Economic Crisis – Page 17 – artdiamondblog.com

An “Entrepreneur’s Visa” to Let the Future Sergey Brin In

(p. A19) . . . , there is one way to create a lot more jobs without spending federal money. Let’s import them. More precisely, let’s import the people who create them: entrepreneurs.

A bipartisan bill that would begin to do just that was introduced on Feb. 24 by Sens. John Kerry (D., Mass.) and Richard Lugar (R., Ind.). Their “Startup Visa Act” would create a new, two-year visa for immigrant entrepreneurs whose firms attract at least $250,000 in financing from American angel investors or venture capital firms.
. . .
Here’s a way to improve on the Kerry-Lugar plan. Create a true “job creator’s visa,” one tied directly and only to job creation by new immigrant entrepreneurs. The visa could be a temporary one for immigrants already here on another visa who establish a business. It could then be extended if the firm hires at least one American non-family resident. The visa should become permanent once the enterprise crosses a certain job threshold (such as five or 10 workers). But it would not be tied to financing.
. . .
Google was founded by Sergey Brin, a Russian immigrant, and American Larry Page by borrowing funds from their own credit cards. Why on earth would we want to create an entrepreneurs’ visa that couldn’t let in the future Sergey Brin?

For the full commentary, see:
ROBERT E. LITAN. “Visas for the Next Sergey Brin; To create more jobs, let’s import more employers.” The Wall Street Journal (Mon., MARCH 8, 2010): A19.
(Note: ellipses added.)
(Note: the online version of the article is dated MARCH 7, 2010.)

United States Exports “High-Value-Added Services that Support Well-Paying Jobs”

Source of graph: online version of the WSJ article quoted and cited below.

(p. A23) Exports of American services have jumped by 84 percent since 2000, while the growth rate among goods was 66 percent. America trails both China and Germany in sales of goods abroad, but ranks No. 1 in global services by a wide margin. And while trade deficits in goods have been enormous — $840 billion in 2008 — the country runs a large and growing surplus in services: we exported $144 billion more in services than we imported, dwarfing the surpluses of $75 billion in 2000 and $58 billion in 1992.

Equally important, Commerce Department data show that the United States is a top-notch competitor in many of the high-value-added services that support well-paying jobs.
. . .
. . . , will Washington offer tax breaks or other export incentives? While businesses may clamor for them, these would be a setback for freer trade — after all, for years it has been America that has been hectoring other countries to end their subsidies to exporters. Will Washington try to pick winners in the global marketplace, like green energy? More often than not, this kind of industrial policy wastes money, fosters inefficiency and creates few permanent jobs.

For the full story, see:
W. MICHAEL COX. “An Order of Prosperity, to Go.” The New York Times (Weds., February 17, 2010): A23.
(Note: ellipses added.)

Unlikely Tea Party Leader Protests the “Porkulus”

“Keli Carender resists the idea of a Tea Party leader — “there are a thousand leaders,” she says. But she has become a leader, and a celebrity. Ms. Carender at a recent rally in Olympia, Wash.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 1) SEATTLE — Keli Carender has a pierced nose, performs improv on weekends and lives here in a neighborhood with more Mexican grocers than coffeehouses. You might mistake her for the kind of young person whose vote powered President Obama to the White House. You probably would not think of her as a Tea Party type.

But leaders of the Tea Party movement credit her with being the first.
A year ago, frustrated that every time she called her senators to urge them to vote against the $787 billion stimulus bill their mailboxes were full, and tired of wearing out the ear of her Obama-voting fiancé, Ms. Carender decided to hold a protest against what she called the “porkulus.”
. . .

(p. 19) The daughter of Democrats who became disaffected in the Clinton years, Ms. Carender, 30, began paying attention to politics during the 2008 campaign, but none of the candidates appealed to her. She had studied math at Western Washington University before earning a teaching certificate at Oxford — she teaches basic math to adult learners — and began reading more on economics, particularly the writings of Thomas Sowell, the libertarian economist, and National Review.
Reading about the stimulus, she said, “it didn’t make any sense to me to be spending all this money when we don’t have it.”
“It seems more logical to me that we create an atmosphere where private industry can start to grow again and create jobs,” she said.

For the full story, see:
KATE ZERNIKE. “Early Arrival at the Tea Party: A Young and Unlikely Activist.” The New York Times, First Section (Sun., February 26, 2010): 1 & 19.
(Note: ellipsis added.)
(Note: the online version of the article is dated February 27, 2010 and has the title “Unlikely Activist Who Got to the Tea Party Early.”)

Federal Government Spending Soars

Source of graph: online version of the WSJ article quoted and cited below.

(p. A17) This has been an unforgettable year in the history of American spending.

It began with an eye-popping $800 billion stimulus bill that came from nowhere and went to nowhere. Done with that, the Washington Democrats turned to President Obama’s health-care reform, which looked big at first, but turned out to be bigger. A well-publicized June estimate of the Senate bill’s cost by the Congressional Budget Office put the 10-year price tag at $1.6 trillion. So $800 billion, then a trillion.
Dollar signs rocketed into the sky all year: hundreds of billions on various TARP salvage projects, much drawn from some magic stash held by the Federal Reserve. The Obama cap-and-trade bill was going to use an auction to siphon $3.3 trillion from various states to Washington over 40 years. Oh, almost forgot–an FY 2011 $3.8 trillion budget.

For the full commentary, see:

DANIEL HENNINGER. “It’s the Spending, America .” The Wall Street Journal (Thurs., February 18, 2010): A17.

“Silicon Valley’s Economy is Sputtering”

“An unoccupied office building in San Jose, Calif., in December. Many tech firms are hiring engineers abroad to do their work.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B3) SAN FRANCISCO — Silicon Valley’s economy is sputtering and risks permanently stalling, according to an annual report by a group of researchers in the region.

Part of the toll on Silicon Valley has resulted from the recession. The region, the center of the global technology industry, lost 90,000 jobs from the second quarter of 2008 to the second quarter of 2009. Unemployment is higher than national levels and the worst in the region since 2005, when technology companies were still recovering from the dot-com implosion.
The drop in the number of midlevel jobs — the engineers who drive much of the Valley’s growth — has been sharpest. And when companies do hire, they are cautiously hiring independent contractors instead of regular employees, and are hiring abroad, according to the “2010 Index of Silicon Valley” report, which was produced by the Joint Venture: Silicon Valley Network and the Silicon Valley Community Foundation, two local nonprofit groups.
Other economic indicators are also gloomy, the report found.
“We show no evidence that the recovery has arrived,” said Russell Hancock, chief executive of Joint Venture.

For the full story, see:
CLAIRE CAIN MILLER. “Report Warns Silicon Valley Could Lose Its Edge.” The New York Times (Thurs., February 11, 2010): B3.
Note: The online version of the article is dated February 10, 2010, and has the title “Report Warns Silicon Valley Could Lose Its Edge.”)

Chamber’s Donohue Promotes Free Enterprise

Chamber of Commerce President Tom Donohoe. Source of caricature: online version of the WSJ article quoted and cited below.

(p. A13) The White House’s war on the Chamber has come just as the group is launching a new $100 million campaign promoting free enterprise.

“We want to encourage and promote and educate and get a bunch of enthusiasm behind . . . the free enterprise system with free capital markets and free trade and the ability to fail and fall right on your ass and get up and do it again!” he says.
The belief in that system, Mr. Donohue says, has been eroded by the recession and subsequent criticism of the free market. “The purpose of this is to get out of the doldrums! Quit sulking and worrying.” He hopes the campaign will remind Americans that “We created 20 million jobs in the ’90s, we can do it again. We don’t have to do it exactly like that–Adam Smith didn’t have a BlackBerry–but we ought to pay attention to what made it work.”

For the full interview, see:
KIMBERLEY A. STRASSEL. “OPINION: THE WEEKEND INTERVIEW with Tom Donohue; Business Fights Back; His organization under attack by the White House, the president of the Chamber of Commerce stands by his defense of free enterprise.” The Wall Street Journal (Sat., October 24, 2009): A13.
(Note: the online version of the article has the date October 23, 2009.)
(Note: ellipsis in original.)

Dubai’s Economic Future Depends on Its Institutions

“A man took in the view of Dubai from the 124th floor of the newly opened, $1.5 billion Burj Khalifa, a rocket-shaped building that soars 2,717 feet.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A7) CAIRO — In the heady days of the Dubai gold rush, when real estate sold and resold even before a shovel hit the ground, the ambitious emirate was hailed as the model of Middle Eastern modernity, a boomtown that built an effective, efficient and accessible form of government.

Then the crash came and revealed how paper-thin that image was, political and financial analysts said. That realization, not just in Dubai but also in Abu Dhabi, the oil-rich capital of the United Arab Emirates, has cast a harsh light on an opaque, top-down decision-making process, not just in business but in matters of crime and punishment as well, political and financial analysts said.
The financial crisis and now two criminal cases that have generated critical headlines in other countries have demonstrated that the emirates remain an absolute monarchy, where institutions are far less important than royalty and where the law is particularly capricious — applied differently based on social standing, religion and nationality, political experts and human rights advocates said.
“I think what we learned here the last four months is that the government, at least on a political level, is still very undeveloped,” said a financial analyst based in Dubai who asked not to be identified to avoid compromising his ability to work in the emirates. “It’s very difficult to read or interpret or understand what is going on. The institutions have not shaped up to people’s expectations.”

For the full story, see:
MICHAEL SLACKMAN. “Dubai Memo; Entrenched Monarchy Thwarts Aspirations for Modernity.” The New York Times (Fri., January 22, 2010): A7.
(Note: the online version of the article is dated January 21, 2010.)
(Note: ellipsis added.)

“Workers repaired a phone line next to an office building in Dubai’s Internet City. Even after a bailout, Dubai remains heavily burdened by debt.” Source of caption and photo: online version of the NYT article quoted and cited above.

Chinese Subsidies Create Unprofitable Overcapacity and Risk of Crisis

(p. 5) . . . subsidies, . . . , have spurred excess capacity and created a dangerous political dynamic in which these investments have to be propped up at all cost.

China has been building factories and production capacity in virtually every sector of its economy, but it’s not clear that the latest round of investments will be profitable anytime soon. Automobiles, steel, semiconductors, cement, aluminum and real estate all show signs of too much capacity. In Shanghai, the central business district appears to have high vacancy rates, yet building continues.
. . .
Over all, there is a lack of transparency. China’s statistics on its gross domestic product are based more on recorded production activity than on what is actually sold. Chinese fiscal and credit policies are geared toward jobs and political stability, and thus the authorities shy away from revealing which projects are most troubled or should be canceled.
Put all of this together and there is a very real possibility of trouble.

For the full commentary, see:
TYLER COWEN. “Economic View; Dangers of an Overheated China.” The New York Times, SundayBusiness Section (Sun., November 29, 2009 ): 5.
(Note: the online version of the commentary has the date November 28, 2009.)
(Note: ellipsis added.)

Socialist Chavez’s Thugs Destroy Venezuelans’ Economic Freedom

“A member of the National Guard stands guard during a inspection of prices at a store in La Guaira outside Caracas Jan. 12.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A8) CARACAS — President Hugo Chávez’s decision to devalue Venezuela’s currency in order to shore up government finances could backfire on the populist leader if the move leads to substantially higher prices and extends an economic downturn.

Just days after Mr. Chávez cut the value of the “strong bolivar” currency, some businesses were marking up prices. Shoppers jammed stores to stock up on goods before the increases took hold.
Amelia Soto, a 52-year-old housewife waited in line at a Caracas drugstore to buy 23 tubes of toothpaste. “Everywhere I hear that prices are going to skyrocket so I want to buy as much as I can now,” she said.
Airlines have doubled fares; government officials said they were looking into reports that large retail chains were also increasing prices.
. . .
The price increases are setting the stage for confrontations with authorities following Mr. Chávez’s orders to shut down retailers that raise prices.
. . .
The higher prices for consumer goods represent a huge liability for a country facing 27% inflation, one of the highest levels in the world.

For the full story, see:
DARCY CROWE and DAN MOLINSKI. “Prices in Venezuela Surge After Devaluation.” The Wall Street Journal (Weds., JANUARY 13, 2010): A8.
(Note: the online version of the article has the title “Venezuelans Rush to Shop as Stores Increase Prices.”)
(Note: ellipses added.)

Venture Capitalists Invested 37% Less in Start-Ups in 2009

(p. B5) Venture capitalists, whose money provides fuel to technology start-ups, last year invested the lowest amount in such companies since 1997, according to a report from PricewaterhouseCoopers and the National Venture Capital Association released on Friday.
. . .
In 2009, venture capitalists invested $17.7 billion in 2,795 start-ups — 37 percent less cash and 30 percent fewer deals than in 2008. Internet companies, which have excited investors for more than a decade, took a big hit as investment declined 39 percent.

For the full story, see:
CLAIRE CAIN MILLER. “Venture Capital Was Tight for Tech Start-Ups in ’09.” The New York Times (Fri., January 22, 2010): B5.
(Note: ellipsis added.)