Musings

amit October 12th, 2008

Let me start by saying I believe in laissez-faire capitalism and freedom as defined by libertarians. It pains me to see “Wall Street greed” being the public discourse of the day. It pains me to see a CEO being questioned if it was “fair” if he earned what he earned. It pains me to see the very concept of pursuit of self interest (even greed if you must call it that), being challenged. Not here, not in America.

And as we shift through the causes and explore alternatives to the financial setback. Let’s not ignore the crisis of credibility in professional management. Most managers are vanguard of resources that they do not themselves own, and one hopes their incentives are aligned to pursue the best interests of their shareholders, employees, and customers in that order. However, that by itself has been proven to be insufficient. I do believe there is a crisis of leadership which needs to be addressed by those in professional management. If we don’t do something about it soon, the day is not far when the society will lose faith. We will be bound by regulation and adjudicated by courts.

I was heartened to see an article (”It’s time to make management a true profession”) in Oct 2008 issue of HBR that calls towards professional accreditation for managers, something along the lines of the bar for the lawyers, or a license for those in medicine. That is but one idea that could help, but we need to think more critically to protect our collective reputation. It’s no longer just a matter of ethics, it’s bad for business. I appeal to your self interest.

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amit October 6th, 2008

As we plan the future of this nation, I implore you to simply listen to its great leaders and thinkers. Milton Friedman (July 31, 1912 – November 16, 2006) was an American Nobel Laureate economist and public intellectual. In this interview held years ago Friedman teaches us lessons we are yet to learn.

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amit October 5th, 2008

At a time like this, when there is a financial crisis, Wall Street is reeling, and some risky investments have turned sour, the LEFT is on a march to save America from the marauding capitalists. In the words of Nancy Pelosi,”… failed economic policies — policies built on budgetary recklessness, on an anything-goes mentality, with no regulation, no supervision, and no discipline in the system”. The LEFT wants to supervise, to instill discipline in the market, and to enact regulation to save us. They want to save us from “gambling” with our future.

Here is the problem with the LEFT saving us. Investment is the only path to growth, return on all investments happens in the future, future is uncertain, uncertainty is risk. Thus by definition reducing risk implies reducing investment which in turn implies curtailing growth. One could question where is the harm in slow growth or even just sustaining our current living standard. What is the rush they say?

To one who has more than a million in the bank, owns a mansion, and has a BMW to drive, perhaps little investment-low growth is fine. It does not open the door to the American dream for the rest of us. Give us the choice to take our own risk and reap our own rewards. Let the invisible hand of Adam Smith discipline our behavior, don’t curtail us by policy. But what about the society at large the LEFT asks?

Well, the society at large does better. If the investor succeeds his wealth is not only taxed, it fuels further growth by creating more jobs and pulling others along. If the investor fails he does so at his own peril; the society does little to save the investor. The LEFT says that’s trickledown economics, and according to them it does not work. So what is their alternative for the society at large I ask?

Their solution is income redistribution through bigger government. If we cannot grow, the only way we can help those who are behind is by taking from those who are ahead. They boldly promise us a few thousand dollars in tax cuts; and they promise government plans to solve all our problems. They are offering us a DMV healthcare, a DMV education, and a DMV retirement in exchange of our chance at the American dream.

You know what, I’d much rather play my own hand.

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amit October 5th, 2008

In my last post I favored empowering the treasury secretary, Hank Paulson, to deal with the financial crisis. This to me was the best of all bad choices available. It wasn’t a good outcome by any stretch of the imagination; it was a necessary bitter pill. As far as my personal values are concerned, I am a libertarian, and am opposed to government intervention in any form. Lest I am misunderstood, let me clarify my position.

I am deeply suspicious of the ideas of the left. The talk about universal health care, more regulation (Nancy Pelosi recently called it “market discipline”), government programs for poverty alleviation, etc. have always sounded utopian and unrealistic to me. After all I come from a country where we tried that approach, with arguably much more altruistic leadership than politicians at Washington, and it simply doesn’t work. We remained poor until we started to get the government off our backs.

Normally small scale socialistic experiments are harmless. They are the most inefficient way to target a problem, but they do help some people in need. So be it, we can live with that. But under reversals of years of an expensive war, negative economic outlook, and a “big idea” socialistic presidential candidate, they are starting to look scary. These are dangerous times. It’s in times of hardship, that we are most susceptible to forgo our freedom. It’s now that it’s most dangerous to ignore the voices of freedom.

Today, I would like to introduce the voice of Friedrich Hayek, a Nobel laureate, and a champion of free market capitalism. In his book “The Road to Serfdom (1943)”, he lays out the fallacies of socialism. The book has widely been regarded as one of the most influential and thought provoking book of the 20^th century. However if you are pressed for time, you will do well to at least see this six minute cartoon illustration of his ideas.

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