Export nationalism — MY COMMENT

by John Brian Shannon

Read Hans Kundnani’s article here.

The solution for more success cannot be aiming for less success!

But this is one of the counter-intuitive prescriptions being offered up to Eurozone members in order to stabilize an imbalance presently occurring between uber-successful Germany on the one hand — and the (economically, at least) failing Eurozone member nations on the other hand.

The astounding post-WWII success story named Germany is one that other nations in Europe should be emulating.

Instead of Germany trying to slow down to the speed of the other Euro nations — those nations should be gearing-up with German assistance, to become full partners in Germany’s success. Which will then become their success!

Let me say it another way. When one finds a good working model, one does not abandon that model – he seeks ways to improve on the performance of that model.

There is nothing wrong with the German model. I quote your words, Hans, to prove my point: “Germany will have a trade surplus of $220 billion in 2012 – bigger than any other country in the world, including China. (The institute predicts Germany will also have a trade surplus with China for the first time since 1988.) If there is a new “economic miracle”, it is one produced by exports.”

What needs to happen in Europe is harmonization with Germany — not the other way around, for such would be a slow spiral of economic death for the continent.

How would that work in practice? In this post, I describe but one way out of many possible ways to accomplish that goal.

All manufacturers know about ‘just-in-time-delivery‘ of parts to a manufacturing location. It is the time-tested method (and really, the only method in use nowadays) for cost-effective and profitable manufacturing, whether it be ‘white goods’, cars and trucks or electronics — among other manufactured goods.

The Euro nations need to produce billions of parts for German manufacturers and reliably deliver them in a timely fashion to German companies. This way, nations become part of their own solution and part of Germany’s success — which leads to an even greater Eurozone success story.

The ‘have not’ nations of Europe must become part of the solution, becoming ‘have’ nations in the process. And they can if they follow an outstanding (and longstanding) German success model.

In a larger context, the next 24 months may well be Europe’s coming-of-age moment, the place where it shakes off U.S. post-WWII control and direction to become a fully-fledged sovereign entity with a semblance of shared success and wealth – or it will begin a long, slow regression into what it once was, a collection of fractious, medieval states.

John Brian Shannon

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ABOUT JOHN BRIAN SHANNON

I write about green energy, sustainable development and economics. My blogs appear in the Arabian Gazette, EcoPoint, EnergyBoom, Huffington Post, United Nations Development Programme, WACSI — and other quality publications.

“It is important to assist all levels of government and the business community to find sustainable ways forward for industry and consumers.”

Green Energy blog: http://johnbrianshannon.com
Economics blog: https://jbsnews.wordpress.com
Twitter: @JBSCanada

Another Bank Bailout – MY COMMENT

by John Brian Shannon

MY COMMENT ON PROFESSOR PAUL KRUGMAN’S ARTICLE BEGINS…

The great sucking sound that everyone is hearing these days is the sound of capital leaving the Western economies by the billions – perhaps trillions of dollars – over the past few decades.

Money goes where the investments pay the best returns – and these days that means the BRIC countries (Brazil, Russia, India and China) and other rapidly developing economies. As uncountable billions leave the Western economies, the jobs attached to those mega-billions go with them. Is it any wonder then, that some of the weaker Western economies have been in free-fall for some time? No, it is not.

A great deal of lamenting has been gone on in recent months – but the geomacro-economy has been changing and will continue to change as it reflects the new and evolving reality, for one simple reason – “If we continue to do what we have been doing, we can continue to expect the same results.”

And what is that result, exactly?

I quote Professor Paul Krugman – arguably the leading economist alive today: “An old routine plays out in Spain, with the banks getting help while the unemployed continue to suffer.” Read Professor Krugman’s excellent article here…

Bought anything lately that ISN’T Made in China? Clothing labels or manufacturing stampings could also read Made in India, Indonesia, or any number of other fast-growing economies.

Our consumers demand lower-priced goods and services, so foreign nations have gratefully fulfilled those requirements – effectively transferring Western wealth to third-world nations in huge, glorious gobs of U.S. and European bank notes!

It is said in China these days that one must watch the sky carefully for all the Manna falling from Heaven – which is falling in the form of chunks of gold large enough to take out entire city blocks!

Lest you think this is a recent development, it all started in earnest about 1973 shortly before the Arab Oil Embargo, when oil prices suddenly shot up and Detroit’s thunderous, but thrilling V8’s became unaffordable for millions of workers in nations used to interstate highways serving distant suburbs, spirited driving on the autobahn, and long summer vacations involving hundreds of miles of travel.

Japan at the time and still to this day, exports huge numbers of cars to the West and enjoys a growing market share of (mostly) fuel-efficient vehicles – and the ones that can’t boast good fuel economy, can certainly brag about outstanding reliability and brand-loyalty.

Since the 1990’s, South Korea, China, Indonesia, India and others have also stepped up to fulfill the wants and needs of American and European consumers with everything from home appliances and personal electronics, to tools, clothing and just about anything else you might purchase. Lower labour rates and production costs in Japan, then Korea and now, China, India and Indonesia, allowed more R&D spending, better products and lower prices for consumers and business alike.

Of course, those are all great things. It has been a decades-long bonanza for consumers, businesses and even the governments of the Western world are able to lower their costs by purchasing cheaper and often, more reliable goods from Asia.

American and European corporations have gladly followed this trend and contributed mightily to those developing nations attempting to service the wants and needs of Western consumers. If you doubt me on this – just do a Google search on Apple Computer for just one of many examples of U.S. companies which have elected to have their goods manufactured in China or other rapidly growing nations, instead of the U.S. Check Apple’s stock price in 1990 (mostly U.S. production) vs 2011 (mostly Chinese production). Impressive by any standard but not unusual, in fact, this Western-inspired trend is well established and continues to this day.

One day soon, there will be no manufacturing capacity in the U.S., Canada or Europe. It is dramatically cheaper to have it all done inside the BRIC countries and export those products to the West. Costs are so low, that shipping millions of products thousands of miles across entire oceans, becomes a tiny factor of the final price paid at U.S. or European cash-registers.

The “real price” of that huge manufacturing shift continues to play out in the daily media – higher Western unemployment rates, longer welfare rolls, lower domestic production, real-estate bubbles, bank failures, bank bailouts and so far, about one decade of destroyed dreams for families and small businesses.

But, man, did I get a great deal at the mall today!

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