Showing posts with label government. Show all posts
Showing posts with label government. Show all posts

Friday, 3 June 2016

The Reason Why Apple Can't Open A Store In India

It may be one of the world's largest and most iconic brands, but Apple has yet been unable to persuade the Indian government to allow the building of a single Apple Retail Store.

Photo: @tim_cook
Recently, Apple CEO Tim Cook made a much-publicised visit to India, mingling with Bollywood stars, visiting a Hindu temple and generally experiencing what the second most populated country in the world has to offer. But this wasn't a holiday- following Apple's success in China, Cook has turned his sights to India, a country whose economy has boomed in a similar fashion over recent decades. No doubt, business was firmly in the Apple CEO's mind throughout the trip, as he met with key players in India's technology market as well as the nation's Prime Minister.

One of the issues believed widely to be at the forefront of discussions is that of Apple Stores in India. Looking at the massive boom in consumerism in India over recent decades, it seems unbelievable, but there remains no official Apple Store built in the country. Yes, there are 'premium resellers' located across India, local franchise-style businesses authorised to sell Apple products, but these lack typical features of Apple Stores, such as a Genius bar for technical support. There is no official, Jony Ive-designed Apple Store anywhere in India.

The situation is all due to the interesting government policies regarding the activities of foreign businesses in India. The headline policy preventing Apple here is the one requiring at least 30% of all products sold in foreign retail stores in India to be sourced locally. This is part of the 'Make in India' initiative designed to encourage foreign investment in Indian manufacturing, on top of input in the local goods market.

Currently, the large majority of Apple's products are made in China, the USA and Brazil, and even if Apple* does begin to manufacture products in India as recent talks were also rumoured to be about, it is highly unlikely that it could produce 30% of the ware it sells in its stores locally by 2017 as it hopes.

So Apple must either play the long game and ramp up production in India over the next 5-10 years to conform to the rule, or it must seek an exception. This will prove an interesting test of Modi's government's commitment to his 'Make in India' policy. Apple being such a massively influencial global company, the country could see a substantial, immediate economic boost if it lets Apple bypass the policy.

However, of course this is a sign that there is room for compromise, and it may provoke other multinational corporations to seek exceptions too. Furthermore, the government could make use of Apple's desperation to open stores in India to its advantage, if they demand that jobs and other sustainable sources of growth (such as factories) can be contributed by Apple in return.

From Apple's perspective, it is time to grab the Lurpak and begin to butter up the Indian government. Modi is highly unlikely to allow stores to be opened without any contributions made elsewhere at all, but if any company is to receive a little leeway in this matter, Apple is highly likely to be it.

* Apple does not technically manufacture its products, this is outsourced to dedicated manufacturing firms such as Foxconn.

Sunday, 24 April 2016

4 Reasons Why Hillary Clinton Is NOT What The USA Needs

The run up to the 2016 USA General Election has been full of twists and turns. As the Democrat Party seeks to settle its own election for who will run for President, it's important that voters recognise just what exactly front-runner Hillary Clinton could bring to the table, and why it means she is not the President the USA needs.



1) Because she's not going to work just for the American people.
The role of money in politics is something that is incredibly important to take heed of, because it has the capability to influence pretty much every policy stance taken by any politician. You can read more about this issue here, but to summarise, 'donations' made by powerful individuals or companies are often far more than that. They are investments, IOUs- I donate $100k to your campaign, when you become President you develop policies that save me far more than that, whether through tax cuts, deregulation, anything. This, of course, often comes at the cost of everyone else.

The Clinton campaign has refused to reveal what
was said in a series of speeches worth millions of dollars. 
The typical belief is that it's only Republicans who use this tactic to support their election chances, but that's far from the truth. The practice is widespread among Democrats, and perhaps no more visible than in the Hillary Clinton campaign. In 2014 and early 2015, she made $11m from making 51 speeches to various banks, financial institutions and corporations. That's over $200k per speech. Among the most controversial of these speeches are three, made at financial giant Goldman Sachs, for which she received $675,000. Not only is this a massive sum of money, but it's the fact that she refuses to release the transcripts that has put the spotlight on Hillary Clinton's fundraising activities.

Could it be her covering up a couple of Romney-esque quotes she made to the financial elite? Who knows. But, to paraphrase her opponent Bernie Sanders, a speech costing $225k must have been an incredible one- one that the American people deserve to hear.

But receiving such massive amounts of money from individuals and corporations with special interests means Hillary Clinton's own guiding motives, as President, would be heavily polluted. Not just Goldman Sachs, but Wall Street as a whole, various defence contractors, and other corporations don't hand over these sums of money just for fun. They gain a return from it, it's an investment to them. That's why they've been doing it for so long. Because it works. And Hillary Clinton being President would be a true victory for this corrupt system.

2) Because she has dangerous stances on foreign policy.
Barack Obama has come under some criticism over his often contradictory foreign policy, particularly regarding the Middle East. . It was a great source of hope, when Obama would speak of how he wanted to "end the mindset that got us into war" and caused such chaos under his predecessors. And indeed, he had some achievements, such as the reparation of some relations with Iran, but his Presidency has been marked with growing instability in the Middle East, spreading from Iraq to Libya to Syria and elsewhere, in which failed US policy played a significant role.

But Obama's 'hawkishness' (if you can call it that) pales in comparison to that of Hillary Clinton. It's actually been a source of some disagreement between the two during Obama's time in office. Take the Iran issue. Obama has led some sort of improvement of relations, through reduction of sanctions. However, in a recent speech at an American Israeli Public Affairs Committee (AIPAC) meeting she set out her far more aggressive vision of relations with Iran, promising that as President she would immediately seek to "impose real consequences" in the form of reinstated sanctions, reversing any progress made by Obama.

Of course, at the AIPAC speech, she completely ignored the illegal activities of Israel, whether it's the occupation and blockade of Gaza, the airstrikes or the continued expansion of settlements in the West Bank. "Parents worry about letting their children walk down the street. Families live in fear", she said at AIPAC, speaking of Israelis. Well Hillary, tell that to the families of the 2,310 Palestinians killed, or the 600,000 civilians who lost their homes in the same 50 days of bombing in 2014.
Jack Keane- military analyst to Fox News, and
close adviser to Hillary Clinton.

But elsewhere, it's reasonable to say that were Hillary Clinton already in office for the past 8 years, the whole ISIS situation may be a lot worse. She has expressed support for some ideas that have proven to only stoke the fires of tension in the Middle East. Not only was she in favour of the Iraq War, but she has supported moves to increase troop numbers in Afghanistan (to 40,000 troops, which was too much for Obama and VP Biden)  provide weapons to rebels in Libya in 2011 (during an UN enforced weapons ban), fund and provide weapons to rebels in Syria too (most of whom turned out to be ISIS). Now you may agree or disagree with these policies, but it's clear that Clinton would be a significantly greater meddler in the Middle East than her predecessor. It's not really surprising, however, how right wing her military mindset is when you see that her "single greatest influence" on her foreign policy is Fox News' chief military analyst.

Hillary Clinton is more distrusted by voters than Donald
Trump (YouGov)
3) Because she's such a 'politician'.
With Hillary Clinton comes a significant lack of trust. A stunning 56% of responders to a YouGov poll stated that they do not trust Clinton. This was the highest of all presidential candidates, and of course she received the lowest number of votes claiming her to be honest. She was even more distrusted than Donald Trump.

But there's a reason for this: the large majority of people who don't trust Donald Trump, Ted Cruz and the other Republican candidates are Democrats. Yes, the Republicans may also have some internal trust issues, and they are likely to prefer one candidate, but they are largely cohesive in their right wing views.

Many allege that it was Hillary Clinton's department's
inaction that enabled an attack on a USA compound
in Benghazi, Libya. 
Hillary Clinton, on the other hand, is not just intensely mistrusted by the Republicans (just google 'Benghazi', or 'Hillary Clinton emails' to get a taste of this), but mistrusted by many Democrats too, who see her previous policy positions and actions as too right wing.

One of the greatest accusations against Clinton is that she is a serial flip-flopper, a 'typical politician' whose views change to suit the political situation which she is in. Take one of her messages this campaign, of "raising incomes for hardworking Americans". She says she will do this by reducing taxes, "closing corporate loopholes" and by imposing "accountability on Wall Street", but many Democratic voters are sceptical- and with reason. After all, if she was really going to bring banks on Wall Street to account, why would they pay her millions of dollars? Even those on the Street itself don't believe she will do anything significant to them. There's every chance she could turn around as President and tell all the banks that they've been had- but let's be honest, that's very unlikely.

Her history contrasts with many of the positions she currently takes. Whether it's economic (she voted in favour of a $137bn tax break for corporations a decade ago, dubbed "The Most Absurd Tax Giveaway of 2005") or social (just a decade ago she was firmly against gay marriage), she has a history of adapting her policies to whatever will help her in the next election. This election, it's clear how Hillary has tried to adapt her policy positions to try to lure over Bernie Sanders supporters, but it has not been successful as a whole. After all, you can't preach about how bad money in politics is while taking it yourself.

4) Because there's a better alternative.
Despite all this, it's difficult to deny that Clinton has the upper hand in the Democratic election, especially after her victory in New York.

But there's still hope for Democrats dissatisfied with her, in the form of Bernie Sanders. With around 1600 delegates still up for grabs, Clinton's lead of 275 will be difficult, but not impossible for the Vermont veteran senator to surmount.

A young student Bernie Sanders, getting arrested in
1963 for participation in a Civil Rights Protest.
Bernie Sanders has real grassroots support. He has no Super PACS behind him, funded by Wall Street or any large corporations, yet with an average donation of $27 he has still managed to raise as much money from campaign contributions as Clinton. He has never made any secret speeches, and received hundreds of thousands of dollars for them. He will not be scared to stand up to those behind the economic turmoil of the past decade; in fact, they're scared of him. He knows of the dangers of military intervention, and has repeatedly voted against it throughout his political career, favouring a diplomatic, co-operative approach. He recognises the rights of both the Palestinians and the Israelis, and has called for an end to the illegal occupation and settlement developments. And, perhaps most important of all, he is trustworthy. He has been a long time advocate of rights, for all minority groups, even when it was not an easy position to take. He has been addressing thousands of ordinary people, while Clinton has been cosying up to elites in exclusive fundraising dinners that have been called 'absurd' by their own hosts.

He, Bernie Sanders, is what the USA needs to progress into a brighter future. It's certainly an uphill battle for Bernie now, but it's not over yet.

Tuesday, 8 September 2015

What Is Corbynomics?

With the results of the UK Labour Party Leadership Elections set to be announced this Saturday, it's time to take a look at the economic policies of one of the candidates considered the frontrunner, and also the furthest to the left, by many- Jeremy Corbyn.


The Islington MP's economic proposals have made such an impact that they have come under the new title of 'Corbynomics'. Though, admittedly, adding 'nomics' to the names of his rivals would lack the front page appeal of this title (especially 'Burnhamnomics', or would it be 'Burnhamomics'?), it is undoubtedly the unique nature of Corbyn's policies in the leadership race that has brought them a name to come under.

So, what are Corbyn's policies, and are they credible? Here are 4 of his policies that are making the headlines.

An End to Austerity

"You just cannot cut your way to prosperity so Britain needs a publicly-led expansion and reconstruction of the economy, with a big rise in investment levels."
Corbyn is a strong opponent to David Cameron and
George Osborne's policy of austerity.

One of the most appealing policies to his supporters on the left, Jeremy Corbyn has pledged to bring an end to the money-saving spending cuts that have been enforced in recent years by the Conservatives.

This means that a government under Corbyn would end spending cuts on public services such as the NHS, the education system and transport- in fact, he would be likely to increase spending on these as demand increases due to a growing and ageing population.

Corbyn would also reverse one of the most controversial austerity tactics, that is the privatisation of public services. He has pledged to renationalise the railway system, and also prevent the further privatisation of the National Health Service.


Reducing Foreign Military Presence


Jeremy Corbyn believes Britain should learn lessons from
an intervention in Iraq seen by many to have failed.

"Thousands more deaths in Iraq ... will set off a spiral of conflict, of hate, of misery, of desperation that will fuel the wars, the conflict, the terrorism, the depression and the misery of future generations." (2003)

However, the only cut that Corbyn proposes is with regards to the military. He is a fervent anti-war activist, something highlighted by his strong criticism of past actions such as Tony Blair's move to invade Iraq, and current proposals like those to militarily become involved in Syria. So, a Britain under Jeremy Corbyn would reduce its military presence in areas like the Middle East, thus saving a considerable amount of money.

Furthermore, as a believer in non-proliferation of nuclear weapons, Corbyn would close down Britain's nuclear weaponry facility Trident, located in Scotland. This would not only save money, but also be a welcome move, considering a significant proportion of Scots are against the facilities themselves. However, some worry that such military contraction would endanger Britain, in what many see as an increasingly threatening world.


'Quantitative Easing for the People'

"QE for people instead of banks"
Banks would no longer benefit from government QE
programmes under Corbyn.

Quantitative Easing is nothing new in government policy, but the manner in which Jeremy Corbyn seeks to implement the divisive policy highlights the new direction in which he seeks to take Britain.

Put simply, in the current system of QE, the Bank of England creates new money that is inserted into the accounts of national banks, with the aim of encouraging these banks to lend more openly and thus stimulate spending in the economy.

Corbyn wishes for the Bank of England to continue creating new money, but proposes that the finances created should not go to the private banks, but a state-owned 'National Investment Bank', that will "head a multi-billion pound programme of infrastructure upgrades and support for high-tech and innovative industries".


National Education Service


Tuition fees have been a source of discontent for many
of Britain's young people. Under Corbyn they would not exist.
"To become a high skill, high pay, high productivity nation we need to invest in education throughout peoples' working lives - that is the path to prosperity for all.

A significant part of Corbyn's anti-austerity programme would be the increasing of government spending on education. There has been much uproar in the past decade over university tuition fees, first introduced by Labour's own Tony Blair, and increased to as much as £9,000 a year under David Cameron.

Not only would Jeremy Corbyn abolish these tuition fees, but he has also proposed the reintroduction of university grants, which have just been replaced by loans.

Free university forms a major part of Corbyn's 'National Education Service' proposal. This system would see the government increase spending on education (funded by tax increases, government military spending cuts and the economic productivity boost the Corbyn camp believe their policies will bring), in order to make education accessible to all, providing universally free childcare right up to free university.

Tuesday, 7 July 2015

Supply Side 'Trickle-down' economics- does it work?

Supply-side (or 'trickle down') economics has for the past few decades been one of the discreet tenets of Western economy. It's the belief that giving financial benefits to the wealthiest of society (in the way of tax cuts/breaks, regulatory advantages given to big businesses) will inevitably benefit society as a whole, as the wealth will 'trickle down' the economic ladder in the form of employment, pay rises or whatever else of the extra wealth the richest will generously share with the rest of the population.

It's been a policy the conservatives of America has held ever so close to their hearts, and one that has faced much opposition by the lower and middle classes of America.

So how did trickle-down begin?

A turning point was certainly in the 1980s, during the divisive periods when Ronald Reagan and Margaret Thatcher were in power in the USA and UK respectively.
Perhaps never have two leaders either side of the Atlantic been so harmonious- Reagan curiously dubbed Thatcher "the most important man in England", and Thatcher once described Reagan as "the second most important man in my life".
The harmony of the two certainly extended to economic policy; both leaders were strongly influenced by the Chicagoan and Austrian schools of economics, the proponents of which included notable anti-regulation, free-marketers Milton Friedman and Friedrich Hayek.

Trickle-down was one of their most prominent legacies. Thatcher and Reagan carried out drastic economic changes that were designed towards 'supply-side economics' (another name for trickle-down). The most important relevant policy change was that of tax rate changes.
In the USA, the Tax Reform of 1986 saw the top tax rate for individuals drop from 50% to 28%, partly compensated for by an increase of the bottom rate of tax from 11% to 15%. This was the very first time in the history of the USA that the top rate of tax fell at the same time as the bottom rate rising.
In the UK, Thatcher followed suit by dropping the top rate of tax from 80% to 63%, meanwhile almost doubling VAT (Value-added tax) and the amount everyone had to pay to fund the National Health Service. However, she did indeed drop the common tax rate from 33% to 30%.

So what were effects of these trickle-down policies?
Let's remember, the motivation supposedly behind trickle-down economics was that the population as a whole would benefit from the wealthy being wealthier. The idea is that as the national wealth pie grows as a result of the richer getting richer, everyone else's pie would simultaneously grow as a result.
So has it worked?
Well, a certainly interesting effect is encapsulated well in the following graphic:


Comparison of wages of the top 1%, overall wages and productivity.
(Mother Jones
Note the real separation point on the graph, where the average income of the top 1% really lifts off- it's after the turn of the decade, through the 1980s- conveniently the decade of Reagan's presidency.

Note not just how the income of the top 1% rises incredibly, that as productivity increases the average overall wages of the population lags behind, barely increasing in relation to the other two factors in the chart.
The meaning of this is pretty unpleasant- the 'pie of wealth' may have increased, but this chart suggests that more prominent has been a relocation of sorts of national wealth.
The wages of the overall population has suffered since the 1980s when it is considered that productivity has boosted- the overall population have not benefited in terms of wages from this increase. Instead the wages of the wealthiest have been boosted far more than before the 80s.
CEOs in 1965 made 24 times more than the average production worker- in 2009, this figure was 185.

It seems clear that wages of the middle and lower classes, contrary to the motives of supply-side economics, have suffered as a result of the policy- meanwhile clearly the wealthiest have benefited HUGELY.

So why haven't most of the population benefited- a key belief of the theory is that it's better for everyone if the wealthy are wealthier, right?


Buffett has been a prominent opponent
of trickle-down economics.
Here there is a great fault in the trickle-down ideology- reduction in the taxes enforced upon the wealth is itself no guarantee of further reinvestment into the economy.
This is because the benefits are being given to people who are not in need of it. Little is in the way of CEOs creating new jobs to further production- most already have the capital available to invest where they see fit.
Warren Buffett (pictured right), one of the wealthiest men in the world, and perhaps the most prolific investor claimed "People invest to make money, and potential taxes have never scared them off". Taxes are rarely a stumbling block for the wealthiest, who are willing to take risks to invest (most entrepreneurs are where they are now as a result of their calculated risks).
Therefore tax cuts to the wealthy rarely open the doors to new investments. Instead it leads to simply a further amassing of wealth by the wealthy. By no means will the wealthy invest everything they benefit from tax cuts, to the gain of the middle and lower classes as the theory suggests. A staggering example of this is how currently the top 1% of wealthiest people in the world control 39% of the world's wealth. This is a clear sign of a broken global system, a large part of which is thanks to trickle-down.

Trickle-down, supply-side, Reaganomics, whatever name it is called, is a lie.

The solution lies not in blessing the wealthy with benefits and hoping that it will filter down to the rest of society, but the solution lies in the middle class. We need to make the middle the centre of our economic system, and see middle-out growth that will benefit everyone (yes, including the wealthy).

Middle-out. That is the solution we need.

Sources for this article can be found linked within.

Wednesday, 18 March 2015

3 Things to Note From the 2015 Budget Announcement.

Chancellor George Osbourne with his red Budget Box of policies. [EPA]
It's Budget Day! Today saw the announcement of the British Coalition Government's budget for the forthcoming fiscal year, by Chancellor George Osbourne. The Budget, in essence, evaluates the past year and sets out the plans for the next year with regards to economic policy; things like whether taxes on certain things should be raised or lowered, whether the government will invest further in a project and so on.

The whole event gives itself much reason to be sceptical; they are often used as more politically charged electioneering events, and even moreso with Britain just a couple of months away from an election. Here are three things I took away from the Chancellor's speech today.

1) Britain's economy is doing relatively well.
As Osbourne proudly announced today, Britain had the fastest growing economy of any developed nation in the world, as deemed by the International Monetary Fund, who estimated Britain's unemployment and inflation rates to be lower than they turned out. These two numbers are in fact lower than ever, with unemployment expected to fall to just 5.3% this year and inflation below 2%. But with regards to employment, there is a problem; because many of the jobs 'created' have been what are known as 'zero hours contracts'- these are job contracts within which the employer is under no obligation to give no minimum number of hours to its workers.
According to the Office of National Statistics, 697,000 people (over 2% of the British workforce) are employed under ZHCs, and over one third of them are unhappy about the number of hours they are receiving. These employees often receive so few hours that they are unable to afford the rising cost of living, but their employed status puts unemployment benefits out of their reach. Their lack of status as a full employee then puts them in a position where they can't access benefits such as holiday pay, leaving many in a worse financial situation than they would be if they were out of work. A significant proportion of the jobs created under the Conservative government have been ZHOs, with over 100,000 being created between 2013-14. So employment may be higher, but with cases such as those of Zero Hour Contracts, one must think more about the quality of employment being created than the job alone.

2) "Football, beer, and above all gambling, filled up the horizon of their minds. To keep them in control was not difficult."
I'm often reminded of this poignant quote from George Orwell's literary masterpiece, 1984, whenever rumours are abound of government plans to reduce taxes. No doubt Osbourne and Co. have announced this with the election fast approaching in mind, and with the Chief Executive of the British Beer and Pub Association calling him a "hat-trick hero" because of it, there's no doubt it will work in gaining Tory support with many. As Osbourne announced tax duty of a pint of beer and cider are to drop by 1p and 2p respectively. For the third year in a row, Osbourne announced tax duty of a pint of beer and cider are to drop by 1p and 2p respectively. He claims it has the potential to create 3,800 jobs in the forthcoming year, but I wonder: is this really the way we should go trying to create employment?
The government seems to be continuing (rightly IMO) its efforts to minimise the nation's consumption, following up on its previous promise to increase tobacco duty by 2% starting today, but why is it doing the opposite with alcohol? Alcohol is an equally damaging drug, if not more damaging due to how much more common it is and its association with events such road accidents and street violence. One-third of the visitors to our already suffering A&E facilities are there due to alcohol- even more during the weekends. 2014 saw almost 6000 more people having to receive alcohol treatment than 2013. The total cost of alcohol-related harm to society is £21bn, and it is costing the NHS £3.5bn a year.
The state of our society with regards to alcohol, why it may not be spectacularly poor on a global stage, has much much to improve. And in my opinion, lowering taxes on alcohol, making it cheaper, is no way to solve the problems that are worth far more than 3800 jobs this could bring.


3) Google and Co. will soon have to pay their taxes
In 2012, Starbucks made profits of over £400m in Britain- yet paid £0 to the Treasury as corporation tax that every registered company operating in the country is obligated to pay. Google had a turnover of £395m in the same year, yet paid just £6m. And it's not just these two companies; six major technology firms including Apple, Google and Facebook made profits of over £14bn in Britain, but paid just 0.3% of this in the form of tax. It sounds scandalous, but the thing is that these companies didn't technically break the law- they didn't evade tax, they avoided it thanks to loopholes that allowed them to store their profits in accounts abroad, avoiding the tax radar of Britain. This left the government pretty powerless to prosecute, but what Osbourne has announced here today is a plan to close that loophole to prevent such behaviour continuing.
Dubbed the 'Google Tax', the 'Diverted Profits Tax' plans were announced today- to put it simply, companies will have to report themselves to the HMRC (Tax authorities) if they are making annual turnovers of over £10m, and will have to comply with investigations that determine how much of the profits have been moved abroad, and pay the taxes determined as a result. The government expects to make £3.1bn from this move over the next five years- not a significant amount, considering the scale of government finances, and it is something that clever corporate lawyers are probably going to flout sometime soon. But nevertheless, it's an important move from the government to let multinationals like Google and Starbucks know that there is no place for tax avoiders in Britain.


Recommended reads: 

Budget Calculator: How Will The Budget Affect You [BBC] http://www.bbc.co.uk/news/business-17442946

The Budget- Official Document https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/413949/47881_Budget_2015_Web_Accessible.pdf

Alcohol treatment in England 2013-14 http://www.nta.nhs.uk/uploads/adult-alcohol-statistics-2013-14-commentary.pdf

Monday, 25 August 2014

The Uber Issue

Uber, a relatively new business seeking to revolutionise the taxi services of cities around the world, has been one of Silicon Valley's hottest new startups. Valued in June 2014 at $18.2 billion, the company has taken the world by storm, with its simple model: you can, via your smartphone, hail a taxi to your GPS destination, and get it to take you to any destination you choose on your device. You don't need cash- money is transferred via online payment, with a credit
card or PayPal, just with a press of a button.

Uber's driver hiring process is relatively simple- you need a car, a driving licence, insurance and need to pass various background checks. Uber takes commission from every ride and pays drivers the rest of their fees weekly.
What's more, passengers can rate and review drivers (and drivers can rate passengers), giving all parties involved the incentive to give good service.
It's a simple, efficient system.

However, Uber has come under increasing attack in recent times- not so much from its customers, or the public in general, but from its competitors (unsurprisingly) but most importantly the governments of various local and national authorities.

Cabbies took to the streets of London to protest against Uber
The main issue seems to be that Uber is undercutting local taxi fares- at most times offering fares lower than their standard counterparts. Also, Uber drivers are not forced to pass the same background checks and inspections as their counterparts- a separate background check is needed. Local cab services claim this is too dangerous and should be outlawed.
London has seen protest from taxi drivers against Uber in the form of 4000 cabbies causing a huge traffic jam in the centre of the city, claiming that Uber illegal due to its lack of a meter on every cab.

There has been anger across the world from drivers part of the same cause- to remove Uber from their streets.
Is this a fair point from the taxi drivers or are they simply trying to eradicate what they may see as a growing threat to their comparatively dated services?

Firstly, it's important to consider that Uber is usually cheaper than the regular taxi services. I took an Uber once from Paddington to a friend's house; normally it cost £24 by cab, but by Uber the same route at roughly the same time was £15.
The cheap fares, quick payment, the lack of a need for cash, these are all advantages that have made Uber so popular- and undoubtedly their nearing obsoletion is frustrating many traditional taxi drivers (though they may not admit it).
As for the question of Uber background checks, perhaps more needs to be done- Uber drivers have received their fair share of bad press, but so have taxi drivers. However, perhaps a unified background check system would ensure all transporters are relatively reliable (background checks don't ensure total safety).

As for meters, it's fair to say that they can prevent exorbitant fares- though perhaps regulation should allow for different systems of fare calculation and regulate those, rather than give them all a blanket ban.

My personal opinion is that the taxi drivers must accommodate innovation in their industry, and, even better, take it up themselves. As a customer of taxi services I want a low fare, I want to be free from the worry of 'do I have cash?', and I want to be able to pay quick and easily. I want a service like Uber, that is innovative and not caught up in 'tradition'- and obviously I am not alone, considering the company's popularity.

So perhaps taxi drivers should embrace change, and innovation. Uber has shown that in this case (though refinement is needed), it will be for the best of the average consumer.

SOURCES (and recommended reads)
http://www.heraldsun.com.au/business/breaking-news/uber-drivers-will-be-fined-sa-govt/story-fnn9c0hb-1227036403657?nk=c226658d765e4f3742a7ba82aefc4ed4

http://www.ft.com/cms/s/0/f07810f6-293f-11e4-8b81-00144feabdc0.html#axzz3BPEs4lxZ

http://www.bbc.co.uk/news/uk-england-london-27799938

http://www.theguardian.com/commentisfree/2014/jun/11/why-london-taxi-drivers-protesting-uber-tfl

Tuesday, 22 July 2014

German Cars: What Makes Them Special?

If you were to ask someone on the street what car they would like to own, without doubt among the most popular brand selections would be BMW, Mercedes or Audi.
These three German manufacturers have taken the global car market by storm in recent decades, and are now the epitome of the well-built, high quality yet mass-marketable luxury car.


VIDEO: http://bit.ly/XHupq2

Of course all their cars are not necessarily of the best quality on the market- the likes of Aston Martin and Ferrari to name just two produce cars closest to perfection- however the crucial aspect to why BMW, Mercedes and Audi are more successful and relevant to this discussion is because they are open to the mass-market. The average middle-class family cannot afford a four-door £150,000 Aston Martin Rapide; though a £23,000 BMW 3-Series is within the reach of many, an achievement highlighted best by how it has consistently maintained a spot in the ten top-selling cars in Britain since 2004. 

The success of the German car industry can especially be noted when compared to that of Britain's. In 2011, Germany produced 5.9 million cars, the highest number in Europe- Britain a paltry 1.3 million- many of these not for British brands but for foreign ones such as Nissan and Honda. 
And the domination of the Germans extends much further- two typical 'British' car makers, Bentley and Mini, are in fact far from British; Bentley is owned by Volkswagen, Mini by BMW. 
There are in fact no longer ANY mass-market 'purely British' brands- Jaguar, Vauxhall, Land Rover, even Aston Martin, are all foreign-owned. 

Germany's success in the car industry must also be put into perspective- consider that less than a century ago the nation was facing huge economic turmoil, the sort that provides textbook examples of hyper-inflation: the wheelbarrows of cash, the 200 million mark loaves of bread, the extremely volatile prices, the lot. 

Post-war reparations had put Germany in a terrible state in the early 20th century- but looking at Germany now, with such economic might that makes it the most influential state in the EU, it is clear that the German system has produced fantastic results.

There are numerous reasons for the Germans' successful car market, but one key reason is the industrial mindset, the 'manufacturing culture' that is fostered by the Bavarians. 


Britain's manufacturing industry has had a rough last 30 years- in this period shrinking by two-thirds. Margaret Thatcher's time as PM during the 1980s to many killed the secondary industry in Britain. I'm sure you've seen the images of striking factory workers, unhappy at Thatcher's crushing of worker unions and the closures of numerous car factories throughout the nation. 

Meanwhile, Germany has only been growing since the Second World War- whereas British car factories became a battleground for a class war between management and labourers, German factories were tight-knit, harmonious and therefore far more efficient. 


The closer relationship between workers and management is part of Germany's attention to what is known as the 'social market economy'- a type of capitalism that does not co-ordinate market activity itself, but at the same time provides support for society- be it in the form of universal healthcare, unemployment insurance and, most relevant in this discussion, trade unions. German workers enjoy among the highest secondary sector wages in the world, and are provided good working conditions. In contrast to the system in the USA for example, where entry-level factory wages were halved from $28 to $14 an hour, the Germans' higher investment in the workers pays off, creating a more co-operative and committed environment, where workers develop loyalty to their company, an idea almost lost in the US labour economy. 

German workers are in fact the most loyal in Europe- the job market is far more stable, meaning companies can afford to invest more in long-term training, and crucially it means workers on the production line are experienced and efficient in their job.

Output is also helped by the power given to the workers on the German production line. Almost all German factories will have members of the regular workforce on the executive committee of the factory- as a result the workers are given a voice in the running of the factory, and have the power to suggest changes that may improve efficiency. 

To those who may believe this system can be abused to benefit the workers at the cost of the company, this is where the German system really makes a difference. Loyal German workers who are decently paid already are more likely to not abuse their power to push such agendas.
This system making workers a part of the running of their factories increases the workers' morale, making them feel more empowered as part of a democratic operation.

The education system is arguably the biggest factor in German industrial success. Whereas in Britain all youths are pushed through the same educational system until the age of 16, after which they are offered either further education or half-heartedly the option of vocational education- such as BTEC, or Apprenticeships.

These being relatively young programs, they are not well-established and are avoided by many students, partly as they are seen as for those intellectually inferior to the further educationers (certainly not always the case).

Meanwhile Germany offers more choice to specialise at an earlier point. After the age of 10 (or 12 in some areas) student can study at the Gymnasium to pursue higher education such as university, or can opt for the Realschule or Hauptschule, schools that will provide education in core subjects such as Maths but have a heavier focus on vocational education and practical work experience.


These extra years provides a head-start for German workers and has created skilled, respected workers, ready-made to enter the world of manufacturing at the age of 18. German factories have had no shortage of skilled workers- and as a result the production lines are efficient and smoother than most others in the world.


Germany have certainly set the benchmark for efficiency in the manufacturing industry. It must be noted that Japan are similarly capable in car production. 

Worker empowerment, the social market economy and an established, effective specialist education system have propelled Germany to the top of the global car industry- and while other countries may not be able to fully translate German practices into their own car industries, it is certain that they can learn lessons from it.


SOURCES (And recommended reads): 

How German cars beat British motors - and kept going bbc.co.uk/news/magazine-23406467 (BBC, 2013)

Mercedes Benz, BMW and Audi Seen as Top Three Car Manufacturers in Terms of Overall Brand Quality By Europeans, According to New Harris Interactive Survey prnewswire.co.uk/news-releases/mercedes-benz-bmw-and-audi-seen-as-top-three-car-manufacturers-in-terms-of-overall-brand-quality-by-europeans-according-to-new-harris-interactive-survey-155096425.html 

Why doesn't Britain make things any more? www.theguardian.com/business/2011/nov/16/why-britain-doesnt-make-things-manufacturing (The Guardian, 2011)

Manufacturing lessons from Germany

German Lessons: DEVELOPING INDUSTRIAL POLICY IN THE UK www.tuc.org.uk/sites/default/files/tucfiles/germanlessonsedit.pdf

US carmakers cut pay as Australia's hourly rates soared www.theaustralian.com.au/national-affairs/us-carmakers-cut-pay-as-australias-hourly-rates-soared/story-fn59niix-1226779288772?nk=7680174eef8fa1a758fb359ff5cd292a (The Australian, 2013)

Consumer confidence drives record year www.smmt.co.uk/2004/01/consumer-confidence-drives-record-year/ (SMMT, 2004)

German workers 'most loyal in Europe' www.thelocal.de/20121014/45553 (The Local, 2012)

German School System www.howtogermany.com/pages/germanschools.html