International -- Readers Report
Investors Have Only Themselves to Blame
Even though "Let the reforms begin" is commendable (Cover Story, July 22), your ideas will not bring back investors for sure. What we are witnessing is equivalent to what happened in Japan until 1989. Chasing ever-higher valuations, creating an asset bubble, and then the inevitable--the bubble gets pricked. This downward spiral started with the tech bust, not with the Enron Corp. scandal. Legislation alone won't do the trick. We need stability. It is more a liquidity issue than an ethical issue: People are running for cash.
Ali Nsouli
Geneva
"Nice speech, Mr. President, but" (Cover Story, July 22) says "Investors are mad as hornets." I understand this, but investors believed and accepted the extravagant projections of Wall Street analysts during the past decades--the claim that businesses should permanently earn well over 20% on equity and, on top, show an annual profit increase of at least the same order.
When a layman dared to ask why companies should produce returns that are multiples of standard bank or mortgage rates, the answer always was: It's because of the higher risks involved.
Why should investors, especially big investors, be so mad now as the risks show their ugly face? Confidence in business will be restored only when more realistic long-term objectives are applied. This will be a far better method to reduce cheating than any speech by a President or jail terms for managers.
Walter Hebeisen
Zug, Switzerland
Why U.S. Stocks Are Losing Their Premium
Pointing out how "poor" companies in other countries are in terms of the accuracy of their accounting reports while proclaiming the U.S. is still No.1 in earnings transparency is almost cowardly ("America the transparent," Economic Trends, July 22). Accounting credibility and a sound financial regulatory system are key reasons for the premium for which U.S. stocks have been trading over their emerging-market peers. When these qualities are in question, it doesn't matter how anyone else is doing.
Stanley Ngan
Hong Kong
Korea: Not As Cool As It Looks
Parts of "Cool Korea" (Cover Story, June 10) were disturbingly inaccurate. While South Korean phones and cars may be popular for their value, they are hardly "prized around the world."
Two Korean movies, Swiri and Joint Security Area, saw some success with limited showings in Hong Kong and Japan but were primarily artistic releases. And the most recent winner of an award at Cannes, Chihwaseon, while excellent, was seen by few outside Korea. In short, Korean movies are little-known outside Korea and not at all outside of Asia.
Korea's jobless rate is listed by the Finance Ministry at 3.1% (2.7% for June), but is calculated using a system that excludes most college-educated women from the labor force and includes what's called "unemployed-employment"-type jobs--such as trying to flag down passing cars in front of restaurants--that pay less than $2 an hour. Calculating the rate with a system similar to that used by the U.S. Bureau of Labor Statistics puts Korea's unemployment rate at about 17%--quite a difference.
Scott Valentine
Seoul
How to Succeed in Consulting
During my business career, I had an opportunity to lead quite a number of small and midsize industrial businesses ("Inside McKinsey," European Edition Cover Story, July 8). Provided you are a competent business leader, there are no better experts on your business than you and your management team. What is even better, as fathers of a plan, your team is highly motivated to execute it. Consultants make strategic planning a top-down process, which is inherently demotivating for the people who are supposed to execute the strategy.
Juhani Rouhesmaa
Tampere, Finland
Peter F. Drucker has had one thing right for years: An effective consultant must be willing when necessary to be an "insultant." Too many consultants are too busy being crowd (management) pleasers. Having retired to New Zealand over 25 years ago, I find I am still called upon, and by some of those I am certain I insulted. Honesty is the only way to go. No economic philosophy or practice, including capitalism, succeeds without its being administered honestly. A little dishonesty is still dishonest.
C. Bayard Sheldon
Hamilton, New Zealand
Why Not Develop Central America?
I wholeheartedly agree with Jeffrey E. Garten's "When everything is made in China" (Economic Viewpoint, June 17). At electronic-industry shows and meetings, we have been warning clients of the dangers of having all American manufacturing eggs in one basket in China, a country with dubious political relations with the U.S. and where the respect for copyrights is overlooked and difficult to enforce.
As Garten mentions, the U.S. has in its backyard developing economies in Central America and the Caribbean, areas from which many illegal immigrants travel to the north due to lack of employment opportunities at home. However, while the tax and tariff incentives are functioning, these countries--much closer to the U.S., and with labor rates that are only slightly higher than China's--need aid to develop the necessary core and spin-off industries to compete. The developed nations have done this in China. Isn't Central America worthy of these investments also?
Stewart Vare
Tegucigalpa, Honduras
Chile's Illusory Spending on Social Security
Casey B. Mulligan, Ricard Gil, and Xavier Sala-i-Martin may have something intelligent to say somewhere in their study allegedly showing that dictatorships are as likely to spend as much or more than democratic governments on social security. But the example they give, Chile, divorces data from social and historical context ("Don't blame democracies" Economic Trends, July 15). Chile under General Augusto Pinochet may have initially spent more money on social security than preceding democratic governments, but it did so for reasons that entirely undermine the authors' argument.
First of all, the country spent more money in the beginning to facilitate a drastic pension privatization designed to reduce government spending on social security for most Chileans. Second, where they actually increased direct social security spending was on themselves, the military, and the national police, which the Pinochet regime exempted from privatization. Everyone else, including other public employees, was left to fend for themselves in what has turned out to be a disastrous system for most people.
Ronald G. Woodbury
St. Augustine, Fla.
|
Copyright 2002, by The McGraw-Hill Companies Inc. All rights reserved.
Printer-Friendly Version
