The owner of the family business: ut sementem feceris ita metes
4' min read
4' min read
One of the hallmarks of capitalism in this first quarter century has been the abundance of capital. From the 10 trillion in financial investments in 1980 to 630 trillion at the end of 2022: it all started with the end of the gold standard in August 1971, passing through the institutionalisation of synthetic money creation in 2009 (those who have studied it call it more elegantly 'quantitative easing') to arrive at the distribution of free money ('helicopter money') to deal with the pandemic crisis of 2020. In the same period, the world's GDP rose from 10 trillion to 105 trillion. To have some terms of comparison: our public debt is about 3 trillion, our GDP 1.8 trillion, our assets 10 trillion: 5 trillion real estate and 5 trillion financial investments.
To give a 3 per cent return on 630 billion capital requires 18 per cent of everything we produce in the world: imagine when you have (or promise) higher returns.
familyandtrends argues that entrepreneurial families perform three key functions: they keep their members together, they grow in each generation entrepreneurs who adapt the business to the changing competition, they take care of the wealth created by those who came before to ensure that it reaches those who will. In this last function, it is necessary to decide which type of investor you want to be among the four possible ones.
The speculator is someone who buys a garden in the winter, harvests all the fruit and flowers in the spring, disregards the health of the plants or working the land, and resells it when summer arrives, showing how many fruits and flowers can be harvested. In the financial market, the speculator's function is to recover gardens abandoned in winter and to make the garden market sparkle.
The activist is someone who buys a neglected or abandoned garden, cleans and aerates the soil, fertilises, waters and when the good season arrives sells the flowers and fruit, then cuts down the trees and sells them as firewood, and before selling the garden to a new gardener or someone who will make a car park out of it, makes rakes, wheelbarrows, sprinklers, etc. at the second-hand market. In the second-hand market, the function of the activist is to ensure that there are not too many neglected gardens and that gardeners do not do their work too complacently for themselves.
