International Trade & Wealth (Pt. 4)
There are winners and losers in international trade. In the developed world the consumers are big winners. The unskilled factory or technical worker are the big losers. In what is euphemistically called the developing world, all but a few of the people are big losers. This is why trade is often viewed negatively in these countries.
I am referring to the countries that survive off of commodities. Government officials make dishonest deals with big companies to sell the countries birthright (the minerals and resources). Foreign worker are brought in for the well paying jobs. The wealth of the country is exploited and the people of the country get nothing except a few low paying service jobs.
If the money from the sale of the resources was used to fund educational or social programs or develop local industry, everyone could be a winner. Unfortunately, most of the money goes to fund foreign bank accounts. The cycle of poverty continues. There are other instances where excellent resource management benefits everyone.
David Segrest is a REALTOR in Charlotte NC. His website is http:www.segrestrealty.com .
Friday, November 30, 2007
Wednesday, November 28, 2007
International Trade & Wealth (pt. 3)
International Trade & Wealth (Pt. 3)
While international trade seems to be a wonderful opportunity to help everyone and make the whole world rich, there is a downside. Thomas Friedman in his book “The World is Flat”, Talks about how technology and communication has leveled the playing field. The book discussed how people no longer have to emigrate to participate in the world economy. He also talks about the many places in the world that are still round. These are the parts of the world that do not have access to the benefits of the global economy. They either have no communication capabilities or they lack the education to take advantage of them.
In many undeveloped countries the farmers cannot compete with big agribusiness and the government subsidies of the USA and the EU. We can say that they must modernize their farming practices so that they can produce enough food for the people in their country and to have surplus for export. We are already seeing the effects of big agribusiness in the developed world. Obesity, cancer and food politics are added ingredients in the mass produced factory food we eat. Talk to a person from outside the USA when they first arrive. Ask them how they like the food here. They may ask you, “What happened to it?”
Imports from China show what can happen when products from an unregulated manufacturing environment hit a vulnerable populace. The savings at the cash register are fast being negated by the dangers of lead paint and dangerous products.
We cannot blame trade for the problems. The blame belongs on greed and ignorance. More universal education can be the answer to many of our problems. Until we live in a perfect altruistic world a little diligence will help as well.
David Segrest is a REALTOR in Charlotte NC. His website is http:www.segrestrealty.com .
While international trade seems to be a wonderful opportunity to help everyone and make the whole world rich, there is a downside. Thomas Friedman in his book “The World is Flat”, Talks about how technology and communication has leveled the playing field. The book discussed how people no longer have to emigrate to participate in the world economy. He also talks about the many places in the world that are still round. These are the parts of the world that do not have access to the benefits of the global economy. They either have no communication capabilities or they lack the education to take advantage of them.
In many undeveloped countries the farmers cannot compete with big agribusiness and the government subsidies of the USA and the EU. We can say that they must modernize their farming practices so that they can produce enough food for the people in their country and to have surplus for export. We are already seeing the effects of big agribusiness in the developed world. Obesity, cancer and food politics are added ingredients in the mass produced factory food we eat. Talk to a person from outside the USA when they first arrive. Ask them how they like the food here. They may ask you, “What happened to it?”
Imports from China show what can happen when products from an unregulated manufacturing environment hit a vulnerable populace. The savings at the cash register are fast being negated by the dangers of lead paint and dangerous products.
We cannot blame trade for the problems. The blame belongs on greed and ignorance. More universal education can be the answer to many of our problems. Until we live in a perfect altruistic world a little diligence will help as well.
David Segrest is a REALTOR in Charlotte NC. His website is http:www.segrestrealty.com .
Tuesday, November 27, 2007
International Trade & Wealth (Pt. 2)
International Trade & Wealth (Pt. 2)
Lets assume that the production possibility of country A is 100 units of item c or 50 units of item d. Country B has a production possibility of 100 units of item d and 50 units of item c. If neither country does trades they could each produce some of each item and come up with a net production of about 70 units depending on what it needs of each item.
By trading with each other each county could have a net gain in production of about 30 units or almost 43%. This is a gross over simplification and does not take into account the possibilities of increased production from economies of scale. This suggests that each country is at least 43% richer because of the trade. The reality is greater because the increased efficiency in production makes the items cheaper for the citizens of each county. This allows them to buy more and further increase production somewhere and increase profits at every stage of the manufacturing and distribution system.
Duties and tariffs do not actually stop trade. What they do is “skim” the profits and reduce the effects of savings and efficiency in the market. Protective tariffs are often counterproductive. The USA tried to protect the steel industry which had about 200,000 jobs with a protective tariff. The result was to drive the steel using industries which employed 10’s of millions offshore. Eventually this hurt the steel industry as well.
David Segrest is a REALTOR in Charlotte NC. His website is http:www.segrestrealty.com .
Lets assume that the production possibility of country A is 100 units of item c or 50 units of item d. Country B has a production possibility of 100 units of item d and 50 units of item c. If neither country does trades they could each produce some of each item and come up with a net production of about 70 units depending on what it needs of each item.
By trading with each other each county could have a net gain in production of about 30 units or almost 43%. This is a gross over simplification and does not take into account the possibilities of increased production from economies of scale. This suggests that each country is at least 43% richer because of the trade. The reality is greater because the increased efficiency in production makes the items cheaper for the citizens of each county. This allows them to buy more and further increase production somewhere and increase profits at every stage of the manufacturing and distribution system.
Duties and tariffs do not actually stop trade. What they do is “skim” the profits and reduce the effects of savings and efficiency in the market. Protective tariffs are often counterproductive. The USA tried to protect the steel industry which had about 200,000 jobs with a protective tariff. The result was to drive the steel using industries which employed 10’s of millions offshore. Eventually this hurt the steel industry as well.
David Segrest is a REALTOR in Charlotte NC. His website is http:www.segrestrealty.com .
Sunday, November 25, 2007
International Trade and Wealth (Part 1)
International Trade and Wealth (part 1)
Adam Smith may be a little bit passé but there are a couple of economic theories that still apply to international trade. These are the theories of “Absolute Advantage” and “Comparative Advantage”. Basically according to these theories when trade takes place between countries wealth is created beyond the actual value of the trades.
“Absolute advantage” assumed that a nation would export items that it produce more efficiently than other nations and import items that other nations produced more efficiently. The theory of “Comparative advantage” says that even if one country produces items less efficiently than another country, it could still get an advantage by producing the item(s) that it produced most efficiently and importing the item(s) that it produces less efficiently.
In order to demonstrate the creation of wealth one needs to understand the “production possibilities” of the countries being compared. “Production possibilities designates the capabilities of a country to produce goods when all of its factors of production are fully and efficiently employed” The next section of this blog will demonstrate how wealth is created. This article and the following articles on this subject draw very heavily on an economics textbook by Franklin R. Root called “International Trade and Investment” The sentence above in quotation marks is a direct quote from that book.
David Segrest is a REALTOR in Charlotte NC. His website is http:www.segrestrealty.com .
Adam Smith may be a little bit passé but there are a couple of economic theories that still apply to international trade. These are the theories of “Absolute Advantage” and “Comparative Advantage”. Basically according to these theories when trade takes place between countries wealth is created beyond the actual value of the trades.
“Absolute advantage” assumed that a nation would export items that it produce more efficiently than other nations and import items that other nations produced more efficiently. The theory of “Comparative advantage” says that even if one country produces items less efficiently than another country, it could still get an advantage by producing the item(s) that it produced most efficiently and importing the item(s) that it produces less efficiently.
In order to demonstrate the creation of wealth one needs to understand the “production possibilities” of the countries being compared. “Production possibilities designates the capabilities of a country to produce goods when all of its factors of production are fully and efficiently employed” The next section of this blog will demonstrate how wealth is created. This article and the following articles on this subject draw very heavily on an economics textbook by Franklin R. Root called “International Trade and Investment” The sentence above in quotation marks is a direct quote from that book.
David Segrest is a REALTOR in Charlotte NC. His website is http:www.segrestrealty.com .
Thursday, November 22, 2007
Managing Properties for Non-resident Aliens
Managing Properties for Non-Resident Aliens
A property manager (or tenant on an unmanaged property) is required to withhold and remit 30% of the rent on a property owned by a non-resident alien. This is not really a withholding tax as it will not be returned to the owner. There are ways to avoid doing this. The owner title the property in a domestic artificial entity or make an election to be taxed on a net basis.
The withheld money must be remitted within 10 days of receipt. This can be a real pain for the property manager. It really makes sense to be sure the owner uses one of the above options. The owners who get caught on this are usually owners of vacation homes who only rent the property out occasionally. There is still no reason not to re-title the property or file the election.
Most properties of this nature do not make a profit and would normally pay no taxes. The property would probably have a net operating loss carry over. A non-resident would probably not meet the criteria to take this loss against other income; but it could reduce the taxes due at the time of sale.
The negligent property manager could be liable for all or part of the taxes owed. If fraud is believed to be involved, criminal penalties may apply.
David Segrest is a REALTOR in Charlotte NC. His website is http:www.segrestrealty.com .
A property manager (or tenant on an unmanaged property) is required to withhold and remit 30% of the rent on a property owned by a non-resident alien. This is not really a withholding tax as it will not be returned to the owner. There are ways to avoid doing this. The owner title the property in a domestic artificial entity or make an election to be taxed on a net basis.
The withheld money must be remitted within 10 days of receipt. This can be a real pain for the property manager. It really makes sense to be sure the owner uses one of the above options. The owners who get caught on this are usually owners of vacation homes who only rent the property out occasionally. There is still no reason not to re-title the property or file the election.
Most properties of this nature do not make a profit and would normally pay no taxes. The property would probably have a net operating loss carry over. A non-resident would probably not meet the criteria to take this loss against other income; but it could reduce the taxes due at the time of sale.
The negligent property manager could be liable for all or part of the taxes owed. If fraud is believed to be involved, criminal penalties may apply.
David Segrest is a REALTOR in Charlotte NC. His website is http:www.segrestrealty.com .
Wednesday, November 21, 2007
Natural and Unnatural Disasters
Natural and Unnatural Disasters and International Real Estate
In the USA and most of Western Europe we see natural disasters like the fires in California and we sympathize with the victims. They’ve lost “everything”. We think about the irreplaceable items that went up in smoke, blew away with the wind or washed away in the flood.
Most of these people at least have insurance. When the events such as earthquakes and many floods are outside the bounds of insurance they get help from federal and state governments. What happens in a place like Bangladesh where there is no insurance and the government doesn’t offer much if any help. The only assistance comes from international aid agencies.
The people don’t have much in the way of worldly goods anyway; but think how much harder it is for them to replace them. In many cases the disaster is political. A person who leaves their home for political reasons may either have to enter another society as an unwelcome guest or live in a refugee camp for years upon years. When they finally are able to return home, they may find their property occupied by someone else.
David Segrest is a REALTOR in Charlotte NC. His website is http:www.segrestrealty.com .
In the USA and most of Western Europe we see natural disasters like the fires in California and we sympathize with the victims. They’ve lost “everything”. We think about the irreplaceable items that went up in smoke, blew away with the wind or washed away in the flood.
Most of these people at least have insurance. When the events such as earthquakes and many floods are outside the bounds of insurance they get help from federal and state governments. What happens in a place like Bangladesh where there is no insurance and the government doesn’t offer much if any help. The only assistance comes from international aid agencies.
The people don’t have much in the way of worldly goods anyway; but think how much harder it is for them to replace them. In many cases the disaster is political. A person who leaves their home for political reasons may either have to enter another society as an unwelcome guest or live in a refugee camp for years upon years. When they finally are able to return home, they may find their property occupied by someone else.
David Segrest is a REALTOR in Charlotte NC. His website is http:www.segrestrealty.com .
Tuesday, November 20, 2007
International Forum...Luke Romero
International Forum…Luke Romero
“True wisdom comes from a fortune cookie”
“Honesty & friendship bring you fortune”
Why (do) international (real estate)?
Great opportunity base
Expanded market base
Constant movement of Capital
Risk appropriate investment Choices
Who is the market?
Business transferees
2nd home buyers
Finding the client…Networks
Great Destinations…Wherever you want to be.
Where to begin
Look around
Secure a certification
Build good relationships
Getting Paid
Establish the contact
Develop relationship
Get it in writing
Verify form of payment
Stay in contact
Currency exchanges
Be Patient
Access the wisdom
David Segrest is a REALTOR in Charlotte NC. His website is http:www.segrestrealty.com .
“True wisdom comes from a fortune cookie”
“Honesty & friendship bring you fortune”
Why (do) international (real estate)?
Great opportunity base
Expanded market base
Constant movement of Capital
Risk appropriate investment Choices
Who is the market?
Business transferees
2nd home buyers
Finding the client…Networks
Great Destinations…Wherever you want to be.
Where to begin
Look around
Secure a certification
Build good relationships
Getting Paid
Establish the contact
Develop relationship
Get it in writing
Verify form of payment
Stay in contact
Currency exchanges
Be Patient
Access the wisdom
David Segrest is a REALTOR in Charlotte NC. His website is http:www.segrestrealty.com .
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