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Manu-services: best of both worlds
The financial crisis has left behind many lessons for developed economies. Among the most widely accepted is the need for advanced economies to re-balance towards manufacturing and other export-intensive activities, reversing decades of relative decline in manufacturing. At times, the arguments in favour of manufacturing have taken on a moral character. We are often told that we need to get back to “making things”, replacing the dangerous alchemy of financial services with good, honest graft. This type of hand-wringing is not especially helpful, especially in a modern, diverse economy. Manufacturing is not important because it involves making things, but because it is highly export-intensive, innovative and productive (three things that all advanced economies desperately need at a time like this). But there is another problem with characterising manufacturing as being about just “making things”: in short, it isn’t. Modern manufacturing is an incredibly complex industry, which includes a wide range of different activities, from design and development to marketing and after-sales care. The Work Foundation’s report More than making things argued that much of the future growth in manufacturing will come from “manu-services”, which involves combining advanced manufacturing with a range of different services. Read more
China’s spoilt brats and America’s disappearing middle class
A recent afternoon brought one of those classes that all lecturers dread: Glazed eyes from one side of the room to the other, and mouths opening and closing in syncopated yawning. Time to tear up the lesson plan and throw out a question: “Hey, did you see the story about the rich kid who beat up that nice couple?” Dull eyes sharpen, slack jaws tighten. Yes, the students have heard about it and, what’s more, they have something to say. In case you missed the story, here’s what happened: On a recent evening, a middle-class couple was driving home in Beijing. Quite reasonably, they slowed to take a corner, forcing a couple of cars behind them to stop. Incensed, the drivers of the two following cars got out and beat them up. Road rage, but that was only the half of it: It turned out that one of the drivers was just 15 years old, which meant he was driving his car – a BMW – illegally. Not only that, he warned onlookers against intervening: “Who dares to call the police?” he supposedly shouted. His cockiness can probably be explained by his family connections: The boy is the son of a celebrity army general, Li Shuangjiang, who shows up regularly on TV to sing patriotic ditties. Read more
Steve, Clarence, Thomas and Topsy
We all agree that Steve Jobs was a marketing genius, persuading the gullible to pay extravagant prices for bright, shiny things because they’re bright and shiny. But unlike Thomas Edison, the man Jobs is often compared to, he never electrocuted an elephant. In 1903 Edison fried Topsy from Coney Island’s Luna Park and captured the event on film. Read more
Nobel Peace Price: Fighting for the victims
I saw Ellen Johnson Sirleaf, co-laureate of this year’s Nobel Peace Prize in Liberia’s capital Monrovia earlier in the year at this conference on peace-building and statebuilding. She shares the prize with another Liberian, peace activist Leymah Gbowee, and Yemeni journalist Tawakul Karman. The Nobel committee honoured them in recognition of what they’ve done of course, but also to draw attention to the place of women more generally in conflict and post-conflict situations. The Nobel prize draws attention to the fact that women and girls are often the main victims of war. Read more
Conflict minerals: demonise the criminals, not the miners
Stephen Groff’s article Conflict Minerals: Hands-Off is Not a Solution is remarkably naive and removed from the actual problem, and represents a pervasively uninformed and simplistic view of what is going on in the DR Congo. As a result of the Dodd-Frank Act’s demonization of minerals instead of criminals, exportation of the four minerals covered by the Act has nearly evaporated from the Congo. A recent article in The Economist says that 95% of mineral exports have evaporated, while Motorola’s Solution for Hope Project argues that “Tens of thousands of people in the DRC depend on artisanal mining, many operating in regions where conflict is not present. Their livelihoods and the economic stability of the region have been threatened by the de facto ban.”
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Comparative advantage: Doing what you do best
The mathematician Stanislaw Ulam did not have a high opinion of the social sciences. He once challenged Paul Samuelson, Nobel laureate in economics, to name one social science proposition that was both true and non-trivial. Samuelson nominated comparative advantage. The absolute advantage Adam Smith talks about is simple and intuitive: it makes obvious sense for France to export wine to Scotland and import Scotch whisky. Comparative advantage is much more complicated. Ricardo introduced the notion in his 1817 book On the Principles of Political Economy and Taxation, using the example of England and Portugal and the production of cloth and wine. Two centuries after Ricardo, can comparative advantage still provide useful guidance to policy makers? A new working paper from OECD’s Przemyslaw Kowalski argues that it can. Read more
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