Wednesday, January 30, 2002

"I conclude that America's economy will indeed soon recover as the US now focuses on producing weapons of war." [Adam Curry] 1:18:26 PM    comment  []

The Great Divide (Paul Krugman, NYT). "One of the great clichés of the last few months was that Sept. 11 changed everything. I never believed that. An event changes everything only if it changes the way you see yourself." "The Enron scandal, on the other hand, clearly was about us. It told us things about ourselves that we probably should have known, but had managed not to see. I predict that in the years ahead Enron, not Sept. 11, will come to be seen as the greater turning point in U.S. society." ... "the most admired company turned out to be a fraud." ... " an object lesson in how appearances can deceive. And I don't think this is just a story about one company." "At the moment, demands for reform seem like unrelated agendas, but I think they have a common theme: They're all about ending an era of laxity, in which nobody asked hard questions as long as everything looked O.K. That era is now over." "Do (politicians) act as if they get it — that they understand that the old laxity is no longer acceptable? ... "Does Tom Daschle get it? Will George W. Bush get it? The answers to those questions may well decide their, and the country's, political future. Enron, I predict, will turn out to have changed everything." ... more. Harvard Business School discussion of same issue. " ... in my view it has shaken one of the pillars that support the American business and financial systems, and indeed our way of life: Confidence." "Will the very underpinnings of the Western capitalism be affected? Do not the relation between shareholders and public companies, their lawyers and accountants...constitute those underpinnings?" "I would love to believe that Enron will make a difference. But I don't. Enhanced ethics? Sounds great. It won't happen. Better corporate governance? Nice theory. History doesn't suggest that much will happen ... " 2003.01.01 1:14:26 PM    comment  []

The noted management philosopher Peter Drucker describes how "complementary" trade was followed by "competitive" trade, then to be followed by the adversarial trade to which we are all now accustomed:       "Trade in Adam Smith's eighteenth century was 'complementary' trade. England sold wool to Portugal that Portugal could not produce, while Portugal sold wine to England that England could not produce. The English bought from India cotton that they could not grow, in exchange for machine-made cotton cloth that eighteenth-century India could not produce. The entry of the United States and Germany into the world economy in mid-nineteenth century brought about a shift to 'competitive' trade. The Americans and the Germans both sold chemicals and electrical machinery in competition with one another and bought chemicals and electrical machinery from each other. Almost unknown in 1850, competitive trade had become dominant by 1900.       "The emergence of new, non-Western trading countries -- foremost the Japanese -- creates what I would call 'adversarial' trade.       "Complementary trade seeks to establish a partnership. Competitive trade aims at creating a customer. Adversarial trade aims at dominating an industry. Complementary trade is a courtship. Competitive trade is fighting a battle. Adversarial trade aims at winning the war by destroying the enemy's army and its capacity to fight.       "Reciprocity is clearly the only trade policy that can effectively work in a world economy that features adversarial trade. Free trade can work under reciprocity if the other side reciprocates. But there will be protectionism if that is what either side chooses.       "Reciprocity is fast emerging as the new integrating principle of the world economy. Unlike traditional free trade and traditional protectionism, reciprocity will not be confined to trade in goods. Services have already become as important as goods in the world economy and require reciprocity even more. The treatment of investments is just as important as trade. Equally important will be reciprocity with respect to intellectual property, patents, technological trade-marks, copyrights, but also with respect to professional services." 12:12:20 PM    comment  []