Friday, June 25, 2010

Ideas of what constitutes "prompt payment"

I have just had sight of a potential contract which offers, in case of overpayment to a party in Italy, a "prompt refund".

Well, having a penchant for asking awkward questions, I wondered "What constitutes 'prompt'?".

The answer was "180 days maximum".


However, I guess that is more prompt than never getting repaid at all :) Sphere: Related Content
A post from "Anonymous" says: "I say thank God for those entreprenuers and business people who take risks and conquer challenges that create jobs, jobs, and jobs. Rather than judge the motives of business people why not judge the fruit of what they produce and the impact on society. What about the large foundations that are founded by very successful business people? Perhaps there is the real answer as to what they value and why they work so hard to fulfill their pledge to shareholders. By the way, I am broke after trying to create a business but I hold no animosity to those who have been successful. Just a thought."

Dear Anonymous

Many thanks for your thought. The question of whether we should thank God or the entrepreneurs concerned is a moot one. And I find nothing to "judge" in the motivations of businesspeople, as the motivation is simple: to make money.

One hopes that they want to make money within the law. But the evidence worldwide is mixed.

Because businesses always seek to remake the law to suit themselves (the latest evidence of this is in today's newspapers, which report that companies from one sector are winning the battle to shape the new regulations which will govern that sector of business).

Note that the business which tries to influence laws and regulations so that laws and rules suit society as a whole is rare.

You also ask: "What about the large foundations that are founded by very successful business people?". Well, what about them? No doubt they do good. But they do good with money that may have been earned (as in the case of Andrew Carnegie, the first great "philanthropist" of modern times) by paying his workers and his suppliers less than he should have....

So in order to make a moral judgement, we have to look not only at the uses that the profit is being put to, but also at what that profit was originally made in a legal, ethical, humane and environmentally responsible way. Otherwise the consequences of the business activity as a whole generate more negative effects than positive ones.

Specially when one considers the lifestyle to which the business person or family treated themselves while running their business.

So there are many aspects to take into consideration.

Please note what I am NOT saying. I am NOT saying that there exists no single business which obtains its profits according to the criteria mentioned above. Only that such businesses are fewer than we would like to believe.

My commiserations that your business venture failed. But I hope that you will have the time and the inclination (and the advice, if that is relevant) to reflect on the reasons that your business collapsed, and that, having learned your lessons, you will go on to build one or more really successful businesses.

As someone who has been involved in business for some 30 years, I know that success takes extremely hard work and infinite attention to detail, combined the capacity to maintain an overall perspective of the business, as well as a wider sight of what is happening in politics, economics, society and technology. Not easy at all....

And yes, if you can create a successful business on a moral basis, live modestly and use your profits for the public good, you will have done a wonderful job. You will in fact belong to the real elite of the world - people such as the Quaker business families which originally built up Cadburys and Wrigleys and Rowntree and
Very best wishes Sphere: Related Content

Wednesday, June 23, 2010

"global warming’s six americas 2009" study by the Yale Project on Climate Change and George Mason University's Center for Climate Change Communication

A nationally-representative survey of American adults was conducted covering such topics as: climate change beliefs, attitudes, risk perceptions, motivations, values, policy preferences, behaviours, and underlying barriers to action

The analysis of the responses segmented the US public into six ("The Six Americas").

Each displays display very different levels of engagement with climate change, and the segments vary in size from 7% to 33% of the surveyed population.

The Alarmed (18%) are fully convinced of the reality and seriousness of climate change and are already taking individual, consumer, and political action to address it. The Concerned (33%) – the largest of the six Americas – are also convinced that global warming is happening and a serious problem, but have not yet engaged the issue personally. Three other Americas – the Cautious (19%), the Disengaged (12%) and the Doubtful (11%) – represent different stages of understanding and acceptance
of the problem, and none are actively involved. The final America – the Dismissive (7%) – are very sure it is not happening and are actively involved as opponents of a national effort to reduce greenhouse gas emissions.

My attention has been drawn to the survey (though it was published just over a year ago, and the actual interviews with surveyed respondents took place in Autumn 2008) in the context of the discussions surrounding the BP oil rig/ spill disaster.

Some people are suggesting that, as a result of the financial crisis, climate change has become very much LESS of a concern in the USA (at least in comparison to financial and employment issues). Others suggest that, as a result of the disaster, climate change and related environmental issues have become MORE prominent in public concern.

Time will tell - though, as always, surveys take a narrow slice to examine and in real life no doubt everything relating to the disaster will get mixed up with the public reaction to President Obama's handling of the issue politically, to whether whatever amount is finally given by BP is considered adequate, and the long-term consequences for the Gulf of Mexico and wider. Sphere: Related Content

The UK's "kill or cure" budget

George Osborne, the UK Chancellor (or Finance Minister) has asked that his first Budget be judged by two yardsticks: its success in reducing the deficit and the proof it offered to the nation that “we are all in this together”.

By the second yardstick, he will certainly fall short because it is widely acknowledged that his budget will disproportionately affect the poor and advantage the rich.

Whether he will be successful in the first (reducing the deficit) remains to be seen. The budget savagely cuts public spending, with most government departments threatened with a 25 per cent by 2014-15. Now that the government accounts for as much as 48% of GDP, that may slash perhaps as few as 50 thousand jobs or – depending on developments – overall unemployment rising as high as 3 million. The budget has welfare reductions and tax increases that grows every year until it hits £40bn in 2014-15. Briefly, this is one of the most drastic spending squeezes in any advanced economy since World War II.

In addition, consumption taxes will be raised (VAT will go up from next January to 20 per cent). That amounts to a UKP 5000 hit for the average family in the UK – though of course any flat tax hurts the poor much more than the rich.

On the other hand, income tax allowances will rise by £1,000 (taking an estimated 880,000 people out of the income tax system - though how many of them will still be in jobs is not clear), the basic state pension will increase in line with earnings from 2011, and £2bn will be spent on children in the poorest families.

Then there is the £2bn tax on banks, which will give him some additional income but I wonder if that will not further constrain the principal growth engine of the UK economy (financial services).

Oh and I should mention some measly measures that the Chancellor has taken which are meant to encourage small businesses.

As Mr Osborne is reported to have said: “Our policy is to raise from the ruins of an economy built on debt a new, balanced economy where we save, invest and export”. Saving and investing might perhaps be possible (though it is difficult to see how that will be within the reach of most people in the UK). What we can definitely say is that export will be a chimera, because the UK really manufactures very little and most of its professional services (which form the bulk of its exports) may be in less demand if one considers that the reputation of professional services derives partly from the overall success of the economy of which it is a part.

So will this budget signal “the start of a period of painfully slow growth, falling living standards, and prolonged high unemployment” (in the words of one commentator) or whether what we have is a "a reckless budget that pulls the rug out from under the economy” (as Harriet Harman, the acting Opposition Leader put it)?

At its best, it is an optimistic budget which leans heavily on inflation and interest rates remaining low – which is probably unrealistic given the volatility of the world economy.

The key matter is whether the budget can prevent a bond market crisis. In other words, it is not governments, nor is it voters, but rather bond market traders, who will eventuallydetermine whether or not the budget will be a success eventually – and that reaction will be based on the bond markets evaluation of whether the UK can create a successful recovery, which in turn depends at least partly on how the whole of the UK responds to the cuts and increased taxes.

Champagne, folks? Or Molotovs? Sphere: Related Content

Friday, June 11, 2010

In spite of the crisis, Americans continue to give to philanthropic causes

According to The Economist this week, a survey of charity donations in the USA reveals that inspite of the recession, charitable giving fell by only 3.2% to $304 billion last year after being adjusted for inflation. Though this was the biggest drop since 1974, most of the decrease was due to a 24% decline in charitable bequests.

That is of course a huge drop.

Was that due to the reduced value of the bequests as a result of the impact of the recession?

Or has something changed in the way people are making wills? Sphere: Related Content

Wednesday, June 09, 2010

UN Sanctions against Iran versus Israeli sanctions against Hamas

Interesting that the existing U.N. arms embargo against Tehran has now been beefed up with a cargo inspection regime.

An inspection regime for all cargo headed to North Korea has already been in place.

So why are so many people making such a noise against Israel's cargo inspection regime for all goods headed into (terrorist) Hamas-held territory? Sphere: Related Content

Regional tensions increasing

I see that the UK government has now reacted to President Obama's stinging attacks against BP with the suggestion that President Obama tones down the aggressive rhetoric or that might damage transatlantic relations.

Also that the US is blaming Europe for Turkey's opposition to UN sanctions against Iran. No less an official than Robert Gates has suggested that it is the EU's reluctance to admit Turkey as a member that could be pushing it away from the west. Nothing could be further than the truth. I have said for a very long time and on various platforms that the essential question is for Turkey to decide: there is a civil war on inside the country on the question of whether it is to be an Islamic state or a modern state. It used to be a much more secular state. Now it is increasingly an Islamic one. Once Turkey has decided that question properly one way or the other, then the EU (and other countries) have some basis on which a decision can be taken regarding the clubs to which it can and should be admitted.

Both the matters above are signs of increasing regional tensions, as countries (including the USA) look around for scapegoats.

Expect more such scapegoating, and more regional tensions - till world leaders realise the only sensible alternative, which is moving to minimum global rules for finance, economics, ecology and humaneness. Sphere: Related Content

The current European financial crisis

The immediate causes of the current European crisis lie not in Europe but in the economic and cultural leader of the world - the USA - though of course Europe was guilty of following that lead voluntarily:

– first, the USA removed the Glass-Steagall Act in 1999, allowing financial institutions to gamble with money not only from the rich (as had been the case till then) but also to gamble with money from ordinary people, municipalities and nations;

– second, the USA refused to register "big deals", and allowed them to be combined with the possibility of unlimited leverage, resulting in a "shadow" (or "black") economy which ballooned unbelievably: the value of all the goods and services produced in the world GDP is something like US$60 trillion, but the most conservative estimate of the size of the shadow economy at the start of the crisis was 610 trillion, though the most authoritative estimate was 1,200 trillion (BIS), while the highest estimate that I saw put together by experts was 1,440 trillion. However, as it is a "shadow", who knows? And who knows where the effects of that shadow will erupt next? That is why it explodes unexpectedly in different places whether that be Lehmann Brothers or Goldman Sachs or Iceland or Greece. That is why we have the current discussions about "re-regulation", and the questions are: will the new regulations be the right ones, will they be sufficient, and will they avoid being unnecessarily onerous? Incidentally, many people (including myself) were writing and speaking on these matters from the 1990s on, but who wanted to listen?

However, the deeper causes of the crisis are spiritual, political and cultural: the choice made in the 1980s, in the name of productivity, modernity and progress, to privilege the rich rather than act justly for the poor: all possible profit went to the providers of capital, and there was no real rise in wages for workers while giving them the illusion of greater spending power by creating a balloon in the availability and price of housing, and making it easy for people to borrow against that - in other words, the provision of credit/ loans to encourage people to consume more than they were actually earning, while persuading people that greed is good, that there is no such thing as society, that the problem is the government, that lack of rules will make it easier for the economy to flourish, and that it is desirable to take huge risks (with slogans such as: "no risk no fun" and "no pain, no gain"). This high-risk political and cultural gamble worked extremely well for three decades or so since the 1980s (and particularly after the fall of the Berlin Wall), producing more apparent wealth than the world had ever seen in the entire history of the world before that. But when the consequences of the system eventually struck, it produced what is already the second biggest economic collapse in history – and we are of course not yet anywhere near the end of the crisis (all that has happened is that a "floor" has been put under the crisis by the billion-dollar bailouts provided by governments), and the worst may be yet to come because governments themselves are now near-bankrupt while the creation of the "floor" has increased the ballooning of the shadow financial system. In other words, governments may be unable to do anything about the coming consequences without becoming bankrupt themselves. For example, it remains to be seen whether EU governments will be able to raise the proposed Euros 440 billion for the new European Financial Stability Facility Company.

So what are we to say about the way the crisis is being handled?

1. Real solutions do need to be put in place:

a. those that are being thought of (such as the examination of the incentive and reward systems in the biggest companies, the creation of transparency by the registration of all deals, the Volcker rule which would effectively reinstate the Glass-Steagall Act, banning of "naked short selling" or speculation, the elimination of the "too big to fail" syndrome", and the introduction of bank taxes (at least in the EU – though, ideally, globally); and

b. those that are not yet being taken seriously (counter-cyclical provisioning, complementary currencies, transparency of the finances of governments).

Note that the current "rescue packages" further penalize the average person: David Cameron, the UK Prime Minister, just launched today (Monday 7 June) a campaign to prepare Britain for an era of "public sector pain", hoping to prepare the ground for decisions that will "affect our economy, our society – indeed our whole way of life"; a proper rescue package would, instead (or alongside this), reinstate taxation of the rich. Getting to that point, and to genuinely addressing the crisis will require a spiritual and cultural transformation.

2. The best way forward for the European (and indeed global) economy is by global rules that enable a genuinely free market to be created around the world: taxation of commercial broadcasting and narrowcasting in order to enable public service broadcasting and narrowcasting to be able to play its proper role, the banning of research by private companies so that all intellectual property belongs to the public, no subsidies by any government for any activity, minimum pay for workers around the world, minimum standards for health, safety, pensions, and environmental care, and a guaranteed minimum standard of living for everyone in the world (two pairs of clothes, one square meal a day, minimum housing appropriate for the weather, minimum education for children, and minimum health care). Instead of the current tilt of the global economy towards those parts of the world that have no proper standards (for example, in environment, health and safety), such global rules would provide a global level playing field in which there can be genuinely free competition across nations in agriculture, manufacturing, robotics and other innovative and creative technologies which might enable us to address global poverty, the diseases of the poor, the boredom of the average worker, and the anomie of the rich. Sphere: Related Content
At a recent conference, an American asked me if it is safe to drink water from the normal cold water water taps in homes and hotels in Switzerland.

I replied that the rule of thumb is that in every country which went through the Protestant Reformation, one can indeed drink water from the tap.

Not only that, in every country which went through the Protestant Reformation, politics are as clean as the streets, there is a reliable fire service and system of medical care, good schools and universities, scientific and technological progress, care for the poor and a relatively large and prosperous middle class.

With the decline of the influence of the Reformation, trains no longer always run on time in Switzerland, and the educational and medical systems are slowly declining. Fraud is on the increase in companies, and law and order are gradually breaking down in society. Once the rot sets in, it is difficult to reverse.

Even the time-table that one prints out from the internet site of the railway company (SBB) is no longer accurate - e.g. it claims that there is a bus number 113 that takes one from Interlaken West to Beatenberg. No such bus number exists, nor has any such number existed for some time. The right number for the bus is 1.

So even the information one gets from official sources is no longer reliable.

Switzerland will probably never become like China, but it seems to aspire to becoming like India or Africa - unless the moral, ethical and social influence of the Bible is brought back into Switzerland.

But the sad thing is that even most Christians here do not understand that. So it falls to Hindus such as myself to point out such elementary things. Sphere: Related Content