In the past when we tried to sort out causes and motivations, a good rule was follow the money. But in our present circumstances it works better to follow the risk. A fundamental notion of capitalism is that profit is the reward for accepting the risk of entrepreneurship.
What distinguished him and made him successful was luck, an uncanny ability to see business opportunities, and a willingness to take big risks. On several occasions he literally bet everything he owned on his next venture. Often he had no detailed plan; he just forged ahead with unswerving confidence that whatever challenges came up, he would be able to work things out as he went forward. Business plans, pro-forma projections of income and expense, were bean-counter concepts he never bothered with unless some conservative banker forced him to.
Not every enterprise Ed launched was successful, and some cost him dearly, but he persisted and ultimately he was rewarded with enough success to leave a business legacy that continues to prosper today.
Sadly this is not the model of the corporate executive of the 21st century. Golden parachutes, huge retention bonuses, and bloated compensation packages completely insulate and buffer today's captains of industry from the business risks they pilot their enterprises through. There is no real downside for them. If the company goes bust, they take a vacation secure in the knowledge that most of their personal wealth is safe. Sure, some of those stock options aren't worth what they hoped, but at no point is their lifestyle at risk. (My father-in-law bet home and hearth on his business judgment. The grocery money was sometimes at risk.)
Actually, most of them probably knew of that risk, but it wasn't their money they were gambling. Those lenders were large institutions, the actual people who made the loans, employees of the institutions, lost only their jobs. Or did they?I've made my point. When our economic system separates risk from reward bad stuff happens. Gambling with other people's money is not the same as gambling one's own.
With all that we as a nation are doing in the name of recovery, the same unhealthy separation of risk from reward persists in our large corporations and financial institutions. We need to find ways to restore entrepreneurial motivation, and peril, to the corporate boardroom and executive suite. As things stand, only the small entrepreneurial businesses maintain a healthy relationship to risk. That closeness to risk keeps them sharp and competitive.
For the future, I say follow the risk and beware of those playing with otherpeople's money.