As the Financial Crisis deepens in Greece the Best and Brightest are choosing to Leave Greece

Posted by PITHOCRATES - June 23rd, 2012

Week in Review

Greece struggles to remain in the Euro.  But it may all be for naught.  For the damage is done.  The best and brightest have been leaving Greece for sunnier pastures (see Greece brain drain ‘wrecking my social life’ by Giorgos Christides posted 6/22/2012 on BBC News Magazine).

According to the latest national polls, more than seven out of 10 young Greeks aged 18 to 24 believe that emigration is the ideal – indeed the only – way out from the crisis. Two out of 10 have already applied for jobs and university places abroad.

For many Greek high school graduates, who are currently sitting for their university entrance examinations, studying in Greece is not a choice but an imperative dictated by their families’ lack of economic means to fund a university education abroad.

Those families who can afford it, don’t give the matter a second thought – they hide their tears and frustration as best they can, and wave their children goodbye, wishing them to go abroad and stay there for good…

Little did we know that a decade later, Greece would be considered an economic wasteland for ambitious young students and graduates, who are now suffering from unemployment rates in excess of 50%.

Workers’ and students’ mobility has been, of course, one of the landmarks and major achievements of European integration. But it is now evolving into a medium-term death sentence for the ageing Greek society and economy.

In an era characterised by intensified global competition for talented, innovative and highly-skilled workers, the brain drain afflicting Greece means the country is losing its best hope of revival.

Rather ironic, isn’t it?  The thing that brought Europe closer together, the Eurozone, may be the thing that makes the Greek tragedy so tragic.  As the politicians massaged the financial numbers to get Greece into the Eurozone, and to keep Greece in the Eurozone, the young people who were to pay for their financial chicanery saw no future and left.  Saying goodbye to that generous social democracy.  Walking away from the welfare state.  And all of that government spending that caused all of this trouble in the first place.  To get a good education.  So they can get a job.  Which they can do relatively easily thanks to the currency union and European integration.

Greece is in a world of hurt.  An unemployment rate of 50% for the young and ambitious is bad.  But it’s better than having the young and ambitious leave.  Because these are the people who get good jobs.  And make a lot of money.  Who pay a large share of the taxes.  These are the tax contributors.  Who barely consume any taxes.  As they leave the tax consumers will be the only ones left.  Which will only make the current financial crisis worse.

The austerity requirements for their financial bailout caused rioting in the street.  And the rioters were primarily tax consumers.  For who else would riot over these spending cuts?  The taxpayers?  Not likely.  The tax consumers are the ones panicking over proposed austerity measures.  Because they are wholly dependent on government spending.  But while they protest the tax contributors, like Elvis, have left the country.  Making the future indeed a dark one.


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Scotland considering Introducing a Local Income Tax and a Wealth Tax

Posted by PITHOCRATES - June 23rd, 2012

Week in Review

The UK is a social democracy.  Which means high taxes.  To pay for all of those government benefits.  Including that national health care.  Exactly the kind of thing a lot of people want for the United States.  Who hope that Obamacare will evolve into a national health service just like they have in the UK.  But there is only one problem with a generous social democracy.  It’s expensive (see John Swinney to consider new local income tax by Simon Johnson posted 6/22/2012 on The Telegraph).

The Scottish Finance Minister said he will examine how to replace council tax with a new levy “based on the ability to pay”, a phrase that has previously been synonymous with the SNP’s argument for a local income tax…

This could see residents taxed on the basis of their savings and share dividends rather than just their income. However, it is not expected that any firm proposals will emerge before the independence referendum in 2014 for fear of angering voters.

This is where Obamacare will lead us to.  To a costly social democracy.  And such a costly welfare state that they will raise our income taxes to pay for it.  And add a wealth tax.  Just like they’re talking about doing in Scotland.  Taxing our savings accounts.  And our investments.  Including our 401(k)s. 

You see, free stuff is expensive.  And is a great disincentive to work hard.  For who wants to work hard and save for their retirement while they will be taxed every step of the way?  Where they’ll tax the income we earn.  Tax the money we save for our retirement.  Tax the inheritance we pass on to our heirs.  And tax the pennies on our eyes.


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Uruguay to Legalize Marijuana to cut down on Drug Violence and Hard Drug Use

Posted by PITHOCRATES - June 23rd, 2012

Week in Review

Drug addiction ruins lives.  We’ve lost a lot of celebrities from their escalating use of drugs.  People have lost their careers.  Ruined their families.  And now there is a new drug that makes people psychotic and makes them want to eat human flesh.  Bath salts.  Nothing good comes from entering the world of drugs.  So criminalizing drugs has a lot of merit.  But there’s also something to say about decriminalizing drugs (see Uruguay government aims to legalise marijuana posted 6/21/2012 on BBC News Latin America & Caribbean).

Uruguay has unveiled a plan to allow state-controlled sales of marijuana to fight a rise in drug-related crime.

Under the bill, only the government would be allowed to sell marijuana to adults registered on a database.

Defence Minister Eleuterio Fernandez Huidobro said this was part of a plan to remove profits from drug dealers and divert users from harder drugs.

He said that the recent increase in murder rates was a clear symptom of a rise in drug trafficking crimes…

The authorities blame the rise in crime in Uruguay on hard drugs, specifically crack cocaine.

Uruguay is looking at the lesser of two evils.  The crime is getting so bad that they are willing to risk the drug addiction.  Hoping people will use marijuana and not move on to harder drugs.  As they currently are.  Which is a risk.  Because people rarely start with crack cocaine.  They start out with something less potent.  Like marijuana.  And then move on to something harder after marijuana bores them.  So this policy could backfire on them.  Unless they have plans to decriminalize crack cocaine, too.

Should America follow suit?  It probably would make life easier in Mexico.  Cut down on some of their drug violence.  Thanks to all those Americans using illegal drugs.  But all those Americans smoking marijuana?  I just don’t see how those on the Left will reconcile that with their attacks on Big Tobacco.  For either smoking is bad for your health.  Or it isn’t.


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Argentine Truckers go on Strike, Demand a 30% Pay Raise to offset 25% Inflation

Posted by PITHOCRATES - June 23rd, 2012

Week in Review

If you want to understand what’s happening in Argentina listen to Andrew Lloyd Webber’s Evita.  It’ll give you a little bit of the flavor of the current political picture there.  A populist president.  High inflation.  High taxes.  Strong unions.  Class warfare.  And there are some who even compare Cristina Elisabet Fernández de Kirchner, Argentine president, to Eva Perón herself.  A comparison she’s not overly pleased with.  But she doesn’t mind when people compare her to the strong defiant side of Eva Perón. 

But there are reasons for these comparisons.  For her political party, the Justicialist Party, was founded by Juan and Eva Perón.  And her policies are not that far away from their policies.  Which is basically a welfare state that taxes the rich to pay for it.  And prints a lot of money.  Hence the high inflation.  Which causes a bit of a problem.  To survive during high inflation means wages have to rise just as fast.  So they can pay those high taxes.  And afford the high prices that result from inflation.  Which isn’t apparently happening for the truckers (see Argentina deploys military police in fuel strike by Hilary Burke and Jorge Otaola posted 6/20/2012 on Reuters).

Argentina’s government sent military police to take control of fuel plants and get trucks back on the road on Wednesday, the first day of a truckers’ pay strike that could cause widespread shortages in Latin America’s third-biggest economy…

Labor disputes are common in Argentina due to double-digit inflation, but the Labor Ministry normally intervenes to avoid major disruption to the economy. In this case, the truckers flouted the ministry’s order for compulsory conciliation…

Pablo Moyano’s [head of the truckers’ union] father, Hugo, used to be a close ally of the president’s but their strategic alliance has all but collapsed, increasing the threat of labor unrest as inflation seen at roughly 25 percent fuels wage demands while economic growth slows sharply…

The truckers, who have threatened to stage a series of protests, want a 30-percent pay rise as well as lower taxes.

This is the same problem all welfare states have.  High public spending requires high taxes.  High taxes reduce economic activity.  With less economic activity to tax there is less tax revenue.  So states turn to borrowing (often giving themselves excessive debt that leads to debt crises like currently in Europe).  And printing money which unleashes inflation.  Increasing prices.  Making it harder and harder for the people to make ends meet.  Which is why these truckers are on strike.

They’re asking for a 30% pay raise.  Which sounds outrageous.  But when inflation is at 25% they are only asking for a net 5% raise.  Which isn’t all that unreasonable.  But their pay raise won’t fix the economy.  Higher wages will only increase prices further.  Requiring further demands for higher wages.  Which is the viscous cycle of high inflation.  Wages chase prices.  And higher wages increase prices.

Unless they enact a little austerity things aren’t likely to improve.  Perhaps this is the reason President Kirchner is bringing up the issue of sovereignty of the Falkland Islands.  To distract from her poor economy.  Much like the ruling junta did when they invaded the Falkland Islands in 1982 to distract their people away from an even worse economy.  But there’s another thing in play today.  The possibility of oil in the waters around the Falklands.  Which is something else they could nationalize.  And pour that oil revenue into their government coffers.  Give more stuff to the people.  And be even more popular.  As long as the oil lasts.  If there is oil.  And if there isn’t, nothing changes.  Except things will probably be worse on the Falklands once they start living under that Argentine inflation.


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Asian Immigration to the United States surpasses Hispanic Immigration

Posted by PITHOCRATES - June 23rd, 2012

Week in Review

Most people believe that President Obama’s recent executive order allowing children of illegal immigrants a path to citizenship without further fear of deportation was purely a political move to help his reelection chances.  If so he may have gained the Hispanic vote.  But he may lose the Asian vote (see Asian immigrants to U.S. surpass Hispanics for first time by Dylan Stableford posted 6/19/2012 on Yahoo! News).

Asians have surpassed Hispanics as the largest group of new immigrants to the United States, according to a new study from the Pew Research Center.

The study, called “The Rise of Asian Americans” and released on Tuesday, reveals that Asian-Americans also have the highest income, are the best educated and are the fastest-growing racial group in America…

The influx of Asians reflects “a slowdown in illegal immigration while American employers increase their demand for high-skilled workers,” the Associated Press said.

 “The educational credentials of these recent [Asian] arrivals are striking,” the report said. Sixty-one percent of 25-to-64-year-old Asian immigrants come with at least a bachelor’s degree—more than double non-Asian immigrants, making the recent Asian arrivals “the most highly educated cohort of immigrants in U.S. history.”

The study also found that Asian-Americans are “more satisfied than the general public with their lives, finances and the direction of the country, and they place a greater value on marriage, parenthood, hard work and career success.”

Jon Stewart joked on the Daily Show that Mexicans are doing the jobs Americans don’t want to do.  And Asians are doing the jobs Americans can’t do.  It’s funny because there is some truth in that.  People are hiring illegal immigrants because they can hire them cheaper than Americans.  And because they’re here illegally they’re hesitant to complain.  For fear of deportation.  While the Asians are arriving with a college degree in their pocket.  And smarter than the average American.  Probably because their universities teach worthwhile degrees unlike many of the American universities.  While Americans party their way through college taking the easier liberal arts and social sciences the Asians are taking math and science and doing a lot of homework.  Which is why American high-tech companies can’t hire enough of these new Americans.

Apart from the education there is little difference between the Hispanics and the Asians.  Most of the illegal Mexicans coming to America are coming to provide a better life for their families.  Willing to take jobs Americans don’t want because they place great value on family and hard work.  Just like the Asians.  When you get down to it the Hispanics and the Asians share a lot of conservative values.  And neither is looking for a handout.  They want jobs. 

So it will be interesting to see who these people will vote for.  Will conservative Catholic Hispanics vote Democrat out of gratitude for this new path to citizenship?  Will Asians coming here legally vote for the party that allows others to skip what they had to do to become citizens?  Or will they both vote for the party more in keeping with their values?  Which you would have to say lean Republican.


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The British NHS is Rationing Medical Procedures to rein in Rising Health Care Costs

Posted by PITHOCRATES - June 23rd, 2012

Week in Review

The proponents of Obamacare would love to see it evolve into a full blown national health care system.  Like the British have.  The National Health Service (NHS) is one of the finest national health care systems in the world.  Health care for everyone.  Whenever you need it.  And wherever you want to get it.  At least, once upon a time it was like that (see Nine in 10 health authorities rationing operations by Stephen Adams posted 6/19/2012 on The Telegraph).

The most comprehensive survey of its kind has found that almost two-thirds (59 per cent) are rationing joint replacement operations, with a similar proportion restricting access to cataracts surgery (66 per cent) after being referred.

The study, conducted by GP magazine, also found 59 per cent were limiting access to weight-loss surgery and 89 per cent were doing so for tonsil removals.

The proportion limiting access for at least one type of operation was 91 per cent, according to 101 primary care trusts (PCTs) which responded to freedom of information requests.

Doctors claimed trusts (PCTs) were “introducing waiting lists by the back door” and warned the moves would only lead to increased health costs, as patients would still need treating and would deteriorate in the meantime…

However, health managers are under intense pressure to avoid overspending and hit “efficiency” targets, to ensure the NHS can cope with increased demand on the same budget in years to come.

Why are they doing this?  Because people are living longer.  And having fewer babies.

This is a problem facing social democracies everywhere.  An aging population.  The rate of people leaving the workforce (who consume more taxes than they contribute) is greater than the rate of people entering the workforce (who contribute more taxes than they consume).  Which means you need either a booming economy so there’s lots of economic activity to tax.  High tax rates (which tend to cool a booming economy leaving you no better off in the end).  Or you have to start rationing. 

The British are looking at a double-dip recession.  And they already have high taxation.  Because they are a social democracy.  So that leaves them rationing.  Which is why they are rationing.

This is what we have to look forward to with Obamacare.  Only it will be worse.  Because we’re starting with an aging population.  And we have about five times the people the British have.  So we should have a budget crisis about 5 times as big.  And have to ration 5 times the amount of medical procedures.


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