Beauty Can Get Ugly

Dear rss free blog,

We need a woman heading the Senate as well as the House of Representatives. This is my reaction to the sexist proposal to slap an excise tax on cosmetic surgery to finance healthcare reform. We need women in our upper house. A jab of Botox, a breast enhancement operation, some work under the eyes, will be taxed at 5%, an outrage by the male Solons of the Senate.

While sometimes men pay for their significant others’ operations, it is almost always women getting cosmetically enhanced. Except for the occasional gynoplasty or hair implants, women’s happiness and success in life depends on their looks. Attractiveness pays off for the ladies, so why should they be taxed for this?

There will be a great rise in Yankee medical tourism, already luring seekers after beautification to operating rooms in Czech Republic… or Brazil. In fact, the Brazilian problems of an appreciating currency will become worse with more beauty-seekers coming to Rio for a bit of improvement and a vacation.

So in addition to a Tobin tax on foreign investment inflows and another tax to stop evasion of the first through the market for American Depositary Receipts, Brazil may have to intervene again for the beauty market.

Which way will Brasilia go? will it subsidize the dermatologists and surgeons, who after all count as exporters under trade rules? Is this an appropriate way to spend money for what is after all a poor developing country?

That sounds wrong. But without some intervention to favor beauty intervention, Brazil may wind up priced out of the market by the rising Real. Cosmetic interventions will be done in Thailand or Argentina instead, and their currencies will get an unwelcome boost as a result.

Beauty can get ugly. Attractiveness can hurt investment destination countries if it stops their exports.

As can be seen, Brazil’s problems are not unique. Other attractive emerging markets are also fighting against appreciating currency levels although few have seen their money go up as fast as the Real. We all know about the bickering over the link up of the renminbi to the greenback, which keeps China’s exports cheap. So other countries are also doing their best to keep their currencies from appreciating. Different tactics are being tried.

Russia buys currency on the spot market. Taiwan stops foreigners placing money in Taiwanese dollars with short-term deposits. India is trying to increase the non-ADR ownership of its leading banks.

A note to reader David B. who complained about my blog yesterday about the price of gold and platinum for jewelery. He writes that platinum is not cheaper than gold by the ounce. It is an industrial metal with use in automobiles, so its price has appreciated much more slowly than the price of gold this year. Gold has fewer industrial uses and its price has soared despite the economic downturn as it is used for jewelry and investment.

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