Tuesday, February 4, 2014

The hubris of Ballmer et al.

“Microsoft's chief executive, Steven A. Ballmer, shrugged off the shift Thursday morning. “No technology company on the planet is more profitable than we are . . .” [Apple passes Microsoft as no. 1 in tech, The New York Times, 26th May 2010] “Michael S. Dell, the founder and chief executive of Dell computer, went so far as to suggest that Apple should shut down and return any money to shareholders. (The computer maker is now worth about a tenth of Apple.) Around the same time, Microsoft’s chief technology officer called Apple “almost dead.”

“Wall Street has called the end of an era and the beginning of the next one. The most important technology product no longer sits on your desk but rather fits in our hand. The moment came Wednesday when Apple . . . shot past Microsoft, the computer software giant, to become the world’s most valuable technology company. This changing of the guard caps one of the most stunning turnarounds in business history for Apple, which had been given up for dead only a decade earlier, and its co-founder and visionary chief executive, Steven P. Jobs.

“Microsoft depends more on maintaining the status quo, while Apple is in a constant battle to one-up itself and create something new . . . Microsoft [a hugely powerful and profitable company in the tech world] . . . [and] a component of the Dow Jones industrial average, has lost half of its value since 2000.”

What happened to Ballmer? “[T]he new [Microsoft] CEO is coming soon enough to replace outgoing leader Steve Ballmer. While his tenure has been marked by improvements in profits and sales, it is now too contrasted by a glacial — even willfully resistant — pace of innovation around key emerging products, most especially mobile devices . . . Thus, it’s long past time for him to move along and end this slo-mo exit that many investors and employees have found excruciating.” [Kara Swisher, recode.net, 19th Jan 2014]

What lesson can we in PHL learn? We can’t afford the hubris of Ballmer et al. despite PHL enviable GDP growth over the recent past . . . given laundry list of sustainability issues that we have yet to address. Note the operative word re Microsoft, i.e., maintaining the “status quo.” We can’t say that we are a hugely powerful economy while Microsoft once upon a time was the biggest tech company – and the most profitable on the planet. And more to the point, is Juan de la Cruz wedded to the status quo? In a hierarchical system and structure as in an oligopoly, the thought of breaking the status quo is to hope against hope?

“These latter-day oligarchs, many of whom have built vast business empires on the back of long standing connections . . . are part of a political tradition that dates back to the rapid expansion of the Grand Duchy of Muscovy in the 1400s . . . the conspiracies, secrecy and power politics of the Muscovite czarist court will be readily recognizable to viewers of "Game of Thrones" . . . [which] punctures the myth of an all-powerful czar . . . [It was] a system dominated by elite groups of boyars (the top rung of aristocracy and the forebears of today's oligarchs) and bureaucrats, who imposed constraints on the country's ruler, [and] became so entrenched in the political culture.” [Andrew S. Weiss, Russia’s Oligarchy, Alive and Well, The New York Times, 30th Dec 2013.]

“Eventually, the day will come when Mr. Putin is no longer in power. Yet it seems highly unlikely that his informal style of rule will be replaced by a rule of law system based on strong institutions and checks and balances. Rather, the West must brace itself for the possibility that the oligarchic system itself, with its deep roots in Russian political culture, will outlive its current master.”

In PHL there is the world of the elite class and there is Juan de la Cruz? Will our oligarchic system likewise outlive the presidency and guaranty the longevity of the former? And so when the Central Bank, for example, is patting ourselves on the back (thanks to OFW remittances!), we have to ask which world is that? And when our expectations are raised amid persistent poverty and outdated infrastructure especially power, among others, and that we’re the next Asian tiger that has to be taken with a grain of salt? As my Eastern European friends would remind themselves, it was not that long ago when they “had to live with Soviet propaganda . . . and they matter-of-factly took us for fools!”

“Even without the foreign investments, [Philippines has a lot of money]. The reason we need them [foreigners] is because of their expertise, not the money . . . Are we underdeveloped? Not really . . .” [Weak FDI equals poverty – Oxford, Manila Times, 28th Jan 2014.]  . . . That’s serious news, not the comic section . . .

Indeed PHL has a lot of money: “It is urgent to stop corporate greed in the state bureaucracy. Those people help themselves to outrageous allowances and bonuses as if the government is an enterprise for profit. That is a sclerotic view of public service,” the feisty former trial judge fumed.” [Senators take home P1.4M a month–Santiago, Philippine Daily Inquirer, 29th Jan 2014] . . . And in town for our annual homecoming, my wife and I are getting an earful about PHL culture of impunity. We could only wonder who else could be trusted. Up and down the state bureaucracy – as far down as the barangays – and across the different branches, we've heard repeatedly, “don't bet on good governance – not in the simple enforcement of traffic rules as in jeepneys and buses clogging and obstructing traffic or sidewalks being appropriated by vendors or uncivilized land use or land grabbing that has been perfected to an art form . . . etc. etc... sadly, the rule of law is just a figment of the imagination in your pathetic country.” Wrote Mon Abrea [If the price is right, Manila Bulletin, 2nd Feb 2014]: “As Fr. Albert Alejo puts it, corruption in the Philippines is family-based, school-based, fraternity-based, law school alumni-based, and even Jesuit-based. As someone who used to work in government, I can say that, indeed, corruption is in our culture. It is a common mindset to tolerate corrupt practices for the protection of our personal and family interests.”

What else is new? “Some lawmakers reckoned that the insertion of a phrase, which would make the Constitution more accommodating to foreign investors, would finally crack the stranglehold of the “1 percent” of Filipinos who control most of the country’s wealth” [Cha-cha’ train starts rolling again but Palace not keen, Philippine Daily Inquirer, 29th Jan 2014] . . “Competition is absolutely necessary in every endeavor. Monopoly does not benefit the public. Sometimes the public interest is sacrificed because of corporate greed most especially if the monopoly pertains to vital industries of the country . . . Amending the economic provisions to make them flexible to the times is a way of dismantling monopolies, oligopolies and cartels that have become a common characteristic of our major vital industries . . .”

“In an economic forum attended by foreign economic leaders last March, former Socioeconomic Planning Secretary Cielito Habito presented data in 2011 that showed that the combined fortune of individuals and families on Forbes’ 40 richest Filipinos accounted for 76 percent of the country’s gross domestic product (GDP) growth . . . [T]his was more than double the share of the Forbes 40 in other countries like Thailand (33.7 percent), Malaysia (5.6 percent) and Japan (2.8 percent).”

And do we approximate, if not mirror, a banana republic? Wikipedia: “[A] politically unstable country . . . It typically has stratified social classes, including a large, impoverished working class and a ruling plutocracy that comprises the elites of business, politics . . . This politico-economicoligarchy controls the primary-sector of productions and thereby exploits the country's economy.”

“San Miguel currently has long-term and short-term debt of $14.8 billion . . . making the company the nation’s most-indebted. San Miguel and its units have 60.8 billion pesos of debt and interest falling due this year, of which 42 percent are in dollars. Cash and near cash items total $4.12 billion . . . With interest rates on the rise and the peso’s continued weakness against the dollar, San Miguel may have to start refinancing its debt now . . . Once capital markets start closing, the company may be forced to sell its assets at a discount.” [Bloomberg, SMC gets $6.6-B offers for stakes, Manila Bulletin, 30th Jan 2014]

“Some . . . noted that the BSP’s moves [to examine the material transactions between a bank and other entities within the conglomerate it belongs to] seem to be in reaction to the IMF’s warnings, with the global lending institution also asking the BSP to investigate if the loans by the conglomerate purportedly for oil purchases or public-private partnership (PPP) projects were being diverted into other ventures . . . [T]he IMF is reportedly set to issue a stronger warning, noting the increase in the country’s corporate debt . . . Despite IMF warnings about the possible debt problems of the conglomerate saying a recapitalization should be ordered to prevent credit contractions, the Bangko Sentral insists there is no need to tighten SBL (single borrower limit) regulations, saying the debts are well managed. Let’s just hope the IMF will not have occasion to say, “I told you so.” [Babe G. Romualdez, Over-leveraged conglomerate, SPYBITS, The Philippine Star, 28th Jan 2014]

Will PHL ever elect a leader that can transcend our parochial bias and inability to raise the bar – that is visionary to boot so that we could learn that there is such a thing as the common good and an egalitarian society? Or does leadership rightly belong to PHL’s elite class because Juan de la Cruz values a cacique hierarchical system and structure that is paternalistic and populist and nurtures crab mentality – “to protect our personal and family interests” – and why “daang matuwid” never had a chance?

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