Category Archives: Economies

Should I stay or should I go?

The headlines on the KIA plant for West Georgia remind me of an old George and Gracie Burns routine where Gracie describes how her brother got run over by a truck.  Seems he was wearing two pairs of pants and the driver couldn't tell if he was coming or going (hey — the material is almost 70 years old!)

Anyway, here are the headlines:

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New Economy

Here, in a concise nutshell found in Tom Friedman's column today, is how the economy will work this century:

Mr. Raju said: "We told ourselves: if business process outsourcing can be done from cities in India to support cities in the developed world, why can't it be done by villages in India to support cities in India. … Things like processing employee records can be done from anywhere, so there is no reason it can't be done from a village." Satyam began with two villages a year ago and plans to scale up to 150.

There is enough bandwidth now, even reaching big Indian villages, to parcel out this work, and the villagers are very eager. "The attrition level is low, and the commitment levels high," Mr. Raju said. "It is a way of breathing economic life into villages." It gives educated villagers a chance to stay on the land, he said, and not have to migrate to the cities.

Any town, any place with bandwidth can play — but, you have got to have the knowledge workers to do it…

Of course, you also have to change the model for intellectualy property management.  Dana Blankenhorn nails it in his column defining Open Source:

Think about it. You make more money sharing your knowledge than trying to control it. You deliver more value, you sell more equipment, you earn more money through support and infrastructure, if you end your obsession with "Intellectual Property".

Postscript : Friedman's column talks about Google Finance – (which I posted a couple a months ago) as an idea conceived and executed by Indians.

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Proof Bush and Oil go together

Several authors have talked about the long history of the Bush family and oil.  Kevin Phillips in his latest book, American Theocracy, makes no bones about the fact that the current Middle East policy is in fact a geopolitical strategy devised by Dick Cheney on behalf of the Oil Industry in the late 90's.  But, if you have any doubts how the public feels about the price of gas and Bush — look at this graph, thanks to Political Insider, created by Stuart Eugene Thiel.  Any questions?

Bush gas price

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Restructuring the Economy

WSJ column by Andy Kessler, The Design Economy, posits that perhaps the stock market knows how the economy works better than we do as it zips past the behavior models we expect it to conform to.

Perhaps here's how the world works these days. No need to borrow billions and build big ethylene plants anymore. You invent something here (chip, movie, iPod, medicine, financial instrument), email the design overseas for manufacture in $1-an-hour factories (OK, not financial stuff), and then ship it back for consumption. Sure, this runs up trade deficits, and our precious dollars leave the country, but that's only half the story. Those dollars come back and invest in the U.S. Most go into long bonds, 10-years and 30-years. That's why Alan Greenspan left with a puzzled look on his face. Foreign buying is keeping long rates low; the yield curve is flat.

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Information, and access to it, Fundamentals for 21st Century Economic Development

That's what Bernanke says – (original source is today's WSJ — subscription required)

"Good data support community growth and development by helping to identify previously unrecognized market opportunities," Mr. Bernanke said. "Free markets can be a powerful source of economic development, but markets work less effectively when information about potential opportunities is absent or costly for private actors to obtain."

The WSJ is kind enough to provide the link to Mr. Bernanke's remarks found at the Federal Reserve site. 

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Perverting the Knowledge Economy: Patents

A Wall Street Journal column on what's wrong with patents makes this cogent observation:

The Constitution grants Congress the power to protect the rights of patent and copyright holders, but only "for limited times" and to "promote the progress of science and useful arts." It does not, by contrast, grant Congress the power to confer the right to real or personal property "to promote the cultivation of land" or "the accumulation of wealth."

If we don't return to that basis of intellectual property, we'll be nothing but a manufacturing station for Asian companies in very short time.

(If you ask nicely, I will email a copy of the article to you.  Otherwise, you need to purchase access)

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Incentives and 21st Century Companies

All the talk over the incentives given to KIA (See list from AJC) causes me to ponder what different high tech execs have told me are important incentives for them to locate a business:

  • Educated (as in engineeing, computer science) work force
  • Access to good infrastructure (as in multiple sources of connectivity)
  • Atmosphere (as in open, inclusive community with energy driven 24 hour activities)
  • A good library (as in books and numerous hard to find technical journal subscriptions
  • Access to Capital (as in local cash willing to take risk and not expect  immediate dividends)
  • Government that understands the need to avoid passing laws that restrict innovations

There are some others, but these were the most frequently mentioned.  Note that tax incentives, property, highways, rail heads and those other singular capital investments were not required.

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