The Glory And The Agony of Free Enterprise Risk-Taking

I had a long and serious talk with an old friend the other day. You see, he's on the board of directors of a mid-sized corporation. They've been through some lean times, but they think things are turning around and they're thinking about investing in some new equipment that would make them more efficient and expand their output. Their competition was beginning to eat their lunch with lower prices.

If they make this move, they'll have to plow back all the after-tax profit they have made for the past few years, and then they'll have to borrow some more for operations. It's a big risk. It would be easy to hunker down, but technology is changing and a company can't afford to let the competition get too far ahead. This board decision is, literally, putting the business on the line. They have good management, with an excellent track record, good times and bad, but these also are scary times. It was the kind of decision that was keeping this particular director awake long hours at night, thinking out the options, the hoped-for rewards and the possible penalties of just for the company, or the stockholders, but also for the people who work there.

The thought struck me: wish the people who criticize businesses for making a profit, and especially those who consider businessmen to be greedy, could stand in this man's shoes right now and have to make this decision with him and take the responsibility for the decision made. To get the glory if the decision turns out to be right; and the grief and loss if it is wrong.

And I especially wish the socialist-thinking politicians who - without fear of personal loss - put our tax money into government ventures, could feel what it is like to risk their OWN money in the hopes of a profit in the future, knowing that if they made the wrong decision they would lose it all. I'm convinced one of the reasons the competitive free-enterprise system works is because people who want to make a profit, first have to risk big-time loss.

This is Gordon Sawyer, from a window on historic Green Street.