Sunday, August 26, 2012

Doing things differently

It seems rare, but virtue often triumphs.  We should remind ourselves of this fact more often.  Here we have another study that seems to prove that those countries with good governments, schools, and honest business practices wind up at the top of yet another business ranking.  If course, the real reason this is true is because honesty and trust allow a group of people to accomplish much more difficult tasks than one made up of liars and crooks.  Virtue is an economic good.

Why Nordic Countries Are More Competitive Than Everyone Else

Ashley Lutz | Jul. 31, 2012

Nordic countries including Sweden, Denmark and Norway have the most productive businesses of all and are best-equipped to compete in the global economy.

These countries won based on worker productivity, cost of business and monetary policy, according to a study by Mercedes Delgado at Temple University, Christian Ketels and Michael E. Porter at Harvard and Scott Stern at MIT.

While countries' global competitiveness is a common topic, the researchers say they are the first to input the cost of doing business into the country's ultimate standing. They also use their index as a predictor of future economic success.

Outside of the Nordic countries, Singapore was highly-ranked, coming in at sixth. The U.S. ranked 20, behind Germany, Hong Kong, Taiwan and France.

They also found that production at the micro level was more important than previously thought:
"We find that the micro economic conditions have a positive influence on competitiveness even after controlling for historical institutional conditions and incorporating country fixed effects (which offer a broader measure of a country’s unobserved legacy). Current institutions and macroeconomic policies seem largely endogenous to historical legacies. Overall, the findings strongly suggest that contemporaneous public and private choices, especially those that relate to microeconomic competitiveness, are an important driver of country output per potential worker and, ultimately, prosperity." more
Denmark has discovered that solving her energy problems is a LOT easier with an actual working democracy.
Embracing the Wind

Denmark's Recipe for a Model Democracy

By Manfred Ertel and Gerald Traufetter

Hailed as a "miracle of modern politics," Denmark consistently earns top marks for its efficient governance, innovation and transparency. Nowhere is this more apparent than with its successful embrace of wind power, making it a role model for the world.

Western democracies consider themselves to be efficient, farsighted and just -- in other words, prime examples of "good governance." But in recent years, the euro and debt crises, along with wars in Iraq and Afghanistan , have shattered faith in the reliability of Western institutions. Disconcerted Europeans are casting a worried eye at newly industrialized nations like China and Brazil . Can the West learn something from countries that for so long sought its advice? This is part III in a four-part series looking at how the world is governed today. For part I, on Brazil , click here. For part II, on the United States , click here. Check back for part IV, on China , next week.

The blades of the wind turbine are made of plain wood painted red, and they measure exactly 1.2 meters (3.9 feet) long. Their curved edges are only roughly sanded. Nothing seems to suggest that this unremarkable-looking device heralded the rise of a global corporation and the restructuring of an entire country.

"At the time, I found the thing in a dusty corner of the barn," says Henrik Stiesdal. "I still clearly recall how I held it in the wind for the first time."

His blue eyes gleam as if he were reliving the experience from 35 years ago, saying: "I suddenly felt this power and thought: That's just the ticket!"

Stiesdal jumps up from his chair, which he had been casually rocking on only a moment ago. He wants to leave his office on the first floor and show his visitors what has evolved from this red piece of wood. The 55-year-old technical director at Siemens Wind Power rushes toward a large production hall with its walls of black granite sparkling in the sun.

Once inside, everyone takes in the view of a vast production line, similar to the ones used in automotive plants. Here, though, workers are assembling white quadrants of steel that are as large as a small single-family dwelling. Stiesdal is still holding his red rotor blade, but it looks like a toy in comparison to the 400-metric-ton (880,000-pound) wind turbine behemoths moved here on air cushions. This is precisely the effect that Stiesdal is aiming for with his visitors: "They need to grasp the rapid development that the wind industry has experienced over the past 30 years," he says.

Stiesdal is regarded as one of the founding fathers of the wind-power-generating industry, in Denmark and around the world. He was just about to graduate from high school when his father's farm was in roughly the same predicament as the entire country: It was the 1973 oil crisis and Arab oil-producing countries had slashed production. The winter was cold, and the government had called on its citizens to only heat one room in their homes.

It was precisely at this critical point in their history that the Danes proved that they have a particularly well-organized state, one that can react and adapt. These years marked the beginning of Denmark's reputation as a model of modern governance, as a paragon of innovation and transparency. And it provided proof that a democratic government can foster enthusiasm among its citizens.

Stiesdal was a key figure in this development. Together with a talented handyman from his hometown in Jutland, he built the first economically feasible prototype of a wind turbine. They received a loan of 50,000 kroner -- the equivalent of roughly €23,000 ($29,000) today -- from the state, which was desperately looking for something to replace the missing shipments of crude oil. In 1979, they sold the license for the prototype to a company called Vestas. "At the time, the company was still manufacturing tractors and cranes," he says.

Today, Vestas is the world's largest producer of wind turbines. Stiesdal, on the other hand, continues to develop new models that generate even more power, though now he is working for the German engineering giant Siemens, which purchased a Vestas competitor in the small Jutland town of Brande in 2004. Stiesdal's latest breakthrough is a wind generator without a gearbox. "With an output of 6 megawatts, this machine is 150 metric tons lighter and requires less maintenance," he says without a hint of humility.

He explains that these technological marvels are nearly 200 meters high and still have a great deal of development potential. One thought makes him particularly proud: "We've produced turbines in this plant with a total output of 15,000 megawatts," he says, adding that they generate 35 billion kWh a year. "Do you know how much energy that is?" he asks. Without waiting for an answer, he says: "Denmark's entire electric power consumption!"

Stiesdal says that these wind turbines have been shipped to the United Kingdom, Germany, the United States and the entire world. "That's this small country's contribution to the battle against climate change," he adds.

Indeed, the statistics are impressive. It's estimated that some 50,000 wind turbines have been exported from this mini-kingdom between the North and Baltic seas, nearly 50 percent of the wind-powered generators worldwide. But sales are declining now that large industrialized nations, such as India, China and the US, are emulating the Danes' success.

In addition to the graceful, towering turbines made of fiberglass and steel, however, Denmark has also given the world a shining example of sustainability: The parliamentary monarchy is widely seen as a laboratory and model for how an entire country can make the transition away from coal, oil and gas and toward energy generated from renewable resources.

Today, already 24 percent of the electricity consumed in Denmark comes from wind power -- a world record. There are plans to increase this to 50 percent by 2020, and the country intends to become entirely independent of fossil fuels by 2050.

It's up to people like Stiesdal to meet the technical part of this challenge, to create increasingly efficient turbines that are quieter and more robust -- and better adapted to operate on the high seas. In the 1990s, for instance, he designed the turbines for the first offshore wind farm at his plant in Brande. more
Not surprisingly, taking the profit motive out of medicine has massive economic benefits as well.  Profiting from the pain of others isn't just evil, it is economically inefficient.

French Healthcare Inflation Vs. US Healthcare Inflation In One Devastating Chart

Joe Weisenthal | Aug. 9, 2012

We're doing more tooling around through the new European inflation data that was just added to FRED and we thought this was interesting.

The blue line represents healthcare inflation in the US.

The red line represents healthcare inflation in France, where healthcare is universal. more

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