Thursday, September 29, 2011

Hunting the Rich: Article in The Economist of Sept 24, 2011 talks about (middle) class warfare

Hunting the Rich: Article in The Economist of Sept 24, 2011
I think that this is quite an interesting article. For the economist to admit that there is a class war is a bold first step. For it to admit that the rich benefit relatively from spending cuts, for it to admit that the rich shift their incomes to less taxed forms, all point to an acceptance that all is not well with the system.
At the same time, I also agree that the top marginal rate needs to be inoppressive and non-confiscatory. The problem is that for years the rich have been protecting themselves with lobbied tax shelters and their effective tax rates are much lower than any marginal rate. If effective personal tax rates are made equal to marginal rates, as the economist is suggesting, matters will improve.
Corporate tax rates are another matter. Already, large corporations are growing larger into uncontrolled leviathans, bigger and more powerful than the State, and as the US financial crisis showed clearly, able to use tax payer money to bail themselves out and give their executives bonuses instead of the sack for their part in the financial crisis.
Perhaps, ceilings need to be imposed on the sizes of large corporations, as I mention in my new blog "Party for the middle classes' available on blogspot.com.
A new world order... who could have imagined that a Tunisian would have led us to this hope...a dream which we refused to dream.

Sunday, September 25, 2011

The free movement of people and the middle classes

The major problem with First world aid and transfers to the third world has been that the money and the multiplier effects occur there, while the developed world would like to see Marshall Aid type benefits occuring here.

Why doesn't it happen?

Simply because we have blocked it.

Once money goes to poor countries and some people benefit from it, these people want to spend it on imported goods and tourism. However, in the name of cultural homogeneity or in the fear of terrorism, we block out these tourists and potential immigrants.

The Marshall Plan was accompanied with ease of travel between the US and Europe. The aid to third world has been uni-directional in the benefits because those benefits have been blocked.

Immigrants need housing. Immigrants need schooling. Immigrants need legal counselling. All the markets get built and are nourished by immigrants. Block out immigrants and you block out growth. Because the existing population already has housing or will inherit. It already has education and has created systems for continuting this. It knows the laws and has participated in laying them down. Thus, if you rely on old population, you can only have a decline in aggregate demand and not growth.

Tourists are like temporary immigrants. They reward different industries. They spend and they go.

Therefore, the first thing required for European growth is to open the borders at least to affluent tourists visiting their families. As movement becomes free, ideas will flow and services will be provided to answer the needs of the new tourists.

Even this is simple to understand and implement and big business would be all for it. But what about the beggars on the street and the unemployment it creates.

This is the real problem. How can we share the new opportunities created by immigration and tourism so that middle class entrepreneurs thrive and that all is not captured by the large national chains providing cheap goods.

If the new business was evenly distributed, all can be happy. So, what is required is not redistributing money once it is earned, but redistributing opportunities for earning money.

One such method would be a cap on size.

Saturday, September 24, 2011

Big spending and the middle classes


In a recent post, I criticised Paul Krugman and his obsession for deficit financing. Yet this weekend's IHT column is interesting. I agree with Paul Krugman that on the revenue side, the rich need to be taxed more. Even the rich Warren Buffet seems to agree, but he may be a lonesome cowboy. And I agree with Paul Krugman that it has become a class war, and this is what this party for the middle classes is. A witness to total pandeminium and confusion.

On the spending side, of course, I don't agree . Is there no exception to the vice of major spending? Can public debt never do good? Well, take a lesson for the conservative middle classes. What are the constructive reasons for taking debt? A brighter future, and not a brighter present. A brigher past may let you afford the debt, but without good expected futures, you are going to whittle down your collateral. Education and property/house are two reasons why the middle class takes debt. Big government spending should also follow this logic. And this is exactly what Paul Krugman is recommending. Expenditure on education and infrastructure.

But the middle class logic is based on answering the question: Does it create a brighter future or does it create useful infrastructure for the future?

In countries where infrastructure already exists, do we need to constantly reconstruct? What are the added benefits of renewing infrastructure before its life time?
Similarly, is it necessary for people to spend thier lives in taking education that they will never use just to form a part of the reserve army of unemployed waiting at the beck and call of their rich masters. Thanks to technologies and institutional infrastructure, the rich masters don't even need to see this miserable eduated unemployed lot on the doorsteps. Thus education seems to observe the fallacy of composition: if some people can gain relatively, more unproductive education for all does not mean better jobs for all if effective demand is finally limited.

So, if we want to construct, we have to construct elsewhere where the marginal productivity of capital is not only positive but higher than the cost of capital (excuse the shortcuts in logic). We have to construct where nothing exists. We have to construct in Africa and much of Asia. Yes, we can take European material there. We can take European esthetics and make the construction beautiful, but we need to find out from the local people what they need. Not to impose our own logic of their needs. For this we need market surveys performed by our middle class researchers in conjunction with their local researchers.

This construction of a bright future for Africans will employ our middle class workers today. It will create travelling opportunities today. European Airlines will benefit. Tourism agencies will benefit. Tourism industry of the poor countries will benefit.

Similarly, we can take our educated students to take classes there. With generations of education experience inherited, this education delivery needs to be mixed with local conditions demand for what needs to be studied. Our researchers need to travel to find and document their history, their geography, their cultures in exercises conducted in collaboration with their researchers and students. All this would employ our middle class researchers in consturctive research instead of masturbating on the next growth model for a mantra which is irrelevant in this part of the world. The existing growth models are quite adequate for that part of the world, but execution is lacking for want of resources.

Part of the money would be spent there. That would create a multiplier effect there. This would reinforce their microfinance and other participatory development movements. Another part will be spent here. Don't forget this! Be useful.

Are you ready to take the lead?

Saturday, September 17, 2011

Who is middle class?


Sorry about this duplication. Will not tweet this link till I add something new.
Just wanted to separate it to remind myself that this is an important topic for a literature review.

However, the figures used by the World Class makes one wonder.... Does the world bank have any idea who are the working poor? These are people earning minimum wages. In France this could be 1365 Euros a month or about 63 Euros a day. Don't tell me these working poor are middle class? If they are lower income class, then middle class must be starting at 70 Euros a day and probably going till 400 Euros a day or 90000 Euros a month.
In India, I doubt that people will consider their maids as middle class. Their driver perhaps. So, if a full time maid is earning about Rs 3000 a month, or Rs 100 a day or $ 2 (probably $ 5 in ppp terms), then this cannot be middle class. Middle class is probably $ 4 or $ 10 in ppp terms per day. On the high end, someone earning Rs 1 lakhs a month no longer believes he's made it to the upper class. This is about Rs 4000 per day or $100 a day (more in ppp).
So, I guess we need to write our own history based as much on sociology as economic statistics.

Friday, September 16, 2011

Middle class revolution on the internet

I decided to look for middle class revolution on the internet

Found pages, many pages




The last one is particularly interesting for those who want different views (have to read through the mundane starting paragraphs first).

For the first one, I added a note
I do appreciate the views of this paper.
However, the figures used by the World Class makes one wonder.... Does the world bank have any idea who are the working poor? These are people earning minimum wages. In France this could be 1365 Euros a month or about 63 Euros a day. Don't tell me these working poor are middle class? If they are lower income class, then middle class must be starting at 70 Euros a day and probably going till 400 Euros a day or 90000 Euros a month.
In India, I doubt that people will consider their maids as middle class. Their driver perhaps. So, if a full time maid is earning about Rs 3000 a month, or Rs 100 a day or $ 2 (probably $ 5 in ppp terms), then this cannot be middle class. Middle class is probably $ 4 or $ 10 in ppp terms per day. On the high end, someone earning Rs 1 lakhs a month no longer believes he's made it to the upper class. This is about Rs 4000 per day or $100 a day (more in ppp).
So, I guess we need to write our own history based as much on sociology as economic statistics.

But I think it would be good if someone wants to participate in doing real research and finding out ways to fix the middle class lower level and upper level. After all, we don't want the stinking rich in our party.... do you want to hold your noses?

Wednesday, September 14, 2011

Anna Freeman helps the middle class lighten up poetically

Here's Anna freeman's poetry on middle classes to ennjoy.

http://www.youtube.com/watch?v=DqhBfNmLTT0

Yes, we shouldn't be taking ourselves too seriously

Yes, we should be counting our blessings.

But shouldn't everybody?

Tuesday, September 13, 2011

Bank of America lays off the middle classes

It seems that Bank of America is going to lay off 30000 middle class workers.
http://abcnews.go.com/Business/wireStory?id=14500592
Of course, some rich kids will also quit or be asked to do so, but you can imagine that solid middle class bankers will make up the bulk of this.

I'm sorry to see so many people lose jobs, probably most of them honest middle class jobs.

Perhaps those without jobs could get together and start a few cooperative banks and do some serious microlending to poor entrepreneurs. With their highly educated backgrounds they could provide advice to the poor to ensure that they succeed in their businesses and pay back. If each of these 30000 help one person a day, almost a million persons could be helped every month!!!

The problem is the banking ethics drilled into a person every day of his life is probably about cost management and helping people is not a very efficient exercise, while giving new loans is. But where has banking efficiency got you? Try the small is beatufil people centred approach.

How many people need to get together to start a cooperative bank? How do you start a cooperative bank?

Well if you liked the idea, find out  and leave a comment here so that all can gain.

Sunday, September 11, 2011

Corruption and the middle classes

The Indian Political corruption is taking tiny paces to make the image of the country compatible with its development.
Twelve years ago, a group of IIM professors got together and started publishing the criminal cases against each person standing for election.
This year, Anna Hazare's Jan Lok Pal Bill demands have been accepted: even the prime minister is not above investigation.
Corruption obviously impacts the middle classes because it is a double tax that they bear. How?
First, the reason for corruption is that in poor countries like India and many others is that the government cannot pay their employees a nice salary and so these poor government officials take to bribery. The taxes are inadequate to have enough people and certainly not enough to police the police. The only way out would be high taxes on those with sufficient income: the rich businesses. But these businesses prefer to not disclose their full income in order to lower their taxes. So, in fact the salaried middle classes (the poor are often exempt) pay high direct taxes.
Second, the rich will pay bribes from their black money or just factor it in the price of goods sold and it’s the customer who pays. But the middle classed salaried person has no black money and has no way of passing on the bribes he must pay for registering land or building a house and getting a certificate of completion.
In developed countries, there is more transparency on the practices of those who do get caught. But what percentage of ministers do get caught? What we need is a register of private fortunes of our parliamentary members before taking office and on leaving office. If this is more than their total parliamentary earnings (assuming they don't spend much), then quite a bit of Sarah Palin's accusation is right: they are making money from their positions.
This excess earning should be made available to the public before the person can seek another public office.
Would be a bit tough to monitor, but why not?

Madonna and the Middle Classes (from Evita)

(Magaldi:)
The city can be paradise for those who have the cash
The class and the connections, what you need to make a splash
The likes of you get swept up in the morning with the trash
If you were rich or middle class ...

(Eva:)
Screw the middle classes! I will never accept them!
My father's other family were middle class
And we were kept out of sight, hidden from view at his funeral.

http://www.youtube.com/watch?v=S8n6YH1BfM4

Saturday, September 10, 2011

Sharing jobs beyond the middle classes

Isnt the solution evident? If we want to share with the unemployed, we need to share today's jobs and not those from the piggy banks of our kids. Just because the previous generation did this to us, doesn't mean that we need to pass the buck to our kids. Why give jobs to people who don't want to work to produce things and services which no one really wants to buy? So we need to share our existing jobs.

The 35 hour week in France was a good experiment. Except that the implementation was watered down. There were so many excluded: the managers, the CEOs, the politicians. The excluded could work more and get richer, while the others were relegated to a cap on middle class income. Obviously, inequalities increased and only the middle classes shared the jobs with the poor.

To really make the thing work, everyone has to do his bit and work only 3.5 days a week. 3 days each and 0.5 days overlap to share what happened with the guy who is going to take our jobs! No exclusions. Yes, it has to start with the President who says the buck stops here! Not just print it behind his chair.

Two Presidents? Can it work? Why not?


Can anyone think of a better idea? There is a comment box just below.

Paul Krugman and the middle class taxed further

The problem with Paul Krugman, although he may come up with nice pieces once in a while, is that he is obsessed with government spending and deficit financing to create growth and jobs. Wonder if he can look beyond the deficit and see who will finance this deficit? Banks and not donors. Will the banks give subsidized interest rates below the risk free interest rate? No. Can banks lending to governments be considered as public deposits with zero rate of interest? Why not? A kind of compusory current account as part of the cost of doing business.
If not, why should the public be collectively taking loans which individually they would not like to do? Why should people be collectively spending on goods like arms which individually they would not like to buy? Why should our kids be paying for jobs which our neighbours don't want to do for purchasing goods and services which nobody really wants.

I'm just a public financial analyst, at best, raising questions that need to be solved by a new political party.

Sarah Palin and the middle classes

Nice piece by A Giridharadas saying that (even?) Sarah Palin has realised that 1. there is a permanet political class which is more and more removed from the general public; 2. these politicians are aligned with big business to create corporate crony capitalism, taking their cut from public spending 3. no one really cares about the public at large. Not very different from my post a few days ago: as long as the middle classes pay for the poor and the rich can keep taking thier cut, the politician is rewarded for his role.

French socialist revival: forget the middle classes?

Judging by French news media, well the socialists are going to win I guess.

Judging by Media, a Socialist conservative is ahead. Obviously, in a country where no change is considered good, we can say "No changes, read his lips."
Those who do something are turned to the pasture after five years. Those who do nothing, can get re-elected. 

Guess the middle classes will have to wait unless they move....if they find a mover.

What complicates the situation in France is the prevalence of a huge class of retired people who are totally out of tune of the reality, except that they know their rights to a nice pension.

These people have the time and the energy to participate politically and ensure that the candidate, even a young candidate, is such that their perquisites are not touched. With life expectancy increasing, little by little they are accepting small changes, but prolonging the agony of the middle classes as long as it is possible.

Halt to the taxation of middle classes

In my opinion, someone will soon form a political party to stop a culture of taxing the middle classes as the only ass that bears the burden. The last straw has fallen. They will want to shed the yoke!

If the conservatives bring a no-change agent as the political head of the country, it may no longer be acceptable.

The time has come, even Warren Buffet has understood, in naturological terms, that the big sheep must hide in the midst of a crowd of middle sized sheep. Otherwise the hungry wolves will come after them.

One such way, according to C.K. Frederick, is to start your Social Responsibility drives and create enough other rich people to be the targets of the wolves.

So, we can expect that only the most illiterate of conservatives will still try to pass on "no change" agents.

A Federal Europe and the Middle class?

Federalism: the F Word. For the last week, the IHT has been suggesting that the EU take a federal approach (instead of confederal) following the US example (and also Indian, but they don't know it I guess).
The federalism mantra is not going to solve anything except the unanimity problem.
Todays EU's problems, largely Greece, Spain and others who wer growing fast a decade ago, come from the lowering of EU subsidies to them.
To recapitulate and simplify. An Economic Union requires opening up markets. Evidently, less developed countries like Greece and Spain know their markets are going to be taken over by more developed countries such as Germany and Holland. So, the political deal is that the EU provides subsidies to agriculture and other stagnant sectors in return.
The problem is that when the EU stops providing subsidies to Greece and Spain (because now it wants to give this money to new entrants or some other reason), it does not also tell Germany and Holland that those markets are off ground.
So, Germans and Dutch continue to make money but do not continue to pay for the Greeks and Spanish.
In theory, there is a feeling that the old subsidies should have been enough for Greece and Spain to have become competitive and not need any more subsidies. But the subsidies were not given to high tech sectors. Nor given to big Spanish businesses to get German markets. So, how could they?
At the moment, with the unanimity requirement, victims such as Greece and Spain can veto any directive to rape other countries, having learnt from experience the lessons of this market colonialism. Once federalism comes in, these countries will meet the fate of Oklahoma or Lousiana. The US tough love doctrine says Vote with your feet. If your state is poor, Go to Silicon Valley or Delaware. The problem is: will Germans allow or even like this kind of mobility of labor where all the Greeks and Spanish (and the millions of immigrants waiting there .... another story, just go to Athens and see) would come to Germany and sit there selling fake French luxury items on the streets till they get a job?
Why does this concern us middle classes? The ethical thing for Germans and Dutch to do is to tax their people, hand over the money to the EU and give it to Greece and Spain to honor the prior agreement. And keep from opening new EU markets till yout think you can pay more.
The alternative solution (leaving the Greek and spanish markets) is ethically wrong because it will take these countries years or decades to reestablish their own business prowess in these fields?
So, if taxation is the only course, who should pay it? The middle class Germans, Dutch, French and so on? Or should it be big business who are in Greece and Spain and benefitting from these markets? The answer is evident. But these rich would prefer to let someone else shoulder the bill. Guess what? The middle classes get it in the middle!!! Again.


Perhpas someone will soon take political action and crete a political party for the middle classes. In the mean time they can enjoy the rape?

Luxemburg and the middle class !!!

Guess what: Luxembourg has a party for Middle Classes, Tourism and Housing. Who would have suspected? Housing for Middle Classes, Housing for Tourists: yes! But what about Toursits and Middle Classes? What is the relationship? It turns out that Middle Classes is Medium Enterprises. Lux is so business oriented, ti could not imagine that someone could imagine somthing different.....

Motivation for a Party for the Middle Classes

Hello everyone
I don't want to act politically. In fact, being a public agent, I can't do it even if I want to.
Yet faced with the political choices before us, I guess somebody has to act.
So, it has to be someone else.

I made this blog because the events of the last few months, the Arab Spring as well as the London riots have motivated us to see that when people do boldly rise, change happens. A glimmer of hope.
I would prefer that I use my talents for solving, or at least analysing, poverty and related development issues in India or Africa or South East Asia.
Unfortunately, every time I meet people and request funding, they ask me what about France?
Well if you look after France, I could go about my work. But if no one is looking at France, I guess someone has to take the lead. And so, I now have to answer their question: yes what can I do for France?
Now, don't get me wrong. I do not have anything against the current leaders or the bright kids from the French Admininstration school ENA. If this is the brightest France has got, well we have to accept our lot in life. And the lot in life is what we have today. Such is France! Well, you get what you vote for. And politically, I am not a change agent since I am a public agent. But I can offer you my analysis of the current political and economic impasse since I have been fortunate enough to receive a good education in India and France.


My analysis is that if you don't like what you have today, the next leaders are not going to be better if you pick them from the same pack. The problem is that academically and theoretically, they just don't know what to do. This is probably, in my personal opinion, the failure of their teachers. Their teachers are oudtated for this world of ICT and globalisation and new criteria of social responsibility and merit.

To understand why: take this simplistic viewpoint of a politician's role which has probably existed for at least a few centuries.

A politician's role is to keep chiefs of different tribes happy so that they live together peacefully and to ensure that people are controlled so that they don't disturb the chiefs. Sounds like Africa?
Now try this

A politician's role is to keep the super rich happy so that they don't compete with each other and destroy each other's fortune and to ensure that the middle classes and the poor are controlled so that they don't disturb the rich. For this they take from the middle class and give to the poor. Sound like Europe or USA?

Do you see the difference? Is there one?

So, the most basics of marketing would suggest we need to first raise the question of what we want? And if we want to give the people what they want, then we need to find out objectively what they want.
We don't know what they want, but they certainly don't want growth, the only mantra of the existing parties. If they wanted growth, they would be spending money and creating effective demand. If they're not doing that, they may be wanting something else. Is anyone trying to find out what they want?
Well I can tell you one more thing that the middle classes don't want: they don't want to pay any more taxes and find that the rich people are handing out small change to show their magnanimity.