Mapping What Every State In America Is Best At

Company towns used to be a defining feature of the American economy. Nowadays, as Raul at HowMuch.net notes, thanks to globalization and offshoring, it is much harder to find employers that exert such influence over a small town (with a few notable exceptions).

That being said, specific industries still tend to grow in clusters and can dominate the economy of a particular region. To understand this new reality, we mapped the most important industries by state according to the U.S. Bureau of Economic Analysis, which takes into account an industry’s collective output as a percentage of the overall GDP. For simplicity, we excluded government jobs and real estate.

The result is one of the easiest snapshots of the U.S. economy you will ever find.

Source: HowMuch.net

The government groups companies into particular industries using the North American Industry Classification System (NAICS). Basically, someone looks at a company and decides where it belongs on a list of industries. This is more complex than it sounds, especially if a parent company holds many different unrelated subsidiaries (like Amazon), or when a business model strides the line between different industries (anyone care to debate if Airbnb is a technology company or in the hospitality industry?). We simply generated a color-coded map of the results of this debate.

You can immediately see some interesting groupings in the map.

 Computer & electronics companies dominate the West Coast, oil & gas remains ascendant in the Southwest, and insurance companies take the greatest market share in the Upper Midwest.

Take a look at the deep South, where you see a lot of red signifying the ambulatory healthcare services industry. This single industry dominates in 13 different states. Think about the Fortune 500 companies headquartered in these places, and it’s pretty easy to understand why these industries are so important. For example, Apple, Facebook, and Google are all headquartered in Silicon Valley in California.

Things tend to be much more diverse across the Northeast, where you see many different industries all grouped together. This is also easy to explain: it’s one of the most population-dense places in the country and it has the smallest states in terms of geography. This environment lets a lot of different industries grow together.

Factory towns may be a thing of the past, but it remains true today that similar businesses tend to grow and expand in areas with the same economic conditions.

This is true for less populous states like North Dakota and places with big cities too, like Colorado. If you’re looking for a job in one of these states, then our list gives you a good idea of where the biggest opportunities might be.

 

China Trade Data Beats As Crude Demand Surges (Ahead Of Maintenance)

Thanks to a 13% surge in crude imports (as refiners prepare for maintenance season), China"s trade surplus hit its highest since Jan (though -4% YoY). Imports (+14.8% YoY) and Exports (+8.7% YoY) both beat expectations.

China’s overseas shipments accelerated in May from a year earlier, as Bloomberg suggests global demand shows signs of picking up.

Exports rose 8.7 percent in May in dollar terms, the customs administration said Thursday. Imports increased 14.8 percent, leaving a trade surplus of $40.81 billion dollars. (In yuan terms, exports rose 15.5 percent and imports surged 22.1 percent, bringing the trade balance to 281.6 billion yuan.)

A brighter international outlook may provide support to the world’s largest trading nation, with the World Trade Organization saying it expects trade to “expand moderately” in the second quarter.

Still, after a robust start to the year, the domestic economy is displaying some signs of weakening momentum. The official factory gauge held up in May, but a private gauge signaled contraction for the first time in 11 months.

China and the U.S. announced a deal in May to promote Chinese access for U.S. natural gas, financial services and beef as an "early harvest" of a 100-day review of the bilateral trade relationship that’s due to wrap up in July. China also vowed it will import $2 trillion from neighbors participating in its Belt and Road Initiative in the coming five years.

China’s crude imports increased as refiners snatched up cargoes to prepare for the end of seasonal maintenance.

Buying by China, which Bloomberg notes has overtaken the U.S. this year as the world’s biggest importer, averaged about 8.8 million barrels a day in May, up 4.8 percent from the previous month, according to Bloomberg calculations using General Administration of Customs data released Thursday. Net exports of oil products jumped 50 percent from April to 1.51 million tons.

Crude demand by the world’s biggest energy user has marched higher on growing need for transportation fuels and strategic stockpiling. Meanwhile, domestic output has stagnated as producers shut high-cost wells that can’t survive with prices struggling to stay above $50 a barrel. The nation’s oil processing is expected to pick up this month after the annual maintenance season ended in May, according to ICIS China, a Shanghai-based commodity researcher.

“Crude imports may have risen because of higher oil processing in months going forward,” Jean Zou, an analyst with ICIS China, said before the data were released.

On a monthly basis, China imported 37.2 million tons of crude, Thursday’s data showed. Inbound shipments are up 13 percent during the first five months of the year to 176.3 million tons, or about 8.56 million barrels a day. The U.S. imported about 8.17 million barrels a day during that period, Bloomberg calculations using weekly data show.

There was barely any reaction in markets around the world to this data.

US Vs Canada: The Numbers Behind the World’s Closest Trade Relationship

Whether we’re discussing the ancient merchants that traversed the legendary Silk Road, or the transfer of goods across modern border lines, trade has always been about building close relationships.

As Visual Capitalist"s Jeff Desjardins notes, there are many examples of strong and mutually-beneficial trade relationships all throughout history, but one doesn’t have to look far back to find what could be considered the closest bilateral relationship ever known: the one between the United States and Canada.

These two countries are each other’s best customers, and they share the world’s longest international border (5,525 miles long). They are both Western democracies with shared cultural heritage and similar standards of living – and each day, the two countries exchange a whopping US$1.7 billion in goods and services.

Our infographic today highlights numbers and tangible examples behind this lengthy relationship between the U.S. and Canada.

AMERICA’S BEST CUSTOMER

Despite China surpassing Canada in 2015 to become America’s largest trading partner in aggregate, the majority of Chinese trade comes in the form of imports ($462B imports vs. $115B exports). That means China is actually only the third-largest customer of American-made goods, buying about 8% of total U.S. exports in 2016.

The largest buyer of American goods is still north of the border – in fact, Canadians buy about 18% of total U.S. exports, which is more than twice that of China.

Canada is the most important international customer for 36 states – and every day the equivalent trade of all U.S./Japan happens over just one bridge (Ambassador Bridge) between Detroit, MI and Windsor, ON.

CANADA’S BEST CUSTOMER

Americans return the favor in a big way: an incredible 76% of Canadian exports are bought by Americans.

It’s estimated that 78% of Canadian exports to the U.S. are raw materials, parts and components, and services used to create other goods in the United States.

CLOSE TIES

Through many years of trade, the supply chains between the two countries have become highly integrated.

Much of the time, the U.S. is buying raw materials and intermediate goods, which get used in final products destined for domestic and global markets. Many of those even get sold directly back to Canada.

This could be buying Canadian crude to reduce reliance on OPEC, importing low cost hydro electricity during times of heavy rainfall, or using Canada’s steady supply of aluminum to make more environmentally sound vehicles.

Few countries in the world have this kind of economic interdependence – and the history, integration, and value of goods traded makes this arguably the world’s closest bilateral trade relationship.

Trump & The Candlemakers' Petition

Authored by Jeff Thomas via InterernationalMan.com,

French economist Frédéric Bastiat was a man far ahead of his time. He was a “classical liberal,” which today would identify him as a libertarian. He expanded upon the free-market argument set forth by Adam Smith in 1776.

In 1845, the French government levied protective tariffs on scores of items, from sewing needles to locomotives. The intent was to protect French industries from companies outside France that could produce the goods more cheaply.

The reaction from Mister Bastiat was to publish “The Candlemakers’ Petition,” a satirical proposal to the government that was intended to help them see the nonsense of protective tariffs.

The petition was presented as having been sent by “the Manufacturers of Candles, Tapers, Lanterns, Sticks, Street Lamps, Snuffers, and Extinguishers, and from Producers of Tallow, Oil, Resin, Alcohol, and Generally of Everything Connected with Lighting.”  

Their plea to the Chamber of Deputies was that the government pass a law “requiring the closing of all windows, dormers, skylights, inside and outside shutters, curtains, casements, bull’s-eyes, deadlights, and blinds—in short, all openings, holes, chinks, and fissures through which the light of the sun is wont to enter houses.”

Mister Bastiat’s satirical petition did an exemplary job of exposing the tendency of governments to pander to special interest groups to the detriment of everyone else.

Throughout the ages, protective tariffs have been created for this purpose and, historically, they work only briefly, if at all.

In 1930, the US introduced the Smoot-Hawley Tariff Act, which raised tariffs on over 20,000 imported goods. Not surprisingly, the source countries for those goods retaliated by passing their own tariffs against the importation of American goods.

The net effect, in addition to the new laws cancelling each other out, was that free trade took a major hit. Consumers in all countries affected had less access to a variety of goods, and the GDP of each nation suffered as overseas orders dried up.

Of course, the justification for Smoot-Hawley was that the US had suffered a stock market crash and the demand to protect surviving businesses was considerable. It’s not surprising, then, that whenever a given country finds itself in an economic squeeze, industry leaders shout “foul!” and governments appease them with tariffs.

Again, not surprisingly, we observe the tariff question rearing its ugly head today, most visibly in the US, where new President Donald Trump has vowed to place tariffs on a number of countries, most notably on Mexico (20%) and China (a whopping 45%).

As is always the case when a government declares it will create a dramatic tariff, those who impose it look no further than the immediate effect—that of limiting importing goods to protect domestic industry. The immediate secondary effect is that goods from those countries suddenly become far more expensive, and domestic industry is either unable to produce the goods at all, or at best, it must do so at a much higher price.

At present, Chinese goods amount to 19% of American imports and Mexican goods amount to 12%. With nearly a third of all goods purchased by Americans during a difficult economic period increasing dramatically in price, the impact to the cost of living can be expected to be substantial. If the tariffs are extended to other jurisdictions, as in 1930, a few domestic industries would enjoy a brief period of benefit, but the population (and eventually all industry, through knock-on effects) would be heavily impacted.

So, why on earth are political leaders so quick to impose tariffs? Well, don’t forget: Tariffs are paid to the government. Any government that’s facing revenue problems will be tempted to go for a quick injection of revenue, even if it will ultimately be destructive. Regardless of how much damage tariffs do to the people of a country, tariff revenue is like manna from heaven for governments.

Of course, the revenue source tends to dry up before long as, ultimately, tariffs are destructive to free trade. Most tariffs are either abolished or at least lowered at some point. In the meantime, they’re like plaque in a body’s arteries, creating a sclerotic effect on the economy. Invariably, they’re a heavy price for a country to pay for a brief period of additional revenue that political leaders may squander.

But, understandably, the temptation is great for any government and, since memories tend to be short, governments can serially con the public into another round of protectionism every generation or so.

Returning once again to Mister Bastiat’s satirical petition, his final paragraph stated,

Make your choice, but be logical; for as long as you ban, as you do, foreign coal, iron, wheat, and textiles, in proportion as their price approaches zero, how inconsistent it would be to admit the light of the sun, whose price is zero all day long!

On the surface, tariffs sound like a good idea, but in reality, they’re veritable icebergs of economic destruction. Two principles should always be considered when musing on a tariff:

1. 
   

   Tariffs (protectionism) never benefit a nation. They do, however, often increase the revenue received by the imposing government.

   
   


2. 
   

   The more a people pay for products, the lower their standard of living.

   
   

It’s hard to overstate how much US consumers rely on cheap goods from countries like China and Mexico. But even without the Trump tariffs, many can already feel their once nice standard of living slipping away.

That’s because the US is on the cusp of an unprecedented economic storm—and we’re already feeling the raindrops.

*  *  *

New York Times best-selling author Doug Casey and his team put together this groundbreaking video showing you how to build a financial shelter to protect yourself and your family. Click here to watch it now.

America Is Hardly A Bastion Of Free Trade

Rhetoric has recently trumped reality. It has become a misconceived bit of common “knowledge” that the United States of America is a bastion of free trade. Little could be further from the truth. The “freest” nation on earth, as we are taught to believe, imposes a staggering number of tariffs, import and export bans, sanctions and embargoes. Yet somehow “free trade” is blamed for the financial ills of the unemployed in the formerly industrial Midwest. Instead of taking a serious look at our existing trade policies, and maybe reducing some of the regulations, President Trump promised Midwesterners that their inefficient factor jobs that have been outsourced to the “right to work” south and overseas will be brought back by imposing new import taxes on specific companies. It is a naïve and ignorant notion that singling out countries and taxing the goods they import into the US will somehow help the unemployed while having absolutely no effect on the country’s general productivity and standard of living. Besides, we’ve already been doing that for far too long.

The US imposes tariffs on over 12,000 different goods and services. No that is not a typo — over 12,000. Some of these tariffs are so significantly prohibitive that they are effectively outright bans.

Sugar, for example, is one product that Americans get gouged on, paying an average of $277 million more per year than they should. That is $277 million per year that would otherwise be used to consume other goods, invested in growing businesses, creating jobs, and raising real wages. This is nothing new. The original tariff was imposed as a “temporary” protection for US sugar farmers, that was more than 80 years ago. It has protected US sugar farmers, but has also decreased the productivity of the sugar farmers’ land. The laws of absolute and comparative advantage would dictate that the land on which sugar cane and sugar beets are grown and harvested should be used to produce goods in which these particular regions can more (cost and time) efficiently produce.

Sugar is not the only good, not by a long shot.

Even America’s favorite snack while watching America’s “favorite” past time — peanuts — are significantly more expensive than they otherwise would be because of measures to “protect” the US peanut farming industry. Specifically, the government imposes a 131.8 percent ad valorem tax on shelled nuts, even higher tariffs are applied to unshelled peanuts. The peanut farming industry is a $1 billion industry, annually. The question is how much are those numbers padded by the tariff, and how much less would consumers be paying for peanuts if peanut farmers weren’t a privileged class. A further example that demonstrates how inefficient these tariffs are is the import tax and quotas placed on rubber tires. In 2012, President Obama bragged about creating “over” 1,000 jobs in the tire manufacturing industry resulting from the measure. One account estimates that in 2011 alone Americans paid an additional $1.1 billion for tires, or roughly $900,000 per “job created,” than they otherwise would have. The same estimation concludes that 2 retail jobs were lost for every 1 manufacturing job created by the tax.

Tariffs are not the only way that the US government engages in what many would call “fair trade” instead of flat out free trade. Embargoes placed on several countries for so-called diplomatic purposes also distort international trade. Worse than the distortions they create, they don’t work for diplomatic advancement either. History tells us — and as 19^th century classical liberal Otto T. Mallery (and many others before and since) did — when goods don’t cross borders armies do. Contrary to popular belief it was not the European Union being created, it was not the United Nations mandating a beach bonfire kumbayah between countries, and it wasn’t the US military presence around the globe that has prevented another World War. It has been the increasingly open global market, the economic entanglements and the consequential benefits that nations reap when trading with others.

Before “heaping absurdity upon absurdity” as Bastiat put it in his famous essay The Petition of the Candlestick Makers maybe first we should take a look at the existing pile of absurdity that is US trade policy. To be clear, trade policies can carry many nuances. Tariffs don’t always necessarily only effect price, they could quite possibly effect profit margins of overseas corporations and create employment. They do always necessarily reduce prosperity. Even in the event that new jobs are created, they are likely to be less efficient jobs — either in cost, time or both — than their overseas counterparts. The best way to increase the number of jobs and the wages paid to those jobs is to increase the productivity of industry. First steps toward that should consist of tax reform, regulatory reduction, encouraging capital formation and accumulation, and repatriating the trillions of dollars stashed offshore as a result of high taxes and burdensome regulations.

Imposing more tariffs on more goods and more countries will simply make America a less productive society. Instead we are far better off focusing on producing the goods and services that — as the law of comparative advantage dictates — we are most superior at producing.

China Imports Spike As Lunar New Year Skew Creates Biggest Trade Deficit In 3 Years

When the headline prints hit tonight on China"s trade data, offshore Yuan dipped and ripped...

As China faced its first trade deficit in 3 years (-$60bn vs +172.5bn exp)...

Obviously there is some major seaonality...

With imports exploding 44.7% YoY (and exports missing expectations dramatically +4.2% vs +14.6% exp). But it appears the economists forgot about this year"s lunar new year holiday falling in January (vs Feb last year).

As Bloomberg points out, the results were skewed because the week-long Lunar New Year holidays that shutter factories and ports across the nation occurred in February 2016 versus late January in 2017, distorting base year comparisons.

Even though the specific data point is entirely worthless, we note that Imports from U.S. rose 41% to 163.5b yuan in Jan.-Feb., General Administration of Customs says in statement.

For now it appears Bitcoin is suffering the most post-data (but this could be renewed selling pressure from this morning ahead of this weekend"s ETF decision)

Trump, TPP, And Taking On China

By Chris at www.CapitalistExploits.at

Market dislocations occur when financial markets, operating under stressful conditions, experience large widespread asset mispricing.

Welcome to this week’s edition of “World Out Of Whack” where every Wednesday we take time out of our day to laugh, poke fun at and present to you absurdity in global financial markets in all its glorious insanity.

While we enjoy a good laugh, the truth is that the first step to protecting ourselves from losses is to protect ourselves from ignorance. Think of the “World Out Of Whack” as your double thick armour plated side impact protection system in a financial world littered with drunk drivers.

Selfishly we also know that the biggest (and often the fastest) returns come from asymmetric market moves. But, in order to identify these moves we must first identify where they live.

Occasionally we find opportunities where we can buy (or sell) assets for mere cents on the dollar – because, after all, we are capitalists.

Join our Insider membership and find out what we"re doing with our own money... targeting asymmetric investment opportunities

In this week"s edition of the WOW we"re covering the US withdrawal from TPP and the repercussions

There"s always something new.

Take US presidents. Americans have had old codgers, young bucks, white men, a black man, dark haired, light haired, even red-haired, and now there"s one with a fox"s hair. Nobody is surprised by this and yet they"re surprised by what "the Donald" has done in his first few days in that ugly looking office that is clearly decorated by an avid fan of the antiques road show.

He promised to be a wrecking ball and now that he"s in that ugly-as-sin chair (who decorates that place, really?) he"s actually doing what he promised and people"s jaws are grazing the floor.

This is the consequence of decades of politics.

Recall the story of the boy that cried wolf?

The podium donuts get up there promise warm milk and cookies, bunnies and rainbows, and chickens in every pot; the largely illiterate electorate play their part, liking what they hear, hoping and praying that it won"t be them that has to pay for it all, and deep down not fully expecting all that is promised.

They can"t pin the feeling down so I"ll do it for them. It"s called experience. Recall Trump"s long line of predecessors and the promises they made on the campaign trails? Point proven.

Now, along comes the ginger ninja who promises all manner of things, many outrageous, and in his first few days of office sets to work delivering them. WHOAH!

Today we"ll cover just one: the Trans-Pacific Partnership (TPP), which is now toast.

To be clear, even though I repeatedly stated that Trump would win and pointed out why (here, here, here, and here) this doesn"t make me a Trump supporter. You can play the probabilities of a horse race without having any "favourite horse". Heck, I carry 3 passports and none are blue.

My job isn"t to opine on what should or shouldn"t happen. Markets don"t give a rat"s furry behind about my opinion (or yours for that matter). My job is to allocate capital according to the best probabilities and continue to profit regardless.

So who benefits and who loses - short-term and long-term?

Firstly, let"s be clear: This is a big deal.

Consider that even though congress never ratified former President Obama"s deal, the signatories to the TPP together represent 40% of world GDP and about a third of world trade. Not insignificant.

Short-Term: The Losers

Vietnam, Mexico, and Malaysia have been beneficiaries as low cost manufacturing hubs. The market has long ago woken up to the stresses the Trump administration puts on Mexico and it"s gotten a lot cheaper as a result. I spoke just last week about Mexico and previously featured Mexico in an edition of World Out of Whack.  

Vietnam index in green, Mexican in orange, and Malaysian in purple.

As you can see both Malaysia and Mexico have been punished by the markets. Strangely elevated and sticking out like a leg in a cast sits Vietnam. Considering that Vietnam"s largest export partner is in fact the United States ($29.9b) I think the market has yet to fully digest this information. When it does I"d rather not be long.

Here"s Vietnam"s breakdown of export destinations:

Vietnam trading partners in terms of exports

You"ll notice that China ($17.5b) sits in second place in terms of exports. Also, let me remind you that China is grappling with a ginormous credit problem and the most appropriate release valve is its currency. And right now China is enjoying rising liquidity problems but this is a topic for another day.

Suffice to say the odds of a nasty surprise coming from China are elevated and there will be secondary trades to be made as they attempt to deal with the confluence of exploding NPLs (non-performing loans) and continued credit expansion. Bullish Vietnam? Not that I can see.

The US?

Bullish. Capital moves like water and Trump"s likely to torch a lot of really idiotic bureaucratic red tape as well as lowering corporate tax rates. Capital will continue to move to the US.

So that"s the quick and nasty on the short term.

The Long Game: Winners and Losers

It was interesting to see Chinese President Xi Jinping denouncing Trumps populism, protectionism, and de-globalization, likening it to “locking oneself in a dark room.” 

Is Trump planning on starting a trade war with China? I don"t know what"s on the man"s mind and annoyingly he"s failed to brief me.

What we do know is that even though China has some serious problems in the immediate future, its long-term prospects are undeniably attractive.

At the end of the day, America has nowhere to go. It"s a fully developed economy that will struggle to grow and it is suffering from a decaying education system, falling living standards, and a crippling military budget. And I"ve not even mentioned the debt...

China, on the other hand, has a billion hungry, and increasingly educated workforce with high rates of growth. Much of Asia is like this. Despite my reservations in the shorter term you can"t ignore this.

So while the west turns inward RCEP is taking shape.

RCEP?

The Regional Comprehensive Partnership will simply get a further boost from partners. Now that TPP is off the table expect the "disenfranchised" to do what humans do in such situations. React. I just got of the phone with a friend whose firm provides economic advisory to governments in Asia and this is definitely happening. Now!

Economic, political, and military ties will be strengthened as a result. Russia, Iran, and China are already moving closer together. This is a force to be reckoned with.

The Consqeuences

So America closes its doors. Now, what if China does the opposite?

When one ally shuts their doors to you, isn"t it in your interests to strengthen ties with those who aren"t?

China, the forerunner for the establishment of the 16-country Regional Comprehensive Economic Partnership, is punching forward. The RCEP would be the 10 ASEAN nations and their six FTA partners: Australia, China, India, Japan, New Zealand, and South Korea.

Interestingly, Australia, Brunei, Japan, Malaysia, New Zealand, Singapore, and Vietnam would all see trade ties weaken with the U.S. due to America’s withdrawal from the TPP. Human nature will be kicking in and RCEP will likely gain greater support and participation.

Once RCEP goes through, American manufacturers are likely to find that breaking through supply chains between these regions, especially as China strengthens its trade ties with low-cost havens such as Philippines and Malaysia, is not going to be easy. Regional deals offering more favorable terms of trade via RCEP could well help these emerging markets grab additional market share from US’s exports to Japan. Slow at first, but watch.

Losing Control

America can"t afford to lose control of Europe"s governments, which is bound to happen as European trade with China increases and decreases with America. This is a natural thing.

Last week something happened which went largely unreported in the tabloids MSM.

The first direct freight train from China to London arrived.

This isn"t completely new but it is a significant sign. Take a look at what China"s access directly into Europe looks like:

Students of history (of which I stand accused) understand that as goods flow and as trade increases so follows influence. China understands this.

This is bad news for Washington. Their influence in Europe will decline and China"s will increase. Watch for it.

The West has routinely underestimated China. Why, I can"t fathom. We"ve had 30 years to witness one of the greatest economic miracles the world"s ever seen as scrawny little brown people clinging to their rice bowls clawed their way out of poverty, amassing increasing wealth - to the extent that they"ve now almost single handedly fuelled bubbles in Vancouver, Sydney, and Hong Kong real estate.

"Illiterate peasants producing plastic garbage" is what a friend, a patriotic American, suggested to me. I suggested a stiffer drink and some education.

Consider the following:

Medicine:

Tu wins China"s first Nobel Prize for medicine

"Chinese scientist Tu Youyou, 84, was awarded the 2015 Nobel Prize in Physiology or Medicine for her contribution in fighting malaria. She won the prize for her work using artemisinin to treat malaria based on a traditional Chinese herb treatment, making her China"s first medicine Nobel laureate."

Technology:

Beidou system extends its reach to global users

"A new-generation satellite of China"s Beidou Navigation Satellite System was launched in March, enabling the Beidou system to expand its coverage out of the Asia-Pacific area."

"The Beidou system, named after the Chinese term for the Big Dipper constellation, is a domestic alternative to the United States-operated GPS. The first Beidou satellite was launched in 2000. By 2012, a regional network of the Beidou system had been formed, providing positioning, navigation, timing and messaging services in China and several other Asian countries."

China launches its first dark-matter satellite

"China successfully launched its first dark-matter satellite at a launch centre in Gansu province on 17 December. The satellite, nicknamed "Wukong", is named after the heroic Monkey King in the Chinese classic novel Journey to the West. Designed in a one-cubic-metre box weighing two tons and with four probes aboard, in the next three years Wukong will search for dark matter, which is believed to make up a large part of the cosmos."

Already the leader in supercomputers, China plans to introduce the first exascale supercomputer by 2018.

Recent PISA scores paint a pretty clear picture. This is an OECD ranking of students" performance in math, science, and reading. The top countries:

You"ll notice China isn"t all thicko in math and science. USA, on the other hand, doesn"t even feature and is in fact below average.

It"s University professors suggest that "algebra is too hard and schools should drop it." (no, really!)

You can"t make this stuff up. America increasingly leads the world in gender studies, safe spaces, and trigger warnings. Snowflakes rejoice. Watch out Beijing.

Trump, a bully with the manners of an ill-tempered and badly trained shitzu, tells Americans that China needs America much more than America needs China. Apart from being ridiculous, you may recall the same thing being said of Iran, Cuba, Russia, and a host of others. How"d that work out?

The taco eating neighbours to the south make for an easy punchbag. China is not that.

Empires typically last for roughly 100 years. Check your calendars.

A Question

2016 was a year of the "unthinkable", Brexit and Trump to name just two.

Why should 2017 be any different?

Cast your vote here and also see what others think

- Chris

“In the short run, the market is a voting machine but in the long run, it is a weighing machine.” — Benjamin Graham

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Don't Threaten Business With A "Border Tax" — Instead, Make America A Great Place To Do Business Again

Submitted by John Sulzer via The Mises Institute,

“They’re going to have to pay a border tax — a substantial border tax,” President Trump pledged Monday morning during a White House meeting with twelve CEOs including the heads of Dow Chemical, Proctor and Gamble, and Ford. He went on to make thinly veiled threats against the businessmen, saying, “All you have to do is stay. Don’t leave. Don’t fire your people in the United States.”

The President also discussed a 75 percent regulation cut and tax cuts for both the middle class and for corporations and a “big border tax.”

This is troubling for several salient reasons, primarily because the public image of President Trump holding White House meetings with businessmen just doesn’t wash. This meeting, at least, was open to the media. However, previous meetings with high-level executives have not been. What was discussed during these back-room meetings? We don’t know. Did the president offer incentives or threats? We don’t know.

What we do know is that the president working directly with CEOs produces at least the perception of secret deal-making. 

Additionally, the narrative that all outsourcing is bad is patently incorrect. Outsourcing factors of production can allow businesses to free up money and hire more workers in the US at higher wages. Another benefit is that those foreign firms who are paid by US companies have to spend the dollars they receive back in the US or trade them in so someone else can. This results in more investment and capital at home.

Also, dumbing down the causes of the decline in manufacturing jobs, as Trump is doing, doesn’t help anyone. New technology facilitated the decline arguably more than outsourcing as US manufacturing output has risen in recent years while jobs have declined. The decline isn’t because of “crooked” or “cucked” trade deals like NAFTA. These deals don’t force firms to outsource or to automate. What forces firms to do so is overbearing tax rates and regulation.

By announcing tax cuts for corporations and a 75 percent regulation cut in the same meeting, the president has signaled he intends to implement pro-growth business policies. The “big border tax” and “renegotiation” of NAFTA won’t help. The tax cuts and deregulation, on the other hand, would.

Finally, President Trump’s reference to “fair trade” was naive and deceptive: “So I don’t call that free trade, what we want is fair trade, fair trade, and we’re going to treat other countries fairly but they have to treat us fairly,” he claimed. This seemingly was his second-worst stray into the Bernie Sanders level of economic illiteracy, after calling the free market, “the dumb market.”

In recent decades, “fair trade” has usually denoted the practice of those in wealthy countries paying inflated prices for goods in order to supposedly pay higher wages to those workers in less-developed countries who produce said product. In reality, this results in unemployment for many of the workers and those who keep their job aren’t paid all that much more. The bureaucracy involved in the deal is the primary beneficiary. It turns out folks could do a lot more good for less by buying the cheaper alternative to fair-trade boondoggles and donating the difference to charity.

The same goes for President Trump’s border tax plan. Just like proposals such as the minimum wage, this sounds altruistic, but it helps no one. The best way to bring jobs back is to make America the friendliest place in the world for innovators and job creators, not punish them for looking elsewhere for an alternative to business-killing taxation and regulation of the Obama years.

Norway’s Fish For Brains Trade With India (Part I: Background)

Submitted by Nick Camran of Letters from Norway

This is a personal story, discussing skilled immigration experiences and implications in both Norway and in the USA. I am a native born American of Indian origin having worked in both the US and Norwegian IT sectors. To translate the Norwegian references, you can right click in the Google Chrome browser and select “Translate to English” or use Google Translate.

Desperate to sell more fish, Norway is looking to India, allowing their IT companies increased access to the local market, in exchange for tariff reductions, which are currently high for European imports. On the surface, it appears to be a win-win deal but digging a little deeper, there are some serious long-term implications. (it still remains unclear whether or not this deal went through).

Monica Mæland: Norwegian Minister of Trade & Industry

Specifically, they want the following:

The ability to transmit and host Norwegian more personal information in India. Special areas within the company are sealed and secured, meeting Norwegian regulations. Indian IT workers can work in those zones same as a Norwegian in Trondheim or Oslo: otherwise known as a “Little Norway” zone. Since the connection is ubiquitous wit the onshore entity, they can access data containing credit card and social security numbers.

Although Mæland hopes that the Indians can make concessions on this point, they and the fishing industry are pushing hard. Geir Ove Ystmark, managing director of Seafood Norway, states that the industry is impatient.

Exemption from Norwegian Labor Laws: Tata Consulting Services (TCS), responding to an inquiry from the Labor Inspector, stated that Norwegian laws should not apply to Indian IT workers, residing onshore for short-term business trips. (If that sounds familiar, there is already a precedent from the US almost ten years ago.) Tata further argues that the workers are really employed in India, visiting Norway for a maximum of four to five months.

After the Vipps scandal at DnB (The Norwegian Bank) last year, involving the development of a now popular payment app, the labor directorate decisively denied the request. Against the hallmark Norwegian labor laws, the workers were putting in almost 16 hours per day to complete the project. I personally heard rumors, talking to TCS guys on the metro in Oslo, that they were not allowed to leave the office without their manager’s permission, even for a bathroom break or a movie over te weekend.

NRK (Translated from Norwegian)

Despite the reprimand, given to Tata, ordering them to correct the situation, Lise Raneberg of the Tekna engineering union, believes that they will exploit loopholes to circumvent the law. Nevertheless, Rina Sunder, from Innovation Forum Norway, believes, “Norway should meet India’s demand for easier access for IT workers.”

Premise:

The initial justification behind outsourcing and offshoring is that there is a skilled labor shortage in software and systems engineering. Generally technical, medical and engineering sectors experience shortages, requiring companies to hire offshore workers or companies, on contract, to fill the void. However, companies quickly realized that they could also save money, paying foreign workers much less than their domestic counterparts.

Mechanisms:

There are two models:

• Outsourcing: sending work to another company, working under contract, to deliver a service. This can be both done within the domestic market like having a local consultant teach a course or do a short term project.


• Offshoring: sending the work abroad either within your own company or outsourcing it to another company.

Offshoring and outsourcing even became a business goal with many companies, in and out of the sector. Target “offshore/onshore” ratios, vary from 40%-60%. In both cases, on location business trips or extended assignments may be required to complete work, allowing them systems access that they could not reach offsite. Often it becomes difficult to distinguish between an extended assignment, covered under local labor laws, and business trips, which are often extended or repeated in close succession. (Business trip visas can repeatedly be extended, or the laborer returns home every couple of months for a week or two before returning on a new visa.) They can even rotate people on and offshore, ducking the laws.

(Next – Part II: The Workers Perspective)