Tuesday, December 18, 2012

True Economic Value


Dear friends,

It has been a very tiring months for me, as we usually had during the last two months of the year. Nevertheless, I think I need to write again as to sharpen my thoughts. Sometimes when we are a bit busy doing our operational routine work, the mind can be a bit blunt.

Today, I would like to write about the value of manufacturing activities to our society. The true economic value is created when there are tangible things being produced. Value is always attached with tangible products. Only recently we’re being told that value is also created by services rendered. As I’ve understand it, service do not create value, it just enhance the existing value. The true initial economic value is created through engineering process, whether mechanically or etcetera (but of course, a physical being has their own value albeit a lesser one). The service we attached to it, can further enhanced the value.

I read an article saying that the U.S started to have structural economic problems when they started to outsourced their manufacturing activities elsewhere and truly focus on services sector. In the end, there nothing left for America, except for a clever advertising and financial services, among others. These advertising and financial services actually do not have any tangible product to back their value creation activities. They create value out of nothing, actually. When the financial sector encountered problems, the economy does not have a strong backup from the manufacturing activities that truly hold a value with their tangible products. The situation in Germany is quite different. Germany, on the other hand, is fully equipped with a strong manufacturing sector to withstand turmoil in the financial sector. This is because; the true value is kept within the manufacturing sector.

Understanding this principle, it is very important for the country to produce more and more technical people. We need more graduates with technical background to be churned out from our education system. The importance of these technical graduates is being manifest by the success of these graduates in the job market.

We need more technical people and less social science graduates. We need more engineering graduates and less MBA holders. J

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