It has been a while

Too bad the world hasn’t improved while I’ve been gone. McKinsey and The Economist have generally reported that executives have better (read not bad as before) expectations for future growth.

In similar significance is the fact that I quite like my new coat.

Without improving the structural problems currently burgeoning the world, or at least the time bombs going off and crashing the whole system, there will be no real improvement.

Anyway here are a few articles I found particularly interesting from The Economist. I’ve attempted to make summaries shorter.

Over-regulated America
http://www.economist.com/node/21547789

“Consider the Dodd-Frank law of 2010. Its aim was noble: to prevent another financial crisis. Its strategy was sensible, too: improve transparency, stop banks from taking excessive risks, prevent abusive financial practices and end “too big to fail” by authorising regulators to seize any big, tottering financial firm and wind it down. This newspaper supported these goals at the time, and we still do. But Dodd-Frank is far too complex, and becoming more so. At 848 pages, it is 23 times longer than Glass-Steagall, the reform that followed the Wall Street crash of 1929. Worse, every other page demands that regulators fill in further detail. Some of these clarifications are hundreds of pages long. Just one bit, the “Volcker rule”, which aims to curb risky proprietary trading by banks, includes 383 questions that break down into 1,420 subquestions.”

“Those who have struggle to make sense of it, not least because so much detail has yet to be filled in: of the 400 rules it mandates, only 93 have been finalised. So financial firms in America must prepare to comply with a law that is partly unintelligible and partly unknowable.”

“Every hour spent treating a patient in America creates at least 30 minutes of paperwork, and often a whole hour. Next year the number of federally mandated categories of illness and injury for which hospitals may claim reimbursement will rise from 18,000 to 140,000. There are nine codes relating to injuries caused by parrots, and three relating to burns from flaming water-skis.”

“Many lawmakers seem to believe that they can lay down rules to govern every eventuality. Examples range from the merely annoying (eg, a proposed code for nurseries in Colorado that specifies how many crayons each box must contain) to the delusional (eg, the conceit of Dodd-Frank that you can anticipate and ban every nasty trick financiers will dream up in the future).”

“The government’s drive to micromanage so many activities creates a huge incentive for interest groups to push for special favours. When a bill is hundreds of pages long, it is not hard for congressmen to slip in clauses that benefit their chums and campaign donors. The health-care bill included tons of favours for the pushy. Congress’s last, failed attempt to regulate greenhouse gases was even worse.

Complexity costs money. Sarbanes-Oxley, a law aimed at preventing Enron-style frauds, has made it so difficult to list shares on an American stockmarket that firms increasingly look elsewhere or stay private. America’s share of initial public offerings fell from 67% in 2002 (when Sarbox passed) to 16% last year, despite some benign tweaks to the law. A study for the Small Business Administration, a government body, found that regulations in general add $10,585 in costs per employee. It’s a wonder the jobless rate isn’t even higher than it is.”

“All big regulations should also come with sunset clauses, so that they expire after, say, ten years unless Congress explicitly re-authorises them.”

“Would this hand too much power to unelected bureaucrats? Not if they are made more accountable. Unreasonable judgments should be subject to swift appeal. Regulators who make bad decisions should be easily sackable. None of this will resolve the inevitable difficulties of regulating a complex modern society. But it would mitigate a real danger: that regulation may crush the life out of America’s economy.”

Good job to The Economist, nailed the hammer on the head with this one. It is worth reading the article in its entirety.
You can read more from them on Dodd-Frank at:
http://www.economist.com/node/21547784

Grappling in the Dark
http://www.economist.com/node/21547821

“Mr Bo is a former minister of commerce and considered to be one of China’s more charismatic senior leaders. Before last week, he was thought likely to be promoted to the Politburo’s nine-member standing committee in the autumn. His failure to gain a seat would be a blow to two influential political camps. One is a group made up of the “old left” who lament the passing of Maoism, and the “new left”, who want to restore some of Mao’s more worker-friendly policies. This group extols Chongqing as a model of the way the country should be run. It admires Mr Bo for his heavy spending on social housing and on education and health care for migrants. The old left likes Mr Bo’s attempts to revive “red culture”, including the singing of old revolutionary songs, and his fierce campaign (carried out by Mr Wang) against corruption and organised crime.”

This is important because it is a rare insight into the direction that the current Politburo and the CCP want to take China in the coming years. That vision does no include a communist revival.

 

EDIT:

Had to add in this picture I found on the Economist with the map as the size of countries according to their government spending:

http://www.economist.com/blogs/charlemagne/2012/01/europes-debt-crisis?fb_ref=activity