http://www.washingtontimes.com/news/2013/oct/9/wyden-nsa-eavesdropping-hurting-us-economy/
NSA Eavesdropping Hurting U.S. Economy
"If a foreign enemy was doing this much damage to the economy, people would be in the streets with pitchforks." That quote was said by Oregon Senator Ron Wyden (D) in regards to the NSA scandal. Some companies working in global technology and communications were forced to adhere to the rules and regulations the NSA administered concerning what work they would be doing. Companies like Microsoft, Google, and Facebook were among many others in the NSA's army of information collectors. Based on opportunity costs, one can see that this is already a hindrance to the companies because their work is focused on something that isn't making them ridiculous amounts of money. The time and effort is taken away from what the companies do best, and it is put towards government responsibility. However, the other economic impact is even larger than the lack of production issue.
Foreign nations don't trust us anymore. Our own citizens don't trust us anymore. Look at the cloud computing industry; the Cloud preaches great security to all participants, but in reality, all of the information can be accessed. When this fact was released to the public, citizens were mad, and they stopped using the cloud. Some estimates predict a decrease of $35 billion in the cloud computing industry. As for foreign citizens, they simply don't want a foreign nation looking at their personal information. They lost trust in companies like Google and Facebook, both of which get 50% of their revenue from foreign consumers. If these consumers lose trust and stop using the products, it is easy to predict what will happen to the revenue of these companies. With the impact that the NSA has on tech companies, it is almost guaranteed that the rest of the economy will be on the receiving end of the financial burdens that may follow.
- David Gerhart
Thursday, October 31, 2013
NSA Revelations Kill IBM Hardware Sales in China
http://www.nakedcapitalism.com/2013/10/wolf-richter-nsa-revelations-kill-ibm-hardware-sales-in-china.html
Wolf Richter: NSA Revelations Kill IBM Hardware Sales in China
When many Americans are asked about the NSA issues they respond with "I have nothing to hide, so I don't care if they see my information." Well let's pose this question... If China or Russia were to steal and look at your personal information, would you reconsider the "I don't care" response? In recent years, the National Security Agency has been taking private information from millions of people throughout the world. Citizens in the Middle East, Asia, Russia, and various other areas were targeted. At this point you may be wondering where the economic impact arises. There is a profound impact on the American economy due to this recent "scandal" per se.
For example, tech companies are going to see dramatic issues arise in their sales and earnings reports. Two weeks after this article was written, IBM, a huge tech company, announced a poor earnings report to their shareholders, and reported yet another loss. The CFO of IBM announced the earnings, and in a series of questions as to why the poor numbers were back, alluded to the fact that he didn't know why sales of hardware in China were down 40 TO 50 PERCENT. Experts looked at the information reported by IBM and concluded that a dramatic drop of that sort doesn't just "happen." What the CFO of IBM was most likely not telling the public is that they were partnered with the NSA to collect information. When Edward Snowden leaked the information regarding the invasion of privacy, citizens in foreign nations were appalled. Governments of these nations began to tell citizens to not use "Gmail" and to not use products from companies mentioned in the reports (including IBM). Foreign sales have a HUGE impact on the financial prosperity of a company, and to destroy these foreign sales destroys profit, earnings reports, and consequentially, stock prices. This impact reverberates to executives, employees, and shareholders of the company. When the NSA decided to step over its bounds, the economic impact was felt by thousands of people across the country in the company and in the stock market.
- David Gerhart
Wolf Richter: NSA Revelations Kill IBM Hardware Sales in China
When many Americans are asked about the NSA issues they respond with "I have nothing to hide, so I don't care if they see my information." Well let's pose this question... If China or Russia were to steal and look at your personal information, would you reconsider the "I don't care" response? In recent years, the National Security Agency has been taking private information from millions of people throughout the world. Citizens in the Middle East, Asia, Russia, and various other areas were targeted. At this point you may be wondering where the economic impact arises. There is a profound impact on the American economy due to this recent "scandal" per se.
For example, tech companies are going to see dramatic issues arise in their sales and earnings reports. Two weeks after this article was written, IBM, a huge tech company, announced a poor earnings report to their shareholders, and reported yet another loss. The CFO of IBM announced the earnings, and in a series of questions as to why the poor numbers were back, alluded to the fact that he didn't know why sales of hardware in China were down 40 TO 50 PERCENT. Experts looked at the information reported by IBM and concluded that a dramatic drop of that sort doesn't just "happen." What the CFO of IBM was most likely not telling the public is that they were partnered with the NSA to collect information. When Edward Snowden leaked the information regarding the invasion of privacy, citizens in foreign nations were appalled. Governments of these nations began to tell citizens to not use "Gmail" and to not use products from companies mentioned in the reports (including IBM). Foreign sales have a HUGE impact on the financial prosperity of a company, and to destroy these foreign sales destroys profit, earnings reports, and consequentially, stock prices. This impact reverberates to executives, employees, and shareholders of the company. When the NSA decided to step over its bounds, the economic impact was felt by thousands of people across the country in the company and in the stock market.
- David Gerhart
Tuesday, October 8, 2013
Minimum wage increases to £6.31 across the UK
http://www.bbc.co.uk/news/business-24340661
I found this article very interesting because it introduced a new idea to me. Have different age brackets earn different amounts of money. It is true that a vast majority of teenagers that earn minimum wage live with those that do not. Why not pay them less? They're just kids. They don't have as many expenses as an adult may have. Pay the adults $0.25 more and just subtract that from the kids pay. There are probably a similar amount of teenagers earning minimum wage as there are adults earning minimum.
Also, maybe the US needs to explore what the UK calls the living wage. If we explored what it actually took to live in an area without many luxuries, then maybe our wage would actually get its value from something. Now it's just a number that tries to keep people out of poverty. I think we would obviously find that by getting a living wage and doing it by geographical location like in the UK, our wages would drop in some areas, and rise in others. These drops would allow the overall amount of money being paid to people to stay the same, but the minimum earners in high cost of living places would be better off, and the minimum earners in low cost areas wouldn't have as much ability to buy luxuries.
I'm not saying that these policies are great or should be enacted tomorrow. I'm simply providing food for thought.
- David Gerhart
I found this article very interesting because it introduced a new idea to me. Have different age brackets earn different amounts of money. It is true that a vast majority of teenagers that earn minimum wage live with those that do not. Why not pay them less? They're just kids. They don't have as many expenses as an adult may have. Pay the adults $0.25 more and just subtract that from the kids pay. There are probably a similar amount of teenagers earning minimum wage as there are adults earning minimum.
Also, maybe the US needs to explore what the UK calls the living wage. If we explored what it actually took to live in an area without many luxuries, then maybe our wage would actually get its value from something. Now it's just a number that tries to keep people out of poverty. I think we would obviously find that by getting a living wage and doing it by geographical location like in the UK, our wages would drop in some areas, and rise in others. These drops would allow the overall amount of money being paid to people to stay the same, but the minimum earners in high cost of living places would be better off, and the minimum earners in low cost areas wouldn't have as much ability to buy luxuries.
I'm not saying that these policies are great or should be enacted tomorrow. I'm simply providing food for thought.
- David Gerhart
Will California’s $10-per-hour minimum wage push other states to act?
http://www.csmonitor.com/USA/Politics/2013/0926/Will-California-s-10-per-hour-minimum-wage-push-other-states-to-act
It is no coincidence that California has one of the highest unemployment rates of any American state. They have increased the minimum wage to $10 per hour. If an individual can make $10 an hour working at a fast food restaurant, then the incentive to ever achieve higher education decreases. Also, lets remember that in order for an individual to benefit from those wage increases, he or she must be employed. Since California's unemployment rate is so high, its increase in minimum wage is less beneficial to the poor working Americans than an increase in many other states would be. If there is less incentive to get a good education, isn't the law simply making our future population less educated?
Also, the skills of workers are remaining the same. Workers in California are simply being paid more for low skill jobs. Those with high skill positions did not see an increase in wages. It is a push to cut the income gap, but by cutting the income gap, eventually you will cut the skills gap, and then everybody will be the same. Who wants that? The article does say that a minimum wage job brings in a yearly salary of $15,080, which is $50 below the poverty level FOR A FAMILY OF TWO. First of all, if it is a family of two adults, even two positions at minimum wage puts them well over the poverty line. If it is a single mother (or father: equal rights equal rights) with a child, she/he receives tax credit that equates the wage to around $9.75 per hour. So how many minimum wage workers are really living in poverty?
- David Gerhart
It is no coincidence that California has one of the highest unemployment rates of any American state. They have increased the minimum wage to $10 per hour. If an individual can make $10 an hour working at a fast food restaurant, then the incentive to ever achieve higher education decreases. Also, lets remember that in order for an individual to benefit from those wage increases, he or she must be employed. Since California's unemployment rate is so high, its increase in minimum wage is less beneficial to the poor working Americans than an increase in many other states would be. If there is less incentive to get a good education, isn't the law simply making our future population less educated?
Also, the skills of workers are remaining the same. Workers in California are simply being paid more for low skill jobs. Those with high skill positions did not see an increase in wages. It is a push to cut the income gap, but by cutting the income gap, eventually you will cut the skills gap, and then everybody will be the same. Who wants that? The article does say that a minimum wage job brings in a yearly salary of $15,080, which is $50 below the poverty level FOR A FAMILY OF TWO. First of all, if it is a family of two adults, even two positions at minimum wage puts them well over the poverty line. If it is a single mother (or father: equal rights equal rights) with a child, she/he receives tax credit that equates the wage to around $9.75 per hour. So how many minimum wage workers are really living in poverty?
- David Gerhart
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