Friday, August 28, 2015
A lot has been made about the costs involved in Donald Trump's proposal to deport all illegal immigrants and keep them out. The big headline number of almost a trillion dollars has been cited by many news outlets as well as politicians. I personally think that it is a very inflated number, but it is not the detail I want to take issue with. It is the assumed cost to US GDP of as much as 6% which I find to be exaggerated and outright disingenuous.
The argument is based on the simple calculation that illegal immigrants make up over 6% of the total workforce, therefore their absence would cause a resulting loss in economic activity proportional to the loss in the workforce, thus the drop in GDP.
The calculation neglects to adjust for the resulting rise in wages and increase in worker participation, right where it is needed the most, among the working poor. Incomes among the bottom 40% of households have in fact stagnated in past years, even when not adjusting to inflation.
Data source: US Census Bureau.
When adjusting for inflation, real household income for the lowest 20% of earners are down by about 13% compared with the year 2000. I am certain that a resulting rise in wages due to a shortage of foreign illegal workers would encourage more discouraged workers to re-join the workforce. The higher wages would also allow many more households to consume more, which would also resolve one of the biggest drags on the economy today, namely a lack of demand, which makes up over 2/3 of the economy. Some tax contributions would also result from more legal workers in the workforce, therefore, it would also benefit the government budget. Not to mention the reduced costs of assistance programs as a result of people on the lower-end of the income scale earning more, thus needing less help.
Now, we have to be honest here and admit to the fact that even a resulting rise in the lower-end of wages will not fill all the vacant positions that would be left behind by the removal of over 6% of the current total US workforce. There are certain jobs that would not be attractive to the average American, even if it would offer more money than it currently offers to an illegal worker. But there is a solution to that, called a temporary work visa program. It should be a visa for non-qualified work, and it should be made easy to obtain, needing nothing more than proof on the part of the employers that they made a reasonable effort to fill the position with a legal US resident, but there were no takers, as well as a criminal record check on behalf of the would-be foreign employee. This would allow employers to fill any voids in labor needs, as well as for the government to take a rightful share in income taxes. This plan would have the added benefit of providing some labor elasticity in the economy, filling the void with temporary workers when there is high demand, while allowing those visas to expire when labor demand is slack.
I don't believe that even many of the illegal immigrants who currently reside in the US would find the concept of a work visa unappealing. Sure, it would mean having to perhaps pay some income tax. At the same time, they would enjoy the benefit of being legal, thus subject to current labor protection laws. Not to mention the fact that they would no longer have to constantly worry about being apprehended and deported at any moment. It would also give the US authorities the opportunity to weed out criminal elements attempting to reside in the US, because the few bad apples would no longer have the opportunity to hide among the masses of people simply looking to exchange their sweat and toil for some wages that they can use to support themselves and their families. The reason I think many illegal immigrants would like this aspect is because it would lessen the stigma attached to coming to the US to work, because it would remove suspicions of wrong doing and give people fewer excuses to stereotype and associate them with the drug smugglers and other unwanted elements.
Donald Trump's proposal on immigration, as it seems to be the case with most other subjects he touches on, lacks on details, therefore there is to my knowledge no comprehensive proposal, which would include my idea of the work visa for instance. But he does claim to be a good manager, and as such, I am sure that if he were to ever get into the position of being responsible for making decisions on immigration policy, he would see the need to expand on his idea and not just do what his campaign suggests and nothing more. Bottom line; there are ways to deal with the illegal immigration issue. And it does not have to result in economic and fiscal Armageddon as much of the mainstream media tried to portray it.
Friday, May 29, 2015
Monday, April 20, 2015
Tuesday, April 7, 2015
I may have taken issue with this line or argument before, but I will do so no longer, because as the case of Valentina Lisitsa proves, Ukraine is indeed fighting for Western values. No, we do not have ministries of truth yet, but in the past year, it has become clear that we are able to do without, and yet still achieve the same goals, while still maintaining the appearance of a free media.
The mainstream media & governments align on unified message.
No one can say for sure what is the mechanism that keeps the entire Western media establishment in line on this particular topic. To anyone who by some accident came to the conclusion that the dominant story-line is biased to say the least, I think it is obvious by now that there is a force that is making sure that media outlets, be they on the left or right, do publish articles that are predominantly supportive and non-critical of the Ukrainian government, and at the same time very hostile towards Russia, or even the ethnic Russian minority in Ukraine and elsewhere and on occasion even hostile to historical minority rights in the region in general, as is the case with this article from The Economist. This article borders on incitement to hatred, given that it portrays minority group aspirations for the same rights enjoyed elsewhere in similar situations, in order to help prevent their assimilation, as a tool of evil, therefore risks giving nationalist majorities in the region more ammunition. Yet, such reporting on the situation in Ukraine has become a commonly accepted practice.
What is not acceptable is to mention the fact that the main cause of the civil war in Ukraine is in fact the extreme nationalistic nature of the new Kiev elite and their supporters. Valentina Lisitsa brought to the attention of her online audience the fact that the current Ukrainian Prime Minister Yatseniuk, called ethnic Russians in the East sub-human. For this, and other statements off stage, she is now being denied the right to perform on stage in Toronto. The media is catching on to the story, but every mainstream media outlet which reported on this so far, has already picked a side, by calling Valentina's statements about the Ukraine government and its actions "controversial". Mind you, if it were not for Valentina, we would not be talking today about Ukraine's prime minister engaging in hate speech against a minority. Interestingly, no Western media outlet seems to have caught on to the controversial aspect of someone whose government we are called to support in the West, making such hate-filled statements against an ethnic minority. Would Canadian society accept Prime Minister Stephen Harper, calling the French minority in Canada sub-human? Perhaps not! That is why reporting on Ukraine's prime minister making such statements is not convenient, because we are looking to support a government policy that is supportive of the current Ukraine government, to the extent that it apparently cannot be subject to criticism.
Most Western governments were largely silent when the day after Yanukovic was ousted, the new government made it its number one priority, the very next day to repeal minority language rights. In an impressive display of public-private partnership, which in my view proves that both are the same entity, the Western media was silent as well. I myself learned about it because I speak Hungarian and Romanian fluently and Hungary and Romania were in fact the only countries in the EU, which took an attitude against this, because there is a significant ethnic Hungarian and Romanian ethnic minority in Ukraine.
Same thing happened when the Odessa massacre occurred. Despite this being one of the most horrific hate crimes to have been committed on the European continent in the twenty first century, there was very little condemnation on behalf of Western governments, only some statements in regards to regret of the loss of life. And to date, no Western media outlet has picked up on the fact that this remains a horrific hate crime that has been committed recently and to date there is little evidence of the Ukrainian government doing anything to bring those responsible to justice, which should not surprise us, given that the most likely perpetrators were members of the Right-Sector extremist movement, who are also supporters of the current government. Given that Ukraine's Prime Minister apparently considers ethnic Russians to be sub-human, we should not expect justice to be done, but should we not expect our Western media to report on the nature of this government that the Western world is supposed to give unconditional backing to?
Valentina also mentioned the death and suffering caused by the civil war in the East, which apparently is also a highly controversial matter. I am sure it would not be seen as such, if she would have followed the lead of the Western elites and would have placed the blame on Vladimir Putin, instead of pointing out the chauvinistic nature of Ukraine's current government. One would think that at least some relatively marginal voices would be allowed to present the other side of this story, but as Valentina's case shows us, even this much deviation is not tolerated. The Expat Ukrainian-Canadian community must have been very pleasantly surprised to learn that their lobby to punish Valentina Lisitsa for daring to point out inconvenient facts for which the current Kiev government would have probably had her arrested, was greeted favorably. The Western Elite cannot afford to drop the charade and have her put in prison as they would do in Ukraine. But, we do have another effective tool of persecution. We can silence those who we deem to be spreading inconvenient messages by simply labeling them as "controversial", thus apparently justifying their persecution.
I guess there is some element of truth in Western media mainstream reporting. Ukraine is in fact moving towards western ideals, they just don't know how to do it in a more sophisticated and stealthy manner. They are still at the stage of using more blunt tools, such as the ministry or truth.
Wednesday, March 11, 2015
Saturday, February 21, 2015
I will not pretend that what I have to offer here is free of bias. I believe that anyone who makes such a claim is untrustworthy. I do have bias in respect to the Ukraine conflict, and I think it has to do with my background, namely being a person born in Romania who is of Hungarian ethnicity. I will therefore always feel sympathy towards the view of the ethnic Russian people living in Ukraine, especially given the hard-core nationalist nature of Ukraine's post-Yanukovic government, which saw it as its number one priority, the first day after they ousted him to repeal minority rights. I have to admit that after such a move, there was never much hope of this new regime gaining much sympathy with me, given that I believe that respect for historical minorities and their right to avoid assimilation by the majority population should be a human right which should be observed everywhere.
Unfortunately, I doubt there are many people in the US government or the media who understand the very concept of a distinct ethnic and linguistic identity. They most likely think of Russians as simply people who live in Russia and are Russian citizens. Europe is however a place where a few hundred years ago a concept was born, which led to nation-states being formed, based on ethnic identity. Unfortunately, borders were not necessarily always drawn in observance of this concept. That is why I was born in Romania, and while I have Romanian citizenship, I consider myself to be of Hungarian ethnicity and to belong to Hungarian culture. When there are certain transgressions that happen against the many ethnic Hungarians who live in neighboring countries, such as was the case in Slovakia, when the 2009 language law was passed, people in Hungary were understandably outraged, because they saw it as an attack on their ethnic kin.
It is the failure to understand or acknowledge this concept which is leading us down a path that is increasingly looking like it is taking us closer to a potential global-scale catastrophe, then we have been since perhaps the Cuban Missile Crisis. If anyone doubts that things are now reaching such a danger point, think again. US politicians are currently pandering to public opinion formed in large part thanks to very one-sided and outright unprofessional coverage of the Ukraine crisis for the past year and increasingly showing their tough guy or gal credentials by talking tough on arming Ukraine. I think it will happen sooner or later, at which point we will have crossed the point of no return.
Russia's government will have only one option as an acceptable response which will save it from collapse and that is to provide full and open support to the ethnic Russian minority in Ukraine and that is exactly what it will do. The end result will be a bloodbath fueled by a hardening of positions on both sides of this proxy war.
Missed opportunities to defuse the crisis.
We might all like to think that given the size of Russia's nuclear arsenal, as well as its very important role in global economic stability given its natural resources that it provides to the world, cooler heads will prevail and the best possible people are brought in to come up with a way out of this crisis. I want to point to a list of missed opportunities since the day that Ukraine's corrupt president was ousted, which might have helped steer the situation in a different, less dangerous direction. I honestly don't know whether these opportunists were missed on purpose due to certain desires to actually push for a crisis or due to incompetence, but in fact both possibilities point to incompetence in this case, because if anyone thinks that it is wise to escalate this thing, he/she must be a very incompetent person.
Repeal of minority rights.
The day after Yanukovic fled due to the violence on the streets, the Ukrainian parliament decided as its first act to repeal Ukraine's law on minority language rights, which allowed for the use of a minority language, alongside Ukraine's official language in areas historically inhabited by ethnic minorities. Aside from EU members Romania and Hungary, which expressed concern in regards to the ethnic Hungarians and Romanians living in Ukraine having their basic rights violated by this move, there was a complete failure on behalf of the Western world to react firmly and swiftly to this event, which in my opinion did more than anything to lead to the present conflict we are dealing with today. I believe that a very strong rebuke by the EU and the US of this move by Kiev's new nationalist government would have not only tempered Ukrainian nationalism but also would have given some reassurance to the large ethnic Russian minority that it will not be left at the mercy of the new nationalistic Kiev regime. The move to repeal minority rights was vetoed later on, but only after the new Kiev government in effect realized that it managed to set its own house on fire. By the time the move was vetoed, the East of Ukraine was firmly in the grips of revolt. The Western media tried to emphasize throughout this conflict that it was all because of Russian propaganda, which is an outright shameless lie, which was repeated over and over again by most mainstream outlets. I am not denying that Russian propaganda played a role, but the main cause of the rebellion in the East was in fact the justified fear that Ukraine had a new government that was showing very obvious hostility towards them. Not to mention that Ukraine's president which enjoyed overwhelming support in the East was ousted through undemocratic means by a nationalist mob, spearheaded by extreme right organizations such as Svoboda and Right Sector.
We should keep in mind that on the issue of historical minority rights, the EU has a terrible record of ignoring the issue and accepting some very harsh policies among some EU members as was the case with the 2009 Slovak Language Law, which imposed very harsh fines of as much a an average yearly salary (5,000 Euros) for not observing the rules of the law, which prohibited the use of any other language aside from Slovak in certain circumstances.
The EU has France as one of its founding members. France refuses to even recognize the existence of historical minorities on its territory, therefore EU laws and regulations evolved over time in a manner that had to accommodate this policy. This is why I believe that allowing countries such as Estonia to become members of the EU and NATO was a huge mistake, which endangers our very existence. There is no telling when a nationalist trend will sweep that small nation and they will decide to mistreat the Russian minority which makes up a quarter of that country's population. At that point, Russia will once again be put on the spot, because it cannot just ignore ethnic Russians being mistreated, while we are bound by treaty to defend Estonia. In other words, the world has become hostage to Estonian nationalism potentially going a bit too far and causing ethnic tensions which would pit two nuclear powers against each other, with no way for either side to back down. If this lack of foresight on behalf of our leadership does not worry the public, I don't really know what would do it at this point.
This is also one of the reasons I believe that Ukraine is not a good fit for EU or NATO membership, therefore the EU association agreement should have never been offered, which would have spared us all from this mess.
The Odessa massacre.
In May, there was a confrontation in the city of Odessa between pro Kiev activists and ethnic-Russians protesting against the new government and for autonomy for themselves. The clashes ended with tragedy, where a group of ethnic Russians took refuge in a government building, which was torched most likely due to Molotov cocktails being thrown back and forth, leading to 39 people being burned to death.
Given that no one was ever brought to justice for this crime, even though it is quite obvious that extreme right-wing organizations are to blame, it is never too late to condemn at the very least Kiev's inaction in punishing this act of hate, which led to the death of so many people. But to date, this crime & failure to bring those responsible to justice was never condemned by Western officials.
I encourage all who are capable of keeping an open mind to take a step back and realize what this would look like from the point of view of the ethnic Russian minority living in Ukraine. The Kiev government did not punish anyone for this hate crime committed against them. Kiev's western backers, likewise did not condemn this atrocity but in fact just kept going with more condemnation of Russia for its support of ethnic Russians in Ukraine. I don't know of any propaganda message that Moscow could have ever possibly come up with which could have had a stronger effect in solidifying the opposition of ethnic Russians to being subjected to the new Ukraine government and its obviously not very sympathetic backers from the West, than these actions.
Kiev's military offensive in the East.
While the Western media and officials wasted no time in condemning former Ukrainian president Victor Yanukovic for using violence as a means to stay in power in the face of the challenge posed to his rule by a violent mob, no major criticism was ever attempted at Kiev's military offensive last summer. Back then Kiev was going up against an insurgent force that was very obviously under-equipped, yet the government went ahead and deployed heavy weapons, including against civilian targets, causing much death and destruction in the mainly ethnic Russian East of the country. I fail to see how people can expect to see an outcome where Ukraine can be one again, given the death, suffering and destruction that has occurred in the Donbas region in the past months. It is like demanding and expecting a spouse to return to a household where much abuse has taken place.
If there is one thing we can be sure of and everyone should have understood from the outset is that Putin cannot afford to allow the separatists to be defeated militarily. He will go as far as he has to in order to prevent that from happening. The West tried to push Russia into abandoning their ethnic kin through sanctions and arguably through the suppression of oil prices, but as we can see, it is not happening and will not happen. Any further attempts to do so will only lead to a further escalation of not only the war in Ukraine but also of the economic conflict, which the US might not feel directly at the moment but the EU sure does as it loses tens of billions of Euros worth of exports and billions worth of revenue in the tourism industry as Russians cho ose to stay home.
The Economic Pain.
When the anti Yanukovic protests started in Kiev in the aftermath of his choice to pick Russia's offer over that of the EU, I am certain that the main driver of the protests was a desire by ordinary Ukrainians to take a path towards a better life. Given that in 2013 Ukraine was the fifth poorest country on the continent, their desire for a new path is understandable. Unfortunately, they failed to take into consideration the country's current economic ties. Russia is Ukraine's biggest trading partner even now after a full year of conflict, with about a quarter of Ukraine's exports going to Russia and one third of imports coming from Russia as well.
Between the declining economic relationship with its main economic partner and the conflict with the ethnic Russian separatists in the East, Ukraine's economy has suffered huge damage in the past year. The economy most likely shrunk by about 7.5% in 2014. Worst of all, its currency the hryvnia is in complete free-fall. It traded at around eight hryvnia to the dollar in 2013, while it is currently at twenty seven. This means that the 1,200 hryvnia minimum monthly wage which was worth about $150 in 2013, is now worth just $45. With inflation running in the 25% range and wages remaining stagnant, life which was already quite miserable before the Maidan revolution is now looking very bleak indeed. Ukrainian wages now resemble something one might expect to see in most sub-Saharan African countries.
The country's economy is set to shrink to under $100 billion, compared to $178 billion in 2013 and GDP per capita will officially drop bellow the level of Europe's current poorest member Moldova, at just under $2,200 per capita, which is down from $3,900 in 2013. Meanwhile, its debt/GDP ratio will go from 40% in 2013, to over 80% by the end of this year. S&P which is where I got this data from, forecasts a relatively strong rebound in 2016, which should see 2015 as the low-point for Ukrainians, but personally, I doubt that will be the case. Ukraine is set to tie itself to the EU economy, which is more or less in stagnation mode for almost a decade now, which means that demand for Ukrainian made goods will be limited, while Russia will continue to de-leverage its economy from its ties with Ukraine.
Just to offer an example, Gazprom's chief announced last month that it will end its reliance on Ukraine as a gas transit route one way or another within the next few years (link). Ukraine currently receives about $3.5 billion in gas transit fees every year, which it will lose in just a few years. There will be many other shocks coming Ukraine's way due to its diminishing ties with Russia. In addition to that, there will be the shock therapy it will have enforced on it by the IMF in coming years, which it will be in no position to resist. I believe that in the best-case scenario, it will take at least a generation for Ukrainians to once again enjoy the miserable living standards they had in 2013.
The EU & Russia
There has been much media coverage of the effects of this conflict on the Russian economy. There is not much I can add to what has already been said, except perhaps point out that the main hit to Russia came from the lower oil prices, which may or may not be the result of Western actions meant to pressure Putin. The price of oil cannot stay this low indefinitely, because it will eventually cause global shortages within the next few years as more and more companies opt to cut investment. Reality is that many oil companies, especially in the shale oil and oil sands were not doing very well to begin with, even when oil was at $100/barrel. If prices remain at current levels beyond this year, we are likely to start seeing massive defaults on the almost $200 billion that shale oil companies borrowed in the past five years or so. So, while things may be tough for Russia right now and the pain might last into next year, Russia will survive and will recover. Its leaders may even come away with some important lessons out of this and recognize that they need to start creating the environment needed to allow for honest private enterprise to develop and prosper within a less corrupt environment and with clear laws in place to govern business.
The EU may have only suffered minor economic pain thus far, but I believe it is the bigger loser in all this for the long-term. The EU needed to have a strong relationship with Russia, because it needs its natural resources. While all the talk lately has been about diversifying away from Russia, the reality is that the EU cannot do that at an affordable price. There are simply no viable alternatives, while the current alternative sources, such as Norway and Netherlands are set to start declining. The decline that is forecast for Holland alone by 2030, is equivalent to the loss of the 63 billion cubic meters that the EU was going to receive via South Stream before it obstructed it. Norway's gas production will also decline significantly by 2030 as well. The EU is therefore in no position to accept a significant decline in Russian gas imports. Its only long-term alternative is to drastically increase LNG imports, which tends to be far more costly. I think this is the last thing the EU, which failed to grow its economy since 2007 needs going forward. It is obviously already un-competitive compared to other major competitors, so more expensive energy is not what it needs to settle for.
So was Maidan worth it for anyone? We can no longer ask this of ordinary Ukrainians given measures such as the "Truth Ministry", which was introduced in December. We have no way of knowing how they feel one year on. I don't think the Russians are happy about it. Westerners continue to be caught up in the spirit of hostility towards Russia, and are yet to see and feel many of the consequences as a result. It seems we think it was worth it, but it is clearly the result of public opinion being formed by a very aggressive mainstream media campaign which wants to present things this way. But, if we actually take the time to look at the consequences, there seems to be no winner in all of this.