SUPPLY--SIDE ECONOMICS IN ACTION

I'll Bet You Didn't Know All this on the Budget

Brian Riedl over at Heritage has a new review of the latest budget numbers. Here's his summary:

-- After increases of 15 percent and 12 percent the past two years, tax revenues are projected to increase an additional 7 percent in 2007.

-- By historical standards, Americans are now overtaxed. Total 2007 tax revenues (18.8 percent of GDP) and individual income tax revenues (8.5 percent of GDP) are well above their historical averages, and even above their averages in the 1990s.

-- The inflation-adjusted 2004-2007 revenue surge of 25 percent represents the largest three-year tax revenue surge since 1966-1969.

-- Total 2007 federal spending is estimated to be 20.2 percent of GDP, up from 18.5 percent when President Bush took office. Had spending remained at 18.5 percent of GDP, this year's budget would show a $35 billion surplus. The tax cuts did not create the 2007 budget deficit; rather, an enormous increase in spending created the deficit.

-- Health care spending is skyrocketing. The MSR projects that Medicare will grow 14 percent this year (on top of 12 percent growth last year) and that Medicaid and SCHIP will grow 9 percent. Combined Medicare and Medicaid spending now exceeds Social Security spending.

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INTERNATIONAL FINANCE CORPORATION

International Finance Corporation


The International Finance Corporation (IFC) promotes sustainable private sector investment in developing countries as a way to reduce poverty and improve people's lives.

IFC is a member of the World Bank Group and is headquartered in Washington, DC. It shares the primary objective of all World Bank Group institutions: to improve the quality of the lives of people in its developing member countries. [1]

Established in 1956, IFC is the largest multilateral source of loan and equity financing for private sector projects in the developing world. It promotes sustainable private sector development primarily by:

1. Financing private sector projects located in the developing world.
2. Helping private companies in the developing world mobilize financing in international financial markets.
3. Providing advice and technical assistance to businesses and governments.

IFC has 179 member countries , which collectively determine its policies and approve investments. To join IFC, a country must first be a member of the International Bank for Reconstruction and Development (IBRD). IFC's corporate powers are vested in its Board of Governors, to which member countries appoint representatives. IFC's share capital, which is paid in, is provided by its member countries, and voting is in proportion to the number of shares held. IFC's authorized capital (the sums contributed by its members over the years) is $2.45 billion; IFC's net worth (which includes authorized capital and retained earnings) is considerably larger and at the end of June, 2005, was $9.8 billion. [2]

The Board of Governors delegates many of its powers to the Board of Directors, which is composed of the Executive Directors of the IBRD, and which represents IFC's member countries. The Board of Directors reviews all projects.

The President of the World Bank Group, Paul Wolfowitz, also serves as IFC's president. IFC's Executive Vice President, Lars Thunell, is responsible for the overall management of day-to-day operations. He was appointed on January 15, 2006.

Although IFC coordinates its activities in many areas with the other institutions in the World Bank Group, IFC generally operates independently as it is legally and financially autonomous with its own Articles of Agreement, share capital, management and staff.

[edit] Funding of IFC's Activities

IFC's equity and quasi-equity investments are funded out of its net worth: the total of paid in capital and retained earnings. Strong shareholder support, triple-A ratings, and the substantial paid-in capital base have allowed IFC to raise funds for its lending activities on favorable terms in the international capital markets. Retained earnings now represent almost three-quarters of IFC's net worth of $9.8 billion (end-June 2006).

[edit] IFC Activities

Within the World Bank Group, the World Bank finances projects with sovereign guarantees, while the IFC finances projects without sovereign guarantees. This means that the IFC is primarily active in private sector projects, although some projects in the public sector (at the municipal or sub-national level) have recently been funded.

Private sector financing is IFC's main activity, and in this respect is a profit-oriented financial institution (and has never had an annual loss in its 50-year history). Like a bank, IFC lends or invests its own funds and borrowed funds to its customers and expects to make a sufficient risk-adjusted return on its global portfolio of projects.

IFC's activities, however, must meet a second test of contributing to a reduction in poverty in line with its mandate. In practice, this is broadly interpreted, but considerable time and effort is devoted to both (i) selecting projects with positive developmental outcomes, and (ii) improving the developmental outcome of projects by various means.

Apart from its core investment activities, IFC also carries out technical cooperation projects in many countries to improve the investment climate. These activities may be linked to a specific investment project, or, increasingly, to broader goals such as improving the legislative environment for a specific industry. IFC's technical cooperation projects are generally funded by donor countries or from IFC's own budget.

THE WORLD BANK

World Bank Group


The World Bank Group is a group of five international organizations responsible for providing finance and advice to countries for the purposes of economic development and eliminating poverty. The Bank came into formal existence on 27 December 1945 following international ratification of the Bretton Woods agreements, which emerged from the United Nations Monetary and Financial Conference (1 July - 22 July 1944). Commencing operations on 25 June 1946, it approved its first loan on 9 May 1947 ($250m to France for postwar reconstruction, in real terms the largest loan issued by the Bank to date). Its five agencies are:

* International Bank for Reconstruction and Development (IBRD)
* International Finance Corporation (IFC)
* International Development Association (IDA)
* Multilateral Investment Guarantee Agency (MIGA)
* International Centre for Settlement of Investment Disputes (ICSID)

The World Bank's activities are focused on developing countries, in fields such as human development (e.g. education, health), agriculture and rural development (e.g. irrigation, rural services), environmental protection (e.g. pollution reduction, establishing and enforcing regulations), infrastructure (e.g. roads, urban regeneration, electricity), and governance (e.g. anti-corruption, legal institutions development). The IBRD and IDA provide loans at preferential rates to member countries, as well as grants to the poorest countries. Loans or grants for specific projects are often linked to wider policy changes in the sector or the economy. For example, a loan to improve coastal environmental management may be linked to development of new environmental institutions at national and local levels and to implementation of new regulations to limit pollution.

The activities of the IFC and MIGA include investment in the private sector and providing insurance respectively.

The World Bank Institute is the capacity development branch of the World Bank, providing learning and other capacity-building programs to member countries.

RESTORING THE REPUBLIC

"I have never been more excited about a conference in my life.”
— Jacob G. Hornberger, founder and president of The Future of Freedom Foundation

$495 Registration — Includes 10 Meals and 24 Speeches

“The general principles of any study you may learn by books at home; but the detail, the colour, the tone, the air, the life which makes it live in us, you must catch all these from those in whom it lives already.”

— John Henry Cardinal Newman

“No one can find a safe way out for himself if society is sweeping towards destruction. Therefore everyone, in his own interests, must thrust himself vigorously into the intellectual battle. None can stand aside with unconcern; the interests of everyone hang on the result.”

— Ludwig von Mises

The Future of Freedom Foundation is holding one of the most important conferences in the history of the libertarian movement, “Restoring the Republic: Foreign Policy and Civil Liberties.”

June 1–4, 2007, from Friday morning through Monday noon, we will be addressing the two most burning issues of our time — foreign policy and civil liberties. This landmark conference will be held at the Hyatt Regency Reston in Reston, Virginia. Reston is one of the nicest areas of northern Virginia and, in fact, was recently named one of the Top 100 Best Places to Live by Money magazine.

For the past several decades, U.S. foreign policy has included support of dictatorial regimes, brutal sanctions and embargoes, invasions and occupations, terrorist “blowback” against the United States, severe assaults on civil liberties and the Bill of Rights, suspension of habeas corpus, torture and “rendition” of detainees, indefinite detentions, and kangaroo military tribunals.

With the ever-growing debacle in Iraq, there has never been a better time to come together to share ideas on restoring the limited-government, constitutional republic envisioned by our Founding Fathers. It is to that end that we are hosting this exciting and important conference. When you review our list of 24 speakers — libertarians, liberals, and conservatives — you will see that this is going to be one fantastic intellectual experience you are not going to want to miss.

Not only will you have the opportunity to listen to speeches by some of the greatest speakers on foreign policy and civil liberties, you will also have the opportunity to mingle with them as well as with conference participants from all over the country who share the same passion and commitment concerning foreign policy and civil liberties.

Register for the conference with FFF either online or by telephoning us (1-703-934-6101).

After registering for the conference, call the Hyatt Regency Reston (1-888-591-1234; 703-709-1234) to make your hotel reservations. Be sure to mention “The Future of Freedom Foundation conference” to receive a discounted room. (Discounted rooms are limited and are offered on a first-come, first-served basis.)

Don’t delay! Register today!

BUSINESS WITH SOUL

The Entrepreneur's Revolution and You

The most powerful force in the world is a pattern-changing big idea - if it is in the hands of an entrepreneur of equivalent ambition.

Each such major pattern shift triggers cascades of follow-on innovations, adaptations, and local applications. The railroad and today's digital revolutions are prime business examples.

"Social entrepreneurship has multiplied, competition has arrived, and the sector is racing to catch up. Building the new institutions needed to support these historical forces is, of course, Ashoka's purpose. "
This is just as true in the social arena. Florence Nightingale redefined her field every bit as much as Andrew Carnegie did his.

Whether or not society generates a vigorous flow of these critical major innovations depends on its ability to foster and support the entrepreneurs. The economic success that has transformed the world over the last several centuries has ultimately been rooted in society's learning, first, how to tolerate business entrepreneurs and, then, how to support and reward them generously and at every step.

Social entrepreneurs have not been so fortunate. Probably because they made governments nervous, they long experienced more persecution than assistance. Florence Nightingale was an exception.

The direct result has been the notorious squalor of the social sector. Inadequate innovation - especially when compared to the steadily compounding productivity gains achieved by an entrepreneurial and competitive business world - has left social organizations sclerotic, service quality poor, costs high, salaries low, and repute lower still.

The last two decades have seen an extraordinary historical turning point, the breakout of the social sector from this squalor. Across most of the world, the logjam suddenly broke. Social entrepreneurship has multiplied, competition has arrived, and the sector is racing to catch up. Building the new institutions needed to support these historical forces is, of course, Ashoka's purpose.

In country after country the number of citizen organizations is up a hundred, even a thousand-fold. Tiny Slovakia went from a handful in 1989 to over 10,000 last year. According to the overall economy of the countries studied by the Johns Hopkins Comparative Nonprofit Sector Project, "the nonprofit sector outpaced the overall growth of employmentý by nearly 2.5 to 1."¹ According to the conservative estimate of the Yearbook of International Organizations, the number of international citizen sector organizations (defined as groups with operations in more than one country) has reached more than 26,000 today, up from 6,000 in 1990. The magazine World Watch provides corollary data on the number of citizen sector groups operating at a national or local level. Approximately 1 million such organizations work in India. Of the approximately 2 million citizen sector organizations working in the United States, 70 percent of them were established in the last 30 years. Eastern Europe has seen well over 100,000 organizations established in the seven years following the fall of the Berlin Wall.²

With learning and maturity, the average size, skill level, and competitive sharpness of these organizations has also increased. They are, moreover, becoming far more than the sum of their parts: We are seeing the emergence of the same sort of open, competitive-yet-collaborative relationships that marked the birth of the modern competitive business sector three centuries ago.

This revolution in the organization of human society has gone little noticed. Even though extraordinarily rapid in historical terms, its pace does not fit the shutter speed of either the press or political cycle.
"Because leading social entrepreneurs dealing with the sort of truly major pattern changes that Ashoka seeks out are grappling with historical forces that span the globe, social entrepreneurship is the first profession being organized at the global level."

Nonetheless, when the history of these times is written, no other change will compete with it in importance. This sort of fundamental transformation in how society organizes itself is a tectonic shift far greater than the railroad or the creation of the nursing profession. This change is, moreover, essential to human evolution and survival: It opens the way for us to adapt far more quickly and with self-preservative balance to the social and environmental challenges our business success has unleashed.

The job of the pattern-change social entrepreneur is to recognize whenever a part of society is stuck in an inefficient or harmful pattern, to conceive a better and safe alternative, to make that vision realistic and then a refined reality, and then to persuade his or her entire society to make the leap to this new way.

Spotting and solving these problems requires the entrepreneur because only (s)he is married to a vision and cannot rest until it has transformed all of society. No other type has this inner need. Scholars and artists come to rest when they express an idea. Professionals when they solve a client's problem. Managers when they have enabled their organization to succeed.

This need makes the entrepreneur persist for years and decades thorough all these steps and despite the resistance of myriad inertial forces that would frustrate others. They instinctively reject solutions that depend on local circumstances that would not work universally. Every day they are listening carefully and realistically for problems and openings. If something doesn't work, it is gone. The idea is constantly evolving and strengthening.

The entrepreneur goes after what is stuck. It could be society's failure to deal effectively with corruption. Or prohibitively expensive rural electrification arrangements. Or land ownership laws that make it virtually impossible for people to work together in a multiple use forest environment. Or trade unions stuck in the heavy industry era that have not evolved to serve the growing portion of today's work force that is mobile. Or. . . . The needs are endless, and they will only grow as change accelerates.

Ashoka: Innovators for the Public is the world's association of leading social entrepreneurs. That is to say, social entrepreneurs introducing changes that will significantly change the pattern in their field (e.g., young people or the environment or human rights) across a giant country (e.g., India or Brazil) or a multinational region of equivalent size.

Ashoka's most important job is to help our rapidly emerging field develop the institutions and patterns that will enable it to contribute as powerfully as possible, that will allow all of us in the profession to collaborate, to help one another, to be far more than the sum of our parts.

Because leading social entrepreneurs dealing with the sort of truly major pattern changes that Ashoka seeks out are grappling with historical forces that span the globe, social entrepreneurship is the first profession being organized at the global level. This is a challenge that requires constant vigilance lest we slip into narrower, most commonly national, lines of thinking.

Ashoka is the field's first professional association. It, for example, has launched an initiative designed to help the citizen sector learn that it can and must build its own broad base of grassroots support (money, time, and information). Otherwise over-reliance on a few foundations and government will lead to both inadequate support and co-option. Ashoka is also working to define and encourage the development of new forms of financing for the sector that could serve the many needs that foundations and government find difficult to reach.

Ashoka is also building new patterns of collaboration among Fellows working on the same issue globally, e.g., the over 300 Fellows working with young people or the 143 Fellows bringing innovation to health. Each has a powerful but partial answer. Only by bringing all these ideas together can one see the few universal principles that could help anyone wrestling with the issue. There simply are too few trees in any one country to see the forest.

Over the next year Ashoka will launch a global Academy for the field's most successful practitioners. It will also experiment with the first firm for practitioners (analogous to the first law or consulting firm) that will allow members to benefit from the sort of economies of reputation, recruitment, common services, cross-fertilization, and colleagueship that the older professions have long enjoyed.

Over the last two decades Ashoka, acting as the field's first venture support group (analogous to the venture capital firms of business), has helped launch over 1,000 important new social change ideas, the long careers of the social entrepreneurs behind them, and the institutions needed to support both. This critical service, which is what Ashoka is best known for and most experienced in providing, will continue as long as there is a need for social change.

Each such entrepreneur and idea that succeeds, moreover, encourages many others to care for society's wellbeing and to champion changes they feel are needed. The multiplication of such decentralized concern and effective action is, of course, the essence of the democratic revolution.

THE MAGIC OF GOOGLE

Google is the most powerful brand in the world, according to research and consulting firm Millward Brown.

Millward Brown Optimor, the company's brand consulting arm, Monday released its Brandz Top 100 Most Powerful Brands survey in conjunction with the Financial Times, which published the complete report.

Google took the top spot with a brand value of $66.4 billion, followed by General Electric ($61.9 billion), Microsoft ($54.9 billion), Coca-Cola ($44.1 billion), China Mobile ($41.2 billion), Marlboro/Altria ($39.2 billion), Wal-Mart ($36.9 billion), Citigroup ($33.7 billion), IBM ($33.6 billion), and Toyota ($33.4 billion).

The value Millward Brown Optimor assigns to corporate brands is based on a company's "intangible earnings," a metric derived from public financial data supplied by Bloomberg Datamonitor.

Millward Brown Optimor determines the portion of intangible earnings attributable to the company's most loyal users. It then projects this value forward based on "research-based loyalty data from the Brandz database," market valuations, the brand's risk profile, and its potential for growth.

"Intangible assets are things like brands, patents, human resources, and distribution networks," said Ove Haxthausen, a director at Millward Brown Optimor in New York. "Things that give you a competitive advantage."

This is in contrast to tangible assets like plants and facilities that show up on corporate balance sheets. Google's current stock market capitalization is $149.2 billion, compared with Microsoft's $281.8 billion.

Google gained 77% in terms of brand value, rising to #1 from #7 in the 2006 Brandz study. Microsoft lost 11% of its brand value from last year's report, falling to #3 from #1.

The brands with the highest momentum -- short-term growth rate -- were Google, Apple, Louis Vuitton, Starbucks, Porsche, eBay, Chanel, Hermes, and Rolex, according to the report.

Beyond Google's ascension, the 2007 Brandz report notes several emerging trends.

One such trend is the increasing affluence of consumers abroad. But succeeding in countries like Brazil, Russia, India, and China means offering "products or services that are relevant to the local consumers," the report states, pointing to specific fast food, apparel, and luxury brands as examples.

The fast food category outperformed all other categories in terms of total growth. Faced with criticism for contributing to unhealthy eating habits, "the fast food industry has responded to the decline in consumer demand by changing its product offerings," the report observes.

Another trend the report observes is the increasing impact of social responsibility on brand value. "Delivering on the promise of corporate social responsibility helped boost the value of major brands including BP ($5.9 billion), Shell ($4.7 billion), and Toyota ($33.4 billion)," the report states.

THE CLINTONS HYPOCRESY

MAKING MILLIONS FROM ANTI-SEMITIC, ANTI-WOMAN, ANTI-WORKER, AND ANTI-UNION U.A.E AND DUBAI

Hillary Clinton and her campaign repeatedly highlight her ardent feminism, her lifelong advocacy of worker’s rights, her consistent support for unions, and her love of Israel.

But those principles go right out the window if there’s money involved. When it comes to lining their pockets, the Clintons have a double standard. While Hillary chastises American corporations and employers for lay-offs and opposition to greater union organizing rights, Bill is paid big bucks that go into their joint bank accounts to legitimize and promote the anti-Semitic, anti-worker, anti-union, and anti-woman Arab state of the UAE and its emirates of Dubai.

It’s not just Bill’s $1.2 million speaking fees from Dubai that have enriched the Clintons. And its not just the million dollar contribution by the Emir of Dubai to the Clinton Presidential Library that has endeared the Islamic monarchy to them.

It’s much more that that: Bill Clinton is personally responsible for delivering the ruler of Dubai and Prime Minister of the U.A.E., Sheikh Mohammed bin Rashid Al Maktoum, to a partnership with Yucaipa Cos., headed by Bill and Hillary’s uberfundraiser Ron Burkle.

Bill Clinton is a paid adviser and member of the Board of Directors of Yucaipa. Together the Sheik and Yucaipa have formed a new company, Dubai Investment Group Limited, to jointly invest Yucaipa funds and the Sheiks’ personal funds.

So Bill Clinton is now an adviser and member of the board of directors of a company that is in partnership with the government of Dubai - a part of the world that blatantly discriminates against women, abuses workers in violation of International law, outlaws unions, deports strikers, and bans Israelis and their products from ever entering the country.

The Clintons won’t reveal how much the former president pocketed for setting up this deal, except to report on Hillary’s Senate disclosure form: “more than $1,000.”

A lot more. According to San Francisco Examiner columnist P.J. Corkery, Clinton makes $10 million a year from Yucaipa.

At the same time, the average worker in the Dubai and the UAE construction industry makes about $177 per month., not enough to support a family. According to the U.S. State Department, 98% of the workforce in the UAE is made up of foreigners, who Human Rights Watch “indentured servants, with no right to form unions or hold strikes.” About 20% of them work in the Dubai construction industry. Most of these workers are illiterate and have paid huge fees (usually with loans) to get the job. It is a routine practice for employers to withhold paychecks for several months and to hold the workers passports as ‘security.’

There is no minimum wage.

There is no right to organize for collective bargaining for foreign workers or domestic workers. There is no right to strike. Those who dare are either deported or banned from working for a year.

There is no right to freely move from job to job unless either the current employer agrees to provide a letter of ‘no objection’ or the worker leaves the country for six months.

Worker safety is not an important matter and there are only 80 inspectors to monitor over 250,000 employers.

Workers are out in 104 degree temperature in the summer with a only a two and a half hour break in the middle of the day – a break that used to be four and a half hours, but was recently shortened.

The workday is 8 hours, but employers frequently require overtime – without extra pay. There is a six day work week.

Many of the lowest skilled workers live in horrible conditions. The U.S State Department report on human rights in the UAE notes that:

“low-skilled employees were often provided with substandard living conditions, including overcrowded apartments or lodging in unsafe and unhygienic “labor camps,” often lacking electricity, potable water, and adequate cooking and bathing facilities. Some low-paid workers did not receive these benefits, even if stipulated in their contracts.”

For the full report: http://www.state.gov/g/drl/rls/hrrpt/2006/78865.htm

But while Bill collects the checks for the Clinton family from anti-worker Dubai, Hillary lectures about workers rights.

Just last week, Hillary spoke at the convention of the Communications Workers of America and urged its members to contact Republican Senators about pro-union legislation:

“let them know this is a voting issue; this goes to the real heart of whether we’re going to be a country that stands on a principle that every person should have the right to join a union, to be part of a bargaining unit that will stand up for your income…”

Hillary doesn’t have the same interest in the workers whose employers enrich the Clintons – she apparently has no objection to the Dubai dollars or Dubai’s disgraceful treatment of workers.

Our own government has recognized the severity of the abuses: “Since 1995 the country has been suspended from the U.S. Overseas Private Investment Corporation (OPIC) insurance programs because of the government’s noncompliance with internationally recognized worker rights standards.”

Hey, Hillary, stop the hypocrisy.