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Saturday, 20 January 2018

“Shitholegate” as the inharmonious epitomy of awkward and unpleasant world politics: Trump barks, but the caravan should move on!

The air attack warning sounds like… This is the sound.
When you hear the air attack warning, you and your family must take cover

Was the writing on the wall last week, when the Hawaiian islands were in shock at the moment that an erroneous warning for an incoming ballistic missile took the islands by surprise?!

Especially in the 30 minutes between the warning itself and the ‘all clear’ signal, the social media were litterally bursting with disbelief, shock & awe, and (unspoken) questions like “This is it?!”

Luckily, as we found out soon, this was not it! Not even close… Just one innocent person who messed up his job and perhaps career, by pushing the wrong button during a drill.

Nevertheless, the nasty feeling that remained after ‘buttongate’ in Hawaii, was the feeling that it could have been ‘it’ indeed! Just because of the current geopolitical situation.

A few days ago, the Dutch newspaper Trouw wrote a very good article about the danger for world peace, coming from the paradigm shift in the United States’ nuclear strategy and the intended investments in small, tactical nuclear warheads.

Such nuclear warheads could be mounted on short and medium range missiles or could even be fired by a powerful canon, as can be seen in a short movie from the Fifties of last century.

Here follow the pertinent snippets of this article in Trouw:

The American administration considers a drastical paradigm shift in its nuclear strategy, that strongly increases the odds for a nuclear war. The Pentagon created a report in which a number of policy proposals are made, among others with regards to so-called ‘first use’. In other words: the question under which circumstances nuclear weapons could and should be deployed.

Until recently, the policy was that the US would only consider the deployment of nuclear weapons as a reaction to nuclear or biological attacks on American soil. However, in the new policy document it is stated that also cyber attacks upon the US could serve as a foundation for the deployment of nukes. A cyber attack upon America’s communication and electricity networks, is ample ground for a nuclear counter-attack. In the document, a plea is written on behalf of a more aggressive stance against America’s rivals, like Russia and China, but also North Korea and Iran.

And this was not all. Trump did not only want a larger nuclear arsenal (initially), but also a ‘smarter’ nuclear arsenal, as the following snippets from Trouw reveal:

Instead of expansion of the nuclear arsenal, [Trump] wants to replace a number of very powerful nuclear weapons by smaller items, also called ‘tactical nukes’. This seems good news, but in reality, it isn’t!

Smaller nukes are not meant for deterrence, like the powerful ones. They are meant for real deployment. This logic goes as follows: as tactical nukes are less powerful, the step towards deployment becomes smaller. However, when small nukes are eventually deployed, the odds increase that an opponent will use more powerful ones.

This is where we are today. A blatantly lying and bragging, mentally unstable and extremely vindictive American president has lowered the threshold for deployment of nuclear arms: for himself, as well as for his adversaries.

Donald Trump did this deliberately with his political desire to build up an arsenal of tactical nuclear weapons that can be deployed at will: not as a ultimate weapon of last resort, but as a tactical discovery on the battle field. As if Hiroshima and Nagasaki or the Cold War did never happen!

And so, after only 10 years of deep economic crisis, the world managed to get itself back in a very dangerous and uncertain political situation, with a lot of possible outcomes, of which a few could litterally become the end of the world.

Nevertheless, this is something for which we cannot blame the current American president alone, as there are more protagonists in this explosive, political conundrum: 
  • President Kim Young Un, the young, very brutal and unpredictable ‘rogue’ leader in North Korea, who leads his country with an iron fist and successfully built up a nuclear arsenal of his own, together with the required longe range missiles to deliver this arsenal at the home land of his enemies;
  • President Vladimir Putin of Russia, the professional plotter and manipulator in the Kremlin, who set the world on fire with his stealth wars against Georgia and Ukraine and his hardly conceived threats against the former Warsaw Pact countries in the NATO;
  • Xi Jinping, the sfinx-like Chinese strategist in Beijing with his repressive visions on his people and a large hidden agenda, regarding the future of China. A president who is involved in gathering a large share of the global commodities and raw materials for his domestic industries, via his ‘beads and mirrors’ policies in Latin America and Africa, his new Silk Route in Asia and his annexation of the oil-laden Spratly Islands;
  • Recep Tayyip Erdoğan, the narcisistic and paranoid leader in Turkey, who dreams of a revival of the Great Ottoman empire under his command, but who is afraid for the ‘mythical’ Fetullah Gülen: a former religious soulmate, who is now his most feared enemy. Turkey, as the 2nd largest country in the NATO, is currently involved in an attack against Syrian Kurds in the north of Syria, who are supported by the American army. This scenario of two NATO partners fighting with each other is even too risky for the Russians;
  • And of course – as icing on the cake – there is the aforementioned American president Donald Trump himself: a genuine political amateur in the White House. An amateur with radical ideas about economic cooperation and free trade, all based upon the ‘survival of the one with the biggest mouth and the most powerful weapons’, who is supported by ultra-religious grassroots with visions of ‘Judgement Day’ and with seemingly more money than brains in his understanding of world politics. 

This is a poisonous cocktail for the world indeed.

How amateuristical, blunt, openly racist and even brainless the American President Donald Trump can operate, became clear in a recent private White House meeting. There was a debate between Donald Trump and his administration about the immigration to the United States, coming from poor countries in Africa and middle-American countries like Haiti and El Salvador. Witnesses stated that Donald Trump called these countries ‘Shitholes’ during this meeting.

This disdainful outburst caused a global commotion among journalists and (non) US diplomats, but especially among representatives of these countries themselves, who were – of course – ‘not amused’. Besides that, it proved that President Trump does not have the credit and credibility within his administration, to keep such an erratic outcry private. Even though president Trump later denied to ever have said this, it is clear that nobody actually believed him, outside a few people whose brains probably still resided in the country of The Wizard of Ozz.

And so ‘Shitholegate’ turned into the inharmonious epitomy of awkward and unpleasant world politics in 2018. A global politics that is seemingly driven by ruthless and unscrupulous egoes, who consider themselves to be the right persons to fight for the interests of their country or – even worse – their own wallets.

What makes this current political situation so particularly dangerous is not so much the strenght and political prowess of Trump’s adversaries:

The most unpredictable adversary (or in fact ally) of Donald Trump is perhaps Recep Erdoğan. His enormous pride and ego, as well as his domestically shown paranoia in combination with his NATO membership, might bring him in uncharted territory of politics very soon; just as the very unstable situation in the neighbouring countries of Turkey could do. Syria, Iraq, Iran and East-Turkey are full of political pitfalls and a gung ho politician like Erdoğan could easily step in one or two, driven by his ego and his ambitious grand scheme for Turkey’s future.

Kim Jong Un, even though seemingly a dangerous madman with nuclear toys, knows that deploying his nuclear missiles towards the United States will become the immediate end for his country and (probably) himself. On top of that, he comes from a seasoned family of Korean leaders, that knows how to tease the Americans to such a level that they become really angry, but just not enough to attack North Korea. For the rest, the meaning of North Korea for the global political spectrum is quite futile, as the country is small and has little political meaning.

Both Vladimir Putin and Xi Jinping know how the global political games are played and keep a profile that does not bring them in immediate contact with the American (nuclear) forces. They make some noise and stir up some things in the global theatre, but further mind their own business.

No, first and foremost it is President Donald Trump himself and his deeply religious, right-wing administration of millionaires and billionaires, who are the most unpredictable party in today’s global politics.

His government, consisting of American exceptionalists with a lack of basic diplomatic skills and political experience, have been in a continuous battle with the media and the Democratic party about who is right, who is wrong and who is lying all the time.

When a relatively new president has come under such heavy artillery fire from the media and the opposition and has so little credibility left as Donald Trump, the obvious option in American politics has traditionally been to start a war or a conflict somewhere, in order to detract attention from the domestic situation. It has happened before and it could easily happen again. North Korea or Iran could then be obvious candidates for such a (probably very bloody and dangerous) conflict.

On top of that, Trump’s new nuclear politics, his rudeness towards other countries and his ‘America First’ economic policies, at the expense of mainly Europe and the Far East, might bring him in a confrontation with his global adversaries, but also his former allies. When the going gets really tough, these countries will also fight for their own interests in the political and economic theatres or on the battlefields.

This makes Donald Trump to these eyes the biggest and most uncontrolable risk for enduring peace in the world. And the risk may increase on a daily basis, as Trump’s politics seemed to become rather more than less erratic during the first year of his presidency.

Perhaps the best idea to get out of this dangerous stalemate situation would be when the other powerful countries just ignore Trump’s bragging and rude politics and try to establish (covert) diplomatic contacts with the other, more reasonable and less ideologically driven members of his administration.

This could be a good way to eventually improve relations with the US and prevent Trump from making catastrophical errors in global politics. In this way, Trump would become a quite powerless president ‘in name only’, with a shadow cabinet that keeps him from doing something stupid. As a political solution, this would perhaps be unprecedented in the US history, but could be the only thing to prevent the world from worse events and geopolitical conflicts.

You could then say: Trump barks, but the caravan moves on fortunately!

Friday, 12 January 2018

"Show us the kwan!" In 2018 it is time to radically kick the wage restraint and excess taxation for lower and middle class workers out of the door and stop the canonization of the executive management

The sheer canonization of the executive management in Dutch (multinational) companies has reached a level, in which the executive managers think they all did everything by themselves. They speak in singular, first person about the achievements of the company, as if they were their own achievements. On top of that, they think they have to earn more than 150 times the median wage of their common employees to make a lasting impression upon the world. At the same time their lowest paid workers see their income security, as well as their purchase power erode.  

This erosion happens as a consequence of the mounting tax pressure and the fact that the salaries and hourly fees of lower and middle class workers not really grow, due to the enduring wage restraint. 

Flexibilization of labour, outsourcing of whole departments to Eastern Europe or the Far East and the emerging robotization of their workspace are the other issues haunting lower and middle class workers in 2018.

It were three articles in the newspapers of the last few days that all three described different sides of the same problem: the circumstance that the income gap between the highest and lowest paid workers is getting out of hand.

This problem is caused by both the (yet unstoppably growing) excessive payment for executives and (at the other side of the spectrum) the excess taxation of especially the lower incomes in The Netherlands. This all is turning into a real problem, as the economy is becoming a two-track road:
  • one fast track with enduring economic success and unstoppable profit growth and a group of companies and people that can litterally afford themselves everything that they want;
  • one slow track in which the rest of the population and the less fortunate (i.e. smaller and more local oriented) companies are trapped. This is a track with no tax-breaks at all, hampered growth and enduring economic difficulties, due to salaries and annual income that are hardly enough to pay for housing and food.The latter is not only among contract workers and freelancers, but also among small and medium entrepreneurs, who see their income erode as a consequence of to their customers staying where they are. 

This two-track road is dangerous for the stability in the country, as the group of people that has to work really hard in order to earn their necessary monthly income, sees how the “fat cat” executives and wealthy investors don’t know where to put their nearly unlimited investment money, that they can acquire against nearly free interest rates.

The first article that I want to share is a letter by a reader, André Rapati from Rotterdam, sent to Het Financieele Dagblad, of which the cynisism is dripping out of every pore:

When the ABN AMRO has a good PR Manager – I have no reason to doubt that – then I presume that he had his annual holiday at the time that CEO Kees van Dijkhuizen was interviewed. When one reads the interview, he sees that the words ‘I’, ‘my’ and ‘mine’ appear very often (29 times), while the words ‘we’ and ‘our’ score not more than 8 times. This paints an image of someone who is rather busy with himself than with the team he is supposed to lead. History teaches that companies led by presumptuous people very often underachieve in the end.    

The original article that provoked this letter by a reader probably said it all. “I am the leader of ABN AMRO. I am the single source of its success, as I decide the strategy and the modus operandi. The 21,000 people who form this bank must be glad that I offer them the opportunity to work for me and share in my success and glory!”.

And who can blame him?!

Forgotten are the enormous blunders that the bank made in the prelude to the economic crisis, when the cockiness, ignorance and bad business / investment decisions – partially under pressure of aggressive shareholders – almost led to the downfall of this once proud bank, together with the other large, Dutch bank ‘Fortis Bank’: the profits were privatized and the losses were socialized.

Forgotten is the fact that the Dutch people kept the bank upright with their tax money and saved the bacon of the Dutch executive management! The current success is his achievement and his success story. He is the king on his throne and he needs to be rewarded like a king.

And Kees Dijkhuizen is not the only one who is canonized by the general public, as the winners of the 21st Century. Almost all CEO’s of large companies think they are indispensable nowadays and deserve to be rewarded like kings and queens. Hence the following article in Het Financieele Dagblad:

Dutch CEO earns 171 times

Dutch chief executive officers of companies with a quotation at the stock markets earn generally 171 times the median salary of an employee of their company. Only in the United States, India, the UK and South Africa the salary gap between the executive wage and the median wage is larger. This was disclosed by an investigation performed by press agency Bloomberg. On average the CEO’s of the 25 largest quoted, Dutch companies, among which Akzo Nobel and Shell, earn €6.9 million per annum, including bonuses and pension payments. With that, the Dutch CEO’s are at a global third place, after Switzerland and the United States.

That the salary gap is so large in The Netherlands, is conspicuous, as the average income is already quite high in The Netherlands. An explanation is that large, international companies as Shell, Unilever and Relx have a quotation in Amsterdam.

This last paragraph is only part of the explanation, in my humble opinion... 

The Netherlands has always been a country that looked at the United States – and to a lesser degree the United Kingdom – as both the promised land and the favourite role model. Especially the executives, who were often responsible for writing their own paychecks, have traditionally looked at these countries and especially to the executive paychecks, as an inspiration for their own salary demands.

Their – long worn out – argument was always: “When I move to the United States I can easily earn a seven figure salary, so I want to earn the same amount of money in The Netherlands! Good executives are very scarce, so deal with my demands!”. 

And the boards of directors, that in many consisted of the same group of old boys, swallowed such arguments; often out of self-interest or under peer pressure.

The same executives did their best to keep the salaries and wages of their normal workers relatively low, in order to save costs and look good towards the shareholders.

They did so by:
  • Enforcing wage restraint among their fixed personnel, in order to let them keep their job;
  • By selling less profitable parts of the company and making their company lean and mean, under fierce pressure of assertive (or aggressive) shareholders;
  • By outsourcing work and complete departments to Eastern Europe and India or China;
  • By hiring foreign workers from Eastern Europe and India, who would do “the same work” for a fraction of the wages that Dutch workers earned;
  • By flexibilizing the work force via temporary contracts and massive hiring of freelance workers, that could be hired and fired at the spot.

The results of all this was that the salary gap between executives and common workers grew and grew until the current, excessive levels. The salaries of especially the lower and middle class workers stayed at roughly the same levels for many years (i.e. roughly fifteen years) in a row, only rising with percentages that were at par with or even well below the annual inflation rate. This led to loss of purchase power for the lower and middle class workers, in spite of the steady productivity increases.

And so the situation has emerged that the Dutch economy is seemingly in a period of steady growth with truly excellent growth figures, but the lower and middle class workers are still cautiously spending their money, as they don't feel the improved economy in their wallets yet.

This effect is dramatically reinforced by the strongly increased tax pressure as a consequence of government policy. The subsequent governments had to earn back the money, that had been spent on saving the banks and other large Dutch companies. To do so, they strongly increased the wage and income taxes.

This policy of increasing almost all direct and indirect taxes (except for wealth taxes) has endured until this very day, in spite of all the (empty) promises of PM Mark Rutte that he would increase the purchase power of the middle class workers in The Netherlands.

Also for 2018, Mark Rutte made the same promise regarding the purchase power, but actually the opposite happened. The consequence of the increased taxes and levies for the lowest paid workers is that their salary will actually drop in 2018, just like in the years before. All other workers – except of course for the highest paid workers – get ‘pennies’ in salary increases.

This is disclosed by the third article, that was printed in het Algemeen Dagblad:

Salary slip for 2018 assessed: lowest incomes lose money

Most employees find hardly extra money on their salary slip of January 2018. The highest incomes gain most, but lower class workers with a minimum wage even lose money. This is disclosed by calculations of ADP, the financial data processing company. Workers with an average salary (i.e. €2,894 gross salary per month) earn net €7 more per month. People earning 1.5 times average get one extra Euro on top of that. However, people that earn a minimum (part time) wage between €1000 - €1500 per month get the shortest straw, with €4 less(!) per month.

The calculations of ADP are based upon all changes in a.o. the new fiscal regulations, employee charges and pensions. These are separated from wage increases that people get, due to collective labour agreements (i.e. CAO in Dutch) or payment rises. The CAO wages rose by 1.5% last year, according to the Dutch Central Bureau of Statistics.

The factual decrease in wages for the lowest incomes is caused by the fact that the labour charge deduction cannot be fully used by these workers. This is true for all incomes until €1,750 per month, according to ADP salary specialist Dik van Leeuwerden. “These workers have to take care that they demand the full labour charge deduction in their income tax statement for 2018. This could yield them €250 in extra income for 2018”.

A factor that suppresses the wage increases is the repair arrangements for the (lost) third year of Unemployment Benefit (UB). The Cabinet has decided that employees, who lose their job, are entitled to receive UB for only two years. 

With the Social Partners (employers’ associations and labour unions) it is arranged that a third year of UB remains possible, as long as this is paid by the employees.

The whole article can be roughly summarized with the statement that most of the workers go up in salary a few bucks and some workers even lose a little of their purchase power. However, virtually nobody among the lower and middle classes sees a substantial wage increase, as both company policy and national politics prevent that from happening.

The fact that remains is that most people wonder when for themselves the economy really starts to grow and when the wage restraint policy comes to a definitive end. 

Even the most profitable multinationals and successful national companies s still scare away from paying their loyal personnel 5+% wage rises. They look instead to freelancers and people from India and East-Europe, as a solace for their increasing need for qualified staff.

The bottomline is that the most profitable firms don’t want to pay the high payment increases for their personnel and the less profitable firms simply can’t pay these wage increases.

And so the personnel is trapped in an economic crisis that does not seem to end, as wage restraint was the message for the last fifteen years and will remain the message for the years to come.

As it is a trap indeed: the lower and middle classes keep their wallets firmly in their pockets and don’t spend much more money in the Dutch economy, except for mobile phones, cheap electronic gadgets and cheap holidays. 

The SME companies (small and medium enterprise)  have to deal with yet disappointing sales figures as a consequence of this and therefore can’t pay their personnel much more than the current salary. This explains why the cheap discount stores and thrift stores are blooming in The Netherlands, while the middle class store chains are still suffering from disappointing sales.

Or do you think that it is a coincidence that Primark (selling the cheapest clothes of all department stores) is so successful, while Hudson’s Bay is threatening to become a trainwreck in “Holland”.

So please, politicians and successful multinationals, please throw the excess taxation of middle class workers and frugal remuneration policy overboard. And please stop with your cheapskate personnel policy, that offers a little or no job security to your very loyal personnel.

Let’s show that the economy is indeed doing fine and give your personnel a substantial payment rise. The government, at the same time, should stop with giving tsmall ax breaks with one hand, while grabbing more money back with the other hand.

The Dutch lower and middle classes need a reward for their very hard work of the last fifteen years; perhaps in the form of a fifteen(!) per cent higher wage! Yeah, I said fifteen per cent, as I think that this is very well possible for quite a lot of companies.

So please don’t tell us that that is impossible. We see the hysteria with the Bitcoin and other crypto currencies and the massive amounts of money invested in those. We see the money splashing at the ceiling of the multinationals and we see the gargantuous amounts of investment money floating all over the world.

And a company that can pay its CEO a multi-million reward has enough money to pay all personnel higher wages.

So stop saying that you can't afford it. We (i.e. the Dutch lower and middle class workers) simply don’t believe you anymore. So show us the kwan! Show us the money!