"If I speak in the tongues of men or of angels, but do not have love, I am only a resounding gong or a clanging cymbal. If I have the gift of prophecy and can fathom all mysteries and all knowledge, and if I have a faith that can move mountains, but do not have love, I am nothing. If I give all I possess to the poor and give over my body to hardship that I may boast, but do not have love, I gain nothing.

Love is patient, love is kind. It does not envy, it does not boast, it is not proud. It does not dishonour others, it is not self-seeking, it is not easily angered, it keeps no record of wrongs. Love does not delight in evil but rejoices with the truth. It always protects, always trusts, always hopes, always perseveres.

Love never fails. But where there are prophecies, they will cease; where there are tongues, they will be stilled; where there is knowledge, it will pass away. For we know in part and we prophesy in part, but when completeness comes, what is in part disappears. When I was a child, I talked like a child, I thought like a child, I reasoned like a child. When I became a man, I put the ways of childhood behind me. For now we see only a reflection as in a mirror; then we shall see face to face. Now I know in part; then I shall know fully, even as I am fully known.

And now these three remain: faith, hope and love. But the greatest of these is love."

1 Corinthians 13

Samsung To Face Challenges Over Looming Leadership Change; Lee Kun-hee Marks 25 years As Chairman At Samsung (이건희 삼성 회장 취임 25주년)

There are several reasons why chaebols have shipped its manufacturing overseas on an on-going basis.  The obvious factors like currency and cheap labor have played a part. There are other factors like bubbles fuelled by bad policies as well.  Of course, corporate greed has played a big part.

It’s not just the Japan, Inc., the Korea, Inc. and the U.S. Inc.  It’s the world Inc.  It’s not easy to deal with the global forces. 

Even so, there are many ways Samsung can take to make a genuine contribution to the Korean society.  As pointed out many times, it all boils down to social considerations and moral choices.

We hope that chairman Lee Kun-hee would be revered as a person who would have contributed to the productive capacity of Korea through manufacturing job creation and investment in long run productive activities of Korea.  This is because quality manufacturing jobs lead to the solid middle class base which is the backbone of Korea’s democracy, and productive capacity is the wealth of a nation (which is a major thesis of this blog).  That may be his best contribution to the Korean society at large.

Samsung must know that mercantilism is in a death spiral.  Samsung must also know that Korea has to make a transition from a mercantilist export-driven economy to a more household-, SMEs-oriented one to sustain its economy with broad prosperity.  If Samsung is really serious about contributing to the Korean society, they may have to come up with measures to help this transition.  Therein may lie Lee’s biggest challenge.

Other recent Samsung-related posts you might enjoy:

Samsung Hits Apple With 20% Price Hike (삼성, 아이폰 핵심칩 가격 인상) http://innovationandeconomicanalysis.blogspot.kr/2012/11/samsung-hits-apple-with-20-price-hike.html

Samsung Electronics to invest US$700 mln in Vietnam (삼성 베트남 휴대폰 공장 투자 확 늘린다) http://innovationandeconomicanalysis.blogspot.kr/2012/10/samsung-electronics-to-invest-us700-mln.html

From Yonhap:

Samsung Electronics chairman Lee Kun-hee has made Samsung a household name in the United States and Europe as well as South Korea after taking over the company from his late father, Lee Byung-chull, in 1987.

   What began as a small trading company that sold groceries in 1938 is now the Samsung Group, spanning businesses that deal in electronics, engineering, insurance, clothing and an amusement park.

   Some experts claim Samsung Group could face challenges in coming years as Lee Kun-hee has yet to come up with specific measures on how and when to hand over his management control of the country's largest family-run conglomerate.

   "The biggest challenge facing Samsung is Lee Kun-hee's desire" to keep his management control over Samsung, said Kim Sang-Jo, a professor at Hansung University. Kim claimed Lee has yet to make a decision on how to hand over his control.

   Under Lee's stewardship, sales of Samsung Group stood at 383 trillion won (US$352 billion), a 39-fold increase between 1987 and 2012, a dramatic development that contributed to Samsung's being ranked as the world's No. 9 brand.

   Now, Samsung Electronics Co. has become the world's top maker of smartphones as well as memory chips. The tech giant has been locked in a high-stakes patent war against Apple Inc., the California-based maker of the iPhone, over the $219 billion global smartphone market since April last year.

   Samsung Electronics CEO Kwon Oh-hyun has stressed the importance of nurturing future growth engines through innovation for the company to become a "market creator" in the electronics industry. Samsung had been widely viewed as a "fast follower" which emulated industry leaders in the past.

   Lee Kun-hee also warned last year that Samsung's top products could disappear in a decade as the family-run conglomerate has vowed to pursue environmental and healthcare businesses as part of efforts to tap future growth engines.

  Though Lee has made Samsung Electronics one of the world's most valuable companies, he has been beset by a series of legal troubles stemming from a murky deal that critics claim was meant to help his only son, Lee Jae-yong, gain control of the group through a web of cross shareholdings.

http://english.yonhapnews.co.kr/news/2012/11/26/87/0200000000AEN20121126009900320F.HTML

한국경제로부터:

“고객과 주주는 물론 국민과 사회로부터 사랑받는 기업”을 강조한 대목도 주목할 만하다. 올초 신년사에서 “국민 기업으로서 책임을 다하겠다”고 한 것과 통한다.

삼성이 25년간 질주하며 한국을 대표하는 글로벌 기업이 됐지만, 사회 일부의 시각은 여전히 따뜻하지 못하다는 점을 의식한 주문이다. 갈수록 커지는 경제민주화 요구 속에서 앞으로 사랑받는 기업으로의 행보를 더욱 강화할 것으로 관측된다.

http://www.hankyung.com/news/app/newsview.php?aid=2012113033311&intype=1

Skills Don’t Pay the Bills; Why the U.S. Manufacturing Has Dwindled

The following article touches upon some critical issues as to why the U.S. manufacturing has dwindled.  There are other factors involved in gutting the U.S. manufacturing base such as the Fed policy.  Diminishing consumption in the U.S. is associated with the demise of its manufacturing.  This is in large part the result of the U.S. policy failure and corporate greed.  Korea is on a similar trajectory in terms of financialization and deindustrialization of its economy.  Of course, it’s not just Korea.  It is Japan, India, China, Vietnam, and so on.  The cycle continues.

From the New York Times:

Nearly six million factory jobs, almost a third of the entire manufacturing industry, have disappeared since 2000. And while many of these jobs were lost to competition with low-wage countries, even more vanished because of computer-driven machinery that can do the work of 10, or in some cases, 100 workers. Those jobs are not coming back, but many believe that the industry’s future (and, to some extent, the future of the American economy) lies in training a new generation for highly skilled manufacturing jobs — the ones that require people who know how to run the computer that runs the machine.

Running these machines requires a basic understanding of metallurgy, physics, chemistry, pneumatics, electrical wiring and computer code. It also requires a worker with the ability to figure out what’s going on when the machine isn’t working properly. And aspiring workers often need to spend a considerable amount of time and money taking classes like Goldenberg’s to even be considered. Every one of Goldenberg’s students, he says, will probably have a job for as long as he or she wants one.

And yet, even as classes like Goldenberg’s are filled to capacity all over America, hundreds of thousands of U.S. factories are starving for skilled workers. Throughout the campaign, President Obama lamented the so-called skills gap and referenced a study claiming that nearly 80 percent of manufacturers have jobs they can’t fill. Mitt Romney made similar claims. The National Association of Manufacturers estimates that there are roughly 600,000 jobs available for whoever has the right set of advanced skills.

The secret behind this skills gap is that it’s not a skills gap at all. I spoke to several other factory managers who also confessed that they had a hard time recruiting in-demand workers for $10-an-hour jobs. “It’s hard not to break out laughing,” says Mark Price, a labor economist at the Keystone Research Center, referring to manufacturers complaining about the shortage of skilled workers. “If there’s a skill shortage, there has to be rises in wages,” he says. “It’s basic economics.” After all, according to supply and demand, a shortage of workers with valuable skills should push wages up. Yet according to the Bureau of Labor Statistics, the number of skilled jobs has fallen and so have their wages.

Goldenberg, who has taught for more than 20 years, is already seeing it up close. Few of his top students want to work in factories for current wages.

It’s easy to understand every perspective in this drama. Manufacturers, who face increasing competition from low-wage countries, feel they can’t afford to pay higher wages. Potential workers choose more promising career paths. “It’s individually rational,” says Howard Wial, an economist at the Brookings Institution who specializes in manufacturing employment.

http://www.nytimes.com/2012/11/25/magazine/skills-dont-pay-the-bills.html?hp&pagewanted=all&_r=1&

How Iceland Restrained the Anglo-American Banks: CBC Interviews Ólafur Grimsson

While Iceland has employed the Swedish model, Korea has followed the Japanese model in dealing with its financial crisis.

From Jesse's Cafe:

As you have read here and elsewhere, there is the 'Japanese model' and the 'Swedish model' for dealing with a crisis caused by asset bubbles and fraud from an oversized financial sector and an overly powerful segment of monied interests. 

It is obviously a simplification to slot such a policy issue into two models, but it has some philosophical validity with regard to the resolution of the bad debt that follows such a period of financial recklessness by the Banks.

The Swedish model favors the disposition of the debt failures on the banks, and their management and bond holders.  The Japanese model seeks to sustain the financial status quo and their associated corporate cartels with public debt and social policy adjustments.

Iceland has famously followed the 'Swedish model.' Perhaps so well it may better be called the 'Iceland model.'

If it is not apparent, what made the difference was the resolute manner in which the people of Iceland rejected the deal offered to them by the Banks and their politicians.

As a smaller nation with a stronger sense of community, the Icelanders receive more of their information from diverse and direct personal sources, rather than through interpretation and packaging of the news by a few large media outlets. They also seem less disposed to make a 'war on the weak' amongst their own people than the larger, more impersonalized nations with less homogenous populations.

The US, the UK, and the rest of Europe are currently following the 'Japanese model' of pretend and extend, supporting those who benefited from the bubble, the wealthy elite, with sovereign debt and a policy of austerity for the public. 

Neither approach is easy or perfect.  But it does seem that one is more just and effective than the other.
http://jessescrossroadscafe.blogspot.kr/2012/11/how-iceland-restrained-anglo-american.html

Ron Paul: "Why I Don't Run As An Independent" (론 폴과 안철수)

다른 포스트에서 언급했듯이 미국의 현 상황을 직시하는 많은 이들이 Ron Paul을 지지해왔다.  안철수 후보와 Ron Paul은 공통점을 갖고 있으면서도 (예를 들어 의대 출신인 점 등) 상이했으면 하는 점도 있다.  그 중 하나가 Ron Paul이 주로 educator로서의 역할을 한 면이 큰데 안후보의 경우 이왕 상아탑을 벗어나 정치에 입문했을 때에는 구체적인 정책을 통해 이를 실행해 옮김으로써 한국의 경제, 사회, 정치, 민주주의 시스템에 변화를 이끌어낸 실천적인 정치가로서 역사에 기억되었으면 하는 것이다. 

또한 Ron Paul이 대학생들이 변화의 trigger가 될 수 있다고 언급한 것도 흥미롭다.  왜냐하면 안철수 후보도 정치에 입문하기 전에 지방대학의 강연을 토대로 정치기반을 다졌기 때문이다.  한가지 염려스러운 점은 현재의 글로벌 상황에서 the hardest hit은 젊은 세대들이다.  올해 서강대 총학생회장에 입후보자가 한 명도 나오지 않아 회장선거가 무산된 것은 시사하는 바가 크다.  기성세대들은 젊은 세대들에게 사태를 방치한 책임과 도덕적 의무감을 가져야지 이들을 변화의 도구로 봐서는 안되지 않느냐 하는 점이다.

From Zero Hedge:

Many have wondered if Ron Paul would have run as an independent. Here is his answer: "[I didn't consider running as an independent because] it is absolutely not practical. This would have been a good year to have an alternative and you can't get much of a showing either on the libertarian side or the green side".... the Republican and Democratics "parties are going to linger because they are locked in by law. The laws are biased against us from competing." So how does one change the two-party system? "You go to the campuses. You rally the young people. You stir up a whole generation of people. Ideas do have consequences and that's where the good news is because the campuses are alive and well with these views and they know the system is bankrupt. And there is this illusion that you can spend endlessly and print endlessly and there will always be credit out there. And so far, so good, but credit can end quickly, the dollar can crash quickly and a new system will have to be developed."

http://www.zerohedge.com/news/2012-12-01/ron-paul-why-i-dont-run-independent

Ten Stocks Driving 88% of SP 500 Earnings Growth

From Jesse's Cafe:

Look at the concentration of financially related stocks in that top ten.

That speaks volumes about the nature of this Fed generated 'recovery.'

h/t The Big Picture

http://jessescrossroadscafe.blogspot.kr/2012/12/ten-stocks-driving-88-of-sp-500.html

Microsoft Has Failed

From SemiAccurate:

Microsoft has three product lines that underpin everything, Windows, Windows Server, and Windows Mobile. On those, the other moneymakers, Office and Exchange, run exclusively. The apps use protocols that are locked down with dubious methods, and will not run on any competition. The competition is likewise excluded from doing what Microsoft can, either directly like Novell, or by raising the cost to the point of it not being profitable. This is how the wagons are circled, with every iteration, the cost of competing go up, and value of alternatives go up too.

The problem is that if you are locked in with a choice of 100% Microsoft or 0% Microsoft, once someone goes, it isn't a baby step, they are gone. Once you start using Google Docs and the related suites, you have no need for Office. That means you, or likely your company, saves several hundred dollars a head. No need for Office means no need for Exchange. No need for Exchange means no need for Windows Server. No need for Office means no need for Windows. Once the snowball starts rolling, it picks up speed a frightening pace. And that is where we are. The barriers to exit are now even more potent barriers to entry.

Microsoft bought Nokia to both kill off one competitor and to buy their market share. Microsoft at the time had approximately 12% smartphone OS marketshare, Nokia a bit over 30%. With the collaboration, Nokia and Microsoft, together with all the other OS partners selling Windows Phone 7.x, sales are now hovering around 2% of smartphone market share.

Microsoft's mobile aspirations have failed so spectacularly that it is almost impossible to account for. Rather than fix the lock in that excludes the overwhelming majority of the market that does not have a Windows phone, Microsoft doubled down with the new iteration playing the same compatibility games they did before to lock out developers, competitors, and innovators.

The death spiral for Microsoft is in full effect, and management is expending a lot of effort to speed it up. Microsoft is unwilling to change, and that is very clear. Even if they wanted to, they are culturally far beyond the point of being able to. What was a slow bleed of marketshare is now gushing, and management is clueless, intransigent, and myopic. Game over, the thrashing will continue for a bit, but it won't change the outcome. Microsoft has failed.

http://semiaccurate.com/2012/11/14/microsoft-has-failed/