1 Global integration and after (Khaleej Times) Over the past three decades, something has been going on in addition to global integration. The world’s mature economies have been piling up massive deficits – not just financial, but deficits of competitiveness: aging populations, rusting infrastructures, out-of-date education systems and antiquated regulations. Just as all emerging markets are facing the middle-income trap at once, so the developed world finds itself having to address all of its huge structural overhangs, and with great urgency, thanks to the ongoing financial crisis. The new “great game” of global competition will not wait to start play while we get our house in order. How to do that? Let me suggest three broad steps.
First, we must invest in the future. We need increased investments in areas like infrastructure, education and deep research, along with greater flexibility through smarter labour and trade regulations. Second, every player in this game needs to deliver unique value. This is something every business knows: If you want to be competitive, you have to be really good at something people value. Finally, government must become smarter, and I don’t just mean it should digitise its public services. Government is in desperate need of an infusion of modern subject-matter expertise.
What the discovery of the Western hemisphere was to the 15th century, the discovery of steam power to the 18th century and the discovery of electricity to the 19th century, the explosion of data will be to the 21st. Its economic and societal value is almost incalculable. If we seize upon this new resource, I believe future historians will look back on this moment not as a shift to lower expectations and growing gaps between haves and have-nots, but as the dawn of a new golden age of innovation, a time of widely shared economic growth and of global citizenship.
2 Procter & Gamble to cut 5,700 jobs (The New York Times) Consumer products maker Procter & Gamble plans to eliminate 5,700 jobs over the next year and a half as part of a cost-cutting plan. P&G said it hoped to save $10 billion by the end of the fiscal year ending in June 2016. The company, which is the largest of its kind, has experienced slowing sales in the US as consumers continue to spend cautiously. The company also has faced high costs for fuel, packaging and other commodities. The job cuts amount to about 10% of the company’s non-manufacturing work force. The company said that even though overall headcount will be reduced, hiring will continue in growth areas like China and in emerging markets.
3 Lloyds posts $ 4.4bn loss (The New York Times) The Lloyds Banking Group, partly owned by the British government, reported a loss for 2011 after it had to compensate some customers who were wrongly sold insurance. Lloyds said its net loss for last year was $4.4 billion. The loss resulted from a £3.2 billion provision the bank made last August after it inappropriately sold payment protection insurance, which covered customers if they were laid off or became ill. Despite the difficult economic conditions, Lloyds benefited from rising customer deposits and a reduction in its use of the wholesale funding markets.
4 Losses for three big European banks (The New York Times) Several of Europe’s largest banks provided a reminder this week of how much work remains to overcome the effects of the financial crisis that began in 2008 and the sovereign debt crisis that quickly followed. Burdened by their exposure to Greek government debt and other damaged assets, Royal Bank of Scotland, Crédit Agricole in France and Dexia, a French-Belgian bank, all reported quarterly losses.
5 For cash, Sears to sell stores (The New York Times) Sears Holdings has moved to allay fears that it could run low on cash this year, announcing plans to sell stores in transactions that the company says could raise nearly $800 million. But the deals also highlight the major challenges that Sears faces as it tries to stop a multiyear slump in its operations, analysts said. Sears may be giving up its most profitable stores in exchange for a quick cash infusion. In one of the transactions, Sears also expects current shareholders to foot the bill, potentially leaving them more exposed to the troubled retailer.
6 Isolated Syria gets fuel from Chavez (The New York Times) A day before the United Nations General Assembly voted overwhelmingly to condemn President Bashar al-Assad of Syria this month for his bloody crackdown on the uprising in his country, President Hugo Chavez of Venezuela was conducting a very different kind of diplomacy on his own. A ship owned by the Venezuelan state oil company sailed into the Syrian port of Baniyas. The ship, making its second trip to Baniyas since December, appeared to be carrying fuel to help prop up the embattled Mr. Assad. The Venezuelan shipment flies in the face of international efforts to isolate Mr. Assad and pressure him to step down. The ship is named after a slave who was a wet nurse and nanny to Simón Bolívar, the national hero, whom Mr. Chávez idolizes. A Venezuelan shipping broker said the shipment probably carried diesel and possibly other types of fuel.
7 Volkswagen profits double (BBC) Profits have more than doubled at Volkswagen after the company delivered a record number of vehicles last year. It reported net profit of 15.8bn euros ($21.2bn) for last year, compared with 7.2bn euros in 2010. It delivered more than 8.2 million vehicles, up almost 15% on 2010. VW plans to spend 62bn euros on new plants and models in the next five years, as well as on research and development. It will also hire 50,000 more staff in the next six years. The company plans to be the biggest carmaker in terms of sales and profits by 2018.
8 India a fully taxed nation (Business Standard) How much tax can you squeeze out of Indians? India’s tax-to-GDP ratio is 15% (of which the Centre’s share is 10%). Compare that with the ratio in other countries. Among economies that are poorer than India, Bangladesh has a tax-to-GDP ratio of just 8.5%, and Pakistan 10.2%. As you go up the income ladder, the tax ratio climbs because it is non-subsistence incomes that are taxed. But even richer countries have lower or comparable tax ratios. Indonesia’s, for instance, is as low as 11%, and the Philippines’ at 14.4%. A much wealthier country like Malaysia has a ratio of 15.5%, while Thailand is at 17%. All these members of the Association of Southeast Asian Nations have higher per capita incomes than India, so their capacity to bear a higher tax burden is naturally greater.
An important way of getting more tax revenue is to introduce a comprehensive goods and services tax, which will plug many loopholes. The other way is to use information networks to detect evasion. For instance, nearly half of the income tax collection comes from just two per cent of taxpayers (715,000 people who report a taxable income of Rs 8 lakh or more). Yet, household surveys show that the number in that income bracket should be twice as large. If they could be traced, imagine what it would do to tax revenue.
9 We live in a house where … (Bikram Vohra in Khaleej Times) We belong to a house where: The remote control has lost its back and the batteries keep falling off. No one switches off the TV if they cannot find the remote control. We’d rather spend hours hunting for the misplaced remote control than just walk up to the TV and press the button. The cordless phone is so cordless that it disappears into the vaguest places only to have everyone frantically searching for it by dialling that thingee number you dial to get a ring and then tracking the phone around the house.
By that token the mobile has a dead battery when it is time to take to the road…only one little bar or a blinking light. The gas cylinder runs out 45 minutes before guests are to arrive on weekend for a lunch. All our sets of sixes are fives and fours, crystal glasses, chinaware plates, even table mats and tea and coffee sets. Every inanimate object becomes animate and works on a devilish schedule. That means you will never find a pen if you have to jot down an urgent phone number, the car keys will disappear every hour, the lighter will hide itself in the most incredible places, and the book that was here just a minute ago won’t be. Two days after the house is whitewashed and pristine it is a sign for rain to fall and, sure enough, the water will leak into the walls and leave those creped patches. This is called a natural arrangement. We live in a house where: Things don’t work but we do.
10 India PM and the ‘foreign hand’ (The Wall Street Journal) Prime Minister Manmohan Singh has now joined the chorus of Indian politicians blaming the infamous “foreign hand” for, well, just about anything they don’t like. In an interview published this week in Science magazine, Mr. Singh has blamed protests against the construction of a nuclear power plant in Kudankulam, Tamil Nadu, on non-governmental organizations and singled out US ones. He didn’t say the words “foreign hand” directly, but he might as well have.
When asked whether, following the nuclear disaster in Japan’s Fukushima last year, he thought there is still room for nuclear energy in India, Mr. Singh said: “Yes, where India is concerned, yes. The thinking segment of our population certainly is supportive of nuclear energy.” The “thinking segment of our population”? Really? Mr. Singh is dismissing all people who don’t agree with him as not thinking.
As Mr. Singh surely knows, protests against nuclear power in Tamil Nadu and elsewhere in India were by no means isolated incidents. The nuclear crisis that followed Japan’s devastating earthquake and tsunami sparked a global backlash against nuclear power. The Japanese government said no new reactor would be built in the country and in Germany, the government vowed to close down all its nuclear power plants by 2022. Elsewhere, including in the United Kingdom, nuclear expansion plans have since slowed down. No thinking people there, surely.
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