Monday, March 12, 2012

To have Prosperity or to have Decline, it depends on Your Choice

by Luke Ho-Hyung Lee

How many public bridges as infrastructure are in the San Francisco Bay area? How many those bridges are in the United States? How many in the whole world? 

If all of those bridges were not public infrastructure but private, and only the owners (mostly big companies) could use their bridges for their own benefit, what would have happened in our economy and society?

The most likely development would have been that, due to the superior position of big companies in efficiency, the businesses of small- and medium-size companies would have weakened and eventually been destroyed, and accordingly, many jobs in those companies would also have disappeared.  Job creation in the market as a whole would have been sluggish as well.  In addition, while the profitability of the general service industry was also seriously diminished, we would have experienced a risk of a vicious cycle with a rapid reduction of total consumption.  Correspondingly, the expanding gap between poor and rich would have become inevitable.… Our society could have anticipated increasing unrest.…  

In this situation, what actions should national governments have taken?  First of all, they ought to have adopted a series of powerful expansionary monetary and fiscal policies, and stimulus plans aimed at preventing the vicious economic cycle due to reduced total consumption, and not have hesitated to activate deregulation to revive the overall market.  Moreover, in order to calm climbing social unrest, the implementation of generous welfare policies--even populist policies--would have been unavoidable….  As a result, numerous national fiscal statuses would have continued to get worse, pushing weaker national economies toward default.
Even if the above is a hypothetical scenario on the basis of "what if,” it looks uncannily similar to the situation that the world economy including the US has experienced over the last several years.

We have developed numerous information-based private supply chain networks in the market over the past 20 to 30 years of the Modern Information Age through the use of advanced information technology.  As a matter of course, most of these networks have been developed mainly by large companies and are used only for their own benefit.

Then, how about the information-based public supply chain infrastructure?  Even if it is hard to believe, no such public infrastructure has been developed at all--not a single one in the whole world!

How could this happen?  Unfortunately, a situation analogous to that imagined world without public bridges has actually happened in the supply chain process of the Modern Information Age.  The real problem is that no one (except me) has recognized this until now. 

Unfortunately, without being aware of it, we have made a simple mistake in developing numerous supply chain systems based on information technology over the last 20 to 30 years.  As a result, information technology has been used in the wrong way in developing those supply chain systems. Thereafter, no competing information-based public supply chain infrastructure could have developed in the market.

What "mistake"?  Even if some technological expertise is required, it is a fact that one of the most important factors in real (or physical) transactions, that is, overcoming the restrictions of time and space, was ignored.  Therefore, “efficiency increase” developed as the narrow focus of the real supply chain process, and “the construction of fair market conditions” has proven almost impossible. In simple words, unfair market conditions grew organically in the private supply chain process of the real market.  In this situation, the introduction of a system like the information-based public supply chain infrastructure was never considered at all.

Even if it was a simple mistake, when compared with the economic results, it could be one of the most expensive mistakes that human beings have ever made in modern commercial history.

However necessary a public infrastructure seems for markets or societies, it cannot be said that the status quo will be destroyed immediately. Nevertheless, it will also be very difficult—realistically speaking, impossible--to improve the status quo, no matter what we do.  Supply-side inefficiencies will always attract the critical eye of the large corporate supply chain manager, whose solutions will cost jobs, thereby reducing demand.  Onshoring programs will fail, because they seek to make an effect become a cause.  This is how the status quo will gradually worsen until it becomes intolerable, and then it will crash all at once.  Considering the current rapidly deteriorating global economic and social situations, the end of the line seems very near.  

If so, what urgent actions should governments in the world, especially the US Federal Government, take? It stands to reason that they should develop the information-based public supply chain infrastructure as soon as possible and implement it quickly and effectively in their own markets.  That is, governments should initiate such actions as soon as possible to overcome this grave situation, with the cooperation of the private sector and academia before it is too late.

I believe that the level of our future national competitiveness and prosperity will depend on who fastest develops the appropriate, effective information-based public supply chain infrastructure in its market in the next five years of the Modern Information Age.

The choice is in your hands, to have prosperity or to have decline.

About the Author
Ho-Hyung (Luke) Lee ( is by training a lawyer, an international businessman and entrepreneur – and an inventor. He is currently the CEO of UBIMS, Inc. ("Ubiquitous Market System"). UBIMS, Inc. is a patent-pending startup with a new business method and system for the information-based public supply chain infrastructure.

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