International Political Economy — What Is It and Why Does It Matter?

English: 2010 HDI (Very High) nations graph by...

English: 2010 HDI (Very High) nations graph by population size and region (Photo credit: Wikipedia)

The social science concept of International Political Economy is a measure of a nation‘s law, politics and economics — and their effect on each other, and it’s worth to the world.  While this sounds complicated, it really isn’t, particularly if you think about the simple phrase itself.

In some aspects, it’s exactly what you think of when you think of how “strong” a nation is, particularly when you compare them socio-economically.  When you hear phrases such as “Nation A is stronger than Nation X,” or “Nation C has a stronger swing in the world than Nations G, E and F.”

Why is this an important thing to consider?  This is the measure of the whole machine: politics, law, the nation’s military industrial complex, state control of the economy and political freedoms work together (…or against) the rest of the “machine” of the country.  A country can have an extremely strong military, but with little social freedoms, this could very well work against the forward momentum of the nation if it’s regime is looking forward (as most of them are…).  However, another theoretical nation with a weaker military, but a strong Gini index and a strong Human Development Index may have a stronger IPE because the Grand Strategy of the nation is more in tune with what the people want in a democratic society.

It’s a simple concept — that has a complicated and involved explanation.  There’s a lot to know.  Check it out, there’s all sorts of really cool theories.  Everything from Marxist IPE theory to Realist IPE theory.

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China’s call for a “De-Americanized” Future?

317b5967cf5b1b4ca8849bfa3f7f89e52a4d4aeeWhile this would, no doubt, be disastrous for the American economy, which is vastly based on the “full faith and credit of the United States government” of the United States dollar — could China’s own less-than-impartial statement that the future of the world should be “de-Americanized” have a point?

Partisan infighting in Congress, on top of massive trade deficits with China and Japan (among others) are threatening the faith the world has in the US government’s ability to pay the debts it has already racked up — even in simple interest payments on Treasury Bills and other things.

While there’s yet been a default on any obligation of the United States, if partisan gridlock doesn’t change in Washington, could it be an inevitable future?

Those on the right say our borrowing to fund the government and to pay our obligations say this is an unsustainable model do have a point.  Borrowing forever with no intention to fix it will only result in a catastrophic failure — sooner or later.

However, liberal economics specifically state that when the economy is in a recession, or otherwise growing at an anemic rate, that it is the government’s duty to pump money into the economy to ensure that consumer confidence remains high and that people spend — particularly during problems like high unemployment or lower consumer confidence, the two silver bullets to economic futures.  When people are scared (fiscally speaking) they withhold money; and not spending money grinds the economy to a halt.  Very effectively.

Are both goals mutually exclusive?  I don’t think so.

While a plan to begin to work down our debt obviously needs to be in place, because consumer confidence still hasn’t fully recovered from The Great Recession, this is where [neo?]liberal economics comes in.  Adaptive economics, in particular.  The economy “running itself,” particularly without any regulation, obviously doesn’t work as much as an authoritarian, centrally planned economy.  A government buffer helps “prop up” the economy, while the wheels of the private sector continue to spin.

It’s a mess, but it’s one we can fix — if we come together and work the problem… and not just point fingers — and America can still be a leader in the world.

This Day in History: 1945: Hiroshima Nuclear Strike

Today marks the 68th anniversary of the United States’ attack on Hiroshima with the nuclear weapon dubbed “Little Boy.” This, along with the strike of “Fat Man” over Nagasaki three days later are the only two uses of Nuclear weapons to date, and catalyzed the end of the War in the Pacific.

The Emperor Showa (a wartime photograph).

The Emperor Showa

Following the signing of the Potsdam Declaration by the United States, the United Kingdom and the Republic of China which called for the surrender of the Empire of Japan on 26 July 1945, the Empire refused the order by the allies and vowed to continue forward.

A few days later, the first bomb was dropped — on Hiroshima. The equivalent of 50,000 pounds of TNT blasted above the city, killing over 100,000. Three days later, with the Japanese licking their figurative wounds from the first strike, the United States Air Force dropped the next weapon on Nagasaki, killing an estimated 50,000.

With further strikes of the weapons of mass destruction possible, including the fact that the Imperial Japanese Navy now devastated to such a point it was unable to function effectively as well as plans to initiate Operation: DOWNFALL, an allied-planned and manned invasion of Japan, AND now a declaration of war by the Soviet Union, the Emperor of Japan, Hirohito (now Showa) ordered the immediate surrender of the Imperial Japanese Forces and unconditionally accepted the terms of the allied forces in the Potsdam Declaration, bringing the War in the Pacific and World War II to an end.

Signing the Instrument of Surrender on behalf of the Emperor was the Foreign Minister Mamoru Shigemitsu, aboard the USS Missouri in Tokyo Bay.

Japanese Foreign Minister Mamoru Shigemitsu si...

Japanese Foreign Minister Mamoru Shigemitsu signs the Instrument of Surrender on behalf of the Japanese Government, on board USS Missouri (BB-63), 2 September 1945.

Afterward, the United States Military Occupation of Japan, which took effect immediately, lasted until 1952. The level of military devastation to the Japanese islands weren’t completely apparent until after the fighting stopped. Devastated infrastructure made caring for the Japanese nation very difficult, but was rebuilt by the efforts of the Occupation and the strong will of their new Japanese friends.

Today, the day is celebrated in Japan as a remembrance to those who died at Hiroshima, and to the valiant efforts to everyone, not just Japanese, who gave their lives to the battles that brought an end to World War on the planet.

In an age where just a few small weapons can destroy the world dozens of times over, those weapons brought about calls for global peace and calls for cooperation never before seen, so their usage would never again be necessary.

How Goldman Sachs is giving you the screw…

Nick Madden, VP/CPO, Novelis, Inc.

“The situation illustrates the perils of allowing industries to regulate themselves.”
— Nick Madden, Chief Procurement Officer, Novelis, Inc.

We all know about the 2007 Financial Crisis — and how it wiped out millions of jobs around the world, and we know where it began, the US Subprime and Unsecured Credit Markets.  Now that the crisis is over, many think that a lot of the rackets, many assume that tighter financial regulations are helping keep large financial institutions from screwing over the same people they boned over in writing and trading in extremely risky securities.

Wrong.

Goldman Sachs, since 2008, has been buying up MASSIVE amounts of one metal: aluminum, and storing them in warehouses everywhere, particularly in Detroit.  What are they doing with it?  Just sitting on it.

Why is this a bad thing?  Isn’t sitting on metal a good idea when it’s cheap?  Sure… always a good thing.  However, when you buy up so much of it, you’re affecting the world supply of it, not so much.  By reducing supply, you increase demand — and what happens when demand goes up and supply goes down?  Raise the cost.

In 2008, Goldman Sachs reported that they were storing 50,000 tons of Aluminum in warehouses and company owned property.  In 2010, that number increased to 850,000 tons.  At this time?  1.5 MILLION tons.   TONS.

Now, when companies want to buy aluminum domestically, as nations like China like to set prices at the state-level, companies will turn to domestic companies, like those owned by Goldman Sachs.  Because they control the aluminum, they can say “Sorry, we can’t get it to you that fast, we apologize,” when in actuality, they can delay delivery to drive up the price.  Indeed, subsidiary of Goldman, before purchasing, was able to supply aluminum to its end-users, was 6 weeks.  After the purchase and management rearrangement by Goldman, the wait is now sixteen MONTHS.

How much, you say?  What’s YOUR bottom line?

According to Cenk Uygur with The Young Turks, the price increase at this time, broken down per aluminum can of soda/pop, is one tenth of cent, per can — equivalent.  While that doesn’t sound like a lot of money to the end user, that makes a massive dent in the profits of the initial supplier, such as the Soda company, in this case, to buy and manufacture the soda cans.  At Goldman’s level, however,

With the average of US$90 million worth of aluminum cans (ALONE) used in the US, and tons and tons of aluminum used in house sidings, wheels in automobiles, automobile body, anything you can think of.  On average, that increase works out to be roughly US$2 per every 35 pounds of aluminum.  With the average automobile using 12 pounds of aluminum (The New York Times), that adds up to US$12 in additional cost — that didn’t come from anywhere other than artificially controlling the supply to demand — only by slowing down aluminum shipment… that it owns, and stores.

Bottom line, from the entire operation of aluminum storage and shipment control, Goldman Sachs’ cut of the operation: US$5 Billion over the last three years.  (Thanks again, to The New York Times for this figure.)

Madden’s quote at the beginning of this entry has a lot sharper a point on it now, doesn’t it?  What do you think?

Halliburton Pleads Guilty to Destroying Evidence in Deepwater Horizon Explosion

Halliburton is expected to plead guilty to the destruction of evidence related to the explosion and sinking of the Deepwater Horizon oil rig in 2010.

The agreement, made with the United States Department of Justice includes paying the maximum fine of $200,000 — and has indeed, already made a $55 million contribution to the National Fish and Wildlife Foundation.

Indeed, the United States has agreed not to pursue further criminal prosecution in exchange for further cooperation in the ongoing  criminal investigation.

Government regulation has once again triumphed.  Halliburton has admitted that it destroyed results of simulations involved cement blocking the blown oil well — the results showing the cementing was unstable and would not work.  Hiding these results, it went ahead with the attempt anyway, which acted as a contractor to the United States Government.  Was this done strictly so it could make the attempt and collect the money — regardless of what happens; and damn the rest?

In an era where people are calling for less government regulation overall — this goes to show that government oversight of business, particularly in government contractors, is a good thing.  Halliburton lied to the people of the United States, then proceeded to go forth with a project that they knew probably wouldn’t work, knowing the results of the simulations — trampling and dishonoring the lives of those who were not only lost, but to the families of those who lost their loved ones, livelihood and those who worked tirelessly to restore habitats and our sea.

Detroit Skyline. Courtesy of Mike Boening www.memoriesbymike.zenfolio.com

Detroit Bankruptcy… Why is this such a big deal? I will tell you…

Yesterday, at 4:07PM, on approval from Governor Rick Snyder, Detroit Emergency Manager Kevyn Orr ordered the City of Detroit to file for Chapter 9 bankruptcy protection under Title XI of the USC.  Sure.  Other cities have done this before — and people and businesses do it every day, but what’s the big deal?

The big deal is simple: Detroit is the largest municipality in history to declare itself insolvent.  This not only is going to be a major rule-writing moment in American legal history, but also has the potential to do as much harm as it does good over the long term.

The long term positives are fairly simple: Detroit, if successful, will be relieved of most of it’s obligations, and many of the others will be repaid at drastically reduced amounts, as ordered by a federal bankruptcy judge.  This will allow Detroit to begin paying its bills — without borrowing to do so, as it has for the past decade.  This is a good thing.

Detroit Mayor Dave Bing, Detroit Emergency Manager Kevyn Orr, Michigan Governor Rick Snyder

Detroit Mayor Dave Bing, Detroit Emergency Manager Kevyn Orr, Michigan Governor Rick Snyder

The bad news is what gets cut.  The Emergency Manager of Detroit made it clear that his priorities were people first, then creditors — meaning he wanted to protect pay, pensions and benefits for workers and retirees of the City of Detroit as much as he could.  He made this abundantly clear; but stated it was not off the table.  Creditors and contractors would be the next priority.  Creditors didn’t take kindly to this, and indeed, made THAT also clear.

Before all this can happen though, the filing sets in motion several things: the first is immediate relief from creditors.  As of the moment the bankruptcy was filed, for the moment, creditors lost all rights to any money for the time being.  This can, if the Judge allows, give Detroit enough relief to pay what’s necessary to keep it running: it’s employees, contractors and even things like the light bills.  What’s next, and likely beginning to happen today, is the investigation by the court of wether or not Detroit CAN qualify for a Title XI bankruptcy.  Just because one files doesn’t mean one qualifies.  This sets into motion a massive audit of EVERY creditor of every DOLLAR owed BY the City — likely including employees as well.  Next, creditors to the city have a right to appeal, and will likely use the excuse that the City/Emergency Manager negotiated in bad faith, just to hold the process up — as it’s their legal right to do so.  Assuming the City is found to be eligible, the Judge then decides what gets the axe, what gets paid, and who gets paid in what amounts; as likely, those who do get paid (speaking in the terms of creditors and contracts) will likely get paid only a portion, if not a FRACTION, of what they’re owed.

Because this move essentially lays waste to Detroit’s already junk-level bond and credit, the move also will not at all inspire confidence in businesses in Detroit, particularly those who DO business with Detroit.  My major fear is large employers will wind up packing up, and saying “So long, Detroit — it was a nice ride, we wish you the best of luck.”  Not only is this further revenue from taxes and spending lost, just one or two larges businesses to do so could inspire other businesses OR people to flee as well.  A CLEAR vote of no-confidence by the business sector if it were to happen.

Make no mistake, we’re witnessing history — the municipal equivalent of Lehman Brothers is happening as we  speak; which will write books and rules on how to accomplish such a bankruptcy in the future.

I see a Title XI as a mixed blessing for Detroit.  The good — DEFINITELY comes with the bad here.

“We have a great city, but a city going down hill for the last 60 years,” he said at an evening press conference. He said 38% of the city’s budget is being spent on “legacy costs,” such as pensions and debt service. He said police take almost an hour to respond to calls, compared to a national average of 11 minutes, and that 40% of street lights in the city are turned off.  That’s unacceptable,”
    — Kevyn Orr
    Emergency Manager, City of Detroit

Detroit city skyline shot courtesy of Mike Boening
www.memoriesbymike.zenfolio.com

If North Korea and Cuba have been trading arms…

North Korean Missiles aboard the DPRK Ship Chong Chon Gang.  (Courtesy of Yahoo)

North Korean Missiles aboard the DPRK Ship Chong Chon Gang. (Courtesy of Yahoo)

…could this lead to a new Cuban Missile Crisis?

Panama found a North Korean vessel with several missiles (stated to be “outdated”) in its hold bound from Cuba back to the Juche-state that is banned from importing almost any type of weapon by sanction.

The Cuban government, in a televised statement, stated they were headed to North Korea for “repair” and return back to the communist state.

Let’s leave the “repair” aspect of this alone — and assume for a moment, that that’s true.  This means that North Korea and Cuba could very  well have been doing this for awhile, freely — with nobody’s knowledge.

Imagine another Cuban Missile Crisis, with arms once again aimed at the United States by a nation less than 100 miles away from the US Coastline.  Except this time, the arms and the figurative “button” are now in the hands of authoritarian North Korea — and a government hell-bent on proving a point to it’s people that it can, indeed “rain holy fire” down on the nation that the Juche and Songun state has made out to be it’s blood-enemy.

chong-chon-gang

DPRK Ship Chong Chon Gang

Could this be a flue warning sign of something that could come in the future?  Could this have also blown open a cover of how North Korea’s been getting stuff?

Iowa Supreme Court rules on Melissa Nelson

quote-open

Eva Evangelina (Courtesy of Brazzers.com)

Eva Evangelina
(Courtesy of Brazzers.com)

“Without proof of sex discrimination, the employment-at-will doctrine followed in Iowa guides the outcome.”
Iowa Supreme Court Ruling, 12 July 2013

The problem I see here is, this sets a dangerous precedent.

Miss Nelson alleges that she was fired because her employer found her “irresistible,” and indeed, her presence during his on-again-off-again sexual relationship with his wife was like “…like having a Lamborghini in the garage and never driving it.”  The employer doesn’t deny he said this, if I remember correctly.

Okay, a fair statement, perhaps.  Perhaps during the downturn of his sexual relationship with his wife, he found himself enamored with his assistant.  This has the makings of a very unfortunate situation.  A marriage hangs in the balance on one side, and Nelson’s employment on the other.  Unfortunately for Nelson, the marriage argument won out, and the employer, under the at-will employment laws in Iowa, terminated her employment — for that exact reason.  She is “irresistible.”

Most At-will laws say that employment can be terminated at any time, by either party, for any reason that doesn’t violate other laws, such as the Civil Rights Act, or anything that’s essentially NOT a BFOQ.  This is common knowledge.  You can be terminated for showing up to work late, even once.  You can be fired for misfiling an important document, even once.  While not “good” reasons, they are reasons under the law.

However, my concern here is the precedent it sets.  While this reason may be “legal,” is it 1) ethical; and 2) safe from precedent?

Because now that the Iowa Supreme Court does not count this at-will termination as a form of sex discrimination, does this set the scene for even more extreme terminations for similar reasons?

Let’s not forget: The court has UPHELD the employer’s right to fire because of his “irresistible” attraction to her, likely physically; as there are mentions of his requiring her to wear lab coats, and her other physical attributes.  Does this now, mean that someone, such as I am now allowed to terminate someone like ME, under the rules of something along the lines of…

quote-open“You are being terminated because I found the size and shape of your breasts to not be large enough.  Because you are a front-office worker of a successful company, I require front-line employees to be dressed and appear impeccable, including your physical attributes, such as breast size, shape, appearance, acceptable amounts of cleavage showing, etc.”

Basically, it means I’m allowed to fire her because her tits aren’t big enough — and she’s not wearing tops or suits that expose them “properly.”  While this may sound ridiculous, is it *REALLY* something that could be unprecedented, if this ruling is upheld in the high court as part of an “at-will” termination?