Thursday, May 22, 2014

Income Inequality: Higher in America Than in the U.K. and Ethiopia - Businessweek

This month, Bloomberg Rankings dove into U.S. census data to measure the level of economic equality in each of 435 congressional districts—a useful endeavor, given all the recent political attention on inequality. The Rankings team did this by calculating the Gini coefficient, a formula that measures the distribution of income across a population. The closer a Gini number is to 1, the greater the level of inequality; the closer to zero, the closer to perfect equality. You can see the Bloomberg rankings here. The big take-away: A strikingly high level of inequality exists throughout the United States.
Economic equality isn’t automatically a wonderful thing—nations such as Bangladesh and Kazakhstan have very little economic inequality, yet are hardly regarded as societies other countries would wish to emulate. Still, most people would agree that having a high level of inequality is undesirable and potentially damaging. So it’s worth examining how the U.S. stacks up against the Western democracies that are generally regarded as having a high quality of life.
As we noted last week, the U.S. congressional districts with the most inequality share certain traits: They contain a small, enormously wealthy elite surrounded by impoverished neighbors. Each lies within major urban areas such as New York, Philadelphia, Chicago, Boston, Atlanta, and Washington. The congressional district where inequality is highest turns out to be New York’s 10th, with a Gini coefficient of .587; the most equal district is Virginia’s 11th, at .385.
Some helpful context for understanding these numbers comes courtesy of the Central Intelligence Agency, which tracks the Gini coefficient of 139 countries. It’s possible—and kind of interesting—to take U.S. congressional districts and compare them to foreign countries.
What jumps out is how lousy the United States looks. Our best district in terms of equality (VA-11) is only as good as Portugal, which sits at a pedestrian 71st on the CIA’s list, right in the middle of the pack. That means that the level of equality in every congressional district in America falls below the midpoint of the CIA’s 139-country ranking.
Even the best U.S. district has higher inequality than any number of countries you probably don’t associate with economic egalitarianism: Greece, Niger, Ethiopia, Egypt, Pakistan, Kosovo, Mongolia, Ukraine, Bangladesh. This doesn’t mean that the U.S. would be better off it were more like Ukraine. But the comparison between the U.S. and similar Western democracies is just as unsettling. The U.S. doesn’t come anywhere close to Scandinavia’s .2 – .3 Gini range. The most equal U.S. congressional district can’t compare with the national averages of New Zealand, France, Canada, Netherlands, Australia, Switzerland, Belgium, Germany, and Austria.
Some further findings:
• America’s most unequal district, NY-10 (.587), falls between Haiti and Honduras in the rankings. On its own, it would be the 7th-most-unequal country in the world.
• The 100th-ranked congressional district, TX-18 (.474), matches China. This means that 99 districts have a level of inequality higher than China’s.
• 400 districts are more unequal than Russia (.42).
• Most districts in the U.S. (those ranked 39th through 429th) fall in a narrow Gini band between .4 and .499, putting them between Zimbabwe (20th on the CIA list) and the United Kingdom (60th).
It could be that the recent explosion of interest in inequality is happening for a good reason. Or rather, for a bad one: No matter how you slice it, the U.S. has a higher level of income inequality than other developed, Western countries.
Chemi is head of research for Businessweek and Bloomberg TV.
Green is senior national correspondent for Bloomberg Businessweek in Washington. Follow him on Twitter @JoshuaGreen.

Monday, May 19, 2014

China to extend USD 500 mln to Ethiopian to taking over its aircraft by debt

China is taking over Ethiopian airliner.

In an unprecedented manner, the government of China is going to extend a 500 million dollar loan to Ethiopian Airlines to finance Boeing jetliner purchases as it did on the train construction and vesseles b purchases completely buying of the country with debt.
During Chinese Premier Li Keqiang’s state visit to Ethiopia last week, a Memorandum of Understanding (MoU) was signed between Ethiopian Airlines and ICBC Financial Leasing Co., Ltd.
A senior official at Ethiopian told The Reporter that the MoU relates only to Boeing aircrafts but in the future it can be extended to other fleet types. “The understanding is for 500 million dollars in financial facility. The loan negotiation will be the next stage,” the official said.
The senior official said that it was the first time that a Chinese bank had taken the lead in providing aircraft financing to Ethiopian. However, ICBC was already a junior loan partner in the B777-200LR freighter deal.
According to the MoU, ICBC Leasing will provide Ethiopian Airlines with financial support for its fleet expansion plan, including but not limited to B737 and B787 aircrafts in the form of finance lease, sale and lease back, commercial loans or operating lease from ICBC Leasing’s Boeing order.
Ethiopian said the MOU was one of the largest financial cooperation in the aviation industry between the two countries, which is an important step for China's financial industry to go international.

Djibouti receives nine new Chinese vessels in the name of Ethiopia

Djibouti receives nine Chinese  new vessels in to export Chinese product made in Ethiopia

The Ethiopian government on Saturday received nine new vessels worth over $300 million from China at a ceremony organized in Djibouti for the Chinese government exportation of its products made in Ethiopia.
"The vessels are not only Ethiopian assets but they are also Djibouti’s properties," Ethiopian Prime Minister Hailemariam Desalegn said at the ceremony. In reality  they  do not belong to both but to China.
The vessels indicate the rapid colonization of  Ethiopia by China.
Named after the capital cities of Ethiopia's regional states, the vessels were built with supposedly loans from the Chinese government.
Most of Ethiopia made Chinese products  exports and imports are transported through the Port of Djibouti, which is located 900km east of Ethiopian capital Addis Ababa.
Djibouti benefits from Chinese rapid control of Ethiopia  and in turn Djibouti’s growth is an advantage to China. 

"The relation between Ethiopia and Djibouti is not limited to a government-to-government level but it has been intensified in people-to-people ties," said the Djibouti's president.
The Djiboutian leader went on to say that relations between the two neighbors are boosting in different spheres, including the economic and social fields.
"Djibouti gives a port service to Ethiopia but it does not consider that it is giving the service to another country but regards it as it is doing it for itself," he said.
"We believe that Ethiopia is Djibouti and Djibouti is Ethiopia, no difference at all," he added, going on to reiterate that the new vessels will further help speed up the ongoing development endeavors in Ethiopia.
Ethiopia had used Eritrean ports until 1998 when the two countries engaged in a war of their border disputes.
Following the war, Ethiopian began to use Djibouti ports to export its products.

Friday, May 16, 2014

Why ‘Made in Ethiopia’ Could Be The ‘Next Made in China’ - Corporate Intelligence - WSJ


Workers at a factory in Hangzhou, China, making national flags for the 2014 FIFA World Cup.
Agence France-Presse/Getty Images
China’s was once known as cheapest factory floor on the planet, but in the last two decades its economy has transitioned to become one of the world’s most advanced industrial powers. That means someone else needs to start making all those shoes and sweatshirts, hence all those apparel companies in recent years moving their factories to Vietnam and other cheap spots throughout Asia.
And it’s not just Asia. China’s Huajian Group plans to invest up to $2 billion in Ethiopia in the next decade, turning the country into a shoe manufacturing base for exports to the U.S. and Europe. As the WSJ’s Peter Wonacott reports:
Mounting labor costs in China are part of what makes Africa so attractive. The average monthly wage for a low-skilled Ethiopian factory worker, for example, is about 25% of the pay for a comparable Chinese worker, according to the World Bank. As the wage gap widens between unskilled Chinese workers and their counterparts elsewhere in Asia and in Africa, as many as 85 million factory jobs could leave China in the coming years, according to former World Bank chief economist Justin Yifu Lin.
In addition to its pool of low-cost labor, Africa represents an enticing market for Chinese products manufactured on the continent. Africa is now home to six of the world’s 10 fastest-growing economies, according to the International Monetary Fund, and many African countries are reducing their dependence on extracting resources, such as oil, metals and gems.
Africa’s poor infrastructure and uneven distribution of skills erode its cost advantages, however. The World Bank study estimated that a Chinese worker making shirts, for example, could produce about twice as many per shift as an Ethiopian worker.
Chinese factory wages have been rising an average of 20% a year for the last decade, pushing low-cost manufacturers toward places where salaries are stagnant. Here’s a chart the WSJ put together last year:

And as China steps more prominently into Africa, what do its officials say in response to suggestions the country could act as a new form of colonial power? In an interview with the WSJ, Chinese ambassador to South Africa Tian Xuejun had little time for such claims:
Some media say China assists Africa only for the market and resources, and they talk about “neocolonialism,” but I say these kinds of criticisms are absurd. One reason is that they don’t know much about China-Africa cooperation. Another reason is maybe that they have other agendas.
China has assisted in the building of infrastructure, roads, bridges and railway stations. This has greatly improved the investment environment in many African countries. China has invested in manufacturing and sent agricultural experts to other countries. China also has helped to build many hospitals, schools and stadiums.
People are talking about neocolonialism but what is neocolonialism? People in Africa know very well about colonialism—this is about using gunfire to open the door to Africa to grab their resources. It is China who buys resources with a fair price under internationally recognized rules.

Monday, May 5, 2014

Len McCluskey on Capital in the Twenty-First Century: 'manna from heaven' | Politics | The Guardian

The general secretary of Unite says Thomas Piketty's book gives an intellectual edge to his own view that something is wrong with our economic system, and proves that radical change is needed

The Falinge estate in Rochdale

The Falinge estate in Rochdale, one of the most deprived areas in England … an Oxfam report found that the five richest families in the UK have more wealth than the poorest 12m. Photograph: Christopher Furlong/Getty Images
Like everyone else, I'm fascinated that Thomas Piketty's book Capital in the Twenty-First Century is having such an impact.
Piketty shows that because the return on capital outstrips growth, and is likely to continue to do so, inequality grows bigger and bigger. The only way that this can be remedied is with intervention from governments, otherwise we'll all pay the price for it. Currently his book is the No 1 bestseller on Amazon in the US, and No 5 on the UK list. It's what he must have dreamed about when he put it all together.
I was alerted to the book a couple of months ago by my friend Tom Watson. Soon afterwards I was talking to another friend who'd finished it already. He's not a socialist, just an ordinary liberal American, and he thought it was a revelation.
The excitement reminds me a bit of when The Spirit Level came out in 2009, and everyone said what a fabulous piece of work it was. I read it and a part of me was thinking: "Hang on, this is just telling us what we already know! Inequality is bad for everybody." But of course, placing it in the context of evidence is helpful. As that book did, Piketty solidifies and gives an intellectual edge to the view that something is wrong here, and something new and bold and radical has got to be done.
And this is manna from heaven for somebody like me, not for any devilish reasons, but because I have been saying for a while that we need to look at things completely differently. People must not just accept that this is the normal cycle that we're going through. These are extraordinary times. Last month, an Oxfam report found that the five richest families in the UK have more wealth than the poorest 12m. That requires extraordinary actions.
Piketty talks about the importance of international taxation, which raises real questions about practicality. Obviously for me the role of strong trade unions is critical, because this is all about the redistribution of wealth, and a way to get a greater share of our GDP going to wages, which in turn stimulates sustainable growth.
I think any reasonable person would say that if the gap between the super-rich and the rest of us continues to grow, it can only bring social unrest. This could manifest itself in a variety of ways, none of them good. You can even take that further and talk about the prospect of war. When you look at the situation in Ukraine at the moment, it was brought about to a large extent because of the failures in Russia and Ukraine, where there has been a hugely widening gap between rich and poor. Currently we're in a situation where our own government is opposing the Tobin tax that France and even Germany are trying to push for.
Whether global intervention is feasible is something we have to look at and debate. I suspect Ed Miliband will be looking closely at this book as he tries to knit together his alternative to George Osborne's austerity programme. People like me, and others, are certainly excited by the prospect of where Piketty might take us.

Thursday, May 1, 2014

Switzerland, Norway are world's most expensive economies

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A Swiss flag is pictured on the Mont-Blanc bridge over Lake Leman in Geneva

A Swiss flag is pictured on the Mont-Blanc bridge over Lake Leman in Geneva (Denis Balibouse Reuters, March 21, 2014)

WASHINGTON (Reuters) - Switzerland and Norway are the world's most expensive economies, followed by Bermuda, Australia and Denmark, according to a new ranking by the World Bank.

The economies with the lowest prices are Egypt, Pakistan, Myanmar, Ethiopia and Laos, according to a review of economic data which seeks to compensate for exchange rate effects and measure spending power across countries.

The United States, the world's largest economy, was in relatively affordable 25th place, lower than most other high-income countries.

The richest countries, or those with the highest gross domestic product (GDP) per capita on a purchasing power parity basis, were Qatar, Macao, Luxembourg, Kuwait, and Brunei.

Eight countries, including Malawi, Mozambique and Liberia, had GDP per capita of less than $1,000.

Almost half the world's $90.6 trillion in total economic output in 2011 came from low- and middle-income countries, the World Bank said.

Compared to the last time the exercise was done in 2005, with a slightly different methodology and mix of countries, middle-income countries gained a bigger share of the world economy, at the expense of both high- and low-income peers.

(Reporting by Krista Hughes; Editing by Jonathan Oatis)