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Apocalyptic economic restructuring

January 23, 2011

Confession: I read the magazine “Inc” and I’m really not sure why. In that magazine there was an article trying to understand why the Norwegians have so many more start ups than the US does. They gave the fav socialistic reasons plus one free market reason: free healthcare, free education, guaranteed government pensions, low tax rate on corporations.

I think they forgot a few

  • – Norwegian oil reserves – no moral issue in Norway against tapping & selling them
  • – more homogenous culture = more commonly shared values. Ex: egalitarianism over flashy wealth (what CEO here would avoid buying an item because it looked too flashy to their neighbors?)
  • – part of that culture is that they view taxes as an exchange for goods (healthcare, education, pension)

One little itty bitty problem that they mention briefly:

“if a company slips into the red, entrepreneurs find themselves in trouble….if a company grows to a large size & has two bad years in a row, the founder may have to sell stock to raise enough cash to pay their taxes”

One of the companies – a $35m clothing boutique – was essentially allowed to start their company ‘rent free’ with a $20,000 grant from the government. I’m guessing anyone who struggles on the backend might get a little help from their friends. In a small country of a few million people, you’d probably have a lot of them (or you’d be run out altogether). To replicate Norway’s model here – it might work in one state where the population is fairly stable & homogenous (Minnesota?), but the guys in the article pointed out that the US isn’t 1 economy. It’s minimally dozens – how can the tops down apocalyptic hand of central planning in D.C. create one size fits all policies someplace this size that work well for all situations?

The Atlantic” talks about where the jobs in the US are going. Attention Dr Krugman: “Before we can fix our jobs machine, we must figure out what broke it. As several economists noted, anyone who says they’ve solved the problem is lying

This version of economic restructuring is apocalyptic in the Hal Lindsay, “Late Great Planet Earth” tradition. The jobs were here but now they’re not & we don’t know where they went – or why.

A recent paper …concluded that the iPhone…actually contributes nearly $2 billion to our trade deficit because it is almost entirely produced and assembled in Asia. …If Apple moved its assembly line to the United States and created domestic jobs but didn’t raise the cost of the iPhone, the company would still turn a 50 percent profit on every one it sold.

Maybe Apple’s greed is at fault. Maybe the government is to blame for not making the industrial climate more hospitable to Apple and other job producers.

And: Maybe the companies are producing and manufacturing in Asia because there is a bigger emerging market to buy them THERE ? Look at population growth rates here & there. I can assure you that Apple does….companies plan product development investments over decades

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