Eq: Total Market
In another historic executive order which simultaneously shows the dysfunction of Congress and the remarkable change of opinion of the President, Barack Obama yesterday announced that he was extending federal benefits to same sex couples across virtually all US governmental agencies. The new benefits will affect all federal employees with spouses of the same sex, and couples will now share things like health and life insurance, flexible spending accounts, and time away to take care of spouses. The new measures will also extend to IRS matters and US immigration cases. The development is highly important for same sex couples as it extends federal benefits regardless of state laws, meaning all Americans will benefit from the measures regardless of where they live. President Obama has made a remarkable u-turn on the issue since being elected in 2008. In 2012, he announced publically that his views had “evolved” on the issue, and he believed that same sex couples should be allowed to wed and enjoy the same benefits as everyone else.
FINSUM: This is massively important news on an American civil rights front as it shows same sex marriage has the White House’s full backing. It also shows how pitifully dysfunctional Congress is that Obama has to carry out these landmark changes through executive orders.
Through a newly developed partnership with Arizona State University, Starbucks is to begin offering a free online college education to any and all employees, whether or not they stay with the company. The extent of paying will depend on how many credits existing employees have, but for most of the company’s 135,000 staff the education will be completely free when combined with US government grants. The Lumina Foundation, an education group, has praised Starbucks, saying they are “going where no other major corporation has gone” in offering free education with no strings attached. Starbucks realises that many of the employees may leave for better jobs once getting their education, but chairman Schultz believes it will actually lower attrition and boost performance. Employees must only meet Arizona State’s requirements for admission in order to benefit from the program. Starbucks has a long history of giving unusually generous benefits to even low-wage service employees, such as stock options and health insurance.
FINSUM: This is a good example of how the benefits paradigm is going to have to shift in the global capitalism of the 21st century. Governments worldwide are cash-strapped and corporations are going to have to start subsidising things that states once paid for if social and economic inequality are to be kept from growing.
In order to meet the ambitious new emissions targets put forward by President Obama last week, a number of states, including Washington state and Pennsylvania, are considering adding their own carbon trading schemes. States each have to meet their own emissions targets, which is an impetus to develop their own specific schemes. Scientists consider CO2 emissions to be a principal contributor to global warming, but pricing the gas at the national level has proved difficult and divisive politically. So far, programs have been designed in a “cap and trade” fashion, where companies receive emissions permits from governments and can then buy and sell them according to their needs. State governments can save over a $1 bn in compliance if they band together to implement new schemes, though the political will to do so remains questionable. The Obama administration believes that a market-based solution remains the best way for states to meet their individual emissions targets.
FINSUM: The impact of Obama’s bold move on emissions is now being felt across the country as states scurry to meet the proposed standards. A state-by-state market system seems like it will prove costly and inefficient in the long-run.
The FT’s senior columnist Martin Wolf has published a thorough and engaging study of the Mexican economy and relates it challenges and opportunities. He explains that Mexico has suffered from a “productivity puzzle” where large business’ productivity has grown considerably while smaller firms’ productivity has dropped at the same time as their share of the economy has grown. Basing his arguments on a McKinsey study, Wolf also believes part of the issue is that Mexico has an “extraordinarily small” corporate credit market, with SME’s suffering from an estimated $60 bn credit shortfall. Wolf also believes the country’s formal sector needs to be opened to more competition and less regulation at the same time as the informal sector needs more regulation and monitoring. This difficult policy need is left to reformist President Pena-Nieto, who is in the midst of a strong push to overhaul Mexico’s economy through the denationalisation of the oil industry and reforms of the tax, education, and labour systems.
FINSUM: This is a great article for understanding the past, present, and future of Mexico. The country has a real opportunity to grow given the soaring wages in China, and now it need to navigate that opportunity correctly.
In what is quickly growing into a humanitarian crisis, the United States has seen rates of child immigrants surge this year to upwards of 47,000. Child immigrants, in this case primarily from Central America, are immigrants who cross the national border unaccompanied. The US government has taken these children in and is caring for them during investigations of their cases in a number of centres across the southwest, but the situation is growing much worse, as cases have doubled over the last year. All told, the program for caring for the children will cost the government upwards of $2 bn. Worse yet, the condition of the care centres is said to be deplorable, with children sleeping in plastic containers and not bathing for ten days at a time. Children from Mexico are usually sent directly back to their home country, but when they are from Guatemala, Honduras, or El Salvador, as most of this year’s immigrant children are, they become wards of the state, and the responsibility of the Department of Health and Human Services. The White House has said the rise in immigration might be due to a false rumour that immigrant children have special rights which would allow them to stay.
FINSUM: This is a deplorable situation all around, especially for the vulnerable children, and it puts added pressure for the US to reform its immigration system.
A major new trend is underway in the online market—rising costs of basic internet access are likely to cause a strong drop in consumer spending on digital content, like music, movies, and TV. The conclusion is from an important new report, published by PwC, which highlights how this trend has partly inspired the recent deal-making wave in the telecom sector, and will cause disturbance to digital content providers. Digital content providers will find it ever harder to charge for content, and in order to survive, they are likely to have to adopt different models, such as a revenue-from-advertising model, or more B2B sales. Companies will also have to negotiate their fee structures, as some consumers prefer fixed monthly payments while others like to buy products and services piecemeal. The report also shows how digital advertising is set to grow strongly, with up to a third of all ad revenue occurring digitally by 2018, versus 13% in 2009, and 25% in 2013.
FINSUM: This is quite an important report for anyone interested in the telecom and digital media sectors. It seems as though the industry is going to be reshaped by rising access costs, which is likely to further lower the cost of content.