Mish's Global Economic Trend Analysis |
| Posted: 22 Jan 2013 02:05 PM PST To the victor, belongs the spoils. Had former French president Nicolas Sarkozy won reelection, he certainly would not be under investigation for illegally funding his campaign, nor there would be an investigation regarding his involvement in fraudulent arms sales to Pakistan. Perhaps Sarkozy wants to escape such charges, or perhaps he wants to move for tax reasons, but regardless of why, the latest political scandal is Sarkozy's plans 'to dodge new 75% French tax rate by moving to London with wife Carla and setting up £1bn private equity fund' Nicolas Sarkozy is preparing to move to London to set up a billion pounds plus investment fund, it was claimed today.France Abuzz Over Sarkozy Plans The Telegraph reports France abuzz over Nicolas Sarkozy 'London private equity fund' claim On Tuesday night, France was rife with speculation – hotly denied [Not Really - at least by Sarkozy - Mish] that Nicolas Sarkozy plans to set up a £800 million private equity fund across the Channel in London.Sarkozy Neither Confirms, Nor Denies Story Notice that Sarkozy did not confirm anything in the Mediapart article, but did not deny anything either. Minc's statement "He has a thousand contacts and hasn't made up his mind about what he wants to do" is certainly plausible. So is his statement "Nicolas Sarkozy doesn't need me to meet the world's biggest funds." Neither is a denial of anything. Evidence suggests Sarkozy is indeed planning a move to the UK, probably for multiple reasons. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Posted: 21 Jan 2013 11:52 PM PST The federal Minimum wage in the US is $7.25 per hour. Ten states have higher minimum wages with Rhode Island clocking in 50 cents higher at $7.75. Costs to the employer are higher of course, even if the employer ducks benefits by using part-time workers. For starters, employer contributions to Social Security are 6.2% of hourly wages which adds another 45 cents to employer costs. That brings employer costs up to $7.95 per hour minimum, not counting training costs, vacation (if any), sick-time disruptions, and other such costs. Of course, employers must also factor in the cost of Obamacare. Small businesses do not have to provide health-care, but under employer responsibility provisions of the affordable care act, businesses that employ more than 50 workers will pay a steep penalty in 2014 if they don't. Click on the preceding link to see a nice flow chart of the penalty process. What IF? What if companies, small or large, did not have to worry about Obamacare? What if they did not have to worry, about training, sick-leave disruptions and weather-related disruptions? What if companies only had to pay $3.00 per hour, rivaling wages in China? Meet Baxter  Baxter - The Automation Robot MIT Technology Review discusses Baxter in Small Factories Give Baxter the Robot a Cautious Once-Over. Chris Budnick, head of Vanguard Plastics, a small injection-molding operation in Southington, Connecticut is considering the use of Baxter for one process that is not yet automated: stacking and packing textured, plastic cups, which Vanguard sells for 2 cents apiece to a medical company. It currently costs Budnick $9.00 an hour to have a staffer from a temporary agency to do the job. Budnick is now considering Baxter to replace that agency job. Let's tune in to the MIT story for additional details about Baxter and the job Baxter will replace. Baxter was conceived by Rodney Brooks, the Australian roboticist and artificial-intelligence expert who left MIT to build a $22,000 humanoid robot that can easily be programmed to do simple jobs that have never been automated before.60 Minutes Discusses Baxter Inquiring minds are listening to a 13 minute video on 60 Minutes that discusses "The Age of Robots", and Baxter. Link if video does not play: 60 Minutes on Robots Please play the video. It's well worth your time. 60 Minutes Quotes and Idea
Email Exchange With Friends Here is an interesting Email exchange I had with a few friends, one of which sent me the MIT article. "Bob" writes "Buy American is a big theme with the robotics guys. My future son-in-law won't even buy his tux from a Hong Kong tailor. He refuses to buy anything from China. They view themselves as abolishing Chinese slave labor by making it uneconomic." "John" responded "What do those people then do to feed themselves?" "Bob" replied "The easy answer is that it isn't our duty or problem to keep a slave state prospering and fed. You are not going to wipe out China's slave labor overnight. If China's elite sees that its low wage slave labor will no longer reap profits, they will do what other slave masters have done: educate its people so that they can compete in an economy where there are no slave conditions." In Praise of Cheap Labor "Mish" says, I fail to see where the above line of thinking goes. We have come to a point where the minimum wage is 200% too much. How does hiring Baxter at $3.40 per hour prevent slave labor in China? Is no job better than some job? Baxter is a hugely deflationary force. Increasing the minimum wage only exacerbates the problem. Oddly enough, Paul Krugman agrees, or at least he once did before he became the "Conscience of a Liberal". Want proof? Please consider In Praise of Cheap Labor; Are Bad Jobs at Bad Wages Better than No Jobs at All? Taxing Robots Cannot Work Economist Paul Krugman and others are now pondering heavy taxes on robots. Is that the answer? How can it be? Paying more people to do nothing (or to do jobs robots can do cheaper) cannot possibly solve anything. Such practices encourage the birth of more people when there are fewer jobs to be had. Two Realities Either technology creates jobs long-term or it doesn't. I believe it does, and on that score I am an optimist (I just cannot say when it will happen). Let's assume I am wrong. Then taxing robots to meet some artificial living-wage standard can hardly be the answer. Encouraging the birth of more unneeded, unproductive people is a sure-fire way to start a major war. In either reality, Krugman is wrong. Fed Cannot Win a Fight Against Robots The problem is not that wages are too low. Rather, the problem is expenses are two high. The remedy then is certainly not higher minimum wages (which previously encouraged more outsourcing and now encourages more robots), but rather making the dollar go further. In that regard, it's a mad world in which the central bankers and the Keynesian clowns are both hell-bent on forcing wages and prices up, when every attempt to do so accelerates the use of more robots. There is nothing wrong with falling wages provided costs fall as well. Who (other than Keynesian clowns and misguided union activists) does not want lower prices? Moreover, falling prices as a result of increasing productivity over time is the natural state of affairs. For example, one farmer today produces as much goods as 100 farmers a few decades ago. Certainly the price of agricultural goods is up over that time frame, but far less than the corresponding increase in money supply and credit (the true measure of inflation). Robots an Invincible Force Central banks are powerless to stop the advance of technology. Robots in particular are an invincible force. Resistance is futile. The Fed, central banks, and governments around the globe need to embrace technology and its deflationary forces. Otherwise, the result will be a sad combination of fewer jobs, rising population, higher prices, and a ultimately a major war. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com I am hosting an economic conference in April, in Sonoma. Please click on the image below for details. "Wine Country" Economic Conference Hosted By Mish Click on Image to Learn More  |
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