When you gotta’ spend, spend. Don’t save…

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It’s budget time again for us.  Content starved news channels and half baked analysts will run riot for days together over this non-event.  Industry associations and business bodies will hold lectures and seminars to enjoy their annual few hours of fame. Few days later, there could be noise of rollbacks and the dust will settle. Man on the street will still be worse off.  Hardly does he care either.

What is certain is we’ll hear more of the `D’ word again – Deficit. It riles me no end to think we are in perennial deficit mode while our neighbor lends money to the Americans to spend and consume.  Where are we missing out? 

The Atlantic figured it out here. 

“China has a high savings rate describes the situation without explaining it. Why should the Communist Party of China countenance a policy that takes so much wealth from the world’s poor, in their own country, and gives it to the United States? To add to the mystery, why should China be content to put so many of its holdings into dollars, knowing that the dollar is virtually guaranteed to keep losing value against the RMB? And how long can its people tolerate being denied so much of their earnings, when they and their country need so much?  

The Chinese government did not explicitly set out to tighten the belt on its population while offering cheap money to American homeowners. But the fact that it does results directly from explicit choices it has made—two in particular. Both arise from crucial controls the government maintains over an economy that in many other ways has become wide open. The situation may be easiest to explain by following a U.S. dollar on its journey from a customer’s hand in America to a factory in China and back again to the T-note auction in the United States.”

When you gotta spend, spend… Don’t save !

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Get a load of “The New Normal”

Roger McNamee of PE firm Elevation Partners and the author of the book “The New Normal”  is quite vocal about change. 

He says, “The New Normal” is the era of the individual. In companies large and small, each person now matters more than ever before. The Internet has finally made it easy to launch and grow a real business. For entrepreneurs and managers, the global economy opens previously untapped sources of supply and demand, cost savings and innovation. Individual investors now have access to tools and knowledge that were, until recently, restricted to professionals.

The individual will have more power than ever as employees and consumers. Independent contractors and will be far more in demand as well as service organizations designed fill a niche for larger ones. Anyone who has strong specialized skills will have far more leverage in the company. China and India will be a powerful, if not dominant, force in the global economy. The stock market will be influenced more by individual investors.

“Forget about the Next Big Thing,” he says. “The New Normal isn’t where you wait for the next boom. It’s about the rest of your life.”  “Getting things right the first time is more important than getting things done quickly.”

That’s the opposite of the late-’90s mantra, “Fail faster to succeed sooner.”  I like that. 

I say “with you, Roger… My business is built on those assumptions. You’d better be right, Mr.McNamee…” 

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The India magic

At a time when the Indian market is agog to know what a ‘world-class’ Vodafone (previously Hutch India) will bring to the Indian mobile phone market, Vodafone is bringing back Hutch India’s world-class practices to Europe. “I’m putting plane loads of managers on flights to India, and I’m telling them ‘go get me the secret of their low-cost business model.’ When we did the deal, we only thought about what we would bring to the business; now we find there’s so much more we can learn from them,” says Mr Arun Sarin, CEO, Vodafone.

Read more on what Sarin thinks Europe can gain from India here.  

No wonder top Indian talent refuses to latch on to overseas postings, leaving only the deadwood to settle down abroad, silently suffering all kinds of racial profiling at the airports and treated like pests and vermin at work.  End of the day, they earn in currencies that’s not even worth the paper they are printed on as are the health of those economies. After all, only the dumbest will leave this blessed land where Chanakya that wrote Arthasasthra was born… 

I’ve always imagined, for an Indian living abroad, it’s like doing time feeding off a breakfast menu that announces the arrival of horribly sick someone - milk and cereals / bread and eggs /croissants / strawberries and cream / fish and chips (all horrible combos) when you have here gastronomic delights like steaming Idlis, lip-smacking chutney(s) and delicious sambar followed by filter coffee for breakfast….!!!!  

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It’s just the beginning

Young middle-class Indians are the happiest people of all and much more satisfied with all aspects of their lives compared to other nationalities, according to a new global survey by Swedish research and consulting firm Kairos Future. The priorities of Indian youth — work, good career and a position with high status, are reflected in their values such as endurance and entrepreneurship.

“Indian youth are also strikingly more optimistic about its future and also about the future of society. The general picture in other countries is that young people tend to be personal optimists but societal pessimists,” according to Kairos Future Group CEO and founder Mats Lindgren. “Indians are focused on their careers and are much more status-oriented than youth in Europe,”  he adds. 

While I say cheers to that, it got me a bit worried too. If that happiness signals contention, I’d rather they be unhappy. We are nowhere near the level of self development that we are capable of achieving with our potential.  Still if young India is content and happy, then I think it is not quite awake to its opportunities and true potential. We could be ignorant, but we can’t afford to be naïve.  My exposure to the developed world and its youth tells me that young India has miles to go.  Be it in its outlook towards life, politics, sense of achievement and creative disruption, we have a lot to learn from others. Young India will have to push (and pull) itself harder and stretch its aspiration levels. There’s no reason to feel comfortable and lax. We’ve got to clean up a lot of mess and in that we’ve an uphill task.  We’ve to educate ourselves about a lot other things than just academics and uplift our poor masses into the mainstream. The hardest task is in presenting the yoke of our population as our strength, a potent, rich market that doesn’t under-consume. If we could achieve that, it will attract large global enterprise to our hinterlands and will create jobs by thousands.  Remember, best way to get rich is by helping others get richer.

We should learn systems approach and intense work culture from Japanese, execution skills from Chinese, attention to detail from Germans, Entrepreneurship and innovation culture from Americans. These are but a few that I’ve had the first hand feel of, but I’m sure there could be other virtues from elsewhere that I may not be exposed.  But please don’t get tempted to absorb the decadent culture of teenage binge drinking, drugs and other bad habits that destroy the health and character of many a youngster in places like England and Italy. That also explains diminishing presence of these once great nations in the rank list of global achievers.  While I think of Lenovo, Google, VMware, SAP and closer home Educomp, Financial Technologies and Suzlon, I can’t think of a single billion $ company that sprouted in the last decade from the UK and Italy. 

So be smart and pick your cherries.  Avoid the rot.  Never rest easy, not for a second.   All the very best.

The ping pong people

William Pesek of Bloomberg makes his point while he says an economy’s biggest export should never be its people.

He goes that nations get smug with large scale “remittances” from abroad that it stops exploring new avenues to attract “investments inward” that creates jobs and opportunities locally. He has got a lot of data to back, with enough of Bloomberg survey results thrown in. 

I finished reading it and had my own questions. Has Pesek been hired by USIS to fuel a debate in the media? Locking down borders is not easy; fueling debates in media, gathering public opinion are…

Most people go on their own. It’s not an economy that drives them away; its lack of depth does. It’s after all a function of demand and supply, isn’t it? You go because someone out there could use you.

What’s wrong with a government that feeds on “remittance inwards” kitty to build its future as long as it lasts?   

[Disclosure : I am not a pro-migration guy]

I think Illegal immigration happens because legal immigration is tough. Not all illegal immigrants harbor ill will. Most of them leave home because they see brighter opportunities elsewhere. Instead of rewarding that acts of enterprise and using the flock to bridge the demand supply gap, nations limit and restrict people traffic by imposing legal restrictions and by making stupid laws. 

Capable students getting Harvard admissions, despite willing to pay full fees, cannot make it because they don’t get Visa – now, isn’t that ridiculous?  Yes, immigrants both legal and illegal will compete for jobs with locals in developed destinations, but then local employers and consumers benefit too; from reduced wages and prices. The immigrants also become consumers and an already vibrant market is further expanded.

When they fly back and forth, the local airlines in the home country orders hundreds of airplanes from Airbus (France) and Boeing (US) creating more jobs there – who benefits?  

Why, it didn’t occur to you Mr.Pesek?  Come on… You can do better.

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America on the buy-list

America has an intuitive, self-correcting economic and political system. Heuristic as it may sound, the development metrics achieved by it are unparalleled and that shows even as it commits giant gaffes (it does nothing small!) it learns from its mistakes fast.  Barring a few exceptions like Vietnam, Iraq and Afghanistan, it has managed to get its act together.

“America is underestimated”, argues this article in The Economist.  Excerpts-

“Other demons are jangling America’s nerves. There is the emergence of China as a rival embryonic superpower, with an economy that may soon be bigger than America’s (at least in terms of purchasing power); the re-emergence of a bellicose, gas-fired Russia; North Korea’s defiance of Uncle Sam by going nuclear, and Iran’s determination to follow suit; Europe’s lack of enthusiasm for George Bush’s war on terror; the Arabs’ dismissal of his democratization project; the Chávez-led resistance to Yankee capitalism in America’s backyard.

China is likely to be more and more in America’s face, whether buying American firms, winning Olympic gold or blasting missiles into space…..An America that stays open to China—an America that sticks to American values—is much more likely to help fashion the China it wants.

Here comes my title score…”If America were a stock, it would be a “buy”: an undervalued market leader, in need of new management.” 

Yeah…but it’s another question how many will stay invested if a Barak Obama or Hillary Clinton are to fix things up 

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