More Jobs, More Housing

Interesting graph. There's a clear correlation between unemployment and housing starts. Lower the unemployment rate, higher the housing starts. Housing and employment booms usually start at tail ends of recessions when interest rates are low, but it's not happening this time around. Is it possible that the recession isn't really over, contrary to what many economists are saying?

Regardless, the key factor is to create jobs, and this means letting the private sector do exactly that, but the President Obama thinks that profligate government spending, raising taxes, and more regulation is the way to go. It's not.

For more on the aforementioned graph, check out this post at Calculated Risk.

France Needs Economic Liberty

Frontline has a good article highlighting France's pension crisis. Not that I agree with the article's leftist slant, but it does clearly illustrate the bankruptcy that's the socialist welfare state, and should be a signal to the United States to get its own welfare system in order.

France, like the rest of Europe, is facing a demographic crisis that threatens to imperil its pension system.

The hole in the public pension system has come about because France has an ageing population where there are more pensioners than active workers who pay into the pension fund. If not tackled in time, the present system is expected to ratchet up losses to the tune of 50 billion Euros by 2020. In 1945, when the system was introduced, there were roughly four workers for each retiree in France; today the ratio has shrunk to 1.5 workers per retiree.

Assuming demographic trends remain unchanged, the French government wants to raise the retirement from 60 to 62 for the short-term, eventually raising it to 67 by 2018. This will put France on par with the rest of Europe. Of course, France can add more workers in the short-term by increasing immigration; or increase the birth-rate in the long-term. But given the anti-immigrant sentiment in France, the short-term solution is not an option.

Two factors have upset this balance: the fact that longevity has increased – the life expectancy for men is 85 and for women is 87 now – while the birth rate has dropped. The age pyramid in the developed world has been inverted, with old people far outnumbering the young. At the same time, technological advance has meant that in many industries men have been replaced by machines, leading to persistently high rates of unemployment and placing an additional burden on state-funded unemployment benefit schemes.

The writer blames high unemployment not on France's anti-business policies but on capitalism's obsession with replacing human beings with technology for the sake of more profit. This is typical leftist dogma Frontline is known for.

Naturally, France's trade unions are opposed to any reforms. They agree changes are needed to keep the system solvent, but the sacrifices need to be made, not by them, but elsewhere.

"We are opposed to Sarkozy's specific proposals because they are unjust. We understand that because of changing demographics the system has to be changed, adapted and we accept that. What we reject is this particular reform. The government is adamant about raising the retirement age. But other solutions can be found. Sarkozy has consistently given tax breaks to his rich friends and business supporters. We can look at other means of financing. This proposal is unjust because it penalises two categories of workers who find themselves on the lowest rung of the ladder – manual workers and women,” said Francois Chereque, the leader of the CFDT, one of France's eight major trade unions.

Raising taxes in a country where taxes are extremely high seems suicidal. Soaking the rich is always a populist theme, but punishing those with capital to invest in jobs is hardly productive. Capital will go where there is money to be made, not taxed.

“"I am a 52-year-old divorced mother of four. My husband had a modest job and it was a struggle to make ends meet. I abandoned my job to stay home, to cook and clean and bring up our children. Six years ago I returned to work. My age meant that it took a long time to find a job, and as an office cleaner I make barely 900 euros a month. I am tired, used-up, paid less than my male counterparts. In this situation to ask me to carry on until 67 is an ignominy."

I feel for this woman, but its France's statist economic policies that are to blame. Its anti-business environment make creating jobs difficult in a country with a history of chronic high unemployment. Not only are the unemployed not working, thus not contributing to the pension system, but are themselves receiving generous welfare benefits. It's a doubly-whammy that is clearly unsustainable.

What France needs is a free-market economic regime with less regulation and taxation and more pro-growth policies. What France needs is more freedom.

A Reminder Why Air Travel Sucks

Whether or not his actions were justified, Steven Slater has become the poster boy for our collective disgust with air travel. The problem with air travel is not just the airlines, which is a given, but passengers, who demand too much for too little.

For me, anyway, air travel should be a simple affair: get me from point A to B safely and on time; don’t lose my luggage (especially if I pay for the privilege); no need to feed me or slake my thirst (airline food sucks anyway, and I can bring my own bottle of water); and no need to entertain me as I can either read a book or listen to my iPod.

Other than that, I will gladly pay the stated fare plus fees and taxes to fly wherever I want.

No Justice For Bhopal Victims

Naturally, the Indian media has come down hard on the recent verdict of eight former Union Carbide executives for their involvement in a chemical leak in Bhopal that resulted in the deaths of thousands and injury of countless more.

I’m not going to quibble about the light sentences the former executives received, this is not the point of this post. What I would like to talk about, however, is how the Indian government betrayed the victims through its inactions.

First of all, that it took 25-years to reach this verdict is mind-boggling. I know justice in India is a very slow, creaky wheel, but even by its own standards, India’s judiciary system has outdone itself! This is a classic example of justice delayed is justice denied. And on top that, such weak sentences! One wonders why the courts even bothered.

Second, the Indian government did not have the victim’s interests at heart when they settled for a paltry $470 million from Union Carbide. This was the 1980s, after all, Nehruvian socialism was still in vogue yet after hectoring both the United States and Union Carbide, it settled for mere peanuts. I have no doubt, in my mind, corruption played a part. Key players were paid off in exchange for indemnity.

The shame of Bhopal and its outcome should be put in proportion, and the Indian government should get the lion’s share of it.

ADDENDUM: Perhaps the victims should sue the Indian government since it failed -- through shear criminal negligence -- to protect its citizens. The multi-billion dollar settlement should come from its coffers and not from Union Carbide, or the United States, who, in my opinion, acted in good faith.

Google: A Simple Choice

This whole China-Google troubles is rather irritating in that choices, for Google, are rather simple: comply with the law and make money in the world's biggest online market or leave the country and keep a clean conscience.

China is not a democracy. We know this. China does not respect, which we in the free world, call human rights. We know this. Yet the expectations for China are the same as a democracy. It's an incongruity that seem to be overlooked by some critics. China is a sovereign country, whose laws we may not like but nevertheless must comply. We would expect the same of any Chinese company operating in the United States.

That Google is wringing its hands over the matter is just drama to me.

Wall Street 2: The Teaser Trailer

Check out the teaser trailer for Wall Street: Money Never Sleeps:



It looks awesome!

Review: Marx for Beginners

Rius. Marx for Beginners. New York: Pantheon, 2003. 160pp.

Many people know about Karl Marx and what he stood for, but how many people, including his many admirers and critics, actually understood the man and his revolutionary ideas? In my opinion, not many, including those who unabashedly call themselves “Marxists.’ Not surprisingly, Marx’s ideas are impenetrable by even the most intelligent of people. Very few understand Marx, and even fewer who successfully translated his thinking to the general public: reading and comprehending Marx is simply beyond the ability of mere mortals. Marx’s ideas are a knotty mess of philosophy and economics, written in the turgid, confusing prose that is the hallmark of many intellectuals. So a book like Marx for Beginners is a welcome antidote, as it explains Marx in the simplest way possible—through cartoons.

The book is illustrated and written by Rius, a pseudonym used by famed Mexican cartoonist and left-wing political activist Eduardo del Rio. The book is only 160 pages or so, but Rius encapsulates Marx’s ideas in a tight, unsparing format, not wasting time on ephemeral matters but focusing on main ideas that made Marx an icon of the left. Rius gives us a biography of Marx, his influences, explains the philosophical underpinnings of Marx’s ideas, and Marx’s blueprint how the proletariat (the “working” class) can seize power. Naturally, Marx was no lover of democracy, which, for him, was a bourgeoisie concept.

Though this edition was published in 2003, the book was originally published in 1975. This explains the many references to Chile and snide attacks on the United States. Obviously, the author was bitter about the overthrow of Salvador Allende in Chile and American imperialism in South America in general. Never mind that Allende was planning to turn Chile into another Cuba. But that’s a debate for another day.

Marx for Beginners is not intended to be a comprehensive, or even an exhaustive, look at Marx. That is just not possible. This book is a primer, of sorts, a kind of jumping off point. Because to understand the man there is no going around reading the man's various works. A bit of a warning: reading Marx is only for the heartiest of souls and not for the faint of heart. And I'm not writing this review as a supporter of Marx. Hardly. But you cannot deny the man's influence on history; and to understand the world today you have to understand Marx.

Two Families Got Seperate Ways

Another two families have vacated their condos in my building, both for economic reasons: one could not afford to stay; and the other could afford to leave - by buying a house at a bargain basement price.

For those lucky enough to have a secure job, and a healthy bank balance, are in prime position to buy real estate, especially a primary residence. Still, the building is starting to feel empty.

I'm Getting The Pantech Matrix

My next phone:



I'm always two generations behind far as cell phone technology is concerned. I'm just not willing to pay for instant gratification many people are so compelled to pay for because of some fetish they have (think iPhone), or trying to keep up with the Joneses.

The Pantech Matrix seems like nice compromise wise both in terms of it's price point and functionality.

Why Help AIG?

Anyone who unflinchingly says the United States practices free market capitalism should get their head examined after taxpayers will have to pay $85 billion to bail out a company that made some bad business decisions. At $85 billion, there is nothing free about it, nor does it have to do anything with markets. I'm so pissed.

Doha Round Collapses: Everybody Loses

The Doha Round of trade talks have officially collapsed. These negotiations, which have been going on for what feels like forever, would have reduced or eliminated odious agriculture subsidies and tariffs and make trading of agricultural products simpler and cheaper. Who to blame for this failure? Depends on whom you ask. Here's an editorial from the The Daily Star, a Bangladeshi newspaper, who is blaming the developed world, specifically the United States and the European Union:

The final impasse was the demand from the G-33 which wanted special safeguard mechanisms to protect farmers in the developing world against temporary surges in cut-price imports of cotton and rice. When one considers that these safeguards would be the only thing standing between hundreds of millions of subsistence farmers and penury, to say nothing of the stability of billions throughout the developing world, it is hard to fathom the opposition.

What is really outrageous about opposition to this from the West is that it insist not only on its own tariffs but also on massive agricultural subsidies that protect its handful of farmers and massively distort the international price of goods, causing further hardship to farmers in the developing world.

But the developed world, in turn, and led by the West, is blaming the developing world for trying to have its cake and eat it too; all at the expense of their farmers. The Washington Post is leading the charge on this score:

Still, as last-ditch talks moved into last weekend, the United States and European Union had made some concessions on farm supports, and WTO Director-General Pascal Lamy had submitted a compromise plan that seemed to draw at least tentative approval from most participants. It was at that point that India and China essentially torpedoed the talks, asserting a broad right to raise tariffs to protect their poor farmers from "import surges," price drops and other vicissitudes of the world market. China, which had been relatively quiet throughout most of the talks, was particularly vituperative, blasting U.S. arguments as "absurd," even though Brazil and several other developing countries agreed with Washington.

China's role in the demise of the Doha Round is particularly dismaying, considering China has reaped huge benefits from global trade in the seven years since it joined the organization -- with strong U.S. support. Chinese exports have quadrupled from $300 billion in 2002 to $1.2 trillion in 2007, thanks in large part to free access to the U.S. market. U.S. supporters of Chinese inclusion in the WTO argued that drawing China into a system of multilateral give-and-take would mute its nationalistic tendencies. Evidently, the Chinese see the matter differently. They, and the world, will be poorer because of it.

It's safe to say that obstinacy on both sides led to the demise of the Doha Round. The developed world insists on paying subsidies to farmers, which in this era of high food prices is absurd. The developed world then demands open access to the developing world markets for their "cheap" food, giving local farmers an economic disadvantage. I believe the developing world has the right to protect its farmers as the developed world protect theirs.

At the same time, the developing world, led by China and India, insist on keeping mechanisms protecting its farmers against the onslaught on "cheap" food, even if the developed world ends its subsidies and tariffs. This will give developed world an advantage while penalizing western farmers for being more efficient and productive. This is a non-starter as well.

But ultimate loser in this fiasco are the consumers in both the developing and developed world, who will continue to pay high prices for agricultural products. It is also a defeat for free-trade, and a disturbing win for protectionism, which will only punish the entire world.

Humor: Weapons Are Cheaper Than A Bag Of Rice

How many in the developing world are coping with high food prices:

3G iPhone Out Today: Will It Be A Success

Starting today you can buy the new 3G iPhone from AT&T (T); and Apple (APPL) has also launched an apps store, where you can download third-party applications for your iPhone. Personally, I find the whole experience underwhelming and a bit overrated. Regardless, I found this ad on Apple's site to a bit amusing:



The phone may be half-price, but your cell phone will almost double because you will have to subscribe to a data plan and pay extra for SMS and other features. Is it worth it? Not to me. But this won't stop the crazies from buying one.

Why not just get a Wi-Fi equipped phone - like a Blackberry? Want e-mail? There are plenty of free e-mail services that provide POP access, like GMail. Why pay extra when you don't have to?

Will the 3G iPhone succeed? Initially, yes; but the cost of ownership is still prohibitive for many people, including myself. Plus, it's a closed, proprietary system. I much prefer open source applications written in Java.

Why Reliance FRESH Is Good For India

I don't know what this Frontline article is suppose to accomplish, but if it is to discredit food chain stores like Reliance FRESH, it fails miserably. On the contrary, it has made the case for them. The article presumes farmers are just being exploited by greedy corporations, but farmers seem all to happy selling their produce to Reliance FRESH. Here's why:

Selvamani, a farmer whose family owns 30 acres (one acre is 0.4 hectare) and has been selling both to Reliance and in the auction market at Kozhinjampara, told Frontline: “On an average, we get at least Rs.2 a kg more for every commodity if we give it to Reliance rather than at the wholesale market. At the local market, as elsewhere, we have to pay a 10 per cent commission to agents in addition to the loading and unloading charges. Their weighing machines are almost always inaccurate. This is why a lot of farmers here prefer to sell to Reliance.”

Higher prices! Much more than what the government's Public Distribution System (PDS) will give farmers. Reliance FRESH also offers:

...electronic weighing, on-the-spot cash payment, extension services and, importantly, an assured market for their produce.

What does the government offer? Indifference and lamentation about high food prices; and blaming neo-liberalism as the main culprit seems to be the official preoccupation.

As I see it, the only way to reduce the cost of food, for the short-term, is to keep the cost of production and transportation low. And only efficient, mechanized organizations, combined with economies of scale, can accomplish this: they are mostly agro-businesses and retail chains like Reliance FRESH. And given the soaring cost of food, the Left (as they are the key players in this 'anti-Walt-Martian' drama) seems keen on keeping them high. I guess they hate the poor.

The Life Of A Consultant: Sitting On The Bench

After a three-month assignment that ended prematurely, I'm back on the bench. This is the life of a consultant - feast and famine. Hope to get a new assignment soon, but given the weakness of IT spending by companies, I might be on the bench for awhile.

I hate sitting on the bench. For me it's a sign of weakness; a personal failure. I need to work all the time, otherwise I feel useless. In the meantime I'm taking some training to sharpen my skills. But what good will it do me if I can't apply it right away? It's like learning a language, I suppose: use it or lose it.

My malaise is also affecting my blog: I was posting almost every day while on assignment - evidence of my busy brain - but I have since dropped to few posts a week; and on the verge of giving up altogether.

Hope to get back in motion soon.

Bring Your Own Toilet Paper

Cost cutting are reaching ridiculous levels at IT companies in India:

BANGALORE: Tough times ahead for techies in India. Pretty soon, they may have to carry tissue paper to office, for the US recession seems to have entered even the toilets of Indian software firms.

After slashing salary increments and travel budgets, many domestic firms and MNCs are now cutting on routine items like stationery, canteen snacks, even tissue paper. The once abundant stock of toilet paper, sanitary disposal bags and bottles of handwash are drying up now.

"Tissue paper rolls have disappeared from most gents toilets. Women colleagues say their toilets still have them, although the quality has dropped," said a tech professional working for an MNC.

Another professional, Meera Sridhar, said, "Tissue paper is found only in a couple of toilets out of the nine we have. The face tissues completely vanished a fortnight ago."

"Earlier, I would send a security guard to fetch a pen or writing pad from admin. A few days ago, the security man said I must go and get them personally. I went, only to be told the company has put a stop on stationery to cut costs," said Akhil D, a senior professional in an IT MNC.

The recession has entered canteens too. "We used to get free snacks, biscuits, popcorn with coffee or tea or badam milk. That has stopped now, although there's no official word yet," said Rajani Pravin, a young BPO executive. The cuts are being implemented very subtly. "Everybody wants to avoid panic and bad publicity," pointed out Lata Mahoharan, manager (admin), with a leading domestic tech firm.

"We heard that an American airline has cut a celery leaf from every burger it serves on board. Are companies being penny wise and pound foolish, or will they actually save?" wondered a senior manager of a BPO firm.

American airlines giving out food on flights! Where has this guy been? Kidding aside. How much are companies going to save skimping on toilet paper, notepads and pens? Small things, added together, have big impacts. If my company denied us toilet paper - which is just disgusting - notepads and pens, I would not only be demoralized but question my confidence in management and, at the same time, plot my exit strategy.

The 3G iPhone: Not As Cheap As You Think

The new 8 GB 3G iPhone is going to sell for $199. Sweet! I was going to buy one for my wife - who never had a decent phone in her life - when our contract with AT&T expires in November...until I read the fine print that is:

Everywhere you look, a new iPhone price hike turns up. At $199, the phones themselves may be cheaper — but Apple and AT&T, the phone's exclusive carrier in the U.S., are charging users by other means. The iPhone data plan by itself is going up $10 to $30/mo. In a GigaOm interview, AT&T wireless chief Ralph de la Vega reveals that the 200 text messages previously included will cost iPhone users an extra $5/mo. ($20/mo. for unlimited messages, which seem practically obligatory.) And then there's Apple's MobileMe subscription, without which the iPhone's new synching features won't work, at $99 a year, or just over $8 a month. Add it up, and iPhone users will be paying about $43 a month, or $1,038 over the two-year course of the AT&T contract they signed up for — all to get an iPhone at $199.

So to fully maximize the iPhone you have to pay $1,038 for the data plan, text messaging, and synching software; plus $199 for the phone itself. This doesn't include voice, taxes and other assorted fees. That's a pretty hefty phone bill to pay each month.

Slew Of Books On Sub-Prime Mortgages

As is my habit, I browse Amazon.com for the latest in books, DVDs, and music. Books about the sub-prime meltdown are already starting to come out.



Nothing sells books like misery.

Apple Releases 3G iPhone..Like, Whatever

Wow. Apple announces the 3G iPhone. Arguably one of the worst kept secrets in history.

Vinod Explains The Food Crisis

Vinod aptly explains what I've been wanting to say but didn't have the time or the eloquence to say it: blaming the West for the food crisis is nothing more than a red herring.