Capitalism - red in tooth and overdraft!

Nothing quite so cheering (and do I need some good cheer - see below!) as watching silly socialists making even bigger prats of themselves than usual.  Tonight I heard a tendentious piece of reporting which would stand as a class-room example of total economic ignorance.  It was a TV report on the attempted take-over of Boots by a 'gang' of private equity investors.  They were actually portrayed as brandy-swilling, cigar smoking, gangster-like caricatures - and this in what purported to be a serious news story!  The usual moaners and groaners, the trades union officials, were interviewed which was fair enough, but no effort was made to explain to viewers that capitalism works by companies making maximum profits from all of their activities and thereby returning good dividends to their shareholders who include, of course, those very workers upon whom the reporter lavished so much of his mis-placed sympathies, or at least, those who have sensibly invested in a pension or savings plan.

If any company fails to maximise its profits, of course, it leaves itself open to some very hard-headed and courageous men who are prepared to borrow huge amounts of money on their own recognisance, in the hope and expectation that they can strip the fat from the the conglomerate, sell it off for a profit and then drive the leaner and meaner core business to new heights before they sell it off again to the wider world of investors.  Apart from the benefit to the company concerned, the good, old Law of Unintended Consequences begins to operate because other companies, living a rather soft and complacent existence with untapped sources of wealth in their 'portfolio' of activities, suddenly have their minds concentrated much in the way that a hanging in the morning is supposed to produce!

Of course, not all private equity buy-outs work out well because capitalism does not work on certainties.  However, without that predatory threat hanging over the boardrooms of Britain, our companies would soon sink into the complacency and uselessness of our nationalised industries who sail serenely on and on and on buoyed up by an ocean of tax-payer's money (or, my money, as I fondly think of it!)

Comments

[N.I.B.]

The board rooms of Britain must be slapping themselves now you've explained this to them - I bet they never knew.

And I'll bet they're quaking in fear knowing they've made it on to Commissar Duff's 'Shit List'...

[David Duff]

Well, 'NIB', it's obvious that the board of Boots didn't know!

[N.I.B.]

Yes, it's 'obvious' - when They (they being Commissar Duff's latest bête noire, the dirty scumbag communist Company Directors of Great Britain) woke up this morning and saw it on the telly, it must have hit them like a bolt out of the blue. I imagine none of them had even heard a peep about this deal before the Mighty Business Brain of Duff sensed it (by way of the same news report).

And it came to pass, everything happened just like the Commissar Duff Pop Up Book Of Economics said it would. It was, to coin a phrase, Historically Inevitable.

Whatever you say, oh Great Leader, whatever you say...

Must. Eradicate. Thought. Crime.

Why think things like "it's probably a bit more complicated than that" when Commissar Duff has already told you the truth? Don't you know he knows *everything*?

[David Duff]

Do you know, 'NIB', you're even more tedious at ten past one in the morning than during the day. Good night, was it?

[Clairwil]

Well I find it hard to believe that Boots have any trouble maximising profits. What the charged me yesterday for shampoo was almost criminal!

And it didn't even put a shine on my hair.

[David Duff]

Clairwil, my dear, (he said, curling his moustache with a rakish smile - or was it 'raking his moustache with a curling smirk'?), if it's a shine to your hair you're looking for, I have just the thing for you - and it'll put a sparkle in your eye ...

(Now where the hell did I put it? Well, it's been some time since I used it last ...)

[N.I.B.]

Yes, it's so tedious having people disagree with you. isn't it? At least you haven't wished me dead yet like you did a certain other blogger recently.

By the way, David, who do you actually write this blog for? Your tone is increasingly that of trying to impress some particular person, or group of people.

This post, for example - is like a reading a precocious ten-year-old's attempts to impress his stern father by repeating 'worldly wise' observations gleaned from newspaper opinion columns.

[David Duff]

'NIB' asks, unnecessarily, "By the way, David, who do you actually write this blog for?"

For *you*, 'NIB', of course! Who else but my most ardent reader? Or should I call you my "stern father" who appears to enjoy reading my "precocious ten-year-old's" scribbles so much so that you never miss a priceless word?

Obviously a man of good taste and discernment!

[N.I.B.]

I think 'never miss a priceless word' is pushing is a bit. I just read the first and last sentences these days, just to be sure of which of your four different posts it is you're recycling.

Actually, I'm starting to suspect this blog might be an automated drivel-generating program, dreamt up by some clever computer science students, with the intent of making right-wingers look silly.

(...and I just know your next reply will be an 'I know you are but what am I', so save yourself the effort!)

[Hilary Wade]

Can I recommend here a rather ace book, "Everlasting Light Bulbs" by a bloke called John Kay? It's a set of very accessible essays, available from Amazon. In particular, one of the essays addresses this idea that businesses exist for the sole purpose of making a profit. In fact, apparently none other than Henry Ford (I think) said that if a business existed only to make a profit, it would quickly go out of business, since it would have no long-term reason to exist. Mr Kay explains why he agrees with this at some length & I enjoyed his conclusions.

[David Duff]

Hilary, thank you, and I had a quick squint at his web-site and some of his articles. It is an obvious truth that no man, and therefor no company, is an island. So a company is made up of many individuals and is bounded in a context of historical, social, legal, cultural, trading (to name but a few) relationships which impinge on its 'raison d' etre'; but whilst those are constraints of a sort, it is vital that the leaders of the enterprise keep in mind at all times that profit is first, last and always the main aim of the exercise.

You will understand, I'm sure, although the likes of 'Ratty' and 'NIB' will not, that such an approach is not a green light for any sort of malfeasance. Just today, another quiz-gambling company has been caught out cheating and it stuns me (yet again!) that no-one had the brains, even if they lacked the morals, to see that it was only a matter of time before they would be caught.

Also, I would wish to be clear that I do not find the pursuit of profit, in itself and subject to the constraints above, to be anything other than admirable. Equally, I find the behaviour of 'fat cat' directors who fail to utilise *all* the assets within their companies whilst pocketing their generous salaries to be despicable.

I have made a note of John Kay's name. Alas, I can't promise to read him immediately because I have been so theatre-bound for the last 10 months that the tottering pile of unread books almost constitutes a risk under 'elf & safety'!

[N.I.B.]

Or, in other words, "it's probably a bit more complicated than that" - it took a while, but you got there!