Fukushima nuclear meltdown - one year later

GLOBAL TRENDS By MARTIN KHOR
 
As the world marks the first anniversary of Japan’s triple tragedy, lessons are still being drawn from the Fukushima nuclear accident and the dangers of nuclear power plants.

 IT’S been a full year since Japan’s triple disaster of earthquake, tsunami and nuclear meltdown, and the reverberations are still being felt.

The tsunami on March 11, 2011, caused around 19,000 deaths (16,000 known dead, 3,000 missing) and 320,000 were made homeless.

The nuclear disaster alone created 100,000 nuclear evacuees.

The lesson, only partially learnt in Japan itself and hardly learnt in other countries, is that natural disasters can come in many unexpected forms and governments must put aside considerable resources and facilities to prepare for and manage them.



The lesson usually becomes obvious when a disaster occurs.

After that, a pledge is made to be better prepared and much of that is not implemented until the next disaster and the cycle begins again.

While the tsunami caused the most immediate damage, it was the nuclear incidents at the Fukushima power plant that were the most shocking and may have the most long-term repercussions.

The nuclear disaster blew away a lot of myths.We now know, again, that nuclear power plants are not safe.

The claim by Tepco – the Japanese company operating the Fukushima plant – that the reactors were fail-safe and could withstand earthquakes, was proven to be wrong.

The ability of the regulatory autho­rities to monitor and check for risks and ensure safety was near absent.
An independent commission, which was set up by the Rebuild Japan Initiative Foundation to investigate the nuclear incident, shows how close Japan came to a catastrophe.

Its chairman Yoichi Funabashi, in an article in last Saturday’s Financial Times, said that Japan was on the edge of an “existential crisis”.

As the tsunami knocked out the Fukushima plant’s cooling systems, the Tepco president indicated his company’s intention to abandon the plant and evacuate its workers.

Japanese Prime Minister Naoto Kan personally intervened, ordering the company not to abandon ship and form a “death squad” to continue the battle and inject water into the reactor vessels.

A worst case scenario, prepared for the prime minister by the Japan Atomic Energy Commission, envisioned a hydrogen explosion, a succession of meltdowns and such extensive radiation that the whole of Tokyo would have to be evacuated.

Funabashi said: “The truth is that the imagined ‘worst-case scenario’ was closer than anyone would wish to admit; but for the direction of the wind (towards the Pacific, not inland, in the four days after the earthquake); but for the manner in which the gate separating the reactor-well and the spent-fuel pool in Unit 4 broke (presumably facilitating the transfusion of water into the pool). Luck was undeniably on our side.”

Funabashi’s commission found that the nuclear industry had become ensnared in its twisted myth of “absolute safety”, propagated by interest groups seeking to gain broad acceptance of nuclear power.

He also found that “Japan’s nuclear safety regulatory regime was phoney. Regulators pretended to regulate; utilities pretended to be regulated. In reality, the latter were far more powerful in expertise and clout”. He offers two lessons to be learnt.

First, is the need to overcome the myth of “absolute safety”, shatter the taboo that surrounds the concept of risks in the nuclear energy business and the need to prepare for the unthinkable and unanticipated.

Second, is the need for an independent regulatory body.

A major fallout from the Fuku­shima accident is the blow it has dealt to the nuclear industry.

It highlighted the danger a country faces when something goes wrong.

Of its 52 nuclear plants, Japan has now shut down 50 plants. The remaining two may also be shut down next month.

Although the government may try to reopen some of them, the public revulsion against nuclear plants could mean that their days are numbered.

There has also been a global backlash, with Germany, Italy, Belgium and Switzerland declaring that they will phase out their nuclear plants.

The situation in Asia, however, is mixed. China has suspended the building of new nuclear plants pending changes in safety standards.
India, Vietnam and Korea are going ahead with their nuclear power programmes.

“If more nuclear power plants are built in developing countries with little experience of operating a reactor, or bordering a region where terrorism is a concern, or without sufficient financial resources to import state of the art technology, then the chance of a major nuclear accident hitting the developing world will loom large in the coming decades,” said Kevin Tu, senior associate at the Carnegie Endowment for International Peace.

Meanwhile The Economist magazine, in its latest cover story, “Nuclear Energy: The dream that failed” is pessimistic about the future of the nuclear industry.

Nuclear plants are costly to build and operate. British studies put the overnight cost of new power plants at US$2,233 (RM6,720) for every kilowatt of capacity in 2004 and US$3,000 (RM9,028)/kw in 2008, according to The Economist.

Capacity fired by gas turbines cost less than one-fifth of that. The cost of renewable energy (wind and solar, in particular) is, however, getting cheaper every year.

Perhaps, the most intractable problem is nuclear waste. As The Economist noted, building a nuclear plant that can last 100 years is one thing, but creating waste that will be dangerous for 100 times as long is another.

So far, countries have failed to create a long-term repository for nuclear waste.

As the public has become intensely more aware of the dangers of radiation, the resistance to locating nuclear plants in their neighbourhood has grown fiercer.

No doubt the Fukushima meltdowns and its aftermath have contributed to increased awareness and to the bad name that nuclear power has acquired.

P/S:  We sympathize with Japan's sufferings from earthquake, tsunami caused by nature that resulted in Fukushima nuclear meltdown a year ago.

How Japan feels when we remember the victims of its Nanjing Massacre committed and occupied by Japanese troops on Dec 13, 1937, China's former capital city suffered a six-week massacre in which more than  300,000 Chinese were Killed, 20,000 Women Raped ... ?


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Challenging the State-Capitalism?

Clash of capitalist systems

GLOBAL TRENDS  By MARTIN KHOR

The Year of the Dragon may symbolise the struggle for prosperity for some, but others may use this year to challenge what they call state-capitalism being practised by developing countries, especially in Asia.



IT’S the first day of the Year of the Dragon. Like others around the world, Malaysians hope it will be an auspicious year.

Certainly it will be an interesting one. Perhaps that’s the only certainty about this coming year of uncertainty.

The new Dragon Year will usher in even more intense debate about the role and the rise of China and of other “emerging economies”.

As the Western countries face gloomy economic prospects, some of their political elite and intellectuals seem to be seized by fears that some developing countries, especially China, will be steaming ahead.

Used to centuries of global economic dominance, these advanced countries are fearful that their leadership will be challenged and even overturned.

This may be the reason for the obsession about China. These days, there are new books almost every month about the rise of China. Some deal with its high growth and prospects or with its complex political developments.

Quite a number, like the book Death by China: Confronting the Dragon, are of the view that China is destroying not only the American economy but the whole world and its environment.

But the fears go beyond China, and incorporate other emerging countries as well, as seen in the latest issue of The Economist, with its cover stories on “The rise of state capitalism: the emerging world’s new model.”



The magazine describes the 88-storey Petronas Towers soaring above Kuala Lumpur, as well as the China Central TV building in Beijing and the VTB bank office in Moscow, as monuments to the new hybrid corporation – backed by the state but behaving like private-sector multinationals.

The Economist’s editorial admits that for emerging countries wanting to make their mark on the world, state capitalism has an obvious appeal, giving them the clout that private-sector companies would take years to build.

But its dangers outweigh its advantages, says the magazine. For their own sake and in the interests of world trade, the huge holdings should be unwound and handed over to private investors.

The Economist however also admits that this hybrid form of “state-directed capitalism” company is not new, and cites the East India Company.

This was the huge conglomeration that took over many Asian countries’ economies, while the English government made use of its gunboats and colonial rule to back up the EIC but other British companies.

The magazine also cites the United States after its war of independence, Germany in the 1870s, and Japan and South Korea in the 1950s as examples of rising powers using the state to kick-start growth.

There is thus recognition that the rise of today’s advanced countries was based on the state’s strong support in their companies’ emergence.

These companies have dominated the global economy for decades and in some cases centuries, backed up not only by subsidies, cheap credit and other policy measures but also by their governments’ political and military force.

In the past three decades, most developing countries have been told, through IMF-World Bank structural adjustment programmes, to give up the role of the state to direct their economies and instead rely entirely on the private sector.

These policies did not succeed as the domestic private sector is weak or even non-existent in many countries. In poor countries, foreign companies were not interested in coming in except in the mining or plantation sectors.

However, several other developing countries, mostly in Asia, took on a different model. Their governments believed in playing an important or even dominant role in the development process.

At first these governments owned companies that they ran like government departments, and this was not efficient. This model was changed in some countries to one where the state can own or partly own companies that are then run on a commercial basis. The state can also assist private companies to grow.

Government investment holding institutions like Khazanah and PNB in Malaysia or Temasek in Singapore have been set up as crucial components of this framework.

The increasing criticism by Western intellectuals and politicians of “state capitalism” is not confined to academic observations.

The US administration and Congress are contemplating legislation and action to place extra tariffs on Chinese products not only on anti-dumping grounds but also that they have been subsidised and that China is not a market economy.

The Congress is also discussing whether to slap tariffs on Chinese products on the ground that China’s currency is manipulated and under-valued.

While the focus now may be on China, other developing countries may be faced with the same actions based on the same reasoning, that these countries are unfairly helping their companies through policy measures that represent state-capitalism and industrial policy.

Moreover, the US and Europe and now negotiating free trade agreements with developing countries that contain clauses or even chapters that seek to prohibit or restrict the practices of government-linked companies, or the provision of subsidies and preferences by government to local companies.

Korean economist Ha Joon-chang wrote a famous book Kicking Away the Ladder to describe how developed countries made use of policies that made them rich, and now want to prevent developing countries from doing the same and thus are seeking to prohibit these same policies.

The clash of capitalist systems and the clash between developed and developing countries over what policies are legitimate and which should be banned will intensify in this Year of the Dragon.

Related articles

• The Rise of State Capitalism. (isellerfinance.wordpress.com)

Learning From The Masters of Management

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Dan Schawbel, Contributor

Adrian Wooldridge

I recently spoke with Adrian Wooldridge, who is the author of Masters of Management: How the Business Gurus and Their Ideas Have Changed the World – for Better and for Worse. Wooldridge is the management editor and “Schumpeter” columnist of The Economist. He was educated at Balliol College, Oxford, and All Souls College, Oxford, where he held a Prize Fellowship. He was formerly The Economist’s Washington bureau chief and “Lexington” columnist. In this interview, he talks about how the field of management has changed over the past decade, the difference between management and leadership, and more.

How has the field of management changed in the past decade?

Management has been revolutionised by two great changes over the past decade. The first is the rise of the internet. A decade ago the internet was still a fancy reference tool and Google was still a start up. Today the internet is reorganising the world. The internet is not only spawning an entire ecosystem of new businesses. It is reshaping the way that even the most conservative companies organise their business.

The second is the rise of emerging markets. A decade ago we still referred (often pityingly) to the underdeveloped world. Today we regard the emerging world as a hotbed of growth and innovation. Investment houses are pouring money into the BRICs even as they despair about stagnating Europe. Multinationals are ‘offshoring’ research and development as well as manufacturing to India and Brazil.

Are all managers leaders? What’s the difference between management and leadership?

No: not all managers are leaders (and not all leaders are managers: some great leaders such as Winston Churchill have been hopeless everyday managers).

The great distinction between the two lies in the choice of direction: leadership is about choosing where to go while management is about choosing how to get there. Jack Welch was a great business leader because he changed General Electric’s strategic direction with his emphasis on being number one or number two in a business or getting out. A secondary distinction lies in inspiration: the best leaders not only set a direction but inspire their followers to strain every sinew in reaching their new destination. There is nothing second-rate about management: great leaders mean nothing without the nuts-and-bolts men and women who put their visions into practice and make sure that the trains run on time. Incremental changes can sometimes add up to big changes. But given the uncertainty of the current business world—the sudden gusts of change that blow from unexpected directions—leadership is more important now than it was say fifty years ago when ‘organisation man’ ruled the roost.



Can you name a few management gurus that you’ve been observing and explain how they have helped make change?

These astonishing changes of the past decade—the world remade by the internet and turned upside down by emerging markets—have changed the pecking order among business thinkers. You are probably more likely to find a mind-changing article in Wired than in the Harvard Business Review or from an Indian than from an American-first mid-westerner.

The business gurus that I pay most attention to come in two guises: geeks or third-world firstists. Christopher Anderson made waves with his book on The Long Tale (which argued that the world of niches is replacing the world of mass markets). The book has had a huge influence not only with high-tech companies but with other organisations (retailers for example) that are seeing their markets redefined by the internet.

I suspect that his work-in-progress on 3-D printing will also have a big influence (though there is a lot of work in this area). V.G. Govindirajan of Tuck Business Shool has produced exemplary work on ‘frugal innovation’ (the idea that the most interesting form of innovation in the emerging world is about radically reducing costs rather than adding more bells and whistles. This has had a huge impact on General Electric which is producing a new generation of ‘frugal’ medical products. John Hagel and John Seely Brown have produced equally fasinating work on how these ‘frugal products’ will send a wave of disruption through rich countries, as traditional producers are forced to cut costs dramatically or see their markets eaten up by emerging-market giants.

What will the new management gurus of the future look like?

The management gurus of the future will look more like the class of 2010 at CEIBS or the Indian Business School than the class of 2010 at Harvard Business School or Wharton. They will also look more like the class of 2010 at the Stanford School of Engineering than the class of 2010 at the Stanford Business School: white faces will give way to ‘faces of colour’ and classic business school types will give way to engineers and other sorts of geeks.

Masters of Management

For the past century business thinking has been dominated by the United States. The bulk of the business cases have been about American companies. The bulk of the tools and techniques have been dreampt up by American managers. The driving assumption has been that if you don’t measure up to American standards—about how you organise your company or measure your performance—you are doing something wrong. That model was shaken by the rise of Japan but reasserted itself in the 1990s. It is now being shaken up even more thoroughly by the rise of a huge variety of emerging world companies. The business gurus of the future will come from emerging world—not just from India (which has cornered the market for the moment) but also from China, Indonesia, Turkey and Nigeria.

For the past century technology gurus have played second fiddle to strategy gurus (or even marketing gurus). Peter Drucker was less interested in technology than in the sociology of organisations. Tom Peters made little use of his training as an engineer in his voluminous writing. Technology is now at the heart of business thinking rather than an optional add on. Technology gurus are rewiring our thinking about organisations. And gurus from other disciplines face a stark choice: think deeply about what is happening in the world of the internet or face irrelevance.

Dan Schawbel, recognized as a “personal branding guru” by The New York Times, is the Managing Partner of Millennial Branding, LLC, a full-service personal branding agency. Dan is the author of Me 2.0: 4 Steps to Building Your Future, the founder of the Personal Branding Blog, and publisher of Personal Branding Magazine. He has worked with companies such as Google, Time Warner, Symantec, IBM, EMC, and CitiGroup.

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