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Economics and commerce, all built from scratch.

Austerity Goes Down

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How’s that austerity workin’ for ya?  Just as sequestration takes hold here in the US, Europe is looking to go the other way, releasing more Euros (and even Pounds) in order to get things going again.  The new US “policy” of budget balancing, backed into without thinking, is now being formally abandoned by everyone else.

There is probably some kind of requirement that any blog on economics has to write about Europe every so often, even if nothing new is happening.  But today there may well be something worth writing about as the Central Banks develop the whiff of panic that has been absent so far.   As Japan becomes more urgent and the US shoots itself, Europe has some tough choices to make.  What, or better yet can, they do?

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Forbidden Fruit?

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How can a company have too much money?  If you believe hedge fund manager David Einhorn, Apple certainly does.  Many in the tech industry “view their self-importance by the size of bank accounts,” according to this Apple investor, and he’s aggressively promoting a unique way of distributing the $137B Apple cash reserve to shareholders ahead of the company’s annual meeting on 27 February.

While Apple’s attitude is on trial – in the courts, the stock market, and the media – it’s hardly an unusual position for a technology driven manufacturing company.  What is unusual is how Einhorn is approaching that pile of cash and how it is distributed.  This may be more evidence that the days of corporate raiders as we know them are over and a potential new golden era for tech companies is ahead.

Right now we still have a fight to finish before anyone can claim victory.

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Low Growth, the New Normal

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What does a future of low economic growth look like?  The Congressional Budget Office (CBO) economic forecast estimates a real growth (adjusted for inflation) of less than 2% for the foreseeable future.  We have discussed before how this pattern is likely to hold through the next generation and around the world as population growth slows and new opportunities will come only through technology improvements.

The implications are vast, if for no other reason than investing and saving for retirement are going to be very different concepts than we have come to expect.  Everything changes – and a few things may even change for the better.  It’s worth thinking through, and carefully.

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Minimum Wage

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“Let’s tie the minimum wage to the cost of living, so that it finally becomes a wage you can live on.”
– President Obama, State of the Union Address

With these words a new policy direction was announced.  It’s not a small move, especially since it’s both the biggest effort to combat the Depression since the Stimulus Act and the biggest challenge to Republicans outside of the budget negotiations (which largely go nowhere).  But for many progressives a higher minimum wage is long overdue.  Even more important, linking it to a “living wage” sets a precedent that has not been a part of policy in most of my advancing lifetime.

How does this go down?  It’s a fight we haven’t seen for a while, so it’s hard to tell.  But it’s very popular and backed by solid research as a sound public policy.  If only it went even further …

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Another Pledge Drive!

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It’s Pledge Drive time at Minnesota Public Radio!   That means one thing to me – I better get my own Pledge Drive in while I can.  It’s been two years since I tried an in-blog pledge drive, and the results were mixed. But I have to try again.

Welcome to another Barataria in-blog Pledge Drive!  There’s a survey at the end where you can tell me just what you think anonymously and easily, whether you give or not.

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