Taking Back Globalization

DAVOS – The World Economic Forum’s annual gathering is normally little more than a toast to the benefits of increasing global GDP, trade, and investment. But this year’s meeting comes at a time when economic expansion can no longer be taken for granted, and when the uneven benefits of past growth are sparking mass social unrest.
So it is little wonder that doomsday scenarios about the “seeds of dystopia” and the risks of “rolling back the globalization process” are being dangled in Davos. The world’s economic and political leaders stand warned: do globalization better, or it will be derailed by the growing legions of the discontented.
Leaders would be unwise to ignore this warning. Discussions in Davos must go beyond how to rectify the imbalances in developed countries’ debt-to-GDP ratios. They must finally pay attention to the wider imbalances generated by unfettered globalization.
Popular anger is directed not only at the bank bailouts, soaring public debt, and bleak employment prospects of recent years. All around the world, people have fallen afoul of a two-track economic process whereby whole industries have been sacrificed to cheaper imports, whole regions have been consigned to abandonment or degradation, and whole populations have been frozen out of economic progress.
Nowhere are these imbalances more evident than in the global food system. Globalization has been wholeheartedly embraced in the service of feeding the world: bilateral and multilateral trade agreements have been put in place to allow food to flow from food-surplus to food-deficit regions.
Yet this model has failed spectacularly. The food bills of the Least Developed Countries (LDCs) increased five- or six-fold between 1992 and 2008. Imports now account for around 25% of their current food consumption. The more they are told to rely on trade, the less they invest in domestic agriculture. And the less they support their own farmers, the more they have to rely on trade. Countries that fall into this vicious cycle leave their citizens vulnerable to historically volatile prices on international markets, which means increased hunger and insecurity.
Despite the persistent challenges of hunger and food inequality, people are told to embrace more open markets, more trade, and more globalized economic processes. Yet open markets do not function as perfectly as many at Davos would like to think. Food moves where purchasing power is highest, not where the need for it is most urgent.
This blind embrace of globalization from above means missing out on key opportunities that do not fit the dogma. If we were to support developing-world small landholders, who are often the poorest groups, we could enable them to move out of poverty and enable local food production to meet local needs. Trade would complement local production, rather than justifying its abandonment.
Trade and investment agreements are the gateways through which globalization passes on its way to redefining a country’s economic landscape, and they are increasing at an impressive pace. There are 6,092 bilateral investment agreements currently in force, with 56 concluded in 2010 alone.
That growth reflects the flawed economic model of the pre-crisis years, which relied on indifference to where growth came from, how sustainable it was, and who was benefiting from it. If we are to learn anything from the ongoing crisis, it must be to start asking the right questions.
Every new bilateral agreement, every chapter of globalization, should be measured against new criteria. How sustainable and how evenly spread will the macroeconomic benefits be? Will they facilitate genuine development and provide dignified opportunities to those who become economically displaced?
An EU-India free-trade agreement is now imminent – and could be the litmus test for how we reengage with globalization in the wake of the crisis. Some estimates suggest that the proposed tariff liberalization in the dairy and poultry sectors could threaten the livelihoods of 14 million very poor households in India, half of them landless.
Globalization involves winners and losers – that has been established. But losing out, for a subsistence farmer, means sinking into dire poverty and hunger. Is the denial of a vulnerable population’s right to food an acceptable byproduct of a trade deal? Should the primary goal be to multiply the interests of powerful multinationals? Are these the economic processes that we want, or need?
These are the questions that leaders must ask at Davos. Globalization can survive the crisis. But not as we know it. Globalization must be taken back for the interests of the many.
Olivier De Schutter is the United Nations Special Rapporteur on the right to food. On March 6, he will present to the UN Human Rights Council in Geneva a set of guiding principles for assessments of trade and investment agreements’ impact on human rights.
I think there are some points we need to explore deeper.
1. Globalization is a not a process that is in our hands and we could switch it on and off as we like. Globalization is an evolutionary process, where through multuiple factors mainly driven by inherent, expansive and pleasure oriented, basic human nature and population growth we have evolved into a totally interconnected and interdependent global network. The presence of this closed network is a well establisehd fact, we have the connections in between us, the only question is how we use them.
2. Our inherent nature is subjective, we always make self calculations and in every situation within any condition we are looking for more profits, rewards for ourselves even if we have to exploit others or our environment in the process.
This selfish and greedy human nature in a closed, interdependent system, with limited natural resources has become harmful to the point of destructive. Again it is objectively established, and the deepening crisis is providing evidence with every passing day.
The problem is how to convince ourselves, especially those who make decisions about this situation, and initiate wholesome changes.
Even if we start to understand how harmful our present attitude and lifestyle is in theory we still behave like the alcoholic who was told to stop drinking based on minimal symptoms and some blood results, but still thinks that 1-2 more glasses, or maybe another week of heavy drinking should not be a problem. He sort of understands in his mind the problem and the recommended solution, but his discomfort, pain is not strong enough to turn him off drinking.
This is the question today: are we wise enought to start changing and start planning, living and acting mutually and equally, taking the well being of the whole global system as our priority ahead of our self interest based on the clear information around us, or we wait until things turn really bad, with complete economical collapse, violent riots even wars to convince us we "need to stop drinking"? Zsolt 10:53 25 Jan 12
 

Three tax resolutions for 2012

While tax season is still a couple of months away, there is really very little you can do to reduce the tax bill on your 2011 return, which will be due on April 30th. That being said, January is the ideal time to start thinking about tax savings for 2012.
Here are three tax resolutions to ponder over the weeks and months ahead:
1. Get Organized
If you’re one of those people who is always scrambling to hunt down receipts, T-slips and other important tax info, now is a great time to set up a tax filing system. It need not be complicated and it can be in physical or electronic format.
For example, I often get e-receipts for charitable donations I make online throughout the year to various friends’ fundraising events or charity runs. I set up a separate folder in my e-mail program to store all these e-receipts such that come tax time, I can simply print them all out at once.
Many T-slips are also available electronically. My employer, for example, posts employees’ T4 slips on a secure internal website. The slip can then be printed off anytime or saved electronically in a tax folder on your computer.
If you use part of your home for business, be sure to also keep records, either paper or electronically, of bills for electricity, heating, maintenance, property taxes, and home insurance, all of which will come in handy in tax season.
Finally, if you’re a non-registered investor who is buying and selling securities throughout the year, ensure that you have a good place to store all your buy/sell trade confirmation slips so that you can properly calculate both the adjusted cost base of your investments when you come to sell them and accurately report your proceeds of disposition.
2. Maximize tax-free/deferred savings
With four types of registered accounts to choose from, ensure that you are prioritizing the order of your tax-free or tax-deferred savings. While each person’s situation is different, my general prioritization order for registered savings goes as follows: RDSP, RESP, TFSA and/or RRSP.
If you are saving for someone in the family with a disability and who qualifies for the disability tax credit, then the Registered Disability Savings Plan (RDSP) is clearly the first priority. Not only can up to $200,000 of contributions grow tax-deferred, but the RDSP may be entitled to receive up to $3,500 annually in Canada Disability Savings Grants and an additional $1,000 annually in Canada Disability Savings Bonds up to a lifetime maximum of $70,000 in CDSGs and $20,000 in CDSBs.
Next in line would be contributing to a Registered Education Savings Plan (RESP) for each minor kid to save for their post-secondary education. By contributing at least $2,500 for each child annually, you can take advantage of the 20% matching Canada Education Savings Grant (CESG). If you are catching up and trying to collect prior years’ CESGs, consider contributing $5,000 per child to the RESP such that you can collect the annual maximum of $1,000 in CESGs per child.
Finally, to save for retirement, consider contributing to an RRSP or TFSA. Can’t afford to do both but having trouble deciding which one is best for long-term retirement savings? My broad, overly-generalized rule of thumb says if you make $53,000 or less, maximize your TFSA contribution first since you are in the lowest bracket ($42,707 + $10,822 of basic personal amount) and likely pay combined federal and provincial taxes at about 20%. Chances are your marginal effective tax rate upon withdrawal will be higher, especially taking into consideration the effect that if you had directed those savings to an RRSP, when withdrawn, that income inclusion could put you into a higher effective tax bracket once factor in the claw back of various income-tested government benefits.
3. Plan your charitable giving in advance
Consider setting up a charitable donation budget for 2012 so that you can give in the most tax-effective way possible by donating appreciated stock or mutual funds directly to charities. Not only will you get a tax receipt for the fair market value of the stock or funds donated, but you also will eliminate any capital gains tax bill on the accrued gains.
An easy way to do this is to establish a donor advised fund (DAF) through a public foundation and transfer the appreciated stock or mutual funds to the foundation at the beginning of the year. Then, as requests for donations come in during 2012, you can direct your DAF to write the cheques. You’ve got the tax break up front and made the donation in the most tax effective way possible by donating “in-kind” and eliminating a future capital gains tax liability. Practically, it simply wouldn’t be feasible to donate $50 worth of stock every time you wanted to help a co-worker raise funds for her favourite cause.

Ignore those fallible forecasts

Every New Year brings a bountiful supply of economic and market forecasts by investment pundits. Well-researched, analytic and often insightful, the typical forecast, whether it is bullish, neutral or bearish, is artfully constructed. In search of guidance, many investors (and advisors for that matter) seize upon a specific strategist’s prognosis as a rationale for their investment decisions. This raises the question: Just how accurate are the forecasts of experts?
Regrettably, the answer is not very accurate. The Congressional Budget Office (CBO) in the U.S. regularly assesses the accuracy of its forecasting track record and that of the Blue Chip Consensus Forecast, an average of 50 professional economists’ forecasts. From 1982 through 2008, CBO found the average error in its annual forecast of real gross domestic product growth was 1.1%. Now that doesn’t sound like much until you realize the actual real GDP growth rate was 3% per annum such that CBO’s forecasts missed the mark by more than 35%.
Well, that’s the government, you might say — certainly, the consensus view of 50 highly regarded economists will be more accurate. As it turns out, the average annual forecast error of the Blue Chip Consensus was also 1.1%, the same as CBO’s. With all of that experience, mountains of data and complex computer models, the professional economists’ average forecast of GDP growth also missed by a wide margin.
Making matters worse, the forecasting errors were largest at the key turning points in the economy. For example, in 2008-2009, the annual real GDP growth forecast by CBO and the Blue Chip Consensus was 2.3% and 2.4%, respectively. As the U.S. economy headed into a recession in 2008, the actual growth over this two-year period was negative — the real GDP contracted by 1% annually.
Just when an investor needs accurate guidance the most, the experts didn’t deliver.
Of course, every year some economists do get it right. In my experience, investors often gravitate toward the strategist who has made the best call over the past couple of years. Unfortunately, this is not a winning approach either. A comprehensive study by the Federal Reserve Bank of Atlanta found that not one single forecaster in the Blue Chip Consensus consistently performed better than the average of the 50 forecasters. As faulty as the Consensus view often is, it is likely to be more reliable than any single strategist’s forecast.
Several studies have found that analysts’ forecasts of the earnings per share for the S&P 500 are too optimistic. So if you are relying on some forecaster’s frothy market view, think again.
You also shouldn’t be waiting for market strategists to call the next bear market correctly. Earnings forecasts for the stock market are most flawed when a recession rears its head. Bianco Research LLC has calculated that market strategists’ earnings forecasts were 10% too high in the 1990/91 recession, climbed to a 25% high-side error rate in 2000/01, and missed the mark by a whopping 40% in the 2007/09 recession.
Investors should ignore the annual ritual of myopic fallible forecasts and accept that unpredictable recessions and recoveries are a fact of economic life. Since 1854, the U.S. economy has experienced 33 business cycles that have created a recurring sequence of bear and bull markets. Yet, over this entire span, the U.S. economy has grown on average by 5.5% a year while stocks have earned 8.9% annually.
Hence, serious investors should focus on the long-term and put their effort into what they can control — clarifying their goals, defining their capacity and tolerance for risk, diversifying accordingly and eliminating unnecessary costs and taxes.
John Kenneth Galbraith, the famous economist, quipped, “The only function of economic forecasting is to make astrology look respectable.” Investors may find their time better spent reading their horoscopes rather than following fallible forecasts.

Apple supplier audit reveals child labour, environmental violations

Apple revealed its once closely guarded list of global suppliers on Friday, taking a dramatic and unprecedented step in response to harsh criticism that it was turning a blind eye to dismal working conditions at partner factories.
The move, unusual in an industry that relies heavily on foreign component suppliers to drive margins but rarer still for an infamously secretive company, underscored some speculation that new chief executive Tim Cook has ushered in an era of greater transparency. Predecessor Steve Jobs, who died in October, kept an iron grip on the internal workings of the company he founded and made great.
“With every year, we expand our program, we go deeper in our supply chain, we make it harder to comply,” Cook told Reuters in an interview. “All of this means that workers will be treated better and better with each passing year. It’s not something we feel like we have done what we can do, much remains to be done.”
Apple said it conducted 229 audits last year, representing an 80% increase over 2010. From 2007-2010 the company only conducted 288 total audits. The company said it looked at all levels of its supply chain, including final assembly and component suppliers.
The audit found a number of violations, among them breaches in pay, benefits and environmental practices in plants in China, which figured prominently throughout the 500-page report Apple issued. Other violations found in the audit included dumping wastewater onto a neighbouring farm, using machines without safeguards, testing workers for pregnancy and falsifying pay records.
The report titled “Supplier responsibility progress report” also said it asked suppliers to repay workers after it found 67 facilities had docked worker pay as a disciplinary measure.
“I would like to make a significant improvement in the overtime area. I would like to totally eliminate every case of underage employment,” said Cook. “We have done that in all of our final assembly. As we go deeper into the supply chain, we found that age verification system isn’t sophisticated enough. This is something we feel very strongly about and we want to eliminate totally.”
Apple said it found six active and 13 historical cases of underage labour at some component suppliers but said it did not find any underage workers at its final assembly suppliers.
Apple said it will grant access to an independent auditing team from the Fair Labor Association in an effort to overcome criticism regarding working conditions at factories in its supply chain. It also terminated business with one supplier and was correcting the practices of another supplier. Both were repeat offenders, the report said.
Apple has made major efforts to improve and communicate its policies following high-profile labour problems at its foreign suppliers and manufacturers, including worker suicides at Foxconn facilities in China.
The suicides at the plants associated with Apple cast a harsh spotlight on what critics dubbed a militaristic culture that pushed workers to the brink to meet unceasing demand for the company. In response, Apple stepped up the number of supplier facilities it audits, to ensure they meet its code of conduct.

Not poverty, but not retired either

In Saskatchewan, a couple we’ll call Edward and Nancy, both 61, fear they will be impoverished in retirement. Today, they live a simple life with few frills. Edward, who receives a small company pension and Canada Pension Plan disability payments of $1,103 per month, has not worked in his field for two years. Nancy, an administrative assistant, brings home $2,285 per month that boosts total monthly family income to $5,034 after tax.
Looking ahead to the day that Nancy retires, they worry they will not be able to sustain much of a life without her income. They want to sell their $300,000 house very soon, move to Alberta to be near their children and spend their spare time driving around the countryside to enjoy the simple pleasures of life.
“We have not built up enough retirement savings,” Nancy says. “My husband’s pension is not very large. We are thinking of downsizing our house and using some money we get to add to our income. Really, we need guidance to make the most of the time we have together.”
Family Finance consulted Graeme Egan, a portfolio manager and financial planner with KCM Wealth Management Inc. in Vancouver.
“This is a case in which the couple’s future is really about the resources they can pull together,” he says.” They have an outstanding six-figure mortgage and fairly limited assets. It’s late, but there are some things we can do to make the most of their opportunities. It is a question of timing Nancy’s retirement, timing the sale of their home and getting the most they can out of their investments.”
Timing Retirement
It’s not possible for Nancy to quit work yet, Mr. Egan says. Her combined pensions from her $84,000 RRSPs and CPP would be about $1,000 per month before tax, which is $1,285 less than what she brings home today from her job. Even if they were to harvest some capital from their house, say $150,000, and invest it, she could not make up the income loss from quitting work.
If she works to age 65, she will receive estimated CPP benefits of $530 per month in 2011 dollars, a little more if she gets a raise before 65, a little less if she quits and does not draw benefits until 65. At 65, Edward’s $1,103 monthly disability cheque will drop to CPP benefits of $960 per month in today’s dollars. At 65, they will each get full Old Age Security benefits, currently $540 per month.
Their total age 65 pension income, excluding any investment income generated by cash liberated through downsizing, would be $12,000 per year from Edward’s registered retirement income fund, $9,000 from his company pension and, allowing 2% annual inflation increases to CPP and OAS, a total of about $33,000 from the two public pensions, and $6,800 from registered savings for total age 65 income of $60,800 per year. If they sell their house and realize $150,000 after selling and moving costs, then, if they can get a 4.5% yield from a corporate bond fund or a portfolio of stocks with strong and sustainable dividends, they could add $6,750 per year for pre-tax annual retirement income of $67,550.
After tax at an estimated average rate of 20%, they would have $54,040 to spend each year, or $4,503 per month. If they take property tax, savings, mortgage and debt service costs out of their expenses and add back $1,000 per month for rent, their living costs would be about $3,100 per month. That would be a supportable level of spending. They would have a surplus with which to buy a newer car, travel and have extra funds to replace health benefits they currently receive from Nancy’s employment.
Nancy had hoped to retire very soon, perhaps this winter. That’s bad timing. Spring is usually a better time to sell houses. A move to Alberta would probably mean their equity in their present house, $172,000 less selling expenses, would not go far. It would be better to rent. That would allow Edward to skip outdoor chores, which are hard given his medical problems. For now, in financial terms, the best course is to stay put. If Nancy can find an Alberta job that pays at least 75% of her present $39,000 pre-tax salary, then it will be possible to reconsider the move.
Edward and Nancy owe $14,200 on credit cards, with annual interest of $1,420 per year. Repayment of purchases drives the bill up to $3,000 per year. They can borrow what’s due on their line of credit at a current rate of 4% and save $850 per year.

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Investment Management
Edward and Nancy have about 80% of their registered savings in equity mutual funds and the balance in fixed-income funds. That’s too high an exposure to stocks, especially for a person of his age, health and dependence on savings. The portfolio should be moved over the next four years to a balance of 60% to 70% fixed income and 40% to 30% in stocks. Their present mutual funds carry high management fees. One of Edward’s funds, a resource play, has an astonishing 4.78% management expense ratio. He should switch funds within his fund company’s dossier of equity and fixed-income funds to a corporate bond fund with much lower risks and fees. For the future, the couple could study capital markets. If they use a discount broker and exchange-traded funds, they can save on fees.
It’s too soon to begin cashing in their retirement savings. Both Nancy’s $84,000 of registered savings and Edward’s $170,000 RRSP have lost value from declining stock values. If they did retire soon, they would have to draw more out of their investments, leaving less for the future. The accounts would deplete faster than if they drew money out when markets are more robust.
Nancy should therefore continue to work and delay her retirement to 65. Working another few years will boost her CPP and her retirement savings contributions. In four years, stock markets may recover at least some of their value, Mr. Egan says.
— Need help getting out of a financial fix? Email andrewallentuck@mts.net for a free Family Finance analysis.

Is real estate overheated? The bubble discussion rages on

Earlier this week several heads of Canada’s biggest banks warned about a possible correction in the housing market. The comments, delivered at an industry conference in Toronto, were perhaps not unexpected given that senior policy makers including Bank of Canada Governor Mark Carney have been saying pretty much the same thing for the past year. What was surprising was that only days after the comments were made Royal Bank of Canada, Toronto-Dominion Bank and Bank of Montreal have all chopped their mortgage rates.
In other words, they’re making it easier for consumers — who are already carrying record debt loads — to buy more houses, take on more debt and potentially drive prices even higher.
So is the housing market headed for a correction or not? It seems the debate is far from over.
Helmut Pastrick, chief economist for Central Credit Union 1, the main trade association for credit unions in British Columbia and Ontario, argues that the industry is just highly sensitive to potential dangers “because of where we have come from in the last three years, because of the financial crisis and what happened in the U.S. [housing market].” People are jumpy and that makes them more prone to putting up maybe more red flags than are warranted.
For his part, Mr Pastrick figures housing in this country is not over valued and due for a correction. Indeed, thanks to low interest rates, most consumers can afford to take on significantly more debt.
“I don’t believe we are in a bubble. I believe prices [including Vancouver] are high because of fundamentals,” he says.
While some consumers may have taken on more debt than they can handle, they are a small minority and “typically it’s around credit cards and lines of credit” as opposed to mortgages.
Mr. Pastrick acknowledges that Canadian households are holding record debt levels representing more than 150% of income, but current interest rates make it affordable.
“We’re going to have a low interest rate environment for a while and most of the debt is mortgages, backed by an appreciating asset, and most of the debt is issued by lenders who have pretty good lending criteria who are not fly-by-night operators, so generally it’s a sound form of credit.”
In Vancouver, home to the country’s most expensive real estate, prices are high because of factors such as limited supply of land and sky-high demand, he says. Homes maybe expensive but the valuations are justified.
Mr. Pastrick acknowledges that his views are not shared by everyone. But nor is he alone. He argues (convincingly) that despite what the heads of the big banks are saying publicly, their actions — for instance, cutting mortgage rates close to historic lows as they did this week — suggest they’re on side with him.

Why you should fear the retiring Baby Boomer

NEW YORK – If you’re an investor in the stock market, you should cower in fear of Barry Uhl.
Not that he’s a mean or imposing guy. The 59-year-old is perfectly pleasant and soft-spoken, a branch manager for discount brokerage Scottrade in Fremont, California who daydreams about volunteering with animals for the Humane Society.
Instead, fear Uhl for what he represents. He’s a baby boomer, and he’s retiring in February. That means he’s about to start drawing down his savings after building up a nest egg for so many years.
Uhl by himself isn’t going to alter the course of the stock market, of course. But multiply his modest investment moves by roughly 79 million other members of his generation and you’ve got trouble. According an Investment Company Institute report, a whopping 44% of all mutual-fund shareholders are boomers. As they take withdrawals from their retirement kitties over the next couple of decades, you’re looking at a major, potentially market-altering event.
The first Boomers have already turned 65, and every day for the next couple of decades another 10,000 people will do the same, according to data from the Pew Research Center. By 2030, 18% of America will be 65 or older, taking the Early Bird dinner special and slowly siphoning off their savings.
“The front end of the Baby Boomer generation is starting to take money out, and that could become a big headwind for the stock market,” says David Foot, a professor at the University of Toronto and author of “Boom, Bust & Echo,” which looks at how demographic trends affect the investing world. “In the short-term, the economy drives market returns. But over the long-term, demographics dominates as the major determinant – and its impact is very hard to offset.”
Take Japan and its lengthy economic stagnation, which Foot attributes not to governmental incompetence or policy miscues but to the simple fact of that nation’s demographics. While younger societies generally experience robust growth as its members enter the prime of their working and investing lives, aging societies grapple with an economic decline that’s very tricky to evade.
For example, almost a quarter of Japan’s population is now over 65 – a number projected to rise to 40% by 2050.
The full force of these investing winds has yet to be felt in the U.S., since the leading members of the boomer generation are still in their mid-60s; minimum 401(k) withdrawals don’t kick in until after 70. Indeed many boomers are still working and accumulating wealth, and the biggest demographic bulge of all is comprised of Americans in their late 50s, still in their prime earning years.
But demographic trends are already affecting the markets in significant ways. The hearty appetite for bonds and dividend-paying stocks reflects that boomers have begun to tweak their portfolios in the direction of income-oriented investments, to help preserve their capital and skirt market volatility. Scottrade’s Uhl, for instance, has been subtly remaking his portfolio over the last five years; he’s now about 50% in bonds and cash.
“For six decades the boomers have driven everything in society, and that’s only going to continue,” says David Rosenberg, chief economist and strategist for wealth managers Gluskin Sheff. “They can no longer afford to buy stocks for the long run and wait out any bust. They’re focusing less on capital appreciation and more on income, and we’re seeing that trend take hold already.”
You needn’t be worried about demographics causing a total U.S. market freefall, though. That’s because many of those boomers had kids of their own, a sizable bloc (though not quite as massive) known as the ’Echo Boomers’ or Generations Y. So even if there’s a gradual exodus of boomers from the stock market, the full effect will be tamped down as their kids continue to work and invest. Says Foot: “When boomers start to sell their stock, a large generation of their children will be coming into their 40s ready to buy them, which should help underpin the stock market in North America.”
That said, there are certain steps you can take to deal with the demographic tsunami that may be on its way. A three-pronged plan:
- Avoid Japan and Europe, look to ’younger’ populations. The demographic challenges facing those regions are significant and not going away, notes Foot. But not all countries have similar profiles: Brazil, Turkey, and Vietnam are three nations with relatively young populations whose economies will likely be revving up in years to come.
- Sectors matter. Speculators would be wise to match their stock picks to nations’ demographic profiles. “In young societies like India, where there are a lot of mouths to feed, agriculture is extremely important,” says Foot. “As those people age – as is happening in Turkey – they buy manufactured goods, housing, autos. Then as people move into their 50s and 60s, as is going on in North America, areas like pharmaceuticals become much better investments.”
- Income is king. For Gluskin Sheff’s clients, Rosenberg has been seeking out “income at a reasonable price”. That means slotting the majority of client assets in combination of high-quality, income-producing equities and corporate bonds. “You have to look at the market environment and demographics together,” says Rosenberg. “And that augurs well for investment strategies dedicated to income.”

10 ways budgeting saved my marriage

Eleven years ago, my wife and I sat across the table from an experienced married couple squirming in their seats uncomfortably as though they feared we were about to deliver some terrible news. But the source of their discomfort was the bomb they were about to drop on us.
You see, we were not yet married, but engaged, and the couple across the table was our mentor couple in our pre-marital class. Upon review of our personality profiles and piles of personal baggage, they felt it their duty to discourage us from further pursuing the sacred vows of matrimony. They’d never seen a hopeful couple more innately disparate, more inevitably destined for failure.
We are indeed vastly different, but one thing my wife, Andrea, and I share in common is a penchant for resisting authority. So with the blessing and support of family and friends, I’m thrilled to report we’ll be celebrating our eleventh anniversary this April with our two wonderful boys, Kieran and Connor, ages six and eight.
We have never forgotten, however, the well-intended admonishment of our mentor couple; indeed, we see much of life from vastly different perspectives, foremost among them our view of things financial. And apparently, we’re not alone. Over 50% of marriages end in divorce. Over 50% of those splits cite financial disputes as the primary reason for the break-up.

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100% of marriages deal with money as a daily necessity.
This thought occurred several times when preparing my recent posts on budgeting on Forbes.com (How To Spend $1 Million At Starbucks) and TimMaurer.com (A Burdensome Yoke…Or A Path To Peace?). It struck me that budgeting ranked right up there with prayer and counselling as a precious few factors that have helped keep us together. Here are the top 10 ways budgeting has saved, and continues to save, our marriage:
10. Budgeting forces us to collaborate. It seems that as parents of young children, the level of commitments between work, school, church, sports and the arts leaves us functioning more as independent business partners than spouses. We’re almost always in short supply of adult conversation and genuine collaboration, and (strange as it may seem) budgeting gives us the context for both.
9. It offers healthy accountability. Ronald Reagan famously said, “Trust, but verify,” and while 100% verification of trust in our marriage would be stifling, we’ve found periodic accountability to be a healthy way to build faith and trust in each other. Our joint budgeting effort means all of our expenditures are accessible to the other. Scrutinizing every penny spent would be unfair (a-hem, note to self), but knowing everything is visible is likely to encourage us each to spend more responsibly.
8. It humbles us. I’ve not found a more helpful tool in the pursuit of a successful marriage than humility, and since the use of money is so pervasive in our lives, small mistakes are the norm, not the exception. Rarely a weekly cycle goes by in which we don’t each humbly acknowledge that we erred in some capacity, humbly submitting our mistake to the other. And of course, a good budget is designed to withstand these small mistakes.
7. It provides an opportunity for reconciliation. The prevalence of small errors in our budgeting, however, provides fertile ground for a destructive tendency: that we’d develop a scorecard, real or implied, and shame the more regular offender (because there normally is one in most households). So for us it’s very important that a humility ground-rule is established: Any time an offending spouse submits in humility to an irreversible mistake, forgiveness and reconciliation is the only way forward.
6. It gives us reason to celebrate. For each mistake, there are several successes in each budget cycle. The long-term success of our marriage is often built on a series of small victories, and we should never withhold an affirmation for completing a project under budget or enjoying the security of a buffer when an emergency arises.
5. It cuts down on surprises. So many aspects of our life are subject to variability and volatility. We can’t necessarily reduce the number of those surprises, but we can certainly reduce their negative impact by being financial prepared for them. Financial strain, and especially shock, pushes many marriages to (and over) the brink.
4. It makes us better parents. All of us parents could probably agree that it’s possible to spend too little OR too much on our children, right? We’re responsible to determine what the right levels of spending are for our children, and budgeting allows us to deliberately set aside appropriate levels of funding for education, clothing, sports, music and fun.
3. It shows our dependence on each other. Andrea and I do think very differently, and this inevitably leads to divisive thoughts like these: “You know, I think I could do this better on my own!” But this decries the very essence of marriage as an institution in which each partner’s primary objective is to serve the other. The process of budgeting puts our (literal and emotional) dependence on each other on full display. That makes us vulnerable, but it’s good.
2. It preserves a healthy level of independence. The income production in most households is almost never perfectly equitable. Andrea sacrificed a successful career in the financial industry when she chose to stay home with our young children. This has been an incredible blessing in our family, but it’s also a breeding ground for insecurity and manipulation as I might have a tendency to overestimate my contribution to the family’s finances and underestimate Andrea’s. It is imperative, then, that part of our budget is the preservation of a certain amount of financial independence for each spouse. To offset this income inequity, we’ve established “His and Hers” accounts with unilateral privileges. Many shun budgeting as too restrictive, but properly implemented, it actually gives us room to breathe financially, and we all need room to breathe.
1. It preserves date night! One of the interactions I’ve enjoyed most throughout my career was with a client who is a generation or two my senior. He and his wife have five kids(!) and appear to be more in love today than they’ve ever been. So at the close of one meeting, I got up the nerve to ask this gentleman what his secret to marriage and parenting was. His answer? They never fail to set aside time — and money — for each other as a couple. He made a convincing case that we are better parents when we deliberately set aside time to be together, away from the kids, and not just for date nights, but also long-weekends and even week-long vacations to remind ourselves that before we were parents we were lovers. This proved especially difficult for Andrea and me because by the time we got to the end of most months, we’d already spent our discretionary cash on the rest of life and felt like we were taking funding away from other things to line-up a babysitter and enjoy a night or weekend out. So now, much as we have preserved His and Hers accounts, we also have an Ours account.
Budgeting is not the slightest bit romantic, but it has the ability to promote and preserve the romance in our marriages and keep us on the right side of that daunting 50% divorce statistic. There are as many good ways to manage this process as there are couples, and I’d love to hear some of the ways budgeting has helped preserve YOUR marriage also, so please share your story in the comments section!

Elite Asian students cheat like mad on US college applications

BANGKOK, Thailand — From sleep to social lives, there is little Asia’s most upwardly mobile students won’t sacrifice for education. Though they belong to the so-called “Asian Century,” American colleges remain the premier destination for the elite from Shanghai to Singapore to Seoul.
The path to US college acceptance, however, increasingly compels students to sacrifice their integrity. For the right price, unscrupulous college prep agencies offer ghostwritten essays in flawless English, fake awards, manipulated transcripts and even whiz kids for hire who’ll pose as the applicant for SAT exams.
“Oh my God, they can do everything for you,” said Nok, 17-year-old Thai senior in her final year at a private Bangkok high school. (She asked GlobalPost to alter her name for this article.) “They can take the SAT for you, no problem. Most students don’t really think it’s wrong.”
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Among Asian high society, and particularly in China, parents’ obsession with sending their offspring to US colleges has given rise to a lucrative trade of application brokers. Depending the degree of assistance, families can expect to pay between $5,000 and $15,000.
“The parent says, ‘My kid needs this GPA but, frankly, his scores aren’t that strong.’ Then the unscrupulous agent says ‘Don’t worry. We’ll figure that out,’” said Tom Melcher, chairman of Zinch China and author of a Chinese-language book on choosing American colleges.
A 250-student survey by Zinch China, a Beijing wing of the California-based Zinch education consultancy, suggests college application fraud among Chinese students is extremely pervasive. According to the survey, roughly 90 percent of recommendation letters to foreign colleges are faked, 70 percent of college essays are ghostwritten and 50 percent of high school transcripts are falsified.
“For the right price,” Melcher said, “the agent will either fabricate it or work with the school to get a different transcript issued.” Admission into a top 10 or top 30 school, as defined by the US News & World Report, can bring a $3,000 to $10,000 bonus for the agent, he said. The magazine, Melcher said, is commonly confused in China for an official government publication.
Demand for such agents is high and getting higher. Rapid economic growth across China and other parts of Asia has sparked an explosion in foreign students hoping to secure their ascent with a Western diploma.

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Chinese citizens currently account for more than one in five foreign students studying at US colleges. Nearly 158,000 Chinese students are enrolled at any given time, a full 300 percent jump over mid-1990s numbers, according to the Institute of International Education.
Chinese, Indian and South Korean students comprise roughly half of America’s foreign college student population. Vietnam has sent 13 percent more students to the US within the last year, and Malaysia has added 8 percent, the institute reports.
But many American college officials are oblivious to the application fix-it men these foreign students may have paid back home. Worse yet, remaining blind to the deception is often financially incentivized.
America’s economic downturn has drained the state tax coffers that provide a funding lifeline to many US colleges. Many schools have resorted to unpopular tuition hikes. But many are also courting wealthy foreign students whose families gladly fork over money for housing and tuition along with out-of-state or even out-of-country fees.
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“International students are seen as a source of revenue ... and the trend has exploded in the past two years,” said Dale Gough, international education director for AACRAO, the American Association of Collegiate Registrars and Admissions Officers.
Foreign students, through tuition and living expenses, contribute $2.1 billion to the US economy, according to the US Commerce Department. “In short,” Gough said, “they help the bottom line.”
Excuses abound for ignoring fraudulent applications, Gough said. Some assume that kids who cheat will inevitably flame out anyway and never score a degree. Some admissions officers, he said, contend that “that’s just the way it’s done over there.”
Many schools also make sloppy attempts to translate foreign transcripts, calculated by an “indigenous” and unfamiliar methodology, into America’s GPA or “grade point average” system, Gough said.
His association publishes a guide to deciphering foreign scores, the only one of its kind, but fewer than 500 of the 3,500 institutions represented by AACRAO bother to buy a copy.
“Translating foreign grades into a GPA system is meaningless,” Gough said. “They attempt to do it anyway.”
Gough fears that universities’ lax standards, and focus on big foreign tuition payments, will eventually undermine the pedigree of an American diploma. The damage, he said, would be nearly impossible to undo.
“This scenario spells disaster,” Gough said. “Even if a lot of the students who cheat are bright, and they go on to succeed, is this fair to American students? Or [to] the foreign students who play by the rules?”
While America has ceded manufacturing power and foreign influence to China, an American degree remains the gold standard of educational prestige. Nok, who is currently applying for colleges abroad, never considered applying to universities in Asia.
“Students who study in America are elite, the privileged,” said Nok. “It shows you’re smarter than the others.”
But like most Asian students, Nok has felt baffled and overwhelmed by America’s complex application system.
“Here, you take a big test one day and report the score. That’s how you figure out where you’ll go to college,” she said. “The Americans are different. They want to know the big picture. All these essays. All this stuff about your life.”
America’s liberal arts application system is “fundamentally more confusing,” said Joshua Russo, director of Top Scholars, a college prep and tutoring agency in Bangkok.
Asian families unfamiliar with the process, he said, are justified in seeking an agency’s help with application strategies and tutoring to build the skills US colleges demand. But Russo’s refrain to parents, he said, is that kids who can’t write their own essays are likely to burn out once enrolled in America.
“Some consultants will promise the world ... and they’re fundamentally preparing students to fail,” Russo said. “Beyond fabricating an essay, they’re fabricating a whole life story. Students will start to believe in the lie. It’s wrong.”
The allure of America’s universities, and the pressure-cooker drive to succeed among Asia’s expanding upper class, will continue to propel Asian students into American schools. Many Chinese teenagers applying abroad, Melcher said, are the sort of highly motivated students colleges desire.
“Chinese kids are typically great,” Melcher said. “They’re not at the tailgate parties drinking. They’re busting their butts. Failure is not an option.”
But college application fraud will continue, he said, so long as the risks are low and the rewards are so high. His consultancy suggests interviewing all Chinese students via online video chats, conducting spot tests in English, and hiring a mainland Chinese staffer in the college’s home office.
“Frankly, I feel really bad for Chinese families who are trying to be honest,” he said. “They’re driving 55 while everyone’s zooming past them. After a while, they throw up their hands and say, ‘Fine, I’ll speed up.’”

How Expedia Plans to Make Travel More Social

Some online travel sellers see an enormous business opportunity in working with bloggers, as well as connecting your friends with your travel plans. Care to share?

By Justin Bachman

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On a recent Monday afternoon, executives at online travel agency Expedia (EXPE) invited 16 bloggers for lunch at a Mexican restaurant in Seattle’s trendy Capitol Hill neighborhood. The steak burritos and green chile enchiladas were richly aromatic, but the bloggers had caught a whiff of something even more tantalizing: money. The lunch, along with meetings with top executives at the company’s suburban headquarters and a corporate suite at that night’s Seattle Seahawks football game, was part of a charm offensive aimed at developing a relationship with bloggers. Expedia, the biggest online travel agent, hopes bloggers can serve as an important plank in its effort to re-engineer the way people shop for hotel and airplane tickets by incorporating those transactions into a marketplace driven by social networks.
“If our goal is to get closer to travelers … bloggers are a very interesting place to us,” says Joe Megibow, vice-president of Expedia U.S. And while Expedia isn’t looking to add a roster of bloggers to its payroll, the company is likely to fund trips for bloggers it deems influential—those with sufficient audience and voice. Expedia would likely use the bloggers’ videos, photos, and writing on its site, without influencing content. The company considers bloggers an untapped resource in an industry whose media strategies are often dictated by newspaper travel sections, magazines, and public relations firms, said Sarah Keeling, the Expedia public relations executive overseeing the effort.
The idea that your friends might alert you to cool stuff while flagging the dreck is not a new one. Industries as diverse as retail, radio, and restaurants have leapt into social networking with gusto in recent years. People tend to trust their friends’ opinions. The $109 billion annual online travel market has been notable for not deploying the mountains of data found on social networks to suggest potential trips, or to connect your friends’ experiences with a hotel or resort you may be researching at a site such as Orbitz (OWW) or Expedia. “Think about what Amazon (AMZN) has done around personalization and recommendations. And we see nothing like that around online travel,” says Douglas Quinby, a senior director for travel research firm PhoCusWright.
A slew of tech startups such as Trippy, Gogobot, Gtrot, and FlyMuch are hoping to change that by using Facebook, Twitter, Foursquare, and other social-networking data as a way to gather information, share reviews, and plan trips. The idea is that as you plan travel, you’ll be more comfortable about booking a particular hotel or resort—or choosing a particular Caribbean island or rain forest hike—if one of your friends has been there.

“Harder to Backpedal Into Social”

Some travel experts question whether such sites, which struggle for traffic, can build viable stand-alone businesses. Most suffer from no recognition and meager traffic. To help build traffic, Gtrot plans to introduce “white label” co-branded sites that larger travel clients will use to offer a socially curated experience, says Brittany Laughlin, a co-founder of the Chicago-based company. For example, airlines, hotels, or online travel agents would offer a link to Gtrot from their sales-transaction pages so customers can share plans with friends. The first such partnerships are to be announced in February. “I think the biggest challenge for OTAs is that they are transaction sites and they always have been,” Laughlin said. “It’s just a lot harder to backpedal into social.” Johnson, of Trippy, agrees, citing the retailing success Apple (AAPL) has enjoyed with iTunes, vs. the dismal public reaction to its Ping social network. The meager traffic for social-travel sites hasn’t kept investors away. Trippy received $1.75 million in funding from Sequoia Capital and True Ventures in November and Gtrot has raised $1 million from Lightbank, the venture capital firm started by co-founders of Groupon (GRPN). Trippy founder J.R. Johnson in 2008 sold another travel startup, Virtual Tourist, to Expedia. Johnson and Megibow declined to comment on whether Los Angeles-based Trippy would fit into Expedia’s plans for social travel.
Expedia’s goal is to make planning the entire trip—from flights to hotel to transportation, with even restaurant selections and amusement park tickets—an integrated shopping experience. Say your family is planning a spring break trip to Orlando. After booking flights, your hotel search would incorporate friends’ views on particular properties. If your cousin’s family has been to a particular restaurant, you’d get her recommendation or caution. And all those Facebook photos that people post after a trip? Expedia wants to mine those for your own travels, just as TripAdvisor (TRIP) does with hotel shots its users submit.

In several important ways, Expedia’s push to personalize travel—“delivering a pleasant, positive surprise,” in the words of President Scott Durchslag—marks a return to the bricks-and-mortar travel agent of old who could steer you clear of a dodgy hotel or restaurant. The twist is that your modern “agent” would be a collection of friends and acquaintances conversing about travel. That would be very different from the way most online shopping for leisure travel takes place today: Visit an airline or hotel site, mix in an online travel agent (or four), check an aggregator site such as Kayak or Fly.com, search Google (GOOG), find a hotel discount site, worry about whether the posted prices are reasonable, become frustrated. Repeat the process. And then your trip is booked.

An Amazon.com-Like “Place Market?”

Expedia’s three-year strategy, still in its infancy, envisions an online “place market” akin to the bazaar overseen by Amazon.com, on which competing retailers post their wares and prices with buyers’ comments. Expedia also wants to know where you’re considering going for your next few trips, to align your personal interests and dislikes with your network and customize it all into an integrated networking-cum-travel shopping experience. “Consumers are eager to engage, if you can do it in interesting, meaningful ways,” Megibow says. Gone would be the guesswork of ascertaining what is a reasonable rate, how small or clean the room really is, or the best time to visit a particular beach. You might also become a loyal Expedia shopper, curbing your travel site promiscuity.
There’s already some evidence that social networks spur sales in the travel industry. Delta Air Lines (DAL) has been selling tickets directly through a Facebook page for more than a year; most airlines still link you back to their own sites to purchase anything. Facebook, with its 800 million users, referred 15.2 million visitors to hotel websites in 2010, a 35 percent jump from the prior year, according to a July 2011 PhoCusWright study on social media’s role in travel. Of that number, about 568,000 resulted in a booking—a “conversion rate,” in industry parlance, of 4 percent. That’s far higher than expected, and higher than the conversion rate from travel-review sites, said Quinby, one of the report’s authors.
“When we saw the results from the data, we kind of did a double take internally and went back to our partners and had them double check,” he said. “I think it’s some very provocative circumstantial evidence that there’s something going on.” One possible explanation: Knowing someone who stayed at a particular hotel or resort makes you want to have the same experience. You’re keeping up with the Joneses, in essence, and will have something additional in common.

Moving in on TripAdvisor

The report also found that the number of hotel reviews posted online is increasing, to 1.1 million in 2010, the latest data available. That trend, coupled with further networking tools, could pose a threat to the largest source of online hotel reviews, TripAdvisor. The Newton (Mass.)-based company, which spun off from Expedia in a Dec. 20 public offering, pioneered the role of hotel reviews and turned it into a business valued at nearly $4 billion. TripAdvisor licenses its 50 million reviews to some 300 clients and says it adds 25 fresh reviews per minute. The bulk of its income comes from referring traffic to hotel booking sites. TripAdvisor founder and Chief Executive Officer Stephen Kaufer said he’s not concerned if Expedia and others jump into social travel with more editorial content, encroaching on an area TripAdvisor has owned nearly exclusively. “I think they have a couple of years before they’re able to catch up with where we were five years ago,” Kaufer says.
That’s where Expedia thinks bloggers can help. Expanded posts on travel adventures, supplemented with user reviews and comments, might draw in more travelers. The online travel agents have been pushing to expand the number of reviews travelers post. Orbitz saw its review count jump 300 percent in 2010, while Expedia says it has collected more than 5 million user reviews to date.
Both company and bloggers say they aren’t concerned that readers may be turned off by commercial relationships between the travel agent and writers. Kim Mance, a Brooklyn, N.Y., video blogger and co-founder of Galavanting, a site aimed at female adventure travelers, says disclosure is important for readers but bloggers need to retain the mission and voice that garnered an audience in the first place. “Bloggers will miserably fail and lose their audience if they piss them off,” Mance says.
Bloggers say they’re ready to deliver travel tales and potential new Expedia customers—so long as they are compensated with exposure and cash. “I’ve spent five years traveling and building up an expertise and a following,” says Sherry Ott, a blogger from South Dakota who was among the Expedia visitors in Seattle. “I want to be able to be paid for my knowledge and for access into my audience.”

Professional Women and a Secure Retirement

The first generation of highly paid professional women is about to enter retirement—and their path could serve as a model for others

 

For millions of aging Americans, it starts by examining the 401(k) statement. Their retirement savings plan has gone nowhere for more than a decade. Their mood darkens when they think about their debts (too many) and their savings (too little). The harsh recession has taken a toll on households headed by people aged 55 to 64, who have seen their wealth—net equity in homes and financial assets combined—fall 13.7 percent, to an average $222,300, since the recession hit. “We’re in a mess when it comes to retirement,” says Steven Sass, program director of the Financial Security Project at the Center for Retirement Research at Boston College.
His comment seems especially true for women. They earned less than men throughout their work lives, and they were more likely to take a break to raise children. The wage penalty shows up in an average retirement income for women 65 and older in 2009 that was 57 percent less than for men of the same age group—$21,519 vs. $37,509, according to the MetLife Study of Women, Retirement, & the Extra-Long Life. Women face the prospect of paying bills much longer than men, since those reaching age 60 have an average remaining life expectancy of 23.8 years vs. 20.6 years for men. Millions of women have labored in low-wage service jobs without pensions. In 2010, three out of five women expressed “a lot” or “a fair amount” of worry about not having enough to live on in retirement, according to a survey by the Institute for Women’s Policy Research.
Nevertheless, it’s underappreciated how much better one large cohort of aging boomers should do financially during the traditional retirement years: The college-educated stalwarts of the feminist movement. A generation of well-educated career women is nearing retirement for the first time. It’s the group that marked the revolutionary shift from earning money because they and their families needed it to embracing working because it defined “one’s fundamental identity and societal worth,” said Claudia Goldin, economic historian at Harvard University, in her 2006 Richard T. Ely lecture at the American Economics Assn. annual meeting. “It involved a change from ‘jobs’ to ‘careers.’” They’re poised to flourish in their elder years, at least compared with most everyone else.

PERSISTENT BUT NARROWER GAP

It’s an accomplished generation with plenty of financial and human capital. Although the earnings gap between college-educated men and their female counterparts remains, it has narrowed. Since 1979, earnings for women with college degrees rose 33 percent, while those of their male peers increased 22 percent. Women make up 51.5 percent of all management, professional, and related positions, somewhat higher than women’s share of total employment, which is 47 percent. Among full-time, full-year workers, a higher percentage of women than men have participated in employer-sponsored retirement plans since 2001, according to the Employee Benefits Research Institute. In 2010, it was 55.5 percent for women and 53.8 percent for men. For women earning $75,000 or more, 72.5 percent were in a retirement plan (69.8 percent for men), and for those with a paycheck between $50,000 and $75,000, it was 70 percent (64.1 percent for men).
Financial stereotypes about women and money are remarkably durable. All one needs to do is peruse the personal finance section of a bookstore, and you’ll see a number of patronizing titles, such as Shoo, Jimmy Choo!: The Modern Girl’s Guide to Spending Less and Saving More and Does This Make My Assets Look Fat?: A Woman’s Guide to Finding Financial Empowerment and Success. The research suggests otherwise, however. For example, a University of Michigan Retirement Research Center study found that men trade 56 percent more than their female counterparts in 401(k) plans, and the more men traded, the worse they did.
The vanguard generation of the women’s movement is well-suited to work long into the traditional retirement years. Baby boomers are healthier and better educated than earlier generations. Survey after survey shows that they don’t think of themselves as old and they’re well-positioned to earn a paycheck. Moreover, a part-time job and flexible work schedule allow savings to compound longer and make it practical to delay taking Social Security, a boost to the annual benefit. Certainly, the trend is toward a longer work life. Between 1993 and 2009, for instance, the labor force participation rate of women ages 65 to 69 who had completed four or more years of college rose 77 percent, the Urban Institute calculated.

A SEARCH FOR MEANINGFUL WORK

Of course, many aging boomers might want to say goodbye to their current employer and try something new. There’s no question the current job market is harsh on all job seekers, young and old. Nevertheless, for college-educated women, the insights gained from a lifetime of work and family flexibility, moving in and out of the workforce, shifting from full time to part time and back again, will hold them in good stead when looking for work. “They’re looking for what will be satisfying in the next stage of life,” says Betsy Werley, head of Transitions Network, a nonprofit that acts as a career resource for professional women 50 and older. “They’re saying, I want to work, but in a different way.”
Take the experience of Pat Snyder of Columbus, Ohio. She’s 64 and like everyone else her age she’ll be eligible for Medicare next year. But she’ll also receive a master’s degree in applied positive psychology from the University of Pennsylvania in 2012. The degree is geared toward boosting her credentials for her third career, which she launched in 2010: coaching lawyers seeking a career change or greater fulfillment in their current profession. She was a lawyer for some two decades previously. Before that, she was a newspaper reporter. “It’s a practical third career for me, it’s flexible, and it’s fun,” Snyder says. “A lot of women are looking for meaningful work at this stage of their lives.”
The women’s movement is probably the most powerful social movement of the post-World War II era. The generation that swayed to singer Helen Reddy’s anthem, “I am woman, hear me roar,” transformed the U.S. education system and the workplace. It’s heartening to think that at least this one group has devised a means to a successful retirement—a path all of us can learn from.

America’s Threat to Trans-Pacific Trade

MUMBAI – As if undermining the World Trade Organization’s Doha Round of global free-trade talks was not bad enough (the last ministerial meeting in Geneva produced barely a squeak), the United States has compounded its folly by actively promoting the Trans-Pacific Partnership (TPP). President Barack Obama announced this with nine Asian countries during his recent trip to the region.
The TPP is being sold in the US to a compliant media and unsuspecting public as evidence of American leadership on trade. But the opposite is true, and it is important that those who care about the global trading system know what is happening. One hopes that this knowledge will trigger what I call the “Dracula effect”: expose that which would prefer to remain hidden to sunlight and it will shrivel up and die.
The TPP is a testament to the ability of US industrial lobbies, Congress, and presidents to obfuscate public policy. It is widely understood today that free-trade agreements (FTAs), whether bilateral or plurilateral (among more than two countries but fewer than all) are built on discrimination. That is why economists typically call them preferential-trade agreements (PTAs). And that is why the US government’s public-relations machine calls what is in fact a discriminatory plurilateral FTA, a “partnership” invoking a false aura of cooperation and cosmopolitanism.
Countries are, in principle, free to join the TPP. Japan and Canada have said they plan to do so. But a closer look reveals that China is not a part of this agenda. The TPP is also a political response to China's new aggressiveness, built therefore in a spirit of confrontation and containment, not of cooperation.
The US has been establishing a template for its PTAs that includes several items unrelated to trade. So it is no surprise that the TPP template includes numerous agendas unrelated to trade, such as labor standards and restraints on the use of capital-account controls, many of which preclude China’s accession.
From the outset, the TPP’s supposed openness has been wholly misleading. Towards this end, the TPP was negotiated with the weaker countries like Vietnam, Singapore, and New Zealand, which were easily bamboozled into accepting such conditions. Only then were bigger countries like Japan offered membership on a “take it or leave it” basis.
The PR machine then went into overdrive by calling the inclusion of these extraneous conditions as making the TPP a “high-quality” trade agreement for the twenty-first century, when in fact it was a rip-off by several domestic lobbies.
American regionalism closer to home shows the US now trying to promote the Free Trade Agreement of the Americas (FTAA). But its preferred template was to expand the North America Free Trade Agreement (Canada, Mexico, and the US) to the Andean countries and include huge doses of non-trade-related issues, which they swallowed. This was not acceptable to Brazil, the leading force behind the FTAA, which focuses exclusively on trade issues. Brazil’s former President Luiz Lula Inácio da Silva, one of the world’s great trade-union leaders, rejected the inclusion of labor standards in trade treaties and institutions.
The result of US efforts in South America, therefore, has been to fragment the region into two blocs, and the same is likely to happen in Asia. Ever since the US realized that it had chosen the wrong region to be regional with, it has been trying to win a seat at the Asian table. The US finally got it with the TPP, simply because China had become aggressive in asserting its territorial claims in the South China Sea, the South China Sea, and vis-à-vis India and Japan.
Many Asian countries joined the TPP to “keep the US in the region” in the face of Chinese heavy-handedness. They embraced the US in the same way that East Europeans rushed to join NATO and the European Union in the face of the threat, real or imagined, posed by post-Soviet Russia.
America’s design for Asian trade is inspired by the goal of containing China, and the TPP template effectively excludes it, owing to the non-trade-related conditions imposed by US lobbies. The only way that a Chinese merger with the TPP could gain credibility would be to make all non-trade-related provisions optional. Of course, the US lobbies would have none of it.

Jagdish Bhagwati, University Professor at Columbia University and Senior Fellow in International Economics at the Council on Foreign Relations, is the author of Termites in the Trading System: How Preferential Agreements undermine Free Trade.