Quote of the Day

Saw this quite wonderful quote on A Western Heart,

“Our business model is one of very high risk: We dig a very big hole in the ground, spend three billion dollars to build a factory in it, which takes three years, to produce technology we haven’t invented yet, to run products we haven’t designed yet, for markets which don’t exist. We do that two or three times a year.”

Paul Otellini, CEO of Intel

It encapsulates everything that is great about the free market – hope, optimism, faith in science, a willingess to take risk, the knowledge that you will be rewarded for this risk, and a total belief in your people to succeed.

God bless free enterprise.

22 thoughts on “Quote of the Day

  1. On the flipside of this, last night I heard a radio ad for a company who’s sole business model is to find Government Grants for businesses doing research. It made my testicles ache.

  2. And converesely folks, if you want a truely depressing read about a key area where the spirit of enterprise is becoming an endangered species, I suggest bracing yourself and then surfing over to Foreign Policy magazine to read “Europe’s Philosophy of Failure”


    Very sobering read as aging radicals commemorate their triumphant summer of student unrest in 1968. Gives you a clue as to what those supposed students who spent so much time out of a class room protesting managed to do with their lives in the interim 😦

  3. Kevo

    This is very true and a problem.

    One of the great features of capitalism is that it has allowed those working in the private sector to greatly increase their pay. However, the salaries of those working in the public sector has not kept pace. Inevitably the quality of teachers has declined. A recent study in Australia showed that a generation ago teachers fell in the second quintile of academic performance (the 20-40% band). Today they come from the fourth quintile (the 60-80% band).

    Also it is no surprise that those working in the state sector should be suspicious of capitalism, partly out of envy and partly ignorance.

    However, the pernicious effects of this brainwashing does not appear to be working as the most popular career choices for Australian students are two of the most ruthlessly capitalistic industries – Entertainment and Sport. 🙂

  4. Dear Pommygranate,

    Indeed your point is well made about the teaching profession. I guess it is the old story of “Pay peanuts etc etc”. One doesn’t want to rub too much salt in the financial wounds of the many committed folk who have taken up teaching with enthusiasm in return for modest financial reward.

    And how do we redress this ? A lot of Australian kids are ambitious and look to leverage their capabilties. For better or worse, I have seen them flocking to do the entrance exams at Macquarie Bank in the hope that they will score big time, as is their right. So changing the mix of teaching skills in the future – a debate for another topic ?

    I guess my main thesis is not just that public sector workers may be suspicious of capitalism and free enterprise within that culture as you rightly point out.

    I dare to suggest that the bureaucracies, academia, media and the teaching professions have become long term, remunerative and sustaining homes for implacible opponents of the free enterprise, capitalist system that pays their salaries. Heck, some of them such as Phillip Adams have profited hugely by working within the system they want to tear down.

    Its seems to me a perverse irony that the real social revolutionaries didn’t wind up as Bader-Meinhof urban terrorists or grinding out pamphlets in a dusty back room at some radical political organisation. They got themselves into positions where they could significantly change society, just at a more leisurely pace than violent revolution.

    Again, I hope Australia will not and does not go down the Europath to social and economic stagnation. But one would also suggest that we have read enough lately about curriculum wars in Australia to suggest a similar risk exists here. And I don’t get very comforted in this context with the thought of Julia Gillard with her hands on the levers of federal education policy.

  5. But with regard to teachers:

    It is not a great secret to those about the enter the profession that they will not be making high salaries; there is no false advertising–at least here in the US.

    So here teaching becomes a magnet for those who have been influenced by social propaganda to “want to give something back” or those for whom the security (and perks aside from salary) are so much more attractive than risk-taking in the private sector.

    But then what happens is that later they discover that a government salary at that level doesn’t give them all the benefits that the more capitalist-minded of the parents of their students can afford, and they therefore deduce that they are under-paid and under-appreciated.

    The truth here is that in the US supply and demand works even in public education. Last year the state of North Carolina graduated more teacher education majors from college than the total number of anticipated entry-level openings in the entire US. There is a glut of teacher candidates (except in science and math), and therefore there is no real pressure on the State to raise the salaries. On the other hand, an excellent math teacher here can often negotiate not only a higher starting salary, but also better perks, because (surprise!) they are in short supply.

    Funny how even when the State attempts to repeal the market, it just keeps on functioning.

  6. I wonder if Phillip Adams has read The Fountainhead and modelled himself on Ellsworth Toohey?

  7. What is that saying? Those who can, do; those who can’t, teach.

    Yeah, I know.. I’m being unfair to teachers. But the truth is, the government has a vested interest in ensuring an oversupply to keep prices down.

  8. Education is easier and cheaper to get into in Australia than Arts. As is Nursing. The cynic in me thinks this is partially because they are traditionally female professions and there are still elements of sexism in the Australian social psyche.

    Beyond that, though, I don’t think they are going to be encouraging potential lawyers and doctors into teaching unless the positions are seen as being as competitive, exclusive and paying as well. I want to get into teaching, but never as a public school teacher in Australia- I’d rather own my own school internationally.

  9. At a party last night, i was chatting to a friend who used to be a teacher. Her observation was that far from wanting to ‘give something back’, most of her fellow trainees entered the teaching profession because they perceived it be a ‘soft’ career with masses of free time. The reality is vastly different, hence the reason that the duration of a teaching career for new starters is now just a paltry four years.

  10. Pommy, A mate of mine is a teacher and has been for awhile, While they still may have a bit to do. I know that they still get the most holiday time out of nearly all positions available in the workforce.

  11. Perry

    Depends on the age of the teacher and the subject they teach. Sciences are easier because they vary little from year to year (i.e. you have to teach Trigonometry, The Periodic Table and Calculus every year) but say, English or History may vary widely as new books and new eras are studied.

    It is also far harder for younger teachers as they must prepare new notes for each topic, prepare new lessons for a class of 35, mark homework for a class of 35, deal with 35 sets of interfering parents and then take the football or the chess team for training in the evenings and often, weekends.

    (Lots of my family are teachers and whilst their hostility toward performance-related pay and refusal to countenance parental choice drives me mad, i can vouch that they do work damn hard).

  12. Mark

    That’s the funny thing. I regularly do. And the answer that always comes back is ‘But how would my performance be measured’?

  13. “to produce technology we haven’t invented yet, to run products we haven’t designed yet, for markets which don’t exist.”

    I don’t want to detract from the positives identified by bloodypommy, but don’t you think Otellini’s prose is a trifle overblown?

    The “unproduced technology” is really just modest evolutionary changes to well-established technology. The undesigned products likewise. And the markets don’t exist? That’s like saying each new edition of the Commodore is risky because nobody has bought the latest one yet.

  14. Jarrah

    What’s more likely to motivate his legions of workers? The above or Jarrah Job, CEO of Average ACME Inc,

    ‘Our business model is one of middling to lowish risk: We dig quite a big hole in the ground, spend conservatively to build a factory in it, to make evolutionary changes to well-established technology, to run products that will certainly sell, for markets which don’t quite exist yet but certainly will soon.’

  15. Holden invested over 1 billion on the last model, ie: costs are very large.
    Risks include fuel prices, trendy environmentalism and local and international tariff protecitons that artifically distort markets and are subject to change at the whim of some politician.
    Holden’s Australian manufacturing sites rely soley on the Commodore don’t they? obviously not ideal risk managment.
    Both Ford and GM have found themselves in financial difficulties laying off workers and losing money (Ford) over recent years particularly in US.

    Sure, the new model Commodore development is not as risky as a nano-tech drug discovery company or small time mining prospecting, but it’s still a good example of the significant risks inherent in all innovation even in big companies.

  16. bloodypommy, you originally said the quote “encapsulates everything that is great about the free market”, but now you’ve downgraded it to just a rah-rah speech to “motivate” the minions?

    I’d say you forgot to list how it displays another prominent feature of capitalism – hype. 😉

    Tim R, I’m not saying Intel or GM are risk-free enterprises. I was just disputing the level of risk Otellini was claiming.

  17. Pharmaceutical development is not in the least risky.

    It costs hundreds of millions to develop a new drug. Most developments fail because their trials suggest they are not safe or effective enough or their manufacture might affect the habitat of the yellow-bellied sap sucker. Or some bureaucrat thinks so.

    If they reach the market they might upset the hearts of people who already have bad hearts (eg Vioxx) and lead to billion dollar lawsuits. Their patents might be set aside to allow generic manufacturers to sell the drug at lower cost (eg AIDS/HIV drugs). The indigenous people from the Amazon jungle in which the fungal spores were found from which the drugs were first extracted might demand huge compensation. And of course absolutely everyone says they are too expensive and refuses to buy them unless they are subsidised by the government.

    Apart from that I mean.

  18. Hype exists in all societies and economies. In a capitalist economy hype can be dealt with most effectively via market adjustments or ignored because trading is voluntary.

    Capitalism (like all economies or politics) can’t guarantee people won’t be guillible but it is the most efficient system for encouraging responsibile rational judgements.
    The same is true of deliberate dishonesty although that should also be illegal.

  19. Jim: No, although I sometimes scan the intro summary on The Australian online edition, he truly is a moonbat. Since they’ve introduced the new online format, I’ve found myself reading less of The Australian’s opinion pieces and editorials. Paper copies aren’t really an option in London.

    It is a shame, because when I was younger I really enjoyed his “fireside chats” with Paul Davies on The Big Questions.

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