Posts tagged ‘economy’


Capitalism falls down when it’s rigged

04.12.2019

Martin Wolf, writing in the Financial Times, touches on a few points that resonate with my readings over the years.
   He believes capitalism, as a system, is not a bad one, but it is bad when it is ‘rigged’; and that Aristotle was indeed right (as history has since proved) that a sizeable middle class is necessary for the functioning of a democracy.
   We know that the US, for instance, doesn’t really do much about monopolies, having redefined them since the 1980s as essentially OK if no one gets charged more. Hence, Wolf, citing Prof Thomas Philippon’s The Great Reversal, notes that the spikes in M&A activity in the US has weakened competition. I should note that this isn’t the province of “the right”—Philippon also shows that M&A activity reduced under Nixon.
   I alluded to the lack of competition driving down innovation, but Wolf adds that it has driven up prices (so much for the US’s stance, since people are being charged more), and resulted in lower investment and lower productivity growth.
   In line with some of my recent posts, Wolf says, ‘In the past decade, Amazon, Apple, Facebook, Google, and Microsoft combined have made over 400 acquisitions globally. Dominant companies should not be given a free hand to buy potential rivals. Such market and political power is unacceptable. A refurbishment of competition policy should start from the assumption that mergers and acquisitions need to be properly justified.’
   History shows us that Big Tech’s acquisitions have not been healthy to consumers, especially on the privacy front; they colluded to suppress wages before getting busted. In a serious case, according to one company, Google itself commits outright intellectual property theft: ‘Google would solicit a party to share with it highly confidential trade secrets under a non-disclosure agreement, conduct negotiations with the party, then terminate negotiations with the party professing a lack of interest in the party’s technology, followed by the unlawful use of the party’s trade secrets in its business.’ (The case, Attia v. Google, is ongoing, I believe.) Their own Federal Trade Commission said Google ‘used anticompetitive tactics and abused its monopoly power in ways that harmed Internet users and rivals,’ quoting the Murdoch Press. We see many undesirable patterns with other firms there exercising monopoly powers, some of which I’ve detailed on this blog, and so far, only Europe has had the cohones to slap Google with massive fines (in the milliards, since 2017), though other jurisdictions have begun to investigate.
   As New Zealand seeks to reexamine its Commerce Act, we need to ensure that we don’t merely parrot the US and UK approach.
   Wolf also notes that inequality ‘undermines social mobility; weakens aggregate demand and slows economic growth.’ The central point I’ve made before on Twitter: why would I want people to do poorly when those same people are potentially my customers? It seems to be good capitalism to ensure there’s a healthy base of consumers.

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Posted in business, internet, politics, USA | No Comments »


Baojun doesn’t scream ‘premium’ and ‘next-gen tech’ to me

10.10.2019

I have to agree with Yang Jian, managing editor of Automotive News China, that Baojun’s new models ‘obviously’ failed to reverse the brand’s sales’ decline.
   It is obvious given that the vehicles are priced considerably above the previous ones, and despite its next-gen tech, there’s no real alignment with what Baojun stands for.
   There might be a new logo (débuted January 2019) but GM expects that this, the new premium products, and (I would expect) other retail updates would undo nearly nine years of brand equity.
   The associations of Baojun as an entry-level brand run deeply, and the new models are like, if you’ll pardon the analogy and the use of another car group, taking the next Audis and sticking a Škoda badge on them. Except even stylistically, the new Baojuns bear little resemblance to the old ones—they’re that radical a departure.
   I wonder if it would be wiser to keep Baojun exactly where it was, and let it decline, while launching the new models under a more upscale GM brand, even one perceived as ‘foreign’ or ‘joint venture’ by Chinese consumers.
   DaimlerChrysler made the mistake of killing Plymouth when it was surplus to requirements, then found itself without a budget brand when the late 2000s’ recession hit. Chrysler, once the upper-middle marque, had to fill the void.
   There’s a reason companies like GM and Volkswagen have brands spanning the market: they feed buyers into the corporation, and there’s something for everyone.
   And while it’s possible to move brands upscale, creating four lines where the base model prices exceed the highest price you have ever charged for your other base models is just too sudden a shift.

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Posted in branding, cars, China, technology, USA | No Comments »


Does TPPA redux protect Big Tech?

25.01.2018


SumOfUs/Creative Commons

Prof Jane Kelsey, in her critique of the still-secret Comprehensive and Progressive Agreement on Trans-Pacific Partnership (formerly the Trans-Pacific Partnership Agreement [TPPA]) notes in The Spinoff:

The most crucial area of the TPPA that has not received enough attention is the novel chapter on electronic commerce—basically, a set of rules that will cement the oligopoly of Big Tech for the indefinite future, allowing them to hold data offshore subject to the privacy and security laws of the country hosting the server, or not to disclose source codes, preventing effective scrutiny of anti-competitive or discriminatory practices. Other rules say offshore service providers don’t need to have a presence inside the country, thus undermining tax, consumer protection and labour laws, and governments can’t require locally established firms to use local content or services.

   If this new government is as digitally illiterate as the previous one, then we are in some serious trouble.
   I’m all for free trade but not at the expense of my own country’s interests, or at the expense of real competition, and the Green Party’s position (I assume in part operating out of caution due to the opaqueness of the negotiations) is understandable.
   Protecting a partly corrupt oligopoly is dangerous territory in a century that will rely more heavily on digital commerce.
   While there may be some valid IP reasons to protect source code, these need to be revealed in legal proceedings if it came to that—and one hopes there are provisions for dispute settlement that can lift the veil. But we don’t really know just how revised those dispute settlement procedures are. Let’s hope that Labour’s earlier stated position on this will hold.
   Google has already found itself in trouble for anticompetitive and discriminatory practices in Europe, and if observations over the last decade count for anything, it’s that they’ll stop at nothing to try it on. Are we giving them a free ride now?
   Despite Prof Kelsey’s concerns, I can accept that parties need not have a presence within a nation or be compelled to use local content or services. But the level of tax avoidance exhibited by Google, Facebook, Apple et al is staggering, and one hopes that our new government won’t bend over quite as easily. (While I realize the US isn’t part of this agreement, remember that big firms have subsidiaries in signatory countries through which they operate, and earlier trade agreements have shown just how they have taken on governments.)
   She claims that the technology minister, the Hon Clare Curran, has no information on the ecommerce chapter’s analysis—and if she doesn’t have it, then what are we signing up to?
   However, Labour’s inability to be transparent—something they criticized the previous government on—is a weak point after a generally favourable start to 2018. The Leader of the Opposition is right to call the government out on this when his comment was sought: basically, they were tough on us when we were in government, so we hope they’ll live up to their own standards. Right now, it doesn’t look like it. I suspect Kelsey is now the National Party fan’s best friend after being vilified for years. Bit like when Nicky Hager (whom one very respected MP in the last Labour government called a right-wing conspiracy theorist) wrote Seeds of Distrust.
   And the solutions that Kelsey proposes are so simple and elegant that it’s daft they weren’t followed, since they are consistent with the Labour brand. I know, trade agreements can stay confidential at this stage and this isn’t unprecedented. But that’s not what Labour said it wanted. At least these suggestions would have shown some consistency with Labour’s previous positions, and given some assurance that it’s in charge.

What should a Labour-led government have done differently? First, it should have commissioned the revised independent economic assessment and health impact analyses it called for in opposition. Second, it should have shown a political backbone, like the Canadian government that also inherited the deal. Canada played hardball and successful demanded side-letters to alter its obligations relating to investment and auto-parts. Not great, but something. New Zealand should have demanded similar side-letters excluding it from ISDS as a pre-requisite for continued participation. Third, it should have sought the suspension of the UPOV 1991 obligation, which has serious Treaty implications, and engaged with Māori to strengthen the Treaty of Waitangi exception, as the Waitangi Tribunal advised. Fourth, it should have withdrawn its agreement to the secrecy pact.

   I once joked that National and Labour were basically the same, plus or minus 10 per cent. On days like this, I wonder if I was right.

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Posted in business, globalization, New Zealand, politics, technology | 1 Comment »


Too many white cars make fake news

17.09.2017


A photo taken in Wellington with a test car I had for Lucire. White cars aren’t the over-represented colour in New Zealand: guess from this photo what is.

A friend of mine put me on to this Fairfax Press Stuff article, entitled