When heros were not zeros

So the election is over, I’m still struggling with the reality of what candidate Romney said he’d do and what President Romney would have had to do. A couple of recent things illustrate my confusion. Much of what the republicans were doing was looking back, back to a time when America was a producer, not just a consumer. Sure things are made here now, but so much of what we consume isn’t.

Here in Austin, at yesterdays City Council meeting, a big deal was made out of the package of incentives given to Visa to set-up office in Austin. Visa claim to be brining 800 jobs to Austin with an average salary of over $110,000 and in return they are getting some $10-million in tax breaks and other financial incentives. Texas gives away the highest tax breaks of any State in the nation, this week the NY Times ran a story on this, with the winners and losers.

The other piece of news that peaked my interest this week was the news that Apple would start making its’ Mac computers in the USA again, relying on tax breaks, and likely in “partnership with with FoxConn”. We will probably never know what this actually means since all tech companies try to keep their hardware operations veiled in secerecy, given the plummeting cost of hardware, that makes even the slightest improvement in process or manufacturing, potentially worth a fortune.

And there is my dilemma. Two big deals, both dependent on tax breaks, which ultimately either require some to pay more taxes, or services to be cut. The problem I have with Candidate Romneys proposal, was that it seemed to do both. While it made great political grandstanding, to claim to cut benefits and big government, the only way it made any real sense, was if he wanted or believed he could turn America into a low wage economy at the bottom of the stack, making people work for subsistence salaries, rather than get benefits and do nothing.

You could argue either way on this politically and humanely, but it would require huge tax incentives, which would be paid for by cutting benefits and effectively forcing people to work, which many would argue, isn’t a bad thing. However, the real problem is that there is a big difference between make and assemble. Assembling products in America would be entirely do-able. Making them much less so.

And, there’s the rub. In order to make things, you need the raw materials. For the last 20-years, and especially the last 6-years, the Chinese have cornered the futures markets in almost everything you’d need to make anything useful, their futures markets themselves have become essential in day to day trading.

So, I’m guessing Apple will be doing more assembly than making, FoxConn will be doing the making. In the next 4-years the Republican party is going to have to come up with a forward looking strategy, rather than a backward looking one. If that strategy is dependent on manufacturing, then it’s going to need a big government, even if only to cover the tax breaks needed to kick-start it. We’ll need real heroes to do achieve that, not just people who measure their value by the number of zero’s in their net worth.

Fear of change

(c) gapingvoid.comReading back my Britain vs America post, I can see now that really what drives this is the fear of change.

In a big country, geographically, and by population, change is something you don’t want. It is too easy to get lost, to be left behind.

It explains a lot of the things that have been said and done during the recent US Presidential Election. People are afraid, either if the President was re-elected, or if Romney got in, that things would change.

Generally even in the less wealthy areas, among the poorer people, change is undesirable. It’s easy for the those not on benefits to see those that are, and demonize them, even if they are only marginally better off, they are afraid that the burden on the government by those on benefits will pull them down too. Those that are on benefits, see those that are not as those out to get them and take from them the only things they have. And so it goes, up the chain. The rich are fighting the tax reforms and the Presidents stated objective of “raising taxes for the rich” not because they need the money, but because they too fear change.

Everyone, in some way, is comfortable. When I went to look for a graphic to illustrate this post, I found HUGH MACLEOD @gapingvoid.com cartoon, which says it all really. America has got to learn to change, because change is inevitable.

to Tax or Not to Tax…. debt is the question

Sat watching the BBC News tonight, my heart rate raced a few beats higher as I watch the Chief Accountants from Apple, Google and Starbucks in the UK defend their accounting process which has meant they’ve largely avoided paying UK Corporation tax, and particularly the hapless public policy wonk from Amazon.com, Andrew Cecil.

I’m glad I’m not working at Google in the UK, who at least as far as their management seemed to be concerned, don’t “innovate” in the UK. oops. Interestingly I used to work with Nelson Mattos at IBM, I wonder what he thinks now?

Starbucks came in for some extra questioning since they were paying dividends to shareholders and telling them, their business in the UK was doing fine, while at the same time declaring a financial loss and using the tax scheme, appropriately to shelter their profits from that loss. The BBC News piece is here.

Margaret Hodge, who chairs the parliamentary committee, told the BBC that she thought it was right for customers to boycott the three companies.

As entertaining as this was, and at first watch/read I was inclined to agree with Margaret Hodge over a boycott. After 15-mins of reading revealed a much more open/shut case that the MP’s need to deal with, that effectively shows Ms. Hodge protestations to be little more than a magicians use of mis-direction.

It was Hodge’s peers in the Labor Government which she joined in 1994, that handed over the water industry to the private sector. Where was the rambunctious questioning, hand waving, pointing and questioning while the water industry was moving all it’s money overseas, and steadily doing a better job at avoiding tax?

Thames Water have paid shareholders handsomely, moved money offshore, and burdened their company with so much artificial debt that according to Moody’s, the credit rating agency, says they can no longer afford the debt aka investment needed to do the infrastructure projects like the new $4.1-billion Thames bypass tunnel, proposed to stop sewage draining into the River Thames.

As Will Hutton’s article in the Guardian sums it up the best, Thames Water – a private equity plaything that takes us for fools. Let’s see the politicians doing something about this, and avoiding asking the taxpayer to either underwrite, or bailout Thames Water before going after the “tech titans”, otherwise these hearings remind me of the barn door, shut after the horse has bolted.

Britain vs America

On a pure headcount basis, for talent Britain appears to beat America hands down. Of course, it doesn’t there is so much “undiscovered” talent in America. As a Brit’ abroad, I regularly get asked why either people or a certain style or culture seems to catch on and then move over to the US. Most recently this came up on Greg Wilsons’ blog in relation to electronic dance music and here is the answer I gave. It does though, in my opinion, apply to almost everything.

America is a very different place from the movies, and a massive country compared to the UK. Leaving aside the racial aspect to dance music, and from the 1970’s the fact it was heavily tied to the gay scene; and the disco is dead revolt of the late 1970’s, all of which made it much harder for dance music to get heard.

America is a culture, where the country is massive and they only way to succeed, largely, is to associate with established clubs/cults. You dress, think and act like them, and to succeed, you are then the best amongst them. This applys in across both geographic and societal barriers.

There are almost no national media outlets, even today, those that are have to pander to the masses, or fail. People, music etc. that are out of the norm’ are mostly excluded, even the extremes are pretty normal and/or manufactured rather than organic. News travels slow.

Compare that to the UK, the country is VERY (geographically) small, people live next to each other, on top of each other, in close proximity.  All media, for the most part is national, news travels fast. Something that catches on in the UK only has to be 1/100th as popular as the USA, or even less.

In the UK, different is celebrated, not shunned. Add to that a more tolerant sexual society, a less racial society, and a more progressive music industry where change makes money, not controlling interests protecting their investment. Dance music came along, it caught on with a small crowd, it was celebrated, successful and grew in the UK, after a while each generation moves on, my daughter(29) now bemoans the state of dance music, much as I did back in the 1980’s, but it will carry on.

The same thing happens here in the USA, but they are complaining and comparing the AOR music from 1980/90’s while EDM has captured the youth market because the music business no longer controls the distribution channels in the same way.

Death Panels open in US Health Insurance

Americans were frightened out of a single payer, medical health care system similar to one in operation in many countries using a number of tactics, including by using the term “death panel”. Sarah Palin, who claimed “proposed legislation would create a “death panel” of bureaucrats who would decide whether Americans—such as her elderly parents or child with Down syndrome—were worthy of medical care.”

Palins claim was totally debunked by fact check organizations, and it was named 2009 “Lie of the year” by Politifact.

So a federal or national health care system, or single payer system passed into history and we ended up with whats become known as Obamacare.

As an executive, who is divorced, and has no dependents, I have the best medical plan available through my employer, it comes with an EXPRESS SCRIPTS prescription plan. Recently they started sending out communications on the changes for the 2013 plan. It included a word I’d never before heard “formulary“.

My formulary letter
Express Scripts

In essence, what it is is major aspect of what Sarah Palin referred to as a death panel. Express Scripts tries in its communication to pass it off as an employer choice. They write “Medications not on [insert employer name here] formulary will remain available, but you will pay full price for them.” (highlighting theirs).

This is EXACTLY what happens with the UK NHS Prescriptions. You pay a flat charge of £7.65 approximately, $12. Thats pretty much all drugs, except mostly untested, unapproved ones. Many of the long term sick and unemployed get exemptions from the charge. We though have a copay, no one is exempted from the copay, and it varies from drug to drug.

Express Scripts list though is pretty short in total, the good news is it does include viagra and cialis. So, with none of the real benefits, we’ve got death panels by the back door.

How about calling it the USSR?

image

Interesting reading in the Moscow Times today. Every article is either about the government, laws, or people in the government. This article discusses the price the Ukraine pays for natural gas from Russia, and the Russian promise that they could get beneficial pricing if they joined the Russia-dominated economic alliance. It’s a far different Russia now than it was last time I was here 20-years ago, but in many ways, some things never change.