Thursday, December 18, 2008

Global Capital 2: ICT, Capitalism and Government

A friend's yahoo email add was hacked, the hacker or virus was able to get into his address directory, and a message announcing or promoting a particular product and website was sent to everyone in his address directory. What's worse, he lost many of the contacts in his directory. Another friend commented that he's using Linux to protect himself from those undesirable hackers and/or viruses. He mentoned one Linux product or derivative, Kubuntu.

I only hear about Linux, but I haven't tried it yet, or too lazy to try my hand in learning those softwares and IT systems. Just a typical user of whatever is user-friendly, reliable, cheap or freely available.

Kubuntu sounds like an African term or village. Nonetheless, innovations like Kubuntu and its cousins or distant relatives, are all products of capitalism and its subversive nature of trying to knock down the complacent and irresponsible, anytime and anyday of the year.

Yahoo, google, yahoogroups, googlegroups, blogger, facebook, friendster, multiply, Linux, etc., are all products of capitalism too and the continuing innovations inherent to it. These are all free products and services, freely available to the people who wish to use them anytime and anywhere, so long as they have access to the internet. And somehow the capitalists, the inventors of those IT systems are making money somewhere. Zero coercion, zero taxation, zero bureaucracy, but there are free services and millions or billions of $ of income to the inventors. That's the "magic" of capitalism.

And capitalism is being ridiculed by many people who so love government regulations, if not socialism. They even herald the "demise" of capitalism with the current global financial turmoil as the single biggest proof for their claim. But it's not the "crisis" of capitalism. Capitalism is simply removing and culling the complacent and irresponsible among its players. The current turmoil is market self-correction to remove the excesses and abuses in the market. It's a healthy process over the long term, though there are pains in the short-term, the same way that there were unjustied gains in the past as a result of those excesses.

Oeople are rationale by nature. If they lose their jobs in this particular industry and company, there is nothing that can stop them from trying another job or another career in another industry, in another company, in another region or country and continent, using another technology and management style, etc. There are always options and alternatives, provided people and markets are allowed to make adjustments freely, and not curtailed by endless regulations and restrictions to mobility.

In the coming months and years, more versions of kubuntu and other derivative products of Linux or competitors by the latter, will be made available to the people around the world, freely or cheaply. Because capitalism never rests. It's a dangerous virus that can cripple the less innovative players by understanding the needs and whims of the people, the consumers around the world, and supplying such changing needs and whims.

Related Papers that I wrote,

(1) ICT and Government

December 03, 2008

Today, I was one of five speakers in the "Congress briefing on the Global IT industry" held at Edsa Shangrila Hotel. The event was sponsored by the Computing Technology Industry Association (CompTIA). All the 4 speakers were industry players, I was the only "outlier" coming from a think tank that dabbles on various topics and subjects. It is also my first paper on information and communication technology (ICT).

My paper is entitled "ICT growth amids mixed government intervention". Below are my concluding notes:

A mixture of less government intervention and regulation in the ICT sector, and a regime of bureaucratic business regulations plus burdensome multiple taxation in general, created some modest growth in internet use and penetration in the Philippines. The 15 percent of Philippine population linked to the global web in this period is small even among many neighboring countries in east and south-east Asia.

The government needs to step back, not come and intervene more, in business regulations and taxation in general, and ICT sector in particular. The proposed creation of a new and big department to harmonize government use of ICT in the short-term, and centralize regulation of private enterprises in the ICT sector later, may create more problems than solutions because the pursuit and propagation of information is one of the inherent values of people. But since the DICT bills are already in advanced stage of possible enactment in Philippine Congress, regulatory restraint should be emphasized in the said measure.

The government and ICT players should go for policies that stimulate competition-driven solutions, innovation and investment. And policies designed to address perceived market inequities should be avoided as such measures are easily used to advance protectionist trade policies and an anti-competitive business environment.

In the current debate in the EU regarding more regulation of broadband access providers (BAPs) for instance, two writers proposed that “the best approach to improving the provision of broadband access is to ensure that the environment in which BAPs operate is competitive. That means removing regulatory and other government-imposed barriers to competition, not creating new barriers in the form of restrictions on differentiation and mandatory quality of service (QoS).” (Morris, Gelder, 2008).

(2) The Ratings Agencies

February 11, 2008

The world has plenty of big banks, big car manufacturers, big IT companies, big airlines, big hotel chains, etc. But there are only 3 big ratings firms - S&P, Fitch and Moody’s. This looks like an oligopolistic industry. How come? I am curious.

In a number of indebted countries like the Philippines, these ratings agencies are often more powerful than the IMF in reviewing these countries' “credit-worthiness” or their ability to pay later. I have read some of the analysis by the staff of these ratings agencies, and funny that they often sound like the IMF bureaucrats that they are supposed to replace. For instance, it's not uncommon to read the former arguing for "more government spending and avoid early 'balance budget' and tax-cut goals for macroeconomic stability."

Turns out that it's the companies being reviewed, or the countries being reviewed, that often pay for these ratings agencies. Hence, the subprime crisis in the US was not "forewarned" by these agencies.

* See also Global Capital 1: Why Market Turbulence are Necessary, November 19, 2007

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