Scr for Geo-Politics

By pjain      Published July 15, 2019, 7:07 a.m. in blog Geo-Politics   

Incentives, Economics and Tweaks to Improve the world!

Require all-inclusive ONE price so consumers can compare!

Unlisted taxes, fees and service charges are bad for the economy - It only sounds normal because we've gotten used to it. Companies should be competing based on price and quality and not obfuscation. And the fact that companies do compete on obfuscation does not create a better economy, does not create a better experience for consumers and can, in fact, raise prices for consumers that they're buying stuff that they don't want.

  • Consider a coffee listed $2.89 but after tax it is $3.15 - people take it for granted BUT still a bit surprise, vs buying a tax-free salad from a grocery store!
  • Lets say you book a hotel room: there's an Internet fee, a parking fee. Sometimes there is something called a resort fee, even though you're staying in a place that's not a resort.
  • Ironically Amazon benefits as most of the featured items are Prime ie shipping costs are included. Ebay, also lets you compare price+shipping to allow comparing say a book that is $1 + $10 shipping vs a $5 + $2 shipping.

SRC: Catherine Rampell a columnist for The Washington Post.

2. All of us should have agents or NEGOTIATORS!

These agents know about your industry or environment in this example those kinds of jobs. She's saying, maybe there's a different job that doesn't exist yet. It'd be some intermediary you pay a flat fee to, and then they'll have a couple of conversations on your behalf when you need it. So when you get a job offer, you say thank you but "this third person is going to contact you with my questions". a. Having this intermediary negotiate for you could be a huge benefit over the course of your career. b. It would be this person's job to study your field and to know what you're worth, and this takes a little advantage away from your employer. c. There's research showing that if you make less at the beginning of your career, you're going to make less down the road. d. Often the details matter a LOT - eg getting those golden parachutes if employer jerks you around or dumps you - so you left your promising existing career for! e. Womens level playing field. Women don't quite ask for the same things that men will ask for in a negotiation. But there's also evidence that when women ask, it's not received the same way as when men ask. By having an intermediary eg a MAN, you can level the playing field.

  1. Negotiating for MORE SALARY by - Aaron Rodgers is the quarterback for the Green Bay Packers. What is different was his

    I'm in a multimillion-dollar salary renegotiation with my bosses, but whatever. I've got an agent. He's dealing with it. I'm just going to keep practicing football.

  2. ALL people getting a job go through this. You feel "I'm getting a good job, but this is the most stressful thing I've ever gone through."

SRC: Abigail Wozniak - a labor economist at the University of Notre Dame.

[TOC] Understanding Central Bankers - Inflation vs Unemployment

New Zealand TALK UP its POLICIES eg 2% inflation rate and Now Central Bankers copying them

Inflation determines how many people in the U.S. have a job. It has the power to wipe out our savings accounts. It is quite possible that bankers might have just spent the last 22 years targeting the wrong number

  1. For decades New Zealand had massive inflation, which meant prices were going up, and everyone's money was losing value. This can happen when there's too much money floating around in economy and everyone tries to spend it on not enough stuff. None of us in our lifetimes, had experienced 2% inflation. We'd all been brought up with double-digit inflation. It was considered extremely difficult to get to 2 percent. And the government had tried everything to lower inflation for nearly two decades but was unable to do it.

    • Banned car driving to stop gas prices from going up
    • Banned businesses from raising prices for a year.
  2. At that time, other central Bankers had different ways of managing inflation - but all these targets were aimed AT KEEPING INFLATION LOW - "its our job"

  3. Some central banks have a monetary supply target, which just means they're capping how much money is printed every year.
  4. Others have an employment target, like what's the perfect amount of people with jobs for the healthiest economy?
  5. Some have an interest rate target - trying to pin down, what's the right interest rate for loans?

  6. Arthur Grimes chief economist at New Zealand's central bank, was assigned to the New Zealand inflation problem

  7. He traveled the world trying to study approaches of central bankers
  8. He came up with DIRECT Targeting of Inflation > - set an ideal level of inflation and drive the economy toward that. THIS WAS FIRST TIME IT WAS TARGETED. It took New Zealand's central bank three years to develop this whole new system.
  9. Arthur says, I'm not going to give you a number. I will give you a range eg Zero to two by '92.
  10. He had proven that sharing your economic secrets is a good thing for central banks - TALK IT UP!

  11. Why and How 0-2% inflation range works! IT IS NEUTRAL and doesn't affect well being.

  12. If inflation is 0% - you don't worry - all prices are going to stay rock solid
  13. If inflation is 1% - prices of basics will go up slightly but it won't change consumer expectations or worry much about it!
  14. So upto 2% - it is like inflation at which it STARTS to get a bit problematic.
  15. A little inflation is actually good for the economy - 2 or 3%.
  16. If inflation is very high double-digit, etc. it is the process of bringing it down - that hurts people. It is a painful process of high rates, low credit extension.
  17. Once the target was set and inflation was say 9%? at that time, Don Brash a tough guy was hired who presented himself as someone who didn't give a fig if it hurt people - just had to MEET THE TARGET? He did it by restricting how much money regular banks had in their vaults, which affects how much money everyone has, which would reduce demand, and would cause a huge spike in unemployment.
  18. However reality was that employees to cope with high inflation needed their wages raised a LOT, which caused inflation even more.
  19. THE WAY IT WORKS IS YOU TALKED IT UP A LOT! Trust me, we will drive it down WHATEVER IT TAKES.
    • This means that employers could tell raise seekers - just wait, Don Brash is going to get it down and not cause even more inflation!
    • Similarly, businesses can be told - dont raise prices for your goods - WE WILL FIX IT!
    • However, people and companies would not listen - so they applied bitter medicine to get unemployment above 11% - A LOT OF PAIN!
    • At the same time, New Zealand did a LOT of reforms - reducing public jobs bloat, privatizing public companies, etc.
    • Realizing that these targets were real, people and companies started to listen
    • Net net instead of '92 it got controlled by '91.

Central Bankers now target 2%

  • Central bankers realized the power of this way of TARGETING the inflation!

a. USA HUGE SHIFT on January 25, 2012, then-Fed Chair Ben Bernanke announced the Fed had an explicit goal of keeping this powerful number at 2%. - Actually internally the Fed rates have had this internal target since summer of 1996 as Alan Greenspan never announced his secret inflation target. - Partly reason for this secrecy is people might claim that Fed endorses or targets people lose their money at 2% per year!

b. Some economists say 2 percent inflation - that's just too low to get us out of a bad economic situation like a recession. They say a 3 or 4 percent target would give us more wiggle room. But that would shrink peoples savings faster - as low inflation does benefit most people. - A higher inflation target benefits borrowers who tend to be those with less income as it allows LESS unemployment. - On the other side of that, those with higher income and greater wealth who are the lenders, you know, would not necessarily want to raise the inflation target.

Modern economies - better target is higher due to different world in 2020 than 1992

  • NZ now targets 1-3% not 0-2%

How Rates control Inflation

It used to be central bankers had a powerful lever to guide the pace of the economy: The ability to raise or lower interest rates. Increase interest rates a bit and it would push down investment, push down inflation, help prevent the economy from overheating and crashing. Or, in the other direction, they could lower interest rates and it would boost investments, boost spending, help to kickstart a slow economy. But lately, the lever hasn't been behaving like the textbooks say it should. The old relationship between interest rates and inflation isn't holding anymore.

  • Late 1970s inflation was very high, by 1980 at 13% partly after OPEC cartel raised oil prices for global economy to get more money for their economies. Paul Volker cranked up interest rates to 20% and it worked - by 1983, inflation was down to just about 3%.

  • Super-high interest rates would make it expensive to borrow money. Consumers wouldn't spend as much. Businesses wouldn't invest as much. The economy would cool down.

  • Lower interest rates, borrowing is easier, so people and companies will spend and invest more, and inflation goes up. Raise interest rates, inflation goes down. Lower interest rates, inflation goes up.

Interest Rates can't control Inflation ANYMORE

  • However now in 2019, interest rates dont work to control. At 0% rates, inflation is still close to zero! globally, the advanced central banks have been putting a lot of accommodation into their economy, and yet, not seen inflation rise.

  • In 1973 era had Flat wages, below target inflation, rising EPOP. It says flat wage is below target inflation, rising EPOP, which I believe means employment to population ratio as the fraction of people with jobs in the population.

  • Since 1980, productivity and hourly compensation has been diverging remarkably since 1980. Basically - wages really haven't grown the way economists expected them to even though productivity has risen all this time. Again FED has failed as wages haven't grown all that much since the early 1970s.

  • From 2009 it gets worse. Global interest rates have been low. And unemployment has come way down; it's less than 4 percent. But wages? Wages have not gone up.

  • Meanwhile since 2009 the top 1%/10% have increased their wealth greatly! A bigger and bigger share of profits has been going to all these big companies, and a smaller and smaller share has been going to workers.

Policies to manage Unemployment rates

  • Very low Unemployment is bad for Economy
  • Employers have very little negotiating leverage
  • Wages rise rapidly
  • Inflation rise rapidly

WHAT TO DO? Interest rates alone are very Imperfect for economic progress!

Monopoly power of Mega-Corps, Consolidating/M&A has greatly reduced Public companies

  1. Pricing Rollbacks due to Pricing power of massive supply chains
  2. Amazons and Walmarts offer low prices really well and keep margins high, while forcing rollbacks!

  3. Globalization - competition - "Commie slaves" suffer so we pay less, MNCs make Mega-profits

  4. Automation, Robots, IT software, Data Driven IE/Optimization - all make productivity rise - this helps keep inflation down

  5. Consolidation Facebook, Apple, Amazon, Google, etc. have been concentrating all of this power in their markets. Shipping, banking, health care. Airlines, insurance, utilities - all consolidating. .. These giant companies are getting more and more efficient.

  6. Low borrowing costs => Increasing Capex would normally allow more investment, FDI to China, etc and again reducing costs Low rates are making the economy act weird through borrowing. It used to be to become a giant company, the important thing was to build the best factories and buy the newest machines.

  7. Companies investing more in intangible capital - things like patents and software.

    Even in Walmart in retail a low-tech - but it HAS invested huge amounts of money in building up better software, supply chain, RFIDs, POS, inventory management, automed lights management, energy management, solar on roofs, reducing losses due to stealing etc. By owning the trucks and warehouses, it understands better than any other company how to move these trucks around the warehouses really efficiently. Ironically, by using capital MORE efficiently, companies may not need as many loans to build factories and warehouses that they used to - so monetary (rates) policies may not affect inflation or employment as much as before.

  8. USD as reserve vs Globalization has shift Monetary levers to China, Europe, Japan etc. where goods are actually made!

    Instead of Fed controlling the interest rates and inflation - they have become irrelevant Money is generated in China by itself - and their state owned banks lend to SOE, which supply cheap commodities to the manufacturers. Also the massive population has hundreds of willing workers that fight to get jobs, and controlled by CCP to be disciplined (ie live like slaves) keeping wages low (or used to). Chinese banking system operates in its own world! JCB has kept yields super low ostensibly to fight deflation, but it also keeps yen super low as carry trade has people selling yen! Europe has 10year gilts near or below zero in Germany, etc - as this allows cheap money there as savings rates are high like in Japan. Bottom line, money supply and employment that are affected are in these hard economies - Japan, China and Europe, not in USD Reserve based consumer US economy.

  9. Larger company power can drive down wages!

    Even if you haven't got unions, what larger firms in particular can do is they can actually drive down wages below what the competitive level is.

SRC: John Van Reenen, Professor in the Department of Economics at MIT and the Sloan School of Management.

[TOC] Tax Policy Disruption

Why the Wealthy keep on getting Richer

  1. Those with Capital benefit more than everyone else
  2. Normally the rate of return on capital will be higher than the rate of economic growth ("r>g") and, as a result, the wealthy will continue seeing their fortunes increase faster than everyone else's. -- Piketty author of Capital in the Twenty-First Century, ~2013.

  3. First to access other people's money (Money in banks)

Wealth Tax necessary to reduce Inequality

[TOC] Global Dark Money Tax-Haven Chains - down the Rabbit Hole

Hidden Dark underground economy of un-taxed money from crime - Lots of loopholes for Structuring Assets

In the world there's a kind of upside-down, shadow economy just under the surface where money - stolen money, dirty money - is vanishing into darkness. No one taxes that money. No one regulates it. No one can even count it.

  • Then all of a sudden hints surface of unclaimed untold wealth - when people don't show up to claim it!
  • a $90 million penthouse that no one is living in
  • a stupidly big yacht.

  • Legally his palace, it isn't even in Ukraine.

    Checking the land registry. And, you know, the area of land was owned by a Ukrainian company, which was owned by a British company, which was owned by another British company and finally was owned by a foundation in Liechtenstein.

The business of hiding global money - run by companies and island tax-havens

  1. In Yanukovych palace he found an address of a "Formations House" in London - 29 Harley Street - in central London. There were more than 2,000 companies based there in a relatively - one house, a small house. In that house was a company that creates companies. In the past 10 years, hundreds of thousands of companies have been created out of this one house. It costs little as 20 pounds to get a company started in the U.K. That's about $26. Viktor Yanukovych's two companies were called Astute Partners and Blythe Europe.

  2. Nevis is an island in the Caribbean - exists to provide people with anonymity. The laws were written for it by a group of American lawyers who wanted, essentially, to make it easier for people who were being sued or who were divorcing their wives to hide their assets.

  3. All these shell companies are all in an area about the size of a football pitch. The first office block is directly opposite the boat harbor. These are perfectly pleasant office blocks with a couple of receptionists.

    When the journalist interviewed the regulator, the person who's essentially in charge of checking the integrity of the financial system there = she just laughed at him during the ENTIRE interview.

Crime of Opportunity - Similar Chains of Tax-Havens Work as DELAYING Tactic

Trying to unpick that chain of companies, you have to go to every single one of those countries to find out who owns the company. And then once you've found out that, actually, it's just owned somewhere else, you have to go to another country and find out who owns it. And eventually, you will end up, you know, possibly finding out who owns it, but years will have gone by.

  • Paul Manafort indictment tied to Ukraine - as a consultant! Made tens of millions of dollars very fast, he hid it and evaded taxes using similar chains.
  • Manafort used structures like the oligarchs - Cyprus, Caribbean, and a whole string of LLCs in the USA.
  • Totally different cultures had Similar Chains of Tax-Havens - just because THEY COULD!

How much is in Global Dark Money Rabbit Hole?

  • In Russia 52% all the money is owned offshore - no longer subject to the decisions of legal government or taxed by it. - estimate from the economist Gabriel Zucman, who studies tax havens.

  • Estimated 8% of all money in the world is in this Rabbit hole!

Companies, and Countries Money VANISHING DOWN THE DRAIN!

Tax avoidance, Growing it! Really hard to trace where money went!

It's important for democracy that money can be taxed because that's how democracies fund themselves.

Even the FBI finds it very difficult to find out who owns a company in Delaware. FBI agents and law enforcement officials find it maddening.

Police in small states like Afghanistan or Ukraine would have no chance whatsover!

The problem is, how do you persuade Delaware when the Delaware state budget is heavily dependent on incorporation fees?

Why People do this? Is it legitimate? What laws protect their privacy?

  • Just hide your identity behind a Delaware company, and you're home free.

Plenty of people who have legitimate reasons for wanting to keep their wealth secret are using our services, are setting up companies here.

A legitimate reason like you live in a really unstable country. You don't want people to know how much money you have because somebody might kidnap your kids and hold them for ransom.

And the courts could very easily decide - you pass a law that says, you know, these are the people who have the right to anonymity, people who have a legitimate fear for their own security.

Resources

  • Gabriel Zucman, who wrote the book "The Hidden Wealth Of Nations.

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