Copied and Pasted from CNN.... as I imagined... the dudes are crazy...
Where is Paulson putting the cash?
NEW YORK - In September U.S. Treasury Secretary Henry Paulson lobbied Congress for $700 billion to buy up troubled mortgage related assets that were dragging down otherwise stable banks. We were told the very future of the U.S. economy was at stake.
Paulson has now admitted what many had already started to guess - they got it wrong. Treasury is no longer planning to use the money to buy toxic debt. That plan, it turns out, was too complicated and was going to take too long to implement. Instead, the government is going to continue to give money directly to financial institutions in exchange for shares.
Not only that, but you no longer have to be a bank, or turn yourself into one, to qualify for help.
Treasury now wants to open the bailout coffers to companies that issue credit cards, student loans and car loans. Paulson says the aim is to lower the costs and increase credit availability to American consumers.
Some say the fact that Paulson is willing to adjust and change the plan so quickly should be applauded; it shows officials are focused on coming up with the best possible remedy to fix the economy and are not worried about losing face.
Others are outraged at what they see as a lack of transparency and information.
Which companies are tapping the funds and what is it about their business or balance sheet that justifies aid?
What about those so-called toxic assets? What happens to them now? Won’t they still be problematic?
There is only $60 billion left from the original tranche approved by Congress. How is the rest going to be spent? How much more will be needed? At Wednesday’s press conference Paulson said that he felt the original $700 billion was enough to get the job done, but few analysts think that is realistic.
What about the $1.5 trillion dollars the Fed has lent out above and beyond the original funds? The Fed has declined to comment on where that money has gone or what they took for collateral. In fact, Bloomberg News is suing the Fed to release documents under the Freedom of Information Act.
It may be the Treasury and the Fed are taking a “what you don’t know won’t hurt you” approach. If the general public knew just how bad it was at some banks or key institutions it could spark a run on those firms and perhaps make a bad situation worse.
But the American public is in no mood for behind close doors operations. There is a severe lack of trust when it comes to government officials and business leaders. Taxpayers want to know just where their money is going. They don’t like the fact that the rules of the game seem to be changing.
Saturday, November 15, 2008
Saturday, October 18, 2008
4. What will happen next...
The money post. I like to tell my team that we are all paid to predict the future in our own function. Anyone can analyze the past.. Look down the rabbit hole and tell me how deep it runs... thats what we are all paid the moolah for.
1. The western economies will roil in the oscillations
2. China will swoop harder and faster into Africa and capture key resources without anyone realizing
3. India will sit and watch.. and fight about Nano plants and the rights of farmers...
4. Russia will suffer as the West does...
5. The middle-east will capture and control several key resources in the West
6. Iran will grow stronger
7. Japan will suffer a housing market collapse, but the banks will not be hit as badly, since I believe that they were more conservative than the US banks...
Will the US get into a recession?
Yes. Atleast for a year or so. If the interest rate lowering happens at the right time, then things will improve. Else there is a long decade ahead of us.
As the US economy goes, so does the Indian economy. I predict that if 10 years ago a 1% drop in the US led to a 20% drop in India, now the drop will be around 10%. But drop it will. Indian businesses cannot sustain themselves on local demand. If they find a way, which they should, that will be great for us.
Situation in Europe and Japan?
I believe that in addition to the poor asset management practices by the IBs, the double whammy came from falling asset prices.
I think the banks in the Eurozone had similar bad asset management practices. So Trichet and co., will have to buy the junk the banks own, but I don't see a housing bubble like in the US. The clear exceptions being Spain and the UK. Spain already went down in 2007. UK will go down in 2009.
So the government will have to step in but the effect should be much more short term. Banks are affected. Home-owners and consumer should not be affected to a great extent.
Japan, I believe has the reverse situation. Assets were managed very conservatively with very low exposure to bad assets. But from what I hear the housing market was in a bubble and the real estate prices are bound to fall.
So the government will probably not have to step in, but the home-owners will suffer. There will be a mini-US-like situation, but the banks will be capitalized enough to manage the resulting defaults.
1. The western economies will roil in the oscillations
2. China will swoop harder and faster into Africa and capture key resources without anyone realizing
3. India will sit and watch.. and fight about Nano plants and the rights of farmers...
4. Russia will suffer as the West does...
5. The middle-east will capture and control several key resources in the West
6. Iran will grow stronger
7. Japan will suffer a housing market collapse, but the banks will not be hit as badly, since I believe that they were more conservative than the US banks...
Will the US get into a recession?
Yes. Atleast for a year or so. If the interest rate lowering happens at the right time, then things will improve. Else there is a long decade ahead of us.
As the US economy goes, so does the Indian economy. I predict that if 10 years ago a 1% drop in the US led to a 20% drop in India, now the drop will be around 10%. But drop it will. Indian businesses cannot sustain themselves on local demand. If they find a way, which they should, that will be great for us.
Situation in Europe and Japan?
I believe that in addition to the poor asset management practices by the IBs, the double whammy came from falling asset prices.
I think the banks in the Eurozone had similar bad asset management practices. So Trichet and co., will have to buy the junk the banks own, but I don't see a housing bubble like in the US. The clear exceptions being Spain and the UK. Spain already went down in 2007. UK will go down in 2009.
So the government will have to step in but the effect should be much more short term. Banks are affected. Home-owners and consumer should not be affected to a great extent.
Japan, I believe has the reverse situation. Assets were managed very conservatively with very low exposure to bad assets. But from what I hear the housing market was in a bubble and the real estate prices are bound to fall.
So the government will probably not have to step in, but the home-owners will suffer. There will be a mini-US-like situation, but the banks will be capitalized enough to manage the resulting defaults.
3. What should be done next...
So, as Pushan said, don't look at sunk costs. Make decisions with the resources you have today and evaluate how you can grow those resources at the fastest rate.
That is where the fundamental debate starts. My limited understanding is as follows: If the world GDP grows at 3%, it can be fairly said that each person in the world can expect a 3% ROC.
Now a capitalist will say, each man for himself, if I get 6% and you get 0%, just too bad for you. Survival of the fittest I say.
A socialist would say, that since you have less capital to start with, you should have easier access to capital, which in effect is a higher rate of return. So the poor grow at 6% and the rich at 0%. Spread the wealth I say.
One thing that both these morons will agree with is that the 3% GDP growth has to be maintained. Otherwise the entire discussion is moot. Both morons are then out of work.
How do we secure the 3%? For that the first question is who is providing the 3% growth. If we are to believe the world's largest economy, small businesses drive this growth.
Small businesses needed daily WC to run. Banks, performing their original task of capital collection and distribution, need to lend them money. If this credit dries up, the 3% is at risk.
What I don't understand is the inter-bank lending business. Who the hell cares if banks lend to each other. MOre inefficiency I say. If banks collapse cos they can't get money, let them. There is bound to be one super giant left behind to distribute the wealth.
So what the EuroGeeks have done is good I think. Take a trillion Euros and give it to the banks. Buy their shit, but force them to use the money to give to businesses. Cap bonuses (don't eliminate them).
In the US, the Fed has made the right noises and for once followed the more sensible and conservative EuroGeeks. As usual, W has the keys to the bank and no oversight. If anyone believes that Paulson (and whoever sits on the hot seat next) has any control on what happens to the money, I have a bridge I wanna sell them.
Anyway, this lending will give us a chance to protect the 3% growth. But thats not all. Economics is like a large spring-mass-damper system. You move it and the oscillations continue.
OK... so in order to buy the Shit and start the money flowing again, we need to pay up. Two options, Benny and Trichet print more money or they increase taxes. Inflation or reduced take home income. In the end you get less for your efforts. With an hour of work, you can't buy a shirt, but only a tie.
Printing money hits everyone the same and reaches a larger audience. Taxing can be designed to hit people who can afford it (or so one hopes).
SO lets assume that since this shit was caused by a few, the funds are raised with 70% taxes and 30% inflation.
So now, I have more taxes, and with what I have left, I can afford less. Demand falls. Businesses who now have money from the banks don't see demand and have to reduce capacity. Eventually business will suffer and shut down. Unemployment will increase and the death spiral will continue.
There is another lever though. The Fed can lower interest rates at a suitable time. If done right, consumers will be able to have easier access to money to buy stuff from businesses that they already bailed out. With these levers, the economy can remain afloat... and hope that as the shrewy pitbull said 'the innovation and the will of the American people' might pull the economy out of it...
So the people first pay to bail out the banks, then borrow money to buy stuff from businesses and keep them afloat, and then work their asses off to create additional value and growth.
Thats what should happen next.
That is where the fundamental debate starts. My limited understanding is as follows: If the world GDP grows at 3%, it can be fairly said that each person in the world can expect a 3% ROC.
Now a capitalist will say, each man for himself, if I get 6% and you get 0%, just too bad for you. Survival of the fittest I say.
A socialist would say, that since you have less capital to start with, you should have easier access to capital, which in effect is a higher rate of return. So the poor grow at 6% and the rich at 0%. Spread the wealth I say.
One thing that both these morons will agree with is that the 3% GDP growth has to be maintained. Otherwise the entire discussion is moot. Both morons are then out of work.
How do we secure the 3%? For that the first question is who is providing the 3% growth. If we are to believe the world's largest economy, small businesses drive this growth.
Small businesses needed daily WC to run. Banks, performing their original task of capital collection and distribution, need to lend them money. If this credit dries up, the 3% is at risk.
What I don't understand is the inter-bank lending business. Who the hell cares if banks lend to each other. MOre inefficiency I say. If banks collapse cos they can't get money, let them. There is bound to be one super giant left behind to distribute the wealth.
So what the EuroGeeks have done is good I think. Take a trillion Euros and give it to the banks. Buy their shit, but force them to use the money to give to businesses. Cap bonuses (don't eliminate them).
In the US, the Fed has made the right noises and for once followed the more sensible and conservative EuroGeeks. As usual, W has the keys to the bank and no oversight. If anyone believes that Paulson (and whoever sits on the hot seat next) has any control on what happens to the money, I have a bridge I wanna sell them.
Anyway, this lending will give us a chance to protect the 3% growth. But thats not all. Economics is like a large spring-mass-damper system. You move it and the oscillations continue.
OK... so in order to buy the Shit and start the money flowing again, we need to pay up. Two options, Benny and Trichet print more money or they increase taxes. Inflation or reduced take home income. In the end you get less for your efforts. With an hour of work, you can't buy a shirt, but only a tie.
Printing money hits everyone the same and reaches a larger audience. Taxing can be designed to hit people who can afford it (or so one hopes).
SO lets assume that since this shit was caused by a few, the funds are raised with 70% taxes and 30% inflation.
So now, I have more taxes, and with what I have left, I can afford less. Demand falls. Businesses who now have money from the banks don't see demand and have to reduce capacity. Eventually business will suffer and shut down. Unemployment will increase and the death spiral will continue.
There is another lever though. The Fed can lower interest rates at a suitable time. If done right, consumers will be able to have easier access to money to buy stuff from businesses that they already bailed out. With these levers, the economy can remain afloat... and hope that as the shrewy pitbull said 'the innovation and the will of the American people' might pull the economy out of it...
So the people first pay to bail out the banks, then borrow money to buy stuff from businesses and keep them afloat, and then work their asses off to create additional value and growth.
Thats what should happen next.
2. Who is to blame?
Another favorite topic. Given that we are only 2 weeks away from one of the hardest choices the US population has to make (thats what I also thought in 2004), clearly there has to be someone to blame.
Just so we are clear, I need someone to blame for the fact that banks are constantly writing off $50B, 3 large banks have vanished, and the various Central Banks have had to back-stop these idiots with my money. So... who is to blame for my money being wasted like this?
I watched super-villan Fuld getting his bones chewed at some irrelevant House Committee.
The moron questioning Fuld, I don't event want to hunt down his name, is not worth the piece of paper he is reading from.
Anyway, who is really to blame? The bankers? They ran un-regulated and no one complained when it was raining money... the government? As we all know they are incompetent. They wouldn't see a financial crisis if it came and knocked at the door. Plus clearly they were not going to shut down a source of re-election money.
I gave my money to the MF houses to invest since you know diversification and all that crap. They bought stock in Lehman amongst other things. Lehman was wondering what to do with all this money, so they gave some of it out as bonuses and with the rest of it, they leveraged it, and bought some cashflow on a bad loan pool from assets whose price was about to fall. In order to leverage, they issued bonds to the same mutual fund houses. The mutual fund houses then also bought insurance against default from AIG. AIG was supposed to take this money and put it away, just in case. But you know the same mutual fund also had equity in AIG. So AIG took the money, handed out bonuses to their people, and with the rest...
You know how it goes and how it went.
But at the bottom of it were the investors who invested in Lehman without knowing what Lehman was doing with the money.
Now the same investors, having lost their money, are being asked to pay out more money to save whatever money they might have left.
What other choice is there?
If it is still not clear, I feel it is those investors who are to blame. I think there was a slight amount of laziness from individual investors who trusted institutions, not with their funds, but with their judgement. They let professional money managers make decisions for them. Good when the going was good.
Capitalism is driven by individuals being responsible and curious for information. It is quite similar to democracy in that sense. It only works if each of us makes our own decisions and exercises our judgement. If we are lazy and give that power to a few, we have no one to blame but ourselves.
But neither BO or JMac will, can, or afford to blame Joe the Plumber or Joe Six Pack.
Just so we are clear, I need someone to blame for the fact that banks are constantly writing off $50B, 3 large banks have vanished, and the various Central Banks have had to back-stop these idiots with my money. So... who is to blame for my money being wasted like this?
I watched super-villan Fuld getting his bones chewed at some irrelevant House Committee.
The moron questioning Fuld, I don't event want to hunt down his name, is not worth the piece of paper he is reading from.
Anyway, who is really to blame? The bankers? They ran un-regulated and no one complained when it was raining money... the government? As we all know they are incompetent. They wouldn't see a financial crisis if it came and knocked at the door. Plus clearly they were not going to shut down a source of re-election money.
I gave my money to the MF houses to invest since you know diversification and all that crap. They bought stock in Lehman amongst other things. Lehman was wondering what to do with all this money, so they gave some of it out as bonuses and with the rest of it, they leveraged it, and bought some cashflow on a bad loan pool from assets whose price was about to fall. In order to leverage, they issued bonds to the same mutual fund houses. The mutual fund houses then also bought insurance against default from AIG. AIG was supposed to take this money and put it away, just in case. But you know the same mutual fund also had equity in AIG. So AIG took the money, handed out bonuses to their people, and with the rest...
You know how it goes and how it went.
But at the bottom of it were the investors who invested in Lehman without knowing what Lehman was doing with the money.
Now the same investors, having lost their money, are being asked to pay out more money to save whatever money they might have left.
What other choice is there?
If it is still not clear, I feel it is those investors who are to blame. I think there was a slight amount of laziness from individual investors who trusted institutions, not with their funds, but with their judgement. They let professional money managers make decisions for them. Good when the going was good.
Capitalism is driven by individuals being responsible and curious for information. It is quite similar to democracy in that sense. It only works if each of us makes our own decisions and exercises our judgement. If we are lazy and give that power to a few, we have no one to blame but ourselves.
But neither BO or JMac will, can, or afford to blame Joe the Plumber or Joe Six Pack.
1. Capitalism... Who was the winner?
Rather interesting turn of events in the world today... I refer to my original post on the role of the firm... and the role of banks in the world... Banks are supposed to allocate money to firms that have good (cash generating) ideas.. instead these morons sit and productize money...
I am a simple guy and as I studied for the hardest exam in the world, only one law was really needed to to solve all the problems that came my way. Energy is conserved.
On wall street, I strongly believe that once a $1 bill is printed it can't vanish. Where did that $1 bill go? What I wanted to know was which smart-ass got the money.
I've started buying the FT Weekend edition. Its a great read and its also good for quality time with my better half, since one section is on how to make money and the other (the better half) is on where to spend it.
Anyway, thats when I heard the name David Einhorn for the first time.
When I first studied economics at IITM, the final exam was to write an essay on a financial event in the last decade. 90% of the class wrote about the Liberalization of the Indian economy. I guess that whole jing bang had completely escaped me... I wrote about Bearings Bank and my personal hero at the time, Nick Leeson. I was 17 and the only idiot who thought that a bank going down was a financial event of some magnitude.
So, Mr. Einhorn who is a hedge-fund manager at Greenlight Capital, apparently had the smarts or the patience to look at Lehman's balance sheet. He then went on to talk to the CFO and other Fuldian cronies and decided they were in the Structured Bullshit business.
This is the most sensible thought process I have heard from anyone on Wall Street.
And he is currently the owner of that missing $1 bill. There is really no value lost on Wall Street in my opinion. All the widows and orphans invested in Lehman and Bear, just gave their money to David.
The winner and my new hero.
I am a simple guy and as I studied for the hardest exam in the world, only one law was really needed to to solve all the problems that came my way. Energy is conserved.
On wall street, I strongly believe that once a $1 bill is printed it can't vanish. Where did that $1 bill go? What I wanted to know was which smart-ass got the money.
I've started buying the FT Weekend edition. Its a great read and its also good for quality time with my better half, since one section is on how to make money and the other (the better half) is on where to spend it.
Anyway, thats when I heard the name David Einhorn for the first time.
When I first studied economics at IITM, the final exam was to write an essay on a financial event in the last decade. 90% of the class wrote about the Liberalization of the Indian economy. I guess that whole jing bang had completely escaped me... I wrote about Bearings Bank and my personal hero at the time, Nick Leeson. I was 17 and the only idiot who thought that a bank going down was a financial event of some magnitude.
So, Mr. Einhorn who is a hedge-fund manager at Greenlight Capital, apparently had the smarts or the patience to look at Lehman's balance sheet. He then went on to talk to the CFO and other Fuldian cronies and decided they were in the Structured Bullshit business.
This is the most sensible thought process I have heard from anyone on Wall Street.
And he is currently the owner of that missing $1 bill. There is really no value lost on Wall Street in my opinion. All the widows and orphans invested in Lehman and Bear, just gave their money to David.
The winner and my new hero.
Saturday, August 2, 2008
Copyright Battles Heat Up on Web
I read a nice article on the Washington post recently...
http://www.washingtonpost.com/wp-dyn/content/article/2008/08/01/AR2008080103131_pf.html
and something struck me...
"Hasbro is stupid," said Saffo. "Thanks to this new electronic lounge called Facebook, board games are hot. Two Indian students pointed [Hasbro] to what could be their iTunes and they responded with lawyers."
One of my pals has written a nice argument in favor of 'People should have to pay for music'. I am unable to write an argument against it. But something in my head tells me that this is not right. I need to frame my thoughts... but along the way... this story also captures part of what I feel...
http://www.washingtonpost.com/wp-dyn/content/article/2008/08/01/AR2008080103131_pf.html
and something struck me...
"Hasbro is stupid," said Saffo. "Thanks to this new electronic lounge called Facebook, board games are hot. Two Indian students pointed [Hasbro] to what could be their iTunes and they responded with lawyers."
One of my pals has written a nice argument in favor of 'People should have to pay for music'. I am unable to write an argument against it. But something in my head tells me that this is not right. I need to frame my thoughts... but along the way... this story also captures part of what I feel...
Tuesday, July 22, 2008
Sunday, July 20, 2008
Mom fights music giant
I wonder if I am breaking copyright rules by posting this here, with a reference to the newspaper?
Mom fights music giant
S.J. COURT CONSIDERS KEY COPYRIGHT CASE
By Howard Mintz
Mercury News
Article Launched: 07/19/2008 01:33:24 AM PDT
For Pennsylvania mom Stephanie Lenz, a closely watched copyright showdown in San Jose federal court is a simple matter of standing up to powerful music moguls and petulant pop stars.
"I figure I have nothing to lose," Lenz said Friday in a telephone interview with the Mercury News. "The music companies are just going to keep doing this to people. I think it's my responsibility to stand up to them and say, 'That's enough.' "
Lenz, whose case reached a critical stage Friday, finds herself at the heart of an epic copyright fight over Universal Music's attempt to force her to take down a YouTube video of her toddler learning to walk with the Prince song "Let's Go Crazy" blaring in the background.
Calling it a "case of first impression," U.S. District Judge Jeremy Fogel on Friday considered Universal's attempt to dismiss Lenz's lawsuit, which maintains the media giant and Prince are abusing a 10-year-old copyright law intended to curtail movie and music thievery on the Web. Lenz is seeking unspecified damages and a court finding that she did not violate Universal's copyrights with the YouTube video.
'Takedown' letters
The case centers on a so-called "takedown" letter Universal sent to Lenz after she posted the video in February 2007. Music and movie companies send tens of thousands of such letters under the copyright law each year, essentially forcing the material to be at least temporarily removed unless
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the target fights the request.
Lenz fought back hard, backed by the Electronic Frontier Foundation, a San Francisco-based civil liberties organization. She maintains that the video was a harmless, legal use of a popular song, and that her case exemplifies how a powerful industry can abuse the copyright law, known as the Digital Millennium Copyright Act.
Fogel dismissed a previous version of Lenz's lawsuit, but her lawyers filed a revised complaint that recasts the case as a test of what copyright holders must consider before sending out takedown letters. Electronic Frontier Foundation lawyers urged the judge to keep the case alive, arguing that companies such as Universal have an obligation to investigate and evaluate a video such as Lenz's before firing off the threatening letters.
Claim of 'fair use'
"It's a tiny, blurry little home movie," said Corynne McSherry, the foundation's attorney on the case.
Lenz and her legal team depict the video as a "fair use" of the Prince song. But Universal attorneys insist the company had the legal right to send the letter in Lenz's case, and that it would be unfair to artists and media companies to force them to undertake lengthy inquiries before asserting copyright violations.
Fogel took the company's request to dismiss the case under consideration and will rule later.
"The copyright owner is arguing that this is infringing; Lenz says it is fair use," said Mark Lemley, director of Stanford University's Law, Science and Technology clinic. "There are no cases directly on this question of user-generated content that incorporates songs as background. Lenz will be the first."
In the meantime, Lenz is prepared to take her case as far as it goes in the courts. The video is back up on YouTube, but that's not enough to appease Lenz.
"Somebody needs to tell these music companies they can't just throw out these (takedown letters) and accuse people of violating federal crimes," she said. "I didn't like feeling like I'd done something wrong, even though I knew I hadn't. It made me panic."
Mom fights music giant
S.J. COURT CONSIDERS KEY COPYRIGHT CASE
By Howard Mintz
Mercury News
Article Launched: 07/19/2008 01:33:24 AM PDT
For Pennsylvania mom Stephanie Lenz, a closely watched copyright showdown in San Jose federal court is a simple matter of standing up to powerful music moguls and petulant pop stars.
"I figure I have nothing to lose," Lenz said Friday in a telephone interview with the Mercury News. "The music companies are just going to keep doing this to people. I think it's my responsibility to stand up to them and say, 'That's enough.' "
Lenz, whose case reached a critical stage Friday, finds herself at the heart of an epic copyright fight over Universal Music's attempt to force her to take down a YouTube video of her toddler learning to walk with the Prince song "Let's Go Crazy" blaring in the background.
Calling it a "case of first impression," U.S. District Judge Jeremy Fogel on Friday considered Universal's attempt to dismiss Lenz's lawsuit, which maintains the media giant and Prince are abusing a 10-year-old copyright law intended to curtail movie and music thievery on the Web. Lenz is seeking unspecified damages and a court finding that she did not violate Universal's copyrights with the YouTube video.
'Takedown' letters
The case centers on a so-called "takedown" letter Universal sent to Lenz after she posted the video in February 2007. Music and movie companies send tens of thousands of such letters under the copyright law each year, essentially forcing the material to be at least temporarily removed unless
Advertisement
the target fights the request.
Lenz fought back hard, backed by the Electronic Frontier Foundation, a San Francisco-based civil liberties organization. She maintains that the video was a harmless, legal use of a popular song, and that her case exemplifies how a powerful industry can abuse the copyright law, known as the Digital Millennium Copyright Act.
Fogel dismissed a previous version of Lenz's lawsuit, but her lawyers filed a revised complaint that recasts the case as a test of what copyright holders must consider before sending out takedown letters. Electronic Frontier Foundation lawyers urged the judge to keep the case alive, arguing that companies such as Universal have an obligation to investigate and evaluate a video such as Lenz's before firing off the threatening letters.
Claim of 'fair use'
"It's a tiny, blurry little home movie," said Corynne McSherry, the foundation's attorney on the case.
Lenz and her legal team depict the video as a "fair use" of the Prince song. But Universal attorneys insist the company had the legal right to send the letter in Lenz's case, and that it would be unfair to artists and media companies to force them to undertake lengthy inquiries before asserting copyright violations.
Fogel took the company's request to dismiss the case under consideration and will rule later.
"The copyright owner is arguing that this is infringing; Lenz says it is fair use," said Mark Lemley, director of Stanford University's Law, Science and Technology clinic. "There are no cases directly on this question of user-generated content that incorporates songs as background. Lenz will be the first."
In the meantime, Lenz is prepared to take her case as far as it goes in the courts. The video is back up on YouTube, but that's not enough to appease Lenz.
"Somebody needs to tell these music companies they can't just throw out these (takedown letters) and accuse people of violating federal crimes," she said. "I didn't like feeling like I'd done something wrong, even though I knew I hadn't. It made me panic."
Friday, July 18, 2008
Sunday, April 13, 2008
Intellectual Property - The Question
One of the things that I have been unable to resolve for myself is whether people should have to pay for music.
If individuals use music to generate revenue, part of the revenue belongs to the author. Granted. But if I am simply listening to music without paying for it, should I be charged with a crime?
The argument from record companies is that downloading music illegally is like stealing from a shop. The latter is a crime and so should the former be.
I guess the greater question here is who owns the right to music, art, etc., and when do things become a crime?
Who owns music? How far is this discussion away from 'Who owns water and air'? That is the purpose of the next discussion.
If individuals use music to generate revenue, part of the revenue belongs to the author. Granted. But if I am simply listening to music without paying for it, should I be charged with a crime?
The argument from record companies is that downloading music illegally is like stealing from a shop. The latter is a crime and so should the former be.
I guess the greater question here is who owns the right to music, art, etc., and when do things become a crime?
Who owns music? How far is this discussion away from 'Who owns water and air'? That is the purpose of the next discussion.
Sunday, March 9, 2008
O&A Innovation
Right... not sure where you ran off to... but to continue with my smoke exhalations on my couch with kool-aid.. I believe in perfect markets and the right of mankind to have perfect markets and perfect access to capital... I also acknowledge that the world is not built that way...
In the O&A space, I think there are three issues (listed as ones that I find happiness solving):
1. Markets are inefficient --> Selling costs
2. Capital is limited --> Finance costs
3. Governments --> Taxes...
and all O&A innovations are a result of trying to minimize these costs for a business (which again in my view is purely S meeting the needs of C), costs which lead to a loss of overall value...
So to move into my grey zone... someone needs to take the trouble to create a market, make it efficient etc... fine... I am willing to acknowledge that and let the 'Market' be a business in itself... The claim therefore is, that the C and the S 'need' (they do not have the fundamental right) a market, some person 'S-M' has provided this service... he is an S... he has a cost, the S, the C, and S-M agree on a price for the service and we are in the business of 2-sided markets.... Google, eBay, and related platforms, I don't want them... but I need them in todays world... badly.... hence I bow to them..
Consider drug development... say the Masai in Africa have a big problem with blindness... Merck has an idea and a way to find a cure... the Masai want the cure... they have cows, Merck wants $s. In the olden days, it would be easy... Merck gives the drug, takes the cows.... is there a cow-money-blindnessDrug market? If so, that is innovation... The Masai don't want this market, but they need it... I bow to the market maker...
Capital.... this is a tricky one. for me.. (1) access and (2) availability are the two issues here I think... Access I think is a fundamental right... availability is on merit... access is a market issue, discussed above...
Availability of capital, since it is limited, is based on return on invested capital... the assumption here (atleast in the beginning I am sure) is that the firm that meets the biggest need will get the biggest returns.. returns are used as a proxy for satisfied-needs... all good for me...
Next problem is the risk associated with the return...
Now, you never know if you are meeting a need perfectly... hence given perfect markets and no government, there is still that risk... but this is part of CSpace and Sspace... and understanding it better... this is business risk... when this is better I bow...
From a firm's point of view, many times the game is, how do I reduce the risk for 'myself' and get access to the capital... you either move the whole risk to a third party say a supplier... and claim that you have reduced risk... and gain access to capital... that is not innovation... that is cheating... investor ABC funding the firm will not lose their money... but investor XYZ who funded the supplier will..
and THIS is where I have the biggest problem... the risk has not gone anywhere... it has just been moved from one place to another -->obfuscation/cheating... or from the present to the future --> gambling... you want to show me innovation here... ELIMINATE this risk from the system completely... and THEN I will bow...
Taxes... don't even get me started... anyone who claims innovation or value creation here must be an investment banker :)...
Shyam.
In the O&A space, I think there are three issues (listed as ones that I find happiness solving):
1. Markets are inefficient --> Selling costs
2. Capital is limited --> Finance costs
3. Governments --> Taxes...
and all O&A innovations are a result of trying to minimize these costs for a business (which again in my view is purely S meeting the needs of C), costs which lead to a loss of overall value...
So to move into my grey zone... someone needs to take the trouble to create a market, make it efficient etc... fine... I am willing to acknowledge that and let the 'Market' be a business in itself... The claim therefore is, that the C and the S 'need' (they do not have the fundamental right) a market, some person 'S-M' has provided this service... he is an S... he has a cost, the S, the C, and S-M agree on a price for the service and we are in the business of 2-sided markets.... Google, eBay, and related platforms, I don't want them... but I need them in todays world... badly.... hence I bow to them..
Consider drug development... say the Masai in Africa have a big problem with blindness... Merck has an idea and a way to find a cure... the Masai want the cure... they have cows, Merck wants $s. In the olden days, it would be easy... Merck gives the drug, takes the cows.... is there a cow-money-blindnessDrug market? If so, that is innovation... The Masai don't want this market, but they need it... I bow to the market maker...
Capital.... this is a tricky one. for me.. (1) access and (2) availability are the two issues here I think... Access I think is a fundamental right... availability is on merit... access is a market issue, discussed above...
Availability of capital, since it is limited, is based on return on invested capital... the assumption here (atleast in the beginning I am sure) is that the firm that meets the biggest need will get the biggest returns.. returns are used as a proxy for satisfied-needs... all good for me...
Next problem is the risk associated with the return...
Now, you never know if you are meeting a need perfectly... hence given perfect markets and no government, there is still that risk... but this is part of CSpace and Sspace... and understanding it better... this is business risk... when this is better I bow...
From a firm's point of view, many times the game is, how do I reduce the risk for 'myself' and get access to the capital... you either move the whole risk to a third party say a supplier... and claim that you have reduced risk... and gain access to capital... that is not innovation... that is cheating... investor ABC funding the firm will not lose their money... but investor XYZ who funded the supplier will..
and THIS is where I have the biggest problem... the risk has not gone anywhere... it has just been moved from one place to another -->obfuscation/cheating... or from the present to the future --> gambling... you want to show me innovation here... ELIMINATE this risk from the system completely... and THEN I will bow...
Taxes... don't even get me started... anyone who claims innovation or value creation here must be an investment banker :)...
Shyam.
Sunday, February 24, 2008
A recent email to a friend...
'I bow my head to these people... If this were on an iPhone, I would be willing to pay what the iPhone currently costs :).'
Why do I seem to appreciate technological innovation more than business innovation...
Allow me to narrate my black and white view point with the understanding that I do ackowledge the existance of a grey area.... maybe I will write another email on the grey...
I also start with the fact that I do appreciate business innovation... but I have seen very little of it... innovation for me is a fundamental change in the way things happen... fundamental... it cannot be an adaptation, improvement, or a pattern-match... it has to be a change at the very basic level.. a quantum leap...
But then this view is also defined by what I consider business to be, whom it should serve, and where the innovation should lie...
Here is what I think a business is.... there are individuals (C)... in society... who need stuff (Cspace)... and there are individuals (S) within society... who can meet (Sspace) that need... everything else is overhead and administrative (O&A)... Business, for me is S meeting the needs of C.. end of story.
I also recognize the importance of the O&A in a complex and tangled world... but that is not business, imo... that is the process of enabling business... now you can easily argue that managing the complexity today and enabling business is also a business... my argument against it is that (a) yes, people who enable business are important and needed... (b) but even so, it is not the fundamental need..
I think after around the creation of the church (the institution, not the religion) and then the East India Company, enabling business has become more and more about explicitly capturing value... and when you are in the 'business' of capturing value, the only person you serve is yourself...
My view of business is a process where society (made up of the Cs and the Ss) is served... that business is only served if there are innovations in Cspace and Sspace and the O&A does their job and lets them meet freely...
So the only current innovations in O&A that I appreciate are the ones that break barriers and eliminate middle men and increase efficiencies.... they allow the pie to grow in size... they take the focus away from value capture to the value creation...
I therefore appreciate eBay's model for letting me as a C meet an S anywhere in the world... I also appreciate them for allowing us to set the price... I am not constrained by the fake 'market-price' of a good or service... I appreciate Google for letting me find information... I LOVE Google for not charging me any money.... I consider them to be the modern-day robbin hood... they take money from the rich and essentially pass the benefit down to me... I love micro-credit for making access to capital easier... given the current state of the world and how business is conducted, I bow to them for breaking through... these are addressing fundamental O&A problems according to me...
Innovations in (Cspace) or (Sspace)... now that is where true business innovation lies imo... is human nature changing so that there is a change in (Cspace)... is the demographic of C changing and how does that affect Cspace... what are the (Sspace)s available to meet that... that is where innovation lies... how do the (S)s recognize the (C)s? THAT is a person connecting with another person and meeting each other's needs... that is where innovation lies.... in business... in my opinion...
Therefore coming back to the case of ABCCo... I really like what the guy is doing... clearly someone has a need he is meeting... what are the components of his innovation..? As an S, he is providing talent, flexibility, and reponsiveness, and the knowledge-base synergies he builds up during his work... now how he optimizes and executes that are all games in Sspace... personally, I am more interested in those strategies... that will increase the size of the pie... this makes me go.. 'Sigh... love'
Whether he shares in the revenue risk or gets his payment upfront is now how should the pie be split... value capture games... in the current situation that is important to deal with... but never sustainable... tomorrow the balance will tilt and your advantage will go... it is a transient game.. I also really do not see an innovation here.. it is at best a pattern-match or an adaptation... but this is a hard-line view, which I recognize... but what to do... I can play this game but this does not make me go 'Sigh... love...'
So... I love Microvision cos they are back to the basics... they met one of my long-pending needs... I bow to them...
Shyam 'TheDolphinWhoHadToLearnTheWayofTheShark' Raghunandan
'I bow my head to these people... If this were on an iPhone, I would be willing to pay what the iPhone currently costs :).'
Why do I seem to appreciate technological innovation more than business innovation...
Allow me to narrate my black and white view point with the understanding that I do ackowledge the existance of a grey area.... maybe I will write another email on the grey...
I also start with the fact that I do appreciate business innovation... but I have seen very little of it... innovation for me is a fundamental change in the way things happen... fundamental... it cannot be an adaptation, improvement, or a pattern-match... it has to be a change at the very basic level.. a quantum leap...
But then this view is also defined by what I consider business to be, whom it should serve, and where the innovation should lie...
Here is what I think a business is.... there are individuals (C)... in society... who need stuff (Cspace)... and there are individuals (S) within society... who can meet (Sspace) that need... everything else is overhead and administrative (O&A)... Business, for me is S meeting the needs of C.. end of story.
I also recognize the importance of the O&A in a complex and tangled world... but that is not business, imo... that is the process of enabling business... now you can easily argue that managing the complexity today and enabling business is also a business... my argument against it is that (a) yes, people who enable business are important and needed... (b) but even so, it is not the fundamental need..
I think after around the creation of the church (the institution, not the religion) and then the East India Company, enabling business has become more and more about explicitly capturing value... and when you are in the 'business' of capturing value, the only person you serve is yourself...
My view of business is a process where society (made up of the Cs and the Ss) is served... that business is only served if there are innovations in Cspace and Sspace and the O&A does their job and lets them meet freely...
So the only current innovations in O&A that I appreciate are the ones that break barriers and eliminate middle men and increase efficiencies.... they allow the pie to grow in size... they take the focus away from value capture to the value creation...
I therefore appreciate eBay's model for letting me as a C meet an S anywhere in the world... I also appreciate them for allowing us to set the price... I am not constrained by the fake 'market-price' of a good or service... I appreciate Google for letting me find information... I LOVE Google for not charging me any money.... I consider them to be the modern-day robbin hood... they take money from the rich and essentially pass the benefit down to me... I love micro-credit for making access to capital easier... given the current state of the world and how business is conducted, I bow to them for breaking through... these are addressing fundamental O&A problems according to me...
Innovations in (Cspace) or (Sspace)... now that is where true business innovation lies imo... is human nature changing so that there is a change in (Cspace)... is the demographic of C changing and how does that affect Cspace... what are the (Sspace)s available to meet that... that is where innovation lies... how do the (S)s recognize the (C)s? THAT is a person connecting with another person and meeting each other's needs... that is where innovation lies.... in business... in my opinion...
Therefore coming back to the case of ABCCo... I really like what the guy is doing... clearly someone has a need he is meeting... what are the components of his innovation..? As an S, he is providing talent, flexibility, and reponsiveness, and the knowledge-base synergies he builds up during his work... now how he optimizes and executes that are all games in Sspace... personally, I am more interested in those strategies... that will increase the size of the pie... this makes me go.. 'Sigh... love'
Whether he shares in the revenue risk or gets his payment upfront is now how should the pie be split... value capture games... in the current situation that is important to deal with... but never sustainable... tomorrow the balance will tilt and your advantage will go... it is a transient game.. I also really do not see an innovation here.. it is at best a pattern-match or an adaptation... but this is a hard-line view, which I recognize... but what to do... I can play this game but this does not make me go 'Sigh... love...'
So... I love Microvision cos they are back to the basics... they met one of my long-pending needs... I bow to them...
Shyam 'TheDolphinWhoHadToLearnTheWayo
Sunday, January 6, 2008
The definition and origin of a firm
So then, we have the individual, the government, business... and now we have the firm.... let me first define a firm.
A firm is an entity (open or closed) in society that is allowed by the laws of the land and within these laws to conduct business and create wealth for itself.
A firm takes in raw materials, employees, capital from society to create a product or service and sells it to members of the society willing to pay for it.
Now I think that is a reasonable and complete definition of what a firm is and what it does. I will look up some of my economics books and try to verify it...
How did business, which was simply open trade amongst the individuals in society, lead to the creation of the firm? Why did society allow the creation of a boundary between itself and business?
A firm is an entity (open or closed) in society that is allowed by the laws of the land and within these laws to conduct business and create wealth for itself.
A firm takes in raw materials, employees, capital from society to create a product or service and sells it to members of the society willing to pay for it.
Now I think that is a reasonable and complete definition of what a firm is and what it does. I will look up some of my economics books and try to verify it...
How did business, which was simply open trade amongst the individuals in society, lead to the creation of the firm? Why did society allow the creation of a boundary between itself and business?
Saturday, January 5, 2008
Society and the poor, the weak, and the disadvantaged...
This is a separate post since I need to deviate from 6500 BC in order to discuss non-contributors. But in order to be complete...
I will stick with the survival theory... it is the basis for my argument and my instincts point that way.
Unless the poor, the weak, and the disadvantaged are able to increase the probability of survival, the set of present contributors has no reason to care.
The other question being, what kind of care is needed by these set of non-contributors.
I will propose that, in general, the set of non-contributors want to become contributors. This is sort of an untested hypothesis... I claim this hypothesis to be true based on the fact that the set of non-contributors who do not want to be contributors have no hope. Society will discard them. I will also make the claim here that the % of non-contributors who do not want to contribute is small.
Non-contributors who want to be contributors... they may know how, they may not know how to... but they do want it... that is the key.
Right so what is society's responsibility to them?
I believe that numbers and diversity increase society's ability to provide an increased probability of survival. I am not getting into details here but I think the argument would run along similar lines as genetics and mutation. Maybe I will elaborate on this in a later post.
Therefore, society (consisting of the present contributors) MUST, in their own benefit try to make these non-contributors into contributors. This is in their long term benefit.
I will stick with the survival theory... it is the basis for my argument and my instincts point that way.
Unless the poor, the weak, and the disadvantaged are able to increase the probability of survival, the set of present contributors has no reason to care.
The other question being, what kind of care is needed by these set of non-contributors.
I will propose that, in general, the set of non-contributors want to become contributors. This is sort of an untested hypothesis... I claim this hypothesis to be true based on the fact that the set of non-contributors who do not want to be contributors have no hope. Society will discard them. I will also make the claim here that the % of non-contributors who do not want to contribute is small.
Non-contributors who want to be contributors... they may know how, they may not know how to... but they do want it... that is the key.
Right so what is society's responsibility to them?
I believe that numbers and diversity increase society's ability to provide an increased probability of survival. I am not getting into details here but I think the argument would run along similar lines as genetics and mutation. Maybe I will elaborate on this in a later post.
Therefore, society (consisting of the present contributors) MUST, in their own benefit try to make these non-contributors into contributors. This is in their long term benefit.
Society and the Individual...
The individual created society for its benefit.... Does that make society more important than the individual?
Society created business for its benefit... Does that make business more important than society?
Similar questions but there is some more work to be done... I will start with the following... what does the society owe the individual? It is clear that the individual owes society discipline, sacrifice.. give up freedoms in exchange for an increased probability of survival. What about the other way around?
The society MUST provide an increased probability of survival to the individual. Aha... the question then is which individual?
We have earlier defined society as the present set of contributing individuals.
What about the poor, the weak, and the helpless? What about the children? The set of non-contributors that is....
Children are the PV of the future survival, so yes, the set of present contributors bears their burden.
The old were the set of past contributors... does society owe them anything? The metric being future survival... I will propose a theory here.. the set of present contributors wants (I am not using needs here) to survive.. if it terminates its old, then soon it will be their turn... hence they must take care of their old so that their children will do the same... thus society MUST care for its elderly...
{It is clear that as much as possible, I do not believe in moral arguments... I am a strong believer in the fact that morality is a survival mechanism}
Now the generic set of non-contributors... the poor, socio-economically disadvantaged... what is society's responsibility towards them?
I will stop this post here... since in 6500 BC, I do not believe there were any non-contributors... they were discarded. Life was hard. I will get back to this set of people in a little while since this is at the core of my discussion...
Society created business for its benefit... Does that make business more important than society?
Similar questions but there is some more work to be done... I will start with the following... what does the society owe the individual? It is clear that the individual owes society discipline, sacrifice.. give up freedoms in exchange for an increased probability of survival. What about the other way around?
The society MUST provide an increased probability of survival to the individual. Aha... the question then is which individual?
We have earlier defined society as the present set of contributing individuals.
What about the poor, the weak, and the helpless? What about the children? The set of non-contributors that is....
Children are the PV of the future survival, so yes, the set of present contributors bears their burden.
The old were the set of past contributors... does society owe them anything? The metric being future survival... I will propose a theory here.. the set of present contributors wants (I am not using needs here) to survive.. if it terminates its old, then soon it will be their turn... hence they must take care of their old so that their children will do the same... thus society MUST care for its elderly...
{It is clear that as much as possible, I do not believe in moral arguments... I am a strong believer in the fact that morality is a survival mechanism}
Now the generic set of non-contributors... the poor, socio-economically disadvantaged... what is society's responsibility towards them?
I will stop this post here... since in 6500 BC, I do not believe there were any non-contributors... they were discarded. Life was hard. I will get back to this set of people in a little while since this is at the core of my discussion...
Thursday, January 3, 2008
The split....
So now we have the trifecta working together to ensure the survival of the society. There are many places to go from here. I choose the following question.
How did we go from this happy simple world to the currently prevelant absolute trichotomy between the players? Don't ask me what trichotomy means...
Before that, another question pops up: 'Who is responsible to whom in this simple world?'
It is clear that the individual voluntarily created society to ensure his/her survival (yes, I believe in giving the Paleolithic woman equal rights). The individual then gave up some of his benefits in exchange for an increased probability of survival.
Society (as we have so vaguely not defined it) owes the individual nothing. It is a creation of the individual for his/her own benefit. Thus it exists without any debts.
Right... the government came about to protect society from imploding. It was created by society, not by individuals, for its protection. Hence its only and primary responsibility should be to society.
Who created business? Was it a creation of society to better itself or the individual contributor to better himself or herself? I propose that it was an agreement between two individuals and by extension, an agreement between members of society.
Thus, in 6500 BC or thereabouts, I claim that, society created business to strengthen itself and its members.
I take a break at this point:
Society created business - to strengthen itself (society) - and its members.
How did we go from this happy simple world to the currently prevelant absolute trichotomy between the players? Don't ask me what trichotomy means...
Before that, another question pops up: 'Who is responsible to whom in this simple world?'
It is clear that the individual voluntarily created society to ensure his/her survival (yes, I believe in giving the Paleolithic woman equal rights). The individual then gave up some of his benefits in exchange for an increased probability of survival.
Society (as we have so vaguely not defined it) owes the individual nothing. It is a creation of the individual for his/her own benefit. Thus it exists without any debts.
Right... the government came about to protect society from imploding. It was created by society, not by individuals, for its protection. Hence its only and primary responsibility should be to society.
Who created business? Was it a creation of society to better itself or the individual contributor to better himself or herself? I propose that it was an agreement between two individuals and by extension, an agreement between members of society.
Thus, in 6500 BC or thereabouts, I claim that, society created business to strengthen itself and its members.
I take a break at this point:
Society created business - to strengthen itself (society) - and its members.
The firm, society, and the government - The beginning
What is the game that these three entities play? What is its purpose? Let me go back to about... say 6500 BC. Life was simple back then.
It is almost certain that society came first as a natural means of survival of a group. This naturally led to inter-dependence and using a set of shared and limited resources.
Shared resources lead to conflict and hence it is safe to say that there was a set of rules created to share these resources and resolve this conflict. It is therefore safe to assume that some sort of government came next. Government... religion... I will not quibble with semantics. The role of government was then to provide a level playing field for society to use shared resources.
Once there was a relatively level playing field, makind I assume, moved on to greater things. Specialization. I can hunt, you can cook... we have a deal.. business therefore probably came last. Its purpose was to create wealth and increase the wealth of the society as a whole.
This is a key point. Individuals did not start trading because they wanted to be rich. Individuals started trading because they were dependent on each other to survive. There was a realization that by doing what each did best, the group as a whole was better off.
Right... to summarize...
1) society was created first as a means for survival
2) government was formed to regulate the use of the resulting set of shared and limited resources
3) individuals specialized in order to make the set of contributors to society better off
And to answer my previous question.. 'What is the game that they are all playing?'
'The game is survival... of the group of a closed set of individual contributors called the society'.
These are my Lemmas for this section... naturally if one disagrees at this point, it makes the subsequent conversations harder....
It is almost certain that society came first as a natural means of survival of a group. This naturally led to inter-dependence and using a set of shared and limited resources.
Shared resources lead to conflict and hence it is safe to say that there was a set of rules created to share these resources and resolve this conflict. It is therefore safe to assume that some sort of government came next. Government... religion... I will not quibble with semantics. The role of government was then to provide a level playing field for society to use shared resources.
Once there was a relatively level playing field, makind I assume, moved on to greater things. Specialization. I can hunt, you can cook... we have a deal.. business therefore probably came last. Its purpose was to create wealth and increase the wealth of the society as a whole.
This is a key point. Individuals did not start trading because they wanted to be rich. Individuals started trading because they were dependent on each other to survive. There was a realization that by doing what each did best, the group as a whole was better off.
Right... to summarize...
1) society was created first as a means for survival
2) government was formed to regulate the use of the resulting set of shared and limited resources
3) individuals specialized in order to make the set of contributors to society better off
And to answer my previous question.. 'What is the game that they are all playing?'
'The game is survival... of the group of a closed set of individual contributors called the society'.
These are my Lemmas for this section... naturally if one disagrees at this point, it makes the subsequent conversations harder....
Wednesday, January 2, 2008
The Stakeholder View - 1
What is business. That is the question that I have been thinking about for several years now. Seems like a pretty stupid thing to think about, but well...
One of the things I learnt in business school was that the answer to most questions was 'It depends... es kommt darauf an'. I guess it does depend on the perspective one takes and the boundaries that one chooses to draw.
If I look at the landscape of business today, it is filled with Corporations, SMEs, and entrepreneurs all driven by the need to make cash profits. That is their singular motive and the reason for their existence.
Axiom 1 > Generate more cash. In the hands of the firm. Than what they started off with.
That is then the well-known shareholder view of the firm. Take the inputs from the employees, capital providers, and suppliers and provide for the customer... fulfill Axiom 1.
Perfect... but then the only monkey wrench in the works is the the 'role' of business... the word role means that you are part of a bigger whole... your role is Axiom 1... but then, what is the play?
Therefore a stakeholder view of the firm is presented... Axiom 1 is played out in the broader context of society and the government. Throw in these two broadly defined constituencies and we have a play... the players being the firm, society, and the government...
Thus, if our role-players (the firm, the employee, the supplier, and the capital provider) are all in business... and if each of them is happy (I may or may not discuss the nature of this happiness)... then the firm fulfills Axiom 1 and its role in the play. We can now discuss how it plays with the other two actors: society and the government. I will tend to ignore the government in my discussions... they might jump in once in a while though.
Some questions come to mind here: What is the play that the firm, society, and the government are in? What does society give to the firm? What does the firm get in return? What is this society anyway?
One of the things I learnt in business school was that the answer to most questions was 'It depends... es kommt darauf an'. I guess it does depend on the perspective one takes and the boundaries that one chooses to draw.
If I look at the landscape of business today, it is filled with Corporations, SMEs, and entrepreneurs all driven by the need to make cash profits. That is their singular motive and the reason for their existence.
Axiom 1 > Generate more cash. In the hands of the firm. Than what they started off with.
That is then the well-known shareholder view of the firm. Take the inputs from the employees, capital providers, and suppliers and provide for the customer... fulfill Axiom 1.
Perfect... but then the only monkey wrench in the works is the the 'role' of business... the word role means that you are part of a bigger whole... your role is Axiom 1... but then, what is the play?
Therefore a stakeholder view of the firm is presented... Axiom 1 is played out in the broader context of society and the government. Throw in these two broadly defined constituencies and we have a play... the players being the firm, society, and the government...
Thus, if our role-players (the firm, the employee, the supplier, and the capital provider) are all in business... and if each of them is happy (I may or may not discuss the nature of this happiness)... then the firm fulfills Axiom 1 and its role in the play. We can now discuss how it plays with the other two actors: society and the government. I will tend to ignore the government in my discussions... they might jump in once in a while though.
Some questions come to mind here: What is the play that the firm, society, and the government are in? What does society give to the firm? What does the firm get in return? What is this society anyway?
Why
This is my first official blog since I realized that I needed some space to write down some of my thoughts. I also intend to compile a whole bunch of parallel ideas and thoughts on this topic of society and business.
This space will be devoted to my view on the role of business in modern society. I am a reader of history and therefore I will also attempt to explore the history of business in society and trace its evolution.
I don't have a particular industry in mind. I love machines, consumers, telecommunications, p2p societies, freedom, opportunity, and the market.
My favorite subjects are economics, optics, physics, and history none of which I have formal training in and all of which I use extensively in my day-to-day work and life. This will constantly come out in my writings.
I have spent some amount of time and effort with a most amazing non-profit and I will elaborate on my learnings from my experiences there.
I intensely hate order and simultaneously love it.
This space will be devoted to my view on the role of business in modern society. I am a reader of history and therefore I will also attempt to explore the history of business in society and trace its evolution.
I don't have a particular industry in mind. I love machines, consumers, telecommunications, p2p societies, freedom, opportunity, and the market.
My favorite subjects are economics, optics, physics, and history none of which I have formal training in and all of which I use extensively in my day-to-day work and life. This will constantly come out in my writings.
I have spent some amount of time and effort with a most amazing non-profit and I will elaborate on my learnings from my experiences there.
I intensely hate order and simultaneously love it.
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