Peter Drucker: Giving the Seal of Approval

You know ideas are funny things. They go round and round and round in a circulation process which is hard to understand, and then suddenly they arrive: bingo, it's true, you know so and so is saying........

Well I think we just went though one of those barriers on India. Some people have been saying kind of tirelessly and repeatedly (Stephen Roach, Brad, Me) that India is arriving: watch out. Now finally, Fortune has published an interview with Peter Drucker, which then showed up in an reduced version on Josh Marshalls Talking Points Memo (incidentally Josh seems to entirely miss the point, imagining that India is destined to enhance the US position rather than supplant the US as the global mega power) and then David goes on to post the story on Fistful. It even shows up here in India.


In general I am sympathetic to Drucker's argument. I do think India will be the new 'brainy' superpower, and that China will become the manufacturing hub, but not the global leader. Day-to-day contact with young bloggers in each of these two fascinating countries makes me even more convinced.

Druker, however, does seem to have an incredible amount of difficulty with detail.

Look at his arguments about Japan being the beneficiary of the US's discomfort, in fact they mainly stand to lose by a continuing dollar slide, as do many of the world's central banks including the ECB. Also a massive devaluation in the dollar, by making US debts worth a lot less, could be positive for the debt, although perhaps not so much so for the US standard of living.

In fact Drucker doesn't seem to understand much economics.

He is also rather weak on fact. The number of 150 million for competent English speakers is clearly ridiculous. No-one really seems to know for sure, but I deduce, somewhat haphazardly, that mother tongue English Indians may account for only between 5 and 10 millionfrom this page. (Josh Marshall again notes the discrepancy in Drucker but claims about 20 million English speakers with 150 million fluent speakers citing this page which at least has the merit of recognising that "exact figures do not exist". Not for nothing am I referring to India in my posts this week as an area of darkness!). Of course the point is that many many more understand English than those who could properly be considered mother tongue speakers, and many of those speak it well - though there are certainly not 150 million in that class - so if India moves up the value chain into things like biotech and software development, and away from all those wretched call centres - which could easily move out to Bangladesh, Pakistan etc as Indian costs rise - then speaking a clear version of the queens English may not be so important.

Drucker is also off target with his numbers for rural India, which are normally put at 700 million or around 70% of the population and possibly rising as the birth rate in the cities declines. He even gets it wrong on IITs: Bangalore is one of the places where there isn't an Indian Institute of Technology, although, there is an Indian Institute of Science there.

So when you look at it, it may be hard to find a single fact which you can corroborate here (including his information on education in China).

Having said all that, I still broadly agree with his point.

Parmalat: Just Another Scandal?

On a day which sees the Parmalat heat being turned up to full blast, with a looming 'cara a cara' between former Chief Financial Officer Fausto Tonna and Parmalat chief legal counsel Gian Paolo Zini, and while in the United States a class action law firm has named investment bank Citigroup Inc and auditing firm Deloitte & Touche Tohmatsu among defendants in a lawsuit against the food group - a lawsuit incidentally filed on behalf of a U.S. pension fund (oh when, oh when will we get class action lawsuits here in Europe) - on such a day it might well be worth asking ourselves one simple question: is this just another one-off scandal?
continue reading if you are interested

SARS: A Thorough Cleaning

Actually looking at the title I've given this piece does make me think about comparisons between the current vigour of the Chinese authorities and the European anti-cholera campaigns in the 19th century: lets try scrubbing it away.

This notwithstanding Sars 2004 is likely to be a very different animal from Sars 2003: in many senses. What follows is a slight rehash of something I have just put up on Living in China. The Mr Sars expression comes from young Chinese blogger Hailey Xie, and she coined the term in this post, which is well worth reading for anyone with an interest in how young Chinese bloggers think. (And BTW there is a world of difference between the Chinese and the Indian blogging community, a difference which I cannot help observing as the posts come in, and a difference whose importance I a sure to want to reflect on here in the coming days).


So what actually gives on the Sars front? Well for starters State media in China are saying that a campaign of culling civet cats is underway in Guandong. In fact the decision seems to have come from the Guangdong Health Bureau. Official Feng Liuxiang is quoted as saying that they "will start a patriotic health campaign to kill rats and cockroaches in order to give every place a thorough cleaning for the Lunar New Year." Meantime the WHO seems to be frantically calling for caution in the proposed slaughter. Roy Wadia, the WHO's Beijing spokesman, has been drawing attention to the fact that "the WHO hopes that the slaughter of animals and closure of wild animal markets will not be done in a way that will drive the trade underground" since "driving the trade underground could be counter-productive to containing the disease."


This point should obviously not go unheaded. Be that as it may, it is already possible to discern a number of important differences between Mr Sars 2004 style, and the 2003 version. In particular in connection with the media handling of the problem.

The Chinese authorities are certainly trying to be far more proactive. The deficiencies of the earlier secrecy approach were all too apparent, and clearly this year there is a much greater attempt to lead from the front. This is in part made possible by the first rate scientific capacity which seems to be available in China at the diagnosis end, and which can be seen in action in the reports from the Centres for Disease Control in Shenzhen and Guandong cited in my post yesterday. However some of the old weaknesses are still apparent, this time in the dangers of overreaction in the de-infestation campaign which, as some media rightly note, is somehow reminiscent of 'oldstyle' Mao Zedong's pest eradication campaigns. However, there are clear signs of a learning curve being at work.

At the other end of the spectrum is the apparent caution and timidity of the current WHO campaign. Fiercely criticised last year for over-dramatising, the WHO now seem to be adopting a much more 'low key' approach. There is still a dedicated page on the WHO site, but at the time of writing this has not been updated since the 31st December. Whilst the Chinese Ministry of Health has stated that "the only suspected SARS case in south China's Guangdong Province has been confirmed as a diagnosed case", the WHO has yet to pronounce. Xinua have also reported that "42 people with close contact with the patient have been isolated for further medical observation and 25 of them with normal physical symptoms have been freed from observation". Although it is not clear, it seems that the 42 and the 25 in question are different groups.

Another of the key features of the way the subject is presented this year is sure to be an increased emphasis on corona virus mutation. As this is a post in itself, I will not go further here. But clearly it is important to note that we are dealing with a different strain, and the consequences of this are as yet unknown. Hence, in part, the WHO's caution. Also of note is the fact that we are dealing with a more informed global public, so naturally the degree of scientific depth in the reprting will be correspondingly greater.

Finally, it should be noted that the confirmed case (plus quaranteened contacts) may not be the only one. There have been reports in the Hong Kong Standard that a waitress has become the second suspected SARS case in Guangdong but provincial officials and hospitals have denied the report. The paper claimed that the waitress, in her early 20s, developed a fever a week ago and has been kept in isolation at the Guangzhou No. 1 People's Hospital. Citing unidentified reports from Guangzhou, it said the woman had symptoms of the flu-like illness but an announcement would not be made unless test results confirmed the disease.

However Wang Ming deputy director of Guangzhou City diseases prevention and control center, subsequently told a news conference that "We do have a fever patient due to pneumonia, but this has no direct connection with any suspected SARS case," while the No. 1 People's Hospital informed Reuters: "We don't have a suspected SARS patient because we are not a first-line SARS hospital."

The reasoning behind this last quote is curious, to say the least. Meantime I would say the jury is still out here.

On another front a Filipino maid, recently returned from working in Hong Kong, and her family, are being tested as possible cases. The maid , who has a fever, is currently isolated at a hospital along with her doctor, according to health department spokesman Dennis Magat. At the same same authorities are busily trying to trace people she may have had contact with.

Are we about to see a major return of Mr Sars? It is hard to say. What we can say, is that this situation needs some extremely careful attention.

Euro: Plus Ca Change

Hi, I'm Back: on the tools as it were. 2004 Bonobo blogging begins here (although, as I'll be explaining later, it almost certainly won't be ending up here). So Happy New Year everyone, and what better way to ring out the old, and bring in the new than a timely post about the Euro.

Of course it continues to go up, and to defy what you might have thought was all economic logic. The problem is a fault, not in the Earth's crust, but in the underlying financial structure. So, at least in the short term, and come what may, the Euro is condemned to rise. What a pity Ben Bernanke isn't a European. He seems to understand what is going on, much to the surprise of the FT journalist covering the story. He is happy with the situation. Now why would this be? Because letting the dollar slide slowly down solves two problems 'a la vez': it does something to counteract the terrible trade deficit problem the US has, and it gives some extra insurance against deflation (which is after all Bernake's number one worry). Meantime what is the consequence of all this for the German economy? Methinks we are about to find out. Like I said: pity Bernanke wasn't born a European.

There was no respite for the dollar at the beginning of the new year as it registered another lifetime low against the euro in Asia as Japanese investors returned to push the greenback lower.


Comments from Ben Bernanke, US Federal Reserve governor, did little to support the struggling US currency which slid to a fresh lifetime low against the euro and the lowest levels for a month against the yen.

The dollar fell to $1.2672 in Asian trade, down from $1.2585/89 in late US trade on Friday. In early European trade the dollar was staving off fresh lows at $1.2646. The US currency has fallen close to 5 per cent against the euro in the last month as dealers worry about the size of the US current account defecit.

Against the yen the dollar fell to four-week low of Y106.76 at which point the Bank of Japan intervened to halt the dollar's decline, although the BoJ provided no official confirmation of the move. In early European trade the dollar was back above the Y107 level at Y107.02.

The euro hit a 5-month high of Y135.75 against the yen in Asian trade before falling back to Y135.24 in early European trade.

On Sunday, Ben Bernanke, governor of the Federal Reserve, seemed to indicate that policy makers were relaxed about the speed of the dollar's declines. Speaking in San Diego the governor said the risk of a dollar crisis was quite quite low and that the Federal Reserve was correct to hold interest rates in the US at their historic lows of 1 per cent.