Like many people, I admire the entrepreneur. Risk-taking, hard-working, value-adding, employment-creating – such are the virtues of entrepreneurs. I wish our schools taught people more about how to be entrepreneurial, as opposed to “business” degrees that teach people to be middle-managers in big corporations. We too often are lectured about the need to impose supply-side remedies to boost entrepreneurship – by people who are not actually entrepreneurs, including corporate bureaucrats, government officials, and Fraser Institute types.
So I have a lot of respect for the Frank Stronachs of the world – the guy who came here with $50 in his pocket and became a billionaire (putting aside his hostility to unions, for the moment). But Belinda? She is the opposite of an entrepreneur, and a good reason for wealth and inheritance taxes. Canada is far too cozy about inherited wealth; rather than the best and brightest rising to the top of the corporate ladder, our business press is all too happy to applaud heirs assuming the throne.
I have never met Belinda but I have been thinking a lot about two CEOs that I know and what their rise to the top teaches us about the society we live in. CEO number one is Eric. He is an extremely bright guy from a middle class family. A few years ago, Eric and a friend started up a software company in Ottawa. It was a slow grind those first few years, but thanks to some timely venture capital and a lot of sweat equity, the company’s revenues grew steadily. In those early years, Eric made poverty wages and worked insane hours. He still works the insane hours but the success of the company means that he now pulls in a six-figure salary.
CEO number two is Ed. Not the brightest light in the room, Ed has been stinking rich since the day he was born. His father took over the family business from his grandfather, and parlayed that capital into an immense fortune that is now one of Canada’s leading companies. Ed is now the CEO of one of the sub-companies in the empire, and will one day inherit the top chair. Ed has never had to mail in a resume to get a job. His jobs have been handed to him by papa, a few summer stints working in various parts of the corporate empire. Ed’s future as CEO has never been in doubt; it is something that he has known all his life.
So what lessons should we draw from these two stories? One is the difference between ability and luck. Conservatives tend to believe that high incomes and wealth are just because they are the returns achieved by the talented (though supplemented by education). The good news is that someone like Eric, who has ability and talent can get ahead, in large part because he lives in a country like Canada (the odds might be stacked against him were he to have been born to a poor family in Botswana). He happlily pays his taxes, knowing that they contribute back to creating opportunities for others and the next generation.
But conservatives tend to ignore luck, not just luck in the engagement of entrepreneurial activities but the dumb luck of being born toe the right parents (someone like Ed). In doing so, they inevitably end up supporting inherited privilege rather than genuine policies that create the conditions whereby everyone can achieve their potential – and perhaps become the next big entrepreneur.
Below is an article from the Toronto Star that set me off on this rant. The Life of Belinda is a nice one: drop out of colleges, have a few marriages, become a single mom while CEO of dad’s holding company, dally in politics for a few years, then quit. And then have the Star write a puff piece about your life.
Belinda Stronach is giving up politics, but although she won’t be the chief executive, she’s not ready to settle into quiet role at Magna International
April 21, 2007
Tony Van Alphen
He’s headstrong. She’s headstrong. They butt heads on the job and off. It works, says Belinda Stronach.
That relationship picks up again next week when she returns from a turbulent 3.5-year stint as a federal politician to executive vice-chair at auto parts powerhouse Magna International Inc. and to business with her hard-driving father Frank.
… His daughter said the job of vice-chair won’t be a part-time position and she expects to become “fully engaged” with the work of other executive committee members, who chart Magna’s course.She will also soon join Magna’s board of directors, possibly as early as the company’s annual shareholders meeting next month. Her compensation will probably amount to several million dollars annually if the company follows past practices in rewarding top executives.
… Frank Stronach founded Magna 50 years ago and a family trust that includes her still controls it through multiple voting shares despite holding only a small percentage of equity.He built the company from a Toronto garage into the world’s third biggest auto parts producer with annual sales of more than $24 billion (U.S.). It employs about 21,000 workers here, more than General Motors of Canada Ltd. He maintains an iron grip on the company and has the final call on all major decisions. Frank Stronach, a fitness buff, likes to joke about living in another century but she said he knows, at 74, he’ll have to slow down soon.
… The company and her father are thinking more now about succession, particularly as his interest shifts to other projects.Stronach is currently trying to stabilize Magna Entertainment Corp., his money-losing thoroughbred racing and gambling company that he calls “a labour of love.”
At the same time, he is looking for partners for a possible blockbuster bid for DaimlerChrysler’s North American operations. If it works, Magna, whose credit rating dropped recently, will need more attention as it manoeuvres its way around an industry in turmoil.
… In 2004, Belinda Stronach had stressed that she was in politics for the “long haul” after leaving Magna. But her father predicted she would return to Magna in five to 10 years. She wasn’t a “career” politician, he said.In her short political career, she sparked the merger of the Alliance and Conservative parties; ran unsuccessfully for the leadership of the new party after indicating no interest; jumped to the governing Liberals but wound up on the opposition benches as a result of the election last year. …
1966: Born in Newmarket.
1985: Drops out of York University.
1990: Marries Magna executive Don Walker.
1991: Son Frank Jr. born.
1993: Daughter Nikki born.
1995: Divorces Walker.
1999: Marries Olympic skater Johann Olav Koss.
2001: Becomes Magna chief executive officer.
2002: Divorces Koss.
2004: Named one of the world’s 100 most influential people by Time magazine. Resigns from Magna. Runs unsuccessfully for leadership of Conservative Party. Elected Conservative MP for Newmarket-Aurora.
2005: Jumps to Liberal Party and becomes Human Resources Minister.
2006: Wins re-election.
2007: Quits politics to return to Magna.
- Dead Money (August 23rd, 2012)
- Baskin-Robbins and the Walmartization of Ice Cream (July 20th, 2012)
- Labour Losing to Capital (July 19th, 2012)
- The Big Banks’ Big Secret (April 30th, 2012)
- In the Wake of the Crisis: Bully Capitalism (February 14th, 2012)