Capital Commerce
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Skilled Immigrants Get Washington Cold Shoulder
Continue reading… 18 CommentsThe H-1B visa program brings many of the skilled employees used by Silicon Valley and Wall Street firms to the U.S. With the current state of hiring, it makes sense that far fewer employers are requesting H-1B workers than in previous years. But, the WSJ reports, it's not just the economy that's making employers wary of looking abroad—it's also the "anti-immigration sentiment in Washington."
How is that sentiment materializing itself?
The cost and bureaucracy of applying for H-1B visas is another deterrent. Lawyers' fees, filing fees and other expenses can easily reach $5,000 per applicant.
And immigration lawyers say some would-be employers are put off by a crackdown on fraud. U.S. Citizenship and Immigration Services, which administers the H-1B program, has been dispatching inspectors on surprise company visits to verify that H-1B employees are performing the jobs on the terms specified. The fraud-detection unit in coming months is expected to inspect up to 20,000 companies with H-1Bs and other temporary worker visas.
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Using Economics to Solve Bone Marrow Transplant Crisis
Continue reading… 0 CommentsHow does bad economics become bad law? One thing that doesn't help is when legislators can't be bothered to read the bills they pass. Some activists recently launched a Read To Vote campaign that demands all elected officials and especially members of Congress to actually read legislation before voting. If they did, maybe we wouldn't have the situation we do with the 1984 National Organ Transplant Act—which bans people from being paid for donating bone marrow, despite the fact that monetary compensation for blood plasma is common practice, and the bill itself even explicitly says it should not criminalize compensation for "renewable tissue" (like blood and bone marrow, as opposed to things that can't regenerate like organs).
Congress threw "bone marrow" into the bill (which bans you from doing things like selling your kidney to the highest bidder) at the last minute probably because it "sounds like an organ," I was told by Robert McNamara, an attorney at the Institute for Justice. The Institute for Justice (IJ), you may recall, is the DC-based pack of libertarian lawyers behind many prominent lawsuits (they were the ones who sued the city of New London, Conn., to protect Susette Kelo's house in a now infamous Supreme Court decision). Today they filed suit in Los Angeles on behalf of a nonprofit group, MoreMarrowDonors.org, that seeks to offer people money to be used for college scholarships, charity gifts, or housing allowances if they agree to donate their marrow. The problem is that if MoreMarrowDonors.org did that, it would be committing a felony under the law punishable by up to five years in prison. "[Compensation for bone marrow donation] is treated exactly like black-market organ sales," McNamara told me. All because of a legislative decision that was "almost an accident."
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One Sign America Is Not in Decline
Continue reading… 2 CommentsYou should definitely check out my colleague Rick Newman's 9 Signs of America in Decline. He combines together some different thought-provoking data that make up for a very worrisome whole. But I do have one comment to make on one of his signs that might make the overall picture not look as bad.
Poverty. The U.S. poverty rate, about 17 percent, is third worst among the advanced nations tracked by the Organization for Economic Cooperation and Development. In that sample, only Turkey and Mexico are worse.
That's completely true. But there's "poverty" and then there's what we normally think of when we think about being poor and its impact on quality of life. The fact that there are more people living "in poverty" in the United States than in most advanced nations does not mean that the U.S. has more poor people than most of those countries.
Poverty is a relative concept. Specifically, the OECD defines it as less than one half of the nation's median household income. Because that income is so high in the U.S., people who would be rich if they lived in Turkey or Mexico could be considered impoverished in America.
When we look at standard of living on an absolute basis, the U.S. fares much better.
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Don't Forget Too Big to Fail
Continue reading… 2 CommentsA former Citigroup chairman and a partner at Roaring Brook Capital (founded by a former Merrill Lynch executive) issue their recommendations for financial reform in the WSJ:
One thing our public officials should not do is get caught up in a debate over "too big to fail." It's a catchy phrase, but that's about it. Indeed, it is important to recognize that our recent financial crisis was provoked by last year's failure of Lehman Brothers, a company that few, if anyone, would have argued was too big to fail. Rather than get side-tracked on this and other complex questions, our policy leaders should focus directly on how to create and enhance market discipline.
Citigroup, of course, is the biggest of the "too big to fail" institutions.
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Executive Paycheck Curbs: Problem-Solving or Populism?
Continue reading… 5 CommentsJimmy P calls the new restrictions on executive pay at bailed-out firms a "great distraction."
If it really is just a distraction, the cynical explanation for why Washington is putting executive compensation on the front burner is that it plays well on Main Street. It's much easier to show to voters that you are doing something about the financial crisis by pinning the blame on fat-cat CEOs and their luxury jets, rather than, say, the byzantine vagaries of Federal Reserve policy.
I've recently pointed to the lack of evidence that compensation made much of a difference in determining which institutions did poorly in the crisis. Here's another interesting study out this month from the NBER. It finds a few counterintuitive results:
1. It's not salaries as much as other incentives:
...the salary of the median CEO has increased less than average wages in the non–farm sector. It turns out that most of the post–1999 increase in Current compensation is accounted for by net proceeds from trade in stock, i.e. by options exercise and stock sale.
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Gas Tax Hikes on The Way?
Continue reading… 0 CommentsAs the dollar continues to fall, the decline will tend to make gasoline more expensive (see Rick Newman's explanation why).
But regardless of the currency situation, Washington might make Americans pay more at the pump. The WSJ reports:
But skepticism remains high over whether any of the measures under consideration would spur significant job creation. Business executives are calling for more dramatic moves, including passage of a proposed six-year, $500 billion highway infrastructure bill, which some Democrats want to see funded through an increase in gasoline taxes.
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Why We Should Open Up The Border With Canada (And Other Political Tips From Tim Draper)
Continue reading… 1 CommentI've been at the AlwaysOn OnDC conference, and I just heard an interesting speech from legendary venture capitalist Tim Draper. Draper was a key figure in the launch of Skype, Baidu, and many other companies that took off. He also was an early developer of the concept of viral marketing.
So what does a guy who is so prescient about business think about the role of government in jumpstarting the economy?
Here's my summary of what he thought the government should do:
- Open up the border with Canada: They've got the oil, and they want more trade.
- Drop Sarbanes-Oxley regulations for the first ten years in the life of a public company. Sarbox is just too costly for the small public firms getting off the ground, Draper said. Thanks to Sarbanes-Oxley, Draper argued, the U.S. has seen a decline in the number of public companies, while European and Chinese stock exchanges have seen increases.
- Green incentives: Use carrots, rather than sticks like carbon taxes, to encourage businesses to address public goods problems like global warming.
- The federal government should make more secure loans to innovative companies like Tesla Motors. But, I should note that Draper has invested in Tesla.
- More free trade: If we didn't have trade with China, we wouldn't have semiconductors, flat screens, computer memory, etc.
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Marijuana And State Budgets: Now What?
Continue reading… 26 CommentsThe Justice Department will no longer go after medical marijuana users in states where the substance is partially legal. At about the same time as the Obama administration made headlines for that move, Gallup announced that a recent poll has found the greatest-ever number of Americans in support of legalizing marijuana.
But still, marijuana activists in California, a state with dire budget problems, have been unable to succeed in a long effort to regulate and tax marijuana to raise money for the state. (see previous post here).
Baby steps toward state-wide legalization might come in the form of tax increases for medical marijuana at the local level (PBS reports here). If those policies prove to be big windfalls for those towns, the state legislature will probably take notice.
No one knows which (if any) states will be the first to take this step, but the idea is certainly getting more popular: A committee in the Massachusetts legislature just entertained the notion of creating a taxable cannabis market.
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How Outsourcing Creates American Jobs
Continue reading… 7 CommentsThis highly-Dugg article lists the top U.S. businesses that have moved facilities and jobs abroad. It's generating comments like this one:
you outsource your country and theres nothing LEFT for normal people to work at except malls and retail stores.
But just a few days earlier, Vivek Wadhwa wrote this interesting article in The American that explains why, outsourcing from the U.S. to other countries withstanding, the U.S. is also a beneficiary of outsourcing by foreign companies:
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Name That Country
Continue reading… 2 CommentsIn today's Financial Times, David Pilling gives a good overview of how the "dead hand" has returned to American economic policy:
Much of the banks’ money has been lent not to small private enterprises, but to big [state-supported financial institutions], many of which do not really need the cash. Some are putting loans straight back into the bank. Much is leaking out into real estate and equity investments, creating concerns about asset bubbles. If, as many suspect, the rash of lending eventually leads to a leap in non-performing loans, most banks probably expect the state to wipe the slate clean.
But oops, I made a mistake. Find out after the jump...
