Will European policies ignite a hedge fund exodus?

FINAlternatives writes,

Many have predicted a hedge fund exodus should the controversial European rules—which once included draconian limits on trading and leverage, and now include equally unfriendly rules governing pay—be adopted. But few have gone as far as Michael Raffan, head of the financial services group at Freshfields Bruckhaus Deringer.

“No hedge funds will operate from within the EU,” Raffan told the Financial Times, noting that the exodus would be “rapid and decisive.”

“Hedge funds are much more mobile than banks,” he warned. “It’s much easier for three guys in Mayfair to pack their bags and move to Geneva.”

In the UK, Taxing the rich is causing exodus

Is it surprising that people respond to incentives?

The number of directors of British companies who have registered in the Channel Island tax havens of Jersey and Guernsey, along with the Isle of Man has risen by almost 500 in the past 12 months.

All three are Crown Dependencies and as such can set their own tax rates.

The British Virgin Islands, a popular tax haven in the Caribbean, has seen an 18 per cent rise on a year ago.

Those who are leaving what they see as the mainland’s punitive tax rates include highly paid bankers and hedge fund mangers along with entrepreneurs running luxury travel companies, healthcare, property firms and call centres.

Bankers: laws on pay and bonuses will scare off talent

From the Telegraph:

The British Bankers’ Association (BBA) said the Financial Services Bill – which would require regulators to tear up existing contracts if pay packages were deemed to encourage excessive risk-taking – would threaten the UK’s prominence as a global financial centre.

British banking is a global business and many of our banks operate outside the UK. Moves to bind how our banks operate overseas could put the industry at a serious disadvantage and also discourage global banks from coming to the UK. This would be a major problem for the economy as well as bad for business,” said Angela Knight, chief executive of the BBA.

“What we need to see is the preservation of high-quality talent and international banks operating here. The Chancellor has to have that competition focus fully in his sights,” she said.

Marijuana: Less Dangerous Than Aspirin

The illustration below shows UK drug poisoning deaths versus popular press coverage:

David McCandless, who created the graph, writes:

There has never been a single documented case of fatal cannabis overdose. Also, the government’s own figures don’t tally. While drug figures from the Office Of National Statistics register 19 cannabis related deaths, the mortality stats from the same office log only 1 death.

Clearly the media disproportionally focuses on some drugs rather than others, thus distorting public opinion. The graphic below illustrates the death-rate per user of each drug:

 

So it appears that Marijuana is less toxic than aspirin.

HT: Andrew Sullivan

Academic income (in)equality

From Philip Altbach, Director of the Center for International Higher Education:

“Salary progression”—the difference in salary between junior and senior professors—in general appears modest compared to the situation in the professions outside academe. According to our research, for most of the 15 countries in the study, salaries seldom doubled between entry level and senior ranks. The major industrialized countries (including Germany, France, Canada, the United States, and the United Kingdom) stood at the bottom, in terms of variations between junior and senior ranks, and the developing countries (such as China, South Africa, Argentina, and others) at the top. India ranks poorly on both progression and on basic salary. The lack of possibilities for improved salaries is a problem for the profession in general, but it is particularly damaging for the most productive academics. The latter are the most likely to leave academe or to go to countries with higher salaries.

Top 5 Medical Tourism Destinations (U.S. at #5)

From Property Abroad (via Carpe Diem):

Medical tourism is where people travel abroad to receive medical treatments like cosmetic surgery, which they could not afford in their own country.

Those travelling abroad for such treatments usually come from developed countries, where treatments are very expensive. The UK and the US are two of the biggest markets. That said: wealthy people in countries with poor health sectors often travel to countries that offer better healthcare for major treatments.

When people travel abroad for medical treatments they have two main criteria: cost and quality of healthcare.

They are looking for a place that they can both get to and be treated in cheaply, but which has a top-class health sector so that they know they will be safe. Below are three destinations which meet the criteria for perfect medical tourism destinations, and as such are some of the most popular destinations with medical tourists.

Malaysia:

Malaysia was recently found to be the most popular medical tourism destination with the growing numbers of Asia’s wealthiest. They travel to Malaysia for major treatments because it has one of the best health services in, not only Asia, but the world.

Malaysia is also one of the most popular destinations with those travelling from English speaking destinations (US and UK). This is because, as an ex-British colony there is a high prevalence of English speakers in the health sector. Tourism from the two combines to make Malaysia one of the fastest growing medical tourism destinations, and well worth a property investment tailored to that market.

Costa Rica:

Costa Rica is massively popular with American medical tourists. Costa Rica disbanded the military in 1980 because of the safety and stability of the country. This makes people feel safe about visiting the country, but it also freed up billions of dollars to spend on education on healthcare.

For that reason Costa Rica now has one of the best, and most efficient health sectors in the world. Of the top destinations Costa Rica is also among the cheapest for procedures, which makes it very popular with medical tourists from around the world including the UK.

India:

India also benefits from cost effectiveness when it comes to medical tourism. People from around the world can afford surgeries and procedures in India that they would never be able to afford in the UK or even America. India is also an ex-British colony, and for that reason it has a developed, very efficient and safe health service, which again is a draw for medical tourists from abroad and within the region.

Brazil:

Brazil is fast growing into an economic giant, on the back of its massive production and agricultural sectors, and massive growth in the services sector fuelled in part by tourism growth. Though Brazil has been affected by the international downturn, it is a testament to its economic potential that its recession only lasted 2 quarters with growth resuming at 1.9% in Q2.

Over the years of economic growth, developing the infrastructure, including the health services has been a major priority of the government(s). The fact that it has been a success is testified to by FIFA choosing Brazil as host for the 2014 World Cup.

America:

Yes, that’s right. America is a medical tourism destination. In fact it is one of the longest-standing medical tourism destinations in the world. That’s right: Brits have been taking advantage of the dollar exchange rate and travelling to America to get their bits tucked in or pushed out since the 80s.

America’s health service is first-rate. Brits trust it because it is on a par with the UK (please don’t start a politics debate), and procedures are just over half the price they would be in the UK — used to be half the price before the Pound plummeted.

Extras:

Panama is also a popular destination with American medical tourists. Its economy grew by an average 10% every year for the last few years, and a lot of this increased revenue was invested in improving the infrastructure, including the health service. Now Panama has an excellent health service and — despite the dollarized economy — surgery is still cheaper than America.

Many Americans are also travelling to Mexico for cosmetic surgery on the cheap. While Mexico’s health service isn’t known for being world class, there are some decent surgeons and people are finding them through word of mouth. Of course there are some horror stories as well from Mexico, so don’t go unless you know.

Health Care and Life Expectancy

The Daily Mail writes,

More than 100 top doctors have signed an open letter to U.S. senators to counter ‘lies’ about the National Health Service.

…The doctors, including former president of the Royal College of Physicians Sir George Alberti and Professor Alan Maryon-Davis, president of the UK Faculty of Public Health, and patient groups, used their letter to point out that life expectancy is longer in the UK than the U.S. – showing, they claimed, it is a better system.

Pointing to a relatively lower American life expectancy as proof of a flawed health care system is a false argument.  “The problem with such international comparisons, Greg Mankiw explains, “is that there are a lot of differences among nations beyond their health systems. To make comparisons in health outcomes, you need to control for other variables. Without such controls, the simple correlations have little meaning.”

As John Stossel explains,

The WHO judged a country’s quality of health on life expectancy. But that’s a lousy measure of a health-care system. Many things that cause premature death have nothing do with medical care. We have far more fatal transportation accidents than other countries. That’s not a health-care problem. Similarly, our homicide rate is 10 times higher than in the U.K., eight times higher than in France, and five times greater than in Canada. When you adjust for these “fatal injury” rates, U.S. life expectancy is actually higher than in nearly every other industrialized nation.

Nobel laureate Gary Becker makes a similar argument:

National differences in life expectancies are a highly imperfect indicator of the effectiveness of health delivery systems. For example, life styles are important contributors to health, and the US fares poorly on many life style indicators, such as incidence of overweight and obese men, women, and teenagers. To get around such problems, some analysts compare not life expectancies but survival rates from different diseases. The US health system tends to look pretty good on these comparisons.

A study published in Lancet Oncology in 2007 calculates cancer survival rates for both men and women in the United States, the United Kingdom, and the European Union as a whole. The study claims that the most important determinants of cancer survival are early diagnosis, early treatment, and access to the best drugs, and that the United States does very well on all three criteria. Early diagnosis helps survival, but it may also distort the comparisons of five or even ten-year survival rates. In any case, the calculated five-year survival rates are much better in the US: they are about 65% for both men and women, while they are much lower in the other countries, especially for men. These apparent advantages in cancer survival rates are large enough to be worth a lot to persons having access to the American health system.

Several measures of the quality of life also favor the US. For example, hip and knee replacements, and cataract surgery, are far more readily available in the US than in Europe.

For even more on this, I highly recommend reading Greg Mankiw’s New York Times Op-Ed ‘Beyond Those Health Care Numbers.’

‘Show Me a Country Without Lawyers, Hobos and Fighting Politicians and I’ll Show You a Dictatorship’

Tim Cavanaugh from Reason writes,

As the healing begins after these terrifying three days when the words “You Lie” held America hostage, let’s round up a parliamentary-procedure control group to see how Yankee decorum stacks up against international standards:

Korea | United Kingdom | Ukraine | Taiwan | Russia | United Kingdom | Taiwan

How limiting the work week increases work

Tim Worstall of the Adam Smith Institute explains why capping the work week doesn’t reduce work, it simply reduces paid work,

There is, sadly, a terrible misconception about the world of work. This misconception leads to, as ignorance of the basics so often does, really rather bad policies being enacted. The misconception is that the only form of work we do is outside the home, the labour that we perform in offices and factories for cash and lucre under the lash of The Man.

This of course is not true, we all also work in the home, unpaid. There’s always the washing, the cleaning and cooking, the maintenance, the clearing of gutters and painting and so on. Some people enjoy these things, true, but then some also enjoy their paid work as well, and they are both work. Possibly the best description of what is work and what is not is the one used in time use surveys: work is whatever you could pay somone else to do for you*. You cannot pay someone else to sleep for you but you can to make your bed: you cannot pay someone else to eat for you but you can to cook, cannot to wash on your behalf but can for someone to wash you.

So in these time use surveys there are three basic classes of time: personal services, work (both inside and outside the home) and leisure. Those who have more leisure are those who are spending less hours in work, assuming that that personal part remains reasonably constant, as it does.

So what are the numbers for leisure in a country which deliberately restricts the paid for working week? Surely they have more than those who do not, no? Well, actually, no, France has an average of 4.28 hours of leisure a day for each adult while the UK has 5.08. The Americans, who everybody knows keep their noses to the grindstone, have 5.18.

The reason would seem to be that if people are denied the opportunity to work the paid hours they desire (possibly to then buy in parts of that unpaid household labour) then they will try to make up that desired income by unpaid household work. But the world of paid work, with its specialisation, leads to work being done more efficiently. Thus it is necessary to work longer hours inefficiently in order to reach the same desired outcome in material (ie, not just cash but goods and services) income. It is more efficient in the use of labour for the butcher to make the sausages in his factory than for every housewife to do so inexpertly at home, after all.

All of which leads me to a tentative and counter-intuitive conclusion. The laws which deliberately restrict the length of the working week actually increase the amount of hours of work done by those subject to them.

Another example of when intentions and results meet different ends.