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  Interview with SAP Co-Founder Plattner: 'The World Has Been Living Beyond its Means'

Interview with SAP Co-Founder Plattner 'The World Has Been Living Beyond its Means'

Part 2: 'We're All in a Complete Fog'

Plattner: They were driven into debt by the American banks which hoped to earn money by lending to poorer and poorer people. There was a crazy amount of advertising behind it. The message was: you'd have to be stupid not to take out a loan for a house at these low interest rates, since houses will always go up in value. That's how America began sinking into mass debt. Maybe it's a cultural question, or a generational one. Personally, I was raised never to have debts.

SPIEGEL: It sounds like you're giving the main responsibility not to the banks but to the dumb small investors.

Plattner: Everyone took part in this, not just the bankers. Americans were ready to live with debt. Why did they buy for example massive cars that could go much faster than the speed limits on their highways would allow? It wasn't just the industry that was seducing them. People want to be seduced. I believe this game would have continued for quite a while if the USA hadn't had to finance two big wars. Wars that ended up being paid for on credit in the same way that ordinary people were borrowing money to buy their homes. That's how everything got even worse.

SPIEGEL: Maybe people on Wall Street should have used more common sense, rather than letting trading operations be managed by cold computer programs.

Plattner: You're right about that. Thinking has in part been taken over by computer algorithms. It's a bit like autopilot on a plane; you can't do without it, but it also can't fly the plane alone.

SPIEGEL: If they all used the same software…

Plattner: ... they all behave the same...

SPIEGEL: ... like lemmings.

Plattner: If all these clever mathematicians and statisticians with their software and financial models shaped such a disaster in the end, the call for more market monitoring and regulation is the wrong answer.

SPIEGEL: Objection! Letting the market run free has clearly failed. That's why all the stakeholders are calling for government intervention.

Plattner: So? Private debt will be exchanged for public debt. The problem will just be transferred. Of course we need short-term financial support, even if it is still a mystery to me why the very companies who practiced the worst business principles should be the first to get money from the state.

SPIEGEL: Are you against state support for banks and businesses?

Plattner: In our current situation, it may not be possible to do without bridge loans. Banks and businesses need time to adjust. But in principle, subsidies are problematic. It's better to invest in the future, in infrastructure and education.

SPIEGEL: And why is the call for greater regulation the wrong reaction?

Plattner: Clearly, we need to draw new boundaries. But in the end it's a question of transparency. More than anything, markets need laws that ensure openness. Look what happened with the fashionable subject of biofuels! In the beginning, many countries sponsored big development programs to produce grain-based energy sources. Then suddenly the UN sounded the alarm because the price of basic foods had doubled.

SPIEGEL: This was another problem powered by speculation.

Plattner: That may be. But suddenly there was a worldwide starvation problem. In the end it's just another example showing that the governments are also just stakeholders, and also make mistakes. The way individuals make mistakes. Transparency helps us recognize such mistakes faster.

SPIEGEL: Is the USA just part of the problem, or also part of the solution?

Plattner: Both, naturally. They sprung this crisis on us, but I feel certain they will also be the first to emerge strengthened from it. The Americans by the way also have no problem locking someone away for 25 years when he's proven to have lied and committed fraud, like Worldcom founder Bernie Ebbers. When something doesn't work, Americans change it fast and sometimes hard.

SPIEGEL: Bonuses for managers were also part of the problem. At the American investment bank Goldman Sachs alone, several billion went out in bonuses over the last few years.

Plattner: That may sound crazy to us, but things work differently in America. Even our top people there tell me, 'You may have founded SAP, but we're developing it further and delivering you the profits -- so we want a piece of the pie.' And you know what? I think they're right.

SPIEGEL: The bonuses are tied to criteria like stock performance. Little wonder that leads people to embellish balance sheets and engage in frenzied activity.

Plattner: It works just the other way round -- increasing company profits lead to a rise in share prices, which in turn leads to increased bonuses.

SPIEGEL: In the last months there have been bankers who drove their companies into the ground and still landed big severance packages.

Plattner: That may be difficult to explain to people. These severance packages and bonuses are really just an echo of past success, their dues for previous years. You can't suddenly deprive managers of components of their usual income. People have contracts. Find me someone who would sign one for, let's say, just one year? To me it seems crazy that only managers are singled out for exorbitant earnings. Owners are rarely taken to task for that.

SPIEGEL: The financial crisis was unbelievably quick to affect real business. Many companies are considering layoffs. Not even a success story like SAP can give a clear outlook for 2009.

Plattner: Having no outlook is worse than having a bad one. We're all in a complete fog. We have no idea anymore how things are going to turn out.

SPIEGEL: Even SAP is now saving on business trips, company cars, and so forth.

Plattner: Oh, that wasn't a big deal. We're cutting back on a few things. Maybe that was communicated a little clumsily.

SPIEGEL: Is it normal for you as the head of the supervisory board to attend the works council meeting to whip up sentiment?

Plattner: It's not unusual for me to show up there. And current circumstances are really unusual. But we aren't the biggest problem for SAP right now, it's the analysts who want their numbers.

SPIEGEL: What lessons have you personally learned from the current economic crisis?

Plattner: Recently on German TV they showed "Domino Day." You could see the pieces falling at an incredible speed. Remorselessly. With the same remorseless resolve, piece after piece in the economy is falling down at frightening speed. I don't have the impression, though, that we're much cleverer now than we were back in the world economic crisis almost 80 years ago. The world has been living too much on credit, and is still doing so.

SPIEGEL: How so?

Plattner: When we look at ourselves, how we are exploiting the environment, there is only one conclusion -- that we are all living way beyond our means, and we don't even notice it. And when the bill finally arrives…

SPIEGEL: Mr. Plattner, thank you for the interview.

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