Archive for the ‘Business’ Category
Tim Johnson reports for McClatchy:
SAN ISIDRO, EL SALVADOR — Somewhere trapped in the earth below Francisco Pineda’s feet are an estimated 1.4 million ounces of gold, and he wants the ore to remain there.
He doesn’t want an Australian mining company to extract the metal.
“What will happen with the water? To separate the gold and silver, they’ll use cyanide. This will either filter into the water table or go into the river,” said Pineda, a stocky agronomist and environmental activist.
Those who share Pineda’s views don’t care if El Salvador remains the proverbial beggar seated on a bench of gold. They say their densely populated nation cannot absorb environmental distress from mining.
Yet the choice is not theirs.
The fate of the El Dorado gold mine won’t be resolved anywhere near this tiny Central American country. Rather, it’s being weighed by a three-judge tribunal on the fourth floor of the World Bank headquarters in Washington.
Last month, the obscure court heard eight days of arguments over whether an Australian firm,OceanaGold Corp., will get a green light for the El Dorado project, or in its lieu receive $301 million in compensation. Sometime early in 2015, the tribunal, known formally as the International Center for Settlement of Investment Disputes, will issue its ruling.
The unusual jurisdiction is a sign of how international investment laws are empowering corporations to act against foreign governments that curtail their future profits, sometimes through policy flip-flops. Critics say it’s giving trade tribunals leverage over sovereign nations and elected leaders who presumably reflect the will of their people.
The lawsuit could put El Salvador in a dilemma: Either allow OceanaGold to mine or pay the $301 million the company says it would’ve earned from the gold.
“For us, it is very tough that three judges will be deciding this case. They’ve never been here. They’ve never asked us what we want. It is really ugly that someone is deciding our future without asking our opinion,” Pineda said.
Suspicions run deep over the project, which has spawned violence. Four mining opponents were killed from 2009 to 2011. None of the homicides has been fully resolved.
The company now at the center of the conflict, . . .
Take a look at this chart, from a Slate article by Eliot Spitzer:
Two things should be evident: the US marginal tax rate is currently VERY low (even compared with our own history, much less compared to developed nations in the EU), and that dropping the marginal tax rate has zero effect on GDP: the notion that we would get lots of economic growth from cutting taxes is quite clearly false—and always has been. (Kansas is finding that out now. Thanks, Kansas, for taking one for team.)
Obviously, without tax revenue, government expenditures must be cut—or, to put it more bluntly, government services that help the public will be shut down. (One could, of course, say that a lot of tax money is spent for the wrong things—e.g., the $7.6 billion totally wasted in trying to shut down the opium trade in Afghanistan: we spent $7.6 billion, and the trade increased. The money may as well have been burned. And let’s not even talk about the $2 trillion Iraq war, which opened the door to jihadist revolution now underway.)
But government revenues have indeed fallen, so government services are cut, favoring cuts to groups that have no lobbyists: the poor, minorities, the mentally ill (now sent to prison or shot), and so on. In the meantime, bank lobbyists (several of whom are former heads of the SEC) are berating the SEC for feebly attempting to enforce the law. Their chutzpah knows no bounds—banks are the NSA of money: they want to collect it all.
Bryce Covert has a modest solution, which he describes at ThinkProgress:
A 90 percent tax rate on the top 1 percent of American earners wouldn’t just significantly reduce income and wealth inequality and boost government tax revenues. It would also be the optimal level for Americans’ welfare, according to a new paper from economists Fabian Kindermann and Dirk Krueger.
They find that the top marginal tax rate that maximizes government revenues before being so high as to discourage the wealthiest from earning more is very high, or 95 percent on those who are among the top 1 percent of earners. They also find that a 90 percent tax rate on the richest 1 percent could significantly reduce the Gini index, a measure of income inequality, and wealth inequality would also steadily decline.
But these effects aren’t worth the policy change in and of themselves, they argue. In an email to ThinkProgress, Krueger wrote, “One could certainly reduce inequality in the economy to zero, by the government confiscating all income and wealth and redistributing it equally among all households… Of course people would stop working and saving and the outcome would be disastrous.” But the interesting finding in their paper is that the same tax rate that would maximize revenues and drive down inequality is nearly the same one that would make everyone better off, or what they call the optimal top marginal tax rate.
Everyone’s welfare is improved if a tax change allows the government to compensate them with enough wealth so that they are at the same level they were before the change, but the government still has money left over. “The more is left over, the better is the reform,” Krueger said. Everyone’s welfare improves or stays steady, including that of the 1 percent, under a 90 percent top tax rate. In fact, the welfare gains are “very substantial,” they note in the paper.
There are trade offs to such a policy change. . .
I doubt this can happen: President Obama has demonstrated a strong commitment to protecting the banking industry and the wealthy in general—those are his donors. (I’m reminded of Roman Hruska, one-time Senator from Nebraska, who was known as “the defender of the strong.”)
Years ago (1964) a book was written about Congress titled Congress: The Sapless Branch, and that title rings true today. We have reached the point now where Congressional action contrary to the interests of large corporations seems increasingly difficult. T. C. Sottek writes in the Verge:
Here’s what’s happening right now on net neutrality:
- The FCC is still deciding whether to completely cave and ruin the internet as we know it
- Americans are pretty mad at the FCC about it
- Congress is twiddling its thumbs
The FCC’s comment period is over and 3.7 million people weighed in — that means even more people are concerned about net neutrality than Super Bowl XXXVIII: Wardrobe Malfunctiongate. And, yes, America, it’s totally reasonable and appropriate to be mad at the FCC. It has screwed up on net neutrality for years from cowardice and simply by using the wrong words. But Americans who want to protect net neutrality should also start being mad at Congress.
It’s Congress that has largely turned net neutrality regulation into a partisan charade that occasionally results in threats to the FCC’s budget and authority via Congress’ telecommunications benefactors. The FCC’s dithering on net neutrality has been enabled for years by this nonsense and it’s now reflected even by the agency’s bench, which seats some commissioners who have advocated stripping themselves of power to avoid going against corporate interests. Even the FCC’s chairman is intimately familiar with those corporate interests; Tom Wheeler is a former telecom lobbyist and was appointed by a president who promised that lobbyists wouldn’t run his administration in a distant magical time called “Before He Was Elected.”
If you want a clear example of Congress’ ineptitude on net neutrality, look no further than a letter sent to Comcast today by . . .
I think the lack of wage growth is simply because businesses and corporations are now so totally focused on increasing their profits that they do not want to spend money on anything: not on taxes, not on wages, not on plant maintenance, not on supplies. They are continuing an effort to reduce costs everywhere because increasing prices doesn’t work well when the great mass of consumers are underpaid and thus cannot afford things—so that cutting cost becomes the primary strategy to increase profits.
Obviously there are exceptions, but one economist seems to go along with the idea. Jared Bernstein has an interesting article in the Washington Post. Here are his conclusions:
. . .
And that’s what I think is really going on here. Worker bargaining power may be so diminished in this country that it’s become what you may recall from Algebra II as a “non-continuous function.” That is, wage growth doesn’t continuously accelerate as slack is diminished. It plods along until the job market is at truly full employment, which is the only thing that we can count on to budge wage growth from its entrenched moorings.
That’s just a hypothesis, but here are some things you’d expect to see if I’m right:
— Employers complaining about not finding the workers they need but not raising pay to get them. Check.
— High levels of income inequality. with most of the growth flowing into profits, not wages. Check.
— Less movement in the job market by workers seeking to upgrade to a better job. Check.
— A flattening of the slack/wage-growth curve, as shown above. Check.
The U.S. business model has devolved to a point where raising pay is antithetical to sound practice. If you’re a successful employer, it’s the very last thing you do, and you do it only if you’re pushed to the wall by such a tight labor market that you’ll literally lose workers and, thus, profits if you don’t.
That, in turn, has two implications. First, policymakers seeking to raise workers’ pay need to be mindful of this dynamic and push for chock-full employment and other countervailing measures, like a higher minimum wage. Second, the Federal Reserve must factor severely diminished worker bargaining power into its calculus, a factor that militates against preemptive tightening.
Longer term, workers need a lot more bargaining clout. But that won’t happen until there’s a politics that reacts to all this technical analysis with the urgency it deserves. I know, the working class isn’t the donor class. But they are, or at least they should be, the voter class, and last I checked, at least on paper, this is still a democracy.
This is interesting. Big Telecom does not want to build a gigabit network in major cities and—very much like the dog in the manger—also does not want anyone else to do it. Big Telecom, when you get down to it, wants us simply to send them money every month and otherwise leave them alone. They have been quite happy to help the government spy on us. Jason Koebler writes at Motherboard:
More than two dozen cities in 19 states announced today that they’re sick of big telecom skipping them over for internet infrastructure upgrades and would like to build gigabit fiber networks themselves and help other cities follow their lead.
The Next Centuries Cities coalition, which includes a couple cities that already have gigabit fiber internet for their residents, was devised to help communities who want to build their own broadband networks navigate logistical and legal challenges to doing so.
Over the last several months, there’s been a Federal Communications Commission-backed push for cities to build their own broadband networks because big telecom companies like Comcast, AT&T, and Verizon either don’t or won’t offer competitive broadband speeds in certain parts of the country.
“Across the country, city leaders are hungry to deploy high-speed Internet to transform their communities and connect residents to better jobs, better health care, and better education for their children,” Deb Socia, the group’s executive director, said in a statement. “These mayors are rolling up their sleeves and getting the job done.”
That’s turned out to be a tricky proposition in a legal environment where more than 20 states have passed legislation (lobbied for by telecom companies and ALEC, acontroversial, big business-backed “charity” that writes legislation for states) making it illegal or legally difficult for cities to build their own networks. [Sort of gives the game away, doesn't it? The idea is to keep people from getting the benefits of the internet unless they also pay Big Telecom. - LG]
Of the cities involved in the coalition, 12 are located in states where there are legal barriers to building community networks. Those cities include Austin and San Antonio, Texas; Chattanooga, Morristown, Jackson, and Clarksville, Tenn.; Kansas City, Mo.; Lafayette, Louisiana; Montrose, Colo.; Mount Vernon, Wash.; Raleigh and Wilson, N.C.; and Winthrop, Minn. To be fair, some of these cities, such as Wilson, Chattanooga, and Austin already have gigabit service (Wilson and Chattanooga built it before a law was passed, Austin has Google Fiber).
“Towns and communities struggle with limited budgets, laws that restrict their opportunity to build/support a network that fits their needs, and even market pressures,” the group of cities said in a recent blog post. . . .
Somehow it reminds me of nothing so much as factory farming: playing music to the cows to increase milk production in the “whatever it takes” spirit. Or the way slaughterhouses are now designed by animal behaviorists to minimize problems due to the cattle becoming fearful or angry: soothing and reassuring environments right up until the hammer falls. Or how casinos have no windows, no clocks, and seating only at the game tables. Free/cheap booze, though…
All examples of how the behavior of animals must be managed to improve corporate profits.