So what is the crux of the problem:

• Capitalism promotes migration of jobs and work to the cheapest possible location;
• Probably ethically right since it rewards the group that is the most desperate, but is unfair to the group that has a net outward migration of jobs
• Results in massive job losses and desperation in one location while net influx of jobs and prosperity in another
• Retraining and a repurpose of labor at source location is usually not attempted or isn’t very successful
• The group losing the jobs is politically powerless to resist or prevent it

Let’s do a simple SWOT analysis of all the players involved :

Company:

Strength:  Capital; Agile Business and Production Processes

Weakness: Bad Political Reputation, and hence opponents try to fight this practice using protectionist/nationalist policies

Opportunity:  Find the optimal production cost to maximize profits and share holder returns

Threat:  Competition achieves a lower per unit cost of production and thus  loss of market share

Investors & Share Holders:

Strength: Capital

Weakness: Run towards the best returns, sometimes very short term focussed rather than long; i.e. support a steep discount rate

Opportunity:  Deploy capital that can be most productively used; Employ private equity/venture capital investment constructs to lock in capital to generate superior returns in the medium term instead of meagre short term gains.

Threat: Other investors generating better returns

Workers at the outbound location:

Strength: Political say at the local level

Weakness: No Capital to invest

Opportunity: Human capital that is free

Threat: A lower cost location comes up and takes on the production and jobs from them; Not trained in anything other than what they are currently doing

Workers at the inbound location:

Strength: Political say at the local level

Weakness: No Capital to invest

Opportunity: Human capital that is free

Threat: Another lower cost location comes up and takes over the production and jobs from them; May not have any training

Given the incentives, a capitalistic society gravitates towards specializing and optimizing labor, capital and production usually towards the detriment of its own workers but in favor of its investor class.

What I propose:

Change the game to utilize the strengths for each player – investors to provide capital to competitive projects, localities to use their resources to set up the right competitive projects using local resources and labor, executors that have a proven track record to implement the projects in a transparent and efficient manner, operators to run the venture profitably and an infrastructure exchange that removes friction from investment, project execution, operation and the ability to move investments in and out of these projects that compete for being a better investment.

Infrastructure Exchange Market

What?

An open market place for micro/ project level sponsorship.

Starts with a contractual agreement between sponsors/implementors/operators on initial project parameters

Proposal put up for bit to the investors – micro credit – or ordinary shares available to folks with a well defined investment profile

Types of projects accepted:

– wind farms

– solar farms

– energy storage pods

– efficiency projects – reduce energy consumption run rates

– later could move to any infrastructure project – build roads / bridges etc.

Why?

– a way to fund infrastructure from goal minded folks that believe in sponsoring a projects goals while making sure of decent returns on investments

Goals can be

– renewable energy

– create jobs

– reduce pollution

– build infrastructure

– competition drives performance

– easy in and out through trading in the infrastructure bank exchange

How?

– sponsors propose projects on exchange

– investors buy in interest; when project fully invested in – kicks off

– implementors run with it and complete execution

– hand over to operators that run and produce steady annuities

– project shares trade on exchange in terms of how well they are doing and can be traded

– all activities have a std set of metrics that are measured and published for full transparency

– create a path for projects to fail and be winded down

– create market on which mature projects performing as annuities can be traded and folks can move in and out of the projects

– should you create it as a bond structure – like infrastructure bonds backed by local/state government?

When?

– create exchange with functionality for each participant

– get investors to fund operations

– sign up sponsors / implementors / operators

Where?

– where there is the greatest need

– local governments struggling with creating jobs but have local resources that can be leveraged

– Examples of local resources

– Land

– Wind power

– Solar power

– Hydro power

Who?

Initial investors – those that fund the exchange

Implementors – those that set up the projects initially

Operators – those that run and maintain the projects – create local jobs;

Investors – who fund the projects

Sponsors – local governments/state that can provide resources (e.g. Land lease/ rent etc)

 

An exchange like the one described above will align the incentives between the workers and the investors to create a win-win situation for both….

We are currently working on a prototype for the platform….watch this space…