Wednesday, February 04, 2009
Friday, January 23, 2009
Is Capitalism Good Or Bad?
How about the globalization movement, which is a child and catalyst of global capitalism?
Is capitalism actually a modern manifestation of colonialism?
What other alternatives do we have? What would an absence of capitalism do to the world, especially the less-developed countries (LDC)?
These questions arose after reading "Confessions of an Economic Hitman" by John Perkins. It surely is not an easy question. Strong arguments have been offered in support of capitalism, and strong arguments have been offered in support of its alternatives, such as socialism, communism, etc. Although I have been working in the business world, effectively supporting capitalism whether I like it or not --or realize it or not--, I have not really seriously thought of the benefits and consequences of global capitalism. So, I'm going to jot down some thoughts on this issue...
Supporters of capitalism claim that it is a powerful tool to develop the world's economies and uphold freedom. There are many truths to this assertion. Capitalism enables resources around the world to move around to where it's needed, and consequently enables development. For example, Indonesia has many natural resources but lacks technology and money. So western techonology and money pours into Indonesia through corporations, NGOs and governmental entities. The resulting development benefits everybody: the country, as well as the investors.
In a way, Capitalism is a manifestation of individual freedom, because Capitalism is egalitarian, much more so than colonialism. This means that anybody can make it in the business world, as long as one works hard, works smart, and possessing luck / favorable circumstances wouldn't hurt. In contrast, the benefit of colonialism mainly goes to the colonialists, which are members of a particular nation. Discrimination is a natural part of colonialism. In addition, property ownership is a major part of individual freedom. Capitalism respects one's right to own properties, while the opposite is true with colonialism, socialism and communism where properties either belong to the colonialists, the community, or the government.
People who opposes capitalism argues that it is a new form of colonialism and slavery. Capitalism provides legitimacy for a group of people with superior resources -namely, money and technology- to "rule over" other people with inferior means. I would say that this is really relative. Let's say a sweatshop in Indonesia pays its labors $0.50/hour or $1,000/year. An American may think that's a very low wage. But Indonesians may think that it's much better than farming or working as a domestic maid.
Some people also think that disproportionate benefits of capitalism go to a small group of people, namely the capital owners. Many LDC citizens believe that foreign corporations get most the benefits from exploiting their country's natural resources. I think this is where government of LDC's holds an important role: they need to negotiate favorable and fair terms with investors (where everybody wins), while at the same time wisely distributing and allocating capitals in a way that maximizes the country's economic development. The most difficult hurdle in this case is that corruption in LDC governments is rampant.
Capitalism not perfect, but I would argue that it is better compared to the least favorable alternatives. Take it into perspectives, the world we live in is not perfect; it's full of greed and selfishness. And these values are inherent in capitalism. The homo economicus which is really a fancy term for greed and selfishness is really the basic premise on which capitalism operates. Here's another gentle reminder that in this imperfect world, we just have to live with imperfect means.
Monday, January 19, 2009
Lessons from "Conspiracy of Fools"
Besides bringing back memories of my previous job (where our firm was hired to represent one of Enron's investment banks and I did some serious studies on the company), this book does a good job personifying the people involved in the whole debacle and teaching me some valuable lessons.
Ken Lay and Jeff Skilling:
Ken Lay was the charismatic CEO, who in the later years of his Enron career, was not heavily involved in daily operations. Instead, he was functioning almost exclusively as the company's public face, the goodwill ambassador, if you will. Delegating the operations to underlings, he plainly believed what subordinates reported and he relentlessly always believed that the company was stronger than ever and never had any problem. That is really his biggest mistake.
Jeff Skilling was the brainiac, creative inventor of energy trading, the genius that transformed the company and the industry. While Lou Gerstner transformed IBM from a products-oriented (hardwares) into a service-oriented (IT consulting) company, Skilling transformed Enron from a traditional pipeline company into a energy merchant/trading giant. However, he was no leader. It's interesting to see how a former McKinsey director --supposedly a very strong leader-- managed and led, and eventually failed.
1. Be engaged. Even if you are a top manager or CEO, do not be completely disengaged from operations. Delegation is a must. However, you still need to do some due dilligence on how the company operates. You still need to look at the details, albeit not every detail.
s a former consultant, Skilling was understandably focused himself in the big picture, grand strategy of the company. This is good and I accept that it is his forte. However, the devils are in the details. As a leader, you still need to look, or at least peek, at the details. Not micromanaging, just quality control and due diligence. This takes hard work, and sometimes it can be time consuming and usually not the most fun thing to do. But it's necessary and your survival -and the company's- may depend on it.
2. Create accountability. Related to #1, do not depend on a single source of information. If you are Lay, don't exclusively depend on Skilling the COO as your sole source. If you are Skilling, when Fastow tells you something, cross-check with other sources. Cross check your source against other sources; make him accountable for his reports. Disagreement means further investigation is warranted.
At the same time be cognizant of the political reality; accountability does not mean distrust. To mitigate this, accountability or check and balance process should be 'institutionalized'. In other words, instead of applying on case-by-case basis, it should be widespread. Then it will be viewed as nothing personal; it is just part of the company culture.
3. Face the reality. If it smells rotten, looks rotten, sounds rotten, then it must be rotten and something needs to be fixed. And fix it early.
4. Integrity is supreme. When you try to be aggressive on the accounting end, when your conscience -and people- says 'enough', it is probably 'enough'. Do not bargain with your conscience, and do not cross its limit. When a leader neglects integrity, he invites others to do the same.
While the general public thinks that Ken Lay and Jeff Skilling are the two evils, I genuinely believe that the real crooks are Andy Fastow (CFO, a Kellogg grad!) and his associate, Michael Kopper. They were the drivers of Enron's demise, the very people who committed the criminal actions, people with the dirty hands, by definition, the crooks. They should have received the longest sentence, and the heaviest condemnation among others.
But the world, as always, is full of hypocrisy and compromise. To satisfy the public (and maybe prosecutors' ambitions), the CEOs were regarded as the utmost target. The big game to hunt. Through plea bargain, Fastow and Kopper escaped with relatively light sentences. Not fair, but reality is rarely fair.
This is an illustration of a society that centers on personalities. Good guys are worshipped as heroes, and for every bad thing there must be guys to blame, and they are usually -conveniently and attractively- the guys on top. Attractive proposition to the public, and the media, and the consultants and lawyers involved in the litigation, and maybe the government. The truth doesn't matter as much as perception, as long as everybody is served!
Jeff MacMahon, Vince Kaminski , ... survived and became future leaders, because they refused to sacrifice their integrity. Sometime preserving your integrity means taking a step back in your career... and sometimes that can take several years. But integrity is the safest path and it will serve you well in the long run.
Last but not least, the book's title couldn't have been more appropriate. The people involved in the debacle are fools not because they were intellectually incapable; but because they did not act in wisdom. They were acting in greed, pride, and ignorance. The fear of God is the beginning of wisdom!
Thursday, July 12, 2007
On giving a rebuke, reproof, or admonition
Although a rebuke may sound harsh, it should be an instrument of love given for the purpose of edification.
Explain the actions of the other person (give real examples) and their consequences on you.
Give actionable solutions.
If necessary, explain your motives why you're giving a rebuke. This is usually necessary when you have never, or very rarely, rebuked the person before.
Giving a rebuke is also helpful as a way to vent out your feelings and thoughts.
Friday, November 10, 2006
I guess it's a kind of place that everybody longs for.
About 2 weeks ago, I watched "The Lost City", which has a scene where the father bids farewell to his son, who is leaving Cuba for good. It was a very simple scene: the father hugs the son and says "God bless you". It reminds me of my farewell with my dad 10 years ago, August 1996, at the Jakarta airport. He just hugged me and said "God bless you". The same hug and blessing he gave me on my wedding day, where again he simply hugged me and said "God bless you."
What greater wish can a father tell his son than "God bless you"? Whatever happens to you, may God bless you, keep you from danger, because you are my son.
Here's what my father said to me in a text message on my last birthday:
"Tuhan berkati kesehatan/keselamatan/study & pekerjaan kamu selalu, kau adalah kebanggaanku. Tak habis2nya terima kasihku pada Tuhan."
Today, I just watched "Elizabethtown", where a guy just lost his father to a heart attack. Just the thought of losing my father one day is unbearable. I guess it will be a day where I thank God for giving me a loving father, and a day where I will mourn a great loss.
I miss my father...
Monday, February 06, 2006
A Call to Fear the Lord
Many people say He's looking for one who is willing.
I disagree, for many are willing, yet uncommitted.
The Lord is looking for those who want to pay the price!
When life becomes complicated,
when knowledge puffs you up,
or when doubt pulls you down,
know that the battle is the Lord's.
His promise is true and amen.
Fear Him and He will deliver you!
Great is our Lord, and mighty in power;
His understanding is infinite.
The LORD lifts up the humble;
He casts the wicked down to the ground.
He does not delight in the strength of the horse;
He takes no pleasure in the legs of a man.
The LORD takes pleasure in those who fear Him,
In those who hope in His mercy.
No king is saved by the multitude of an army;
A mighty man is not delivered by great strength.
A horse is a vain hope for safety;
Neither shall it deliver any by its great strength.
Behold, the eye of the LORD is on those who fear Him,
On those who hope in His mercy,
To deliver their soul from death,
And to keep them alive in famine.
Joshua 23:9-16, 24:14-15,19,24
For the LORD has driven out from before you great and strong nations; but as for you, no one has been able to stand against you to this day.
One man of you shall chase a thousand, for the LORD your God is He who fights for you, as He promised you.
Therefore take careful heed to yourselves, that you love the LORD your God. Or else, if indeed you do go back, and cling to the remnant of these nations—these that remain among you—and make marriages with them, and go in to them and they to you, know for certain that the LORD your God will no longer drive out these nations from before you. But they shall be snares and traps to you, and scourges on your sides and thorns in your eyes, until you perish from this good land which the LORD your God has given you.
… And you know in all your hearts and in all your souls that not one thing has failed of all the good things which the LORD your God spoke concerning you. All have come to pass for you; not one word of them has failed.
Therefore it shall come to pass, that as all the good things have come upon you which the LORD your God promised you, so the LORD will bring upon you all harmful things, until He has destroyed you from this good land which the LORD your God has given you. \When you have transgressed the covenant of the LORD your God, which He commanded you, and have gone and served other gods, and bowed down to them, then the anger of the LORD will burn against you, and you shall perish quickly from the good land which He has given you.”
“Now therefore, fear the LORD, serve Him in sincerity and in truth, and put away the gods which your fathers served on the other side of the River and in Egypt. Serve the LORD! And if it seems evil to you to serve the LORD, choose for yourselves this day whom you will serve, whether the gods which your fathers served that were on the other side of the River, or the gods of the Amorites, in whose land you dwell. But as for me and my house, we will serve the LORD.”
… He is a holy God. He is a jealous God
And the people said to Joshua, “The LORD our God we will serve, and His voice we will obey!”
Tuesday, June 14, 2005
Recent lessons on marriage & relationship
A husband's core values:
2. Set the financial in order
A husband's attitude:
1. Understand and develop your wife's talents and callings
A wife's core values:
From Richard-Arni's wedding:
The recipe for a successful marriage:
B - Bless each other
E - Edify one another, encourage
S - Spend time
T - Touch (especially touch her feelings)
Purpose for our marriage (just thought them up last night):
L - Love one another
S - Spiritual: seek the Lord
B - Bear fruits: be a blessing to others
Recent leadership lessons
- I've been reading a book about how the CEO of IBM turned around the company. IBM almost went bankrupt in 1992. After the new CEO took over in 1993, he turned around the company and made it very successful. In the book, he wrote about how he did it and he taught about his leadership principles. To me, the book is an example / experience of how a leader can turnaround an organization that's already at the brink of disaster, how to clean up the mess, how to deal with the people, how to set the vision/strategy, how to carry out the plans, etc.. I think I can refer many things to what he experienced at IBM.