The Economics of Collaboration – the Dealer Network

Amongst the things making news today is the hook-up between Italian carmaker Fiat, and struggling, if not near-dead, American icon, Chrysler. The deal, if approved, would give the Italian auto maker a 35 per cent stake in Chrysler. Given that some believe that Chrysler has a book value near zero, one might question how much that stake is actually worth.

But the actual deal between the two is less about cash then it is about technology exchange and access to their respective dealerships. Fiat, for example, is keen to bring its line of compact cars to the US, and is willing to trade access to its successful small-car platforms and fuel-efficient technologies to do so. Seems like a high price to pay for real estate, non? Read the rest of this entry »


(re)Defining the social contract?

Jean-Jacques Rousseau, 18th century French philosopher and one of the fathers of the Enlightenment and industrial revolution once wrote, “L’homme est né libre, et partout il est dans les fers.” Man is born free, and everywhere he is in chains.  


Rousseau believed that a true citizen was one that put aside his or her private interests in reverence to the will of society. Man was, in essence, chained to his fellow man. And so developed society through this period of moral and social enlightenment.


Such societies, however, were by and large ethnically, racially and linguistically homogeneous. The following two centuries saw further dissolution of the remaining empires in Europe, and outside of our more recent moves towards integration, saw a steady return to small, individualistic nation states which used such social and cultural cohesion to develop strong national identities.


But how does this concept of a social contract evolve in countries where the composition of the population, notably its ethnic, racial, religious and linguistic participants begins to become more heterogeneous. Do the ties that helped create national identity and social cohesion in its former form become weaker in this multi-cultural model?


Or, given our insistence on unfettered freedoms, is a social contract a realistic possibility in today’s global world? Rousseau feared chaos would takeover should man operate without one but perhaps times have change. Read the rest of this entry »