI’s suggested reasons:

(1) slow global growth and thus a smaller global FDI
pool;

(2) weak technology investment levels;

(3) falling confidence in long-term U.S. growth prospects, as perceptions of terrorist threats grow and structural budget deficits re-emerge after recent tax bills; and

(4) higher dollar values relative to the euro in 2001 and 2002, raising the price of acquisitions here.

You might come up with one or two more on your own.

Mutating Corporations

This entry was posted in Economics on by

Virginia Postrel’s article Specialization is the Rage will likely disappear into the NY Times pay content world in a few days. But, as Lynne Keisling tells us, it is a must read:

Its topic is specialization, and specifically the move away from vertical integration in the structure of many industries. Technological change has contributed to making this move possible and profitable.

The implications should extend far beyond the corporate world.