Rich-poor gap driving migration; Tata Steel cuts 500 UK jobs; US intelligence chief defends spying





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1 Rich-poor gap driving migration (Matt Wade in Sydney Morning Herald) World Bank economist Branko Milanovic points out that the difference in gross domestic product per person between rich nations such as the US and Australia, and some of the poor countries of Africa, is about 50 to one. That’s up from a ratio of 10 to one in 1960. Even in fast-growing Asian countries such as India, Bangladesh and Indonesia, hundreds of millions of people have not benefited much from the economic changes.

A recent report by investment bank UBS that compared prices and earnings across the world showed the real hourly wage rate of a bus driver (adjusted for the cost of living) was about $US20 in Sydney but only $US3 in India’s biggest city, Mumbai. The same report found the weighted hourly wage for 15 common professions in Sydney was 12 times higher than in Jakarta. The gulf in average incomes is the main motivation for migration.

But a potent new dynamic has been added to the migration equation – widespread access to information. Thirty years ago, many people in poor countries knew very little about nations such as Australia. The growth in media and communications in Afghanistan illustrates this transformation. When the former Taliban regime was toppled in 2001, the Afghan telephone network was barely functioning and television was virtually non-existent. But a little more than a decade later, the country has about 22 million mobile phone subscribers and more than 70 television stations.

The global income gap has become common knowledge among the world’s 7 billion people and that has fuelled the motivation for migration. Economists call this a “disequilibrium phase” – a huge mismatch between supply and demand. Because migration is one of the only mechanisms to fix this disequilibrium, migration pressures will exist until the income gap between countries becomes much smaller.

British economist Paul Collier’s new book on migration, Exodus, explores this volatile issue from three perspectives: the migrants, the host societies where they relocate, and the people they leave behind. He points out that moving to better governed and wealthier nations has been good for migrants because their productivity rises sharply. The disequilibrium now creating migration pressures will gradually change but probably not for many decades.

2 Tata Steel cuts 500 UK jobs (Sean Farrell in The Guardian) Tata Steel is cutting almost 500 jobs in the UK, blaming a slump in demand across the European construction industry and the cost of green levies. Announcing the cuts, the company and its biggest union called on the government to do more to support the steel sector by helping with exports and encouraging use of UK steel in building projects.

The cuts come less than a year after 900 steel job losses. Tata said then that the cuts were part of a plan to cope with terrible market conditions. The financial crisis exacerbated overproduction in the European steel industry. China’s rapidly expanding capacity has also pushed up the price of iron ore, the sector’s main raw material, while putting downward pressure on the price of steel. Eurofer, which represents the steel industry, forecasts that steel consumption will fall 4.5% this year in Europe with only 0.5% growth expected in 2014.

Europe has emerged from its long recession but growth is still sluggish and manufacturing is picking up in the UK, albeit from a low base. Tata said steel is one of the last industries to benefit from economic recovery because customers can use stockpiles left over from the boom years before buying more. The Unite union accused Tata of trying to “sack its way out of a downturn”. Its national officer Paul Reuter said: “We are urging the leadership of Tata Steel in the UK to look at what steps are needed to grow the company rather than slashing jobs.”

3 US intelligence chief defends spying (Lara Jakes & Julie Pace in San Francisco Chronicle) Facing lawmakers who suggested US surveillance has gone too far, the national intelligence director has defended spying on foreign allies as necessary and said such scrutiny of America’s friends — and vice versa — is commonplace.

National Intelligence Director James Clapper defended the secret surveillance that sweeps up phone records and emails of millions of Americans as vital to protecting against terrorists. He played down European allies’ complaints about spying on their leaders, saying the allies do it, too. “That’s a hardy perennial,” Clapper told a House intelligence committee hearing.

He said during his 50 years working in intelligence it was “a basic tenet” to collect, whether by spying on communications or through other sources, confidential information about foreign leaders that reveals “if what they’re saying gels with what’s actually going on.” Committee Chairman Mike Rogers asked whether allies had conducted the same type of espionage against US leaders. “Absolutely,” Clapper responded.

Asked about the reports of eavesdropping on world leaders, president Barak Obama himself said in a television interview that the US government is conducting “a complete review of how our intelligence operates outside the country.” He declined to discuss specifics or say when he learned about the spying on allies.


About joesnewspicks

This blog captures interesting news items from around the world for those strained by information overload and yet need to stay updated on global events of significance. The news items displayed are not in order of merit. (The blog takes a weekly off — normally on Sundays — and does not appear when I am on vacation or busy.) I am a journalist for nearly three decades.
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