A number of high-profile investors have recently shown up here. KKR & Co., the New York-based private-equity firm, last summer bought control of a rose farm, Afriflora, for about $200 million, its first investment in Africa. Blackstone Group plans to build a $1.35 billion pipeline to bring gasoline to the capital, Addis Ababa. Hedge-fund manager Paul Tudor Jones is backing a $2 billion geothermal power project.
The investors are following in the footsteps of Irish punk rock singer turned activist Bob Geldof, whose Live Aid concerts 30 years ago this summer raised about $145 million for the victims of a devastating Ethiopian famine. Mr. Geldof now chairs 8 Miles LLP, a London-based private-equity firm that invests in Ethiopia. 8 Miles raised a $200 million fund in 2012; Mr. Geldof put in a few hundred thousand dollars. “They don’t have to die in vast numbers before we pay attention,” Mr. Geldof said in an interview. “The potential rewards in Africa are far greater than anywhere else.”
Is the middle-class economically stagnant? And is “middle-class” a misnomer? Should we really be talking about the bottom of the economic pile? After all, isn’t the 1% controlling everything?
Cato Institute Senior Fellow Alan Reynolds says the government’s claim of middle-class stagnation is based on faulty statistics. In Monday’s Wall Street Journal, Reynolds quotes Sen. Elizabeth Warren (D., Mass.), speaking at an AFL-CIO conference: “Since 1980, guess how much of the growth in income the [bottom] 90% got? Nothing. None. Zero.”
Reynolds take on this?
Real personal consumption per person has tripled since 1968 and doubled since 1980, according to the BEA. Are all those shopping malls, big box stores, car dealers and restaurants catering to only the top 10%? The question answers itself. (more…)
In a country rife with economic and social ills, Venezuela’s Catholic bishops issued a strongly-worded critique of the government during their annual conference this week. According to The Wall Street Journal:
The church has long preached reconciliation in the bitterly polarized nation. But as the oil price plummets and economic disaster threatens, the bishops clearly are losing patience. Monday’s statement recalled the 43 deaths during antigovernment protests in early 2014, the “excessive use of force” by the state against protestors, and “the detention of thousands . . . many of them still in prison today” or awaiting trial.
It has become a regular occurrence at conservative publications to note the strong correlation between traditional marriage and family and higher income levels. Take, for example, Ari Fleischer, who wrote the following in the Wall Street Journal last June:
If President Obama wants to reduce income inequality, he should focus less on redistributing income and more on fighting a major cause of modern poverty: the breakdown of the family.
He continues, “One of the differences between the haves and the have-nots is that the haves tend to marry and give birth, in that order.”
Despite my traditionalist leanings, I’ve always been a bit skeptical of these sorts of editorials. For example, contrast this with Ben Steverman’s recent article in Bloomberg:
Divorce among 50-somethings has doubled since 1990. One in five adults have never married, up from one in ten 30 years ago. In all, a majority of American adults are now single, government data show, including the mothers of two out of every five newborns.
These trends are often blamed on feminists or gay rights activists or hippies, who’ve somehow found a way to make Americans reject tradition.
But the last several years showed a different powerful force changing families: the economy.
He goes on: (more…)
Earlier this month, I wrote a two part article for the Library of Law & Liberty, critiquing the uncritical condemnation of income inequality by world religious leaders.
In part 1, I pointed out that “while the Pope, the Patriarch, the Dalai Lama, and others are right about the increase in [global income] inequality, they are wrong to conclude that this causes global poverty—the latter is demonstrably on the decline. And that, I would add, is a good thing.”
In part 2, drawing on the work of F. A. Hayek, I noted, “As societies learn to use their resources ‘more effectively and for new purposes,’ the cost of manufacturing luxury goods decreases, making them affordable to new markets of the middle class and, eventually, even for the poor.” I continue, “Such inequality not only accompanies the very economic progress that lifts the poor out of poverty, it is one essential factor that makes that progress possible.”
We may add to this two more ways in which focusing solely on income inequality can be misleading from article in the Wall Street Journal yesterday by Nicholas Eberstadt: increased equality in lifespan and education. He writes,
Given the close correspondence between life expectancy and the Gini index for age at death, we can be confident that the world-wide explosion in life expectancy over the past century has been accompanied by a monumental narrowing of world-wide differences in length of life. When a population’s life expectancy rises from 30 to 70, the Gini index drops by almost two-thirds—from well over 0.5 to well under 0.2.
This survival revolution—and the narrowing of inequalities in humanity’s life chances—is an epochal advance in the human condition. Since healthy life expectancy seems to track closely with overall life expectancy, a revolutionary reduction in health inequality may also have occurred over the past century. Improvements in global mortality for the poor have contributed to the very “economic inequality” so many now decry. This is another reason such measures can be deceiving.
The spread and distribution of education has had a similar impact. In 1950 roughly half of the world’s adults—and the overwhelming majority of the men and women from low-income regions—had never been exposed to schooling. By 2010 unschooled men and women 15 and older account for a mere one-seventh of the world’s adults, and about one-in-six from developing areas. (more…)
Last week was a busy one, news-wise, and this may have slipped by you. Suddenly, 4.5 million people in the 5 U.S. territories (American Somoa, Guam, Northern Mariana Islands, Puerto Rico and the U.S. Virgin Islands) are now exempt from Obamacare. Just like that.
What’s the story? Obamacare costs too darn much, and insurance providers were fleeing the U.S. territories, leaving many without insurance or at least affordable insurance. These territories have spent the last two years begging to get out from under this law, only to be told the Department of Health and Human Services
has no legal authority to exclude the territories” from ObamaCare. HHS said the law adopted an explicit definition of “state” that includes the territories for the purpose of the mandates and the public-health programs, and another explicit definition that excludes the territories for the purpose of the subsidies. Thus there is “no statutory authority . . . to selectively exempt the territories from certain provisions, unless specified by law.”
Laws, let us remember, are made by Congress. Unless they’re not. For instance, last week, the Department of Health and Human Services said they’d reviewed the situation and
the territories will now be governed by the “state” definition that excludes the territories for both the subsidies and now the mandates too. But the old definition will still apply for the public-health spending, so the territories will get their selective exemption after all.
As the Wall Street Journal notes, there seems to be some elasticity in the White House’s definition of “state.” And, may I add, some elasticity in the democratic process, the Constitution and rule of law. Perhaps a review via Schoolhouse Rock will help.
It seems like nowadays everyone has a connection to someone who brews their own beer. Grand Rapids recently was named Beer City because of its lively microbrewery scene so this is especially true here. While this hobby can be very enjoyable and refreshing be aware that taking your hobby to the next step could be more difficult than you would imagine. Recent regulations have made it harder than ever for new craft beers to enter into the consumer market.
Entrepreneurs are the building blocks of all economies. Every company must come from somewhere to create what they are today. This can easily be seen by looking at any company from Apple all the way to Nike. The problem is that many large companies are now being protected from competition from small businesses by unnecessary regulations. (more…)
The American Bar Association and Arizona State University’s McCain Institute and School of Politics and Global Studies have issued the first study of its kind: examining Fortune 100 companies for policies regarding human trafficking and forced labor. The study also looked at whether or not Fortune 100 companies had policies regarding conflict minerals (what are often referred to as “blood diamonds:” gems and minerals mined by children and/or forced labor.) The study is entitled, “How Do Fortune 100 Corporations Address Potential Links To Human Rights Violations In A Globally Integrated Economy?”
According to a summary in The Wall Street Journal, the study itself had a straightforward approach:
[The policies] had to be available on the company website or by searching for them on Google. The objective was to go as far as the public would in finding the company policy, said Linda Hayman, of counsel at Skadden Arps Slate Meagher & Flom LLP who is co-chair of the American Bar Association’s task force on human trafficking. It also didn’t judge the company’s conduct in relation to the policy, she said.
Much has been said about Pope Francis’ views on economics (in fact, you can read Acton’s Special Feature on this here.) In The Wall Street Journal, Cardinal Timothy Dolan of New York, discusses how the media has skewed Francis’ remarks as endorsing redistribution and denouncing capitalism. Cardinal Dolan says this is unfortunate, given what the pope has actually said. While the pope is clear that we must be generous in all our social activity, he is not denouncing capitalism.
The church believes that prosperity and earthly blessings can be a good thing, gifts from God for our well-being and the common good. It is part of human nature to work and produce, and everyone has the natural right to economic initiative and to enjoy the fruits of their labors. But abundance is for the benefit of all people.
“Most CEOs now spray the word ‘innovation’ as if it were an air freshener,” says Dennis Berman in the Wall Street Journal, “A little spritz can’t hurt.” A prime example, notes Berman, is what Kellogg’s CEO John Bryant described as one of their company’s most important “innovations”: a peanut butter Pop-Tart.
Most of us would probably agree that a new flavor of breakfast pastry isn’t as innovative as, say, the iPhone. But how do we know? What exactly is innovation?
As David Brier explains, innovation is about “seeing and connecting the dots.”