Just finished reading Robert Rubin’s “In an Uncertain World” last night. Read it cover to cover in one sitting — it’s that interesting. Lots of stuff about his years in the Clinton administration both before and after his appointment as Secretary of the Treasury.
In Staring Into the Mouth of the Trade Deficit, New York Times reporter Elizabeth Becker writes from Seattle about ships leaving port half empty — or filled with hay and paper to be recycled into Barbie boxes. Wonder what’s in the cargo bays of those 747’s as they also head back to Asia? Empty plastic bottles?
Virginia Postrel writes in the Sunday New York Times Magazine about just one of the problems with labor statistics.
The official job counters at the Bureau of Labor Statistics don’t do much to overcome our blind spots. The bureau is good at counting people who work for large organizations in well-defined, long-established occupations. It is much less adept at counting employees in small businesses, simply because there are too many small enterprises to representatively sample them. The bureau’s occupational survey, which might suggest which jobs are growing, doesn’t count self-employed people or partners in unincorporated businesses at all. And many of today’s growing industries, the ones adding jobs even amid the recession, are comprised largely of small companies and self-employed individuals.
Columbia University Professor Eli Noam writes in the Financial Times:
The market failure of the entire information sector is one of the fundamental trends of our time, with far-reaching long-term effects, and it is happening right in front of our eyes. The basic structural reason for this problem is that information products are characterised by high fixed costs and low marginal costs. They are expensive to produce but cheap to reproduce and distribute, and therefore exhibit strong economies of scale with incentives to an over-supply. Second, more information products are continuously being offered to users. And information products and services are becoming more “commodified”, open, and competitive.
Malcolm Gladwell’s superb New Yorker article on SUV’s and safety is now available online.
The Explorer was big and imposing. It was high above the ground. You could look down on other drivers. You could see if someone was lurking behind or beneath it. You could drive it up on someone’s lawn with impunity. Didn’t it seem like the safest vehicle in the world?
Of course, no surprise, SUV’s actually are the worst when it comes to safety. Ride ’em high!
Bill Safire has a great column in today’s New York Times about these big media mergers.
The reason given by giants to merge with other giants is to compete more efficiently with other enlarging conglomerates. The growing danger, however, is that media giants are becoming fewer as they get bigger. The assurance given is “look at those independent Internet Web sites that compete with us” — but all the largest Web sites are owned by the giants. …
But the message in this latest potential merger is not about a clash of media megalomaniacs, nor about a conspiracy driven by “special interests.” The issue is this: As technology changes, how do we better protect the competition that keeps us free and different?
Which, of course, brings to mind the impact that patents have on competition in a world of ever larger big players. Property rights vs. competition — a very juicy turf for debate.
Better yet, call it “citizens’ media” — as Jeff Jarvis does. Tim Oren says it’s time for a conference.
Morgan Stanley Chief Economist Stephen Roach is out this morning with a new commentary on global offshoring and the associated backlash. Roach makes an important observation about what’s different about the latest offshoring wave — being associated as it is with services, not the production of physical goods.
In days of yore, it used to be that services had to be delivered in person, on site. Cross-border trade in services was unheard of. Now, courtesy of the Internet, that critical assumption has been turned inside out. There is now real-time connectivity between the knowledge content of offshore white-collar workers and parent companies in the West. That is a truly transforming event — it essentially converts many nontradables into tradables.
The result is a whole new form of competition for American workers — most difficult to address and politically very unsettling.
Meanwhile, HP CEO Carly Fiorina has an opinion piece in this morning’s WSJ urging Americans to be creative, not protectionist. She writes:
Yet spending our time building walls around America will do nothing to help us compete for the millions of new jobs being created. Instead, we must focus on developing next-generation industries and next-generation talent — in fields like biotechnology, nanotechnology and digital media distribution; around issues like IT security, mobility and manageability — that will create long-term growth and jobs here at home, while raising all of our living standards in the process.
Nice. She’s just trying to be helpful. In this political year, displaced workers reading that will, I’m sure, appreciate her suggestions — and, unfortunately, vote accordingly. Are you “next-generation talent”?
Meanwhile, elsewhere this morning, the University of Michigan’s consumer sentiment index plunged. Double dip, anyone?
A front page article in this morning’s WSJ talks about the Chinese government considering what to do about their currency and its current peg to the dollar.
Another article by Steve Liesman in the same WSJ talks about the foreign demand for US Treasurys being a primary factor in keeping US interest rates low. Foreign governments, especially Asian, have more dollars than they know what to do with so they buy US treasurys and recycle them into our economy.
What happens if China re-pegs its currency, effectively increasing the costs of its goods in dollar terms, reducing its need to recycle so many dollars? Demand weakens for US treasurys and interest rates have to go up to entice other borrowers into the mix. Feels pretty ugly.
If a company priced its services to you with two options: one price, presumably higher, based upon account servicing being handled domestically within the US and a second, presumably lower, price based upon account servicing being handled offshore, how would you vote?
Today’s American Banker has a story on legislation being considering by several states to limit offshoring — while Chris Larson, CEO of E-Loan, talks about given such a consumer choice option a try.
E-Loan plans a pilot program in its home equity unit to disclose exactly how operations are being outsourced, Mr. Larsen said. It may eventually offer a choice of a domestic or outsourced application and service processes, and he is “anxious” to see how many people actually opt out. If enough do, he said, E-Loan may offer a “straight-up” cost rundown. “If you want this domestically, it’s going to be X cost, if you want it internationally, it’s going to be Y cost.”
Reminds me of those days not so long ago when Wal-Mart used to feature goods in its stores that were “Made in the USA”. Feels like ancient history now.
The New York Times reports on the amazing story of AQ Khan, developer of Pakistan’s nuclear bomb and arms merchant to the world.
“It was an astounding transformation when you think about it, something we’ve never seen before,” said a senior American official who has reviewed the intelligence. “First, he exploits a fragmented market and develops a quite advanced nuclear arsenal. Then he throws the switch, reverses the flow and figures out how to sell the whole kit, right down to the bomb designs, to some of the world’s worst governments.”