Nice ideas but ....

The previous post asked inter alia the question if countries can be treated (ranked etc) in a similar way to corporations.

Let's stay on this comparison, but for a different reason.

Political parties like to differentiate themselves on policy ideas not policy implementation ability. They compete to attract voters based on their ideology, their policy ideas and in some cases, specific policy agendas (aka manifestos).

Would it not be interesting though to see somewhere 2 political parties compete on their ability to actually implement a certain policy agenda?

Of course, when a political party, alone or in coalition (eg Tories-Libs in the UK or CDU/CSU-FDP in Germany, etc) wins a majority to govern it does so with Ministers and Deputy/Junior Ministers and in some countries with Secretary Generals of Ministries. And advisers. A government does not get, normally and properly, to choose or hire/fire most of the human resources (public servants) a state has.

Much like a new corporate CEO or Board cannot claim to manage a corporation by hiring/firing most of it staff. What good is a football manager (in any type of football, US or soccer) if to do his job he needs to fire most of the current players? That is actually one of the reasons it is managers that get fired, not whole rosters!

Thus back to the original thought. Why are political parties competing on ideology, policy ideas and at beast policy agendas (manifestos)  instead of their ability to implement a certain policy agenda? Because, after all, it is easier. Or has been.
 

Competitiveness: Does ranking countries make real sense?

There is no question that Greece needs a real economy. But what is a real economy in 2012 Europe and world like? How many of the national economies are real, after all?

Is Germany a real economy? The UK? NL? USA? Canada? Singapore? Finland? Time for real talk on real economics.

Is world trade real? Is the EU Single Market real? Real people and real companies need real economies. Where are they?

Let me propose the theory that: The Euro crisis and other events turned the world economy from competition between companies to competition between counties.

But countries are not SAs/companies to be ranked in world tables and rated like horses in a race, are they?. Were/are they meant to be?

Many competitiveness concepts were invented when only few countries played the trade game. Now they are 150+.

So when for example its international lenders want Greece to be competitive, that is compared to whom? Spain? Bulgaria? TK? China? Nigeria? Singapore? Argentina? All 150+? The rest of the Euro or the EU27? The rest of the EEA? The rest of the WTO?


What I mean is: Can any team compete in a league of 150+ teams? Can countries compete in the trade games of the 150+ WTO League?


How deep is the pit, ie how can one have a competitiveness strategy when in a league of 150+ especially when that someone is not flexible as a corporation but a whole country? Are we in effect treating tankers as if they were fishing boats?

Maybe Greece is the best case re how antiquated much of the current thinking on competitiveness is.

 Let me phrase it in a provocative way: Maybe just because financiers focus (too much?) on sovereign bonds, that  is not a reason to focus on national rather than corporate competitiveness?

So what I am saying is: of course every country needs to provide a suitable environment for econ activity, but ranking countries is maybe faulty and misleading the analysis and our thinking.

Notes on global dynamics

Germany: ZEW's investor confidence index climbed to 6.9 points in December from -15.7 points in November (Dec 11, expatica.com)
China's government has released data indicating strong a) industrial output and b) retail sales (December 9).
The Bundesbank has cut its Germany growth forecast for 2013 to 0.4% but expects 1.9% in 2014 (Dec 7)
The US jobless rate down to 7.7%, lowest in 4 years (Dec 7)
EU: Current account surplus 28.4 bn euro (Dec 7, Eurostat)
UK manufacturing output fell in October 1.3% compared to September (Dec 7)
GDP down by 0.1% in the Eurozone and up by 0.1% in the EU27 (Dec 6, Eurostat)
Eurozone: Volume of retail trade down by 1.2% (Dec 5, source: Eurostat)
EU Industrial producer prices up by 0.1% in both euro area and EU27 (Dec 4, source: Eurostat)

Competitiveness and its models in the 2010s

This post is work in progress:

Competitiveness:

Different countries are "best suited" for different types of companies.

No country can be best suited for all types.

A business-friendly type of approach has general benefits but when some 200 countries (some 150 in the WTO) and thousands of regions compete for location of company HQs and operations, being business-friendly or something like that is maybe, at best, a necessary (albeit in practice maybe debatable) but certainly not a sufficient factor.

Does the above rationale imply a call for return to sectoral "industrial policy"? Not really.

Some years ago, someone asked me to do a study of competitiveness models for Greece. What he really wanted though was a paper on best practices "abroad". I said No to taking on the study. A competitiveness model cannot be a patchwork of best practices, because then it becomes like "Frankenstein".

Notes:

1) Competitiveness: In search of balance? http://npthinking.blogspot.gr/2012/12/competitiveness-in-search-of-balance.html

2) Along with the advantages and management/business/policy techniques of complex goods manufacturing: Is the German Mittelstand under-studied by US, European and international business gurus?

Notes on the EU Single Market

A live blog post (ie to be updated regularly)

• The key to the EU single market and the EU in general is making SMEs and people feel at home in "it". Has not happened yet. And I do not mean just trade of goods or freedom of capital movement.
• The Euro was/is an element of a single market and a single "space", not a goal in itself or the tool for bankers and central bankers (and speculators) it became.
• Language inter alia prevents the EU27 from being a single market for advertising. And that is a serious fundamental flaw for a single market and an entity like an EU.

Are modern corporations "prisoners"?

Watch a 62 seconds video introduction of the topic (youtube): http://youtu.be/ERvQMLgtxe4

This is not a final version of work in progress on the subject:

I have experience in public affairs and in public policy, and I am an MBA, but I never fully grasped the concept as well as the practice of corporate social responsibility. "Corporate citizenship" (not the in way interpreted in the US, in that corporations have the same "rights" as individuals/people/citizens) but in the sense that a corporation should act "responsibly" the same way a citizen (in the Ancient Athenian sense of the term) is supposed to act, seemed more applicable. But, as I wrote in an analysis some years ago, prompted by some comments by the then newly elected leader of the Tories now PM, David Cameron, appearing to act as a "responsible" entity may have negative effects.

After all, what is anyone supposed to follow in a society (polis in the Ancient Greece term), other than the (written) laws? Social "laws" or conventions, social pressures and dynamics, are they part of any citizens obligations?

Many corporate people, especially these days, claim that a corporation has a mandate by its shareholders to maximize "value", and only that, and can even be accused if it does not act solely based on that! I assume they mean while following the laws.

But then again the labyrinth of local, regional, national and inter-national laws makes even that goal realistically hard.

My "thesis" in this analysis is that corporations have become "prisoners" of state, social, financial and other constraints, so much so that either they have to run huge multi-variable Operations Research models in order to maximize Net Present Value under millions of constraints or be lost in this "labyrinth".

Can Social Responsibility instead of following all these constraints be a way out? Should it? Is a person or other entity that has accumulated "social capital" in the minds of public opinion, media, clients, authorities, etc, more easily excused or forgiven for stepping over some of the millions of law and other constraints or gates/fences it faces when trying to operate, especially inter-nationally? Is it a heuristic in an effort to find the best feasible (but not optimal) solution?

This is a video version of the above analysis (youtube, 4+ minutes): http://youtu.be/gKUIba5KZPM

How can a corporation that operates in let's say 100 countries be socially responsible (in addition to following the all the laws, which is a tall order to begin with) in those 100 different societies with obviously very different social norms? Can a corporation that does that remain "sane" or even true to the concept of CSR? To put it differently, can a corporation be a responsible citizen of 100 different states/countries at the same time?

Globalization systemics: It has to be more than trade

Here are some systemics and dynamics thoughts (written and tweeted on this Sat, afternoon Nov 24, 2012):

What libertarians seem to forget imo is that any group of more than 1 person constitutes a "society" or polis etc. Laws are part of explicit and informal "social contract" between members of a society/group/polis (politics comes from polis). The economy is also a dimension of a social contract when families stopped self producing everything and started trading w/ each other. Intra-polis trade between families created need for prices (even in barter trade) and thus money. But in basic intra-polis/village trade no one was really left "jobless", was mostly specialization benefits.

I am sure economic theories/models (be they of 5000 BCE or 2012 CE) worked much better in 5000 BCE! In a way, extra-polis trade (see eg explorers to "new worlds") disrupted the social/econ contracts/balances of de facto closed societies. Not to mention that lack of competition rules probably had created warlords and other oligarchs inside closed systems/cities/villages.

Why do I say probably? Cos I was not there to see for myself, at 5000 or something BCE. Were you?

Opening up and allowing trade between families in a polis came as part of social and legal contracts/laws/balance. But but inter-polis (ie inter-national) trade/exchanges were not coupled by common laws and a social/econ contract! Were they? No WTO etc.

That is still in 2012 the underpinning element of trade and other inter-state exchanges of all kinds: They fall outside national scopes. Of course so many are in favor of free trade without unification, it sort of allows them to have the cake and eat it too!! Think about it!

Trade between entities not bound together the way a country is bound together is sort of having a cake and eating it too! Sort of "dumping".

That is also part why imo most economic models/theories have failed. They deal in principle and de facto with closed systems. Look at GATT and the WTO: It regulates basically trade but fails to deal with many other dimensions thus systemically unbalanced. What I am saying is that trade, investment, migration and other flows need to happen within a "system". Is such system compatible with any sub-global/earth sovereignties? In other words is even trade compatible with national sovereignty since separate social contracts?

Can comparative advantage really exist in a league (competition) bet 200+ national economies where there is no actual "league"? Does this mean that the world needs to become a federal political entity for "fair" trade to exist? Is it otherwise an "animal farm"? Can national social contracts exist at the same time as free trade exists? Much like libertarians who want to exploit imo the benefits of a society (econ is a social activity) w/o the "costs" of a society ... Or look at how some in the UK want to free-ride Europe and the world w/o any associated social contracts or rules! Pick and choose only!

Thus no wonder that many of the arguments used against the EU are actually prompting localism/separatism in many EU member states!To use absiloute logic, either sovereign states need to become like eg Cuba or North Korea or join together in a federal entity!!

But in any case, imo trade was, back when it started in human history, the first opener for more open systems. But that was thousands of years ago. Not in 2012! The systemics to work need more than trade flows. Or less.

The idea that one can be a sovereign state (city, national, etc) and still engage even in trade with others is imo challenged in this era!  It worked in 1200 BCE or 1400 CE or even 1949 (GATT era) etc but not in the systemics and dynamics of 2000s!

Thus it should come as no real surprise that European and US and world systemics and dynamics are out of control in the 2000s and 2012 and that globalization, regionalization (EU, UNASUR, ASEAN), nationalization (UK), localisation/separatist dynamics do co-exist in 2012!  Because systemically speaking the system is out of whack! Freedom of trade & investment cannot work systemically for long w/o full system integration.