Archive for July, 2010

Arizona immigration law sparks controversy

The western US state of Arizona has enacted the toughest immigration law in the country aimed at cracking down on hundreds of thousands of undocumented immigrants. Barack Obama, the US president, has called the law “misguided” and expressed concern over possible civil rights implications. Activists say the new legislation legalises racial profiling and discrimination, and right groups have vowed to take their case to the nation’s highest courts. The new legislation is likely to reignite a national debate on the reform of the US federal immigration system, as Al Jazeera’s Monica Villamizar explains. (Apr 24, 2010)

Tea Party

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Democratic Convention Deadlock?

Please someone win the Democratic presidential nomination! Terry McAuliffe totally changed the priamry scenario for the Democrats, even to the point of denying Michigan and Florida, so that Hillary, his queen be, could have it all wrapped up on Super Tuesday. Now what Terry? What a mess you’ve created, or is it Obama’s fault?

No one know for sure just who has how many delegates because the Democratic party has the most complex and convoluted format imaginable. But, what is for sure is that Obama holds a narrow lead: anywhere from 15 to 125 delegates depending upon which way the wind is blowing for all those super delegates: who change their mind at will. The Democrats are inching closer to smelling victory in November: however, a brokered convetion this summer could kill all of that!

So,former Vice President Al Gore and a number of other senior Democrats plan to remain neutral for now in the presidential race in part to keep open the option to broker a peaceful resolution to what they fear could be a bitterly divided convention.

Democratic Party officials said that in the past week Gore and other leading Democrats had held private talks as worry mounted that the close race between Senators Barack Obama and Hillary Clinton could be decided by a group of 795 party insiders known as superdelegates. The signs that party elders are weighing whether and how to intervene reflects the extraordinary nature of the contest now and the concern among some Democrats that they not risk an internal battle that could harm the party in the general election.

The issues party leaders are grappling with include how to avoid the perception of a back-room deal that thwarts the will of millions of voters who have cast ballots in primaries and caucuses. That perception could cripple the eventual Democratic nominee’s chances of winning the presidency in November, they said.

A number of senior Democrats, including Speaker Nancy Pelosi and three candidates who have dropped out of the 2008 race, former Senator John Edwards and Senators Christopher J. Dodd and Joseph R. Biden Jr., have spoken with Mr. Gore in recent days. None have endorsed a candidate, although Ms. Pelosi made comments on Friday that were widely seen as supportive of Mr. Obama when it came to the process the party should use to make its choice of candidate.

“It would be a problem for the party if the verdict would be something different than the public has decided,” Ms. Pelosi said in an interview with Bloomberg Television. Ms. Pelosi said she intended to remain neutral, though some of her closest friends and allies in the House are publicly supporting Mr. Obama. She said the nomination should not be decided by delegates from Florida and Michigan.

Right now the best bet is that Obama wins the Wisconsin primary Tuesday, upsets Hillary in two weeks in Texas and Ohio, and the thoughts of a brokered convention doesn’t have to be a side circus. We’ll know in a little over two weeks won’t we.

ernie@lrchouston.com

Being an independent, some times both parties can really make me laugh some times. Something I have noticed the past 10-15 years is the evolution of ideas that are quite simply sad and distorted.  It’s similar to what the bible says – Stop pointing out the spec in your brothers eye and remove the plank from your own.

According to many studies and references including wikipedia, minorities often opt for the democratic party. But, historically – the republican party has done much more for major minorities improvement in their “day to day life”.

Although republicans aren’t big on providing a free ride to citizens of any ethnicity, They were founded by anti-slavery activists. In contrast, the democratic party was pro-slavery. Good ol’ Abraham Lincoln was the reason that slavery was abolished and he lead the way in fighting the democrats succeeding from the union, and he won so that all blacks could be free.  President Lincoln was one of the first republicans to really reach out to minorities. He first stopped the growth of slavery, and then cut it off by the head. After saying no more slavery would be allowed, Lincoln said in order to save the Union he would accept slavery or denounce it to save the Union. However, his initial belief was to abolish it, and he was fearful when the democratic party started to succeed from the union to keep their slaves, choosing their own prosperity over the rights of others.

The notion that republicans are racist evolved from large numbers of allegations over time. For example, just recently there have been numerous allegations of the entire republican party being racist for making border access from Mexico cease and desist.  However, The Civil Rights Act of 1964 received 20% more votes from republicans.  I want everyone to be an independent, but democrats raged about racist republicans should really look at who has protected their rights.

Let’s look at the first 3 black people placed in to major government positions. Clarence Thomas, Colin Powell, and Condi Rice. Weird.

Who is Rush Limbaughs most popular fill in? You got it, a black guy named Walter Williams. A recent study of voting patterns from Yale found out that historically    25% of republicans are more likely to vote for a black GOP hopeful if they are black, in house races white democrats are 38% less likely to vote democratic if their candidate is black. It would have been better if they decided to poll republicans and democrats evenly for the 2 different polls, but it’s still interesting data.

There was another study from a professor at Stanford on how much government largess democrats and republicans believe people deserved to be given a Katrina, and surprisingly democrats behaved in a racist fashion, yet the republican party was considered racist for not responding within 10 hours or so to organize their troops and drive in through the feet of flood water.

Often times, it seems to me that parties are very good at distorting views on issues and I am actually shocked that the democratic party ever had the gull to make these allegations.

My opinion is this, there are a going to be racists in both parties, however there are more in the democratic party – but they will never tell you that.

I am glad that the democratic party now has a black leader, but I really believe that they simply could not ignore Obama because he is probably the most eloquent speaker that American government has ever seen. He is a smart man in my opinion, I believe he is spending amazing amounts of money, and I don’t know if that is the right choice. Time will tell, I would like to be educated more about the reasons that they required so much money – but that information may be hidden to protect our economy from collapse. The fact that the government has been buying up banks since the Bush administration leads me to believe we are on the edge of collapse, and I also believe that this money being pumped in is simply an economy collapse deterrent in hope that american innovation will off-set inflation and eventually get us out of this.

When I think about the NAACP and their democratic backing, I have to think that their abbreviations stand for Never Aware About Colored Past

Joel David

FUNDAMENTALS of ECONOMICS

The Aim & Scope of Economics:

The study of economics is aimed at finding the natural law governing an economy and its scope is to find the ideal principles for the working of an economy based on those findings.

There is no such Thing as Free Lunch:

It is the most fundamental law of nature that every thing has either monetary or non-monetary value. Though generally things have both monetary and non-monetary aspects, never the less for the purpose of simplicity and understanding we only consider monetary aspect of things in economics.

INVISBILE HAND

This is the most vital as well as an extremely difficult idea to logically explain, and however absolutely impossible to mathematically prove it. Perhaps in order to understand it one needs to think beyond logic and one may comprehend it after one’s own peculiar experiences. How the invisible hand plays it role in making financial shifts among individuals, groups and even among nations can be understood by studying natural phenomenon viz., the animal world, the plant world, the rotation of the solar system, the rain, diseases, wars, natural disasters etc. Moreover the mental state of an individual changes continuously and mysteriously which affects one’s decision making and other faculties that results in changes in one’s economic/financial conditions. Uncontrollable and unpredictable invisible factors beyond human control brought financial changes.

Defining Economics:

Economics deals with the efficient management (by the individuals & entrepreneurs) of scarce resources to satisfy unlimited human wants by applying science & technology in the market.

* Efficiency can be defined as doing things in a best possible manner.

Basic Economic Problem:

Scarcity of Resources, Unlimited Wants & Choice:

It is a known fact that our resources (time, raw materials, land, human resources, machines, money etc.) are limited while our wants are unlimited and recurring therefore we have to make some choice among available alternatives to satisfy our wants.

Economic Resources:

Economic resources can be broadly divided into following four categories:

o Land & Raw Materials:

These are free gifts of nature. All things derived from nature are included in this category.

o Labor:

It consists of the contribution of human beings.

o Capital:

It consists of plant & Equipment.

o Mind/Entrepreneurial Ability:

Entrepreneurial ability refers to the ability to organize production and bear risks. Some people are more intelligent and have the gift of managing things better than others. It is due to their contribution that societies develop. Due to this reason we categorize this resource separately from labor.

Motivating Force – Self Interest:

It is the self-interest that makes us act. Here it is also very important to mention that economics cannot be separated from other fields of study. All knowledge is interrelated. Adam Smith, who has significant influence in formulating modern western economic thought, was a professor of moral philosophy, which deals with finding the ideal kind of life. It is a fact that every individual tries to gain best from his/her available resources to make one happy. It is assumed that individuals will follow his/her interest to make choice among different alternatives. It is also important to mention here that self-interest is entirely different from selfishness. As a general rule of life: “Enlightened Self Interest is the best interest”.

*Selfishness is a short term while enlightened self-interest is a long-term phenomenon.

Logic & Logical Fallacies:

All interpersonal communication is based on logic. Likewise all human knowledge, that is experiences and views of all human beings since inception, is also communicated on the base of logic. Though logic fails at very minute as well as very huge levels, still because of human limitation in our interpersonal communication we are dependant on logic. Logic can be defined as a science of correct reasoning.

o Logical Errors/Mistakes:

Here we will mention the two main fallacies of logic that makes human knowledge erroneous. They are:

§ post hoc, ergo propter hoc fallacy (association as causation)

It occurs when one incorrectly assumes that one event is the cause of another because it precedes other.

§ Fallacy of composition

It occurs when it is incorrectly assumed that what is true for each individual in isolation is also true for an entire group.

Demand & supply:

In any economy prices of goods are determined by the interaction of demand and supply. All study of economics revolves around these two fundamental concepts.

o Demand:

Demand is a relationship between price & quantity demanded of a good in a given period of time while keeping other factors like tastes, preferences, status etc. constant i.e., considering only price as a determining factor.

o Supply:

Supply is relationship between price and quantity supplied of a good in a given period of time while keeping other things constant i.e., considering only price as a determining factor.

CORE ISSUES IN ECNOMICS:

Role of Government:

The proper role of government should be as minimal as possible. For efficient management, civil society is much more important and efficient than political society.

The market, by the interaction of demand and supply, not the state, should set wages and prices. Similarly monetary policy should also be set by interaction of market forces. Taxes levied by the government should be minimal. Lower taxes would provide the fundamental incentive for the entrepreneurs and individuals to work hard and to reinvest for greater profits that would consequently raise economic activity. The role of government should be as minimal as possible so government should do only those things private citizens can’t do for themselves. The corruption level is extremely high in public enterprises and also the efficiency of public enterprises is much lower than that of private enterprises.

Government should control its expenditure and it should match expenses with revenue. Bigger government is the biggest problem. Therefore decentralization and only taking those tasks that private enterprise cannot perform; are highly desirable for efficient management.

Rules and regulations should be formulated with a view for maintaining justice among members of the society and law should be equal for all.

Tariffs and other barriers to trade should be completely abolished, gradually. Free trade can greatly and rapidly improve the general economic condition and consequently social condition of the society. In short, government governs best which governs least.

Entrepreneur & Entrepreneurship:

Entrepreneurship is a vital aspect for economic growth and development. Because of its importance this should be studied in depth. Entrepreneurs are gifted individuals who have the gift of managing resources and have keen foresight to visualize things much better than ordinary people. High growing economies provide viable environment and freedom for the entrepreneurship to grow that eventually led to the development and growth of economies.

Economic Growth:

An important element and field of study in economics is economic growth. Essentially the motive behind all economic activity is in raising the standard of living. We study that how standard of living is raised. Education plays a pivotal role in raising general standard of living in the long run. Capital formation results from prudently managing resources and by finding new ways to improve the present means of production by using new technology; that is a consequence of knowledge gained by acquiring education. Therefore capital formation is the key factor for economic growth.

Trade:

Exchange, monetary or non monetary, is an integral part of any human activity. Human exchange views/goods/services etc because they feel that they will gain by exchanging. However, in economics we are only concerned with monetary exchange of views/goods/services etc. It is wrongly assumed that our world is a zero-sum world where gain by some is loss of other. Factually and fortunately we are living in a positive sum world. If this had been the case then progress in our world would have never been possible. Never the less it does not entail that in all monetary exchanges both parties will equally gain. Moreover the value gained in an exchange between two individuals or groups can never be evaluated precisely by the third party because the value of an exchange is very different for different individuals.

Free and greater trade, free from force and coercion, would result in comparatively more fair deals and consequently the chances of greater gains by both parties are more realizable.

Factually accurate information is not fully known that results in greater imbalances from trade. As a hypothetical rule we can very easily infer that where accurate information is known both trading parties gain.

Competition:

The prevalence of competition in the filed of economics in world is universal, because of scarce resources and innumerous and recurring wants. Where competition has negative implications, it has also positive implications. It is the element of competition that drives different individuals to excel from others, which results in greater discoveries, technological advancements and pursuit for finding new ways to earn greater profits that consequently raise general prosperity level in the world. It is unethical aspects of competition where some individuals initiate force and fraud that causes violence in the society. Competition can never be eliminated from any society; rather any attempt to eliminate competition would result in regression and more violence. Therefore, check should only be imposed on negative effects of competition.

Cooperation:

For the efficient management of the resources (time, skills, natural etc) human need to cooperate to make optimal use of these resources. Moreover most of the natural resources need to be transformed for use and to make them valuable. Groups need to cooperate to be successful. Cooperation juxtaposed with positive competition is an ideal combination for efficiency.

Specialization & Comparative Advantage:

Natural inequality among humans is a fact of life. Economics aims at efficient management; therefore to make best use of human resources different individuals specializes in those particular fields in which they can be better than others because of their natural abilities. Due to this reason some individuals have comparative advantage over others.

Information:

Information is very important for making informed rational decisions. However accurate information is impossible by any individual because of the human mind, because every human being is unique, and also due to unpredictable future. Information about market behavior is extremely diverse and ubiquitous. Therefore it is not possible for any individual to accrue the available information and our decisions about future at best are mere estimate with enormous possibilities.

Profit & Loss:

The expectant and prevailing profit and loss are the determining factors for the investments. It provides the criteria for the goods and services to be produced. Where in the short run demand of the products is the primary factor in stimulating the investment trends, profit or loss is the litmus test for products produced in the long run.

Trade Off:

It’s a general principle that in order to gain something one needs to loose something. The most important resource for an individual, time is limited. Therefore no one can do all the things oneself, so a rational individual focuses one’s time on those tasks where one can perform best. However it is quite impossible to precisely quantify the time one put in some particular activity is equal to the forgone activity/activities. Nonetheless for the purpose of understanding this concept economists assume that the price of engaging in some activity is equal to the cost of the other activity/activities one has forgone.

Price Theory:

Demand for and supply of products determines their prices in the market. It is wrongly asserted by the majority of the people that cost of goods determines the prices of the product. In actuality it is the marketing activities of the producers and the perception of the consumers about the products that determine the prices of the products. As a general rule higher the prices lower will be the demand and vice versa. However in some cases due to the nature of the product and the marketing efforts of the producers higher prices lead to higher demand.

Causality — Cause & Effect:

Despite limitations of logic, causality is the most important phenomenon in understanding economic theory and practice. Excluding mega-microscopic and mega-macroscopic phenomenon, every cause has some effect and that effect is a cause of some other effect ad infinitum. Due to this cause and effect relationship in a world of numerous individuals and groups their actions has great impact on other elements in the economy. Despite the complexity of this relationship that is also chaotic, understanding this relationship can help enormously in making good estimates about the future and to form comparatively sound opinions about the market trends.

Labor Economics:

In this field we study that how wages are determined. Like all other markets the wages are set by the interaction of demand and supply. Higher wages can only be achieved by greater investment and economic activity in the long run. Employment and unemployment are also the key issues that we study in this field. Ups and downs in the economy are the facts that cannot be avoided. Higher consumption level asks for greater capital investments that will raise general wage level and results in lower unemployment.

Uncertainty:

No one knows the future. It’s the fear of future that is an integral part of our lives and also an impetus for human activity. This factor of uncertainty gave birth to the idea of risk. There is always degree of risk in all human activities. As a general rule: “higher the risk, higher the reward”. Uncertainty is also nature’s law of rewarding and punishing the human actions. Moreover it is also a way of nature of teaching

and making known new ideas to the new participants and making room for the new and efficient members.

Public Finance:

The filed of public finance is directly related with role of government. Bigger the government, larger the funds are needed to finance it. The accountability principle is of pivotal importance in public enterprises because the ownership of these enterprises has no personal owners. Moreover, fund should be received from those who get benefits from that service.

Money & Banking:

Banking in an economy is the determining factor for gauging its performance. Money is the medium of exchange that facilitates transactions among participants of an economy. Banks play the role of intermediaries. Interest rates and value of currency with relation to other international currencies is set by central banks. However ideally it is best that market forces of demand and supply determine them.

Consumption & Saving:

Raising the consumption level is key factor to all economic activities for reducing costs, creating employment, raising standard of living and eliminating poverty.

On the other hand, raising consumption greatly can result in undue depletion of resources in a given market and cause inflation. If this situation prolongs that would result in recession to depression. Therefore a sagacious policy of moderation is the ideal combination.

Marketing:

Marketing is the key for stimulating demand and consequently enhancing economic activity. Entrepreneurs have the sharp ability of marketing to understand the economic environment and knowing the customer demand ahead of time and finding new segments that would consequently raise general standard of living.

Cost & Production:

Every thing entails cost. Finding the best methods to produce goods at minimum possible cost is essential for firms to earn profits and compete successfully.

Technology:

Technology makes the difference between the present age and the previous one. The problems faced by humans in all times are quite similar yet the technology of their respective eras determines the mode of production as well as way of living. Technology is of utmost importance for understanding economics because by applying it we enormously reduce costs and even reach new markets that could not have been possible with out technology. Moreover it raises standard of living by simplifying the complex tasks.

Poverty:

The problem of poverty is the focal point in the field of economics. Ignorance is the main cause of poverty. The best way to eradicate poverty is by spreading knowledge.

(Lahore, Nov 16, 2003)

Parties seek more money from the taxpayer but there will always be tight constraints on this source of funding. The obvious source of big money is rich donors and corporations. But such donors are not usually motivated by generosity. They want to see a return. Political parties in a number of countries now accept large donations on the condition that the donor can be identified. Some have also banned donations from abroad. For officials who are tempted to evade rules on party funding the current punishments hardly act as disincentive. Yves Marie Doublet says, where there are controls on party finance the sanctions are usually toothless. In some countries punishments are as little as being banned from political office for two years.

Scandals erupted throughout Europe. The Elf Aquitaine affair spread from France to Germany when it was revealed President Mitterrand provided slush funds that were passed onto their allies at the Christian Democratic Union. The former German CDU Chancellor, Helmut Kohl, escaped prosecution in March 2001 although he accepted $1m in illegal political donations for the CDU when he was in office. Instead Kohl paid a fine of $142,000 admitting that he had broken the rules on the funding of political parties but rejected accusations that he accepted donations in return for political favors. For receiving dubious funds worth a total of DM12m the CDU was separately heavily fined some DM 18million. The scandal delivered a blow to Germany national self-image. No longer could it be seen as a country considered largely free of ingrained corruption.

In Britain, despite reforms during the mid 1990s, the Labor Government which came to power in 1997 has suffered repeated problems over political donations despite promises of transparency. As early as 1997 Labor faced allegations of sleaze after it was revealed that one major election donor had later managed to negotiate with the government an exception to a new law. Bernie Ecclestone, the millionaire head of Formula One Racing, had donated £1million to the party in the run up to the election. Then Ecclestone had also negotiated with the new government an exemption for Formula One Racing from the banning of tobacco advertising in sport. The Labor government argued that the two events were unrelated, though it subsequently returned the money. Labor continued to be dogged by allegations. The Hinduja Brothers, who run their international business mainly from London, have been accused of buying access to politicians with donations. The situation was exacerbated when members of the family were questioned by the Indian Police in connection with the Bofors guns for bribe

Parties seek more money from the taxpayer but there will always be tight constraints on this source of funding. The obvious source of big money is rich donors and corporations. But such donors are not usually motivated by generosity. They want to see a return. Political parties in a number of countries now accept large donations on the condition that the donor can be identified. Some have also banned donations from abroad. For officials who are tempted to evade rules on party funding the current punishments hardly act as disincentive. Yves Marie Doublet says, where there are controls on party finance the sanctions are usually toothless. In some countries punishments are as little as being banned from political office for two years.

In Dublin in March 2001 journalists watching from the street saw Liam Lawlor light a bonfire in his back garden to burn confidential financial documents. Mr Lawlor, a member of Ireland governing Fianna Fail party, had just spent a week in Mountjoy Prison for refusing to co-operate with the Flood Tribunal. The TD is alleged to be at the centre of a vast web of bribery and backhanders involving politicians, councilors, property developers, planners and accountants going back 20 years.

President Clinton pardon of sanction buster Marc Rich in the last moments of his administration also caused public and media outrage. Marc Rich wife Denise Rich had made large donations to Democratic Party funds and for the Clinton library project.

In the USA, concern has focused recently on campaign financing. “Effective political campaigns have always been fuelled by money as well as ideas. But in recent years, the cost of running for Congress and the Presidency has soared to record heights. For many candidates, raising money is no longer one important issues, it is the only issue,” says John S Weston, Chairman of the Committee for Economic Development Research and Policy committee, introducing a statement calling for radical reform of campaign finance laws in the US. In this policy statement, the Trustees of CED makes a strong case for sweeping reforms that will restore trust and balance to the campaign finance system, while protecting the first amendment rights of candidates and contributors.

In the US the average candidate for Congress spends $3.8m on their campaign while the average House of Representatives candidate spends $500,000. Personal wealth is becoming a key requirement for effective candidacy. Of particular concern were ‘soft money’ donations that are exempted from the Federal Laws on political donations yet are beneficial to candidates. In 1998 the US national party committees raised $201m, a record for a midterm election: The Republicans raised 112% more than in 1994 and the Democrats 89% more. The parties use this money for such activities as party building, candidate-specific issue ads, and voter registration and turnout drives. Much of this money was raised from contributions from individuals or organizations that could afford $100,000 or more.

There are continuing attempts to reform the US system. In March 2001 the Senate began a debate on overhaul of the nation campaign finance laws, with critics likening the current system to a ‘money laundering’ operation that exchanges cash for influence, while its defenders argued that the prescribed cure would violate free-speech rights and endanger political parties.

Two Senators have proposed a bill to reform the US laws on political donations. At the core of the McCain-Feingold bill is a ban on unlimited ‘soft money’ contributions to political parties from corporations, unions and wealthy individuals. These donations have run from $100,000 upwards and have often been associated with pressure on politicians for favors in return.

But it is not all bad news. “Scandinavian countries seem to be doing the best, judging by their relative lack of scandals. Strong party loyalty? Parties make the decision on candidates for office and provide funding for campaigns? Enables countries such as Sweden to publicly finance parties and steer clear of scandal. Abuses are also no – existent in part because Scandinavian countries start with a high level of consensus on propriety and a low tolerance for corruption. These values carry over into the campaign finance. Yet Scandinavia and Canada almost prove to be the exceptions.

The Hinduja affair in London has cost one Cabinet Minister, Peter Mandelson, his job and damaged the reputation of another Minister, Keith Vaz.

The Republicans are in trouble in the 2008 Presidential election. John McCain is the nominee for a political party that has lost its brand identity. In fact, public opinion polls show that McCain is only competitive with Barack Obama because of his history of independence from the Republican Party mainstream.

The problem that the Republican Party has is that its voting base is just plain tired of the same old politics inside the Washington beltway. They are fed up with the ever increasing gasoline prices at the pump to fill their cars. They are shocked at the rise of the price of oil to heat their homes and the lack of proper planning to end the war in Iraq. Indeed, every voter is weary of the ongoing partisanship and corruption that permeates Washington, D.C.

In 2008, in every public opinion poll, an overwhelming majority across the United States feel that the country is heading in the wrong direction. The voter does not want politics as usual, they want new ideas and attractive candidates who think of ways to improve government process. The voter desires smart, honest, reform candidates that can think outside of the box and are not trapped in the beltway mindset of the status quo. Indeed, the voter wants government managers not just a career campaign manager interested in the next political election.

It is with this background that John McCain will soon make his selection for Vice President on the 2008 Republican ticket for the fall election. In general, the Republican Party is in need of a candidate with a young, vibrant, fresh approach. The Party needs someone with integrity and intelligence. The person needs to be a manager with a vision and an ideological purpose. So, here is the speech announcing his selection of the Republican Vice Presidential nominee that John McCain should consider making at the Republican National Convention in August 2008.

” I am honored today to announce my selection of Vice President. The man whom I have chosen will make an excellent running mate for me in the 2008 Presidential election. In addition, I have no doubt that he will become an important leader in the Republican Party of the future. The man I have chosen as a running mate is a graduate of Brown University. He has received a Masters degree from New College, Oxford and graduated as a Rhodes Scholar. In the private sector, he has worked for McKinsey and Company, a consulting firm, where he advised many of the large Fortune 500 companies.

He was put in charge of Louisiana’s state hospitals and health department at the early age of 27. He then served as executive director of the National Bipartisan Commission on the Future of Medicare and was named assistant secretary of Health and Human Services for planning and evaluation under George W. Bush.

The man I have chosen is the highest elected Indian American in the nation and its youngest serving governor. He is the son of Indian immigrants. He has been chosen by Scholastic Update magazine as “one of America’s top 10 extraordinary young people for the next millennium.” In addition, he was India Abroad’s Person of the Year in 2005.

He served in the United States House of Representatives before his election as the Governor of Louisiana last year. Immediately after his election, he established a new era of integrity in state government through the passage of legislation that promotes ethics reform. This man also understands first hand the limitations of a large federal government bureaucracy while using his experience from the private sector to promote solutions to government problems that require fresh new ideas.

It is certainly a testament to his success and integrity that he currently enjoys an approval rating of over 70% as the Governor of the state of Louisiana. Ladies and Gentlemen, my choice for Vice President of the United States for the 2008 Republican ticket is Louisiana’s distinguished Governor, Bobby Jindal.”

There are many qualified people who could be selected to run as Vice President on the Republican ticket. There are politically safe choices and some that would probably bring more immediate strategic value. However, the selection of Bobby Jindal would be an excellent choice for the Republican Party as it looks to its future. It is a party that needs to rebuild a brand identity that should endorse integrity and ethics, creative thinking, intelligence, efficient management, limited government, low taxes, and reform. The selection of the Louisiana Governor for Vice President would signal that the Republican Party was serious in the creation of such an identity. Indeed, Bobby Jindal would be a Republican Vice President for the next generation.

James William Smith has worked in Senior management positions for some of the largest Financial Services firms in the United States for the last twenty five years. He has also provided business consulting support for insurance organizations and start up businesses. Visit his website at http://www.eWorldvu.com

Economic Liberalisation Reforms and Growth

                                                       CHAPTER 1
INTRODUCTION AND THEORETICAL BACKGROUND

Economists through out the world are searching for what really are the major determinants of growth of an economy and different policies have been used in pursuit of the answers. The world as large has gone through a lot of economic problems, such as depressions of 1930s, 1970s and 1980s. The 1930 depression led to employing of the Keynesian policies of strict government intervention. However, the 1970s depression made policy makers lose faith in Keynesian economics. Nevertheless, most Third World countries continued with their central planning type of economic policies. There was strong disenchantment with this type of policies, which led growing number of economists and influential international development organisations to begin, in recent years, to advocate the increased use of the market mechanism that is to liberalise the markets, as the key instrument of promoting greater efficiency. In this regard economic liberalisation implies minimisation of government intervention in allocating economic resources and letting the market forces play the cardinal role, doing away with all forms of government distortions in running the economy. The market forces should play a leading role in financial, trade, labour, commodity markets and other sectors, increasing reliance in market forces is normally accompanied by stabilisation programs, (Krueger 1978,1985).


        There has been an increasing call for the private sector to take up the challenges of national development. According to Robert Barro (1996), most empirical facts point to primacy of government choices; countries that have pursued broadly free market policies, in particular trade liberalisation and maintenance of secure property rights, have experienced higher growth, than those which pursue central planning type of policies. For this reason, there have been calls for the privatisation programs.


  On the other hand Rodrik, (1992) argues that trade reforms is frequently met with scepticism on the part of the private sector and may lack support, the country implementing them suffers from terms of trade deterioration which may result into reduction of capital inflow and increase capital flights. He goes on to say that this is coupled with inflation and low zero growth. Krueger (1978) points out that to avoid this, appropriate macroeconomic policies need to accompany the increase in price of foreign exchange (devaluation), or else domestic inflation would soar and affect the intended benefits of liberalisation. That is why stabilisation programs, such as reduction in government expenditures, accompany liberalisation by cutting on government consumption, which is often negatively related to the growth of an economy.


         However Wha Lee (1993)’s findings in the case of Korea are very interesting, Korea gave subsidies to some firms manufacturing exports, managed to grow faster. He argues that the theoretical predictions about the link between growth and open trade may be ambiguous and misleading. According to critics, tariffs can either enhance or decrease growth rates, depending on which sector is protected. This is the argument of infant industry. Krueger (1985) notes that LDCs have been protecting infant industries for decades, but they have still remained infants; this is an indication that there is something wrong with the economics of protectionism. Nevertheless Wha Lee (1993) notes that since the current theory of liberalisation is inconclusive, as is the empirical evidence, the link between trade policy and dynamic efficiency is vague, depending on the industry considered.


Kirkpatrick (1995) argues that the orthodox arguments concerning the role of trade policy as the determinant of industrial performance are seen in the major role of creating price incentives. This is because liberalisation and a neutral incentives structure between import substituting and export activities is expected to yield both static and dynamic effects, static in form of technical efficiency and dynamic in the form of switching process. However, many models, both for planning and explaining the development process, according to Krueger (1978), have made a foreign exchange central to determination of the growth rates. This focus is on the role of foreign exchange (forex) in complementing domestic savings needed to support domestic investment. The effect on economic growth will be via an increased volume of exports and reduced imports due to liberalisation and devaluation respectively. It is argued that if trading partners removed tariffs, we expect the market to expand which will ultimately lead to growth of exports. Exports are also viewed as a stimulus to greater capacity utilisation, greater horizontal specialisation, increased familiarity with absorption of new technologies transmitted through trade, greater learning by doing, as a result of the increased market size and output levels and stimulation effects of having to achieve international price and quality. Expanded market economies of scale enable a producer to cast or spread a “net” widely on various consumers who may be helpful by sending back comments on how to improve the quality of the products. Since tariffs tend to be reactionary, if a country adopt liberalisation policies, its trading partners will also do away with tariffs the moment one country scraps trade restrictions, so the market size will expand.


           However, Trade liberalisation alone is not an answer. For this to be successful, there is a need to liberalise the financial sector, so that exporters can have ready capital for re-investment; nuisance taxes have to go, so that most of the foreign exchange earnings are retained by the exporters. This creates incentives to them. Macroeconomic stabilisation also has to be enforced so that inflation will not impede planning, and if this creates confidence in investors, exports should increase.


 Pro-liberalisation economists have argued that more open economies are more efficient in absorbing exogenously generated innovations, since, without barriers, not only will this increase the volumes of essential imports, but it will also facilitate the entry of new technology which developing countries are able to absorb and assimilate easily in order to expand their manufacturing base. Edwards (1992), finds strong evidence supporting the hypothesis that, with other things being equal, more liberal economies tend to grow faster than those which are not. He calls this learning by doing type of process, “technical progress ” where more contact with new commodities and technology enhances efficiency, which result in higher production. He argues that if the rate of technical progress is positively affected by the gap between the stock of the world and domestic knowledge with respect to the foreign source of technological improvement, then the country’s ability to appropriate world technical innovations depends positively on the degree of economic trade liberalisation. Therefore more open economies have an advantage of absorbing new ideas from the rest of the world. He finds that countries with more open and less distortive trade policies have tended to grow faster than those with more restrictive commercial policies. His results are in conformity with the catch up theory effect. Wha Lee (1992), points out that international trade is perceived as a vehicle through which foreign inputs are provided to domestic production. According to him trade distortions caused by tariffs and exchange rate controls decrease the long run growth rates more significantly in a country that needs to import more.


            Therefore, it can be summarised that liberalisation enhances international trade which provides comparative advantage and also provides an additional source of competition to domestic firms. Subsidies to ailing industries, no matter how much they may alleviate economic distress in the short run, represent an effort to decelerate growth, reduce incentives for mobility and lock in resources in the inefficient industries that should contract in the process of economic growth.


 However, there is a problem of measuring the benefits of trade liberalisation, which even Kirkpatrick (1995) acknowledged. Kirkpatrick admits that measuring of trade liberalisation benefits is a difficult and frustrating task. It involves two considerable methodological problems; it is important to assess the extent to which the World Bank’s conditions have been adopted. This is because most of the liberalisation policies of LDCs are not unilaterally adopted, but imposed, and therefore may lack consistency. The other problem is the assessment of the reforms that were implemented. It is complicated by problems of separating causality from association. According to him, it is difficulty to establish counter factual, and separating out the effect of multiple influences on economic performance.


             Larry Sjaastad (1982) noted that the economic liberalisation that swept Southern cone during the 1970s and 1980s was a clear reaction to the failures of preceding economics of protectionism. Uruguay and Argentina, once prosperous nations had fallen on hard times by the mid 1970s. Real per capita income in Uruguay had been declining at a rate of 1 percent in 20 years. Chile, though never a prosperous country, was crippled with a continuos fiscal deficit and an inflation of 1000 percent. Their economies were characterised by inefficient state enterprises, which despite massive tariff protection, regularly required subsidies to sustain their operating loses. Price controls, tariffs, subsidies and export taxes severely distorted relative prices with much of the private enterprises devoted to production of luxury goods. Regulatory bodies administered import duties and quotas, interest rates, credit allocation and wages. The monetary and financial sectors were dominated by the state banks with special rediscount privileges at the central bank. Their economies were in a bad state. Therefore all these countries introduced liberalisation programmes in the1980s, but their results were disastrous. The Southern cone experiences, according to Sjaastad (1982) are widely interpreted as evidence of the failure of economic liberalisation.


Zambia like Argentina, Uruguay and Chile had almost the same type of economic policies, with nationalised economy before the liberalisation program which swept the country in 1991. Its economy was characterised by inefficient state enterprises with massive tariff protection in order to enhance import substitution industries. Price controls, nuisance custom duties, subsidies on production and consumption, export taxes, foreign exchange controls. Private enterprises had to declare all their export earnings to the central bank, as it was illegal to hold forex. Zambia, before privatisation and liberalisation, had regulatory bodies to administer import quotas, interest rates, credit allocation and wages. All the macroeconomic factors were determined by political decree. The monetary and financial arenas were dominated by the state banks, with special rediscount privileges to the Bank of Zambia. According to the advocates of the liberal markets, poor rates of growth, massive inflation and balance of payment problems experienced by LDCs, and Zambia in particular, during the 1970s and 1980s were because of the rising burden of public spending through parastatal companies, excessive price distortion and inward looking trade policies which are the order of the day in the planned economy.


       Zambia today, according to the World Bank Report (December, 1997), has the most liberal and least nationalised economy in Africa. In 1991, more than 80 percent of the economy measured as a percentage of GDP was state owned. Now, as at 1997, more than 80 percent of the economy is in private hands. The one party state, which ruled Zambia since independence in 1964 from the British, chose the path of nationalisation and centralisation. According to the World Bank report (Dec., 1997), this was ruinous. The government and international organisations such as the World Bank and IMF believe that macroeconomic stability and growth are being achieved after years of inflation and decades of stagnation. According to them, the foundation for higher growth have been laid by liberalising the markets, broad tax and tariff reforms, financial sector reforms and by privatising the state enterprises. The key element in the government’s programme has been the reduction of inflation, which has fallen from 200 percent in 1990 to 20 percent in 1997. This helped the GDP to grow by 6.4 percent in 1996/7 period.


         This dissertation investigates whether there are genuine reasons behind economic liberalisation and related austerity measures, using Zambia as the case study, by describing and comparing its economic performance before and after liberalisation. We then use panel data and cross-section regression analysis on selected African countries to see if the econometric analysis results support the calls for liberalisation measures.  The dissertation is organised as follows Chapter 1 has provided introduction and theoretical background to economic liberalisation. In chapter 2, Zambia’s detailed account of its pre-liberalisation economic policies is presented. Chapter 3 looks at post-liberalisation economic policies of the country. Chapter 4 presents econometric analysis and empirical results, and Chapter 5 concludes the findings.  It should be borne in mind that this study is not about the direct measurement of the effects of liberalisation policies on economic performance. This is due to the problems cited by Kirkpatrick (1995) and the unavailability of many of the data required for undertaking a more detailed study of the country.


                                   CHAPTER 2


THE PRE-LIBERALISATION ECONOMIC POLICIES OF ZAMBIA


          Zambia’s economic history traces back to the colonial era. Zambia a former British colony was known as Northern Rhodesia. The British’s main emphasis was the mining of copper, which they exported as a raw material. Zambia obtained independence on 24 October 1964 with an economy characterised by an industrial enclave based on copper mining using British and USA capital (Hawkins, 1991). During this time there was little or no significant investment apart from the mining sector, and before independence most of the copper profits were expatriated and very little was re-invested. However, in the first years of independence 1964-69 the economy unfolded and great progress was recorded (Turok, 1979). The country had a GDP per capita that was amongst the highest in Africa; according to Turok, 1979, it was just below that of South Africa. Copper prices were high and the industry was profitable, so every indication was towards rapid growth and development. The economy was more of a capitalist than a state led.


2.1-Post-Independence Economic Reforms


          Few years after independence in 1968 and 1969, President Kaunda, with the then ruling United Nation Independence Party (UNIP), initiated reforms. According to him, this was to lead state control of the whole economy to enhance growth and equal distribution of income. It was also aimed at empowering the indigenous people to control and decide the destiny of their country’s economy. This was characterised by developmentalist philosophy (command economy) and recognition of political realities (Turok, 1979).


          The 1968 and 1969 Mulungushi and Matero economic reforms were meant to repossess the foreign economic and business interests, which now became under the state control. The UNIP government also introduced indigenous import substitutions in the industrial sector, this was aimed at reduction in the dependence on foreign manufactured goods. Although a small indigenous and foreign private sector was left, a large public sector was created and maintained by copper revenue and protected and supported by government controlled markets. As a result of the state controlled type of the economy, which emphasised the creation of industrial capacity, commercial agriculture perished and the private sector was crowded out.


          According to Turok(1979), it is commonly accepted that the weaknesses of the economy, which levelled off in 1972 and then began declining, cannot be solely blamed on the falling copper prices, though this might have been one of the contributing factors. This is because, even by 1974 before the collapse of copper prices, foreign exchange had started posing a serious constraint on economic development. A major explanation lies in the economic policies of the day. Despite its inheritance of highly concentrated and buoyant foreign owned mining enclave, the Zambian government was determined to use the state for development. The state sector share of manufacturing output was growing almost every year. Four years after Mulungushi reforms in 1968, in which the government announced its acquisition of major companies it was 53 percent of total manufacturing output and this was concentrated on essential consumer goods required by Zambia. However, despite its size and scope, the state sector which included parastatals had not established an integrated economy with forward and backward linkages, parastatals, though they were import substitution industries (ISI) deeply depended on essential inputs from abroad. The government intervened extensively and imposed a number of restrictions on the private sector, while parastatals’ decisions were made by political leaders and ministers who sat on their boards. The parastatals were to be organised on lines of the country’s philosophy of ‘Humanism’, which was coined by the President as an African socialism. There was intervention in pricing policy, which seemed to be concerned more with social welfare than with pursuing economic development goals.


In 1970, barely two years after the Mulungushi and Matero reforms capital expenditure was only growing at a marginal increase, while consumption expenditure soared. Table 2.1 shows the higher government consumption and lower gross domestic consumption from 1964-90. Due to little emphasis which was made on capital expenditure, in 1973, value added in manufacturing recorded only a marginal increase from 106 Million Kwacha to only 107.5 Million Kwacha in 1976, compared to 480 Million Kwacha in 1965 a year after independence (GRZ Economic Report, 1977). Value added by manufacturing in 1978 real terms was 15 percent lower than 1974. Hence by the mid 1970s, the bells of economic doom were loud enough in politicians’ ears, but pretended to be deaf. They instead nurtured and guarded the inefficient parastatals and the command economy. To make the situation worse, some more parastatals were created and added to the list of inefficiency. After 1970, a substantial part of Zambia’s economy was dominated by parastatal organisation, about 60 percent of the economy in terms of GDP was now in parastatal hands. Most larger companies which had been run and owned by foreigners came under government control through Industrial Development Corporation (INDECO), an agency of a government holding company.


These newly nationalised companies were especially active in such industries as food processing, textiles, auto assembly and mining. Through large- scale capitalisation, using copper revenue, these parastatals became the pillar of the Zambian formal sector. They employed 1/3 of the workforce and maintained their employment levels even during the recession, for political reasons. For instance during recession, the number of employees in private manufacturing fell from 27,370 to 23,390 in 1977, about 14.5 percent reductions, while in the parastatals they remained constant over the same period (Turok, 1979). In these parastatal bodies there were rampant and continuing reports of corruption, inefficiency and mismanagement, but government decided to give it a deaf ear. The Kayope Commission (1976), revealed catastrophic failures in major parastatals and widespread misappropriation of funds, but still the government shelved the report, and continued to give subsidies and protection to these inefficient parastatals.  Real Gross domestic fixed investment declined as there was no significant capital formation. The emphasis was put on government consumption while the economy continued   to decline. This can be seen in the decrease in capital expenditure which fell in 1979 to its lowest since independence in 1964 as Table 2.1 shows. This shows that INDECO, on which the government relied as agency of intervention was performing poorly.


 At independence, Zambia’s economy had poor foundation, domestic production supplied less than one third of the local market for manufactured goods, while total manufacturing goods accounted for only 6 percent, the same setting continued even 10 years after independence, domestic economy was not integrated lacking forward and backward linkages. In trying to enhance domestic integration the government after its 1968 Mulungushi and 1969 Matero economic reforms bought out the private share holders in INDECO which was established in 1965, but reinforced after these reforms, and obtained a larger share of profits from copper by means of higher taxation, which was then used for public investment.






TABLE 2.1: GOVERNMENT CONSUMPTION IN COMPARISON TO GROSS DOMESTIC FIXED INVESTMENT 1964-90 (IN KWACHA MILLION)


   Year              Government consumption                     Gross domestic fixed 


                                                                                             investment

1964

309.2

76.2

1965

383.4

120.4

1966

435.8

175.8

1967

558

225.8

1968

594

264.7

1969

589.4

253.6

1970

717.5

279.8

1971

801.9

264.7

1972

857.3

381.1

1973

900.7

426

1974

1083.1

560

1975

1241.8

510

1976

1337

483

1977

1547.8

437

1978

1789.3

450

1979

2045.6

65.8

1980

2473.5

566

 

 

Andhra Political News – JAN 02 2009

www.AndhraRajakeeyam.com – Pawal Kayna Padaytara in telangana Ponnala response on Miniters resignation and pawan kalyan Chnadrababu and Chirnajeevi response on ZTPC results Commite in yallampally Response on ZPTC elections Marappa Response on ZPTC election defeat Posani Krishna Murali

Ofcourse its fathomable that people all over are curious to learn  the facts about newly elected US president Obama.The masses wish to know where was barack obama born, what nationality is barack obama (duh)? whether obama birth certificate paobama birth certificate forgery obama fake birth certificate are indeed situated on reality or just semipolitical mudslinging? They want to see supreme court obama birth certificate attesting to his true citizenship? Barack obama age old beliefs and extra-curricullar involvements in the past? The citizenry want to decipher other records of obama, voting records,religion or is barack obama muslim as it is rumored? Obama-Antichrist-Nostradamus( some people forcibly are attempting to make those connections),Comparisons between Obama-Kennedy-Reagan. Obama gun control upcoming policies for the US etc.

It may possibly not shock you that much that there have been large demands for memorabilia such as Barack Obama wallpaper, barack obama cartoons, obama tax calculator as a way perhaps for the supporters to have an emotional contact- barack obama. You can see that support and adulation in many barak obama web internet sites, where not only his info is available but about Michelle Obama biographical information? How tall is michelle obama? The Michelle Obama election night dress are also of vast interest to women and fashionistas  wide! Some not so fitting searches are also being typed on the internet searching for michelle obama nude pictures? I can not and will not get into that today but let me just post some key facts about barack obama background on this article.

President Barack Obama Biography:
1961 – at the age of 25 Barack Obama Senior senior and Ann Dunham married in Honolulu, Hawaii. August 4,1961, Barack Hussein Obama II was born in Hawaii.

1963- Barack Obama senior is received at Harvard University. He departs from his family and child to live in Massachusetts.

1967 – Ann Dunham aged 25 at the time encounters Lolo Soetoro from Indonesia at the University of Hawaii, and later on they decide to get married the same year. They also decided to move to Lolo’s hometown in Jakarta indonesia while the lttle Obama goes to school there in the following few years.

1971 – Just Barack Obama, mother was left in Indonesia and he decides to live with his grandparents in the original Obama birthplace (in Hawaii) to attend the prestigious Punahou School.

1979 – Obama graduates from Punahou School and relocates to Los Angeles to study college (liberal arts) at Occidental College

1981 – Obama enrolls in Columbia University to learn Political Science. Hes presently 20 at this time, and is inhabiting in new york.

1983 – He starts working at Business International Corporation after graduation from Columbia.

1985 – At Present 24 years old, he decides to move to Chicago. He becomes a director of DCP, or  Developing Communities Project.

1988 – He travels back to Massachusetts and begin studying at Harvard Law school. He becomes the first black editor of the Harvard Law Review and subsequently on became the president of the Harvard Law Review. He also worked at various Chicago law firms where he ran into his wife Michelle.

1991 – At Present 30 years old, graduates with Juris Doctor, magna cum laude from Harvard Law school. He is tendered a fellowship at the University of Chicago Law school. During this year Obama marries Michelle.

1992 – Now teaching Constitutional law at the University of Chicago Law school. During this time he served as civil rights litigation lawyer while functioning in the board of directors for divers philanthropy organizations.

1995 – He publishes his first volume, Dreams of my father.

1996 – He is elected to the Illinois State Senate. He’s presently 35 years old at the time.

2004 – Makes-up his mind to run for the U.S. Senate and won over a 52% of the votes.

2005- He is sworn to  the US Senate. He was  44 years old at this time.

2006 – His following volume, The Audacity of Hope gets printed.

2008 – Declares his candidacy for president of the United States, acquires the party nomination versus Hillary Clinton.  he wins the 44th US presidential  constituting him the 1st Black-American president of the United States of America.

CLICK HERE to find out about the man, the US president, Barack Obama

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