International Headlines: Economy

Amazon and the Realities of the New EconomyAugust 19, 2015 The New Yorker The revelation in a recent New York Times article that some of Amazon’s white-collar workers were treated harshly, such as recriminations for cancer sufferers and other employees dealing with major personal issues, has led to much debate of the retailer’s culture and work practices. Under founder Jeff Bezos’ direction, the firm has long adopted a Darwinian approach to business, encouraging its upper-echelon employees to work around the clock, and systematically culling under-performers. As the “New Economy” celebrates its twentieth anniversary, it is becoming harder to ignore some of its negative aspects. Behind all the technological advances and product innovation, there is a good deal of old-fashioned labor discipline, wage repression, and exertion of management power. Amazon provides a good example of how the New Economy really works. To most of its customers, it is a wonderfully convenient website. But behind the New Economy front end lies a huge old-economy network of warehouses, trucks, and modestly paid workers. Amazon employs about a hundred and fifty thousand people around the world, many of whom are temporary employees who don’t receive medical benefits or paid leave. Amazon has also long resisted efforts to unionize its workforce, both in the US and abroad. Larry Elliott, the Guardian’s economics editor, reminded his readers that American private-sector unions “were originally formed as a response to exploitation by 19th century mill owners.” He added that, by “keeping a cowed workforce under the lash with non-stop pressure, bullying and psychological warfare, Bezos is the 21st century equivalent.”

Tokyo Asks for Ruling on Seoul Import Ban August 20, 2015 The Japan Times The Japanese government asked the World Trade Organization (WTO) to set up a panel to rule over South Korea’s import ban on Japanese fishery products following the 2011 Fukushima nuclear crisis that Tokyo says violates international trade rules. The move comes after the two countries failed to resolve the issue through consultations that took place under WTO procedures. Tokyo is claiming the South Korean ban has no scientific grounds, while Seoul is arguing that its trade restrictions legitimately help to ensure food safety for its people. After radioactive water leaked from the Tokyo Electric Power Co. plant, triggered by a powerful earthquake and tsunami in March 2011, South Korea banned imports of 50 kinds of marine products from Fukushima Prefecture and seven other nearby prefectures, due to fears of radiation contamination. In September 2013, Seoul expanded the restrictions to ban all fishery products from the eight prefectures.

Despite Icy Relations, South and North Korea Agree to Wage Increase August 18, 2015 The Hankyoreh North and South Korea reached an agreement on August 17th to retroactively raise the monthly minimum wage of North Korean workers at the Kaesong Industrial Complex to US$73.87. North Korea had notified Seoul last November that its Supreme People’s Assembly had voted to unilaterally amend labor regulations, but the two sides had been unable to come to an agreement until now. The agreement is expected to lift workers’ real wages 8-10%. Workers currently receive US$120-200 a month, roughly on par with workers in Cambodia, which has some of the lowest wages in the world. Other issues, such as labor regulations, system changes, and development normalization are to be discussed later by the complex’s joint committee, raising questions whether they will be able to reach an agreement. However, this agreement is noteworthy for coming at a time when inter-Korean relations are otherwise in a downward spiral, with a recent mine blast at the DMZ prompting both sides to resume propaganda broadcasts for the first time in eleven years.

Why You Should Invest in Africa’s Fastest-growing Country August 10, 2015 Forbes Kenya is expected to be the world’s third-fastest growing economy in 2015. Its location and free-trade agreement between the East African Communities (EAC), Common Market for Eastern and Southern Africa (COMESA) and the South African Development Community (SADC) offers market access to 600 million consumers. It is the largest economy in the region and accounts for 40% of the EAC’s GDP and has the region’s best performing regional currency. Its nascent economy is bolstered by a highly educated population: Its adult literacy rate is 87%, one of the highest in Africa; 300,000 students attend public and private universities; and one in five is enrolled in Kenya’s 39 public and private universities.  Its population is also English-speaking and young. Some 60% of Kenyans are 25-years old or younger.

Furthermore, Kenya has undertaken a comprehensive program, Kenya Vision 2030, to modernize its infrastructure, increase tourism and strengthen industrial presence. Additionally, Vision 2030 is aimed at growing Kenya’s consumptive capacity by raising all Kenyans above the poverty line and increasing per capita income to at least US$3,000. To further facilitate growth, the government is considering legislation that would establish three special economic zones within the country. These zones will allow lower levels of taxation and fewer regulatory hurdles, and will focus primarily on industrial activity, in particular, textile production.

Boeing, GE Cut off Donations to Ex-IM Foes August 5, 2015 Politico Boeing and GE have halted political contributions to more than a dozen Republican lawmakers, such as House Majority Leader Kevin McCarthy, who are opposed to reauthorizing the Export-Import Bank, which facilitates billions of dollars in low-interest loans to U.S. exporters like Boeing and GE. Both gave McCarthy the maximum $10,000 during the 2014 election cycle. McCarthy has long been a vocal opponent of Ex-Im, arguing that the private sector should be able to underwrite loans for companies looking to sell their goods abroad, but companies like Boeing say they can’t get competitive financing from the private sector, and the U.S. Chamber of Commerce argues that eliminating the bank would put tens of thousands of jobs at risk. Facing those kinds of threats to their business, big players are increasingly willing to withhold donations from lawmakers to express their displeasure with lawmakers. The battle over Ex-Im is the latest example of the GOP splitting with the business community. For Boeing, the loss of Ex-Im financing is beginning to have a tangible impact; it’s the military supplier’s top political issue, and its CEO has threatened to move its manufacturing operations overseas if it isn’t renewed.