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National Ratings – What Is The World Coming to?

August 24, 2011 5 comments

Examining governance records of selected ten premiere post-WWII governments across the world could throw up some surprises.

Momentum and direction is half the story. The Other Half is more difficult. (Cartoon by Bill Leak; Courtesy - cagle.com). Click for larger image.

Momentum and direction is half the story. The Other Half is more difficult. (Cartoon by Bill Leak; Courtesy - cagle.com). Click for larger image.

Any flavour – as long as it is socialism

With a global recession staring at the world, unemployment at record levels, gold prices in the stratosphere, there is need to understand where nations – and their country-models are going. Communism has failed, Capitalism died with end of African slavery – and in a world made of  socialist flavours, it may be worthwhile to understand what works – and for how long.

Maybe you should read more about भारत-तंत्र Bharat-tantra.

Performance and propaganda

If we are to examine governance records of selected ten premiere post-WWII governments across the world, a lot of State propaganda will stand exposed. To enable a broad understanding of national direction – based on historical milieu, current context and future prospects, a country Rating Engine is available.

10 nations have been chosen. Four from Europe (France, Germany, Italy and UK), two from South America (Argentina and Brazil) Japan and USA, China and India. Looking back at the 65 years after WWII (1945-2010), the context and strategies of these ten countries throws up some surprises.

10 Country Rating Engine

For purposes of this post, a 10-country snapshot has been presented with a Rating Engine. The Rating Engine can be used to measure performance on three parameters.

  1. Relative Decline or Rise From WWII-to Now

  2. Current Status

  3. Country Outlook Over the Next 10-25 Years.

Readers can do a country wise rating on these three parameters, for each country. Cumulative ratings will appear instantly.

USA – the world’s largest economy.

Rise or Decline (1945-2000)
Today
Future

With

  1. 25,000 tons of gold after WWII, now down to 8000-odd tons
  2. Bretton Woods system on its side
  3. World industrial base in shambles,

USA was the supreme power. Without a challenger.

Especially after the atomic bombs in Nagasaki and Hiroshima.

The same USA is a second rate power, mired with wars in Iraq and Afghanistan, battling economic stagnation, with the world’s largest prisoner base.

Run by an intrusive policing system with CIA, FBI, and sundry other agencies that snoop on its own citizen.

The place of the US dollar in the world trade system has been eclipsed.

With a

  1. Huge Welfare State
  2. High levels of crime
  3. Low marital levels
  4. A Big Brother State

the US Govt. employs between 25%-30% of its labour-force.

The largest government in the world, only after China.

Probably.

Britain – The Grand Phuski (or also The Great Damp Squib)

Rise or Decline (1945-2000)
Today
Future

Britain, a victor of WWII, a super-power in its own right, with its mighty industrial base intact, is now a shell of its former self.

Within two decades after loss of Indian raw-material sources and markets, British steel, shipbuilding, automobile, electrical, electronics, coal, railway industries collapsed.

North Sea Oil saved Britain in the 80s and 90s.

British sterling which was the world’s prime currency before WWII, is now not even in reckoning.

North Sea Oil is no longer a buffer or a significant opportunity.

Limited British industrial base is now captured non-British companies (like Tatas from India).

Labour supply managed by high immigrant population is proving difficult to integrate.

With: –

  1. Gross National Debt (Govt, Corporate &Individual) at 500% of GDP
  2. Low marital rates
  3. High imprisonment levels
  4. Bloated Welfare State,

the British economy faces a bleak future.

To this add, the threat of Scottish secession.

Argentina – The Land Of Missed Opportunities

Rise or Decline (1945-2000)
Today
Future

Unaffected by WWII, Argentina, became a major food producer and exporter – especially to UK.

A raw material giant from 1900-1950, Argentina descended into

  1. Military dictatorships
  2. Economic stagnation

to be finally eclipsed by its Latin American neighbour, Brazil.

In the last 20 years, Argentina has seen: –

  1. Mediocre economic performance
  2. Debt default
  3. Bad fiscal position

This makes the current position of Argentina no better than yesterday.

Argentina’s polity has been served by husband-wife teams of Juan and Eva Peron earlier, and now by Nestor and Cristina Kirchner.

With no special economic advantage, Argentina’s struggle for relevance continues.

Argentina’s exports of soybean and corn were significant. Argentina’s industrial and agricultural base give it no special place or advantage.

Inflation (exceeding 100% at times) has been an endemic problem in Argentina for most of the last 60 years.

Brazilian Success – Resounding and Recent

Rise or Decline (1945-2000)
Today
Future

Brazil success built partly on agriculture, raw-material mining, and a BPO sector – and long-term public policy decisions like the use of ethanol instead of petrol for cars.

A freshly minted democracy after years of military rule has stabilized Brazil’s political scene. From 1930-1945, Brazil was ruled by a military junta which was reestablished in 1964, to continue till 1985.

Brazil’s governance model is too recent to merit any credit.

Wealth disparities between the landed and wealthy and the poor, landless, employed or unemployed have been persistent and stubborn.

The ethanol industry has soaked up large amounts of subsidies – and finally may turn out to be a waste, as natural gas seems like a cheaper and feasible alternative.

Brazil’s

  1. Activism in multi-lateral forums
  2. Vibrant agricultural sector
  3. Comfortable foreign exchange position
  4. Smooth transfer of power
  5. Low-risk of war-and-conflict reduces defence burden.

positive points for Brazil’s future.

The French Success Model

Rise or Decline (1945-2000)
Today
Future

French success is based on two very interesting devices. One is the creation of a democratic dictator who can have only one final challenger in the election – till recently, only once in seven years.

The other French innovation was to create a vast public sector economy with government bureaucrats.

 

French private sector is an oligarchy with deep links between French banks and industry and vast subsidies to its agricultural sector.

French auto, aerospace, defence, electronics industries remains competitive and significant.

French fiscal and debt situation while under control is not in the pink of health.

 

French agriculture based on huge subsidies not sustainable.

Managing public sector economy, using a large bureaucracy, with low-levels of entrepreneurial activity with low-cost migrant labour and a Welfare State, is not the most alluring model.

Integration of immigrants into the French society may be an issue

Loser’s Miracle

The three most ‘impressive’ examples of economic resurgence have been the losers of WWII – Germany, Italy and Japan. Significant industrial nations before WWII, it is no co-incidence that these three economies came together on one side to fight WWII – against colonial powers, Britain and France.

The Japanese Miracle

Rise or Decline (1945-2000)
Today
Future

Japan’s airforce in WWII used its own Zero fighters (Mitsubishi A6M1); a significant industrial power by 1920s

Japan’s textile industry was a dominant player in the world from 1920’s-1970s; a major buyer of Indian cotton and exporter of polyester sarees in the 1970’s;

Toyota was a textile machinery firm, Toyoda

 

Japan’s

  1. 20 years of stagnation
  2. Aging population
  3. Uncertain economic outlook
  4. Dependence on exports to USA
  5. Government debt of more than 200% of GDP
  6. Focus on ‘developed’ markets

makes the Japanese ‘miracle’ questionable

 

With low traction in: –

  1. Emerging economies like India, China, Brazil
  2. In new sectors like software, internet

With an

  1. Aging population
  2. Stagnant markets (like USA and EU) for Japanese exports

Japan’s future seems cloudy – if not bleak.

The Italian Job

Rise or Decline (1945-2000)
Today
Future

Italy, one of the three losers in WWII, built itself with a vibrant private sector based on

  1. Food, wine, luxury items, hi-technology
  2. And a small number of public sector firms.

Inspite of

  1. Frequent changes in coalition governments from 1945-1990, due to unstable coalition politics

 

 

Italy’s vibrant private sector

  1. Hobbled by an over-valued Euro
  2. Compromised by unstable banking

Italian public sector in telecom, heavy engineering, energy,  (like ENI, ENEL, Telecom Italia) does not dominate the economy like in France or Germany.

Few Italian companies make to the Global 500 companies- just about 10.

 

 

The Welfare State in Italy as not as efficient’ as the UK, USA, France or Germany.

The public sector too is weak.

With one large oligarchic Fiat, Italy is rather unique in that the common modern ill of MNC-Government oligarchy seems to be weak in Italy

Italy’s dominance of luxury and design businesses has only France as competition

The Rise and Rise of Germany

Rise or Decline (1945-2000)
Today
Future

Germany’s

  1. Vast & competitive public-sector
  2. Export growth, in spite of an overpaid labour force, an over-valued Euro,

is without parallel in Europe – or anywhere else.

 

It must however be remembered that Germany’s

  1. Security
  2. Political structures
  3. Democracy

was imposed on it after WWII.

German reconstruction was bankrolled by the Marshall Plan – the US aid plan for Europe.

German smooth integration of East Germany is a plus

 

Germany’s technology prowess has consistently outperformed the world, without

  1. Mass slavery
  2. Captive markets,
  3. Colonies
  4. Military plunder
  5. Low cost labour

in 20th century.

Unlike Britain or France.

China – The Jade Garden Blooms Again

Rise or Decline (1945-2000)
Today
Future

Mao’s China has gone through two major famines.

During the Great Leap Forward and the Cultural Revolution.

The Communist Party reinforced control using the Tiananmen Square Suppression.

 

China’s growth based on: –

Favorable yuan-dollar exchange rate; earlier used by Europe, Japan, Asian Tigers to grow.

Low labour costs

At a huge non-apparent costs on environment, health, lifestyle

 

China’s dependence on exports to the US markets, favorable exchange rate, clouds its economic and political outlook.

Can it keep Tibet under its control, using its army?

Can Xinjiang be ‘pacified’?

.

India – What is The Difference

Rise or Decline (1945-2000)
Today
Future

India’s

  1. Top-class entrepreneurs
  2. Competitive economy without a dollar-crutch
  3. Vast agricultural output
  4. Small-sized government
  5. Public sector in retreat
  6. Are clouded by rise of an oligarchy.

 

Peaceful changes in elected governments for more than 60 years is unprecedented for a country close to this size.

Except the USA.

Most importantly, India’s stable social structure based on universal marriage makes it unique among all other countries of the world.

Plus a young population.

 

India’s creation of a

  1. Modern industrial infrastructure
  2. Change in governments,
  3. Market-economy systems (stock and foreign exchange markets)

is without parallel or example in the last 200 years – with its religious, genetic, racial, economic, diversity.

Karl Marx on the opium trade

June 7, 2011 1 comment
Faced with a labour crisis after slave revolts, Europe (specially England) needed alternatives for a new 'slavery' model. A fugitive theorist - Karl Marx. Capitalists and capitalist nations of Europe loved – especially the USA.. Click for bigger image.

Faced with a labour crisis after slave revolts, Europe (specially England) needed alternatives for a new 'slavery' model. A fugitive theorist - Karl Marx gave a model for 'slavery'. Capitalists and capitalist nations of Europe loved – especially the USA.. Click for bigger image.

Marx on the Opium trade

Some 150 years later, Karl Marx’s commentary on the opium trade remains relevant.

Much loved by the capitalists of his time, Karl Marx analyzed opium trade well.

Nurtured by the East India Company, vainly combated by the Central Government at Pekin, the opium trade gradually assumed larger proportions, until it absorbed about $2,500,000 in 1816. The throwing open in that year of the Indian commerce gave a new and powerful stimulus to the operations of the English contrabandists.

In 1820, the number of chests smuggled into China increased to 5,147; in 1821 to 7,000, and in 1824 to 12,639. Meanwhile, the Chinese Government, at the same time addressed threatening remonstrances to the foreign merchants, punished the Hong Kong merchants, (with) more stringent measures. The final result, like that in 1794, was to drive the opium depots from a precarious to a more convenient basis of operations.

The trade shifted hands, and passed to a lower class of men, prepared to carry it on at all hazards and by whatever means. Thanks to the greater facilities thus afforded, the opium trade increased during the ten years from 1824 to 1834 from 12,639 to 21,785 chests.

The year 1834 marks an epoch in opium trade. The East India Company lost its privilege of trading (and) had to discontinue and abstain from all commercial business whatever. It being thus transformed from a mercantile into a merely government establishment, the trade to China became completely thrown open to English private enterprise which pushed on with such vigour that, in 1837, 39,000 chests of opium, valued at $25,000,000, were successfully smuggled into China, despite the desperate resistance of the Celestial Government.

We cannot leave without singling one flagrant self-contradiction of the Christianity-canting and civilization-mongering British Government. In its imperial capacity it affects to be a thorough stranger to the contraband opium trade, and even to enter into treaties proscribing it.

Yet, in its Indian capacity, it forces the opium cultivation upon Bengal, to the great damage of the productive resources of that country; compels one part of the Indian ryots to engage in the poppy culture; entices another part into the same by dint of money advances; keeps the wholesale manufacture of the deleterious drug a close monopoly in its hands; watches by a whole army of official spies its growth, its delivery at appointed places, its inspissation and preparation for the taste of the Chinese consumers, its formation into packages especially adapted to the conveniency of smuggling, and finally its conveyance to Calcutta, where it is put up at auction at the Government sales, and made over by the State officers to the speculators, thence to pass into the hands of the contrabandists who land it in China.

The chest costing the British Government about 250 rupees is sold at the Calcutta auction mart at a price ranging from 1,210 to 1,600 rupees. But, not yet satisfied with this matter-of-fact complicity, the same Government, to this hour, enters into express profit and loss accounts with the merchants and shippers, who embark in the hazardous operation of poisoning an empire.

The Indian finances of the British Government have, in fact, been made to depend not only on the opium trade with China, but on the contraband character of that trade. Were the Chinese Government to legalize the opium trade simultaneously with tolerating the cultivation of the poppy in China, the Anglo-Indian exchequer would experience a serious catastrophe. While openly preaching free trade in poison. it secretly defends the monopoly of its manufacture. Whenever we look closely into the nature of British free trade, monopoly is pretty generally found to lie at the bottom of its “freedom.” (via Karl Marx in New York Daily Tribune Articles On China, 1853-1860 Free Trade and Monopoly; linking text in parentheses supplied; parts excised for brevity and relevance).

Charge of the lite brigade

The nature of the political beast is the same. Welcome to globalization of ideology. A standardized world. No difference at all!

It has been Post WW2 belief that Economic planning and State intervention will work. (Artist - David Low; (1891-1963) Published - Evening Standard, 26 Jun 1944).

It has been Post WW2 belief that economic planning and State intervention will work. (Artist - David Low; (1891-1963) Published - Evening Standard, 26 Jun 1944).

Low-cal, idea-lite brigade

With a collapsing economic base, changing power equations, their social superiority in tatters, the West has created a corps of propagandists, whose  job it is to create red herrings and  dead-end arguments. These content-lite ideologues, manage to put many ‘victims’ on the defensive.

For the past few quarters, we have seen a rising tide of co-ordinated attacks on China, using right-wing Christian rhetoric, from pit-bulls like Hugh Hendry, Jim Chanos, with the Charlie Rose show chiming in, aided by ‘think-tanks’ like CFR.

A recent column, deals with one such nuisance. A banker-economist-columnist, Abheek Barman writes about Ian Bremmer and his latest ‘theses’ about ‘state capitalism.’

Ian Bremmer, a pundit who analyses global political risks at the Eurasia Group, has recently argued that giant companies, backed by governments, are out to capture free markets. Among others, he identifies China, Russia, Brazil – and India – as candidates that practice ‘state capitalism.’

Western auto industry

Is the French and German auto industry anything but State controlled. With governing boards packed with representatives of the various Landesbanks, union representatives, where does private sector classification come from.

'Confidence of the voter' is always useful and preferred. In case it is absent ... does it matter? (Artist RJ Matson - from Roll Call, Date - 7/21/2010 4.02.01 PM).

'Confidence of the voter' is always useful and preferred. In case it is absent ... does it matter? (Artist RJ Matson - from Roll Call, Date - 7/21/2010 4.02.01 PM).

Are we forgetting how Europe’s largest auto-manufacturer Volkswagen, was set up by State initiative? Or how Renault was saved from the ignominy of ‘Nazi’ collaboration by State initiative? How long would the Agnelli Empire last without State support? Are we not forgetting how Chrysler has been saved several times by US State guarantees – and now GM, too!

Banks on a dole queue

A Swiss survey estimates that the Western banks may need US$1.5 trillion in capital-support. Would Mr.Bremmer like to name the likely source for these funds? French banking is public-sector controlled – which in turn controls French industry. Are we saying that Alsthom, ENI and ANSALDO are private creatures!

In the USA, the heavy-hand of the State was plain and for all to see in the handling of LTCM, WaMU, Bear Sterns, Lehman Brothers. Can anyone forget how Robert Rubin, Hank Paulson, Alan Greenspan all had a distinguished private-sector career (mostly at Goldman Sachs) – before and after their positions in the US Government.

Ian Bremmer frequently faults the ‘sovereign funds’ as a ‘marker’ of the State Capitalism’. Are BofA, Citibank, JP Morgan-Chase, RBS, Barclay’s, Credit Lyonnais, Credit Agricole anything but sovereign funds by another name? Was the Western housing bubble anything but an ‘efficient’ cash-tranfer mechanism? US-Fed printed money and the banks distributed – and the State bailed out the banks. A welfare scheme by another name.

And no! I solemnly declare that there was and is no conflict of interest in all this.

Voter apathy is the real objective behind the mock-fights and pseudo-competition - a facade for collusive power-sharing. (Artist - Jeff Parker, from Florida Today, 7/30/2010, 2.02.01 PM)

Voter apathy is the real objective behind the mock-fights and pseudo-competition - a facade for collusive power-sharing. (Artist - Jeff Parker, from Florida Today, 7/30/2010, 2.02.01 PM)

The incestuous bureaucracy

This kind of co-ordination, without an explicit policy, is possible in a close-knit, group, which has a shared value system, and is accepted by the general population. National bureaucracies have followed similar paths across nations.

What is good for General Motors is good for America. In the USA, Fortune 500 corporations, Wall Street firms, top banks serve as recruiting and training grounds for top bureaucrats. In China and the ex-USSR, the overtly political Communist Party was the training and recruiting ground for bureaucrats.

In most other countries, certain ‘secular’ institutions covertly work as training and recruiting rounds for creating an aligned bureaucracy. Top Japanese and French bureaucrats strangely come from one university. For instance, in Japan from The University of Tokyo, Law Faculty and the French ‘enarques’ cut their teeth at Ecole National d’Administration (ENA). The role of Oxbridge in the British Government cannot be understated.

Making the 'right' noises is 'modern' politics! (Artist - Peter Brookes, Published - The Times, 21 Sep 2002).

Making the 'right' noises is 'modern' politics! (Artist - Peter Brookes, Published - The Times, 21 Sep 2002).

Between 1900 and 1986, 45 per cent of permanent secretaries –or administrative heads of government departments –came from Oxford, 23 per cent from Cambridge.

Like Secretary Hillary Clinton correctly pointed out to business leaders in Pakistan, “we tax everything that moves and doesn’t move, and that’s not what we see happening in Pakistan.” Compared to G7, the share of the State in the BRIC nations would be less than 25% of the national GDP.

The nature of the beast is the same, Mr.Bremer. And this goes for you too, Mr.Barman. The world, these days has become ideologically standardized. Welcome to globalization. No difference at all!

And to think! Ian Bremmer accuses the BRIC countries of practicing ‘state capitalism’. Mr.Bremmer, these arguments are futile. Much like the futile British charge of the Light Brigade in the Crimean War, against the Russians. Like the French general said, it is C’est magnifique, mais ce n’est pas la guerre, c’est de la folie. (It is magnificent, but it is not war, it is folly).

Extract from Ian Bremmer in Foreign Affairs

From The End of the Free Market | The Call.

A generation ago, the collapse of communism made clear that government can’t simply mandate lasting economic growth. To fuel the rising prosperity on which their long-term survival will depend, political leaders in China, Russia, the Arab monarchies of the Persian Gulf and other authoritarian states have accepted that they have to embrace market-based capitalism. But if they leave it entirely to market forces to determine winners and losers, they run the risk of enriching those who will use their new wealth to challenge the state’s power.

Instead, they have embraced state capitalism. Within these countries, political elites use state-owned and politically loyal, privately owned companies to dominate entire economic sectors — like oil, natural gas, aviation, shipping, power generation, arms production, telecommunications, metals, minerals, petrochem­icals, and other industries. They finance all these institutions with the help of increasingly large pools of surplus foreign cash known as sovereign wealth funds.

State capitalism isn’t an ideology. It’s more a set of management principles. It can never match the hold that communism once had on the popular imagination, because it wasn’t born as a response to injustice. It was created to maximize political leverage and state profits, not to right historical wrongs. The system is not the same from one country to another, because the ruling elites in Beijing, Moscow, and Riyadh use it to meet distinctly different sets of needs. And no two state capitalist governments can ever fully align their interests. By its very nature, it’s exclusionary; like mercantilism, it promotes one state at the expense of others. That’s why there can’t really be any kind of “state capitalist consensus.”

Instead, you get client states — mainly smaller Asian countries in China’s shadow and energy exporting governments in Africa and Latin America badly in need of friends with deep pockets. Brazil, India and other big emerging markets that have elements of both free market and state capitalist systems have seats at the G20 table alongside some serious free market skeptics. The developed states don’t have much to offer them at the moment that looks attractive for their economic stability.


Emulate Gujarat’s agricultural success – The Economic Times

Talk is cheap ... data talks

Talk is cheap ... data talks

Gujarat is a drought-prone state, with an irrigation cover of just 36% of gross cropped area. Increased water supply from Sardar Sarovar project, higher investments in check-dams and watersheds (as of June 2007, a total of 2, 97,527 check dams, boribunds and Khet Talavadi (farm ponds) had been constructed by the state in cooperation with NGOs and the private sector), and of course, good rainfall for the past few years has helped propel growth. (via Emulate Gujarat’s agricultural success- Policy-Opinion-The Economic Times).

Indian economic model

There is something interesting in the state of Gujarat. Sometime back there was a status report on finances of all state governments in India. The difference between Gujarat and the Rest of India was stark and telling. Very impressive.

While we have Westernized ‘experts’ saying that Indian agriculture is a dead end – and promoting a line of ‘there is no option apart from mega projects’, we have here in Gujarat the real solution to agriculture and water management. The Gujarat solution, which has been India’s way of managing water. Effectively, at a low cost, under the control of the people who use it and need it. Indian agriculture has a bright future – these ‘experts’ notwithstanding.

Which makes me think.

With Chief Minster’s like Yeddyurappa in the South and Narendra Modi fom the West, what BJP needs is two more Chief Ministers. One for the North and one for the East. To break the logjam at the national level. The last two electoral defeats at the national levels has seen BJP in disarray.

But at the state level it is a different story. More power to such Chief Ministers.

Where Marx comes alive – Pallavi Aiyar

August 9, 2009 1 comment

For greater good of the most many ...

For greater good of the most many ...

perhaps nothing exemplifies European socialism more than the maze of regulations governing the retail trade in Belgium. It took a panel of five young government officials from the Directorate for Regulation and Organisation of the Market, armed with pages of notes, to explain the main highlights of these to me.

This is what I learnt: In Belgium, shops can only legally go on ‘sale’ twice a year, in January and July. It is only during these periods that shops may sell goods at below cost or ‘extremely reduced’ profit. For six weeks before the sales period, shops may not advertise price reductions.

Although offering discounts (as long as these do not amount to a loss) is legal at other times of the year, for a month before the biannual sales, textiles, shoes and leather products may not be discounted at all. Moreover, the sales are reserved for the ‘seasonal renewal’ of stock, so products deemed non-seasonal may not be included in the sale. Sofas, for example, are considered seasonal but antiques are not.

To implement all of this, two hundred-odd inspectors from the Directorate wander around the country inspecting and many complaints regarding non-compliance are also phoned in.

The rationale behind this mountain of red tape is the protection of small and medium enterprises (SMEs) which it is believed would go bankrupt if big retail were to be allowed to dump in an unrestrained manner. (via Pallavi Aiyar: Where Marx comes alive).

Europe has come a full circle!

The State has slowly and surely, completely taken over. The hard-fought liberties, the Magna Cartas, the Liberté, Egalité, Fraternité, have been in vain. The people have just stepped up to the dias and handed over all the power back to the State. The much touted Renaissance and Reformation have all come to nought.

For the Rest of the World, what is truly a cause of anxiety is that the East seems to be embracing Western political ideology and constructs with reckless enthusiasm – in their quest for ‘progress’ and ‘modernity’. And the public sector behemoths may yet cause some damage.

Remember the East India Company – a public sector company.

Mercantilism reconsidered by Dani Rodrik

July 28, 2009 1 comment

Healthcare is killing

Healthcare is killing

the mercantilist mindset provides policymakers with some important advantages: better feedback about the constraints and opportunities that private economic activity faces, and the ability to create a sense of national purpose around economic goals. There is much that liberals can learn from it.

Indeed, the inability to see the advantages of close state-business relations is the blind spot of modern economic liberalism. Just look at how the search for the causes of the financial crisis has played out in the US. Current conventional wisdom places the blame squarely on the close ties that developed between policymakers and the financial industry in recent decades. For textbook liberals, the state should have kept its distance, acting purely as Platonic guardians of consumer sovereignty. (via Dani Rodrik: Mercantilism reconsidered).

Public sector or oblivion?

During the Great Depression, more than 19 auto companies (similar to the number of banks today) were folded into the Big 3. The Big 3 lived to fight for another 70 years. In their death throes, the US Big Auto is likely to go the way European auto sector has gone – public sector or oblivion.

What is on the table

Hobsons choice?

Hobson's choice?

2 out of the G-7 countries are bankrupt – US and Britain. Their industrial base was supported by raw materials and captive markets – acquired by genocide, and the loot of centuries.

France, Germany, Canada, Italy  and Australia (not in G7) are tethering on the brink – under the weight of their social security system, and most of their business is in the public sector. A geriatric Japan is dependent almost entirely on exports to these declining seven. Japan’s investment in India and China has been negligible.

Real low … real truth (seen an oxymoron like that?)

The real question – who will pay for this financial crisis?

Not the Americans! No siree. Definitely not. Neither the American super-rich or the American welfare-poor! Not the American tax payers or the American tax evaders? Not the American Whites or the American Blacks?

It is the Chinese, the Russians, Indians, Brazilians, and above all, the Africans, who will pay for these bailouts! They (BRICS+Africa) have done, what bankers call non-recourse lending! The Chinese, Russians, Indians, Brazilians and the Africans, have no recourse. Who will the Chinese go to, for redeeming their US$2 trillion? The bankrupt US of A?

Welcome to the real world.

US economic outlook

How the West can become competitive?

How can the West become competitive?

US auto is down – but not yet out. It will limp along for few more decades. The US is still the prime force in the computing industry – though not on the manufacturing side. US oil industry no longer dominates international markets the way they did in mid-20th century. The US nuclear industry faces increasing competition from a public sector French and Russian industry. The seemingly strong position of the US in agriculture is based on two aspects. Massive direct subsidies – of more than 8 billion dollars. And indirect subsidies of possibly another US$ 8 billion. Most of which goes to the 46000 farmers who account for 50% of the US agricultural production. The communication sector has again seen the erosion of US competitiveness – with the domination of GSM technology seemingly solid for another 10-15 years. The global financial markets were dominated by the US organizations in the past – but with the global financial crisis and the end to dollar dominance may see reduced clout for US firms.

Big Government ... Big oil ...

Big Government ... Big oil ...

With such an economic outlook over the next 10-25 years, what the US leadership may focus on, is Arctic oil. Oil will remain a strategic asset only with high prices (slower production increase and faster demand growth) and if no other energy source appears. Oil finds in the Atlantic and Pacific republics may spoil the party – for instance, Cuban oil.

Much like the respite of the North Sea oil to Britain, Arctic oil may provide a temporary halt to the slide in US economic dominance. If the US can lay its hands on a significant part of it!

The other option is to nationalize the US economy. Like France, Germany and Italy. The economies of France, Germany and Italy are practically run by public sector monopolies – or subsidized behemoths, who make survival of competitors difficult by their ability to sustain losses – based on Government largesse.

The lure of ‘capitalism’ …

The Franco-German-Italian public sector model may be the only answer

The Franco-German-Italian public sector model may be the only answer

Why is the West so keen on calling these publc sector, subsidy driven regimes as Capitalism? Capitalism depended on looted capital and slave labour to prosper – resulting in the famous ‘laissez faire’ quip. Capitalists wanted and got ‘laissez faire’ capitalism – which was a ‘coda’ for unlimited slavery. The restrictions on laissez faire were actually restrictions on slaves.

Now under socialism, they get unlimited protection from ‘destructive’ competition. Which is being papered over by names like crony capitalism, free market capitalism. etc.,  etc.

After the multi-trillion dollar bailout, which has just begun, and with more than US$4 trillion with China, Japan, Russia and India, neither is the outcome certain nor is the outlook bright.

Last but not the least, we must remember the power wielded by the Chartered Companies of Europe – another word for public sector.  East India Company was a public sector company!

The Rest of the World needs to be careful of these public sector monsters!

Italian capitalism … French Capitalism .. German Capitalism …

May 13, 2009 3 comments

To hide the empty cupboard, new ‘isms’ and fresh ‘cracys’ are paraded. E.g. Crony capitalism, State capitalism and so on. As these balloons lose height, a new balloon is launched.

More than outsourcing, it a question of being competitive  |  Cartoon titled CEO Nightmare  on October 9th, 2008 by Barry Deutsch  |  Click for image.

More than outsourcing, it a question of being competitive | Cartoon titled CEO Nightmare on October 9th, 2008 by Barry Deutsch | Click for image.

The Agnellis were more than Fiat’s controlling shareholders. They have been the de facto royal family of Italian capitalism. Gianni Agnelli, the patriarch who died in 2003, was at the centre of a web the cross-shareholdings that gave a small group of entrepreneurs and bankers disproportionate power over Italian industry. The group was called the “salotto buono” (literally “the fine drawing room”).

The downturn has been tough on some of the old powerbrokers. Mediobanca, the investment bank disproportionately powerful because of its shareholdings, reported a plunge in profits after taking E281m of writedowns on strategic stakes in Telecom Italia and RCS Mediagroup.

But the old network might be replaced by something worse: “Berlusconism”. Silvio Berlusconi is prime minister, the richest man in Italy and master of most of the country’s media … Berlusconi has already meddled directly in the national airline, Alitalia and the national telephone operator, Telecom Italia. His indirect influence is even being felt in old bastions of financial power such as Mediobanca where his daughter recently won a board seat.

Italy did not do too badly with the “mixed” state-private economic model it followed postwar. But Berlusconi’s version seems to have a special twist. His record shows he likes talking about reform, but his actions reveal an unhealthy interest in furthering his personal empire. With Italian GDP predicted to shrink 4% this year, that approach is the last thing Italian business needs. (via Fiat’s dealing will change Italian capitalism).

Capitalism was always about controlling capital

Capitalism was always about controlling capital

Public sector economies of Europe

The economies of France, Germany and Italy are practically run by public sector monopolies – or subsidized behemoths, who make survival of competitors difficult by their ability to sustain losses – based on Government largesse.

Spain and Britain have all but collapsed! Which way will the US jump – will it also go the public sector way – go the Spanish way? By the way, the national industry in Spain these days is prostitution!

Which bring me to another question!

The lure of ‘capitalism’ …

Why is the West so keen on calling these public sector, subsidy driven regimes as Capitalism? Capitalism depended on looted capital and slave labour to prosper – resulting in the famous ‘laissez-faire’ quip. Capitalists wanted and got ‘laissez faire’ capitalism – which was a ‘coda’ for unlimited slavery. The restrictions on laissez-faire were actually restrictions on slaves.

Now under socialism, they get unlimited protection from ‘destructive’ competition. Which is being papered over by names like crony capitalism, free market capitalism. etc.,  etc.

Coverup .. Papered over .. Spit and polish ...

Coverup .. Papered over .. Spit and polish …

Look at Spain and Britain

Spain’s national industry today is prostitution. Britain is floating on the sewage of the Bretton Woods bilge! After the multi-trillion dollar bailout, which has just begun, and with more than US$4 trillion with China, Japan, Russia and India, neither is the outcome certain nor is the outlook bright.

Last but not the least, we must remember the power wielded by the Chartered Companies of Europe – another word for public sector.  East India Company was a public sector company!

The Rest of the World needs to be careful of these public sector monsters!

Public sector or oblivion

During the Great Depression, more than 19 auto companies (similar to the number of banks today) were folded into the Big 3. The Big 3 lived to fight for another 70 years. In their death throes, the US Big Auto is likely to go the way European auto sector has gone.

Public sector or oblivion.

Saddam lives (through his words)

The way it looks, it will mean the Mother Of All Mergers. At which point, there is no team of accountants in the world who can figure out what is where, or what condition what is in? And then the evasions, the lies the obfuscation can continue for some more decades?

Which model will US follow – public sector or closure? Subsidies or welfare?

Real low … real truth (seen an oxymoron like that?)

The real question – who will pay for it?

Not the Americans! No siree. Definitely not.

Will the Lilliputs manage a soft landing?

Will the Lilliputs manage a soft landing?

Neither the American super-rich or the American welfare-poor? Not the American tax payers or the American tax evaders? Not the American Whites or the American Blacks?

It is the Chinese, the Russians, Indians, Brazilians and above all the Africans will pay for this! They have done, what bankers call non-recourse lending! The Chinese, Russians, Indians, Brazilians and the Africans, have no recourse. Who will the Chinese go to, for redeeming their US$2 trillion?

The bankrupt US of A?

Welcome to the real world.


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