Economic, Industrial Policy and Productivity

By pjain      Published June 17, 2021, 7:47 p.m. in blog Geo-Politics   

Economic Policy, Industrial Competitiveness

Resilience and Stable Economic System

Iceland with a population of 320,000 was devasted by 2008 GFC - how did it recover so quickly?

  1. Tourism was a key factor. Cheap airfaires and flying through Iceland became all of a sudden a big thing.

  2. Realistic mending of the domestic banking system and debt restructuring.

Taxation Systems are Highly Political

Moore's movie details French tax return, which notes how much each taxpayer’s contributions went to what government expenditure. I

Europe eg France is socialist and HEAVLY regulated. It’s hard to set up a company and hard to exit there. It’s hard to engage in profitable business.

Europe's corporate income tax rate in European Union nations is now on average lower than in the U.S. In countries like Ireland and Hungary the rates are well under 10% and favored as tax havens.

Rising Wealth Shared makes More Democratic but today's Inequality makes People Leftist

From Dark Ages and medieval the standard of living either remained steady for hundreds of years or actually declined. In Colonial America, if you look at genealogical trees, you will be amazed at even just a century or two, the number of second wife because first wives often have died in childbirth.

From the Industrial Revolution in psuedo-capitalist UK and Europe was fundamentally enabled by capitalism. It helped drive our ability to afford so much of what we have today — the basic sciences, cures, technologies, transportation and even the cameras, radio, TV and now mobiles that define our civilization.

Capitalism has provided enormous amounts of wealth, health and longevity. I’m now 42.

As people get richer over time, they want political rights and societies go democratic.

But when people are poor and lose their jobs, they start to reevaluate their beliefs. Sometimes they take on more radical views than they would otherwise.

German RealEconomik Lessons

Keeping Military Spending a small Part of GDP - like S.Korea, Japan - Boosts Economy

Keeping Cheap Gos

China Investment Treaty

Overland Rails to China

Economic and Policy - Productivity

Documentaries about Industrial Success

Collapse of Smokestack - Roger & Me - 1990?

Roger & Me, Melnyk and Caine decided to structure their film around their efforts to get Moore to sit down and answer a number of troubling questions. Roger & Me drew critical praise for melding the personal and the political, using Moore's apparently down-to-earth persona to draw audiences in to the film's larger theme: that of corporate malfeasance and indifference.

The film's central conceit was that Roger Smith, CEO of GM was such a heartless, appalling person, he simply would not give a frustrated Moore the time of day, let alone an interview. (The unsuccessful interview search has become a staple of Moore's films, a recurring stunt in which he and a small film crew show up at a company's headquarters, only to be told by exasperated receptionists and security staff that since they don't have an appointment, an interview will not be possible.)

GFC'08 and Financial Repression

Big Short - BEST penetrative

Christian Bale fills a fact finding analyst role in The Big Short - before being whisked upstairs to explain things to the big wigs.

I.O.U.S.A. (2008) - Early Warning

From before the financial crisis unfolded by director Patrick Creadon, who records ex-government watchdog David Walker lay bare America's crushing debt burden using smart interviews, impassioned vox pops and the odd SNL sketch. At the time Walker seemed like a crazy lone voice of warning.

Capitalism: A Love Story

To some extent the theme and the film is contradictory and confusing. On one side Moore aays he loves America and would never leave, yet as tours America exploring the parts The Big Short fails to reach: the homeowners repossessed, the airline pilots with their pensions cut and the deliberately mystifying language of Wall Street. It's not always subtle but it fillets the American dream with a scalpel. "In America, sometimes you're better off working at Mickey D's," runs the sobering conclusion.

  1. Criticizes Globalization and Free TRADE - the film blames the Republicans but Democrats were also responsible for asset-stripping that cost America its industrial base and lost the country its footing in the global economy once its wartime foes had rebuilt themselves.

  2. The disturbing times we live in, in which the banks appear to be above government and even the law.

  3. The primary weapon that Moore employs is shame e.g. it uses Franklin Delano Roosevelt just before his death, calling for a Second Bill of Rights for Americans. He says citizens have a right to homes, jobs, education and health care. In measured, judicious words, he speaks gravely to the camera.

  4. Employee life insurance policies at very low costs that companies take out on their workers to collect the benefits when they die. Companies don't usually inform a surviving spouse of the money they've made from a death. Wal-Mart eg may have legitimate reasons for taking out insurance on key executives; the reasons are less legitimate when doing it on non-key employees.

  5. CDOs and Financial derivatives that are so complex they're created by computers and not even the software authors really understand them. Moore asks three experts to explain them to him. All three fail. Essentially, they involve bets placed on the expectation that we will default on our mortgages, for example. If we do, the bets pay off. What if we don't? Investors can hedge their bets, by betting that they will fail. They hope to win both ways.

  6. Illegal Repossessions of Homes. Our mortgages are the collateral for these CDO bets. Moore says they are sliced and diced and rebundled and scattered hither and yon. He has an interview with Rep. Marcy Kaptur (D-Ohio), who advises her constituents: If a bank forecloses, don't move, and demand they produce a copy of your mortgage. In many cases, they can't.

  7. Sky High Health Care Costs due to Employer Gold Plated plans. Two-thirds of all American personal bankruptcies are caused by the cost of health care. Few people can afford an extended illness in this country. Covered also in Sicko.

  8. Those who contribute heavily to the welfare of our society—teachers, police officers, emergency personnel, pilots and health care workers—are dismally underpaid while too many government and political officials appear to be cozying up with the boards and directors of leading bank and financial institutions.

  9. Moral Hazard and Socialize the Losses. True Capitalism is about we shouldn’t have used taxpayer money to bail out the banks.

    The principal problem was that if Wall Street had done really well with derivatives, the [bankers and traders] would have captured most of the upside. But when they failed, they got to go to the taxpayers and say, “Hey, bail us out.” Heads we win, tails you lose — which creates a large moral hazard problem.

  10. Financial Advisors need Reforms eg in broker/dealer and financial planning areas, which is in need of regulatory reform. It’s a massive $110 billion a year industry that is dominated by “crooks and creeps” that take commission kickbacks on the advice they give. The UK is outlawing this model by the year 2012. Clients will pay a financial planner upfront and make it very explicit so that there is nothing sneaky — no kickbacks or commissions. Moore misses this aspect.

  11. Mortgages Tighted but not Reformed after GFC. Moore was right that the mortgage area needs serious regulatory reform in order to make mortgages very transparent. There is no reason they have to be so complex. You could have a one-page summary of the key terms of any mortgage.

11a. People who already owned homes and refinanced them being tempted by lowering variable rates - enticed to borrow against their homes with a new type of mortgage where they paid a teaser low rate followed by a jump in rates later on.

11b. New Homes low Down. Moore does not mention is that most of the mortgage busts are coming from GREEDY over-extended new home buyers with incomes of $60,000 buying a $600,000 home. It wasn’t just the banks’ fault. While prior to 2008 we can criticize the banks for their lack of transparency, but the people themselves should also be criticized. Now these approval rules are tighter.

  1. PENSIONS CUT IN Private Sector.

    [The airline "hero" who landed a plane safely in Hudson river blamed the pay cuts and pension reductions by airline companies , but the real problem there is that airlines have enormous legacy overheads, including generous defined benefit programs. So they have these enormous costs. As a result, they don’t have a tremendous amount of room on that side. They are already paying out a lot in employee compensation. The big difference between today and 30 years ago is that the airlines are now deregulated. So we have a lot lower prices than we had. It’s a lot cheaper to fly and there is a lot more competition. But Moore never discussed how much profit these airlines are actually making. Are there a few fat cats making a lot? There is not a lot of evidence that they are. These airlines are constantly teetering on the edge of bankruptcy, not because they are paying too much for the fuel or in big salaries for their top executives; mainly it’s because they have such huge employee costs in the form of very large pensions. So this is, again, another example of Moore being selective. -- Smetters of Wharton

Critical Review

Moore is careful to try to retain credibility with both sides - each time he makes a scathing point about the American system, he hastens to remind us that the system works; film could have used some people-power to fine-tune it.

But critics denounce Moore as a rabid commie.

Mr. Moore doesn’t have any real answers - it is more entertainment milking a hot topic.

Big Data, Analytics and Data Driven

Moneyball (2011)

Moneyball by The Big Short writer Michael Lewis, offers a journalistic command of analytics, numbers and personalities. It demystifies complex ideas of subprime baseball players.

Insider Job (2010)

Skipping from Iceland, a fishing economy elevated to untold riches, to Wall Street, a madhouse of numbers, narcotics and expense accounts, Ferguson turns over the bricks of America's collapsing economy and charts the CEOs, politicians and regulators that scurry out. Angry but objective

Too Big To Fail (2011)

Instead of about unemployment and the housing crisis, focusses on how the US government and Wall Street tried to save its collective skins over two months in 2008 from the man who made L.A. Confidential.

Learn about inner workings of Federal Reserve.

Margin Call (2011)

J.C. Chandor's gripping banking parable plays like a conspiracy thriller as Zachary Quinto's analyst stumbles upon a black hole on the bank's balance sheet. Then Jeremy Irons's vampiric CEO flies in by chopper and it all turns into The Titanic. Only, this being Wall Street, the women and children go last.

99 Homes (2015)

Michael Shannon's Oscar-worthy performance is about how the US economy lives on its real-estate market. Shannon is its Terminator, evicting families.

  • Similar but lot more polarising than Lost River which tackled similar themes in the scariest look at life in Detroit.

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