Former Malaysian PM:'"Europe is poor so should live within its means"

Brussels Sprout

Former Malaysian PM says Europe overpays its workers, isn't productive and needs to face up to that fact that it's not as rich as it thinks it is anymore.

According to former Malaysian Prime Minister Mahathir Mohamad, the message is simple but devastating: Europe must face up to the new economic reality.

"Europe... has lost a lot of money and therefore you must be poor now relative to the past," he reasons in an interview with BBC World Service's Business Daily.

"And in Asia we live within our means. So when we are poor, we live as poor people. I think that is a lesson that Europe can learn from Asia."

Dr Mahathir believes European leaders are in a state of denial.

"You refuse to acknowledge you have lost money and therefore you are poor," he says.

"And you can't remedy that by printing money. Money is not something you just print. It must be backed by something, either good economy or gold."

Dr Mahathir may be 86 years old, but he still holds very strong views.

In particular, he believes Europe and the West must begin the long slow process of restructuring their economies to reduce their dependence on the financial sector.

"I think you should go back to doing what I call real business - producing goods, providing services, trading - not just moving figures in bank books, which is what you are doing."

His big bugbear is still currency trading, which he believes did huge damage to the Malaysian economy during the financial crisis that hit Asia in the late 1990s.

"Currency is not a commodity", he says.

"You sell coffee. Coffee… can be ground and made into a cup of coffee.

"But currency, you cannot grind it and make it into anything. It is just figures in the books of the banks and you can trade with figures in the books of banks only.

"There must be something solid to trade, then you can legitimately make money."

"To recover your wealth you have to work over many years to rebuild your capacities, to produce goods and services to sell to the world, to compete with the eastern countries," he says.

European workers are overpaid and unproductive, Dr Mahathir believes.

"I think you have paid your workers far too much money for much less work," he says.

"So you cannot expect to live at this level of wealth when you are not producing anything that is marketable."

A lot of uncomfortable home truths there. A few months ago we had a Chinese official calling Europe a welfare culture. Expect more of these kind of comments as there is a gradual shift in power from west to east.

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Solair

Europe's not that poor to be quite honest. Rather, it is suffering from largely self-inflicted internal debt bubbles.

The European Union has a GDP of US $16.282 trillion which is absolutely enormous e.g. China is US$ 5.88 trillion, USA 14.58 trillion.

Chucking out the entire social-democratic model will simply not work. I would see the EU and possibly the US reverting to the old tariff and trade barrier system to protect the internal markets before they would start to really damage standard of living. Electorates simply would not stand for it.

The reality is that without the US and EU markets, the Asian economies would also collapse back to developing country levels. So, it's not as simple as the commentator from Malaysia is making out.

Huge damage is being done to western economies by unrealistically low, predatory pricing by certain other economies particularly China.

There is no reason why we should just throw open absolutely everything and compete so viciously that we destroy ourselves in the process. As it stands at the moment, certain Asian countries are producing goods with almost slave-labour wages, low / no environmental standards, and currency distortions.

If we all do that, we all end up back in the dark ages socially and economically! It's simply not going to happen as, particularly in Europe, Governments would be hung out to dry!

Europeans and Americans fought long and hard to improve labour standards and lifestyles. Unfettered globalisation and bullying by companies is eating away at that.

There's going to come a time when we need to make a decision - is all this completely unrestricted trade actually undermining our economies...

I really don't think that this will be politically acceptable for very much longer as standards of living do begin to slip.

jmayo

Solair wrote: »

Europe's not that poor to be quite honest. Rather, it is suffering from largely self-inflicted internal debt bubbles.

The European Union has a GDP of US $16.282 trillion which is absolutely enormous e.g. China is US$ 5.88 trillion, USA 14.58 trillion.

Chucking out the entire social-democratic model will simply not work. I would see the EU and possibly the US reverting to the old tariff and trade barrier system to protect the internal markets before they would start to really damage standard of living. Electorates simply would not stand for it.

But electorates have stood for it.
Remember how many people were bitching how Irish (and indeed European farmers) were too well looked after and that they should not put pressure on peter mandelson about the Doha round of trade talks ?

There are a lot of people around here who reckon we should support non Western imports and allow completly free trade with developing countries or indeed the growing Asian economies.
The thing these people fail to notice is that the very much cheaper imports are screwing people here at home.

Solair wrote: »

The reality is that without the US and EU markets, the Asian economies would also collapse back to developing country levels. So, it's not as simple as the commentator from Malaysia is making out.

Huge damage is being done to western economies by unrealistically low, predatory pricing by certain other economies particularly China.

But who are the companies often behind this and benefiting from this, but Western companies ?
Apple produces it's iphones in China.
Why don't they set up a production plant in the US ?

Actually so far the ones that benefit most from free global trade are not the people in the growing economies, but the ones that own and control the great corporations and these are people in the West.
Yes the economies of the likes of China, India, Malaysia grow exponentially, but so does the operating profits of the multinationals that site their manufacturing there.

Solair wrote: »

There is no reason why we should just throw open absolutely everything and compete so viciously that we destroy ourselves in the process. As it stands at the moment, certain Asian countries are producing goods with almost slave-labour wages, low / no environmental standards, and currency distortions.

If we all do that, we all end up back in the dark ages socially and economically! It's simply not going to happen as, particularly in Europe, Governments would be hung out to dry!

Europeans and Americans fought long and hard to improve labour standards and lifestyles. Unfettered globalisation and bullying by companies is eating away at that.

There's going to come a time when we need to make a decision - is all this completely unrestricted trade actually undermining our economies...

I really don't think that this will be politically acceptable for very much longer as standards of living do begin to slip.

So far Western governments have been feeding their people the line that we are moving up the food chain.
We will no longer be working in factories, we will be the designers, the capital providers, the ones with the knowledge.

Look how our own governments (last one in particular) started all the sh**e about a smart economy, a knowlegde based economy.
Except not everyone is a design engineer, not everyone is a leading edge chemist or investment banker.
Wait until the pension timebomb hits to really see how bad the Western economies are going to fair.

The other thing in all of this is that we the West will not be the ones coming up with the ideas for much longer.
So far the Chinese have been robbing ideas and technology, then producing copies at a cheaper price than the brands owned by western multinationals.
They can get away with this through lax to no copywrite protection in China, but how much longer before they bypass the west altogether as they develop their own home grown home designed cheaper goods.

Japan did the exact same and how long was it before they were the leaders in house hold consumer electronics and cars.

Within 20/30 years we won't be talking about the latest Apple technology, we will be talking about the latest Aigo or Compal device.

Brussels Sprout

jmayo wrote: »

The other thing in all of this is that we the West will not be the ones coming up with the ideas for much longer.
So far the Chinese have been robbing ideas and technology, then producing copies at a cheaper price than the brands owned by western multinationals.
They can get away with this through lax to no copywrite protection in China, but how much longer before they bypass the west altogether as they develop their own home grown home designed cheaper goods.

Japan did the exact same and how long was it before they were the leaders in house hold consumer electronics and cars.

Within 20/30 years we won't be talking about the latest Apple technology, we will be talking about the latest Aigo or Compal device.

Interesting point. I was reading before about how innovative and creative thinking is a problem with Chinese due to the fact that from a young age they are encouraged to conform. Whilst this has its political advantages in that a Chinese Arab spring is less likely it leads to problems when it comes to dreaming up new products and processes.

[Jackass]

If you look at the turn of the 20th century, the UK was the most industrialised nation on earth, and western Europe was THE super power in terms of economic productivity.

Over that century, USA caught up, and particularly post WWII, overtook Britain and Europe, and in the second half bypassed us all to become the Economic powerhouse of the world.

Certainly, in our life time, the emphasis will shift eastern, with China and Japan and to a lesser extent, India become the industrial and economic centres of the the world. Dubai for example, is a city they want to build up to surpass New York in terms of density and buildings and population, in 50 years and with all the oil money, I don't doubt that it will. Already this region holds all the aces - oil.

Historically, this crash will probably be seen as the tipping point that we will probably never recover to previous levels, and I think the western dominance peaked at the turn of the 21st century, and the torch is being passed, and it'll take about 50 years before it's completed.

I suppose we can only wish in Europe to one day be as progressive and sensible as the Malaysians.

jmayo

Brussels Sprout wrote: »

Interesting point. I was reading before about how innovative and creative thinking is a problem with Chinese due to the fact that from a young age they are encouraged to conform. Whilst this has its political advantages in that a Chinese Arab spring is less likely it leads to problems when it comes to dreaming up new products and processes.

There might be some truth there but the Chinese leadership either have to accept that for them to move on from purely performing cheap labour manufacturing for others they will have to open up.
See how the Sth Koreans moved and then see the unrest that resulted when the younger generations demanded more than the preceeding ones had accepted.

Also in China with such a huge population and such a huge amount of educated graduates in the sciences, engineering, design you are bound to get a few bright sparks.

The only thing that China has to build is a similar startup venture capital infrastructure and a startup ethos to allow these bright sparks flourish.

[Jackass] wrote: »

If you look at the turn of the 20th century, the UK was the most industrialised nation on earth, and western Europe was THE super power in terms of economic productivity.

The only remaining European industrialised superpower is Germany who didn't chose to screw it's own industrialised sector like the British (both at worker and government level).

[Jackass] wrote: »

Over that century, USA caught up, and particularly post WWII, overtook Britain and Europe, and in the second half bypassed us all to become the Economic powerhouse of the world.

Certainly, in our life time, the emphasis will shift eastern, with China and Japan and to a lesser extent, India become the industrial and economic centres of the the world. Dubai for example, is a city they want to build up to surpass New York in terms of density and buildings and population, in 50 years and with all the oil money, I don't doubt that it will. Already this region holds all the aces - oil.

I can't ever see the likes of Dubai being as successful as the likes of New York, Hong Kong or Singapore.
The rulers have all these grand plans, but they need Westerners and Easterners, who they actually don't really want to live there permanently, to actually achieve their goals.
Around 40% of the population are Indians, with only about 20 % odd being actually native.

They have built a large port, have both IT and financial service companies based there, but their other areas of recent huge growth was tourism and real estate.
And we know what happened to the last one.

Scofflaw

On the other hand, twenty-thrty years ago the word was that the Japanese were going to eat all the other economies on earth, for much the same reasons now given in respect of China.

And, come to that, thirty years ago it was clear that the UK was a complete has-been, with nothing left to do but decline gracefully to third world status.

Twenty years ago it was clear that Germany was a sclerotic dinosaur who would be passed out by nimbler nations. The Asian tigers were riding high.

And ten years ago Ireland was one of the most competitive countries on earth.

And then things change.

cordially,
Scofflaw

jmayo

Scofflaw wrote: »

On the other hand, twenty-thrty years ago the word was that the Japanese were going to eat all the other economies on earth, for much the same reasons now given in respect of China.

The evils of property speculation helped put paid to their ambitions.

I would reckon China is probably now where Japan were back in the late 60s.
As I said earlier they were producing, they were copying but they were not leading.
That day is around the corner and when they are that stage they are also consuming a huge chunk of their own product.
You do know that the one of the biggest markets for the latest iphone is China itself.

China has some problems and disadvantages that Japan didn't, but it also has advantages that Japan didn't.

Scofflaw wrote: »

And, come to that, thirty years ago it was clear that the UK was a complete has-been, with nothing left to do but decline gracefully to third world status.

But the UK is still a shadow of it's former self.
For instance 30 years ago, they had some semblance of an indigenous automotive manufacturing industry.
Today they have shag all bar a few factories owned by some foreign multinational.

Scofflaw wrote: »

Twenty years ago it was clear that Germany was a sclerotic dinosaur who would be passed out by nimbler nations. The Asian tigers were riding high.

And today Germany is tied to the PIIGS.

Scofflaw wrote: »

And ten years ago Ireland was one of the most competitive countries on earth.

And then things change.

In Ireland's case the idiots were allowed run amuck.

There may be twists and turns, but seriously claiming that the future economic powers are not going to be in the Far East is like claiming pensions are not going to be a problem for the Western economies.

Cool Mo D

Just because some nations become richer, does not mean other nations are poorer.

For example, the UK was once the most powerful nation in the world. It is not now, but it is still a much richer country now, than it was then.

And it is a myth that the manufacturing industry has collapsed in the USA and the UK. Both countries are manufacturing more than they ever had before. The UK is the sixth largest manufacturing country in the world, and the USA is the largest, and manufactures 2.5 times the amount of stuff that China does.
What has changed is that manufacturing is no longer a major source of low-skill high-income jobs for the working class, since factories are automated to a huge degree. In terms of output, manufacturing in western countries is doing just fine.

Europe and the USA are by far the richest parts of the world, and even if global growth rates remain as they are now, it will be 30-50 years before the average person in south-east Asia has an income comparable to the average European.

Scofflaw

jmayo wrote: »

The evils of property speculation helped put paid to their ambitions.

I would reckon China is probably now where Japan were back in the late 60s.
As I said earlier they were producing, they were copying but they were not leading.
That day is around the corner and when they are that stage they are also consuming a huge chunk of their own product.
You do know that the one of the biggest markets for the latest iphone is China itself.

China has some problems and disadvantages that Japan didn't, but it also has advantages that Japan didn't.

But the UK is still a shadow of it's former self.
For instance 30 years ago, they had some semblance of an indigenous automotive manufacturing industry.
Today they have shag all bar a few factories owned by some foreign multinational.

But are hardly the third-world country they were predicted to become.

jmayo wrote: »

And today Germany is tied to the PIIGS.

In Ireland's case the idiots were allowed run amuck.

Yes, it's a record of happenstance and coincidence.

jmayo wrote: »

There may be twists and turns, but seriously claiming that the future economic powers are not going to be in the Far East is like claiming pensions are not going to be a problem for the Western economies.

Oh, I expect them to become economic heavyweights, certainly, but there will still likely be half a billion people or more in Europe, and so on. The problem is that while the initial development of an under-developed economy is very rapid, that growth spurt doesn't continue. You can't keep undercutting other countries by paying lower wages while developing an affluent population.

cordially,
Scofflaw

Roadend

jmayo wrote: »

But who are the companies often behind this and benefiting from this, but Western companies ?
Apple produces it's iphones in China.
Why don't they set up a production plant in the US ?

Watching one of the news channels the other day, they said that to setup production in the US would require 8k+ engineers. This would take nearly a year of recruiting in the states whereas it would take 15 days in China. Take that whatever way you will.

Icepick

China is gonna have huge demographic and environmental problems.

stringed theory

The West invents printing and soon we have publishing houses producing large numbers of books, newspapers, a surge in education etc. China invents printing and even hundreds of years later it's use is mainly confined to producing prayer sheets in monasteries. The same with many other inventions that Chinese civilization was unable to make sensible use of.
Even today, Chinese society seriously strait-jackets innovation, and the list of those that the rest of the world has felt compelled to emulate is impressively short.

Solair

I think the comparisons between China and Postwar Japan are a bit misleading to be quite honest.

Postwar Japan developed into a very stable, modern democracy and rapidly became one of the world's most developed countries in areas other than just economics. It developed a very strong society built very solid foundations of social democracy quite comparable to Western Europe, Canada, Australia etc.

China, despite the outward impressions, is still a dictatorship with extreme oppression of academics, political movements, artists, journalists and anything that could challenge the regime.

You could however easily draw parallels between Japan and Korea and other liberal, democratic Asian countries.

I would predict that China will quite likely implode due to an inability of the regime to recognise that it needs to rollout democracy.

There are MANY scenarios which could lead to this:

Scenario 1:
Workers get sick of bad conditions, organised labour becomes a major political force and there's an uprising of some sort.

Scenario 2:
Uprising happens in a city and a Tiananmen Square type incident happens again. This time in the full view of social media. Resulting outrage causes civil war.

Scenario 3:
One of the more liberal and progressive and economically wealthy regions develops a pro-democracy movement and attempts to exert self-Government and results in a nasty conflict with Beijing.

There are lots of other possibilities that could result in China turning into a total mess.

southsiderosie

Solair wrote: »

I think the comparisons between China and Postwar Japan are a bit misleading to be quite honest.

Postwar Japan developed into a very stable, modern democracy and rapidly became one of the world's most developed countries in areas other than just economics. It developed a very strong society built very solid foundations of social democracy quite comparable to Western Europe, Canada, Australia etc.

China, despite the outward impressions, is still a dictatorship with extreme oppression of academics, political movements, artists, journalists and anything that could challenge the regime.

You could however easily draw parallels between Japan and Korea and other liberal, democratic Asian countries.

I would predict that China will quite likely implode due to an inability of the regime to recognise that it needs to rollout democracy.

I disagree with your analysis a bit here.

Japan was a regional industrial power before the war. So its post-war reconstruction (like Germany's) was arguably a return to form.

South Korea was not a liberal democracy until relatively recently. Its 'economic miracle' happened under a military dictatorship. Of the original 'Asian Tigers' - Japan, South Korea, Hong Kong, and Taiwan - two only democratized in the 1980s (and a third was a colony). Singapore is not a liberal democracy, but its economic growth over the last 40+ years has been nothing short of astounding. There is very little relationship in Asia between democracy and economic development - something Lee Kuan Yew, the former PM of Singapore, likes to point out.

Now I would say that China is a different animal. It isn't a trade-oriented city-state like Hong Kong or Singapore, and its population (and therefore its potential domestic market) dwarfs that of Japan and South Korea. But I have to wonder how sustainable its growth is - especially since I don't think its growing middle class is well-off enough to pick up the slack should the economic slump in the West become prolonged.

To go back to Mahathir Mohamad's comments, while I would agree that most Western governments need to get their domestic spending under control, it's a basic mathematic principle that not all countries can have a trade surplus - if one country has a surplus, someone else has to have a deficit! Asia's economic growth has largely depended on Western consumption, and a lot of that consumption is (was) possible because of cheap credit and public sector employment. There are fundamental underlying problems in both the global trading system and in most of the world's largest economies (including China's), so instead of finger-wagging, perhaps he and other exporting countries should take some of the underling political dynamics in the West more seriously? Because it is beginning to seem like the 1920s all over again.

SupaNova

The eurozone ran a trade surplus in 2010, i.e exported more goods and services than it imported, the US ran a $500 billion goods and services deficit. So the Malaysian PM's comments would be far better directed at the US.

Scofflaw

Singapore is not a liberal democracy, but its economic growth over the last 40+ years has been nothing short of astounding. There is very little relationship in Asia between democracy and economic development - something Lee Kuan Yew, the former PM of Singapore, likes to point out.

Singapore is interesting - it's a benign dictatorship, which the later Greek philosophers regarded as probably the best form of government. The tie-in of large companies to the regime is very tight - the state is organised more like a business, with the PM as CEO.

cordially,
Scofflaw

Wibbs

[Jackass] wrote: »

Certainly, in our life time, the emphasis will shift eastern, with China and Japan and to a lesser extent, India become the industrial and economic centres of the the world.

Maybe, maybe not and there are more maybe not's on the balance sheet IMHO. India has serious issues with infrastructure and widespread corruption for a start

Dubai for example, is a city they want to build up to surpass New York in terms of density and buildings and population, in 50 years and with all the oil money, I don't doubt that it will. Already this region holds all the aces - oil.

And that is pretty much all they have. As nations attempt to more and more reduce their need for oil, just having one trump card won't be enough. If nations like that try to sabre rattle because of this commodity, other nations will find a way around it. People tend to forget that Germany prosecuted a world war with no natural oil reserves of their own and remarkably little in the way of stock. While one of their objectives were ME oil fields, they developed artificial oil in the interim.

Historically, this crash will probably be seen as the tipping point that we will probably never recover to previous levels, and I think the western dominance peaked at the turn of the 21st century, and the torch is being passed, and it'll take about 50 years before it's completed.

Western dominance has been around for a very very long time. It's had lots of peaks and troughs. However during those thousands of years only once has the average Chinese peasant had a higher per capita worth than the average European peasant(The Tang Dynasty, 7th/8th centuries). And that's in our "dark ages". I have the figures somewhere I'll try and dig em out. A Chinese peasant of the year 1000 would not have had a very different life to a Chinese peasant in 1600, or 1700 or 1800, hell 1900+ When the western nations went into China in the 19th century they had no decent roads outside the cities, never mind railways or extensive canal networks. Compare that with the trajectory of the average person in the west over that time. Manufacturing dominance? China has been kinda here before. They flooded the west with cheap and high quality goods throughout the 17th and 18th centuries. That's why your granny calls the good plates "china". What happened? Europe pretty quickly developed the technology and soon broke their dominance. That's why your granny may call another plate "delph".

Scofflaw wrote: »

Oh, I expect them to become economic heavyweights, certainly, but there will still likely be half a billion people or more in Europe, and so on. The problem is that while the initial development of an under-developed economy is very rapid, that growth spurt doesn't continue. You can't keep undercutting other countries by paying lower wages while developing an affluent population.

Exactly. That's their major problem. The US could in theory close their borders in the morning and just trade among themselves. Yes the standard of living would drop, but if China was to do the same it would plummet. Never mind that for the vast majority of Chinese beyond the cities their standard isn't exactly 1st world anyway, hence the low wages.

stringed theory wrote: »

The West invents printing and soon we have publishing houses producing large numbers of books, newspapers, a surge in education etc. China invents printing and even hundreds of years later it's use is mainly confined to producing prayer sheets in monasteries. The same with many other inventions that Chinese civilization was unable to make sensible use of.
Even today, Chinese society seriously strait-jackets innovation, and the list of those that the rest of the world has felt compelled to emulate is impressively short.

Yep an interesting subject. The list of Chinese innovations is a bloody impressive and long one. They has suspension bridges in the 6th century that still stand to this day. Widespread implementation seems to have eluded them however. They didn't actually invent printing, that was a Korean invention, but your point stands. One problem was their needlessly complex language. If you have a couple of thousand "letters", movable type becomes a tad unwieldy. The 20 odd of the European languages was in the perfect position to take advantage. They had gunpowder and a history in metalwork that would shame anywhere in the world, yet their cannon were crude and used sparingly. Europe gets a sniff of gunpowder and they start changing European and then world maps. China had a fleet of huge ocean going junks far ahead of European ships of the time(for the most part) that explored the known world, likely made it to the Americas and Australia too. A century before Columbus was a gleam in his ma's eye. And what did they do with this? Burnt the ships in the harbour and looked inward again. We all know what Europe did. There are many examples of this.

Why? You hear about culture and that's part of it. You hear about some nebulous difference in the "Chinese mind", but that's bollocks IMHO. The main why is that "China" isn't a country, it's an empire(to a lesser extent so is India). People muse about how far ahead we might be if Rome never fell. I say look to China and be thankful it did. As an empire on both the maps and in the mind, it became very monolithic and very centralised and very inward looking. Thei great wall served to keep others and their ideas out and them isolated. It seemed very attractive to do so. Even their version of the "barbarians" the Mongols, very quickly plugged into becoming Chinese. Quite unlike the barbarians of Europe.

Large centralised, monolithic cultures stagnate. They tend to avoid internal innovation, inc social for the sake of stability, indeed take great pains to do so. If they're big enough external forces are barely noticed(until it's too late). They stay feudal and rigid in social structure. Competition dies and all of that becomes ingrained in the culture. Again compare that to Europe. Rome falls and hundreds if not thousands of new cultures follow it's funeral. These settle down into nation states, tooing and froing back and forth in competition for centuries. Yes it's not nearly so stable, but it leads to huge innovation across the board. It becomes built in, the background noise of the culture. Even in language. English/French/Spanish etc are quite different languages compared to even two centuries ago. Chinese isn't. So yes your iphone/pc/telly may be made in China, but it was designed in the west and most of the money goes back to the west. The "new" Chinese people dress like westerners, they drive "western" cars and listen to local versions of western music. If an alien was to land, he'd see their growth, but would also see which culture was "winning".

The Chinese have to start reinventing themselves culturally and fast. I suspect they face huge hurdles doing so. Not least of which are the huge peasant population beyond the shiny new cities that aren't getting a slice of the pie. They'll need to learn innovation. They'll need to invent a word in Mandarin for "Copyright". They'll need to drop centralisation. Personally I don't see it panning out the way many do.

I particularly find it interesting that so many Irish people go on about the growth and dominance of China, yet kinda miss the same stuff was being talked about us in microcosm ten years ago. Look what happened. We built ghost estates, the Chinese are currently building what have the real potential to become ghost cities.

Wibbs

TBH I would somewhat agree with Mahathir Mohamad's take on the western financial angle and money as a commodity in of itself. IMHO We got a bit too clever there and took an OK idea and ran too far with it and took otherwise industrious minds out of the production pool. So I would agree with him there, we do need to be more in the business of making "stuff".

Tipp Man

He is dead right - and the EU has a lot to answer for in this regard with its direct involvement in the labour market. Setting minimum wages and legislation that is quite frankly pure nuts and making Europe ever increasingly inefficient and making it harder and harder for business, in particular small business, to get ahead

Scofflaw

Wibbs wrote: »

TBH I would somewhat agree with Mahathir Mohamad's take on the western financial angle and money as a commodity in of itself. IMHO We got a bit too clever there and took an OK idea and ran too far with it and took otherwise industrious minds out of the production pool. So I would agree with him there, we do need to be more in the business of making "stuff".

To some extent that may be a reflection of the way European culture works - competition without adequate restriction.

China had a fleet of huge ocean going junks far ahead of European ships of the time(for the most part) that explored the known world, likely made it to the Americas and Australia too. A century before Columbus was a gleam in his ma's eye. And what did they do with this? Burnt the ships in the harbour and looked inward again. We all know what Europe did. There are many examples of this.

Why? You hear about culture and that's part of it. You hear about some nebulous difference in the "Chinese mind", but that's bollocks IMHO. The main why is that "China" isn't a country, it's an empire(to a lesser extent so is India). People muse about how far ahead we might be if Rome never fell. I say look to China and be thankful it did. As an empire on both the maps and in the mind, it became very monolithic and very centralised and very inward looking. Thei great wall served to keep others and their ideas out and them isolated. It seemed very attractive to do so. Even their version of the "barbarians" the Mongols, very quickly plugged into becoming Chinese. Quite unlike the barbarians of Europe.

Large centralised, monolithic cultures stagnate. They tend to avoid internal innovation, inc social for the sake of stability, indeed take great pains to do so. If they're big enough external forces are barely noticed(until it's too late). They stay feudal and rigid in social structure. Competition dies and all of that becomes ingrained in the culture.

Yes - taking the point you mention about the large Chinese fleet which toured extensively in the early 1400's (only about 20-50 years before Columbus), the next Emperor simply decided they'd had quite enough of that, thanks, and that was that. Had China been a collection of states, it's possible that another state may simply have taken over - although presumably the efforts involved would have been more similar to European state efforts rather than the much more impressive display afforded by imperial backing.

cordially,
Scofflaw

Scofflaw

Tipp Man wrote: »

He is dead right - and the EU has a lot to answer for in this regard with its direct involvement in the labour market. Setting minimum wages and legislation that is quite frankly pure nuts and making Europe ever increasingly inefficient and making it harder and harder for business, in particular small business, to get ahead

Er, the EU doesn't set minimum wages. And it does provide freedom of movement within Europe.

cordially,
Scofflaw

Tipp Man

Scofflaw wrote: »

Er, the EU doesn't set minimum wages. And it does provide freedom of movement within Europe.

cordially,
Scofflaw

Of course - that was Ahern and Co that decided that our minimum wage earners deserved to be some of the best paid in the world

I should have said legislation like the working time directive.

and its not just the legislation - it is the ethos of work (lack of) and the focus on the employee rather than the employer, especially small business employers. Many small business employers are working their ass off so that their employees can lead a good "lifestyle". The whole relationship is wrong

jmayo

Scofflaw wrote: »

But are hardly the third-world country they were predicted to become.

Where did I ever say any country in the EU was going to be Third World ?
Please tell us where any of us said that.
What we are saying is that there is a shift happening where the economic powerhouses of the future are probably going to be in the East.

Scofflaw wrote: »

Oh, I expect them to become economic heavyweights, certainly, but there will still likely be half a billion people or more in Europe, and so on.

Europe's population is still richer, but they are also heading for trouble as the number sponging off the actual working population is going to increase over the next 40/50 years.
Something will have to give.
The manufacturing base is moving to the East.
We can at the moment claim that the West are the inovators and are the ones with the intellectual rights, but China is going to catch up.
Besides they disregard our intellectual rights.
See BMW or Sukhoi for example of this.

Scofflaw wrote: »

The problem is that while the initial development of an under-developed economy is very rapid, that growth spurt doesn't continue. You can't keep undercutting other countries by paying lower wages while developing an affluent population.

But China's population is bloody huge.
They can have a middle class of a few hundred million at the same time as a poor working class of a few hundred million.
Indeed they will over time have to develop a proper middle class and over time the next generation will probably demand more money and more rights.
Now the communist party either has to losen it's grip or face going backwards.
But see how far things have come in the last 20 years.

I could eventually see China going like a Singapore, where the form of rule is more open but not quiet as open as the West.

Roadend wrote: »

Watching one of the news channels the other day, they said that to setup production in the US would require 8k+ engineers. This would take nearly a year of recruiting in the states whereas it would take 15 days in China. Take that whatever way you will.

[/QUOTE]

8K+ engineers to build an iphone ???
I find that a little hard to believe.
How many engineers did Dell have in it's plant ?
Or are you counting the engineers necessary to build every single component ?

Solair wrote: »

I think the comparisons between China and Postwar Japan are a bit misleading to be quite honest.

I have only ever used this comparison with regard to how Japan went from copying technology to actually leading and dictating technological trends.
Sth Korea has followed suit to a degree.

Solair wrote: »

You could however easily draw parallels between Japan and Korea and other liberal, democratic Asian countries.

I don't think Sth Korea was quiet the liberal democracy that you might think.

Solair wrote: »

I would predict that China will quite likely implode due to an inability of the regime to recognise that it needs to rollout democracy.

But what do you mean by democracy ?
People should not always think that the form of democracy in the West is what is the ideal.

Solair wrote: »

There are MANY scenarios which could lead to this:

Scenario 1:
Workers get sick of bad conditions, organised labour becomes a major political force and there's an uprising of some sort.

Scenario 2:
Uprising happens in a city and a Tiananmen Square type incident happens again. This time in the full view of social media. Resulting outrage causes civil war.

Scenario 3:
One of the more liberal and progressive and economically wealthy regions develops a pro-democracy movement and attempts to exert self-Government and results in a nasty conflict with Beijing.

There are lots of other possibilities that could result in China turning into a total mess.

Yes it could happen, but all of your scenarios work on the presumption that
movements form and agitate against the ruling communist party.
For a start that is hard and secondly would the Chinese people actually do it ?
Also you are presuming that the communist party does not change.

Scofflaw wrote: »

Singapore is interesting - it's a benign dictatorship, which the later Greek philosophers regarded as probably the best form of government. The tie-in of large companies to the regime is very tight - the state is organised more like a business, with the PM as CEO.

cordially,
Scofflaw

To me Singapore is also a blueprint for how any multi ethnic multi racial environment can actually work.
If some other places around the world had their system and a leadership with foresight we might not have had the ethnic clensing we have come to see.

IMHO the Wests definition of democracy is not always what is best for some countries.

Wibbs

Scofflaw wrote: »

To some extent that may be a reflection of the way European culture works - competition without adequate restriction.

Oh certainly Scoffy, it comes with the potential to go either way and it has gone either way in the past. For me, it's still the better system/cultural mindset.

When the Chinese culture tries to do same it tends to be a race to the bottom. Look at the example of the Chinese built mopeds a few years back. It summed a lot of this up. They ripped off the Honda example. Even called them Hongas and Hohndas etc. The first guy to get the idea was swiftly joined by others, but not as suppliers or outlet, they proceeded to rip him off and the prices got lower and lower until they ended up being sold by weight.

Yes - taking the point you mention about the large Chinese fleet which toured extensively in the early 1400's (only about 20-50 years before Columbus), the next Emperor simply decided they'd had quite enough of that, thanks, and that was that. Had China been a collection of states, it's possible that another state may simply have taken over - although presumably the efforts involved would have been more similar to European state efforts rather than the much more impressive display afforded by imperial backing.

True again, however imperial backing while being great for one off vanity projects and spectaculars, it's very rarely sustainable beyond a couple of generations, or even one. Compare the Greeks to the Egyptians as a fairly good example. The whim of the imperial court usually stifles longevity or mires it in tradition for it's own sake and it's much easier to fall into the "not invented here" syndrome.

Scofflaw

Tipp Man wrote: »

Of course - that was Ahern and Co that decided that our minimum wage earners deserved to be some of the best paid in the world

I should have said legislation like the working time directive.

and its not just the legislation - it is the ethos of work (lack of) and the focus on the employee rather than the employer, especially small business employers. Many small business employers are working their ass off so that their employees can lead a good "lifestyle". The whole relationship is wrong

Having been a small startup business employer I'm not unsympathetic to that point of view! And it's completely true that there's a balance between labour market flexibility and employee protection.

However, the level of variation in Europe is very high in terms of labour laws. The EU sets minimum standards in certain areas, but I'm not sure which countries only follow those minimums and don't go beyond them - certainly not Ireland.

cordially,
Scofflaw

goose2005

Tipp Man wrote: »

Of course - that was Ahern and Co that decided that our minimum wage earners deserved to be some of the best paid in the world

Given that our cost of living is also one of the highest in the world that would make sense

I should have said legislation like the working time directive.

What parts of the EWTD are excessive?

and its not just the legislation - it is the ethos of work (lack of) and the focus on the employee rather than the employer

The reason being that the employer is, generally, the one with money and power, who sets the conditions of employment, and the employee can either take it or leave it.

Many small business employers are working their ass off so that their employees can lead a good "lifestyle". The whole relationship is wrong

And a lot of employees are working their asses off so their employers can have amazing lifestyles.

Tipp Man

goose2005 wrote: »

Given that our cost of living is also one of the highest in the world that would make sense


What parts of the EWTD are excessive?

The reason being that the employer is, generally, the one with money and power, who sets the conditions of employment, and the employee can either take it or leave it.

And a lot of employees are working their asses off so their employers can have amazing lifestyles.

Firstly what do you think drove the cost of living in this country through the roof? Nothing to do with paying excessive wages to Public Servants and too much social welfare??

The 48 hour restriction is a serious limitation for starters

I take it from your comments that you are most definately not a small business employer - because if you were you'd know that very few of them have anything like the lifestyles of their employees yet have all the responsibility and have made the financial investment as well

The balance is all wrong

Scofflaw

Tipp Man wrote: »

Firstly what do you think drove the cost of living in this country through the roof? Nothing to do with paying excessive wages to Public Servants and too much social welfare??

The 48 hour restriction is a serious limitation for starters

I take it from your comments that you are most definately not a small business employer - because if you were you'd know that very few of them have anything like the lifestyles of their employees yet have all the responsibility and have made the financial investment as well

The balance is all wrong

I'd agree that the balance of power in a small business is often not towards the employer at all - particularly if the business relies on the skills of a key employee. And similarly small business conditions often mean that things like the working time directive can only be applied at high cost.

However, I don't think this is something that's not being recognised. Just recently, we've had the European Small Business Act:

From now on, the European Commission will seek wherever possible to exempt micro-enterprises from EU legislation or introduce special regimes so as to minimise the regulatory burden on them.

and:

As of January 2012 the Commission will further:

- step up the search for exemptions or lighter requirements for micro-enterprises in existing and new EU legislation;
- strengthen the processes by which micro-enterprises and other SMEs are consulted when reviewing existing EU regulation and preparing new EU laws.
- produce annual scoreboards to evaluate the real benefits for businesses and to ensure a continuing focus on their needs and interests .

http://ec.europa.eu/governance/better_regulation/documents/minimizing_burden_sme_EN.pdf

cordially,
Scofflaw

maninasia

Tipp Man wrote: »

Of course - that was Ahern and Co that decided that our minimum wage earners deserved to be some of the best paid in the world

I should have said legislation like the working time directive.

and its not just the legislation - it is the ethos of work (lack of) and the focus on the employee rather than the employer, especially small business employers. Many small business employers are working their ass off so that their employees can lead a good "lifestyle". The whole relationship is wrong

It's a balance, you want to reward people for working hard and taking risks, at the same time it's no use creating a slave class. Right now there are too many restrictions in running a business that extend beyond labour regulations, things like insurance, rates, utility costs, rents. I would say the minimum wage should be adjusted along with the dole though so that there is none of this picking and choosing jobs lark over the long term.
I don't think there is a generic European but even so most of what Matathir says is pretty logical.
I don't fully trust manufacturing statistics quoted either, just like in Ireland they can be distorted by certain industries like pharmaceuticals.
You don't want to lose too much of your manufacturing base to migrate otherwise you lose the cluster effect and it becomes difficult to regain the industry.

I see the 21st century springing some surprises and I don't see the US and Europe fading off into the sunset just yet.I also feel there are some new paradigms being created in a networked and globalised world with new technologies alonging new ways of living, working and interacting. The nature of work and manufacturing is also changing rapidly. Many of us work from home or are mobile. Many work as contractors and not permanent staff. Things are changing so fast, how can we accurately predict 20 to 30 years from now?

maninasia

I have a fair amount of interaction with China and Chinese but even then I couldn't claim to understand all its parts. I don't think anybody can. But what I will say is that China is not going to be like Japan due to one simple characteristic. The desire for perfection and the willingness to keep at something for years and years until it is achieved. We have seen them do this with many industries. Industries they may still take a lead in include robotics and electric cars. The company I work for is facing grave competition from a Japanese product that has been in development for 10 years. We sat on our lead and they tried a new approach and spent millions pursuing it. Now our customers are switching and we want to follow their lead but it is possibly too late, they have the advantage in IP and production experience being first mover.
The Chinese? They just buy our stuff, the Japanese or the Americans products when they need the best results. The Chinese then Make the finished product and sell it in China, India or developing countries.
At the same time we also collaborate with some Japanese companies as they need to spread the risk these days. It's a globalized world and as long as your country and it's industries and services has some value to add and you as an individual have some value to add, you should do okay.

AlekSmart

maninasia wrote: »

I have a fair amount of interaction with China and Chinese but even then I couldn't claim to understand all its parts. I don't think anybody can. But what I will say is that China is not going to be like Japan due to one simple characteristic. The desire for perfection and the willingness to keep at something for years and years until it is achieved. We have seen them do this with many industries. Industries they may still take a lead in include robotics and electric cars. The company I work for is facing grave competition from a Japanese product that has been in development for 10 years. We sat on our lead and they tried a new approach and spent millions pursuing it. Now our customers are switching and we want to follow their lead but it is possibly too late, they have the advantage in IP and production experience being first mover.
The Chinese? They just buy our stuff, the Japanese or the Americans products when they need the best results. The Chinese then Make the finished product and sell it in China, India or developing countries.
At the same time we also collaborate with some Japanese companies as they need to spread the risk these days. It's a globalized world and as long as your country and it's industries and services has some value to add and you as an individual have some value to add, you should do okay.

On the Button !

However,Maninasia,whilst there are plenty of our people who can and do see this self-evident truth,which has always been thus,the Government policy remains staunchly skewed toward avoiding the need to force people to produce stuff.

It would be an interesting exercise if you,with your Asian slant,could perhaps enlighten us as to the level of "Entitlement" an average Asian unemployed person has vis a vis their employed fellow citizen or the average Elderly Asian or the Asian Lone Parent etc etc.....

This is developing from a simple economic problem in Ireland into a Hearts n Minds conversion task !!

joseph brand

Wibbs: The Chinese have to start reinventing themselves culturally and fast. I suspect they face huge hurdles doing so. ..... They'll need to learn innovation. They'll need to invent a word in Mandarin for "Copyright".

As an example:
Intel built FAB 24 here in Leixlip, Kildare, which was (maybe still is) their latest technology. It would have been built in China a lot cheaper, but we were told by management that there was a risk of the Chinese stealing Top Secret information on product design, so it was safer not to.

AFAIK, China builds what the West designs. There was an article in Time magazine last year, I think, that talked about how China doesn't encourage innovation.

http://business.time.com/2011/03/10/can-china-compete-with-american-manufacturing/

Despite the great growth of Chinese automobile manufacturing, the product they’re churning out simply isn’t good enough to compete in major markets. That’s also why China’s leadership is always talking about the need to upgrade Chinese industry and improve R&D capabilities.

Making that leap isn’t just good business, it’s absolutely crucial. As Chinese wages increase, China will become less and less competitive in many low-end products, like toys, apparel and footwear. That process is already underway. Some factories for such goods are already opening up in lower-cost environments, like Vietnam, instead of China.

texidub

I think the Former PM has a point. The international monetary system is rigged towards western interests (and their allies). The leading western economies can do a little QE and rig the game (since these are the currencies that most of the world trades in). (Not even getting into the World Bank and IMF.)

But if the global economy was built on something substantial (such as the gold standard.. or production of goods and services) then the rest of the world --places like China-- would get a fairer crack of the whip.

And the Former PM knows --and we suspect-- that they can beat us on production (both in terms of numbers and wages).

I think that is what he's implying anyway...

I also think that for the east to get richer, the west needs to get poorer. rates of consumption will become more equalised, IMO.. and if that is abhorrent to Europeans, then good, because the prospect of further falling standards will drive innovation and force us to search for smarter ways to sustain our current standard of living.

texidub

maninasia wrote: »

Industries they may still take a lead in include robotics and electric cars.

The size of this contract blows my mind: http://news.xinhuanet.com/english2010/china/2011-07/30/c_131018764.htm

SHENZHEN, July 29 (Xinhua) -- Taiwanese technology giant Foxconn will replace some of its workers with 1 million robots in three years to cut rising labor expenses and improve efficiency, said Terry Gou, founder and chairman of the company, late Friday.

The robots will be used to do simple and routine work such as spraying, welding and assembling which are now mainly conducted by workers, said Gou at a workers' dance party Friday night.

Sidenote: Imagine going to a "worker's dance party" and hearing that you're going to be replaced by a bot. Doing the huck-a-buck with a smile fixed on your face for the benefit of the party officials watching via CCTV.

Sesshoumaru

texidub wrote: »

The size of this contract blows my mind: http://news.xinhuanet.com/english2010/china/2011-07/30/c_131018764.htm



Sidenote: Imagine going to a "worker's dance party" and hearing that you're going to be replaced by a bot. Doing the huck-a-buck with a smile fixed on your face for the benefit of the party officials watching via CCTV.

The company currently employs 1.2 million people, with about 1 million of them based on the Chinese mainland.

So one company employs as many people as we have employed in the entire country. This company is now embarking on a program to go from 10,000 robots to 300,000 robots by next year. This is a wake up call I feel. Low skill jobs are disappearing entirely.

With a declining population and continued investment in quality education we in Europe should be well prepared for the future.

dermo88

Dr Mahathir has a known tendency to make what I can only politely describe as outrageous comments from time to time. Occasionally some gems of wisdom emerge. But this is not one. Europe is not poor, but it should live within its means.

Each comment is designed with a purpose. It is maintaining an illusion to his own people that they should be grateful for having him as a leader, and blinding them to the alternatives on offer.

maninasia

We can see the Euro and Sterling have weakened significantly against Asian currencies, this is a sign of that wealth and productivity flow switch.

The Euro was propped up by too much debt. Now the Germans and ECB are trying to stop inflation by adding debt to individual nation state balance sheets, which does indeed make the average citizen poorer through higher taxes and reduced economic growth!

In terms of Cyprus depositors money was seized, again too much debt causes people to be poorer, sometimes in a very direct way!

Looking at average incomes in Southern Europe along with government debt, how can one say that some of these nations are not borderline poor?

In Ireland incomes have held up fairly well, the poverty aspect has been averted by massive borrowing though. Perhaps Ireland can escape the poverty trap through having a better jobs base and growing population compared to the Southern Europeans. We shall see. Even in the UK you can see there is a big squeeze on the middle class, with stagnating wages, massive drop in sterling, rising inflation, rising taxes and huge increases in educational costs.

hawkwind23

thread title reminded me of something Bernie Ecclestone said in 2004.

"Countries like France and Britain really believe we have a place in the world by right. But you cannot live on history. People should worry about our economy and the fact that in 10 years' time Europe will be a third world region, taken over by Asia and Latin America. We can't produce anything like the prices they can. We want a 35-hour week. Time off to go to the dentist and God knows what else. And we're supposed to be competing."

always stuck with me what he said as he deals with every government on every continent at the highest levels.

Scofflaw

hawkwind23 wrote: »

thread title reminded me of something Bernie Ecclestone said in 2004.

"Countries like France and Britain really believe we have a place in the world by right. But you cannot live on history. People should worry about our economy and the fact that in 10 years' time Europe will be a third world region, taken over by Asia and Latin America. We can't produce anything like the prices they can. We want a 35-hour week. Time off to go to the dentist and God knows what else. And we're supposed to be competing."

always stuck with me what he said as he deals with every government on every continent at the highest levels.

On the other hand, many concerns are driven by straight-line projections into the future of current productivity gains, whereas, strangely enough, once nations that are competitive because poor become wealthier, their citizens too start wanting dental visits and so on.

cordially,
Scofflaw

srsly78

texidub wrote: »

But if the global economy was built on something substantial (such as the gold standard.. or production of goods and services) then the rest of the world --places like China-- would get a fairer crack of the whip.

Nonsense, China engages in currency manipulation just like everyone else.

Zubeneschamali

hawkwind23 wrote: »

always stuck with me what he said as he deals with every government on every continent at the highest levels.

It's 9 years later, and we aren't a third world region. He was wrong.

Look at the iPhone: Apple make €300 per phone. They pay FoxConn €8 to assemble it.

Cody Pomeray

Brussels Sprout wrote: »

Former Malaysian PM says Europe overpays its workers, isn't productive and needs to face up to that fact that it's not as rich as it thinks it is anymore.

You don't exactly have to go to Malaysia to find that viewpoint. Whatever about not being as rich as it thinks, Europe does have productivity problems. This is an objective fact.

hawkwind23 wrote: »

thread title reminded me of something Bernie Ecclestone said in 2004.

"Countries like France and Britain really believe we have a place in the world by right. But you cannot live on history. People should worry about our economy and the fact that in 10 years' time Europe will be a third world region, taken over by Asia and Latin America. We can't produce anything like the prices they can. We want a 35-hour week. Time off to go to the dentist and God knows what else. And we're supposed to be competing."

always stuck with me what he said as he deals with every government on every continent at the highest levels.

Does it strike you that we're not going to be a third world region next year?

hawkwind23

Does it strike you that we're not going to be a third world region next year?

Hopefully not!

"Crisis? What crisis?"

maninasia

Zubeneschamali wrote: »

It's 9 years later, and we aren't a third world region. He was wrong.

Look at the iPhone: Apple make €300 per phone. They pay FoxConn €8 to assemble it.

It's not a good example. Foxconn usually make a lot more than that on their projects as they often own the component suppliers too. Also iPhones and iPads are almost entirely manufactured in Asia, so all the component suppliers make money too. In the case of the new Apple TV, they will use a Sharp 10th generation LCD plant in Japan which is co-owned by Sharp and Foxconn.

It's also not true that if Apple makes money America makes money, much if not most of their cash is kept offshore and their profits belong to the shareholders, not American citizens. Apple shareholders could be from anywhere.

Finally Apple's dominance has already crumbled in this market, Samsung is the dominant player with many other Asian companies doing well too.

Now if you said software it's true that American companies hold the lead in general, but that is also being chipped away.

maninasia

hawkwind23 wrote: »

thread title reminded me of something Bernie Ecclestone said in 2004.

"Countries like France and Britain really believe we have a place in the world by right. But you cannot live on history. People should worry about our economy and the fact that in 10 years' time Europe will be a third world region, taken over by Asia and Latin America. We can't produce anything like the prices they can. We want a 35-hour week. Time off to go to the dentist and God knows what else. And we're supposed to be competing."

always stuck with me what he said as he deals with every government on every continent at the highest levels.

This quote is meaningless. Asia is the biggest continent, it doesn't mean anything! Europe is an amalgam of how many dozens of states?

And in a given country there are massive regional differences and also class and income differences.

I ignore these kind of blanket statements.