The problems with Vietnam have only become worse, with the currency in free fall against the US dollar as foreigners are trying to get their investments out as quickly as possible. Averting this would require the authorities to increase interest rates sharply in order to maintain the attraction of the dong, but doing so will only increase bad debts at the local banks and in turn spark a surge in non-performing loans at state-controlled banks.The article recognizes that there is one key difference between China and Vietnam with the former running a large current account surplus - that is to say that it sells a lot more than it buys on international markets. But otherwise, with that the collapse began in the financial services sector, and a similar weakness in China's financial services sector, the other similarities should not be ignored. What's worse is that the currency crisis in Vietnam appears to be spreading to Indonesia and Thailand.
Monday, June 30, 2008
Useful reminder here (Incentive Intelligence):
Rewards are earned. Gifts are given. To denounce the application of "non-cash" awards because some folks employ them incorrectly is akin to saying you're against the use of computers because some people use them for spam.
I agree with Milton Friedman when it comes to the view that managers should recognize that shareholders come first. The bizarre reaction by some in the media and in turn the public at large has been that this must mean that managers should basically exploit anything and everything in the pursuit of profit. In the last few days I came across two articles of interest.
From Time Magazine:
"Simultaneously we hit upon the philosophy that I think will be the dominant philosophy in business in the 21st century," Mackey says. "It's this principle that the purpose of business is not primarily to maximize shareholder value."From the Globe and Mail's Report on Business Magazine:
Every big company these days professes to have obligations to employees, communities, the environment—and humankind in general—that go well beyond making money. Annual reports, with their yawn-inducing financial statements, have been superceded by earnest CSR and sustainability reports. It's a long way from Milton Friedman, who in 1970 called business supporters of corporate social responsibility "unwitting puppets of the intellectual forces that have been undermining the basis of a free society." Would any Top 1000 CEO dare side—in public anyway—with Friedman today? Not likely.In the Time article, the founders of Whole Foods Market and the Container Store say that in building their businesses, they put their customers first and joke about how they're both fabulously rich. It's at this point I have to ask - how did they make the money they have? It couldn't possibly be because they've been shareholders could it? This idea that putting your customers "first" doesn't directly benefit your shareholders is bizarre at best. Surely, if customers were really first, both companies would just sell their products at a subsidized rate (ie a loss) or better yet, give their products away?
The Report on Business article ironically comes out at another extreme and against CSR because companies greenwash (giant PR efforts that amount to very little at all), and in doing so, governments abdicate responsibility to regulate corporations. Of course in this case, the journalist is referring to mining companies that work with despots around the world. Let me be pretty clear though that like Market Based Management pointed out a few days ago, I too am against any form of political profit but this approach seems to be a bit of a broad prescription for a somewhat limited industry. Besides, I seriously doubt that CSR allows countries to ignore their responsibility to their people - it may give them another excuse, but the blame here lies almost entirely on the governments themselves.
Sunday, June 29, 2008
Sort of a random (but hopefully one you'll find interesting) post. From the Chicago Tribune on new research on falling in love/lust:
"It's ground-breaking," says Stony Brook University professor Arthur Aron, author of several classic relationship studies. The speed-dating research "makes it possible to study something that hasn't been ethically or practically possible to study before."Pretty funny, tracking the hormones of speed daters.
Easier said than done, given that I'm probably an overthinker and this research assumes I trust my subconscious. From the WSJ, a few interesting data points:
"We think our decisions are conscious," said neuroscientist John-Dylan Haynes at the Bernstein Center for Computational Neuroscience in Berlin, who is pioneering this research. "But these data show that consciousness is just the tip of the iceberg. This doesn't rule out free will, but it does make it implausible."
[... for the implications:]
Dutch researchers led by psychologist Ap Dijksterhuis at the University of Amsterdam recently found that people struggling to make relatively complicated consumer choices -- which car to buy, apartment to rent or vacation to take -- appeared to make sounder decisions when they were distracted and unable to focus consciously on the problem.
Moreover, the more factors to be considered in a decision, the more likely the unconscious brain handled it all better, they reported in the peer-reviewed journal Science in 2006. "The idea that conscious deliberation before making a decision is always good is simply one of those illusions consciousness creates for us," Dr. Dijksterhuis said.
Courtesy of swissmiss:
If you can't explain it simply, you don't understand it well enough.I'm currently in the midst of developing training and content for one of our marketing initiatives and that's a useful reminder.
- Albert Einstein
Who knew? (Washington Post):
People who make less than $20,000 a year, for example, told Kahneman and his colleagues that they spend more than a third of their time in passive leisure -- watching television, for example. Those making more than $100,000 spent less than one-fifth of their time in this way -- putting their legs up and relaxing. Rich people spent much more time commuting and engaging in activities that were required as opposed to optional. The richest people spent nearly twice as much time as the poorest people in leisure activities that were active, structured and often stressful -- shopping, child care and exercise.Update: I changed the title from "rich people work harder" to just "more" since I guess it's possible that rich people aren't as productive during that time though I have my doubts.
Update #2 (07.07.04): Greg Mankiw blogs about the study and points out that people who make over 100K in the US aren't really "rich", they're just affluent.
Saturday, June 28, 2008
These are some of the same people that presume to lecture the rest of the world (though generally Americans) on morality. Funny. Governments require accountability. Even those in Europe. (h/t Instapundit)
Vietnam is often considered an alternative to production in China. We've even had a vendor who moved their factory to Vietnam though I can't say it's been a successful experience. Vietnam however may be set to get a whole lot cheaper. According to the Times of London:
Vietnam lurched closer to a currency crisis yesterday as the Government cut the official exchange rate to a record low. UBS analysts said that the country’s economic profile was more extreme than that of Thailand on the eve of the 1997 Asian financial crisis.
Though it may mean at least 4 years of pain. Apparently Americans aren't becoming increasingly economically Liberal. According to a Gallup Poll:
When given a choice about how government should address the numerous economic difficulties facing today's consumer, Americans overwhelmingly -- by 84% to 13% -- prefer that the government focus on improving overall economic conditions and the jobs situation in the United States as opposed to taking steps to distribute wealth more evenly among Americans. . . . A separate question finds Americans more likely to believe government is doing too many things that should be left to individuals and businesses (50%) as opposed to saying government should do more to solve the country's problems (43%).Given how they've been abandoning the Republican Party, I guess it means they've decided that the Republicans as they are now won't help them get what they want. They're probably right. (h/t Instapundit)
Update: Possibly even more encouraging is the graph that they use here:
Friday, June 27, 2008
According to Cato's Daniel Griswold, trade may have saved the US from recession (though it remains debatable as to whether or not the US is in a recession / was in a recession / or will succumb to a recession). Griswold basically makes the point that with the falling dollar, and expanding US industrial capacity because of a slowing economy, exports have risen dramatically.
Recessions have a habit of bringing out the protectionists in politicians given the apparent loss in jobs because of those dang foreigners. Of course the problem is that politicians seem to want to have exports without imports as if you can have one without the other while also ignoring the benefits of imports particularly for consumers. That said, Griswold's conclusion should be a useful reminder to politicians:
Instead of blaming trade for our current economic slowdown, politicians should be thankful that trade has spared us from something worse.
Pretty interesting point-counterpoint series compilation here. The main criticism from libertarians/capitalists that I agree with is that markets don't need to be directed towards social objectives, they happen on their own in recognition of demand once clear rules for property rules are set and governments get out of the way.
PS. I should note that if "creative capitalism" moves some of the old stalwarts and statists away from their traditional levels of success in development (which is to say very little to nil), then I'm all for "creative capitalism" as a stepping stone to just, "capitalism".
From Popular Mechanics: "Looking way beyond ethanol, scientists have zeroed in on 2010 or 2011 for the zero-emissions magic to start happening: a genetic transformation from bug juice to eco-friendly hydrocarbon power—the production-ready designer fuel to end high gas prices for good."
Supposedly one of the companies involved believes that they would be "competitive" at $50/barrel oil - which means it's already economically efficient. Thankfully, it doesn't depend on corn based ethanol (Seattle PI). The days of high energy prices are numbered... though I'm not willing to make a short term bet that they won't go up further from here.
Update: Related topic - the strategy adopted by those concerned about high prices is bizarre given that many are also against finding new domestic US sources of oil/energy. Don Surber (h/t Instapundit): "Slap a dollar-a-gallon tax on residents of any coastal state that bans drilling in the Pacific or Atlantic, and give that money to people who live within a mile of a coal-fired power plant."
Thursday, June 26, 2008
Wednesday, June 25, 2008
In need for humor... I found this, but it also seems like a pretty good object lesson:
Bill Gates has apparently been fairly ruthless when it comes to pushing his developers to improve the experience of the products Microsoft offers (Crunchgear). This probably speaks to the success of its products over time but the excruciatingly detailed approach to documenting the experience in an attempt at improving it is something that I aspire to.
The first (and currently only) commenter points out "Screw the email, that is one sweet 'jazz hands' Billy G. picture!" - to which any rational observer can only agree.
I get the sense that those who try to make the claim that despite all of Mugabe's "flaws" it is better than when Zimbabwe under British Colonial rule, feel compelled to do so out of a certain level of political correctness.
This raises the question though of why objections and concerns haven't come up earlier. While it's difficult to get numbers, his worst crimes may have been committed in the aftermath of his initial rise to power with the crushing and mass murder of his opponents. I can't help but wonder if, at least in part, the lack of condemnations for his tactics is at least in part because of the shame for the colonialism that came before him (and that some would have preferred to forget) and possibly also in no small part to the socialistic/communist ideologies as espoused by Mugabe's party.
Of course if one were to paint this in racial divides one could also suggest that while Mugabe was just killing his fellow and black comrades, the world looked away but it was only when he started taking away farms from white people that the spotlight shone on Mugabe. Heck, Britain gave the man a knighthood as late as 1994 (and the Queen quite belatedly stripped him of the honour only today).
In any event, Megan McArdle, a former writer with the Economist, considers the choice between two "incredibly awful" evils having made the point that Zimbabwe had been better under colonial rule. Writers at the New Republic wonder whether America's two Presidential candidates will recognize Morgan Tsvangirai as being the President based on the previous runoff election results. I wouldn't bet on it... that might take political courage (h/t Instapundit).
I once had the worst experience ever returning from Asia and connecting at Chicago's O'Hare on my way to Toronto. The plane was already slightly late so coming off the plane, I had to change terminals and therefore leave the secured area to return again in the new terminal. Of course the flight was the exact furthest possible point relative to the entrance but beyond this, there was a massive snaking line to get through security.
Unlike Toronto where Air Canada agents have the good sense to try to move passengers for soon departing flights to the front of the line, such is not the case in Chicago where United Airline's staff really only know how to glare at you and make snarky remarks (I won't burden you with the aftermath in trying to get on another flight which was even more painful). Bearing in mind that I had not slept for about 18 hours at this point coming off a transpacific flight, this behavioural research might have been helpful (courtesy of the Economist Blog):
Behavioral scientist Ellen Langer and her colleagues decided to put the persuasive power of this word to the test. In one study, Langer arranged for a stranger to approach someone waiting in line to use a photocopier and simply ask, "Excuse me, I have five pages. May I use the Xerox machine?" Faced with the direct request to cut ahead in this line, 60 percent of the people were willing to agree to allow the stranger to go ahead of them. However, when the stranger made the request with a reason ("May I use the Xerox machine, because I'm in a rush?"), almost everyone (94 percent) complied...
Here's where the study gets really interesting...This time, the stranger also used the word because but followed it with a completely meaningless reason. Specifically, the stranger said "May I use the Xerox machine, because I have to make copies?"
Comments the Economist writer: "As Tyler Cowen notes, compliance in the latter case was a stunning 93%. This will surely lead to a provocative new round of campaign advertisements, declaring, 'Vote for me, because I'm running.'"
Tuesday, June 24, 2008
Two recent and noteworthy posts on Adam Smith.
First, "did Adam Smith hate businesspeople?" (Market Based Management) - a reminder that while progress can be achieved within capitalism through both altruistic and rather base motives, not only is the result the same but it is the latter motivation that Adam Smith believed to be more pervasive:
Despite his disdain for businesspeople, Smith noticed that once deprived of their government-granted privileges, the still-contemptible merchants and manufacturers could only profit by serving their fellow humans. This is Smith’s lasting legacy. He did not appear to have a high opinion of his fellow man but observed that free markets forced even the worst people to provide for others—even those who might hate one another. The real Adam Smith was no ideologue, but a careful observer of human beings. Incidentally, he also gave away most of his money to the needy, which remains a little known fact—probably because he didn’t tell anyone. I like to think that Smith might have a different opinion of today’s businesspeople, but he would probably tell us not to kid ourselves. The many cheap and high quality products we enjoy today are not there because human beings are any better than they were in Smith’s day, but because the invisible hand forces them into what is best described as public service.And the second exploring the nature of poverty and Adam Smith's view that poverty was as much a social and emotional issue as a material one. The argument is that in order to reduce poverty then, financial subsidies and grants may have a negative effect as the mere effect of qualifying for these subsidies and grants results in a "signal" and reinforcement of poverty without necessarily the development of tools in order for the poor to climb into wealth (Club Troppo):
For Adam Smith poverty meant having visibly less than others. But it’s not obvious that Smith’s problem of poverty could be solved simply by handing out food, housing and health care to those at the bottom of the income distribution. Smith argued that people have social as well as physical needs. In our society, working-age adults meet many of these needs through paid employment. Work is not just a source of income, it can also be a source of status, belonging and approval from others.
This view of well-being helps explain why income redistribution on its own will never be enough to guarantee that the needs of the least advantaged are met. When income support payments are linked to tests of employability (as with disability payments) or job search effort (as with unemployment payments), eligibility for the payments is itself a signal (whether we like it or not).
I'm a little skeptical that oil prices are high because of cartels. I get the sense that because of chronic underinvestment (or for some who do not include myself who suspect peak oil), the despots of the world being the greedy buggers that most of them are, are being limited in trying to game the system and "cheat" in every way possible but with still little impact to global oil prices.
Without a doubt in my mind though the prices as they are now and for as long as they have been around, are more than sufficient to result in longer term alternatives that will result in substantial demand destruction in oil. But oil being a somewhat inelastic commodity, might only need a small amount of demand deterioration to result in significant price drops.
There's an interesting comparision in the Tierney Lab (NYTimes) comparing the oil cartel with the Debeers Diamond Cartel that appears to finally be unravelling. None too soon I think. Notes Tierney on oil:
In the first half of the twentieth century, the precursors to today’s prophets of energy doom worried that economic growth would be crippled by the pending exhaustion of copper reserves — and how could any modern economy survive without copper telephone wires? Sure enough, there were attempts to form copper cartels, but so many substitutes for copper were discovered (like fiber-optic cables for communication) that the cartels couldn’t control prices. Same thing happened to the tin cartel.
So how long do you give OPEC?
Cool. A sample:
"Home Taping Is Killing Music" — A 1980s campaign by the BPI, claiming that people recording music off the radio onto cassette would destroy the music industry.(listverse, h/t Club for Growth)
It's revolutions like this that make it difficult not to be thrilled about the exciting times in which we live. Apparently a company has come up with a bra that can power your iPod using nanotechnology. (h/t Instapundit)
Monday, June 23, 2008
"Advertising is the price companies pay for being unoriginal." Used in Yves Behar's Ted.com Presentation "Creating objects that tell stories" - also a great 17:43 minutes well spent.
Update (08.06.24): More on the value created by good design from Core77.
Saturday, June 21, 2008
I'm not sure anyone would be surprised where my political sensibilities tend. However, in this, I'm beginning to recognize there is a significant number of people who will end up voting for Obama because he is black (of course, not to do so is apparently racist) not having a clue what the man stands for - and further, that Congress will remain solidly Democratic. To be fair, Karl Rove has pointed out in the WSJ that even Republican nominee John McCain is no friend of markets: "Messrs. Obama and McCain both reveal a disturbing animus toward free markets and success."
So what does this mean? As Lawrence Lindsey points out in the WSJ, Obama wants to apply Social Security taxes on income above 250K USD. Here's the effect:
The economics of what Sen. Obama is proposing should be at least as troubling. A high-income entrepreneur would see his or her federal marginal tax rate rise to 53% from 37.7% under Sen. Obama's tax plan. He proposes a 4.6 percentage point hike in the personal income tax rate, a loss of some itemized deductions, and a 12.4 percentage point hike in the Social Security payroll tax. This would take a successful entrepreneur's effective marginal tax rate higher than what it was under Jimmy Carter or Richard Nixon, when the maximum tax on an entrepreneur was 50%.I tend to think that it won't be the successful entrepreneurs who will bear the brunt of it, but rather high value sales people, consultants, managers and bankers. An entrepreneur can, after all, just issue dividends. The Economist's blog points out that the very unfunded nature of Social Security was a flawed idea to begin with.
Just as well for those who fund Obama like George Soros and Warren Buffett who has complained that income taxes on those like himself are too low, but that's easy for him to say given that higher income taxes wouldn't affect him one bit (h/t Greg Mankiw) and that both are betting against the value of the US dollar. Through Obama, Soros may finally have found a way to ensure at least one of his dire predictions come true. OK so let's say that you think that 'fat cats' should fry and pay higher taxes, but what about everyone else? Keep in mind that the US continues to flirt with a recession. The Bush tax cuts are set to expire January 1, 2011. You might think that's plenty of time but bear in mind that markets anticipate and are forward looking. But even so, what might tax rates look like after they expire (h/t Greg Mankiw)?
As Robert Mundell, Nobel Prize winning economist, one of the architects of the Euro (not to mention the chair of the economics department at the University of Waterloo in the 1970s) points out, "the big issue economically . . . is what's going to happen to taxes". An issue Mr. Mundell believes is even bigger than the weak dollar and subprime debacle. Noted in the WSJ:
Democratic nominee Barack Obama regularly professes disdain for the Bush tax cuts, suggesting that those growth-spurring measures may be scrapped. "If that happens," Mr. Mundell predicts, "the U.S. will go into a big recession, a nosedive."Politicians seem to forget that prosperity depends on the innovation and risk appetite of entrepreneurs. The idea of providing negative incentives for doing so certainly seems counterproductive.
Consider energy policy. Some members of Congress want to nationalize oil to reduce oil prices while preventing oil companies from exploring and extracting oil in the US. What is probably more troubling is that those same members of don't consider these views to be absurdly embarassing. Other than the bizarre incentives that it creates (like the lack of investments in maintaining oil infrastructure in Iran and Venezuela) as Investor's Business Daily points out: "The fact is, the world's oil crisis is due almost entirely to government intervention in working markets at all levels. As we've noted before, roughly 93% of the world's oil reserves are controlled, directly or indirectly, by governments. It is they who have screwed it up."
The issue that will affect us and our clients the most of course, is trade. Obama wants to "opt out" of NAFTA and has recently made a number of comments hostile to any and all trade agreements as Instapundit points out highlighting a Republican ad that points to Obama's reversals from his previous more favorable views on the issue. In this, trade with China is vulnerable despite the belief that the benefits of trade is near universal amongst economists of all political stripes.
Ask those who will vote for Obama, 'why?' and too many believe that it will either not make a difference, and that somehow Obama will heal the nation and relations with other countries around the world. Reality check: so long as the US remains the world's only superpower, they will continue to be hated for this very reason. Given how Obama has run his campaign to date, I can't help but think that they will be disappointed - the extent to which will only be a question of degrees. As I've pointed out to others, I think that Republicans deserve to lose because of their recent repugnant stances on earmarks and free markets. One solace I have is that progress is rarely linear - sometimes a step back is required to move forward again.
Intrade currently gives 64.2% odds for Obama. My sincere hope - and one that is neither without precedent or reason, is that if Obama becomes the next US President, he will abandon his supposed convictions in favor of pragmatism (Winds of Change and Austin Bay both point his positions on Iraq and US security have been quietly changing, h/t Instapundit).
update (08.06.23): Mary Anastasia O'Grady from the WSJ compares proposed economic policy on key US issues to Argentina's in article titled "From Breadbasket to Basket Case". Instapundit points to others who note "It is weird how so many who claim to like Obama hope he is lying." One can only hope.
Friday, June 20, 2008
I'm glad most of our manufacturing and suppliers are down south. From ACF China:
Everyone knows the Olympics is causing major headaches for anyone in or planning to come to China during these past and next few months. From Visa cancellations to the sudden demolition of warehouses (as a result of last minute beautification campaigns) to unannounced restrictions on transport (to curb pollution) - its all headaches! Some of our own suppliers from the more “sensitive” regions in China have been “deported” back home for “security reasons.” Even our French intern will return to France early since his visa cannot be extended.
A fascinating review of Lijia Zhang's "Socialism is Great" from Peking Duck through a time of upheaval. My mother's side of the family lived through the Cultural Revolution in China and while I'm inclined to believe that there really haven't been very many fun times in China over the past century, those were particularly terrible times for my grandmother (on my mother's side) in particular. I've heard some other fairly haunting stories of those times so it's interesting to see how China has changed while the memories and often the bitterness remains.
"Socialism is Great" largely covers the intersect between the transition from Socialism in the 80s to whatever you want to call it now. I haven't read it, but I'd like to.
Interesting article on traders from Africa in Guangzhou in "Chocolate City" ("chocolate" is how Chinese people refer to Blacks).
It's interesting that they are resentful over the Chinese buying some of their resources - and doesn't bode well for what might happen after regimes change as they are often violently wont to do in Africa. Incidentally, I used to think that it was bizarre hearing a British Chinese accent... but that got topped by the time I heard a Chinese guy who had learned to speak English in Nigeria (probably just as radical as a Chinese person with a Jamaican accent).
This was too bizarre to pass for a post (The Conspiracy to Keep you Poor and Stupid):
A monument to the enema, a procedure many people would rather not think about, has been unveiled at a spa in the southern Russian city of Zheleznovodsk. The bronze syringe bulb, which weighs 800 pounds and is held by three angels, was unveiled at the Mashuk-Akva Term spa, the spa's director said Thursday.
"There is no kitsch or obscenity, it is a successful work of art," Alexander Kharchenko told The Associated Press. "An enema is almost a symbol of our region."
[emphasis mine. Let's just say that I don't want to go anywhere near Zhelevnovodsk.]
Wow, the visa issues are becoming just brutal. I don't want to be anywhere near them this August but I'm considering going to a friend's wedding nearby but this could be problematic:
Of course the good news is that at least the firm that issued the bulletin thinks that these controls are temporary (though some believe that things will not be as easy as before): "The government of China will implement new policy on July 1st,2008 and then all the foreign nationals need to apply or extend the L-visa or F-visa outside China(not enclude Z-visa). And after the Olympics(about OCT.17),the government will begin to make a relaxation of the policy to foreign."
Recently in many housing estates entrance there will be immigration officers inspecting every foreign nationals. If you applied or extended a visa in our company before,you need to know the following points so that to avoid some troubles.
Immigration officials will ask you some questions:
Where did you get your visa?
How did you get the visa?
Now are you working or touring in Shanghai?
Have you processed the temporary living certificate?
Before you answer their questions,you need to check the place of issue now.
This makes me wonder as well though given that I've heard that getting tourist visas is no easy task either, how many foreigners will actually be able to stick around for the Chinese Olympics... and if that's not the point, that certainly seems like it will be the effect.
Thursday, June 19, 2008
I'm back in Canada so can start blogging a bit easier again. An update on Nanosolar from VentureBeat:
What Nanosolar has now, it says, is a $1.65 million printing tool that can churn out one gigawatt of cells each year, running out up to 2000 feet of material each minute (the average speed is 100 feet per minute). Rather than stuttering as it speeds up, Rosencheisen says the printer is more effective at higher speeds, producing cells of up to 14 percent efficiencyPretty cool and potentially extraordinarily disruptive. If this is really is as cost effective as they say, developing countries like China can leapfrog "dirty tech" with the incremental cost of production pretty darn close to zero - or whatever it costs to maintain the grid.
Thursday, June 12, 2008
Times of London: "They grabbed Mrs Chipiro [45, a former pre-school teacher] and chopped off one of her hands and both her feet. Then they threw her into her hut, locked the door and threw a petrol bomb through the window [burning her alive]." They did this to her because she was married to a junior official in the opposition party in Zimbabwe. While I do enjoy a good political rant and the occasional hyperbole, events like this give pause and (political) perspective while serving as a reminder that the freedoms we enjoy should not be taken for granted. (h/t Instapundit, who quotes a reader who says "shooting's too good for them".)
Posted by Clement Wan at 1:21 PM
Sunday, June 08, 2008
The Wall Street Journal has a great article that aptly captures the fears of many when it comes to China's nationalism. My proxy for Chinese elitist sentiment railed on and on about Tibet (an issue I didn't raise) - which I do sort of understand his point. China's heavy handedness speaks to either their insecurities on the issue or just plain bad advice - since I am coming around to the view that there are legitimate grievances to be had against the Dalai Lama and that a 'Free Tibet' might hardly be free at all. The article also makes the good point that nationalism and historical grievances are issues that democracy will not cure though "political freedom should help to soothe such feelings in the long run, but this will not happen in time for the Beijing Olympics." Indeed - though the wrinkle and wildcard is the goodwill generated towards foreigners following the earthquake in Sichuan - though this may not be enough.
Posted by Clement Wan at 8:30 AM
Courtesy of the Great Firewall of China. Before I used to be able to hit "New Post" from blogger.com - but no longer, now the request just stalls into cyberspace oblivion. I'll have to get the blog its own domain when I'm back on the other side (which may also attract a few more China readers who currently can't access any blogspot blogs without blog readers). Until then, I'll try to do a few posts via email which is somewhat less flexible (especially since I can't see the posts after the fact to correct any embarrassing errors - of which, when it comes to grammar, I'm sure there will be many - especially where it comes to my professed love of run on sentences.)
Posted by Clement Wan at 6:44 AM
Thursday, June 05, 2008
My general rules of thumb when it comes to compensation systems are that they should be 1. simple and 2. a reflection of the value an individual and team contributes to the company (value being evidenced and as paid out as, as close to a reflection of actual profitability as possible). The goal of the latter being that I'd like my colleagues to consider how we can build a better company and for them to think that by doing so, they'll be compensated for it.
Of course, that's much easier said than done. And in recent years, I've also increasingly noticed that the better the culture is in a firm, the less #2 needs to be true (ie in econ speak, people are willing to trade off being paid better with being happier at work and as their employers take advantage of this presuming that productivity levels could be even better at such firms which seems ironic on a few levels).
In any event, I've recently discovered the blog Fistful of Talent via Incentive Intelligence. A recent post talks about the dangers of giving employees what they want when it comes to incentives:
The point being is companies own the program, and the results. Simply giving employees what they say they want is irresponsible. Ask any employee - what would you rather have a crystal trophy or $100 in cash. I'm betting the cash wins. Of course it does. It would be insane to say otherwise. However, the trophy drives a much different response than the cash. The response you want. It binds the employee on a social level. The cash (or near cash in the case of debit cards and gift cards) binds them at a transactional level. These types of awards create mercenary behavior. Plus recognition and non-cash awards don't have the same inflationary constraints that cash and cash-like awards have. Being appreciative and showing it isn't indexed to the CPI.It's a good reminder that we shouldn't be as focused on monetary compensation though I still believe that the best way to retain someone is to ensure that they have the tools and environment available to them such that they are best able to create value with us more than they could elsewhere or on their own.
Wednesday, June 04, 2008
Sometimes I wonder if I have a glandular problem. I don't handle heat particularly well and it used to be that people in the office in HK would initially wonder if there had been torrential rains. It is almost be embarrassing, if I were embarrassed by such things, how quickly everyone seems to offer me napkins/toilet paper to wipe off the sweat (it is also noteworthy that for Christmas, a colleague bought me handkerchiefs).
On the other hand, a happy side benefit has been that it has been my high metabolism which I'm told is related. Because I've been somewhat inactive in the last few months, in the last few weeks I have alarmingly noticed that my metabolism has been slowing down and I have added as much as an inch to my waist. The suffocating heat therefore was somewhat welcoming this time around as I stepped out of the airport as I like to think that it's much like watching the fat drip from a roast - of course, one probably doesn't want to be downriver from the roast. Incidentally, that I flew into HK yesterday afternoon is also the reason why blogging has been light as I have been in a mad rush trying to tie off loose ends in the days prior (my blog reader had accumulated to over 780 posts - now that's depressing). It's also almost sad how excited I am to see my baby girl Kali (who happens to be a dog, literally) when I go into China.
Sunday, June 01, 2008
This is one where seeing is believing (Small Dead Animals). Truly stunning - while it would be in poor taste if it were a joke, I'm pretty sure they're being serious. I think most of the rest of us would wish they would lead by example:
Some of them shiny even:
- [Trade] Cato points out that the US steel industry isn't doing as poorly as politicians and lobbyists claim. Unfortunately I think it's the politicians who have been bringing out the hyperbole and protectionism who are currently winning this fight towards November.
- [China] China Law Blog posts more on Visa issues. Linking to a Forbes article.
- [China] This is China! posts on the creeping managerial incompetence and the overweight some foreign firms have been using to equate English skills and competence in China. I have to say that I really lucked out with some of my staff.
- [China/Trade] China Law Blog points to an article in the WSJ by Jeremy Haft of BChinaB, who makes the US sound more desperate than I think it really is (in fact, I don't think it is desperate at all) but makes the good point that this is an opportunity for the US to sell into China benefiting both countries.
- [Legal] Learn how to pay lawyers less from zenhabits.
I'm still trying to find the balance between posting on useful entrepreneurial information and some of my er, other interest that spill over into politics and economics. I can't help myself, but I suspect that posting will tend back towards the business side as I leave again back to China/HK Tuesday.
Anyway, for those not as familiar with the lingo, that's a third party logistics provider - like a travel agent but for freight and warehousing. Useful link - and even more useful for anyone who does shipping - because just like travel agents, not all 3PL providers are the same. My general rule of thumb is that it is quite rare that the provider that initially appears cheapest turns out to be the least costly. I also recommend using a 3PL so that you don't have to navigate the byzantine maze of importing a product yourself.
Apparently according to Thomas Barnett, their approach is already backfiring? The money quote he pulls from the article: "China seems to have difficultly maneuvering in countries more democratic than itself." The link to the article in Foreign Policy can be found here.
Not surprising, but I'm skeptical that the backlash or concern at this point as great as has been suggested. Maybe it's just my cynicism, but I suspect that the autocracies, dictators and despots in Africa will continue to take whomever's money they can get their hands on. However it makes sense that more liberal societies of which there unfortunately are sparingly few, would be considerably more reluctant to China's approaches. Where I think China will feel the pain will be longer term, as they are seen to work with the despots, corrupt and dictators and risk being "remembered" - and that's not in a good way, as a result.
Where in the world can we do the most good? Supplying the micronutrients vitamin A and zinc to 80 percent of the 140 million children who lack them in developing countries is ranked as the highest priority by the expert panel at the Copenhagen Consensus 2008 Conference. The cost is $60 million per year, yielding benefits in health and cognitive development of over $1 billion.The second on the list of priorities is to increase free trade - though not sure what the costs here would be. Some like the President of the Soil Association - a group of UK-based organic farmers against imported organic foods, disagrees (even going so far to say that there are those in the developing world who should suffer "a bit" to protect UK farmers). According to Bailey, "the remaining top ten priorities addressed problems of malnutrition, disease control, and the education of women." Note that global warming ranks number 30 on the list of priorities because "spending $75 billion on cutting greenhouses gases would achieve almost nothing."
Of course this raises the issue as brought up Bailey earlier in the week: Does Fashionable Beat Rational When It Comes to Solving the World's Biggest Problems? (h/t Instapundit) Particularly as environmental concerns have taken a back seat and where the real pollution concerns for "more than 3 billion people" relate to "indoor air pollution from indoor fires using wood and coal for cooking and heating." There was also discussion related to greater acceptance in the developed world of genetic engineering, also here (in how it will help forestall global warming) which I'm sure will also go a long ways to pleasing environmentalists.
Quite fortuitously, this report from the Copenhagen Consensus (funded by the Danish Ministry of Foreign Affairs) comes on the backs of a $4 million World Bank Growth Commission that William Easterly of NYU, former economist for the World Bank and writer of The Elusive Quest for Growth suggests was just a big waste of time: "[The] conclusion is fleshed out with statements such as: 'It is hard to know how the economy will respond to a policy, and the right answer in the present moment may not apply in the future.' [Translated:] Growth should be directed by markets, except when it should be directed by governments." (via Cafe Hayek)
Find out more about the Consensus here.