President Obama’s mission to increase foreign direct investment without changing any tax laws or regulations, or anything else of consequence, and instead instructing cabinet members to be better salesman, is a consummate Chicago move.
A few years ago, when Chicago Cubs manager Dusty Baker was confronted with the observation that his incredibly valuable starting rotation was worn out, he refused to countenance the idea that ridiculously high pitch counts were to blame. Instead, he averred, his pitchers were tired because of video games and a penchant for walking off the mound between pitches.
Were their arms — and the team’s hopes of reaching a World Series that decade — ruined because of Madden ’03 and a predilection for mound peregrinations? Oh, absolutely, just as it is clear that foreign companies will line up to invest in the U.S. once Gary Locke visits and tells them about this hidden gem of a country they might not have heard about called the United States.
This article originally appeared in National Review Online on October 12th, 2011.
For the third time in the last four months, the World Federation of Exchanges reported a significant gain in world stock market capitalization for the month of October, with a $2.5 trillion increase that pushed the total value of world stocks to $52.7 trillion (see chart). The October increase follows strong gains of $2.7 trillion in July and $3.8 trillion in September (and a slight decline of $0.50 trillion in August), for a cumulative four-month gain of $8.5 trillion from July-October, one of the largest four-month gains ever for world stock market value.
From the cyclical low of $26.6 trillion in February 2009, the total value of world stock markets has almost doubled to $52.7 trillion last month, and provides further evidence of a worldwide economic recovery and global bull market rally.
This originally appeared on Carpe Diem on November 28, 2010.
SHANGHAI (WSJ) -- "China's domestic auto market could reach sales of more than 17 million vehicles this year and 19 million next year, said a senior General Motors Co. executive, outpacing home-market sales for several Western auto brands . The sales forecasts are up sharply from the 13.7 million vehicles that auto makers sold in China last year (see chart) as the country's auto market grew about 50% to surpass the U.S. as the world's biggest."
1. Daimler expects Chinese consumers to become the biggest buyers of Mercedes Benz cars in the next three to five years.
2. Volkswagen AG's Audi unit expects its sales in China to surpass German sales next year.
3. GM's sales in China will surpass that of its parent company in the U.S. according to GM's Kevin Wale (source)."
MP: We hear a lot about how because of corporate greed and trade with countries like China, we end up "shipping U.S. jobs overseas." (Q: How exactly are jobs packaged and shipped from the U.S. to China or other countries, i.e. which shipping method is used to send jobs overseas: air freight, containers by ship, or ??)
The story above illustrates how trade with China benefits the U.S. and creates jobs in the U.S. for GM workers. But by selling more cars in China than in the U.S. this year, doesn't that mean that China is "shipping jobs overseas to the U.S.?" And by buying so many Mercedes, Audis and Volkswagens in China, doesn't that mean that China is "shipping jobs overseas to Germany?"Don't all those brand new Buicks, Mercedes and Audis sold in China make the Chinese people worse off?
This post originally appeared on Carpe Diem.
According to the World Federation of Exchanges, a Paris-based association of 52 stock exchanges around the world, the world stock market capitalization reached more than $50 trillion in September, the highest monthly value in 26 months, since July 2008. That was an increase of almost $4 trillion (and 8.2%) compared to the $46.4 trillion value of global equities in August, and a $10 trillion increase since September of last year. Compared to the cyclical low of $26.6 trillion in February 2009 from the effects of the financial crisis and global economic slowdown, the world stock market capitalization has now almost doubled to $50.2 trillion last month, a gain of 89% in the last 19 months.
A lot of the growth in world equity values over the last year has been driven by strong returns in the emerging markets (17.5% overall for the MSCI Emerging Markets Index), with especially strong returns over the last 12 months in countries like Chile (53%), Colombia (48%), Turkey (44%), Thailand (43.5%), Indonesia (39%), Philippines (29%) and India (27.5%). In contrast, developed markets have underperformed the emerging markets over the last year, with returns of 3.3% for Europe, 10% for North America and 4.4% for the Pacific region.
This strong rebound in global equity valuation to a 26-month high in September of $50 trillion is evidence that the world economies are making a gradual comeback from the 2008-2009 recession and financial crisis, and also means the chances of a global-based double-dip recession are fading away.
See Scott Grannis' related post "Global Equities Mark a Post-Recession High."
This originally appeared on Carpe Diem.
In a desperate attempt to salvage their 77-seat majority in the U.S. House, Democrats are reaching into their grab bag of scare tactics to persuade voters that trade is responsible for the nation’s 9.6 percent unemployment rate.
The problem is, as usual, that the politicians have it all wrong. Trade isn’t the culprit of our current economic malaise; it is the antiquated and uncompetitive tax system that fear-mongering pols have been peddling for decades.
According to a new study by Professor William Melick of Kenyon College in Ohio, reforming our destructive corporate income tax would put the U.S. back on the path to prosperity. Ohio, for instance, is currently burdened with a 10.3 percent unemployment rate and stagnant economic growth. This poor record stems mainly from tax policies that discourage exports and job creation.
The U.S. currently has the second highest corporate tax rate in the nation, trailing only Japan, a country that is committed to lowering its tax burden. Some detractors immediately panic when economists broach the idea of lowering taxes for corporations, but middle-class workers stand to benefit just as much as corporations from tax reform.
According to the non-partisan Congressional Budget Office, middle-class workers bore the burden of 70 cents out of each dollar of corporate income tax. One reason for this impact is because the U.S. is the only country that engages in the destructive practice of “Worldwide Taxation.”
For Ohio, this means that if Akron-based Goodyear sells tires in South Korea, then Goodyear is forced to pay taxes in South Korea and the U.S. If a Canadian corporation sells tires in South Korea, they pay only the South Korean levy of 20 percent, or half the current U.S. tax rate.
This is a severe handicap for U.S. corporations and U.S. workers. The response of our elected leaders is anything but innovative. Some seek to convince our neighbors to raise taxes. However, over the past twenty years, every country in the developed world has reduced its corporate tax rate, except for the U.S. of course.
Going forward, there are some proposals that could boost exports abroad and increase employment at home. One promising proposal would increase tax deferral for corporations. For example, the U.S. tax on foreign earnings is “deferred” until the income is returned to the U.S. Former Clinton economist Dr. Laura Tyson estimated that increased deferrals could create as many as 425,000 jobs. Proposals to eliminate tax deferrals would obviously have the opposite effect.
Professor Melick estimated that the elimination of tax deferral could lower employment in Ohio by more than 11,000 jobs. For perspective, private sector job growth in Ohio was a mere 2,100 from June to July this year.
Often unseen, tax policy is the tail that wags America’s economic engine. As much as politicians demagogue trade and corporations, conducting business with the world’s other 6.5 billion customers is vital to our prosperity. Just ask Youngstown, Ohio. There, exports account for 20 percent of total economic activity.
Deterring trade and increasing taxes on American companies that do business overseas won’t create jobs for politicians desperate to see employment rolls grow. If Democrats continue to rely on the stick rather than the carrot, the only job they’ll waste bloated rhetoric on will be their own.