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Sunday, March 14, 2010

Industrializing a Nation is an Art of War

By Mwarang'ethe

Kenyans have agonised over many years why we are unable to develop with all the manpower and resources in our hands. With a religious conviction, we have convinced ourselves that, if only we were less corrupt, we would have ended our poverty and attendant social miseries. We are also convinced that, all will be well if we utilise “donors” funds well, have free primary education, and “fight” diseases like AIDS and malaria.

These are myths and delusions fostered by the propaganda from the media, donors, NGOs and our schools. As thus, this common wisdom is totally baseless. The other side of the story that is left deliberately untold is this. Nations do not develop or industrialize and maintaining their prosperity, by fighting corruption, diseases and such mumbo jumbo.

In truth, these are lullabies given to Africans to ensure their continued deep sleep as others f#%£% them. Excuse that French please. So, how do nations develop? Well developing a nation IS AN ART OF WAR.

Industrialising a nation is an art of what, is what the Japanese Prince cannot tell Raila. (See Japanese Prince Dinner with Kenyan PM Here: http://www.youtube.com/watch?v=3ITzlWOqYc4&feature=channel.

Among other lullabies, the Japanese Prince did mention how Japan has helped us grow more rice (yes, a Malthusian activity we have mentioned many times). In his remarks, the Kenyan Prime Minister said there are a number of Japanese companies in Kenya. He seemed very pleased with that.

In this article, we wish to dispel these delusions and myths, not with mere speculations, but with factual evidence of what Japan has been doing since 1945. Armed with these facts, you will decide whether we know what we are doing or not.

After the 2WW, the remaining imperial centre of capital, i.e. USA was desperate to stop the spread of socialism. To do so, it had to assist countries like Japan that had lost that war. So, USA provided Japan with:

 Industrial technology.
 Finance capital.
 Dropped import barriers while permitting Japan and Germany to protect their industries and markets. This was the same formula USA had used in building its industry and wealth.

Question

(a) Did Kenya/Africa get access to technology, finance, markets and more crucially, are we able to protect our industry and market?
(b) If no, it means that, we believe we will develop under free trade regime. We will be very happy to get any example of a nation that has ever developed under free trade regime as we have embraced it.

As Japan rebuilt under the above conditions, it developed long term strategies for entering existing high tech markets (Schumpeterian activities, the opposite of Malthusian activities like rice growing the lullaby the Japanese Prince sung to us). These strategies were composed in detailed plans spanning 20 – 50 years for getting a share of existing markets. At first, it started by introducing new and highly refined versions of existing products and then slowly upgraded these products.

It begun with CRUDE copies of advanced German cameras like Leica and Rolliflex. They then honed their skills by continually upgrading their entries into these markets until their level of quality and technology began to equal that of Germans and then surpassed them. In a span of less than 20 years, using such long range managerial approach, the Japanese were able to gain by far the largest share of the worldwide camera and optical goods market and thereby, edging Germans to the sidelines.

Having taken this market, they now took aim of other existing markets which they could use their advanced optical skills. These were small copying machines, professional video devices, computerised silicon chip etching equipment. They now dominate this market as well and have edged the Americans who plan 24 months ahead.

As Japanese chanted free trade and laissez faire lullabies to Africa, the Japanese Ministry of Finance (MOF) and the International Trade and Industry (MITI) controlled the government’s budget, set monetary policy, collected taxes, supervised banks, brokers, and insurers and established parameters for credit, asset values, capitalization and lending.

More so, through cross shareholding, they ensured no outsider takeover (remember how Raila is happy about presence of Japanese companies in Kenya?). To further these mercantile schemes under the banner of laissez faire for the foolish, they ensured Japanese corporations are primarily owned by each other.

Questions for you

(a) Does Kenya have any long term plans for entering any high technology market? Please do not tell us about tea branding and tourism marketing in Germany.
(b) How coordinated is ownership of Kenyan companies like Kenya Railway, Safaricom, Telkom, Ken Gen etc?

To further protect its markets, Japan came up with very complicated high product prices which were protected from imports by arbitrary health, safety and quality standards. These “standards” permitted charging Japanese consumers 3 times the price for consumer products as that paid by the rest of the world. Through these "standards" which are never met, instead of TARIFF, the Japanese prevented others from selling on its home front. See the irony, in Kenya/Africa; a Minister proudly launches a new foreign product as you can see here. http://www.youtube.com/watch?v=EVC4OcWFf9U&feature=player_embedded#.

These high prices were nothing but hidden taxes along with other dictated policies and creative accounting which gave Japanese industry the same finance capital as it has received 100 years earlier. In other words, government financed industry and protected home market created a comparative advantage which permitted the Japanese industry to sell, for a period of time, at what would be a loss for a free enterprise corporation. Having built the world’s most modern industry and captured markets around the world, so long as trade surpluses are maintained, losses can be absorbed up to a point by those high domestic prices taxing back a part of the economic multiplier gains.

When Japanese government tried to deflate cautiously the land and stock bubbles by raising interest rates, the Wall Street bankers went on the attack using their new weapons of mass destruction, i.e. derivatives to sell the market short and bring it crashing down.

In other words, Japanese formula is this. Buy RAW RESOURCES cheap (from Kenya/Africa), build and maintain the most efficient industry in the world, educate its citizens, pay Japanese labour well (remember SAPS from IMF telling us to pay badly?) charge Japanese consumers above export prices, price exports just under the products of other nations and sell enough on the world market to pay for it all with a substantial cushion to spare. It may appear that, these policies contravene the Most Favoured Nation clause in free trade treaties. Well, that’s a small deal. As long as all nations face same arbitrary standards, the problem is “solved.”

So, why don’t the rich nations force Japanese to comply with the laws Kenya/Africa must comply with? Very simple. In 1987 when Japanese sold its bonds, the global liquidity was lowered such that, America experienced the worst one day stock collapse. So, if they are forced to, they will liquidate these investments, properties and dollar will crush. This is jiu jitsu economics at its best because USA and Japan, China etc, are now locked in debt – equity embrace that no knows how to get out of it. Remember that, these nations have very old art of art of war skills.

When the Western capital withdrew finance capital from Asian Tigers (this is a story for another day) they shattered (deliberately) these economies and then bought the best industries for pennies on the dollar. When they turned these derivatives as we noted above on Japan, they met their match. Japanese never permitted outside finance capital to gain TITLE to their industrial wealth. How so? They simply kept all bankrupt banks and industries running by ABANDONING capitalism’s bankruptcy rules. This enabled Japan to maintain trade surplus, expand savings, and thereby avoid DROP IN LIVING STANDARDS. We see the entire world now trying these formulae’s. We will see the end of this soon.

We have cut short a very long story, but, we hope short as it is, we are able to show that, developing a nation is more than fighting corruption, inviting foreign investors, “bringing development,” new constitutions etc as we are told. It requires leaders who understand the art of war.

16 comments:

Anonymous said...

it quite interesting someone with your exquisite educational background and reasoning is an avid supporter of ODM goons. They are full of BS, insecure and they would not give you the time of the day. You see it everyday in this blog and it is all about their leaders who are not worth a penny. I tried to have a conversation with some ODM Doctors in DC and it was all about emotional without facts. Maybe it is because I belong to the tribe of the enemy. You are brilliant my friend and keep the splendid job. Can attest to your grandiose for i hold a PhD in economics and cannot express myself on paper like this.

Anonymous said...

Mwarangethe,

One word, brilliant.
Unfortunately, expecting the hair dyeing octogenarian buffoon of Bondo to understand these things is akin to teaching a cow to talk. The best you can get from the cow is milk and molasses is busy praising the Japan as they milk Kenyan resources dry in exchange of the 'royal dinner'.
What a fat fool.

Be ready for his spanner boys like Phil to come tying long upuzi. Forgive them for they cannot understand your advanced thinking.

Nimesema

Anonymous said...

Mwarangethe, are most readers ready to hear and accept these facts, me thinks not, for quite a few would rather gorge on trivial tribal politics that in long run will amount to nothing but death and destruction while the political elite gorge themselves and the true beneficiaries of our resources enrich themselves... we African are looking at the wrong enemies the sooner we realize that better the lives of progeny will be

Great article...

Ken Thumbi

Anonymous said...

Mwarang'ethe if kumekucha wrote like this everyday then maybe 2030 project may became a reality.Mwarage you have a point, but how can we move forward as a nation post 2007 PEV. How can we move forward if, I from jeng tribe would rather promote a muhindi or Muzungu business than my fellow kikuyu bro. How can we move forward if I would rather kiss the ass of a muzungu than kale cheeks?
As long as tribe, corruption and impunity prevail. Industrialization will just be a mirage

Anonymous said...

There are 5 factors to fulfill for a country to industrilize.

1)You need well trained engineers with BSc,MSc and PhD. You need good technicians with HND and Diploma. And above all you need well trained manual skilled workers with Trade test Grade I to III.

2)You need policy makers with visions. You need a president and politicians who are not sleeping in the job. Someone with a fighting past who is patriotic and knows what technology is all about, preferrably an engineer.

3)You need an atmosphere where tribe plays no role, but only professionalism.

4)You need a country where corruption is minimal and rule of law is generally followed. Stealing of public funds should be a capital offence same like robbery with violence.....death sentence.

5)Healthy protectionism, inland investment to be promoted. Foreign investments to be fought and rewinding of stolen Kenyan money
should be a priority.

Comments: The kind of education Kenya has doesnt promote technical supremacy. Technical education must be taught in special schools, colleges and universities.

Kenyans should avoid politicians who befriend killers, robbers and thieves. The past bad regimes should be avoided.

To develope a country, tribe, religion, race is not important.

The future of Kenya is more important than individual interest.

Anonymous said...

the problem with our African governments is that we are proud of managing poverty rather than seriously thinking of creating new wealth. This Country can easily develop if we concentrated on industrious that bring in foreign exchange inflows.Let's export services and goods to COMESA countries through industries like; consultancy services, tourism, transport (opening up central Africa Through the port of Mombasa),selling of finished agricultural products etc.
we also need to enforce the limit of foreign components in all industries like construction, consultancy services and IT. Look at how the chinese are reaping millions through construction, mobile phone business and IT?

Anonymous said...

Great article, should be made compulsory reading for every politician. Your caparison of industrialization to warfare is thought provoking; It made me realize the futility of African development goals as along as we keep on electing "popular leaders".

As a nation we have chosen to go to war with elected popular pedestrians (man off the streets) as opposed to having trained professional military men guide us.
Its a pity we don't realize we are war

Anonymous said...

Its funny how such an important article has so few comments. Shows how unlearned most of Kumekucha leaders are. This article is way above their level.

Keep them coming Dr. Mwarangethe.

Kumekucha Prefect

Anonymous said...

^^*readers not leaders

Anonymous said...

I think mwarangethe's articles would do well and even fit here:

http://pambazuka.org/en/category/comment/

Anonymous said...

Recently, a friend of mine and I were discussing the draft constitution and we were trying to see why the debate is now drifting to political lines and we were of the view that if something as basic as the constitution can stir such divisive emotions what of industrialization which the enemy will cause to reap the country.

To industrialize Kenya will be akin to a war as Mwarangethe so aptly put. We need a general who understands the art of war. Does anyone care to see what Kagame is attempting in Rwanda? He may not have all the skills to stir this country well but he surely has some ideas.

I believe to industrialize, firstly we need to have a water tight constitution that defines us as a people, our values, and our goals. Secondly we need a solid land policy. If we are to move to be an agricultural powerhouse (and by this I mean we add value to our produce before we export) we need to consolidate our small parcels of land to viable commercial entities. Peasant farming ought to be done away with and people given incentives to move to eco-villages or urban centers where the govt will provide all the basic facilities and job opportunities. This is no mean task and will need a leader with vision and who can rally everyone behind a common course. By moving people from peasant farming, we can release the much needed land for agriculture and at the same time provide impetus for industrialization (manpower).

Michael Mwaura said...

Anonymous said...
Peasant farming ought to be done away with and people given incentives to move to eco-villages or urban centers where the govt will provide all the basic facilities and job opportunities.
------------------
We are of the opposite opinion. Peasant farming and promoting sustainable rural economies is the way forward. Sending people to urban centers to wait on government subsidies will only add to urban blight. Please read our articles for further arguments.
Let me congratulate the contributors to this thread for their ideas that may progress to our nation.
Unfortunately as some one said the comments have not been many as this is not a 'juicy article' but it is what we should be talking about

KenyaMoja said...

Are you advocating for is forced industrialisation as seen in the Soviet Union with the stalinist five-year plans? It worked and changed the backbone of the USSR economy from agriculture to industry in less than 50 years BUT farmers were starved and impoverished with their produce rotting or being sold for extremely low prices to the govt with the govt setting the prices itself, all in a move to make them stop farming and move into industry. This ruthless policy created another underclass after the revolution and is one of the factors leading to the implosion of the USSR. I have read a lot of your comments and you are heavily influenced by Marx, especially your views on land and rent-seekers which I agree with to a certain extent but that is a story for another day.

Your view of the Japanese industrialisation is in my opinion limited. Japan industrialised due to American help as you stated just after the war, but also The Korean war, the work of the ministry of International Trade and Industry, and later the sound policies of Prime minister Ikeda.

Both these models will never work in our country. Before we go into all theories we have to look at the context and address fundamental issues. The average kenyan is not as hard working as a the japanese, he is not as honest as the japanese, he is a tribalist, if he went to school he did the 8-4-4 which did not teach him how to think critically and to use simple logic, he will vote for someone who gives him a bag of unga and dissapears for 5 years to it in nairobi while trafficking drugs to kill his voters' children etc etc.

The average Kenyan AND the average kenyan leader does not understand and has never heard of economic theories and models. A Kenyan politician is not there to come up with models and theories, he is there to EAT and to stay in power as long as possible by any means necessary. Whether he is an economist or a university dropout or an engineer or a form 4 leaver, he is not capable of coming up with policies, pursuing them untill he succeeds, and if they don't work apologising and resigning gracefully.

What I am trying to say is, your work is great but unfortunately it will do nothing to change Kenya. Tell us why we and our leaders are the way we are. Tell us how to be better people, to right our wrongs. Analyse our education system, corruption,the police brutality,tribalism etc in simple terms and and propose solutions, you will be doing Kenya much more good. To think and to innovate we need a minimum of comfort and peace of mind. We should be working towards that reaching that minimum before we embark on theories, some of which have been tested and failed.

Mwarang'ethe said...

KenyaMoja said...

you advocating for is forced industrialisation as seen in the Soviet Union

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No, we do not. By the way, China has also used 5 years plans. What do u say to that?

We only suggest, let our politics be animated by issues as industrialization. Then, Kenyans will come up with their own policies, and not copy everything from others.

In any case, all nations had forced industrialization.

UK banned the Indian better quality and cheaper textiles so as to develop its own.

England charged duties on raw materials export so as to make it expensive for other nations to manufacture.

USA went to war with Britain in 1812 so as to be able to free itself and industrialise.

Wasn't the American civil between industrialising North and South backed by Britain so as to keep it producing cotton for export?

Napoleon blocked Europe to cut off England's exports so as to allow others like France to industrialise.

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... you are heavily influenced by Marx, especially your views on land and rent-seekers which I agree with to a certain extent but that is a story for another day.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxx

Who has influenced yours? We answer, aristoctrats who had divine exclusive rights to God's gifts.

Didn't Central Bank appear in the Communist Manifesto? This is opportunistic ignorance. Let us analyse issues without dogma.

Was Churchill a communist when he presented the famous PEOPLE'S BUDGET of 1909 in the UK?

NB: A more detailed proposal is on the way.

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Your view of the Japanese industrialisation is in my opinion limited.

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We are not discussing every detail of the Japanese industrialization. Yes, about Korean war etc, we concur fully.

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The average Kenyan AND the average kenyan leader does not understand and has never heard of economic theories and models.

xxxxxxxxxxxxxxxxxxxxxxxx

It is true what you say. There are so many theories and models he does not understand.

For instance, does an average Kenyan or person for matter anywhere in the world understand entropy?

It is for those who understand to explain issues to our people in a manner they can understand.

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A Kenyan politician is not there to come up with models and theories, he is there to EAT and to stay in power

xxxxxxxxxxxxxxxxxxxxxxxxxxx

We agree. And, this is the main point in our argument. We need to engage these leaders by telling them what we want, and not them telling us rubbish every day.

It is thus, your duty to "reset" the meaning and purpose of our politics. Thats the challenge.

xxxxxxxxxxxxxxxxxxxxxxxxxx

Analyse our education system, corruption,the police brutality,tribalism etc in simple terms and and propose solutions, you will be doing Kenya much more good.

xxxxxxxxxxxxxxxxxxxxxxxxx

The solution is found in this quote by Johann Jacob Meyen that:

"It is known that primitive nations do not improve their customs and habits, later to find useful industries, but the other way around."

or Bacon's that:

there is a startling difference "between the life of men in the most civilized province of Europe, and in the wildest and most barbarous districts in New India ... And this difference comes not from the soil, not from climate, not from race, but from the arts."

or in Karl Marx's saying that:

"... rapid improvement of all instruments of production, ... draws all, even the most barbarian, nations into civlization."

NB: We are advocating this route. You advocate the other way round. The problem is that, u cannot give an example of where such an approach in the last 500 has worked.

Philip said...

Maybe the time this post was posted I was up in the sky looking down at huge chunks of idle land and wondering how people can be poor in Kenya with such great wealth.

Majority of us have been taught to believe that wealth is about money and nothing more and one can create wealth through a white or blue collar job only.

Mwarang'ethe said...

Philip said...

Majority of us have been taught to believe that wealth is about money and nothing more and one can create wealth through a white or blue collar job only.

3/16/10 2:37 AM

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You are right, our views about wealth is extremely distorted.

At the same time, u cannot develop your agriculture without advanced manufacturing sector in the same nation.

So, no matter how much money we pour in the agri. sector, to the extent our industrial sector is dead, we are going nowhere.

So, when so called donors give u money to develop agri. without allowing us to industrialise (compete with them), they are cheating us.

In the same manner, advanced service industry requires advanced industrial sector. Thus, the idea that we can develop service industry without a sound industrial base, is a waste of time.

More so, as we have noted before, if you have free education, but, without an industrial sector where these kids will work, they will only end move out of the nation.

In a nutshell, we must have a fully intergrated approach to these matters. And, this is totally lacking today.

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