$2000 CAR FROM INDIA SLAMS NORTHERN AUTOMAKERS’ RENT-SEEKING

$2000 CAR FROM INDIA SLAMS NORTHERN AUTOMAKERS’ RENT-SEEKING

 

Erle Frayne D. Argonza

 

Good morning from the suburbs south of Manila!

 

To continue with our exciting news for the ‘ember’ months, let me share some reflections about the recently released people’s car from India. The array of new innovations goes longer than that, with the car serving as the icing in the cake.

 

Beth Day Romulo, international journalist who’s the other half of the late Carlos P. Romulo who is one of Asia’s greats in the foreign policy field (former President of UN), featured the Nano car in her regular Sunday space at the Philippine Panorama, dated July 25, 2010. The Nano was engineered by the giant Tata group of companies of India, and sells at a very affordable $2000 apiece.

 

As Beth Day Romulo aptly titled, “In India, cheap doesn’t mean shoddy.” A sleek yet classy looking prototype, the Nano would surely be an envy of many countries up North who just couldn’t think of a car unless it sells past $25,000 apiece. Accustomed to the corrupted status-seeking behavior, the North’s customers would do everything in the books (e.g. get credit) to acquire flashy Mercedes Benz or Porsche and brag the same to their family circles and peers.

 

Mass markets are the in-thing in automotive industries as far as the bankrupt or near-death Northern car manufacturers are concerned. Flashy cars & SUVs would be okay for the fractional upper middle class markets up North and their clones down South, but for the larger billions of workers & professionals in emerging markets utility is the yardstick, hence the affordable folk car suits them well.

 

Before I venture into other thoughts, let me declare my own deep admiration for the Tata Group over its feats across the decades. I encountered this group during my own research on the steel industry in the late 90s, and in 1999 their representatives presented papers in the Manila-held conference of the Asian Iron & Steel Institute (I participated in that conference held at the Shangrila Plaza in Manila).

 

From Tata Steel to Tata metallurgies and now to automotives, what can I say but SALUTE! With top-of-the-line scientists among their design innovators, including the world-renowned steel expert Dr. Mukerjee, the only way for Tata to go is to jettison upwards in a very exponential fashion.

 

What the Tata Group is silently proclaiming to the world is that the price policy of Northern car makers is pure and plain rent-seeking practice. Look at the Volkswagen beetle for instance, a people’s car that is now priced at past $23,000 apiece, and that surely makes one have doubts about the ‘people’s car’  facet to the Volkswagen.

 

It’s all pure and plain rent-seeking. Profiteering is a more palatable term for the layman. Just like those Western pharmaceuticals that are produced for a mere $0.01 apiece but sell for over $1 per pill, rendering the pharmaceutical companies the top-gun of obnoxious rent-seeking firms.

 

I wouldn’t be surprised if we’d find out that a people’s car up North should be selling at merely $4000 apiece, using factors of production costs in their own backyards. A Beetle should be selling at $3000 or even lower, come to think of it.

 

At any rate, the peoples of the emerging markets have lives of their own, and they set the patterns of consumption on the basis of their own needs. Such as the need for utility cars that are truly ‘utility’ and not luxury items masquerading as utility.

 

As per report, the German engineering company Siemens had jumped the gun, by committing to mass produce and market the Nano in India, China, Russia, and Brazil. The Mumbai subsidiary of Siemens alone will produce half of the Indian innovations (Nano’s just one of them) that they’ve committed to produce and market.

 

As Beth Day Romulo reported, “While western engineers work on highly sophisticated products, the Indian engineers, who focus on high quality but low cost, aim at simplification and adaptation to the environment.”

 

Stressing on the infusion of social technologies to the engineering works, Madam Romulo concluded that “all of those devices and products are the result of local innovation, the engineers on the ground who study and recognize the needs of the Indian consumer.”

 

Not just the Nano car but also a whole array of innovations from India have been showing the way to the fusion of quality and consumer sensitivity in the product prototypes. This is what true development should be in terms of technological innovations: driven by people’s needs rather the pockets of greedy corporate executives and owners.

 

[Philippines, 02 September 2010]

 

[See: IKONOKLAST: http://erleargonza.blogspot.com,

UNLADTAU: http://unladtau.wordpress.com,

COSMICBUHAY: http://cosmicbuhay.blogspot.com,

BRIGHTWORLD: http://erlefraynebrightworld.wordpress.com, ARTBLOG: http://erleargonza.wordpress.com,

ARGONZAPOEM: http://argonzapoem.blogspot.com]

 

USA’S LEADERSHIP HAD EVAPORATED, WHY OUGHT STOCK MARKETS FOLLOW?

USA’S LEADERSHIP HAD EVAPORATED, WHY OUGHT STOCK MARKETS FOLLOW?

 

Erle Frayne D. Argonza

 

Good day fellow global citizens!

 

It’s late afternoon here in the Philippines, daylight is still around though quite faded a bit. The time of the day seems to be delivering the message that there is still some light in the global economy, and that is a feel-good ambience.

 

Light there may be for the global economy, but that light no longer comes from the Western economies. Definitely no longer from the once mighty ‘economic superpower’ USA that had lost the leadership leverage this decade when it suffered two (2) successive recessions within a short span.

 

I’ve already treated the matter of declining Western techno-economic power and hegemony over the rest of the globe in many articles. There is hardly any serious, highly-informed analyst in the world today who doesn’t share the same view, a view that Western (Caucasian) social forecasters do likewise hold even as they forewarned the West of the catastrophes that will confront them.

 

Stock markets across the globe, however, just couldn’t adjust to the new reality soon enough. They still behave like old hush puppies that look up to Wall Street for precedence in setting the trends of local bourses. That renders the local bourses as laughing stock dinosaurs that need to retool quickly, and the quickest that such retooling will be translated into practice, the better will it be for their respective stock trades and financial-monetary markets.

 

To reminisce a bit, America was the unchallenged global leader after World War II as it contributed 40% to the Gross World Product or GWP. Its European & Japan partners contributed another 20% to GWP, so that empowered the USA & partners’ (OECD) 60% contribution to GWP to exercise hegemony in all regions of the planet.

 

Today, the economic landscape had entirely changed. The USA’s $13+ Trillion GDP is down 22% of world income, while the entire EU’s $13+ Trillion is another 22%. EU + USA/Canada + Japan put together couldn’t even amount to 50% of Gross World Product, so the old partners may just have to metamorphose out of their old identities and retool quickly. They no longer hold the planet’s collective purse and should desist from bullying other nations with their economic clout that is pathetically a non-clout today.

 

Herd behavior, of course, is the least that we can make of the behavior of plummeting bourses. “Follow the leader” mindset of cave dwellers is still in, a mindset that is a messy sticking point for retooling purposes.

 

Why should local bourses refuse to see the new reality and dis-engage from the antiquated herd instinct? After all, stock markets are the exclusive games of the big corporate boys and consummate traders who have been addicted to the casino economy of antiquity. They hardly matter for the real economy sectors, such as those of Asia’s that have effectively built firewalls between the real economy and casino stock markets.

 

If to serve a bit of relevance to domestic growth at all, local bourses ought to look at the health of their own domestic physical economies and financial-monetary wellness.

 

Take a look at East Asia. The region has been driving the global economy beyond doubt, its average investments and savings rates are high, gross international reserves are equally high, and the physical economy as a whole has shown the way to high value-added production. Stock markets should better follow the lead of the healthy conditions of their domestic economies rather than look up to an offshore global leader that is now a chimera.

 

Or, if they can’t resist looking at offshore patterns, then they should look at their very own regional backyards for such models. Regional integration has been the strategy of the day, so why get fixated to a dinosaur fiction (USA as leader) when there are regional economic patterns that can show the lead.

 

USA’s lead will never ever return, this is a foregone conclusion. And Europe ought to rethink its integration efforts, as the Eurozone is now hotly burning, so Europe better not behave like a global hero that can  fill up the vacuum left by the USA. A continent that is perennially flat on its back and is now burning in financial-monetary flames can never fill up such a vacuum.

 

As already articulated by me in previous articles, the Western markets will decline progressively across time. Consumption from 2007 through 2015 will decline by as much as 30% of their pre-recession levels. In contrast, Asia’s consumption will more than double during the same period, thus rendering Asia the unquestioned driver of the global economy in terms of (a) technological cutting edge, (b) production levels of the real economy, and (c) consumption levels.

 

In closing, just like the pattern for mega-cities where no one mega-city can be considered a global center today, so is it with national economies. Economic leadership has already been de-centered, global hegemony had been erased, and there can only be inter-dependence between markets as the most viable option. That interdependence should find translations in the bourses and currency markets.

 

[Philippines, 13 August 2010]

 

 

[See: IKONOKLAST: http://erleargonza.blogspot.com,

UNLADTAU: http://unladtau.wordpress.com,

COSMICBUHAY: http://cosmicbuhay.blogspot.com,

BRIGHTWORLD: http://erlefraynebrightworld.wordpress.com, ARTBLOG: http://erleargonza.wordpress.com,

ARGONZAPOEM: http://argonzapoem.blogspot.com]

 

 

 

 

 

 

 

 

 

 

ENERGIZING HINTERLANDS: DILEMMA OF ISLAND REPUBLICS

ENERGIZING HINTERLANDS: DILEMMA OF ISLAND REPUBLICS

 

Erle Frayne D. Argonza

 

Good morning from the Philippines suburban boondocks!

 

Erecting energy grids is the main thing in energy distribution and could be so for some decades to come. The Philippines has been among the most notably advanced in building a grid infrastructure in its large islands (Luzon, Mindanao), a precedent that has been emulated by other developing countries.

 

Observably, power production had somehow followed the course of grid infrastructures. That is, it had been facile to install and operate energy production plants for many countries, including island republics, following the distribution lines of energy grids.

 

The dilemma in power production comes with the hinterlands of developing countries. Situated too far distant from grid lines, energizing hinterland villages had proved to be a daunting task particularly for island republics.

 

Ironically, the Philippines has been one of those countries where many hinterland villages remain without power. The key reason is that tapping power along the grid lines for the hinterlands is simply un-feasible from a marketing sense, and so the solution is to build small-scale power plants in or near the villages themselves.

 

Even that option—of installing micro-power plants in situ—proves to be un-feasible using standard yardsticks of economies of scale. The solution adopted by RP’s energy experts is to innovate on hybrid technology, with clean technologies such as solar power on the frontline.

 

Two (2) years ago, the state’s energy department pronounced that merely 900+ barangays (villages) out of the country’s over 42,000 barangays remain without electricity. The regime of the previous president Gloria Arroyo promised to energize the said villages before her term ends in May 2010.

 

Alas! Arroyo’s term had already ended and a new president—Noynoy Aquino—has been installed to power, but the electrification of the said villages is nowhere in site! Just exactly what ‘barriers to entry’ continue to hound the hinterlands electrification program seems to be kept as tightly guarded secret by the energy department, a fact that is tainted with transparency questions (the mass media is a bit silent about the matter).

 

I do recall that the contemporary hinterlands electrification program in RP began yet with the incumbency of then Secretary Vince Perez, an investment banker, who sat in the post for four (4) consecutive years. He was later replaced by Popo Lotilla, a laywer and economist, with similar pronouncements made by his office regarding the matter. Angelo Reyes, former defense secretary, then replaced Lotilla as energy secretary, and heralded the same pronouncements about electrification targets for the hinterlands.

 

Secretaries Perez and Lotilla are brilliant minds no less, as I recall both gentlemen pretty well during our freshmen years at the University of the Philippines (Diliman, the flagship campus). They were my former dorm mates at the Kalayaan Residence Hall for freshmen, we were then the first batch of residents, and at that time I could already sense the aura of brilliance in the two gentlemen.

 

The energy sector surely grew more robust and dynamic during the incumbency of the energy secretaries Perez and Lotilla, and the patterns they set were then followed by those who replaced them later. I just hope that the visions and program targets their respective offices have set will be followed without reserve, as time had already elapsed since they left their respective offices (they are now back to their private practice).

 

With a new president now sitting in power, the question remains the same: will the 900+ villages see the electric lights at night very soon? Or, will the same villages continue to wallow in the ‘dark age’ of zero electricity?

 

Meantime, let us hope that the situation for other island republics isn’t as bad as it is in RP that leads the world in grid technologies yet is lackluster in electrifying the hinterlands. What sayeth New Zealand and its development experts concerning the matter? [NZ is an island republic too, and it seemed to have made enormous mileage in total electrification.]

 

[Philippines, 31 August 2010]

 

[See: IKONOKLAST: http://erleargonza.blogspot.com,

UNLADTAU: http://unladtau.wordpress.com,

COSMICBUHAY: http://cosmicbuhay.blogspot.com,

BRIGHTWORLD: http://erlefraynebrightworld.wordpress.com, ARTBLOG: http://erleargonza.wordpress.com,

ARGONZAPOEM: http://argonzapoem.blogspot.com]