Friday, December 17, 2010

This has been talked about way too often about how the world's population is bulging in the wrong spot but any avid blogger about world events should have at least one post pertaining to it.

Within the next 20-30 years Asia's population will become much too large for the job shift. In India for instance by the year 2025 there will be nearly 400 million people entering the labor force but there won't be enough jobs. A lot of them may be well educated but an even larger number of them will not have work in the forseeable future because the expanse of cities is becoming too large. Other developing nations such as Vietnam, the Philippines, and Indonesia will face similar problems to India in which the overall standard of living and general spread of education will increase but there still won't be enough capital or enough jobs to create a good market environment for these new laborers.

Then you have the more extreme case where the labor force is too young. Usually that is correlated to government instability and a lack of rural opportunities and hence poor farmers have more children in the hope that there will be more children to survive and provide for the family. The logic is highly flawed because there are more mouths to feed but because there are more mouths to feed, people become impatient and lash out at the government through a series of violent coups. African nations are experiencing this problem on a wide scale in North and Central Africa and less so towards the Southern part of the continent where environmental degradation is a bigger concern. Economic growth is pretty strong in these nations but the change is hardly noticeable as everyone seems to be caught in a poverty trap and there is very little industrialization taking place.

On the other side of the spectrum, some regions are growing too old and cannot generate growth because there won't be enough laborers. As a result there is a disproportionate amount of pensioners to taxpayers and that causes an unnecessary burden on the government and I am specifically talking about France, Germany, Italy, and other European nations that are bound to face this problem or are already facing this problem.

Well, I'm more interested in where the ideal age is for both political stability and economic growth. Nations such as Brazil, India, and China are all experiencing their best growth rates and are attracting global attention as these 4 economies are expected to become world powers in approximately 10-20 years give or take. India's median age is approximately 25, Brazil 27.2,and China is the oldest but strongest growing at 33. There is no perfect correlation as these countries have widely varying population sizes and urbanized population sizes too. China is able to support strong growth because of excess labor being controlled for some 30 years now. India is enjoying similar prospects and because its growth is not quite the same as China's right now, we can assume that the ideal median age is just around the corner. Brazil is an odd case because it's in between India and China in median age but does not have the same kind of growth levels as either country growing at a stable but not so fast rate of 5%. Some people will throw in Russia as an example of an old country prospering but not every country can profit from natural gas, oil, and other valuable resources in the same way Russia can and even Russia will start to find it burdensome because of a low labor force and a declining population.

My guess is that a nation is truly ready to expand its potential if its median age is younger than 30 and is not forseeable to change rapidly.

Friday, November 26, 2010

I don't quite understand why FIFA is choosing to nominate the 2022 World Cup at the same time as they are choosing to nominate the 2018 World Cup. Usually a nation should be given about 6-8 years to prepare for a world cup. 12 is a little excessive.

Some of the bidding nations are plausible picks and others are just ludicrous.

Plausible nations for 2018: England, Netherlands/Belgium
Risky nations for 2018: Spain/Portugal, Russia

Plausible nations for 2022: United States and Australia
Risky nations: Japan and South Korea
Unplausible nations: Qatar

2018
Of course I am not a FIFA expert nor do I profess to know that much about soccer but I think that England or Belgium/Netherlands would be a good pick to host the world cup given its plethora of stadiums, tourism, accommodations for fans, history, and distance between each major stadium. The bids have similar strengths and weaknesses but have earned strong government support.

Risks:
What I am unsure of is how a bid with Spain/Portugal would fare and how Russia would do. Russia is a rather far destination and like South Africa may not attract the same number of fans that previous world cups have been able to. Spain and Portugal are on the brink of default and might need of emergency loans so economically speaking, both countries might not be able to handle a World Cup. They are great tourist destinations but they have bigger issues to solve

2022
I really like both the Australia or the US bids. Australia has plenty of available stadiums and can readily build a few more in 12 years time. The US doesn't even need to build new stadiums. For the US the only concern is transporting between West coast and East coast and selecting cities that can optimally hold tourists. Chartered planes for each country wouldn't be very burdensome either. However FIFA has deemed that the US is a medium risk since it lacks government stability. 2 words: TOTAL NONSENSE. If they believe that Republican opposition will block a World Cup, well remember back to the 80s and 90s where Republicans were a majority in Congress and supported the bid for 1994.

Riskier nations
Japan was able to successfully host the 2002 World Cup but that was with South Korea's help. Without South Korea's help, Japan will need to build some new stadiums and likely support a lot of tourists and fans from everywhere. Same thing with South Korea. South Korea's flaring tensions with the North may not be good business and who is to say that both countries will compromise within 12 years. South Korea's size is a matter of concern when it comes to accommodating tourists and fans.

Unplausible
Qatar, although they claim to have great plans and the president of FIFA Sepp Blatter says the Arab World deserves a World Cup, it seems completely unrealistic. A joint effort would make this possible but 5 stadiums will have to be built in Doha which is slightly unreal considering Qatar isn't a very strong soccer nation that needs all 5 stadiums. Then they have to build several more in the other, smaller cities. Then the conservative fundamentals of Qatar might be overlooked but then the climate is highly unfavorable with temperatures exceeding 100F degrees. The cooling systems that were proposed might work but the financial burden that Qatar faces might not be solved with their oil wealth.
In the past few months, North Korea's hostility seemed to be waning a bit. There was hope that perhaps Kim Jong-Il was becoming too senile and had nominated a youthful, western educated Kim Jong-Un. There was a proposal of reunification and of course North Korea's willingness to participate in the 2010 World Cup.

Well a few days after a devastating attack on a South Korean island should restore the unpredictability that we had grown to ignore.

Why this happened, no one seems to have a clue. South Korea will reassert its claim that it should fear its Northern neighbors with an attack like that. South Korean soldiers are going through different military exercises with the 28000 or so troops stationed there.

A little common sense. Obviously we are all worried that the North will attack again but when you are preparing a country in military exercises with the expectation that there will be another round of military fisticuffs, that's not quite promoting peace either.

Luckily China has decided to step in and promote peace given that it is one of North Korea's few allies, but how effective will they be.

This attack has just given us a reason to perhaps dismiss the possibility of reunification. Our new North Korean focus is how can we lull the angry North Korean government back to a serene state where it is willing to negotiate.

Of course South Korea is angry because about 200 shells were fired at the peaceful island. Right now the West and South Korea should take a more reactionary position and see what North Korea's next move is. In the meantime there should be immediate talks coordinated between the two leaders.

Monday, November 8, 2010

I must say I was rather pessimistic about the result of this election on November 2nd. Although I am happy that some balance was restored to Congress in the sense that we're less likely to see all Democratic ideals passed.

At the same time however, I was not happy by the impact that was created and the Republicans response to victory.

The Republicans in an opportunistic move chose to credit the tea party for their rise back to the top and essentially take credit for their movement's impact. This only gives me the indication that the Tea Party which has very little to offer in terms of fixing the problem will likely dictate terms in Washington.

There are still multiple issues to deal with, including how Barack Obama will have to manage now that his majority in the House has been completely reversed and his Senate is not anywhere near the Super-majority it once held. But in my opinion these next two years will be his greatest opportunity to redeem himself with the American public.

Fiscal involvement: Republican legislation will likely press for tax cuts on all levels and a spending cut. President Obama has stated his intention to return to fiscal responsibility but his record indicates otherwise with a large stimulus and a large healthcare reform bill. President Obama is not in favor of tax cuts for the wealthy but this might be where he'll have to compromise. His best solution?: He would have to either accept Republicans behavior on their tax cut notion and he'll have to cut spending by an even bigger margin.

Healthcare Repeal: President Obama will have to and likely will stand his ground on reform but he said he was willing to make some minor tweaks to the bill. Republicans, particularly Tea Party candidates will want to scrap the bill altogether but this has to be the issue where President Obama keeps his ground. Anyway, a repeal of the bill has little passing success in a still Democratically controlled Senate.

Education Reform: This is one of the President's next goals in mind and he should ask for bipartisan support on the upcoming legislation

Job Creation: The Tea Party has already got the wrong idea and is now criticizing Obama for his 2010 Asia trip starting in India. The president seems to understand 21st century economics in which countries can no longer rely on themselves to recreate jobs. Foreign deals with rising powers have to be made if the US wants to end its unemployment slump. The Tea Party should either recognize this or promote a different solution rather than producing incessant criticism.

War on Terror: This already has bipartisan support and will likely continue although this is a big component in reducing spending. The conflict has to be taken up by regular citizens who realize extremism is crippling their progress. The US has to shift focus towards the people to stand up against Al Qaeda. Kill the philosophy, not the people who believe in it. This is where the focus should turn.

Friday, October 8, 2010

Today the French Senate Les Senateurs voted in favor pass retirement reform raising the legal retirement age from 60 to 62.

From a French viewpoint: This is an absolute outrage, an example of how the elite at the top are hurting the poor, hard-working French worker. Clearly the government must be pandering to businesses. They are corrupt officials and this is disgraceful, therefore we shall strike at dawn (not that we don't do that anyway)

From a French Politician's viewpoint: This is necessary to deal with a rising budget deficit, rising union power, and an aging population. 2 years will be relatively mild and we will save a lot of money.

From my viewpoint: This will reduce the burden, but only in the short term.

What I am trying to say is that in the context of this bill, French workers will have to pay taxes for an additional two years raising revenue for the government to actually pay for all of the benefits it offers. But then what happens?

Voters will probably realize this and will demand more benefits from its politicians, leading to new bills in which the already entitled French population will receive even more cheques du gouvernement and then the problem will keep compounding on itself.

If French politicians want to reduce the burden they face, they should try a combination of several acts in which the population strike a deal with their "out of touch" senators. I understand that they consider it a great personal achievement if they have a universal healthcare and subsidized education. Leave that in place but French laborers are going to have to reform. The French government can promote domestic spending if they can pass a tax cut but at the same time strike a bargain with the workers to cut back on their luxurious paid vacations. The average French worker has 39 days of vacation under his belt. That's a whole summer that even I couldn't enjoy and I'm only 17, not 60. That too, I think that it is time that French politicians jump on the side of businesses who are right now feeling that France isn't a great country to keep their operations going anymore. The CAC 40 index is a good reflector of how corporations are feeling at the moment and the index has remained stagnant. Maybe allow entrepreneurs more collective bargaining power and then we're talking about motivated workers who might just think twice before they head to picket lines.