Defla-inflation – the Answer to Europe’s Problems
The problem of stagnant economies! (Cartoonist - Chip Bok; published on 2005-06-05; source and courtesy - cartoonistgroup.com).
Curse of the ‘Strong-Euro’
Euro-zone would not have gotten itself into such a twist but for chasing the ‘strong’ Euro chimera.
An over-valued Euro made imports cheaper, gave excess inflows, liquidity, and the average Europeans abroad, a false sense of prosperity.
The strong Euro also made way for stagnating, indebted, deficit-prone economies of Europe.
Behind the ‘Strong-Euro’
Of course, Europe needed to make a success of the Euro. If the USA could ride on a dollar-float equal to US GDP, for the last 60 years (1950-2010), could EU be left standing, watching, inactive and hurting (as in envy).
USA let the Euro-Ride continue for the last 7 years (2002-2009) knowing that this can only result in a over-priced, stagnant, option-less Europe. Makes me wonder if Goldman Sachs acted alone in arranging all those off-book loans to Greece?
Hank Paulson … have you been naughty, again?
This may look like Bleak House on 'Bleaker' Street! But the situation ain't so bad. (Cartoonist Bruce Tinsley; Mallard Fillmore series; published on 2010-04-15; source and courtesy - cartoonistgroup.com).
A nervous Europe
Erosion of Western dominance makes Europe resort to underhand ideas, legalistic sleights of hand that stretch definitions and prolongs the war of attrition.
- With Indian and Chinese manufacturing on the roll a nervous Europe is stuck for answers.
- With Indian pharma and auto sectors challenging the world, Euro-powers are nervous and fidgety.
- With surging Chinese manufacturing, Europe has run out of answers.
- With an indifferent USAon one side and the economic expansion of Asia on the other side makes for one, very nervous Europe.
Luring Kenya, with an Uganda waiting in the wings, by the use of ‘incentives’ to create legal hurdles for pharma-imports is a demonstration of this strategy.
TRIPS recognises IPRs as territorial rights and IP is protected only in the jurisdiction where it is registered. However, Kenya’s recent Anti-Counterfeit Act even recognises IPRs protected in other countries . This would make generic goods imported into or transiting through Kenya illegal if a patent exists anywhere in the world. This has serious repercussions not only for Indian exports but also takes away right of Kenya to independently define patentability criteria based on its development requirements. This is also a loss for Kenya, which in initial stages of its development would be denied the opportunity of drawing innovation and encouraging economic growth within the country.
Many other African countries are being lured into the same trap. There were allegations that EU provided funds for a similar bill in Uganda. Such legislations would deny public access to generic drugs and make them dependent on monopoly of a few patent drug suppliers. Three AIDS victims had to move Kenya’s Constitutional Court against the Anti-Counterfeit Act for a stay on the grounds that it denied them access to generic anti-retroviral drugs and, thus, violated their Right to Life. (via Time to challenge plus-size IPRs-Comments & Analysis-Opinion-The Economic Times).
How will Europe get out of this pit?
How will Europe unwind this complex knot?
The way out for Europe will mean severe belt-tightening. Not an easy thing in easy times, belt-tightening is the bitter pill that Europe may need to swallow.
A mix of defla-inflation with Euro-devaluation will be needed to fix things for some time. Deflation in wages, property and stock prices, inflation in consumer prices combined with Euro devaluation below dollar parity may see Euro zone on the road to growth! Not an easy road!
Is it a wonder that you get to hear a stuck Europe, squealing!
Related articles
- China Rebuffs Hopes It Might Help Bail Out Europe (online.wsj.com)
- Europe Aiming To Ramp Up Crisis Fund As Other Nations Raise Alarm (huffingtonpost.com)
- Pastor to be extradited to Kenya accused of stealing babies (guardian.co.uk)
- Euro Crisis to Hurt Ireland’s Deficit-Cutting Efforts (online.wsj.com)
- The euro will survive (That’s not a typo) (money.cnn.com)
- Mandelson calls for Euro backing (independent.co.uk)
- Crisis, Wages Get Stuck in a Conundrum (online.wsj.com)
- Immi-grunts and Assimilation (behind2ndlook.wordpress.com)
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Who’s amung us
Quick Take - As It Happens 
Anuraag,
You chose the wrong example to make your point. I have been on both sides of the equation for HIV/AIDS drugs. That is a very simple case of daylight robbery.
Let me ask you a question. How would you feel if I were to take all the wonderful and original thinking in your posts on this blog, package them as my own and start benefitting financially and personally by selling them as my own ideas? Let’s leave alone the how you feel portion out. Would that be right and ethical?
That’s exactly what the drug manufacturers in India are doing. The drug companies in the West are spending billions of dollars to create Intellectual Property and develop these drug formulas. Indian companies are copying these formulas (sometimes doing such a bad job of copying that it creates more harm than good for the patients) and then selling these drugs internationally without paying any royalties to the companies from the West. Truth be told, 99.9% of modern medications have been developed in the West. India has developed no new therapies to speak of. Yet, the Indian government is protecting these copycats by not acknowledging the IP of these companies.
I acknowledge that the Indian manufacturers provide low cost manufacturing. The ideal solution is to leverage superior drug discovery skills of the West with the low cost manufacturing from India.
Interesting! Very!! You must take a 2ndlook at your above response!
You are assuming that
1. Research for these drug ‘discoveries’ was – original, standalone, pioneering, unique, path-breaking, trail-blazing, a paradigm-shift, etc.
2. Research is driven by – genius, talent, vision, insight, piercing gaze, etc.
I hope I have covered all the possible epithets.
Hogwash, I say to these two assumptions. Better still, the Indian concept of maya describes the above two assumptions. Research is based on two things – funds and an existing body of knowledge.
Period.
Asuric civilisations will always concentrate wealth in the hands of the few. These few
1. Will become patrons of research, learning.
2. Make the above two claims to continue the extraction on which their wealth and power is based
3. Create maya to sustain this extraction.
The Indic model of innovation is vastly different – and does not depend on this.
I am willing to concede that as an ‘interim’ measure, investors possibly do need ‘some’ protection for ‘some’ time to recoup their costs.
But the Western legal system, of ever-greening their research is ‘patently’ a fraud. No less. It deserves to be broken – and that too into small little pieces, and ground into dust.
Coming to my work – some of my readers and myself have discovered that ‘some’ of my output has indeed been ‘copied’, claimed as ‘original’ etc. I insist, a small amount. Where this has been ‘copied’ in spirit I am extremely happy. Where it is copied in letter, it is useless. It is of no help or harm to anyone.
But then my work, as of now, has limited commercial value. So, the comparison is surely irrelevant.
Anuraag,
I am willing to learn from you on this topic. Please elaborate:
1. Research for these drug ‘discoveries’ was – original, standalone, pioneering, unique, path-breaking, trail-blazing, a paradigm-shift, etc.
2. Research is driven by – genius, talent, vision, insight, piercing gaze, etc.
In this particular situation, should the innovator not benefit from the ” funds and existing body of knowledge” they have invested?
Also, your response begs the question:
What is the Indic model of innovation and how is it different from the “asuric” system? Please provide references for your information on the Indic model of innovation.
What will it take to go back to the Indic system? The results of the current system that exists in India are clearly nowhere close to the results (in terms of innovations in modern medicine) that the current Indian system has created.
I have an open mind on this and its good that you are knowledgable and opinionated on this topic. Its a great opportunity for me to learn.
To get a real flavor about this subject check out the Tesla and Edison rivalry to understand the problems with this approach. Or the dispute between Elisha Gray and Alexander Graham Bell. You may further want to check out the JC Bose’s work on radio transmission – on which Marconi’s work is based.
The other trend you must examine is how these patent disputes get resolved. Qualcomm and Nokia ended their dispute by cross-licensing each others technology. And that is how most of these litigations are resolved. This again creates barriers for ‘outsiders’.
This entire system creates disputes, false messiahs (an oxymoron, since messiahs can only be false) – and tools for extraction.
The creation of the existing body of knowledge is something that is done by many people over a vast span of time. Who will decide who contributed how much to which ‘innovation’. Can any technology be created without a zero! Who will settle this intellectual debt to the Indian who invented zero? With what, when and how?
Any significant innovation usually does give its creator a lead time to recoup his costs – unless cost itself is an entry barrier.
Asuric Slave Societies usually do have a higher costs structure – given their social and economic dynamics. And using this entry barrier, they also create a increasing rate of innovation. Witness the car industry. New models with old technology, with new trims, decreasing life spans, increased ecological footprint – all create an entry barrier, to keep others out.
For this you will need to wait.
This is a myth. Maybe I will concede advances in diagnostics. Modern medicine, my experience tells me, creates disease.
Recently, in 9 months, we normalized my nephew, who was suffering from nephrotic syndrome – without dialysis, hospitalization and steroids.
I look forward to learning from you about Indic method of innovation.
…Indic method of innovation was akin to the Open Source movement… individual contributors made a living out of it… but no one “owned” it… none of the contributions were “property” that could be owned…
The disadvantages are obvious… as you will point out – I’m sure. An example of the “intellectual property” successes are the scores of patents by Edison…
The advantages were simple… no one “owned” knowledge – and no inventor was an “employee” of someone else… in Edison’s case, he put his name on all the patents that his employees had invented… the “world” saw great inventions… but it would suck to be in the shoes of those employees…
Exactly.. The indian method of knowledge and innovation is akin to open source movement in the software industry.. ie, knowledge is in public domain, and everyone’s contribution is available to everyone else..
Also, the indic method of innovation by its very nature ensured that there was no monopoly/cartel etc which further ensured the price for the product or service was fair and justified, unlike the pharma companies of the west today.
Same is the story with Gunpowder. Indian manufacturing designers ensured that gunpowder technology was available in every village, and every child learned how to handle explosives – Diwali. Till the dawn of 20th century, India was the largest manufacturer of gunpowder.
Anurag,
Another point to note is that the jaathi setup ensured that these knowledge were passed on to successive generations for thousands of years.. the state education system broke this chain, and deprived the present generation of the knowledge their ancestors possessed.