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JULY 7, 2003
What the Euro Zone Does--and Doesn't--Have Going for It In "Britain is smart to hold off on the euro" (Editorials, June 16), you assert: "The Continent, in short, is becoming more like Britain." Let us hope you are wrong. As viewed from the Continent, Britain is a country burdened with Third World health-care and public-transportation services, a history of boom-and-bust economic cycles, and a per-capita wealth that, according to the advocacy group Britain in Europe, puts it at the bottom of European countries, along with Spain, Portugal, and Greece. Although the Continent is burdened with inflexible labor markets and unaffordable social welfare programs, it is moving painfully toward pension and labor market reforms. But one can be confident that it will achieve these reforms without sacrificing a system of public services that is far superior to Britain's. Chris G. Petrow Neuilly Sur Seine, France Your editorial calls the euro "the currency of 12 Continental nations." I am aware of the binary opposition of Britain vs. the Continent. I did not realize it had become so strong as to detach one of the euro-zone countries, namely Ireland, from its westerly location and attach it to the European mainland. I suggest that next time, you could at least make room in your analysis for Ireland, a country located on no continent known to geographers. Christopher Rollason Metz, France One Samsung Product That Didn't Live Up to the Hype Re: "The Samsung way" (Cover Story, June 16): Samsung CEO Yun Jong Yong is absolutely right to put great value on speed to market, but sometimes it's done at the expense of quality. While choosing a replacement for my old mobile phone in May, I picked Samsung's SCH-A595 "Dream" as it was being launched in Brazilian markets by Vivo, the largest operator in the country. Among other features, it offered seamless PC integration via an optional data cable. To my surprise, available software would work only with older versions of Windows. The data cable was useless with my mobile PC running Windows XP. The retailer was keen to refund the money on the data cable, but I question whether Samsung marketed its product correctly. Paulo Janousek São Paulo, Brazil   Japan Has Priorities Beyond Its Economic Malaise I am responding to "Why Koizumi is still riding high" as a Japanese resident in the U.S. (International Business, June 16). Japan has been in a long tunnel, named a deflation spiral, for a decade, as you point out, but you overlook the Prime Minister's diplomatic results, especially relating to the Iraq war and the North Korea problem. Diplomatic competence is the most important requirement of the Japanese people for the Prime Minister now. I believe that Americans would agree, considering Japan is the neighbor of an "axis of evil" country. Toshihiko Tamura Port Washington, N.Y. Mexico's Labor Costs Are the Least of Its Woes As the general manager of a small precision metal stamper in Guadalajara, I could not agree more with your article "Wasting away," about the challenge Chinese manufacturers present for Mexico and the resulting loss of exports to the U.S. (Latin America, June 2). Every day, we are faced with tremendous competitive forces from the Far East that, in the last few years, have forced many companies in the area to close or scale down operations, with the resulting loss of many thousands of jobs. For the record, our company is located in the industrial park of one of the companies, Flextronics, that you featured, and we service all the big-name contract manufacturers. However, I think your figures are exaggerated from a cost point of view, since my company's operator-level labor costs are below the $2.50-an-hour range. Elsewhere in Mexico, that cost can be even lower. Mexico has many challenges ahead and, indeed, labor cost is one of the factors that make us less competitive. However, when compared with the crime, big bureaucracy, lack of infrastructure, and fiscal burdens we have, labor cost is a much smaller problem. Diego Giannini Interplexico Manufacturing Co. Zapopan, Mexico Editor's note: The wage rates we listed include take-home pay plus government-mandated benefits -- or "fully loaded," as they say in the industry. The figures we gave for China (50 cents to 80 cents an hour) are also fully loaded. Protectionism Sows the Seeds of Deflation "Deflation nation" was interesting and informative but failed to spot the basic reason for Japanese deflation (Asian Business, May 26): For the 50 years from 1945 to 1995, Japan was the ultimate protected economy. Absolute embargoes on any imported products that could be made domestically drove domestic prices sky-high, thus subsidizing Japan's tsunami export effort. It became common knowledge in the engineering world that Japanese products had two prices: the first, in export markets, set to undercut all competitors, and the second, in the protected domestic markets, approximately double the first. It's no surprise Japan now faces deflation. As its protectionist ramparts fracture and at long last the first chill breezes of global pricing are felt, its hugely and artificially inflated domestic prices are bound to fall. It is clear that the propensity of an economy to deflate is in direct proportion to the degree of protectionism it historically maintained. Japan was way out in front on this count. Germany, ever protectionist, will be next. France will follow. But the U.S., and particularly Britain, the most open economy in the West, will probably escape. Andrew Cook Sheffield, England What Kind of Dollar Are We Talking About? In "Why the second half isn't looking half bad" (Business Outlook, June 16), you use real outlays for tech gear and software as a basis for your analysis. In current dollars, investment in equipment and software has gone from $890 billion in 1999 to $848 billion in the first quarter of 2003, and it is current dollars that are spent on buying wages and material inputs, not "real" dollars. Arthur Andreassen Columbia, Md.
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