We
don’t have to live hand-to-mouth. Capital can earn money that can finance our needs,
and in good times wants. It can provide a buffer for the knocks. Then how we spend
our time ceases to be filtered through the question “how can this make money?”.
We can free ourselves from a pass-the-parcel economy where a break in the chain
causes us to all fall down. We can afford to do care work that doesn’t pay. A
challenge with this is “Agency Risk”. There has to be trust and alignment of
interest if the managers are not the owners. A lot of risk management focuses
on performance. What you can see. What you can see isn’t all there is. Risk
control is holistic. If managers get rewarded in good times, but feel no pain
in bad, interests aren’t aligned. If (some of the) managers co-invest (for
show) but have substantial other assets and safety nets, interests aren’t aligned.
The advantage of scale is that standard solutions can spread, and be provided
by fewer people. The disadvantage is that things become abstract, confusing,
and distant. Without a solid, explicitly-aligned, universal foundation, trust is
bound to be superficial and dependent on a fragile illusion being maintained.
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