Saturday, February 23, 2008

Super Duper High Speed Japan and the Question of Government Intervention

So, Japan just launched it's "super high speed internet" space rocket. The technology, if it works would allow customers who are fitted for the technology to reach speeds of up to 1.2 gigabytes per second (this is all according to the Associated Press). Whenever we seem to reach some sort of technological bottle neck, something completely different comes along and challenges all of our previous notion of the technology. Read more about this here.

Now, I really do have a point in mentioning this here, other than the fact that technology is important to any blog. This high speed internet rocket carrying what is called the WINDS sateelite was built by Japan Aerospace Exploration Agency (JAXA) and Mitsubishi Heavy Industries. Why is this interesting? Well in Japan it's very normal for government sponsored agencies to work together with private business.

In fact, much of how countries like Japan and Korea have become some of the worlds top economies is through strong government partnerships in private business. There are some draw backs in this sort of economy, but there are also some great benefits.

Take for example the handful of companies operating in Korea that seem to dominate everything. To the average non Korean, companies like LG might appear to be only in the electronics market. Well, in Korea (until several years ago when the company split into several parts) LG not only makes electronics but also ran gas stations, convenience stores, apartment buildings and lots of other products you wouldn't normally see an electronics company produce. Also, Lotte makes everything from that chewing gum and chocolate which is beginning to appear around the world, but also some electronics, department stores, grocery marts and apartment buildings.

Hyundai isn't only the worlds best ship building company, and half decent car manufacturer, but it's a large chain of higher end department stores, makers of escalators and elevators and who knows what else.

Part of the reason why these companies control nearly everything in Korea...(wait, I left out Samsung...) is that they have been assisted along the way with favourable government policies and readily available capital.

The result? Korea went from a destitute nation ravaged by war in the 1950's to one of the worlds largest economies by the late 1990's. While it's true that between the 1930's and the 1980's, Canada also transformed from a primarily agricultural and resource based economy to one of the worlds most advanced technological economies, we started out from a position of relative stability. In short, our country was never levelled by massive bombing campaigns, nor did we have over half of our population starving in even the darkest periods of the Great Depression.

Canada and the U.S have always been prosperous in comparison to the rest of the world. Korea built an economy from the ground up in only 50 years. Japan built an economy from little in a few decades. This massive growth just didn't happen on it's own, rather it happened because the governments of these two countries were not afraid to interfere in the economy at times.

If we in the West want to see similar levels of technological innovation and economic expansion, perhaps our governments need to realize that important things don't just build themselves. A free market economy is important but regulation to smooth out the hard capitalist edges, and public investment and ownership are also important.

Take a look at our own history in Canada. The railroad that transformed Canada in so many ways, not limited to our sustainability as a country covering such vast and underpopulated regions, was not a product of free market forces. Today, public transport is seldom profitable yet without it our cities would jam to a halt. Electricity production is often a big money loser, and with newer greener technologies still in development, will be a money loser for the foreseeable future...but we need it, don't we?

My point is is that our economy would be well served by a little bit more government intervention from time to time. I bet the people at Chrysler wish the U.S had have interfered just a bit more in healthcare over the years, but more on that later.

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