by focusing on the scoreboard. This crisis is bringing to the forefront something I’ve argued for years: the excessive focus on the shareholder in business.

I’ve always believed it’s like how the Philippine Constitution is supposed to be (but isn’t, that’s another story as one of my favorite columnists Conrado de Quiros says)—three co-equal branches.

There are three co-equal branches of business, or should be: The shareholder, the worker and, the consumer. For far too long, the second two have suffered to gratify the first. And no, I’m not a socialist or anything like it. I’m a humanist who cares for people ahead of money.

How can you possibly justify a salary of about US$2 million (general basic annual salary of chief executives, excluding stock options & other bonuses or financial incentives) to manage a business where you pay your secretary a base salary of about US$40,000. This financial crisis has highlighted past complaints that chief executives were making 100 to 200 times the amount of “regular” workers of their corporations. I’ve run businesses, it’s tough, making the right decisions is critical and failure can be disastrous. But 100 to 200 times the amount? The gap is too stark. And AIG has the hide to say it must still pay its managers a bonus despite them causing the company to collapse. I don’t believe in government intervention in such matters, but in this case I do. And I fully support President Obama’s—and everyone else’s—anger. It’s time to bring some rationality back into the system.

Throwing these people in jail for causing a world collapse and throwing millions into poverty because of their personal greed and aggrandizement would be a very acceptable option for me. Giving them a bonus is very definitely not. Incidentally, I have no trouble rewarding people for successful ideas, but I do have a problem with such reward being at the expense of people.

Bill Gates’ net worth is over US$40 billion, that’s 23 percent of the whole Philippine economy of $175 billion. You can pay for a legitimate Windows XP Operating System ranging from P5,000 to P6,000 or pay P100 for a pirated one. Bill had the idea, he deserves a reward, but enough, at 50 times basic cost, to make him a quarter as rich as the Philippines? I don’t think so, the business world has gotten to be out of kilter with human reality.

I’d like to hope this world-shattering crisis will bring some sense of humanity back into the world. In case we’ve forgotten, the world is filled with people and not bits of paper that say you are worth millions of dollars when you’ve done nothing to justify that “wealth.” Actually, it’s a bit of worthless paper now, anyway.

But back to the beginning. Had there been more concern for the consumer (in this case mostly home buyers who clearly couldn’t really afford the houses foisted on them), the greed would not have occurred.

And now the first reaction of many companies is to “retrench,” to “downscale,” to “become leaner,” to use whatever euphemism you like to fire workers. “We’ve given them a very attractive retrenchment package.” B.S., you’ve put them out of a job, you’ve put the welfare of their families, the ability to bring up their kids in jeopardy. They are not some unknown entity who has given you money and then sat back with a martini in hand waiting for you to return it and more, generated from the work the worker did and the profit a customer paid you. I really am sounding like a socialist, am I not? Well, maybe some sort of shift in that direction is the way the world must go. The free market is a great thing, but sadly we have this kind of people in the world who won’t play the game fairly. We need stricter controls.

The crisis is a shock to the system that requires a new lifestyle. You don’t go back to playing tennis after a quadruple by-pass. You certainly shouldn’t go back to gouging as much money out of the system as you possibly can. A lifestyle change is called for. All these fancy financial intermediaries have to go, they add no real value to the system.

Even Jack Welch of GE, a capitalist if ever there was one, recognized this need for change when he said (Financial Times of March 13).

“On the face of it, shareholder value is the dumbest idea in the world. Shareholder value is a result, not a strategy. Your main constituencies are your employees, your customers and your products.”

What’s even dumber is that much of the focus has been on stock market value of a company. Here the company doesn’t even get the money. It does on the first sale of shares—to get the company going —but after that, whoever bought the shares gains when he sells. The value of the shares bears little relationship to the true value of the company. It’s an artificial number based on perception.

Supposedly, about $50 trillion has been lost in the world’s economy. But money just doesn’t go up in smoke— unless there’s a real fire. $50 trillion hasn’t been lost, it was never there. There were bits of paper that said that there was money, but no bank would have honored it (well, maybe the Legacy group would have). Money is tangible, you have it or you don’t. If $50 trillion was lost, who gained it? It can’t just disappear, yet it did because too much of this wealth was in promise. I promise you my company really is worth $XM. And people believed it.

You don’t win a game of tennis by focusing on the scoreboard.

In the Philippines, we haven’t even built the tennis court yet. So the first order of the day is—to build. Thirty-years of a neglect to put in place the infrastructure, in all its ramifications (roads, bridges, ports, airports, irrigation, power, water etc. etc.) has been a major reason for the slowest growth in Asia. For being left behind when we were ahead. Well the President has said much of the stimulus package will be on infrastructure. But how? The bureaucratic systems and impediments that have been there for 30 years are still there today. If it took five years to get a project going last year it will still take five years to get it going this year.

I doubt that there are enough projects at the finally-approved stage to truly stimulate the economy in a meaningful way. I’d be interested to see such a list from government if they believe there is. I mean the President said she would front-load the infrastructure spending in the first half of this year. Well the first half of the first half is almost over and the budget has only just been signed. You’re not going to get much front-loading in three months.

Comments to my columns can be sent to wbfplw@smartbro.net