Carpe Diem

India’s Global Reach; Its “Carpe Diem” Moment

From Fortune Magazine’s article “India’s Global Reach“:

Once sheltered from overseas competition by a government fearful of foreign domination, Indian companies now are building global empires with impressive speed, ramping up exports, striking cross-border corporate alliances, snapping up firms in the U.S., Europe, and emerging markets, and attracting billions in foreign portfolio capital to India.

India’s largest IT-services companies, which count on foreign customers for more than 90% of sales, remain at the vanguard of India’s outward expansion. In little more than a decade, firms like Wipro, Infosys Technologies, and Tata Consultancy Services have evolved from niche players handling basic debugging projects for foreign multinationals into giants in their own right, with operations in every major foreign market, tens of thousands of employees, and equity valuations in the tens of billions of dollars.

From the same issue of Fortune, an article “Google Goes To India“:

Google’s experiment in replicating its Silicon Valley workplace indulgences and luring back the Indian talent that helped fuel the dot-com boom in the U.S. is a deliberate strategy. This is not outsourcing in the usual sense of seeking cheaper labor. Rather, it’s a brain drain in reverse.

Google chose Bangalore in 2004 as the site of its first R&D center outside the U.S., says Sukhinder Singh Cassidy, who heads Google’s Asia operations from the company’s Mountain View, Calif., headquarters, in part “because so many Googlers who are Indian want to move back to India and participate in India’s growth.”

There may be no Chinese or Russians in these offices. But there is a wide range of diversity nonetheless. These Googlers aren’t just Indians. They’re Sikhs, Hindus, Muslims, Buddhists, Christians, and Jains. As the cream of India’s talent crop, they speak English, but they also speak Hindi, Tamil, Bengali, Telugu, and several more of India’s 22 officially recognized languages. “In the U.S., because you live in a fairly segregated society, you have to do something explicit to build diversity,” Ram says. “We don’t.”

MP: It’s “Carpe Diem” time in India.

Carpe Diem

The “Silver Tsunami” of Retiring Baby Boomers

WASHINGTON (Reuters)Retired school teacher Kathleen Casey-Kirschling on October 15 became the first ripple in a “silver tsunami” of retiring baby boomers applying for pension benefits that threatens to overwhelm U.S. government finances.

Casey-Kirschling was born one second after midnight on January 1, 1946, and will receive her first Social Security check in February 2008 as the first wave of baby boomers turns 62 next year and becomes eligible for early retirement benefits.

Social Security Commissioner Michael Astrue said the agency is bracing for some 80 million Americans to apply for retirement benefits over the next two decades.

The unsustainable pyramid/Ponzi scheme is starting to crumble…
Carpe Diem

A Lesson in Lower Healthcare Costs from the UK?

Here’s something the U.S. can learn from the U.K. about lowering healthcare costs, improving efficiency and increasing access:

Allow pharmacists to dispense certain drugs without a prescription from a physician? The Food and Drug Administration is inviting comment on just such a proposal. The idea is to add a new class of “behind the counter” drugs that consumers could buy after consultation with a pharmacist.

Other countries, including Britain, already use this system to dispense drugs that do not require sophisticated diagnosis and prescription.

Continue reading here.

Carpe Diem

Inconvenient Truth: Global Warming Saves Lives

Global warming was blamed for 35,000 deaths in Europe’s August 2003 heat wave. Cold, however, has caused 25,000 deaths a year recently in England and Wales–47,000 in each winter from 1998 to 2000. In Europe, cold kills more than seven times as many as heat does. Worldwide, moderate warming will, on balance, save more lives than it will cost–by a 9-to-1 ratio in China and India. So, if substantially cutting carbon dioxide reverses warming, that will mean a large net loss of life globally.

~From George Will’s Column “An Inconvenient Price

George Will applies some common sense, solid economic thinking, and cost-benefit analysis to global warming, and concludes that efforts to battle global warming by reducing human greenhouse gas emissions, such as those endorsed by Al Gore, could probably be accomplished, but at what price? Probably at a very costly and inconvenient price far greater than any benefits.

Will concludes “If nations concert to impose antiwarming measures commensurate with the hyperbole about the danger, the damage to global economic growth could cause in this century more preventable death and suffering than was caused in the last century by Hitler, Stalin, Mao and Pol Pot combined. Nobel Peace Prize, indeed.”

Carpe Diem

Masonomics: “Markets Fail. Use Markets.”

Arnold Kling describes “Masonomics” (the economic approach of the George Mason University Department of Economics) this way:

At the University of Chicago, economists lean to the right of the economics profession. They are known for saying, in effect, “Markets work well. Use the market.”
At MIT and other bastions of mainstream economics, most economists are to the left of center but to the right of the academic community as a whole. These economists are known for saying, in effect, “Markets fail. Use government.”
Masonomics says, “Markets fail. Use markets.”
I’m down with that.

Carpe Diem

Meet The New Farm Bill, Same As the Old Farm Bill

From today’s Washington Post: “This was the year the antiquated and expensive farm subsidy program was to be reformed. A growing chorus has turned against the $16 billion annual subsidy, and yet the 2007 farm bill is pretty much the same as previous versions.”

What’s wrong with farm subsidies and who’s against them? Here’s a list from the Post article:

1.Most of the farm subsidies go to 150,000 big corporate farms rather than the small farmers for whom the program was designed during the Depression, further hastening the death of the small family farm.

2. Major business lobbies, including numerous Fortune 500 companies, have attacked the farm bill because it is blocking a multibillion-dollar global trade deal.

3. International charities oppose farm subsidies in the U.S. because they undermine poor foreign farmers, who can’t compete against subsidized American crops.

4. Environmentalists want the program changed because it rewards farmers who are among the nation’s biggest water polluters.

5. Parents worried about obese children, and the growing cult of foodies — from celebrity chefs to urbanites newly addicted to full-flavored tomatoes — made impassioned pleas for the money to go toward local and organic produce.

6. Surging prices for corn, milk and other commodities have raised farmers’ incomes and undercut arguments about the need for this expensive income transfer.

In other words, just about everybody is against farm subsidies in general and the 2007 farm bill in particular.

So who’s in favor of farm subsidies? The “Iron Triangle” of: a) rich corporate farmers harvesting cash subsidies and addicted to the lucrative D.C.-style pork, b) the pork-pushing politicians catering to a well-organized special interest group in return for votes and contributions, and c) the bureaucrats at the Department of Agriculture whose jobs depend on distibuting the pork to the pork addicts.

And why doesn’t this change? It’s a perfect example of the “tyranny of the status quo.”

Masonomics would explain it this way: “Governments do not face competitive pressure. They are immune from the “creative destruction” of entrepreneurial innovation. In the market, ineffective firms go out of business. In government, ineffective programs develop powerful constituent groups with a stake in their perpetuation.”

Carpe Diem

The Narrowing and Often Disappearing Pay Gap

From today’s NYTimes Business Section article “For Women, a Slow Narrowing of the Pay Gap“:

“In 1979, women working full time made only 63 percent as much pay as men, according to data compiled by the Bureau of Labor Statistics. Now working women make 81 percent as much as men (see chart above). What is the reason for the disparity? Discrimination? Choices that women and men have made? That is not entirely clear.”

Tables 1 and 4 of the original BLS report used by the NY Times helps to answer some of the questions posed above:

1. Controlling for marital status, and looking only at those workers who have “never married,” the BLS reports that women earned 93.8% of what men earned in 2006 for full-time workers and 98.6% for part-time workers.

2. For workers in the 25-34 year old category, female earnings are 88.2% of male earnings.

A 2005 NBER study also helps answer the NY Times’ questions:

“There is no gender gap in wages among men and women with similar family roles. Comparing the wage gap between women and men ages 35-43 who have never married and never had a child, we find a small observed gap in favor of women, which becomes insignificant after accounting for differences in skills and job and workplace characteristics.”

Carpe Diem

Top Ten Signs the U.S. Economy is Healthy

1. Almost all mortgages are not in default.

2. Almost all workers in the labor force who care to work are not unemployed.

3. The largest percentage ever of American household units own their own homes.

4. The stock market, in both absolute terms (the number on the Dow) and relative terms (the relationship of price to earnings), reflects optimism and an extraordinary, robust level of profits.

5. The spread between the interest rate paid on risk-free Treasury issues and on the Merrill Lynch master junk-bond index is far, far less than it was in the dark days of the tech meltdown from 2000 to 2002. This is a sign of less than horrific fear about high-risk debt.

6. For all but the least qualified buyers, mortgage money is plentiful, and in fact the potential borrower is bombarded with offers.

7. Hotels are full.

8. Airplanes are full.

9. Casinos in Las Vegas are jam-packed.

10. There is still a long waiting list for Bentleys in Beverly Hills.

~From Ben Stein’s article in today’s NY Times Business Section, “The Gloomsayers Should Look Up

Carpe Diem

Capitalism and Markets: Enablers of Civilization

Quote of the Day, related to the post below about the rising middle class in India:

When markets and human values work together, the gains are immense. The market economy and capitalism are among the greatest enablers of civilization. Our lives are comfortable instead of wracked with hard physical labor, chronic malnutrition, and massive losses of women and babies during childbirth, to cite just a few features or earlier times.

Imagine a time traveler from the eighteenth century visiting the life of Bill Gates. He would witness television, automobiles, refrigerators, central heating, antibiotics, plentiful food, flush toilets, cell phones, personal computers, and affordable air travel, among other remarkable benefits. But the most impressive features of Gates’s life, from a historical point of view, are shared by most middle-class Americans today.

~From George Mason economist Tyler Cowen’s book “The Inner Economist”