Revolution 4.0 - the Textile Industry

Revolution 4.0 -

the Textile Industry

In post-industrial societies, knowledge is about to become the most valuable commodity of all. And while developed countries continue to lose the low-end jobs in manufacturing which are outsourced to low cost countries, the challenge is how to add value to the economy to remain competitive. An example in the textile industry comes to mind. Before, textile was manufactured in Europe. But today, countries debate themselves between two models: import clothes, or keep a high-value adding textile industries. Keeping the whole supply chain does not seem like an option.

How can we integrate the Fourth Industrial Revolution to the textile industry? In my release "Where No Man Has Gone Before - the Road to the Fourth Industrial Revolution", I take you through a recount of 5000 years of civilizations to understand the crucial moment the World is facing today. The NeXT industries, less capital intensive than before, must integrate to the old industries in order to add value. While manufacturing is automated and outsourced, design must remain in developed countries. 3D Printers can be used today to sketch digital blueprints at almost no cost. Their easy access make it easier for small business to have access to the latest technology to develop rapid prototypes. To cite my release "Nike uses 3D printers to create multi-colored prototypes of shoes. The cost and timing for prototyping has been cut significantly in the last few years. Besides rapid prototyping, 3D printing is also used for rapid manufacturing. Rapid manufacturing is a new method of manufacturing where companies are using 3D printers for short run custom manufacturing".

"The Internet of Things" is another example. Again citing my Release "Where No Man Has Gone Before: the Road to the Fourth Industrial Revolution": "the process starts with the devices themselves, which securely communicate with an Internet of Things platform. This platform integrates the data from many devices, and applies analytics to share the most valuable data with Applications that address industry specific needs". To add value and differiante, brands can add technology to the classical outfit. A chip can be inserted into a training shoe, which in turn sends signals to an iPhone or iWatch that can be used to run reports and analytics. Metrics can help the runners identify their areas of improvements to increase their performance. And help the Brand position itself in the high quality segment, which the final customer is willing to pay for.

For bigger companies, having a strong powerful ERP also helps. The company "Pacific Textiles", headquartered in Hong Kong but with factories in Asia Pacific, uses SAP to achieve the Digital Transformation of it's Fabric Manufacturing. Efficiencies in month-end closing and MRP processes allow to automate a large part of the Supply Chain. By using Data, the company ensures consistency in quality. With Real time reports, decision making process is made agile. SAP HANA ensures a one-service framework which gives Pacific Textiles access to a global network of high qualified IT consultants ready to drive organizational change through software implementation. The aggressive strategy in technologization has helped the company expand globally, focusing on developed countries. 

While the textile industry might be seen by some as a "dying" industry, it represents an excellent example of an industry ready to be reborn. Companies must understand that using the latest technology is not a choice, but a must in order to remain competitive. All that can be automated must be automated, in a transition to "intelligent manufacturing". The low end jobs that must be destroyed should not be protected, as the focus shifts to more value added and more creativity. Companies must manage to differentiate to position their brand in the mind of the consumer and rapidly expand globally. Today, thanks to technology, it is easier than ever. Revolution 4.0 allows easy access to the latest tools to develop your business. There are no excuses. Hop on the Revolution and drive your business to the NeXT level!!!

Cristian Bøhnsdalen
CMO/CFO & Co-Founder @ITRevolusjonen

Tango 2017

Tango 2017

What can be said about the richest country in the world, measured in Natural Resources per inhabitant? How can a country that had the same GDP x cápita as Austria and Italy in the late 1960s go through 30 years of instability, to resurface and go through a new period of stagnation (2012 - 2016)? Argentina is well known for Tango, football and meat. Little is it known that it has a fantastic public education system at University level, and that it houses a world class health system. Human Resources appear as the country's main asset, but are they correctly capitalized? Recent comments from the current Minister of Science and Technology "I am not here to defend the scientists"[1] offer a cloud of doubts. The truth is, the country does not have a long term mentality. Recently elected president Mauricio Macri promised the greatest industrialization plan since the 1960s, where there would not be engineers to cover the job positions. But where is the plan?

Predictions of a 1% growth failed to present a slowdown of -2% GDP in 2016. After a bad economic year, Finance Minister Alfonso Prat-Gay has been recently fired (namely to take the blame for bad economic performance). Some lights for 2016 though:

- The issue with the Vulture Funds was finally arranged, giving the country access to International Capital Markets for the first time since 2001.

- The black market to purchase USD at an unofficial rate (in the same manner as Venezuela) was eliminated, giving room to a normalization of the currency exchange rate.

- Inflation and unemployment figures, previously faked, have been cleaned and are now accurate.

These are not minor issues. They all converge to the normalization of the economy and aim to present a more serious image to attract capital investments. Mauricio Macri expected that investments would pour in very shortly after his election, but this never happened. He forgot, as I always explain, that BEFORE attracting massive investments he must make sure to communicate to the WORLD what it is that Argentina has to offer!!! The goal should be to attract long term genuine capital investment, and not only speculative funds. In my releases "Revolution 4.0 and the Man of Tomorrow - Post-Industrialism, Inequality and the Knowledge Based Economy - Part 2" I name 20 measures that should be taken in Argentina in order to climb up to the top 10 nations over the NeXT 15 years. Quite clearly, Argentina does have the POTENTIAL to clear it... But will the politicians, or society as a whole, understand how to do it? While scientists are treated like garbage and knowledge is not valued, other countries like Singapore, the UK and the US do understand that it is through investment in education, science and technology that the future will be built! Having a great university system is a great thing, but there must be more efforts to connect the world of knowledge, of the ideas, to the private sector. Knowledge must be materialized into value which in turn creates wealth. In that way, societies' great investment in education (through taxes) is actually channeled back to them through job positions, growth and an increase of the standard of living.

In order to attract those desired investments, Mauricio Macri should present a proper strategic industrialization plan. University Students, professors and actors in the private sector should be invited to participate, it is after all THEM who will execute the industrialization plan! Discussions about income tax are futile, the same as the series of adjustments in the National Budget in order to balance Fiscal Deficit which have nothing but launched the country into recession and contributed to a rise in the unemployment rate. Jobs must be created in the private sector in parallel to lay-offs in the public sector, as the economy becomes more dynamic. If anything, Macri has failed in transmitting a VISION of industrialization. It is not clear which NEW industries will be developed, and HOW this will be done! Meanwhile, the economy has lost 200.000 job positions only in 2016. As I always explain, a healthy economy is constantly adding high-value positions to the private sector, the Job Report[2] being the most important indicator of growth. While Macri debates himself in political discussions and quarrels with the Unions it might be that, as the Economist says, that 2017 will prove even more challenging than 2016[3].  

Cristian Bøhnsdalen

CMO/CFO & Co-Founder @ITRevolusjonen

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[1] http://www.ambito.com/867146-yo-no-estoy-para-defender-a-los-cientificos

[2] http://fortune.com/2016/11/04/october-employment-reports-numbers/

[3] http://www.economist.com/news/americas/21712129-end-reformist-presidents-long-honeymoon-recession-emboldens-argentinas-opposition?zid=305&ah=417bd5664dc76da5d98af4f7a640fd8a

Globalization

Globalization

Globalization[1] is the process by which the markets of different countries become increasingly integrated thanks to the exchange of good, services, technology and capital. Exchanges between people in countries far apart are now fast and simple, thanks to the development of new ways of communication, both virtual and real. A very good example is the film industry: before, films were released in the US and Europe and then cascaded down to undeveloped countries. Today, films are released worldwide simultaneously to avoid illegal copies to eat up a slice of the market share. Globalization depends on economic factors and on social aspects, such as the relationship with other cultures and the dissemination of information. Globalization has changed the way we work. Today, people in countries cooperate to produce and distribute the same goods of services.

What is the effect of globalization? Globalization does not eliminate the inequalities and the distribution of wealth, but it does encourage investments in the less developed areas of the world, and allows poorest countries to find markets in richer ones. Globalization is not a new thing: during the last three Industrial Revolutions, the developments of transport and communications facilitated the launch and integration between the countries. Today, you buy a T-Shirt designed in France but produced in China. Since the 1960s underdeveloped countries have been manufacturing consumer goods for domestic markets but primarily for foreign ones.  

Globalization has had positive effects on the eradication of poverty. Extreme poverty, defined as a condition characterized by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education and information, has been reduced by half in the last 15 years!!! By the year 2030, people living in extreme poverty will drop to less than 400 million. Since the end of WW2, Free Trade agreements and technological advancements mean good and services move around the world more easily than ever. The Mobile Phone, sponsored by our genius Steve Jobs, are the most transformative technology when it comes to the developing world. Phones give people access to banking, and payment systems, better access to education and information. In some places, mobile phones help farmers get information and get the best price for stuff they are producing. International Trade has also created new opportunities for people to sell their products and labor in a global market place.

In a globalized world, the low end jobs are being outsourced to countries where labor is cheap and  regulations are weak (workers rights). In developed nations, consumers get good products at a cheaper price and stockholder get value for their money, but the workers that had those jobs lose them towards jobs overseas. Globalization has fans and detractors. Those who are positive towards it mean that it helps economy to grow by offering more opportunities to workers, which in time puts upward pressure on wages. Those who are negative think that it is not sustainable and has adverse effects on global climate.

According to Swedish economist Hans Rosling[2]: the way globalization is occurring could be much better, but the worst thing is not being part of it. In a fantastic documentary, Hans Rosling shows the advances in life expectancy, income, etc., in the last 200 years. Check it out:

https://www.youtube.com/watch?v=jbkSRLYSojo 

The first 3 Industrial Revolutions made countries in Europe move away from the rest. The countries in the West developed more rapidly, while other countries were hindered in their development. Two World Wars had catastrophic effects but also contributed to technological development. Notice however how from the 1970s strong growth in South East Asia (Rise of China), and Latin-America (Brasil), meant accelerated development for developing nations.

Rosling addresses the fact that developing nations have been rapidly catching up with developed nations the last 40 years at a fast and steady pace. He addresses the differences in inequality between nations, but also within Nations!!! He remarks regional inequalities showing the case of China, where Shanghai produces as much as Italy, but Guizhou produces the same as Pakistan, not to mention differences in social classes. We have seen 200 years of remarkable progress, where that huge gap between Western countries and the rest of the world is shortening. Hans Rosling is optimistic and sees a bright future with aid, trade, green technology and peace where it is fully possible that anyone can make it to the wealthier corner.

In developed nations, where people have the luxury of functioning healthcare and education systems, Revolution 4.0, or the Knowledge Based Economy, will offer possibilities for people from lower and middle classes to fight inequality by becoming knowledge experts in their field and turning that into a products or services. Whereas Europe took the lead in the last 3 industrial revolutions, free access to education and resources will shorten the gap even more. Hans Rosling is right in naming that Nations will eventually converge in a long term perspective. He is also right in being optimistic about the future. After all, we are reaching an era of balance and prosperity for the people of Earth.   

Cristian Bøhnsdalen

CMO/CFO & Co-Founder @ITRevolusjonen

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[1] https://en.wikipedia.org/wiki/Globalization

[2] https://en.wikipedia.org/wiki/Hans_Rosling

Trumponomics

Trumponomics

Few should I say or comment about the recent Presidential Election in the US won by Donald Trump[1], being that I am not an American citizen and as such do not have the right to vote. However, Presidential election in the US is the most important for the Western World being that it is the most powerful Nation. So it is always advisable to follow US news not only on economics but also on International Policy. Commerce, but also War, Defense, Diplomacy, many factors are defined at the White House. Consider though that US has a bigger impact in the Western Hemisphere (including Euro Zone AND Latin-America), whereas other Nations have more impact on other regions. China is clearly taking the lead in South-East Asia, whereas Oil Nations are the most powerful in the Middle East.

But back to Global Economics, one of the main focuses of this blog. When we hear news it is very important to read between the lines, and to assimilate or integrate them to understand the total impact.

- Economics: Trump promises to cut taxes for individuals and businesses and increase infrastructure spending. Now let me be clear on this. Right-wing governments (in this case Republicans), are usually more business friendly, but at the expense of the government. Now, Obama did a great job at lifting the US out of the worst depression since the 1930s. However, his government did print trillions of dollars and increased government spending, which is not sustainable in the long term. I am always in favor of 4 or 8 year periods when it comes to Government, shifting between left and right. Too little tax burden hurts government dependents. These are not just administrative employers, but teachers, policemen, hospitals, firefighters... Too much tax burden eventually hurts business... Quite clearly Trump will favor business, but will cut government spending. In the short term, jobs might be lost. The most important is that his administration manages to reactivate the private sector in a fast and efficient manner, to compensate for the loss of jobs in the public sector.

- Energy Policy: restrictions for production of shale, oil, natural gas and clean coal will be lifted. This will add to the creation of thousands of jobs, but will also put pressure on the Supply side. Consider the following article: "US energy independence look tantalizingly close"[2]. The US has embarked on a journey towards energy independence, which it might achieve by 2020. This means that they will stop importing oil to become and oil exporter. Consider how oil imports in the US have shrunken from 65% in 2005 to 28% in 2015, to a projected 11% in 2020, while domestic oil production has reached a 43-year high. Whereas the article states that energy independence will be easier if prices rise sharply to USD 100 a barrel, consider my view[3] that the Shale Revolution itself and a superpower like the US leaving it's position of Importer to become Exporter will hold the prices at bay (in a channel of 30 USD to 60 USD) for many years to come. In the Oil industry, cycles are long. On the other hand, lower Oil prices are pushing innovation in the technology field to become dramatically more efficient.

But it's not all about economics, politics play a major role as well. Whereas in the past the OPEC controlled the market, today there are many other players such as Russia and Canada. By becoming a major player in the industry, the US ensures that the Arab Oil Nations lose power, and  their positions weaken in the game of world politics. Squeezing the Arab Nations might be much more important for the US than the economic effects of the Shale, reason for which I believe America will do whatever it takes to lead the Shale Revolution.

- Trade: this is one of his most controversial points. Trump has identified that the biggest rival to the US when it comes to Global Trade is actually China. This is correct. By the year 2030, China will surpass the US as the world's largest economic player (measured in Nominal GDP)[4]. Donald seems keen on "punishing" companies that send jobs overseas and wants to get those manufactory jobs back to the US. He obviously missed John Travolta's speech in Primary Colors:

https://www.youtube.com/watch?v=lIHasecz5d0

According to Economic Science Nobel Prize winner Paul Krugman "No matter what Trump does, manufacturing jobs are not coming back to the US"[5]. I could not agree more. According to Krugman: "the manufacturing sector hasn't added jobs to the labor market in years past. Instead, improved equipment and automation has allowed US manufacturers to increase output. Thus even if manufacturing came back to the US, most of the plants would be automated anyway, producing a lower number of jobs than one might hope for" (...) "The service sector is the future of work, but nobody wants to hear it". YES!!! Finally some sense to it. It is through automation and technology that value is added to the private sector. Low end jobs will disappear anyway, and do not add so much value to the economy. In my 4 books and this blog, I start with Economics from a historical perspective, to conclude that the focus should be on developing technologically as we gaze at the beginning of the Fourth Industrial Revolution. Nothing will be gained by fighting against that, and it is important to understand that it is best to stay in the lead, even if that means sacrificing some low end positions in order to develop those high end value adding positions that the economy needs.

Trump's external trade policy will lead to restrictions to import to the US, which will impact all their trading partners. Quite clearly the US has all the power, so there will not be so much negotiation there. In Argentina, some concerns from the Agribusiness are already arising, since the US is the main market for their products. It is advisable to strengthen ties with other countries as well, to diversify risk and mitigate the impact of change at the White House. In the case of Argentina, whose main markets are Brazil and the US, more efforts should be done to align positions in World Commerce with China. This has worked very well for Australia, that takes advantage of it's geographical location to do Trade with BOTH the US and China. Hopefully there should not be a need to "choose" when it refers to simple Commerce Agreements. Europe might want to strengthen ties with the US though, in the "pie of World Commerce", it seems to be the European Union the one that will be "eating" less and less...

- Interest Rate: Trump has critized the Fed (an independent economical entity responsible for setting the US Treasury Interest Rate), by saying it is creating a bubble with low interest rates. Now, the Fed has done a great job under the Obama Administration. Lower interest rates make it cheaper and easier for the private sector to finance itself, at the detriment of investment (currency weakens, but exports are more competitive). Lower interest are advisable in contexts of recession or weak economies, to encourage taking debt. However, with the recession already behind and thousands of jobs being created in the Obama Administrations, the US economy might be strong enough to raise the interest rate. A stronger interest will attract investment, strengthening the US dollar. Job creation will continue, but must not be driven by cheaper cost but by higher value added positions. But how will a raise in the Fed's interest rate impact Europe? Consider that Europe's interest rates follow policy making in Berlin. However, all the stock markets are at some point linked to the Dow Jones. A raise in the Interest Rate in the US will obviously impact Europe as well (since it has impact on the US dollar, which would strengthen), but European Central banks might have some sort of margin of maneuver.

- The Wall with Mexico: I have not much comment here, except that Mexico is actually part of the North-American continent and should be treated as such. As children learn at school in the US, the American continent is divided in two: North America and South America (divided by the channel of Panama). I agree with migration laws, but the best solution is to integrate with Mexico and look for a way to increase productivity for Mexico as a country, or for Mexican communities that are living in the US (mainly in the Western Coast, that was actually part of Mexico until the year 1847). In the same manner that Argentina has to target increasing the productivity of Bolivians, Paraguayans and Peruvians (their latinos), the US has to work to increase the productivity of the Mexican people in efforts for Regional Integration. Remember, if your neighbors are poor, you will eventually be impoverished yourself.

The election of Donald Trump means great news for the US. Compared to other Republicans like Richard Nixon, Ronald Reagan or the Bush family, Donald seems a much more "center-right" choice. He is really a Business man who turned to politics and not a typical politician. He will surely be more concentrated on Business and job creation, and less on warfare. Consider that when Republicans take office usually bad things happen: War in Afghanistan, occupation of Kuwait... Investment in Defense will surely rise, but I do not believe this Administration will engage in meaningless warfare. How the rest of the Nations manage to adjust to his "rules of the game" remains to be seen. He is a strong leader and an even stronger negotiator. Americans surely have 4 fantastic years ahead of them.

Cristian Bøhnsdalen

CMO/CFO & Co-Founder @ITRevolusjonen

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[1] https://en.wikipedia.org/wiki/Donald_Trump

[2] http://money.cnn.com/2016/08/09/investing/us-energy-independence-oil-opec/

[3] http://thenobeleconomist.blogspot.no/2016/02/the-price-of-oil-as-predicted-by.html

[4] http://www.theglobalist.com/china-economy-larger-united-states/

[5] http://www.businessinsider.com/krugman-tweets-on-manufacturing-labor-market-jobs-donald-trump-2016-11?r=US&IR=T&IR=T

Equalitarism in Modern Times

Equalitarism in Modern Times

According to Wikipedia, Equalitarism[1] is a trend of thought that favors equality for all people. Egalitarian doctrines maintain that all humans are equal in fundamental worth or social status: either as a political doctrine that all people should be treated as equals and have the same political, economic, social, and civil rights; or as a social philosophy advocating the removal of economic inequalities among people, economic egalitarianism, or the decentralization of power. Some sources define egalitarianism as the point of view that equality reflects the natural state of humanity.

Social Equality is at some point the major goal of governments, but it is difficult to know what is the best way to achieve it. Socialists usually refer to heavy government intervention as a way to balance inequality, in the form of Social Plans, benefits, etc. Capitalists take the opposite approach: they are usually in favor of a pro-company free-market philosophy. Both have advantages and disadvantages. Too much Welfare and help from the government stances Entrepreneurial spirit: the population expects to have everything resolved for them. No government intervention would mean very few benefits: some sort of Social Support is necessary to support the working force that is shifting jobs, unemployed or needs some sort of social assistance.

It is quite clear though that European countries have achieved the highest levels of development through the most important factor: Education. The first Universities in Europe were established in the early 1000s! Very clearly, only well accommodated men were able to afford University in the first centuries. From the 1900s and onwards, going to University became more popular as well. Families would save up money to support their children's education, with the expectation that they would have a better life (and eventually support their own parents financially in their old age). In European countries and countries of European origin (such as Argentina and Canada), public education has been a reality for more than a century. The same could be said about Public Health Care system.

So what is it then, that has made some countries more successful than others? Why is it that some societies achieve higher levels of development than others? Very simply put... it's the CULTURE. Again, examples from the American continent come to mind. Canada, one of the most developed countries in the World, has been mainly populated by Europeans. However, they have not received much non-European migration, making it a multi-european country (and not multi-cultural). Amongst Europeans abroad there are high levels of trust, and good levels of integration. This is not the case for Europe, where hard feelings between nations prevail after centuries of conquest, occupation, civil wars... and Two World Wars!!! Another great example is Argentina: whereas Europeans who migrated there between 1880s and 1970s have integrated and achieved high levels of trust, it has not been so for the people of indigenous origin and their children. This has led to the formation of Guettos and poverty districts spread throughout the country. But Argentina has a great educational and health system, plus interesting welfare benefits that have been re-established in the last 10 years under the Kirchner Administration. How can it be then, that 5% of the population is poor (by poor defining people who live in slums, a type of poverty not found in Europe), and more than 20% of the population is Socially Excluded?

In Argentina, people of European origin are considered Argentinian. But not those of indigenous origin, who must tolerate bad working conditions, be treated as a thieves, do not get proper jobs, are victim of racism, discrimination, etc, etc. Meaning, the 20% of the population that is not of European origin are not considered... Argentinian (at least not in practice)!!! Identification might be an issue for people who belong to different cultures, but were born and raised in that country.

By separating between different cultural groups, the US has done the best job at multi-culturalism. Latino-americans, Hispanic-americans, Italo-americans, Scandinavian-americans, Afro-americans, Asians... They are not the same. By separating the groups they can be studied independently, to find out how productive the different groups are, and what are their issues. Some of the groups have been established many decades ago and pass on their inheritances. Other groups are newly established and could struggle more due to lack of proper contacts and networks (like the Asians). But some groups like the Afros have been around for a couple of centuries and have been oppressed, discriminated and relegated only until a couple of decades ago. By finding representatives or figures to lift forward in society, the US has managed to get their population identified with the American dream. When a black person sees a Tina Turner in the music industry they think: it is possible, I can make it, I can be the NeXT Tina Turner. Or J Lo. Or Britney Spears... These figures target very different audiences.

The US also values grades. The people in lower classes do not have proper contact and networks. But if they got good grades at school they get places at good universities. And if they continue their streak at University companies go to search for them at the Universities themselves. The best students get the best jobs, with impressive salaries. Another route is through sports: those who excel in sports also get good places at University and high paying jobs after graduation. In that way, some sort of equality is achieved: people who do merits do get better places.

The issue of inequality will always continue. There is no real solution to it. But it's effects can be tampered by making it easier for the best people from different cultures to earn their place by hard work and studying. In that way, wealth is also spread within that community or in that circle, providing a concrete "map" of footsteps for other people to follow. It might not be the solution to all people's problems, but at least it provides some hope. Like building channels or bridges between different cultures and social classes. Clearly the "American model" cannot be copied by other countries, since US development also responds to historical and cultural reasons. Which is why it is important to compare models that can offer a CULTURAL match.

Cristian Bøhnsdalen

CMO/CFO & Co-Founder @ITRevolusjonen

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[1] https://en.wikipedia.org/wiki/Egalitarianism

Comparing Apples vs. Oranges

Comparing

Apples vs. Oranges

Compared to, compared to, let us compare... the countries!!! In my Releases "Revolution 4.0 and the Man of Tomorrow - Post-Industrialism, Inequality and the Knowledge Based Economy - Parts 1 & 2", I take you through the last 200 years of history of the two regions I know the most: South-South America and Scandinavia, to show you the differences, but also the similarities. Comparing countries is a difficult thing. Sure, government processes have played their role, but what about history, culture and religion? It is very difficult to compare countries in different regions. Let us take the discussion to a higher level. While the American continent has been mainly populated by immigrants, Europe has much more history of emigration, war and colonization. Could be difficult to explain the situation TODAY without knowing a little bit about the history of these regions.

While Northern Europe has only received migration waves from other parts of Northern Europe, and Southern Europe was under the influence of the Roman Empire (a multicultural empire), Argentina was populated mainly by Europeans, being the 2nd country in the American continent to receive the most European immigrants after the US. Argentinians naturally tend to compare themselves with the US, but the United States of America consists of 320 million inhabitants spread in 50 States. Meanwhile, Argentina consists of 23 states housing 43 million inhabitants. Norway, on the other hand, has only 5 million inhabitants and can be compared only to a Province in these countries. There is no possible comparison.

As explained in my fantastic chapter "Death and Taxes", tax systems cannot be applied indiscriminately without having regards for the culture. While Scandinavians tolerate a heavier tax toll, Southern Europeans prefer a more moderate tax rate and Southeast Asians do not want to pay taxes at all. Consider that communities IN those countries will keep their customs and traditions. Meaning the Asians will still resist paying taxes, even if they live in Europe (or Argentina). The counterpart of the Tax System is the Welfare System. The more taxes you pay, the more you get in return: be it healthcare, education, social plans, whatever. But be careful, too much welfare kills entrepreneurial spirit and drives laziness. Countries should then look up to models that offer a CULTURAL match.

Argentina, the most southernmost country in the World, can look up to both Australia and Canada. From the center South, it could be said that Argentina is very much like Canada. Consider an average of 25.000 USD x capita for Buenos Aires and the Southernmost provinces compared to 5.000 USD x capita in the North. This responds to lower Productivity from the Bolivians, Paraguayans and Peruvians, people of Indian origin and their children also found in Buenos Aires and who live in very bad conditions (they are Argentina's poor people). Former President Cristina Kirchner referred to this group as the people "of the original tribes". They are really 3er or 4th generation immigrants from nearby countries that were not incorporated Productively to the workforce (for whatever reason). I will refer to this group as "the latinos", a much friendlier term than the nicknames that they usually get. The solution to poverty in the case of Argentina lies in increasing the Productivity of the latino group. Canada, much further North, does not face this issue. Australia did have descendents from indigenous people, but not as much. The US does have a much higher Latino immigration rate, usually coming from Mexico. My view is that migration at some point happens naturally: no wall or fence will separate the North of Argentina from Bolivia or Paraguay. As explained in my chapter "Bolivia: the NeXT India", the most powerful nations in South America must "help" or make sure that the situation in Bolivia and Paraguay improves, to resolve their own situation. The impoverishment of nearby countries eventually hits you, as migration waves naturally flow from one country to another. This was not understood by Europe, that with austerity measures strangled Southern European economies dooming itself to the deepest depression since WW2.

In my article: "Dark Clouds over Norway and Scandinavian countries", I explain the challenges Scandinavian countries are going through TODAY. In his masterpiece "Scandinavian Unexceptionalism: Culture, Markets and the Failure of Third-Way Socialism", Nima Sanandaji explains that the success of the Nordics little had to do with the Government. Scandinavians and their descendants abroad show higher Productivity rates than in Scandinavia itself, were government intervention and the Welfare system have actually contributed to hinder growth. This might refer to "the Protestant Work Ethic and the Spirit of Capitalism", as described by German Sociologist Max Weber. Consider that Scandinavian countries have not received migration that is not from Northern Europe at any point in history, and are as such uni-cultural societies. Social tensions are arising as the region shifts towards multi-culturalism. From that view, ALL Scandinavian countries (composing a total population of 20 million people, excluding Finland), should look to the Kingdom of the Netherlands, a country with a colonial, multicultural and merchant history consisting of 17 million people.

Consider the case of Spain. Many times Spain looks up to Germanic countries. Quite clearly, nothing does the multicultural Kingdom of Spain (Roman Empire influenced), have to do with Northern Europe. Different religion, colonial history, multiculturalism, the way the country is organized, the Tax system... Comparisons seem futile. But what is Spain missing, to take the leap? In my article "How Tech Hubs create Wealth", I explain that entrepreneurs should be focused in the efforts of Wealth creation leaving the distribution of that Wealth in the hands of the Government (hopefully in a transparent manner). Culturally different but with the same Religion and Tax burden, Spain can look up to Ireland, a country that appears as bridge between the US and Europe and that the largest Tech giants in the World have chosen to establish their offices (location matters as well). Once more, the same cannot be said about the Nordics, which offer a different Tax System and can look to each other for examples in the Tech Industry (Finland being the most attractive case).

But enough with the countries and comparing!!! In my article "the 4 Keys of Value Creation", I have given you the ingredients to change YOUR OWN life and situation. If you live in a Developed Country, you have all the tools that you need to improve your situation. Don't follow the Pack, do your own thing, find your niche, succeed, and ENJOY LIFE!!! Better LUCK NeXT time!!!

SKÅL!!!

Cristian Bøhnsdalen

CMO/CFO and Co-Founder @ITRevolusjonen

Dress yourself in Orange... to be like the Netherlands!!!

Dress yourself in Orange... to be like the Netherlands!!!

Countries look up to other countries for examples, or for role-models. The big disadvantage of being number 1 in the HDI Index is not to have someone to look up to. And since things change, and times change, if you don't keep yourself updated at some point you are going down in the ranking without even noticing it. So, much has happened in the World in the last 10 years. I mentioned before stagnation and lack of growth in the Euro Region. A context of stagnation has it so that younger people, foreigners and their children struggle in the job market. Good and solid welfare systems help tamper the situation, but only true raw entrepreneurship is the solution to the rising social tensions that come from the Rise of Inequality (check out my Release in Amazon: "Revolution 4.0 and the Man of Tomorrow: Post-industrialism, Inequality and the Knowledge Based Economy").

But can countries indiscriminately "choose" other countries as role models? The answer is NO, they don't have the RIGHT to choose. After travelling Europe to study European culture, history and religion, I have concluded that culture or historical processes prevail over government policy. In the mentioned releases, in chapter 19 "Death and Taxes" I explain how different cultures tolerate or not different degrees of Tax Burden. An extreme right government had disastrous results in Argentina in the 1990s, a mainly Southern European country (culturally speaking). Can Norway be like the Netherlands? Maybe... in 20 years. The Dutch Empire, one of my favorites, was a colonial empire famous for it's strong navy, commerce and overseas territories. Quite clearly, born and raised abroad to a Dutch parent is Dutch by blood-right in the Netherlands. But Norway, more isolated geographically speaking and closer to the North Pole, is really more culturally similar to Sweden, Denmark or Iceland (depending on the region).

So becoming like the Netherlands would imply a "liberalization" of the culture. That would mean things like: it would be OK to be gay, to marry a foreign, , there would be many bars, discoteques, good accessible restaurants, we could eat some brownies (space cakes) at restaurants, there would be a Red Zone to... (for å ???). Anyhow, many things that are not happening today. However, there are some similarities industrially speaking. Like the Netherlands, Norway is a Kingdom. Norway has historically been a fishing country, with a strong Shipping Industry. The Netherlands also suffered the "Dutch Disease"[1] in the 1970s, which refers to economies that are based on natural resources which in turn destroy the other local industries due to the high cost of labor (influx of capital to the offshore industry strengthens the currency making exports less competitive). Now that my prediction of a long-term downturn in the Oil markets is confirmed (and being the ONLY person in the WORLD who predicted the Oil Crisis AND found FUNDAMENTAL factors as to WHY the price of oil was going down, but also WHY it was not going back up again), many times people ask me what we will are going to live off in the post-oil era. Remember that oil will still be important, but not as important as today (as explained in my Release "Where No Man Has Gone Before: the Road to the Fourth Industrial Revolution"). Some options do come to mind:

- Shipping Industry: it is clear that the industry already exists and is international, but more focus on global expansion can be made.

- Aviation: Norwegian appears as a relatively new airline with a solid brand with possibilities for global expansion.

- Banking Sector: strong brands like DnBNor could also be exported anywhere. It is clear that banks in Northern Europe are more solid and offer more confidence than anywhere in the world. So the banking sector has tremendous potential for international expansion and creates thousands of jobs.

- IT Sector: as I always mention, and this would be the same for any country, Revolution 4.0 refers to the Knowledge Based Economy. And here Norway is really lagging. In the article "Norway lacks the future's mind power"[2] we are explained about the challenges for entrepreneurs to grow in Norway, and how we do not have enough qualified technological heads to build a proper Tech Industry. In another article we learn how Norway takes the last place in the Start-Up scene in the Nordics (and surely Northern Europe).[3] But this is not an issue. It is still easy to get hold of qualified foreign skilled workers and entrepreneurs. Since Norway is in the European continent, there will always be foreign competence available. So the question is, do we really want to benefit from foreign skilled labor? In the Netherlands they do... This would be the same in most developed countries. Despite efforts from the coordinators, at some point it is the locals who open doors to foreigners, or not. Engineers and people in the Tech field are usually the best well paid and sought after in the job market. But remember that the people IN the Hub, make (or break) the Hub. Do we want them here, or not? If we don't and as the IT sector becomes a larger and larger player in any country's economy, I can only think that technological development will lead to growth and welfare of those who understand it, and more stagnation, isolation and recession for those who don't... Or are not willing to understand that picture of a future dominated by Artificial Intelligence, Robots, Virtual Reality and things you can only read about in an Isaac Asimov sci-fi novel.

If we want to be like the Netherlands the road must be paved today, with a LONG-TERM 20 year perspective. Building channels is the first step, towards a better and more inclusive tomorrow for ALL. A salutation from KING WILL OF THE KINGDOM OF NORWAY, and his Wife Maxima, FROM Argentina!!!

Cristian Bøhnsdalen

CMO/CFO and Co-Founder @ITRevolusjonen

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[1] https://en.wikipedia.org/wiki/Dutch_disease

[2] https://www.abelia.no/politikk/nyheter/norge-mangler-fremtidens-hjernekraft/

[3] http://shifter.no/index.php/2016/06/01/norge-sist-i-nordic-startup-awards-lettere-a-vinne-priser-med-candy-crush-enn-logistikk/

Inheritance: the root of Inequality

Inheritance:

the root of Inequality

More about inequality. Do we ALL start from nothing? Is the starting point the same for ALL? The answer is: NO. Some people inherit stuff, others don't. Check out the following article: "How to stay rich in Europe: inherit money for 700 years"[1], where it states "family fortunes are more prevalent in Europe than in U.S. or Asia. Their relatively high level is a sign of the continent’s low social mobility, keeping education, income and social connections from evolving over generations. In many European countries, not only wealth and income but even occupations tend to be “sticky,” passed on from generation to generation. More than one-third of Italy’s richest people inherited their fortunes, compared with just 29 percent in the U.S. and 2 percent in China. Overall, heirs and heiresses make up about half of Western Europe’s billionaires." "In hardly any other country does social origin influence one’s income as much as in Germany. An example: Count Alexander Fugger-Babenhausen, a descendant of arguably Europe’s richest man in the 16th century, says maintaining the fortune’s integrity is a responsibility. The 34-year old returned to Germany to manage the family’s wealth and charitable activities after working in investment banking and private equity in London".  

Interesting the case of Argentina, as always, it stands out. As a country founded by European migration, the hispanics that were first established 200 years ago took possession of large areas of land called: "latifundios". European migration that entered the country in the beginning of the 1900s were promised that if they worked the land they would be allowed to purchase it and eventually become owners. This never happened. The rich people, members of the aristocracy and owners of the land, also controlled the police and the military. In the 1920s, period famous for the appearance of Carlos Gardel and Tango, Italian workers that were rebelling against the factory owners to fight for their rights were brutally murdered by the police. Bad working conditions and a feeling of "longing for home" characterize Tango, a sad and melancholic music. Violence and government repression against unions and working class remain even today. See the following chart: "One Way to Make Money: Percentage of billionaires who inherited their wealth, by country":

Some economists suggest that the only way to really eradicate inequality is to abolish inheritance. That would be the only way to secure that everyone starts from the same level. It is clear though that this will never happen. Some countries though do introduce heavy taxes on inheritance as a way to equalize. In the same line of thought, in the article "Inherited wealth destroying our country"[2] Nobel Prize winner Paul Krugman, states that the number of self made millionaires is decreasing, giving room to the rise of an oligarchy. That being said, the US remains the system closest to a meritocracy in the Western World.

When we think of inheritance however, most people think about money, or assets. But positions can be inherited as well. Take the example of last names. 1000 years ago, last names would define professions: Smith (for the Blacksmith), Cook, Butcher, Baker, Taylor... Usually one member of the family would somehow get into the business, establish a shop and get his children involved as trainees until they grew older to take charge of the business. An even better example would be in farming, where owners of large portions of land usually had up to 10 or 12 children to help them work the land!!! It was so also that child mortality was very high, so not all children made it to adult life. It was important to have many children.

The difference between people who inherit and who don't inherit must be stressed. People who DON'T inherit must work harder to get ahead in life. People who DO inherit might be a little more relaxed... they know that THEIR OWN situation is more or less resolved. Once again, entrepreneurial knowledge, culture and spirit is transmitted from generation to generation. In my case, coming from a Norwegian business family has given me an unfair advantage.  

Due to the strong Networking and relationship-based structures in European countries, getting ahead in life has been very difficult in Europe for people with no connections in the business world. Today, however, things are changing. Revolution 4.0 makes access to information easier than ever. The Knowledge Based Economy and free and easy access to information has it so that acquiring knowledge and selling it as a product or service can be done by anyone. Developed countries already have solid healthcare and education systems. It is up to YOU and only YOU to change your life. You can take control, reach people internationally and become a leader in your field. You don't have to be a genius, you just need to take the initiative... and be a VISIONARY.

Cristian Bøhnsdalen

CMO/CFO and Co-Founder @ITRevolusjonen

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[2] http://www.alternet.org/economy/paul-krugman-tells-bill-moyers-inherited-wealth-destroying-our-country

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[1] http://www.bloomberg.com/news/articles/2016-08-23/how-to-stay-rich-in-europe-inherit-money-for-700-years

The impact of Dictatorships on Economic Development

The impact of Dictatorships on Economic Development

According to Mayan calendar, the year 2012 will see a period a great change for mankind. A period of peace and prosperity for the people of Earth. For people who have travelled or lived in South America in the last 20 years, my comments or optimism towards the region must sound at least "strange". Without any doubts, european migration has positively contributed to growth and productivity. But political processes have also played their role. After WW2, the World was divided in 2: "the West" and "the Soviet bloc". Whereas in Europe people were told that "the West" was composed of Western Europe, the US and allies (Canada, Australia); in Latinamerica people were told that they were actually part of "the West" as well (I would assume as part of the Western Hemisphere). I found out, to my surprise, that the Latin-american region is NOT really considered part of the West, but it is considered a 3rd world region at the same level as Africa or Asia.

The Latin-American region became under US political and military influence after 1945 in it's "War against communism". Puppet governments where supported politically and financially in order to secure that the region did not turn to communism. Communistic parties, or people that had communistic or socialists views (there was no difference between communism and socialism), where kidnapped and murdered by local authorities. Operation Condor[1] was a campaign of political repression carried out by US-backed Latin American dictatorships in the 70s and 80s that was designed to eliminate tens of thousands of leftwing activists. It was the idea of Chilean dictator Augusto Pinochet, who enlisted Argentina, Bolivia, Paraguay, Uruguay and Brazil in a continent-wide campaign. In Argentina, an estimated of 30.000 people "disappeared" in the last dictatorship the most bloody of all. Pinochet's[2] dictatorship in Chile was the longest and lasted from 1973-1990. Thousands of Chilean refugees moved to Scandinavia in the beginning of the 1980s. They established themselves in communities which can be still found today. The members of these communities can of course not believe or accept the advancements Chile has had since the 1990s.

The same situation, but opposite, occurred in Eastern Europe. In the same way that the Latin-American region was not really part of "the West" but satellite contries under the influence of the West, countries in Central and Eastern Europe were not part of the Soviet Bloc but satellites under Soviet influence. In the case of the Soviets, dictators were placed more directly. Everyone knew that Nicolae Ceausescu[3], the bloodiest Rumanian dictator who ruled for 1967 to 1989 years until executed, responded to Soviet interests. This was not so in Latin-America, were the public only found out that it was "the West" that was behind the dictatorships only a few years ago. In the same way that Americans wanted the Latin American region to turn extreme right, the Soviets wanted the Central and Eastern European region to turn extreme left.  

The threat of WW3 hovered for many decades in what was known as the Cold War[4]. The Cold War was a state of political and military tension after World War II between powers in the Western Bloc (the United States, its NATO allies and others) and powers in the Eastern Bloc (the Soviet Union and its satellite states). It's climax was the Vietnam War[5], were US and Soviet fought for control of Vietnam, in an effort to spread their influence in South East Asia. Secuels in landscape and the region still exist today, an example being the Agent Orange[6], which was spread as a herbicide from airplanes and has produced deformities not only to those exposed but also to their children and grandchildren.

The attempt to control the regions did not only obey political interests but also economic. The puppet governments in Latin America where also turned "Adam Smith" from an economical perspective. In Argentina, the process of de-industrialization carried out from 1976 - 2001 meant opening barriers to trade and destroying the local industry. Whereas the US spoke about liberalism (which was really New Liberalism, carried out from 1980 - 2008), the country was in a better position to compete with imported goods. It was not so for Latin American countries. Opening barriers of trade meant importing cheap goods and destroying the jobs in the local economies. The region was under political influence from the US until the 1980s, but maintained economic or thought influence until the 1990s. This explains why TODAY the region is still divided in left (socialist) and right (republican) from a political perspective. Older generations actually lived the period where being a leftist was a crime to be paid with your life.

From the end of the 1990s and with the rise of Chavez as president in Venezuela, the left was slowly reestablished in Latin America. With Chavez and Evo Morales as the most leftists, other political figures such as Lula Da Silva, Rafael Correa and the Kirchners in Argentina focused on government policy to reestablished workers rights which had virtually disappeared in ultra rightist governments. These governments have been protectionists of national interests, and as such have received mass critique from international media. Chavez was portrayed as a Dictator, when he was democratically elected. With defamation campaigns and bad press, international leaders tried to weaken his position. Under his command, Venezuela was very bad for business but he did protect the national oil reserves from foreign appropriation and improved significantly the lives of poor people. Government such as his as known as "populist governments", where social plans, welfare, etc, are handed out to the poor people in exchange of a vote. But definitely not dictatorships. With a series of populist governments, South American countries might not have developed but "caught up" in many social aspects where they were lacking. However, as I always explain, after many years of populism growth stagnates. This has happened to Argentina from 2011 - 2015.   

The rise of democracy in Latin America, and new young generations who are not as politically "charged" as their progenitors is bringing stability to growth and institutions. This explains why they have not yet matched central countries, but they have rapidly taken distance from Third World countries in other regions. Besides the atrocities and crimes against humanity that dictatorships bring about, they hinder growth and are bad for business. The impact of democracy in development cannot be stressed enough. While Europeans think that things haven't changed, the Latin American region has advanced substantially in a period of only 20 years. From asking for advice to developed nations, to finding their own solutions to problems. From commodity based economies, to the debate of value added that is only starting to happen now. From bad working conditions, to solid laws for workers. The same could be said about Central and Eastern Europe. After a civil war, the ex-Yugoslavia is showing signs of recovery. For polish people, working in the West might not be as attractive unless they are offered good working conditions. In the article "I want you back"[7], you can see how some Eastern European countries want to get back their most talented citizens by offering them better working conditions. It might work out for some, depending on their current situation. Brexit will of course have a stronger impact on foreigns and their children than on British people.

After the fall of the Iron Curtain and having moved towards democracy and economic freedom, the Latin American and Eastern European regions (who have a common history having been suppressed by military governments under the Cold War), will find that they are in a strong position to make the most of Revolution 4.0. Once solid healthcare and educational systems are in place, it will be up to the citizens to see how they can capitalize on these fantastic period of changes. The same cannot be said about countries that have still not found a way to freedom, or that are trying to get rid of totalitarian regimes. Achieving solid institutions and economic freedom comes of course before all else. To those who have not understood my point, that is what differentiates  South America FROM Africa!

Cristian Bøhnsdalen

CMO/CFO and Co-Founder @ITRevolusjonen

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[1] https://www.theguardian.com/world/2013/mar/10/latin-america-left-40-year-timeline

[2] https://en.wikipedia.org/wiki/Military_dictatorship_of_Chile_(1973%E2%80%9390)

[3] https://en.wikipedia.org/wiki/Nicolae_Ceau%C8%99escu

[4] https://en.wikipedia.org/wiki/Cold_War

[5] https://en.wikipedia.org/wiki/Vietnam_War

[6] https://en.wikipedia.org/wiki/Agent_Orange

[7] http://www.bloomberg.com/news/articles/2016-08-17/-i-want-you-back-cries-east-europe-as-emigrant-tide-erodes-gdp