HBR continued.. Capitalism or Wall Street
November 4, 2009 Leave a comment
Andy Rappaport posted an article to the HBR debate on U.S. competitiveness: Outsourcing, the Culprit is Capitalism, not Wall Street
Valuable comments. One of my primary criticisms of Wall Street in the past decade, and some of their largest clients, has been an enormous unproductive use of capital.
While Alan Greenspan has earned his criticism, at least his ideology was based on a belief that large investors would choose self-preservation over systemic suicide, rather than the more cynical view that has so often been rewarded in recent years. I long ago tested self-regulation in micro markets, so was not surprised, however sickening. But the FRB did not direct the fire hose of gasoline even if they provided much of the fuel, and refused to manage the blaze, much less prevent it.
At precisely the time when the U.S. badly needed to redirect investment — both public and private — to improve upon future competitive pressures already well under way, instead Wall Street elephants brokered trillions in unproductive, counter productive, and self-destructive assets.
At the early stages in technology venturing, deployment of capital wasn’t much better as a similar misguided philosophy of activism and emotional dysfunction ruled.
I personally find the excess in outsourcing to be sourced in a similar failed ideology — that somehow the end justifies the means — that to kill the golden goose is somehow justified. The convenient emotional delusion aligning with short-term greed and peer pressure within careerism simply doesn’t mesh with the math — my 8th grade math teacher hobbling on two crutches from his WW2 contributions knew better.
Jeffrey Liker raises a very interesting point — we developed a state of the art holistic system with a global leader in mind, and when I presented it to the chairman of the board — he said that their internal scientists had looked at the issue (for the sake of this point let’s call it knowledge systems), and deemed it impossible. Of course the same was said of his founder decades earlier, and neither were accurate fortunately, but I agree Jeffrey — the only reason I have been able to find at all for those in government and global companies in refusing to adopt holistic systems makes me very uncomfortable indeed — which is that they don’t want to prevent crises, improve performance, and increase both meritocracy and accountability.
One final comment that I haven’t seen raised here, and it should be raised. I firmly believe that one of the key drivers of excessive outsourcing has been what is largely invisible protectionism; that is the implication by governments in a few of the highest growth markets that goes something like this: if global companies want access to these markets — representing the vast majority of growth worldwide — and don’t want to face a government backed if-not-owned competitor, then we best see not only factories dotting the skyline, but research centers as well.
While the U.S. is certainly far from pure in trade, I do believe that the comparison to the NZ experiment in free trade is valid. We all know that trade is rarely free, but to ask (demand) that U.S. tax payers subsidize the exportation of future competitors whether through R&D deals with global corps, universities for decades, and/or tax incentives — is well beyond acceptable for this son of a lifer in the military who sacrificed in two wars, bringing his grief home to his family.
The problem isn’t capitalism — the problem was the scum that too often rose to the top of firms feeding off of capitalism, creating a culture that would not allow cream to rise to decision levels across their sphere of influence. I was so ashamed that I almost relocated permanently in protest. It has been a disgrace.