Several weeks ago I saw a TV report about Nairobi, Kenya. It focused for a while on their taxis and how it's a fashion in the highly competitive (and dirt cheap) Nairobi taxi business to install flat screen TV sets for the passengers.
Indeed, these poor Africans have apparently flat screen TV sets in their taxis!
How could that be? Kenyans are extremely poor in comparison to Germans and they pay maybe a tenth as much per kilometer in a taxi.
The reason (besides their fierce competition) lies apparently in poor country economics: They basically only pay for a TV set because the installation is done with a work force that's extremely cheap.
Let's say such a set with screen and receiver costs as hardware 200 €.
The whole taxi upgrade would then probably cost 210-220 € in Nairobi.
I would certainly not be able to get such an custom upgrade for my car for mere 220 €. The work hours+taxes+profit would cost me certainly more than the hardware itself - especially as I would want to see it done nicely, well-fitting into the seat's back.
In other words; their problem is the price of hardware, my problem is the price of work hours. That's also why DIY is so popular in Western countries.
An Euro has different values in different countries. It's everywhere the same as 100 cents, but it's not even remotely the same in purchasing power.
That's why direct, exchange rate-based comparisons of national economies are pointless. We need to look at purchasing power parity-based values.
Let's use the CIA World Factbook to illustrate that for the exchange rate and PP or the USD;
The entry for Kenya tells us:
The difference is obvious. We need to use PPP when we compare countries - including comparisons of (anyway questionable) military budget data.
Such a vastly different relative scarcity (poor countries can easily afford manpower, especially unskilled and quickly trained manpower but they cannot easily afford import goods) has a strong influence on how things are done.
Indeed, these poor Africans have apparently flat screen TV sets in their taxis!
How could that be? Kenyans are extremely poor in comparison to Germans and they pay maybe a tenth as much per kilometer in a taxi.
The reason (besides their fierce competition) lies apparently in poor country economics: They basically only pay for a TV set because the installation is done with a work force that's extremely cheap.
Let's say such a set with screen and receiver costs as hardware 200 €.
The whole taxi upgrade would then probably cost 210-220 € in Nairobi.
I would certainly not be able to get such an custom upgrade for my car for mere 220 €. The work hours+taxes+profit would cost me certainly more than the hardware itself - especially as I would want to see it done nicely, well-fitting into the seat's back.
In other words; their problem is the price of hardware, my problem is the price of work hours. That's also why DIY is so popular in Western countries.
An Euro has different values in different countries. It's everywhere the same as 100 cents, but it's not even remotely the same in purchasing power.
That's why direct, exchange rate-based comparisons of national economies are pointless. We need to look at purchasing power parity-based values.
Let's use the CIA World Factbook to illustrate that for the exchange rate and PP or the USD;
The entry for Kenya tells us:
GDP (official exchange rate): $31.42 billion (2008 est.)and
GDP (purchasing power parity): $61.83 billion (2008 est.)
The difference is obvious. We need to use PPP when we compare countries - including comparisons of (anyway questionable) military budget data.
Such a vastly different relative scarcity (poor countries can easily afford manpower, especially unskilled and quickly trained manpower but they cannot easily afford import goods) has a strong influence on how things are done.
Back to military affairs; poor countries have a vastly different military, a much more manpower-intensive (para-)military. This different is strength and weakness. Their superiority is obvious in tasks that require very much manpower, while their ability to withstand a rich country's air or armor attacks is marginal in most terrains.
We should understand that their very different ways are not always inferior even though they don't come close to us in most of OUR performance criteria. 20th century military history - especially post-1945 - should make this insight self-evident.
They have different scarcities and therefore a different optimal approach to build up military power. It's no coincidence that the PR China began to turn its armed services from quantity-oriented to quality-oriented at a time when wages rose strongly in China.
I am quite concerned about this manpower problem. It's really expensive, maybe in some future conflict too expensive. We've seen the terrible effect of insufficient military training of men sent to battle in both World Wars. Manpower becomes suddenly cheap in total war mobilization, but the relatively high costs and thus relatively short or missing military training prior to the war was hurting all armies.
Conscription is a quite primitive way out of the problem. It fakes a solution by using coercion. Nevertheless, the approach of short training to build and keep a strong, militarily trained manpower reserve was successful, effective - and affordable.
My preferred approach is different and would (if it works) get rid of the disadvantages of coercion.
Our shrinking military manpower and our seemingly ever-diminishing share of manpower-intensive infantry is in my opinion a serious problem in our military forces' development.
It's based on our 'rich' economies that use automation to achieve greater wealth than manual work alone could ever achieve. The same industry raises the wage/salary level so high that military manpower becomes ever less affordable, especially as it equals a loss of productive manpower in the economy.
Our focus and craze about "force multipliers" is a reaction to our specific economic situation and not necessarily a universal and ultimate military wisdom.
We need smart personnel economic strategies to keep our forces well-balanced instead of overly automated and specialized.
We should understand that their very different ways are not always inferior even though they don't come close to us in most of OUR performance criteria. 20th century military history - especially post-1945 - should make this insight self-evident.
They have different scarcities and therefore a different optimal approach to build up military power. It's no coincidence that the PR China began to turn its armed services from quantity-oriented to quality-oriented at a time when wages rose strongly in China.
I am quite concerned about this manpower problem. It's really expensive, maybe in some future conflict too expensive. We've seen the terrible effect of insufficient military training of men sent to battle in both World Wars. Manpower becomes suddenly cheap in total war mobilization, but the relatively high costs and thus relatively short or missing military training prior to the war was hurting all armies.
Conscription is a quite primitive way out of the problem. It fakes a solution by using coercion. Nevertheless, the approach of short training to build and keep a strong, militarily trained manpower reserve was successful, effective - and affordable.
My preferred approach is different and would (if it works) get rid of the disadvantages of coercion.
Our shrinking military manpower and our seemingly ever-diminishing share of manpower-intensive infantry is in my opinion a serious problem in our military forces' development.
It's based on our 'rich' economies that use automation to achieve greater wealth than manual work alone could ever achieve. The same industry raises the wage/salary level so high that military manpower becomes ever less affordable, especially as it equals a loss of productive manpower in the economy.
Our focus and craze about "force multipliers" is a reaction to our specific economic situation and not necessarily a universal and ultimate military wisdom.
We need smart personnel economic strategies to keep our forces well-balanced instead of overly automated and specialized.
Sven Ortmann
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