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Oligarchs, biofuel, and conflicts of interest

I am not among those who would believe that rich people shouldn't be allowed to do politics. In fact, they may even do some of these activities at the same time. And Silvio Berlusconi's activities in Italy seemed borderline OK to me. But I am shocked by many people's selective inability to see the risks (and actual wrongdoings), especially in the case when the politicians are very rich entrepreneurs.

When talking about the post-Soviet realm, we often talk about "oligarchs". This word comes with some negative connotations. Some of them are unjustifiable signs of racism of a sort. When a wealthy Russian guy is doing the very same thing as his American or Italian colleagues, he may still be just an "oligarch" rather than a legitimate mogul or tycoon.

Well, sometimes the negative flavor may be justifiable. What is the difference between the "bad oligarchs" from the post-Soviet countries and the "good moguls" from the West? I think that the assumption is that the "oligarchs" are mixing their political and economical powers in ways that are not kosher and that abuse the poor existing standards when it comes to the enforcement of laws.

Most Ukrainian wealthy men in politics deserve to be called "oligarchs". One of them, President Poroshenko, just fired another one, the Dniepropetrovsk Regional Governor Kolomoisky. The latter created a private army (which was helpful for Kiev during the Donbass war) and decided to protect his power over two Ukrainian oil-related companies. Poroshenko said that he wouldn't tolerate private armies and similar things. Kolomoisky seems out of business but it is not guaranteed that he will accept this weakened position.

At any rate, the idea that Ukraine is ending the "era of oligarchy" seems silly. And the recent theatrical public arrest of two government officials (doing emergency services, accused of corruption) during the meeting of the government may scare some people but I think it's ultimately counterproductive and hypocritical, too.

The percentage of Ukrainian public officials who are routinely bribed is estimated to be something like 70%. It seems pretty much unavoidable that not just most of the people who watched the arrest of their colleagues but also most of the people who were working on the arrest are corrupt, too. At the end, the "winners" of such anti-corruption witch hunts are not going to be the "worse offenders" but the people who have less power, or a useless kind of power.

As long as one keeps democracy, one simply can't "abruptly" reduce the amount of corruption because the democratic management is being done by the "same people" as before and the concentration of corruption is ultimately determined by the people's average feelings "what is tolerable" and "how the fight against corruption is important next to other priorities". People who believe in "miraculous cures" are brainwashed simpletons. Almost all of the vigorous anti-corruption speech is an example of hypocrisy and demagogy and some of the loudest preachers against corruption were (and probably are) corrupt themselves. As long as public officials decide about some money or stamps that have a value, corruption is unavoidable and more or less determined by the overall ethical standards in the nation (or environment).

This brings me to Czech politics. We have this weird, Slovak-born "political star" named Andrej Babiš, a the world's fifth most powerful billionaire according to a recent survey, probably a former informer of the communist secret police who began his food industry business as a director during communism, and a guy who founded the political party ANO 2011 to fight against the standard post-Velvet-Revolution democratic political arrangement in 2011. He has bought numerous major newspapers and lots of other things, too. The degree of the power concentrated in his hands is pretty much unprecedented in the post-feudal history of our lands.

He is currently the finance minister, the vice-premier, and the "de facto prime minister", as some people say (because the social democratic prime minister Sobotka lacks charisma and generally looks invisible). He would win the elections if there were elections today – with a gain of more than 30 percent. His party is a classic, NSDAP-style one-man show. As a leader, he had no competitors in the intra-party "elections" and he was elected unanimously. Lower-tier folks in his party, ANO 2011, are chosen according to the number of their joint photographs with Mr Andrej Babiš they can offer, and according to the good words that the leader Babiš says about them.

Lots of people are excited about him because they believe that

  1. he has already managed a big corporation and he is likely to be similarly successful with a country
  2. he won't try to suck money from the public budgets because he is already rich
People who buy these memes display a near-zero understanding of politics, business, human psychology, and their tendency to be impressed by the cheapest populist tricks.

The first point is wrong because a free and democratic country isn't really similar to a company. In a company, the employees obey the boss' orders. But in a free and democratic country, citizens simply don't obey the leader's orders. Much of the art of politics is about the ability to achieve consensus, agree with other people, and political trade. A society where the leader may manage things as directly as a boss of a company is by definition a dictatorship.

The second point is pretty much the opposite of the truth. If someone is rich, his desire to become rich was probably a necessary condition for the outcome. Because he has earned a billion of dollars, it indicates that $100 million simply wasn't enough for him. It is simply a totally naive, foolish idea that people get automatically "satisfied" when they become much wealthier than the average citizen. Most of the wealthiest people clearly didn't. Just like there is a difference between earning $20,000 and $40,000 a year, there is a difference between $100 million and $200 million and the rich people are instinctively aware of the difference.

Now, can someone like Mr Babiš be bribed? Everyone can be bribed – the question is just "how much". So obviously, $100 will be unlikely to be enough to bribe him. But that doesn't prevent the people beneath him to be bribed by $100; and it doesn't mean that he won't be bribed by $100 million which may also be a problem. In fact, it's likely to be a bigger problem.

Mr Babiš is unlikely to get his illegitimate income in the same way as a traffic cop. However, his tools to devour huge amounts of the public money are extremely powerful and the voters who were so impressed by the witch hunts based on accusations that a couple of people stole millions of dollars from the public finances seem to be totally blind when it comes to Mr Babiš' stealing.

Days ago, we just saw a shocking example of Mr Babiš's conflict of interests. In 2010, Babiš was actually one of the main forces behind the lobbyists who made the Parliament adopt a bill about the support of first-generation biofuels. Mr Babiš built some refineries – which were running at full steam to produce subsidized oil from his oilseed rape – and he has made huge amounts of money from this dirty subsidized business.

Fields somewhere in Czechia, oilseed rape, May

It was always insane and immoral to subsidize the first-generation biofuels, to use fields to grow fuel instead of food. But you would expect that now, when everyone – from sensible people to Greenpeace, Al Gore, the EU, and the IPCC – agrees that the first-generation biofuels were a giant blunder, the subsidies would be terminated as soon as possible.

The 2010 bill was supposed to end in this year, 2015. That's what the EU expects to happen, too. However, some regulations allow the bill to be extended so he wants to extend the subsidies for the oilseed rape oil by five more years – up to 2020 and Mr Babiš, the politician, seems powerful enough top make this happen. This will allow his refineries to produce money at full steam for five more years. People have estimated his company's profits from this extension as $200 million. This amount is vastly higher than any single "big claim" about misappropriation of public finances that the brainwashed voters obsessed about "corruption" have gone ballistic about.

Why do these people suddenly cease to care when we are talking about $200 million stolen in this way? Probably because the amount is already so huge that they can't see it. Even more precisely, they probably consider Mr Babiš to be a super-human who is flying in the heaven and that's why they are no longer envious about his wealth. Well, I view Mr Babiš as another semi-corrupt parvenu and stupid, inarticulate bumpkin – and yes, I think that even Mr Babiš must be primarily grateful to great people like Václav Klaus who have made such things and wealth possible – so of course that I am about 200 times more upset when he steals $200 million than how I am upset about similar people who steal $1 million.

He can escape such problems with extremely ludicrous arguments. The first aspect of his "innocence" is that "he didn't want to become a politician", he claims whenever he gets into trouble during an interview etc. We are supposed to assume that because he didn't want to become a politician (which is a questionable claim by itself), we shouldn't demand him to obey the same ethical and legal conditions that other, mortal politicians have to obey. Sorry but even if he didn't want to become a politician, it can't work in this way. Once you are in politics, you are a politician and you have to be held accountable just like everyone else.

But his arguments about the economic details of his "innocence" are ludicrous, too.

In a recent TV debate, he argued that he won't get a "crown" [penny] from the subsidies because those subsidies are only paid to consumers of the fuels (which are obliged to contain some biofuels) and not to the producers such as himself. The TV host understood why this excuse is totally lame. But the problem is that millions of Czechs are so incredibly stupid that they don't see it, and perhaps they don't want to see it, so they are not able to conclude that Mr Babiš is planning to steal $200 million using this conflict of interests and he can continue to do such things.

When a government pays X dollars to buyers of Y whenever Y is being bought, it is helping the transaction between the buyers of X and sellers of X. It doesn't really matter whether the seller of X or the buyer of X is getting the subsidies. The effect is exactly the same. If the producer/seller were getting the subsidies, the price of Y (dictated by the market distorted by the subsidies) would drop by the subsidies, so the consumer/buyer of Y would save those X dollars, anyway.

The real difference that the subsidies make is that the producer of Y won't go out of business with the product – in this case, the first-generation biofuels – that would otherwise be uncompetitive. It's so simple. How can someone fail to comprehend it? Just in this single "innocent" episode, Mr Babiš is stealing a greater amount of public money than any Czech has ever been accused of. And he can do similar things on a weekly basis.

If you look at the actual policies of Mr Babiš and social democracy, his coalition partners, they are very similar. For example, both of them are waging a war against small entrepreneurs and freelancers – they just differ in the details "how to do it" (social democrats want to increase the healthcare payments by the small entrepreneurs etc., Babiš wants to copy electronic cash registers from Croatia so that he can look into finances of every single entrepreneur and they have extra work, hassle, and expenses, and so on). All these policies and the philosophy behind them are pretty bad and designed to impress the typical jealous losers who (openly or secretly) preferred communism but they are perhaps still tolerable.

However, it's the long term in which Mr Babiš scares me, and probably more so than the social democrats. Well, assuming that he will exist in the long term: lots of business-linked Czech apolitical parties have faded away after a year or two (he already seems more resilient than all of them). The social democrats have been tested and they have never "fully reverted" the post-1989 evolution towards capitalism and democracy. However, Mr Babiš represents the style of politics and its "moral justification" that is pretty much isomorphic to that of Mr Adolf Hitler. He is also considered to be "above everyone else" by his fans and they think it's right. Everyone else is so dirty, and so is democracy and capitalism. I am terrified by that. Of course that I prefer a million of dollars to be occasionally lost – the inefficiency reflecting that we are an imperfect nation, like every other nation – over this dictatorial regime symbolized by Mr Babiš where billions may be redirected to the leader's pocket and everyone is supposed to clap his hands.

And I am scared that the greatest fraction of the Czech voters – about one-third – has a different opinion about this fundamental question. In my viewpoint, they are mentally and morally inferior voters and a politician building on such people is bound to do very bad things.

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reader Shannon said...

If he does bad things the population will eventually hang him. We need to start seeing examples in Occident. We need to start seeing these types of guys hanged high and short to send a message. ;-)

reader thejollygreenman said...

Lubos, fair comment.

However, in discussing the subsidy of the biofuels you missed another point, what can be called the Martini effect. If you mix vermouth with gin you end up with drink that is not so strong, less alcohol content, than straight gin. If you add the biofuels to petrol you end of with a less efficient product, and the average consumer will find that his mileage on a tank of petrol, will go down and that he will have to refuel his car more often.

So the net loss of the poor Czech consumer is actually more than the $200 million pocketed by you smart politician.

And he gets the people to vote for him, just like turkeys voting for Christmas.

He is indeed a smart man.

reader Luboš Motl said...

He is not a smart man. He is just a political representative of the idiots.

It's always the case that when such economically unwise policies - like the support for biofuels - are introduced, only a portion, usually small portion, of the lost money actually goes to someone's pocket. The rest is "lost for everyone".

reader thejollygreenman said...

I agree, I used the wrong noun. Maybe smart snake-oil salesman is more apt.

This destruction of capital and money, the lost for ever effect, is so fascinating and hardly ever discussed.

reader br said...

Live updates here:
Present view is that he had a history of depression and hid it from his employers, and an unconfirmed but probable break-up with girlfriend. Both of which leave a few possible motives.

reader Gene Day said...

If biofuel/petrol mix is cheaper it is solely due to governmental subsidies and tax incentives. If biofuels such as methanol were fundamentally less expensive there would be no petroleum industry.

reader Wizard said...

that doesnt make sense, why would diluting petrol with ethanol make the fuel more expensive? although there might also be additional tax incentives (carbon tax for example, sorry lubos ;))

the reason the petroleum industry is not dead is because you can't run your car on pure ethanol. you need atleast 85% petrol.

reader lukelea said...

Dear Lubos, Off topic, I suppose, but when I read about these Russian and Ukrainian oligarchs who, in a matter of years, managed to appropriate huge chunks of the "means of production" that had been created in the days of Stalin, etc., my only thought is, "Same as it ever was."

For what is capital if not the accumulated crime and sacrifice of centuries, plus interest? What else could it be?

The best we can hope for is that it ends up in the hands of capable businessmen, even if corrupt, who, instead of squandering it, know how to invest it and make it grow.

reader QsaTheory said...

corrupt and capable(as in productive) is an oxymoron. corrupt and capable of extracting money that is synonymous.

reader Tony said...

"Behind every great fortune there is a great crime", attributed to de Balzac.

So what would be Bill Gates' great crime?

reader RAF III said...


reader lukelea said...

Gates' chrime? None that I can see, unless you count his monopoly power. With him I think it has been mostly sacrifice and interest.

reader peter griffin said...

So you're saying Muslims should not be pilots for Western airlines? First of all, what is a "Western" airline? Second, why only in Western Airlines? If Muslims pose a threat to humanity because they constantly want to kill themselves for Allah, why let them in any cockpit? Why let Muslims drive taxis (or any car)? Isn't that dangerous because of Jihad & stuff? Why let Muslims work in kitchen? I bet they constantly wanna poison the infidels. Why even let them work in offices? They might blow up the building with their bomb belts. Why let Muslims leave their houses? They might kill the next best person with their swords. All Muslims should be locked up on an island like Alcatraz! That's the solution.

reader keepit simple said...

It is self evident!, most cultures DO NOT MIX! (see kosovo) how about they stay where they belong!

reader Luboš Motl said...

Well, indeed, I do believe - and, according to recent polls, 98% of my countrymates also believe - that mixing of cultures is a net negative, should be discouraged, and people should either fully assimilate with the culture that welcomes them or stay where they belong. And we do believe that multi-culturalism has failed and we have seen many dramatic pieces of evidence that it's the case.

reader Luboš Motl said...

Please, give me a break with this Marxist crap, Luke.

Private ownership and capitalism is the most efficient way of dealing with assets and production of new assets. Laws in decent capitalist countries write rather clearly what is the kosher way to accumulate the capital, and if one does it in agreement with the law, it's just fine.

After the fall of communism, privatization -"appropriation of huge assets by relatively few people" - was the intent, not a bad side effect. The intent was to establish capitalism as quickly as possible. Slowing down this process to additional 40 or 70 years that would be comparably long to the "days of Stalin" would clearly be no good.

In Czechoslovakia, Klaus made a clear plan to privatize everything within a year or two. It was a very wise decision.

reader scooby said...


reader Alexander Ač said...

The richer one is, the less empathy with the poor or normal people in general (says social research). So if we want sociopaths in government, why not. In the end, rich get richer and poor get poorer is an excellent policy!


reader QsaTheory said...

Lubos, just a clarification about the world of business. Modern day companies are quite a bit different animals from the past. The number one rule is separation of ownership and management. There are two main classes for medium to large companies, the publicly owned and family held. The publicly owned may have people with large stock ownership with representative(s) in the board of directors but the board has a vastly different function from executive management. It is a good practice for family owned companies to follow the same pattern, if they don't they risk breakup with only 6% of them remaining after third generation.

The number one rule is separation of ownership and management.

reader Luboš Motl said...

Haven't you ever considered the possibility that "social research" mostly says these things because it employs otherwise unusable jealous Marxist losers?

Rich people are "mostly" richer because they have done more stuff for other people than what poor people have done.

reader Luboš Motl said...

That's what the reality looks like but I don't think that this rule is bringing some radical improvements of anything.

It's done in this way simply because the owners - either from the beginning or from some moments - become lazy and want others to do the work that their predecessors used to do themselves.

So they hire managers which are people pretending to be the owners from the internal perspective of the company, while the owners above them have all the time for their hobbies.

In principle, the control still belongs to the real owners - because those appoint the managers etc., on the shareholders meetings if there are any. In practice, the everyday work is done by someone else. But again, this indirect complexity is a matter of convenience and the ability to produce enough excess product to allow the managers to hire their productive clones.

One advantage that is real is that the owners are often not that competent - especially if they inherited it, or got it in different ways - which is why it's a good idea to make someone else a manager. But if one only talks at fresh new companies so that we may assume that the owners have something to do with the reasons why the wealth was accumulated, I think it's easy to see that the separation can't bring any net positives.

reader QsaTheory said...

Maybe that is true for Europe because of it isolated geography. However for the rest of the world multicultural is the norm. That is why the rest of the world see you(that doesn't mean it is true) as a bunch of cocky racists.

reader Alexander Ač said...


"...are mostly richer because they have done more stuff for other people than what poor people have done." - Like Ghandi, Tesla, Luther-King, ...and countless others... :-)

While hedge-fund managers billionaires and "investors" have done for society exactly what?


reader Luboš Motl said...

I didn't forget to write "mostly". Still, your would-be counterexamples are lousy..

Mahatma Gandhi - note the spelling - would have been wealthy if he wanted. He deliberately decided to live as a poor man - it was his form of wealth.

But note that there are Gandhi billionaires from that family - like Sonia Gandhi.

Nikola Tesla would have been the richest guy on the planet

but he threw away his most valuable patent, and he invested all of his substantial money to crackpoty projects because he was not just a great inventor but also a highly prolific and obsessed crank.

I don't think that Luther King deserved to be wealthier than he was.

Hedge funds managers are rarely hedge fund managers from the beginning. They usually have to do their names by something else before their hedge fund career.

So I can answer the question if you substitute particular people. For example, Peter Thiel is a hedge fund manager whom I know in person, and he has created the most important electronic payment system and allowed the most important social network, Facebook, to be built. Not enough?

reader QsaTheory said...

Well, I think this rule was brought about because of experience. Owners, and especially after initial success(businesses are said to have five stages) tend to wreck havoc on the business. You hire a consultant that cost you a fortune to tell you that. That is as the business grows the skill set and the management style becomes formal ( business school principles).

The decisions that are made are mufti layer depending on the task. That is why you have shareholders voting, board of directors, management executives. Add to that government, consumer advocates, labor Union ... etc.

reader QsaTheory said...

Just a note the Gandhi's are unrelated.

reader Luboš Motl said...

Dear Qsa, they are not *relatives*. But they have surely been related in many ways.

For example, here is the picture of small Indira with her "unrelated" Mahatma Gandhi

reader Luboš Motl said...

This is a very biased, tendentious description.

In many other cases, and perhaps most cases, the evolution is exactly the opposite than what you indicate:

A great dynamic company loses the control by the founder-owner, gets under control of relatively mediocre mangers, and becomes a stagnant bureaucratic entity.

Apple is in this process towards stagnation, too.

reader QsaTheory said...

As an example. My brother hired a manger from the biggest in Europe to run his new business. After meeting him for 10 minutes I told my brother he is not the right guy he is not the type that dirty's his hand.
Six months later he fired him loosing a million dollars on him. He told me he is just politics, like meeting Putin to open a branch in Russia and such. So Jobs in business become highly specialized. Thanks to Adam Smith the father of capitalism.

reader Luboš Motl said...

Come on, Qsa, this is just silly. Places outside Europe paint an even clearer picture that multi-culti is wrong.

The U.S. assimilates everyone and tolerates almost zero multi-culti, and it works. Vast regions in the Middle East etc. are almost uniform - just Arabs who are Muslims etc. - and they are lethally intolerant of every other culture.

India is multi-cultural but it probably impacts its economy etc. and may be a reason why India remains a third world country of a sort.

Latin America is a uniform native-Hispanic place.

Europe is really the only part of the world where many cultures co-exist and where the co-existence may at least marginally be believed to be valuable. Still, when things are looked at in their entirety, multi-culti is a net negative.

reader Alexander Ač said...


seems like you basically equal money with "benefits" for society. By this logic, business with weapons, drugs, endangenred species, or entertainment, is several orders of magnitude more important than education or research. Do I get it right?

reader QsaTheory said...

I read it differently. In Europe in large cities you see some blocks that few cultures intermingle that is it, maybe for you it is such a big deal that you call it "multi".

In south america the population is mixed from Spanish, Africans, European whites and locals with breads including all of them.

In Iran there are five major ethnic groups, Turkey two major and one minor with host of religions.

Arab world is mixed also. the Gulf and Iraq has a mixed population with Iran. Many gulf are actually blacks from Africa. some of us are very dark. As a matter of fact our previous King's mother was black.

It is known that Syria and Lebanon are made up of endless ethnicity.

North Africa, is Arab/Berber and Africa mixed.

Africa might look all black to you but they see clear differences between themselves, the east is markedly different than the west.

China and Afghanistan(Uzbek Pashtun...) the same.

reader Luboš Motl said...

Money isn't the same thing as benefits for the society but their correlation is positive and much stronger than what the likes of you are capable of imagining.

Whether you like it or not, weapons bring benefits to societies, too. They allow them to defend themselves, or to attack or beat others (or to increase their chances of this success).

There's no way to quantify the value of endangered species but one may still observe how much people are willing to pay for policies meant to help these species. Most people including yourself hypocritically claim that this issue is more important for them/you than it actually is.

Entertainment is very important - even your (and other environmental whackos') communist predecessors knew that. It's what gives lives some portion of the soul and content.

Education and research are important but overrated and the fraction quantifying how important they should be relatively to all other activities is comparable to that 1% or 2% or few percent and is nicely matched by the spending for those things.

So yes, you basically did get it right, but I guess that even if you write something that is right, you are 100% incapable of understanding it. You are like the broken clock that is right twice a day.

reader Luboš Motl said...

Dear Qsa, you mostly write about the Middle East and the Muslim World.

Its ethnic composition is complex but I assure you that if you will try to sell the ethnic political arrangement in that part of the world as a great example for the Europeans to follow, you will fail. You may be much more successful if you present it as the deterrent example. ;-)

reader Tony said...

Upvote! The only way to do it without logging in.

reader Luboš Motl said...

Well, the bosses of big companies must think that it wasn't such a bad idea - e.g. because Siri is the new Clippy

reader RAF III said...


reader RAF III said...

Upvote! (2nd)

reader QsaTheory said...

Dear Lubos, In my original post I just stated what I believed to be a fact, I did not say anything about its being good or bad. It just happened because the Middle East geography is as such that it is open on all the parts of the old world, so naturally you will have more intense interaction.

The Middle East is in a mess because of its strategic location and it's the main source for the commodity that runs the world economy. So regional and international powers are vying for position. It is not unlike when countries in Europe had their colonies and were coming into conflict with each other and outsiders.

reader Tony said...

Yes, it is pretty cool.

Off topic I have something that is very uncool (hint - climate change and the role of women):

reader Luboš Motl said...

Dear Qsa, you clearly seem to be utterly uninformed about the region you are associated with.

Saudis are not attacking Zaidis but the Houthi rebels who are unquestionably Shiites, and strongly so.

It's also rubbish that the mess in the Middle East may be blamed on either the openness of the region or on oil - although I am sure it is more convenient for people like you to blame someone else for the mess that people like you are producing and extending.

Central Europe is also open on all sides which doesn't mean that it must be messy in the same way as the Middle East.

And oil is just another part of the economy. There are many other parts that the world economy "runs upon". Moreover, nations that have lots of things that may be traded tend to be in peace with each other, so your logic wouldn't work even if all of the economy were about oil.

reader dreamfeed said...

How could they have stopped it (the growth of the Albanians)?

reader dreamfeed said...

I still don't see how you can think the risks are significant at all given the very small number of terror attacks we have experienced but I guess I'm beating a dead horse here.

reader Gene Day said...

Owners may rarely be excellent managers but there is no rule against it because it is surely possible. Wise owners, just like top leaders in any business or profession, gather top talent and create an atmosphere in which they can work effectively as a team. The key word here is “top”. Second best in no place.
Jobs was a classic example of this but there are many others active today. Elon Musk and Mark Zuckerberg, for instance, have done wonders by doing exactly this. Readers of this blog could easily list a dozen more.

reader Gene Day said...

That’s baloney, Wizard. If designed for it cars run perfectly well on pure ethanol. There are millions of them in Brazil, for example.
Mixing petrol with ethanol increases costs unless ethanol yields more BTUs per dollar than petrol, which, in the absence of incentives, it does not!

reader Luboš Motl said...

There is also a very small number of Westerners going e.g. to Balochistan. The risk per single visit is high.

reader Luboš Motl said...

There are lots of minor policies that should have existed and should exist to fight against disproportionate birth rates or immigrations in different ethnic groups.

But most obviously, most of the Kosovo Albanians should have been expelled from Kosovo after the Second World War just like most of the Germans we expelled from the territories of Poland and Czechoslovakia and for the very same reason. They were overwhelmingly a problem-making pro-fascist minority that was responsible for the war problems and that lost the war.

reader Luboš Motl said...

I don't see why you think it's a "rare" combination.

Owners who created the company must be pretty good managers pretty much by definition, right?

And even those who inherit a company from the founders have a high chance to have inherited some relevant genes.

As generations continue, the percentage of inherited talent goes down, but so does the relative influence of these owners, in average.

reader QsaTheory said...

What you are saying is correct in limited cases and for limited time. The Actual practice for the majority of medium to large publicly owned companies have a cookie cut style of management that is taught in business schools that is proven to work. Of course business is an art and science.
The majority stock owners have reps on the board that choose the CEO/president approve strategic plans drawn up by the soldiers in the company, etc. Many of the people on the board are chosen specifically for the opposing(or variety) views, this is recommended by consultants AND approved by the owners(wise or otherwise).

Family businesses are recommended to follow suit , by putting strangers on the board to act as mediator and father like to the competing share holders. one of the owners is usually groomed to run the business, but with proper constraints so as not to act in self interest.

Gene and I speak from experience.

reader Luboš Motl said...

One may teach business-as-usual and bureaucracy in business school but in these schools, one can't teach one to be an extraordinary entrepreneur who actually moves the industry forward.

reader davideisenstadt said...

who were responsible for the other half of the "attacks"?
what percentage of the population do they comprise?
cheesy argument.