Byline: The US car industry can look to a string of management failures for its demise, writes Sin-ming Shaw



These idiots don't deserve a dime. That was director Michael Moore's comment, during a Larry King TV show recently, while discussing the Big Three Detroit carmakers' plea for a financial bailout. And the Oscar-winning documentary filmmaker is on solid ground when he talks about the industry. His grandfather and father both worked on the assembly lines at General Motors and his uncle was a co-founder of the United Auto Workers Labour Union, the largest manufacturing union in the US.

The "idiots" are, of course, the senior executives at General Motors, Ford and Chrysler who have taken the legendary companies to the brink of bankruptcy.

They are not solely responsible for the demise of Detroit; a number of their predecessors over the past 30-odd years share that infamous honour.

But those "idiots" have continued a failed policy to meet the challenge of a world that, since the first oil crisis in the early 1970s, has increasingly accepted the necessity of energy efficiency and green technology, as well as quality with near-zero maintenance.

Detroit has failed on each of the three counts, despite clear signals from global consumers about what they want.

General Motors was once the icon of the mighty American manufacturing prowess. Former chairman Charles Wilson was defence secretary under president Dwight Eisenhower. He famously proclaimed in the early 1950s that "what was good for GM was good for the country and vice versa".

GM was the largest supplier of military hardware to the allied armies during the second world war and emerged as the largest manufacturing concern in America, as well as the single-largest contributor to the country's gross domestic product in the 1950s. It not only stood for might, but quality, as well. One of its signature cars was the Cadillac that for years represented engineering excellence, money and elegance.

Fast forward to the 21st century. Cadillac, far from a status symbol for the rich, famous and powerful has now become a laughing stock, synonymous with poor quality and bad taste.

Even by the early 1980s, Japan and Germany were already making superbly engineered, reliable and fuel-efficient cars that GM was unable to match.

Today, GM's entire market value (as of December 9) was US$3 billion, a mere 3.3 per cent of Toyota's US$93.4 billion. And that after Toyota's factories had been reduced to rubble by allied bombing after the second world war. GM today is a failed company led for years by "idiots".

The executives from the Big Three even flew to Washington in separate company jets and then, after being reprimanded for their tasteless extravagance while seeking handouts from Congress, later returned - in a pathetic publicity stunt - driving hybrid cars all the way from Detroit.

They must have thought the rest of us were idiots, unable to see through their stupid little ploy. Flying economy class would have made a lot more sense.

Come to think of it, they would have been better off walking; their longer absences from their respective headquarters would have meant fewer stupid and destructive management decisions.

Unproductive American workers and their supposedly union-mandated higher benefits are usually cited as among the primary reasons for Detroit's failure. That is misleading. Non-US carmakers have proved that American workers can be just as good as their Japanese counterparts.

Indeed, going back at least 20 years, management at Toyota and Honda have insisted that their US-made cars were every bit as good as those made in Japan. The record speaks for itself. Nearly all Japanese cars sold in the US are made in America. And their reliability is, indeed, just as good.

Higher wages are a factor, but only because Detroit has never attempted to compete on quality and innovation. Lower wages per se do not automatically translate into competitiveness. Conversely, higher wages do not necessarily mean that your products are overpriced.

China didn't become the "factory of the world" on lower wages. If that were the case, low-wage countries anywhere in Africa, or Indonesia, the Philippines and Thailand would have long ago captured the bulk of the manufacturing done in China. Productivity is the key to any manufacturing success. Wages are high only in relation to the products.

Detroit management has, for too long, ignored its own considerable engineering talent and designers. The best engineers and designers do not look to Detroit for work; they go to the competitors, who now include Chinese and Korean companies.

Should GM be saved? Moore put it well: save the companies and the workers by all means, but get rid of the "idiots" who have always acted arrogantly and ignorantly.

Unless that happens, American taxpayers will be throwing good money after bad. The idiots will spend it so fast, they will be back asking Congress for more.

Sin-ming Shaw is a former stock analyst for a large Los Angeles-based fund management company

"Thailand's future is up for grabs," proclaimed the eminent Thai scholar Thitinan Pongsudhirak, just before the Constitutional Court ruled, in effect, that the ruling People Power Party (PPP) and its two smaller coalition partners are "illegal" and, hence, must disband, due to election fraud. Party leaders, including prime minister Somchai Wongsawat, are barred from politics for five years.

With that, Thailand's popularly elected government fell. Parliament must now reconstitute itself without the three parties loyal to Mr Somchai.

History is repeating itself in Thailand's current crisis, for the PPP under Mr Somchai was the same Thai Rak Thai party formed by ousted prime minister Thaksin Shinawatra, a figure much hated by the Bangkok-based elite. The PPP was created because Thai Rak Thai was outlawed at the time of Thaksin's removal.

What is perverse is that every recent poll in Thailand shows that Thaksin remains wildly popular with the vast majority of Thais, most of whom live outside Bangkok. So, despite the ousting of two Thaksin proxies in a row by the court and the elite, Thais are likely to return yet another Thaksin loyalist if they are allowed to vote in an unrigged election.

The current crisis has been brewing for some time, but the breaking point came when anti-government protesters occupied Bangkok's main airport. They marched under the banner of the People's Alliance for Democracy, but the truth is that they resorted to undemocratic means to topple a democratically elected government.

This parade of toppled and ousted governments has led Pavin Chachavalpongpun, another eminent Thai scholar, to call his country a "failed state". That description may not yet be true, but the shadow of state failure is certainly growing.

Thaksin's unforgivable sin was his violation of Thailand's unwritten rules about how the country's ruling elites are to behave: that the winner in any power play must not shut out his opponents.

But Thaksin, a self-made billionaire, allowed his greed and huge electoral successes to get the better of him. After his two landslide victories, he thought he could have it all.

His supposedly legal "tax planning", which allowed him to pay zero capital gains tax on the billion-dollar sale of his flagship telecom company, Shin Corporation, in 2006, offended the rising urban professional classes.

But Thaksin had, by then, won over Thailand's rural population through popular policies including handouts. That rural base rewarded him by returning him to power, ignoring his personal corruption.

Thaksin's detractors call his rural strategy (which his proxy successors have followed) cynical vote buying. But Thaksin's rural base wonders why the anti-Thaksin groups and his predecessors in power never tried to do much for them. Such vote buying to win hearts and minds is, after all, a fair game for any party to indulge in.

The going "wage" for the "rent-a-crowds" at the heart of the crisis was 300 baht (HK$65) a day per person, plus food, transport and a clean yellow T-shirt - yellow being the royal colour. These protests have run, on and off, for nearly 200 days. It is widely known that the anti-Thaksin business elites provided the money.

Thailand's universally loved and respected king has not taken a public stand on the occupation of the airports nor on any other recent public demonstrations. Some analysts say anti-government leaders have hijacked the royal colour to pretend that they have his support.

Nevertheless it is widely believed that Thaksin committed l鋊e-majest?by attempting to undermine the moral authority of the crown, a cornerstone of the kingdom, perhaps replacing it with a republic.

Until the anti-Thaksin elite can convince the rest of the country that they are serious about winning the hearts and minds of the poor, Thailand will teeter between banana republic and failed state.

Sin-ming Shaw is a former visiting fellow at Oxford University. Copyright: Project Syndicate

BANGKOK – “Thailand’s future is up for grabs,” proclaimed the eminent Thai scholar Thitinan Pongsudhirak just before the country’s Constitutional Court ruled, in effect, that the ruling People Power Party (PPP) and its two smaller coalition partners are “illegal,” and hence must disband due to “election frauds” committed by party executives a year ago. Party leaders, including Prime Minister Somchai Wongsawat, are barred from politics for five years.

With that one stroke, Thailand’s popularly elected government fell. Parliament must now reconstitute itself without the three parties loyal to Somchai.

In Thailand’s current crisis, history is repeating itself, for the PPP under Somchai was the same Thai Rak Thai (Thais Love Thais) Party formed by the ousted Prime Minister Thaksin Shinawatra, a figure much-hated by the country’s Bangkok-based elite. The PPP was created because TRT had been outlawed at the time of Thaksin’s removal.

What is perverse about this is that every recent poll in Thailand shows that Thaksin remains wildly popular with the vast majority of Thais, most of whom live outside Bangkok. So, despite the ousting of two Thaksin proxies in a row by the court and the elite, Thais are likely to return yet another Thaksin loyalist if they are allowed to vote in an unrigged election.

The current crisis has been brewing for some time, but the breaking point came when anti-government protestors occupied Bangkok’s main airport. The protestors march under the banner of the “People’s Alliance for Democracy,” but the truth is that they have resorted to undemocratic means to topple a democratically elected government.

This parade of toppled and ousted governments has led Pavin Chchavalpongpun, another eminent Thai scholar, to call his country a “failed state.” That description may not yet be true, but the shadow of state failure is certainly growing.

Thaksin’s unforgivable sin was his violation of Thailand’s unwritten rules about how the country’s ruling elites are to behave. The key rule here is that the winner in any power play must not shut out his opponents. In a land of “smiles” and plenty, the winner must not take all.

But Thaksin, a self-made billionaire, allowed his greed and huge electoral successes to get the better of him. After his two landslide victories, he thought he could have it all. The traditional Bangkok elites had always thought of him as an uncouth upstart. Once in power, he essentially shut them out of the “grabbing” game, preserving it for himself and his cronies.

Thaksin’s supposedly legal “tax planning,” which allowed him to pay zero capital gains tax on the billion dollar sale of his flagship telecom company, Shin Corporation, in 2006, offended the rising urban professional classes.

But Thaksin had by then won over Thailand’s rural population through popular policies including handouts. Some of these projects were the proverbial bridges to nowhere. But others did meet real rural needs: cutting medical costs, providing subsidized agricultural loans, and maintaining price supports. Thaksin’s rural base rewarded him by returning him to power, ignoring his personal corruption.

Thaksin’s detractors call his rural strategy (which his proxy successors have followed) cynical vote buying. But Thaksin’s rural base wonders why the anti-Thaksin groups and his predecessors in power never tried to do much for them. Such vote buying to win hearts and minds is, after all, a fair game for any party to indulge in.

The going “wage” for the “Rent-A-Crowds” at the heart of the crisis was 300 Baht a day per person, plus food, transportation, and a clean yellow T-shirt – yellow being the Royal color. These protests have run, on and off, for nearly 200 days, with crowd sizes ranging from a few hundred to tens of thousands. It is widely known that the anti-Thaksin business elites provided the money to keep people in the street.

Thailand’s universally loved and respected King has not taken a public stand on the occupation of the airports nor on any other recent public demonstrations. Some analysts say anti-government leaders have hijacked the Royal Color to pretend that they have his support.

Nevertheless it is widely believed that Thaksin committed “lèse majesté” by attempting to undermine the moral authority of the crown, a cornerstone of the kingdom, perhaps replacing it with a republic that he would control. Lèse majesté is a grave crime in Thailand.

It is true that Thailand’s queen herself recently presided over the funeral of a protestor killed in a clash with the police. From that point on, policing of the protests became utterly passive. The queen is rumored to have said she would pay the medical expenses of any injured demonstrators.

The anti-Thaksin factions have failed to produce a knockout in any recent general election. Street protests to paralyze the government remain their sole weapon. But until and unless the anti-Thaksin civilian elite can convince the rest of the country that they are serious about winning the hearts and minds of the poor, Thailand will remain on a knife edge between banana republic and failed state.

Sin-ming Shaw is a former visiting fellow at Oxford University.
Copyright: Project Syndicate, 2008.
BANGKOK – “Thailand’s future is up for grabs,” proclaimed the eminent Thai scholar Thitinan Pongsudhirak just before the country’s Constitutional Court ruled, in effect, that the ruling People Power Party (PPP) and its two smaller coalition partners are “illegal,” and hence must disband due to “election frauds” committed by party executives a year ago. Party leaders, including Prime Minister Somchai Wongsawat, are barred from politics for five years.

With that one stroke, Thailand’s popularly elected government fell. Parliament must now reconstitute itself without the three parties loyal to Somchai.

In Thailand’s current crisis, history is repeating itself, for the PPP under Somchai was the same Thai Rak Thai (Thais Love Thais) Party formed by the ousted Prime Minister Thaksin Shinawatra, a figure much-hated by the country’s Bangkok-based elite. The PPP was created because TRT had been outlawed at the time of Thaksin’s removal.

What is perverse about this is that every recent poll in Thailand shows that Thaksin remains wildly popular with the vast majority of Thais, most of whom live outside Bangkok. So, despite the ousting of two Thaksin proxies in a row by the court and the elite, Thais are likely to return yet another Thaksin loyalist if they are allowed to vote in an unrigged election.

The current crisis has been brewing for some time, but the breaking point came when anti-government protestors occupied Bangkok’s main airport. The protestors march under the banner of the “People’s Alliance for Democracy,” but the truth is that they have resorted to undemocratic means to topple a democratically elected government.

This parade of toppled and ousted governments has led Pavin Chchavalpongpun, another eminent Thai scholar, to call his country a “failed state.” That description may not yet be true, but the shadow of state failure is certainly growing.

Thaksin’s unforgivable sin was his violation of Thailand’s unwritten rules about how the country’s ruling elites are to behave. The key rule here is that the winner in any power play must not shut out his opponents. In a land of “smiles” and plenty, the winner must not take all.

But Thaksin, a self-made billionaire, allowed his greed and huge electoral successes to get the better of him. After his two landslide victories, he thought he could have it all. The traditional Bangkok elites had always thought of him as an uncouth upstart. Once in power, he essentially shut them out of the “grabbing” game, preserving it for himself and his cronies.

Thaksin’s supposedly legal “tax planning,” which allowed him to pay zero capital gains tax on the billion dollar sale of his flagship telecom company, Shin Corporation, in 2006, offended the rising urban professional classes.

But Thaksin had by then won over Thailand’s rural population through popular policies including handouts. Some of these projects were the proverbial bridges to nowhere. But others did meet real rural needs: cutting medical costs, providing subsidized agricultural loans, and maintaining price supports. Thaksin’s rural base rewarded him by returning him to power, ignoring his personal corruption.

Thaksin’s detractors call his rural strategy (which his proxy successors have followed) cynical vote buying. But Thaksin’s rural base wonders why the anti-Thaksin groups and his predecessors in power never tried to do much for them. Such vote buying to win hearts and minds is, after all, a fair game for any party to indulge in.

The going “wage” for the “Rent-A-Crowds” at the heart of the crisis was 300 Baht a day per person, plus food, transportation, and a clean yellow T-shirt – yellow being the Royal color. These protests have run, on and off, for nearly 200 days, with crowd sizes ranging from a few hundred to tens of thousands. It is widely known that the anti-Thaksin business elites provided the money to keep people in the street.

Thailand’s universally loved and respected King has not taken a public stand on the occupation of the airports nor on any other recent public demonstrations. Some analysts say anti-government leaders have hijacked the Royal Color to pretend that they have his support.

Nevertheless it is widely believed that Thaksin committed “lèse majesté” by attempting to undermine the moral authority of the crown, a cornerstone of the kingdom, perhaps replacing it with a republic that he would control. Lèse majesté is a grave crime in Thailand.

It is true that Thailand’s queen herself recently presided over the funeral of a protestor killed in a clash with the police. From that point on, policing of the protests became utterly passive. The queen is rumored to have said she would pay the medical expenses of any injured demonstrators.

The anti-Thaksin factions have failed to produce a knockout in any recent general election. Street protests to paralyze the government remain their sole weapon. But until and unless the anti-Thaksin civilian elite can convince the rest of the country that they are serious about winning the hearts and minds of the poor, Thailand will remain on a knife edge between banana republic and failed state.

Sin-ming Shaw is a former visiting fellow at Oxford University.
Copyright: Project Syndicate, 2008.
www.project-syndicate.org

We are in the eye of the "perfect financial storm". More fortunes will be lost. Ludicrously lucrative Wall Street jobs are gone.

How ludicrous have they been? "In 2007 alone, the five-largest Wall Street firms paid their staff US$66 billion, including US$39 billion in bonuses", a recent Bloomberg report claimed. Among these beneficiaries were many in Hong Kong, an important global financial hub.

The two US presidential candidates have condemned the Wall Street culture as one of "greed and corruption". These are strong words for what was once the habitat of "Masters of the Universe", the high-testosterone symbol of global financial capitalism.

"Wall Street" has, for sometime, been more than a street in lower Manhattan. Its avaricious culture has long been adopted in other countries.

Joseph Yam Chi-kwong, head of the Hong Kong Monetary Authority - whose salary is several times higher than that of Chief Executive Donald Tsang Yam-kuen - has always justified his remuneration by referring to Wall Street financial sector salaries.

Writer Tom Wolfe coined the term "Masters of the Universe" to satirise the vain, arrogant Wall Street traders. But investment bankers and traders took the words literally. They never knew the joke was on them.

There is perhaps a silver lining to the destruction of Wall Street. The humiliating implosion of blue-chip investment banks should give pause to future generations of the "best and the brightest" young minds all over the world educated at the elite universities. They should reconsider whether selling complex investment ideas is such a worthwhile way to spend one's limited time on Earth.

Providing financial services is a respectable profession but the bloated financial rewards to those "masters" playing with other people's money in years past have been abnormal and unsustainable.

Ask the elite Hong Kong families and I bet eight out of 10 would tell you their children have gone to a branded university and are working, or seek to work, in an investment bank. Forty per cent of Princeton graduates in recent years have gone to Wall Street - more than the combined total choosing law and medicine, according to Daily Princetonian, the student paper. At its state-of-the-art engineering and science graduate school, more than 55 per cent of new students are foreign.

One Princeton professor told me that, excluding just the Chinese student contingent, the engineering school would have to close, unable to justify its existence financially. A little dramatic perhaps, but probably not far from the truth. Other top-ranked graduate engineering and sciences schools such as MIT and Berkeley report similar figures. Consider the latest report from the American Society of Civil Engineers. It has given a D (a non-pass grade) to the conditions of basic infrastructure in the US; D+ for aviation. D for dams, energy, hazardous waste, roads, schools and public transit; C- for rail, public parks; and C for bridges. There isn't one grade higher than C+ for a country whose basic infrastructure used to set the world's gold standards.

Easy money and greed have indeed twisted the values of many of our best and brightest, be they in the US or Hong Kong, and detracted them from pursuing careers that actually produce something "real".

The Harvard Crimson student paper recently reported that economics professor Kenneth Rogoff received "spontaneous applause at a public forum for his jabs at recent Harvard graduates who had gone into investment banking by saying that many of them would now be free to 'go into other activities'."

There is a huge demand for those who want to do something "real", rather than playing "master of the universe", a role that was never that real to begin with. This is a perfect time in the perfect storm for parents and youngsters to reconsider chasing a career whose prime has passed.

Sin-ming Shaw was a former visiting fellow at Harvard and Princeton