BusinessWeek: Housing policies of the rich have contributed to unemployment

Bloomberg Business Week


Bloomberg BusinessWeek has a great story on the lack of affordable housing in the suburbs contributing US income inequality. However, make a more startling argument that rich neighborhoods are using zoning and land use laws to keep the poor from jobs in high income area.. This "discrimination" has stopped the shrinkage of the rate of income inequality that existed from 1880 to 1980.

The business week article is based on a paper by "Peter Ganong and Daniel Shoag" called "Why has regional income convergence in the US Stopped". Both work a Harvard University.

What's new in the paper is they have developed a data set that models communities land use and zoning laws.  The restrictions increase the price of housing.

barriers to the poor in high income areas are discriminatinon against the poor by the rich though zoning lawas and regulation is responsibile for a large amount if income inequality.  That is unemployment due to geographic mis-match has contributed to income inequality. Interestingly, city with less restricted housing policies have not been affected by income inequality.

Dr. Dre shelters income in Ireland

Andre Young (Dr. Dre) is setting up three legal entities in Ireland to shelter income from the European sales of his beats head phones.  The fake corporations were set-up by and accounting firm in Cork, Ireland.  According to the article. Beats headphones has no other presence in Ireland.

The Irish Herald has the story here. 

The story in the Irish Independent is here.

Brown University Economic Impact Statement

Here is a report from Brown University detailing it's economic impact on the Rhode Island and Providence communities.  The report is here for 2012.

Year 2012
Year 2009
Year 2005

We go back and forth on these reports.  They are clearly done for public relations reasons.  Brown Univeristy must be feeling some heat to produce these reports.

On the other had we believe in making public investment decisions based on hard facts like cost benefit analysis.  These rudimentary economic impact reports are a good first step when state and local goverments have to make decisions about infrastructure and services.

Don't try do this at home kids: UK Austerity Update from NYT

The New York Times has a long look at UK austerity program under David Cameron's Conservative government. The New York Times article is here.  Cameron recently announced the austerity would continue for another five years.

The UK Independent has a piece on the UK budget deficit worsening.  The article from the UK Independent is here.

Here is a discussion in the London Review of Books calling the Cameron / Osborne policy a failure.  The story by John Lanchester.  He has a great reference in it to the International Monetary Fund's World Economic Outlook (October 2012) publication. On Page 41, of IMF Outlook,  they discuss the multiplier used calculating the effect of government spending cuts on the larger economy.  The IMF suggests that the GDP reduction effect could be as high as 1.7 times the cut.  In other word, removing 100 Billion pounds in spending would reduce economic activity by 170 Billion pounds.  Not something you want to be doing during a recession.

So you have to ask if the savings are worth crippling the economy.

In our opinion, voters want simple solutions to complicated problems and politicians are willing to do just that.

Thank goodness the US federal reserve has the right idea: Low, predictable interest rates for the short and medium term, short term stimulus until unemployment falls to a certain level and pressure on policy makers for gradually reduce long-term healthcare costs.

UK Guardian: Starbucks, Google and Amazon in the press for paying no UK taxes

The press in the UK has seized the issue of the large corporation paying little or no taxes in the United Kingdom.

Here is a story about Members of Parliament requesting action on tax avoidance.  In the UK Guardian. According to the story Starbucks paid no UK taxes in the past three years and paid only 8.6 million pound in UK taxes on sales of 3.1 Billion.  A rate of 0.28% or about a quarter of 1%.

Which tax havens do the top 100 US companies use

Every wonder which countries the Fortune 100 use for the tax shelters ?  Well the government already knows.  Here is a report from the GAO that lists which countries helped the Fortune 100 avoid taxes. It also lists the countries used by the top 100 government contractors.

The report from the GAO in 2009 is here. GOA Tax Shelter Report.  It list which countries are used by which companies to avoid paying US taxes.

The financial industry was the leader in the number of tax shelter companies followed by the pharmaceutical and high-tech industries.  Both industries transfer their patents or other assets to low tax jurisdictions and then collect royalties.  They also earn profits outside the US and then use the money for overseas investments.

NY Times: Poverty in Japan

New York Times to the rescue always. I was looking for something on poverty in Japan.  I was trying to find a developed post-industrial country comparable to the US which may have followed an economic route similar to us and has a aging population.  It does not look good for the US. 

Poverty in Japan.

Is their a "Real" Skills Gap in Manufacturing ?

I came across this publication from the Manufacturing Institute describing a skills gap in manufacturing in the united states.  Skills Gap in Manufacturing.

I have a lot of problems with the report.  1) It seems totally self-serving.  The manufacturing industry wants better skilled employees, but does not want to pay any more money in wages or benefits. 2) They want federal, state and local governments to pay for closing the gap.3) Proposes the manufacturing industry do little or nothing different to close the gap.

We realize manufacturers are in a very tight bind between off shore price pressure and low domestic demand. However, we would propose more internal cross-training and job flexibility along with employee ownership, not just outsourcing the problem to the government.

37% do not collect unemployment benefits

USA today has a story on uncollected unemployment benefits.

USA Today Story is Here. 

Fix the Debt: Simpson - Bowles Plan

Fix the Debt: Simpson - Bowles Plan

First, let us state that the US Debt discussion is a smoke screen to cut social spending and the government. Period. The real problem is lack of jobs.  It is purely and ideological augment over the size and scope of government.  The financial markets could careless and the same goes for consumers.


Given all that we like the Simpson Bowles plan. Many of the CEOs who visited the white house recently support the plan.  Simpson Bowles raises taxes oh the rich, cuts military spending and curbs social security and health care costs. It also taxes corporate gains at the same rate as income.

Here are some of the CEO's that support the plan. The CEO Council of Fix the Debt

Fix the Debt 
Moment of Truth

You can Google Simpson Bowles at "National Commission on Fiscal Responsibility and Reform" oe read more here.

While not directly criticizing the plan the IPS, The Institute for Policy Studies has a counter argument here. 

Finally, we are opposed to a territorial tax which would let companies bring revenue's back to the United States without paying taxes when the revenue is taxed overseas. Foreign taxes and US taxes are part of the cost of doing business.

NY Times: Corporate Subsidies

The New York times has a series on government subsidies for corporations. How taxpayers bankroll business.  The series took 10 months of analysis and reporting

Very deep, well researched and though provoking amount of quality journalism.

Starbucks paid no taxes in the UK last year

There is a big battle in England over corporate taxes. Last several large companies paid no taxes


The British Broadcasting Corporation has a long story here: Tax: Starbucks in talks with UK's Revenue and Customs.

Starbucks has 700 stores in the UK and sales of 400 million pound (600 million dollars) but paid no UK corporate taxes. Instead transfers all its profit to a "shell" company in the Netherlands as royalties   Microsoft, Google and Amazon all pay abnormally low taxes in the UK.

The article also had a strange quote from chancellor George Osborne saying the UK must remain "Tax competitive"  with other countries to attract corporations. The truth is the United Kingdom would be attractive to starbucks and other coffee sellers regardless of the tax rate.  In a tax reasonable environment, starbucks wants to be in the United Kingdom.

Political leaders are doing a disservice to their country, communities and people by not collecting more taxes from companies like Starbucks 

Senate Bill S. 1346 - Stop Tax Have Abuse Act

Carl Levin, Democratic senator from Michigan, is sponsoring a bill, S1346, to stop the abuse of offshore tax havens by US corporations.  The bill was introduced in July of 2011.  The details are here.

Here is a great detailed review from Citizens for Tax Justice. If you want to understand some of the accounting and legal tricks used to avoid US taxes, this document has plenty.

The bill would increase reporting requirements for offshore entities and treat tax entities managed by US companies as domestic corporations.

It also extends anti-money laundering reporting to off shore tax entities.

It would ban tax consultant contingent fees.

It also support the IRS process of issuing "John Doe" summons for tax information.

You can read the full bill summary here. S1346 Stop Tax Haven Abuse Act.

This bill has a snowballs chance in hell of passing.

Federal government program for low-income poeple

Here is a nice, comprehensive list of federal programs designed to benefit lower-income people.

CRS report federal programs for low-income people.

GOP on reducing poverty

Here are some Republican ideas on reducing poverty at the Republican Study Committee web-site. The web site is here.

The discussion covers two very minor programs: one program is the social work of a ministry in Richmond  VA and the second is in Washington DC that helps children walk safely to school in bad neighborhoods.

That is it. That's all.  Pretty laughable. They are just completely, intellectually absent from the problems of poverty in the US.  It is just incredible.

The lack of any substantial proposal implies that their are no acceptable Republican answers.   If there was private market based solution they would be all over it.  So, let's play devils advocate. Let's assume they have good research people and are genuinely interested in helping poor people, then should have produced some ideas or policies.   Their complete lack of ideas supports the idea that solutions to poverty must come from the government. Poverty cannot be fixed though market mechanisms, it must be handled by government using public funds from taxes.

Since the national Republicans don't have a solution, they ignore the problem.Where is Jack Kemp when you need him ?.