When super-riches grow unchecked

I am so happy to see how the French economist Thomas Piketti began the New Year. After the world's leading expert on income and wealth inequality had criticised Mr. Hollande's policy, on January 1st he refused the award of the Legion d'Honneur. Mr. Piketti, who is the author "The Capital in the twenty-first century", said that "it isn't the government role to decide who is honorable". His main criticism is about the French tax policy: on the one hand, the French Prime Minister promised in 2012 a more progressive tax system. On the other hand, Mr. Hollande recently increased tax on the middle class.

As Mr. Piketti underlined in his bestseller, an apparently small gap between the return on capital and rate of growth can on the long run have powerful and destabilizing effects on the structure and dynamics of social inequality. In this perspective, the French economist wrote that a progressive tax on capital and income would be an "efficient response to the eternal problem of private capital and its return. A progressive levy on individual wealth would reassert control over capitalism in the name of the general interest while relying on the forces of private property and competition".

As mentioned in a brief article recently published by the Harward Business Review, no society should desire a class of super-rich. When super-riches grow unchecked, no one wins, not even the super-rich themselves, in the long run. Everyone possibility is stipled when the invisible line from rich to super-rich is crossed. When societies allow the rich to grow into the super-rich, they are limiting what those societies can achieve. Of course, if someone were to avoid that destructive trend about the future of economic inequality, she/he would not be the world last communist shaking her/his fist ridiculously :) 

Happy New Year.      

P.S.: the picture above shows the Conciergerie, which is a former prison in Paris, located in the west side of the "Ile de la Cité". I took the picture in 2010.

The need for new technologies

By The end of the 1990s, it has been easier to communicate through new technologies than to talk to someone in person. Many people, and young people in particular, do not seem to worry that certain types of contact disappear. They see transactions as just that with little or no need for direct human contact. And people who used to hang out together now "hang out" together online.

Actually, today's technology had cut of ourself from human interaction. One of its paradoxes is that it connects us and isolates us at the same time, and we can somehow feel less satisfied. New technologies revolution is having its effects on all of us.  

Statistics show that most people report a lack of communication and the generation coming online don't know conversation face to face. They are happy to hold conversation and transactions through WhatApp, Snapchat and Twitter. In addition, people sometimes get information through smartphone, Ipad or cellphone that they don'r really need.

As the British columnist Tony Schwartz says, information people ordinarily consume leaves they poorly nourished and still hungry and, consequently, their brains may feel overloaded and need time to clear they out. If we had a crazy busy  month at work, we would need a short vacation. But what we need most of all is a period of total digital disconnection. The greater the performance demand, the greater the need for recovery. And getting away from our job or town wouldn't be enough if we were to remain tethered to our online life. When I am on holiday I always decide not to bring my I pad or my cellphone: I soon realise how satisfying any adventure is when it is not interrupted.
I am always happy to know your point of view about this matter.     

  

2014 elections for the European Parliament

Thanks to the rise of China, India and other developing countries, Europeans feel as if they might be teetering on the edge of a serious crisis in their democracies. Illegal immigration, inequality and unemployment are still rising in the Southern side of the old continent. And while the post-2008 recession increased the ratio between South Europe's public debt and GDP to the same level it had attained in the early 1990s, Moscow prepares a further invasion of the Donestk metropolitan area after its takeover of Crimea, close to the Eastern European Union's border. Just because it isn't happening here doesn't mean it isn't happening!

Although between May 22nd and 25th the citiziens of the EU will vote in elections for the European Parliament, many Italians, Greeks and Spaniards still think that the politicians are all corrupt, nobody care and nothing can be done. That's why some alternative parties, which support an anti-European position, may do well. For instance, Nigel Farage in Britain, Marine Le Pen in France and Beppe Grillo in Italy dislike being in the European Union. They believe that there are too many people from Poland, Romania and Bulgaria in Western Europe, and that more millions will arrive thanks to the EU legal framework. It is known that many countries, such as Australia and Switzerland, have planned to impose quotas on the number of immigrants they will accept from abroad. From a demographic and economic point of view, European policy-makers would have to think about the carrying capacity of EU cities.

I'd like to know your point of view about this situation in Europe which is 

certainly interesting these days.

Solidarity among European states

In my previous post I mentioned some thoughts about unemployment in South Europe. It's a hot topic considering that we still see a catastrophic mood in Europe. According to official figures, in Europe peripheral countries youth unemployment is running above 50 per cent and credit crisis may be related to constant expectation of catatrophes that might occur tomorrow.

While European Union is dealing with the severst test in its history, this week Swiss voters narrowly approved a referendum to place new limits on foreigners living and working in Switzerland. In other words, Switzerland, which is not a part of the European Union, will not have to renegotiate agreements with the EU. Hitherto there have been few restrictions on foreign nationals moving into the country to live. In this perspective, foreign workers from the EU have been allowed to freely commute from France and Italy.

It's easy to see Switzerland's contribution to South European nations whose economies are already weakened. In addition, those countries are dealing with people fleeing from persecution and civil war. On one hand, EU directives specify that the country in which refugees arrive is the country in which the asylum procedures should be initiated and completed (for the most part Italy, Spain and France). On the other hand, Switzerland holds a referendum on whether to impose quotas on the number of immigrants it will accept from European Union countries. With regards to Switzerland's constitutional change above mentioned, I think that the deeper question is how much solidarity can and should be achieved in Europe.

Do you think that European countries should help each other overcome their economic and financial issues? In my opinion  European countries  need to seriously sit down and discuss these issues.

New markets

It is a wide perception among Europeans that Western countries  can only lose from East Asia's success in terms of growth and employment. Development in one part of the world may require lower growth in another and Europeans are worried about competition from developing countries, such as China, India and Brazil. But what are they worried about? Since 2007 German, British and Dutch export to China and India has risen steadly. German car makers and chemical companies are focused on what is going on in East Asia economies. The expansion of educational products and services has become a good opportunity for UK.
At the same time, other developing countries, such as Indonesia, Mexico and Turkey, may soon show an extraordinary growth in demand for consumer products because people, who live in those parts ot the world, may desire the same consumer goods that we all desire in Western countries. Of course, a change is always demanding, especially for those workers with narrow or manual skill. That's why most experts estimate that 2 billion people are going to be brought into the global middle class as some of the most challenging parts of East Asia and South America economies develop. Consequently, 4.9 billion people are predicted to be middle class in the world by 2030. As Jim O'Neal wrote in 2012, since a couple of years we have been seeing  Indians paying prices to go up in ski lifts in Switzerland in the summer, Chinese traders offering rewards to native Parisians to buy them Louis Vuitton bags and Tibetan street traders walking across high mountain ranges in the Himalayas using mobile telephones. 

On the other hand, some European peripheral countries situated on the edge of Mediterranean sea have been seeing their unemployment rate rising sharply since 2008. For instance, Italy's unemployment rate has risen at 12.5 % and this obviously means that Italian policy-makers have made something wrong from a political point of view. They are still predicting disaster, quite routinely, in order to justify the distruction of social security and other popular programs. At the same time, companies investing in Italy, Greece and Spain have been becoming entangled in bureaucracy, poorly drafted regulation and corruption cases. Ambiguous tax laws for investors exacerbate the challenge.
Morevover, as it is known, the current economic crisis has led many South European companies to lay off some of their employees. This explains partly why direct investments in South Europe countries have been weaker than in those parts of the world above mentioned. If South Europe coutries had a friendlier environment for investors, employment (and investment) would grow gradually.
It's much better to be open-minded and think more globally. 

(photos used with cc permission from Stefano, http://cavnero.blogspot.it/ )

Fast food companies still continue to use palm oil

While travelling abroad maybe we have seen some of the world's most popular fast food restaurants with slogans at the entrance. In recent years there have been serious accusations against these multinational companies that get a monopoly in some strategic points of the world and dominate the market by excluding others.  It is known, they serve unhealthy food, considering that palm oil is a key ingredient in many fast food dishes such as deep-fried potatoes.

For instance, the world's leading baked goods chains, "Dunkin' Domuts", provide a kind of dessert which are usually deep-fried from a flour dough. Those cakes are fried in palm oil which contains an unhealthy composition of  saturated fat. As a deduction, too much saturated fats can increase the amount of cholesterol in the blood, which can increase the risk of coronary heart desease. Actually, "Dunkin' Domuts" decision makers know that frying with palm oil is cheaper but unhealthy. But they don't care!

The most important pizza restaurant in the world, which is called "Pizza Hut" and has over 34,000 restaurants in 100 countries, also uses that unhealthy oil above mentioned for their pizzas. And the same goes for "KFC", the world's most popular chicken fast food restaurants, which serve deep-fried food and still use palm oil. In 2002, Pizza Hut, KFC and Taco Bell formed "Tricon", which later become "Yum": it is the largest food company in the world.

In addition, using palm oil is also unethical and in this perspective these multinationals companies are adding a gruesome side of  "forest destruction" with every meal: sucking out palm oil for these fast food monsters slays tropical rain forest and gives a wide contribution to the extinction of some animal species, such as sumatran tiger, asian rinoceros and pygmy elephant. Please, take a few minutes of your time to see the following website that reveals the truth about the palm industry and it's effect on the wildlife, environment and people of East Asia:  http://www.saynotopalmoil.com/ .
It is encouraging to hear that, since the second decade of the twentyfirst century, awareness among people about the unhealthy meals served by these restaurants chain has been increasing sharply. I really hope palm oil usage in food industry products will face change soon.

China's unfair advantage

In my two last posts I wrote down my thoughts about China's economy and its blooming which we've seen since the late 1990s. In most European countries we can find Chinese shops and restaurants whose goods are very cheap. It is known that China and other Asian countries, with weak enforced labour standards and poorly environmental protection laws, can export their good easily. That's why their goods are cheaper than European ones. But this is an unfair advantage in international trade. 

And while East Asian people (first of all China and India) don't control their internal carbon dioxide emissions and still continue to pollute their environs, one in three South European under 25 are unemployed and are coming of age.