The impact on business of political uncertainty in countries
that are seized by revolution can be substantial—so much so in fact that CEO’s
and board directors are motivated to avoid the uncertainty itself. I submit
that business analysts of political risk tend unwittingly to routinely overstate
the uncertainty arising from incoming U.S. presidential administrations. If I
am correct in this claim, CEO’s and board directors pay too much heed to
political uncertainty itself in the making of major strategic decisions
involving operations in the American context.
Friday, December 2, 2016
Modern Day Mercantilism: Donald Trump Intervenes at Carrier
The tension between the free-market philosophy and mercantilism
(e.g., an industrial policy) has been longstanding. I contend that the
philosophy of international business (or international economics) is flawed terms
of how far comparative advantage is applied, even at the expense of full
employment at the city or country level. The case of Carrier in Indiana points
to the legitimacy of government intervention even at the expense of comparative
advantage.
The full essay is at "Modern Day Mercantilism."
Wednesday, November 30, 2016
Springtime for China's Coal Industry: Is China Too Big to Swerve Enough to Avoid the Climatic Iceberg Ahead?
Even as Chinese government officials “called on the United
States to recognize established science and to work with other countries to
reduce dependence on dirty fuels like coal and oil,” China was “scrambling to
mine and burn more coal.”[1]
Notably, short-terms concerns were dominant. “A lack of stockpiles and worries
about electricity blackouts” were “spurring Chinese officials to reverse curbs
that [had] once helped reduce coal production.”[2]
By December, 2016, coal mines were reopening, and with them coal miners were
returning to work. The renewed activity would of course make it more difficult
for China and the world to meet CO2 emissions targets, “as Chinese coal is the
world’s largest single source of carbon emissions from human activities.”[3]
In fact, China’s use of coal results in more emissions “than all the oil, coal,
and gas consumed in the United States.”[4]
The implications for being able to contain the global rise in temperature within
2 degrees C are not bright from this real-life scenario. It is important,
therefore, to grasp the underlying dynamics behind China’s plight.
The full essay is at "Springtime for China's Coal".
1. Keith Bradsher, “Despite Climate Vow, China Scrambles for Coal,” The New York Times, November 30, 2016.
2. Ibid.
3. Ibid.
4. Ibid.
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