Surya Sripati

I'm a strong believer in demand & supply theories. I go to the extent of arguing that, knowing well that most people in this world will call it absurd, even affection that we show towards our wife, children and parents in a particular situation is based on demand & supply theories! - Everything an individual does is based on how much he wants of that 'everything' and how much can the other take of that 'everything'!

Well, that was just a prelude to drive home by belief!

Now, there has been a rage on what Obama & team are doing with Finance, Banking and Automotive industry in the recent past. His team's thinking seems to be in the direction of 'I'm giving you the money so I better run the company' and this is exactly what I'm quite against to!

If one starts to believe that giving money (or investing in a company) is the only qualification to run a company successfully, God help them. I'm not suggesting that the investor (in this case government) should not interfere or that he should just give money and disappear or something of that sort. As an Investor they are fully entitled to have a say in the strategy & operations of the company but nothing beyond.

The very reason for origination and continued existence of 'Owners/Investors' and 'Professional Managers' is that these two are different arts. Yes, at times, you will find an individual who is good at both arts but that is more an exception than norm. This is precisely why I say Governments have no business to do business.

They do have a role in creating a policy framework, infrastructure, regulatory framework etc which are very vital for doing business successfully and all other matters of actually doing a business successfully should be left to those who are good at them.

Here is an interesting piece of transcript of TJ Rodgers, Founder CEO of Cypress Semiconductors. The best way to describe Rodgers is 'brutally candid'.

This is his testimony before the subcommittee on Technology, Environment and Aviation in March 1993 in the context of Clinton Administration trying to intervene in technology industry. I know it is 16 years back and world has undergone a sea change since then. I'm also aware that what Obama's administration is trying to do is lot different to what Clinton tried to do. Nevertheless point remains - lesser the government's intervention in doing business, the better it is for business and people at large!

Complete Transcript - Click Here.

Excerpts below (Blue colored parts are the ones that I believe have great relevance to what Obama's team is doing. Let me urge to readers to go beyond the literal meaning of the text to get the relevance for the current context):

"......Cypress makes data-communications chips used in electronic superhighways, memory chips for supercomputers, and microprocessor modules for massively parallel computers. We would benefit greatly if billions of taxpayer dollars were showered on the various technology projects favored by the Clinton administration. It would be easy for me to support these projects. I could spend one minute talking about our products, a few more discussing the wonders of the basic technologies, a few more minutes on the serious peril we face from other countries, especially the government-financed Japanese and Europeans, and finally, I could ask for a dole--to save American high technology.

But I am here to say that such subsidies will hurt my company and our industry. Why? Because they represent tax-and-spend economics--a brand of economics that is a known failure. I do not want handouts. The men and women of our company do not want handouts. And if Congress wants to help American high technology, handouts are the wrong way to go--especially if they are funded with huge tax increases on individuals and corporations."

"As a high-technology executive who faces the rigors of the market every day, I view both the data highway and any subsidy of high-performance computers as the most recent examples of industries lining up to feed at the public trough. There may be a few select winners, but the majority, and the taxpayers, lose."

"Don't assume that the Pepsi-Cola kid [John Sculley] speaks for Silicon Valley. We do not need pretenders who speak for us. We have visionaries who are rare, important, and doers."

"To Washington I say, please do not help us. The world of technology is complex, fast changing, unstructured, and thrives best when individuals are left alone to be different, creative, and disobedient. Go help the Russians. They are a Third-World technology state. Go help all the people who know how ‘pork' works, and who want to be taken care of. But please do not help us: Anyone who thinks corporate taxes promote employment does not understand the problem."

"I am a strong supporter of industrial policy, but lowering taxes would be the best form of industrial policy we could have. We should balance the budget by cutting spending, and if that means we cannot put money into the high technology infrastructure, that is okay. If wealthy individuals get taxed more, they will spend more time figuring out how to minimize taxes and less time creating wealth."

"....It too serves a useful political purpose. Indeed, it is a game as old as politics itself: divide-and-conquer, or, as Gil Amelio says, preaching "the politics of envy." Yes, the White House tells the American people, we plan to increase spending by hundreds of billions of dollars. But we plan to spend that on "you." Even better, "they"--the bad guys--pay for it"

"In essence, the administration is arguing that by taking my money in the form of higher taxes and "investing" it in subsidies, it can make better investments--more jobs and wealth. Does anyone believe that Washington invests more effectively in high technology than the free market?"

"Washington cannot create more companies like Silicon Graphics. The way to create more Silicon Graphics is to allow knowledgeable investors, steering their money through world-class venture capitalists, to try to fund just the right companies with just the right technologies at just the right time. Even these venture experts are not right all the time. But surely they are right more often than Washington."

"What does work? The ragtag, unmanaged, sometimes-painful melee of the free market. It's not pretty, it's not neat, but it is what has made the United States the world's technology powerhouse."

"America has plenty of work to do on the economic problems we have created for ourselves--problems that trace their roots to fiscal recklessness. Ultimately, though, the economic battles of the 1990s will be won in America's factories, labs, and offices--not in the halls of Congress or the corridors of the Commerce Department. That's good news. America's entrepreneurial companies have the guts, brains, and drive to beat the best the world has to offer. All we need from Washington is the confidence to let us fight it out."