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JULY 12, 2004
Weighing In On The Reagan Presidency Re "Reagan's economic legacy," (News: Analysis & Commentary, June 21): I admit that the article concerns his economic legacy but I am thankful to Ronald Reagan and his advisers for increasing the U.S. investment in armaments, which weakened the Russian empire. Thanks to that, Russia could not "compete" more on the field of armaments and had to release its influence on its vassal states, which led to the changes in 1989. I think this was the biggest contribution to our free development in Central Europe. Ing. Jiri Fencl Prague If Chinese Products Cost More, Would The U.S. Turn To India? What you describe in "Wielding a heavy weapon against China" (Asian Business, June 21) is clearly China-bashing by U.S. corporations and government. Using India or other emerging markets as benchmarks to determine the correct cost of manufacturing in China is not only inaccurate but myopic as well. Here's why: China's labor costs are competitive. The monthly wage for a common manufacturing worker is so low that it would not attract even an American beggar. Material costs are also lower because most components are manufactured in China as well. Where can you find such a huge market for materials importation? The volume itself will deflate the cost. Add to this a low profit margin and you could easily assume that the manufacturer is selling at a loss just to have the business. Yet American corporations are thrilled to purchase these low-cost items. American corporations have been pushing down margins all this time. Chinese companies are willing to conduct a business even if the margin is as low as 5%. American companies will not even bother to consider a deal if the margin is less than 30%. So we are looking at a scenario where the big American corporation seeks to satisfy its perks and pay, company profits, and responsibility to its shareholders in exchange for pushing manufacturers in another part of the world for lower costs almost to the point of slavery. If Chinese companies kept a 30% or more margin and gave their workers a better living standard, the U.S. would likely not import from China anymore. More likely it would be buying from India. Roy Jao Taipei   When Dysfunction And Innovation Go Hand In Hand Re "Who's the real Mr. Chips?" (The Great Innovators, June 21): I enjoy studying how strange human behavior is, and how peculiarity leads to innovation, be it good or evil. William B. Shockley, John Bardeen, and Walter H. Brattain's collaboration and conflict is the "real Mr. Chips." Their collaboration created the breakthrough of December, 1947. The disbanding of the group in a colossal clash of egos helped: 1) the progress of finding an explanation for superconductivity by Bardeen and his two students; and 2) the creation, whether wittingly or unwittingly, of Silicon Valley by Shockley. Nur E Jannat Ayesha Islam Dina Dhaka, Bangladesh Economist Barro's Skewed Assumptions Robert Barro's "The liberal media: It's no myth" (Economic Viewpoint, June 14) contains very questionable assumptions. First, the report he cites uses a scale of 0-100 with 100 being the most liberal. Yet Barro chooses 39 as the median rather than 50 because 39 is the average for U.S. congressional representatives and therefore, he presumes, for "viewers and readers." That skews his statistics. Second, Barro classifies think tanks, like the media that quote them, as either liberal or conservative (in American usage), left or right wing. That portrays think tanks as propaganda-pushers. Sir Antony Fisher, who through his Atlas Economic Research Foundation fathered dozens of economic think tanks around the world, aimed to establish "economic truth." Is that concept outdated? Is economics a branch of social science -- or has it become a tool for dogma? Murray Sanderson Kitwe, Zambia GM In China: Why The Carmaker Is Likely To Crash Your article "GM: Gunning it in China" (Asian Business, June 21), was well- written but missed an important point. General Motors Corp. (GM ) has technical smarts (IQ) in spades but lacks rudimentary soft skills (emotional intelligence, or EQ). Blaming the United Auto Workers for the woes of the 1970s, GM initiated its "Southern Strategy." Unfortunately, utilizing the same management style, it was only a matter of 15 or so years before GM had an antagonistic relationship with Southern employees as well. The Saturn project suffered a similar fate. With great fanfare, this "new kind of car company" had a spectacular launch. But again underestimating the importance of EQ, GM replaced charismatic President Richard "Skip" LeFauve with a journeyman numbers guy. Saturn has yet to recover. Should GM take this failed philosophy to China, the results are predictable. Unfortunately, given how huge the Chinese labor pool is, this will not become obvious for two to three decades, and those responsible will escape with huge rewards. It's the soft side, stupid. Jerald L. Duff Dayton, Ohio Are we supposed to believe that General Motors makes a profit of just $145 on a $40,000-plus sport-utility vehicle produced in North America? That's just a little over two "fill-ups" for the same vehicle in today's gasoline market. If GM's profit margin is so low, how did it accumulate the $3 billion to invest in China? A Chinese auto worker makes 78 cents an hour and still is not considered competitive. How many $30,000 Buick Regals do you think these workers will purchase this year while earning 78 cents an hour? Remember what Henry Ford said during the Great Depression in response to the questions: "Why do you hire more workers for the assembly line than you need, and why do you pay them more than you have to?" Ford replied: "Somebody has to buy my cars!" Ford had a better idea. Mark Broczkowski New York
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