Sexism in the US today

Women have made great stride for equality in the last 100 years, but is close enough good enough? Woman can now vote, run for political office and run top companies. However there is still a large gap in equality in the workplace.

Women in 1963 were earning on average 53 cents for every dollar their male counterpart made and as of 2013 they have increased that average to 77 cents per dollar. That’s only a 24 cent increase in the last 50 years, and they are still 23 cents behind a man. Do they have to wait another 50 years to be seen as equals in the business world?

This is odd considering study the Center for American Progress and the Center for Economic and Political Research recently released. The study concluded that woman alone entering the workforce, over the last 30 years, were responsible for increasing the US economy by 11%.

 

One of the main reasons for the large inequality in the workforce lies in the inequality in home life. A survey conducted by the Harvard business review found that of woman who have had children 93% wanted to return to work, but only 74% managed to do so and only 40% were able to return to full time jobs.

 

This stresses the one sided approach to raising children and domestication that the US culture has instilled in families. Housewives still greatly outnumber house husbands, but in a never ending chase for equality it become in efficient economically speaking for the one working parent to be a woman because of the dive in household income to 77% of what they would otherwise have.

Inequality for woman is most easily seen in the business world but still exists in every sector of life. One easy example is marriage, in most marriages in the US today the woman takes the mans last name, or if she is feeling self-riotous she will hyphenated or keep her own, but how often do you see the man take the woman’s last name? These inequalities are not only bad for women but are damaging to men as well. If a man takes the woman last name or is a stay at home dad, he is seen as less masculine and weak, when in reality he is most likely more nurturing than his spouse and respects her as an equal.

HP and the Foreign Corrupt Practices Act

Recently Hewlett-Packard Co. (HP) agreed to pay $108 million to resolve bribery investigations to help secure a multimillion-dollar contract with government agencies in Russia, Poland, and Mexico. HP pleaded guilty to violating the Foreign Corrupt Practices Act (FCPA). The 108 million paid by HP is among the largest ever paid by a U.S. company for violations of the FCPA.

Yet world wide Siemens AG still holds the record in 2008 when they paid the SEC and Justice department $800 million for violations. Not far behind, Alcoa Inc. this year agreed to a $384 million settlements for bribery.

What exactly is the Foreign Corrupt Practices Act?

 

The United States Department of Justice website explains that the Foreign Corrupt Practices Act of 1977 (FCPA) is a United States federal law that addrDepartmentesses bribery of foreign officials as well as visible accounting records. It applies to any person or business of the United States who is taking part in foreign corrupt practices that include giving anything of value (money or otherwise) to a foreign government official, candidate, or party.

A Wall Street Journal article titled H-P to Pay $108 Million to Settle Bribery Case by Spencer E. Ante and Don Clark explains what happened and gives example of how HP violated the FCPA.

 

In Poland, between the years 2006 and 2010, HP was involved in more than $600,000 in bribes, $360,000 of which involved an unnamed HP executive repeatedly delving bags of cash to Polish Police Officials to secure contracts valued at $32 million.

In Mexico, HP made $1.4 million in bribe payments, $125,000 of which were funneled to a government official to secure a $6 million dollar software sale.

And in Russia, between the years of 2000 and 2007, HP created a slush fund filled with several of millions of dollars for Russian officials, and financed lavish expenses. One example was a $150,000 hotel bill for a company owed by a family member of an unnamed senior Russian Government Official.

 

Along with the $76.8 million paid in penalties and forfeiture and the $31.5 million paid for SEC settlement (totaled $108 million), HP also cooperated largely with the investigation saving a large amount of time and money for both sides. HP cooperated by conducting an extensive internal investigation, voluntarily making U.S. and foreign employees available for interviews, and collecting, analyzing, and organizing evidence and information for the Department, enhancing there protocols, terminating involved employees, and agreed to continue to cooperate with the Department in any ongoing investigation of the conduct of the conduct of the Company and its officers, directors, employees, agents, and consultants relating to violations of the Foreign Corrupt Practices Act of 1977.

 

Whiskey

Tin Cup American Whiskey

This is a wonderful whiskey and I would recommend it to anyone who like a sweet finish. Created by whiskey entrepreneur Jess Graber (co-founder of Stranahan’s Colorado Whiskey) and Proximo Spirits. Tincup American Whiskey is distilled by MGP Ingredients in their Lawrenceburg, Indiana facility, then sent over and bottled in Colorado. As purely a marketing tactic, they call it a Colorado whiskey and even have Colorado etched into their bottles. Don’t be fooled, it is not a Colorado whiskey.

Positive Demand for high-end Cars

There has been a large positive shift in the demand for high-end cars, and no one does high-end cars like Germany. Mercedes, Audi, BMW, and Porsche control close to 80% of the market for these superior cars.

 

In the past few years there has been a large increase in the amount German auto makers have invested in car factories over seas. An article from the Dow Jones Company titled, German Luxury Car Makers look beyond Home Market by William Boston and Neal Boudette, explain why they are investing so much on factories outside of Germany. Production abroad swelled to 134% since 2000, while German car factory production only grew 6%.

 

This is largely to keep up with current and growing demand they need to invest in the major growth markets in the U.S. and China. By building in different counties with a variation of currencies they are also protecting themselves from currency changes. China and the US are important because the US is the biggest car market by value and China is the biggest car market by volume. Car sales expected to rise 7% in China, 3% in the US and stay nearly flat in Western Europe. Due to the trade restrictions set up by the Chinese, the only way to keep up with demand in China was for the auto company’s to manufacture in China. While with the US, German car companies encounter a lower manufacturing cost and can then export the cars.

 

The Germany auto companies have large plans for investment so far. Daimler, signed an agreement to invest $1.38 billion, to more than double production at its Chinese joint venture, Beijing Benz Automotive Co. (BBAC), part of their 4 million euro plan to invest in BBAC. While BMW revealed their $1billion expansion of the company’s U.S. plant, creating more than 800 jobs.

 

The article out of The Wall Street Journal titled Porsche’s 2013 Operating Profit Nearly Matched VW’s also written by William Boston talks about the major risk factors for the German auto companies to consider being the uncertain outcome of the Ukraine crisis, and currency risks. Ukraine is still fragile global economic system in recovery, this paired with punishing economic sanctions against Russia arouses fears that Europe’s economic recovery could be slowing to a standstill.

 

The currency risk, especially in some emerging markets is something worth thinking about for the auto companies. Last year VW reported that the exchange rate swings cut sales 4.6 billion euro, and this year it is expected to be around still around 1 billion euro.

 

 

Whiskey

 

Coillmór Bavarian Single Malt 

Like the high-end car companies, this high-end whiskey is come from southern Germany, or Bavaria, in the Bavarian Forest. Coillmór Bavarian Svingle Malt Whisky is from the Bavarian Forest Bärwurzerei specialty distillery Gerhard Liebl. This Bavarian single malt has won a silver metal and three gold metals. Keep an eye out for imports of this luxury product.

Recreational Marijuana

We are currently entering into our fourth month of the first ever legalization of Marijuana in the United States. There hasn’t been a significant amount of “pot related” deaths, violence, robbery or stoned drivers, as some news sources had feared.

In fact, for Colorado the new legalization has proven to be positive so far. There has been 6.3 percent increase in the amount of incoming airline flight searches for Colorado as well as the large amounts of tax revenue.

While Colorado and Washington were the first states to legalize marijuana, the rest are hot on their trail.

 

 

 

This is more than likely due to the amount of tax revenue the recreational Marijuana industry is expected to generate. An article from the Miami Herald written by Kristen Wyatt titled Colorado Marijuana Sales up Slightly in 2nd Month, elaborates on the tax revenue that Colorado has see so far.

In January Colorado made $3.5 million in taxes and fees with 59 recreational Marijuana businesses, and in February the numbers rose to $4.1 million and 83 businesses. However, the sales tax collected only went up $30,000 from January to February suggesting that despite the increase in businesses, the market for recreation Marijuana didn’t grown much.

 

The original prediction for the anal tax revenue Colorado would collect from recreational Marijuana was around $125 million, and has been re-estimated by legislative forecasters to only around $65  million.

 

Coincidentally, an article by the same author by Kristen Wyatt, for The Cannabist and titled Gov. Hickenlooper Dialing back Colorado tax Prediction, explains where that tax revenue goes.

 

Shortly after the legalization of recreational Marijuana, Colorado voters decided the first $40 million of tax revenue would go to school construction. Colorado Governor Hickenlooper preposed to spend some of the additional tax revenue on youth prevention programs, additional policing efforts to check for stoned drivers and a project to study the effects of Marijuana on pregnancy. Yet in the end the additional taxes will be delegated where lawmakers deem appropriate.

Currently the sales tax for Marijuana is set at 12.9 precent, but we have to wonder if the high tax is the cause of the drop in the annual tax revenue generated. There is already a black market for Marijuana selling pot at market equilibrium prices much lower that that of the business licensed pot sole due to the taxes. If prices were more competitive would the sales of recreational Marijuana increase enough to make more tax revenue?

 

Whiskey

Templeton Rye

Small Batch

 

This whiskey was originally made in Templeton, Iowa during the prohibition era. It was said to be, mobster, Al Capone’s drink of choice and is rumored that there was found empty bottle of it in his jail cell after he passed. Today Templeton is still said to be biased on the probation-era recipe.

Templeton is one of the best American Rye whiskeys, and as it survived as alcohol was made legal again, maybe we can look forward to strains of week or edible recipes that will also with stand the test of time.

Job loss Due to Taxes

We are constantly hearing about the employment rate, and different factors that affect it.  One concern you’ll likely to hear about is that our jobs are being sent overseas. There are many reasons for this but today I’m going to focus on the federal corporate tax rate. Large corporations should be taxed, that’s where all the money is, but to what degree?

 

The U.S. federal corporate income tax currently sits around 35%, which is a tie for the second highest top-bracket tax rate in the world behind Antigua & Barbuda and Congo. These high corporate tax rates incentivize companies to shift there headquarters and sometime even there whole business over seas. Corporate Tax Rate & Jobs ProCon.org, a nonpartisan, nonprofit website helps put it into perspective;

 

“Aon, a company with $11.28 billion in 2011 revenue that moved its headquarters from Chicago to London in 2012, said the move would reduce its tax rate by five percentage points, increase its profits by about $100 million annually, and allow them to expand by hiring more employees”.

 

That’s 100million with only a 5% reduction. Compare that to the corporate tax rates in Ireland that are at only at 12.5% and you too will feel compelled to move your business. Similarly, the 60 minuets episode below points out the tax rates in Zug, Switzerland are as low as 15-16%. This draws in businesses like crazy. The population of Zug is around 26,000 a very low amount considering there are around 36,000 companies in Zug and growing by a rate of around 800 per year.

 

 

Zug is an example of companies relocating there headquarters instead of the entire company. This isn’t terrible news because it keeps jobs in the U.S. however it keeps the profits overseas. To bring back the profits the company would have to pay the same 35%, so instead of putting that money back into our economy it remains abroad, where the company opens up new locations creating even more jobs abroad.

 

Lawmakers on both sides agree that the federal corporate income tax needs to be reformed. An article from the Wall Street Journal states that the Obama administration is seeking to lower the tax to 28% while his republican opposition Mitt Romney has proposed 25%. Either way would this be enough to incentivize companies? Should the US workers be more flexible in traveling abroad for a job? And would we end up loosing or gaining more tax revenue form decreasing the corporate income tax?

 

The Second Machine Age

Are we entering into the second Machine age? Erik Brynjolfsson and Andrew McAfee of MIT’s Center for Digital Business, and authors of the book The Second Machine Age, sure seem to think so. Their argument is that first machine age replaced our muscles while the second will replace our minds. This isn’t to say that we are doomed to be oppressed in a world overrun by robots, instead it means that technology is growing at an exponential rate. The three shaping forces of the second machine age are Moore’s Law that states that computer processing power doubles every two years or so, Mass datafication caused from every day devices like cell phones putting out massive amounts of data to study, and recombinant innovation where we build on previous innovations.

 

 

As you can see in a variety of different areas machines are developing more into cognitive functions and because of this, there are growing concerns that with this second machine age that there will be more trouble finding jobs. Brynjolfsson and McAfee assert that unemployment won’t be any more of an issue that in already is as long as we reform education. They insist that instead of focusing on routine skills and how to follow instructions like much of the twentieth century education, the twenty first century should be focused on creativity and interpersonal skills.

 

 

 

Cleveland Whiskey

Made in Cleveland, Ohio, this whiskey has a unique store. Much like the rapid expansion of machine progress, owner, Tom Lix has come up with an idea for accelerated aging of whiskey from years down to about six months. He starts by making the bourbon in a traditional way and aging it in a virgin oak barrel for 6 months, then transfers it to a stainless steal tank for about one week. Once in the stainless steel tank, he chops up the barrel and adds it into the whiskey. He then squeezes out all of the flavor possible out of it.

Arizona’s Gay Codes

Modern Day Jim Crow Law

Earlier this week there was much discussion on a bill passed by Amazonia’s legislator, and awaited signature by the Governor Jan Brewer.  The bill would give business owners the right to refuse service to homosexuals and others on religious grounds.

 It is important to make note that business owners already have the right to refuse service for a variety of legitimate reasons, they just have to abide by the Civil Rights Act of 1964 that states they can not refuse service to patrons on the basis of race, color, religion, or natural origin.

 

Governor Brewer did not sign the bill. Her reasoning had nothing to do with the clear violation of constitutional law, or the striking similarities to segregation laws. Instead her decision came from the threats of financial disaster.

Amazonia is still under financial strain due to the passing of the immigration law in 2010 SB 1070. The law gave police officers the right to stop people who they suspected of being in the country illegally and ask for there papers. It also made it illegal for non-legal immigrants to hold jobs.

As Fernanda Santos points out in her New York Times article, the loss of business due to this bill became quite clear for Arizona as the bill became closer to being passed. The Hispanic National Bar Association announced that it had canceled plans to hold its annual convention of 2,000 lawyers in Arizona next year due to the bill. As well as the NFL began actively exploring other options for where to hold the Super Bowl next year.

This would not have been the first time the NFL would have to relocate the Super Bowl due to prejudice in Arizona. In 1990,the NFL moved the location of the super bowl from Amazonia to California to avoid controversy over the refusal to recognize Martin Luther King Day as a state holiday.

This is not the first anti-homosexual law in play today. Ian Ayres and William Eskridge, two law professors at Yale point out in their Washington Post article additional anti-homosexual laws that exist in the US.

Arizona also prohibits portraying homosexuality as an “alternative positive life-style” to children and even suggesting that there are “safe methods of homosexual sex”.

Utah prohibits supporting homosexuality.

Texas and Alabama both instruct in sex-education classes that homosexuality is not a positive lifestyle acceptable to the general public and that homosexual conduct is a criminal offense. Even though it has been unconstitutional since 2003 to criminalize private, consensual, homosexual sex.

Looking back on history, change tends to make certain groups fearfully discriminate.  The United States is in an era of change and acceptance, where the chauvinistic have now become the outliers. It is refreshing to see businesses will show that they do not tolerate this kind discrimination by refusing to do business in the area. If nothing else will open intolerant eyes, the hurt in their wallet will.

Whiskey

Maker’s Mark Bourbon

Makers Mark is a small batch whisky distilled in Kentucky, and made by Bean Inc. This 90 proof whiskey is aged for six years and during the aging is exposed to different variations of temperature swings. Makers Mark has its own branded restaurant named Maker’s Mark Bourbon House & Lounge in Loretto, Kentucky. The restaurant has been known for racial discrimination over the years and its refusal to serve black customers.

China

China is currently considered the second largest world power, following only the US, and is currently undergoing a transformation, some for better and some for worse.

To start with the good news, a ban in Beijing has been passed that forbids smoking in all schools across China. Considering the fast that China has 350 million smokers, more than the entire population of the US, and detrimental health risks associated with smoking, this is a large step. Along the same lines, the long needed pollution monitoring that Beijing finally enacted has started to make a visible difference.

The less desirable news revolves around economic conditions and international relations. In recent years, China’s contribution to the global growth rate has been around 36% GDP, twice that of the US.

Economist Ruchir Sharma predicts a massive slow down for the Chinese economy in the years to come. China has been acquiring debt to maintain it’s unrealistic growth target of 7-8% and if it continues to do so we could see it decline all the way to 4-5%. If China slows that drastically it will have a large impact on the US.

While the US has acquired debt due to the stimulus to boost the economy it pales in comparison to that of China’s stimulus on steroids. China keeps building more and more hoping that it will inspire more economic growth, yet what they need to stabilize the level of debt or they will have large scale economic crisis.

China’s foreign relations are also under strain. The Prime minister of japan compared relations of Japan and China today, to the relations of Germany and the United Kingdom before the outbreak of WWI. The president of the Philippians has made similar remarks and has made clear the long term threat his country feels from China.

Currently China has control over 90% of the South China Sea (the sea between the Philippians and China). The US has recently remarked that amount of control of the South China Sea intervenes international law, and they will stand by their alleys in the region. One theory is that China is using Nationalism to gain the support of their country in their rough economic times.

On a side note regarding China, there has been a new virus that is killing 100% of large farmed shrimp populations in China and will mean a sharp increase in the price of shrimp over the next few months.

Facts and some ideas taken from the GPS show with Fareed Zakaria

Whisky

Whisky coming soon….

Quantitative easing

There has been quite a bit of discussion regarding monetary policy lately, specifically for Japan and the US regarding quantitative easing. Japan has again started their use quantitative easing again while the US seeks to reduce theirs. This begs the question what exactly is quantitative easing?

In it’s most basic form quantitative easing is a monetary policy that works by a central bank buying specific amounts of financial assets from commercial banks and private institutions (a bundled package of bad loans). This increases the portion of the commercial banks reserves that are held in the central bank, and the total currency circulating in the public, there-by lowering the cost of the assets.

This means that it increases the money supply making debts worth less. This is often seen as a last resort monetary policy and is aimed to put a failing economy back on track. While this can be very effective, quantitative easing has its flaws and criticisms.

Japan is now attempting to use quantitative easing, like the US did in the face of the great recession. The Prime Minister of Japan has a “Three Arrow Plan” that involves 1. Quantitative easing, 2. Financial stimulus, and 3. Reform. The major controversy with quantitative easing that economists argue is if it creates too much uncertainty and inflation. This leaves many economists asking if quantitative easing hurts more than it helps.

It has been noted that excessive growth rates of the money supply can lead to hyperinflation. That is why the US has started slowly reducing quantitative easing from 85 billion per month to 10 billion to month. While this still causes inflation, economists argue that small amounts of inflation are good for the economy, similar to the way that being exposed to small amounts of germs are good for the human immune system. The argument is that small amounts of inflation reduce the severity of a recession letting labor markets adjust more quickly in a down turn.

All things considered, it will be interesting to see the outcomes in the next few years for both the US and Japan regarding their economy and the inflation rates.

 

Whisky

Yamazaki 12 single malt

An ideal paring would be Yamazaki 12 single malt. Yamazaki is medium in body with a honey and fruit nose, like the sweet sound of a plan to get the economy back on track. On the pallet it has a scotch-like mellow taste, with a lingering dry finish reminding us of the lingering effects inflation can have on the economy.

Japan started producing whiskey around 1870 but did not gain international popularity until 2000, the same year that Japan first used quantitative easing as attempted monetary policy, which was the first try at quantitative easing in the world. Yamazaki is also a trendsetter, being from the first distillery in Japan and one of the first whiskeys to be made in Japan.