A Danish adage:
Your last suit doesn't have any pockets.' You can't take it with you. You can make all the money you want, but who cares?
Sunday, February 22, 2009
product and era
every product comes of a certain age.
They have an indelible stamp of their beginnings.
cars have had a beginning in the 1900's.
guns in the 1800's.
Rail in the 1850's.
telephones in the 1900's.
they would have taken a modest investments in the beginning.
But as they scale upwards to supply to the masses the investments in capital is huge.
In 1903, Ford in setting up his initial assembly plant for the Model T was able to do so with USD 100,000.
In the 1960, Ford required USD 60 million of investments in its assembly line for the Mustang.
At that time its total investments was USD 6 billion.
Most products in their life cycle require more investments as the product begins to get sophisticated or specialized as in the case of cars.
Today a re jig on its assembly line for a new line of vehicles would require an humongous source of capital. The big 3 Detroit car makers Chrysler, Ford and GM are looking to the government for funds so as to sustain their product lines in a recessionary market.
What this could imply is that products can become sophisticated or specialised such that they can be rendered uneconomical in market downturns.
What one can also infer is that the product lines are outmoded in the current era.
Just as we find running an old car less fuel efficient or uneconomical, maybe products that require such kind of uneconomic investments should be laid to rest.
The fault lies with the car companies itself, to not have invested adequately to come up alternate or superior products to reduce investments in capital machinery.
Technology generally renders the traditional to be uneconomic or inefficient.
Locomotives outmoded the camel and horse.
Airlines outmoded Ocean Liners.
Markets generally align to newer cost effective alternatives.
In such a case, should companies that are outmoded be baled out.
Since there isn't as on date an alternative to the personal car, it looks unlikely.
And as long as cars are dependent on fossil fuels, a newer novel invention from them is highly unlikely.
in all likelihood the big 3 would be baled out by the government.
They have an indelible stamp of their beginnings.
cars have had a beginning in the 1900's.
guns in the 1800's.
Rail in the 1850's.
telephones in the 1900's.
they would have taken a modest investments in the beginning.
But as they scale upwards to supply to the masses the investments in capital is huge.
In 1903, Ford in setting up his initial assembly plant for the Model T was able to do so with USD 100,000.
In the 1960, Ford required USD 60 million of investments in its assembly line for the Mustang.
At that time its total investments was USD 6 billion.
Most products in their life cycle require more investments as the product begins to get sophisticated or specialized as in the case of cars.
Today a re jig on its assembly line for a new line of vehicles would require an humongous source of capital. The big 3 Detroit car makers Chrysler, Ford and GM are looking to the government for funds so as to sustain their product lines in a recessionary market.
What this could imply is that products can become sophisticated or specialised such that they can be rendered uneconomical in market downturns.
What one can also infer is that the product lines are outmoded in the current era.
Just as we find running an old car less fuel efficient or uneconomical, maybe products that require such kind of uneconomic investments should be laid to rest.
The fault lies with the car companies itself, to not have invested adequately to come up alternate or superior products to reduce investments in capital machinery.
Technology generally renders the traditional to be uneconomic or inefficient.
Locomotives outmoded the camel and horse.
Airlines outmoded Ocean Liners.
Markets generally align to newer cost effective alternatives.
In such a case, should companies that are outmoded be baled out.
Since there isn't as on date an alternative to the personal car, it looks unlikely.
And as long as cars are dependent on fossil fuels, a newer novel invention from them is highly unlikely.
in all likelihood the big 3 would be baled out by the government.
Thursday, February 19, 2009
oxymoron
China is a socialist state with a capitalist economic system (a product of democracy however China is not a democratic state).
We are a democratic state with a socialist economic system. We should have a capitalist economic system and free trade, no barriers but strangely we have a protectionist socialist economic system.
Our free democratic system should have created universities, laboratories, entrepreneurs, venture capitalists, inventors, innovators, multinationals and free markets, we seem to have these but they are still lacking vis a vis a USA or W.Europe.
The one thing China does have that we don't is: they have a vision for the future and they know when and how to achieve it.
We have a vision for the future too, but we get lost in the politics, bureaucracy, voters backlash, special interest groups, lobbyists, minorities, backward classes,
etc.
Despite all that paraphernalia, we seem to have got somewhere but the paraphernalia is making our progress much slower, it is holding us back and at the pace we are going I don't know if this pace will mean anything for us for the future.
We may not be someone to reckon with for the future.
We seem to have chosen democracy and not yet savoured its fruits in a capitalist economy.
China seems to have chosen socialism but has enabled a capitalist institution to function that is reaping them dividends.
Dividends that should accrue to us on choosing democracy.
We are a democratic state with a socialist economic system. We should have a capitalist economic system and free trade, no barriers but strangely we have a protectionist socialist economic system.
Our free democratic system should have created universities, laboratories, entrepreneurs, venture capitalists, inventors, innovators, multinationals and free markets, we seem to have these but they are still lacking vis a vis a USA or W.Europe.
The one thing China does have that we don't is: they have a vision for the future and they know when and how to achieve it.
We have a vision for the future too, but we get lost in the politics, bureaucracy, voters backlash, special interest groups, lobbyists, minorities, backward classes,
etc.
Despite all that paraphernalia, we seem to have got somewhere but the paraphernalia is making our progress much slower, it is holding us back and at the pace we are going I don't know if this pace will mean anything for us for the future.
We may not be someone to reckon with for the future.
We seem to have chosen democracy and not yet savoured its fruits in a capitalist economy.
China seems to have chosen socialism but has enabled a capitalist institution to function that is reaping them dividends.
Dividends that should accrue to us on choosing democracy.
walk the talk
On a recent visit to China, I happen to see that there is a great disparity in our walk.
I hear a lot of talk about India being the powerhouse of services and China the powerhouse of manufacturing, but this recent visit kind of made it clear that we can claim to be a powerhouse of sorts but we may not be any powerhouse in the future, though at present we seem to have go something going that has given us some lead over our Asian counterparts.
If you look at our walk and ignore a lot of our talk, I would have to conclude that we have no sense of urgency when it comes to infrastructure, civic planing, resource efficiency and research.
It is as if the the Asian world is doing a lot more on these fronts and we just get up everyday, have a shower and go to work. There is no innovation or
inventions or even for that matter solutions addressing these needs; we just hope and expect that the problems we face with our billion plus people the urbanisation of towns and villages are going to sort themselves out by itself.
In China, however I see a definite plan and action.
I can see them walking the talk.
For us in India it is all talk.
I hear a lot of talk about India being the powerhouse of services and China the powerhouse of manufacturing, but this recent visit kind of made it clear that we can claim to be a powerhouse of sorts but we may not be any powerhouse in the future, though at present we seem to have go something going that has given us some lead over our Asian counterparts.
If you look at our walk and ignore a lot of our talk, I would have to conclude that we have no sense of urgency when it comes to infrastructure, civic planing, resource efficiency and research.
It is as if the the Asian world is doing a lot more on these fronts and we just get up everyday, have a shower and go to work. There is no innovation or
inventions or even for that matter solutions addressing these needs; we just hope and expect that the problems we face with our billion plus people the urbanisation of towns and villages are going to sort themselves out by itself.
In China, however I see a definite plan and action.
I can see them walking the talk.
For us in India it is all talk.
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