Econintersect: Every day our editors collect the most interesting things they find from around the internet and present a summary "reading list" which will include very brief summaries (and sometimes longer ones) of why each item has gotten our attention. Suggestions from readers for "reading list" items are gratefully reviewed, although sometimes space limits the number included.
China’s Rise, America’s Fall (Ron Unz, The American Conservative) Hat tip to AussieLouis. Unz argues that extractive corruption in the west (especially the U.S. and Europe) significantly exceeds that in China and this is leading to a comparative advantage for China. GEI columnist Frank Li has been writing on this issue, most recently this week: Human History: the West vs. the East.
'Dead zone' in the Gulf of Mexico is the size of Connecticut (Barbara Liston, Reuters) Fed primarily by nutrient run-off from U.S. farmland, a large area in the Gulf of Mexico is deoxygenated by "fertilized" algae growth to the extent that marine life is suffocated and cannot survive. The current dead zone has been larger at times than now, at one point reaching the size of Massachusetts, 60% larger than Connecticut. A similar effect is occurring on other parts of the world. The Baltic Sea off Finland is mentioned in the article as the only such area larger than the Gulf.
First Comet Close-Ups from Rosetta Spacecraft Reveal a 'Scientific Disneyland' (Photos) (Miriam Kramer, Space.com) The European Space Agency (ESA) has published the first ever close-up surface images of a comet. The images were taken by a ten-year old exploratory space craft, Rosetta, from a distance of 81 miles above the comet's surface. The comet, named 67P/Churyumov-Gerasimenko, is 251 million miles from earth, about mid-way between the orbits of Mars and Jupiter. But the spacecraft didn't get there in anything like a straight line, having traveled more than 6 billion miles, about 15 times the current separation distance from earth. Comets are reported to be "composed of loose collections of ice, dust, and small rocky particles". We may soon know a lot more because Rosetta carries a small landing craft which has a planned visit to the 2.5-mile-wide comet surface to collect and analyze samples, then return data to earth. Planetary Resources called this the most interesting thing to happen in 4.6 Billion years. See Planetary Resources video following the picture.
Surface of comet 67P/Churyumov-Gerasimenko taken by Rosetta spacecraft's OSIRIS camera
There are 10 articles discussed today 'behind the wall'.
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There are between 75 and 100 articles reviewed most weeks. That is in addition to the 140-160 articles of free content we provide.
Inverting the Debate Over Corporate Inversions (Josh Barro, The New York Times) Barro suggests that the problem of corporations leaving the U.S. to avoid taxes could be solved by taxing the shareholders instead of the corporations. Potential problems he doesn't discuss include various corporate behavior distortions that might occur. For one, if the taxes are assessed to dividends and unrealized capital gains as he suggests, then why wouldn't corporations and divert revenue into "operating expenses" that are nothing more than holding pens for (hopeful) future profit recognition? What is more likely is that tax avoidance (deferral) could create all sorts of malinvestment situations which would simply be money losers.
Another possible mode of taxation would create a pass through to shareholders of all net income for tax purposes. This would create the same tax structure for C-corporations as exists today for S-corporations. This would likely be implemented by corporations as a pass through of part of the net income (say 40% or 42%) to provide enough for any individual taxpayer to have the cash flow to pay the personal income tax and, for some, to retain some cash after-tax. The consequence here is that corporations would lose some of the ability they have today to retain earnings and create a narrower range of capital planning opportunities.
Wouldn't the simplest solution simply be to cut corporate income taxes to a low nominal level and remove all exemptions and credits? A graduated tax structure that had a top bracket at 20% (or some other low level on an even footing with other nations) would be the simplest solution, n'est pas?
Demographics and 2020 (csen) The top of the corporate world and the national political leaders will be Gen-X. In six years the "power" influence of Baby Boomers will be all but over. But the Gen-Xers will have a short stand because the larger Millennial generation will be "squeezing their space". See the next article.
It's finally happened. 10-year-old Facebook is now worth more than 104-year-old IBM (Walter Kurtz, The Daily Slot email, no url) Attributed to Dennis Berman, The Wall Street Journal:
Millennials and Boomers: Don't Forget Generation X (Christine Henseler, Huffington Post) Gen-Xers are given short shrift because of the shortened calendar span with which they were bequeathed: Only the 14 years 1966-1979 were allotted. The Baby Boom covered 18 years and the Millennial generation has covered 34 years so far with no end date yet specified. Econintersect expects that the Millennial generation time span will be have an end date assigned retroactively and we will some day find that sociologists will say that we are presently in a new generation. How about Generation Flux?
I have been going through Banco Espírito Santo's half-year 2014 results. They make pretty grim reading. No, actually it's worse than that. They read like an instruction manual on how to rip off a bank.
I can't work out if the BES management at the time was stupid, naďve, complacent or criminal. Probably all four. No matter - it has now been entirely replaced. Well, I say "no matter" - but actually such abysmal management DOES matter. Those responsible for audit, risk and compliance have been guilty of incompetence so gross it borders on the criminal.
For Argentina, debt default is a solution not a problem (John Weeks, The Conversation) John Weeks has contributed to GEI. "The problem is not default, the problem is the absence of an international mechanism to bring it about in an orderly manner." Argentina's monetary condition is well within acceptable limits and has been improving for the last 11 years.
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