News & Analysis
When Money Power Rules Business
Starting a business: young entrepreneurs are vital to Britain's economy ... There's never been a better time to start a business, says Richard Reed, co-founder of Innocent Drinks, who also believes that young entrepreneurs are vital to our economy. – Richard Reed/UK Telegraph
Dominant Social Theme: It's not easy to found a business but you can do it.
Free-Market Analysis: Richard Reed is CEO of Innocent Drinks, a UK smoothie chain, and obviously he knows what he is talking about when it comes to businesses. Today Innocent Drinks has sales in excess of £100 million, 250 employees and offices across Europe.
The three founders of Innocent Drinks have also cashed out handsomely, as Coca Cola has bought a majority stake in the company for in excess of £65 million. The founders are said to retain operational control and the company remains a fast-growing young franchise.
Reed's personal success obviously influences how he looks at business. He firmly believes in entrepreneurship and the capacity for individuals to create new and successful ventures. Here's more from the article:
Every big business that you can think of started life with an entrepreneur's good idea. It is so important to encourage entrepreneurship because it has a direct and positive impact on society as a whole through the creation of new jobs, opportunities and wealth.
The reason why we should encourage young entrepreneurs in particular is that they have the best naturally occurring opportunity to start a business. They tend to have a lot less to risk than people who have had time to develop their career, put down roots and have people who depend on their income.
Business people tend to be at their most creative during their mid to late twenties, and because setting up a business is inherently a creative endeavour – from creating your philosophy to designing your product or service – the process suits the abilities of younger entrepreneurs.
While people with more experience in the workplace tend to spot opportunities in tangents of the work they do for a living, people with little or no experience of work concentrate more on "big picture", customer-facing ideas in sectors such as food, retail and manufacturing ...
Cheaper and more powerful communications, in the form of devices and software, as well as online services for funding your business, organising the way you work and sourcing suppliers, means there has never been a better time to start a business.
Reed also points out that banks "are lending again," and thus this is a good time for a startup. It is here we begin to depart from Reed's optimism. Banks may be lending again but this does not necessarily translate into a business opportunity.
In fact, Reed is likely wrong about the business cycle. This article bangs the drum generally for a "recovery" – though it is widely acknowledged that Britain remains mired in recession. Additionally, there are numerous factors that militate against a real recovery.
The biggest one is the monetary system itself – something Reed elaborately avoids discussing. Central banks seem to have dumped something like US$50 trillion into the larger marketplace via the commercial banks they use as their distribution arms.
But most of this money apparently has not yet been lent out. It has been used instead to run up securities markets, recreating bubbles that had collapsed in 2008. And now this money threatens to seep out into the larger economy.
When it does, it will push up prices. And price inflation will lead to higher interest rates. In the late 1970s, Paul Volcker had to yank rates all the way up to 20 percent to control US price inflation.
But how high will rates have to go this time if economies really begin to recover? We figure it may not even be feasible to wring out price inflation this time around. That's why we suggest another monetary system is going to take the place of this one ... one that may be global in nature.
From our point of view, the economic environment is being driven by a power elite that wants to create world government. Crashes and recoveries are manipulated with this goal in mind. And thus, from our point of view, entrepreneurs are a bit like bugs skating on the surface of a dark lake; the real action is taking place at a murky, deeper level.
Once upon a time, perhaps, entrepreneurs were the most important – vital – force in a capitalist economy. These days, however, it is the bankers who run the world, specifically those bankers who run the money production via central banking.
Reed may believe it is a good time to start a business but please note he and his partners are funded by Coca Cola which, as near as we can figure, is controlled by the same interests that control central banks.
The best that can be hoped for these days, maybe, is to create the kind of value that attracts the powers-that-be and opens up the spigot of significant investments. But within this context, one ends up supporting a system that is in many ways profoundly anti-entrepreneurial and anti-competitive. (Ironic, eh?)
Reed doesn't discuss this cognitive dissonance. In fact, as he is a drink-maker (albeit a rich one), it's in a sense beyond his pay grade. He'll go on making smoothies and hopefully he doesn't over-expand his company because the recovery he believes is on its way is almost certain to be derailed by high interest rates.
Conclusion: Opportunities may abound, as Reed maintains. But in this day and age – for the moment anyway – Money Power rules.
Posted by Danny B on 12/24/12 10:58 PM
Dear Bell, have you taken a look at limited purpose banking? It's an idea of Kotlikoff and Leamer.
Apparently, there is interest from heavyweights.
"Prominent economists and policymakers, including Bank of England Governor, Mervyn King, and former U.S. Secretary of Treasury and U.S. Secretary of State, George Shultz, have either strongly endorsed the plan or urged its careful consideration. "
Click to view link
There is no mention of a CB so, I can't judge exactly who would have the power.
It would make EVERYTHING clearer if Mr. Fekete could pass judgment on it.
Posted by clark on 12/21/12 08:35 AM
"There's never been a better time to start a business, says Richard Reed,"
Sounds a bit like what's known in the construction trade as, mothering.
The other word I kept thinking of while reading this, mal-investments.
Posted by Joe on 12/21/12 05:28 AM
There are still opportunities... many people I know who are small time are quite wealthy relatively speaking multi millionaires at least. I get that money power is powerful is there any point in increasing this power? They just need to maintain surely? Are the different elite families all linked or do they have some inner differences?
In my experience when looking at inter-generations of a family or dynasty..the children do not always live up to the expectations of the founder pioneer... by the 3rd of 4th generations the family may give birth to many idiots who fail the dynasty and bring ruin upon it. If these elite families are immune from this how have they managed it?
Reply from The Daily Bell
It seems to depend on how large the family is and how signficant the wealth is.
Posted by taxesbyanyothername on 12/20/12 06:21 PM
Entrepreneurship would instantly explode again, bigger than ever before, if government would let it. That is what the elite are really afraid of, the change too fast for them to predict, and their consequent loss of control. The old who are very slow are often more impatient than babies. The very powerful with enormous control, are more feerful than those living on the ragged edge of existance.