Kuwait’s Arab Spring

by Charles Krakoff on December 27, 2011

in Crisis and Recovery,Democracy and Governance,Development,Economic Reform,Politics

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With the exception of Bahrain, where anti-government protests were violently suppressed by the ruling royal family with military support from Saudi Arabia, the kingdoms and sheikhdoms of the Arabian Gulf – in America we refer to it as the Persian Gulf, but that terminology does not sit well with the Arabs – have appeared largely immune from the struggles of the Arab Spring. There have been no street demonstrations, no tear gas, no bullets, rubber or live.

I have just returned from a three-week stay in the Middle East. A few days in Doha, the Qatari capital, to attend the World Petroleum Congress and then the rest of the time in Kuwait, where I am part of a team doing a feasibility study for a technology park. It was my first-ever visit to Qatar and my first to Kuwait since 1986. Doha, flush with money from natural gas, a small low-slung, dun-colored city 20 years ago, now resembles a sci-fi movie set, all futuristic towers glowing with neon, surrounded by the most barren of landscapes. Kuwait City has expanded enormously, and sprawls almost from the Saudi border in the South to the Iraqi frontier in the north. Areas that were empty desert 25 years ago are now studded with new suburbs filled with enormous mansions and shopping malls. Young Kuwaitis zoom around town in Hummers, Range Rovers, and Maseratis or on Japanese super-bikes, stopping to eat at any of a mind-boggling array of Western restaurant chains. Applebee’s, Chili’s, Taco Bell, Burger King, McDonald’s, Pizza Hut, TGI Friday’s, they are all there. The 1991 Iraqi invasion seems impossibly distant. [click to continue…]

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America’s Stately Progress Towards Third World Status

by Charles Krakoff on November 17, 2011

in Business Models,Competitiveness,Crisis,Democracy and Governance,Development,Growth,Politics,Social Issues

Compared to the U.S. Senate’s recent refusal to approve a mere $60 billion in new infrastructure spending when we really need to spend an estimated $2 trillion just to make up for all the years of neglect of our country’s roads and bridges, the recent report in the New York Times that the U.S. Agriculture Department will stop collecting and reporting data on a wide range of agricultural commodities, including catfish, sheep, goats, hops, honey, and mink,  is no big deal.  But it is just one more bit of evidence that the U.S. is on its way to becoming a third-world country. Compared to the revelation that the U.S. now ranks 25th in the world in Internet connection speed, behind both Greece and Romania, the future lack of production data from the country’s 389 catfish farms and 265 mink farms is hardly a calamity. All joking aside, however, one of the many things that distinguish developed countries from less developed ones is the extent and reliability of the economic and business information they provide. [click to continue…]

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Malefactors of Great Wealth: How Citigroup, Goldman Sachs, and JP Morgan Bought Their Way Out of Trouble

by Charles Krakoff on October 24, 2011

in Crime & Punishment,Free Markets,High Crimes and Misdemeanors,The Markets

Less than a week after a federal court in Manhattan sentenced hedge fund boss Raj Rajaratnam to a record 11 years in prison for insider trading, and ordered him to pay forfeiture and fines of more than $60 million, comes the news that Citigroup has agreed to pay $285 million to settle a to settle a civil complaint by the Securities and Exchange Commission that it had defrauded investors. According to last Thursday’s New York Times,  “the transaction involved a $1 billion portfolio of mortgage-related investments, many of which were handpicked for the portfolio by Citigroup without telling investors of its role or that it had made bets that the investments would fall in value.” This is the third such complaint brought by the SEC. In July 2010 Goldman Sachs paid $550 million to make the SEC’s charges go away, and this past July JP Morgan Chase settled its case with a payment of $154 million. None of the three firms has admitted any wrongdoing, and neither the firms nor any of their employees have been charged with any crime. [click to continue…]

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Concerned About Income Stagnation? Blame Rising Health Insurance Costs

by Charles Krakoff on October 13, 2011

in Business Models,Crisis,Democracy and Governance,Economic Reform,Economics,Politics,Social Issues

It’s hard not to feel sympathetic towards the people occupying Zuccotti Park in lower Manhattan and their brethren who have mounted similar protests in cities and on college campuses across the United States. There is a pervasive sense in our country that something is wrong, and that Wall Street financiers have something to do with this sorry state of affairs. One of the charms of the movement is its lack of specific policy demands; once the occupiers come up with a manifesto they become just another interest group, hardly different from the “Republicrats,” whose pettiness and dithering have prevented Congress from enacting any sensible solutions to our current and future economic woes. But so far, the Wall Street occupiers have been eloquent, if misguided, about what they are against, and relatively clueless about what they are for. [click to continue…]

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The End of Outsourcing?

by Charles Krakoff on September 16, 2011

in Business Models,Competitiveness,Investment,Trade

Foxconn International Holdings, the world’s largest contract manufacturer of electronic components, made notorious last year by a rash of employee suicides at its Chinese factories, recently published its half-yearly financial results, which showed that its annual labor costs per employee have risen by a third over the past year, to $2,900.

Foxconn, 71% owned by Hon Hai Precision Industry of Taipei, and which also assembles products for Sony, Dell, and Hewlett Packard, employs an estimated 400,000 people at its two factories in Shenzhen (Hon Hai, with 800,000 employees, is the 10th-largest employer in the world). These people, most of them young, many of them women, work 11-hour shifts, seven days a week. According to the New York Times, Mr. Ma Xiangqiang, a 19-year-old Foxconn employee who jumped to his death from a Foxconn dormitory in January 2010, had worked 286 hours in the month prior to his suicide, including 112 hours of overtime, more than three times the legal limit. By all accounts, Foxconn is not a fun place to work, combining some of the worst features of military service, summer camp, and prison, but the problems facing Foxconn are far from unique. [click to continue…]

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