Wealth Management

Voted #6 on Top 100 Family Business influencer on Wealth, Legacy, Finance and Investments: Jacoline Loewen LinkedIn Profile

September 5, 2011

I am not against all business, just big business

An anti-business, anti-capitalism, view is popular with the young people today, despite their good fortune to be born into such a wealthy society. It seems to be forgotten how our wealth developed by individuals with a dream. The business owners take out mortgages and risk everything, including their marraiges, to create something of value. They pay the salaries and taxes that then pay government officials and for government programs. This rise of Western capitalism, even embraced by China and India, has uplifted the living standards of so many yet the current US government labels all business owners as one category of business leadership. 
I agree that there are flaws that this recession has laid bare, but I disagree vehemently that business owners of private companies can be compared with public companies.
The media, school teachers, university professors, political experts and those denouncing business would gain credibility if they distinguished between corporations, which may be public and have professionally paid CEOs, and owner operated corporations, which are run by the original founder or family.  
My uncle was one of the leaders of The Royal Bank of Scotland back in the 90's, just as bankers stopped being bankers and became corporate finance experts, and he talks about one of his top issues with this distinction between big and middle business. 
The salaries and benefits of Directors in public companies are disgusting. This needs to be said a hundred times.
These corporate CEOs, paid to lead, do not take the same risk as owner operated business because they get obscene salaries and benefits even if (and when) they fail. Mid sized business owners often lose everything, their house, their wife. 
Here is my dear uncle:
I am not against all business, per se, but only big business. I noticed today in an article in the Independent that the average Pension Pot for FTSE 100 Directors had risen in less than a decade to £84 million, nearly 600 times the average retirement fund for five ordinary workers! These are the same people who have been closing down Final Salary Related Pension Schemes for their staff on the grounds that they are simply unaffordable! Small businesses, on the other hand, are finding it difficult to obtain necessary support from the Banks, who are amongst the worst culprits in the Obscene Rewards League.
What Big Government Does Not Reveal
The expansion of government is easy for politicians and means announcements of programs can be made to the media, like mother bird dropping bits of regurgitated worms into the mouths of eager baby birds. 
Another issue my uncle speaks about is the image of Scotland as a Quebec of Canada, keen for a dying culture while taking in more from London government than paying out in tax revenues. When there was North Sea oil, the revenues were taken to London and not saved for future generations in the form of a sovereign fund similar to Finland. 
Here is my uncle again:
As I said earlier, there is a great deal of comment in the press about the pros and cons of Scottish independence, with varying statistics being thrown around to "prove" opinions. Statistics can be invoked to prove almost anything, but one quoted last week was that, despite all the areas where Scotland seems to do better than England, Northern Ireland looks better off and Wales only slightly less well treated. Guess who gets most support from central government - the City of London!!! Furthermore, the Exchequer receives more in taxes from Scotland than it pays out under the Barnett Formula.

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