Home Tags Business
The equity markets with which we are familiar came into being in the 19th century to finance railways and railroads. Railways and railroads were...
The decline of manufacturing industry had been associated with the decline of the company town. In contrast, service companies have always tended to be fragmented. And yet there is one service industry which is conducted in large plants, in which people travel hundreds or even thousands of miles to consume the product, and which has been conducted in company towns not just for decades, but centuries.
When a corporation is unable to meet valid claims, control passes to the holders of these claims in a legally defined order of priority. But, as finance has grown more complex, these rules have come to look more shaky; they can falter dangerously in modern banking or in the case of a struggling retail business such as BHS.
Buffett's method is to find well-run companies and give them more freedom than they would enjoy on public markets. Yet other conglomerates use financial engineering and impose “transferable” management skills.
Recent stumbles by Bernie Sanders illustrate a misdirection in his attack on the banking establishment. The central problem is not so much “too big to fail” but “too complex to fail”.
Uber's superior service threatens London's black-cab drivers, just as (my namesake) John Kay's flying shuttle eventually led to rebellion by out-of-work Luddites in the 19th century. The losers from such innovations should in some circumstances be compensated. But restricting competition is against the public interest.