Both sides of the political aisles were caught off guard when the House Small Business Committee hearing convened on the 25th of May 2021 to review the progress of the small business Covid relief programs under the $900 billion Covid-19 relief bill was attended only by the Small Business Administrator Isabel Guzman. The Treasury Secretary Janet Yellen was a prominent absentee, although she was required by law to do so.
This could be a minor oversight, a bureaucratic quirk, a miss, something you may be tempted to ignore. Who doesn’t take a chance to skip a meeting when there are other more pressing affairs to attend? But this is exactly the problem here: why is it a program of $900b aimed at assisting small business not important? Maybe Yellen was not enthused about a program originated by the previous administration. But it may also be Yellen is not interested in small business that much.
It is perhaps too early to conclude with confidence that Yellen did not attend the hearing because the small business has lower priority to her, but the size of the program is too large not to bear some significance. The Biden administration proposed a $2.3 trillion infrastructure program, later downsized to $1.7 trillion, aimed at funding roads, bridges and infrastructure projects, broadband internet, and manufacturing, workforce development and R&D.
Yes, it is a bit of a stretch to use this absence as a proof that Jane Yellen is not interested in small business, but if you look at her academic background, her stated position and priorities during her leadership role at the top three most powerful economic bodies in United States and recent policy announcements as the US Secretary of Treasury, the small business is a glaring miss, a dwarf sitting between two giants: labour and large corporations.
Labour is one of the persistent areas of research and application during Yellen’s career as an academic and executive economist. The key tenet of her work is that wage is an important element in individual’s (with social implications at large) motivation leading to higher employment and ultimately to prosperity (The Fair Wage-Effort Hypothesis and Unemployment). This belief is reflected in her view that stimulus should be maintained during difficult times and a while after to help society transition from periods of crisis to stability.
Yellen’s academic background is described often as “very” Keynesian, as someone who sees the role of government as a principal actor in the nation’s economy, especially in difficult time. All these instruments of intervention and control are aligned with her goal of supporting the working class.
Meanwhile, calls for raising the minimum wage makes the life of the small business even more difficult. The increase global minimum tax will result in an increase in prices by global corporations which will put extra pressure on small businesses.
The Biden’s administration tax reform is designed accordingly: tax large corporations and wealthy individuals to support wage increases and create jobs through large government funded infrastructure projects. There is little or nothing at all in for the small business as that doesn’t fit the mould of the big Keynesian framework. The recently announced historic G7 agreement on global corporate taxation is in fact a disguised partnership between big business and governments, a way of streamlining income for governments while giving certainty to corporations. Yellen was a key champion behind this deal “driving a hard bargain” to achieve the final result for the benefit of the “working class people in the US and around the globe”. It sounds like punishment at times to “bring justice”, but it isn’t. The large corporations even welcome it because they can now avoid patchy harassment in separate European countries. They very well aware of the pricing power they possess.
We need to wait and see how economic policies evolve in the near term in the US and Europe before coming to a definite conclusion. Small business is the main employer and it is a key source of innovation. Non-friendly policies will be felt in time in a not so friendly way.
Facebook Messenger now makes up 10% of global mobile Voice Over IP calls. Because the audio quality of mobile VOIP calls are higher than the quality of the standard phone calls, considering that these calls are free and accessible, the use of Facebook Messenger will continue to go up. Facebook will also add free mobile VOIP feature to WhatsApp.
Two years ago, I anticipated Facebook will become a communications medium in which your Facebook ID is your de facto phone number. I admit that while Facebook Home didn’t succeed at all, with 600 million Messenger users and 800 million WhatsApp users the mobile VOIP call feature could have a global impact on the telecommunication services.
The phone companies will have to rely increasingly on charging for data usage rather than for the traditional voice calls. Even that avenue of profits may become problematic with Google, Facebook, Elon Musk and Richard Branson (through their new satelite ventures) aiming to become global ISPs for over 50% of world population. Telecommunications companies will have to adapt and figure out new ways of generating income.
Europe power grid system was put to the test by the recent solar eclipse that swept the continent. The solar power installed base generates over 89GW, of which more than half is sourced by Germany with a capacity of 39GW. The German grid operators managed the rapid transition from full power to a low level caused by the eclipse and back to normal levels by rebalancing the power system using traditional power sources and reserves. Overall the European grid was back to normal without any issues. This event though is warning us the solar power system has a major weakness. If an event causes a significant reduction in solar exposure, the power grid relying on this type of source will be affected severely. For instance, a massive volcanic eruption could cloud vast areas of land for a long time. Solar power is an excellent source of energy, but it needs a good backup plan. Europe’s Power Grid Passes Eclipse Test; No problem meeting electricity demand, despite large amount of solar capacity.
Could there be a state of Silicon Valley, a dream political unit in which innovation can be represented unhindered by the problems typical of the old industrial era? This is what Tim Draper is proposing in his plan to split California into six states. The proposal cites the reasons of oversized California compared with other states in terms of population, geography and economic power, the lack of proper political representation and poor administrative services. The movement behind this proposal already has a website for marketing and support gathering.
I assume a lot of effort went into the design of the territorial make up of the new states. The logic behind this blueprint must consider the history of California, the demographical distribution and its group interests. It is clear though that beneath this general dry presentation that the high-tech are the key influencers. What they really want is to have one state for themselves, the state of Silicon Valley.
This is fascinating. What an idea! On one hand one could think that this is madness, an exaggeration, one of those crazy ideas that are doomed to failure from the beginning. It could be interpreted as a sign of out-of-touch grandeur of companies that have achieved colossal success at a global scale: the Twitters, the Facebooks, the Apples and the Googles. It almost sounds like a prank. On the other hand maybe the people behind this proposal are onto something. Tech companies are moving much faster than Washington, they have caused a revolution that is changing the economic landscape not only in terms of novel technological products, but in terms of structure of workforce, education, social relationships.
Regulations are slow to adapt. Maybe this is a good thing and a bad thing in the same time. You don’t want to make mistakes that affect future generations because you made a quick bad decision or because you procrastinated for too long. This plan goes for speed. The California six-way split is wanting to accelerate the pace of regulatory change and create a power base for the tech class that can rival those held by the finance, energy, manufacturing and agricultural groups. The Twitters, the Facebooks, the Apples and the Googles are the new dynasties as the Morgans used to be (they still are to some degree). Or perhaps the likes of Kleiner Perkins Caulfield & Byers (Tom Draper is representing one of them) are the real dynasties pushing for this change. If somehow through a miracle this happens, other states will follow. The consequences are incalculable.
Update 3 Jan 2014: I found this map created by professor Andrew Shears who created a fantasy version of US based on past partition proposals.
Mike Nobis saw how the financial crisis led his customers to postpone orders until the last minute, forcing his 100-year-old family printing business to work faster to deliver on time.
Business invests more in software to increase efficiency and reduce the headcount
See on www.bloomberg.com