LA port to open round the clock to tackle shipping queues

As Christmas approaches, businesses especially small to midsized businesses are getting concerned due to the global supply chain issue since most of them do not have huge warehouses to store goods. As retailers rushed to restock their inventories from Asia, the shipping system struggled to keep up. As a response, the Port of Los Angeles in California, one of the largest ports in the United States, will start operating 24 hours a day to handle more goods at night after a similar move by the nearby Long Beach port.
            So how did this happen? The Covid-19 pandemic is definitely at the bottom of the problem. As the center of manufacture, China exports around $2000 billion every year. The shutdowns of factories and ports in China led to shortages of children's toys, timber, new clothes, and pet food in the U.S. and elsewhere, while also pushing up consumer prices. What made the situation worse is that the shortage of labor in the U.S. resulted in the lack of lorry drivers and port staff to unload and deliver the goods when ships reach the ports. Therefore, containers are getting stacked up and ships are getting congested in ports. For example, on one day in September, a record 73 ships were forced to queue outside for a berth in the Los Angeles port. It had to move 30% more shipping containers than usual in August, while Long Beach moved an extra 23%. The shortage of drivers also means that there is a delay in returning empty containers for re-use, which further exacerbates the situation because it not only drives up the shipping fees that businesses have to pay but also causes a longer-than-usual delivery period of the goods.
            Besides major ports picking up night shifts to reduce their empty container stocks with the help from Walmart, UPS, FedEx, Samsung, The Home Depot, and Target, the White House has been making attempts to tackle the supply chain problem in general. Early this year, a Supply Chains Task Force was established and a Port Envoy was appointed to find remedies for the disruption. Not to mention the effort that the Biden administration put into passing the $1tn (£730bn) infrastructure bill which includes investments in improving the logistics of ports in the United States.
 
Credit: https://www.bbc.com/news/business-58901777 
            https://www.bbc.com/news/business-58895246

3 US-based economists win Nobel for research on wages, jobs

     A U.S.- based economist, David Card, won the Nobel prize in economics on October 11th for pioneering research about the labor force. The research showed how an increase in the minimum wage does not hinder hiring and immigrants do not lower pay for native born workers. Joshua Angrist and Guido Imbens shared the award with Card.

    In a study published in 1993, Card looked at what happened to jobs at Burger King, KFC, Wendy's, and other fast food restaurant called Roy Rodgers when New Jersey raised its minimum wage from $4.25 to $5.05. Using restaurants in eastern Pennsylvania, Card and his late partner Alan Krueger found that an increase in the minimum wage had no effect on the number of employees. Card and Krueger's studies changed economists' views of wage laws. From the year of their study to 2000 less people agreed with the statement that minimum wage laws increase unemployment.

    Card and Krueger's research produced conclusions into why a higher minimum wage would not reduce employment. One conclusion was that companies are able to pass on the cost of higher wages to customers by raising prices. Also, if a company is a major employer in an area, it may be able to keep wages particularly low, so it could afford to pay a higher minimum without cutting jobs. Higher pay would attract more applicants, boosting labor supply. Their research deserved an award and made a huge impact on other economists. It is too bad that Krueger died in 2019 and was not able to share the award.

    Card also found that an rush of immigrants into a city does not cost native workers jobs or lower their earnings. Card studied the labor market in Miami when Cuba allowed their citizens to leave in 1980. The 125,000 people who left Cuba resulted in a 7% increase in the Miami's workforce. However, Card discovered no negative effects for Miami residents with low levels of education. Some work even showed that increase immigration can have a positive impact on income for people born in the country.

     Angrist and Imbens won their half of the award for working out the methodological issues that allow economists to draw conclusions about cause and effect according to strict scientific methods. They figured out to isolate the effects of things like an extra year of school that enabled researchers to draw clearer conclusions about cause and effect, even if they are unable to control factors they way scientists in a lab can. For example, Imbens published a paper found out that a basic income prize of $15,000 did not have much effect on a person's likelihood to work.

    

Source: 3 US-based economists win Nobel for research on wages, jobs (apnews.com)

Is Poland going to exit the European Union?

 Last Thursday,  Poland’s Constitutional Tribunal ruled that parts of EU law are incompatible with the country’s constitution, undermining the legal pillar on which the 27-nation bloc stands. After this controversial court ruling, 100,000s rallied in support of  European Union Membership. In more than 100 towns and cities, demonstrations took place and even abroad. This shows the strong opinion of the people who really support EU and want to stay a part of it. On 10/10/21, people came out with banners saying "we are staying". The opposition party in Poland right now said that the ruling party wants to leave the European Union so that they can violate democratic rules without being accountable to anyone. People are however fearing that how Brexit suddenly happened when no one anticipated it, Polexit might happen as well. The ruling party has said that people who are protesting are protesting against the constitution. While the Prime Minister accepted and welcomed the court ruling, he said he has no intention of leaving the European Union and the party said that his idea of 'Polexit' is an invention of a weak opposition that has no other ideas. The European Court of Justice said that it is violation of the European Union law for Poland's new regulation of appointing Supreme Court Justices. While Poland is in a a tussle and the people vs government are of different opinions, the outcome can be either too damaging to Poland or the matter can die down. But if 'Polexit' has chances, it might be very big for European Union and the effects can be anywhere from good to bad. It would be hard to anticipate how this would affect the economy.

September Jobs Miss Economists Estimations

U.S. employers in the month of September hired less workers than expected as supplemental unemployment benefits expired.

The unemployment rate fell to 4.8% as nonfarm payrolls increased by 194,000 workers in September. 

Economist were expecting the addition of 500,000 new jobs and an unemployment rate of 5.1%.

The labor market is far from what we want as an economy but it is also far from total devastation. As COVID begins to go in our rear-view mirror, we can have optimism going forward on the labor market. President Biden commented on the September unemployment rate as “progress”. 

The September report was the first since the $300 per week supplemental unemployment benefits that expired early September on the fifth. This is an influential factor that need to be thought about when interpreting Septembers statistics. Other factors that are influential in Septembers statistics are increasing vaccine mandates in workplaces and the Child Tax Credit which pays families up to $3,600 per child per year. 

Noticeable job gains and losses were :

Leisure and Hospitality (+74,000)

Business Services (+60,000)

Retail Trade (+56,000)

Local Government Education (-144,000)

State Government Education (-17,000)

  

Optimism going forward is essential in this job market for the economy as progress is underway with more to come. Even as targets are missed, the economy’s job market is sloping upwards. 

Article : https://www.foxbusiness.com/economy/jobs-nonfarm-payroll-report-september-2021.amp

Why the latest series of Facebook leaks is more politically potent

 Facebook, the biggest social media platform in the world may finally be held accountable for their “two-faced” toxicity. Frances Haugen who was a previous worker at Facebook just testified highlighting Facebook’s “moral bankruptcy” and Facebook downplaying its adverse impacts on teenage depression and ethnic violence.

For many years there has been suspecting of the negative impacts that social media has on young adults, but never any means of proving it, but now Haugen has released corporate documents to prove of Facebook’s ignorance. She proved that Facebook did research that showed there was a relationship between Instagram use and teens’ suicidal thoughts and eating disorders. Facebook still ignored their findings and still prioritized sending teens this content that elevated their anxiety. In 2018 another person outed Facebook for releasing data used for political profiling for Donald Trump’s campaign.  Mark Zuckerberg did apologize for this and agreed to a settlement with America’s consumer protection agency. Although Facebook did have a 5 billion dollar settlement for their 2018 data leak, no laws have been changed to hold accountable tech bosses for their poor behavior.

How is congress going to take action to control tech bosses? It is hard to say if they will come out with a law soon to protect social media users, but the hope is that this will trigger more whistleblowers to come out about these major issues. If anything there is a hope that Congress will at least focus in on protecting children online. Congress could strengthen the Children’s Online Privacy Protection Act that protects children under the age of 13, and raise that age. Legislative proposals are also taking aim at marketing and design features that cause social media to be so addictive for the young.

There is a high chance that there will be many more leaks for the social media powerhouse. Facebook’s vice president of policy and global affairs defended the company and expressed that they took down 49m posts last year that violated policies on terrorism and hatred. In 2021, there is little to no privacy with 70% of the US population owning a social media account. Facebook has violated so many people’s privacy, can no longer count on privacy either.

https://www.economist.com/united-states/facebook-flounders-in-the-court-of-public-opinion/21805344

TSMC and Sony considering joint chip factory, Japan gov't to help -Nikkei

 Ever since the start of the Covid-19 pandemic in early 2020, there has been plenty of shortages and problems with supply chain management, none more so in the Chip industry. The shortage rightly named the "Global Chip Shortage", has caused major price hikes in several industries, mainly the automotive and computer industries. The largest producers of these chips are located in Taiwan and are called "Taiwan Semiconductor Co. LTD." have been having trouble keeping up with the demand and have been falling behind in production, i.e supply. 

To combat the high demand, TSMC has teamed up with one of the biggest electronic companies in the world, Sony, in Japan to jointly build a microchip factory. The plant is going to be built in Southern Japan and will produce chips for automobiles, cameras image sensors, and other various products which have been affected by the global chip shortage. The operations are hoped to start in 2024, but as of now there is no further information has been provided.

The reasoning behind this partnership is very interesting to me as it shows a newfound sign of economic partnership between the two East Asian countries. TSMC has been concerned with the longevity and concentration of its chip-making in Taiwan, as China has not ruled out their use of force over this island which they technically have control over. On the other hand, Japan and its officials are worried about the supply chain stability of its various industries, as it has the biggest automotive company in the world, Toyota, and due to this chip shortage, they have been forced to cut production. Either way, you look at this situation, both counties could benefit from this joint production and find new economic growth and political allyship.

Source: https://www.reuters.com/technology/tsmc-sony-eye-joint-chips-factory-japan-govt-help-nikkei-2021-10-08/

The pandemic changed the trajectory of America’s overdose and suicide crises

 The pandemic has been tough for many people during this pandemic, suicides have decreased about 5%, while those numbers dropped during the pandemic the drug overdose epidemic increased about 30%. This is very surprising because prior to the pandemic these trends were highly correlated. One reason for this massive increase in overdoses is the increasing popularity of fentanyl, “Preliminary data indicates that, while heroin overdose deaths dropped in 2020, deaths involving fentanyl grew exponentially”. Another reason for the increase in overdoses is the COVID restrictions that states placed that caused people isolate themselves. There has been no proven theory to describe why these trends suddenly diverted from each other. Economists have come up with theories to explain one of the trends individually, but have not found any evidence to explain the split. 

Something to note is that although there is no theory to explain why trends diverted from each other, British researchers have said that this is because suicide experiences a disaster shock. British researchers have found evidence that following a disaster such as Hurricane Katrina the suicide rate decreased in the short run and then resumed exponentially in the long run. The researchers are worried that the decrease in suicide rates is just temporary and that the trend in the long term will follow closely again with the overdose rate. 

source: https://www.vox.com/policy-and-politics/2021/8/12/22619913/covid-19-us-suicides-drug-overdoses-2020-fentanyl

North Korea Accepts Medical Supplies

 As of Thursday, North Korea began accepting medical supplies again from the world health organization. It is currently unknown as to whether or not there has been or is an outbreak currently in North Korea. The acceptance of this aid has been long overdue as North Korea had the aid in route to them but then rejected it at the last minute. North Korea was also excepting many other types of medical supplies from outside the country but that was all rejected when the borders were sealed off when cover was deemed a national threat. Up to now North Korea has also denied the entrance of any outside vaccine into the country as well which also posses questions again at the country handling of covid and if there has been any significant outbreaks within the country. All in all it will be interesting to see with North Korea allowing for health supplies to come into the country if that will open the door for any big pharmaceutical companies to get in and and find a way to get rights at supplying the country with their medical supplies. Another interesting thing to look at will be the state of North Korea with covid and if they will ask for more outside assistance if the virus becomes too bad to handle. 

Polexit

Poland's top court ruled on Thursday, that some of the European Union's articles were "incompatible" with the Polish Constitution, which prompted fears of Poland exiting the Union. Pro-EU-membership Poles organised a protest against the ruling and leaving the bloc.

Basically, the court rejected the idea that the EU has power over national legislation in some judicial areas. The fears of Poland leaving the  EU has been building up for years already, and this is the latest in those line of fears. Many Poles do not want Poland to leave the bloc and hence the massive protests.

Even the EU does not want Poland to leave the bloc, and they do not support the court's ruling. The European Court of Human Rights, that has no relation to the EU, has alleges that one of the judges appointed in the Polish court, was done so illegally. And moreover, tensions are rising against the current Polish government regarding it's top court consisting of mostly judges who would stand in favor of the ruling party.

The Prime Minister of Poland says that Poland being a part of the EU is important, and will not leave the bloc, but they're only words and anything could happen, especially in these obvious circumstances. With the post-Brexit effects Britain is facing right now, it is safer for Poland to stay in the EU for a couple more years, if not decades, and properly plan it out and plan out for the unforeseen too.

Article link: https://www.bbc.com/news/world-europe-58863680

The China Effect

It is no doubt at this point that China plays huge role in the global economy, and its internal issues send a ripple throughout the economies of other countries as well. Located at an epicenter of trade, and a hub for supply chains, the global economy may yet again face another crunch.

The most recent factors indicating this is the cash crunch at the China Evergrande Group. While its $300 billion plus in liabilities makes it a big deal for note holders, the real economic fallout for the world was always going to be contained so long as China’s central bank kept liquidity ample and regulators prevent any “Lehman moment.” 
But a power crunch curbing production in the factory to the world — that’s clearly going to send some shock waves through the global economy. Many companies located within the US have already been struggling due to so much of their manufacturing being present within China-- inclusive of small and big companies such as Nike, Apple and Tesla too. This may also indicate slower growth in China too.

After the pandemic, the world has already faced a huge low and hardships within supply chains. These factors suggest that companies should begin diversifying their supply chains, perhaps bring them more local/domestic, as to avoid such problems. It will be interesting to see what happens from here.

Consumers Ramped Up Spending in August as Inflation Remained Elevated

 

In August, personal spending increased by 0.8 %. Personal income increased by 0.2% which reflects the increase in wages and federal government’s distribution. However, some states ended their pandemic related supplemental payments. During the peak of covid, consumers spent less on airline tickets, hotels and dining outside, and now they have accumulated substantial savings and furthermore, are benefitting from increase wages and abundance in job openings. Chief Economist at RSM US LLP, Joe Brusuelas, thinks that the demand for the next 2 to 3 years should remain strong as the growth continues well above the long-term trend. He also thinks that due to the excessive demand supply shortages may create some hurdles. Such as, global chip shortage has adversely affected the auto industry as well as the tech industry. To be more specific, Ford paused their production due to chip shortage, as well as Apple Inc. as they are overdue for a new MacBook Pro, but due to supply chain issues they have pushed back the launch. The biggest source of U.S. economic growth and the main tool for rapid recovery from the pandemic is consumer spending, and the economy expanded from 6.3 % in the first quarter to 6.7% in the second quarter. Consumers avoided purchases of vehicles which may reflect high prices and low inventories. However, according to University of Michigan’s survey, the consumer sentiment index increased from 70.3 in August to 72.8 in September.  Analysts expect that consumers are to spend more during this holiday shopping season than last year, since consumers were not able to shop during the pandemic. In addition, consumers are also booking in advance for the upcoming months.

 

Thus, if the consumer demand exceeds the supply of the good and services, an example of this would be chip shortages, the price would increase, and if this goes on inflation would increase.

 

 

Cambon, S. C. (2021, October 1). Consumers ramped up spending in August as inflation remained elevated. The Wall Street Journal. Retrieved October 1, 2021, from https://www.wsj.com/articles/consumer-spending-personal-income-inflation-august-2021-11633027180?mod=hp_lead_pos4.

China's tensions with Taiwan

China has again said it will reunite Taiwan with the mainland. Tensions ramp up further between Beijing and the government of Taiwan. President Xi Jinping told a communist party gathering that such a move would happen peacefully and said Chani could never tolerate any form of separatism. Taiwan has responded by saying, “it is a sovereign nation and its people will decide their future”. This speech was made just before the national day of Taiwan. Compared to the speech, which was made in July, it had a soft tone. Xi Jinping said that he wants to see a peaceful reunification. People from Taiwan have been witnessing what’s been happening in Hong Kong for the past few years. The suppression of political freedom and freedom of speech. Nearly 90% of Taiwanese people reject the one country two system framework. Beijing sees Taiwan as a province that has to be handed back to the motherland. In my opinion, the Chinese president wants to become a national hero of the country in rejuvenating the Chinese nation. He is still to compete in his second term next year. Thus this achievement would give him a big advantage in upcoming elections.  

Coronavirus in DR Congo: How funds went missing

 https://www.bbc.com/news/world-africa-58834108 

There has been poor management of the covid funding that the IMF gave Congo last year. Only $6m of the $363m Covid funding provided by the IMF has been publicly accounted for.

 DR Congo is one of the 50 countries across the globe that has failed to fully vaccinate 10% of their population [ this is a target that was set up by the World Health Organization (WHO)].

Some estimates suggest that 0.1% of the country's 89 million people have been vaccinated.  According to WHO, more than 57,000 people are known to have contracted the virus and 1,086 of them have died. 

Some of the challenges include the country's heavy reliance on the Covax Scheme*, an underfunded health system that is already wrecked by concurrent outbreaks of measles, Ebola, and cholera, mistrust in authorities, and conflict between the government and armed groups in the eastern region of the country. 

The country is plagued by corruption and this is not the first time that funds have disappeared.

 At least $240,000 went missing in the purchase of ambulances and vehicles for the health ministry's covid response.

 Two former health ministers have been arrested over corruption allegations in recent years - one is currently serving a 5-year jail sentence, and the other is free on bail and denies the allegations. 

Researchers say that the health ministry has used emergency situations and international funding "to pay bonuses to staff who are not normally well paid". The report says that the health ministry declined to reveal how many staff it paid or how much was paid in bonuses. 

*Covax scheme was created last year to ensure that covid vaccines are made available globally, with rich countries subsidizing costs for poorer nations. The scheme hopes to distribute enough vaccines to protect at least 20% of the population in low-medium income countries - starting with healthcare workers and the most vulnerable groups. (https://www.bbc.com/news/world-55795297)

Corruption in Moldova

     In 2014 it was discovered that approximately $1 billion was stolen from the Moldovan government in a scheme to clean Russian money. The huge amount lost had significant impacts on Moldova's economy. For context, their GDP at the time was just over $8 billion so when news of the scandal broke there was public outrage and nationwide protests. Foreign aid came to a halt and inflation spiked to nearly %10 in 2015.  Ever since the countries leaders have been focused on rooting out corruption. 

    They are not currently apart of the EU but are being considered. They neighbor EU members Romania and Bulgaria who have the most similar cultures too Moldova. However, Russia still has strong influence in Moldova and any current corruption is likely tied to them. In 1991 Moldova left the Soviet Union and has been slowly integrating with central and western Europe since. Becoming an EU member would mark in important milestone in this integration and be a huge benefit to the Moldovan people and economy.