[YEDG] 15th of Dec. 9am for english discussion
jiyoen park
Dear YEDGers!
Here is this week's facilitator, Emily Park
Come to Kyungbok Palace station exit 3, go straight around 50 m, there is a coffee place called "JK coffee"
refer to the map as follows. FYI, you can park ur car near coffee shop just in case!
Mao Zedong
Merry Mao-mas!
The chairman’s birthday this month will put Xi Jinping to the test
Dec 7th 2013 | SHAOSHAN | From the print edition
THE village of Shaoshan in the green hills of Hunan province in east-central China is gearing up for a big party on December 26th: the 120th birthday of its most famous son, Mao Zedong. Debate rages in China over Mao’s historical role. Some call him a tyrant for the violence he put at the heart of his rule, causing the deaths of tens of millions of people. Others worship him almost as a god. In Shaoshan he is a money-spinner, with the farmhouse where he was born attracting millions of Chinese tourists every year.
For President Xi Jinping evaluating Mao’s legacy is especially tricky. On the anniversary he must tread a careful line. Since he took over as Communist Party chief a year ago Mr Xi has shown a fondness for Maoist rhetoric. He calls, for instance, for a “mass line” campaign to restore the party’s traditional values and a “rectification” movement to purge it of corruption. Mr Xi’s willingness to show off his grip on power suggests a leadership style more evocative of the Mao era than of the grey consensus of recent years. Earlier this year he is reported to have told Vladimir Putin, the Russian president, that “you and I have very similar characters”.
Yet in ideological terms, Mr Xi is no Maoist. This month’s anniversary is probably a headache he could do without. In November, at a landmark plenum, the party’s central committee adopted a resolution which, in economic terms, aims to shift China even further from Maoism than the late reformer, Deng Xiaoping, attempted. Market forces, it ruled, would henceforth play a “decisive role” in the economy.
Still, Mao continues to exert a powerful influence over the party and public opinion. Mr Xi dares not play down Mao’s “contributions” for fear that outright de-Maoification could fatally weaken the party’s grip. A recent article in the party’s mouthpiece, the People’s Daily, said that a big reason for the collapse of the Soviet Union—an unadulterated tragedy, it was naturally understood—was the “negation of Lenin and other [historical] leaders”. As Communist China’s founder as well as the leader most noted for brutal excess, Mao is Lenin and Stalin rolled into one.
At December’s birthday celebrations, some sense an opportunity. At one end of the political spectrum are liberals who want Mr Xi and China’s new generation of leaders to repudiate Mao as a prelude to far-reaching political reform. At the other end are diehard or born-again Maoists who revere the late chairman as an embodiment of anti-Western nationalism. They want Mao to be, in effect, sanctified, with December 26th declared a national holiday. In recent months, both ends of the spectrum have been trying to push their cases. They will be paying close attention to what Mr Xi has to say.
He will be wary of right and left. This year he has clamped down on free expression, with police rounding up many liberal bloggers and civil-society activists. But leftists also suffered a blow with the sentencing in September of their hero, Bo Xilai, to life in prison for corruption and abuse of power. As party chief of the south-western region of Chongqing, Mr Bo played up to the Maoists by encouraging the public singing of Mao-era songs and displaying a pro-poor populism reminiscent of Mao’s. Mr Xi does not want to encourage criticism of Mao, but neither does he want to encourage supporters of Mr Bo, who was a political rival.
Neither left nor right will easily be silenced, however. This anniversary of Mao’s birth is the first significant one in the age of online social media, which despite attempts at censorship have given ordinary Chinese unprecedented opportunity to engage in public debate. Through their blogs and websites, Maoists have urged that December 26th be declared “Mao Zedong shengdanjie”. The term shengdanjie literally means “sacred-birth festival” and also happens to be the Chinese word for Christmas. They note that, given the time difference between West and East, China’s Mao-mas overlaps with Western celebrations of Jesus’s birth. Thus, as one vitriolic leftist website put it, “Westerners with yellow hair and blue eyes and big noses celebrate their fictitious shengdanjie” on the same day as Chinese and the “global proletariat” celebrate the “real” one of Mao.
Mr Xi will resist the temptation of such calls, although Beijing’s opera house is putting on a performance of Mao “carols” on December 25th to celebrate his birthday. He is also likely to be wary of visiting Shaoshan, the Maoists’ Bethlehem. Mr Xi went to Hunan province in early November but raised eyebrows by failing to include Shaoshan in his tour. On November 26th he even visited the birthplace of Confucius, in the eastern city of Qufu, becoming the first party chief to do so in two decades. Maoists have little truck with the ancient philosopher. When they complained bitterly after the authorities put up a statue of him near Beijing’s Tiananmen Square in 2011, it was promptly removed.
Mr Xi paid a low-key visit to Shaoshan in 2011 when still vice-president. A museum there recounts that he remarked during his trip that Mao had saved his father from execution by leftist guerrillas in 1935, nearly two decades before Mr Xi was born. “One could say that without Mao my father would have been no more; without Mao there would be no Xi Jinping today. I will never forget this loving kindness.” Liberals have little to look forward to.
The politics of low pay
Raising the floor
America’s minimum-wage debate has rolled round again
Dec 14th 2013 | BALDWIN PARK, CALIFORNIA, AND NEW YORK | From the print edition
HE LIKES the work; but at $9.60 an hour, stacking the shelves at a Walmart in east Los Angeles does not pay Anthony Goytia enough to cover the bills for his family of five, he says. He supplements his fortnightly pay of $560-600 with the odd catering job, by subjecting himself to clinical trials of a treatment for his psoriasis, and with federal and state assistance. He was recently approved for food stamps; that should make Christmas a little jollier.
America is going through one of its periodic fits of agony over the minimum wage. In recent weeks several states and municipalities have approved rate rises; most dramatically in SeaTac, a suburb of Seattle consisting of a large airport, where voters raised the hourly figure to $15. On December 4th Barack Obama called for a higher federal minimum wage. He has previously suggested that it rise from $7.25 to $10.10. It has lost 5.8% of its purchasing power since it was last raised, in 2009.
Between 1979 and 2007 the incomes of the top 1% of American earners rose by 275%, according to the Congressional Budget Office. Those of the bottom 20% rose by 18%. Had the federal minimum wage kept up with productivity gains since 1968 it would have reached $21.72 last year, estimates the Centre for Economic and Policy Research (CEPR), a leftish think-tank. Campaigners gripe that the government should not have to top up the pay of workers like Mr Goytia (who agrees); this “hidden subsidy” amounts to $7 billion in the fast-food industry alone, according to one study.
There is no consensus among economists about the extent to which minimum wages kill jobs. But recent research suggests that relatively low rates (America’s is 38% of the median wage) are not harmful, and that small increases can be beneficial. They not only lift workers’ purchasing power; they also make them more loyal, and so reduce the amount companies must spend recruiting new people.
Mr Obama will not convince Republicans in the House of Representatives to vote for an increase. But by raising the idea he may help Democrats in next year’s midterm elections, particularly in red states where local minimum-wage rises are on the ballot. Republican voters do not recoil at the prospect; 58% told Gallup in November that they would support a rise to $9 an hour; overall, 78% of Americans agree.
Advocates for a higher federal minimum wage point out that, in real terms, it is well below its peak in 1968. That is true, but misleading. First, the big drop came in the 1970s and early 1980s, not recently. Second, as David Neumark of the University of California, Irvine, has pointed out, the earned-income tax credit, a federal subsidy for low-wage workers, makes up for a lot of the losses.
Moreover, the proliferation of state and municipal minimum wages means that the federal rate covers far fewer people than it once did. In 1979 7.9% of workers toiled at or below the federal minimum wage; last year 2.8% did. From January 1st 21 states will have a minimum wage higher than the federal one (see map). More may introduce one next year; others will raise theirs further.
Variable minimum wages make sense for a large country with variable costs of living. But they can have unexpected consequences. The campaign in SeaTac became a big issue during the concurrent mayoral race in Seattle; there, both candidates backed a $15 rate. John Burbank of the Seattle-based Economic Opportunity Institute now reckons the city will approve a $15 rate next year. Washington, DC and two neighbouring counties recently co-ordinated huge rate rises to stop firms playing them off against each other.
Such quirks are inevitable when politicians are left in charge. Most countries with a minimum wage outsource rate-setting to independent technocrats. Eleven American states and several cities index their rates to inflation; this can be awkwardly inflexible when economies stumble, but it does mean firms and workers avoid nasty shocks. Elsewhere, and at the federal level, minimum wages are subject to the fancies of politicians and voters.
Some agitators for higher pay focus on specific industries or companies, such as McDonald’s. Last week hundreds of union-backed workers went on the latest of a series of nationally co-ordinated strikes calling for a $15 wage. That figure, according to a recent business-backed survey, would lead to “personnel decisions” (management-speak for cutting jobs or hours) at 86% of fast-food and other franchises. Ron Shaich, the boss of Panera, a chain of 1,800 eateries, is an exception in the industry; he backs an increase in the minimum wage so long as it applies to everyone.
Other business leaders feel differently. The solution to the “wage problem” said Jim McNerney, the boss of Boeing, this week, is not a minimum wage but “an economy that’s growing”. But John Schmitt of the CEPR says the demand for a $15 wage is best understood as a broader push for collective-bargaining rights. Perhaps some employers can be convinced to pay higher wages as part of a strategy to reduce job churn, he suggests.
This happened with caretakers (janitors) in the late 1990s, after a decade of campaigns. An industry once staffed by ill-paid part-timers now pays workers in unionised cities $15 or more an hour.
From the print edition: United States
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The journey of an Indian onion
Lords of the rings
Walmart, Carrefour and Tesco have been knocking on India’s door, without much luck. The route of an onion from field to shopping bag shows why they are needed
Dec 14th 2013 | LASALGAON, MAHARASHTRA | From the print edition
Cry me a riverNITIN JAIN is the big man in Lasalgaon, a dusty town a day’s drive from Mumbai that boasts it has Asia’s biggest onion market. With a trim moustache and a smartphone stuck to his ear he struts past a thousand-odd tractors and trucks laden with red onions. Farmers hurl armfuls at his feet to prove their quality. A gaggle of auctioneers, rival traders and scribes follow him, squabbling and yanking each other’s hair. Asked why onion prices have risen so much, Mr Jain relays the question to the market. “Why?” he bellows. His entourage laughs. He says that the price of India’s favourite vegetable is a mystery that no calculation can explain.
High food prices perturb some men and women even bigger than Mr Jain. Raghuram Rajan, the boss of India’s central bank, is grappling with high inflation caused in large part by food prices: wholesale onion prices soared by 278% in the year to October and the retail price of all vegetables shot up by 46%. The food supply chain is decades out of date and cannot keep up with booming demand. India’s rulers are watching the cost of food closely, too, ahead of an election due by May. Electoral folklore says that pricey onions are deadly for incumbent governments.
A year ago it seemed that India had bitten the bullet by permitting foreign firms to own majority stakes in domestic supermarkets. The decision came after a fierce political battle. Walmart, Carrefour and Tesco have been waiting for years to invest in India. They say they would revolutionise shopping. Only 2-3% of groceries are bought in formal stores, with most people reliant on local markets. They would also modernise logistics chains, either by investing themselves, or indirectly, by stimulating food producers to spend on factories, warehouses and trucks, and establish direct contracts with farmers, eliminating layers of middlemen.
On the ground little has happened. Foreign firms complain of hellish fine print, including a stipulation to buy from tiny suppliers. Individual Indian states can opt out of the policy—which is unhelpful if you want to build a national supermarket chain. In October Walmart terminated its joint venture with Bharti, an Indian group. India has reduced the beast of Bentonville to a state of bewilderment. Tesco has cut expatriate staff.
The reaction from politicians has been indifference. “We have liberalised…to the extent that we can. People have to accept this and decide whether they want to invest,” said Palaniappan Chidambaram, India’s finance minister. Despite the apparently obvious benefits of supermarkets and the experience of most other countries, few Indians seem to want change.
You’re not in Bentonville anymore
Just how bad is India’s food supply chain? To find out The Economist followed the journey of an onion from a field in the heart of onion country, in western India, to a shopping bag in Mumbai, a city of 18m onion-munchers. The trip suggests an industry begging for investment and reform.
“The system hasn’t changed much—it’s been the same since the 1970s,” says Punjaram Devkar, an elderly farmer in a white cap. For generations his forefathers have grown onions near a hamlet called Karanjgaon. He owns a crudely irrigated six-hectare (14-acre) plot, larger than the national average farm of just 1.2 hectares. He does not want to buy more land; unreliable electricity and labour mean “it is too hard to manage.” There are four onion crops each year—in a good season production is three times higher than in a bad one. To hedge his bets he also grows sugar cane. Costs have soared because of rising rural wages, which have doubled in three years. He says welfare schemes have made workers lazy. “They just play cards all day.”
Storage facilities amount to a wooden basket inside a shed—at this time of year onions perish within 15 days, although the variety grown in the spring can last eight months. From here one of Mr Devkar’s finest is thrown into a small trailer, along with the produce of nearby farms, and taken to Lasalgaon. The roads are mostly paved but the 32km (19-mile) journey takes a couple of hours in a rickety old tractor.
Lasalgaon neophytes will find their eyes water upon entering its market, a huge car park full of red onions, trucks and skinny farmers. Although the auction is run twice daily by an official body, it doesn’t look wholly transparent. Some farmers complain that Mr Jain and another trader dominate the trade (Mr Jain denies this). Prices vary wildly day by day and according to size and quality, which are judged in a split second by eye. The average price today is $0.33 per kilo.
Neither traders nor farmers agree why prices have risen so steeply of late. They blame climate change, the media, too much rain last year, too little rain this year, labour costs, an erratic export regime. “Our biggest problem is illiteracy,” says one farmer. “We don’t know how to use technology.” Most folk agree that India needs better cold storage but worry that it is too pricey or that it ruins the taste of onions.
Farmers must pay a 1% fee to the auction house and a 4% commission to the traders. Sometimes they also have to stump up for fees for packing and loading. That takes place at several depots surrounding the market where farmers must drop off their loads and pour them onto tarpaulins on the ground. The onions may wait there for days but once put into hessian sacks they are loaded onto trucks operated by separate haulage firms and owned by intricate webs of independent consortiums.
At 8pm Prabhakar Vishad, a 20-year veteran of the onion-express highway from Lasalgaon to Mumbai, climbs into a battered Tata truck with “Blow Horn” painted in big letters on the back. Over the years the roads have improved and power steering has made life easier. Still, it is dangerous work, says Mr Vishad, who had a bad crash last year. By 6am next morning he sets his bloodshot eyes on Vashi market on the outskirts of Mumbai. It handles 100-150 truckloads of onions a day—enough to satisfy India’s commercial capital.
Onions are sometimes unpacked, sorted and repacked, with wastage rates of up to 20%. By 9am the market is a teeming maze of 300-odd selling agents, who mainly act on behalf of middlemen, and several thousand buyers—who are either retailers or sub-distributors. Everyone stands ankle deep in onions of every size. The bidding process is opaque. The selling agents each drape a towel on their arm. To make a bid you stick your hand under the towel and grip their hand, with secret clenches denoting different prices. Average prices today are about $0.54 per kilo. If the seller likes your tickles you hail a porter. He carries your newly bought sacks on his head to a dispatch depot where another group of couriers takes them into the city.
“I’m crazy, like the guys you see in the movies. I don’t negotiate,” declares Sanjay Pingle. One of the market’s biggest agents, he charges the seller a 6.5% commission. The buyers pay loading charges on top of that and a fee to the market. He says business is tough—bad debts from customers run at a fifth of sales and he has to pay interest rates of 22% on his own debts. The solution to the onion shortage is obvious, he says. “In China they keep things in storage facilities—if India had the same facilities as China has, prices would be lower.” He says he has seen photographs of Chinese technology on his mobile phone.
By the afternoon thousands of cars and trucks are picking up small batches of onions to take them into Mumbai. In Chembur, a middle-class neighbourhood, Anburaj Madar runs a big sub-distributor. He handles 200 sacks a day which he sells to retailers and restaurants. He buys daily from Vashi market and has space to store only about 12 hours’ worth of stock. Rent is dear and he too reckons cold storage destroys the flavour of onions. He marks up his prices by perhaps 20% but says a chunk of what he buys has to be thrown away—it is either damaged or of inferior quality.
For the onions that do make the cut the next stop is a small shop down the road where they are sold for another mark-up of 10% or so. From here Indubai Kakdi is hand-selecting onions with elaborate care. Buck-toothed and ragged, she sells seven kilos a day from a wooden barrow; she makes a 10% margin. She says climate change has made prices more volatile.
Peeling back the layers of truth
The journey of an onion from Mr Devkar’s field to the end customer in Mumbai takes only a few days but is enough to make you weep. There are some underlying reasons why prices have risen—higher rural wages have pushed up farmers’ costs. But the system is horribly fiddly. Farms are tiny with no economies of scale. The supply chain involves up to five middlemen. The onion is loaded, sorted or repacked at least four times. Wastage rates, either from damage or weight loss as onions dry out, are a third or more. Because India has no modern food-processing industry, low-quality onions that could be turned into paste or sauces are thrown away. Retail prices are about double what farmers receive, although the lack of any standard grading of size or quality makes comparisons hard.
The system is volatile as well as inefficient. Traders who buy onions from farmers may hoard them, but for the supply chain as a whole far too little inventory is stored. As a result small variations in demand and supply are amplified and cause violent swings in price. In the first week of December 2013 prices fell again.
It is easy to see how heavy investment by supermarket chains and big food-producers—whether Indian or foreign—could make a difference. They would cut out layers from the supply chain, build modern storage facilities and probably prod farmers to consolidate their plots.
The shoppers of Chembur agree that Indian onions are the world’s tastiest but are fed up with price swings. No one mentions reform as a solution and until there is popular support and political leadership it is hard to see much changing. And what of the last stage of the onion’s odyssey, to the stomach? By one stall stands an elderly lady who says she likes the vegetable so much that she doesn’t bother to cook it. Instead she chomps on raw onions as if they were apples. At least someone has an eye on efficiency.
From the print edition: Business
Casey Lartigue, Jr.
Question: Then what is stopping them from paying more? There is no maximum salary. If more people would put their actions behind what they say, then the world would be a better place because there would be, for once, more doers than talkers.
>> Ron Shaich, the boss of Panera, a chain of 1,800 eateries, is an exception in the industry; he backs an increase in the minimum wage so long as it applies to everyone.
What a guy! He supports an increase--as long as EVERYONE must pay it. I suppose he wouldn't mind if I punched him in the nose--as long as everyone got punched in the nose on National Nose Punching Day.
>> But John Schmitt of the CEPR says the demand for a $15 wage is best understood as a broader push for collective-bargaining rights. Perhaps some employers can be convinced to pay higher wages as part of a strategy to reduce job churn, he suggests.
Based on my experience and from dealing with others in business, employers--including the likes of Mr. Schmit of CEPR and Mr. Shaich of Panera--are already paying above the minimum wage when they want good workers.
Anyway, the article is what I have come to expect from the Economist--a well-researched article that mentions both sides of the argument but in the end favors government control.
Casey
Dear YEDGers!
Here is this week's facilitator, Emily Park
Pls refer to the below 3 articles for this meetingI invited some friends to it this time for 9am meeting at the new venue.Come to Kyungbok Palace station exit 3, go straight around 50 m, there is a coffee place called "JK coffee"
refer to the map as follows. FYI, you can park ur car near coffee shop just in case!
Then, I look forward to meeting you this week!