Response to Greg Mankiw’s “The U.S. has a flat tax (in effect)”

I found this article to be very interesting as very few people actually pay attention to the marginal tax rate increases rather than the tax rate overall. Mankiw looks at tax rates for lower income household and for those at the top of the income distribution. He found that both are rising at similar levels and that both are affected by similar driving factors.

I believe that this is a blogger worth following as he currently teaches economics at Harvard University, and has been analysing not the large news covered by everyone else, but the details that many seem to overlook when making a decisive stance on their opinions. He argues that rather than retaining all of the complicated “taxes and transfer programs,” the US could “replace them with a flat tax” with a tax return equal to that of the overall degree of progressivity. I believe this would help ease disparity tensions as a simpler tax plan with tax cut incentives on economic progress would motivate large business owners to continuously develop and drive the economy, and  could create an “equal field of opportunity” where everyone pays the same amount of taxes.

In response to Adrian Francis’s “Risky Idea or Smart Move”

Here is another example why it is a good idea to properly understand a topic before blindly writing about it. I believe the key points of the initial article have been vastly overlooked as the point was not that Best Buy is looking to shut down stores in order to lower online prices.

The article writes about the differing views of management minimizing costs while founder Richard Schulze believes that better in-store customer experience is needed to increase revenue. Schulze’s key point of argument: Why research and buy online when you may come in-store and have an employee find a solution that best suits your needs?

Ultimately, by purchasing outstanding shares and taking the company private, Schulze would be free to make any changes he may see necessary, unhindered by the pressures of public investors. This move would initially drive up costs, but in the long run, greatly generate increased sales and revenue.

In response to Adrian’s comments that Best Buy’s strategy “would work… if you were Apple”, I believe that he has not considered Apple’s flaws which are Best Buy’s advantages. Apple sells Apple products, they do not sell HP, Dell, or Samsung, nor do they provide mobile devices, cameras, printers, monitors, and pretty much everything else you could ever want. This is the key flaw Best Buy is looking to exploit. If I wanted to buy a Macbook, I can only go to an Apple store, if I want cheaper laptop of equal – most often better – quality, then I have many options available, and Best Buy is smart in looking to develop its customer service to challenge that of Apple and overtake market dominance.

A response to Corey Wong’s “Playing to Win on the Digital Frontier”

Social media sites are a telemarketers dream come true. Every day, Facebook and Twitter must collect more information on any individual that one could collect in a year by calling. So then why haven’t investors dumped every penny they have into social media? Isn’t social media so powerful that we should be taking out mortgages on our homes to buy Facebook?

Although Corey’s analysis of why social media investment isn’t highly sought after is logical and well argued, I cannot say I fully agree. I believe the real reason for the lack of investment is that companies such as Facebook and Twitter are limited in their growth and cannot generate new ideas to make long term investment feasible. For example, the acquisition of Instagram by Facebook was valued $730 million. Is this a justifiable price for software that simply crops, and adds color effects to images? When a company is considering re-investing $730 million into their company, they generally look at the benefits that come with that investment. All I see is millions in expenses for software that turns up the exposure on my pictures, and that’s exactly what investors see as well.

This ultimately becomes the heart of the problem, what is it actually that I am buying when I put my money into Facebook? Ads? Why would I put my money into Facebook when Google also sells ad space, and is expanding into the mobile phone market? It all ends up being about growth because in Silicon Valley, if you’re not growing, you’re dying.

Oil runs the world. Nobody can dispute that.

So when recent estimates came out showing that North America may not only end its dependence on foreign oil, but begin exporting it, it is a BIG DEAL.

Why?

Because the need to import oil in order to run a country ultimately means that instead of paying local companies out on the Canadian oil sands, you are actually paying someone in the middle east. By producing large amounts of oil within North America, wealth stays within the countries, further driving forth the economy and consumer spending.
This presents Canada with the opportunity to not only strengthen the economy, but begin innovating new ways to decrease our dependence on crude oil. The International Energy Agency (IEA) estimates that approximately one-fifth of the world’s energy demand will be produced by innovative economically viable “green” energy. With reduced dependence, Canada and the US are appropriately positioned within the next decade to take lead in alternative energy innovation.

The increased production of crude oil on Canadian soil will open up opportunities to invest in innovative alternative means of energy, ultimately severing our dependence not only to foreign oil, but fossil fuels as a whole.

http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/north-america-to-be-net-exporter-of-oil-by-2030-iea-predicts/article5188639/

Battered and bruised, a flailing RIM seeks to find refuge where the novelties of the west have not yet reached. The once booming Canadian manufacturer of smartphones is on the offensive in Nigeria, where Blackberries are still the novelty must-have among youth and businessmen.

Within Africa, Nigeria is the most populous nation, with about 40 per cent of its population aged 14 and under, majority of which are fixated on owning a Blackberry. With so many local competitors and an emerging black market for Blackberry products RIM cannot afford to miss the opportunity to set up legitimate shops. I believe that Africa is RIM’s last shot at survival over the next 5 years. With continuously declining sales and massive mounting losses, the company must radically re-strategize before it is too late. By taking advantage of the growing middle class in Africa, RIM can establish itself as the local provider of phone services, and possibly expand to dominate as the largest network provider. Especially in a place like Nigeria, the price of monthly mobile phone service – with unlimited access to BBM, Facebook, and Twitter – is cheaper than regular internet access subscription.

The battle for North America is lost, and the steady decline of RIM only shows the need for change, and as the mobile world is changing rapidly, the question remains, will Africa be RIM’s last stand?

The Canadian Praries have traditionally always planted one thing: wheat. So why is it that more and more farmers are opting to plant corn?

Over the past few years, global warming has been shifting the area corn can be grown. What used to only just reach the tops of Montana and North Dakota, the corn belt is slowly extending to reach the fertile fields of Alberta, Saskatchewan, and Manitoba.

This may seem frightening to environmentalists, however from an investment perspective, this could mean some big things for Canadian agriculture. As the global population increases, the prices of staple food commodities such as corn and wheat will go up in price. This means that as the wheat and corn belts are creeping north, Canadian farmers can cash in on what was once a mostly American product, and continue to dominate the wheat industry.
This not only has farmers excited, but investors as well. The increasing land prices within central Canada have caught the eyes of international investors, however they may not all be so welcome to buy as land is seen as a natural resource. Saskatchewan has strict regulations, limiting foreign investors to only buy 10-40 acres of land. Although seemingly harsh, this may actually only strengthen the Canadian economy as investors put their money back into Canadian assets, strengthening the economic recovery.

So what does global warming mean for Canada? We may have less ice and snow, but we’ll most definitely have more food. In the end, this whole warming thing may not be such a bad thing eh?

http://www.businessweek.com/articles/2012-11-08/canadas-corn-belt-attracts-the-hot-money

Dollar stores have traditionally disappeared into the shadows of the retail industry, often being overlooked as giants such as Wal-Mart dominated majority of small-item consumer sales. However, the past few months have proved the resilience of the local dollar store. Smaller chains such as Dollarama and DollarTree have seen a boom in sales as consumers are opting to save on any expense possible.

The recent trend in consumer spending has sparked new strategies from other giants. Wal-Mart and Canadian Tire have recently ramped up promotion of “dollar deal” merchandise, and have begun stocking much more 1$, 2$, and 3$ items.

But what does this mean for consumers? I believe that the gradual shift towards more practical, lower priced merchandise is an indication of a slowly stabilizing economy. Although it would appear the consumer spending has decreased, people are simply trying to maximize their utility with what they have at this time. A move towards cheaper merchandise indicates a step away from the need to take on credit, which in turn should lower the average consumer debt load.

Ultimately, the dollar store has made a strong comeback which not only boosts the economy, but also promotes the longer term stability which is much needed during these times.

http://www.theglobeandmail.com/globe-investor/how-canadas-retailers-discounted-the-rise-of-the-dollar-store/article4596897/

Major deregulation starting in the 70’s paved the path for quick-and-easy money schemes of which securities could be traded at high risk to create a high payout. Individuals had the ability to leverage at astoundingly high rates, allowing them to multiply their profits, or riddle themselves with debt they could not account for. This created massive problems as individuals began borrowing money to pay for previous loans. The financial collapse of 2008 marked a point in modern history which proved the need for financial regulation. Yet almost 4 years later, major changes are nowhere close to being implemented.

This lack of progress is discouraging to investors who saw “economies melt away in the murky depths of a runaway derivatives markets“ in 2008. Although economic growth is still possible, market stabilization is crucial to the recovery of the economy, especially in a time when job growth is beginning to plateau and countries are on the brink of default. I believe that due to the fragile state of the world’s economy, it is important for Canada to implement these regulations to create security within the national economy from external volatility.

http://www.theglobeandmail.com/globe-investor/investment-ideas/four-years-since-the-crisis-and-safeguards-still-elude-us/article4593407/

Canada has always been renowned globally as one of the most beautiful and most livable places on earth. Recently Canada has also been named to have the most reputable economy, but does this ranking necessarily mean that we are better off? A new report made by the consultancy The Reputation Institute shows that although the Canadian economy is honest, it is not necessarily the strongest.

Although full of highly educated people and plentiful resources, the lack of venture capitalism limits Canada’s international potential as much of its many talented people often move to other countries in search of work. The only way we can expect to be competitive in a global economy is to retain our educated workforce and promote innovative growth within Canada.

Another key issue we face is the limitations of our production. Canada has traditionally been known as an exporting nation, providing the world with a range of raw materials from wood to precious metals. However, the production capabilities within the country are rather weak compared to those of China and the US, who notably did not make the list.

So what does this mean? Should Canada change its practices for higher profits? I believe that in the long run, it will be more important to have a strong economy than a weak one.

http://www.theglobeandmail.com/report-on-business/economy/canada-competes/oh-canada-do-nice-guys-finish-last/article4588913/

Since the mid 19^th century, Sudan has been a centre of genocide and crimes against humanity which have gone largely un-noticed by the western world.  This small frontier zone between the Arab and African worlds has been in a state of civil conflict for almost 23 years as the Arab  Janjaweed militia – with the support of the Sudanese army and air force – has engaged in an ethnic war against the African minorities, killing upwards of 400,00 people [1].

However, amidst all the chao, anarchy, and international sanctions, Sudan was ranked as the world’s 17^th fastest growing economy in 2006 and has consistently experienced significant GDP growth [2]  – 5.2% growth in 2009, 4.2% in 2008 – which has been fueled almost entirely by immoral trade agreements with The People’s Republic of China.

Since the discovery of oil sands in the province of Darfur, Beijing has invested “millions in [Sudanese] infrastructure” such as “building pipelines, roads, and airfields in oil producing regions” [1]. This investment assures that China can import the majority of Sudanese oil – about 80% of the nation’s yearly output, valued at more than US20$ billion – and creates a stable trading relationship in which Sudan can easily pay not only for vital food imports, but also for new Chinese military hardware [1].

Hmm… I didn’t know Sudan made mounted machine guns!

For many years, “most major oil companies [have] regarded the country as too unstable for investment” [1], but it would appear that China has successfully found a way to extract oil in hostile countries: simply supply the local genocidal regime with tanks, helicopters, machine guns and grenades!

Not only that, but China has “consistently blocked efforts at the UN” to have Sudan’s actions classed as genocide, which prevents the victims suffering in Sudan from receiving much needed protection. China’s “public position is that it abides by all UN arms embargoes” and claims it has “told Sudan’s government not to use Chinese military equipment in Darfur” [3].

In order for military action to be taken by the UN security council, all of the P-5 countries – US, UK, France, Russia, China – must all agree, otherwise one of these five may veto the proposal and impede any action to be taken.

Now although China could argue that it has not directly supported the genocide in Darfur, it’s “economic self-interest” [1] has only fueled the bloodshed. By freely selling arms to a military regime, a choice was made in Beijing that cheap oil is worth the lives of thousands of human beings.

Ultimately this becomes a question of how far companies – not only in China but also the rest of the world – are willing to go in order to maximize profits. There have been countless cases of unethical treatment of workers in huge factories to cut costs, or exporting products containing known carcinogens to unregulated countries in order to simply sell a by-product. But are we beginning to push the limits of maximization to the extent that human lives are sacrificed to save a few dollars on each barrel of oil? If we haven’t stopped destroying wild habitats in order to plant a few more acres of corn, what is there to stop us from clearing out entire human communities in order to cut costs while filling up our cars?

[1] – http://www.taipeitimes.com/News/editorials/archives/2007/04/06/2003355508

[2] – http://en.wikipedia.org/wiki/Sudan

[3] – http://news.bbc.co.uk/2/hi/7503428.stm