Investing Curiouscatblog

Category: Economics

  • Commerce Takes More People Out of Poverty Than Aid

    Bono (who is fairly well known 🙂 as the lead singer for U2): “Commerce — entrepreneurial capitalism — takes more people out of poverty than aid, of course, we know that.”

    That is my belief and something I believe in strongly. Real capitalism will bring people out of poverty. That isn’t the same thing as any businesses will do that. Businesses that use monopolistic powers to extract benefits to themselves and suppress free markets may well do more damage than good. But we will continue to bring more people out of poverty through economic development and capitalism than through aid.

    Related: Helping Capitalism Make the World Better – Kiva – Giving Entrepreneurs an Opportunity to Succeed – Dr. Deming’s personal aim was to advance commerce, prosperity and peace – Business 901 Podcast with Me: Deming’s Management Ideas Today – Monopolies and Oligopolies do not a Free Market Make

  • The Growing Market for International Travel for Medical Care

    Medical “tourism” is a potentially huge market. The size of the market is greatly aided by the extremely expensive and broken USA health care system. Even while the standard rich country provides the same, or better, results than the USA for half the cost they are not doing well either (so the USA is very bad compared to pretty bad results for rich countries on average).

    Medical tourism is on of the most attractive economic growth areas. However the competition is fairly high as the attractiveness of building such an industry is well known. Countries that have very good potential are: Thailand, Mexico, Malaysia, Singapore (for high end solutions), Costa Rica, India, Philippines and Panama. India has some great advantages but they have a deeply ingrained and extremely unhelpful bureaucracy. It seems to me that that creates a burden that likely means India can’t complete with the others effectively.

    Even for the simplest aspect – visas for those seeking to bring income into the country as medical tourists I don’t have confidence India can do well.

    Cayman to Singapore Gain as Rules Stump Clinics: Corporate India

    India, which offers the world’s biggest savings for U.S. medical tourists, is losing clients to Singapore and Thailand as visa rules and greater awareness of drug-resistant germs that spread from the South Asian nation scare away patients. Government neglect means India may fail to tap the $40 billion market that’s expanding 25 percent a year, said Josef Woodman, founder of the guidebook “Patients Beyond Borders.”

    “They’ve done everything to ruin our prospects of becoming a tourism center,” Reddy said. “I once said India should become the global health-care destination–now I’m swallowing those words. It could grow 10-fold in the next five years, if only the government would facilitate it, the way others have.”

    India continues to be held back economically (across the entire economy not just in health care) by ineffective and burdensome regulation and government inefficiency.

    The USA actually has a portion of the medical tourism market – those that have no concern about price (royalty, trust fund babies, movie stars etc.). Those with any concern about price can find the same level of care in Singapore, Japan, France, etc. at a fraction of the price.

    I believe 2 or 3 countries in South East Asia will do very well with international medical care. The extent to which Thailand, Philippines, Singapore and Malaysia (and potentially others) do in this field could greatly impact their economic success. There is a great potential for Singapore and Malaysia to cooperate in this area (in Malaysia’s Iskandar region, which borders Singapore).

    Related: Traveling To Avoid USA Health Care Costs –
    Traveling for Health Care (2007) – Leading Countries for Economic Freedom: Hong Kong, Singapore, New Zealand…

  • How to Balance the Benefits of Foreign Workers and the Potential Damage to Citizen’s Job Prospects

    There have been quite a few complaints about companies hiring foreign nationals to work in the USA to save money (and costing citizens jobs or reducing their pay). The way the laws are now, companies are only suppose to hire people to work in the USA that can’t be met with USA workers. The whole process is filled with unclear borders however – it is a grey world, not black and white.

    I think one of the things I would do is to make it cost more to hire foreigners. Just slap on a tax of something like $10,000 per year for a visa. If what I decided was actually going to adopted I would need to do a lot more study, but I think something like that would help (maybe weight it by median pay – multiple that by 2, or something, for software developers…).

    It is a complex issue. In general I think reducing barriers to economic competition is good. But I do agree some make sense in the context we have. Given the way things are it may well make sense to take measures that maybe could be avoided with a completely overhauled economic and political system.

    I believe there are many good things to having highly skilled workers in your country. So if the problem was in recruiting them (which isn’t a problem in the USA right now) then a tax on the each visa wouldn’t be wise, but I think it might make sense now for the USA.

    I think overall the USA benefits tremendously from all the workers attracted from elsewhere. We are much better off leaving things as they are than overreacting the other way (and being too restrictive) – but I do believe it could be tweaked in ways that could help.

    Outsourcing Made by India Seen Hit by Immigration Law

    In June the U.S. Senate passed an immigration bill that allows more H-1Bs while also increasing their cost and barring some companies from placing holders of the visa with customers.
    …
    Indians received more than half the 106,445 first-time H-1Bs issued in the year ending September 2011, according to a U.S. Department of Homeland Security report. The second-biggest recipient was China with 9.5 percent.
    …
    While the legislation raises the annual H-1B cap to as much as 180,000 from 65,000, it increases visa costs five-fold for some companies to $10,000. It also bans larger employers with 15 percent or more of their U.S. workforce on such permits from sending H-1B staff to client’s sites.

    The aim is to balance the U.S. economy’s need to fill genuine skills gaps with protection for U.S. citizens from businesses that may use the guest-worker program to bring in cheaper labor

    Related: Relocating to Another Country – Working as a Software Developer – Science PhD Job Market in 2012 – Career Prospect for Engineers Continues to Look Positive

  • Top Nations for Retirement Security of Their Citizens

    Across the globe, saving for retirement is a challenge. Longer lives and expensive health care create challenge to our natures (saving for far away needs is not easy for most of us to do – we are like the grasshopper not the ants, we play in the summer instead of saving). This varies across the globe, in Japan and China they save far more than in the USA for example.

    The United States of America ranks 19th worldwide in the retirement security of its citizens, according to a new Natixis Global Retirement Index. The findings suggest that Americans will need to pick up a bigger share of their retirement costs – especially as the number of retirees grows and the government’s ability to
    support them fades. The gauges how well retired citizens live in 150 nations, based on measures of health, material well-being, finances and other factors.

    Top Countries for Retirees

    • 1 – Norway
    • 2 – Switzerland
    • 3 – Luxembourg
    • 6 – Finland
    • 9 – Germany
    • 10 – France
    • 11 – Australia
    • 13 – Canada
    • 15 – Japan
    • 19 – USA
    • 20 – United Kingdom

    Western European nations – backed by robust health care and retiree social programs – dominate the top of the rankings, taking the first 10 spots, including Sweden, Austria, Netherlands and Denmark. The USA finished ahead of the United Kingdom, but trailed the Czech Republic and Slovakia.

    Globally, the number of people aged 65 or older is on track to triple by 2050. By that time, the ratio of the working-age population to those over 65 in the USA is expected to drop from 5-to-1 to 2.8-to-1. The USA actually does much better demographically (not aging as quickly) as other rich countries mainly due to immigration. Slowing immigration going forward would make this problem worse (and does now for countries like Japan that have very restrictive immigration policies).

    The economic downturn has taken a major toll on retirement savings. According to a recent report by the U.S. Senate Committee on Health, Education, Labor and Pensions, the country is facing a retirement savings deficit of $6.6 trillion, or nearly $57,000 per household. As a result, 53% of American workers 30 and older are on a path that will leave them unprepared for retirement, up significantly from 38% in 2011.

    On another blog I recently wrote about another study looking at the Best Countries to Retirement Too: Ecuador, Panama, Malaysia. The study in the case was looking not at the overall state of retirees that worked in the country (as the study discussed in this post did) but instead where expat retirees find good options (which stretch limited retirement savings along with other benefits to retirees).

    See the full press release.

    Related: Top Stock Market Capitalization by Country from 1990 to 2010 – Easiest Countries in Which to Operate a Businesses: Singapore, Hong Kong, New Zealand, USA – Largest Nuclear Power Generation Countries from 1985-2010 – Leading countries for Economic Freedom: Hong Kong, Singapore, New Zealand, Switzerland – Countries with the Top Manufacturing Production

  • Lavishing Tax Cuts on Ourselves That Our Grandkids Have to Pay For is Bad Policy

    Those that want to continue the policies of the last few decades of policies that tax our grandkids to pay for us living beyond our means seem to have won the day again. Not a surprise; very sad though.

    In my reading stories on the wonderful success of “avoiding the fiscal cliff” seems to amount to passing the George Bush tax cuts again (except this time when in a much much worse budgetary position) and modifying the extent to which the absolute richest benefit from those cuts (so the richest don’t get quite as step cuts as they had been getting but still are getting big cuts from before the Bush tax cuts were made. And the recent trend of treating trust fund babies as the absolute most favored taxpayers was continued (though a few of the absolute richest trust fund babies will have to have some taxes withheld from their windfalls).

    I haven’t read anything about them getting rid of the “hedge fund manager” tax favors. Did they? Did they even bother to change the law so retired managers don’t get the super huge tax favors too?

    On the spending beyond our means issue they seem to have just decided that having the grandkids continue to fund our spending is wonderful.

    If it were up to me I would have continued some of the Bush tax cuts (certainly not for those making more than $200,000 – unless we can cut spending way more than I would guess in which case I would be fine having taxes even for the richest few lowered). I would have continued treatment that reduced taxes owed on dividends and capital gains, though perhaps a bit less than they did. I would cap mortgage deductions (at say $50,000 a year or something).

    I certainly would not have supported such massive Bush tax cuts without large spending cuts. If this level of spending is what we intent to do, we need to pay for it and not just bury our kids and grandkids with huge bills. Without spending cuts I would not have voted again for the Bush tax cuts, which seems to be the main extent of their “solution” (taking a bit of the tax cuts for the wealthiest off the plate but pretty much just passing Bush’s tax cut again).

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  • USA Fiscal Cliff – Better Than Past Behavior

    I am glad we have a “fiscal cliff” to finally get some reduction in the future taxes both parties have been piling on with abandon the last few decades. When you have enormous spending beyond your income, as the USA has had the last few decades, cutting current taxes is just raising taxes on your grandchildren to pay for your spending. Shifting taxes to your grand children is not cutting taxes it is shifting them to future generations.

    If you want to really cut taxes you must cut taxes and not pass on paying for your cuts to your kids. It seems pretty obvious those that advocating cutting current taxes the last few decades were only interested in living beyond their means today and foisting the responsibility to pay to their grandchildren. That is despicable behavior.

    The fiscal cliff is an opportunity to return to a budget that has the generation doing the spending paying the taxes (last seen in the Clinton administration). The fiscal cliff outcome is going to be far from perfect. But the result will be a much more honorable outcome than foisting ever increasing taxes on future generations to pay for our current spending.

    Obviously, if you reducing how much you are adding to your credit card balance each month and start paying your bills that means you don’t get to live off your future earnings today. So you will suffer today compared to continuing to tax the future to pay for your spending.

    I hope the compromise results in spending cuts and an elimination of the Bush generation shifting taxes (cutting taxes on the the current wealthy without spending cuts – so just taxing the future to pay for tax cuts today). It is unlikely the fiscal cliff results in us actually paying for our spending (the best possible result is not an elimination of adding to the taxes future generations must pay but just a reduction in the level of tax increases we are imposing on the future every year).

    Lots of little things should be done to save a few billion (maybe it could add up to $50 billion a year if we are very lucky). But the serious spending cuts have to come from reductions in military spending, reducing waste in the health care system and making social security more actuarially sensible (social security is not part of the fiscal cliff discussions though). Reducing tax breaks also has to happen, unless absolutely huge spending cuts can be found which is not at all likely.

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  • Leading Economic Freedom: Hong Kong, Singapore, New Zealand, Switzerland

    Hong Kong again topped the rankings, followed by Singapore, New Zealand, and Switzerland. Australia and Canada tied for fifth, of the 144 countries and territories in the Fraiser Institute’s 2012 Economic Freedom of the World Report.

    “The United States, like many nations, embraced heavy-handed regulation and extensive over-spending in response to the global recession and debt crises. Consequently, its level of economic freedom has dropped,” said Fred McMahon, Fraser Institute vice-president of international policy research.

    The annual Economic Freedom of the World report uses 42 distinct variables to create an index ranking countries around the world based on policies that encourage economic freedom. The cornerstones of economic freedom are personal choice, voluntary exchange, freedom to compete, and security of private property. Economic freedom is measured in five different areas: (1) size of government, (2) legal structure and security of property rights, (3) access to sound money, (4) freedom to trade internationally, and (5) regulation of credit, labor, and business.

    Hong Kong offers the highest level of economic freedom worldwide, with a score of 8.90 out of 10, followed by Singapore (8.69), New Zealand (8.36), Switzerland (8.24), Australia and Canada (each 7.97), Bahrain (7.94), Mauritius (7.90), Finland (7.88), Chile (7.84).

    The rankings and scores of other large economies include: United States (18th), Japan (20th), Germany (31st), South Korea (37th), France (47th), Italy (83rd), Mexico (91st), Russia (95th), Brazil (105th), China (107th), and India (111th).

    When looking at the changes over the past decade, some African and formerly Communist nations have shown the largest increases in economic freedom worldwide: Rwanda (44th this year, compared to 106th in 2000), Ghana (53rd, up from 101st), Romania (42nd, up from 110th), Bulgaria (47th, up from 108th), and Albania (32nd, up from 77th). During that same period the USA has dropped from 2nd to 19th.

    The rankings are similar to the World Bank Rankings of easiest countries in which to do business. But they are not identical, the USA is still hanging in the top 5 in that ranking. The BRICs (Brazil, Russia, India and China) do just as poorly in both. The ranking due show the real situation of economies that are far from working well in those countries. China and Brazil, especially, have made some great strides when you look at increasing GDP and growing the economy. But there are substantial structural changes needed. India is suffering greatly from serious failures to improve basic economic fundamentals (infrastructure, universal education, eliminating petty corruption [China has serious problems with this also]…).

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  • Easiest Countries in Which to Operate a Businesses (2011)

    Singapore is again ranked first for Ease of Doing Business by the World Bank.

    Country 2011 2008 2005
    Singapore 1 1 2
    Hong Kong 2 4 6
    New Zealand 3 2 1
    United States 4 3 3
    Denmark 5 5 7
    other countries of interest
    United Kingdom 7 6 5
    Korea 8 23 23
    Canada 13 8 4
    Malaysia 18
    Germany 19 25 21
    Japan 20 12 12
    France 29 31 47
    Mexico 53 56 62
    Ghana 63
    China 91 83 108
    India 132 122 138
    Brazil 126 122 122

    The rankings include ranking of various aspects of running a business. Some rankings for 2011: starting a business (New Zealand 1st, Singapore 4th, USA 13th, Japan 107th), Dealing with Construction Permits (Hong Kong 1st, New Zealand 2nd, Singapore 3rd, USA 17th, China 179th), protecting investors (New Zealand 1st, Singapore 2nd, Hong Kong 3rd, Malaysia 4th, USA 5th), enforcing contracts (Luxemburg 1, Korea 2, Iceland 3, Hong Kong 5, USA 7, Singapore 12, China 16, India 182), paying taxes (Maldives 1, Hong Kong 3, Singapore 4, USA 72, Japan 120, China 122, India 147).

    These rankings are not the final word on exactly where each country truly ranks but they do provide a valuable source of information. With this type of data there is plenty of room for judgment and issues with the data.

    Related: Easiest Countries from Which to Operate Businesses 2008 – Stock Market Capitalization by Country from 1990 to 2010 – Looking at GDP Growth Per Capita for Selected Countries from 1970 to 2010 – Top Manufacturing Countries (2000 to 2010) – Country Rank for Scientific Publications – International Health Care System Performance – Best Research University Rankings (2008)

  • US Treasury Yield Fall to New Record Low

    Us treasury yield hit a incredibly low level years ago and they have continued to fall further. Granted this is mainly due to the bailout of the economy necessitated by the politicians favors to the too-big-too-fail financial institutions that have given those politicians so much cash over the years. Other factors are at play but the extent of the excessive punishment of savers is mainly due to political bailouts of bankers and bailouts of the economy caused by the bankers actions.

    This extremely low rate environment is crippling to many retirees. The small percentage that actually did what they were told to have been blindsided by years of artificially low rates (and it is likely to continue for years). This has pushed some that would have been comfortable in retirement into an uncomfortable one an has pushed some from a challenging balancing act to essentially having to eliminate every possible expense (and even that may not be enough).

    I can’t believe long term bonds are a sensible investment now. Of course I haven’t thought they were for 10 years, but they are even worse now. Bonds of “strong” governments (USA, Germany, Japan) are paying less than inflation (sometimes even less than 0 nominally – I think this has just been for short term issues so far).

    I cannot see putting more than token amounts into long term bonds at these rates. Corporate bonds are not much better. The economic damaged caused by out of control too-big-too-fail institution is huge and continuing. And the politicians that have been paid lots of cash by those too-big-too-fail institutions continue to treat the too-big-too-fail players are favored friends. The yields are corporate bonds are not good for companies that are strong.

    The alternatives are not great. But real assets, strong dividend stocks, strong company stocks, and short term bonds seem like better options to me in many cases. And hope we elect people that will put the economic interest of the country ahead of a few well paid friends at too-big-too-fail institution. They also need to eliminate the captured “regulators” that have facilitated the continued wrecking of the global economy. I don’t hold out much hope for this though. We keep re-electing those given lots of cash by the too-big-too-fail crowd and they continue giving them favors. We are getting what we deserve given this poor performance on our part but it is pretty annoying having to watch us vote ourselves into economic calamity.

    Related: Buffett Cautions Against Buying Long Term USD Bonds – Is Adding More Banker and Politician Bailouts the Answer? – Bill Gross Warns Bond Investors – Congress Eases Bank Laws (1999)

  • Working Less: Better Lives and Less Unemployment

    The average worker in Germany and the Netherlands puts in 20% fewer hours in a year than the average worker in the United States. This means that if the US adopted Germany’s work patterns tomorrow, it would immediately eliminate unemployment.

    I do think there is merit to reducing yearly hours worked in the USA. The problem is this is all within a larger system. The USA’s broken health care system makes it extremely expensive to hire workers. One way to deal with the health care system failure is maximizing hours worked to spread out the massively expensive USA health care costs.

    Also the USA standard of living is partially based on long hours (it is but one factor). We also have to work quite a few hours (about 5% of the total hours) to just bring us equal with other rich countries, in order to pay for our broken health care system.

    Still reducing our purchases by cutting out some fancy coffee, a few pairs or shoes, a few cable channels (or all of them), text messages from overcharging phone companies… in order to have a couple more weeks of vacation would be a great tradeoff in my opinion. And one I have made with my career.

    I have changed to part time in 2 of my full time jobs (to make my own sensible yearly hour model even if the bigger system can’t. Another time I bargained for more vacation time over more $. It isn’t easy to do though, most organizations are not willing to think and accommodate employees (hard to believe they respect people in this case, right?). The system is not setup to allow people to adjust total hours to maximize their well being.

    Another option in the USA is to live within your means and then make your own sabbaticals during your career. Take a year off and travel the world, or hike the Appalachian Trail, or read trashy novels, or whatever you want.

    Related: Medieval Peasants had More Vacation Time Than We Do – Dream More, Work Less – Vacation: Systems Thinking