* Posts by elro

1 post • joined 26 Jun 2010

The long and the short-term of it: Apple's future



You misrepresent the critics of the anglo saxon variant of capitalism and rely on anecdotal evidence (a single company) to make your point.

In most public companies, shareholders exert very little influence, the shareholders are overwhelmingly large, staid, institutional investors - pension funds, life insurers, etc. Those who have control are the senior execs who will in all likelihood stay only for a few years and so obviously want to maximise performance in that period. The people making the investment decisions in the pension funds have similar short term incentives.

People like WIll Hutton are not arguing against shareholders (and venture capitalists take equity, they are active shareholders with long term interests), they are arguing against lending through bond markets rather than through banks, where the lending institution makes the loan, packages it up and sells it on. Securitisation means those making the loans have no incentive to think long term - they only need to be sure they have a market for the debt.

Apple and Microsoft were both driven by founders with long term interests in their companies who are able to think past the next quarterly earnings statement.

The 'Californian' (venture capital) and 'German' (long term bank loan) models of capitalism have produced a huge amount of value and growth through innovation. The 'New York/London' model of financial capitalism has enriched bankers and has brought nations to the brink of bankruptcy. These people create little value, but are very good at redistributing it into their own pockets.