Blog

Competitive Advantage – Business Lessons in Economics

April 1, 2017

This is a brief supplemental analysis for one of my articles titled The Market for “Lemons” from my series on Business Lessons in Economics. Its purpose is to introduce a brief marketing synopsis to the problems resulting from the difficulty of distinguishing good quality products and services from bad, which is inherent in the business world, or perhaps more significantly, the failure of so many in business to recognise the costs.

The Market for Lemons – Business Lessons in Economics

April 1, 2017

This is the first in a series of my articles on business lessons in economics inspired by a series of economic briefs in the Economist published in 2016.

Business people often come across the situation where the client will only buy their product if they are able to match the price of an inferior competitor product because it is so much cheaper. And with much regret, you just have to walk away from the deal. Sometimes, you end up introducing a comparable cheaper product just to compete, which eventually leads to the discontinuation of the original superior product, even though you know this is not in the client’s or the markets interests. In a sense, although a bit more complex, that is what Akerlof’s The Market for “Lemons” is about. It’s an inability to counter misinformation and illusory perceptions. However, in the majority of cases in business, this can be significantly alleviated with a little common sense, foresight and planning.

Britain and the European Union structural economic model, post Maastricht 2002 reviewed Dec 2016

March 18, 2017

December 2016 – Review of – Is Britain’s economic heritage and cultural ideology compatible with European Economic and Monetary Union and the euro? Aug 2002

When I wrote the original essay in 2002 I was specifically warning about the disastrous consequences that would result if Britain joined the euro. I explored the historical evolution of Britain’s economy and how this went to the heart of Britain’s social and cultural identity. In reviewing this thesis in 2016, the most important question that begs an answer is whether the essay is still relevant now that the British people have voted to leave the EU?

The simple answer is ‘Absolutely’. In economic terms, I established that Britain’s economy was not compatible with the average European model and that our historical global trading ethos was being undermined and constrained by EU membership. As we enter the stormy seas of 2017, the concept and the facts are absolutely relevant. But perhaps what is more important, are the reasons that lie at the heart of this incompatibility and the almost constant trauma that was evident through much of the 40 years that Britain was a member of the European community. And regardless of whether people voted to leave or stay in the EU, there is an underlying feeling of insecurity, inequality and alienation permeating throughout much of British society that stems from a sense of loss of identity. Although on the surface the effects of membership of the European Union played a large part in this, it was by no means the only contributing factor. In my essay, I explored some of the core issues on identity and these are very relevant when dealing with the deep-rooted effects of modernity and globalization. I am most pleased that the current UK Prime Minister, Theresa May, appears to be tuned in to these subtle but potentially debilitating undercurrents.

And perhaps another important question is whether there is any relevance in this analysis and these concepts for the remaining members of the EU? The answer is most definitely. As we enter 2017, Western liberal ideology is being challenged as never before. The numerous crises and the current lack of leadership in and across the EU, are threatening its very existence. Although there are many separate pressing issues, probably the biggest long-term challenge for the EU, is how to recapture those early manifestations of a collective identity without undermining individual cultural identities. We can only hope, that the EU accepts with good grace, that there are some sagacious lessons to be learnt from Britain’s decision to leave the EU and also how Britain adapts to deal with the effects of a dramatically evolving world order. There is much to be gained by the EU in working in partnership with its closest ally. A failure to embrace these opportunities is likely to herald a dark age for Western European stability and prosperity.

The EU Single Market, success or failure?

March 1, 2017

December 2016 – Review of – Is the EU as a globalised business force? Sep 2001

Much has happened and changed in Europe and across the globe since I originally explored this topic in September 2001, but I would argue that relatively little has changed within the EU. The principal questions are, after 25 years, is the Single Market likely to overcome its excessive resistance to change; how much economic cultural convergence has been achieved; has the EU formulated a broad enough common industrial policy that could be conceived as producing a relatively unified global economic and business force; and lastly, has the EU created the necessary economic model or platform to produce global industrial champions?

It is possible to point to individual areas of achievement with variable degrees of success, but sadly, the EU has failed to deliver on the critical big picture needs and the principal cause is, diverse political interests driven by deep rooted societal and cultural heritage. The single greatest failure in the overall European project, despite early gains, has been the inability to create a common European identity. This was understood to be the most critical component of successful European integration by the founding Fathers some 60 years ago. Even worse, momentous events of the last 12 months have brought these and several other underlying tensions to the surface and currently threaten the very existence of the European dream. If the euro collapses so does the Single Market and then the EU, which brings us to the heart of the matter. Is the euro sustainable throughout the EU; does the Single Market really work; has it inhibited external trade; can a common European identity ever be achieved and is this the end of regionalism and the beginning of the dark age for globalisation? Unlikely, but whatever the fate of neo-liberalism, the tectonic plates in the global political, economic and social structure are shifting and it is a Brave New World for those with vision.

Do the US and Western Europe still need a military alliance like NATO?

February 16, 2017

December 2016 – Review of – The relationship of the United States and Western European in the new millennium. March 2001

Successive US administrations have justifiably complained that many European governments are failing to honour their commitments to NATO, structurally, politically and most importantly, financially. The current US President Elect, Donald Trump, has made it clear that the US will not continue to foot 70% of the cost of NATO. This once again raises the question of NATO’s future. In March 2001 I explored if there was a continuing need for NATO following the end of the Cold War and whether NATO could or had evolved beyond its original purpose. However, it would appear that despite the collapse of the Soviet Union, the Russian Bear was only hibernating or maybe it was prodded back to life by the advance of NATO to its borders. Perhaps the new warmth erroneously radiating towards Russia from the US, combined with the new Russian détente, particularly in the Middle and Far East, will further subvert the need for the alliance. Or, are Russian military provocations and ambitions coalescing forces to make the World a very unstable and dangerous place and therefore the arguments for a sustained Northern military alliance are more valid today than they were in 2001?

British sovereignty & the EU

June 2, 2016

With regard to sovereignty and the British government’s inability to control EU immigration, it has to be said that the free movement of people is one of the four founding pillars of the EU and without it, the EU would probably collapse. So setting immigration to one side, what are the real issues with regard to transfers of decision-making and the resultant loss of sovereignty? Is it a critical and necessary part of EU membership? Do the public really understand the true nature and purpose of the EU? Is there a point where the transfer of decision-making can undermine the principles of democracy and national identity? Can the European journey continue without deeper integration? Or, is the loss of sovereignty a non-issue for most ordinary people and is the current rise in nationalism in Europe simply a reaction to the EU’s current traumas and Britain’s EU immigration problems?

UK Security Safer in – Safer out?

May 29, 2016

Safety from War; safety from Terrorism; safety from Crime, on our streets and in our beds is surely the main or one of the main concerns of any British citizen. The British government tells us that we will be safer in the EU and yet in the past their delivery of this message seems less forceful than it perhaps should be. However, the British Prime Minister, having previously clearly stated that he is very prepared to take Britain out of the EU if he did not get his way, now suggests that if Britain does vote to leave the EU it is likely to lead to war in Europe. We have to hope and believe that this aberration is a momentary lapse in judgement. Was it a response to a weakness in the delivery and the reaction to the previously confident but lacking message? Is the evolving argument, that continued EU membership might force Britain down a path that might be less secure, making the argument more finely balanced? Safer in now, safer out later?

Page updated

Report abuse