I have experienced several occasions over the past three decades of investing where an individual, or group of individuals, look out into the future, and take on a major risk of investing money in an idea they believe will be successful long term. It worked and they made a large amount of money on the investment.
Now before I continue, I am talking about real opportunities, not scams, or positioning oneself for advantage at the expense of others. I am talking about someone that saw the advancement of aviation in the sixties, or computers and the net while investing in technology. Or, maybe the artificial heart or online based retail, or took their entire life savings and built the small family business that grew into a successful retailer or engineering company. These people had a vision and put their money at risk. The result was success, large success.
I am puzzled and surprised when I hear individuals accuse this same group of risk takers as: greedy, selfish, non-caring management people running equally selfish companies. Why is it assumed by many, that successful people cheated their way to the “top”. Unfortunately, more often than not, I hear, “what the country needs to do” is stop the CEO’s from becoming so wealthy; or, take it from the 1%. Now there are probably some CEOs and 1%s that did not get to where they are by honorable means but, they are getting caught and punished every day. There are many more CEOs and 1%s that got there the right way, through hard work, and making sure everyone benefitted along the way.
There are several considerations that should be given to this thought process before blanket condemnation of everyone with a specific title or income level.
First, wealth may have been created because someone had a brilliant idea that helped millions of people live better lives. (Yes, this does happen.)
Second, many people, in addition to the CEO, may have benefitted as well from the process and they in-turn have shared the success with others in the enterprise and this enabled even more to have shared success.
Fourth, seeing good beneficial success may be the motivation of other creative, honest people to take the leap of faith and also risk capital for a good beneficial product or service.
The list can go on and on.
We all know there are times when greed and dishonesty leads to occurrences where people in authority, such as CEO’s, have taken advantage of their position and abused the situation. The puzzling result is why does society, more than not, lump wealth in the latter category, greedy, and not in the honest category? I think I have the answer; it’s easier to categorize the position than making an evaluation of the individual. History is full of society condemning everyone in a group rather than evaluating someone as an individual. This mistake has caused some horrendous losses to mankind and society.
Rewards stimulate creativity. If the desire to create is squelched due to a lack of rewards or stigma of greed, economic activity slows or worse stops. Economic activity is required for jobs and income at all levels. What will the blanket hatred of those that take the risk to pursue a new idea that creates wealth, do to future economic activity? I’m guessing it is not positive. Maybe we should spend more time recognizing the CEOs and 1%s that are doing it right and not just using the bad ones as poster children.