"Fareed Zakaria GPS," Sundays at 10 a.m. and 1 p.m. ET on CNN
Zanny Minton Beddoes, the economics editor for 'The Economist,' responds to readers' questions on recent economic data, the national minimum wage and gridlock in Washington.
Figures out this week suggest groundbreaking declined at home construction sites, factory activity in the mid-Atlantic region dipped. How concerned should we about these kinds of numbers?
I think we’ve had a fairly mixed crop of numbers, some of which are worrying, and some of which are quite positive. You have to be careful not to draw too much from any individual number. But broadly, my sense is that the private side of the U.S. economy is recovering at a reasonable, but not terribly dramatic, pace. The housing market, in particular, is on the mend.
Yes, some numbers disappoint, but broadly it’s a good news story. But I think the overall pace of recovery is being held back by the fiscal tightening that is going on. We had quite big tax increases at the beginning of the year. And in the sequester – and we’re getting somewhere in the order of 1.9 percent of GDP in fiscal tightening. So that’s acting as a brake on the economy and so the overall recovery is not as strong as it otherwise would be, which means there’s slower job growth than there otherwise would be.
It is a recovery, but it’s a pretty lackluster one considering how much we have to catch up, and I think that has quite a lot to do with fiscal policy.
By Richard Pearshouse, Special to CNN
Editor’s note: Richard Pearshouse is a senior health and human rights researcher at Human Rights Watch and author of Toxic Tanneries: The Health Repercussions of Bangladesh’s Hazaribagh Leather. The views expressed are his own.
Last year, I spoke with a 40-year-old woman working in a Bangladesh leather tannery in the Hazaribagh neighborhood of Dhaka. The Hazaribagh tanneries, which export hundreds of millions of dollars in leather for luxury clothes, shoes and boots around the world, spew noxious pollutants into surrounding communities. They can also make their workers very ill.
Much tannery work involves measuring and mixing chemicals, adding chemicals to hides in drums, or hauling hides saturated in chemicals out of pits. Fungal infections, scabies, hives, and contact dermatitis are common. Others suffer from respiratory illnesses and chest pains.
Asked what she thought of the possibility that Hazaribagh’s tanneries might eventually move out of the city, the woman told me, “It would be very good…They could start garment factories. This would be cleaner work with a better salary.”
By Bruce Stokes, Special to CNN
Editor’s note: Bruce Stokes is director of global economic attitudes at the Pew Research Center. The views expressed are his own.
The Great Recession and the ensuing euro crisis have wreaked havoc with the European economy and now threaten to undermine the European Union itself. As Washington prepares to begin negotiations with Brussels on a U.S.-EU free trade agreement, America’s European partner has never been weaker. Europeans’ lack of faith in the European Project and the fissures that have emerged in European public opinion between the French and the Germans bode ill both for efforts to revive the European economy and for effective transatlantic cooperation in the near future.
Support for European economic integration – the idea that if nations lower their trade and investment barriers they will all be better off – is down over the last year in five of the eight European Union countries surveyed by the Pew Research Center in March 2013.
Fewer than a third of Europeans surveyed now think European economic integration has strengthened their economy. This includes just 11 percent of Greeks and Italians and only 22 percent of the French, the latter two citizens of founding members of the European Community. Since the fall of 2009, meanwhile, support for a more integrated European economy has dropped sharply: by 21 points in France, 20 points in Italy, and 16 points in Spain.
"Fareed Zakaria GPS," Sundays at 10 a.m. and 1 p.m. ET on CNN
Fareed speaks with Financial Times journalist Gillian Tett and TIME’s Rana Foroohar about the state of the U.S. economy. To see the full interview, download the show at iTunes.
You wrote a column where you said everyone's looking at these economic numbers from the U.S. and saying they’re bad.
Foroohar: Right.
You actually found a silver lining.
Foroohar: Well, absolutely. You know, government spending has been down. We’re feeling the effects of the sequester. And if you look at the 2 percent economy which we've been on now for a couple of years, that’s in part due to the fact that the public sector has cut back so much. But if you strip the public sector out, the growth numbers actually go up above 3 percent, to about 3.1 percent. And most of that is down to the consumer. You know, American consumers have actually done a really good job of balancing their budgets, getting out of credit card debt, managing their own personal finances. And now they can dip a little bit farther into savings than they used to. And that’s what they did last quarter.
Tett: Absolutely. Rana is right. And she’s highlighting one of the great unsung stories of the last year, which is that consumers have actually managed to adjust to the new normal, if you like. Credit card debt, which is such a key factor in creating pain for millions of American households during the bubble, that credit card debt is now down at a 10-year low, so that people actually have been trimming their spending. And what that means is that the consumers are in not quite the kind of situation that your grandfather was in, you know, 40, 50 years ago, in terms of debt, but certainly something much healthier.
For more What in the World, watch GPS, Sundays at 10 a.m. and 1 p.m. ET on CNN
By Global Public Square staff
Watching countries from around the world grow and prosper, we tend to assume that global poverty is falling. And in fact, the World Bank says that in 1981 nearly half of the world's citizens were impoverished, that is, they lived on less than $1.25 a day. And today, less than a fifth of the world's population lives in poverty. In raw numbers, that translates to a 40 percent drop from about 2 billion to 1.2 billion people.
But when we dig deeper, it’s clear the picture is more murky. Put simply, most of the reduction in global poverty has to do with one country – China. Take it out of the equation and the numbers look very different.
Let's go back to 1981. Back then, China accounted for 43 percent of the world's poor. The other major contributors were South Asia, with 29 percent, and sub-Saharan Africa, with 11 percent. Fast forward just a decade, and you'll see that China's share of the world's poor began to drop. The trend continues through the 2000s. By 2010, China accounted for only 13 percent of the world's impoverished population. South Asia's share had jumped to 42 percent, while sub-Saharan Africa's share tripled, to 34 percent.
By Global Pubic Square staff
We've been watching one of the world's key economic indices collapse. It dropped 13 percent in two days. Over the last two years, it's down 20 percent. And here's the strangest part – this might be very good news for the global economy.
What is it that has been falling? Gold. For much of the last decade, the whole world has been on a gilded shopping spree. Hedge funds poured money into it; Indians and Chinese hoarded it; you could even find ATMs dispensing gold. To give you a sense of the hysteria, consider that if you had invested about $100 in gold in 2001, it would be worth $700 in 2011 – a seven-fold increase, a stunning return.
So: why the sell off last week – and what does it mean?
"Fareed Zakaria GPS," Sundays at 10 a.m. and 1 p.m. ET on CNN
Fareed speaks with Ratan Tata, who until recently ran the Tata Group – India’s largest conglomerate – about ethics in business.
When you make these determinations, and as you say, it's part of the culture at Tatas that you won't get bribes, often you weren't asked, but was it difficult to institute that among all your managers, all your chief executives, because there must have been ambitious ones who wanted to get ahead at any cost?
Yes. We have 450,000 employees and I am quite open in the statement that I can't guarantee the integrity of every one of them. What we do, when somebody breaks that code, how we deal with that person, I think, is the true index of what we will do. And when we have had a major rogue officer or director, we’ve actually prosecuted that person and the person has actually gone to jail. So, I think we have walked the talk in terms of what we have advocated, we have practiced what we have preached, as a matter of fact.
Tata Sons, the holding company that governs the entire Tata group, is two-thirds owned by charitable trusts, is that right?
Yes.
Which means that two-thirds of the income that comes from this enormous industrial and services empire goes to charity.
Yes.
Has that changed the way in which, you know, does that change your perspective on how and why you’re running it?
Yes, it has. First of all, you know, it runs counter to the general perception that Tatas are a family company and that the proceeds of these industrial operations go to the Tata family. It does not. The family owns about two percent, collectively, of Tata Sons. And the 60s, 65 percent that goes to charity has always been seen as a noble usage of the wealth we have created from our companies, it goes back into education, medical, elevation of poverty or rural development. So, in a manner of speaking, it has always been our driving force that what we’re doing is really for plowing it back to the people of India.
By Heather Gautney, Special to CNN
Editor’s note: Heather Gautney is an assistant professor of sociology at Fordham University, and author of ‘Protest and Organization in the Alternative Globalization Era.’ The views expressed are her own.
The United States has become one of the most unequal countries in the world. Just 1 percent of Americans own about 40 percent of our wealth, gaining all of the nation’s income growth from 2009-2011. The income of the average middle class family is lower today, in real dollars, than it was 17 years ago. And 46 million people live in poverty, including about one in five children by some estimates.
CEO pay scales are both a symptom and cause of these terrible trends.
Defenders of high pay levels argue that corporate executives are our nation’s job creators. If only that were true. Despite a record-high Dow and soaring corporate profits, our workforce remains stymied around 8 percent unemployment, a gross underestimate if you include those actively looking for work. The truth is that employers are content with boosting productivity and racing workers to the bottom.
By Global Public Square staff
It's not every day you see Russia's Vladimir Putin receiving a bear hug from a Frenchman, but the actor, Gerard Depardieu is no ordinary Frenchman. In fact, he may not even remain French for very long in some sense.
You see, Depardieu has been threatening to give up his French passport, especially now that Putin has handed him a brand new Russian one. But why on Earth would he or anyone, for that matter, want to leave France? Think of the food, the wine, Paris, the countryside. Well, for Depardieu, it comes down to taxes.
Under President Francois Hollande, France has been weighing a proposal for a 70 percent marginal tax rate on millionaires. Russia, on the other hand, offers a flat, 13 percent tax.
By John Hamre and Rhonda Zygocki, Special to CNN
Editor’s note: John J. Hamre is president and CEO of the Center for Strategic and International Studies. Rhonda I. Zygocki is executive vice president of policy and planning at Chevron Corporation. The authors were members of the CSIS study’s Executive Council on Development. The views expressed are the writers’ own.
The world’s population is expected to grow to 9 billion in the next forty years, which will inevitably increase demand for food, water, land, energy and jobs. Such challenges will be closely connected to the United States’ economic and national security. Yet improving capacity to meet basic human needs will require more than just public assistance.
Now, more than ever, it is critical that America engages in trade, investment and development assistance. But while much of the nation’s engagement in these areas has until now been facilitated by the U.S. government, the current budget environment means that some of the best new opportunities lie in catalyzing the strength and drive of the private sector.
U.S. businesses, in particular, are ambassadors of American values and are more engaged in the economies where they operate, especially in the rapidly growing markets of Africa, Asia, Latin America and the Middle East. By putting those values into action, the private sector can serve as the leading edge of American influence by promoting entrepreneurism; empowering communities; and demonstrating all the advantages of contracts, competition, transparency and fair dealing in the marketplace. Capitalizing on these opportunities will not only improve the lives of those in the developing world, but also improve America’s economic future and national security.
By William Pomeranz, Special to CNN
Editor’s note: William Pomeranz is the acting director of the Kennan Institute at the Wilson Center in Washington D.C. The views expressed are his own.
The European financial crisis has reared its ugly head – this time in Cyprus. The tiny nation’s lawmakers have rejected a confiscatory tax on bank deposits that would have allowed the nation to receive a 10 billion euro bailout from the EU. Cypriot citizens angrily took to the streets to express their disapproval of the plan, but it turns out that they were not the only aggrieved party. The Russian government also joined in the chorus of protests, calling the Cypriot government’s actions “unjust, unprofessional, and dangerous.” Much of the money to be expropriated, it turns out, is held by Russian individuals and businesses (or, to put it in slightly less flattering terms, oligarchs and shell companies). But Russia’s public outrage masked a more fundamental dispute with Cyprus concerning the island’s status as a major offshore financial center.
For more What in the World, watch GPS on Sundays at 10 a.m. and 1 p.m. ET
By Global Public Square staff
A curious phenomenon is unfolding in China. Hundreds of couples are rushing to marriage bureaus across the country. Perhaps the first signs of spring are bringing on a sudden impulse for romance?
No, it's the opposite. These couples are filing for divorce. In each case, a husband and wife mutually agrees to quick separation, no arguing, no quibbling over money or assets. How? Why? Well, actually, it was about money and assets. A vast majority of these couples are getting divorced so they can avoid a new Chinese tax.
Beijing recently decided to impose a 20 percent capital gains fee on sales of second homes. So the theory goes, if you have two homes and you get divorced, you can register each home under separate names. Then, if you see one of those homes, you escape the new tax and, then, perhaps you can get remarried. The bizarre exploitation of this loophole tells a larger story.
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