BUSINESS CLASS: East, West and deep South

It's economics, stupid

Economics has been the red-hot topic this week, what with one great American economist dying, and one being named Time magazine's Person of the Year. But we'll kick off our travels in China, which was named by 44 per cent of Americans as the "world's leading economic power", in a recent Pew poll. The results of the poll, originally released early this month, irked The Atlantic's man in China, James Fallows, so much he has felt the need to clarify, twice.

Says Fallows: "OK, I can understand why some people might think so – what with the trillions of dollars of US debt to our Chinese overlords, the ubiquity of 'Made in China' products wherever you shop, and the precision and scale of the opening ceremony of the Beijing Olympics. Still, people who think this are wrong.”

"Some people outside China have evidently developed a wholly unrealistic, fantasy-world concept of a China ...[that] is surging effortlessly ahead," he continues. "A more realistic view – of a country that is advancing dramatically, but from a very low level of average wealth – is better for all concerned." Fallows then posts a note from an "American financial-industry expert" who corroborates his' views with some first-hand observations of his own. Well worth a read if you, like Fallows' "crazy Americans", need some perspective on our industrious Asian neighbours.

For even more perspective, read this China Smack post about student conditions. And for rather a lot more perspective, see the same blog for a heartbreaking story about a poor farmer and his adopted daughter.

Now calm down and stop doing surveys!

It's not economics, stupid

Still on China, the climate change debate was rudely interrupted last week from over Canada way (yes, Canada, that country that has been described as "to climate what Japan is to whaling”) in the form of an op-ed by National Post editor at large Diane Francis, proposing that the solution to global warming was for the whole world to adopt China's one child policy. Says Francis: "Humankind has not yet recalibrated its behaviour to account for the fact that the world can only accommodate so many people, especially if billions get indoor plumbing and cars. The fix is simple. It's dramatic. And yet the world's leaders don't even have it on their agenda in Copenhagen."

Hmmm. You might find, Diane, that there are probably quite a few good reasons for that. China-based blog Shanghaiist has one: "While we think overpopulation is bad for the Earth, the one inconvenient truth of this article, which talks about the bright side of the one-child-only edict, is that it's factually false."

And from the most unlikely of sources, Fox News's O'Reilly Factor (not from Big Bad Bill, himself, mind, the world hasn't gone completely mad!), guest host Laura Ingraham had a few more reasons. And as much as it's a bit of the blind leading the blind (or should I say, the deaf shouting down the deaf), Ingraham's interview with Francis is a firecracker that just highlights what shady territory this real-issue-avoiding debate strays onto. Here's a sample:

Ingraham: How do you call yourself ... a feminist if you say that it's not necessarily a bad thing for a totalitarian state to tell women how many children they can have? Yet, that is the ultimate anti-choice attitude, is it not?
...
Francis: Yeah, no, I think the point I'm trying to raise here is I want the conversation to be extended into things other than the science, the junk science. We have, you know, every day you see on television, you see starving children.

Ingraham: Right.

Francis: And it's heartbreaking and it's terrible. And yet you see lots of governments that are encouraging women to have children they can't afford. We got to do something about that.

Ingraham: Save the planet. Save the planet. Abort the babies. I get it. I see the bumper sticker. Diane, we appreciate it. Thanks for joining us.

More banking hijinks

After last week's bad run for bankers, it seems conditions have not brightened particularly this week. On the Continent, proceedings kicked off rather sensationally with Antonio Maria Costa, head of the UN Office on Drugs and Crime, telling The Observer that drug money worth billions of dollars kept the financial system afloat during the GFC. Right! Costa told the paper he had "seen evidence that the proceeds of organised crime were 'the only liquid investment capital' available to some banks on the brink of collapse last year". As a result, Costa deduces that a majority of the $US352 billion of the year's drugs profits was injected into the economic system. Quite the stimulus package.

Meanwhile, in the US of A, the heads of the country's leading banks were summoned to the White House for a "frank and candid" (the administration's words) discussion. The 90 minute, "very, very serious" (the participants' words) chat – which took place a day after Obama had blasted Wall Street's "fat cat bankers" in a CBS TV interview, and said that they "still don't get it" – was to remind the banks of their good fortune, vis-a-vis the massive bail-outs, and also to remind them that America still hates their guts, and will continue to do so if they don't start trimming the fat on bonuses and loosening up on loans to small businesses.

But in a twist to the story, it seems that three of said "fat cats" failed to show up for the gathering in person – Lloyd Blankfein, CEO of Goldman Sachs; John Mack, chairman of Morgan Stanley; and Richard Parsons, chairman of Citigroup.

"Their excuse?", asks Andrew Ross Sorkin in DealBook: "'Inclement weather,' according to the White House. More precisely, fog delayed flights into Reagan National Airport." Says The Observer: "Corporate leaders have avoided using private aircraft to political meetings since the bosses of General Motors, Ford and Chrysler were lambasted by Congress last year for flying to Washington on executive jets to appeal for emergency aid from taxpayers.” See! They can learn.

But there's more to this than a few no-shows, says Ross Sorkin. When Obama "stared at the Polycom speakerphone in front of him," it was an awkward moment that "spoke volumes about how the balance of power between Wall Street and Washington has shifted again, back in Wall Street's favour. Now that Citigroup has given back its bailout money – and Wells Fargo announced late on Monday that it would, too – whatever leverage Washington had over the financial services industry seems to be quickly eroding."

So, that's some good news. For the banks, that is.

A rebirth and a funeral

While Ben Bernanke was being crowned man of the year, another economist of great renown was shuffling off this mortal coil. Nobel prize winner Paul Samuelson died this week, opening the floodgates of tribute-writing and iconoclasm. Here's a selection of some of this (mostly the former. Hey, the guy's barely left us. Let's be nice.).

There's NYT's Krugman, and more Krugman, this time on Samuelson's prescience. WSJ's David R Henderson on Why Everyone Read Samuelson ("The late Nobel laureate's mathematical approach to economics has been a mixed blessing.") And in The New Yorker, John Cassidy revisits his 1996 interview with Samuelson, which has some great quotes ("Like herpes, math is here to stay".) and more eerily accurate predictions.

Now, to the rebirth. Ben Bernanke is Time's person of the year, a thought-provoking choice, no doubt. For those of you trying to understand Time's thinking, try starting with the magazine's managing editor Richard Stengel's explanation, including the comment that "rarely had such a perfect revision of the clich that those who do not learn from history are doomed to repeat it. Bernanke didn't just learn from history; he wrote it himself and was damned if he was going to repeat it.” (Hmmm. One of Business Spectator's readers had a different way of putting this: "...a bit like giving an arsonist an award for arriving back on the scene of the crime and putting the fire out.")

And then there's The Motley Fool's Alice Lomax, who sums it up for many with this comment: "I like to think of 2009 as the The Year of the "What the [word my editor deleted]?!" as moral hazard issues swamped the market. For a year like that, I guess Bernanke is indeed the Person." By choosing Bernanke, she adds, "Time seems to have invited a whole bushel of controversy and questions." (And poetry, apparently). We look forward to that. And I bet Mr Bernanke does, too. No pressure, Ben!

Oh, what a failing

The other other big story of the week was about branding. What with all of Tiger's skeletons now out of the closet (oh, be quiet, Jessica Simpson) the new Tiger watch is trained on which brands are dumping him. The first to go was Gatorade. And most recently, Accenture washed their hands of him, going so far as to tell employees to tear down the campaign posters that say "we know what it takes to be a Tiger". Oops.

But the brand disaster of the week surely belongs to our own Toyota Australia, with a nod and a wink to Saatchi & Saatchi. The two had an unfortunate brush with 'crowdsourcing' this week – that is, harnessing the 'community of thought' and leveraging it for business, innovation or for improvement – when a competition-winning short film was seeded in a social media forum (alright, it was Facebook) and then roundly slammed for being sexist and promoting incest. Not a good combination, however you look at it.

The fact that the ad was for the Toyota Yaris, a model pitched at the young female market, makes the whole mess all the more unfortunate. And while you can argue the finer points of whether or not it really is sexist, it doesn't change the fact that the result couldn't have been what Toyota was after.

So let's hope that this sorry tale reminds advertisers everywhere that, as one industry boffin put it, "we've got a ways to go" with this troubled method of marketing. Perhaps it's time to put crowdsourcing on the back-burner, hmm? (We're looking at you, Kraft 2.0.)