Midterm Elections

Today Americans are voting in the midterm elections. The Republican party is expected to increase their influence, and the Tea Party movement is expected to gain influence as well. Elections for the congress is every two years; the Congress is the legislative body of the US government.The Congress is made up of two chambers: the Senate, to which members are elected for six-year terms; and the House of Representatives, whose members are elected for two-year terms. Meaning that all the 435 House seats will be filled by the will of the people now in November. Also around one one-third of the Senate is also elected, this year 37 senators will be elected or re-elected.

It is expected that the Republicans will get a majority of the chairs in the House of Representatives, the Senate seem to harder to predict and more uncertain. What is quite clear however is that this election will force president Obama to negotiate more with the Republicans and compromises will have to be made. The most pressing issue is obviously the strained economy, an area where compromises will be hard since the parties are quite far apart.

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CSR and the Global Market

The market has become increasingly globalised, in the sense that product and services are bought and sold in a global context. As value chains span over border, often several borders, regulating it becomes more difficult and a single state is not enough to ensure responsible business practise. This shows a need for other actors to help promote CSR, in the form of companies or international organisations,. Thus CSR work is perhaps even more important in the globalised world of today.

However, some countries with developing economies are critical to international CSR standards, for example India. In this case CSR is considered a concept developed and defined by developed countries and not fit for developing countries. In the global market place developing countries generally have their main advantage based on the low costs of labour, and by implementing a CSR standard this advantage is believed to diminish due to the cost of CSR. Therefore a standard giving companies importing from developing countries incentives to choose suppliers that are compliant with the standard, could give developing countries a disadvantage, at least at first. If this would force business out of the developing countries, investments would decrease and the standard of life would likely decrease; what would be beneficial for workers on the surface, could lead to adverse effects.


The (economic) reasons for CSR work are often stated by a few assumptions:
• Customers favour product and services by responsible companies
• Investors favour investments in responsible companies
• Potential employees would rather work in a responsible company
• Engaging the stakeholders of the business leads to larger opportunities for innovation
• Reduction of risks in regard to environment, labour and society

However, according to Knox and Maklan these assumptions seem to be hard to measure and the results so far seem to be ambiguous at best. To get a clear idea on the relationship between CSR and beneficial results further research is needed, in doing so new ways to measure and explore this issues need to be developed.

[The Firm] [CSR] [Corporate Social Responsibility] Share on Facebook

Don't buy stuff you can't afford

In a time where more and more nations are falling into deep debt, here is a friendly reminder from SNL.

Don't buy stuff you can't afford



[Debt] [Economy] Share on Facebook

Why deflation is bad

Economists everywhere fear inflation and lots of effort is put in to keeping it down. Perhaps the most important tool for reducing inflation is increasing the interest rate in hopes of cooling down the economy. Often inflation is a result of a heated economy and a well-performing economy. Inflation is bad since it reduces the value of money, but the alternative is even worse for an economy. 

Now some large economies are facing deflation, Japan is already there, the USA is not far behind and the rest of the industrialised world may follow. Deflation means, opposite of inflation, that prices are falling over the entire market. This may at first sound like a good thing; things get cheaper we can increase our standard of living and so forth. However, if we all assume prices will be lower tomorrow than they are today; it will makes us curb spending. This will obviously decrease demand, which will lower prices even more and in the long run force companies to cut wages and lay off staff. If it goes this far, the downward spiral is in full spin. Furthermore, this will make debts more expensive as the money value increases. The trouble is now that lowering interest rates can only be done until they are 0, and even then the real interest rate is still positive. For Japan this is a real problem since the interest rate is currently extremely low.

Krugman on Deflation

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A tip

http://www.gapminder.org/

Gapminder is an organisation working with visual presentations of various data. I like the concept and the videos are quite educational.


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The tides are turning

USA has for some time been the world largest democracy, the world foremost industrial country and the foremost oil power. During the last years and in the near future this is all changing. Other countries are growing at a much mroe rapid pace. Economists has forecasted that China will surpass USA in terms of purchasing power between 2012 and 2015. By 2025 China is set to be the largest economic power in the world. How radical will this change be?

This economic power, the quest for water and raw materials and climate changes will have large consequences. Will this create an imperialistic policy? With China seeking expansion and increased influence?

India is today the world's largest democracy, China is the foremost industrial power and USA is an oil importer. A lot has changed, and it is not finished yet.

[USA] [China] [Economy] [Future]

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Super Bowl

Right now the Super Bowl is in half-time. This large spectacle of a sports event; one of the largest isolated sport events in competition with the soccer World Championship and the Summer Olympics.

It has been estimated that the Super Bowl generates almost $10 billion dollars of sales, within product areas such as television sets, snacks and beverages. This is a huge amount of money relating to one event, as a comparison this number is larger than the GDP of about 80 countries. Even though the US economy is seeing a recession, the spending relating to Super Bowl are largely unafflicted.

Time for the second half now.

[Super Bowl] [Economy]

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