Should the auto industry be bailed out?

Emotions would suggest yes - but practically would it help? I think not in the way the government is suggesting. The bailout should be done through indirect methods to stimulate demand for automobiles and reduce the auto companies cost of carrying until the economy picks up. For example tax credits on all auto and auto component purchases could be part of the option. The Auto companies have very high costs per unit of production and capital infusion will not help - maybe a loan for working capital for 12 months could be thought of - but what happens should they not be able to improve cash flows? Which they cant if they dont cut costs . So here's what needs to be done in my opinion:
a) Provide working capital loans to all three based on a realistic projection for 12 months
b) Provide tax credits for the auto components industry
c) Force the big three to improve emission standards
d) Force them to move out of gas gazzling inefficient products over a staggered time line
e) Get the unions to the table and make them part of the discussions
f) Set up a structure to take out their pension liabilities over the next five years and take them off the balance sheet
g) Put a salary freeze on the companies for the next three years and reward only through bonuses based on agreed performance measures.

New WorldWatch Institute Report

I managed to read the salient features of the WW report. The document makes a number of interesting points worth noting:

a) It costs less to clean up the world than to pollute it.
According to the Stern report to the UK government the climate impact of the business as usual economic activity over the 21st century ranged from 5% (direct) of global GDP to 20% (indirect costs), while the cost of climate action is only 1%.

b) The loss in biodiversity over the last 50 years has been phenomenal with species extinction rates increasing by 50 to 500 times.
39 countries experienced a decline of 5% or more in wealth when bio diversity loss, resource depletion, carbon damage were taken into account.

c) Income distribution is considerbaly more skewed than before.
The UN development report indicated that the combined income of the world's 500 richest people was about the same as the world's 416 million poorest people.

And it also points out that building a low carbon economy is the central economic challenge of our age.

More later.

Building sustainability into business practices

How can organizations start developing competitive advantage? According to the work done by Jib Ellison and others at Blu Skye, make sustainability a key driver of competitive advantage. I think this is a really fantastic concept and one that is likely to gain more acceptance in the future.

Applying the sustainability lens will drive innovation in products and processes and make the world a better place. This will provide firms with new sources of value and at the risk of sounding trite - sustainable value. Much like a healthy IP regime drives innovation, focus on sustainability will drive innovation. Look at d-lite, the company started by a Stanford MBA that sells LED based lighting in India.

More later.

What Extraordinary Times - Obama is President

I cant fully describe what I feel - but the emotions were powerful. It was wonderful hearing President-Elect Barrack Obama speak and to watch the entire proceedings in Grant Park. He has run an excellent and disciplined campaign and it felt very good to see him elected. Over the last few months I have watched him interact and heard him speak many times, (always on TV admittedly). I have also read his Audacity of Hope (which is a bit rambling at times, but a very interesting read nonetheless). I have been impressed by him for so many reasons: he is thoughtful, he is unflappable, he is generous and most of all he comes across as very sincere, smart but humble. I felt that I was watching a statesman who could reach across and provide a degree of leadership that has so far been missing in this world. He has the ability to play the politics required to win without coming across as a sleazy politician.

My wife and I were very moved watching him tonight. And we are not even American citizens. But the impact of this historic occasion has not been lost on us. In some ways, Obama has revived a faith in leadership that I lost with Bill Clinton's antics. One thing that I have noticed about Obama - he never looks smug or have the politician's grin - his comments are always very made in a calm but firm manner.

I also thought Senator McCain gave a very gracious speech this evening. I felt that he was generous, firm and very sincere in his wishes. It was a very good speech and also reaffirmed what I have always felt - that Senator McCain is a good man and a very admirable human being, but not the right choice for leading this country. In fact I think Senator McCain would be very good as an advisor, who could stand by what he believed.

I feel very lucky to have been watching these historic events.

Green is going to become more important

With oil prices hovering around $70 a barrel, some may think that the focus on green may go away. At least that's what the stock market thinks. Solar stocks are down and tracking with oil price. But here's why it makes sense to invest in green and renewable energy - for all the reasons we already know - energy security, greenhouse gas emissions and oil prices (stll well above the $30 a barrel we knew a few years ago). But in addition, there is one more reason - because green and renewabel energy will create new jobs, jobs and roles that do not exist and also create wealth at the bottom of the pyramid. Over the next five years, green tech is going to help pull the world through. And governments need to recognize that. Look at Europe's green tech industry-more and more jobs are being created everyday in that sector. Asia needs more green tech - India does for sure.