Introduction
Edward Moore Kennedy was born on 22 February 1932 in a prominent Irish-American family to Joseph P. Kennedy Senior and Rose Fitzgerald Kennedy in Brookline, Massachusetts. He is the second longest-serving member of the Senate since his election in November 1962 in Massachusetts, a seat he has held up to now. His political activism throughout his political career has touched many, and his influence in the Democratic Party affairs is enormous. He is touted to be one of the pillars of the party. A lawyer by profession, his recognition began with the re-election of his senior brother John F. Kennedy as the Massachusetts senator where he was the campaign manager. His brother was to later contest for the US presidency in 1961, which he won but was assassinated in1963 while still in office. This paper looks at Ted’s political activism throughout his political career spanning over 45 years. His ideas and views are liberal to accommodate technology and changing times. The paper is divided into several sections to allow a deeper insight into some of the areas where his activities are most significant.
Minimum wage
Ted has proved to be someone who is in touch with the troubles that befalls a common man financially and otherwise. In 2007, his long-time advocacy to raise the minimum wage culminated in the Fair Minimum Wage Act, which sought to increase minimum wages from $5.15 to $7.25 over a two-year period. In 1981, he was also among the initiators of the program to increase the minimum wage. This earlier call for minimum wage increases was targeted at the black minority who were not given the same amount of wages as their white counterparts despite the same job group. The latest Act also brought with its tax cuts for small businesses and a hike in taxes to the larger businesses. What does this mean to the commoner and electorate? He is someone aware and familiar with the situation on the ground despite having been brought up in a wealthy family. The common man can now feel that he has someone to identify with. This, I think, is the ideal position that any politician is supposed to take, being a servant of the people instead of being their boss.
Education
In 2001 he joined Bush and other politicians to enact the No Child Left behind Act. He, however, complained of having been hoodwinked as the Act did not provide on how to fund the program. What we see here is a man bent on the reality side of events and practicality of Acts and their actual completion instead of having the Americans give credit to their leaders for enacting and passing a bill that would not deliver the promises. This Act was initiated in light of the fact that some kids from poor families were unable to access college education in the world’s wealthiest country, which is a shame to the country. On this same issue of protecting our learning young adults, Ted, together with Richard Dublin, introduced the “Student Loan Sunshine Act,” which aims to protect students and parents from exploitation by private lenders who at times offer gifts to colleges as a way to secure loan business. The Act was arrived at after reports detailing the abuse of student and parent exploitation by the aforesaid lenders.
He said that going to college is hard, and students shouldn’t have to worry about being exploited when they take out student loans which the lenders offer. It’s obvious that some lenders are pulling out all the stops to woo colleges into buying their loan products which are usually attached with “good” offers. These inducements may be legal, but they’re wrong. They hamper the provision of students and their families with the help they need to afford college. As more and more students and families are turning to private and alternative loans, we need to make sure they’re being offered under the best terms possible, not because a lender has sought to make a convincing deal with a school.
Abortion
Ted has been an ardent pro-choice activist for the last three decades. Earlier on, he had been a pro-life activist. The change of thought came after Roe vs. Wade became law. He asserts that the best way to avoid back-alley abortions, which are very risky, is to legalize the whole issue so as to enable the involved access to proper medical care. His view on this matter arose from the fact that even when abortion is illegal, the rich are always able to access these illegal services in highly guarded private hospitals in secret. The best way forward for America as a country is to safeguard our future generation while by making abortion rare and at the same time making life comfortable for the living by offering them an opportunity to make a choice. Ted says that we should be more focused on the methods of avoiding situations that may necessitate an abortion rather than embroil ourselves in the debate whether to have it legalized or illegal. The fact that he is interested in avoiding the causal reasons for abortion shows he has the interest of women at heart.
Accountability
Ted is known to campaign against the nomination of persons he feels are not legible to government positions citing their past performance in leadership positions. His intent in doing so is basically to protect the ordinary American from abuse of office and his right to receive the correct level of service. His method of running his office has earned him favor with the Massachusetts electorate, as indicated by his re-election in seven consecutive Senate elections. He was, in fact, voted among the most active ten senators by the Times magazine in April 2006 and the most liberal in light of his support of same-sex marriage.
Bills in congress
Congress is charged with the responsibility of drafting bills and enacting them into laws as required by the constitution. As such, some members have come out as conscious of the common man’s plight, thus calling for the relevant bills to be enacted. Kennedy, a long-timer supporter of gun control, was instrumental in denouncing the Vitter Amendment, which restricted gun control to all disaster-stricken areas, such as during the Katrina hurricane in New Orleans. Ted has sponsored and co-sponsored many bills that touch on the day-to-day life of everyone in America.
Political Advice
It would be fair enough to label political endorsements of people to office as political advice to the electorate. Since the beginning of his career, Ted has supported or opposed the appointment of some people to office. As of now, he has thrown his weight behind his fellow democrat Obama for the US presidency. Though his proposed candidates do not always win, his grassroots connections and general appeal to the masses have a huge effect on how the voters vote. Previously, he had endorsed Bob Dole and John Kerry for the US presidency.
Racism
Although this man has at times been accused of being a racist by some people, in my opinion, I wouldn’t name him one. First of all, it would be expected that being a racist, his endorsement of Barrack Obama would look misplaced. To prove these detractors wrong, he has several times accompanied his candidate of choice in campaign rallies. A true racist, as we have come to know them, will not go anywhere trusting a black man with such an office. If at all one was to be a racist in the mildest sense, he/she would campaign against the wrong race or be quiet about the whole issue. In 1987 he was against the nomination of Judge Robert Bork to the Supreme Court due to his record on abortion, civil rights, etc. In fact, he made a very influential speech at the floor of the senate-house to protest against the appointment, which was later reversed.
Conclusion
The most liberal senator of our times, as nicknamed by many, is facing a test on his influence in his party and America as a country. His political activism and grassroots connections are to be measured with the performance of his chosen candidate, Obama, as the November presidential elections have taken center stage in world politics.
References
Verta Taylor, Nancy Whittier, Leila J. Rupp, Feminist Frontiers” 7th edition, New York, McGraw Hill, 2006.
http://bioguide.congress.gov/scripts/biodisplay.pl?index=K000105. Web.
Apple Inc.’s Stockholders’ Equity Analysis
Apple Incorporated has a common stock that is traded on the Nasdaq Stock Market LLC. In 2018, the company had 12,600,000 shares authorized, 4,754,986 shares are issued, and 5,126,201 shares are outstanding (Apple Inc., 2018, p. 40). Apple’s treasury stock for the year 2018 is equal to $0, so it does not impact the overall stockholders’ equity. If Apple had treasury stock, it would reduce stockholders’ equity. The given memo will analyze Apple’s stockholders’ equity and make recommendations on whether the company should issue the common stock and convertible bonds.
Issuing the common stock to the general public is a good way of generating capital. Other advantages of selling new stock include the possibility of selling debt, which is large for Apple. The debt-to-equity ratio of 2.41 indicates that the company’s total liabilities are approximately two and a half times greater than its total shareholders’ equity. With the debt being more than two times greater than shareholders’ equity, Apple could benefit from issuing the new common stock by not having to make obligatory interest payments to investors.
The capital structure leverage ratio of 70% indicates that 70% of the company’s assets are financed by the creditors, and owners are providing only 30% of the cost of assets. Nevertheless, Apple’s return on equity is equal to 55.5%, which means that the company can generate profit without heavily relying on its capital (Atrill & McLaney, 2017). Moreover, the capital is efficiently deployed by the shareholders’ equity. It is worth mentioning that the company’s times interest earned ratio of 21.88 speaks of Apple’s ability to meet its debt obligations successfully.
However, there are several cons of the common stock issuance that should be taken into account. Firstly, an increase in the number of outstanding shares facilitates the dilution of the ownership of existing shareholders. In other words, share issuance gives shareholders the right to vote on the important company’s developments. Secondly, after considering taxes, issuing new stock maybe even more expensive than borrowing money (Hancock, Bazley, & Robinson, 2015). Thirdly, the issuance of shares must be followed by a disclosure of the company’s financial details to the public.
Taking into account all the above-said, it is recommended that Apple should not issue the new stock. Instead, the company can consider repurchasing its shares to reduce its corporate tax rate, which was equal to 24.6 in 2017 (Apple Inc., 2018, p. 28). As Apple will funnel money to shareholders, they may increase their investments in the company. As to the convertible bonds, the advantages of their issuance include reduced interest rates and the tax deduction of interest. However, the main disadvantages are the liquidity risk and the possibility of a decline in the shareholders’ equity as a result of stock dilution (Atrill & McLaney, 2017). It is recommended that Apple should issue convertible bonds to finance stock repurchase and increase stock’s dividend.
References
Apple Inc. (2018). Form 10-K. Web.
Atrill, P., & McLaney, E. J. (2017). Accounting and finance for non-specialists (10th ed.). Harlow, UK: Pearson Education.
Hancock, P., Bazley, M. E., & Robinson, P. (2015). Contemporary accounting: A strategic approach for users (9th ed.). South Melbourne, Australia: Cengage Learning Australia.
Multi-Fibres Agreement And Free Trade In Textile Sector
Introduction
The textile and clothing (T&C) industry has always been an opportunity for developing countries to industrialisation with low-value-added goods. Since the industry requires a lot of labour, it favours well in a population with a large number of mostly unskilled workers, women and children. Until recently, it had remained the only major manufacturing industry not subjected to the General Agreement on Tariffs and Trade (GATT) agreement. In place of these rules, it was subjected to the application of quotas known as Multi-fibre Arrangement (MFA) by the importing countries, Appelbaum, R. (2004).
The quota system started with the Long-Term Agreement (LTA), putting international trade in cotton textiles under the general GATT agreement in 1962. It was only in 1974 that LTA was extended to cover other materials beyond cotton and thus became to be known as the Multi-Fibre Agreement (MFA). After negotiations with Uruguay, it was agreed that those countries that wished to retain quotas would have to commit themselves to phase them out in a ten-year period gradually. MFA came to an end in 2005, with the last quota being lifted on 1 January 2005. Since then, this has significantly changed international trade worldwide as well as having the sector restructured.
Effect of the protectionists’ multi-fibre agreement on developing countries like China
Phasing out of MFA implies changes in the employment sector as a result of both negative and positive production shifts. To minimise the social cost of adjustment, a faster adjustment of production should be coupled both to the passive and active labour market policies during the transition period. It is at this time that it would be necessary to coordinate industrial and trade policies with the labour market policies. In some extreme cases, the affected countries may completely lose production and thus are left with no option but to look for other sectors of specialisation, thus, ends up diversifying the economy, Institut Français de la Mode, (2004).
Mauritius is an example of the countries that applied diversification successfully, and this is a good example to the smaller Central American countries as well as African countries. Part of the international community and other developing countries that have benefited from the new rules in T&C carry with them the responsibility of helping the disadvantaged countries. This assistance will apply mostly to those countries that lack sufficient financial and technical potentials to adjust. Trade privileges to these disadvantaged countries could be applied in other sectors of trade as a means of restructuring. With these kinds of measures, future trade conflicts could be avoided and social hardship reduced. Thus, a more equitable share of benefits in T&C trade could then result.
Some countries fear that cheap clothing and textile could flood their market and thus threaten the domestic market that may not be prepared for the challenge of competition. Other countries are looking for new export opportunities due to the newly introduced free quota trade environment, while others will lose their preferential entry into the US and EU markets, thus having to deal with the difficult completion of exporting to these countries. Some of the quick to adjust countries will be able to maintain their market by adjusting successfully to the new challenges, while others will have to abandon theirs all completely and specialise in other fields.
Currently, the textile and clothing industry has evolved into more of an open market that is subjected to stronger quality and price competition. Some of the high-cost producers who survived under the ATC regime now are facing the difficulty of maintaining their position.
To achieve cost reductions, companies are being forced to reorganise because of the intense price competition, with the worker being on the negative receiving end to this as in most cases there is a general reduction in working conditions and wages. Although the producers aim at short term advantage of increased market share, this trend has some direct benefits to the consumers due to the reduced prices. Increased depletion in labour conditions and wages may be a disadvantage to some workers while others still will be able to find a better paying job within the T&C industry, Kyvik Nord and Hildegunn., (2004).
As a means of achieving certain developmental outcomes, qualitative restrictions on imports have been utilised in international trade. This is a form of shield against foreign competition to the local industry. If foreign goods were allowed to enter the market freely, the competition would be high in the local market. Quotas special characteristic is that they restrict foreign goods competition irrespective of the price. Thus, quotas remove foreign supplier’s incentive to be able to compete on price.
Early trade measures that affected the textile and clothing sector in the United States were agricultural policies that restricted cotton importation. The US later had a bilateral agreement with Japan that limited its export of textiles to the US for a number of years. Europe exercised more restrictions than the US as they covered both the textile and clothing sectors.
Agreement to phase out MFA quotas
Agreement on Textiles and Clothing (ATC) initiated a formal process that saw the removal of global quotas on clothing and textiles. Although WTO Agreement was binding to all the state members, the practical implementation of the agreement was not always as per the theoretical prescriptions. Four stages were set by the quota liberalisation schedule. The first stage took three years, the second one four years, and the third one took three years. The first one between 1995 and the end of 1997 saw quantitative restrictions removed from the minimum of 16% of imports that was then followed by minimum batches of 17%, 18% and 49% in the remaining categories.
A slow pace of implementation
The pace at which this trade liberalisation took place was much slower than theoretically planned. This was expected as the key quota imposing countries (US, EU, Norway and Canada) had not lifted any quota by the end of 1997, which was the end of the first ATC stage. There were business reasons for this as most of them were driven by the fore-sight that a negative effect will be felt in the quota imposing countries with rapid trade liberalisation.
Despite the ATC guiding principles, its flexibility was fully exploited. Products that had not been previously restricted by the quota system were also included in the ATC. Their inclusion gave a good loophole for the large importing countries to integrate those other products first. An example is the Oxfam report that indicated that up to 37% of the products included in the ATC list were never restricted by the USA while EU pseudo-integrated previously unrestricted items in 1995 such as typewriter ribbons, parachute parts and dolls’ cloths. It’s only Norway that made rapid progress in integrating the textile and clothing trade under the ATC, Hightower, Neil., (2004).
Objectives of quantitative restrictions
Import tariffs have been used to raise the cost of imported goods. These tariffs are usually calculated on an ad valorem (percentage of value) basis or in some quantitative denominator form such as surface area, volume, weight or unit. These two forms could either be used singly or combined. Tariffs thus provide a partial protection measure that depends on the denominator in use. They also serve as means of collecting revenue beyond enhancing the competitiveness of the local product.
In situations where local firms are still not protected by the tariffs system due to the low cost of the imported products, even when the tariff is added, the quota system is applied, Krugman, P., (1979).
The textile and clothing sector is an example of an industry that has some of the major producing countries that enjoy cheap labour and thus supply cheap products even when the tariff is added. The result is that the quota system was introduced which;
- Are not susceptible to any (declining) price movements in the price of foreign-produced goods;
- Provide an absolute measure of protection to local producers in that they limit physical quantities of imports;
- Provide immune to movements in the exchange rate, for example, where the devaluation of a foreign currency may make that country’s products more competitive in the domestic market;
- On textiles and clothing are usually set individually against specific countries and on specific products and are thus particularly effective in shielding local producers from specific foreign competition;
- On textiles and clothing, they do not fall under countries’ binding commitments vis-à-vis the reduction in tariffs on industrial goods;
- Negate foreign subsidies impact by lowering the price of a foreign commodity.
Quotas also have the advantage of ensuring the orderly functioning of the general market. Irrespective of variables such as logistics problems, exchange rate movements and even foreign supply interruptions, the domestic market ensures a steady supply.
Unfortunately, consumer welfare is also lost since restrictions on cheap foreign products means that the domestic consumers will have to pay more for the local products. In the textile and clothing trade, the quota system has had both intended as well as unintended far-reaching effects. Although it has enhanced the orderly running of the market, a significant impact has been felt by the consumer in both quota-constrained countries and quota-imposing countries, Lankes, H.P., (2002).
Textile and clothing trade in the developing world
One of the noticeable outcomes is the protection of production centres in the quota imposing countries, mainly Europe and the United States. MFA slowed production as well as export from East and South-East Asian countries and enhanced growth of the sector in the industrialised countries. Between 1990 to 2003, textile and export increased from USD 212m to USD 395m. This represented a 4-5 % annual growth and an increase of approximately 86%.
Developing countries form the leading category of exporters, with China in the lead. Much of the European Union exports take place within Europe. The textile market dominance of China was obvious by the year 2003, even without taking into consideration Hong Kong re-exports.
Due to the fears of the end of the protectionist quota system, initiatives such as the ‘Istanbul Declaration’ were put forth. Although the US and the EU continued to resist the extension of the quota system, imports from China continued to increase following the textile and clothing trade opening.
Economic analysis on the costs of EU trade restraints on textile and clothing trade has been done in different research. It was estimated that by 1997, EU consumers were to pay roughly ECU 12 billion. If the complete integration had occurred by 31 December 1997 through the acceleration of the implementation process, EU consumers would have gained approximately ECU 25 billion per year this including indirect effects. Of these gains, approximately ECU 6.5 billion would have been from ATC quota rents recapture, Gatt, (1986).
Other gains could be traced to the reallocation of resources in areas that have higher opportunity costs and also from increased investments. It was estimated that from a full 1997 implementation, over EU 160 billion discounted gains would have been felt. The delayed implementation gains can also be traced also in the cost of saving jobs. It was estimated that this was equivalent to ECU 41 thousand and ECU 28 thousand in the clothing and textile industries, respectively, per year. When these values are re-calculated as per the EU family of four based on ECU 12.3 billion from loss inefficiency and ECU 12.7 billion for consumers from the accelerated implementation, average gains of about ECU 270 per year is got.
Phasing out of MFA meant a reduction of distortions to trade in clothing and textiles hence more transparency, although this was still hampered by the re-installation of safeguard measures by the EU and the USA. Tariffs combined with other non-tariff trade barriers, e.g. eco-labels, have now become a major trade obstacle for the exporting countries. The end of MFA has reshaped the T& C industry, especially in terms of production, trade, employment, thus, creating new business opportunities but also introducing new social and economic threats.
Textiles and clothing are low-value goods that are less sophisticated. Being labour-intensive, they need a large number of unskilled workers. As a result of the rationalisation and consolidation process, there has been a decline in employment. Some of the OECD have pulled out of the market or are surviving with difficulty while South Asia and the South-East have increased their exports. It can also be observed that new markets have emerged due to preferential access to the rich markets.
Some of these new producers are in Central America and Africa. Worldwide employment in clothing and textile is of great importance, especially, China, Pakistan, India and Bangladesh. Developing countries such as Mauritius, Cambodia and Madagascar also rely on T&C employment to a high degree, Gereffi, G (1994).
Phasing out of some countries in the T & C trade and the coming in of new producers imply a noticeable change in the worldwide trade structure that has led to an employment shift and strong output in and between different countries. Based on these observations and the cheap labour market from countries such as China and Pakistan, they may eventually be the biggest winners. Some other countries such as Thailand, Bangladesh and Cambodia may be slight losers if they fail to apply the right policies.
Such strategies as modernisation and restructuring of their production, creation of enterprise and political alliances with other countries and leading companies, as well as integration into the global production systems, cannot be avoided by these small countries. These countries have the advantage of a good transport network and cheap labour, which they could use to their advantage. Alternatively, they can even merge their domestic production with the production systems of those countries that are successful within their region.
Loser countries form the third category. These are the countries. which may lose a part or even a large part of their T & C industry but still survive in niches due to the restructuring strategies that they apply or due to the geographical advantage. Examples are countries like Mexico and the Central American States that benefit due to their proximity to the US. Germany falls in this category due to the restructuring strategy that has seen it produce high-quality products ready to face high global competition. Turkey, Egypt and Morocco are some of those countries that are benefiting due to their proximity to the EU market, Cortes Claudia Imenez (1997).
The fourth category is countries that eventually lost out completely from T & C trade and have got thus to find other industrial sectors to specialise in. Madagascar is a country example that falls in this group.
Advantages and disadvantages of free textile trade to the European Union
On-going liberalisation and globalisation expose the EU industry to competition from low labour cost countries such as Asia. Although there is a huge labour cost difference between other countries, especially Asia, the EU industry has remained competitive because of high productivity and incorporation of competitive strengths such as quality, innovation, creativity, fashion and design. Although at the home market, the EU countries are faced with intense competition, most of the export markets remain nearly closed due to the tariff as well as non-tariff barriers. It is worth noting that the EU textile and clothing industry managed a 17.4% export of its turnover in 1999. This put it in the second position after China as the largest world exporter of textile and clothing, Bhala Raj (2001).
Recently, access to the world market has topped the world community policies. Global trade in textiles and clothing should be in both directions as per what is generally accepted. It is thus a mutual market where countries willing to enter into the EU market must, in turn, be willing to have their market liberalised.
In order to abolish barriers and thus create a free access market, the EU monitors its trading partners on their compliance with the trade policies. The past has shown that some trading partners infringe the discipline and rules by engaging in unhealthy competition. An example is the Uruguay Round, which has enabled the commission to wrap up anti dumping cases quickly.
Hong Kong’s clothing and textile exports to the EU had previously been under the World Trade Organization (WTO) agreement on ATC up to 1 January 2005 like it was with Chinese mainland export to the EU market. But EU has continued to have safeguard quotas on Chinese textile products in ten different categories. Since this EU-china agreement was for a period between 2005 to 2007, full liberalisation is expected this year, 2008.
Conclusion
The United States, as well as the European Union, being the original architects and beneficiaries of textile and clothing quotas, have moved in to counter the effect of China’s export. Although the EU approach is seen as coming from the bilateral agreement with China, the effect of both moves, either from the US or the EU, eventually has the same effect. China has recently turned to be the primary point of focus when it comes to quantitative restrictions. It is worth noting that available safeguard measures for the countries under WTO rules have been foregone more so to be in favour of the remedies found in China WTO Accession Agreement, Appelbaum, Richard (2004).
Reference
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Institut Français de la Mode: Study on the Implications of the 2005 Trade.
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Krugman, Paul R. “Increasing Returns, Monopolistic Competition and International Trade.” Journal of International Economics 9: (1979) :469-79.
Lankes, H.P., (2002), “Market Acces for Developing Country Exports”, Finance and Development (2002), pp 8 – 13. Mohamed Hedi.
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