Malasyia Implements Minimum Wage

Story first appeared in The New York Times.

At construction sites, plantations and factories, millions of low-income workers across Malaysia are set to receive a pay raise. Washington DC Labor and Employment Lawyers say that this is a huge step and improvement for the country.

About 3.2 million such workers are expected to benefit from the newly announced introduction of the country’s first minimum wage, part of the government’s plan to transform Malaysia into a high-income nation.

But reactions to the government’s decision to introduce a minimum wage varied Tuesday, with one economist dismissing the move as an election gimmick designed to appeal to workers before voting that many expect could be held as early as next month.

The minimum wage will be set at 900 ringgit per month, or $297, for workers on the Malaysian Peninsula, and 800 ringgit for those in the states of Sabah and Sarawak, on the island of Borneo, Prime Minister Najib Razak said late Monday, in announcing the details of the new legislation.

The lowest-paid will now be guaranteed an income that lifts them out of poverty and helps ensure that they can meet the rising cost of living.

The number of countries and territories in the Asia-Pacific region that have some form of minimum wage has grown in recent years, and now includes Cambodia, Hong Kong, Indonesia, Thailand and Vietnam. In some places, the minimum wage covers all workers, while other places have set minimum wages for specific regions or industries.

The Malaysian government is seeking to transform the country into a high-income nation by 2020, which would require the average annual income to rise to the equivalent of $15,000. Last month the per capita income had increased to $9,700 a year, up from $6,700 two years ago.

Most companies will be required to begin paying the minimum wage in six months, although companies with five workers or fewer will be given 12 months to comply.

Foreign workers will be entitled to the minimum wage, but it will not cover workers in the domestic sector, like maids and gardeners.

The union had been calling for a minimum wage for more than a decade. While the union initially asked for the minimum wage to be set at 1,200 ringgit a month, he said it had later revised its demand to 900 ringgit in an attempt to reach a compromise with the government and employers.

However, the opposition Socialist Party of Malaysia had called for a minimum wage of 1,500 ringgit a month. The party, which held a rally in Kuala Lumpur on Tuesday, criticized the government for not introducing the new rates immediately and said in a statement that it was discriminatory that there would be different rates for workers in different parts of the country.

The prime minister has said that the different rates were a reflection of regional variations in salaries and cost of living, according to news reports.

Employer groups say that paying the minimum wage would reduce companies’ profit margins and that some companies with five or fewer employees could be forced out of business.

It’s a big challenge is because the new rates are not really premised on increases in productivity or performance. This is a cost factor that has to be borne by employers, which eventually will affect their competitiveness.

Some companies might have to increase wages by as much as 100 percent. For instance, he said, some plantation workers in Sabah are currently paid about 400 ringgit a month, but that would increase to 800 ringgit under the new wage structure.

A professor in the economics faculty at the University of Malaya, said the introduction of a minimum wage could increase the cost of exports if companies passed the extra cost onto their customers.

The 900-ringgit monthly wage would be more significant for workers in rural areas than those in urban centers like Kuala Lumpur, where the cost of living has risen steeply in recent years. He added that in Malaysia, the rural vote is what puts the government in power.

There has been much speculation that a national election could be held in June, although the government has until April 2013 to hold the vote.

It was recently announced that civil servants would receive a pay raise and gave families earning less than 3,000 ringgit a month a one-time payment of 500 ringgit, a move expected to benefit four million households.


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Skype Investigating Anonymous IP Hackers

Story first appeared on Slash Gear.

Skype has said today that it is investigating a method that can discover a user’s last known IP address when using the VOIP service. Information on how to unearth IP addresses was posted to Pastebin several days ago, which involved downloading a modified version of Skype 5.5 and enabling debug log file creation in the Windows registry settings.

The method describes how to resolve a user’s IP address without them being on your contact list. With the patched version of Skype, you need only follow the instructions to add a Skype contact, but clicking on their generation information instead of adding them. The debug log file will then contain the public IP address of the user, which could lead to the discovery of their whereabouts thanks to WHOIS services.

Skype put out a statement via email saying that it was looking into the issue, which is apparently faced by all peer-to-peer software companies. Skype is committed to the safety of customers and developing applicable Security Solutions. 

It’s not the first time that Skype has acknowledged the issue: a research paper published in October showed how the IP address could be resolved and linked to BitTorrent usage.


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Sony Reaches Out to PS3 Hacker

Story first appeared in TG Daily.
A new interview with the infamous PS3 hacker reveals that at one point he had a confidential meeting with Sony.

The hacker is the subject of a new expose in the New Yorker, and it's revealed that after he reached a legal settlement with Sony, the company wanted to pick his brain.

He shot to online stardom last year as the center of attention in a highly publicized lawsuit from Sony. The hacker had been publishing information on how to hack the PS3, which Sony said was a violation of the console's terms of use.

Supporters said that Sony was going too far and had no reason to sue him. Attackers took down various Sony websites and servers in protest to the Hotz case.

Not everyone agreed, though. Some said he knowingly broke the rules, facilitated illegal software piracy, and should be tried to the full extent of the law.

In the end, the case was settled for less than a slap on the wrist. He merely had to agree to end his hacking exploits.

But a couple months later, Sony reached out to him and asked him all sorts of questions, hoping to gain insights that it could use to help the company prevent future attacks.

He said he was worried there would be lawyers present, but in fact he really just met with what he described as "respectful" PS3 engineers who wanted to learn from him.

The Sony SVP explained the meeting, saying that the last year had demonstrated how sophisticated cybercriminals can be. Sony is always interested in exploring all avenues to better safeguard our systems and protect consumers. This is a good example of why sophisticated Security Solutions are a must for businesses and corporations.

The hacker went on to land a job that most people would kill for - an engineering position at Facebook. But he ended up quitting because he didn't like the monotony of office life.


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Drillers May Be Allowed to Drill Before Disclosing Chemicals

Story first appeared in Bloomberg.

Natural-gas companies drilling on U.S. land would be permitted to wait until after hydraulic fracturing is completed to disclose what chemicals they used, under a draft rule being considered by the U.S. Interior Department.

A version in February required companies to file a complete chemical makeup at least 30 days before work began, something energy trade groups, including Washington-based American Exploration and Production Council, complained about. They said it could slow energy production on federal lands.

The President has pledged to increase U.S. natural gas production in a way that doesn’t hurt the environment. Hydraulic fracturing, or fracking, releases gas trapped in shale rock by injecting water, sand and chemicals thousands of feet underground. It’s used for almost every new natural-gas well drilled in the U.S. There is a concern that fracking could contaminate ground water reservoirs, and it is imperative that Fracking Expert Witnesses are on hand to make sure everything is being handled properly to avoid problems.

Requiring disclosure of chemicals would only be required after the fracturing operation has taken place, according to the draft, obtained by Bloomberg News.

The Washington-based Environmental Working Group said in February that some of the chemicals already disclosed by the companies are known to cause cancer or reproductive harm.

The Presidential administration plans to post the fracking information on a public website, possibly on FracFocus.org, according to the draft. FracFocus is managed by the Ground Water Protection Council and Interstate Oil and Gas Compact Commission.

API Guidelines

Draft rules are being developed with input from the public and industry, according to an administration official familiar with the rule’s development who declined to be identified because he isn’t authorized to discuss a matter still under development.

The rule, which also includes standards for well construction, is consistent with guidelines for well construction and integrity established by the American Petroleum Institute, the largest trade group representing the industry, according to the draft.

In the draft, the Interior Department said it doesn’t expect the additional requirements to slow approval of drilling permits.

While the president has praised natural-gas production as a source of hundreds of thousands of jobs over the next decade, critics in the industry say the regulations may be a first step toward broader federal oversight of fracking.

About a fifth of U.S. production occurs on U.S. government land, primarily in western states such as Colorado and Wyoming. With the rise in natural gas drilling, the interest in Workers Compensation Insurance has risen at an exponential level. Natural gas companies argue regulating the practice should be left to state authorities who are more familiar with the local geology.

States are effectively requiring disclosure, without discouraging investment. FracFocus, which is working very effectively, is an example of this and is being adapted by several states.

An Arkansas Hosting Company reports that the amount of hosting requests for sites against fracking has risen drastically.


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Rebalancing the Tax Code

Atlas won’t shrug.
That’s the view of some economists: They argue that higher taxes will not discourage the wealthy from working harder or slow the economy, unlike in Ayn Rand’s 1957 novel, “Atlas Shrugged.” Its hero, led a strike by industrialists and others against the government, partly because they thought they were too highly taxed.

The Top 1 percent earners now make 20 times the average, while they made only 10 times the average in the 1970s. If they worked hard then, they should continue working hard today, even if they are taxed at 50 percent. The top federal tax rate is now 35 percent.

The economists’ work is of more than just academic interest. The President’s former budget director has said that their research on income inequality helped to point the way for the administration in its pledge to rebalance the tax code. Senate Republicans last month blocked the president's plan to raise taxes on the rich via the so-called Buffet rule, arguing it would hurt the economy claiming that high marginal tax rates distort decisions to work, save, invest and start a business.

In France, the Socialist presidential candidate has called for a 75 percent tax on annual incomes of more than 1 million euros ($1.3 million), a proposal championed by a professor at the Paris School of Economics. Polls show him leading over the incumbent President in advance of May 6 elections.

‘Just Crazy’

The French professor asserts that the idea that we need to pay people many millions of euros per year to get them to work harder is just crazy.

He and a professor of economics at the University of California-Berkeley, agreed in a November 2011 paper that the rich do behave differently when their taxes are raised. They pursue financial strategies to reduce their taxable incomes and bargain for higher compensation, instead of cutting back on how much they work and save or becoming less entrepreneurial.

The man who won the 2010 Nobel Prize in economics, also sees little evidence that raising rates on the top 1 percent of income earners -- households making about $350,000 or more a year in 2010 -- would restrict growth.

‘Overwhelming Likelihood’

The overwhelming likelihood is that the revenue- maximizing federal tax rate is somewhere in the 50 to 70 percent range. If you are reluctant to overshoot, then you can only go up to 50 percent.

Lionized by Republicans, the late Ronald Reagan championed an across-the-board tax cut soon after he became president in 1981 that lowered the top rate to 50 percent from 70 percent. He subsequently pushed it to 28 percent as part of an overhaul of the tax code in 1986.

The economy actually grew faster in the 30 years before that tax cut than it did during the following three decades, according to experts. Gross domestic product per capita advanced at an average annual 2.2 percent rate between 1950 and 1980, compared with 1.7 percent between 1980 and 2010, their calculations show.

Internationally, advanced economies that have reduced top tax rates the most since 1975 haven’t shown a tendency to grow faster than those that cut less.

Data ignores such emerging-market economies as Brazil and India, which have lowered top tax rates and enjoyed faster growth than developed nations.

Brazil’s economy has expanded at an average annual pace of 3.6 percent since 2000, more than double the 17-nation euro area’s 1.4 percent.
The British government is worried enough about the economic impact of high taxes on the wealthy that it has said it will reduce its top rate to 45 percent next year from 50 percent now.

No government can justify a tax rate that damages our economy and raises next to nothing.

‘Reduced Work Effort’

It’s not only through “reduced work effort” by the rich that higher tax rates can hurt the economy. Stepped-up tax avoidance also can impede economic efficiency by diverting money and attention away from more productive purposes.

Such efforts -- which include taking more compensation in the form of tax-advantaged health-care benefits -- reduce revenue for the government and “increase deadweight losses” for the economy.

Very high top tax rates also may have long-run effects on growth that aren’t immediately discernible. New people coming into the labor force might decide it’s not worth it to try so hard to get ahead.

High taxes have depressed the labor supply in European economies, according to an expert economist, who argues that Americans generally work more hours because U.S. tax rates are lower. The result: U.S. inflation- adjusted GDP per capita in 2010 was about 40 percent higher than the average for the euro area, according to data from the Organization for Economic Cooperation and Development in Paris.

‘This is Nonsense’

Increases in top rates should be coupled with steps to close loopholes and broaden the tax base to limit the avoidance efforts Feldstein worries about.

Capital-gains taxes should be raised as well. That would discourage business leaders from trying to take more of their compensation in shares, rather than salary, to avoid paying higher income-tax rates. The top U.S. rate on long-term gains is 15 percent.

Taxes on capital and labor income earned by the wealthy “don’t have to match, but they should move together and shouldn’t be too far apart.

Hurt the Market

An increase would hurt the stock market and the economy. Because evidence suggests that higher dividend- and capital-gains taxes are capitalized in equity values, increasing those tax rates will reduce stock prices and the wealth of millions of Americans. A rise would discourage investment, leading to lower productivity, wages and output.

Based on data from tax returns, economists have concluded that the top 1 percent of U.S. earners have more than doubled their share of income during the last half century, to about 20 percent in 2010 from less than 10 percent in the 1970s.

The research says more about fluctuations in earnings reported for tax purposes in response to changes in the tax code than it does about inequality.

‘Increasing Inequality’

The general trend is still toward increasing inequality.

The Congressional Budget Office said in an October report that the share of income received by the top 1 percent grew from about 8 percent in 1979 to over 17 percent in 2007.

In its calculations, the Washington-based CBO takes account of government transfer payments, primarily from Social Security, and company-paid health-insurance benefits.

Even after those adjustments, the rapid growth of income for the top 1 percent remains “a major factor” contributing to growing inequality, the CBO report said.

That’s reflected in the Occupy Wall Street protest movement’s motto, “We are the 99 percent,” and its calls for a more even distribution of wealth.


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