Näytetään tekstit, joissa on tunniste capitalism. Näytä kaikki tekstit
Näytetään tekstit, joissa on tunniste capitalism. Näytä kaikki tekstit

sunnuntai 17. elokuuta 2014

Ayn Rand: Philosophy - Who Needs It?

Ayn Randin tuotanto alkaa tämän kirjoituksen myötä olla luettuna ja yhteenvetoa lukuunottamatta käsiteltynä. Philosophy - Who Needs It on viimeisin kirja, jonka kanssa Rand työskenteli eläissään ja se koostuu useammasta novellista, jotka pääasiassa toimivat vastauksena joko jonkun esittämään kritiikkiin Randia kohtaan tai muuten kannanottoa johonkin yleisesti vallitsevaan näkemykseen. Tyyliltään se siis poikkeaa merkittävästi muista hänen teoksistaan, ennen kaikkea Atlas Shruggedista ja The Fountainheadista.
 
Ayn Rand: Philosophy- Who Needs It
Teoksena Philosophy - Who Needs It on keskinkertaista Randia, jos sitäkään. Siinä Rand asemoi oman objektivistisen filosofiansa suhteessa sekä klassisiin filosofeihin että aikansa yhteiskuntaan. Kollektiivinen ajattelu saa läpi kirjan kyytiä ja kapitalismille pyritään luomaan filosofinen viitekehys. Kirja ei saanut aikanaan kovinkaan hyvää vastaanottoa, eikä se kyllä merkkiteokseksi nousekaan, ainakaan suhteessa Randin tunnetumpiin teoksiin. Ehkä tekstiä hallitsee liikaa tarkoitus vastata muiden ajatuksiin oman ajattelun sijasta. Teoksen taustallahan on hänen USA:n Military Academyssa pitämänsä puhe.
 
Jos siis jossain kohtaa haluaa oikaista, niin tämän Randin voi hyvinkin jättää lukematta. Joitain hyviä sitaatteja, mutta kokonaisuutena jää varsin sekavaksi. Hienoa on huomata, Randin nostavan Ludwig von Misesin esille omana taloustieteen suosikkinaan. Näin tulee luoduksi yhteys itävaltalaisen koulukunnan ja randilaisyyden välillä, vaikka toki perustavaa laatua olevia eroavaisuuksia näiden ajattelusta löytyykin.
 
Poiminnot
  • Tribalism is a product of fear, and fear is the dominant emotion of any person, culture or society that rejects man's power of survival: reason. (58)
  • If you ask me to name the man most responsible for the present state of the world, the man whose influence has almost succeeded in destroying the achievements of the Renaissance - I will name Immanuel Kant. (87)
  • Capitalism did not create poverty - it inherited it. Compared to the centuries of precapitalist starvation, the living conditions of the in the early years of capitalism were thefirst chance the poor had ever had to survive. (91)
  • Capitalism and altruism cannot coexist in the same man or in the same society. Tell it to anyone who attempts to justify capitalism on the ground of the "public good" or the "general welfare" or "service to society" or the benefits it brings to the poor. All these things are true, but they are by-products, the secondary consequences of capitalism - not its goal, purpose or moral justification. The moral justification of capitalism is man's right to exist for his own sake, neiher sacrificing himself to others nor sacrificing others to himself; it is the recognition that man - every man - is an end in himself, not a means to the ends of the others, not a sacrificial animal serving anyone's need. (91)
  • Philosophy is a necessity for a rational being: philosophy is the foundation of science, the organizer of man's mind, the integrator of his knowledge, the programmer of his subconscious, the selector of his values. To set philosophy against reason, i.e., against man's power of cognition, to turn philosophy into an apologist for and a protector of superstition - is such a crime against humanity that no modern atrocities can equal it; it is the cause of modern atrocities. (111)
  • Concepts are the products of a mental process that integrates and organizes the evidence provided by man's senses. Man's senses are his only direct cognitive contact with reality and, therefore, his only source of information. Without sensory evidence, there can be no concepts; without concepts, there can be no language; without language, there can be no knowledge and no science. (121)
  • In reality and in the Objectivist ethics, there is no such a thing as "duty". There is only choice and the full, clear recognition of a principle obscured by the notion of "duty": the Law of Causality. (133)
  • Inflation is a man-made scourge, made possible by the fact that most men do not understand it. It is a crime committed on so large a scale that its size is its protection: the integrating capacity of the victims' minds breaks down before the magnitude - and the seeming complexity - of the crime, which permits it to be committed openly, in public. For centuries, inflation has been wrecking one country after another, yet men learn nothing, offer no resistance, and perish - not like animals driven to slaughter, but worse: like animals stampending in search of a butcher. If I told you that the precondition of inflation is psycho-epistemological - that inflation is hidden under perceptual illusions created by broken conceptual links - you would not understand me. (170)
  • Money is the tool of men who have reached a high level of productivity and a long-range control over their lives. Money is not merely a tool of exchange: much more importantly, it is a tool of saving, which permits delayed consumption and buys time for future production. To fulfill this requirement, money has to be some material commodity which is imperishable, rare, homogenous, easily stored, not subject to wide fluctuations of value, and always in demand among those you trade with. This leads you to the decision to use gold as money. (172)
  • There is only one institution that can arrogate to itself the power legally to trade by means of rubber checks: the government. And it is the only institution that can mortgage your future without your knowledge or consent: government securities (and paper money) are promissory notes on future tax receipts, i.e., on your future production. (174)
  • If student minorities have succeeded in demanding that they be given courses on such subjects as Zen Buddhism, guerilla welfare, Swahili, and astrology, then an intellectual student minority can succeed in demanding courses on, for instance, Aristotle in philosophy, von Mises in economics, Montessori in education, Hugo in literature. At very least, such courses would save the student's mind; potentially, they would save the culture. (271)

torstai 31. heinäkuuta 2014

The DAO Of Capital - Austrian Investing In a Distorted World

Tuli luettua The DAO of Capital – Austrian Investing in a Distorted World, jossa amerikkalainen entinen meklari ja hedge fund sijoittaja Mark Spitznagel pyrkii kertomaan, miten sijoittaa itävaltalaisen koulukunnan opein. Lähtökohtaisesti siis varsin kiinnostava aihe.
 
Mark Spitznagel: The DAO of Capital - Austrian Investing in a Distorted World
Kirja esittelee Carl Mengeria, Eugen von Böhm-Bawerkia, Ludwig von Misesia, Murray N. Rothbardia ja Friedrich A von Hayekia eli itävaltalaisia avainhenkilöitä ja heidän ajatuksiaan, mutta kyky esittää näistä teorioista pohjautuvaa sijoitusfilosofiaa jää valitettavan vajanaiseksi. Jää tunne, että itävaltalaisuus on kirjassa päälle liimattua. Kirjassa ollaan lähes koko ajan ikään kuin hukassa. Itävaltalaisuuden osalta herää epäilys siitä, kuinka syvällisesti kirjoittaja on itävaltalaiset teoksensa lukenut ja sisäistänyt. Ainakaan tätä kirjaa ei kannata käyttää välineenä aitoihin ajatuksiin tutustuessa.
 
Jos ja kun tavoitteena on kirjoittaa sijoituskirja, sorrutaan kirjassa kertomaan liiallisesti epäolennaisuuksia. Kirjan 290 tekstisivua olisi voinut käyttää paljon fiksummin. Vielä enemmän hukassa ollaan yrityksessä liittää entisajan itämaiset viisaudet (DAO) yhteen itävaltalaisen teorian kanssa ja vielä sijoittamisen viitekehyksessä. Se nyt vain ei toimi. Siis koko kirjan nimi, The DAO of Capital, ja sitä myötä sen markkinoima sijoitustyyli jää epäselväksi ja siten tylsäksi. Ihan hirveästi ei arvostusta herätä kertoa "Roundabout" metodista, eli vastakkaisuuden opista, jonka mukaan liikenneympyräkin osoittaa, että vasemmalle pääsee helpoimmin kääntymällä oikealle.
 
Kirjan lopussa esitellään kaksi sijoitustapaa, joista toinen on likimain indeksisijoittamista itse kehitetyn indeksin mukaisesti ja toinen tapa perustuu hyvien yhtiöiden ostamiseen. Tämä toinen tapa on kirjoittajankin mukaan lähellä arvosijoittamista. Ei siis mitään mullistavaa tai tieteellisesti poikkeuksellisen lahjakasta.
 
Suomalaisittain kirja menee loppusuoralla jo tragikoomisen puolelle, kun siinä yritetään selittää suomalaista sisua, talvisodan henkeä ja Sibeliusta. Sijoituskirjan kontekstissa nämä sivut veivät viimeisimmätkin uskottavuuden rippeet. Valitettavasti. En siis suosittele kirjaa lukemaan, en itävaltalaisena teoksena enkä sijoituskirjana. Heikko esitys kummassakin sarjassa. VMP voisi joku kiteyttää. Vaikka moni nimekäs kommentaattori on kirjaa kehunut, minä seison nyt oppositiossa. Pahoitteluni kirjoittajalle!
 
Huono kirja erinomaisesta aiheesta alkoi ärsyttämään minua niin paljon, että ajattelin pistää paremmaksi ja kiteyttää itävaltalaiseen teoriaan perustuvan kapitalistin mallisalkun yhdessä blogitekstissä. Sellainen on siis tulossa lähiaikoina, kunhan saan ajatukseni kootuksi ja kirjoitetuksi.

lauantai 2. marraskuuta 2013

Ayn Rand: The Virtue of Selfishness

Jatketaan vielä Ayn Randin tuotannolla. Tällä kertaa on vuorossa The Virtue of Selfishness, joka on ehkä selkein paketti Randin filosofiasta ja ajattelusta. Siinä missä Randin Atlas Shrugged on fiktiivinen ja pitkä tarinamuotoinen mestariteos, The Virtue of Selfisness koostuu lyhyistä ja suoraan aihealueeseen iskevistä tekstipätkistä. Tyyliltään se on samanlainen kuin Capitalism - The Unknown Ideal, joka paneutuu puolustamaan kapitalmismia yhteiskunta- ja talousjärjestelmänä, tässä teoksessa sen sijaan keskitytään puolustamaan yksilöä kaiken toiminnan keskiössä.

Ayn Rand: The Virtue of Selfishness
Varoitus: herättää varmasti vastustusta!
 
The Virtue of Selfishness on Radin teoksista kaikkein eniten vastustusta herättävä. Se on niin tiukka yksilökeskeisyyden ylistyspuheenvuoro, että kaikki "itsekkyys on pahasta" ajattelijat saavat siitä bensaa liekkeihinsä. Se tarjoaa ravisuttelevan vastakohdan yleisesti vallitsevalle ajattelulle ja siksi se nostaa taatusti karvat pystyyn. Itsellenikin se oli lukukokemuksena melko mykistävä. Kuitenkin Randia ei pitäisi tuomita ilman tarkempaa tarkastelua, sillä Rand on ajattelussaan looginen, järjestelmällinen ja perusteellinen. On syytä tarkistaa omat lähtöolettamat (check your premises), jos aikoo Randin näkemykset vääriksi osoittaa. Ihan helpolla se ei onnistu. Ehkä lopulta joutuu vain toteamaan, että maailmankuvat ovat erilaiset.
 
Arvot, ajattelu ja tuottava työ
 
Randin teos kulminoituu yksilön arvovalintojen arvostamiselle. Tämä on kaiken toiminnan lähtökohta. Yksilöllä on tavoitteita ja tahtotiloja, jotka hän haluaa saavuttaa. Toiseksi Rand kunnioittaa suuresti kykyä ajatella. Tämä kyky erottaa ihmiset ympäristöönsä reagoivista eläimistä ja mahdollistaa kehityksen. Kolmanneksi Rand nostaa arvoon tuottavan työn. Siinä ajatukset siirretään käytäntöön ja luodaan omin käsin hyvinvointia. Arvot, ajattelu ja tuottava työntekeminen, aika hyvät peruskivet elämänfilosofiaan.
 
Rand tuomitsee rasismin
 
Rand varaa kirjassaan kokonaisen kappaleen rasismille. Hän tuomitsee rasismin ja rasistisen ajattelun kiitettävällä tavalla. En tiedä mihin viitekehykseen kokoomusnuorten puheenjohtaja Susanna Koski yksilökeskeisen ajattelunsa perustaa,  mutta ehkä hänen olisi kannattanut lukea Randia hieman tarkemmin ja ymmärtää yksilökeskeisyyden lähtökohta hieman syvällisemmin ennen kuin lähti julkiseen keskusteluun aihealueesta. Hänen argumenttinsa kun eivät pysyneet kasassa, yksilön oikeudet ja rasisimi sekoittuivat, ja koko keskustelu kääntyi itseään vastaan. Randin mukaan rasismi on kollektiivisen mielen ilmentymä. Pienin yksikkö maailmassa on yksilö, joten jokainen yksilöä arvostava arvostaa myös kaikkia vähemmistöjä.
 
Klassikko
 
The Virtue of Selfishness on kirjana sen verran radikaali, että aivan vasta-alkajan käsissä siitä voi helposti vetää vääriä tulkintoja. Toisaalta se on suoraviivaisin tapa tutustua Randiin, mutta syvällisemmin se aukeaa, jos on ensin lukenut muita tuotoksia. Lukemisen arvoinen ilman muuta ja jokainen sivu tarjoaa takuuvarmaa sitaattimateriaalia. Klassikko, joka kannattaisi suomentaa.

Poiminnot
  • The exact meaning and dictionary definition of the word “selfishness” is: concern with one’s own interests.
  • The first step is to assert man’s right to a moral existence – that is: to recognize his need of a moral code to guide the course and the fulfillment of his own life.
  • “Value” is that which one acts to gain and/or keep. The concept “value” is not a primary; it presupposes an answer to the question: of value to whom and for what? It presupposes an entity capable of achieve a goal in the face of an alternative. Where no alternative exists, no goals and no values are possible. (16)
  • … It is only the concept of Life that makes the concept of Value possible. It is only to a living entity that things can be good or evil. Only a living entity can have goals or can originate them. (16)
  • An ultimate value is that final goal or end to which all lesser goals are the means – and it sets the standard by which all lesser goals are evaluated. An organism’s life is its standard of value; that which furthers its life is the good, that which threatens it is the evil. (17)
  • Consciousness is the basic means of survival. (19)
  • Reason is the faculty that identifies and integrates the material provided by man’s senses. It is a faculty that man has to exercise by choice. …Thinking requires a state of full focused awareness. (22)
  • Psychologically, the choice “to think or not” is the choice “to focus or not”. Existentially, the choice “to focus or not” is the choice “to be conscious or not”. Metaphysically the choice “to be conscious or not” it the choice of life or death. (22)
  • Ethics is not a mystic fantasy – nor a social convention – nor a dispensable, subjective luxury, to be switched or discarded in any emergency. Ethics is an objective, metaphysical necessity of man’s survival – not by the grace of the supernatural nor or your neighbors nor of your whims, but by the grace of reality and the nature of life. (24)
  • Since everything man needs has to be discovered by his own mind and produced by his own effort, the two essentials of the method of survival proper to a rational being are: thinking and productive work. (25)
  • The Objectivist ethics holds man’s life as the standard of value – and his own life as the ethical purpose of every individual man. (27)
  • Value is that which one acts to gain/or keep. Virtue is the act by which one gains and/or keeps it. The three cardinal values of the Objectivist ethics – the three values, which, together, are the means to and the realization of one’s ultimate value, one’s own life – are: Reason, Purpose, Self-Esteem, with their three corresponding virtues: Rationality, Productiveness, Pride. Productive work is the central purpose of a rational man’s life, the central value that integrates and determinates the hierarchy of all his other values. Reason is the source, the precondition of his productive work – pride is the result. (27)
  • Productive work is the road of man’s unlimited achievement and calls upon the highest attributes of his character: his creative ability, his ambitiousness, his self-assertiveness, his refusal to bear uncontested disasters, his dedication to the goal of reshaping the earth in the image of his values. (29)
  • The basic social principle of the Objectivist ethics is that just as life is an end in itself, so every living human being is an end in himself, not the means to the ends or the welfare of others – and, therefore, that man must live for his own sake, neither sacrificing himself to others nor sacrificing others to himself. To live for his own sake means that the achievement of his own happiness is man’s highest moral purpose. (30)
  • Happiness is the successful state of life. Happiness is that state of consciousness which proceeds from the achievement of one’s values. (30)
  • Happiness can properly be the purpose of ethics, but not the standard. The task of ethics is to define man’s proper code of values and thus to give him the means of achieving happiness. (33)
  • The principle of trade is the only rational ethical principle for all human relationships, personal and social, private and public, spiritual and material. It is the principle of justice. A trader is a man who earns what he gets and does not give or take the undeserved. (34)
  • To love is to value. Only a rationally selfish man, a man of self-esteem, is capable of love – because he is the only man capable of holding firm, consistent, uncompromising, unbetrayed values. The man who does not value himself, cannot value anything or anyone. (35)
  • It is only on the basis of rational selfishness – on the basis of justice – that men can be fit to live together in a free, peaceful, prosperous, benevolent, rational society. (35)
  • The only proper, moral purpose of a government is to protect man’s rights, which means: to protect him from physical violence – to protect him from physical violence – to protect his right to his own life, to his own liberty, to his own property and to the pursuit of his own happiness. Without property rights, no other rights are possible. (36)
  • When I say “capitalism”, I mean a full, pure, uncontrolled, unregulated laissez-faire capitalism – with a separation of state and economics, in the same way for the same reasons as the separation of state and church. A pure system of capitalism has never yet existed, not even in America: various degrees of government control had been undercutting and distorting it from the start. Capitalism is not the system of the past; it is the system of the future – if mankind is to have future. (37)
  • The proper function of consciousness is: perception, cognition, and the control of action. (40)
  • Faith is the commitment of one’s consciousness to beliefs for which one has no sensory evidence or rational proof…. Faith is the equation of feeling with knowledge. (41)
  • Pride is one’s response to one’s power to achieve values, the pleasure one takes in one’s own efficacy. … Pride has to be earned. (45)
  • The root of selfishness is man’s right – and need – to act on his own judgment. (46)
  • Always act in accordance with the hierarchy of your values, and never sacrifice a greater value to a lesser one. (50)
  • Love and friendship are profoundly personal, selfish values: love is an expression and assertion of self-esteem, a response to one’s own values in the person of another. One gains a profoundly personal, selfish joy from the mere existence of the person one loves. It is one’s own personal, selfish happiness that one seeks, earns and derives from love. (51)
  • Any action that man undertakes for the benefit of those he loves is not a sacrifice if, in the hierarchy of his values, in the total context of the choices open to him, it achieves that which is of greatest personal (and rational) importance to him. (51)
  • It is only in emergency situations that one should volunteer to help strangers, if it is in one’s power. …One should help men in an emergency. (55)
  • One’s sole obligation toward others, in this respect, is to maintain a social system that leaves men free to achieve, to gain and to keep their values. (55)
  • There are no conflict of interests among rational men. And there are four reasons to that: Reality, Context, Responsibility and Effort. (57)
  • Like any other value, love is not a static quantity to be divided, but an unlimited response to be earned. (63)
  • There are, broadly, five (interconnected) areas that allow man to experience the enjoyment of life: productive work, human relationships, recreation, art, sex. – Nathaniel Branden.(72)
  • Of the various pleasures that man can offer himself, the greatest is pride – the pleasure he takes in his own achievements and in the creation of his own character. The pleasure he takes in the character and achievements of another human being is that of admiration. The highest expression of the most intense union of these two responses – pride and admiration – is romantic love. Its celebration is sex. – Nathaniel Branden. (76)
  • A man falls in love with and sexually desires the person who reflects his own deepest values. – Nathaniel Branden. (77)
  • There can be no compromise on moral principles. (81)
  • One must never fail to pronounce moral judgment. Nothing can corrupt and disintegrate a culture or a man’s character as thoroughly as does the precept of moral agnosticism, the idea that one must never pass moral judgment on others, that one must be morally tolerant of anything, that the good consists of never distinguishing good from evil. (82)
  • There is no escape from the fact that men have to make choices; so long as men have to make choices, there is no escape from moral values; so long as moral values are at stake, no moral neutrality is possible. To abstain from condemning a torturer, is to become an accessory to the torture and murder of his victims. (83)
  • Judge, and be prepared to be judged. (83)
  • “Surely you don’t think in terms of black-and-white, do you?” – The proper answer (in essence, if not in form) should be: “You’re damn right I do!” (92)
  • What will happen to the poor in an Objectivist society? If you want to help them, you will not be stopped. Only individual men have the right to decide then or whether they wish to help others; society – as an organized political system – has no rights in the matter at all. (93)
  • The man who is willing to serve as the means to ends of others, will necessarily regard others as the means to his ends. (94)
  • Progress can come only out of men’s surplus, that is: from the work of those men whose ability produces more than their personal consumption requires, those who are intellectually and financially able to venture out in pursuit of the new. Capitalism is the only system where such men are free to function and where progress is accompanied, not by forced privations, but by a constant rise in the general level of prosperity, of consumption and of enjoyment of life. (97)
  • All public projects are mausoleums, not always in shape, but always in cost. (98)
  • America’s greatness lies in the fact that her actual monuments are not public. The skyline of New York is a monument of a splendor that no pyramids or palaces will ever equal or approach. But America’s skyscrapers were not built by public funds nor for a public purpose; they were built by the energy, iniative and wealth of private individuals for personal profit. (105)
  • There is no such dichotomy as “human rights” versus “property rights”. No human rights can exist without property rights. Since material goods are produced by the mind and effort of individual men, and are needed to sustain their lives, if the producer does not own the result of his effort, he does not own his life. To deny property rights means to turn men into property owned by the state. Whoever claims the “right” to “redistribute” the wealth produced by others is claiming the “right” to treat human beings as chattel. (106)
  • If one wishes to advocate a free society – that is, capitalism – one must realize that its indispensable foundation is the principle of individual rights. (108)
  • The right to property is a right to action, like all others: it is not the right to an object, but to the action and the consequences of producing or earning that object. It is not a guarantee that a man will earn any property, but only a guarantee that he will own it if he earns it. It is the right to gain, to keep, to use and to dispose of material values. (111)
  • There are two potential violators of man’s rights: the criminals and the government. (111)
  • The Founding Fathers spoke of the right to the pursuit of happiness – not of the right to happiness. It means that a man has a right to take actions he deems necessary to achieve his happiness; it does not mean that others must make him happy. (114)
  • Rights are moral principles which define and protect a man’s freedom of action, but impose no obligations on other men. (115)
  • Those who advocate laissez-faire capitalism are the only advocates of man’s rights. (117)
  • The government is not the ruler, but the servant or agent of the citizens; it means that the government as such has no rights except the rights delegated to it by the citizens for a specific purpose. (129)
  • The proper functions of a government fall into three broad categories: all of them involving the issues of physical force and the protection of men’s rights: the police, to protect men from criminals – the armed services, to protect men from foreign invaders – the law courts, to settle disputes among men according to objective laws. (131)
  • In a fully free society, taxation – or, to be exact, payment for governmental services would be voluntary. The citizens would (and should) be willing to pay for such services, as they pay for insurance. (135)
  • For every species, growth is a necessity of survival. Biologically, inactivity is death. (141)
  • Capitalism, by its nature, entails a constant process of motion, growth and progress. It creates the optimum social conditions for man to respond to the challenges of nature in such a way as best to further his life. It operates to the benefit of all those who choose to be active in the productive process, whatever their level of ability. But it is not geared to the demands of stagnation. Neither is reality. (146)
  • Racism is the lowest, most crudely primitive form of collectivism. It is the notion of ascribing moral, social or political significance to a man’s genetic lineage – the notion that a man’s intellectual and characterological traits are produced and transmitted by his internal body chemistry. Which means, in practice, that a man is to be judged, not by his own character and actions, but by the characters and actions of a collective of ancestors. (147)
  • Just as there is no such thing as a collective or racial mind, so there is no such thing as a collective or racial achievement. There are only individual minds and individual achievements – and a culture is not the anonymous product of undifferentiated masses, but the sum of the intellectual achievements of individual men. (148)
  • Racism has only one psychological root: the racist’s sense of his own interiority. Like every other form of collectivism, racism is a quest from the unearned. It is a quest for automatic knowledge – for an automatic evaluation of men’s characters that bypasses the responsibility of exercising rational or moral judgment – and, above all, a quest for an automatic self-esteem (or pseudo-self-esteem). The overwhelming majority of racists are men who have earned no sense of personal identity, who can claim no individual achievement or distinction, and who seek the illusion of a “tribal self-esteem”. (149)
  • There is only one antidote to racism: the philosophy of individualism and its politico-economic corollary, laissez-faire capitalism. …It is not a man’s ancestors or relatives or genes or body chemistry that count in a free market, but only one human attribute: productive ability. It is by his own individual ability and ambition that capitalism judges a man and rewards him accordingly. No political system can establish universal rationality by law (or by force). But capitalism is the only system that functions in a way which rewards rationality and penalizes all forms of irrationality, including racism. …It is capitalism that gave mankind its first steps toward freedom and a rational way of life. It is capitalism that broke through national and racial barriers, by means of free trade. It is capitalism that abolished serfdom and slavery in all the civilized countries of the world. (151)
  • The smallest minority on earth is the individual. Those who deny individual rights, cannot claim to be defenders of minorities. (154)

sunnuntai 20. lokakuuta 2013

I am John Galt

Sainpas hyvällä tekosyyllä blogiini hienon otsikon. Nimittäin lukemalla Donald L. Luskin ja Andrew Gretan teoksen I am John Galt - Today's Heroic Innovators Building the World and the Villainous Parasites Destroying It.
 
Luskin & Greta: I am John Galt
Valitettavasti kirja ei vain ollut lukemisen arvoinen. Se oli oikeastaan surkea. Sen yksinkertainen perusajatus oli tuoda Ayn Randin mestariteoksen Atlas Shruggedin ihmiset nykyaikaan hakemalla hahmoille vastineita reaalielämästä. Ayn Randin hahmot Atlas Shruggedissa ovat erinomaisen todentuntuisia ja niille löytyy vastineita arkipäivän elämästä useita, mutta kirjan kirjoittamiseen tämä vertailuajattelu ei vain kanna. Vielä ontuvamman vertailusta tekee se, että itse hahmojen luojalla eli edesmenneellä Ayn Randilla ei tietenkään ole ollut osaa eikä arpaa näiden vastinparien valinnassa.
 
Kolmen henkilön osalta kirjoittajiin on helppo yhtyä: Paul Krugman Ellsworth Tooheyna eli sosialistina, Bill Gates Henry Reardenina eli toimialaansa muuttavana teknologisena innovaattorina sekä Milton Friedman Hugh Akstonina eli akateemisena vapauden ja markkinatalouden puolustajana. Alan Greenspan esitellään kirjassa Robert Stadlerina eli liberalistina, josta tuli talouden tsaari. Hänet esitellään myös takinkääntäjänä, osin petturinakin, eli todetaan hänen olleen Ayn Randin lähipiiriläisiä ja ystäviä, mutta valtaan päästyään hänen talouspolitiikkansa tulkittiin osin ihanteiden vastaiseksi. Tämä tulkinta ei liene tällaisena ulkopuolisena arviona reilu Greenspania kohtaan.
 
Atlas Shrugged Suomessa?
 
Jo Atlas Shrugeddia lukiessani mietin, kuka olisi kukin Suomen yhteiskunnassa. Nimittely ei ole reilua, voisi olla jopa henkilön kunniaa loukkaavaa, joten jätän sen julkisesti tekemättä. Wesley Moucheja eli poliitikkoja, jotka kuvittelevat ymmärtävänsä taloutta sitä oikeasti ymmärtämättä ja siten sekoittavat yhteiskunnan toimintaa, löytyy lukuisia. Aivan liikaa. Ja aivan liian keskeisistä asemista. Samoin James Taggarteja löytyy eli suurten yritysten johtajia, joiden pääasiallinen tehtävä tuntuu olevan oman aseman turvaaminen ja yrityksen toiminnan suojaaminen kilpailulta lobbaamalla lainsäädäntöä. Henry Reardeneita eli periksiantamattomia yrittäjiä ja innovaattoreitakin onneksi löytyy useista suomalaisista pk-yrityksistä. Siinä on aika paljon pohjanmaalaista henkeä Henry Reardenin toiminnassa.
 
Mutta missä on Suomen Hugh Akston, akateeminen liberalismin ja vapaan markkinatalouden puolustaja? Yksi vahva kandidaatti, nyt jo eläköitynyt, taitaa löytyä Tampereelta.
 
Entä Francisco d'Anconia, renesanssi henkilö ja todellinen kapitalismin provosoiva puolustaja? Tämä kunniallinen titteli on helppo jakaa eräälle viiksimiehelle, joka ei keskustelunavauksillaan ole taatusti jättänyt ketään kylmäksi. Lienee kapitalismin ykköspuolustaja suomalaisessa yhteiskunnassa.
 
Löytyisikö Ragnar Danneskjöldiä, henkilöä joka haluaa lopettaa Robin Hoodin ihanteen maailmasta eli rikkailta ryöstämisen? Vielä ei ole kävelly Suomessa tällaista vastaan.
 
Mites Dagny Taggart, Atlas Shruggedin päähenkilö, nainen joka ei jäänyt jalkoihin miehisessä korporaatiomaailmassa vaan veti rohkeasti omaa polkuaan ja otti aina vastuuta muiden sitä väistellessä? Näitäkin onneksi löytyy, ennen kaikkea liike-elämästä. Yksi vahva nimi on myös järjestöjohtajana.
 
Myös Midas Mulligan on kiinnostava persoona. Pankkiiri, joka liittyi ensimmäisenä lakkolaisiin ja toimi keskeisenä taustavaikuttajana ja rahoittajana koko operaatiossa.
 
Mutta silti, kaiken tämän jälkeenkin, kysymys kuuluu, kuka on John Galt?

tiistai 15. lokakuuta 2013

Ayn Rand: Capitalism

Viime aikoina olen lukenut laajasti Ayn Randin tuotantoa. Aloitin The Art of Non-Fictionilla, jatkoin mestariteos Atlas Shruggedilla ja nyt kävin läpi Capitalismin. Seuraavaksi vuorossa on For The New Intellectual, The Virtue of Selfisness sekä Philosophy - Who Needs it? sekä kun löytyy sopiva hetki, toinen mestariteos The Fountainhead.
Ayn Rand: Capitalism - The Unknown Ideal
Capitalism - The Unknown Ideal on Ayn Randin ylistyspuheenvuoro kapitalismista. Siinä otetaan käsijarru pois päältä ja paahdetaan täysillä ja kritiikittä kapitalismin ilosanomaa. Teksti menee kiihkoilun puolelle, niin innostuneesti Rand suitsuttaa kapitalismin ylivertaisuutta. On huomioitava, että Neuvostoliitossa syntyneelle ja sieltä pakoon lähteneelle Randille kapitalismi ja USA merkitsivät henkikökohtaista vapautta ja totaalista yhteiskuntajärjestelmän muutosta. Nämä traagiset elämänkäänteet vaikuttavat väkisinkin Randin suhtautumiseen ja kirjoituksiin. Harva kapitalistisessa yhteiskunnassa koko ikänsä asunut syttyisi vastaavaan kipinään.
 
Kirja koostuu lyhyistä kolumnityyppisistä kirjoituksista ja mukana on myös kaksi ulkopuolista kirjoittajaa, Nathaniel Branden ja Alan Greenspan. Jostain syystä Rand irtisanoutui myöhemmin Brandenin teksteistä todeten, että ne eivät edusta randilaista objektiivisuutta. Greenspan sen sijaan on kirjoittajana äärimmäisen mielenkiintoinen, onhan kyseessä USA:n liittovaltion keskuspankin Fedin entinen pääjohtaja. Greenspan ja Rand olivat sydänystäviä pitkän aikaa ja Greenspan osallistui Randin vetämiin keskustelukerhoihin. Kirjoituksissaan Greenspan ottaa kiitettävän kapitalistisen linjan, jota hän ei kuitenkaan aina Fedin johdossa noudattanut.
 
Capitalism - The Unknown Ideal on kaltaiselleni kapitalistille kiihottavaa luettavaa. Se toteaa asioita tykittämällä eli varsin napakasti ilmaisee asian olevan jollain tavalla, piste. Perusteluja näkemyksille tarjotaan randilaisesta objektiivisuuden filosofiasta johtaen. Ihan aina asiat eivät välttämättä ole niin mustavalkoisia kuin tässä esitetään, mutta suoraviivaisuudessaan ja selkeydessään Rand on kyllä ylivertainen. Kapitalismin ylivertaisuutta epäilevien keskuudessa tämä kirja aikaansaa ärsytystä. Kommunisti ei tätä kirjaa kestäisi lukea. Jos Randin Atlas Shruggedia voi verrata yhdeksi kapitalismin raamatuista, niin tämä lienee sitten kapitalismin katekismus.
 
Kapitalismia käsittelevä kirjallisuus on subjektiivisen näkemykseni mukaan liiaksi kallellaan kritiikkiin, eikä positiiviseen analyysiin. Tältä osin Randin teos on arvokas osa kapitalismin puolustamisessa. Tämä on teos, joka pitäisi suomentaa, koska kirjalla on paljon annettavaa myös suomalaiseen yhteiskunnalliseen keskusteluun. Toisin kuin romaanimuotoinen Atlas Shrugged, tämä kirja sisältää pelkkää asiaa tiivistetyssä muodossa, joten ehkä tämä on hyvä ensiaskel Randin tuotantoon siitä kiinnostuneille. Ainakin minä suosittelen tätä teosta lämpimästi!

Poiminnot

  • Objectivism is a philosophical movement; since politics is a branch of philosophy, Objectivism advocates certain political principles - specially, those of laissez-faire capitalism - as the consequence and the ultimate practical application of its fundamental philosophical principles. It does not regard politics as a separate or primary goal, that is: as a goal that can be achieved without a wider ideological context. Politics is based on three other philosophical disciplines: metaphysics, epistemology and ethics - on a theory of man's nature and of man's relationship to existence. It is only on such a base that one can formulate consistent political theory and achieve it in practice... Objectivists are not conservatives. We are radicals for capitalism; we are fighting for that philosophical base which capitalism did not have and without which it was doomed to perish.
  • No politico-economic system in history has ever proved its value so eloquently or has benefited mankind so greatly as capitalism - and none has ever been attacked so savagely, viciously, and blindly.
  • It must be remembered that the institution of private property, in the full, legal meaning of the term, was brought into existence only by capitalism.
  • All wealth is produced by somebody and belongs to somebody.
  • Mankind is not an entity, an organism, or a coral bush. The entity involved in production and trade is man. It is with the study of man - not of the loose aggregate known as a "community" - that any science of the humanities has to begin. (5)
  • The right to life is the source of all rights, including the right to property. ...Without property rights, no other rights can be practiced. (9)
  • Is man free? In mankind's history, capitalism is the only system that answers: yes. Capitalism is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned. (10)
  • In a capitalist society, all human relationships are voluntary. Men are free to cooperate or not, to deal with one another or not, as their own individual judgements, convictions, and interest dictate. They can deal with one another only in terms of and by means of reason. (11)
  • Corresponding to the four branches of philosophy, the four keystones of capitalism are: metaphysically, the requirement of man's nature and survival - epistemologically, reason - ethically, individual rights - politically, freedom. (11)
  • The moral justification of capitalism lies in the fact that it is the only system consonant with man's rational nature, that it protects man's survival qua man, and that its ruling principle is: justice. (12)
  • The objective theory holds that the good is neither an attribute of "things in themselves" nor of man's emotional states, but an evaluation of the facts of reality by man's consciousness according to a rational standard of value. ...The good is an aspect of reality in relation to man. ...Of all the social systems in mankind's history, capitalism is the only system based on an objective theory of values. (14)
  • Capitalism gave mankind the longest period of peace in history (1815-1914). (34)
  • The degree of a country's freedom is the degree of its prosperity. (38)
  • The proper functions of a government are: the police, to protect men from criminals; the military forces, to protect men from foreign invaders; and the law courts, to protect men's property and contracts from breach by force and fraud, and to settle disputes among men according to objectively defined laws. (43)
  • A man can grow rich only if he is able to offer better values - better products or services, at a lower price - than others are able to offer. Wealth, in a free market, is achieved by a free, general, "democratic" vote - by the sales and the purchases of every individual who takes part in the economic life of the country. (44)
  • Let me define the difference between economic power and political power: economic power is exercised by means of positive, by offering men a reward, an incentive, a payment, a value; political power is exercised by means of negative, by threat of punishment, injury, imprisonment, destruction. The businessman's tool is values, the bureacurat's tool is fear. (45)
  • There is no way to legislate competition: there are no standards by which one could define who should compete with whom, how many competitors should exist in any given field, what should be their relative strenght or their so-called "relevant markets", what prices they should charge, what methods of compensation are "fair" or "unfair". None of these can be answered, because these precisely are the questions that can be answered only by the mechanism of a free market. (53)
  • Businessmen are the symbol of a free society - the symbol of America. If and when they perish, civilization will perish. (62)
  • The ultimate regulator of competition in a free economy is the capital market. So long as capital is free to flow, it will tend to seek those areas which offer the maximum rate of return. ...Therefore, the existence of a free capital market does not quarantee that a monopolist who enjoys high profits will necessary and immediately find himself confronted by competition. What it does guarantee is that a monopolist whose high profits are caused by high prices, rather than low costs, will soon meet competition organized by the capital market. - Alan Greenspan. (69)
  • The belief that unions can cause a general rise in the standard of living is a myth. - Nathaniel Branden. (89)
  • Economic progress, like every other form of progress, has only one ultimate source: man's mind - and can exist only to the extent that man is free to translate his thought into action. -Nathaniel Branden. (91)
  • Education should be liberated from the control or intervention of government, and turned over to profit-making private enterprise, not because education is unimportant, but because education is so crucially important. - Nathaniel Branden. (95)
  • In a free economy, inherited wealth is not an impediment or a threat to those who do not possess it. Wealth, is not a static, limited quantity that can only be divided or looted; wealth is produced; its potential quantity is virtually limited. ...The greater the amount of wealth, of industrial development, in existence, the higher the economic rewards (in wages and profits) and the wider the market for ability - for new ideas, products and services. - Nathaniel Branden. (97)
  • Stripped of its academic jargon, the welfare state is nothing more than a mechanism by which governments confiscate the wealth of the productive members of a society to support a wide variety of welfare schemes. - Alan Greenspan. (106)
  • The law of supply and demand is not to be conned. As the supply of money (of claims) increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of the society lose value in terms of goods. ...In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. ...The financial policy of welfare state requires that there be no way for the owners of wealth to protect themselves. This is the shabby of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. - Alan Greenspan. (107)
  • Government control of the economy, no matter in whose behalf, has been the source of all the evils in our industrial history - and the solution is lassez-faire capitalism, i.e., the abolition of any and all forms of government intervention in production and trade, the separation of State and Economics, in the same way and for the same reasons as the separation of Church and State. (116)
  • Capitalism is based on self-interest and self-esteem; it holds integrity and trustworthiness as cardinal virtues and makes them pay off in the marketplace, thus demanding that men survive by means of virtues, not of vices. (130)
  • Contrary to the ”argument of scarcity”, if you want to make a limited resource available to the whole people, make it private property and throw it on a free open market. (134)
  • Since “public property” is a collective fiction, since the public as a whole can neither use nor dispose of its “property”, that “property” will always be taken over by some political “elite”, by a small clique which will then rule the public – a public of literal, dispossessed proletarians. (139)
  • The airways should be turned over to private ownership. The only way to do it now is to sell radio and television frequencies to the highest bidders (by an objectively defined, open, impartial process) – and thus put an end to the gruesome fiction of “public property”. (139)
  • Patents and copyrights are the legal implementation of the base of all property rights: a man’s right to the product of his mind. (141)
  • Altruism is not a doctrine of love, but of hatred for man. (148)
  • Collectivism does not preach sacrifice as a temporary means to some desirable end. Sacrifice is its end – sacrifice as a way of life. It is man’s independence, success, prosperity, and happiness that collectivists wish to destroy. (148)
  • Colbert, chief adviser of Louis XIV asked a group of manufacturers what he could do for industry. A manufacturer named Legendre answered: “Laissez-nous faire!” (“Let us alone!”), (153)
  • A principle is “a fundamental, primary, or general truth, on which other truths depend”. Thus a principle is an abstraction which subsumes a great number of concretes. It is only by means of principles that one can set one’s long-range goals and evaluate the concrete alternatives of any given moment. It is only principles that enable a man to plan his future and to achieve it. (157)
  • Businessmen – who provide us with the means of livelihood, with jobs, with labor-saving devices, with modern comforts, with an ever-rising standard of living – are the men most immediately and urgently needed by society. (174)
  • There can be no compromise on basic principles. There can be no compromise on moral issues. There can be no compromise on matter of knowledge, of truth, of rational conviction. (202)
  • Capitalism was the only system in history where wealth was not acquired by looting, but by production, not by force, but by trade, the only system that stood for man’s right to his own mind, to his work, to his life, to his happiness, to himself. If this is evil, by the present standards of the world, if this is the reason for damning us, then we – we, the champions of man – accept it and choose to be damned by the world. We choose to wear the name “Capitalism’ printed on our foreheads, proudly, as our badge of nobility”. (213)
  • If you want to fight for capitalism, there is only one type of argument that you should adopt, the only one that can ever win in a moral issue: the argument from self-esteem. This means: the argument from man’s right to exist – from man’s inalienable individual right to his own life. (224)
  • Capitalism is not the system of the past; it is the system of the future – if mankind is to have a future. Those who wish to fight for it must discard the title of “conservatives”. “Conservatism” has always been misleading name, inappropriate to America. Today, there is nothing left to “conserve”. (225)
  • Observe that both “socialism” and “fascism” involve the issue of property rights. The right to property is the right of use and disposal. Observe the difference in those two theories: socialism negates private property rights altogether, and advocates “the vesting of ownership and control” in the community as a whole, i.e. in the state; fascism leaves ownership in the hands of private individuals, but transfers control of the property to the government. Ownership without control is a contradiction in terms; it means “property”, without the right to use it or to dispose of it. It means that the citizens retain the responsibility of holding property, while the government acquires all the advantages without any of the responsibility. (227)
  • In any undertaking or establishment involving more than one man, it is the owner or owners who set the rules and terms of appropriate conduct; the rest of the participants are free to go elsewhere and seek different terms, if they do not agree. There can be no such thing as the right to act on whim, to be exercised by some participants at the expense of others. …It is only on the basis of property rights that the sphere and application of individual rights can be defined in any given social situation. Without property rights, there is no way to solve or to avoid a hopeless chaos of clashing views, interests, demands, desires and whims. (294)
  • Capitalism valued a man’s life as it had never been valued before. (325)
  • An idea is a light turned on in a man’s soul. (348)
  • When you clamor for public ownership of the means of production, you are clamoring for public ownership of the mind. (352)
  • The source of wealth is man’s mind. (352)
  • Right to property is a right to action, like all others: it is not the right to an object, but to the action and the consequences of producing or earning that object. It is not a guarantee that a man will earn any property, but only a guarantee that he will own it if he earns it. It is the right to gain, to keep, to use and to dispose of material values. (370)
  • The purpose of law and of government is the protection of individual rights. (384)

maanantai 18. helmikuuta 2013

Maailman uudet omistajat

Apollo, Bain, Blackstone, BlackRock, Carlyle, KKR, TPG...

Jim Coulter, David Bonderman, Daniel D'Aniello, Henry Kravis, George Roberts, David Rubenstein, Steve Schwarzman, William Sonneborn, Mitt Romney...

Tuntemattomat taustavaikuttajat
Kuka tunnistaa? Mitt Romney, siis republikaanien ehdokas USA:n presidentinvaaleissa? Kyllä, hän on yksi heistä. Nimittäin pääomasijoittamisen pioneereista. Yllä olevat yritykset ovat maailman suurimpia pääomasijoitusyhtiöitä. Maailman uusia omistajia, voisi perustellusti nimittää, koska nämä yhtiöt löytyvät yhä useampien globaalien suuryritysten taustalta. Erään arvion mukaan pääomasijoitusyhtiöiden omistamat yritykset muodostavat noin 8% USA:n BKT:sta. Blackstonen omistamissa yrityksissä työskentelee 680 000 ihmistä, enemmän kuin esimerkiksi General Electricilla. Toki vertailu ei ole relevantti, koska nämä ihmiset eivät työskentele suoraan Blackstonelle, mutta antaa kuitenkin kuvaa siitä, millaisista kokonaisuuksista on kyse. Silti vain harva tunnistaa näitä taustavaikuttajia.

Jason Kelly: The New Tycoons - Inside The Trillion Dollar Private Equity Industry That Owns Everything
Maailman uudet omistajat

Jason Kellyn The New Tycoons New Tycoons - Inside the trillion dollar private equity industry that owns everything avaa maailman suurimpien pääomasijoittajien maailmaa. Tai siis amerikkalaisten pääomasijoittajien maailmaa, jotka nyt sattuvat dominoimaan globaalisti. Kirjan lukemalla saa hyvin käsityksen siitä, kuinka isosta toiminnasta on kyse. Kelly alkaa kirjan myötä tarkkailemaan, kuinka usean yrityksen taustalla on pääomasijoittaja ja havahtuu: hän voisi hyvinkin viettää viikon tai kuukauden asioimalla ainoastaan pääomasijoittajien omistamissa yrityksissä, samalla tavalla kuin Supersize Me asioi vain McDonaldsissa.

Pääomasijoittajat eivät näy, mutta he kyllä päättävät monien yritysten omistajina ja hallituksissa. Vaikka toimiala onkin kooltaan massiivinen ja vuosikymmeniä vanha, nousi se ennennäkemättömällä tavalla otsikoihin vasta viime vuonna, kun Bain Capitalin perustaja Mitt Romney pyrki USA:n presidentiksi. Kampanjan aikana käytiin värikästä keskustelua siitä, keitä pääomasijoittajat ovat ja miten heidän toimintansa vaikutta yhteiskunnassa. Romneyn valinta maailman vaikutusvaltaisimpaan tehtävään olisi kruunannut pääomasijoittajien valta-aseman, mutta valitettavasti se jäi vielä toteutumatta.

Kirjan nimi juontaa juurensa aiemmasta teoksesta The Tycoons, jossa esitellään Amerikan yritysmaailman rakentajia kuten Henry Fordia ja Rockefellereita. He olivat yrittäjiä, he olivat yhden toimialan imperiumin rakentajia. He loivat omaisuutensa pääosin itse. Pääomasijoittajat sen sijaan ovat finanssitaustaisia henkilöitä, joiden keskeinen kyky on koota yhteen institutionaalista pääomaa ja kasvattaa jo olemassaolevista yrityksistä vieläkin suurempia ja kannattavampia globaaleja markkinajohtajia.

Kirjan lukemista voi suositella alan toimijoille, mutta aloittelijoille se on liian toimialakeskeinen, eikä siitä välttämättä saa juurikaan irti. Kirja on tehty pääosin toimialan kärkinimiä haastattelemalla, mutta sisällöllisesti se jää vähän kevyeksi. Se on viihdyttävää luettavaa, mutta tarjoaa turhan vähän uutta tietoa. Kirjasta löytyy joitain hyviä kirja-arvosteluja mm. Forbesilta, Huffington Postista ja Kellyn haastattelu (toinen täällä) ovat myös katsomisen arvoinen.

Poiminnot

  • Private equity firms globally and collectively had almost USD 3 trillion in assets at the end of 2011. The companies they own account for about 8 percent of the U.S. gross domestic product by one estimate.
  • Private equity is like a teenager with a lot of potential, but still struggling with adolescent tendencies - at times unresponsive, rash, selfish, and fluctuating between arrogance and self-doubt.
  • Abu Dhabi Investment Authority is called the largest sovereign wealth fund with assets at around USD 750 billion. The Abu Dhabi fund bought a stake in Apollo itself, paying to own a slice of the manager, not just participating in the funds. Carlyle cut a similar deal with Abu Dhabi-based Mubadala Development Company.
  • Berkshire Hathaway have avoided buying companies outright from buyout firms in part because they "don't love the business" in the same way long-time owners do. Warren Buffet's preference is to keep owners after the acquisition to take advantage of their "passion" for the company.
  • Doing The Big Deal is quintessential KKR.
  • At KKR people played high-stakes poker game where "the house" extended people's credit for their bets.
  • Henry Kravis asks job candidates to describe their personal balance sheet - that is, what they perceive to be their assets and liabilities.
  • How to succeed in an increasingly transactional Wall Street: "Be interesting, be relevant".
  • Don't congratulate me when I buy something. Congratulate me when I sell. - Henry Kravis.
  • Kravis and Roberts initiated a multi-faceted approach. They decided each investment would have a 100-day plan, like General Electric had for its businesses, forcing the dealmakers to think beyond the closing dinner.
  • Kravis and Roberts saw a business opportunity in capital markets, specifically raising equity and debt for companies they owned.
  • Many Wall Street firms had a "Eat what you kill" culture whereby your compensation was largely based on what business you brought in. Kravis described a culture where you locked your office or your desk when you went home at night so no one took clients or business ideas. The KKR founders decided that everyone would have a piece of the firm, however small. It helps make it feel like it's bigger than any one person. It's the difference between being a firm and a franchise.
  • ...Kravis and Roberts took to personally walking around the office handing out distribution checks. In one memorable case in the 1980s, the sale of a single portfolio company meant secretaries each got a one-time USD 80 000 check for their participation in that deal hand-delivered by the bosses.
  • KKR, ever opportunistic.
  • The total "dry powder, or committed, unspent capital in all types of private equity funds was close to a trillion dollars in 2011, with about 41 percent of that held in leveraged buyout funds. Stiff competition for almost anything is a foregone conclusion.
  • KKR has never thought as being in the distressed business - that is, targeting deeply broken businesses and making radical changes. Some of their deals ended up being worse than they'd thought, but KKR's general approach is to buy businesses that are undervalued or poorly managed. In recent times, the latter investments have often been in the energy sector, where KKR has made a bet on, say, shale deposits, where very little operational expertise is needed.
  • One way private equity firms are making noticeable operational changes to their companies is by a different kind of leverage, the kind that comes when you control massive budgets and huge employee bases. In that regard, they've reviving a corporate concept largely abandoned in the 1980s: the conglomerate. The notion of the conglomerate - a holding company controlling a sprawling set of companies found it disparate industries largely went the way of the dinosaur as companies found it difficult to convince investors that there was value that was even equal to the sum of parts. A few have hung on, including the Tisch family's Loews Corporation, which owns everything from hotels to oil fields to insurance companies. And the most famous remains Warren Buffet's Berkshire Hathaway. Private equity in its early days was in part a conglomerate dismantler, a solution for those wanting to disassemble empires. For example Blackstones owns companies with USD 117 billion in aggregate annual revenue and 680 000 employees, more in headcount than General Electric or Home Depot.
  • The "three box model" of private equity, divided among stock-pickers, deal guys and portfolio managers.
  • Like Kravis and Roberts, Coulter (TPG) obsesses over his firm's culture. TPG partners are quick to mention Coulter's "No assholes" rule.
  • U.S private equity firms employ 8.1 million people by one estimate, out of a total workforce of roughly 154 million. That is one in 20 workers.
  • Each company is technically owned by a distinct partnership created by Blackstone, a partnership that shares nothing other than a common owner.
  • KKR companies together had annual revenues in 2010 of USD 210 billion. That's more than USD 50 billion more than General Electric had that same year.
  • One researcher pegged the average cash earnings for a private equity executive at USD 248 000 in 2011. That's roughly five times the median household income at the end of 2010 in the U.S.A of USD 50 046.
  • Private equity managers justify their enormous fees at the end of the day: because they can deliver returns investors can't find anywhere else.
  • Overall, the study says, private equity is neither a massive job creator nor a massive job destroyer.
  • A crucial element of the entire conversation around private equity is not just the ultimate returns, but how they are measured and, ultimately, how they are judged. One way that argument has played out in recent years is a nerdy debate on evaluating a firm on percentage returns versus cash returns. Call it the "You can't eat IRR" debate. Pension funds can't use IRR to fund a retirement plan. A university endowment can't give financial aid or pay a maintenance in IRR. They need cash, real money that can be deposited in a bank. For a private equity fund to really be of use to its investors, it needs to deliver those returns in the form of money coming back, in healthy multiples of what the pension or endowment put in. "At the end of the day, I care about how much do I give you, and how much money do I get back".
  • The average person can't in fact invest in a typical private equity fund. They are by design limited to accredited investors, which means meeting a threshold of net worth of USD 1 million in liquid assets or USD 200 000 in annual income for a single person. This, of course, cuts both ways. It protects the retail investor from putting her money at undue risk. It also prevents her from participating in the lush profits that can be generated through these vehicles.
  • There is one element of the private equity conversation that seems clear: Returns are going down. The competition for deals surely hurt returns. The best returns come from investments where there is an information advantage - in other words, I win because I simply know something you don't or before you do.
  • It's the barbell theory of private equity. On one end there are the bulge bracket names best known on Wall Street and in the world at large: Blackstone, KKR, Apollo, Bain, Carlyle, and TPG. These firms measure their total assets under management in tens of billions, or in some cases hundreds of billions. It's highly unlikely that they limit their business to private equity. They have some combination of hedge funds, real estate, and credit investments in various stages of development. On the other end of the barbell are the mono-line private equity firms, those who have actively chosen, or passively accepted, that they'll focus almost exclusively on the buyout business. The model has changes and you have two kinds of players: public and diversified and private and focused.
  • "There will be people who continue to make 20 percent IRRs off reasonable pool of capital. I'm not a believer in just making 5 percent over the S&P. I believe in 2,5 times your money and 25 percent returns." - Thomas Lister, Permira
  • Alpha is a proxy for manager skill.
  • "Hilton was a sleeping giant. This sort of deal allows you to reboot the company's hard drive, to really ask yourself what is should be". - Chris Nassetta
  • Public investors seem to have decided that they can't find a coherent and consistent way to value private equity... Public valuations are by their nature forward looking. Investors who buy stocks are betting the stock will gain in value in the short- or long-term, allowing the holder to profit by selling it at a later time. Or they may see that a company pays a predictable, generous dividend and hold it for that steady income stream, even if the stock doesn't rise dramatically in value. With that in mind, investors and analysts place a value on a stock that's usually based on a multiple of earnings. With private equity among the biggest questions is actually constitutes those earnings and when investors will actually see evidence of them. 
  • I briefly considered for living a week or month using only private equity products, a sort of Supersize Me, private equity style. 
  • I began to realize that companies that weren't owned by private equity firms could someday be, or that some enterprising analyst tucked in a windowless cubicle at Blackstone or KKR probably built an Excel spreadsheet about it. Somewhere, someone has run the numbers. Even in a subdued, post-LBO boom age, it seemed that there was nothing they couldn't buy at least a piece of. 
  • Private equity barons are, truly, the new tycoons. 
  • Private equity isn't good or bad - it just is. 
  • Anyone who directly has say over that much money and can so deeply impact millions of lives has a big responsibility. Such people can't be judged solely on how much money they make for their investors or themselves. And they can't even be judged simply on how many jobs they create or destroy.

sunnuntai 7. lokakuuta 2012

Niall Ferguson: The Ascent of Money

To work in a financial sector is not the most popular place to be these days. I guess that politicians and bankers are the most to be blamed about the financial crisis at hand. Well, this is nothing new. Throughout the history, people working in "real economy", doing "real work", have seen finance and financiers somehow less valuable to society. However, it can be said, that the development of finance has been the most important reason for the increase of human wealth and the improvement of living conditions all over the world.

Professor Niall Ferguson

Finance is the most important innovation in mankind's history

In order to understand the role of finance in the development of world's well-being, I highly recommend to read Niall Ferguson's The Ascent of Money - A Financial History of The World. Professor Ferguson gives a historical insight into monetary innovations and explains practically why the role of money is - and has always been - crucial in different societies. Ferguson highlights, for example, the importance of credit and limited liability company stating that these are perhaps the most remarkable innovations in mankind's history. It's easy to agree with him. Without financial structures, many other innovations wouldn't have developed. 

Must read for bankers and politicians

Ferguson's book is a must read for everyone working in the financial sector. More importantly, it should be read by politicians in order to understand that blaming financial sector about the crisis is like shooting your own leg. The financial sector is a solution, not a problem for the political (not financial!) crisis we are living. 

Movie on Youtube

Niall Ferguson The Ascent of Money 4 hours documentary movie

In addition, Ferguson's homepage includes a lot of interesting material for further reading. 

Key points:
  • Throughout the history of Western civilization, there has been a recurrent hostility to finance and financiers, rooted in the idea that those who make their living from lending money are somehow parasitical on the "real" economic activities of agriculture and manufacturing. This hostility has three causes. It is partly because debtors have tended to outnumber creditors and the former have seldom felt very well disposed towards the latter. It is partly because financial crises and scandals occur frequently enough to make finance appear to be a cause of poverty rather than prosperity, volatility rather than stability. And it is partly because, for centuries, financial services in countries all over the world were disproportionately provided by the members of ethnic or religious minorities, who had been excluded from land ownership or public office but enjoyed success in finance because of their own tight-knit networks of kinship and trust. 
  • The evolution of credit and debt was as important as any technological innovation in the rise of civilization, from ancient Babylon to present-day Hong Kong. 
  • Paradoxically, the people who live in the world's safest country are also the world's most insured. 
  • If the last four millennia had witnessed the ascent of man the thinker, we now seemed to be living through the ascent of man the banker.
  • The financial sector has also become the most powerful magnet in the world for academic talent. 
  • A 2008 survey revealed that two thirds of Americans did not understand how compound interest worked. 
  • Poverty is not the result of rapacious financiers exploiting the poor. It has much more to do with the lack of financial institutions, with the absence of banks, not their presence. Only when borrowers have access to efficient credit networks can they escape from the clutches of loan sharks, and only when savers can deposit their money in reliable banks can it be channelled from the idle to the industrious of from the rich to the poor. 
  • If the financial system has a defect, it is that it reflects and magnifies what we human beings are like. 
  • Hunter-gathers do not trade. They raid. Nor do they save, consuming their food as and when they find it. They therefore have no need of money. 
  • For Incas, gold was the "sweat of the sun".
  • Money, it is conventional to argue, is a medium of exchange, which has the advantage of eliminating inefficiencies of barter; a unit of account, which facilitates valuation and calculation; and a store of value, which allows economic transactions to be conducted over long periods as well as geographical distances. To perform all these functions optimally, money has to be available, affordable, durable, fungible, portable and reliable. Because they fulfil most of these criteria, metals such as gold, silver and bronze were for millennia regarded as the ideal monetary raw material. 
  • Value of precious metal is not absolute. Money is worth only what someone else is willing to give you for it. An increase in its supply will not make a society richer, thought it may enrich the government that monopolizes the production of money. Other things being equal, monetary expansion will merely make prices higher. 
  • When human beings first began to produce written records of their activities they did so not to write history, poetry or philosophy, but to do business. 
  • Banknotes, which originated in seventh-century China, are pieces of paper which have next to no intrinsic worth. They are simply promises to pay. 
  • What the conquistadors failed to understand is that money is a matter of belief, even faith: belief in person paying us; belief in the person issuing the money he uses or the institution that honours his cheques or transfers. Money is not metal. It is trust inscribed. And it does not seem to matter much where it is inscribed: on silver, on clay, on paper, on a liquid crystal display. Anything can serve as money, from the cowrie shells of the Maldives to the huge stone discs used on the Pacific islands of Yap. And now, it seems, in this electronic age nothing can serve as money too. 
  • The central relationship that money crystallizes is between lender and borrower. 
  • Without the foundation of borrowing and lending, the economic history of our world scarcely have got off the ground. And without ever-growing network of relationships between creditors and debtors, today's global economy would grind to halt. Contrary to the famous song in the musical Cabaret, money does not literally make the world go round. But it does make staggering quantities of people, goods and services go around the world. 
  • Who were Medici? They were foreign exchange dealers: members of the Arte de Cambio (the Moneychangers' Guild). They came to be known as bankers (banchieri) because, like the Jews in Venice, they did their business literally seated at benches behind tables in the street. ... Prior to the 1930s, it might be legitimately be suggested, the Medici were more gangsters than bankers: a small-time clan, notable more for low violence than for high finance. 
  • In finance small is seldom beautiful.
  • The ability to finance war through a market for government debts was, like so much else in financial history, an invention of the Italian Renaissance. "The fighting is possible only if you can raise the money to pay for it".
  • Inflation is always and everywhere a monetary phenomenon, in the sense that it cannot occur without a more rapid increase in the quantity of money than in output. - Milton Friedman
  • There are essentially five steps to high inflation: 1) War led not only to shortages of goods but also to 2) short-term government borrowing from the central bank, 3) which effectively turned debt into cash, thereby expanding the money supply, 4) causing public expectations of inflation to shift and the demand for cash balances to fall 5) and prices of goods to rice. 
  • Hyperinflation is always and everywhere a political phenomenon, in the sense that it cannot occur without fundamental malfunction of a country's political economy. 
  • Inflation has come down partly because many of the items we buy, from clothes to computers, have got cheaper as a result of technological innovation and the relocation of production to low-wage economies in Asia. 
  • In a greying society, there is a huge and growing need for fixed income securities, and for low inflation to ensure that the interest they pay retains its purchasing power.
  • It is the company that enables thousands of individuals to pool their resources for risky, long-term projects that require the investment of vast sums of capital before profits can be realized. After the advent of banking and the birth of the bond market, the next step in the history of the ascent of money was therefore the rise of the joint-stock, limited-liability corporation: joint-stock because the company's capital was jointly owned by multiple investors; limited-liability because the separate existence of the company as a legal "person" protected the investors from losing all their wealth if the venture failed. Their liability was limited to the money they had used to buy a stake in the company. Smaller enterprises might operate just as well as partnerships. But those who aspired to span continents needed the company. 
  • Stock markets are mirrors of the human psyche. 
  • The biggest challenge of VOC, the first company in the world, was the principal-agent problem: the tendency of its men on the spot to trade on their won account, bungle transactions or simply default the company. 
  • In perhaps the most important work of American economic history ever published, Milton Friedman and Anna Schwartz argued that it was the Federal Reserve System that bore the primary responsibility for turning the crisis of 1929 into a Great Depression. 
  • The history of risk management is one long struggle between our vain desire to be financially secure - as secure as, say a Scottish widow - and the hard reality that there really is no such thing as "the future" singular. There are only multiple, unforeseen futures, which will never lose their capacity to take us by surprise. 
  • Most primitive societies at least attempt to hoard food and other provision to tide them over hard times. And our tribal species intuitively grasped from the earliest times that it makes sense to pool resources, since there is genuine safety in numbers. Appropriately, given our ancestors' chronic vulnerability, the earliest forms of insurance were probably burial societies, which set aside resources to guarantee a tribe member a decent interment. 
  • Saving in advance of probable future adversity remains the fundamental principle of insurance, whether it is against death, the effects of old age, sickness or accident. The trick is knowing how much to save and what to to with those savings to ensure that there is enough money in the kitty to cover the costs of catastrophe when it strikes. 
  • Insurance, in other words, is where the risks and uncertainties of daily life meet the risks and uncertainties of finance. 
  • Before the dawn of modern probability theory, insurers were the gamblers: now they are the casino. 
  • The origin of hedging, appropriately enough, are agricultural. 
  • A pure hedge eliminates price risk entirely. 
  • The world is divided in two: those who are (or can be) hedged, and those who are not (or cannot be). You need money to be hedged. 
  • When we play Monopoly we can dream of buying whole streets. What the game tells us, in complete contradiction to its original inventor's intention, is that it's smart to own property. The more you own, the more you make. 
  • Nothing beats bricks and mortar as an investment. 
  • "Safe as houses": the phrase tells you all you need to know about why people all over the world yearn to own their own homes. But that phrase means something more precise in the world of finance. It means that there is nothing safer than lending money to people with property. Why? Because if they default on the loan, you can repossess the house. Even if they run away, the house can't. As the Germans say, land and buildings are immobile property. 
  • Home ownership was for most of history, the exclusive privilege of an aristocratic elite. Even the right to vote in elections was originally a function of property ownership. In rural England before 1832, according to statutes passed in the fifteenth century, only men who owned freehold property worth at least forty shillings a year in a particular county were entitled to vote. 
  • If the old class system based on elite property ownership was distinctively British, the property-owning democracy was made in America. 
  • Those who ran Saving and Loans at Freddie Mac could live by the comfortable 3-6-3 rule: pay 3 per cent on deposits, lend money at 6 per cent and be on the golf course by 3 o'clock every afternoon. 
  • The best way to rob a bank is to own one!
  • "We want everyone in America to own their home". - George W. Bush in October 2002. 
  • "It is in our national interest that more people own their home". - George W. Bush in December 2003
  • "People who own property feel a sense of ownership in their future and their society. They study, save, work, strive and vote."
  • NINJA loan: No Income No Job or Assets
  • Property rights will eventually lead to democracy. - Hernando de Soto
  • Today you can tell the owner-occupied houses from the rest by their better fences and painted walls. The houses whose ownership remains contested are, by contrast, seedy shacks. As everyone knows, owners generally take better care of properties than tenants do. 
  • There is no doubt that home ownership has changed people's attitudes in Quilmes. Arrording to one recent study, those who have acquired property titles have become significantly more individualist and materialist in their attitudes than those who are still squatting. 
  • It is not owning property that gives you security: it just gives your creditors security. Real security comes from having a steady income. For that reason, it may not be necessary for every entrepreneur in the developing world to raise money by mortgaging his or her house. In fact, home ownership may not be the key to wealth generation at all. 
  • Roughly two fifths of the world's population is effectively outside the financial system, without access to bank accounts, much less credit. 
  • The success of the Quantum Fund was staggering. If someone had invested USD 100 000 with Soros when he established his second fund in 1969 and had reinvested all the dividends, he would have been worth USD 130 million by 1994, an average annual growth rate of 35 per cent. 
  • "In a crisis, markets can remain irrational longer than you can remain solvent" - John Maynard Keynes
  • If Warren Buffet had charged investors in Berkshire Hathaway a typical 2 and 20 fund fees, he would have kept for himself USD 57 billion of the USD 62 billion his company has made for its shareholders over the past forty-two years. - John Kay
  • Republic China has become banker to the United States of America.
  • Economies that combined all these institutional innovations - banks, bond markets, stock markets, insurance and property owning democracy - performed better over the long run than those that did not, because financial intermediation generally permits a more efficient allocation or resources than, say, feudalism or central planning. 
  • The ascent of money has been one of the driving forces behind human progress: a complex process of innovation, intermediation and integration has been as vital as the advance of science or the spread of law in mankind's escape from the drudgery of subsistence agriculture and the misery of the Malthusian trap. 
  • The financial system is the brain of the economy... It acts as a coordinating activity that allocates capital, the lifeblood of economic activity, to its most productive uses by businesses and households. If capital goes to the wrong uses or does not flow at all, the economy will operate inefficiently, and ultimately economic growth will be low. 
  • Macroeconomists have successfully predicted nine of the last five recessions. 
  • Finance has a Darwinian quality. 
  • Of the world's 100 largest companies in 1912, 29 were bankrupt by 1995, 48 had disappeared, and only 19 were still in the top 100. 
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