Some twenty-five years ago one of my childhood friends emigrated to America.
I reconnected with him in 1994. He had worked his way up from the ‘floor’ of a auto-parts distribution business to manager of the most important of its warehouses. At that time he was putting on at least 10 hours a day from Monday to Friday and some 5 hours on Saturdays. At some point he felt the need to go back to school – he had very little formal education – and told the owner of the business he wouldn’t be able to contribute so much as he did until then so he was willing to accept a pay cut. The owner replied that he would have to replace him. They departed in good terms, my friend told me he didn’t harbor any bad feelings toward the guy because he was honest and straightforward.
Flash-forward three years. My friend had finished a course for computer engineers and got hired by a really big, privately owned, multinational corporation. He told me he had the impression of working again for a state owned company: people didn’t have the guts to speak up their minds and their main occupation was to cover up their asses under a ton of paper. Procedures took prevalence to common sense. He was the first to tell me that if there is too big a distance between the shareholders/owners and the general management the people at the top of the company start acting as if they own it and this is the reason for which it doesn’t really matter if a huge corporation is privately or state owned. What it does matter is local culture – if earning undeserved money is shunned by the people then things are OK but if people put money above anything else the big corporation will run into trouble sooner or later. My friend gave up working for others and started a hair-salon with his wife.
Flash-forward to our times.
We have found out about the existence of some (privately owned) corporations which are too big to fail but which despite (because?) their size and importance have reached some really dire straits and desperately need assistance. We have experienced TARP and QE I and II.
The general public is now split in two:
The Tea Party abhors big Government because it is intrusive and stifles individual initiative.
The Occupy Movement abhors big Business because it is callous and treats the individual exclusively as a consumer/workhorse, effectively disregarding its very humanity, and because it has dumped a huge pile of loses on the humble taxpayer.
And yet Tea Partiers and Occupiers can’t see eye to eye with each-other.
Isn’t this the strangest thing of all?
PS. The existence of a significant shareholder might help a big corporation to overcame the disadvantages of its size. Ford has coped better than GM or Chrysler, BMW (controlled by the Quandt family) than Daimler-Chrysler, etc. Same rationale works for the .com companies where the founders still have a loud enough voice on the board. And maybe the secret of Warren Buffet’s success is that he invests in companies which already have a management focused on the long term survival of the company instead of their own enrichment at all costs (all costs for the company, of course).