Thursday, August 6, 2015
America on the wrong side of history; Russia bulldozes cheese mountain; Crazy-rich tech moguls
1 America on the wrong side of history (Joseph Stiglitz in The Guardian) The Third International Conference on Financing for Development recently convened in Ethiopia’s capital, Addis Ababa. The tasks that these countries are undertaking – investing in infrastructure (roads, electricity, ports, and much else), building cities that will one day be home to billions, and moving toward a green economy – are truly enormous.
At the same time, there is no shortage of money waiting to be put to productive use. Just a few years ago, Ben Bernanke, then the chairman of the US Federal Reserve Board, talked about a global savings glut. And yet investment projects with high social returns were being starved of funds. That remains true today. The problem, then as now, is that the world’s financial markets, meant to intermediate efficiently between savings and investment opportunities, instead misallocate capital and create risk.
Much has changed in the 13 years since the first International Conference on Financing for Development was held in Monterrey, Mexico, in 2002. Back then, the G7 dominated global economic policymaking; today, China is the world’s largest economy (in purchasing-power-parity terms), with savings around 50% larger than that of the US. In 2002, western financial institutions were thought to be wizards at managing risk and allocating capital; today, we see that they are wizards at market manipulation and other deceptive practices.
Today, developing countries and emerging markets say to the US and others: if you will not live up to your promises, at least get out of the way and let us create an international architecture for a global economy that works for the poor, too. When China proposed the Asian Infrastructure Investment Bank to help recycle some of the surfeit of global savings to where financing is badly needed, the US sought to torpedo the effort. President Barack Obama’s administration suffered a stinging (and highly embarrassing) defeat.
The US is also blocking the world’s path towards an international rule of law for debt and finance. The vast majority of countries have called for the creation of a framework for sovereign-debt restructuring. The US remains the major obstacle.
Developing countries and emerging markets, led by India, argued that the proper forum for discussing global tax issues was an already established group within the United Nations, the Committee of Experts on International Cooperation in Tax Matters, whose status and funding needed to be elevated. The US strongly opposed: it wanted to keep things the same as in the past, with global governance by and for the advanced countries.
New geopolitical realities demand new forms of global governance, with a greater voice for developing and emerging countries. The US prevailed in Addis, but it also showed itself to be on the wrong side of history.
2 Russia bulldozes cheese mountain (BBC) Russia has bulldozed a pile of Western-produced cheese and tonnes of other foodstuffs imported in violation of sanctions. The country has also steamrollered fruit and burnt a huge pile of bacon.
The actions come a year after Russia banned some Western food products in retaliation to EU and US sanctions applied after Moscow annexed Crimea. The destruction has caused an outcry from anti-poverty campaigners who say it should have been given to the poor.
One steamroller took an hour to crush nine tonnes of cheese. Another consignment was due to be burnt. Boxes of bacon have been incinerated. Peaches and tomatoes were also due to be crushed by tractors.
Religious leaders expressed outrage. One called the actions "insane, stupid and vile". Russia has suffered notorious famines in its recent history which saw millions starve. More than 285,000 people have backed an online petition calling on President Putin to give the food away. Food price inflation is running at around 20%.
The EU is providing aid for European exporters of dairy produce, fruit and vegetables to ease the impact of the Russian ban on those goods. The EU Commission said last week the "safety net" for Europe's dairy sector would remain in place until March 2016 and for fruit and vegetable growers until July 2016.
There have been daily road blockades by French farmers - and on Thursday similar protests erupted in Belgium. They want higher prices for their produce, saying they are struggling to stay in business.
3 Crazy-rich tech moguls (LA Times/San Francisco Chronicle) Forbes has released its World’s Richest in Tech, a list of the top 100 wealthiest individuals in the industry, with Silicon Valley leaders making up half of the top 10.
Not surprisingly, Microsoft co-founder Bill Gates, the richest person in the world, was No. 1 with a $79.6 billion net worth. He was followed by Oracle founder Larry Ellison with $50 billion and Amazon’s Jeff Bezos with $47.8 billion.
Rounding out the top 10: Facebook’s Mark Zuckerberg, Google’s Larry Page and Sergey Brin, Alibaba’s Jack Ma, Microsoft’s Steve Ballmer, Apple and Disney’s Laurene Powell Jobs and family, and Michael Dell.
Forbes noted that the top 100 are younger than the average billionaire and most likely to be American and living in California. Fifty-one of the people on the list are Americans and 33 are Asian. Just eight are Europeans and only seven are women.
Altogether, the world’s 100 richest tech billionaires are worth $842.9 billion. The average age is 53 — which Forbes said is a decade younger than the average age of all billionaires — and 15 of the top 100 are under 40.
The youngest member of the list is Snapchat co-founder and CEO Evan Spiegel, who is 25 and worth an estimated $2.1 billion. The oldest is Intel co-founder Gordon Moore, who is 86 and worth an estimated $6 billion. “Nearly all of the 100 are self-made billionaires: 94 made their own luck, three inherited their fortunes and three have inherited fortunes but have been actively expanding them,” Forbes said.