Piet Coetzer reviews Jeff Jarvis’s book, What Would Google Do?, in which he sets out to re-engineer the remarkable success story of the Internet economy and applies it to other companies and industries.

Taking the title of his book from devoted Christians’ WWJD (“What Would Jesus Do?”) armbands, Jeff Jarvis from the outset shows a bias that turns this book into a work more of glorification than one of clinical dissection.

In fact, apart from leaving the reader slightly uncomfortable with the glib play on what for others is the subject of deeply held religious convictions, the book displays a surprisingly uncritical approach from a seasoned journalist, academic and consultant widely held in high esteem.

But having said that, it does not take away from the fact that every day over 64 million people use Google in more than 100 languages, making it one of the most remarkable organisations of modern times.

Google and similar/generically related organisations like Facebook and Twitter have had a huge impact on modern society, the way we do business, market, interact as communities and individuals, how we learn/study, do research, collect and distribute information and knowledge.

To come to grips with this new world and what makes it tick, is crucial for any business, organisation or professional wanting to continue functioning effectively and remain at the top.

Jarvis’s book does make an invaluable contribution. Although the roll-over-and-play-dead approach to the Google way of doing things as advocated by Jarvis is not recommended at all, it would be wise to take note of the challenges the open world poses for interaction with customers and the growing importance of niche markets vis-à-vis the mass market.

Maybe the most important lesson from the Google gospel is that the days of control by large companies are over. There has been an important power shift to the customer.

If you are a critical reader willing to read past the multitude of oversimplifications and really wants to come to grips with the world of Web 2.0 and its unimaginably powerful search engines, multitudes of networks and links, open social networks and collaborations – then WWGD is well worth a read.

“What Would Google Do?” by Jeff Jarvis (pictured below) is published by Collins Business, New York; ISBN 978-O-06-170971-5. Priced from R277.

Coming to grips with the post-Google world

What went wrong?

The market economy failed on its own terms

Mark Fortuin reviews Graham Turner’s topical book, The Credit Crunch with its special preface for the South African edition.

The Credit Crunch by Graham Turner is a critique of government-created asset bubbles and analyses how the market economy has failed on its own terms.

The author states that the roots of the recession lie in governments encouraging globalisation and companies relocating production in search of cheaper labour in destinations such as China and India. Central banks were forced to keep interest rates low to stimulate growth, which led to increasing debt. Rising house prices were relied upon as a reflationary measure. Eventually the credit bubble burst.

According to Turner, the swing in the relative strength of capital versus labour lies at the heart of the current financial crisis. A rebalancing of worker and environmental rights versus the dominance of corporations is suggested.

This will increase the ongoing battle for worker rights in the developing world, China in particular. Based on Keynesian economics, Turner reasons that there has been a failure to learn lessons from the 1930s and the near two-decade recession in Japan which came about as a result of a similar crisis in 1990.

Having worked in Japan in the financial services sector he has first-hand knowledge of the collapse.

The book traces the historical roots of the financial crisis, going back to post-World War 2, the international monetary system, indebtedness in the United States, trade deficits, the Vietnam War and the growth of Reaganomics and Thatcherism, among others.

Turner exposes Gordon Brown’s “10 years of GDP growth” and shows how the British economy had personal and private debt soaring at a rate higher than any other industrialised economy over the past decade. We have always feared inflation; what we ought to fear is deflation and “debt deflation”, he says.

As indicated, this edition comes with a South African introduction. For years, South Africa boomed, like so many other emerging economies. Then suddenly capital markets froze and South Africa tumbled into recession, helped on by the rapid increase in borrowing of recent years, financing ostentatious consumption.

Globalisation was meant to provide a leg-up for rapidly industrialising economies.

Free trade would provide access to more lucrative markets, a chance for exports to grow, creating jobs, and a faster rise in living standards for the many, not the few.

In reality globalisation has created credit bubbles across much of the developing world. The surge in borrowing was the fuel for South Africa’s boom, not rising exports.

As debt levels soared, so too did imports. Inevitably, the trade deficit mushroomed.

In 2008 South Africa ran a trade deficit of close to 8% of GDP, nearly as much as Thailand’s deficit in 1996, which triggered the infamous Asian crisis. Net capital inflows reached a mammoth 7.8% of GDP in 2007 and continued rising during early 2008.

Then the music stopped. The exodus of speculative capital showed that South Africa was even more vulnerable than most emerging economies. The rand tumbled, and share prices fell by nearly two-thirds.

Most of the gains witnessed since the credit bubble began were wiped out in a matter of weeks. South Africa’s banks may have been tightly regulated and the government may run a prudent budget, but this cannot protect a country when the foreign investors, so critical to South Africa’s private borrowing, take fright.

With the West sinking deeper into recession, it will be virtually impossible for South Africa to export its way out of trouble.

Its main trading partners – Japan, the US, United Kingdom and Germany – are set for their worst economic declines in the post-war era.

Most of South Africa’s exports are indelibly tied to the commodity and mining cycle. Its top manufacturing industry – motor vehicles – is blighted by an excess of global capacity.

The government and central bank cannot insulate the economy from the ravages of global recession now that it is so tied in through “free trade”.

South Africa has to create a more durable economic expansion – one that benefits a greater proportion of its citizens and focuses on wage gains across the board, rather than asset bubbles that benefit the few.

In the end, Graham Turner shows the inability of the global market economy to efficiently allocate and match the world’s resources to the needs of its people over the long term.

This book is essential reading for anyone trying to make sense of what has gone wrong with the economy.

“The Credit Crunch: Housing Bubbles, Globalisation and Worldwide Economic Crisis” (with a South African introduction); Published by Jacana Media (2009), Johannesburg; ISBN 978-1-7709-687-5. Priced from R165